ONTARIO HIGHWAY TRANSPORT BOARD AND PUBLIC VEHICLES AMENDMENT ACT, 1996 / LOI DE 1996 MODIFIANT LA LOI SUR LA COMMISSION DES TRANSPORTS ROUTIERS DE L'ONTARIO ET LA LOI SUR LES VÉHICULES DE TRANSPORT EN COMMUN
Monday 13 May 1996
Ontario Highway Transport Board and Public Vehicles Amendment Act, 1996, Bill 39, Mr Palladini / Loi de 1996 modifiant la Loi sur la Commission des transports routiers de l'Ontario et la Loi sur les véhicules de transport en commun, projet de loi 39, M Palladini
Ministry of Transportation
Jerry Ouellette, parliamentary assistant to the Minister of Transportation
Jim Devlin, president
Silver Fox Tours
Avo Kingu, general manager
Amalgamated Transit Union, Canadian Council
P.M. Bunting and Associates
Dr Mark Bunting, consultant
Ontario Motor Coach Association
Brian Crow, president
Canadian Federation of Students -- Ontario
Heather Bishop, chairperson
Can-ar Coach Service
Ray Burley, vice-president
Travel Ventures Canada Inc
Larry Hundt, president
STANDING COMMITTEE ON RESOURCES DEVELOPMENT
Chair / Président: Gilchrist, Steve (Scarborough East / -Est PC)
Vice-Chair / Vice-Président: Fisher, Barbara (Bruce PC)
*Baird, John R. (Nepean PC)
*Carroll, Jack (Chatham-Kent PC)
Christopherson, David (Hamilton Centre / -Centre ND)
Chudleigh, Ted (Halton North / -Nord PC)
Churley, Marilyn (Riverdale ND)
*Duncan, Dwight (Windsor-Walkerville L)
Fisher, Barbara (Bruce PC)
Gilchrist, Steve (Scarborough East / -Est PC)
Hoy, Pat (Essex-Kent L)
*Lalonde, Jean-Marc (Prescott and Russell / Prescott et Russell L)
Maves, Bart (Niagara Falls PC)
Murdoch, Bill (Grey-Owen Sound PC)
*Ouellette, Jerry J. (Oshawa PC)
*Tascona, Joseph (Simcoe Centre / -Centre PC)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Colle, Mike (Oakwood L) for Mr Hoy
Johnson, Bert (Perth PC) for Mr Maves
Klees, Frank (York-Mackenzie PC) for Mrs Fisher
Martel, Shelley (Sudbury East / -Est ND) for Mr Christopherson
Parker, John (York East / -Est PC) for Mr Murdoch
Pouliot, Gilles (Lake Nipigon / Lac-Nipigon ND) for Ms Churley
Ross, Lillian (Hamilton West / -Ouest PC) for Mr Chudleigh
Clerk / Greffier: Douglas Arnott
Staff / Personnel: Ray McLellan, research officer, Legislative Research Service
The committee met at 1532 in committee room 1.
ONTARIO HIGHWAY TRANSPORT BOARD AND PUBLIC VEHICLES AMENDMENT ACT, 1996 / LOI DE 1996 MODIFIANT LA LOI SUR LA COMMISSION DES TRANSPORTS ROUTIERS DE L'ONTARIO ET LA LOI SUR LES VÉHICULES DE TRANSPORT EN COMMUN
Consideration of Bill 39, An Act to amend the Ontario Highway Transport Board Act and the Public Vehicles Act and to make consequential changes to certain other Acts / Projet de loi 39, Loi modifiant la Loi sur la Commission des transports routiers de l'Ontario et la Loi sur les véhicules de transport en commun et apportant des modifications corrélatives à certaines autres lois.
The Chair (Mr Steve Gilchrist): Good afternoon, ladies and gentlemen. Our timing today will be 20 minutes per deputation, but before that, we're going to be hearing from the three parties. We'll have opening comments from the government and then 10-minute responses from the official opposition and the third party.
Even before that, the clerk reminds me, the first order of business will be to approve the subcommittee report. You all have copies on your desks. Any comments arising from the subcommittee report? Seeing none, I look for a motion to adopt. Mr Carroll so moves.
All in favour of the adoption of the subcommittee report? Contrary? It's carried.
Moving right along, I'll ask for opening comments from the government.
MINISTRY OF TRANSPORTATION
Mr Jerry J. Ouellette (Oshawa): Before we get started today, I want to say a few words about this government's commitment to deregulating the intercity bus industry. We believe the travelling public will be better served by an industry free from economic regulations. It will create a more competitive market in which entrepreneurs can meet passenger needs in new and innovative ways.
However, it became clear after second reading of this bill that there are several issues surrounding intercity bus deregulation that need to be clarified. I want to do that today.
First of all, this legislation does not in itself deregulate the intercity bus industry. Bill 39 creates an interim system to help us move towards deregulation. It also gives the industry time to adjust to the transition.
Another important issue I'd like to address is public safety. I assure you that the safety of the travelling public is this government's priority and we will take all steps necessary to ensure the industry is safe.
The increased competition that comes with freer access to the marketplace will not compromise public safety. Deregulation will only affect the economic aspects of the industry. Current safety regulations will continue to apply. However, later this month we plan to introduce legislation that will impose harsher penalties on companies that don't meet safety standards. It will include dramatic increases in the maximum fines for safety offences.
Another part of this legislation will clear the way for a demerit point system for commercial drivers who violate industry-related safety laws. This system will allow us to monitor the safety practices of professional drivers.
On top of these measures, the Ministry of Transportation will launch its new safety rating system for truck and bus operators by next year. The system rates a truck or bus company's safety performance on the road and its overall corporate safety practices and policies.
Another issue that came up in the House had to do with service in small, rural and remote communities. The current regulated system does not guarantee service to small-town Ontario. In fact, in the past 15 years, more than 400 communities across Ontario lost their bus service. By removing restrictions on the industry, we can only improve the chances for these communities to get the services they need. When the demand is there, market forces will encourage the private sector to create more local bus services.
In fact, I think people who live in small towns across Ontario will find that their local bus service is an important link in the chain of intercity travel. After all, passengers from smaller towns often transfer to larger bus services to get to a central location. Without these so-called feeder services, the larger bus companies would probably not have enough passengers.
However, if some bus companies choose to withdraw their services from communities during the next two years, this government will require that they give us and the community fair warning. They will have to give 90 days' notice instead of the current 10 days. Those planning to cut a bus service by more than 25% must give 30 days' notice. That's three times the current required length.
A carrier company's rating -- either satisfactory, conditional or unsatisfactory -- will be available to the public, including banks, insurance companies and customers who do business with the industry. We believe this system will encourage bus and truck operators to follow good safety practices.
During the interim stage, new bus operators will have to demonstrate that they know their responsibilities for highway safety. They will also have to indicate how they will ensure their vehicles operate safely on the highway. They can expect MTO enforcement officers to audit their business within six months of starting up their service.
On top of this, we are increasing insurance requirements for bus operators to bring them in line with today's operating environment. This will discourage fly-by-nighters, those companies hoping to make some quick cash without giving the appropriate attention to safety. Finally, this government supports a national review of bus safety to determine if special bus safety measures should be in place right across Canada.
Plus, we will require bus companies to continue to provide service until a replacement is found or until the notice period expires, whichever comes first. During that time, and in cases of serious hardship, the company must work with the local community and other interested groups in a reasonable effort to find a replacement.
I am confident that Ontario's towns and villages will actively encourage local entrepreneurs to provide the transportation services needed by their fellow residents. In this respect, deregulation should give smaller companies an opportunity to get started.
During the debate in the House, several members accused the government of abandoning northern Ontario. This government is committed to ensuring a safe, efficient and healthy bus industry right across the province, including the north. There are entrepreneurs in northern Ontario that are ready, willing and able to take on the challenge of a bus industry without regulations. There are also existing operators that are interested in expanding their service in the north, that are not allowed to under the current system.
I understand that many of you are concerned about the potential for unfair competition from neighbouring provinces. During the next 20 months leading up to deregulation in Ontario, we will pressure the federal government to follow through with nationwide deregulation. The federal government is in the best position to pursue this since it has jurisdiction over the majority of bus companies in Canada. The current interprovincial and international trade agreements tend to support deregulation. It is only a matter of time before it extends to the entire North American intercity bus industry.
Both the United States and the UK removed economic restrictions on their intercity bus industry more than 10 years ago. A Canadian study found that the number of US bus companies almost tripled seven years after deregulation in the US. Although some studies show that US deregulation has had some negative results, it is very likely that those same scenarios would have occurred even if regulations had remained in place.
In the UK, the intercity bus industry has been deregulated since 1980. Deregulation in the UK has reduced fares and improved the quality and quantity of service. Following deregulation, ridership also increased by some 14% after a decade of decline. As with the US experience, various negative results in the UK can be attributed to a general decline in the industry that existed in the years prior to removing economic regulations. However, the UK experience is difficult to sort out since they deregulated the intercity bus industry and local transit at the same time and also introduced a major bus privatization initiative.
Several studies on this subject also recommended relaxing the regulations on the bus industry. The most noted, the 1992 Royal Commission on National Passenger Transportation, reinforces this government's view that deregulation will not necessarily lead to operators abandoning feeder routes. The study found that if some operators did so, they could undermine their competitive position in the market as a whole. The royal commission also found that deregulation would result in a somewhat smaller but equally regional network, with a dominant carrier running a network of local feeder routes. It suggested that specialized bus services would emerge, some in the form of commuter services, others providing intraregional bus services.
I'd like to make one final point. Intercity bus operators can appeal decisions made by the Ontario Highway Transport Board. If an operator feels a board decision is unfair or beyond its jurisdiction, he or she can request a review through the courts.
Ladies and gentlemen, I assure you that a deregulated intercity bus industry will meet the needs of the travelling public. It will encourage innovation and attract entrepreneurs. It will also be safe, efficient and profitable.
This legislation will ease the transition to deregulation. It will provide some stability for the industry and it will help operators prepare for a more competitive marketplace.
The Chair: Thank you, Mr Ouellette. First off for responses, the official opposition.
Mr Mike Colle (Oakwood): The final comment really puzzles me. It's typical of this whole act. I know in the explanatory notes in Bill 39 it says: "The decisions of the board are final. Appeals to Divisional Court, petitions to cabinet and stated cases to Divisional Court are no longer available." This is the thing that perplexes me about the approach the government takes to this act. Is this therefore a mistake? Is it a misprint? It just contradicts exactly what you said about a minute ago. I wonder if the parliamentary assistant could refer to that later on, whether we should disregard this in the preamble.
In terms of the process in this bill, there's a constant reference to what will happen, what they're confident will happen with this act. The real flaw is that there's been no business case analysis on what the impacts would be. The government has failed to do that. I guess that's the most surprising thing. If you're going to affect thousands of people who are passengers, hundreds of companies and thousands of workers in an industry that affects so many communities in Ontario, why wouldn't the government undertake to do a business case analysis on the impact the legislation would have on the providers, on the people in the business, the communities and the riders? That should have been done so that we could get at least an independent perspective on what would happen to this industry, what would happen to the passengers and what would happen to the communities.
To go ahead and do this without that impact analysis in the first place is really shortsighted. I think it leads to a lot of confusion, and that is what has happened with this bill. People don't really know.
For instance, they refer to the fact that 400 communities in Ontario over the last 15 years or so have lost bus routes. The government has not brought forward an analysis of that. In other words, why did these 400 communities lose service? I'm sure in some cases it's got a direct relationship with the present state of affairs of bus regulation in Ontario, but there are also all kinds of other variables and mitigating circumstances which caused those communities to lose those bus routes that had nothing to do with government and bus regulation or deregulation. All we keep hearing from the government on this issue is, "Oh, 400 lost it," with no analysis of why they lost it.
The same thing in the United States. On the opposite end of the spectrum, when deregulation took place in the United States under Ronald Reagan, we know that 5,000 communities in the United States lost bus routes. I guess it would be easy for the opposition to say, "They lost it because of deregulation." Again, I think that would be shortsighted. What would be interesting to see is an analysis of what happened in the United States as a result of deregulation.
We talked about the UK example. Again, the UK example is quite complex, because there are a lot of factors that caused different changes as a result of deregulation in the United Kingdom. But again, it would be very valuable, I think, to have an analysis of that and relate it to the Ontario experience.
That is not before us. All we have are anecdotal references by the government. In fact, during the discussions in the House, they never even referred to the UK or the American examples. Now, because we've asked that question, they've finally referred to and acknowledged the fact that deregulation has had a negative effect to a certain extent in the UK and it's had a negative effect to a certain extent in the United States.
Again, it's not to say that all the good and bad in terms of bus services and the infrastructure have to do with deregulation or regulation, but I think it behooves the government to put before us a business plan, a business analysis on why deregulation is good, and give us the breakdown on what effect it would have on the industry. That has not been done. There have been discussions, I'm sure, with the industry. There has been very little comprehensive analysis, though, and that is why I think the critical thing we're saying from our side is that's the missing ingredient in this whole process.
Before you proceed, there should be a breakdown on the impact these changes will have. It's not good enough to say, "We're going to put in this measure, this Bill 39, and then we'll look at it over the next 20 months." I think this process should have started seven or eight months ago, where there was time enough for an independent expert, someone the government would have faith in, to do a comprehensive analysis. What we're really looking at is an infrastructure, we're looking at an industry, we're looking at a vital link that many small towns and communities have, and we're looking at a very changing marketplace.
In terms of the reference to competition, I would say the most troublesome thing of all is what's going to happen with the Quebec competition. It's fine to say, "We're going to urge the federal government to do something about deregulation in the rest of Canada," but the truth of the matter is, we've had very little success in effecting change in Quebec. Go across to Ottawa, sit on Booth Street in Ottawa, and you'll see every morning thousands of Quebec workers coming across to work in Ottawa. Our Ontario Ottawa workers can't go across to the other side. No matter how much we've asked them to amend the situation, the Quebec government is not being very cooperative. I don't think it's good enough to say, "We are going to hope and pray and we are going to ask the federal government to do something about it," when that is a very real threat to the viability of the industry -- never mind what it does in terms of ridership across the province.
The government has really no answer on how it's going to mitigate that threat of Quebec or Manitoba perhaps poaching or infringing upon an industry which right now, as a result of this and as a result of total deregulation, might be on an unequal footing with its competition in Quebec. There are no protections in place, and I say that is very worrisome in terms of what it might do to an industry that is a very tenuous industry when you consider the competition it has in this province and the geography that poses a challenge in this province. Those are realities that face us in this province.
There's no denying that this is a very perplexing challenge. It's not an easy thing to sort out. But I think if you want to do it in a comprehensive way, you do it in a way that looks at what the history has been in the UK, in the US, and you bring in all the players, all the stakeholders, including the riders, including the small-town mayors and reeves, and ask them what they think the impact of deregulation would be on their communities, and ask certainly the people who have put their capital investment into these businesses, these industries, what they think the impact would be. I think that has not been done in a comprehensive, systematic way and I think it's good business to do it that way. That hasn't been done. We're putting the cart before the horse here and I don't think it really helps create a climate of confidence as you go ahead into this deregulation.
The Chair: Moving to the third party.
Mr Gilles Pouliot (Lake Nipigon): We find ourselves in the midst of what is for the government of the day, the régime du jour, an ideological bend, if you wish. They, on Bill 39, spoke with candour, certainly not a departure from the present style, form, ideology of today's government. We of the New Democratic Party, a year ago we were the government. We served the full four years and nine months. We came close to the sunset, the limitation, of the Constitution, of course. The reason I say this is that we too had ample time and opportunity to look at what is in front of us and, make no mistake about it, interim is a de facto to what is about to happen.
Our position has been one of consultation, of equilibrium and, we feel, of balance. We ask ourselves first and foremost who would benefit; who would lose; does the legislation need change? We conclude on the latter that if it's not broke, if the present system serves well, why fix it? Why change for the sake of changing? We find, to say the least, ironic a position voiced by the government, echoed by the government, that on the matter of safety "We will do better." It is veiled with the usual attributes to have the roads and highways in the province of Ontario the safest in North America. "We value safety. Safety, for our government, is a priority," all befitting the day after Mother's Day.
The reality is that on the one hand you honour those commitments and on the other hand you cut the budget significantly so those women and those men who are enforcing the statutes will be there but they will be there in fewer numbers. It's difficult, to say the least, to reconcile the two positions. One is a commitment, but it loses its significance or raises doubt once you don't have the money and the staff therefore to adhere to it.
Mr Colle, the critic for the official opposition, has mentioned the position of the province of Quebec vis-à-vis what is being proposed there. I want to read into the record the position of both Manitoba and Quebec -- their recent communiqués. The one from Manitoba, the province immediately to the west of Ontario, is one from November 23, 1995, and I quote:
"The purpose of our submission is to set out Manitoba's position on the future deregulation of the intercity bus industry. Our submission is brief as all significant problems experienced by this industry in Manitoba have been resolved within the current regulatory regime.... This positive record is the basis for our position that the existing system of economic regulation in Manitoba largely achieves its objectives, and is capable of managing the adjustments required by the industry to preserve its economic viability. There is simply no major problem that would be addressed by bus deregulation, and no significant constituency advocating it on other than theoretical or ideological grounds"
Three days before, November 20, 1995, the position of the province of Quebec, a larger jurisdiction than that of Manitoba, the province immediately to the east of Ontario, and I quote:
"In this context," says the Quebec government, "the most likely consequences of total intercity bus transport deregulation would be:"
Number 1, "the bus transport system would be limited to those services which are profitable." They are saying the bottom line. They point out to it, the right and the expectation that a profit will be generated.
Number 2, "a portion of the population which currently enjoys services would have to provide those services itself, or the government would have to intervene financially."
