[Recorded by Electronic Apparatus]

Tuesday, April 23, 1996

.0902

[English]

The Chairman: Good morning and welcome. I'm sorry for the brief delay. There was a caucus meeting this morning on an item that may be of interest to all of us later today.

From the Canadian Owners and Pilots Association we have Mr. Butler, Mr. Hofmann,Mr. McNeill, and Mr. Peppler. Mr. Butler, are you making the presentation?

Mr. Harold Butler (President, Canadian Owners and Pilots Association): No, we have a chief delegate who will make the presentation.

Mr. Chairman, members of the committee, ladies and gentlemen, COPA is a 44-year-old organization. We were founded in 1952.

I'd like to introduce the members of our committee who are here today. Our founding president, Mr. John Bogie, is here with us today. Frank Hofmann is our eastern vice-president; Mr. Bill Peppler is our manager, who I'm sure you all know; and our chief delegate is Ken McNeill, our western vice-president. He'll make all the presentations and we'll back him to the hilt on those matters.

With that, Mr. Chairman, we'll turn it back to you.

The Chairman: Mr. McNeill, I would ask you to keep your remarks to around ten minutes, to give members time for questions.

Mr. Ken McNeill (Vice-President, Canadian Owners and Pilots Association): Thank you Mr. Chairman. I'll certainly try to do that.

We appreciate the Canadian Owners and Pilots Association being given the opportunity to address the Standing Committee on Transport concerning Bill C-20.

The Canadian Owners and Pilots Association represents some 17,000 to 18,000 members, the majority of whom own or operate small private aircraft for personal travel and recreation. The perspective of these private, non-commercial small aircraft operators and the economic impact of ANS fees on their flying activities is fundamentally different, in our opinion, from the perspective of the commercial users of the system.

In our opinion, commercial users are business entities with an ability to pass charges on to customers and to include mandatory fees as an operating expense for tax purposes. Private pilots who own or rent aircraft for personal travel or recreation do not have that option and must pay all operating costs and fees with after-tax income. In our view, Bill C-20 must ensure that the costs of ANS services, at least those that exist primarily for commercial users, are not unfairly distributed to private citizens. We believe that due recognition must be given to aviation taxes already imposed on private pilots for their nominal and often obligatory use of the system.

Some basic statistics may be helpful, Mr. Chairman, with apologies for those of you who are familiar with these numbers.

Of the 28,000 registered aircraft in Canada, about 6,000 are commercially or state owned, and about 22,000 are privately registered. Being aware, of course, that some corporations register their aircraft privately, let's assume that 2,000 of those are registered to business corporations. It still leaves about 20,000 aircraft in this fleet that are owned and operated by private citizens and private individuals for their recreational purposes.

.0905

As of December 31, 1995, there were about 57,000 pilot licences in Canada, of which some 20,000 were commercial or ATP licences. There were about 28,000 private pilot licences or, let's say, roughly 50% of them. The remainder were predominantly glider, ultralight or balloon licences.

Lest we sound negative, ladies and gentlemen, we can and do support aspects of commercialization. We support all efforts of the federal government to reduce the deficit and to eliminate the debt. In that vein, we hope that the $1.5 billion realized from the sale of these assets goes directly to debt repayment.

We do believe that NAV CANADA can vastly improve on the procurement processes imposed on the federal government. We also believe that NAV CANADA's board of directors will bring strong business values and disciplines to its operations.

We do, however, have significant reservations about the impact on non-commercial users of a system that is dominated by commercial users. As yet we have received no firm indication of what charges, if any, are being contemplated for recreational private pilots. We do know that the initial estimates - I forget whether these come from Price Waterhouse or Burns Fry studies - were something in the nature of $5 million to $15 million of recovery from recreational aircraft operators.

If we assume 20,000 aircraft, that's about $250 or $750 per airplane per year. If we assume 15,000 active recreational aircraft, as Transport Canada air division does, that number escalates to about $300 to $1,000 per year per aircraft. We firmly believe that these numbers, in whatever range, will be the last straw for many more of our private pilots.

We appreciate that our purpose here is to speak to the provisions of Bill C-20, so I'll skip through some of the material that's in our paper and I do hope that you or your staff have had an opportunity to look at it.

We address some issues under clause 13, which speaks to the issues of classification of airspace. Our view here is fairly simple. We want the ability to designate airspace uses left with Transport Canada, for safety purposes and to make sure we're not elbowed out of there.

Subclause 19(2) deals with amendments to northern or remote services. It was somewhat obscure in our mind in that they talked about one-third of the revenues accruing to the corporation. We think it should be one-third of the aircraft operators affected by such things.

We address clauses 32 and 33, which give the minister the right to impose charges on users and also for the two-year period following a transfer of the corporation and the issues of appeal. We have some concerns under that, but hopefully this committee will realize our position and we will not become paying users of the system and therefore we will have no reason to appeal.

Our main position is under subclause 35(5), which identifies costs that the corporation is entitled to recover in establishing its financial requirements. The sale of ANS at $1.5 billion, in our opinion - we've made some assumptions about pay-down time and interest rates - will add about $350 million per year in debt servicing costs to a system that should have been in operating balance with the addition of $200 million in overflight charges. This debt obligation, in our opinion, ladies and gentlemen, belongs to the major beneficiaries of this transaction - the federal government and the commercial operators.

We feel that the other commercial operators now being obligated to pay, from a business point of view, their share of the system, plus future efficiencies in the system, should provide NAV CANADA with the finances necessary to operate the system without what we consider to be double taxation of private citizens.

We would like to refer the committee to pages 9 and 10 of a study by Transport Canada Aviation, discussion paper 5, Illustrative User Charges. We have attached those pages to our submission. You will find in this that first of all, there are special arrangements made in other jurisdictions where this commercialization has taken place to exclude private, recreational, general aviation aircraft - our preferred term is ``non-commercial'' - from charges under these systems, whether en route charges or terminal charges. May I point out that we still have not addressed and cannot address the impact on this segment of our aviation population in terms of terminal charges until we see the impact of the outcome of privatization of the airports. We fully expect that we will have to pay some fees to access major terminal areas for landing fees. We're not addressing that in this contemplation.

.0910

We also point out some estimates that were made under cost of redistributing to commercial users, the numbers that they propose to recover from recreational aircraft. On a maximum take-off weight basis, the terminal fees would increase by 0.91% to the other users, and en route fees, if they were not charged, by 0.6%. In our opinion these increases are not material in light of the efficiencies of the new system.

Lastly, we found little or no reference to the handling of private, recreational aircraft from the U.S. or other countries. We hope that in the regulations promulgated from this bill, some way is found of handling those aircraft so that they're not subject to charges from visiting countries.

I guess we're a little confused by the stance of the federal government with respect to its attribution of charges and costs. We find these significant. We find, for example, that for each litre of aviation gasoline we buy out in redneck country, in Alberta, it costs us about another 50% of the basic cost of the fuel in additional taxes of all sorts. That includes an excise tax, a federal aviation fuel tax, plus an Alberta government tax and other things.

We've made some assumptions about using ten gallons an hour for an average of fifty hours per year; and that about meets the profile of our members. They're not averaging much more than that, and their average use of a gallon would be about that.

If we assume all taxes, the private pilots are already contributing about $9.2 million per year in aviation-related taxes. Let me just break that down a little bit. We figure that federal excise tax alone is about $181 per aircraft per year. All taxes would be about $460 per aircraft per year. Excise and federal government fuel taxes would be about $277 per year.

Australia exempts all piston-engine aircraft from terminal fees except at major airports, which is typical of what's happening in Canada now, and exempts them from en route charges in recognition of that 15¢ excise tax on aviation fuel. In the United States, as you well know, the U.S. fuel taxes paid by non-commercial aircraft are allocated to the aviation trust fund, and general aviation aircraft are exempted from ANS charges. We recommend either of these approaches for Canada.

In terms of the specific recommendations we would make, chairman and gentlemen, we have made some with respect to other sections, but I won't deal with those. With respect to subclause 32(2), which is the exemption section for state and National Defence aircraft - which again puzzles us because we understood that everybody was going to contribute - we would propose the addition of a paragraph 32(2)(c). It would provide that exemption from charges would also apply to private aircraft, which are, one, registered to an individual person or persons; and two, not used for the purpose of reward or hire.

We don't propose to be legal experts, but we think those are two definitions that could be worked with by knowledgeable people and arrived in exclusionary....

We considered strongly whether our members who fly in the IFR system should be included and whether or not we should ask for an exemption for them. We have had considerable discussion with our colleagues in the commercial sector and from the Air Line Pilots Association, both CALPA and the Air Canada group. Without exception they all encourage us not to encourage any charges for those people for the simple reason of safety. First of all, they say they need those people. They need them well trained and well experienced, and they need them familiar with the system. Therefore, in their opinion a private, non-commercial pilot should have access to the nominal use of that system without fees. They strongly recommended that we take that position.

.0915

Our position is that there should be no fees for private, non-commercial aircraft. We understand the pull, the yin and the yang of these sorts of things. If NAV CANADA really does need to recover that sort of money, then our position is that it be attributed from the various levels of taxation from the federal government, and that NAV CANADA and the federal government agree on a transfer payment that is, in their words, neither unreasonable nor undue.

In summary, we have great concerns that the escalating costs of operating a simple single-engine or private aircraft are becoming beyond the reach of our younger people. We look at our membership and they're all grey-haired, like my colleagues and me. We're finding it increasingly difficult for younger people to enter this field, and the costs in all phases are escalating.

While this one in isolation may not be viewed as significant by some, we think it's the last straw, the camel's back sort of syndrome. We are concerned that it will directly affect not only the private pilots and those who wish to get into it, but the training sector as well. While we don't speak for the training sector particularly - our colleagues at ATAC do - we strongly urge the committee and the government to consider their needs in moving this bill forward as well because they are the underpinning of our industry. They are the underpinning of our colleagues in the commercial sector.

Mr. Chairman, I've taken more than my ten minutes, for which I apologize, but we should leave the remainder of the meeting for direct questions from the committee.

The Chairman: Thank you, Mr. McNeill.

[Translation]

Mr. Mercier.

Mr. Mercier (Blainville - Deux-Montagnes): I have a question regarding your first recommendation, as well as a comment.

In your recommendation (a), you say:

... recommend that the clause be amended so that the Minister ... remains responsible for defining the classes of air space ...

I would like to know what you mean by "classes of air space".

Mr. McNeill: In our brief review of this, we considered that it gave NAV CANADA the right to plan and manage Canadian airspace. At the risk of our misinterpreting the intention of that section, we were concerned that the Aeronautics Act, which provides the minister with the authority to classify and designate airspace, might be transferred to NAV CANADA so that they would also be responsible for designating airspace.

We have no intention of trying to get into the line-up with 747s at Pearson. We don't want to interfere with that sort of activity. But we will have some concern if all or great portions of the airspace we use become controlled airspace. If our interpretation is correct, we would like that to remain with the minister.

[Translation]

Mr. Mercier: My comment concerns fuel, on the last page. I see there is a federal excise tax of nine and a half cents. You say the GST applies to the federal excise tax. So this is a federal tax that applies to a federal tax. Is that correct?

Mr. McNeill: Yes, sir.

Mr. Mercier: That's incredible.

.0920

[English]

The Chairman: Mr. Gouk.

Mr. Gouk (Kootenay West - Revelstoke): I'd like to clear up a few points, gentlemen. At the bottom of page 4 of your submission you say you are prohibited from being full members of NAV CANADA. It's my understanding that COPA was offered a seat on the board of directors of NAV CANADA and turned it down. Would you comment on that?

Mr. McNeill: Mr. Gouk, I will. My friends can correct me.

We were approached by the initiating study members to participate in this, with the understanding that they wish to move it towards a not-for-profit corporation. We support that. We think that of the options that's the correct one.

Let me get to our being prohibited from becoming a full member. Voting members in NAV CANADA are specifically identified or defined within the articles of association, if I understand it correctly, and associations such as COPA are specifically excluded. The offer of a membership or a directorship was strongly considered by COPA. However, we were not going to be a member of this organization per se.

Secondly, at that time we considered whether there was going to be a conflict of interest between a nominated director from COPA and the outcomes of NAV CANADA as they concern the charges and control of private, non-commercial operators. In any event, we felt we could be just as completely represented by participating in the advisory committee of the board. Since the seats on the board of NAV CANADA were limited, and since we were fully supportive of putting strong, business-oriented people in that position, we concluded we would be just as well served and happy enough with a seat on the advisory committee.

