Good morning.
Thank you for the invitation to sit with you today and to voice the concerns of the small business owners and operators of passenger vessels in Canada. While there are numerous concerns regarding SMS, safety management systems, the transportation of dangerous goods is very minimal within the association.
Please allow me to introduce myself and my colleague. My name is John Chomniak, and I'm currently the president of the Canadian Passenger Vessel Association. Here with me today is Captain Dan Duhamel, a past president and director of the CPVA and a small business owner and operator here in Ottawa.
The CPVA is an association of day boat operators, dinner cruise boats, charter boats, and overnight cruise vessel operators, as well as a small number of short-run ferry operators. The CPVA currently has within its membership 70 companies, operating 368 vessels and transporting about 10 million guests each year over our six-month operating season. The average size of a vessel within the association is less than 150 gross tons, capable of carrying fewer than 200 passengers.
The regulatory cost of operating these vessels is becoming quite cost prohibitive. That's right; the regulations that are imposed on small business owners are putting many of those small business owners and operators on the brink of closure. To my knowledge, there are four companies that will close their doors and chain their vessels to the dock, not expecting to operate next year.
While the safety of those on board must be paramount, we cannot continue to sign international agreements, bring them back to Canada, and try to enforce them on a domestic fleet. It just will not work.
Since Transport Canada introduced safety management systems to the marine sector in Canada, it has done what it is supposed to do: identify the risks before they become larger issues. Having an SMS in place is an extra layer of protection to help save lives and maintain vessels, all while keeping the industry safe.
While SMS is a global standard, part of ensuring that the standard is met is the auditing of the SMS program on board each vessel. At the moment, there are not any Transport Canada marine safety inspectors capable of fulfilling the audit of an SMS aboard a Canadian flagged vessel. The only persons qualified to carry out an audit of an SMS on vessels in Canada are duly authorized persons from one of the five recognized organizations or classification societies. If one of the five recognized organizations is willing to accept your vessel to be inspected by their classification society and not Transport Canada, they would require a completed SMS prior to being accepted into their organization.
However, the alternative security program does not favour the small business owner. If your vessel is not within the five metropolitan areas of Canada or was not built within the last 15 years, they do not want your vessel within their organization. Once declined, they are handing you back to Transport Canada and its inspection services regime. Again, Transport Canada is not qualified at auditing SMS programs of Canadian vessels.
It was Transport Canada that came forward to us with various SMS models and produced the framework to allow a simplified SMS to be introduced, while ensuring that the simplistic approach still worked within the guidelines of the basic SMS model. Even within this model, individual companies would have to find better ways to prevent hazards and then be able to update the SMS to include those dangers.
We, the CPVA, do believe that having a working SMS makes good business sense. However, here's the challenge. When you mandate the vessel owner-operator to comply with having an SMS, even if the Transport Canada inspector is capable of auditing the vessels, do they have the time to carry out the audit? In this day and age, when we, the owner-operators, and Transport Canada are trying to reduce the amount of paperwork that is produced, this venture actually increases the workload in an area within Transport Canada that we believe is well short of manpower.
You should look at the basis of what SMS is. This risk assessment should be looked at within Transport Canada marine safety.
We presently have one of the safest marine industries in the world and, as operators, we do not want to intentionally jeopardize that, but as lawmakers, you are in fact doing so. You are increasing the risk by allowing the number of Transport Canada marine safety inspectors to be reduced, thus allowing the risk to increase. We as business owners know that it is our livelihood on the line, and we must ensure that we stay in line or above the requirements. It is worse when there are so many regulatory bodies with their hands in our pockets, both provincially and federally, that owners and operators are having a hard time staying afloat.
We are our own economic, environmental, and safety stewards. However, we must all ensure that good working practices prevail and that we are accountable for such. But being a small business owner can lead to a blinded view of what may be right in front of you. Without this ability to have an outside source to audit the SMS and evaluate it, whether it is Transport Canada or a member of a classification society, then there is no room for improvement. If one does not have a preventive or corrective action to manage, there is no SMS in place. Then, who is liable?