Mr Colle has mentioned that at present there is no mood for the federal government to dictate or to ask, especially the province of Quebec, to endorse a system which the province of Quebec does not wish to adhere to. In the real world, Monsieur Chrétien will not talk to either Mr Johnson or Monsieur Bouchard about intercity bus deregulation. It's not very high on the agenda, I can assure you. It's no time to go and tease the bears. Their position is recent; their position is clear. That of Manitoba is recent; that position is clear as well. Who will benefit? In the charter business, our Ontario operators will be left trying to compete. The playing field will not be levelled.
I've given the true story in the House of having a flight from Europe, of course landing at Pearson; Prevost buses with bells and whistles bringing people to Niagara Falls and after two hours back on the bus, going for eight days to Quebec City. You can't compete with that because theirs is a regulated industry and yours is not.
The position of the various players is almost unanimous. I don't want to impute motive and charge anyone with motive. The big players are opposed. They see regulation for the purpose where you tap the most lucrative route, and given the history and the nature of our vast and magnificent land, you're asked to pay back and you subsidize with what you make on the lucrative route those who are less lucrative, those where the disabled, those where the seniors, those where the students -- those where there is really, truly no alternative. People use what has become the most democratic system of transportation because it suits the need of the democratic class. The government doesn't wish to throw the poor, the disabled, people in small and remote communities, the seniors, in the ditch. No one wishes to have this.
When bus deregulation took place south of the border with our neighbours, within one year 4,000 -- count them -- lines were removed. That should suffice. Let me quote in the last minute that I have Freedom To Move. They've been around for some time. They're saying people in eastern Ontario -- Elgin, Lambton, Essex, Haldimand, Oxford, Perth, Huron and Wellington counties -- followed by northern Ontario -- Cochrane and Nipigon -- will be the ones most impacted.
Some of the presidents, members of the boards of the majors, are saying -- Canadian Intercity Bus Task Force, OMCA, in 1995 in its brief predicted that once deregulation came to Ontario, American companies would begin a battle for the lucrative southern Ontario bus market. "An open market would result in a significant shakeout, with scheduled and charter markets dominated by US-based carriers. Ontario operators would be limited to less attractive markets, or to subcontract or subordinate alliance relationships with outside carriers."
I thank you for your time. I have chosen to let the experts in the field work their craft. I've tried, with my limited ability, to voice their concern in the limited allocation that we have for us. I thank the members of the committee.
The Chair: First up making representations before the committee today will be Trentway-Wagar Inc. Good afternoon and welcome to the committee. Thank you for your indulgence while we had the opening comments. That clock actually is a bit wrong. We're remaining on schedule, I see. We'll have 20 minutes for your presentation. You can divide that as you see fit between an actual presentation and question and answer period.
Mr Jim Devlin: Thank you. My name is Jim Devlin. I'm president of Trentway-Wagar and one of the owners. I've been involved in the regulated bus industry for many years; as a matter of fact, 38 in total. I've been involved in the discussion of the regulation of the bus industry now in government committees, both at the federal and provincial levels, for in excess of 20 years. I guess you could say after all those years that I'm starting to become weary of talking about regulation of the bus industry.
Having said that, just a little background about our company first. Our roots are in Peterborough. The company was founded 40 years ago and has steadily grown through, by and large, acquisition. We now have operations in Kingston, Port Hope, Whitby, Toronto, Hamilton and Niagara Falls. Our company is split between line run charter and school bus, with charter being the largest part or component, although with the purchase of the Canada Coach Lines in 1993 from the Hamilton Street Railway, or the city of Hamilton, we got into the line run industry in a much larger format. We're now operating in excess of 300 buses, of which 119 are over-the-road highway coaches.
I'm here to speak in support of Bill 39, clear and simple. Bill 39 is not deregulation. Bill 39 is a bill that is, in my mind, 10 or 12 years overdue. Bill 39 brings to the regulated industry a way to deal with a lot of the things that are wrong, and have been wrong for many years, with the current rules and regulations. The system is very much broken and has been broken for some time.
When I look at the industry and the areas I've been involved in, both in line run and charter, I can tell you that there's overcapacity in the charter industry. Applications to the transport board for charter authorities are merely, in all cases, rubber-stamped, so much so that very seldom is there opposition to charter applications today.
The issue of Quebec in dealing with the charter industry: I think the whole province of Quebec is licensed to operate legally at Pearson airport, authorities that have been granted by the government through the board over the last five to six years. The fastest-growing market in Canada is the market through Pearson airport that the Quebec industry has now.
We have looked at the Asian market, we have looked at other markets to support our companies. That market is gone and I don't think there are very many carriers in Ontario looking at the market coming from Europe and France as lucrative any more. We just don't share in it. In my mind, in these discussions Quebec is a non-issue as far as charters are concerned; line run, they could be.
The line run industry, by and large, is a monopoly. It's a major monopoly and it has been a monopoly for many, many years. I personally don't think the public is well served with a monopoly. In fact, I know they're not. Once again, I can only speak from my personal experience.
Since the purchase of Canada Coach -- first of all, Canada Coach was a major money loser for the Hamilton region, big-time loser, and that's why they sold it off. We bought it. We thought, look at it, maybe there are some things we can do, make some changes, address the efficiency issue. But, by and large, we bought it with the idea that it had to be expanded on. It was nothing more than a feeder from the Kitchener to Niagara corridor to the major monopolies in Ontario.
With the purchase, we made our applications to serve the Niagara region from Toronto in competition with the monopoly; a hearing that probably cost us, in just out-of-pocket expenses, in excess of $200,000; an application where we proposed, for the carriage of the disabled, fully accessible coaches -- the fully accessible coaches had a market value of about $475,000 to buy, which we did end up buying, by the way -- and the board ruled against it. We had about 60 witnesses in support.
In their reasoning, they said the test of public need and convenience was not met. It was not met because we brought forward members of the disabled community to support the application, and there were not enough able-bodied people to support it. Therefore, we failed to meet the test of public need and convenience.
That's a system that's broken. I don't blame the board, because I don't think the board is getting enough direction. We have dual jurisdiction; we've got the ministry and we have the board, and they quite often go off in their own directions. As an industry, we're spinning out there like a spinning wheel because we don't know how to deal with it.
Bill 39 reduces a lot of that. It brings it down to the board. It takes enforcement away from the ministry, an area that, because of the lack of effective enforcement -- and this is not a knock of the ministry and their staff, because I feel that with what they have to work, they do a very good job, but it's not very effective. I know of an unlicensed operation that started -- 10 years of messing around in the courts, the licence review board, I think it's called. Ten years to try to stop this operator. Meanwhile, it grew from about one bus to over 30 in that 10-year period.
Bill 39 provides a mechanism that allows the industry, a licensed carrier, to put a matter to the board. User-pay, very effective, timely, all of which we don't have today. If I file a complaint with the ministry on an illegal operation, first of all, I never hear anything back; I don't know what's happening. That's why there are no complaints being filed now, because they're not allowed to discuss the investigation with us, and rightly so. With Bill 39, a licensed carrier would become a party to it. Therefore, we would be involved in the process. Illegal activities wouldn't be allowed to continue for 10 years.
I like Bill 39. By and large, what is in Bill 39 is the type of thing that, in all my years of working on committees to try to get, is there. Very effective. In fact, we used to have it many, many years ago. Unfortunately, the chairman of the board at that time didn't have the authority to do what we think Bill 39 will do. When the late Mr Shoniker was the chairman of the board, he ruled with an iron hand and people stayed in line.
If I could just for a minute discuss the issues of deregulation, there are many people in the bus industry who would say, "Devlin is a deregulationist; Devlin is trying to destroy the industry." Well, I'm neither. After 38 years, I think I'm going to retire out of this industry, and to destroy it now would affect my pensions. I'm here to make sure we have a healthy, financially viable industry.
We all share the issues of deregulation. Harmonization is a must. Ontario cannot proceed with deregulation without Quebec. But to hold up Bill 39 to deal with an issue that's not a part of Bill 39 is going to do tremendous harm to our industry. We need it now. Like I said before, it's long overdue.
I will publicly commit today to be involved in any committee that all parties of government would like to set to deal with the issues of deregulation. I would be the first one at the table to sit down and work on it, because harmonization is very important.
Safety: There are a lot of issues associated with safety, many of them, and there are no better people to discuss the issues of safety than those in the industry themselves. There are a lot of issues we would like to bring to the table. We're not bringing them now, we're not bringing harmonization now, because Bill 39 does not address either one of them.
I strongly urge you to please support Bill 39. We need it now. We need those changes now so we can get on with business so we can bring some sanity to our industry. With the support of Bill 39 I'm going to ask you to send a message that competition is not bad. Mr Pouliot mentioned the Prevost coaches with all the bells and whistles. They're in the charter market. If you look at all the nice buses running around Toronto, I assure you that 99% of those buses are in the charter business, because it's very competitive and if you don't have the best, you're not in the business.
I'm not so sure the line run that you're concerned about, the people who require the services, are getting a fair deal. I don't think they're getting the best of service and they may not be getting the best rate that the service could be operated for. Competition is necessary.
In closing, the cabinet issued a -- I forget the official word for it -- anyway, it was a direction to the board in 1978 telling them to take four things into consideration in the test of public need and convenience. It was interesting that this was issued as a result of an application by a major carrier to operate over another carrier's route. It was Greyhound and Gray Coach, Greyhound to operate over Gray Coach's route from Sudbury to Toronto. A petition was filed at cabinet and cabinet upheld that there should be competition within the mode.
One of the items that was sent to the board: "The need for competition to ensure the best service at the lowest cost to the public, while maintaining the economic viability of licensed carriers." There have been no duplicate licences issued since 1978 that were challenged by the main line monopoly carriers.
Thank you. If you have any questions --
The Chair: Thank you, Mr Devlin. We'll start our questioning with the official opposition. We have nine minutes, obviously three minutes per party.
Mr Colle: Thank you, Mr Devlin. I appreciate your input. In terms of your position, you would like to see that this bill be used as a stepping stone to open deregulation; in other words, get rid of regulation and end up with an open marketplace in two years.
Mr Devlin: Obviously, Mr Colle, at this time I can't say that definitely. This bill is needed. If there were no deregulation for the next 10 years, this bill is needed today. Deregulation is an issue that we don't know enough about. I know the government has set a deadline of January 1, 1998, but when you throw in the issue of harmonization, I think they do have some problems because I don't believe Quebec will be ready to deregulate on January 1, 1998. Without harmonization in Canada, I don't think any one province should move on its own and leave the neighbours open to come to our markets, but we can't go to their markets.
Mr Colle: What I'm trying to express to you is the concern we have that the preamble of this bill and this government's ideological bent is that they're saying they believe in deregulation and therefore this bill is going to set the stage for that. In essence, because of their belief -- they don't believe regulation is needed in this industry -- they have to take this first step to reach deregulation.
We're saying, like you, before you take that step, you should do an analysis to see the impact of it, and maybe there need to be some adjustments, as you said. There are obviously some problems in the industry; I concur with you there. At what point do you do this analysis to find out the impact of essentially this free-for-all that the government is bent on?
They have stated categorically in the House, they are going to get rid of all the regulations by January 1, 1998. The question is, what can we do in the interim to have them look at the impact that this is going to have on the industry and on communities?
Mr Devlin: Bill 39 itself does not address deregulation. Bill 39 is very important. Bill 39 will deal with the issues, the problems that we have today. I know the government has dealt with it as a transition period. From the industry point of view, we have looked for a lot of what is in Bill 39 for years.
I believe discussions should be had on the virtues of deregulation and they should be held between now and January 1, 1998. At the end of those discussions, it may be the ideal way to go. From a personal point of view, I'm not afraid of competition within Ontario. I have no problem competing with anyone in an open market within Ontario. I have some concerns with some of our friends south of the border. They do have advantages that we don't have. They've been known as a very mobile industry where they cherrypick: They're on the west coast one season, they're in Florida the next season. In fact, sometimes I wonder if they live in their buses, they're so mobile. But they would be difficult to deal with and there are some issues to address.
Quebec: I don't know how they do it. Maybe they should come up here and give us some lessons in running a company, but they seem to be able to operate a lot cheaper than we do. I hear taxes are greater in Quebec than Ontario, but there's something about the Quebec operations that they're allowed to operate cheaper. I don't know whether money is available to them cheaper or the cost of the Quebec-made bus is cheaper, but there are some advantages there.
We do have to sit down and address those issues. But to stall Bill 39 is not the way to do it. I think we have to start those discussions now because we don't want to wait till the fall of 1997. Those discussions should be entered into at this time, but I strongly urge, don't hold up Bill 39.
Mr Pouliot: Thank you very much, Mr Devlin; always a renewed pleasure. I know of your contribution to the sector over many, many years. I have a supplementary question and I only have three minutes. It has been decreed that we share the time and rightly so.
Your opinion is that, with respect, you are in favour of Bill 39 because it simplifies the matter. You're hesitant about -- in fact, I have a quote from you, Jim, which says, "I'm not in favour of deregulation." Then you go on to say, to support that, you would like to know more, more consultation, 10 years' harmonization. But you like enough in Bill 39 that you want to see it move forward. Is that your position?
Mr Devlin: As you know, when you were minister we had many discussions about the bad actors in the industry. Bill 39 provides a mechanism that will deal with those bad actors in a timely fashion, and that is very attractive to me.
Mr Pouliot: I agree with you on this part; it streamlines. But you see, I have here, and this comes from the ministry and I have to assume that the ministry and the minister are in tune here: "Statement to the Provincial Legislature by Transportation Minister Al Palladini," introducing interim measures to prepare for deregulation in the intercity bus industry. Then the minister says, right in the Leg, "The legislation I'm introducing today will allow a transition to full economic deregulation of the industry on January 1, 1998, a move that this government is committed to bringing about in an orderly manner." Then on page 2 he goes further: "Economic deregulation of Ontario's intercity bus industry will lead to an efficient system that provides appropriate levels of service based on market demand and the needs of the travelling public."
When I look at the heading there, and I did some representation in the same office -- I should have brought the chair with me; it's one of those nice, comfortable chairs -- this is the interim measure right in bold lettering here, what this bill is all about, what the catalyst is, what the heart of the bill is: deregulation, January 1, 1998. That's what they're selling. I mean, it's the Jays playing the Sox. The Indians come next week, Jim, but this is the ticket that you're buying when you endorse Bill 39. This is what makes the bill breathe.
Mr Devlin: Unless there's a section in Bill 39 that I haven't read, there's nothing in there that says this will cause deregulation. I know that's their goal. That's their goal and there are some problems with deregulation, and I think we all want to address those problems. That's their ultimate goal and I don't argue with their ultimate goal. Let's face it, we're the only transportation sector in Canada left that's regulated. But the bottom line is, Bill 39 does not itself deregulate the industry.
Mr Pouliot: But this is the only thing on the menu. I mean, here on the menu it says rice pudding and you believe they're going to serve me a steak.
Mr Devlin: But the bill itself, the legislation itself, will be the guideline to the board to regulate the industry. It won't be his statement, because I have learned a long time ago that once it becomes law, you forget about all the statements in the House because it's only what's written in the bill.
Mr Jack Carroll (Chatham-Kent): Mr Devlin, being a native of Peterborough, my questions will not be quite as flowery as Mr Pouliot's, but nevertheless, did I understand you to say that there's an illegal carrier that the government has been fighting with for 10 years that has gone from one to 30 buses in that 10-year period?
Mr Devlin: He has been regulated now because finally after all those years the government was just ready to shut the door on him and someone sold him a licence. But it took 10 years. I believe it was 10 years, and my friends over here could support me on that. In fact, it may even be more than 10 years.
Mr Carroll: Obviously proof that the current system doesn't work. Is the extraprovincial regulation of the motorcoach industry a federal jurisdiction?
Mr Devlin: It is. By the way, I heard the discussion in the House and there were some statements made that were in error on the regulatory issues. I am a federal carrier. So if Ontario was to continue regulation and the federal government deregulated, I could do whatever I want, because I'm a federal carrier and a federal undertaking is out of the province, into a province, point to point within a province. So there are a lot of issues at the federal level that have a major impact on what's going on in Ontario, and I sit on a federal committee dealing with those issues.
Mr Carroll: So you see the deregulation part from a federal standpoint being a totally separate issue from Bill 39?
Mr Devlin: If the federal government was to deregulate this afternoon, Bill 39 would be a non-issue to me: I'm deregulated.
Mr Carroll: So you are in favour of us working with the federal government to have deregulation take place, but your fear is that if we don't, we can't do it unilaterally. Is that what you're saying?
Mr Devlin: The Ontario government must work with the federal government as well as the other provinces to achieve harmonization in the rules on buses.
Mr Carroll: The Prevost buses you talked about and their access to Pearson airport, how has that happened in a regulated industry?
Mr Devlin: We all opposed, and somewhere along the way the train jumped the track and they all got licensed. By and large, there are very few carriers that you see at Pearson airport that are illegal from Quebec, because I think the whole province is licensed now. There are about 10 Ontario carriers and about 60 Quebec carriers licensed to operate from Pearson. That's been over the last, my guess is, four or five years.
Mr Carroll: How would deregulation change that?
Mr Devlin: It wouldn't.
Mr Carroll: So basically we're deregulated now is what you're saying?
Mr Devlin: In the charter industry there are a lot of players and it's very competitive. There are those in the charter industry who say by and large it's deregulated because everybody just does what they want to do anyway. But it's the line run industry that is the other side of it which is by and large a monopoly.
The Chair: Thank you very much, Mr Devlin. We appreciate your taking the time to come and make representation before us here today.
SILVER FOX TOURS
The Chair: Our next group up is Silver Fox Tours, Avo Kingu, general manager. Good afternoon, sir. Again, we have 20 minutes to use as you see fit, divided between presentation and question and answer time.
Mr Avo Kingu: Good afternoon, ladies and gentlemen. A little bit about my company. We're a small tour operator based in London. We do approximately, I'd say, 6,000 to 10,000 people a year. We own no coaches, but we use coaches daily and we have to deal with approximately, 15 coach companies in southwestern Ontario and negotiate individually with everybody, which is a terrible burden. I get pricing from $550 a day currently to $950 a day. The cities are approximately half an hour apart and the equipment is no different.