The end offer, in any event, Mr. Gouk, or result, was that it was a seat shared, I think, between our associates from the Canadian Business Aircraft Association and COPA. We felt it would be just as well for them to nominate.... I think Mr. Stinson was their representative, and we have great admiration for his business acumen.

Mr. Gouk: I just wanted to clear that up.

I've heard an argument that one of the concerns is that if general aviation, private and recreational aircraft, had absolutely no charge, it could provide some ramifications for NAV CANADA, not limited to, but particularly, foreign carriers, those which land in Canada and more so those which overfly Canada - not from Canada, not landing in Canada, but getting a charge - if they could relate back and say ``But you have your own Canadian people flying in the system for free''. For that reason NAV CANADA feels, or at least argues, there should be some nominal fee for private and recreational aircraft, as opposed to no charge at all.

Mr. McNeill: Mr. Gouk, first of all, this is what they have in the United States right now. General aviation is not charged for ANS services in the United States.

Secondly, don't believe it's for free. Each one of these members, if it's not a commercial entity, is paying for all these fees and services in after-tax dollars, and they are paying in their excise tax on the gasoline and so on. We think between personal income tax and the other taxes that are collected sufficient funds are flowing into the sources that they should be paying for this, so we are covering ourselves.

Thirdly, we occasionally find it difficult to argue with our members that in terms of services they are in the same position as Air Japan or something else over-flying when they're taking off from Estevan, Saskatchewan and flying to Nowhereville, Manitoba - and that's a typical Sunday afternoon flight for some of these recreational pilots. So our view is that we are a slightly different clientele and a slightly different entity operating within the system.

Mr. Gouk: I have just a couple of points. One is that if you're saying you're already paying for it through av gas taxes, I would point out that the carriers also pay aviation gas taxes, and given the rate of fuel they burn, they pay a considerable amount. Of course the argument would be there for them to reduce their costs as well.

Mr. McNeill: That's a point, certainly.

Mr. Gouk: It's something we're going to have to look at at some point, accountability for fees collected.

I would make just one other point and then let you comment. I have been a recreational pilot for a long time. I'm a commercial pilot. Many times I fly from Sticksville to Sticksville. But in between I might use VOR radio to help me on my way or to simplify the navigation so it's a more relaxing flight. I call in and I use weather services, because notwithstanding that I'm flying to a couple of little places, I want to know what my end-route weather is. So I make use of those services. Even though I'm strictly in the VFR spectrum, and even though I'm flying out of a small field to another small field, I still utilize those services.

.0925

Mr. McNeill: That's true. My friends may have a response to that as well.

We are using VORs and NDBs and other services and flight services as we go en route, out of good practice and because they're there. We don't say we are not users; we say we are nominal users.

What we are not users of are CAPS and RAMP, and we certainly don't have a microwave landing system.

Mr. Gouk: I hope that not many do. It's quite outdated technology.

Mr. McNeill: So the major capital items are really not ones that affect us.

Secondly, getting back to our position, it isn't that we want a free ride. We think we're paying our way for the nominal use that we make of the system. As it's been recognized in other jurisdictions, we think that's appropriate to follow. We hope that the efficiencies of this system will accommodate that.

Again, our position is that the end impact on commercial users is not very large. If we speak of the payment of the taxes from the commercial users, I don't have the right to deduct those as an operating cost in my personal use of the aircraft, whereas they do. So it's a cost to them, but a lesser cost.

Mr. Gouk: One of the places you pointed out is exempted from this, but they pay 50% more in fuel tax than you do. They pay 15¢ a litre. Is that part of your proposal, that as a consideration we should look at going that way but possibly with a 50% increase in your excise tax?

Mr. McNeill: I don't know if the United States has a Transport Canada airport fuel tax. If they don't, then our fees are exactly the same.

Mr. Jordan (Leeds - Grenville): I'm just following up on what Jim said. The whole concept of this government in relation to a lot of the things we're doing is user pay, in all respects. So I don't see why, if it's nominal use, there wouldn't be a nominal charge.

I can't follow the thinking when you say, we want to use this service, indeed we need it, but we don't want to pay anything for it. I can't see that.

Is there that much difference in the service that's expected to be out there, whether it be for a 747 or for a privately owned Cessna? Wouldn't you need the same tools around you in order to handle that aircraft safely? Are you asking less of them?

Mr. McNeill: Because there are always exceptions, I have to speak in generalities, but the general private, recreational, non-commercial aircraft pilot is not using the centres to any great extent unless he's flying IFR, and only about 2% of the private pilots in Canada are even licensed to fly in an IFR environment.

So we are not using the major terminal areas to any great extent. We are not using the control centres to any great extent. The majority of our pilots are recreational pilots who may file a flight plan with flight service or may call up to get some weather information. For the most part, that's the extent of the use. So it is considerably less.

Mr. Jordan: But at one point you said you need them. Did I understand you to be saying that? In reference to privately owned aircraft, you were saying that you need them.

Mr. McNeill: I'm sorry, Mr. Jordan, but I don't recall the context in which I might have said that.

Mr. Jordan: Okay. I'm just questioning the rationale, that you already pay because you pay the tax. If you used that argument, then you could rationalize why we shouldn't be paying any registration fee on our cars or anything like that, because we pay tax on the gas that's going through the car.

It is just a bit of a contradiction of what we've been talking about in the transport committee for a long time. If it is to be a minimal use, then it should reflect that in a minimal charge.

I personally wonder about the wisdom of starting out with somebody getting a free ride. If that isn't going to cause you problems immediately, then I think it will down the road a piece, where you'll be in dispute as to to what degree you use it and to what extent you should be charged.

.0930

I think a minimal charge would get you off to a much better start on the whole concept of it, relative to the size of the aircraft, I suppose. In terms of the demand you would make on the service, as you say, there are certain things you'd need and certain things you wouldn't need, but I think the whole idea of having it there and available for no charge might come back to haunt you very soon.

The Chairman: Thank you, Mr. Jordan.

We'll have one short question from Mr. Keyes.

Mr. Keyes (Hamilton West): I have just one reference to put to rest the concerns of the witness. We spoke of your concern about regulating airspace. Clause 13 does specifically set out that under the Aeronautics Act the government would still be responsible for classifying the use of the airspace and for making the designations on airspace.

Mr. McNeill: Classification was clear; it was the designation that was not clear to us, Mr. Keyes. Thank you for that clarification.

Mr. Keyes: Mr. Chairman, this issue of a seat came up at our last hearing and it's come up here today as well.

We have an organization trying to put together a board in order to facilitate change. It reaches out into the community of stakeholders and users and says it wants the valuable input of those people and wants them to participate on its board. The group that was before us earlier in the week - I think it was Mr. Jenner who made that presentation - said they turned down a seat on the board, and Mr. McNeill says his group turned down a seat on the board. I find this curious. I'm just not clear on this.

You said you didn't want to face a conflict. What do you mean by a conflict?

Mr. McNeill: Mr. Keyes, I may not have explained that appropriately for you.

The initial discussions on board seats included one board seat for COPA, but the number of directors who were then accommodated by that number of organizations with that number of seats became rather large. ATAC and the unions objected to that ratio of representation, so the numbers kept reducing.

The final offer to COPA was to share a seat on the board with the Canadian Business Aircraft Association. We will be well represented there anyway, so rather than end up with a shared seat we simply said they should have CBAA nominate that director and we will participate in the advisory committee. We fully intend to participate and to advise the NAV CANADA board in that regard.

Mr. Keyes: Thanks, Mr. McNeill.

The Chairman: Thank you, Mr. McNeill, Mr. Butler, and everyone else.

The committee will be completing its round of hearings on Thursday and moving to clause-by-clause in about two weeks, so we'll see if some of your concerns are reflected. Thank you.

Mr. McNeill: Thank you, Mr. Chairman. Thank you, gentlemen.

The Chairman: Next we have Mr. John David Lyon from the Canadian Business Aircraft Association.

Welcome, Mr. Lyon. As with everyone else, I would ask you to hold your remarks to about 10 minutes to give committee members time for questions.

Mr. J.D. Lyon (President and CEO, Canadian Business Aircraft Association): Thank you, Mr. Chairman. It's a pleasure to be with you this morning and to address some of the issues that face us with Bill C-20.

I'd like to start by saying that we last appeared before this committee in November 1994.Mr. Keyes was in the chair at that time, and we indicated our support for the commercialization of the air navigation system through a not-for-profit corporation. I won't go back into the history of that; it's there in our written submission. I'll simply say that we continue to support the government's initiative to commercialize the civil air navigation services, but we do have a number of concerns that we will outline in the pages that follow.

.0935

Section two of our brief is an outline of what the Canadian Business Aircraft Association is all about. We've been around since 1961. We are a founding member of the International Business Aviation Council and have observer status at ICAO. We try to represent those companies and corporations that operate aircraft for the purposes of business. We represent a broad range of companies from banking to retail stores, from fast food to utilities, from natural resource companies to manufacturers.

Some 180 companies are members of the association. We include within our ranks some 25 foreign flight departments, mostly based in the United States, who regularly operate in the Canadian system.

I'll leave to you the next few pages that go into a little greater detail about our contribution to aviation, perhaps only to stop long enough to say that in 1995 our members moved some 750,000 passengers, about the same number as a major regional commuter airline moves. Our expenditures were in the order of $3 million and we directly employed about 8,000 people in business aviation activities.

I think the bottom line for most of the companies operating business aircraft is that time is money, and especially in today's globally competitive marketplace, this is what the business aircraft offers and why it can contribute to both profits and jobs.

I'd like to get to the specifics of some of the concerns we have found in reviewing this bill.

We have areas of concern. We believe that under the interpretation section, subclause 2(1), the definition of user.... We agree with the point that's already been made to the committee by at least one other association: we are concerned that this definition not be too narrow and that it recognize that an operator often is the company or individual who owns the aircraft as opposed to a user who may simply be a pilot who rents an aircraft or is flying it for professional reasons and who is obviously very concerned about what is happening in the air navigation system.

We hope the committee will broaden that definition or ensure that there is some better understanding of that term to make sure it does include pilots.

Last week the Canadian Air Line Pilots Association raised the issue of manoeuvring areas with you. We support the position that CALPA has taken with respect to manoeuvring areas. At many of the larger, busy, active airports the ramp area has become a source of accidents. Largely these are not life-threatening, but nevertheless there has been an increasing number of accidents occurring in the so-called ramp area as aircraft are backed away from gates and try to get out to what is considered the actual manoeuvring area where air traffic control takes place.

For example, at the present time Transport Canada has authorized Lockheed to handle the ramp area at Pearson's Terminal III. Services for the ramp areas for Terminals I and II are provided by Transport Canada. It's uneven. These people are trained, but not necessarily to a national standard. As more of the major airports in the national system become airport authorities, we worry about who will do that ramp area activity and how it will be done.

We support the CALPA position that there should be a standard. We would like to see that standard charged to a responsibility of NAV CANADA. That's not to say that NAV CANADA must provide that, but we certainly believe they should be responsible for ensuring that there is a standard that has to be met in providing those services.

The next section of our brief deals with changing services and closing facilities. In general we suggest an increase in the number of days before an action may be taken. Notwithstanding the wonders of the electronic age, it's difficult for national associations to canvass operator members and assure reasoned responses in the timeline stated. In working with Transport Canada, it's been our experience that it's very difficult to get a request in from Transport; to have it relayed or faxed out to our membership, to have them consider it, work on it and return it to us; and for us to put it into an acceptable format. We're suggesting an increase in the allocation of response times within the act from 60 to 90 days and from 45 to 60 days.

.0940

As for subclause 19(2), rejection by users, the committee may wish to consider carefully the application of rejection by users providing one-third of the revenues received by the corporation. Retention of a ground-based aid may well be wished for by operators landing and departing from an airport but be deemed as unrequired by overflights using satellites. Given the large share of revenues that will be derived from overflights, this may skew the results and adversely affect local Canadian operators.

