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Proceedings of the Standing Senate Committee on
National Security and Defence

Issue 3 - Evidence

OTTAWA, Monday, November 18, 2002

The Standing Senate Committee on National Security and Defence met this day at 4:20 p.m. to examine and report on the need for a national security policy for Canada.

Senator Colin Kenny (Chairman) in the Chair.


The Chairman: Welcome to the Standing Senate Committee on National Security and Defence. Today, we will continue our study on the need for a national security policy. I am Senator Colin Kenny, from Ontario, and I chair the committee.

Let me introduce the other members of the committee:

Senator Michael Forrestall is from Nova Scotia. After an early career as a journalist with the Halifax Chronicle- Herald and as an airline executive, he entered politics and was first elected to the House of Commons in 1965. For more than 37 years, he has served the constituents of Dartmouth, reminding us of the particular importance of 12 Wing Shearwater. Throughout his parliamentary career, Senator Forrestall has followed defence matters, serving on various parliamentary committees as well as representing Canada at the NATO Parliamentary Assembly.

Senator David Smith, from Ontario, is new to the Senate and to this committee. During a career as a lawyer, he became a distinguished practitioner in municipal, administrative and regulatory law. At the time of his appointment, Senator Smith was chairman and partner of Fraser Milner Casgrain, one of Canada's oldest and largest law firms. In the 1970s, he was a member of Toronto City Council and was appointed Deputy Mayor in 1976. From 1980-84, Senator Smith sat in the House of Commons and served as Minister of State for Small Business and Tourism.

Senator Jack Wiebe is one of Saskatchewan's leading citizens. He has been a highly successful farmer and a member of the Saskatchewan Legislative Assembly. In 1994, he became the first farmer in almost 50 years to be appointed Lieutenant-Governor of the province. Senator Wiebe has a strong interest in the Reserves and has served as the Saskatchewan Chair of the Canadian Forces Liaison Council.

Senator Norman Atkins is from Ontario and came to the Senate in 1986 with a strong background in the field of communications. He also served as an adviser to former Premier Davis of Ontario. A graduate of economics from Acadia University in Wolfville, Nova Scotia, Senator Atkins received an Honorary Doctorate of Civil Law in 2000 from his alma mater. As a senator, he has concerned himself with a number of education and poverty issues and has championed the cause of Canadian Merchant Navy veterans. Senator Atkins currently serves as Chair of the Senate Conservative Caucus.

Senator Michael Meighen is from Ontario and has a specialization in administrative and commercial law. He has a strong background in business and holds extensive community interests. Appointed to the Senate in 1990, he was a member of the Joint Parliamentary Committee that studied defence policy prior to the release of the 1994 Defence White Paper. Senator Meighen is the Chancellor of the University of King's College in Halifax and is an active supporter of the Stratford Festival.

Senator Tommy Banks is from Alberta and is well known to Canadians as one of our most accomplished and versatile entertainers and as an international standard-bearer for Canadian culture. A Juno Award winning musician, Senator Banks has achieved national and international renown as conductor or music director of many signature events such as the opening ceremonies for the 1998 Olympic Winter Games. He is a resident of Edmonton and a strong supporter of the Princess Patricia's Canadian Light Infantry.

The committee's mandate is to examine the subjects of security and defence. Over the past 16 months, we have concluded a seven-month study of the major issues facing Canada and we have produced a report entitled ``Canadian Security and Military Preparedness.'' We have also issued a report on coastal defence entitled ``Defence of North America: A Canadian Responsibility.'' In the past week, the committee released a report entitled ``For an Extra 130 Bucks...Update on Canada's Military Crisis, A View From the Bottom Up.''

The Senate has asked the committee to examine the need for a national security policy and today's focus will be airport security.

Before I move to the committee's business, I would like to take a brief moment for an important announcement. I would like to make a small presentation to the clerk of the committee, Barbara Reynolds. On behalf of the committee, I am pleased to present to Ms. Reynolds, for her service to the Senate, and to this committee in particular, the Queen's Golden Jubilee Medal, celebrating Her Majesty's 50th anniversary.

Perhaps I could ask General Keith MacDonald to come forward, as well. General MacDonald has been military adviser to the committee since its inception and has been of great service. It is my pleasure, on behalf of the committee, to present him with the Queen's Golden Jubilee Medal.

So far, our committee has visited airports in Montreal and Vancouver and held hearings on this subject in Toronto in June and in Ottawa last August.

Our first witness today is Ms. Sheila Fraser, Auditor General of Canada. She was appointed in May 2001, having served as Deputy Auditor General for two years. Before joining the federal government, Ms. Fraser enjoyed a fruitful and challenging career in the private sector and has had various assignments with the Auditor General of Quebec, as well as with several departments of the Government of Quebec. The Office of the Auditor General has conducted a study on the transfer of ownership of airports. In addition, there have been several studies on the control of Canada's border directly related to security.

Ms. Fraser, welcome to the committee. Would you be kind enough to introduce your colleagues to us, please?

Ms. Sheila Fraser, Auditor General of Canada: Mr. Chairman and honourable senators, it is a pleasure to be here this evening to discuss the work of our office related to air travel security. With me is Shahid Minto, who is the Assistant Auditor General, currently responsible for citizenship and immigration and for both audits that we will be discussing relating to Canada Customs and Revenue Agency and airport transfers. Also with me is Peter Kasurak, a principal in our office, who is responsible for the Solicitor General portfolio and for national security audits.

I would like to review the reports we have already published that touch on air travel security and then give an overview of relevant current projects.

The work we have done to date related to air travel is not recent and predates the September 11 attacks. Our office has not audited air travel security directly. Our most recent transport audit, which was published in October 2000, focused on ownership transfer of airports in the national airport system. The audit centred on the financial and oversight aspects of the transfer and not on air travel security and safety. We have completed several audits of the control of Canada's border that are directly related to security.

In April 2000 we published two reports that dealt with the movement of people. The first report looked at how the Canada Customs and Revenue Agency manages risks at ports of entry, including airports. We found that customs officers did not have adequate information to assess the risk that travellers pose to Canada and that many long-service officers had not received necessary refresher training.

Some findings were specific to air travel security. The Primary Automated Lookout System used to screen travellers was outdated, and customs inspectors used it infrequently. Further, the information for targeting air passengers was poor. Customs had a limited capacity to receive advance information on travellers from airlines and depended on data at the discretion of the airlines.

In that same report, we presented our audit findings on the economic component of the immigration program managed by Citizenship and Immigration Canada. We found that these officers had little information and support to ensure that applicants were unlikely to engage in criminal activities or endanger the safety of Canadians. There were no effective measures in place to discourage people from submitting fraudulent applications, and visa officers often resorted to costly detection methods. We also found inadequate control over revenues, visa forms and computer systems. As in our customs audit, we found that the training of visa officers was inadequate.

In addition to auditing the people side of border control, we also audited the control of commercial shipments entering Canada. In December 2001, we reported on an audit that included 13 major airports. We raised questions about the effectiveness of efforts to target high-risk shipments. At the time of our audit, the Canada Customs and Revenue Agency was not collecting the information it needed to tell whether its targeting activities were leading to more enforcements actions. In other words, it did not know whether its approach to risk management was working.

As you may know, we follow up on all our recommendations a year later by asking departments and agencies to tell us what they have accomplished. According to the information we have received, most of the recommendations we made in the audits I have mentioned are being dealt with satisfactorily. An exception related to air travel security is training. Neither Canada Customs and Revenue Agency nor Citizenship and Immigration Canada have reported much progress.

Let me now turn to work in progress on which we have not yet reported. As this committee is aware, the government decided to fund the $2.2 billion in air travel security improvements contained in the 2001 budget through a $12 Air Travellers Security Charge. Air carriers are to remit the charge each month to the Canada Customs and Revenue Agency, who in turn deposit it in the Consolidated Revenue Fund of the government

Budget 2001 provided additional funding to Transport Canada to strengthen its capacity to set regulations, review standards, and monitor and inspect air security services. A number of key air travel security activities are provided by the Canadian Air Transport Security Authority, or CATSA, also created by the 2001 budget. CATSA may provide services directly or may pay other agencies such as the RCMP, airport authorities or the private sector to perform security services. Revenues thus end up in the Consolidated Revenue Fund while most expenditures are made by CATSA.

The Department of Finance is now engaged in a number of studies to review and update its original expenditure and revenue estimates. In consultation with the departments and agencies concerned, the Department of Finance is also preparing a separate financial statement for the proceeds of the air travellers security charge and of expenditures for enhanced air travel security.

At the request of the Minister of Finance, we have begun a financial audit of this financial statement aimed at providing assurance that both revenues and expenses have been correctly stated. We expect to complete this audit soon. We believe that a separate annual financial statement for this program is a good idea and should the Department of Finance decide to continue to prepare it, we would be pleased to continue to audit it.

As required by the Crown Corporations section of the Financial Administration Act, in future years we will perform annual financial audits of the Canadian Air Travel Security Authority as well as a special examination every five years. In addition to our routine annual monitoring of progress on our recommendations, we also do in-depth follow-ups where we believe it is warranted.

We will report on our follow-up of the Customs audit and the audit of immigration enforcement in the spring of 2003. The audits focus on activities related to control and enforcement, including: the update of the memorandum of understanding between Citizenship and Immigration Canada and the Canada Customs and Revenue Agency to co- ordinate their work; immigration training for both Customs and Immigration officers; quality control of screening travellers at ports of entry; computer support for the Primary Inspection Line at ports of entry; improvements made in the provision of advance data on passengers; and the progress of the Canada-U.S. 30 Point Action Plan. The audit will cover these activities at four major airports as well as land ports of entry.

We are also working on a government-wide audit of the $7.7 billion initiative announced in the 2001 budget to improve national security. As you know, $2.2 billion of this funding was directed specifically at air travel security. Other funding intended to improve intelligence and smart border initiatives will also affect air travel. This audit is still in the early planning stage, and it is difficult to say to what extent any particular subject will be discussed in the final report; however, air travel security is one of the six top-level issues that the audit is pursuing.

The other issues are strategic resource allocation decisions, which are essentially ``where is the money going and why?'', human resource capacity, information technology and physical infrastructure, consequence management and reporting to Parliament on the use of new powers.

The audit will likely focus on Transport Canada's role in managing air security overall. We note that the government's response to the Public Accounts Committee report on airport transfers referred to interim improvements of airport security before the establishment of CATSA. We will review these improvements in the planning phase of our audit.

That, Mr. Chairman, completes my opening statements. We will be pleased to answer questions and particularly appreciative of any areas of concern that we might include in our future work.

Senator Banks: Thank you for being here. I know I am asking this question a little in advance of your being able to fully answer it. You mentioned the $12 air traveller security charge that you are in the process of auditing, and you think it will be done shortly. I will couch my questions to presume your statement as to what is going in and coming out is substantially correct. I have three questions with regard to that charge, which was of great concern to many air travellers and service operators in Canada, some of whom regard it as punitive. First, do you have an opinion as to whether the imposition of the $12 per person charge is fair as it applies to persons travelling from here to Vancouver, as well as from here to Toronto, which is a much shorter distance?

Second, you have already mentioned the question of what is going into the top of the hopper and what is coming out of the bottom. I know it is difficult to follow specific funds, but the understanding of most Canadians was that the $12 was specifically being spent on airline security. Presuming the audit shows your report to be correct, are you satisfied there is a reasonable balance between the $12 going in and what is planned to be spent on airport security? Third, as a corollary to that question, the minister said at the time it was implemented that if it were too much, the fee would be reduced. That was said partly to assuage the concern of airlines, including the short-haul airlines, that if it were found that the amount of money was substantially in excess of what was needed to do the job, then the fee would be reduced. Do you have any opinion on the likelihood of that, given the ``dollars in, dollars out'' question?

Ms. Fraser: I will have to clarify that the audit that we are doing is essentially a financial audit, so what we will be auditing is the amount of revenues appearing on a statement and the amount of expenses.

