The CTA Review:
Searching for Balance-Can
It Be Done?
By
Brian Flemming
Delivered to 36
th
Annual
Conference of the Canadian
Transportation Research
Forum Vancouver
May 8
th
, 2001.2
I welcome this opportunity to speak to you today.
The Canadian Transportation Research Forum (CTRF) has been the premier
gathering place for Canada's transportation professionals for more than 35
years. Over that time - and again this week - the Forum has promoted
excellence in research on a wide range of transportation issues. I trust our
work of one year will be up to those high standards.
In less than seven weeks, the distinguished Panel which I am honoured to
lead, will deliver our report to the Minister of Transport. Soon after that, I
expect the report and its recommendations will become public.
While I cannot scoop the Minister by telling you what our detailed
recommendations will be. I think it would be useful to give you some of my
reflections on the last 10 months of intensive work-of our reflections,
actually since there are five of us on the Panel and three of us - a quorum -are
here today. I will touch on how we interpreted our mandate and what
we heard and learned along the way to June 30, 2001.
First, some background reminders. The appointment of the Panel to review
the Canada Transportation Act was neither a governmental nor a ministerial
whim.
Parliament itself required our appointment when it mandated a periodic
review through Section 53 of the CTA that says, four years after the Act
comes into force, the Minister of Transport must appoint people to assess
the Act to determine whether it is providing Canadians with "an efficient,
effective, flexible, and affordable transportation system". My co-chairman
Jean Patenaude calls these "les quatres mots magiques", the four magic
words.
The current Act came into force in 1996, to ours is the first review of it..3
Last July, five persons were appointed to a Panel by the Minister of
Transport.
 In addition to myself as Chairman, Jean Patenaude serves as Vice-Chairman.
Prior to this assignment he was Vice-Chairman of the
Canadian Transportation Agency. Jean is a distinguished transportation
lawyer whom many of you know and respect.
 Dr. Glen Findlay once held a number of cabinet positions in the
Government of Manitoba, including Transportation for seven years.
When he is not working on the Panel, he farms 5000 acres at Shoal Lake
in Western Manitoba.
 The Honourable Robert Rae is the former Premier of Ontario, and is
currently a partner at the law firm Goodman, Phillips & Vineberg. Most
recently, Mr. Rae has been in the news doing a splendid job battling for
Canada's softwood lumber producers..
 And finally your Vice President of CTRF, Dr. Bill Waters, distinguished
economist and former director of Transportation Studies at the
University of British Columbia is someone who hardly needs and
introduction to this Forum. Bill has been a tower of intellectual strength
and gentle discipline throughout CTAR's existence. Our report will be
immensely better because of his presence on the panel.
From the outset, my colleagues and I were in no doubt as to the magnitude
of the task before us. Our terms of reference encompassed all modes of
transport essential to the national economy-ships, trucks, trains and
aircraft.
As well as-wait for it because it's a mouthful-"any other Act of
Parliament for which the Minister is responsible that pertains to the
economic regulation of a mode of transportation and transportation
activities under the legislative authority of Parliament".
We did some checking early on and found that there were no fewer than 50
such pieces of legislation. But our job went even beyond those acts of
Parliament..4
On top of everything, in the Panel's terms of reference, Minister Collenette
as is his right and responsibility-suggested half a dozen extra issues of
special interest to the Government that we were asked to look into. And he
asked the Panel to deliver a written report half way through our mandate on
one of the most challenging issues of them all, the "Godzilla" of Canadian
transportation policy-competitive rail access.
Needless to say, we had our work cut out for us, and unlike a Royal
Commission with years to waste, we had only 12 months to do it.
There were many potential pitfalls associated with such an ambitious
mandate but I believe we've managed to avoid most of them.
A more insidious risk, however-especially working together with so many
intelligent and experienced people on such a compelling and vital subject-
is that we might study everything but wind up being too superficial. At the
beginning of our work, my colleagues and I determined that we could only
make a significant and useful contribution if we identified the core
challenges and deployed our resources accordingly. I believe we have
succeeded in meeting that challenge but you will be the final judge of that.
The competing imperatives were obvious: Transportation is an intensely
practical subject with many livelihoods, communities and investments at
stake. Narcissistic musings on public policy that failed to come to grips
with the tough issues would simply not do.