Again, in looking at that section, it left me wondering whether the people landing at the airport and providing revenues who would have the say. At the same time, how can they have a say if the nav aid is also used by overflights who are also contributing? So you get into a bit of a quandary, and I think the clarification needs to be there. With the polar flights, I would hate to see someone saying they don't need the ILS to Resolute Bay because it's only an alternate and they have GPS or some other means by which they can go. They might then vote to not support it, when a significant flow of revenues may be derived in that area from the overflights, negating the ability of the local users.

So I think there should be some consideration by the committee to make that a little clearer so that it is not as open as it appears to us at the present time.

In terms of levels-of-service policies, great care is taken to protect northern and remote area services. Yet there are many locations throughout Canada's southern latitudes whose cases may be equally deserving. We believe there needs to be a strengthened process to assure that levels-of-service changes are not permitted without due consideration, and a review process when there is a significant reaction from both the users and, if appropriate, the affected community.

I can look at literally pages that describe the protection that's given to remote communities in the north, and the absolute absence - I can certainly think of areas in Newfoundland and Labrador, in Quebec, Ontario and across the prairies - in areas where both distances to other airports and the impact is as great as it may be for many of those communities in the north. I believe there should be some consideration given to a better protection for levels of service provided at the present time.

Part III covers charges for navigation services and the right to impose charges. This section prevents the corporation from charging the Minister of National Defence for services rendered to military users of civil air navigation systems. It also extends this exemption to state aircraft of other countries unless designated.

The level of military and state aircraft activity in the civilian system varies. It is in the order of 3% to 11%, with the largest activity being associated with the North Atlantic operations. The government, through this section, is asking the civil operators to absorb a cost of approximately 8%, representing the cost of military operations. There is no logic for this position, and I would like to draw to the attention of the committee what is happening in the United Kingdom. There, the system is in the process of restructuring the air traffic control prior to privatization, and the ministry of defence will be paying £40 million a year to NATS for services to be rendered.

As an aside, throughout the advisory committee process leading to the development of NAV CANADA, the government representatives have spoken of a subsidy to be paid to NAV CANADA to help cover costs of services to remote and northern communities. It would again appear that the civil users are expected to undertake this expense on behalf of the Canadian taxpayers.

On charging principles, clause 35, there is insufficient guidance with respect to charging principles, in CBAA's opinion. General aviation is the base of the aviation industry. High costs of flight training and aircraft operation have led to a decline in general aviation usage as well as in in-flight training.

.0945

Should this decline continue because of increased costs, Canada will find itself short of qualified pilots to adequately fill the needs of commercial aviation. Ideally, the legislation should exempt recreational and flight training operations from any fee that might be levelled for air navigation services.

The government currently collects more than $10 million a year in excise taxes on aviation gasoline. This is different from the tax that's collected for aviation fuel that the commercial operators are using - the jet fuel and such. This money could be paid to NAV CANADA to compensate it for the provision of free air navigation services. Since the government - taxpayers - will be contributing nothing to the operation or capital costs of the air navigation system, this would be a return of a tax contribution no longer required by the federal government to support the system.

It will also be in the long-term interest of the country to continue to produce a cadre of well-trained pilots to aid in maintaining proficiency levels, and in the interest of aviation safety. With a significant reduction in the number of pilots being trained by the military, the civil side of the house must be heavily relied on to meet future needs.

In another area, we are concerned that whatever formula is derived for the charges, the turning over of excise revenues obtained.... I just lost my place.

The Chairman: In return for exemptions to support general aviation.

Thank you very much, Mr. Lyon. Given the time available, I'd like to move to questions so each group gets an opportunity to ask a question.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

Good morning, J.D. I'm going to ask you a question that gets into the one part you didn't get to with your presentation, dealing with the financial arrangements where you're concerned about the price extracted for the system. I also had some concerns about that because I know the background behind it.

I don't really have a question for you on it, but the government has to transfer approximately $1.3 billion to NAV CANADA for the pension plan of the employees who are transferring over. Although I've asked the question, I haven't received an answer to it as yet. I suspect the pension fund is not unlike the Canada Pension, where a lot of it isn't there in an invested nucleus of money, so it has to get at least $1.3 billion from NAV CANADA in order to have $1.3 billion to give it to compensate for the pension obligations it has. So that may be some of it.

You mentioned apron control. Is it not true - and I find your support for CALPA on this interesting - that in most of the major airports like Vancouver and Toronto you would go to a different section of the airport with business aircraft, in any case, as opposed to the main part of the terminal where this apron control, if it existed, would be?

Mr. Lyon: For most of our aircraft that's true. You have to recognize that some of our members are operating Airbus A-320s, 727s, and Avro 748s, which in some cases must make use of gates in order to handle their through-flow. We do have a commercial component within the make-up of our membership.

Mr. Gouk: So you would have some connections, but primarily you would go to a....

Mr. Lyon: We see it as a safety issue. When we believe safety is being compromised, whether or not our members are affected directly.... A lot of the people flying in the back of those aircraft on those ramps work for companies I represent. We have a common ground at any time on safety issues to try to support any other association or work together collectively to try to ameliorate a safety problem.

Mr. Gouk: You mentioned at some length the non-fee for handling military aircraft. I brought this up at the original briefing that we got from the Department of Transport when it first brought out its little briefing books on this.

.0950

Its argument was that in return, civilian airport will not have any fee imposed upon it by military air traffic control, or those types of facilities, where they overfly military-controlled areas or fly into airports controlled by the military. Would you comment on that?

Mr. Lyon: I think it's a ridiculous argument if you look at the volume of traffic. It may make sense with respect to Canadian Air Force activities, but that's really the lesser amount of the military activities. One has to look at the volume of the Department of Defense from the U.S., the number of flights it's operating through our airspaces. We decline....

The military facilities that are used may occasionally include Goose Bay, Bagotville, Comox, and flights through the Moose Jaw area. You may get some skirting the edge of Cold Lake. Let the military charge us an equal amount for the number of aircraft it's putting through, and let us charge for the military aircraft. I can tell you we will be collecting something close to that £40 million that the U.K. is going to charge its air force.

Mr. Gouk: From your perspective, would it be viable to have an internal deal with the Canadian military for charges to it, as opposed to civilian charges for use of Canadian military places for other places where we don't have those specific rights? In other words, if a civilian aircraft goes into the United States it does not have any special deal with the American military, so any foreign military aircraft we handle, particularly over the North Atlantic, we would still charge the same as any other aircraft. We would have a specific reciprocal agreement with the Canadian military only. Would that be more suitable?

Mr. Lyon: I think foreign state aircraft constitutes the largest percentage. You would find there are some agreements signed as a NATO ally, as a member of NORAD, where reciprocal services are provided to Canadian flights operating in the U.S. or Europe. Under those sorts of agreements, the Canadian military is locked in.

It could certainly make a payment to cover all of the flights. Look at the volume of activity over Labrador, the number of German flights that are going into Winnipeg, and British flights going into Alberta to take advantage of some of the activities that are ongoing. The military, on the Canadian side, leases those services to those foreign countries and they pay a price for them.

It seems to me that the civilian users are being asked not only to pay all of their costs, but to assume responsibility for the associated national defence costs in this country.

Mr. Jordan: With changing services and closing facilities, if 60 days is too short a time I don't see what objection anyone would have to increasing it to 90 days. I think it was just said that 60 days should be enough, but you're suggesting 90 days would be a great deal better.

Mr. Lyon: From the viewpoint of the one-armed paperhanger, 90 days gives me a little more breathing room to get things together, consolidate them and respond. I think most associations are equally pressed in terms of turnaround times.

Mr. Jordan: In the next item, though, the rejection by users, you suggest it's based on revenues generated and could be sent out of proportion to everything else when you apply it to overflights.

Mr. Lyon: I think we need to be just a little careful. I want the air navigation system to be responsive to and answerable to the Canadian industry, and not because we anticipate that overflights may generate 40%, or something in that order, of the total revenues.

Depending on where those revenues fall in the area of the country, if it's open to that 30% and someone says, I'm overflying, I don't need a landing aid down there, I don't need a whatever down there, it could unduly influence the corporation, and there is a specific charge on that 30%.

Mr. Jordan: How would you suggest it should be done? Wouldn't revenues have to be an aspect of any formula you would use?

.0955

Mr. Lyon: I would try to look at the consensus applying to navigational aids used for overflights as separate from the consensus applying to the domestic uses, and let each of them have a waiting factor to apply so we can split up the two groups.

Mr. Jordan: That's a good point. Personally, I would like to see the Canadian model be the same as the British model. If the military is using it, charge them for it. Build in the cost of doing business for DND. That would seem to be the simplest way of doing it.

Aren't you going to get into a lot of administrative problems if you try to determine that this one qualifies for no charge and this one doesn't? Would there be some that would be a little of both? Don't military planes carry some civilian responsibilities too, on occasion?

Mr. Lyon: If the flight is chartered as a commercial flight by the military, it will be subject to fees. If, for example, Canada charters Air Canada to deliver x number of troops to a foreign location, then Air Canada would in fact be charged that service.

In the United States a number of commercial operators charter aircraft to support the Department of Defense, and they would be subject to it. If it's a military aircraft with military markings or if it's a state aircraft carrying government officials, then it would be exempt.

Mr. Jordan: That becomes fairly complicated. The simple thing to do is charge them. If they use the service, reflect it in the cost of doing business.

Mr. Lyon: They might wish to make an annual payment of some amount. That seems to be what the U.K. has agreed to, as opposed to a per-flight charge. They have a flat contribution from the Ministry of Defence in the United Kingdom.

Mr. Jordan: Then you go on to suggest that the government currently collects money, and that money could be given to NAV CAN. We're trying to simplify it, not complicate it.

Mr. Lyon: Then stop taking money off of this that's not supporting the system.

The argument previously was that the taxpayers were subsidizing the system. Now that the taxpayers are no longer subsidizing the system, the taxes that previously helped support the industry and provided the moneys to the government should no longer be collected.

We are standing on our own. We are paying for everything we are getting. We are subsidizing the northern communities. We are being asked to subsidize the military. It seems to me the least the government can do is look at making that contribution, and this gets us around some of the problems about free service to one component of our aviation and not making it free to everyone else.

Mr. Jordan: Yes, okay.

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

Mr. Lyon: Just before I go, I'd like to say I would welcome the opportunity to appear should the committee ever decide to look at transportation policy on the aviation side on a broad base.

Our association and others are concerned about the way in which this user pay concept is leading and the amount of money that is still going to be collected by the government, with none of it coming back to the industry. I don't know when, but should your committee ever be prepared to consider a session, I know a number of associations would very much like to meet with you and make presentations on what we think is a very import aspect, and one that in the long term has serious consequences economically for this country.

The Chairman: Thank you, Mr. Lyon.

Our next organization is the Pan Arctic Inuit Logistics Corporation, with Mr. Fred Hunt. However, I just have one item to insert here.

Is Mr. Hunt available?

While the clerk is looking, perhaps I could ask Mr. Keyes something. An item was raised at an earlier session of the committee about the use of French, and I wonder if Mr. Keyes is able to make a response.

You indicated you'd come back to the committee with a response to that question.

.1000

Mr. Keyes: Thank you, Mr. Chairman. As you outlined, I promised that at our last meeting on April 18, and we've researched the query on the bilingual issue raised by Mr. Jenner.

I can report back to the committee that NAV CANADA re-enacted its by-laws and filed supplementary letters patent with Industry Canada on April 9, 1996. The letters patent and by-laws have been available in both official languages since shortly following the incorporation of NAV CAN on May 26, 1995.

Both official languages - and this is important - have equal standing in law.

I only regret, Mr. Chairman, that the Bloc member, Michel Guimond, whose only interest in this legislation was to come and play some crude politics with the issue of language, didn't pop in again to hear the answer.

An hon. member: Hear, hear!

The Chairman: Thank you, Mr. Keyes.

Welcome, Mr. Hunt. I would ask you to keep your remarks before the committee to about ten minutes to allow committee members an opportunity to ask questions.

Mr. Fred Hunt (President, Pan Arctic Inuit Logistics Corporation): Good morning,Mr. Chairman and members of the committee. My name is Fred Hunt and I am the president of the Pan Arctic Inuit Logistics Corporation. For everyone's sake, allow me to simply refer to it as PAIL.

I wish to thank the committee on behalf of the board and the shareholders of PAIL for the opportunity to come and share with you our concerns about Bill C-20.