Senator Banks: That is precisely my question.

Ms. Fraser: In that kind of an audit, we do not get into issues of whether amounts are fair based on travel. We will look at the amount imposed and whether it is recorded correctly in the books. There is no value judgment, if you will.

For the part of your question on costs, our understanding is that this $12 fee was to pay for incremental costs of security. Our audit will seek to ensure that it covers costs related to security and that they are incremental. In some instances, that will be clear-cut, in others it may not be so clear-cut. That is part of the audit of the expenses.

On the last question, my understanding is also that if the revenues exceed the expenses, there will be some adjustment. I believe the Ministry of Finance is looking at that now in various studies they are undertaking. We are not yet at a point where we can publish a statement. It will be up to the Ministry of Finance to determine how they want to deal with this going forward, based on the studies and this initial statement. We have to remember this statement is only for a very short period of time because the charges and expenses only came in a few months ago. I expect they will probably have projections over a longer term to see if the fee is reasonable or not.

Senator Banks: I have a very short question on another matter. Your report mentioned some things that have to do with the CCRA, which is now an agency rather than a department of government.

Is the CCRA susceptible to what your office refers to as ''special examinations'' under the Financial Administration Act?

Ms. Fraser: No, it is not subject to special examinations because it is not a Crown corporation, but it is subject to our value-for-money audits. We also do a financial audit on the statements of the agency. Every year, we do several audits of the agency and specific components of it.

Senator Banks: You mentioned the training levels of customs and immigration officers, for example, and commented at one point that they were insufficient in some respects. Does that fall within the value-for-money question?

Ms. Fraser: Yes.

Senator Banks: Can we therefore continue to look for advice from your office as to whether that situation has been addressed?

Ms. Fraser: Yes, most definitely. That would be one of the issues in our follow-up audit when we come back in the spring. Because it was a major concern at the time, we will be looking to see if any improvements have been made since the last audit.

The Chairman: To clarify the witness's answer to Senator Banks, when you refer to incremental costs, that sounds like additional costs. My understanding is that the airlines were paying for the inspection of passengers going onboard, and the federal government assumed that cost. Is that an incremental cost?

Ms. Fraser: No. It would be, for instance, for air marshals, who did not exist before, and exist now.

Senator Meighen: Can we get more examples of incremental costs?

Ms. Fraser: I will ask for my colleagues' assistance, but I know that air marshals, for example, did not exist before. If you had to increase the number of inspectors, then that would be an incremental cost. The additional screening equipment put into airports would be as well. It has to be clearly an additional cost to what was there before. Where there may be difficulty is in the allocation of overhead, because if you have hired 100 more people, that would bring more administrative work with it. The question then becomes ``how much?'', and that would have to have some judgment applied to it.

Senator Banks: There was also an undertaking when the government took over the screening, to which Senator Kenny has referred. It was an understanding that there would be an improvement in the quality, efficiency or usefulness of that screening process. Assuming that those things require higher pay and more training for officers, would those not be incremental costs?

Ms. Fraser: I can ask Mr. Kasurak if he has additional information.

Mr. Peter Kasurak, Principal, Office of the Auditor General of Canada: I think one of the key distinctions is that when we speak of incremental costs, we are speaking of costs to the government. Therefore, if the RCMP has to provide air marshal service, what is considered to be a fair charge against the enhancement initiative would include increased costs of training air marshals and perhaps hiring additional RCMP officers, but not the full cost of the RCMP depot at Regina, for example.

Therefore, in terms of the discussion, it is not incremental to the entire air system that was there before. It is incremental to government operations in that the departments that are providing the service are allowed to say, ``This is extra. We should be compensated for it.''

The Chairman: That would be excluding the costs that the airlines were paying in the first instance.

Mr. Kasurak: The government has taken that over from the airlines. In reference to a previous comment, it is supposed to be at a higher level of effectiveness than before. However, the costs of the Canadian Air Transport Security Agency, CATSA, which is either contracting out or directly providing this, are all incremental to previous government efforts. Now, there should be an equal and offsetting reduction in the airlines' expenses since the government has essentially taken over the activity. That is where that difference should be made up.

Senator Wiebe: I would like to follow up on Senator Banks' first question. I am not an expert when it comes to government finance, and neither are the majority of the people in Canada. That is why we all appreciate the work you do within your department.

For example, if in the current fiscal year, the $12 tax raises $5 million, and at the end of the fiscal year, only $2 million has been expended on security, what happens to $3 million? It goes into the Consolidated Revenue Fund, but is it automatically applied to the national debt, or is it there to be used for security in the next fiscal year?

Ms. Fraser: The whole $5 million in your example goes into the Consolidated Revenue Fund and could be used for any purpose. Parliament then re-appropriates it to this agency or other departments of government for the costs of airport security.

Senator Wiebe: You mentioned the following in your remarks today:

We believe a separate annual financial statement for this program is a good idea, and should the Department of Finance decide to continue to prepare it, we would be pleased to continue to audit it.

My question is: Do we as taxpayers have some assurance that the $12 we are paying will go directly towards enhancing security, or will it be used as other revenues that go into the general fund and become just another tax?

Ms. Fraser: I cannot answer that. I know the intention is that the revenues be used for these expenditures. As we have done in other cases where we have seen revenues that we think are dedicated to a certain expenditure far exceed it, we would raise it in our report.

The best way is to have the statement that the Department of Finance has prepared, which clearly shows revenues and expenses, because the two are not linked to CATSA. CATSA will have only expenses, and maybe not all the expenses, so it is important that this separate financial statement is prepared, and I hope they continue to do that.

The Chairman: Just to clarify that, the funds from the $12 tax go into the Consolidated Revenue Fund. Is it fair to ask you to describe to the committee how CATSA or the Department of Transport then accesses the $12 collected per flight? How does the money move from the Consolidated Revenue Fund to be spent on security items?

Ms. Fraser: It is done through the normal appropriation procedure.

The Chairman: It is exactly the same as any other expenditure. Therefore, can we expect at the end of the day to know down to the last nickel where the money has gone?

Ms. Fraser: There will be a separate financial statement, as for any Crown corporation, produced for CATSA, which we will audit. Those will be the expenditures in CATSA.

Possibly, there could be expenditures in other departments that do not flow through CATSA. Presumably, the large amount of money can go to CATSA, and appropriations will come in to finance those expenditures.

The Chairman: CATSA will compensate the RCMP, as an example? The funding would not go directly to the RCMP?

Ms. Fraser: That is right. It flows through CATSA.

Senator Meighen: To take Senator Wiebe's example, if the $5 million goes into the Consolidated Revenue Fund, will the Canadian taxpayer be able to know what comes out to fund airport security in a given period of time? If $5 million go in, will we be able to establish that $1 million has come out or $10 million has come out?

Ms. Fraser: It will be possible because there will be an appropriation given to CATSA, and it will appear on CATSA's financial statements. Therefore, you will know how much was voted out of the Consolidated Revenue Fund for CATSA.

However, if you do not have this other statement that is currently being prepared, you will not see on one piece of paper the revenues that came in on the $12 fee and the related expenses. That will not appear on one statement.

Senator Meighen: The amount going to CATSA could include rent for office buildings and salaries for employees. Therefore, to determine how much is going to enhance airport security — I do not mean to suggest that employees of CATSA would not play a role in that — in terms of equipment, for example, would one be able to break down those expenditures?

Ms. Fraser: We have started discussions with CATSA on the form of the financial statements. The first financial statements will be produced next March, and there are some concerns about the level of detail that will be given as to the nature of the expenses. We are presently discussing with them what minimum level of detail we think is appropriate.

Senator Meighen: In your audit dealing with the transfer of airports, there was a specific exclusion of safety and security issues. Who decides that? Is it you? Is it the people you are auditing? Is it a government minister? How does it work?

Ms. Fraser: The scope of the audits is our decision, and on this point, we were mainly concerned with the financial process on the transfers, not with other issues of security. It would have broadened the audit far beyond what is reasonable for us, and security is one of those things we said we would get to a little later on.

Senator Meighen: Are you able to give me any indication at this stage of whether you have noticed any progress in efforts to make management of airport authorities more transparent, accountable and consistent across the national airport system?

Ms. Fraser: We have not done any work that would enable us to comment on that.

Senator Meighen: Do you anticipate doing such work or being able to comment in due course?

Ms. Fraser: It would be an interesting point to look at, and we could take it under advisement if the committee thinks it is worthwhile.

Senator Meighen: I believe you mentioned in your audit the need for transparency, accountability and consistency. It would be interesting to know whether there has been progress in that area.

Finally, have you had any rationale provided to you to explain the Department of Transport's decision to ignore the principle of ``as-is-where-is'' that was to govern the transfer and allow the Greater Toronto Airports Authority a rent reduction of $185 million, covering the cost of capital works improvement?

Ms. Fraser: The short answer is no, but I will ask Mr. Minto to elaborate on some of the questions that we asked.

Mr. Shahid Minto, Assistant Auditor General of Canada: The long answer is probably also no.

A few weeks after the deal was negotiated, it was reopened and approximately $185 million dollars was allowed as a rent credit to the Toronto airport authority. This was in 1997. We made inquiries. Two things concerned us. One was that cabinet had directed that all the airport transfers had to be fair, which meant that all airports had to be treated in an equitable manner. The first question we raised was, ``Have you done some analysis to come to a conclusion that this fulfils this directive?'' The answer was no. Then we asked, ``What were the capital expenditures that required this?'' We were given a press release listing the three capital expenditures for which the money was given. Unfortunately, when we went back to the original lease, we found that a press release had also been issued that had listed these three capital expenditures as being included in the original cost. We said, ``Is there any other legal requirement? This does not make sense.'' We were told that all there was were the two press releases. As I said, the long answer is no.

Senator Meighen: It does seem rather strange.

Senator Forrestall: In pursuit of Senator Meighen's last question, I want to know, first of all, whether such a reduction was granted to other airports for capital purposes.

Mr. Minto: Nothing of that magnitude and nothing that quickly right after the lease was closed. The concern was how to ensure fairness across the system.

Senator Forrestall: That $175 million, although not occurring in the same year, is certainly in the same five-year time span. They now have the $12 departure fee — I am not talking about security — and the $7 connecting fee, ostensibly, as I understood it, for capital programs. Am I correct in assuming that?

Mr. Minto: Yes.

Senator Forrestall: When Toronto came on board in 1997, it was subject to devolution. That is five or six years. Do we have any idea of the total amount of monies collected? I am rather curious as to what kind of break we gave Pearson. I am damned curious about how much money we pay the chairmen of these boards, and the directors, on an annual basis. I wonder whether it is commensurate with what we might pay a director of Marine Atlantic. I have a very vital and real concern, and so do most Canadians that I talk to, about these questions. Has any ballpark figure been presented to you or come to your attention?

Ms. Fraser: I would begin answering your question, senator, by saying that these arrangements are not subject to audit by us, so we have very little information on airport authorities and their actual operations. As for the salaries and such, if they are not disclosed in the financial statements or annual report, which may be available on their Web site, we have no way of getting that information, and most Canadians would not have any way of getting that either.

Senator Forestall: It is a very secretive little club, is it not?

Ms. Fraser: We raised issues in our audit about the role that Transport Canada was playing in the oversight of these authorities and whether certain principles were being respected or not. One would expect that there would be provisions about contracting rules and that they would be open for tender and things like that. We did not see that that was occurring. The use and management of the fees and the setting up of subsidiary companies that could hive off profitable operations and all of those issues were raised as something that really needed to be looked at with these authorities, because they were operating, in many ways, quite independently of government.

Senator Forestall: In the 1998 report by your predecessor on the Greater Toronto Airports Authority, the auditor found it had failed to fully disclose the value of each sole-source contract over $75,000 and to provide any information about sole-source contracts for concessions and other forms of revenue. When we transferred the airports, it was a hidden transfer, with the capacity to raise money through a form of taxation. You do not have any choice. Has this problem been corrected? Do you have any access at all to disclosures on sole sourcing?