It's a burden to me and to the public, and the equipment is never guaranteed. We get equipment from MC-8s that are still operating to brand-new, bells-and-whistles Prevosts. If I ask for a Prevost, they say, yes, a Prevost will show up, but I get an MC-8. Who do I complain to? The man has a monopoly. I can't complain to anybody. I can say, "Hey, why did you send it to me?" but I have no option. I cannot say to him, "Oh, I'll get John's bus." I can't do that because the man has a monopoly. I have to live with it, the public has to live with it, and it's bad for business. It's bad for business because I have to deal with so many layers, layer upon layer, and different every time. If I want to sell a brochure or a product throughout Ontario, it's a burden that's very hard to live with.
That is the one big point that I wanted this committee to understand, as a small businessman. I'm not a big operator, but a small entrepreneur.
We have thought of buying coaches. There is a big, crying need in London for a small coach: 15, 20 seats. The last time I inquired about getting a licence, they told me, "Your hearing's going to cost you $20,000, and that doesn't guarantee you a licence." So what am I to do? I just throw my hands up and walk away from it. I could put a couple of those coaches into charters immediately and move people, not cancel trips, service my customers, but I can't because there are a bunch of people holding licences who won't dispense with them, who protect themselves, and there are people who hold these licences, have no coaches and won't release the licences.
I guess it was about six years ago. There's a chap in Strathroy, Ontario, who holds a London licence. He sold all his coaches and he's sat on those licences ever since. I offered to buy those licences from him; he wouldn't sell them. So why keep them? Well, it's like money in a pocket. The next guy comes, maybe he'll offer you more. And that's not right. That's not in the public interest; it's not in the interest of the small businessman and everybody involved in this industry.
That $20,000 that we had talked about, I could have put that down on that coach. The coach only costs $40,000 or $50,000 for those small ones, and I would put some Ontario people to work, because it could be used. But I'm not going to spend $20,000 to find out that, "Hey, you can't have the licence," because somebody has to be protected.
That's the nitty-gritty of small business. I cannot expand. I cannot get the product. I can't get the quality, and neither can the public, because I sell to the public. If I advertise a deluxe motorcoach and an MC-8 shows up, or a 9 that's been used for umpteen years, who's going to get the complaints? Me? Yes, me. Who's going to suffer? Me. The coach company? No. That is bad for my business. I cannot grow.
Those are the basic reasons for my wanting deregulation. I'm not afraid of competition. I'm not afraid of anybody, nobody in this business, because I know what I do and I try to do it with quality. If we're running the same kind of equipment and our pricing is really close to the mark, I don't have a problem, because I do it with quality, or I try to. So the sooner this deregulation happens, the better it is for the industry. We can have 10 tour operators side by side and we'll all prosper if we know what we're doing. It's the same as running McDonald's and Wendy's. They're all together and they all do more business because they're together. The myriad doesn't affect the business; it's the availability of the licences to everybody.
I'll leave it at that. If you have any questions, I'll gladly answer them.
Mr Pouliot: I have only appreciation for anyone who is not a major, by your own admittance, and who's trying to, first, survive, make ends meet, prosper, and feels very confident that if not on the overall, certainly in a niche market, if you know your product, you know the clientele, you do your own real-life marketing, if you wish, that no matter what, you will do quite well.
You don't have a licence that is worth $20,000 or in some cases over $100,000, right? You don't use your privileges in that context, if you wish, or your right to operate as collateral. It doesn't apply here, right?
Mr Kingu: Yes.
Mr Pouliot: It does apply for other people where licences have, we know, changed hands.
You see, I don't think that certainly our party is opposed to the essence of the free marketplace, providing that if you can regulate competition, then it takes its place.
The thing is, we have 882 municipalities in the province of Ontario. If it were only that simple, and we saw what happens by way of regulations. I want to put this to you in terms of a question. Aren't you concerned that -- it could be anyone -- that ABC company is so big -- and if we wish to talk about cartel and monopoly, we'll put them under that definition -- that they'll take a beating along your route, hypothetically of course, and they'll take a beating for six months, take a beating for a year, and then wave you goodbye?
Mr Kingu: As a quick answer to you, as an illustration talking about big players, the big player is Greyhound. Can we take them as an illustration? I used to use Greyhound very frequently and it was one of my major suppliers. Greyhound pulled out of the market. They decided when they purchased the Peterborough runs they were going to use their equipment there and they upped their prices, and I said, "No, I'm not going to use you any more, not at those prices." I guess it was about three, four months ago, guess who's knocking at my door? Greyhound. What happened to the prices? They dropped.
But the thing is that it doesn't matter if you're big or small. In the end, quality, service and price tied together will win the day. You can have 100 buses out there and if you're not efficient, you're going to be out the door, the same as with me. I'm very cost-conscious. I operate my business with only about four, five full-time people, and we are profitable, have been for the last eight years, and we've grown every year.
I really, truly believe that something has to be done to cut these chains so that I can go to you and sell you something or I can go to Harry and sell him something without being told, "No, you can't do it because you've got to have this piece of paper." If you sold this piece of paper to everybody -- make your rules and regulations about the piece of paper: "You've got to operate safely" -- I agree with that -- "you've got to operate this, this and this," but make it available to everybody. That's the key, not to cost me $20,000 and I don't know at the end whether I'm going to have it or not. That's not right.
Mr Frank Klees (York-Mackenzie): I gather from your comments that you're not objecting to standards of operation.
Mr Kingu: No.
Mr Klees: What I think I hear you saying is that your experience has been that because of the monopoly situations that exist now, really there are two people who are disadvantaged. One is you because you don't have the choice that as an independent businessperson you feel you need to have in order to make good business decisions --
Mr Kingu: That's about right, yes.
Mr Klees: -- and the other is the customer, the user of the service, who, because you don't have choice as to the kind of vehicle that you can either lease or use for a particular route -- in the end, your customers don't have a choice because you don't have the ability to then pass on whatever efficiencies and savings you'd be able to generate if you had the ability to operate as you would do.
So I'd like to just have you comment as to what you feel the effect on the user of transportation services would be from a price component standpoint.
The second part of my question is, do you feel now, because of the monopoly circumstances that exist, that some of the large players who have that monopoly are actually cross-subsidizing from another area of their business to unfairly pass on some of those costs to the end user of the service?
Mr Kingu: First of all, I'll reply to the last part that you mention. I don't know about the internal bookkeeping, so I can't comment on that end of it. But I do know the big disparity in price. Now, how Greyhound can come one day and charge me this amount of dollars and then the next day or a year later come back and charge me differently, I don't know.
But as an illustration to the end user, which is the general public -- and I'll go back to that initial one that I was talking about: $550 a day or $950 a day. That $950 is the true price that I paid for somebody operating out of a small town called Parkhill. There's only one operator out of there and there's a horticultural association that we deal with and we do day trips for them and we do other things for them. So you can imagine, I have to pay $950 for a day trip instead of $550. So who pays for it? I don't pay for it. The public ends up paying for it.
In that instance, I've had cases where I've been guaranteed nice equipment, and, like I say, an old MC-8 shows up -- which is 15 years old, it's muddy, it hasn't been cleaned -- and I have no recourse. People get mad at me, "Why are you doing this?" and I say, "Well, I can't, blah, blah, blah." It's always an explanation. So the end user, the public, is not happy with this. And the price: I upped my price by 20%, 30% because of that, because somebody has to pay that difference.
I do some trips down to Atlantic City. Out of London, it costs me to go down to Atlantic City $2,600 for a coach. Out of St Catharines, which is closer, they charge me $5,400. That's what they want. So what do I do? I shuffle people, because I do want to work within the regulations. But that's wrong, and that's the nitty-gritty of it.
Mr Colle: Just quickly, in terms of Bill 39, how is that going to get rid of the monopolies that you feel right now are impeding your business?
Mr Kingu: Bill 39? I'd like to see deregulation tomorrow. It's just a stopgap. I'm waiting until the industry's deregulated on January 1, 1988, to go out and buy myself a coach and get some people working.
Mr Colle: So you'd like to see total deregulation.
Mr Kingu: Yes.
Mr Colle: But in the interim there's nothing in Bill 39 that gets rid of monopolies.
Mr Kingu: No. It's just a stopgap.
Mr Colle: I'll just pass it on to my colleague here from the Ottawa Valley.
Mr Jean-Marc Lalonde (Prescott and Russell): I can see you're a broker. You're not an operator, I would call it.
Mr Kingu: I would like to be but I can't.
Mr Lalonde: But you said that they had the monopoly and still you see on a daily basis the cost varies between $550 and $950.
I've had the experience before with Voyageur, which started in my home town. They had the whole monopoly. We couldn't get hold of anybody else because they were the only one that had the licence for charters east of Ottawa. I could see why you're in favour of this Bill 39, which would deregulate at the present time.
But my concern is, in eastern Ontario -- especially in the Hawkesbury area, which at the present time the Quebec buses are picking up on the Ontario side -- there's nothing we can do. If this bill goes through without amendment, it would mean the elimination of two bus companies or two small operators in my own area. In your case, you would benefit, because you will have more people to go to to get an estimate or a price for a trip; because you just mentioned, from St Catharines it costs $5,000 and from London it costs $2,600.
I just can't see at the present time -- in your case it's all right probably, because you're not on the border, on the southern border, US border or the Quebec border. But how do you think you are going to benefit from it at the present time, because you do have the choice between $550 and $950 a day?
Mr Kingu: I won't benefit right now from it.
Mr Lalonde: You don't have enough operators?
Mr Kingu: That's another thing you can come into. I don't think there are enough operators. I don't think there's enough equipment. You take certain periods of this year, and certain peak months in the spring and in the fall, which is the main travel period for seniors and students and so on, and the equipment shortages are very major. I can't go out and get another coach. I can't go out and promise to get another coach. Why shouldn't I be able to? If the local supply doesn't have it, why shouldn't I be able to go and get somebody from somewhere?
Mr Lalonde: My concern is the full deregulation would open up the -- it's a door for a large operator which will kill the small one.
Mr Kingu: I don't think so, because I'll tell you, I can operate it as cheaply as anybody in Ontario right now, and I don't think the Quebec suppliers -- I had a chat, as a matter of fact, last week with a chap who's in Quebec, and we were comparing coach prices. We can still do business.
Mr Lalonde: Just my last question, Mr Chairman. Do you think that if we were to deregulate within Ontario only it would be better?
Mr Kingu: Hopefully, it's the first step.
Mr Lalonde: Thank you.
The Chair: Thank you, Mr Kingu, for taking the time to come before us and make your comments here today. We appreciate it.
AMALGAMATED TRANSIT UNION, CANADIAN COUNCIL
The Chair: Our next presentation will be from the Amalgamated Transit Union, Canadian Council, Mr Tom Parkin. Oh, I see we may have a different name here. Good afternoon. Are you Mr Parkin or Mr Foster?
Mr Tom Parkin: I'm Tom Parkin. But on behalf of Ken Foster, who is the Canadian director of the Amalgamated Transit Union, I want to thank the committee and the House leaders for making this opportunity possible to comment on Bill 39, changes to the Ontario Highway Transport Board Act and the Public Vehicles Act.
A little preface is that we are the largest representative of transit employees in the intercity bus business. Generally speaking, especially listening to some of the comments and concerns by the previous operator, there's a lot of things that we can agree on with him and with others seeing as we tend to look at ourselves as being partners in the industry, and therefore anything that helps streamline and make the regulatory system more efficient, puts more buses on the road, brings more people on to buses and gets through the regulatory system faster is something that we will support. Within this bill, there are things that we do support and we would like to be able to say that with some amendments, which I want to speak about, we might be able to support the bill as a whole.
The board, like other boards that are quasi-judicial, in our opinion, especially when moving to a sole arbitrator who will be part-time and potentially limiting the number of rehearings or ability to rehear, it may be advisable, and we would suggest, moving towards something like a purpose clause, just because it's been a trend now that, generally speaking, no appeals to cabinet are allowed. There has to be that aspect of what is the crown's interest and a statement of that. Losing the appeal to cabinet, which surely had to go at some point, should be fulfilled by some sort of purpose clause. We have drafted something. It would state the purpose of the board to be that the board "exists to protect the transportation interests of smaller communities and ensure the greatest level of service possible for the commercial use of the public's highways." It leaves a fairly broad opening.
In the same way that the CRTC, for example, is the custodian of the public's airways, we look for the transport board as the custodian of the public's highways. It's announced that it is owned by the public and therefore the public has a voice in that, and there needs to be a representative purpose to that. I hope you will consider that, and maybe we can have something approaching that in terms of an amendment.
With respect to rehearing, the old section 16 allowed for rehearing, and it was non-specific. If the board wanted to rehear from time to time, it could rehear. It didn't really have to ask anybody. Bill 39 is taking out rehearing totally. I think that's a mistake and I want to tell you why.
Sometimes -- I'm sure you'll all be surprised -- people will make deputations, even to boards, that are not completely accurate, sometimes exaggerated by puffed-up prose in lengthy oratories in a hearing or obfuscating terminology in a report. The board doesn't always get a clear idea of what's going on. Then should we not be able to have the ability to rehear? It's possible that fraudulent or misleading evidence which led to a board decision couldn't be reconsidered. That's a very serious problem. In a sense, it's a natural justice thing. Secondly, there are cases where boards simply make errors and there needs to be a process for re-evaluating what seems to be an error.
What we've been thinking is whether there's a way of trying to get rid of a lot of the frivolous rehearings but still maintain the essential natural justice of what I think the hearings were intended to do, and that's make sure that decisions were consistent, that people could depend on what the outcomes were going to be. I would hope that if an amendment of that sort came forward, you could support it.
On the issue of appeal to the courts, this is something I have to say up front: Despite what it says in the presentation, I'm of two minds about exactly what's in the act. I've heard from some lawyers who say that the new section 28, which says all decisions are binding, will mean that you won't be able to appeal to a court even under the Statutory Powers Procedure Act. Others have said no, you can never outlaw the justiciability of a law. None the less, I'm concerned enough -- and I think it's obvious that that should be justiciable -- that obviously you can't allow a judicial board to break a law and then not have some recourse to that. Either a really good clarification for me or just being specific in the act would deal with that issue well.
On the issue of oral hearings, which I guess were in sections 22 and 23, something like that, 21, 22, 23: I think the intention of this was to move more quickly. I think there are some times when being wedded to a written process can slow you down. It is cases where you get into 40 pages of lawyers' text that is really designed to obscure the purpose where sometimes it would be a heck of a lot faster to be able to bring somebody in and give them a good cross-examination and really, in essence, whip them down and see what it is they're driving at.
As well, the oral hearings may be a strength for us right now as an Ontario-based industry with respect to Quebec interests possibly trying to come in and take the Ontario-domiciled industry's work in the so-called runup period, which I'll discuss in a minute.
The other issue is that of who is a party in front of this board, and it's not completely sure who someone with an economic interest would be. In part II, one of the new definitions there is what an economic interest is. Is a mayor whose town loses service, a couple of people move out, and therefore the storekeeper doesn't do as well, so he's receiving less revenue -- does that make him somebody with an economic interest? Therefore, could that person appear at the board? That's not really clear.
There are some issues about that. I think we should just be more clear about allowing parties to be people, in effect, as the act was before, but at the same time I respect what the ministry has tried to do to move issues ahead more quickly and to deal with some of the really guerilla warfare tactics that have happened at the board that have nothing to do with board licences and everything to do with obscure commercial interests. Perhaps while bringing back a person as a party, if we also increase the punishment for people who got involved in vexatious, frivolous matters in hearings in front of the board, we might be able to offset that and still allow the community representation, which I think is the purpose of the act, as I believe it is, to regulate it in the public's interest. Therefore, I see that the public should be allowed to be someone to be present at a board hearing and make application.
There is another issue with regard to access to justice. As I think all the members of the committee will know, the elimination of funding from the Ministry of Transportation will mean a large increase in the fees that will have to be paid. There is a bit of an issue in my mind about whether, for example, a smaller operator really has the ability, regardless of whether this person has been proven right or believed that he was going to be proven right -- you can think that you are the rightest person in the world and you go in and you are the wrongest person in the world, and then you get hit with a big fee at the end of the game. For someone who is a small operator, that's got to be a detriment. This is a legal body and in these situations there is no legal aid or place a smaller organization could go to ask for some sort of reduced payment. To me, it's an access-to-justice issue and there should be some commitment to allowing for smaller business or individuals to not be unjustly penalized by exercising their right to participate.
On transitional issues: It's very clear that the ministry has taken the position that anything that is up to a hearing, not in the hearing yet, will have to go under the new rules. It seems to me that once you've made your application and you go in, you should be treated under the same rules throughout unless there's a huge overriding reason. I don't see a huge overriding reason why somebody should have to reapply and go through a lot of the red tape that's being suggested here.
Finally, notice period: The notice period in the previous act, in the legislation, was marked at 10 days. The ministerial statement indicated that we'd be moving to 90 days for complete abandonment and 30 days for service reduction. When I looked in the legislation, it wasn't there, and I found out later that the intention was to bring it forward in regulation. If it was in the legislation before, my opinion would be that we should carry that. If there's a true commitment to those 90- and 30-day periods, we should put it up front and let it be discussed.
Those are the changes in the act that we feel the government caucus could suggest or accept that would make us feel much better about the bill.
Leaving Bill 39 aside for a second, we have a very firm position with respect to deregulation, and that is that we oppose it. I'll put it this way: The way we view it is that Minister Palladini is really testing out a trial balloon here. He's talked about it. Nothing's been done on it yet, obviously, although we've seen some reforms here but nothing that is necessarily leading to that conclusion. I think that is an opportunity for people to be here and see how they feel. You can make your mind up and see whether you want to let that trial balloon float away or not. I don't think people should feel too wedded to it.