With me today are Mr. Don Axford, the acting general manager of PAIL, and Paul Lalonde, one of our lawyers. Mr. Lalonde will be more than happy to respond to any questions of a legal or constitutional nature and to respond to any questions in French. I understand he has also prepared an executive summary of our brief and recommendations in French.

I expect that by now you have all received a copy of our brief. The brief contains in some detail the events that have brought me here today and the views of PAIL on the privatization process and Bill C-20. You will be glad to know I do not propose to go over the brief line by line with you today. You can certainly all read at least as well as we can write. Instead I would like to give you some general comments and personal observations that I hope will help you to better understand our arguments and recommendations.

I have lived in the Arctic for over 25 years. In that time I have been involved in numerous business ventures in transportation and in other industries. In that time I have also witnessed first-hand a remarkable transformation in the northern business community.

In the north 25 years ago there were practically no aboriginal businesses to speak of. Most business was carried out by southern companies and southern employees, who typically returned south as quickly as they could, along with any profits they might have generated while in the north.

.1005

A good example of what I'm talking about is the policy of the Government of the Northwest Territories about twenty years ago. It was to encourage Inuit groups to build hotels in these small communities. The reason for that was that our job was to house and feed the southern workers. That was considered northern content.

Gradually, encouraged by progress on land claims issues and by the successes of a few pioneers, the Inuit and Inuvialuit have started to take control of their economic destiny and to run successful local businesses involved in non-traditional enterprises. The signing of comprehensive land claim agreements in recent years has greatly assisted the Inuit and Inuvialuit's long march towards economic self-reliance.

Today, although northern communities continue to suffer great economic hardship, there is reason to be hopeful for the future. The Inuit and Inuvialuit now control a sophisticated and sprawling array of businesses in sectors such as mining; oil and gas; air, land, and marine transportation; environmental consulting and remediation; logistical support; investment portfolio management; real estate; retail; and so on.

Remarkably, not only are the Inuit and Inuvialuit doing these things successfully at a bottom-line level, but they are doing so in a manner that is responsible and sensitive to the particular plight of northern and aboriginal communities. They employ local people and the profits usually remain in the communities, thereby contributing further to local economic activity. In addition, northern aboriginal enterprises provide a training ground of immeasurable value for the next generation of northern entrepreneurs and managers.

Hopefully successes will breed success and a greater sense of hope and confidence in the communities. If our youth is to survive and we are able to reduce the rate of alcoholism, drug abuse, and suicide, we must succeed in our efforts. This progress benefits not only our northern communities but all taxpayers, through reduced unemployment insurance payments, welfare roles, justice and correctional expenses, and so on.

Our own company is a good example of this new breed of northern aboriginal businesses. Founded very recently, in 1994, PAIL is already, among other things, a 50% partner in the $268 million contract with the Government of Canada for the operation and maintenance of the north warning system, the National Defence northern radar surveillance system.

The progress made by aboriginal businesses has not been easy. Like any business, we have to face the problems of getting a return on investment in an increasingly competitive environment. However, aboriginal businesses must also overcome a legacy of prejudice, systematic barriers, and ignorance.

To overcome these disadvantages we have a few effective tools: our proven track record at the business level, our unique knowledge of northern operations, and the land claim rights of our principals. These land claim rights are therefore crucial to our business and must be defended as vigorously as possible.

As stated in our brief, we are not against de-privatization of the ANS. On the contrary, we agree with the broad policy objectives pursued by the government. However, we believe the matter in which de-privatization is being carried out has completely disregarded our hard-earned, constitutionally protected rights as a northern enterprise. In our view, ignoring our concerns and those of other aboriginal representatives is bad policy on the part of the government and bad business on the part of NAV CANADA in its northern and remote operations.

When we first heard Canada was planning to commercialize the ANS we sent one of our representatives to attend a briefing session given by Transport Canada. Initially we had only a rough idea of the commercial potential relating to northern ANS operations. Nonetheless, we were determined to pursue any opportunities that might exist. In the north, the economic climate is as harsh as the weather and we have no choice but to explore, to the fullest extent, any opportunities that present themselves. Our commercial survival depends on it.

.1010

At the briefing and subsequently in writing, we simply sought confirmation from the government that the ground rules under which the government does business in our principal settlement areas would apply to the commercialization of the ANS. In other words, we wanted the government to confirm that the land claim agreement would be adhered to along with Treasury Board policy 1995-2.

To put it mildly, we were very disappointed when the government's response came back in late September 1995. Essentially, the government was saying to us: go away and stop bothering us; you have no rights here. They did say they would suggest to NAV CAN that we would be considered if and when NAV CAN let contracts in the north. Frankly, this kind of lame tokenism is no longer acceptable to the modern, business-oriented aboriginal groups, like the Inuit and the Inuvialuit.

In parallel to our exchanges with Transport, we hired Carmen Loberg, a transportation industry consultant, to inquire into and advise us as to the scope of activities carried out under the auspices of the ANS in the north and the commercial potential of those activities for PAIL.

Mr. Loberg's initial conclusions were that there existed opportunities for PAIL at the NAV CAN board level and in subcontracts and other arrangements relating to operation and maintenance of air navigation aids, flight service stations, community air radio services, stations or cars, and in participating in a proportionate share of southern-based operation and management relating to northern and remote activities.

Initially, it was difficult to get a clear picture of what all this might be worth. Recently, we have obtained more information from NAV CAN, which indicates that these activities may represent as much as 100 full-time northern jobs and $100 million in expenditures over the first five years of NAV CAN's business operations. For the north, this represents a very major piece of business.

Perhaps as important as the potential dollars and cents here, is the principle. As a northern aboriginal business, we cannot accept that a major privatization like this, the ANS, having extensive operations in our principal land claim area, be carried out with no input or involvement on our part. We cannot accept an interpretation of our land claim agreement that is so narrow as to justify Minister Young's view that they have no application in the context of commercialization affecting northern activities.

A few weeks ago, we tried once again to pursue opportunities with NAV CAN, but this time directly, at a business-to-business level. I wrote to Mr. Ken Copeland, the president of the company, suggesting a meeting to go over our concerns and the mutual opportunities that might exist.

Mr. Copeland's response was both gratifying and astonishing - astonishing because apparently my letter, dated April 2, was the first Mr. Copeland had heard of any aboriginal claims or concerns vis-à-vis the ANS privatization. We cannot comprehend why Transport failed to advise NAV CAN of our concerns and repeated communications. Transport either felt it was not important enough or felt it was preferable to hide our complaint as long as possible, or they just forgot. I don't know. Perhaps the committee will have the opportunity to ask them.

On the positive side, we were gratified by Mr. Copeland's response, because he was fully in agreement that officials from our two companies should meet. On April 12 I therefore met by telephone with John Crichton, the chairman of NAV CAN. We had a good discussion in which he expressed NAV CAN's willingness to develop a process for aboriginal involvement in the northern and remote operations.

.1015

Mr. Crichton followed up with a letter confirming this, dated April 12, 1996. Mr. Crichton's letter, unfortunately, was not attached to our brief, but I understand we have given a copy to committee staff for distribution.

Following this letter another meeting occurred between officials from PAIL and Mr. Crichton on April 17 in Whitehorse to discuss in more detail where PAIL might participate in northern ANS operations. This meeting turned out to be quite useful for the PAIL representatives, who were able to get a much clearer picture of where PAIL and NAV CAN might work together. These efforts will, we hope, continue after today and, we hope, will result in tangible involvement for PAIL. To date, however, nothing concrete has come out of all of these discussions.

As aboriginal businesses, we have seen these situations all too often. Our rights over our lands are factored in, if at all, late in the process and we must scramble to assert our rights and overcome institutional bias and inertia.

These situations are all the more frustrating when you consider the interdepartmental consultation that occurs, from which DIAND is supposed to inform other departments as to applicable land claim issues.

It is also very frustrating for us when you consider that what we are asking for is ultimately quite modest. At best, it is a fair chance to participate as provided in the land claim agreements. We know if we are given the chance, we can do the work as well or better than any southern-based businesses. We have proved beyond any doubt that we are good business partners in northern activities. We know the land. We know the people. We know the politics. We know the business. The only thing we don't appear to know is how to change southern bureaucratic attitudes about our abilities and our rights.

I want the committee to understand that affirming our rights is not a zero sum game. Recognizing our rights in Bill C-20 does not take away anything from anybody else. It will not cost the taxpayer anything. It is not a threat to anyone. It will merely ensure that when NAV CAN operates in our backyard, our interests will be factored in front and centre from the beginning.

By contrast, in the present situation, we have to write to ministers and senior officials, beg for meetings, disrupt a process already under way and claim breach of our legal and constitutional rights. That's not exactly a promising start to a commercial partnership.

Will we have to go through such a process every time NAV CAN undertakes a project? Will we always have to bicker with the government and industry as to the scope and nature of our rights? We certainly hope not, for our own sake but also for NAV CAN's sake.

The Chairman: Mr. Hunt, I should point out that we are running short of time. I have a number of members who wish to ask questions.

Mr. Hunt: I have two paragraphs left. NAV CAN needs to focus on the smooth execution of its mandate, not argue with land claim groups. We are convinced the best way to assure our orderly and productive participation is to affirm our rights from the start in Bill C-20 itself in the manner in which we propose in the recommendations spelled out in our brief.

I was planning to read these recommendations out loud, but because of time I will not. You all have the recommendations. We believe these recommendations are legally sound, politically legitimate and morally necessary. We hope the committee will agree. Thank you for your time. If you have any questions, we will do our best to answer them.

The Chairman: Thank you.

Mr. Paul Lalonde (Lawyer, Pan Arctic Inuit Logistics Corporation): Mr. Chairman, I have just two seconds of housekeeping.

The Chairman: Mr. Lalonde. Could I ask you to pick it up in response to a question. I would like to give at least one question to each side.

Mr. Lalonde: It's purely housekeeping, Mr. Chairman.

The Chairman: I'll let you come in.

.1020

[Translation]

Mr. Mercier.

Mr. Mercier: Mr. Hunt, I heard you say that the bill did not respect the constitutional rights of the Inuit. Could you tell me briefly what rights are not respected and how, and whether you intend to take the case to court?

Mr. Lalonde: Mr. Mercier, I can help Mr. Hunt here.

First I'll answer your last question. We haven't decided whether we'll take the case to court. We believe we have highly valid legal arguments to put forward and we simply hope that this will not at all be necessary.

Now, what rights have been forgotten in Bill C-20?

In a moment Ms Kuptana will speak in a more detailed way of the specific rights contained in the native land claims agreement that concerns the shareholders of Pan Arctic Inuit Logistics. Perhaps it will be time to go into the details at that point. But the rights we say have been forgotten are contained in the agreements that Ms Kuptana will discuss in her presentation.

[English]

The Chairman: Mr. Gouk.

Mr. Gouk: Gentlemen, you've presented quite a large brief. I'm sure you can appreciate, along with all the other ones we get, that we don't all have a chance to get through these ahead of time, so there will be some reading after the fact.

Going to your recommendations, point A, and I suppose to a certain degree point D, dealing with land claims, is it your concern with regard to this that there would be a change in status on crown land where land claims have not been settled? Are you after primarily crown lands with a concern that this would transfer some lands out of crown status to private status, or does it have to do with settlements already made and provisions other than the land itself contained inside those provisions that are already settled?

Mr. Hunt: The concerns relate not to crown lands versus private lands, but to a feeling that by simply commercializing a government project, the issues under the land-claim agreement simply go away because it has been privatized. We do not believe for a moment that by commercializing a government policy or project, those rights disappear; those rights are still there.

Mr. Gouk: I'm having trouble understanding what rights you're concerned -

Mr. Hunt: They're under the land claims. For example, in the Nunavut Final Agreement, section 24 relates to employment and training opportunities under the land claims agreement. We believe that by privatizing the ANS, those positions that are within our land claims area clearly should be subcontracted to our aboriginal groups to provide the service for ANS.

Does that answer your question?

Mr. Gouk: That pretty much answers me. So it's more of a work right than a land claim per se.

Mr. Hunt: It's more of adhering to the conditions of the land claim agreement -

Mr. Gouk: Which has to do with work rights.

Mr. Hunt: - as related to work rights.

Mr. Gouk: Thank you, that clarifies it.

The Chairman: Mr. Jordan.