Ms. Fraser: No, we have no authority or mandate for that. They do have an independent financial audit, as do all airport authorities. They are subject to a five-year review, which would be the responsibility of Transport Canada. However, if there are no provisions in the initial contracts and agreements on some of these basic issues, then one can question if that is actually occurring or not.

Senator Forestall: Does GTAA have any role in this? It is the recipient of the funds, presumably. It disperses the funds. Does it have any management control over how it is spent?

Ms. Fraser: Transport Canada has a responsibility because it is still the owner of the airport and has a 60-year lease agreement with the airport authority. There are provisions in those lease agreements. Transport Canada should be actively managing those leases. One of the issues we mentioned at the time was that they had not fully transformed from an operating department into one that was managing the leases adequately. They needed to do more work on insuring that the lease conditions were being respected and in finding out what was happening in things like subsidiaries and contracting, but we have not yet gone back to see what improvements have been made since then.

Senator Forestall: Do you have a mandate to review the improvements, if any?

Ms. Fraser: We can go back to Transport Canada to see what they are doing, but we have no mandate to go to the airport authorities to see what is occurring there.

Senator Forestall: No mandate to tell us how much the chairman of the board is paid?

Ms. Fraser: We do not have that information, I am afraid.

Senator Forestall: Who has the proper right to ask that question, in your judgment?

Ms. Fraser: I would hope it would be disclosed in their financial statements. If not, I guess it would have to be through Transport Canada, which has various representatives on their board.

Senator Forestall: Is it included in any of the financial statements, not just for Pearson but any of the others that have devolved?

Ms. Fraser: I do not know that.

Senator Forestall: Very private, closely held, smelly — pardon my —

Ms. Fraser: I do not know that I would characterize it that way.

Senator Forrestall: I did not suggest that you characterized it that way. I just think of the thousands upon thousands of Canadians that fly on these beautiful $110-return trips from Halifax to Toronto, which soon rapidly become $300 trips when you add in all the $10 and $12 extras.

Is it in a healthy condition? They have had five or six years. Are they acting as good corporate citizens? After all, these are public ventures and this is public money. You are the only individuals who can provide us with the professional services to examine what is happening.

Ms. Fraser: To my knowledge, we have not recently looked specifically at the financial statements of the airport authorities.

Mr. Minto: When we did our audit in 2000, we pointed out to Transport Canada that, although they are no longer running the airports, they are the landlord, with a lease with which comes certain obligations. They also have obligations for the security and viability of the airport system. Under that, there are some things they should know.

The problem was that at that time, the Department of Transport had not thought of most of these issues. They were so busy divesting themselves of the airports that they had not prepared themselves for the next phase.

In response to the Public Accounts Committee, they have said that they are trying to do more active monitoring. I have no idea what that means. When we go back to do our follow-up we will find out.

Senator Forestall: If you have no idea what it means, we can imagine what it means.

Mr. Minto: I do not mean it in that sense. I do not know because we have not been back to look at it.

Senator Forestall: Keep up the good work. Thank you.

Senator Atkins: Has your office noted any success in the effort to make management of airport authorities more transparent, accountable and consistent across the national airport system?

Ms. Fraser: That goes back to the previous answers. We have not done follow-up work to see whether there has been improvement in that. That is something we would be interested in looking at. We are always concerned by these new governance arrangements that, at times, leave something to be desired in accountability and disclosure. I think airports would be an interesting area to follow up on. Unfortunately, we have not yet done anything on this.

Senator Atkins: What is the secret to Transport Canada wanting to unload the airports? There was a previous question about the deal they made with the Greater Toronto Airports Authority, and with Fredericton, so the transfers could go ahead. I think the small airports now would be more vulnerable because of costs and use. You do not, at this stage, have any feel for the effect on smaller airports?

Ms. Fraser: No, although at the time of our audit, we did raise concerns that many of the financial projections were optimistic. They kept foreseeing an increase in traffic, and we asked whether they had done a worst-case scenario. What happens if passenger travel should fall off? It had not been done. We thought they should look at it, because many of the airports have contracted very large debt levels to do refurbishment. Would they remain financially viable if there was a significant decrease in passenger travel?

Even at the point of that audit, in most instances, airports were paying negative rent, so the government was actually still paying.

Senator Atkins: I believe that was the case in Charlottetown.

Ms. Fraser: Only a minority were paying rent. Most were in a situation of negative rent. We have a table that shows the situation at that time.

Senator Atkins: Your point is that many of these airports are not making money?

Ms. Fraser: They were not at that time. Are they since then?

Senator Atkins: We had 9/11, of course.

Ms. Fraser: That is right, although this is up to 1999.

Senator Atkins: I think the assumption was that the private sector would be more creative in the ways they could produce revenue. Do you think that is the case?

Ms. Fraser: There were studies done on, I believe, four airports. The theory was that the government would be better off transferring the airports out. Of the four, there was one case in which the government was better off, and three where it was not.

Mr. Minto: That is exactly right. The studies were inconclusive and the department decided not to rely on them. They wanted to do more studies.

A big increase in revenues came from the airport improvement fees, which were not levied before. This was almost a dedicated tax, if I can use that expression. The money is used for that airport. Previously, the money went to the Consolidated Revenue Fund and came back through appropriations for improvements. You cannot compare the quality of service because public servants could not run that type of a business. Now it can be run as a business.

When we did the audit, many people were paying negative rents. As a matter of fact, only three airports accounted for 95 per cent of the revenues.

Senator Atkins: I can guess which they were.

Mr. Minto: The rest of the airports accounted for only five per cent.

Senator Atkins: Transport Canada sets regulations that they impose on the different airports. Often, that would mean that the local authorities would be paying more money to implement these regulations. Who covers those costs?

Ms. Fraser: There are regulations for some of the security issues, but the major document would be the lease agreement. As in any lease, there would be certain standards that the lessee would have to meet. I cannot comment on whether this would involve additional costs.

Senator Atkins: No one would have anticipated 9/11, for instance, and that must have forced the local airport authorities into substantially increased expenditures.

Ms. Fraser: As a minimum, they certainly would have experienced a decrease in passenger volume.

Mr. Kasurak: The link here is CATSA. In the interim period, payments were made to airlines and local airport authorities to increase and enhance security, but that was funded under the public security and antiterrorism program of the federal government. The airport authorities were not left on their own to fund this; it was funded directly by the federal government.

The situation on a continuing basis is supposed to be that CATSA will receive nearly all the money for security and will then either do the work themselves, engage the airport authorities and pay them for services rendered, or use agencies like the RCMP. If the local airport authorities will be called upon to do more security-oriented work, the plan is that there would be additional funding through CATSA for these services.

Senator Atkins: So the $12 airport improvement fee, which is funnelled through CATSA —

Ms. Fraser: No, it is $12 on the ticket price. The airport improvement fee is the amount we pay before we get on the plane. The airport improvement fee goes to the airport authority; the other goes to the government.

Senator Atkins: Someone is covering those costs. Is it coming through CATSA?

Mr. Kasurak: The security expenditures would come through CATSA and it would be up to them to determine whether they want the RCMP, the local airport authority or a security firm to do it.

Senator Atkins: You mentioned that you would be auditing four airports. Do you know which ones they are now or would you rather not mention them?

Ms. Fraser: I would rather keep it to us for now.

Senator Smith: I risk flogging a dead horse, but to me it is not quite dead. I want to try to summarize the sense I have gained here and then follow up with a couple of questions.

When this incremental tax was announced, I am sure the government's intent was bona fide. I suppose the original rationale was that revenues would roughly equal incremental expenditures. However, in looking at some of this material, I see that Toronto has about one third of the passengers. This year, they will have about 30 million. Thirty times 12 is about 360 million. If that is a third, we will be over a billion already. If that is on an annual basis, then that is a lot of security improvement.

Can we assume from the exercise you are engaged in now that, at some point, and we will get to what point, you will more or less know what amount has been raised by this and what constitutes genuine incremental security costs? Thereafter, we will know the degree to which revenue may exceed expenditure. Can you give us some idea as to the timing of this exercise?

Ms. Fraser: We are auditing the revenues and expenditures up to June 30, 2002. Therefore, that would account for only three months of charges, that is, April, May and June. Expenditures could be from September to June, which is a longer period of time.

I expect that we will have this statement for that period of time completed and out in the next couple of weeks. At the same time, the Ministry of Finance is also working on studies and analyses for projections of costs and revenues going forward. That is because the three-month period may not be representative of a full year. I think it would be inappropriate to adjust a fee based on that one very early statement. They will be doing more work. As well, we will have the CATSA financial statements on March 31 next year, which will have a more complete summary of costs. If Finance does this for each year, we would have it on an ongoing basis.

Senator Smith: Has the Ministry of Finance indicated that it is tits intent to adjust the fee so as to have a revenue approximately equalling expenditure and that this will not be a money-maker for them?

Ms. Fraser: It is my understanding that in public announcements the minister has said that the fee will be adjusted to cover the costs and that it will not be used for more than that.

We also have to realize that at the time the initial amount was set, it was probably difficult to obtain precise numbers because they were based on estimates of passenger travel and costs. This was the best estimate they had at the time. There has been an indication that they will adjust it going forward.

Senator Smith: That clarifies the situation to my satisfaction. Thank you.

The Chairman: When you are discussing with CATSA how they might organize their reporting system, do you contemplate having them break out their expenditures by airport?

Ms. Fraser: We have talked more about expenses by line item. I suspect there will be some reticence to break it out by airport, but that is just a supposition at this point in time.

The Chairman: In terms of line items, can you give us an idea of how broad the categories will be?

Ms. Fraser: We are in early discussions with them because the statement will only be produced next March. I know there are concerns about security. On those issues, obviously, we would like to see more disclosure than less. We will be working with them. If the committee has any views on that, we would be interested in hearing them. Thus far, it is a very preliminary discussion.

The Chairman: We have certainly heard from the people at Pearson about their concerns regarding security. However, we find it seldom is related to security but more to something that is not happening at all. After hearing other testimony, we discovered that the smokescreen of security is used to prevent reasonable and proper disclosure. We would be very interested in a breakout by airport and by line item. We think the burden should be placed on those claiming that this is a security question to demonstrate why in fact it is, and not something to cover up the quality of management. If that case can be made then that is fine. However, failing that, we think there should be a fair amount of transparency as to whether the money is going toward fencing, X-rays or people doing searches, as well as in what part of the country the money is being spent.

Am I correct in understanding that the only governance control of airport authorities that the federal government has is through lease arrangements?

Ms. Fraser: I also believe that there are government appointees on the boards of airport authorities. However, they would be a minority — two or three. The major mechanism is through the lease agreement.

The Chairman: We have a list of the board members of some of the airport authorities. We can see how they break out according to different municipalities and different levels of government. Have you examined any of these lease agreements?

Ms. Fraser: Yes, in the audit we did.

The Chairman: Do these lease agreements make any reference to governance?

Ms. Fraser: I would ask Mr. Minto to respond to that question.

Mr. Minto: Yes, they do. They set out the structure of the general principles of the board.

The Chairman: Do they get into details regarding conflicts of interest, for example? Would they be required to meet certain standards or tests relating to conflict of interest?

Mr. Minto: The lease agreements are all individually tailored and different. In the general statement of principles, there was to be no conflict of interest. However, I do not know how that general statement of principles is translated in the detailed document. Each lease agreement was a voluminous set of documents.

The Chairman: What you are describing is a unique agreement for each airport, but included in that unique agreement there is a common set of standards that apply to all airports?

Mr. Minto: I would not go so far to say that there is a common set of standards. I know there was a common set of principles set out before the agreements were signed that said, ``We have to do something about governance, and here are some of the things to keep in mind.'' I could not tell you how they were translated into individual agreements.