The reasons for our opposition are fairly clear. We got together with a few other groups last fall when we heard about the possibility of this policy -- the Canadian Federation of Students and the Ontario Coalition of Senior Citizens' Organizations and the United Transportation Union, which represents employees of Ontario Northland -- and we did a research paper. I would be more than happy to give it to anyone who wished a copy of it; I think it's been liberally sprinkled around. It deals with some of the issues that have been put up as part of the trial balloon for why we should be going in this direction.
For example, one of the reasons often stated is that since 1981, I think is the reference, 400 communities have lost service. That's down from 1,500 to 1,100 today. That's a 25% community loss, which is pretty terrible, admittedly. But when we look at what happened in the United States from 1982 just to 1991, we've seen a 52% loss under deregulation. So the argument that we lost 400 stops under regulation isn't really an argument for deregulation when you look at the deregulation statistics. In terms of preserving service to the smaller communities, it's fairly clear which system has done that when you do a little comparative with the American experience.
We're also very concerned about the emergence of unregulated route monopolies. This does not serve the bus industry as a whole or the consumer well. In American and British deregulation, what tended to happen was actually less, not more competition. In England, it was a case of buyouts, a lot of buyouts. There was actually a monopoly corporation publicly owned in England -- in Britain, I should say -- and it was broken up, privatized. But then the new private companies ended up buying each other, so it was kind of the same in the end anyway.
In the United States, it was a little bit different, reflective of the business attitude there. It was an "eliminate the competition" kind of thing, try to get your regional area under control and then try to get rid of the competition as you can, including running at a loss and whatever tactic you can use to drive competitors out.
If we look at what happened in the airline industry since 1988 deregulation, that's fairly significant. We had Wardair, Nordair and Vacationair -- many, many smaller airlines which were competing in a regulated market, which all disappeared. Now we're really down to -- unless Greyhound gets in the game, which may or may not happen -- two airlines, one of which is basically an American-controlled airline.
We've had less competition, not more competition, and what happened, of course, with less competition was that the air fares in the airline industry went up by 31% in the first four years, which outstripped inflation quite a bit, despite the fact that we saw the seat sales, or maybe I should say because we saw all the seat sales; because of running at a loss and trying to conquer routes, somebody had to make it up, and that's really what happened.
In our opinion as an organization, regulation is essential to maintaining healthy competition, and going the other way would be a very big mistake.
Another issue that's been raised is that of smaller buses: Why are we running 47-passenger coaches from Owen Sound down to Guelph? Why don't we run buses? Under the Highway Traffic Act, which is the reference for what a bus is under the Public Vehicles Act, a bus is any vehicle that carries 10 people or more and is, under the Public Vehicles Act, registered as a public vehicle. It's just not an issue. They could be running buses if they want, but as others might mention to you, the cost of the bus in and of itself is not the major -- it is a major, but not the major -- contributing overhead cost; it's mostly the fuel and wages and insurance and that sort of thing. I don't think we should get sidetracked on that.
I want to mention the possibility of a real strong impact on GO Transit. When we are running buses from Guelph or Stouffville or Oshawa or Hamilton, they are now subsidized, they run a very good service -- I think we'd all say that -- they are the safest service in North America and they arrive 99% on time. With deregulation, the competition could run against them, but the problem is that it would likely run against them only during peak time, because obviously there are times, as there are with subsidized service, when it doesn't make money. A private company is not going to come and try to compete against that time of day, obviously. It's going to be peak rush-hour service only. If GO Transit starts losing the money it makes during those small segments of the day where it actually earns money, then that means even more cuts to the service to your communities. I think it's just very important that you be aware of the damage that cherry-picking could do to the service your constituents rely upon.
Finally, Quebec interests: I think it just goes without saying that it would be foolish to push ahead with deregulation in Ontario when Quebec-based companies can come in and do Ontario work and Ontario-based companies can't go and do Quebec work. There needs to be a national plan on this. There is a national process on this and I think that's what we should hang our hats on.
Today we're just talking about the regulatory system, trying to get that in order, do a little efficiency work. I've talked a little bit about the trial balloon that you've put up. I want to mention that the work we've been doing isn't completely legislative committees, as I'm sure you'll know. If the Chair doesn't mind my using some props, I'd like to just show you a few of the responses I've been receiving over the last little while from riders of the service. We have petitions and postcards, a fairly large amount of each -- I would say a rough count is about 11,000 as of this morning -- from people writing us and saying, "We don't want to lose our community service." So these are from your constituencies, and this is the trial balloon. I've got to say that I don't think the response is really what you want. It goes on here a bit.
It will give you the idea that we've been active. We've been out there talking to people. We've been out trying to listen to people about the issue. What we want to suggest to you is a trial balloon. I want to ask that the members consider going out and doing a little listening of their own, perhaps doing a little listening to whoever is the regional company in your area, checking in with them. Mr Murdoch isn't here, but in Owen Sound, for example, the city of Owen Sound owns the bus terminal. If there are no buses in the bus terminal, the city of Owen Sound is going to lose money. Maybe the transportation manager should be checked with, in the case of Mr Murdoch, or other people like businesses that are auto parts suppliers or computer parts suppliers who depend on that BPX. There's some listening that I think you should go and do. I think you'll find that people are pretty concerned about what the impact could be on their community.
I want to just mention a few of the quotes that we've pulled together.
PMCL -- I don't know if Mr Debeau is appearing in front of the committee, but I read him in a newspaper saying, "Rural Ontario is going to suffer if intercity bus service is deregulated."
Reg DeNure who is down from Chatham, Chatham Coach Lines, said, "If it isn't broken, why fix it?" That's the shorter part of a rather longer ramble.
Mr Devlin, whom we've met with before, has stated to us his opposition to deregulation.
The Chair: We have to ask you to wrap up fairly quickly, Mr Parkin. We're over 20 minutes.
Mr Parkin: I'm right at the end.
The OMCA itself has stated that it has a lot of concerns about the impact on safety and the viability of the industry.
Thanks for your invitation to have me here. I appreciate it. I hope you will listen to some of the people back in your constituencies.
The Chair: Thank you very much, Mr Parkin. As I said, that does use our 20 minutes, so there won't be an opportunity for questions, but we appreciate your taking the time to come down before us to make some comments here today.
P.M. BUNTING AND ASSOCIATES
The Chair: The next group up is P.M. Bunting and Associates, Dr Mark Bunting. Good afternoon, Dr Bunting. Again, we have 20 minutes for you to divide as you see fit between presentation and question and answer period.
Dr Mark Bunting: I am a transportation economist and policy analyst, and over the last couple of years I've had the benefit of doing some work for the Ontario and Alberta governments and also for the Ontario Motor Coach Association on bus policy and deregulation issues.
Clearly, we're here to talk about Bill 39, but having read it through, and I'll admit somewhat superficially, I don't think I really see major problems with this piece of legislation. It streamlines the process and I think that's a benefit and it's worthwhile. I do have a few questions in my mind which I will leave to those of a legal cast of mind. I certainly think the issue of who is an interested party is an interesting question because it raises the question as to whether the revised regulatory process will serve a broader public mandate or indeed whether the government will deal with the broader public issues in some other way.
My intention is to deal with concerns which I understood were before this committee and the government about what happens after the Bill 39 process is set up, and I would add also what happens during the runup to 1998.
What I'd like to do is not speak for or against deregulation, but rather to give you an interpretation of what happened in Britain when they deregulated the intercity market and what I think might be the implication for us here.
Before doing that, I want to make some general remarks about the British case because there are obviously some important differences. First of all, as a brief summary, the intercity deregulation was, in my opinion, a modest success. Certainly from a financial point of view it worked well and there wasn't a great deal of adverse comment about losses of services; there was some and I'll talk about that later.
The main reason for that was that they had a very particular industry structure which we don't have here and also the availability of services provided by local governments, and I shall be turning to that later. But that's an important difference.
The second thing to keep in mind is, as in Ontario, the intercity market is a small part of a larger bus market. In the UK, the bus industry is worth about $7 billion a year, of which only 4%, about $300 million, is due to the intercity scheduled market and I might add that about 80% of that I believe now is taken by one carrier, one dominant carrier in that country -- certainly not the same as here. It's also important to keep in mind that when you hear comment about the British experience, typically much of the adverse comment concerns urban services where there are some interesting issues and not intercity. There's been very little debate on that score.
Finally, I want to point out that in Britain what you saw was the result of both deregulation and privatization, whereas what we're looking at is just deregulation, so we shouldn't expect the same scale of activity here.
With that little preface, I'll go into my little story. There are copies of my presentation circulating, so you don't need to take notes.
Prior to deregulation, the National Bus Co, which of course was the public sector, operated both local and intercity operations throughout Britain. They set up the National Express division to organize and market intercity services which were provided by many other companies. When the government deregulated services in 1980 National Express, still a public company, had spent several years analysing its market and they were ready to compete -- and that's an important issue. We don't have the same sort of situation here with a dominant carrier that is an obvious market leader.
Immediately after deregulation, they were challenged by a consortium of bus operators -- and it's important that National Express saw them off really quickly, and they did that within about six months. It took about two years for the consortium to fold, but they had done the job on them in six months.
I doubt that we're going to see that kind of stabilization here and the reason is that we have several very capable carriers and the possibility of entry from the US. We might eventually be facing service by one, I hope strong, carrier, but not before a period of uncertainty and the question is what damage that may do to the public transport market in the interim.
During the 1980s, National Express operated within the public sector. In 1988, it was privatized; it was sold to its management. Because they were a marketing and planning unit and not a bus operator, they continued to contract for services. This is a rather unusual model from our perspective. It's rather like the old GO Transit model, but not what we have now.
In 1991, the company was sold on to its investors and it's now listed on the London Stock Exchange and anyone who bought stock at the time did very well. It's a profitable company. They are able to acquire capital for expansion, they now own the fourth-largest regional airport in the UK, a large European tour operator, and they've also developed a parallel airport coach system, so these are no slouches.
Back to what happened under deregulation: One of the immediate effects was a sharp drop in fares on the main routes -- about 50% -- and the services improved significantly. During this period the traffic went up. There were large gains in traffic, and some of it came from British Rail, but not all of it. However, since then, fares have crept up gradually. They're now back to where they were before deregulation, pretty much. You can still get a good deal on the trunk routes coming into and out of London, but that, combined with British Rail's response, because we're talking about quite a capable rail operator as opposed to what we have in this country, has basically eliminated most of those gains. So National Express is back to the traffic it had before deregulation.
The other interesting feature is that National Express, and I think you'll see this here, has moved off standardized, distance-based fare structures. What they do is differentiate by market, and what that means is that on the less-travelled routes you get higher fares. That's inevitable. That suggests increased competition in Ontario might result in some fare cuts, but they're not going to last long. Where you're going to see the competition that's significant and beneficial, in my opinion, is in service quality. You'll see perhaps more use of tour quality coaches on the main runs and possibly increased frequency on the main routes.
Of course, the other side of this, and it's been mentioned already, is that as the company focused on profitable routes it cut back on services to smaller communities. There's not a lot of information on this. There were some studies done by the DOT and other organizations. There was one study in the east Midlands area which suggested that for cities that were larger in size than 100,000 they got more service; if you were below that, you got less. In a town I used to live in, Loughborough, which is about 100 miles north of London, a population about 50,000, the services dropped from about 96 departures a week to about 30 over a period of four years.
This isn't particularly surprising. You shouldn't expect operators in a competitive environment to support money-losing services. What is a little less clear in the British case is whether it mattered, whether this was a particularly important loss, because in many areas local bus services are provided by the counties, and that provides people the opportunity to connect to the urban centres and thence to get intercity services. So rural services may be not consistently good throughout Britain -- there are some bad areas to be -- but essentially there is an alternative. Here we don't have the comparable alternative: local services running through rural areas, subsidized by some form of local government.
The other point I want to make about local services is that a lot of communities do not now have a great deal of service and I think it may sound a little crude, but there may not be a lot to be lost. I think an important issue is, what in fact are we talking about?
In concluding my remarks, I want to draw attention to two particular features, and this is going to particularly focus on what I think should be happening during the regime that is being set up by Bill 39, because the issue is in fact what is the larger context within which this bill operates and what are the things you need to do to make deregulation a success if and when it occurs?
First of all, National Express owns very few buses. I've already said that they contract for services throughout Britain, and I think this is an important reason for their success. The company's focus is on market research and planning, service design, quality control and financial management. This results in a strategic business that is less concerned with operational details and more focused on a workable passenger system. I think it is an important point that the focus on the passenger system, which you'll see in competent airlines and you see in National Express, is what partly explains their success. What you're doing is adding value for the customer.
There is no equivalent to National Express here. There isn't one phone number that I can call to get information on services throughout Ontario or to book a seat. Although there are some good carriers in Ontario, I don't really have the same assurance of timely, convenient and consistently high-quality service throughout the province, because we have a fragmented system. Unless government plays a direct role, and this obviously seems pretty unlikely, we are going to only get an effective system if one carrier dominates. That may seem a little hard. It may sound as if I'm against competition, but I think we have to raise some questions about what it is we want at the end. The alternative is fragmentation and the uncertainty, the unevenness of quality of service that goes with that.
So the issue for me is not whether deregulation is good or bad policy, but what should be done while Bill 39's streamlined regulation is in force. In the runup to 1998, should the regulator limit change, in effect freezing a fragmented industry, or actively encourage industry consolidation and repositioning? Putting it another way, in providing policy direction to a new regulator, should the province say what bus system it wants following this interim period?
The other concern that I've alluded to is the impact of deregulation on smaller communities. Obviously, there may be low-cost operators, and that's certainly an argument that my colleagues in Alberta and Ontario have alluded to from time to time, that they may take up the slack. But some communities are bound to lose out. I think we have to be realistic about this. Some of the new services that we get may not be that well-connected with the services on the main routes. In Alberta there's been some direct attempt to negotiate with Greyhound to make sure there are those connections, but we shouldn't assume that we're going to get them here.
For many years we relied on the regulatory bargain which protected intercity runs in exchange for service to smaller communities. This bargain doesn't operate any more. We can't rely on regulation to assure service to small communities. That can't be an argument for maintaining regulation. If these services are truly essential, they will have to be provided some other way.
That brings me to the other feature of Britain's bus market which I mentioned, and that is the role of local government in providing bus service, not only in urban areas but also to outlying communities. In Britain, planning and funding of these services is a local responsibility. There's a little bit of indirect funding from central government, but it's essentially a local matter.
This suggests that we should ask not how to prevent service cuts through regulation, but ask who is responsible for services of a local or regional nature. If the interest is local, why not also the responsibility to decide what kind of service should be provided? The province can play a role by facilitating cooperative planning among communities, but decisions on services and funding should rest at the local level. Communities may choose not to support these services and may lose them, but this would simply reflect local priorities. I see this as a proper exercise of political responsibility. That concludes my remarks and I would be pleased to try and answer your questions.
Mr Joseph N. Tascona (Simcoe Centre): Thank you for your presentation. I'm just interested in your comments with respect to England, and what resulted with what was a major carrier, and with respect to smaller communities. As you noted in your paper, you said there's not much service provided at this time, but when you make the statement -- I believe it's at page 2, number 3, under deregulation -- you finish off saying, "Ontario may eventually be served by one strong carrier, but not before a period of uncertainty, which may impair the market for public transport." I just ask you why it would impair and why you think there's a need for one dominant carrier in this province.
Dr Bunting: To give you an example of the kinds of problems that have occurred in the urban bus market in Britain, where there has been a period of considerable competition, instability, uncertainty, the market for public transport has continued to decline. In other words, the hope for improvement in the public market by essentially entertaining privatization and deregulation hasn't come to pass, and part of the concern is that the public may be confused by the variety of operators, the variations in service levels, changes in carriers, because of course some carriers are going to go broke and other ones will come in -- that's part of what a market's all about -- and the concern is that that's going to impair the market from that point of view.
The bus industry has particularly worked hard to counter a very negative image. They've tried to improve the quality of bus stations, tried to improve the quality of the equipment, but you can lose that quite quickly. Certainly the rail system got a very bad reputation many years ago and it certainly didn't do it any good. So I think that the issue is not necessarily whether or not one should deregulate, but what can one do to encourage some degree of consistency among the industry to encourage the industry to maintain high standards not only on the safety side but in terms of public service.
Mr Tascona: But wouldn't competition in the industry encourage there to be service in the smaller centres, which doesn't exist at this time for this province?
Dr Bunting: In some centres you will get lower-cost operators. In many cases that will be the appropriate answer and in fact you may get better quality because some of those may run more frequently than would somebody operating a 47-seat bus, so you're right on that score. There are going to be some communities for which the traffic is just not sufficient to justify that kind of service.
Of course the other issue is one of connections, because if you're a small business running, say, a minivan service connecting to a community, you don't have a guarantee that you're going to get cooperation on things like through-ticketing, appropriate parking etc to make the right kinds of connections with the main carrier. Those are solvable problems, but they are problems none the less, and I think they need to be addressed.
Mr Colle: Thank you very much. You've presented a very objective analysis, and I think it's the type of analysis that is required in this discussion and certainly in this time of transition. I appreciate your input and I hope that you continue to have a role to perhaps guide the decision-makers in government in terms of what the impacts are.
The question I have is that the real challenge we have here in Ontario is that we have a fragmented industry, and given the fact that the industry is fragmented, the only way you're going to have a level of service in our smaller outlying communities and fares that are reasonable is that you have to have a certain degree of government intervention, because you don't have that one carrier, National Express, that you have in England, so how do you achieve that coordination if you've got full deregulation?
Dr Bunting: I think there are different types of government intervention. I once saw a list of about 20 different styles, running from encouraging people to getting in and doing it oneself. I think the role that government can play is to facilitate relationships between the smaller carriers and the majors, perhaps to fund the kinds of research the industry needs to do in order to define the kinds of infrastructure that it needs in order to provide the kinds of system functions that National Express provides as a dominant carrier. For example, smaller operators can't get into the business of supplying terminals, they can't get into the business of supplying, say, a province-wide reservation and information system, and governments may have an important role to play in that, but I'm very hesitant to say that government should be directly involved in coordinating relationships between suppliers of services in the marketplace.