Mr. Jordan: It's been suggested that the process, as broad and as far as we are now with this bill, was wrong and that you weren't consulted. You were having difficulties, as a matter of fact, in making your presence felt, and so forth. I can't argue with that.

.1025

You also reiterated some of the success stories up there now that Inuit are having as businessmen.

How do you see Bill C-20 impacting so negatively on those businesses, on which I think we all agree? You listed some of the results of Inuit becoming more successful in a businesslike way, employing their own people, turning a profit, and how that would reflect positively on their way of life and their communities. How is NAV CANADA going to impact so negatively on those splendid efforts that have been made and those success stories that are obviously out there? Could you be specific about how you see it turning that around now so that what were success stories are suddenly going to become losers again?

Mr. Hunt: In my point of view, the response we got from Minister Young in January was the biggest threat of all. It was an insinuation that by privatizing a previously government-controlled operation, the rights under the land claims agreement appeared to disappear. Simply all you had to do was privatize the operation.

Mr. Jordan: No, that's not what I'm saying. I'm asking you how Bill C-20 is going to have a negative effect on the successes you reiterated when you started talking. Just zero right in on that. Is it going to have a negative effect on those businesses that have been successful? You've struggled to make them successful, but they're not going to be successful any more.

Mr. Hunt: Well, it won't affect the past successes, but it could compromise future successes. Clearly, when Bill C-20 was being written, it did not take into consideration, in our opinion, any of the rights under the land claims agreement in our lands. Therefore, we think the bill is flawed. It should have considered the rights under those land claims agreements.

Mr. Jordan: So you see some future situations in which there may be difficulties with this?

Mr. Hunt: Absolutely.

Mr. Jordan: You're making a note of that. You've informed the committee that you see not so much the current situation but that there are some risks involved here.

Mr. Hunt: It's the current situation as well. We believe that if NAV CANADA, through Bill C-20, is allowed to put their operation together as proposed, then the current situation will be in jeopardy. That's because it will clearly be in violation of the agreements signed under the various land claim agreements we're talking about.

The Chairman: Okay. Mr. Hubbard, a short question.

Mr. Hubbard (Miramichi): I'll just follow up on the topic of employment. Could you give us the number of employees in your company and how many are native or aboriginal people?

Second, in terms of the system in the north, you're afraid a commercialization could mean that native people would lose work. Do you have any figures to indicate how many are working there now? What are your concerns with those numbers?

Mr. Hunt: There are two parts to your question. In response to part one of your question, we could not give you an exact number of employees. Throughout Arctic Canada, we have a lot of companies with a lot of employees from different areas there. I would suggest to you that the number is probably in the thousands.

Mr. Hubbard: But in your own particular corporation, how many employees are natives?

Mr. Hunt: In PAIL we will have 100 out of 200 employees who will be aboriginal employees at the end of our contract with the north warning system. That contract involves the training of aboriginal people into positions. There will be 100 positions available for training and, hopefully, for full-time jobs at the end.

Mr. Hubbard: But PAIL itself, though, how big is it? How many employees do you have in your corporation? How many of those are native people?

Mr. Hunt: We have right now....

.1030

Mr. Don Axford (Acting General Manager, Pan Arctic Inuit Logistics Corporation): You should understand that PAIL was created as a joint venture with Frontec Logistics Corporation. We agreed with Frontec that the people we place on the line would not become employees of PAIL but employees of Frontec, so we wouldn't have two sets of employees with two sets of collective agreements, etc.

That's why Fred is having a hard time answering your question about the number of employees. It's because of the way we placed them under the terms of our joint venture agreement. He is talking about the 200 people that will be employed as part of the north warning system.

Mr. Hubbard: But I am asking specifically now.... Every board of directors knows it has a certain number of employees. I think if your ambition is to employ aboriginal people, you must, when your board sits down, say...we have 3,000 employees and 2,500 of them are native people. What is your answer?

Mr. Hunt: Our ambition in PAIL, sir, is to have 100 people trained and employed on the north warning system line at the end of the five-year contract. That is the objective of the one contract PAIL is involved in at the present time.

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

Mr. Lalonde, you had a brief housekeeping matter you wish to raise.

Mr. Lalonde: Yes, it's pure housekeeping, Mr. Chairman.

First I'd like to apologize for our delay, but perhaps you might want to talk to your security down there. We were there for ten minutes.

I have a translation of the recommendations here, but unfortunately we have not been able to prepare an executive summary in French yet. The letter from Mr. Crichton that Mr. Hunt referred to will be delivered to the committee as soon as we can produce the copies.

The Chairman: Thank you very much. And thank you for your presentation.

Mr. Jenner, let's see if we can do it now.

Mr. Jenner and Mr. Lyon, I trust the two of you are wearing different hats from what you were previously, Mr. Jenner, and you were earlier, Mr. Lyon. I shan't bother to repeat my instructions that you not go beyond ten minutes to give us time for questions.

I will take it as read. Thank you.

Mr. Jenner.

Mr. Brian Jenner (Chairman, Board of Directors, Council of Air Transport Association): You're absolutely right, Mr. Chairman. We're here today as members of the board of governors of the Council of Air Transport Associations.

The Council of Air Transport Associations is an umbrella organization representing Canadian regional and specialty air operator associations.

Its members include the Canadian Business Aircraft Association, the Central Air Carriers Association, the Saskatchewan Aviation Council, Helicopter Association of Canada, Northwestern Ontario Air Carriers Association, the Ontario Aerial Applicators Association and the association québécoise des transporteurs aériens.

Through its member organizations, CATA speaks in the name of over 200 commercial users of the air navigation system, far more than any other association or group of associations in Canada. As the representative of this very significant user group, we share the government's desire to create a safe, effective and efficient air navigation system as it is transferred to the private sector. However, the imperatives of public sector reorganization notwithstanding, we are preoccupied by the need for a system that is also sensitive to the many facets of our industry and respects its diversity.

In spite of our common goals, CATA is unable to fully support the existing arrangements. In our opinion, the ANS privatization project suffers from major flaws. It makes no provision for public interest. It lacks accountability for governance of NAV CANADA. Any real protection from loss of service or unacceptable pricing is absent from the project.

In a society that demands the local telephone company offer services to just about everyone, under the Civil Air Navigation Services Commercialization Act, NAV CANADA for the most part will not be obliged to maintain levels of ANS services.

.1035

In exchange for an absolute monopoly that will generate hundreds of millions in foreign revenues, Bill C-20 will require the Canadian government to compensate NAV CANADA for furnishing services considered essential to the public interest.

In a society where public hearings are a prerequisite to government approval for an increase in monthly telephone rates, Bill C-20 would allow NAV CANADA to set prices as a self-regulating private sector monopoly.

Subclause 35(3) of the bill would provide somewhat insidious protection to the international travelling public at the expense of Canadian travellers. Committee members might want to take special care in reading our expose on the subject, and I will come to that clause at the end of my executive summary. It is, to say the least, enlightening.

Paragraph 35(1)(e) will impose on NAV CANADA the obligation to charge landing and take-off fees with the same insidious proportions that are provided for in subclause 35(3).

Furthermore, because clause 35 does not coincide with the information supplied at the time by the ANS privatization study, we now realize that industry supported ANS privatization on the basis of insufficient or erroneous information. Consequently, we inaccurately evaluated the impact of ANS privatization on the many facets of the Canadian aviation industry.

Telecommunication companies must get CRTC approval for their pricing policy. NAV CANADA is responsible to four persons, who are themselves only more or less responsible to any constituency in only more or less direct terms. Because it is not responsible at least to the various aviation constituencies, NAV CANADA does not meet the requirements of responsible governance in Canada.

It's paradoxical that an advisory committee of constituent industry organizations gave birth to NAV CANADA and that NAV CANADA is now not responsible to them or their constituents. Those aviation associations that gave birth to NAV CANADA are not even assured a seat on the NAV CANADA advisory committee.

We have always supported the principle of the not-for-profit ANS corporation managed by industry. Although CATA members have worked hard to that end, we do not believe our common objectives have been reached as the matter stands.

However, through the recommendations we have put forward in our brief the transfer of air and navigation system from public administration to the private sector administration could win total support of all elements of aviation.

Mr. Chairman, that ends the executive summary. I would like nonetheless to continue just a bit and draw your attention to section 2.32 on page 17 of our brief. That section will highlight why CATA members are very worried about public interest, about the accountability of NAV CANADA and about pricing policies.

There is a diagram on page 18. I'd just like to explain that I put this diagram together recently after having looked once again at the examples of user charges that were given to us by the ANS privatization study when J.D. and I were with with the advisory committee.

In this document that was part of the dog and pony show that Transport Canada took across the country and used to explain to Canadians what ANS privatization meant there are several charts similar to the one that we have in our brief.

I think in each case, or at least in several cases, the charts in this document are based on calculations with respect to the maximum take-off weight of an aircraft, the square root of the maximum take-off weight of an aircraft, and the 0.9 root of the maximum take-off weight. I didn't know that 0.9 root existed, but it has a very interesting function.

.1040

All the economic models that were given to us were based on the comparison of the three different types of charges, three different methods of calculating ANS charges in the private system. We very much made our decisions on that basis. But all of these calculations compare the cost per aircraft.

In our brief we've transferred that economic model to cost per passenger. As you can see, we have 9-passenger, 16-passenger, 64-passenger and 256-passenger aircraft for comparison. In the first column we have a charging system based on the gross take-off weight, which we've simply transferred into numbers of passengers. Based on the gross take-off weight, you have charges based on proportionate value, so everybody pays $10 a passenger. A charge of $10 per passenger for any specific service is not particularly expensive or inexpensive. Right now the 10% tax is a proportionate charge. On a $500 ticket, 10% tax means $50 in ANS charges. That's $25 one way and $25 the other way. So a charge of $10 per passenger is neither excessive nor small.

In the second column you have the same charges - that is to say, the same revenues for NAV CANADA - but based on charges that are calculated as a function of the square root of the number of passengers. You can see that for a 9-passenger aircraft you go from $10 per passenger to $40 per passenger. On the 256-passenger aircraft you go from $10 to $7.50. For the smallest of the aircraft, you're increasing the ANS costs by 300% by using the square root of the gross take-off weight. For the 256-passenger aircraft, you're decreasing by 25%.

If you go to the last column, this 0.9 root method of calculating charges - this is always for the same amount of revenue for NAV CANADA - now the 9-passenger aircraft goes down to $7.15 per passenger; it goes down by 28%. The 256-passenger aircraft goes up to $10.40 per passenger, an increase of 4%.

Remembering that we are right now, as we speak, working on a proportionate system, the dangers are considerable, because subclause 35(3) makes it illegal to charge ANS services on a proportionate basis. So the scenario of $10 per passenger is impossible. It also makes it illegal to charge services on a more than proportionate basis. So the 0.9 root method is also illegal now.

Somewhere between the time this dog and pony show made the rounds of the country and influenced our decision and the time that Bill C-20 was presented to you, somebody influenced the scenarios to the point where we can no longer even consider the scenarios given to us in the first place.

Now coming to governance, who is going to decide? The board of directors. Who is on the board of directors? Mainly people who have experience in the 256-passenger area. That's why we're worried about governance. That's why we're worried about the choices being made with respect to public interest. It is in the interest of the Canadian traveller to have a system of charges that imposes on the Canadian traveller the least amount of fees. We're interested in governance because it's in the interest of everybody in this business to see to it that NAV CANADA is responsible to all the constituents, not just a part of them.

The Chairman: Thank you, Mr. Jenner.

I have the sense that I'm back in decision analysis searching for n dimensional space, but we'll see where the questions get us.

Mr. Mercier.

[Translation]

Mr. Mercier: You say the bill was based on incomplete and false information. Could you give us examples?

.1045

Mr. Jenner: In working paper No. 5, Mr. Mercier, concerning the air navigation system commercialization study, there are examples of user charges.

This is a paper that was published by Transport Canada last year. It was used to inform the general public of the possible and likely effects of privatization. It concerns three methods for calculating air navigation system fees.

The method used in those calculations is a method proportionate to the weight of the aircraft. The other method is more than proportionate. It uses a 0.9 root factor, which systematically gives more unit charges to large aircraft and less to small aircraft.

The third method proposed is the square root of the maximum take-off weight, which yields a negative proportion. The smaller the aircraft, the more you pay per pound, and the larger the aircraft, the less you pay.