The Chairman: We heard testimony about sole-source contracting over the amount of $75,000 at Pearson airport. What mechanism is there in the lease to address that? Would the statement of principle cover questions like sole-source contracting?

Ms. Fraser: In response, Mr. Chairman, I will quote from our report of October 2000, in particular, paragraph 10.127, where we talk about the use of sole-source contracts by airports.

Paragraph 10.127 reads as follows:

The airport authorities established before 1994 (the LAAs) were not required by their original leases to tender any of the contracts they let — that is, to open them to competition in order to receive optimal value and to embrace the public sector value of equal access by suppliers. In contrast, the authorities established since the 1994 National Airports Policy (the CAAs) are expected to follow the Public Accountability Principles, which require them, as a general practice, to tender all contracts over $75,000 for goods and services. If a CAA does decide to sole-source a contract, its annual report must disclose information on the contractor, indicate the dollar value of the contract and justify the decision to award the contract without competition. There is currently no such requirement for most LAAs.

Those are the ones established before 1994.

It continues on in 10:128:

Transport Canada reviewed the 1998 annual report of the Greater Toronto Airports Authority... The report listed a significant number of sole-source contracts over $1 million. In the Department's view, information in the report did not meet the principles of the Public Accountability Principles... Moreover, sole-source contracts for concession revenues were not disclosed at all. The current lease agreement does not contain any clause that would penalize the authority for not complying with the disclosure requirement. The Department has advised the GTAA of its concerns and is working with the authority to resolve the issue.

The Chairman: If I understood you correctly, the Greater Toronto Airports Authority is sole-sourcing contracts for over $1 million?

Ms. Fraser: That is right.

The Chairman: They are not making any disclosure as to whom they are going, why, or whether the money is being well spent.

Ms. Fraser: That was the case for the 1998 report, yes.

The Chairman: In terms of addressing this issue, the only response you have had from Transport is that they are discussing this matter with GTAA?

Mr. Minto: Clearly, Transport Canada was concerned about this. They were very forthright and said that it does not meet the principles they agreed to with GTAA. However, the lease agreement it signed had no penalty clause, so these principles could not be enforced.

The Chairman: They seemed to be able to transfer $185 million back to these folks that was not contemplated in the lease agreement. Is there any reason why they cannot go back and clean up this business of sole-source contracting?

Mr. Minto: Maybe when they were giving the money was the time to get all the other changes made, but I do not know. At the time we audited, there was nothing in the lease agreement that could force GTAA to disclose that.

The Chairman: For how long will this contract last?

Ms. Fraser: Sixty years.

The Chairman: Sixty years, without any provision to reopen?

Mr. Minto: That is a little strong, because the federal government, with Parliament's backing, can do many things. You gentlemen are part of this thing and it can be done.

Ms. Fraser: I would note, too, that our report makes the point that the department has a right to audit the airport authorities.

The Chairman: Ms. Fraser, I thought you made the point earlier that the department does not have the right to discipline them in any way if it does not like what they are doing.

Ms. Fraser: If they felt it was sufficiently serious, they could go in to find out what is going on now.

The Chairman: Have they been doing that?

Ms. Fraser: No. At the time we reported, they had not done that.

The Chairman: Do you believe that that has changed?

Ms. Fraser: I do not know.

The Chairman: Where is the check in the system on the improvements fees that we are talking about? I am not referring to the security charge, but to the improvement fees that airports charge to customers. It seems that we have a monopoly here. Where is the check in the system that determines whether or not an airport is charging a reasonable improvement fee?

Mr. Minto: We said in our chapter that Transport Canada has not developed a position on the growing use of airport fees. At that time, 22 per cent of the revenues of the airports were coming from this source. We found that the department had been slow in collecting data and assessing the reasonableness of the escalating airport improvements fees. The lack of detailed information on AIF — the airport improvement fee — was very disconcerting.

In its five-year review, the department found little information on how airport authorities used the revenue from the airport improvement fees. They also found that some airport authorities have yet to conduct any costing studies to determine whether their fee structure and rates are reasonable and comply with the provisions in their leases that pertain to the obligations of national and international agreements.

The Chairman: That leads us back, Mr. Minto, to the point I was trying to get to. Do you, or does anyone, know if any of the airport improvements fees have gone toward improving and enhancing security?

Mr. Minto: I do not think we can answer that question. We are not the auditors of the airport authorities. Perhaps Transport Canada, subsequent to September 11, has asked for that information. We have not seen it.

Senator Banks: On the question of the security charge, most of us have been talking about whether it is too much. However, it may also not be enough, depending on how long a period we look at. At what point do you begin to measure the expenditures? That is to say, it is possible that several millions of dollars, and maybe even tens of millions of dollars, were expended by the government before it began to collect the fee. This is a very short period that you are auditing now. At what point will you be comfortable enough to answer Senator Smith's question about a saw-off? It surely cannot be within the first three months, because I know the government expended a lot of money before it began to collect those fees. What is the point at which we can ask for a saw-off?

Ms. Fraser: That is an excellent question. The revenues were only basically for three months, because the charge only came in on April 1 and we are auditing until the end of June. For the expenditures, we are starting at September 11, 2001. We would pick up all of the expenditures to June 30. It is very likely that there would not be an exact matching because of the very short period of time. I would hope that the studies of the Department of Finance will help to give some answers. They should be projecting what additional expenses, or ongoing expenses, and what additional capital expenses, for instance, might have to be incurred over what period of time, and what the flow of passengers would be. Their studies would give some indication of what would be a reasonable time.

Senator Banks: You agree that it is a possibility that we may see an imbalance on the expenditure side in the first audit?

Ms. Fraser: That is a possibility.

Senator Banks: Will the capital expenditures to which you just referred, and the other incremental costs, be costed out in the year in which they occur or would the department amortize some of them over time? Do you know the answers to those questions yet? Will this become a great big gumball to which no one will have any answers?

Ms. Fraser: That is a really good question. We are asking that question as well because there are two ways of treating this. One is to record the purchase of equipment as a whole expense now and have the fees finance it. The other one would be to buy the equipment and amortize it over a certain period of time. CATSA has no authority to borrow, so all of its funding to date is coming through appropriations, although in the wonderful world of accounting in Crown corporations the equipment probably would be capitalized and then amortized over its useful life. We could have varying accounting policies and decisions on how this will be presented.

Senator Banks: Is a conditional sales contract borrowing? I am making a joke.

Ms. Fraser: Most definitely.

Senator Banks: Turning to a different subject, you talked about visa officers. In number 7 of your overview comments today, you said that you found that visa officers had little information and support to ensure that applicants were unlikely to engage in criminal activities or endanger the safety of Canadians. That is a double negative. If you are an immigration officer, when you face me, how can I prove to you that I am unlikely to be a danger to Canadians? What is the mechanism by which I could do that, or by which you could ask me about that?

Ms. Fraser: I will ask Mr. Minto to give more details, but one of the tools that is confirmation from police authorities and others that people do not have a record and have not been involved in criminal activities. However, in the audit we noted there were some 60 countries where those kinds of guarantees or letters are not considered valid, and that the people from those countries represent a very high proportion of our immigrants.

Senator Banks: Those are countries where the last thing you do is call the police.

Ms. Fraser: That is right. That poses a difficulty. The main point was that the visa officers had to have good knowledge of the country, of the situation there, and they had to have information. Furthermore, the information sharing and coordination, be it with CSIS or others, was somewhat lacking.

Senator Banks: These criticisms have relevance to access to information in advance, as opposed to making a judgment call on the spot.

Mr. Minto: You are absolutely right. There are some inherent limitations in this business. How can you tell if a person is going to commit a criminal act in Canada?

Senator Banks: According to your report, if I am an immigrant, I should be asked to demonstrate to you that I will not cause trouble. How can I do that?

Mr. Minto: During the audit, the people we were talking to were saying, ``Given this inherent limitation, you need good tools, good training, good interaction among the government departments that deal with this and a method to evaluate the whole thing.'' In each one of these areas, we found significant problems.

For example, the memorandum of understanding between Immigration and the RCMP, which is a key player, had been undergoing revisions since 1986. This is in October 2000 and they had been working on it with CSIS since 1987. In another chapter, we talked about how long it was taking with the CCRA. They have not been able to sort it out. The immigration officer who must make an immediate decision relies on the information on his computer, which comes from the RCMP and other people. We list all the shortcomings in one of the chapters. These computers do not talk to each other. It is a big problem.

Another huge problem they were facing is that a large number of people were applying offshore. By ``offshore'' I mean, for example, that someone from Beijing would be applying from Buffalo. You may have someone in Beijing who knows the local conditions and who can go out and check. However, when they go to Buffalo and apply there, you cannot expect that person in Buffalo to know about the situation in all the countries. These are some of the problems they were facing.

Senator Banks: That person would be a U-turn applicant; that is, someone who got here by other means and left the country for the specific purpose of applying for landed immigration status. That person could not be a refugee. We have solved that problem.

Mr. Minto: We were only looking at the economic component of the Canadian immigration program. These were people with money.

Senator Meighen: Mr. Minto was talking about the importance of training. In your presentation today you pointed out that most of the responses to your recommendations were satisfactory. One area in which you did not receive a satisfactory response, however, was training. Can you elaborate on that and specifically tell me whether either CCRA or Citizenship and Immigration Canada offered any reason why they had not been able to achieve much progress?

Mr. Minto: At the moment these are their representations as to what they have done. Our people are now over there working on some validation of the representations. When they come back with the evidence, we will have a better chance to look at it.

For CCRA, both for travellers and for commercial businesses, you must have good training. Let me give you an example on the commercial side. For 100 years, CCRA has looked at events on a transaction-by-transaction basis. A truck comes in, you open the back, check the goods, levy the tax and out it goes. We have now moved away from that to inspection, which means that you know the truck is coming in so you let it go through and release the shipment and then do a post-release inspection. That is a very different regime from what you were used to. You must have people trained for the enforcement of this regime. Where is the training for all this? It is a good idea. You are doing risk management and we are delighted with that, but people must be taught a new way of doing this.

The methods of work have not kept up with the new tools. It is the same for immigration. Suddenly, there are many problems with new technology. Where are the people getting training? Because of the massive numbers of people coming into the country, they are hiring temporary people at ports abroad and at the borders they are hiring students. Training became an important part of this work. The responses we got were not satisfactory.

Senator Meighen: The response you got was, ``Yes, we acknowledge the importance of training, but we are sorry that we have not been able to make progress.'' Do they tell you why? Do they say they do not have the money to do it, or their recruitment of competent people is not going well? Do they give a reason?

Mr. Minto: The reasons we were given originally still apply. For example, customs is a 24-hour a day, seven-day a week business. If you have people out on training, it will affect your business because resources are limited. Everyone says that training is important and that they are working on it. However, working on it and achieving results are not the same. We will let you know when we finish the audit.

Senator Meighen: I will look forward to that.

Senator Wiebe: The last two reports in April 2000 dealt with training. On page 3 of your brief, you say that, ``We follow up all our recommendations a year later by asking departments and agencies to tell us what they have accomplished.'' As far as the Canada Customs and Revenue Agency and Citizenship and Immigration Canada are concerned, does that mean that you followed up once in 2001 and again in 2002 and have received the same reply in both years, or do you just follow up once?

Mr. Minto: In the first instance, we request written representations and ask, ``Where are you in implementing the recommendations?'' We received them without validation. We are now in the process of going back to do validation work. We want a progress report in the first year. They also must report back to the House on the progress in implementing recommendations. This was part of that process. At that time, we would not have done any validation; we are doing that now.

Senator Wiebe: If you do not get satisfactory answers, do you have another way to put some clout behind your request for action?

Ms. Fraser: When we do follow-ups, we would not normally report on them when we have been given information on progress by departments. It is only when we go in and perform our own validation, in many cases a re-audit, that would we report to Parliament publicly on the progress or lack of it.