I think that the regulatory model certainly helped a bit, because in fact there was a period during which carriers cooperated with one another, so that, for example, if I went into my bus station in Kingston, I could get information not only about Voyageur's services but also about Greyhound's or any of the other carriers in the province. Now, to some extent, that's beginning to break down, and that may be an indication of where we're going, but I don't think there is a basis for the kind of regulation that we've had in the past, and certainly what's happened with the market is not encouraging. In other words, we've had regulation; the market has declined quite precipitously.
Mr Colle: But is that equated to the industry or other factors? There's been a decline in bus ridership all over North America and it's not necessarily because of the regulatory structures. There's certainly car usage, demographic changes. Those are maybe more important factors than whether there's government regulation or not.
Dr Bunting: I think that's a fair comment except that the challenge of reviving your public transport system is not going to reside in protecting the regulatory system. It requires adaptation, creativity and change, and yes, I do think there is a government role. I'm not confident that we're necessarily going to get the right kind of government role out of this at the end of the day, but I don't think regulation is going to solve the problem.
Mr Colle: No, but the thing is to try and achieve some way of cooperative, innovative partnership with government and the industry to try and achieve some kind of progression towards providing better service at lower cost and maybe maintaining profit levels at reasonable levels.
The Chair: Good statement. Thank you, Mr Colle.
Mr Pouliot: Dr Bunting, we're certainly most appreciative, my colleague and I, of your remarks. We are both from northern Ontario, and I know you attempt to be so terribly consistent, and we like the analogy, the parallel with Great Britain, with England in this case. If we were to speak of government interference and be equally consistent, we would remind ourselves that GO Transit recoups as an objective close to 70 cents on the fare box. The government pays 100% of rolling stock. TTC, right here in Toronto, recoups 68 cents. That's during very, very good years. Then the citizens, the taxpayers of Toronto and the taxpayers of the province join forces and they split the remaining 32-cent shortfall, and the government, the people pay 75% of rolling stock. You can take these figures quite close to the bank, I know of, which I'm comfortable with these, which I'm talking about.
I need your help. The population of England is 56 million, 57 million or 58 million. Is it in that neighbourhood? Could be one of the three? The population of Ontario is closer to 11 million at present. I see with some comfort that the 160 kilometres -- and that's where in my humble opinion the analogy starts. I'll put it to you this way. In my riding, there are 33,000 people and we are the size of Germany. We try to find the situation that fits us, and there's an acquiescence, yes, when you are a small community and it's not your role, I don't appreciate, it wouldn't be fair to say it, but you chose to live there, but nothing can be lost if you don't have it. I guess you don't miss what you don't have. So even if I tried to say, "Well, how many?" to make it relevant, if we were to go 100,000, for us it's a lot of people. There are over 800 communities and we know the size of Toronto, Ottawa, London and then you start Windsor, Sudbury, maybe, shortly Thunder Bay, then you start really searching, once you pass the first dozen, that 90% of the communities have less than 10,000.
But my question is as follows: What did you factor in? We know that because of the changes there, the intercity bus has been, if not in disfavour, the numbers have been decreasing. Why the comfort and the latitude, with the highest of respect, Dr Bunting, that in the final analysis, we will have one giant operator, that by whatever ways we'll have eliminated, when we hear and will hear of people who say: "Thank you very much. I'm very comfortable where I am. Just tell me what the rules of the game are, keep the playing field level and I will do it." What would you answer to those presenters, people that are doing that for a living? They're the experts in the field.
Dr Bunting: Let me deal with the question of the single operator, because that came up before in the earlier comments. Obviously there are monopoly concerns when that sort of thing occurs. I think there's reason to be concerned, particularly if there isn't a good alternative. In Britain there is in the case of British Rail. My reason for thinking that we will end up with a single operator, at least in southern Ontario, is that as soon as somebody figures out how to provide the system in the way National Express did, they will find themselves attracting the customers, and they will have the advantage.
Whether you get the same story in northern Ontario is a different matter because clearly when an operator is looking for their profitable markets, they're obviously going to pick the main routes, Sudbury through west and so on. They're not going to go into the smaller communities.
Certainly in Britain, there is the other 20%. There are a number of smaller operators who deal in primarily local or commuter-type services, servicing London. There's a very interesting case between Oxford and London where there are two operators that are not National Express running head to head, and there is of course rural service, but of course the rural service is subsidized.
The issue I was trying to bring to the fore is the question of who is responsible, and it may well be in the north's interest, as it may well be in my own community's interest, to take a direct involvement to make sure that there are certain services that are of social significance or indeed economic significance provided.
The question for the government is always, should the province be involved in it, directly or indirectly or how? That really is a question that hasn't been answered.
I don't know how it's going to work out, but it seems unlikely that we're going to end up with half a dozen scheduled carriers surviving in a deregulated market. I really don't see it. I would even be surprised if we had two or three by the time we get, say, five or six years down the road.
The Chair: Thank you, Dr Bunting. I appreciate your taking the time to come and appear before us today.
ONTARIO MOTOR COACH ASSOCIATION
The Chair: With that, our next presentation will be the Ontario Motor Coach Association, Brian Crow. Again, 20 minutes to use as you see fit, divided between presentation and questions and answers.
Mr Brian Crow: Mr Chair, members, my name is Brian Crow. I'm president of the Ontario Motor Coach Association. The OMCA represents bus companies, tour operators, bus suppliers. We have affiliate members that range from hoteliers, foodservice organizations, attractions and destination management organizations that sell to the motorcoach tour industry. We have members in every province and in 43 states. We have a total of 1,209 members.
Our membership is very diverse. The interests of those members that supply products or services to a tour company are different from the interests of the tour company. The interests of the tour company are quite different from the interests of the bus company that supplies them charters.
Even within the bus operator membership of OMCA there is diversity. Some bus companies operate scheduled services with or without BPX. Some operate charter services, others tours, others contract municipal transit services, some operate commuter runs and some operate contract services.
Bus company members in our association vary greatly in size. We have the largest bus operator in North America -- it operates 30,000 vehicles -- and we have a one-bus operation affectionately referred to as a mom-and-pop operation. The needs of these bus operators vary greatly. The needs of a large carrier are significantly different from the needs of a small carrier, so with economic regulation, our opinions vary significantly. The opinion on economic regulation is not unanimous.
In the 1920s, the Ontario government chose to regulate our industry. They created regulation in the hope of creating stability in the industry to better serve the public. Over the years, the Public Vehicles Act has been amended, but generally on a relatively minor basis. The principles that applied to the initial economic regulation still apply today.
Our industry has worked and invested under these rules of economic regulation. The industry has accepted the bargain which sees the higher-density routes and higher-return services cross-subsidize services that are more remote or more rural in nature and that are unprofitable. This service to the public was the industry's end of the bargain. In return, the industry received a stability gain through a regulated market.
Over the past five years, OMCA has tried to get our members to read, shall I call it, the writing on the wall as it applies to economic regulation. There is a global movement towards deregulation. Other transportation sectors, as well as other industries, have been deregulated.
NAFTA discussed deregulation. The federal government has convened a Canadian Extraprovincial Bus Task Force to look at deregulation of the industry, and the federal government has indicated its preference for deregulation. We have to consider that direction.
In 1993, OMCA wanted to find out what our members thought, so we hired Professor Richard Sobberman of the University of Toronto, who surveyed our members. Conclusion: The vast majority of our members wanted to retain economic regulation, but the vast majority of our members did not think the existing system worked.
In 1995, we engaged the service of Dr Mark Bunting, whom you just heard, to do a more in-depth survey of our operator members. Dr Bunting found that most of our members prefer continued regulation but at the same time do not support the status quo. In particular, licensing enforcement processes could be greatly improved and their cost reduced.
Our members also expressed concern that while they are not opposed to competition, outright deregulation could compromise safe operations and would greatly diminish the role of Ontario carriers faced with unfair competition with out-of-province carriers. Many of our tour operators -- some operate buses, some don't -- are in favour of deregulation so that they can get better prices or better service.
In August 1995, we met with the Honourable Al Palladini, Minister of Transportation, who indicated and made it very clear to us that deregulation was inevitable and it was a matter of deciding when. Consequently, our operator membership met, discussed this direction and approved a proposal to phase in deregulation over a three-year period. The proposal was submitted to the Ontario government and it was not accepted.
Again in November, our operator membership met and discussed the issue of deregulation and expressed, among other things, the following concerns: harmonization with neighbouring provinces; time to adjust for deregulation; effective enforcement in the interim period; a fair and consistently applied system and that it be cost-effective.
With that, we developed another position that was approved by the majority of our members in February 1996. That position, in most respects, reflects Bill 39.
When it became apparent that the government would deregulate our industry, we believed we only had three options: outright deregulation immediately; maintain the existing system until deregulation; or develop an interim regulatory system as similarly proposed in Bill 39. We were not in favour of outright deregulation.
There are many in our industry who believe the existing regulatory system is on a slippery slope to a deregulated environment. The existing system has seen reductions in scheduled service. It has provided for a huge influx of Quebec-based operators into the Toronto market; for example, 50 to 60 Quebec operators at Pearson airport and only seven or eight Ontario carriers.
The existing system has antiquated wording in some licences which makes it impossible for proper interpretations, understanding and enforcement of these licences, and consequently enforcement has suffered.
Another example is a carrier that has a line run licence from Drayton to Kitchener, but got charged for picking up in Waterloo on his way to Kitchener.
Why does OMCA support the passing of Bill 39? It is our understanding this is not a deregulation bill. We support it because we think it will provide the Ontario government time to harmonize the regulatory environment so that Ontario carriers are not discriminated against by other provinces.
We are in favour of it because it will provide the Ministry of Transportation time to implement safety and insurance standards that ensure continuance of the excellent safety record of our industry. It will provide the industry time to adjust to and plan for open competition at some point in the future and, very importantly, it will create an environment where enforcement will be easier and more effective.
It will assist the public, in that carriers will have to provide 90 days' notice of termination of service or 30 days' notice for major reduction of service. It will require carriers to assist in finding replacement service if they decide to discontinue a service.
It will provide a more streamlined application process.
The longer the industry is left hanging, the harder it will be for our industry. Many carriers want to get on with it so they can make business decisions either to reinvest in the industry or to remove themselves from the industry.
In summary, it is our opinion that defeating Bill 39 will result in de facto deregulation of our industry. This is our belief because the existing regulatory system, without a commitment to and funds for enforcement by government, will in fact be deregulation.
There need to be rules, but it's important that all carriers know the rules and abide by them. Passing Bill 39 provides an interim period when carriers know the rules, the rules for now and the rules after January 1, 1998, and can be prepared for deregulation. It also provides for enforcement of these rules. Also, importantly, it allows time for the industry, along with government, to deal with issues such as safety and harmonization.
We ask that you approve Bill 39. Thank you for your time.
The Chair: Thank you, Mr Crow. You've allowed us three and a half minutes per caucus. The questioning this time will start with the official opposition.
Mr Colle: Mr Crow, just a question of interest. Do any Ontario operators have a licence to operate out of Dorval? How many licences would there be?
Mr Crow: I believe there are two, whether it's Mirabel or Dorval. The other problem is there's two; one's international and one's domestic. At Pearson it's all the same. I believe there are two Ontario carriers that have licences out of the airport in Montreal.
Mr Colle: The fact that there are two, is that just because our carriers don't have any interests there or is it because of the restrictions imposed on Ontario carriers by the Quebec government?
Mr Crow: There were restrictions imposed on Ontario carriers. Up until just recently you had to be a resident of the province of Quebec before you could get a licence in Quebec. We worked on that restriction and I think it was removed six months to a year ago.
Mr Colle: So now you can apply for a licence if you are an Ontario-based carrier and not a citizen?
Mr Crow: Correct.
Mr Colle: Do you think that will open up opportunities for other Ontario companies to seek licences in Quebec?
Mr Crow: A couple have already applied. Their applications are in process, but I don't believe there will be anywhere near the neighbourhood of 50 or 60 applying or obtaining licences in Quebec, because you still have to obtain it. There's still a PNC, or public need and convenience, contest there.
Mr Colle: So there's still going to be some difficulty obtaining those licences. Do you see that as an ongoing problem, despite the fact they've changed some of the rules?
Mr Crow: It will not be easy to obtain licences in the province of Quebec anywhere, airports included.
Mr Colle: Would it be profitable or viable, do you think, for Ontario companies to get into Quebec? Is there the kind of market there that could benefit Ontario carriers?
Mr Crow: There's certainly a market there. There are certainly trips that come in from Europe and Asia, although I believe Pearson is the predominant airport where the most business is. Consequently, we're getting that competition from those Quebec carriers.
Mr Colle: I think you've given a pretty good rundown of the juxtaposed positions and problems with bus deregulation, and there are some concerns. You feel that Bill 39 essentially gives you an opportunity to iron out some of the problems the industry may have over the next couple of years before deregulation comes about. As you said, there are some concerns that deregulation may impact negatively on some of your members.
Mr Crow: Absolutely. As I said, we've been operating under a set of rules for 60 years; now that the rules are changed. We need some time to work with government to make sure, as Mr Pouliot said earlier, we have a level playing field between non-domicile and domicile carriers.
Mr Colle: That would be the biggest concern you think your members would have, basically that level playing field. Of all the other concerns they have about deregulation, is that the one sticking point that would do the most damage if it wasn't corrected?
Mr Crow: As I said, our industry is very diverse and there are a lot of different opinions. It affects different carriers differently. If you're operating a charter market in Toronto with a whole bunch of competition now -- if we've got 50 Quebec carriers out of the airport, what's it going to matter if there are 51? That is a little different than a carrier operating out of North Bay, where there are one or two competitors. He may face another 10 or 15 competitors.
Mr Colle: So it depends on whether you provide line service or charter and then --
Mr Crow: That difference as well, yes.
Mr Pouliot: Mr Crow, I want to take you back to the HighGrader magazine that has a picture of people who work in the mining sector. It says: "In their 1995 brief to the intercity bus task force, the OMCA predicted that once deregulation came into Ontario" -- Mr Crow, let's make no mistake about it, if I may be bold -- may I?
Mr Crow: Go ahead. I notice the article is entitled Cheap Shot. Is that something I should be concerned about?
Mr Pouliot: No. You should be more concerned about my having immunity at the committee and you not having it.
A year and a half from now, whether you like it or not, the minister is coming in with deregulation, period. You can take that to the bank and cash it, and it won't bounce; that's what it says.
Your brief says, "When it became apparent that government would deregulate our industry, many in our industry believe that our options are limited." That's what you're saying yourself, so you have some degree of acquiescence.
At the bottom of your page 2, you say, "...provide the Ontario government time to convince the federal government and other provinces to harmonize the regulatory environment...."
We know the very recent position, just a matter of a few months back, of Manitoba -- quite adamant. Quebec has other things to look at. They won't move. In a year and a half, in my opinion, it's not likely that there will be enough powers brought forth to lean on the province of Quebec so they will change their mind -- to please whom?
It's highly likely that the situation will remain the same. If it were so, would your membership be much more concerned? I'm not talking about regulatory changes that could be done to regulation amendments; I'm talking about the introduction of deregulation, because that's what this bill is all about. It just gives a little time for the transition. A year and a half from now, you wake up one morning, and that's what it is. How would your membership feel if there was no harmonization between Manitoba and Ontario in the next year and a half?
Mr Crow: The majority of our members would not like that at all. We are concerned about deregulation. We're concerned about the federal government announcing its plans to deregulate. As you heard earlier today, if the federal government deregulates, there's not an awful lot left of provincial regulation to deregulate. So we're obviously concerned with deregulation, whether it's now, whether it's by the province or whether it's by the federal government.
Mr Pouliot: Mr Crow, was that a cheap shot?
Mr Crow: No, but the article did say that, didn't it?
The Chair: Thank you, Mr Crow. We appreciate your taking -- oh, a great afternoon I'm having. Mr Carroll.
Mr Carroll: Mr Crow, just a couple of things I'd like you to comment on. Are you familiar with this list that's being circulated around by the Freedom to Move group about the 170 locations they say will lose their bus service?
Mr Crow: I'm not familiar with that one, but I assume it's the same 170 that somebody issued a release on last fall.
Mr Carroll: Any comment on the validity of that claim?
Mr Crow: When that list came out, I contacted the carriers that I thought would be serving those points. The carriers indicated to me that it was not a list they had generated, that the companies had generated. I'm not sure where it came from -- you'd have to ask the authors -- but I was told it was not generated by companies, and it's the companies that make the decisions on what points will be served or not. They did not generate that list.
Mr Carroll: In his brief, Mr Parkin from the ATU said, "Regulation is essential to maintain a healthy competition." Would you care to comment on how you feel about regulation being essential to maintain healthy competition? It seems like a bit of an oxymoron to me. How would you feel about that?
Mr Crow: I guess initially I'd say the same as you: It seems to be an oxymoron. It depends what that regulation does. If the regulation forces a monopoly, then it's not competitive. If regulation allows an oligopoly, then you can have some form of competition. For example, you can regulate municipal transit, but it can be contracted out to the private sector on a bid basis and operated. You can have competition within a regulated framework, but I'm not sure in the context that he talked about it.
The Chair: Thank you, Mr Carroll. Again, my apologies. I'm always so mesmerized by Mr Pouliot's preambles.
Thank you again, Mr Crow, for taking the time to come and see us here today.
CANADIAN FEDERATION OF STUDENTS -- ONTARIO
The Chair: Next up will be the Canadian Federation of Students -- Ontario, Heather Bishop, chairperson. Good afternoon, Miss Bishop. Again, we have 20 minutes for you to use as you see fit, divided between presentation and question and answer period.