With that said, the international safety management code only requires vessels over 500 gross tonnes, travelling on an international voyage, to have an SMS. Of the thousands of passenger vessels in Canada, only a handful are over 500 gross tonnes, but none of them travel internationally and have to meet those requirements, that I am aware of.
Over the last few years, Transport Canada marine safety has been working with the CPVA to ensure that owners and operators begin the process of producing an active SMS. While the majority of the CPVA members have or are in the process of producing an SMS, there is still one issue that has to be resolved: who will audit it? Will it be someone from Transport Canada who is familiar with the vessel, or someone from a classification society who has only worked on large ocean-going vessels and has never worked on a vessel of our size or where it is used?
While there are issues in having enough Transport Canada safety inspectors to inspect or audit any vessel, it is also becoming difficult for owners and operators to ensure that their annual inspection of their vessels maintains some continuity from year to year. This continuity must be maintained on the regulatory side as well as the financial side of any business, especially for these mom-and-pop operators, but also the inspection services of Transport Canada.
Everybody wants a safely run and operated business. With any business, the financial aspect must be examined, but what is the true cost of operating a safe vessel?
Thank you for allowing the Canadian Passenger Vessel Association to come before you today. We look forward to doing it again to help our industry and those who ride aboard our vessels.
Before we take your questions, I would like to invite you, Mr. Chairman, or perhaps the minister, to our annual conference of the Canadian Passenger Vessel Association. We meet next month in Toronto and at that time the members come together with the regulators to discuss regulatory issues affecting the industry. We would be able to hear many of those issues first-hand.
Thank you.
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Thank you very much, Mr. Chairman and committee members, for the invitation to speak to you today on this very important topic.
I am the president of the Canadian Shipowners Association, and I'm joined today by Ms. Debbie Murray, who is our director of policy and regulatory affairs.
We're here today to talk to you primarily about safety management systems already employed by our members as well as about industry safety, and to answer questions you may have. We want to convey the message that the marine mode has a strong and more than sufficient safety regulatory regime with a track record to show it. We would propose that the system is ready to handle Canadian economic growth and commodity movement in a safe and reliable fashion. We want to ensure that any future regulations or legislation are proportionate to the risk, are not excessively burdensome, and are levied equitably against all modes of transportation.
Our member companies own Canadian ships. They are larger ships, generally over 20,000 tonnes. They employ only Canadian mariners, and they pay Canadian taxes. They operate in the very unique and demanding Canadian waterways of the Great Lakes, the Saint Lawrence River, the east coast of Canada, and the Canadian Arctic. They operate 86 vessels and last year carried over 50 million tonnes of bulk cargo, including petrochemicals, iron ore, coal, grain, aggregate, and general cargo. Our membership conducts what is called short-sea shipping in Canada and North America.
If I can leave you with any message today—and I don't want to bore you with too many acronyms—it's that we support safety management systems, and we've been using them for over a decade. It's a prerequisite for being a member of CSA that you have one or that you are moving towards having one.
Obviously, safety and protection of the marine environment are our first priorities for our membership, and that shows. Our customers expect it and demand it. It's good business to be safe. Data shows that marine safety has improved, and our track record is good and defendable, especially over the last decade.
Transport Canada data shows that there were no reported in-transit dangerous goods marine-related incidents between 2006 and 2011. In terms of collision-related injuries and fatalities per tonne kilometre, our mode had the lowest number of both from 2002 to 2011.
Most of the cargoes carried by our membership would not be classified as dangerous goods according to the International Maritime Dangerous Goods Code. However, we do carry some petrochemicals. Given the potential for future growth in this sector, it is in my membership's interest to ensure that this committee and other decision-makers are aware of the current regime and practices of my membership and the effectiveness of these.
Our membership is confident that the current safety regimes and voluntary safety management systems are appropriate to the risk presented. We do not believe, given the track record, that increased regulation or stringency is required. We think we're doing a good job and we continually review our practices.