Senator Forrestall: Because we are concerned about security, money is very important in this. There are other associated risks with the independence that the airports have. One you cite as being ``offshore risk.'' That is a little vague to me, but I think I can understand what an airport might want to do by way of subsidiaries and countries. Your paragraph 123 states that:

Transport Canada does not know whether the authorities have guaranteed loans from other lenders to subsidiaries.

Any such guarantees would create contingent liabilities for the airport authorities that, in turn, would translate into costs for the Crown or deny monies for security purposes. The Department recently obtained limited and unaudited financial information on subsidiaries that suggested in 1997 they generated a total of about $16.3 million in revenues, had assets of $25.7 million and posted a net loss of $53,000.

That is not very much — pretty darn good.

In your last sentence you mention they had received $17 million in interest-free loans from parent airport authorities. Can you expand on that a little?

Ms. Fraser: Certain airport authorities set up subsidiaries that were doing consulting or helping developing countries establish airports. They were helping develop these airports in foreign countries — if you will, selling their expertise. There is nothing intrinsically wrong with that as long as it is being managed properly and is not putting the airport authority at risk.

However, when I see $17 million in loans, my antennae go up. The issue that we raised there was that Transport Canada was not monitoring this, nor were they aware of what was going on.

Senator Forestall: That was five fiscal years ago. Do you know if that situation has changed?

Ms. Fraser: I do not have current numbers. However, I know there was one airport authority that did have difficulties with one subsidiary that it had set up in Eastern Europe. It was reported in the newspapers and the media. I do not know what the financial consequences of that were. At least one of the airport authorities had some issues.

The Chairman: An airport authority had a subsidiary in Eastern Europe?

Ms. Fraser: Yes. It had a subsidiary that was assisting in setting up an airport in Hungary.

Senator Forestall: It is a widespread practice for these airports to set up their own wholly owned subsidiaries, move them out of the airport and change the whole game. Am I correct?

Mr. Minto: Senator, at the time we did the audit, a number of airport authorities had done this. We had two concerns. For example, if you are building an airport in Hungary and there are huge losses for some reason — the government nationalized that airport — then where do we recover this money, from the airport improvement fees or the Canadian taxpayer? Who pays for that? What does this do to the viability of your own airport authority? That was one issue. Transport Canada could not answer that. We are not saying there was a threat, because we have not seen the information. We went to Transport Canada and said, ``Have you looked at that?'' They had not.

The other issue was what happens when you transfer profitable parts of the airport into these subsidiaries, which then do not become part of your equation for recovering fees and paying rent? Then the owner is losing money, because somebody else is making it. Transport Canada did not know much about that. Transport Canada assured us that they were going to get on to it. Transport Canada was really concerned once they found out that this was happening.

I have no detailed information about what Transport Canada has done. However, I know from discussions, and also from when they came to the Public Accounts Committee, that they said they were very concerned.

Senator Wiebe: Are you going to follow up on that as well?

Mr. Minto: We intend to follow up on the whole chapter. We will talk to Transport Canada again and say, ``As the landlords and the people who have to maintain the integrity of the airport system, what have you done about it?''

The Chairman: Ms. Fraser, on behalf of the committee, I would like to thank you and your colleagues very much for appearing before us. We always look forward to your testimony. You have not disappointed us tonight. You are very helpful to this committee, and we are grateful to you. We look forward to seeing you again soon.

Ms. Fraser: Thank you very much.

The Chairman: Our next witnesses are from the Canadian Union of Public Employees, CUPE, which represents flight attendants. I would like to welcome Mr. Richard Balnis and Ms. France Pelletier.

(Richard Balnis, sworn)

(France Pelletier, sworn)

Mr. Richard Balnis, Senior Research Officer, Canadian Union of Public Employees: I work for the Canadian Union of Public Employees. I have been doing their research work since the airline division joined CUPE in 1986. I have represented our airline division before Parliament and various regulatory bodies within Transport Canada. I have done so at the direction of our elected leadership within the airline division.

Ms. France Pelletier, Legislative and Regulatory Affairs, Airline Division, Canadian Union of Public Employees: I am a flight attendant and have been since March 1972. In addition to that, I have represented flight attendants before Transport Canada, Human Resources Development Canada and different regulatory bodies in all sorts of matters that affect flight attendants.

Mr. Balnis: This is France's first appearance before a Senate committee, so she is a little nervous, but I said members would be nice to her.

We have some remarks that have been distributed. I will summarize them quickly and leave as much time as we can for your questions.

Thank you for the opportunity to appear before you tonight. For those who do not know, the Canadian Union of Public Employees, CUPE, is Canada's largest union, representing 500,000 workers. The airline division became part of CUPE in 1986, and we represent about 10,000 flight attendants across Canada at Air Canada; Air Transat; Calm Air; Cathay Pacific, based in Vancouver; and First Air. We have had a history of representing our members before various parliamentary bodies.

Some senators may recall that in 1995, we provided you with a video on a Transport Canada initiative to reduce the number of flight attendants. With the help of senators, we were able to turn back that initiative. We now appear on the question of aviation security.

We have provided the committee with our 54-point security agenda. As you can see on page 4 of our remarks, it is designed to strengthen our lines of defence on the ground and on the aircraft. As you can see in those six points, we hope that we are able to strengthen measures to prevent non-authorized access to the sterile area and control who can enter, what can reach the aircraft, what can travel with the aircraft, how we can better deal with onboard security situations and, most importantly, provide better training.

We have also provided the committee and its staff with reports of two working groups convened by Transport Canada since November 2001, one of which reported in March 2002 and the other in June, on various aspects of improving security. Those working groups made unanimous recommendations in 47 different areas, but many of the recommendations directly affecting flight attendants, such as better training and how to deal with sky marshals on aircraft, have not been implemented.

Other improved security measures, such as dealing with chemical or biological attacks, are months, or even years, away from being put in place. Many areas have not even been discussed yet, as you will see from recommendation 21 of that working group report where we list an inventory of issues yet to be discussed.

As you can see on page 7 of our remarks, we asked the question: ``Is security better a year later?'' On security issues affecting flight attendants, the answer is no, or at least, ``not yet.'' There are six areas where we would like to bring you up to date on developments. The first is flight attendant training. Flight attendant training procedures on how to deal with the new breed of suicide terrorists are outdated. Our procedures and training are still based on the hijacking scenarios of the 1970s: try to negotiate, offer liquids to drink.

The need for better training is reflected in recommendation 24 of one of the working groups. The proposal was to update the standards for flight attendants to deal with problems in an integrated fashion, from unruly passengers up to violent suicide terrorists, but those standard have yet to be drafted by Transport Canada. We have also, as you will see in that recommendation, called for training in basic self-defence techniques for flight attendants.

Sadly, the development of these new training standards has been delayed because of an internal turf war between Transport Canada, civil aviation and Transport Canada security. We understand an internal Transport Canada working group has now been formed, but it is still unknown to us when they will finish their preparatory work. In the meantime, some airlines, and they deserve our commendation and praise, have gone out on a limb and introduced their own improved training programs. However, they run the risk of retraining their flight attendants in the absence of Transport Canada standards.

The second issue is better identification of suspicious passengers. Well, there are better techniques and training that will make all aviation industry workers more aware of suspicious situations and will lead to intervention on the ground, not in the air, when it is too late. This is reflected in recommendation 15 of the Airport Security Working Group. It is hoped that this neighbourhood-watch concept will give all workers, from passenger check-in to onboard the aircraft, with new and basic training procedures to recognize and report suspicious situations in a reasonable and pre-emptive fashion. Unfortunately, the minister's response of November 5, in our view, indicates that he has missed the point. We believe this glaring loophole of untrained and unprepared staff will remain.

We endorse the introduction of armed federal air marshals on all our flights. Transport Canada has introduced the Canadian Air Carrier Protection Program, CACPP. Unfortunately, the development of that new program has been slow and/or has excluded CUPE and its members. As we emphasize on page 11 of our remarks, this can produce dangerous situations. For example, not all flight attendants on any particular flight are guaranteed of knowing whether an armed RCMP officer is onboard their aircraft. In our view, such lack of knowledge could lead to confusion and unwitting interference with the sky marshals in the performance of their duties in the event of a terrorist attack.

The development of Transport Canada training standards for cabin crew is six months behind schedule. Most importantly, the RCMP's desire for secrecy is out of line with similar programs in the United States, Israel, Austria and elsewhere, where all operating crewmembers have knowledge of the onboard presence of sky marshals and participate in joint pre-flight briefings. In our view, our CACPP must become more like the international standard.

Recommendation 11 of the Aircraft Security Operations Working Group calls for the development of a strategy to deal with chemical and biological attacks. In Appendix E of that report, we outline what that strategy would involve. In June, the minister acknowledged that this is a very important issue. In November, his department is still saying that they are working on a strategy to approach this recommendation, which, in our view, is far too slow in dealing with this emerging and real threat.

On the question of airport screening of security-cleared employees, I am sure you have heard about that from other witnesses. Our belief is there should be security screening of all passengers, pilots, flight attendants and other personnel who may have access airside or to the aircraft. On November 5, 2002 it appears that the minister assigned this issue to the Canadian Air Transport Security Authority, CATSA, but it looks like they will only do random screening, which is actually no more than the current status quo. We await further details, but this action appears to fall short of what is required.

On the question of improved security passes for employees, you can see on page 14 that the current system is a patchwork. It uses low technology, is of varying security quality, and lacks consistency. We have a number of suggestions that you can read in our remarks. The airports have resisted this initiative, believing only they can control access to the lands and buildings leased to them by the federal government. It appears that this issue has now been referred to CATSA. We are hopeful that, on this matter, the devil being in the details, we will be able to reach some of our objectives.

Finally, Transport Canada is very fond of saying that Canada has one of the safest and most secure air transportation systems in the world but, as we have tried to show in our submission, far more needs to be done faster to ensure an adequate level of aviation security. In our view, we and our passengers deserve no less.

We are open to your questions. We will try to answer them to the best of our ability. If you have any specific questions on the details of how flight attendants operate, I think I will defer mostly to Ms. Pelletier, who has spent 30 years on those aircraft, and I will offer my perspective on some of the government issues.

Senator Forrestall: In June 1999, I chaired the committee that you appeared before with respect to some of these matters. Is it at all possible, and would it be okay in your view, to have the agents who give us our tickets and check our luggage stop saying ``Did you pack this bag yourself?'' and ``Has it been out of your sight?'' For one year, agents have conducted their own survey. On no occasion has someone said ``no'' to the first question and ``yes'' to the second. I said that I would ask because I agree with it. I am fed up with answering it. I would not get my wife out of bed at five o'clock in the morning to pack my bag for all the tea in China. Is that a matter of security, in your minds?

Mr. Balnis: Yes, because as I understand it, that rule was introduced to catch the unwitting, inadvertent person who may have had something planted on them. It is not for you, senator, who diligently packs your bag, or for us, who diligently pack ours. I believe it was introduced because someone unwittingly carried something on the aircraft and did say, ``Yes, it was out of my sight,'' and that led to further questioning. In our view, those three questions actually need to be expanded to recognize passengers who may potentially be a problem.

Mr. Balnis: Rather than the simple — just in talking of our members — very knee-jerk response that if person is of a certain origin, he or she is suspicious, we believe there should be training to examine passengers who may be potential risks to alert people down the line.

We believe the three questions serve a purpose and we should actually be expanding that point of contact.

Senator Forrestall: Do you agree with that?

Ms. France Pelletier, Legislative and Regulatory Affairs, Airline Division, Canadian Union of Public Employees: I agree. I believe that it is all very well to ask those three questions, but if the people asking are not trained to be able to pick up on something —

Senator Forrestall: They are not, really. There is no question about that.

I wanted to deal with training. Since September 11, have you noticed any difference in the training emphasis being placed by Air Canada or a Canadian airline, by the Department of Transport or any other agency, on protocols, as you might describe them, for biological or chemical attacks? Have you had any training in this regard? Has there been any system of lectures, either for new entrants into your profession or for the more senior people?