This is the information we had at the time of the advisory committee on privatization and that enabled us to support the principle of privatization. Of course, as representatives of small and medium-size businesses, we examined the more than proportionate method, the one using the 0.9 root, and we concluded, rightly or wrongly, that this was the method that should be used in the Canadian public interest.

You will remember that the method that favours large aircraft favours first and foremost those that do not land in Canada. Those aircraft represent more than 60 percent of all air navigation system activities. These European and U.S. aircraft travel to two countries other than Canada. So the non-proportionate method, the square root method, favours foreign aircraft and the more than proportionate method, the 0.9 root method, favours Canadian aircraft.

We made our decision based on this information, which was all based on the weight of the aircraft and provides comparisons between aircraft. We very recently converted the three methods on a passenger basis to see what the cost per passenger was.

In our paper, we see that the consequences on the unit cost per passenger are very great depending on the calculation method chosen. The proportionate method is prohibited by Bill C-20 and the more than proportionate method, the 0.9 root method, is also prohibited under subclause 35(3) of Bill C-20.

Mr. Mercier: Which of the three is used in the bill?

Mr. Jenner: We don't exactly know which. We know that it's less than proportionate. We can hope that it stops at the square root.

Mr. Mercier: On page 18, where we get your figures, you favour the third column?

Mr. Jenner: Yes, absolutely.

Mr. Mercier: But the third column is prohibited by the bill. So it would be the first or second.

Mr. Jenner: You understand correctly, but the first is also prohibited.

Mr. Mercier: So it would be the second.

Mr. Jenner: The second is allowed.

Mr. Mercier: In the second, there is a little "2" on the right. This isn't correct?

Mr. Jenner: The little "2" refers to the fact that it is less than proportionate charges.

Mr. Mercier: It's not the square of a square?

Mr. Jenner: No, it's a footnote.

Mr. Mercier: So, in overall terms, that means the bill favours large aircraft and thus in large part foreign aircraft, and operates against Canadian aircraft.

Mr. Jenner: Absolutely and inevitably.

Mr. Mercier: Thank you.

.1050

[English]

The Chairman: Thank you, Mr. Mercier.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

First, I'd just like to confirm what I think I heard you say. You feel that 69% of the traffic is foreign overflights.

Mr. Jenner: I said it's over 60% of the traffic. Now, I'm relying on information that I received from people who are more well-versed on the subject, but I believe that at our last advisory committee meeting Dave said it was 63%.

Mr. Gouk: That's interesting. It must have changed drastically since I was an air traffic controller, because I've never seen that kind of volume of foreign overflights.

Mr. Jenner: We may be referring there strictly to the high-level domain, although I'm not sure. But there is clearly a very high percentage of foreign usage.

Mr. Gouk: Okay.

As I understand it, your concern is how this passenger charge works. Is it not the intention, as I understand it, of NAV CANADA to charge based on an aircraft mile? It has nothing to do with gross take-off weight or number of passengers, but rather on miles travelled. It's a fee for services provided on a mileage basis.

Mr. Jenner: We don't know exactly what Transport Canada is going to do. We can only -

Mr. Gouk: We're talking about NAV CANADA.

Mr. Jenner: Oh, NAV CANADA. Well, we don't know what they're going to do. We can only assume that because the law provides for no proportionate charges on the basis of weight, the intention of the law is that there be no proportionate charges at all.

The Chairman: Mr. Lyon would like to add something.

Mr. Gouk: Could I just have clarified one point there that I'm having trouble with? You were saying that you want proportionate charges even on the basis of mileage travelled. I'd suggests to you that a larger aircraft travels faster. If you're providing service to go from a navigation fix to a navigation fix, and if you are providing during that time horizontal and lateral separation, traffic and weather information, and so on, with a few exceptions, a lighter or smaller passenger aircraft generally takes longer to travel that same distance. It would therefore impose more, rather than less, on the services provided by NAV CANADA.

Mr. Jenner: It's not a question of speed. It's a question of the travelling public wanting to get from A to B. It doesn't matter how fast you get there. What they want to know is how much it's going to cost. So on a given distance, if you're charging proportionately, the travelling public has no affinity to large aircraft. That is to say that there's no advantage to taking a large aircraft if the ANS fees are proportionate, and there's no disadvantage to taking a small aircraft. But if they are less than proportionate, there is a very, very dramatic disadvantage to smaller aircraft. And $40 per passenger, as I said, is not an exaggerated figure. It's very reasonable, very realistic. And if you have nine passengers, that means - how much does that mean? - $360 per flight one way and $360 back again.

Mr. Gouk: I have just one last question, if I could. Wearing whichever hat - I believe it's the one you were wearing here before rather than this one, but I guess this could be from either position - could you tell me whether or not you're concerned about representation? Were there discussions with you about either you or your organization having a seat on the NAV CANADA board?

Mr. Jenner: There were discussions at the last advisory committee meeting with regard to the Council of Air Transport Associations having representation on the board. That was refused by the incorporating committee, and the Minister of Transport refused to intervene.

Mr. Gouk: So you're saying that your organization would have liked that seat, but -

Mr. Jenner: We requested, demanded, did everything we could to get ourselves named as representatives.

Mr. Gouk: Okay, thanks.

The Chairman: Jim.

Mr. Jordan: I'm working a little bit backwards here. I'm starting on page 18. If that isn't an appropriate way to determine charges applied for the use of the services, then what are you proposing? What should it be?

Mr. Jenner: What I'm proposing is that the governance of NAV CANADA.... Our recommendation is that the NAV CANADA board of directors be responsible to a constituent assembly made up of representatives from all the associations, just as the advisory committee -

Mr. Jordan: No, no. I'm getting practical here. If you say that isn't a good chart by which to determine cost per passenger, what is? On what would you base it, the weight of the person perhaps? How would you do this?

.1055

The Chairman: Careful.

Mr. Jordan: Your points are all used up, Mr. Alcock. You've been home twice. That's it.

It seems to me this is a pretty reasonable way to do it, but if it isn't, give us your reasonable way of doing it.

Mr. J.D. Lyon (Director, Council of Air Transport Association): Mr. Chairman, if I might try to respond and give a specific example, the Government of Canada has established en route fees. Those fees are calculated on both the size of the aircraft and on the distance travelled.

Let me give you an illustration. If you're out of New York and you're going to Paris, for that portion you travel through the airspace of Canada, if you're flying on a 747 those charges work out to about $2 per passenger. If you're on a 19-passenger aircraft on the same route, it comes out to $17 per passenger.

Both in this brief and in the brief I submitted to you earlier, we are suggesting that the impact of those fee calculations should be looked at because of the potential higher-end charges that will occur to aircraft that are operated as commuter and regional services.

If you're flying in a Dash 8 with a seating capacity of 28 and you are being charged proportionately a much greater fee than someone flying on a 767, you will find that the economics of the price of that ticket will be significantly higher for those short runs. To some extent you have that with the ticket tax where, if you were flying overseas, there's a cut-off point beyond which you don't pay anything. If you're flying on the local runs, you're paying a higher proportionate cost.

I think our argument is not that it necessarily should be equal right across the board and everyone paying the same, but that in looking at whatever sort of formula is approved, the price of the ticket should not be so onerous as to discourage people from using regional and local carriers.

Mr. Jordan: But in the other hand, you proportion it. You base it out on the number of people who have used it, and that would seem like a sensible thing to do. So if fewer people are using it because the Dash 8 is loaded, wouldn't it reflect on the price of those tickets that fewer people are using the same service? Getting maybe a better service, a more comfortable service, a faster service, shouldn't that reflect on the ticket?

Mr. Lyon: In many cases the people who are going in those smaller aircraft are riding in less comfortable, slower aircraft. If you turn around and put on a ticket tax that's in the same sort of ratio, between Calgary and Edmonton you may add $15 or $19 to the price of the ticket. If you put that on, you're going to encourage more people to get off the plane and drive or make use of a car. It is a proportionately higher cost for those shorter distances when they're being travelled in a smaller aircraft.

Mr. Jordan: So the tendency then would be for them to move from the smaller aircraft. Economically, they should be moving to the larger aircraft.

Mr. Lyon: Oh sure, we should all be flying on 747s between any two points in Canada because that's the most comfortable aircraft. The airports don't handle it, the volume of traffic isn't there, the market forces....

If you're travelling on a Twin Otter between two points in the Northwest Territories because that's the sort of market that is sustainable, you have to look at what is the impact of the navigational charges that are being added to that price, and how does the air carrier, or the commercial operator, the charter operator, spread those costs over those passengers to recover it.

I'm saying one has to be sensitive to it - not that you're locked in step - and there will be some proportional differences because of economies of scale - but you don't want to work an undue hardship for those local operations.

Mr. Jenner: Mr. Jordan, if you're flying, for example, from Castlegar to Penticton, it's not a question of moving up to a 747. The choice is going to be that if the air transportation is too expensive you're going to use the ground transportation, so we're going to lose customers. Our own air transportation system is going to be disadvantaged, and the ones that are gaining the most advantage are the foreign air carriers overflying Canada.

Mr. Jordan: What about this unacceptable pricing aspect in your executive summary? NAV CANADA is supposed to be a non-profit organization. Wouldn't that alone have some bearing on the pricing that's going to go on in future in the history of pricing of NAV CANADA? Because it is non-profit, there's no incentive there. It isn't like a return to stockholders or something. Wouldn't there be some control on that? Is that risky?

.1100

Mr. Jenner: It all depends on who is making the decision and what constituents he's reporting to. If the people making the decisions are reporting mostly to the international community, or if they have affinities mostly with the international community, we may end up with our local and regional services being severely hindered.

Mr. Jordan: That's something you'd have to watch, isn't it?

The Chairman: Mr. Keyes, a supplementary of 30 seconds.

Mr. Keyes: Mr. Jenner is certainly aware that NAV CANADA will be charging for overflights in this country. He's certainly aware that in most cases these are foreign-owned aircraft - the KLMs and British Airways of the world - that pay for these overflights all over Europe. Paying for overflights is nothing new.

Is he aware that NAV CANADA will be taking the money fully? It's estimated that one-third of the revenues for NAV CANADA will be coming from overflights. Will taking that money, as a not-for-profit corporation, enable it to reduce the charge to the customer domestically and even create an opportunity for lower flat fees for smaller aircraft and smaller companies that move passengers domestically?

Mr. Lyon: Absolutely not. Under the ICAO guidance material that deals with the setting of rates, there can be no cross-subsidization. If one looks at the long history we've had in collecting fees in the North Atlantic system for that part of the airspace we've handled, the airlines have come in, examined the books, identified every cost and separated them. You have a cost base that is scrutinized by the international community. If you are found to be subsidizing your domestic operations in any way through enhancing charges for your en route services, then you -

Mr. Keyes: But you would reflect it in the charge based on weight, based on a flat fee.

Mr. Lyon: But you have a base of cost. You have a structure that you've paid a certain amount for. You have x number of employees and ongoing operating costs. All of those have to be folded in to make those charges.

Mr. Keyes: Precisely. That's what NAV CANADA hopes to accomplish.

Mr. Lyon: It can't cross-subsidize.

The Chairman: Thank you very much.

Mr. Jenner: We don't expect to see flat fees for this size of aircraft - 9-passenger and 16-passenger aircraft.

The Chairman: Mr. Lyon, thank you. Mr. Jenner, it's always a pleasure.

Mr. Lyon: Thank you, Mr. Chairman.

The Chairman: Ms Kuptana. By weight you win the briefing battle thus far, although the department is far in front of any of you now.

Welcome, Ms Kuptana. You are a veteran at these tables. We have been requesting presenters to try to keep their opening remarks to about 10 minutes, at which time we will give some time for questions. We only have half an hour.

Ms Rosemarie Kuptana (President, Inuit Tapirisat of Canada): Gentlemen, thank you.

I've travelled a long way, so I'd like to have the opportunity to raise the very important points that have been brought to my attention by the Inuit community.

.1105

The ITC, as you know, is the national Inuit organization that represents Canada's 40,900 Inuit in four major land claim Inuit regions in Canada: the western Arctic, Nunavut, northern Quebec, and Labrador. By virtue of the land claims agreements we are the largest landowners in this country.

With me today is Paul Lalonde, who you met this morning. He is a lawyer who is advising us on the matter of the privatization issue, and he'll be able to assist me on any legal or technical questions you may raise that I cannot answer or any questions in French.