Canadian flag vessels are governed by the domestic regulatory regime administered through Transport Canada, which is shaped by and incorporates 33 protocols and conventions from the International Maritime Organization. This very extensive safety regulatory framework covers everything from vessel construction to the training of highly qualified personnel. Our members are also required to develop emergency procedures and agreements with certified response organizations, to be responsible for our acts at all levels of management, and to have the required liability insurance coverage and access to national and international compensation funds.
All seafarers must have certificates or licences as well as general seamanship, and they must undergo regular medical exams. Transport Canada sets these standards for minimum crewing, and our vessels adhere to these standards or go beyond them. It is also important to note the close relationship between shipowners, Transport Canada, the class societies, the Canadian Coast Guard, the St. Lawrence Seaway Corporation, and ports. This is really part of our safety and marine safety culture, and the Canadian industry does it very well.
Finally, and, I would suggest perhaps most important in addition to this extensive safety system, are the people we employ. They are Canadian mariners who have been educated in Canadian colleges, and they develop a very keen knowledge of the currents and contours of our inland, coastal, and Arctic waterways. Some move from ship to shore and work in corporate offices, and some even work at Transport Canada and the Canadian Coast Guard.
Safety management systems augment our industry's aforementioned regulatory regime. The domestic commercial fleet was exempted from the implementation of SMS in 2002. Most of our domestic commercial fleet, as I mentioned, already has an SMS in place, and the remainder are working towards having one.
Transport Canada is in the process of revising these regulations to make SMS mandatory for domestic vessels, and we understand that the revised regulations may be gazetted as soon as 2015.
Our membership does not see their SMS as one of documents; they are living documents that are consistently improving, evolving, and developing, based on a rigorous audit schedule, both third-party and internal, and by keeping eyes on industry best practices as well as applying lessons learned from other modes of transport and land-based industries. These are living documents that our crews use every day.
I would not say that SMS has singularly been responsible for safety in the marine mode. Safety has been the result of previously described international and domestic legal and regulatory frameworks, industry innovation, training, and a culture of safety. Indeed, I would suggest that if anything were to enhance safety it would be the reduction of any duplication in red tape. I know the government is working towards that objective. Filling out forms multiple times, often with the same data, does not serve to reduce risk. This is something that we can all work towards improving.
We understand that the committee is considering what additional measures should be taken to further improve the adoption and integration of SMS in all transportation modes. Given that we compete primarily with other modes of transportation in the domestic and continental bulk and petrochemical market, we would argue that the adoption and integration of SMS and any other safety regime must be equitable and applied equally to all modes of transport. The burden of compliance reporting and the stringency levels must be fair and based on appropriate levels of risk. We would also advise that the committee recognize the highly evolved framework and safety culture currently in place and build upon it for further success.
Thank you again for the opportunity to speak to you today.
I would like to thank the witnesses for joining us today. Unfortunately, I am going to have to talk about procedural matters.
Mr. Chair, you know that the committee has cancelled three meetings at which we were supposed to discuss the issue of the transportation of dangerous goods by water. We know that the issue affects a lot of people at the moment. People are concerned and Canadians want information.This is the ideal time to get more information and to hear from witnesses on the issue. But three meetings have been cancelled, as we know.
Mr. Chair, why do we not study these issues at subcommittee meetings rather than talk about them here and waste the witnesses' time?
I would like to know what is going to happen. Are we going to be able to make those meetings up? A lot of people are concerned, whether it is about Cacouna and all the transportation of dangerous goods on the St. Lawrence, or about what is happening on the west coast. We want information.
Mr. Chair, can you explain to us what is happening?
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I have an SMS on board my vessels.
We were made aware of a template that was being used in Australia, so we basically looked at that template and worked on it to apply it to our own operation on our vessels here in Ottawa. But prior to an SMS or even hearing about an SMS, we had something called “standing orders”, and it was very, very similar. Each and every operator had their own standing orders for their vessel, for their crew.