Miss Heather Bishop: My presentation will be relatively short.
I'm sure you're all wondering what students have to do with the inner workings of the transit industry, and the answer is, very little. We got involved originally last fall with the Freedom to Move coalition when the original announcement was made about bus deregulation. A number of our students from the extreme regions of the province, from smaller communities, called in expressing concern that they wouldn't be having bus service in their communities and letting us know that this was one of the primary modes of transportation for them getting back and forth to school and to job interviews.
I've put some information in the package about the federation and how it works. Basically, all our policies are implemented and brought forward by individual members. So the reason I'm here is because individual members of our organization are concerned that they won't have access to transportation to get back and forth to post-secondary schools and to larger cities to jobs. Primarily these are students coming from the north, from remote communities like Kapuskasing, Hearst, Rainy River, all the ones up there who don't necessarily have access to air transport, don't have the finances to fly, and where rail service has been discontinued.
There are very few details in Bill 39 that we're concerned with. The notice period was the only one that stood out that we felt we should comment on specifically. In the bill it says "in accordance with the regulations," yet we heard the minister say in the House the 30 days and the 90 days. That was something we felt strongly about speaking out in favour of, being more specific with the 30 days and the 90 days. Students get a little bit wrapped up, especially at exam time, around Christmas and at the end of the year, and if they're depending on the bus service, chances are they're not going to buy their bus ticket a whole lot in advance. If there is only 10 days' notice and their route has been discontinued, they may be stranded at Christmastime because of the stress of exams and not a whole lot of planning. If there is 30 to 90 days' notice of a change of route or a discontinued service, that gives them a little bit more time to plan and prepare for that kind of thing and we don't have students stuck far away from home at key times in the year.
Just for interest's sake, we found that students tend to travel about five times a year, travelling back and forth from home to school: Thanksgiving, Christmas, Easter, reading week and one other time throughout the year, generally for a birthday or an anniversary. Students in general are having more access to cars than they had in the past, but again we found that for students from the north and students from smaller communities that's not necessarily the case, and a lot of them are very dependent on the bus service.
Our concentration was more speaking today about deregulation, and I understand that it is more or less inevitable, but we have a year and a half until it comes into place so we felt compelled today to come and speak out about some of the students' concerns with deregulation and plant the seeds of a little bit of a question in people's minds. Maybe before it happens there can be some more changes made that will ensure that smaller communities don't lose their service and students aren't sort of stuck out in the cold.
I've outlined in the brief very shortly some of the costs involved with post-secondary education. That may or may not be of interest to people, but I felt it was important so that people realize that students are facing a huge burden and are looking for the cheapest form of transportation, and in many cases the bus is it. So losing the service through deregulation and losing it in smaller communities could be devastating to a lot of students.
Safety is an issue that we're very concerned with. We've seen in a number of other areas things that have been deregulated. Prices go down initially and service looks really great, and over a period of time, through the competition to make more money, it gets a little bit more fierce and people start cutting back to make that profit. We're concerned that maintenance levels with the vehicles will be cut back, and that's certainly going to cause unsafe conditions not only for the driver and the passengers but for other people on the road. We're concerned about the training involved with the drivers. If unregulated companies don't have to follow specific guidelines for their drivers, we're concerned about the safety of passengers again and of people on the road, especially in the north with severe conditions in the winter.
The safety issue that comes into play that you'll notice in here which concerns me personally the most if service is cut off for students who don't have access to air or rail travel is common practice right now and one that concerns a lot of student leaders, and that's people accepting rides home back and forth from people they don't know. That's especially a concern for women. A lot of times there's only two people in the car. Our parents taught us not to take rides from strangers and people we don't know, yet students do it all the time because certain services aren't available to them. This is a concern, as is hitchhiking, for people from small communities if bus services are cut off in those areas.
Access is listed in here as well. It may sound a little bit farfetched, but there are a large number of students from smaller communities and northern communities that either don't have access to a car or a train or are intimidated by Toronto driving to come down here for job interviews in a car and who rely very heavily on the bus for that. So if the small towns are cut off, it could have something to do with their unemployment levels later on.
Some general concerns that Freedom to Move and other groups we have spoken with have around the issue of bus deregulation include the loss of jobs. There is concern, and I heard it mentioned a few minutes ago, about unfair competition from out of province if the harmonization doesn't happen and Ontario's not allowed to compete in other provinces. Students don't like to hear anything about potential job loss in any industry at this point. We're all hoping that jobs are going to flourish.
The other serious one is the GO bus service. A lot of students, especially in southern Ontario and the Metro Toronto area, are heavily reliant upon the GO bus service to get back and forth to schools and to jobs. Our concern is that if deregulation happens and there isn't some kind of regulation put back into place regarding GO buses, there will be other carriers hijacking peak times and peak hours. Initially that's going to lower the cost for students. Ultimately it's going to cost people who live outside of Guelph and have to take that bus. It's going to cost GO Transit because they're going to have fewer riders. That costs the taxpayer, that service is going to result in decreased service for other people who use it. So that's one of our main concerns in the Metro Toronto area.
I said here that's it's easy to criticize any legislation without coming up with alternatives, and I certainly don't claim to have any really great ones. If the industry is prepared to regulate and pay for the cost of regulation, as seems to be the case over the next year or so, we would be happy to see the regulation left in place. If it's not costing the taxpayer anything and it's putting some stipulations on the way the industry is run, that likely is going to make it safer for everyone.
The other option that we thought about was smaller buses, obviously for smaller routes, northern cities. You don't need to have the big 47-passenger bus. Varsity teams and schools have managed on smaller buses. You get what you need and you don't drive the big vehicles and obviously there's going to be some cost savings there.
Students are big ones for working out partnerships with people to try and save money, so perhaps there are businesses in communities or smaller companies that could work out some kind of agreement and some kind of partnership to make sure that people are still serviced in these communities and no one is left stranded.
We recognize that Bill 39 is not the deregulation bill specifically. That's not set to happen until 1998. Students, again, don't have a whole lot of place here discussing the detailed aspects of bus deregulation, but there are some concerns that we have with deregulation and we felt this would be the time to bring them up so that you have a year and a half to think about these and perhaps fix a few of the problems that you may not have considered yet.
Ms Shelley Martel (Sudbury East): Miss Bishop, it's a very good thing that you're here and it's more than appropriate that you've come here today to talk about this issue, because I think all members have to recognize again that while Bill 39, as the government purports, is only some minor changes that will help the industry, especially around what happens at the transport board, Mr Crow certainly made it clear in his last presentation that Mr Palladini does see this as the interim measure before we have full bus deregulation. There's no doubt about it. While some of the government members in the House have been trying to say the year and a half before we get to 1998 will allow the minister to study it, it's very clear that the minister has no intention of studying it. The question is, how fast are we going to get to it? I suspect if we could have done it full tilt right away he probably would have done that too.
Returning to the concerns that you are relating on behalf of students, what do you think this is going to do to access for students who are coming from rural Ontario and northern Ontario? Both Gilles and I, as we said earlier, represent a number of those small communities, he more than I. Certainly, a lot of the kids who are living in those communities don't have cars. Their parents can't afford to give them cars. With their increase in tuition over the next couple of years, a lot of them are not going to be able to afford a bus ticket. What is access for them going to be like if probably the single source of transportation they now have in and out of the community is taken away?
Miss Bishop: We've seen a lot of access questions come up over the last little while, specifically around financial things and the rationalization issues that have been discussed about closing specific universities throughout the region. I think people in rural communities and extreme northern communities are sort of hanging on. A lot of them have succumbed to the fact that they're not going to be able to go away to school and are partaking in distance education programs. There are only a couple of universities in the province that offer distance ed to the extent that a student can complete an entire degree through distance education.
A lot of rural and northern communities are solely dependent on bus travel, many more than I expected until I started getting involved with this. I think it's cutting them right off, frankly. There will be some distance education through Laurentian, through Lakehead, but there certainly isn't the vast range of programs that a student should be entitled to if they're looking at post-secondary education. I personally don't think that it's value for the money. You pay pretty much the same for distance education or for going to the classroom and experiencing the whole experience. I think students in rural communities and in the north especially are being completely cut off from post-secondary education if their final mode of transportation is cut off.
Mr John R. Baird (Nepean): Thank you very much for the presentation. I have a quick question at the outset. I'm just reading that you represent 110,000 individual members across the province, you're a democratic organization, and the policies originate from the members. Just a question of process: When you have a policy, does it go through the student governments for all the 110,000 students you represent?
Miss Bishop: Generally. Individual policies come forth from students, either directly to the office or through their student union. Those policies then go to general meetings, where they're voted on by representatives from each of the schools, and then they go back to the student unions at the local campuses and are discussed there.
Mr Baird: Did your position on bus deregulation go through the general meeting?
Miss Bishop: It was discussed this past January at our general meeting, because we originally got involved in November with Freedom To Move. It was discussed at our national general meeting just to ensure that students across the country knew what was going on, and there was not a lot of discussion from other parts of the country. It was in November that students from the north spoke up most heavily and said, "We have to do something about this." It was discussed in January.
Mr Baird: But this policy, though, has been through all the --
Miss Bishop: Yes, it has been discussed at our general meeting in January.
Mr Baird: But more than discussed; this policy you're presenting, all the schools in Ontario --
Miss Bishop: Yes, these are the initiatives that were presented by people at our general meeting, so between January and June they all go back to student unions for discussion and they'll be discussed again in June. But these are the initiatives that came up from the students in January for interim policy.
Mr Baird: But the student unions which you appended to your brief would have supported that?
Miss Bishop: Yes, they've all seen these.
Mr Baird: Great, thank you. Just a question with respect to GO Transit, because it is something that I am learning more about because I'm not from the greater Toronto area. On the last page of your brief, with respect to general concerns, you mention that you believe many students are dependent on GO bus service. "If the industry is deregulated, there will be independent companies trying to capture the peak routes and times," which would initially result in lower fares but might see less revenue and then see GO abandon them.
We heard from a previous presenter, with respect particularly to an Uxbridge-Toronto line, which includes Stouffville and Markham, that they were actually able to go in and then when GO pulled out, they were actually able to go in and make up those lines. What would lead you to think that would be the conclusion with respect to GO Transit service?
Miss Bishop: It was just sort of a general overview that we had of people coming in from -- this was Guelph that brought up this one because they are very dependent on the GO service -- just a general feeling that if there were competitors coming in -- the service from that area is heavily used right now and the buses are full, they claim, when they come in.
There were concerns that if competitors came in, originally they would offer lower prices and the service coming into the city would be the same, but the service going outwards from that area, people getting into the smaller communities that are not the major runs, I think obviously -- we've seen the way the government works. If the GO service is losing money, we're not going to keep funding it when there's a private company out there that can do the main routes just as well.
So our concern wasn't that the main routes would be lost, it was that the smaller routes, the more rural routes that didn't necessarily come into a bigger city -- they operate obviously at a deficit already, so if the major lines begin to operate at a deficit, then those smaller communities are certain to lose.
Mr Baird: But on principle, if a private operator could come in and replace GO Transit and provide an approximate level of service, would the Canadian Federation of Students have a problem with that?
Miss Bishop: Provided it still served the smaller communities at a similar price, then we would support it. What we're not supporting is a private industry that would come in and take over the service and either cut out communities that students are currently in right now, that they need the service, or any kind of dramatic price increase. Students are strapped right now and any kind of increase in anything, even transportation, is going to limit their access to education.
If there's a private company out there that can offer the same kind of service at the same price servicing the same communities and the same numbers without the government subsidy then I would encourage the government to go out there and get them, but I'm not convinced that those communities --
Mr Baird: But it would have to go to all of them --
The Chair: Thank you, Mr Baird. Moving to the official opposition.
Mr Dwight Duncan (Windsor-Walkerville): You may have answered this already. I apologize. Do you have any rough idea about how many students actually use bus service in Ontario?
Miss Bishop: It varies from community to community obviously. As I mentioned, the people in Metro and southwestern Ontario rely more heavily on the GO service than they do on Greyhound or the northern services. There are a large number of northern students. I went to Laurentian and about 25% of the students at Laurentian came from the northern communities and probably 20% of those relied on their parents to drive them, which got less and less over the years as their parents could take less time off work obviously to come and pick them up for whatever, and they depended heavily on the bus. My comments were relating specifically to the north. Students in southern Ontario generally have access to other forms of public transit, but northern students are heavily reliant on this.
The Chair: Thank you, Miss Bishop. We appreciate your taking the time to come and see us here today.
CAN-AR COACH SERVICE
The Chair: This moves us along to Can-ar Coach Service, Ray Burley. Mr Burley, good afternoon, having soaked up the ambience all afternoon back there.
Mr Ray Burley: Yes, wonderful. It's not very warm in here.
Thank you for the opportunity to address this standing committee. My name is Ray Burley and I'm vice-president of Tokmakjian Group and I'm also a director of the Ontario Motor Coach Association.
This evening I'd like to address two issues which are critical to the future of the Ontario motor coach industry particular during the runup to full deregulation in 1998.
Before I get into the detailed comments about the impact of Bill 39 on our industry, I'd like to take a few moments to tell you about the Tokmakjian Group and my own experience in this industry.
Tokmakjian Group is a privately held company specialized in the transportation industry. Its operations include Can-ar Coach with about 80 highway coaches; SN Diesel which services and rebuilds all major brands of diesel engines; National Refurbishing, which rebuilds highway and transit buses; and Toronto Truck Centre, a Volvo heavy truck dealership. These operations are all leaders in their respective fields and in all they employ about 350 persons.
My own experience in transportation stretches back more than 25 years, beginning with a family-owned bus company which was typical of the bus industry in this province for many years. Later experience includes sales and servicing of construction equipment and after-market operations for heavy trucks. Most recently, before joining Tokmakjian Group, I was vice-president of sales and marketing for a national distributor of heavy trucks.
I mention this experience because it gives me a unique perspective on road transportation in Ontario. The bus and trucking industries are precisely the same, but there are enough similarities to allow me to make some observations which should be relevant in your consideration of this bill and how it will affect the industry.
The first concern is to ensure a level playing field for motor coach competition in this province. As Brian Crow has pointed out, our industry holds differing opinions on whether deregulation is a good idea or not. Regardless of these opinions, we all recognize that deregulation is a fact of life and that deregulation will benefit Ontario consumers.
Speaking for the Tokmakjian Group, and I believe for most members of the Ontario motor coach industry, we aren't afraid of fair competition, but the emphasis is on fair. As the government establishes a deregulated bus industry in this province, it is important that Ontario bus operators not be placed at a competitive disadvantage compared to their colleagues in neighbouring provinces.
Deregulation in Ontario must be harmonized with parallel action in Manitoba and Quebec. Deregulating point-to-point service in Ontario will certainly invite many new competitors from outside this province. To date, there's no indication that Ontario operators will have the same access to these competitors' home markets.
To permit new competition from out-of-province carriers without ensuring equal access for Ontario carriers in these competitive home markets is to place the Ontario industry at a significant disadvantage. Ontario would become a deregulated oasis while our companies would remain barred from working in other provinces. These competitors will be able to deploy their buses and thereby spread their costs over a much broader business base, and this is a big advantage.
As Ontario legislators, you will recognize that the regulatory environment in other provinces is beyond your realm of responsibility. However, Ontario may well lose skilled jobs and an industrial tax to other provinces if our industry suffers because other provinces' bus industry is provided with a significant competitive advantage at our expense.
I'm not recommending that the Ontario bus industry be actively protected by legislation or regulation. I am suggesting that in deregulating our industry you give full and careful consideration to balance, fairness and a level playing field for Ontario business. I believe your analysis of this situation will lend you to conclude that deregulation in Ontario must be harmonized with neighbouring provinces.
The second issue I want to address with you this evening is even more critical, and that's the importance of maintaining high safety standards in the Ontario bus transportation industry.
With more than 25 years' experience in this industry, I can assure you that Ontario's bus safety standards are higher than any other jurisdiction in North America. We can take our buses and drivers anywhere with confidence. In contrast, Ontario's standards cause operators in other jurisdictions serious concerns about their ability to measure up.
Secondly, Ontario bus operators are acutely conscious of the responsibility of carrying human cargo. Generally we don't view minimum safety standards as maximums for daily operations. We're always looking for ways to make operations safer. Because we depend on public confidence for our livelihood, the highest safety standards are both morally imperative and sound business judgement. Our record over the road is very good and it reflects this deep commitment to safety.
Yet my experience with deregulation of the trucking industry leads me to be concerned about bus safety in a highly competitive deregulated environment. That experience tells me that routine maintenance is often delayed and sometimes cut out entirely to cut cost and boost hours and service.
Recently we had an out-of-province registered bus in our Toronto service shop when it broke down. In addition to being several years older than the oldest buses still in general service in Ontario, this vehicle had at least five gross safety defects. The problem included broken glass, bald tires and one tire on the point of a blowout with a bad sidewall bulge. This bus shouldn't have been on the road anywhere, let alone in Ontario. We informed the operator that if this bus was left in our shop in that condition, we would report it immediately. The contrast between this bus and an average Ontario bus would have been obvious even to the casual observer. This isn't a very complex business.
Our industry has been told repeatedly that safety isn't being deregulated, but I have to express some doubts. Certainly the bus I described was a horrifying deviation from most currently running on Ontario roads, but let me make two points to put this example into better perspective.
Firstly, the bus I described already slipped through the system, both where it began and the trip in Ontario. Nobody from the Ministry of Transportation or the OPP caught this bus. It just turned up in our repair shop and while there will always be exceptions to general rules, it would become harder to catch the exceptions, not easier. It will become harder to catch the really bad vehicles because while the number of coaches on the road will remain about the same as today, the number of operators is expected to increase dramatically. It's comparatively easy to inspect 100 buses operated by one company; it's much harder to inspect 100 buses operated by 50 or 100 small companies.