I'm here to support the submission that was made by Mr. Fred Hunt and also to alert you gentlemen to the very grave concerns that our national organization has with respect to Bill C-20 and the process leading up to its tabling in the House of Commons.

I understand that the committee has received our written submission. Our brief was submitted to the clerk this morning. It contains the details of our involvement in this matter to date and the correspondence that's been exchanged with the office of the Minister of Transport, as well as an analysis of the land claims rights that we believe apply to the privatization process and to NAV CANADA's post-privatization activities in northern and remote areas.

I sincerely hope that the committee and other parliamentarians will give our brief very careful consideration and that you will call upon us for any explanations or clarifications that you might think are necessary.

By way of background, I am an Inuvialuk from the western Arctic, from Sachs Harbour. I grew up in the north and I live in the north most of the time. I was born in an igloo and I was born at a time when my parents were still nomadic.

This morning I heard Mr. Fred Hunt's personal testimony before the committee, and I must say that I agree with him entirely. The north has changed enormously within my lifetime, as you can appreciate. I too remember when aboriginal businesses were almost non-existent in the north. You can appreciate that the Inuit and Inuvialuit that I represent have struggled very hard to achieve the commercial successes that Mr. Hunt described and that we are justifiably proud of the businesses we have built.

While we are proud of the accomplishments of our businesses, we want the committee to understand that northern communities are still deeply economically depressed. For instance, Mr. Chairman, the north has the highest unemployment rate in the country. I'm sure that as a parliamentarian you know this. Furthermore, we have the highest cost of living. Air transport in northern Canada is probably the most expensive in the country.

For us the modest business advantages that the land claims agreements provide are not just a matter of dollars and cents. They are a way to help alleviate the true hardships that are experienced in our communities.

I'm just going to talk a little bit about ITC's involvement in this issue to date. Last fall when representatives of PAIL explained to us the difficulties they were encountering in trying to participate in the ANS privatization process, we immediately recognized the importance of the principle that was at stake. Our letter to Minister Young, which was dated November 3, 1995, I believe reflects the importance of the issues for us.

.1110

To say the least, we were very disappointed by Mr. Young's dismissive response. We had hoped that upon consultation with the Department of Justice and the Department of Indian Affairs and Northern Development, Minister Young would at least recognize in good faith that we had an arguable case for involvement and might so advise his bureaucracy.

Instead we are faced with a flat refusal to do anything more than ask his officials to bring our letter to NAV CANADA's attention. As you heard from Mr. Hunt this morning, we subsequently learned that even this token effort was not done.

The ITC considers Minister Young's response unacceptable. It manifests a profound ignorance of the scope, nature and purpose of our land claims agreements and our land claims rights. It also demonstrates that the federal government does not take its fiduciary responsibility to aboriginal peoples very seriously.

We also note that Bill C-20 enshrines a broad range of rights in a post-privatization era that are normally associated with a government operation rather than a commercial one. These rights include the civil service rights of Transport Canada employees, the public's right to safety and affordable air navigation services and linguistic rights. In addition, NAV CANADA will be subject to the government's undertaking contained in international treaties. We believe there is no reason that aboriginal land claims rights could not be explicitly secured in the same fashion as contained in Bill C-20.

I'd like to say a few words about the nature and scope of the land claims rights we are trying to secure here today. Our brief covers some of these in some detail, and I don't propose to review these rights agreement by agreement. However, I would like the committee to understand two things quite clearly: the non-intrusive nature of these rights from the perspective of a project proponent and the crucial importance of these rights to economic development in the north.

As our brief tries to explain, the procurement and economic development rights set out in our land claims agreements do not impose onerous restrictions or employment quotas on project proponents. They are designed primarily to ensure that the Inuit and the Inuvialuit get a fair chance at bidding on projects through notice requirements and the like.

To the extent that aboriginal firms are given any preference, it remains subject to principles of sound procurement management and competitiveness. As such, the claims do not result in unqualified or inefficient firms getting the work.

People who have dealt with Inuit firms, either in procurement matters or in cooperation or participation agreements, know that Inuit and Inuvialuit firms are professional - that they have competent enterprises that perform extremely well. As such, NAV CANADA need not be worried about being bound by the land claims agreements. The agreements will not impede NAV CANADA's northern operations. What they will do, however, is facilitate.

.1115

The second point concerning the land claims rights that I would like the committee to keep in mind is their crucial importance to our communities. As Mr. Hunt has said, in contrast to southern firms, aboriginal businesses employ local people and reinvest their profits in their communities. They provide a training ground of incalculable value for our young people and offer the Inuit and Inuvialuit a sense of pride and accomplishment. In some of our communities these are rare commodities indeed, particularly amongst our young Inuit people.

The fact that our land claims agreements guarantee us a fair shot at contracts is also very important. In the past, when we failed to get a contract, we never knew whether we had lost because the rules of the game were against us. Now if we fail to win a bid that follows the land claims agreement process, at least we know we were beaten by a better proposal and not by prejudice, systemic bias or ignorance.

Under the land claims regime, at least we know that the ground rules are fair and that continuing our effort is worthwhile. Given our history, such assurances are very important to us.

I believe this is neither the time nor the place for a very long discourse on the federal government's fiduciary responsibility or duty to aboriginal Canadians, but I cannot resist pointing out that it is very hard for us not to become somewhat cynical about the government's role in this regard.

You see, when it serves the government's purpose, for example in opposing Quebec sovereignty, the government takes a broad if not aggressive view of its obligations in defending aboriginal interests. However, when it comes to defending our interests in less visible initiatives, the federal government often becomes very timid in its role as defender of our rights. Suddenly, to use Mr. Young's words, it becomes ``inappropriate and improvident'' to defend our rights.

As examples like the ANS privatization accumulate, one thing becomes more certain: we cannot rely on the federal government not to act against our land claims interests. We must be ever vigilant, even of the institutions that profess to be our trustees and defenders.

By way of closing, as a general observation, allow me to thank NAV CANADA's officials for the good faith they have demonstrated recently. We believe their efforts to come to arrangements with PAIL are sincere. However, we know from long experience that good intentions towards us are not sufficient. We do not want to be in a position where our ability to participate in projects affecting our land depends entirely on the goodwill of NAV CANADA's officials.

Our experience has taught us the necessity of having our rights recognized and understood in advance. It helps us to appropriately assert the rights to which we are entitled and it helps parties dealing with us to anticipate the manner and extent to which we must be involved in their undertakings in the north.

You see, when our rights are not clearly stated and understood, confusion, surprise and disputes are sure to follow. We believe that if our recommendations are implemented, conflicts with affected aboriginal groups over their involvement in northern and remote ANS operations could be avoided and will be avoided. We believe this will be better not only for the Inuit and the Inuvialuit that we represent, but for NAV CANADA and the government as well.

.1120

Mr. Chairman, I'd like to thank you for your time, even though it was very short.

The Chairman: But you made very effective use of it, Ms Kuptana.

Mr. Gouk.

Mr. Gouk: It appears that there is competition for the size of the brief, because the one from PAIL certainly gave it a run. I gather from just quickly going through it, because I have not seen yours prior to this, that it is very similar in content and intent to the one from PAIL presented by Mr. Hunt. Certainly it will take a bit of time to go through that.

I would like to pose two questions. I'll give them both to you and let you respond to them because they're interwoven. I just want you to confirm that it is not your position that if you had the expertise or the ability to supply it at an effective cost, NAV CANADA, wanting to keep its costs as low as possible, would not want to hire someone else who would be more expensive or less able to pursue the contract; or on the other hand, they should not be barred from taking someone other than you if it is more cost-effective or there's a level of expertise available. So if it makes more sense to hire you, is there any reason they wouldn't? Conversely, if it makes more sense to hire someone else, should they not be allowed to do so?

Mr. Lalonde: You raise a lot of points. I'll do my best to answer them all.

The land claim agreements mostly protect procedural rights so that we know the process isn't stacked against us, that a contract is not going to go to a company the president of which plays golf with the president of NAV CANADA. I'm not suggesting that's going to happen or anything, but at least when the land claim rules are followed, we know that the rules are fair and that our efforts are worth while.

If two bids for a project come in and one is southern and one is northern, and from the perspective of NAV CANADA they're equal - neither will cost more, they both supply the services satisfactorily, etc. - then the preference in our land claim agreements can kick in. By reason of the fact that we're local, we're there, it has been decided as a policy matter in the land claim agreements that the aboriginal business then gets the bid.

I hope that answers your points.

Mr. Gouk: I think you basically covered it. So you do accept that if they can supply the service better from someone other, then they should have the right to do so.

Mr. Lalonde: Yes, and anyone contracting in the north, including other government departments, knows this. There are contracts being carried out in the north right now where aboriginal businesses have bid and the work relates to work in the territories, but it's a southern company doing it because the aboriginal bid was higher. We accept that. We just want to know that the rules we worked so hard to get, which make sure the procedure is fair, are preserved.

Ms Kuptana: Basically we're saying that we want the federal government to adhere to the spirit and intent of the agreements it signed with us. It doesn't necessarily mean that every time a contract is bid in the north an aboriginal firm gets it, but that everyone should have a fair crack at it, including the people who have been discriminated against in the past.

Mr. Gouk: So your main concern is that fine line where there's not a clear winner on either side. It's that point at which you're most concerned that you get preference, if it is not creating any hardship to NAV CANADA.

.1125

Mr. Lalonde: That's right. If you look at the land claim provisions, all the procurement provisions are subject to so-called sound procurement management. That means it has to be economically viable. These provisions are not make-work projects. They're not designed to supplement welfare and unemployment. That's not their function.

Mr. Gouk: Thank you, Mr. Chairman.

The Chairman: Mr. Keyes.

Mr. Keyes: Thank you, Mr. Chairman.

I want to thank our witness. I too am sensitive to the fact that she has come a long way to make this presentation. We're certainly very grateful for that. It was a very thorough and to-the-point presentation. I want to thank her for that.

I remind her, too, of course, that Mr. Young is no longer the Minister of Transport. We have a new Minister of Transport in David Anderson, and he too is very cognizant of the concerns being brought forward to this committee from your group and from others.

The question I have for you is this, Rosemarie. Does your organization fear that NAV CAN would not be a good corporate citizen and make the necessary arrangements under contractual obligations?

Ms Kuptana: As I stated very clearly in my presentation, Stan, what we're presenting here is that the federal government made an agreement with various Inuit regions by virtue of the land claims agreements that it signed. What we're stating is that the provisions in those claims agreements as they relate to the NAV CAN process and the privatization process should be respected. It's not good enough for the federal government or NAV CAN to say that yes, they will abide by that agreement. There has to be a political and legal willingness by both parties.

Mr. Keyes: Is that what this is to a degree, more of a political willingness than a legal one? If you were going to look at it - and I guess I should speak to Mr. Lalonde, he's a lawyer - from a strictly legal point of view, you're dealing with agreements between the federal government and Transport Canada, etc., that we are clearly bound by and we do respect and we do carry through with. But then along comes a not-for-profit private sector organization that says they are going to take over from you, they are going to put this idea to you, what do you think? They say that it is not initiated by the federal government. It comes from outside the federal government's domain. The pitch is made. The federal government understands and realizes the economic viability of it, the adherence to competitiveness principles and all the rest of it, and says it is a good idea from a legal point of view. Are we bound to apply to a virtually not-for-profit corporation the agreement we reached with the party?

Mr. Lalonde: To answer your question in a very unlawyer-like fashion, yes. Simply yes.

Mr. Keyes: No, but I want you to answer it in a legal-like fashion. I know what your position is politically. I want legally.

Mr. Lalonde: I have a justification for my yes as well.

Mr. Keyes: Is it a legal obligation for us to do that? That would have to be determined by the courts, of course, eventually, if you were going to go that far.

Mr. Lalonde: Let me give you the pitch that we would make to a court, and I think it holds water.

When the government is operating these assets, providing these services and doing this undertaking in the north in our land claim territories, they do that and they own those things and they provide those services subject to certain duties and obligations that attach to that enterprise. They do not have the right constitutionally in this country to do that thing called the ANS in the north without it being subject to our land claim rights. That's what section 35 of the Constitution says.