We comply with the regulation. We are required to run drills biweekly: fire drills, man overboard drills, evacuations. This all has to be recorded and entered in logbooks.
I found that the SMS that we had adopted from Australia, which was an accepted SMS for smaller domestic fleet operators like us, was pretty good, but it was basically putting everything we had already been doing into yet another package, another folder. There was a lot of duplication.
I represent the oldest family owned and operated tour boat company in Canada. We've been at it for a long time. We've evolved as we've had to in the different markets, and it's yet another piece of paperwork, another requirement, that was already in place and just given a different name. We still have our standing orders.
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Okay, well, maybe you can help Canadians understand.
Let me just get the question out, and, Mr. Lewis-Manning, I'd like to hear from you as well.
Here's my short preamble. Canadians don't understand all of this complexity around SMS. They want to know that your vessels are safe, and they want to know that their government is playing a role in keeping those vessels safe, just as they want to make sure that rail is safe and trucking is safe and transport generally is safe. They feel that governments have an obligation to get the big things right, and one of the big things is transportation safety.
With that being said, help us to understand where we should go with SMS. You don't have mandatory SMS. You don't have any auditing of any significance in place, unless you're international in nature. You're telling us that none of the five recognized organizations....
Mr. Chomniak, I want to deal with your fleet or vessels particularly, because you're either too small, you're not in an urban setting, and so on and so forth. I understand all of that.
So what do we do about this? We're all legislators here. We're trying to improve things. What do we do?
I think you're asking me what is the role of Transport Canada in regulating the class societies—
Mr. David Yurdiga: Yes.
Mr. Robert Lewis-Manning: —to some degree, just to make the question more simplistic, they have to audit the class societies to ensure the class societies are doing their inspection regimes properly in accordance with the government's regulations. I would say that class societies and Transport Canada work hand in hand almost daily, because the class society is the customer of Transport Canada, not of the shipowner, for example.
What comes of that is a very experienced and knowledgeable inspection regime that I don't think Transport Canada could have on its own, because they would never have the capacity to do it as often and with as much expertise as the class societies, which not only are dealing with the Canadian domestic fleet but have experience globally, because most of them are global companies, so they bring a lot of expertise to the table. I know for a fact that Transport Canada and the class societies work closely in developing new regulations or amending current regulations, so I think they're getting good value for money and good advice from that expertise that is on the dock, shall we say, and working with shipowners every day.
You can imagine that in a domestic regime our ships are in port almost every day because they're not doing long transits, so that relationship with the regulator is much closer than you would find in ocean-going shipping, where you're transiting a week or two. It's a very different relationship that you find domestically than you would internationally.
My intention this morning—or I guess it's afternoon for you folks in Ottawa—is to concentrate on the aspect of safety management systems in the marine mode.
Just by way of a short introduction, I am a master mariner. I sailed in sea on deep-sea vessels for about 17 years, mainly on tankers, bulk carriers, tugs, and ferries. Following that, I was with Transport Canada for about 16 years, both here on the west coast and in Ontario as the regional director of marine safety. For the past 11 years I've been the president of the Council of Marine Carriers here in Vancouver.
The Council of Marine Carriers is a shipowners association representing the tugboat industry on the west coast. Our vessels sail up and down the west coast of North America and into the Arctic. We have about 40 members, 30 of whom are shipowners. The remainder are affiliated members consisting of lawyers, insurance companies, and marine underwriters. The Council of Marine Carriers, as I said, is a shipowners representative, and as such we generally look after the welfare of the vessels, the companies, and the people who are manning their vessels.
I'll go back to safety management systems. The Council of Marine Carriers firmly believes that an effective safety management system is probably one of the most truly effective safety measures that a company can institute, providing the safety management system is applicable to the size and the operation of the vessel.