We decided our report had to be more than a laundry list, or litany list, of
outcomes, good and bad, from five years of living with the CTA. Canadians
expected, and deserved, critical insights into how their transportation system
can and should serve them in the years ahead, and how public policy could
best be structured to help make that happen. High minded notions to be
sure, but no less valid because of that.
I trust we have found the appropriate balance in our report. Balance is a
theme I will return to shortly.
Even before our report is released-indeed, we are still drafting it-I can
tell you that one of the accomplishments of which I am most proud is how
we consulted with Canadians. These consultations were sustained, intense,.5
multi-dimensional and highly constructive. Not only did Panel members
and staff learn an enormous amount from the process, I trust, so did the
participants. This mutual learning experience was especially important in
the area of competitive railway access.
We held formal and informal meetings with groups and individuals, often
more than once, in every province and territory. In January, we even visited
Iqaluit the capital of Nunavut - Canada's newest Territory.
We took every advantage to engage individuals and groups and to
encourage dialogue amongst some groups that were not used to civilized
discourse with one another.
Interest groups, companies, associations, producers, shippers, consumers of
every kind submitted briefs - more than one hundred and seventy of them -Panel
Members have read thousands and thousands of papers of material in
getting up to speed.
We were not shy about seeking outside help. We engaged two prominent
non-partisan policy research bodies-WESTAC of Vancouver and the IRPP
of Montreal-to assist us in casting the widest possible net for information
and analyses.
The Panel did its own intellectual homework too. We commissioned forty
studies in an attempt to fill important gaps in our knowledge about how this
country's transportation system functions. By the way, all of this
information is already available in one form or another on our web site.
I mentioned earlier the need to identify core issues. We tried to do this early
in a public document we released in January entitled - Issues Under
Discussion. This document has since proved extremely valuable for
focusing our own efforts and those of the many stakeholders with views to
convey to us.
I am going to touch on each of these core issues briefly.
1) Emerging Industry Structures.6
Then Panel weighed thoroughly the implications for competition and
efficiency in the air and rail sectors of newly - emerging industry structures
- which is economist's jargon for mergers and corporate concentration.
In passenger aviation the focus was on the structure of the domestic airline
industry and an assessment of current and future barriers to entry of new
participants.
For rail there were two related concerns: looking across an increasingly
porous transportation border with the United States, where mergers have
reduced the number of rail carriers to a handful. Simultaneously at home,
the two class-A Canadian railways have transformed themselves into fully
North American operations where half their revenues now come from
customers in the lower 48 states.
The Panel's task was to determine whether the existing legislation and
policies impede or distort market forces in ways that are harmful and, if so,
whether there are practical solutions.
2) Sustainability of Capital Investment
Transportation infrastructure as we all know is hugely expensive, and likely
to become more so as technologies of ever greater sophistication are
required to stay competitive. The Panel wanted to ensure that, in the first
decades of the 21
st
century, Canada's public policies and regulatory system
created an environment conducive to capital formation and investment.
This issues arises both in areas where governments invests directly - such as
roads and urban transit - and in areas where private capital investment
prevails, railways being in prime example.
3) Sustainable Development and the Environment.7
While sustainable development and the reduction of green-house gas
emissions are part of overall federal policy, transportation policies have not
been coherent on the issue.
Here, the Panel weighed options for promoting the development of
sustainable transportation systems, and tried to meld those efforts with
provinces and cities, especially in the areas of mass transit and roads.
4) Preservation of Urban Rail Corridors
An association concern is the need to preserve urban rights-of-way for
future mass transit use. The policy dilemma here was how to make sure
urban jurisdictions get access to these assets at reasonable cost, while at the
same time compensating current owners appropriately.
5) E-business and Global Logistics
I don't need to tell anybody in this room about how electronic business and
global logistics are changing the way all companies do business. No sector
is likely to be more affected by this fundamental change on technological
environment than transportation, and transportation in turn is a major key to
Canada's status as a global trading nation. The equation is startling simple.
The Panel's recommendations here will be aimed at ensuring that legislation
and policy do not hinder the transportation sector in adopting e-business
practices.