It's also fair to suggest that small operators rarely have the financial resources to invest in new vehicles or in the most modern diagnostic and repair systems. Older vehicles aren't inherently bad or unsafe, but they do take more maintenance than newer buses if they're to be kept in safe, productive use.
Unfortunately, a deregulated operating environment with insufficient resources for safety and enforcement is unlikely to create the right conditions for a high standard of safety throughout the fleet.
The second reason for concern about this bus and about safety in a deregulated bus industry is the directly comparable experience of the trucking industry after deregulation. The Ontario bus industry has not experienced the high-profile accidents which have beset the trucking business in recent years, at least not yet. Evidence from the trucking industry after deregulation suggests that maintenance and safety issues will grow. That suggests to me that buses, such as the ones I saw, will become more common in a deregulated environment.
Accidents can occur both in the large fleets and the smallest operation and both be spectacular and tragic in their result. In addition to the immediate human cost, any significant increase in the perceived frequency or severity of bus accidents could badly damage public confidence in bus transportation generally. That will more than cancel any consumer benefit obtained from increased competition, as well as delivering irreparable harm to the industry.
It should also be pointed out that there's a very large international market in Asia, Latin America and other regions for used buses. Because of the high standards to which they've been maintained, Ontario buses bring better prices and hold their values longer. That business would also suffer if Ontario's bus safety standards were relaxed.
To maintain both high safety standards and a high degree of public confidence, our industry and our association recommended that any carrier operating in this province be required to meet our current high standards. One way to ensure the standard would be to have applicants pass a safety audit prior to start of operations instead of within six months of startups as is currently proposed.
In addition, our industry and our association support the imposition of a high minimum standard of liability insurance coverage. Many members of the OMCA have invested in more insurance coverage than mandated by regulation, and some carriers currently operating in Ontario, perhaps including the operator of the bus I described, have insurance coverage which is only comparable to that of a private passenger car. In our view, that's totally irresponsible.
While we acknowledge there's a degree of economic protection for Ontario's established motor coach carriers in the imposition of high minimum standards of liability insurance, we believe that the enhanced public protection outweighs any reduction in the potential competition in the marketplace. Our experience over more than 60 years is that safety is good business.
Let me sum up briefly before I respond to your questions. Regardless of the collective and individual opinions on deregulation, Ontario's motor coach operators are preparing for deregulation which will increase competition to the benefit of the Ontario consumers.
In shaping the environment in which we will operate for the next 20 months, we ask you to consider these two important points:
Firstly, we ask that you ensure that on opening the Ontario bus transportation market to increased competition you do not provide potential competitors with access to this market which is not reciprocated with access to their markets for our operators.
Secondly, we ask that you maintain Ontario's long-established high standards for bus transportation safety by ensuring adequate resources for enforcement of safety standards, by maintaining current high vehicle and operator safety standards for any new interests, and by imposing high minimum standards of liability insurance for all bus operators in Ontario.
Bill 39 provides the time to address these issues and to ensure that the Ontario motor coach industry can continue to provide safe and productive service for the people of Ontario.
As the environment in which we operate begins to change, to keep pace with changing needs of our consumer, we ask that you consider the importance of fair competition for the industry and high safety standards as a key element of a successful system of bus transportation. These are important to both our industry and to the people we serve.
Mrs Lillian Ross (Hamilton West): Thank you very much for your presentation. In reading your brief, on page 2, you made a comment that bus deregulation is the way of the future. I wonder if you could tell me why you would make that statement.
Mr Burley: It's very difficult to operate in this global market that we operate in and have regulated environments. We are going to be confronted with that, like it or not, and if we're going to be successful in this globe, we will be deregulated in most, if not all, things we do.
Mrs Ross: Carrying on with that statement, you also say that deregulation will offer Ontario bus transportation consumers important benefits. What benefits do you see for the consumers?
Mr Burley: Hopefully, lower prices should arrive from that. That's what you typically get in that kind of competitive environment. You continue to provide the services. It always finds its optimum level and the customer usually wins in that benefit.
Mrs Ross: Do you see that competition would also provide better service?
Mr Burley: Conceivably it could in certain areas. You never know. When you're in a regulated environment, you don't know what a deregulated environment does until you step into it. I would use the truck industry. Having lived through the truck deregulation, there was a lot of bruising; I still have a lot on my back. However, at the end of the day, I think it was a healthy environment for the consumer. There are a lot of excellent companies that were brand-new companies that came out of it.
Mrs Ross: I want to talk to you a little bit about safety. You've addressed it in several areas. Safety is a priority with the Ministry of Transportation. If safety issues were addressed and Ontario's high safety standards were maintained and perhaps even enhanced, would that alleviate your fears with respect to --
Mr Burley: It certainly would help.
Mrs Ross: You know of course that recently the ministry has had several truck blitzes where they've pulled trucks over and inspected them for safety, maintenance and all that sort of thing.
Mr Burley: Correct.
Mrs Ross: I think that addresses the safety issues. As I say, the ministry's very concerned about safety. I think that I heard -- I'm not sure if this is true; well, I know this is true -- that harsher penalties are going to be brought into force for unsafe vehicles. That would also address that problem.
Mr Burley: As long as the enforcement is there on a continuous basis for that large volume of people who will be playing in that competitive market. I've referred to one bus which I've physically seen in our shop -- because we cross so many lines and we repair buses and we repair engines -- and you would have been appalled if you had seen this piece of product that was in our shop. The only reason it ended up there was that the brakes failed and the driver had called back to the office. This was an out-of-state product and we wouldn't release it until they gave us a purchase order to bring it up to safety standards. They didn't really want to do that, but they also didn't have any option. But had you been a passenger or had to have been a passenger on that bus, you would not have been a very happy person from a safety point of view. It was really surprising how that thing even hung together.
Mr Colle: It would be very interesting to see how the enforcement's going to take place when they're just about to chop 1,200 people in the Ministry of Transportation. You just can't have it both ways. By the way, Mr Burley, I think your presentation was very incisive because it really focuses in on the issue here, and that is safety. In essence, the deregulation of the trucking industry has been a disaster from a safety perspective because people have been able to enter a market to make that fast buck -- I'm not talking about the good operators in Ontario. They've taken advantage of the good operators by cutting costs on safety. They've done irreparable damage to the trucking industry, and if the government doesn't learn by that lesson that you just can't deregulate and forget safety --
You have a government that has said that come January 1, 1998, it's going to deregulate. Now, if I were a Quebec trucking firm or if I were the Quebec government, why wouldn't I just wait the Ontario government out, let them go through this period and, come January 1, they've got the whole Ontario market? They've already said they're going to deregulate, so why should Quebec move to level the playing field?
Mr Burley: You stated why they won't move to deregulate it. That's why we're asking for you to put as much emphasis as you can on that situation. I don't think we're unrealistic. As I stated in there, you only have so much capability, but if I were sitting on the same side of the fence, I would wait it out as well.
Mr Colle: Yes, because from my reading of it, I think what the government had intended to do was deregulate April 1.
Mr Burley: Yes.
Mr Colle: That was their intention. They realized that they hadn't looked at the consequences and, all of a sudden, they changed gears dramatically in reverse. I think they burned out the engine in doing it. What do we do at this point now, when we've got a government that's already played its card and has said, "We're going to deregulate, come hell or high water, on the 1st because ideologically it's the best thing to do"? What recommendation can we give them to say, "Hey, wait a minute, here's what you can do to get out of this mess, with Quebec sitting there waiting to pick off the rest of the Ontario industry"? What can they do to get out of that mess?
Mr Burley: I think the key issue then falls under the safety side of it. As long as everyone knows that in this deregulated environment for us operating in Ontario -- and we appreciate the fact that we have 20 months to build up to it, that it isn't a complete drop on us, to try and prepare as businessmen as best we can -- the safety and the insurance become the key issues in this thing. We need to make sure that everyone has proper and adequate insurance in case that accident does happen, that the passengers, or at least the survivors, in those situations are taken care of. Because I believe many operators in those situations, in going back to the trucking side -- they call them brokers for more than one reason. You'll see that, as I said, in this particular bus that I witnessed myself in our shop. If I have to compete with that, it's very unfair. For what it costs us in overhead to operate the shops, to maintain that product, we also -- you believe that people are intelligent, the consumer you're dealing with at large. Listening to the speaker before me being concerned about the students, obviously people are aware of those things and hopefully they won't step on those types of vehicles and support them, but let's face it, in this economic climate it's pretty difficult.
Mr Pouliot: I too find it passing strange that on the one hand you lay off 1,200 people from the Ministry of Transportation, yet you factor in that when you have a deregulated environment with the trucking industry -- we've literally seen the wheels fall of the trucks -- safety will all of a sudden become a high priority by virtue of a decree. It doesn't add up; in fact it's contradictory. Just as much as a safety and employment issue, and I'm seeking your expertise, it is not likely in the next year and a half that Premier Mike Harris will achieve success in convincing Premier Filmon and Premier Bouchard. If you were to call the people who hold book, the book shop, you can get pretty good odds on that. In fact, I'll give them to you; no, I won't, because it's illegal.
In your opinion, how many jobs would be impacted -- I'm talking about women and men, Ontarians -- if things remain the way they are, that in a deregulated environment Manitobans and Quebeckers are entitled to come and get a licence while we cannot reciprocate? That is the real climate we are facing in a year and a half, as true as we're sitting here today. What kind of impact will it have on Ontario jobs and therefore Ontario companies?
Mr Burley: It's very difficult for me to put a number on it. Brian, you may have a thought about that as a number. It could be in the thousands, literally. There's a tremendous number of people employed in this industry, from ticket agents to the mechanics who repair them. It could be a dramatic number if indeed it's not an equalized playing field. I'm concerned about other provinces; I'm concerned about nearby states.
Mr Pouliot: I need your insight. I just cannot shake the safety aspect. Please involve me in your own world. Everyone professes to -- I mean, I don't meet people who don't like their mothers; I don't meet people who don't preach family values; I don't meet people who don't preach safety. But what happens in the real world when competition is such? How does it happen that safety does not necessarily take a back seat, but in orders of priorities it might not be as catalytical, as important, as sacred as it would be otherwise if you have more latitude? How does that happen?
Mr Burley: Absolutely, you're correct. It doesn't take place. I mean, that's the first thing to go. It's expensive. If you're competing in an environment and your profit is diminishing, you only have so many places that you can take that out of if you're going to stay in business. I would use probably, on the truck side of it, a perfect example of a situation that we have in the province of Ontario -- I'm not sure whether it has been rectified yet or not -- with a carrier from another province that I witnessed previously. Prior to deregulation in the truck industry, it was very profitable and maintained very high standards within its fleet. Yet not less than eight months ago they were in a tragedy type of situation with a vehicle hanging over the side of a bridge in Ontario, and I'm looking at a vehicle that shouldn't even be on the highway. I know the government is still dealing with that particular issue. That's what happens. If you do not pay attention to safety, that's what will happen, because it has to come from someplace.
The Chair: Thank you, Mr Burley, for appearing before us here today and making those comments. I appreciate it.
TRAVEL VENTURES CANADA INC
The Chair: Next up is Travel Ventures Canada Inc, Mr Larry Hundt, president. Good afternoon, sir.
Mr Larry Hundt: Good afternoon, Mr Chairman and members of the committee. First of all, I'd like to thank you for the opportunity of speaking here today. With the limited time we have, if you'll excuse me, I'm going to read my presentation.
Firstly, to tell you a little bit about myself and our company, I've been involved in the bus business for 27 years, in all facets of the bus business. I've been involved in bus passenger service, charter service and, in more recent years, the bus tour side of the business. Presently, along with my wife, I operate a company called Travel Ventures. We probably rank ourselves as the second-largest bus tour company in the province serving the Ontario public.
As far as the changes that are being proposed to the Public Vehicles Act are concerned, I certainly have a number of things I'd like to point out. It's very troubling for me to see the indecision and confusion that the current government has created since taking office, keeping in mind that it's very hard to make decisions about purchasing half-million-dollar motor coaches when you can't determine from one month to the next whether you're going to have regulation or not. I applaud the present government for moving in the direction of deregulation. It's something that should have been done many years ago, in my opinion.
One of my biggest concerns is that presently, with this legislation, no allowances have been made to make this a meaningful transition. We're going from 60 years of a regulated system that has fostered a very conservative and non-competitive industry to a sudden change to a free market environment.
Many of the older complacent companies will not survive a sudden change to a free, open market environment. There should be a period of adjustment and transition, in my opinion. The new legislation does not serve the industry well in this transition, if there's no relaxing of these entry requirements.
There has been, in recent years, one area of growth in our industry that comes from a huge influx of international travellers coming into our country, because of the weakness of our currency. There are really only about six bus carriers serving this market, and they simply can't handle the huge influx of these travellers. In 1994 they banded together and fixed prices, passing on rather large increases, some as much as 35%, to the travelling public without very much warning.
Let me tell you that the vast majority of the bus operators in the province are anxious for deregulation, in my opinion. I've spoken to a lot of the smaller carriers who feel that way, because they look upon this lucrative Toronto market and all of this international business that's coming into the city and feel that they can provide some of the service that's necessary to serve these people.
One of my biggest concerns about the new legislation is that it gives enormous power to the OHTB board member without any appeal process or ability to challenge his decisions in the courts. This person also is going to have to be a very good magician to look after the multitude of licence applications and rule on the many enforcement issues that are going to be put before him. There has been no consultation with the bus tour industry whatsoever in the formulation of this legislation.
The Ontario Motor Coach Association, unfortunately, just represents the bus operators, and not the tour operators. The bus tour operators have been forced into hiring buses over the years from a very limited number of bus companies, many of which are often direct competitors in the tour market. Our company has spent hundreds of thousands of dollars over the years to develop innovative tour programs, only later to expose these ideas to bus companies that can take these ideas and customer lists and use them to compete with us directly.
When the trucking companies were regulated in the past, a large percentage of the business was their ability to apply for special licences to serve specific customers. This type of name-user application has not been looked upon kindly by the OHTB in regard to the bus side of our industry, and really, quite frankly, should have been.
The PV Act restricts bus companies, insisting that 75% of their passengers have to come from a particular licensed area. This is one of the most restrictive, unrealistic and unworkable regulations that exists in our industry today. Our company and many others are constantly breaking this law because there simply is no company that can work under this regulation.
All too often, we underestimate the impact tourism has on our job growth potential and its economic impact. The bus tour market contributes over $1.6 billion to the Canadian economy. Every night a tour comes to a community, it leaves behind $6,500 to that local economy. The current regulations have stifled the growth and potential of tourism in our country.
A great deal of discussion will ensue over the next few months about the future of our industry. Greyhound has been leading the way, lobbying the government and certain special-interest groups, talking about the loss of rural mobility. I think it would be wise to look at Greyhound's history and have a good look at their company just to see what their contribution to the loss of rural mobility might be. They have dropped service over the years to such a point that now they serve only our major corridors. They have all the gravy.
Why should they be left with only the best routes in this country? Why shouldn't they too accept some of the responsibility for moving some of the people in those rural markets? I might also ask why the cost of rural mobility is shouldered by the smaller bus companies that, in turn, have to pass the cost on to the charter and tour passengers.
The Ontario government pours millions and millions of dollars into transit subsidies for cities, and plenty of money also goes into GO service for commuters who want to go into Toronto, but nothing for rural mobility. It's not fair that the government shouldn't be paying something to provide service for the less fortunate living in the more remote areas. I really can't see the fairness in the system in having rural mobility strictly the responsibility of the charter and tour customers.
That's about all I have to say. I'd be willing to answer any questions.
Mr Colle: Thank you, Mr Hundt, for your presentation. I guess the one point that I wanted to start with is that the bus tour operators were not consulted prior to Bill 39. Is there a group or are there individuals or how does that work?
Mr Hundt: Unfortunately, the bus tour side of our industry is not officially represented by any group. There are 80-some-odd members that belong to the Ontario Motor Coach Association, but they really don't have an official voice within the OMCA about policy decisions, about regulations.
Mr Colle: The other concern you raised was one that I've raised myself, in terms of it looks like they're going to have a one-person board. That's going to be a quorum. What if the person before the board disagrees with that board member's decision? They've cut away the appeal to cabinet. They're cutting away appeal to the Divisional Court. I can't find out where the recourse would be.
Mr Hundt: I agree, Mr Colle. That's an area that is of grave concern to me.
Mr Colle: What, I wonder, could be a suggestion that we could make an amendment to it that might give an individual recourse to appeal a decision of that one-person decision? Would Divisional Court still be too expensive a process for an appeal for a small company, for instance?
Mr Hundt: It could be a very lengthy process with time constraints and deregulation hopefully coming. The courts may not be our best avenue. But certainly before, the appeal to cabinet at least gave you a sober second opinion.
Mr Colle: In terms of the process here in place, I know your industry or I guess the tour operators basically think deregulation would help you achieve, I guess, a greater opportunity to present your product and to compete etc. Are there any suggestions you might make in the interim that could improve Bill 39 in terms of ensuring that we end up with a mechanism in place by January 1, 1998, that could ensure there's an orderly constructive transition to deregulation? I know you mentioned that there didn't seem to be any mechanisms in 39. What suggestions could you make that you think might enable this to be proceeding towards that goal of deregulation but at the same time putting in mechanisms to make it viable?
Mr Hundt: I think there should be a reasonable transition period here, and this new legislation doesn't provide for that. I would like to see them relax the entry requirements so that there could be more competition. I know that a policy directive from the minister in the past has been for more competition, and I'm not so sure that the board has given us that more competition that we need in this transition period. Maybe some more name-user applications could be grants so that tour operators, if they don't want to use a bus company that could be competing with them, could use another carrier. They wouldn't have to be compelled to use a competitor.
Mr Colle: Because right now you're forced to use those carriers because, in most cases, tour operators don't have their own buses.
Mr Hundt: That's right.
Mr Colle: And so that would be a suggestion of enabling more options for the tour operators.
Mr Hundt: That's right.