There is an international safety management system in existence. I'm sure you've probably heard most of this from your other witnesses this morning. I'm afraid I didn't hear their testimony, so you'll have to bear with me if I do repeat some of their information. The international safety management system, or ISM, was developed for use on large ocean-going vessels and has proven to be effective. However, for smaller vessels, implementing the full ISM can be cumbersome and almost impossible to institute at times, mainly because of the level of information that's required to be carried on board the vessel.
In 2009 the Council of Marine Carriers entered into a pilot project with Transport Canada for what we called at that time DSM. We changed the “international” to “domestic”, so it's the domestic safety management system.
We prepared the DSM pilot project with Transport Canada throughout 2008. In 2009 five of my member companies entered two vessels each into the pilot project. Of those companies, two had already implemented ISM—they were large companies with fairly large vessels; two had no safety management system whatsoever; and one had a fledgling system. The companies ranged in size from the largest, Seaspan Marine, one of the largest towboat companies in North America, through to a mom-and-pop operation on the west coast of Vancouver Island.
For the pilot project we developed a safety management system for each individual company. We tailored it to that company, so for a large vessel, an ocean-going ship, we boiled down the paperwork from probably seven or eight binders two inches thick each for the towboats to about one binder one inch thick with about 80 pages in total. The project ran for two years. In our opinion it was extremely successful.
Upon the conclusion, Transport Canada decided not to proceed with implementing such a system in our industry. It was our hope that it would be applied across the board, across Canada, to the domestic fleet.
However, a testament to the success of that, which by the way cost about $1 million total for the five companies to implement, is that we found that safety culture within those companies showed evidence of vast improvement. For instance, I was speaking to an employee of one of the companies, on the tug. This individual advised that he had resigned from the company prior to DSM being put into place. He went to the company about one year afterwards and he said it was like night and day. The safety culture and the approach of the company to safety and the whole operation of the vessel was completely different. He was sorry he wasn't around—
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I'll try to make it better by lifting the handset.
I just described the experience of one of the employees on board one of the vessels in the pilot project. Another company, North Arm Transportation, had a complete change in its approach to its safety culture. That is most significant for them, since they were one of the companies that had previously implemented ISM.
A third company advised me that, at the beginning of the project, it had been having a lot of small accidents on board its vessels. It was having warnings from its insurance companies and its underwriters that it might not be able to have insurance coverage in the future. It went from that to getting a discount on its insurance from its underwriter, two years later.
A testament to the project was that all five companies continue to this day[Inaudible—Editor] and enhance their safety management systems, even though there is no obligation by law for them to do so. They've all seen safety, efficiency, and financial gains as a result of that.
At the end of the project, we had a meeting with Transport Canada and discussed the project and the outcome with all the companies. We proposed at the end that all commercial vessels in Canada, regardless of size or area of operations, should have an appropriate safety management program in place.
I stress the word appropriate. It is no good trying to force the veritable round peg into a square hole. I think it's more like trying to get a round peg into a triangular hole, which is even more difficult. By that I mean trying to put in place, for instance, the international system and have that in place on a small, two-person towboat running on the west coast of Vancouver Island. It has to be an appropriate system that is tailored to the size of the company, the size of the vessel, and the operations of that vessel.
I'd like to point out that both the Canadian Transportation Safety Board and the U.S. National Transportation Safety Board fully support the establishment and the operation of safety management systems. They see them as critical safety measures.
Unfortunately Transport Canada chose not to require all commercial vessels to implement SMS but have moved to a three-tiered approach where SMS is voluntary for smaller vessels and not monitored by Transport Canada. I don't think having a voluntary system would be as effective as having one that is audited. We did propose to Transport Canada a small vessel compliance program based on our pilot project; however Transport Canada did not see fit to implement it. It put into place since then, though, an alternate service delivery program whereby classification societies perform both approval and inspection services on the government's behalf, and they're authorized by Transport Canada to do—
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I think the number one enabler in my statement is the fact that between industry and government we have a very close relationship in conducting risk assessments. We have a very strong pilotage regime in Canada, where the vast majority of the mariners who pilot vessels that carry petroleum products have been educated in Canada. The vast majority of their experience has been earned in Canadian waters. They are very, very adept at navigating very unique places like the St. Lawrence River, the Great Lakes, and all three coasts of Canada. They bring an incredible amount of experience. That's a capability that we should be promoting and protecting.