Ms. Pelletier: Absolutely none.

Senator Forrestall: Not even the most senior people onboard major flights?

Ms. Pelletier: Absolutely none. It was only after my insistence that one carrier implemented some sort of procedure in our flight attendant manual. Our flight attendant manual contains basically all of our standard operating procedures. It was after my insistence that we were able to get some sort of procedure written in as to what to do if we see some unknown substance onboard an aircraft. However, we have absolutely no training and there has been no developments in that area whatsoever from Transport Canada either.

Senator Forrestall: How much extra time would it take, for example, to give you the training that you feel is required at either the entry level or by way of refreshers? Is it a significant amount of time?

Ms. Pelletier: I cannot answer that question, because I have not looked in depth at any training programs that are out there. From what I have seen, there has been some training for employees at Canada Post. I really would not be able to answer that because I do not know at this time how long the training would be just for that aspect.

Senator Forrestall: Is there a reason why the RCMP does not advise you when there is an armed air marshal onboard?

Ms. Pelletier: From my understanding, it seems to be a question of interpretation by the carriers, how they are interpreting the air carrier security measures, where it is indicated that the pilot may inform the crewmembers. The carriers are saying it is not a need-to-know for the rest of the crew, only those in charge.

Mr. Balnis: Just to amplify that, we have had three directors general of security since September 11, and the second was the one responsible for this regulation. We said, ``Listen, you are guaranteeing in the regulation that the pilot knows and the in-charge flight attendant knows; we believe all the crew should know.'' Unfortunately, the interpretation has been that the in-charge and pilot need not necessarily tell the other operating crewmembers. We were told, ``Well, no, our intention was that everyone should know,'' but we said, ``Carriers are not applying it that way.''

The only response I have heard from the RCMP is that their sky marshals are on an undercover operation and, therefore, the identity of those officers needs to be protected. We wholeheartedly agree with that. That may be useful in an undercover operation in a bar or a drug situation — but on an aircraft, it is different. We have to work as a team. You cannot just run out of the doors of an aircraft in operation. We have been unsuccessful in convincing the RCMP to be, in our view, more enlightened and allow that to happen. We had a meeting, two weeks ago, with the new director general and the assistant deputy commissioner of the RCMP, and we emphasized that point again, but I fear we have failed to convince them yet again. Our fear, in talking to our leadership, is if someone pops up, begins to draw out a gun, you do not know them and you are walking by, you may just slug them. That is the unwitting interference.

Now, when an officer gets up, we have been assured that we will know full well that it is armed RCMP officer and we will know what to do, but it is that inadvertent prior action that is upsetting to us. We have yet to convince the RCMP. As we understand it, the other jurisdictions, like the U.S., have pre-flight briefings with their sky marshals, with the whole crew. We think that is the better way to go. We have been unsuccessful here in Canada in convincing the RCMP on that.

Ms. Pelletier: We do not even have pre-flight briefings with the whole crew now, without even the sky marshals.

Senator Forrestall: That is dangerous for some of the reason set forth in your paper — as was suggested, something could happen. An inadvertent thing could cause trouble.

Ms. Pelletier: That is right.

Senator Forrestall: Do you have any idea of the nature of the equipment that the sky marshals carry?

Ms. Pelletier: We are not told.

Senator Forrestall: You have no idea at all?

Ms. Pelletier: No, sir.

Mr. Balnis: We have been assured they will be deadly and effective and should not damage the aircraft. That is what we have been told. In other words, they will be dead when they hit the ground. It will be over in a matter of seconds. We said, ``What do you want us to do? Do you want us to get on the floor and lie flat on the ground? Do you want us to help in any way?'' We still do not know that. The assistant deputy commissioner of the RCMP said ``Maybe you could be a spotter for us for other terrorists.'' We need to know that and we need to know what to look for, because I suspect there will be pandemonium in the cabin. We have not even gotten to that detail. We had a meeting in April at which we were promised action. We were promised a training syllabus. We met at the beginning of November, and it is still in draft.

Ms. Pelletier: The concern of the flight attendants is, if I am in the cabin and I am in the process of serving a bar to the passengers, and all of a sudden this person gets up and has a gun, I do not know if that person is an air marshal or a terrorist. I am going to grab that bottle of wine on the trolley and I am going to break it, but I might interfere with that person while they are trying to do something I do not know about. It would be a normal reaction for a flight attendant.

Senator Forrestall: It would be a normal reaction; the defensive part of it, in any event.

Have you had any opportunity to consult with your sister unions in other countries that use air marshals? What have you learned from them?

Ms. Pelletier: They are having pre-flight briefings with the whole crew and the air marshals. The air marshals have identified themselves, so the crew knows what they look like. The air marshals know how many flight attendants are working on that flight and their advice is, ``Do not do anything; let us take care of it.'' They are not asking the flight attendants to get involved when they are engaged in their duties.

Senator Forrestall: Are Canadian aviation companies different from aviation companies in other countries in this respect? In other words, is the use of sky marshals widespread?

Ms. Pelletier: We do not know. We only know that, because of the security regulations, that one of our carriers, the one that has flights to Ronald Reagan, has air marshals, but that is the only one that we are sure about.

Senator Forrestall: Your concern is the plane.

Ms. Pelletier: That is correct.

Senator Forrestall: In the old days, we built fences around airports so people would not walk into propellers and hurt themselves. Today we protect the plane, not the person. We build walls around them. Are we able to do this? Are we able to provide those of you who fly professionally with an airplane that satisfies you as being safe and able to make a flight uninterrupted? Is it possible for us to achieve a clean airplane? If so, how would you do it?

Ms. Pelletier: That is a very good question that touches us very closely. We believe a lot more can be done. I cannot speak for all the flight attendants, but I think I can speak for most of them. We do not feel that we are 100 per cent secure. We feel that more can be done. I guess there are a lot of little things that can be done. For example, just the other day, a crew got onboard the aircraft and there was a box of cutters, box cutters, on one of the seats. This was just recently. We still do not know how that thing, how that box, got on board, but we are of the mind that the people who have access to that aircraft, whether it is the caterers that get on to the premises of the airport, that get on to the aircraft, that anybody who gets access to that aircraft is checked. What we are seeing also onboard the aircraft is that the flight attendants are being asked to do checks for bombs and other things when we are not trained. We do not even know what they look like.

Senator Forrestall: Is this happening in Canada?

Ms. Pelletier: Yes. Yes, it is part of our duties.

Senator Forrestall: How would you go about that?

Ms. Pelletier: We are required to check every single galley unit, the trolleys, the aircraft, but we have absolutely no training. We do not know what a bomb looks like or what could be a weapon. There is a lot more that could be done.

Senator Banks: You may have read our report. I suspect that you know we share many of your concerns and have already talked about them. Senator Meighen and I were just talking about the fact that the most feared words in response to the question of what various governments are doing are ``We are working on it.'' Those are frightening words. Have you seen any evidence of the $12 security fee being spent anywhere? I guess I am asking the same question as earlier, which is whether you have seen any improvement in security since September 11.

Ms. Pelletier: Some, like an increase in police and security personnel.

Senator Banks: On the airside, or at the entrance where we are all checked to enter the secure area?

Ms. Pelletier: Depending on the airport, it is more obvious that there are more police walking around. At the security screening checkpoints, there seems to be more personnel, and in some of the airports. It is not consistent. It is really not consistent across the board.

Senator Banks: You probably go through the security screening process more frequently than most of us.

Ms. Pelletier: That is correct.

Senator Banks: Are you treated more or less like a passenger?

Ms. Pelletier: More or less. Sometimes worse, because there have been problems with some of the security screeners thinking the flight attendants and pilots are maybe more suspicious than the travelling public.

The Chairman: We were led to understand that there were now separate entrances for aircrew in some airports.

Ms. Pelletier: In some.

The Chairman: We were also led to believe that the aircrews were no longer searched every time they went onboard, and that it was random.

Ms. Pelletier: In some airports.

Mr. Balnis: It is our understanding that Vancouver, Toronto and Montreal-Dorval were the holdout airports. We believe that both Vancouver and Montreal have moved to allow the bypass, and it is simply Toronto-Pearson that insists that flight crew, pilots and flight attendants, go through passenger checkpoints. What France is referring to is, we have a security clearance from CSIS saying that we have no criminal record and we have passed their tests, and we are there in our stocking feet being searched as if we were the ones who would bring something onboard the aircraft to kill ourselves, as if we were the target. We have debated the matter with GTAA and this working group, and we have tried to rebut them, but there is an attitude that you are a threat. We are saying, ``Well, if we are a threat, how come everyone else can go through the back doors?''

There has to be some consistency.

Senator Banks: Is that everyone else who has access to the aircraft?

Mr. Balnis: Like a mechanic, yes, so where is the consistency? Other airports say it is a waste of resources because they are security-cleared employees, and then we look internationally and we see other airports making sure that — and Transport Canada hired consultants who confirmed that — everyone entering the sterile area at Heathrow, for example, any employee, would go through the same search procedure. It was a dedicated private channel, not mixed in with passengers, but nonetheless they would go through a search to make sure there was nothing problematic that they were bringing in. We are saying, at least be consistent here.

Mr. Balnis: We do not understand the logic that it is not consistent.

Senator Meighen: Excuse me. I just want a clarification. Did you say you had to demonstrate that you had no criminal record?

Ms. Pelletier: No, when we get our security clearance passes, they do go into our background. We are fingerprinted, and they have to ensure that we have no criminal record of any kind.

Senator Meighen: If had you a serious criminal record, would you be able to work?

Mr. Balnis: The security clearance would not be granted, and, therefore, you would not get what we call the ``green card,'' but it is now red and blue and orange.

Ms. Pelletier: But you would not have a job.

Senator Meighen: Do you happen to know whether other employees such as caterers, mechanics and the like are subjected to the same rigorous level of security and scrutiny in terms of a criminal record? Our information is they are not.

Mr. Balnis: My sense is any airline employee is. I do not know about caterers.

Ms. Pelletier: I do not know about caterers.

Mr. Balnis: It is the little card they carry around their necks that is issued by an airport that would have the security clearance. We do have the security clearance. It goes back five years, and it is done by CSIS. That is the best they can do because they under-resourced. We thought it should be more frequent, but they will check you five years back, and they will renew it every five years.

Senator Banks: We have information that is different from that. For example, in many places, baggage handlers, specifically, do not have to undergo that rigorous check, but we will see.

You mentioned in your remarks that you believe that one of the impediments to moving ahead more quickly with improvements in security on the airside and in the air at airports has to do with a turf war between two sections of Transport Canada. Tell us what you think about that or what you know about that or what you heard about that.

Mr. Balnis: We dealt with the issue of who approves the procedures onboard the aircraft to deal with the sky marshals when they came on, and we literally had one director general for security and the other director general for civil aviation within about two hours on the phone saying, ``He is not supposed to be doing it. I am supposed to be doing it,'' and vice versa, and at the end of the day, we said, ``Come on, guys. We need the procedures.''

To this day, as we understand it — and I did not go into depth in my remarks because I did not want to go over the limit — the standard operating procedures for armed sky marshals are approved negatively. In other words, as long as the procedures do not offend another provision, they are okay. However, they do not have positive standards for those operating procedures to meet. They have not developed them yet. I am sort of saying, ``Well, who is doing this?''

Security is saying they are doing a survey of current training. Civil aviation is saying they are trying to upgrade flight attendant training. We are saying, ``You are in one house, Tower C. It is a big building under one minister. Please get the act together and get it going.''

Unfortunately, it is now November, and, at best, we may see something in draft in January, and the minister announced the creation of the CACPP back in his December 2001 budget. We are working on it.

Senator Banks: Ms. Pelletier, would you recognize, for example, a plastic explosive if you saw it?

Ms. Pelletier: No, sir.

Senator Banks: I think Mr. Balnis said the impediment to knowing whether there is a sky marshal — that is not our term — an armed RCMP officer on the airplane, and the fact that some flight attendants did not know was a decision of the airline.