6) A National Transportation Vision
The Canada Transportation Act specifically mandates the Panel to examine
overall transportation policy. Over the course of our review stakeholders
made it abundantly clear that in addition to their specific concerns, they
wanted CTAR's recommendations to help bring a new coherence to
transportation policies overall. The principles the Panel will articulate in its
final report are aimed at meeting this concern, serving we hope as
innovative guideposts for federal policy makers and legislators..8
While on this subject, I should mention that my colleagues and I were
heartened to note that even before they've been delivered, our
recommendations are impacting the Government's overall transportation
strategy.
Three weeks ago, in Victoria, Transport Minister David Collenette launched
a process to create a national transportation "blueprint" by Spring 2002. He
singled out the Review Panel's consultation process and said our report
would be an essential step along the way to creating this new transportation
strategy.
7) Competitive Rail Access
It is no secret that the Review Panel has devoted a significant proportion of
its time and resources to rail access issues. Our interim report dealt solely
with that one question, and it will take up a lot of space in our final report.
I believe our efforts in this area were both necessary and appropriate. Rail
access issues are contentious, of long-standing and both technically and
economically complex. While I cannot claim the results of our inquiries
will constitute a revolutionary breakthrough, my colleagues and I are
convinced that there is now a clear convergence emerging among interested
parties on what the important issues really are, and where to focus problem-solving
efforts.
The appear to us to be four main points of convergence:
First, that the rail transportation system works well for most users most of
time. The basic elements of a competitive and efficient rail transportation
system are in place.
Second, virtually all stakeholders stated a preference for commercial
solutions over regulatory ones.
Third, there are problems - very serious issues of community development
and income - that transportation policies cannot solve. The crisis in Prairie.9
farm income is not the only one but certainly is the most widely known of
these ongoing difficulties.
Fourth, that Canada's transportation markets are sufficiently diverse so as to
make "one size fits all" regulatory solutions potentially problematic. Any
change to legislation and regulation must be structured so as not to solve a
problem in on area and create five new ones somewhere else - all at the cost
of overall efficiency and effectiveness.
"So, go on, tell us what you recommend" you say seductively. Well, that I
cannot do that today. It would be impolitic, impolite and, not incidentally,
against the law. The Minister of Transport gets first dibs on reading our
report before it becomes public.
But I can tell you some of the essential principles that underlie virtually
every element of what is shaping up to be a complex and comprehensive
document. In no particular order of importance here they are:
Transparency: Information is essential for both government accountability
and corporate competitiveness. Citizens are both taxpayers and consumers.
The more they know the better. Hoarders of data must, like the proverbial
dogs in the manger be encouraged to disgorge data-but always in a
commercially responsible way.
Flexibility and Adaptability: The life cycle of legislation and regulation is
measured in years and decades while markets, technologies and people are
changing ever more rapidly. The regulatory environment for transportation
needs to avoid the straitjackets of one size-fits-all and instant obsolescence.
As the speed of change accelerates, conventional solutions may no longer
work.
Self-executing Policies and Regulations: Legislation should be designed to
encourage parties as much as possible to mediate their own disputes and
police their own problems. It should discourage the requirement for costly
appeals and regulatory oversight.
Regulated Competition As Last Resort: Competition is best fostered through
commercial means. As far as possible, regulation should be the last resort
employed in order to solve any market failure..10
Most important, there is the search for balance: The need to balance
competing "goods" has emerged as a constant theme, in large ways and
small:
 There are worthy private transportation interest as well as public ones.
 The efficiencies of large-scale enterprise are self-evident, but so are the
dangers of concentration of market power.
 Remote communities surely deserve access but costs too must be
weighed.
 Consumers want low prices as low as possible, but operators need
revenues sufficient to satisfy shareholders and keep running.
 Grain handling could be done more efficiently but at what cost to
communities.
The Panel believes that the role of public policy and legislation is not to
decide the correct balance in any of these situations. Rather we must help
create commercial, civil, legal, and regulatory environments where these
balances can be conceived and reached according to circumstances by those
most concerned.
Thank you for giving me this opportunity today to present this truncated of
"report card" on the Review Panel's travels, both intellectual and corporeal.
With such a short time to go before we report to the Minister I doubt you'll
hear from any of us on the subject until after the document is made public
then. We await your reviews.
In the meantime, CTAR, the five-stringed policy panel, will finish its
composition, one that will, I trust, be both melodic and harmonic-in other
words, balanced.