Mr Pouliot: Mr Hundt, as an applicant, suppose you no longer have to satisfy public necessity and convenience as criteria; all you have to do on the regulation side is answer the safety criterion, the safety concern, and provide proof of published insurance requirement -- that would make an applicant more likely to have success, would it not?
Mr Hundt: Yes.
Mr Pouliot: Share with me, please. At present, if you make an application and you're turned down by the board, what appeal mechanism do you have, in your opinion?
Mr Hundt: Presently, all you can do is appeal to cabinet and hope that they will reverse the decision of the board.
Mr Pouliot: Oh, so you would appeal to cabinet. What do you think your chances would be? I don't know; I'm asking, sir. If you're turned down by the board, you've applied for a licence and then you appeal to cabinet, there's been nothing catastrophic, there have been no new circumstances or evidence to change the value of your application. It's been turned down by the board. The same goes to cabinet for review and possible approval. What do you think your chances are? Be careful. Then I will tell you how many have been approved.
Mr Hundt: I think that there have been a couple of interesting test situations where historically in the past it's been difficult for tour operators to get licences. There have been two where they've gone to cabinet and cabinet has reversed the decision of the OHTB that I'm aware of.
Mr Pouliot: You know why ministers are afraid? I know why one minister was petrified by these things and when you are in doubt and when you're petrified, you say no. Because the board is quasi-judicial. You try not to even have a cup of coffee with them because of the relationship, and that's always the bête noire, the glass jaw of any relationship. It's quasi-judicial. Why don't they make it judicial or not judicial? You operate at arm's length, so you set the guideline, you give them the tools but you can't get them back in, so unless it is extraordinary in its application, you're always frightened that somebody will point the finger and say, "This is too political."
What I'm saying is, maybe if we had a mechanism where you would have a frivolous argument thrown out, that you don't reapply for the sake of reapplying, or if new evidence comes to form, that you would have a body after a reasonable time period that would not review but would consider that application deemed to be a new application even if it is by the same person.
Mr Hundt: Yes.
Mr Pouliot: I share in your concern. I wouldn't count too much, and I say this with respect. I think regardless of administration, people are quite reluctant when it comes to appeal to cabinet, because things haven't changed a heck of a lot. It's just one more crack at it and it has very little chance of success because it kills the ministry in terms of morale and it certainly undermines the authority of the board.
Mr Carroll: Following up on that line of thinking, because I'm a little bit confused as to exactly what the issue was there, but the new board that we're proposing will not have a political component to it. Do you not see that as an improvement over the current situation as described by Mr Pouliot?
Mr Hundt: The Ontario Highway Transport Board to my knowledge has never had a political component, but there was always this option, if you were turned down by the board, to appeal to cabinet. So they were always supposed to be completely neutral, OHTB.
Mr Carroll: You'd like to see us allow more competition through that transition period. In other words, you'd like to see deregulation tomorrow. That would be your preferred position?
Mr Hundt: Yes, by all means.
Mr Carroll: Okay. But in the absence of that, you would like to see Bill 39 allow more deregulation, instead of just, "On January 1, 1998, we're deregulated." Would you believe in deregulation?
Mr Hundt: Yes.
Mr Carroll: Explain to me a little bit. We had a gentleman in here before who was in the same business you're in, the bus tour operator business. He didn't own any coaches. You own some coaches that you operate under somebody else's licence, I understand.
Mr Hundt: That's correct.
Mr Carroll: He talked about a situation, the problem being that for him to buy the service of the coach he was totally at the mercy of the person who had the licence to operate in the area he wanted to pick the people up from. He talked about a situation, a specific one, where to take people from London to Atlantic City was $2,600 but to take people from St Catharines to Atlantic City was $5,400 because he was dealing with two different people. Is that a fairly common occurrence? Maybe not of that magnitude but --
Mr Hundt: That is very common and it makes it very difficult, as tour operators, to offer prices to the public when one bus company's charging him one rate and another one could be charging him rates that could be 30% or 40% higher.
Mr Carroll: And you have to use that company?
Mr Hundt: That's right; you have no choice.
Mr Carroll: Having your own buses and operating under somebody else's licence: How does that change that scenario for you?
Mr Hundt: It gives us more control over the quality of our service. We work with a lot of senior citizens and we've got drivers who do a much better job in serving those people. It gives us a lot more control, and also control over our pricing.
Mr Carroll: If you wanted to go outside of those areas where those licences function, you can't use your own buses?
Mr Hundt: That's right. Sometimes we've got to park a half-million-dollar coach, which doesn't make a lot of sense, and hire a coach from somebody else.
The Chair: Thank you, Mr Hundt, for taking the time to appear before us here today.
The Chair: Our last presentation this afternoon will be Mr Hugh Morris. Good afternoon.
Mr Hugh Morris: I'm appearing on my own behalf, but I'm also a member of the Canadian Transport Lawyers' Association. At about 5 o'clock their executive authorized me to appear on their behalf as well.
The transport lawyers' association is a group in Canada of about 125 lawyers, 100 of whom are Canadians and the remainder are Americans, and there's an allied organization in the United States. Our association's been active, and I certainly have been active, in appearing before regulatory tribunals across Canada for four decades.
I want to talk about six things, and hopefully I can keep my remarks focused and also brief, bearing in mind the hour of the day.
Firstly, I want to applaud the scheme of Bill 39. I think, as one who has appeared -- I was adding up today. I'll bet I have appeared 5,000 days in my career before the Ontario Highway Transport Board and other tribunals across Canada, so I've got some sense of how these regulatory tribunals work. I think what you have achieved is an attempt to telescope a function. Particularly, moving the enforcement side of transportation regulation over to the board is a major step forward.
I also like the idea of telescoping time, if it's at all possible, in order to have speedy hearings and hearings of some finality, although I'll have some comment about that in a moment.
By moving administration of enforcement to the board as well as the board functions to one body, I don't think three days a week, which I understand is the amount of time they're going to be given to operate, is nearly enough. I think in whatever budgeting that takes place or direction takes place, you need to give the flexibility, if the workload is there, to let them work somewhat longer.
I know this industry has relied upon this board in particular for decades, for as long as I've been there, firstly as a body of expert opinion and a board that works very, very efficiently. The industry has found over the years -- and certainly I as a practising lawyer and I think my colleagues -- you need advice on a timely basis, you need it on a daily basis, you need it to be responsive, and you need decision-making to be done in a speedy manner as well. My experience over the last 10 years, and particularly today's board, it's a very dedicated group of public servants who do an outstanding job and I just question how they can do it in three days.
The second point I want to make is the question of no hearings. I know the purpose of this is to speed up the process, but I tell you, no hearings will not speed up the process.
I think of Dr Bunting who's sitting back here. My hunch is the new procedure, the new process will be not bringing in 100 people to a hearing from all across northern Ontario, or all across anywhere else, and saying: "We're in favour of more competition." It'll be expert testimony: city managers, city industrial officers, experts such as Dr Bunting. Most tribunals with which I am familiar give the tribunal the power to determine that it will be no hearing, or it will be a hearing, or part of it will be in public hearing.
For instance, Dr Bunting could be far more effective giving evidence orally. He files his brief. "Dr Bunting, do you swear the contents to be true?" "Yes, I do." "Would you give the same answers today if you were asked them orally?" "Yes, I would."
No more direct examination; cross-examination instantly. The board gets the flavour of what he's got to say in cross-examination because his brief is already there, the competing brief is there and that kind of expert testimony is far more effective for the decision-maker if it's in a public hearing, because what if the board has some questions? We've got Dr Bunting's brief, we've got Dr X's brief in competition, but I have some questions. How do I question them? I don't have any way of questioning it or asking more questions or informing myself.
If the essence of this legislation is to speed up the process, in my view it can be far more quickly handled than to have to prepare a long document in reply, no questions, and maybe another reply document from the applicant, no questions. It all takes a lot of time and is far more efficient if handled in a public hearing. It lets the board decide, based on the written material it ha. "That's not necessary for a public hearing. I don't need to hear 100 citizens from Timbuctoo saying they want more competition. I'll accept that evidence, but I do want to see what the expert has got to say under cross-examination."
Page 3, paragraph 2 of my brief. The board can't rehear or review or amend its decisions, basically doing away with sections 16 to 20. I heard some comments on the appeal provisions and I really wasn't intending to spend any time on it, but if I could briefly comment, petitions to cabinet have not worked, traditionally. That's too time-consuming, too much written material and it's really difficult for a cabinet to understand why the board made the decision it did.
There is a provision in the existing act which works very well and has some salutary benefit to the unhappy applicant or the unhappy respondent; that is, you can bring a motion asking for a hearing by way of argument only, and maybe the legislation or rules of the board would be "written argument only, a written motion only," everything filed by fax, shortening the time limit. The purpose of all this is to speed up the process. We don't want hearings going on for months and months, in writing or otherwise.
If you're unhappy, you file a motion maybe on five days' notice by fax. The board considers it and gives an answer. The respondent to that motion replies in another five days, the board reads it and says, "No, you're not entitled to another hearing," or "You're entitled to a hearing on this one specific issue," just one narrow issue. At least it gives you a little bit of a safety valve to let possible errors be corrected, and I'm not talking about typing errors, because the Statutory Powers Procedure Act provides for them.
I think you need to look at the entire section in the Statutory Powers Procedure Act that lets a board make its own rules as to how it's going to handle this situation. If you're going to make the system work and have some credibility, I would have some safety valve, but shorten the time; make it very short, maybe no hearing on the rehearing, if you will, but some method by which you can say, "Hey, you missed the whole point on this area," or "You've disentitled me to something that everybody agreed to and you've given me something that nobody agreed to."
There's got to be some safety valve because you can get decisions that might be 10 pages long; it's easy to make a mistake when you don't have a chance to consult in one way or the other. A rehearing on a very simplified basis I know would work.
The transition provision is unfair to the public. If the purpose is to speed up the process, I want to back up. In February, the Ministry of Transportation advised the transport board: "No more hearings. You can't do anything with anything." I objected. That's unlawful, in my opinion. I threatened to take the board to court if they wouldn't hold hearings. I've now got my hearings back.
This was all in anticipation of legislation that would have been enacted a couple of months ago. I understand, and I applaud what the ministry had done in trying to harmonize and speed up this process. I think they've done an outstanding job, but in that area we've got commercial transactions sitting out there and the public buying and selling, and I can't have a hearing. Now we can have hearings.
Let's say this legislation is enacted on June 15. I have an application I filed last week. Normally it would be published for a hearing in the March 25 or March 30 Ontario Gazette, whenever that Saturday was -- 29 days to oppose, so I've gone past June 15 and I have to start all over again; I have to refile. I'd have to put in a business plan now. I don't have to put in a business plan the way the current system is. I do that at the hearing.
My hunch is that by not allowing the legislation to permit applications filed and hearings commenced to go forward under the transition provisions, I could lose two, two and a half months in time in an industry that depends historically on fast reaction time from the board, a very efficient board and a very quick response time in terms of your ability to get a hearing and get a decision.
I don't see how anyone is prejudiced if you allow me to file today, get my hearing and proceed under the old legislation rather than having to start all over again in a costly, time-consuming, time-wasting process.
It's a big industry. A lot of mom-and-pop companies operate in this industry, but I believe it's unfair to force me to start all over again, especially in these economic times.
The final point I want to make, and you've all touched on it, is this whole question of harmonization. As I said earlier, I've spent more time before this board than I think they care to admit, but I can tell you that in eastern Ontario a lot of small operators will be dead meat very quickly if the competitive environment suddenly has them facing not just the big Montreal operators, of whom there are many, but many other small mother-and-father operators in western Quebec who will move into that market just like that. It's unfair.
I know for a fact that the Ontario segment of this industry -- not just the Ottawa Valley -- northeastern Ontario, coming over from Rouyn-Noranda, would be devastated within six months, I assure you, with this additional competition if they didn't have an opportunity to operate on the same level playing field. It just will hurt them very badly. I'd have the applications filed tomorrow. If you do deregulate, in a year and a half it will hurt those family businesses very badly.
The same would hold true for northwestern Ontario. Manitoba operators will be here just like this. I've tracked this both in the United States and Canada for many years. Certainly, from what I read of what Quebec wants and what Manitoba wants, they believe in a system which in essence protects rural communities with service by virtue of their regulatory scheme, and I don't see them changing their minds in the near future.
In conclusion, I applaud what's been attempted here. I think it's a first-class piece of work. For the next while it will work well, especially the ability to handle much of this work on a no-hearing basis. Even if you accept my thesis that where you've got a specialist or an expert such as Dr Bunting, it's far more effective and far better for the tribunal, in making its decision, to have that person heard orally, but you don't need troops of witnesses coming in to make their submissions.
My very last point is, if it is intended to deregulate on December 31, 1997, if we have legislation on June 15, in essence we have about 18 months. I have to say that's a very short period of time for anyone to be on a learning curve. I would hope that whomever the government appoints, they pick some people who have the administrative experience, the historical experience of how this board has worked, because if they don't, they'll fail.
I don't agree with all the decisions the existing board makes. I've never agreed with all the decisions, because sometimes I lost, but if you talk about integrity, competence and experience, it takes a long time to learn it, and the people you've got there are first-class administrators in a really tough job. If they are to be replaced, fine, that's government choice, but I certainly hope the government will pick people of similar experience and dedication, because these are really good people. Thank you very much.
Mr Pouliot: When one listens to Mr Morris, integrity, competence and experience come to the forefront. With respect, sir, I say this not so much by way of a compliment as by way of observation and reputation. Any government would be well advised to listen to your counsel. Not to do so, in my opinion, would be at the peril of the public good. You offer equilibrium and true balance. Your experience has long been acquiesced and attested to by people on all sides of the issue.
Unfortunately, what makes us all worried is not if they will deregulate and under what conditions; we have to assume from sitting where we are, Mr Morris, that it will be done under existing conditions -- if we could have the certainty that time would permit us to witness other practices than predatory, because not vultures but certainly some entrepreneurs are poised for the day when it's legal to file and they will be soliciting your good advice and your good service. They won't come by the thousands, but those who come will be well equipped and there will be many. I don't think anyone wishes to have anyone hurt, and I certainly appreciate very much your understanding of process.
What better light and expert to guide a client? If I were a proponent, if I were in that sector, I would hire yourself and I would hire the good doctor as well. Hopefully, with expediency I would be able to afford both of you. I really have no question, just comments. Thank you.
Mr Morris: I accept.
Mr Tascona: Thank you, Mr Morris, for your presentation. I just want to refer you to page 3 of your brief dealing with the section 16 review. What types of errors are you referring to? You alluded to possible other circumstances as well where the review powers would be beneficial.
Mr Morris: The kind of situation where they may describe a route and misname the route, misname the towns, misname the counties or the townships or the regional municipalities, misname the types of equipment, make errors with respect to various conditions the parties had agreed to in a licence. Licensing is a very complicated process. Some of that can be corrected under the Statutory Powers Procedure Act, but that act also says boards can make powers to rehear unless specifically prohibited by a statute. I just question that.
My hunch is that there weren't two motions in the whole year to rehear a case before the board; maybe three, but that doesn't take a lot of time. There was one recently, which I was only watching peripherally, where the person was not a lawyer. They filed a motion and the board heard the motion and said, "Yes, we're going to hear argument on this one narrow point." It was just one narrow point, and the person was successful.
With fax today it needn't take two or four weeks or notice in the press or anything else. You just give notice to the parties, and it's a very salutary way of helping to correct those errors, but also to try to air a subject where you're an aggrieved party on one side or the other.
The key is speed, and I think this legislation has to be handled very quickly because the industry is just sitting in limbo. But I also think that once it's in force, the ability of the board to move quickly, expeditiously and give very quick service to the public will have a lot to do with its ultimate success over the next 18 months or two or three years.
Mr Tascona: Isn't that why it's important that you don't have applications filed prior? Your point in terms of applications filed, that's going to slow down the board if you have a flood of applications filed for the transition.
Mr Morris: Why would it slow them down? Why can't they sit and have the hearing right now?
Mr Tascona: If you want to move fast, if you're going to have those types of procedures in place which still will be subject to section 16 review, you wouldn't have the speed you would need.
Mr Morris: I don't understand you, sir.
Mr Tascona: I think my point is basically that if its hearings commence, the rules don't change, but you could have had a flood of applications coming in before, and that will slow down the board.
Mr Morris: Not really, because a lot of them are not opposed. The board has power over its own procedures, and you can elect. I can say: "I don't want to spend a lot of money on a five-day hearing. I'll go the other route." Why take away that option?
Mr Colle: Thank you, Mr Morris. I think you've made some very good suggestions that might improve this bill. The one thing that is very apparent here is that the board is going to have some complicated matters before them and they're going to have to deal with them quickly. Do you feel that the one way of allowing for a safeguard on decisions made for the board and recourse for applicants is to allow people possibly to file a motion that would enable them to have an opportunity to address an error or some kind of contradiction in the ruling?
Mr Morris: That's correct, but again on a very tight, time-limited basis, and the motion might be handled in writing. All I say is, you need a safety valve of some kind. It'll work better if there is that safety valve, provided it doesn't delay the process.
Mr Colle: If the safety valve isn't in place, how will it cause confusion and problems in the industry?
Mr Morris: I don't see it. The safety valve is there now, excluding petitions to cabinet and going to the court, which I agree don't work. I can bring a motion and say I want to rehear this case, and the board has pretty tight rules on whether I can succeed even on that motion.
Mr Colle: Those are pretty rare.
Mr Morris: Very rare.
Mr Colle: At least in this case, if it's kept there you know there is that recourse.
Mr Morris: That's right. It's a great safety valve.
Mr Colle: For that odd time it happens.
Mr Morris: Seldom used.
The Chair: Thank you, Mr Morris. I'm glad we were able to accommodate you at the last minute at the hearings today.
That being the last submission for us today, this committee stands adjourned until 3:30 in this room on Wednesday, May 15.
The committee adjourned at 1908.