Ms. Pelletier: That is correct.

Senator Banks: Someone referred to the fact that it was the RCMP that did not wish to have it widely known. Is it both the airline and the RCMP who have decided, for whatever reason, that some flight attendants on an airplane will not know whether an armed officer is onboard, who it is, where he or she is sitting and what he or she looks like?

Ms. Pelletier: I believe it comes from both sources. I think it is the airline and the RCMP, because why do we not call them APOs? That will make it easier.

The criteria for them to become an APO onboard, let us say an Air Canada plane, is that they have to go through some sort of training on the standard operating procedures, how an aircraft reacts in a decompression, what the flight attendants do, where the galleys are. They have to go through some sort of airline-specific training. I got the feeling that when they decided to get together with the carrier to undergo training, this is where they discussed whether or not the flight attendants are going to know the identity of these APOs onboard.

Mr. Balnis: Just to add to what France said, our understanding is CATSA has contracted with the RCMP to provide the police, so there must be contractual arrangements there. We also learned that the RCMP, the APOs, meet with the carriers to develop standard operating procedures, and that may be another source.

In most airline security firms, there are former police or RCMP, and when they talk with the RCMP, they know what to talk about, but we are saying, ``Well, hang on, guys. We are in an aircraft. It is a new program. You have to consider the rest of the aircraft to make the program work, in our view,'' and it is taking a little while. We will just leave it at that. Sometimes they look at you, they smile, but you know they are just not registering the point. They feel it is interfering with their police duties, and we are saying in an aircraft, if there is ever an incident, we have our duties, and we are going to make sure things just go boom, boom, boom, incident over, and we do not create a problem — that is our only worry. We want them there. We think they are needed now in the cabin. We just want to make sure that it goes boom, boom, boom, and it is a success story, and there is no problem.

Senator Banks: Just to confirm, Ms. Pelletier, you said, in your worst case example, you are walking past with a cart, facing the people in an airplane as you would normally do, and someone stands up suddenly and is in the process of drawing a gun, and if you have a wine bottle in your hand, you are going to bash him or her.

Ms. Pelletier: That is correct.

Senator Banks: Is that part of your training?

Ms. Pelletier: We do not have any training. It would be a normal reaction of a flight attendant because sometimes we get pilots who come onboard, and they say — and I have a quotation here — ``I expect everybody back here to prevent entry to the flight deck at all costs, even at risk of your own lives.'' We do have some pilots coming onboard telling us that, but we have absolutely no training. We do not know what the rules of engagement are. We do not know what we are supposed to do.

Senator Banks: Do you have any marshal arts training of any kind at all?

Ms. Pelletier: Absolutely not, sir.

Senator Wiebe: Are aircraft groomers part of the union?

Mr. Balnis: No, they are not.

Senator Wiebe: It was my understanding from witnesses that appeared before us that before the flight attendants and passengers are allowed on the plane — this is after the caterers — that the groomer gives the final word as to the cleanliness and the safety of the aircraft. Is that correct?

Ms. Pelletier: No, groomers do not give any word on the safety of an aircraft. That would be maintenance.

Senator Wiebe: Are they through with their job prior to the attendants coming onboard?

Ms. Pelletier: Not necessarily. Most of the time there are such quick turnarounds. Everybody is there at the same time: the caterers, the groomers; they are fuelling and they are boarding the baggage.

Mr. Balnis: And the flight attendants are doing their pre-flight check. It can be chaotic.

Ms. Pelletier: It is very chaotic.

Mr. Balnis: Assuming the aircraft has been groomed at that particular location, because that does not happen in all cases, either.

Senator Wiebe: The aircraft are not necessarily groomed each time they take off?

Ms. Pelletier: That is correct.

Senator Wiebe: The backs of the seats are not checked, if someone left something?

Ms. Pelletier: No.

Senator Wiebe: It was my understanding that was the responsibility of the aircraft groomers. Is that correct?

Mr. Balnis: They would be looking in the seat pockets, but they are not there on every flight.

Ms. Pelletier: And they are not there looking for bombs. They are just picking up garbage.

Senator Wiebe: They have no training, either?

Ms. Pelletier: Absolutely not.

Senator Wiebe: Something has happened to me on a number of occasions on a Canadair aircraft carrying 50 passengers that flies from Ottawa to Reagan International. This flight is supposed to have a sky marshal onboard. Prior to September 11, I had made a number of flights, and the stewardess or the flight attendant sat in a seat off to the side, or up front if there was an empty seat there. I was rather amazed, after we were allowed back into Reagan, that there was a seat that folded out from the side of the cabin directly in front of the door into the pilots' cockpit, and that is where the stewardess sat.

Ms. Pelletier: That is our flight attendant jump seat.

Senator Wiebe: If I were a terrorist and wanted to get into the pilots' compartment, I would have to first deal with the stewardess. On that particular flight to Reagan where that jump seat comes sliding out, does that person sitting there have special training?

Ms. Pelletier: No, sir.

Senator Wiebe: Then why do they put the seat there?

Ms. Pelletier: That is where it is. That is how Air Canada ordered that aircraft. Originally, that aircraft was supposed to have two jump seats, but Air Canada — because normally, on a 50-seater, you would have two flight attendants under our present rule of one flight attendant per 40 passengers — was able to get an exemption on this aircraft and only have one flight attendant. Therefore, they removed the seat in the back. When they took delivery of the aircraft, there was only that one jump seat at the front of the aircraft. For purposes of service, if they do board a second flight attendant, that flight attendant is sitting in the cabin.

Senator Wiebe: Where would they sit, then, if there were only one seat?

Ms. Pelletier: In a passenger seat.

Senator Wiebe: Okay.

Ms. Pelletier: And sometimes in the cockpit.

Senator Wiebe: Do you feel that there are air marshals on every flight originating in Canada whose destination is Reagan?

Ms. Pelletier: It is a requirement.

Senator Wiebe: I know it is a requirement, but do you —

Ms. Pelletier: I do not know, sir.

Senator Meighen: I just have a couple of questions. Ms. Pelletier, if you have a pass issued by such and such an airport, do you have any problem using it at any other airport?

Ms. Pelletier: Yes, it is not necessarily recognized at other airports, so we do go through security screening.

Senator Meighen: The pass, then, is not designed to enable you to avoid the security check? What does the pass do for you?

Ms. Pelletier: It gives you security clearance for the particular airport that issued the pass.

Senator Meighen: Fair enough. Now you are in another airport, and it may or may not serve the same purpose?

Ms. Pelletier: That is correct. It depends on the airport.

Mr. Balnis: We have had cases internationally where crew are maybe come from different bases, with the red and the blue, and the gendarme is standing there saying, ``How come everybody has different passes here?'' That is why we said for those users of more than one airport, we believe we should be upgrading the passes. We used to call it a ``green card.'' Now it is every different card. Let's go back to that, but also follow the U.S. example of using improved biometric technology. We are hopeful that the minister has delegated that to CATSA, and that they will get onto it. On that one, we are encouraged. We are concerned about the slowness, but we are encouraged that that we are working on it perhaps a little faster than the other issues.

Senator Meighen: Going back to air marshals for a second, your last note refers to the need for our CACPP to become more like the far better international standard. Is there an international standard?

Mr. Balnis: I think what we were referring to is in the previous paragraph, the programs in the United States, Israel and Austria, where there was interaction.

Senator Meighen: There is no standard that you are aware of, is there?

Mr. Balnis: We understand that ICAO is working on amendments to Annex 17, and we have seen some of that stuff. We have been promised a copy of that draft material. We have yet to receive it. We believe it is in there, so ICAO is working on it.

Senator Meighen: Has it ever happened to you, Ms. Pelletier, that you were able to identify the sky marshal without being told?

Ms. Pelletier: Yes.

Senator Meighen: Did that individual know you had identified him or her?

Ms. Pelletier: No. I was very discreet.

Senator Meighen: You were very discreet?

Ms. Pelletier: Yes.

Senator Meighen: If you were able to, with the stroke of a pen, order one change immediately, what would you do? In other words, what is the most serious security flaw, in your opinion, that exists right now?

Ms. Pelletier: Proper training.

Senator Meighen: Proper training. Referring to flight attendants now?

Ms. Pelletier: Flight attendants and ground people. We have to stop these people from getting onboard the aircraft, so the chain starts from when that passenger or that person gets into the airport right up until it gets to the aircraft, and then if that person does get to the aircraft, then we have to know how to deal with it.

Senator Atkins: Thirty years as a flight attendant.

Ms. Pelletier: Yes. It is giving away my age.

Senator Meighen: You started at 15.

Ms. Pelletier: Thank you.

Senator Atkins: So you have seen a lot of changes.

Ms. Pelletier: I certainly have.

Senator Atkins: With your seniority, when you review which block you want, do you think of security when you make that decision?

Ms. Pelletier: Yes.

Senator Atkins: I assume you are flying on 767s or 747s, the big aircraft?

Ms. Pelletier: I can hold flights overseas. I can hold just about anything I would like to do. Of course, the preference is to stay away from certain flights, because we have had some situations with flights to Tel Aviv. I do not want to get into occupational health and safety regulations, but under Part 2 of the code, we have a right to refuse dangerous work, and we have had many flight attendants exercise their right to refuse unsafe work in doing the Tel Aviv flights because we have layovers there. The crews are laying over, and the company has not been forthright in giving us their contingency plans for taking care of us if something happens while we are on a layover. That would be a flight that I would not choose.

Senator Atkins: So 30 years ago, you could get on a 9 or 8 —

Ms. Pelletier: DC-8.

Senator Atkins: DC-8, and it was a fun experience, and you looked forward to it. Are you apprehensive about flying these days?

Ms. Pelletier: Yes and no. Yes. Yes. I do not feel safe. The nature of the responsibilities that are being put on the flight attendants is forever increasing, and the numbers of flight attendants onboard an aircraft make it so that security does not seem to be on the top of everybody's mind. We have to get the service out, and everybody has to be up in business class for this new service, so there are very few people in the back cabin to be looking at the passengers as they are boarding. It is stressful.

Senator Atkins: So the destination and the size of aircraft would have some significance in your choices?

Ms. Pelletier: Not necessarily the size of aircraft. That goes along with the destination, because depending on where you are going, it may be an A-340 or a 747 or an RJ. It is mostly the destination, I think.

Senator Atkins: With your experience, though, what would you look for in passengers boarding an aircraft, even without any training?

Ms. Pelletier: What we do now, when we can — that is the big problem right now. There are so many requirements of flight attendants and such short turn-around times that sometimes we should be in the cabin more and we should be really concentrating, looking at the passengers, to see if they are nervous, see if they are fidgety. You can tell. I mean, after 30 years, you can tell if somebody is really hyper or relaxed or just really tired or just checking it out. When you do see somebody who is not too comfortable, you go up to them and say, ``Can I help you?'' You have a good day or bad day. There are ways of talking to people, and we just do not have time for that right now, because there is too much that is asked of us in preparation for the flight, and one of them is to be checking the galley equipment for bombs. We should be in the cabin checking out the passengers when they are boarding, and that should be done by the ground people too.

Senator Atkins: CUPE supports air marshals with weapons.

Ms. Pelletier: Non-lethal weapons.

Senator Atkins: What is a non-lethal weapon?

Ms. Pelletier: Things that cannot damage the aircraft or kill people.

Senator Atkins: What is CUPE's view on pilots having weapons?

Ms. Pelletier: We were against it. Terrorists, armed marshals and now armed pilots? It would be a battlefield.

Mr. Balnis: The other aspect is that they are in the cockpit, which has been fortified and is stronger. There should be procedures for them not to come out. They should not be coming out to help us, or be lured out of the cockpit. If there are resources to train the pilots, let's train the back and let's put on more qualified air marshals.

Senator Atkins: Are all the aircraft that Air Canada is now flying more fortified than they were?