That's the first one. The second one is the strong relationship between the industry, the ports community, the communities where we sail, and the government regulators. It is close. Canada is a huge country, as we all know, but the marine community is very, very connected. The types of trades that we do deliberately bring those stakeholders together.
I think the government...and when I say “government”, I'm talking primarily about the coast guard, CBSA, and Transport Canada. Theirs is a very collaborative relationship and process that demands consultation. For example, I'm flying out of here immediately after this and I'm going to Windsor, where I'll be meeting with the entire eastern industry, the coast guards of Canada and the U.S., and Transport Canada to talk about the icebreaking season that's upon us. It's not that far away.
That's the type of collaboration that happens all the time, which I think brings a high degree of engagement and safety to our industry.
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Those risk assessments are done by a number of organizations, for a number of different reasons.
Certainly when you're talking about petroleum products, the customer is definitely demanding it. It's a very significant vetting process that happens for carriers that ship petroleum products.
From a shipowner's perspective, that risk assessment is done to make sure that the business is viable from both a safety perspective and an economic perspective. It doesn't make any sense if one of those isn't supported.
I think there are other organizations that conduct risk assessments based on anticipation. A large, semi-political regional body called the Great Lakes Commission recently did one on the carriage of petroleum products on the Great Lakes. I think that process—maybe not official by any oversight by a single government agency—is happening in anticipation of increased traffic with petroleum products.
Do we anticipate that there will be more that is necessary? Absolutely, yes. Whenever you're operating with a different type of vessel, a different cargo, or in a different operating environment, it has to happen. It's the culture of the industry to want to do that.
Thank you, of course, to our witnesses for participating in hearings regarding the marine mode, and as we're looking at how, if possible, to improve safety management systems and the transportation of dangerous goods regime in Canada.
Before I ask some questions, I just want to clarify some details from some questioning earlier by Mr. McGuinty, related to what he mis-characterized as spending cuts in marine safety. I've done some looking at this. What he calls cuts, 80% of the number he quotes are actually efficiencies, or money saved and not spent, because they got more efficient in how they deliver in the back office. Things like reducing travel expenses for bureaucrats and reducing professional services costs are not decreases in the safety regime spending. Also, of the other 20%, we have transfers out of the department to other departments, so there is an increase in other departmental budgets for functions like environmental assessment responsibilities. It's hardly a reduction in safety. I just felt it was important to have the proper characterization, that what they did was 80% savings, delivering greater value for the service, and almost all of the other 20% ending up being increases in other departmental budgets. That's just for the public record.
Turning to the matter at hand, can we get some clarification. By what class do we divide our inspection regime here? If I understand it correctly, if ships are 24 metres and above there's a particular regime, or you can obtain your inspection through classification societies. What happens below that particular threshold?
It's impossible not to respond to my colleague, the parliamentary secretary. I just want to make sure that everyone is aware of the numbers from the “Public Accounts of Canada” 2011-12 and 2012-13. In my background, Mr. Chair, the numbers never lie. Always follow the money and find out where priorities are for the government by following the money. From one year to the next, they dropped from $75,594,201 to $56,492,575. When Mr. Watson speaks about “efficiencies”, it reminds me of Mr. Justice Dennis O'Connor's report about the Walkerton crisis. He talked about the previous government in Ontario, referring to efficiencies having led to a lot of water inspectors being let go and having led to the tragedy of Walkerton.
Mr. Nelson, you said that after your pilot project with SMS in five separate companies, you had a meeting with Transport Canada, and you put forward the recommendation that all vessels, regardless of size, have SMS in place, mandatory, but tailored to size and scope of vessel.
What did Transport Canada say to you when you made that recommendation?