.1130

When they transfer that package of things, assets, services, the whole shebang, to someone else they can't transfer to that person a right they don't have themselves, i.e., to operate the ANS without due consideration for our land claim rights.

Mr. Keyes: I'll promise you this in closing, Mr. Chairman, that I'm going to bring forward this question to our NAV CAN representative when we see them, I believe on Thursday. Thursday they're coming before the committee. I want to put this to them and hear if there have been any new revelations on this particular subject. Thank you.

Mr. Lalonde: New revelations at a legal level or just at the...? I'm not sure.

Mr. Keyes: Maybe I shouldn't have said new revelations, but rather considerations being given to this by NAV CAN beyond what has already been put forward.

The Chairman: Thank you. I always get nervous when the lawyers begin to talk. I believe, Ms Kuptana, you indicated - and it's certainly contained in the letter from NAV CAN - that there is a willingness to work on this, that we aren't at the point of legal disputes at this point. You're just reminding us that there are some obligations -

Ms Kuptana: There are obligations on behalf of the federal government to ensure that the rights they negotiated and recognize with the Inuit are adhered to and to ensure that they are transferred in any kind of activity that affects Inuit in the Inuit territory. This is what we are saying, Mr. Chairman. Once that is done, we are absolutely willing to sit down at any time with NAV CAN to determine a working relationship.

The Chairman: Thank you.

Now, from the Aircraft Operations Group Association, we have Mr. R.L. Richardson.Mr. Richardson, while you are preparing yourself might I remind you, as I have so many others, that you have about ten minutes to make your point in order to leave some time open for questioning by the other members of the committee.

Mr. R.L. Richardson (President, Aircraft Operations Group Association): Good morning, Mr. Chairman and committee members. I'd like to thank you very much for giving me the opportunity to appear before you this morning and to express the concerns of the Aircraft Operations Group Association. But if the chairman and the committee please, I would ask at this time to cancel the last half of our presentation. We were allotted an hour, and I spoke to your clerk this morning.Mr. Moody was going to give that presentation on our behalf, but I'd ask Ken if he would join me this morning and we will be able to complete this, I hope, in the next 30 minutes and save you people a half an hour of your time and save one of our problems.

The Chairman: Absolutely. We're always in favour of that.

Mr. Richardson: Ken's joining me, and I think it only fair to introduce him. We had a number of concerns from the president and the chief executive officer of NAV CAN as of last Thursday, terminating with a phone call last Friday that removed some of our concerns. I'd like to introduceMr. Moody as a CAI who is going to NAV CAN. We have about 70, we expect, of our 500 people going over. He is a former air force C-130 Hercules squadron commander and he also spent three years in Moscow as Canada's air attaché to U.S.S.R. His life, similar to mine, has been in aviation and I think he'll be able to add considerably to any insight you might want to have.

The AOGA represents 563 pilots who are employed in every facet of civil aviation in Canada, including the Canadian Coast Guard helicopter pilots who fly from the decks of ice-breakers, the engineering test pilots who test new and imported aircraft before they can be registered to fly in Canada, and some 40 accident investigators who are presently employed with the Transportation Safety Board. However, the majority of our civil aviation inspectors are pilots, and to quote the independent government consultant study:

A Civil Aviation Inspector is a pilot hired to design, regulate, control and monitor the National Civil Air Transportation System. To fulfil this role, inspectors need to maintain a certain standard of flying proficiency and an intimate knowledge of the air navigation system.

Each of our 563 pilots had a minimum of 2,500 hours flying time and were qualified airline captains with class 1 instrument ratings when they commenced employment with the government. They have traditionally been employed with a minimum of 48 hours of flying time annually to enable them to do their jobs, to keep abreast of the changes in aviation, and to maintain their credibility in the aviation community.

Within this group of CAI's, a number are destined to join the NAV CANADA portion of Transport Canada, and it is their future employment that I wish to address this morning. They are employed in three general categories, the first being the flight testing of precision navigation equipment; the second being the designing, the flying, and the publishing of non-precision approaches, airspace and airway documents; and the third, the evaluating of the numerous requirements of the air navigation system, including beacons, radio facilities, control towers, flight service stations and weather offices. And I might add that these people all work in little silos, separate from each other in many cases, but sometimes together.

Until last Friday, April 19, we had a very genuine concern that the management of the new entity did not understand the issue of why civil aviation inspectors fly, nor did we think they were prepared to provide the required flying hours. Over 20 years ago, and on a number of occasions since, the AOGA has had to justify why pilots must fly if they're to maintain the current knowledge necessary to make a meaningful contribution to the aviation system. The last major evaluation was the operational fleet plan task force study in 1988. With over 200 people participating and in excess of a one-year long assessment - in fact, it was nearly two years - the independent consultant recommended that all pilots receive at least fifty hours of flying annually.

We hope it is becoming evident to the new entity that our pilots must fly on a regular basis if they are to provide first-hand knowledge of the management of the air navigation system. Without current information, it would be impossible for the pilots to continue to provide the foresight that has previously saved our government millions of dollars while assisting Canada to maintain its position as a world leader in civil aviation.

The requirement for the individual pilot to maintain a current air transport licence with a valid instrument rating is paramount. If a pilot is not provided the opportunity to fly on a regular basis and to maintain his or her credentials, then it is doubtful that he or she will be able to maintain a safe standard of hand-eye coordination, or to maintain any credibility as a professional.

I would hope that NAV CANADA does not want to be staffed with pilots who can't fly, who have lost their currency and their credentials, and who have not been able to keep up with the rapid changes in today's aviation. We want to make it very clear that we agree with the conclusions that have been reached by every study that has taken place in the last two decades. They have all recommended that the ANS pilots must continue to fly a minimum of 48 hours annually.

Since the first meeting that I attended in July of last year with the Transport Canada and NAV CANADA representatives, and at every public discussion since then, the employees have been assured that the transition would be seamless and transparent, that the first day at NAV CANADA would be the same as the last day at Transport Canada. I signed the tripartite and bilateral agreements with this understanding. It is axiomatic that neither of the agreements could contain every possible facet of each employee's working conditions. The value of the agreements must surely rest with the goodwill and the integrity of the signators. Should NAV CANADA fail to provide the pilots with the myriad benefits that they derive from their historical requirement to fly, we would consider the failure a breach of the tripartite agreement and a breach of the content of Bill C-20.

Should NAV CANADA not have the necessary facilities to provide flying for our pilots at the time of transition, it is very conceivable that a number of our pilots will refuse to accept an offer of employment with the new entity. The pilots who are considering employment with NAV CANADA are not asking for one iota more than they presently receive, and has anyone the right to ask them to accept anything less?

With regard to those pilots who may chose not to accept an offer of employment, NAV CANADA could stand to lose an entire regional corporate memory in one or more air navigation system specialties. With regard to the pilots who may choose to accept the NAV CAN offer while looking for more suitable employment, we would feel obligated to investigate the application of the doctrine of estoppel - and I could expand on that later if you wish.

However, should NAV CANADA honour the spirit of the signed agreements, I am confident that our members will not only accept the challenges of the new organization, but will also look forward to providing the leadership that could bring Canada into the next millennium with the finest air transportation system in the world.

.1140

Gentlemen, once we see the evidence that NAV CANADA has acquired sufficient flying resources for all of our pilots to be provided with minimum flying hours, then the AOGA will not hesitate to give Bill C-20 its unequivocal support.

Mr. Chairman, we appreciate having the opportunity to appear before you this morning and we'd be pleased to answer any questions the committee may have.

The Chairman: Thank you, Mr. Richardson.

Mr. Mercier.

[Translation]

Mr. Mercier: Mr. Richardson, I thought I understood that you approve of Bill C-20, provided your members can make the necessary number of flights each year in order to remain qualified, and your concern would be that NAV CANADA does not have the number of flights enabling it to meet this obligation which arises from the tripartite agreement.

I believe you met with NAV CANADA representatives last Friday. Did they give you any kind of guarantee, a firm assurance that they would meet this obligation?

[English]

Mr. Richardson: To answer your question, Mr. Mercier, I did not meet with members last Friday but I did receive a phone call from the president and chief executive officer from Toronto. His personal assurance led me to believe that our problem of being provided with a flying will be solved.

About our problem of convincing the staff, the content of the letter I received from him on Thursday does not convince me they understand the entire reason why our pilots have to fly. Mr. Copeland phoned me from Toronto on Friday afternoon after he had been in contact with the assistant deputy minister. He led me to believe - although it wasn't completed - he felt very favourable about an offer that had been received from the government to provide the necessary airplanes in the regions where they will have to lease or make some arrangement to provide that flying. So that's why I said I feel very confident at this time that's going to happen.

That's why we cancelled the presentation for later this morning. I expect we'll go ahead. But should it fail, if they don't make the necessary arrangements and the management of NAV CANADA fails to understand what the reasons are for these pilots to fly, then I feel the pilots will not go over to NAV CANADA.

We are in a different position, I might add for the members of the committee. All the air traffic controllers, all the flight service station specialists and a number of the other associations - there are seven of us involved - will normally transfer to NAV CANADA on the appropriate day.

Our people who are going to NAV CANADA make up about 60% to 70%, and we will not know until the offer of employment is made. But at that time we expect they will make up only about 10% of our employees, so they have a number of options to go to other places.

Does that answer your question, sir?

The Chairman: Mr. Gouk.

Mr. Gouk: Mr. Richardson, I have a couple of areas of question. First of all, as I understand it now, your work group members are designated and as such are not in a situation where you could find yourselves on strike. Is that correct?

Mr. Richardson: That's exactly correct. Going by the designation of the last time we came to the industrial question on the contract, only about - and I'm guessing now - 10 of our 563 members were not designated as essential.

Mr. Gouk: With this changeover, of course, you go from being public servants to private sector employees, and as such would, in theory, have the right to strike again. Would you be opposed to the concept of some form of strike settlement mechanism being placed in this legislation that would find some alternative to strike to settle differences between your members and the employer? At least in my opinion, and in the opinion of a lot of others in the aviation sector, we simply cannot shut down the aviation sector of this country.

.1145

Mr. Richardson: You raise a very good point, Mr. Gouk. I think the committee should know that the Aircraft Operations Group Association is considered to be the most professional and least likely to strike of any association. I was led to believe that when I arrived here in July, because we were told we had the right to go back to the bargaining table, although our contract wasn't up, to discuss a number of points. I asked why we had the right to meet with Treasury Board and nobody else? They explained that we had the smallest number of grievances and the least amount of unrest. Therefore, I don't think it's a problem.

I agree with what you said. I think the transportation aviation industry cannot stand a strike. People don't deserve that sort of thing, and I think we would be the last to strike. To answer your question, we would be most willing to agree to any new type of labour settlement you may have. I think it's an excellent idea.

Mr. Gouk: There's just one other area I wanted to get into - your three categories. Would category two not generally stay under the responsibility of the Department of Transport - designing of approaches, airways and the documentation pertaining to them? Would that one aspect not tend to stay under the Department of Transport as a regulatory agency and licensing authority, as opposed to being under NAV CANADA?

Mr. Richardson: I might ask Ken to add to it, but we expect all of those people in the region to go over. They may keep a very small number here in Ottawa to lay down the parameters and guidelines to govern this, but we expect all those people in the regions to do it and to explain what they do.

Of course you understand it very well, but for the rest of the committee members, they design a three-dimensional map to allow an airplane to get from the upper elevations to the ground. Once they put all their work together and draw it up, it's called an instrument approach procedure. Then they fly it visually with one of the regional airplanes as a last check on quality control to make sure it's safe.

We expect most of those people will be staying over. As you know, none of our members has been given an offer of employment, nor has anybody else in the government at this time.

Mr. Gouk: Thank you.

The Chairman: Thank you, Mr. Gouk. Are there any questions over here?

I think you've made your point clearly and it sounds as though you're moving toward a resolution.

Mr. Richardson: I think we're halfway there. We do have a real job to convince the executive that there is a real requirement to fly, and it's not only in our minds. We have a 20-year history that I brought with me of different commissions that do it. I think we're going to be there and I feel very confident. I hope NAV CANADA is as good as its word. With that, we will have no disagreement with Bill C-20.

I'd like to thank you very much.

The Chairman: Thank you. We might even be positive and supportive, if possible.

Members, I'll see you back here at 3:30 p.m. for the next round.

The meeting is adjourned.

Return to Committee Home Page