Ms. Pelletier: There is an interim procedure. They have to have them all fortified by April 2003. They all have a bar going across the cockpit door.

Senator Atkins: What is your view of the double door?

Ms. Pelletier: I agree with it.

Senator Atkins: How do you implement it on some aircraft?

Ms. Pelletier: I have seen one demonstration. You would have a pass code to get through the first door. Then the first door would shut and you would be stuck between the two doors and have to enter another code before getting through the second door. It is an additional barrier. I have seen them and I think it is a good idea.

Senator Atkins: Senator Wiebe talked about some aircraft on which there is one flight attendant at the front near where you enter. Some of the larger aircraft have two seats there, with two flight attendants sitting there. You are saying that if they had the proper training they could be effective in terms of any difficulty that might arise?

Ms. Pelletier: We could, and we could also protect ourselves and be better able to handle the situation and help the passengers.

Senator Atkins: Have you had any experience with air rage?

Ms. Pelletier: Oh yes.

Senator Atkins: How do you deal with that?

Ms. Pelletier: We have no training in that either. That depends on the situation. It takes a lot of patience and a lot of diplomacy. Sometimes you end up getting whacked, bitten or having something thrown at you. We have no training on how to protect ourselves in those kinds of violent situations either. Sometimes we get cornered in the galleys.

Senator Atkins: CUPE has no impact on the airlines with regard to such situations?

Mr. Balnis: We try very hard. In fact, with one carrier we have developed common ground, since September 11 and the advent of unruly passengers, developed training such as they have in the United States, from level 1 through to level 4. How do you recognize a passenger who has had a bad day and refuses to buckle his seatbelt and then it escalates into a situation? How do you recognize a terrorist act? We also want basic self-protection training for flight attendants. We are on common ground with that carrier, but the carrier has 8,500 flight attendants, and if they train them and then Transport Canada comes out with something else, they cannot afford to retrain them. We both want Transport Canada to deliver. We are still waiting, but we are told they are working on it.

Ms. Pelletier: It is the turf war again.

Senator Atkins: Where is your clout; where is your leverage?

Mr. Balnis: That is why we are here tonight. We are looking for friends.

Ms. Pelletier: We are looking for help.

Mr. Balnis: We look for friends anywhere we can. We make representations to Transport Canada and to the carriers, but at the end of the day they sometimes say —

Ms. Pelletier: We are working on it.

Mr. Balnis: No, worse. We have actually had a very senior Transport Canada bureaucrat say that air rage is overplayed in the media so they do not think they should do any more. We politely told him that he was incorrect. However, since they have seen that the media has lost interest, they think that maybe air rage is not an issue and maybe September 11 will go away and maybe we will all forget and go back to normal. We fear that complacency is setting in when we should be building on it.

We try to find friends and make the best impact we can. It is also an entrenched philosophy within Transport Canada security that they feel they are doing it right and they are not very open to ideas. They are paranoid and reluctant to listen to ideas outside the box, because it could condemn them for missing September 11. It is that kind of inertia as well and it is powerful.

Senator Meighen: Are those incidents documented and do you have any information as to whether they are increasing in number or staying the same?

Ms. Pelletier: Air rage?

Senator Meighen: Yes.

Ms. Pelletier: It is still happening.

Senator Meighen: I am sure it is still happening, but is it increasing or decreasing and are the incidents documented?

Ms. Pelletier: They are all documented.

Senator Meighen: If an incident occurs, you write a report and file it somewhere?

Ms. Pelletier: Yes, we have a specific reporting form for an unruly passenger situation.

Senator Meighen: That would go to Transport Canada?

Mr. Balnis: Not necessarily. We are hoping that they will develop a reporting format. They have a notice of proposed amendment to create a reporting form so Transport Canada can develop a database and so we can track it.

Senator Meighen: Where does it go now; into a wastepaper basket?

Mr. Balnis: It stays within the carrier. There is no requirement necessarily to consolidate it, so one could look at carriers A, B and C and see whether there is a trend at one carrier or whether there is a system. Each carrier has its reports. Each flight attendant prepares a flight report detailing incidents.

Senator Meighen: Is it not public information?

Mr. Balnis: It is within each corporation. We are hoping that certain basic details will be put into a central database so we can start analyzing things. We are hoping that that will emerge shortly. September 11 threw everything off and now we want to put the pieces together. We can do it right once so that the carriers save money and our flight attendants are properly trained.

Senator Atkins: If you were to pick a model of the best security process from any airline that flies around the world, which one would you pick?

Ms. Pelletier: I would not necessarily look at an airline. I have seen some of them. Some were too aggressive, some were too kung fu type thing. I would look at what law enforcement people teach their officers with regard to how to face a situation and talk it down. Verbal judo is what I am looking for, as far as words are concerned. One of the carriers that is looking at developing that training is looking at a law enforcement training package on how to deal with somebody who is very aggressive and things like that — verbal judo, self defence, how to put on handcuffs. That is another thing. We have restraint ties onboard aircraft and we are not even trained in how to use them. We are looking at that. We are looking at different airlines. I would not pick one airline in particular. I would look at different modules of training.

Senator Atkins: But you are certainly in support of openness.

Ms. Pelletier: Absolutely.

Senator Smith: With regard to air rage, does the carrier keep this information in a computer program and then refuse tickets to people who have exhibited air rage?

Mr. Balnis: They do, and the Canadian Transportation Agency has upheld their right to do that, as long as it is clearly specified in their tariffs. In most cases they have been upheld. There was one recent case in which it was overturned because the airline did not have it spelled out. As long as it is publicly known, in the small print on the back of your ticket, and it is reasonable, the CTA has been upholding it, and they deserve credit for doing so because it helps.

Senator Smith: In response to Senator Meighen's question about if you could do one thing, you talked about training. You have been with Air Canada the whole time, have you not?

Ms. Pelletier: That is correct.

Senator Smith: Let us focus on Air Canada for a bit. They have had a rough financial ride in recent years. In a recent quarter they were actually in the black, which I am sure employees felt good about.

Let us leave government out of this for a second.

What is driving the resistance? Let us consider just the training program. Is it purely cost driven?

Ms. Pelletier: Before September 11, it was a cost thing. Since September 11, it is a priority thing. Unless they are told that they have to do it by a certain date, that they have to train all their flight attendants by a certain date in a specific matter, I do not know if they are going to do it without being forced to; and also the fact that, like Richard was explaining before, they are a little reluctant to develop training because all training that a carrier does has to be approved by Transport Canada. So if they prepare a training package and then they send it to Transport, Transport find themselves in a situation where they cannot approve it because they do not have a basis to approve it on. So they are sort of reluctant to go ahead with the training. Once Transport gets their act together and they do develop a training standard, it does not mean that air carriers' training is actually going to meet that standard. So there is a reluctance to go ahead. We are pushing really hard to do it, and I have started working with Air Canada to develop training, but it is a slow process, and also it has been a question of priorities.

There has been other training — three-day training that has occurred just recently for a new kind of product, and that sort of overrode security training.

Senator Smith: As a condition for a carrier's licence, obviously there would be training requirements for pilots, and exams and tests?

Ms. Pelletier: The same thing with us.

Senator Smith: What are the requirements for flight attendants?

Ms. Pelletier: Every year, we have to undergo annual training, and there is a training standard developed by Transport Canada. Air carriers must follow the training standard. Every year they can modify it. This year, we will teach about ditching with an actual raft, and the next year we will do live firefighting and then a little bit of first aid. They can modify it a little. Right now we are working on the annual training for 2003. When they work on the training, they develop it and then they go to Transport and say, ``Is this okay? Does it meet all the requirements of the training standard?'' But there is nothing in there on security training.

Senator Smith: Do you have a sense of whether Transport Canada monitors this training, or do you know?

Ms. Pelletier: That is why we are involved, to ensure it meets the requirements. They do meet the requirements of the training standard, as far as what is required by the Canadian aviation regulations now, but there is no requirement to do security training.

Mr. Balnis: The security training is very minimal. It is in the air carriers security measures Appendix 8; and security is updating that because they realize it reflects the 1970s and not the 21st century. So we are waiting for them to update that, and then the two of them will put it together, but hopefully they will find a way to do that.

Senator Smith: As a matter of policy, does CUPE have a position on this? We heard from the Auditor General prior to your appearance. The primary issue before them was the security surcharge of $12 and all the money it is generating. If you take $12 times something in the neighbourhood of 100 million passengers per year in this country, we are talking over $1 billion per year. Who do you see as making this training happen? Should Transport Canada have a training school toward which some of this money goes? In that way, they could deal with these security issues. Do you think the ball should be purely in the court of the airlines? Have you sorted out a position that might work so as to ensure that all the attendants get the appropriate training, with specific reference to security measures? Might some of that money that is being generated go to such a facility; or has there been any thought of something like that?

Mr. Balnis: I would like to answer that. After Justice Moshansky looked into the crash of Air Ontario at Dryden, one of the products of that was an improved flight attendant training standard, which is an enabling standard by Transport Canada. As France explained, the carriers follow that. That is the route to go.

We believe we should strengthen those aspects — unruly passengers and security training — and that would be then the regulated norm that the carriers need to follow. It will be a consistent, level expectation. The carriers will train their cabin crew to meet those standards. If there were additional costs —

Senator Smith: So you see the carriers doing that.

Mr. Balnis: That is right. They would do it now.

Ms. Pelletier: They have the facilities. They have the training facilities.

Mr. Balnis: The simulators.

Senator Smith: Air Canada would, but I do not know if Bearskin would, for example.

Mr. Balnis: No. They do. Our Calm Air flight attendants, our Cathay Pacific flight attendants, FirstAir, Air Transat, are all trained; they have company training. I guess in terms of if the company said, ``Well, listen now, it is adding two days of training that you have mandated on us,'' we would not be adverse to the carriers coming forward to say, ``We need some assistance.'' It is not part of CATSA's responsibility, but our understanding of the legislation is there are duties assigned. They have started out with security screening. They have done air marshals. They have assigned two more tasks, and maybe the question of finding funding for the carriers to do that is fine.

Now, they did get a $100-million break because security screening was taken off the carriers. But you are absolutely right; the carriers are all suffering around the world, and in Canada as well. We should know. We are trying to bargain a collective agreement with Air Canada just as we speak. Times are tough there. Maybe if there were additional training, that $12 could be used. We are open to that, as long as that training does happen.

Senator Smith: Are you aware of any countries that are moving in that direction?

Ms. Pelletier: That are training their flight attendants?

Senator Smith: Either funding it or having requirements for licensing purposes that attendants receive security training?

Mr. Balnis: Is there a government that is providing extra funding for the additional training as required after September 11? I do not know. I just do not know.

Ms. Pelletier: One of the obstacles that I am coming across with Air Canada as far as their training is concerned — some of the training is three days, some of the training is four days, some training is two days, and in my discussions with Air Canada, they want to make it a half a day, a half a day or a day. Now, it is all very nice to talk about training, but we have to look at the actual value of that training and we have to look at the adequacy of that training.

If additional funding can be provided to the carrier to ensure that we get proper training, that makes a lot of sense. But I do not know of any countries where it is a requirement and where funding —

Senator Smith: Are there no airlines that you can point to anywhere that are a role model to some extent?

Ms. Pelletier: British Airways

Mr. Balnis: Our sister union in the United States, as part of September 11, had a demonstration saying, ``We need better training,'' so the U.S. models are not very good.

There may be some other offshore models, but we are trying to develop something in Canada, within North America, and so far, we have not. Transport Canada hired consultants who looked at the security models of Israel, Germany and England, and came to the conclusion that they were appropriate to those three cultures. Canada should have something different. I do not know how much they were paid. At the end of that analysis, we sort of said, ``Okay, what is good for Canada?'' and they really had no lessons for us. That is a problem. You can look and pick and choose. That is why we developed our 54-point agenda, to try to address those and bring those practices together. We just cannot point and say, ``Airline X is the best; if we were only like them,'' because not everyone has the best features, unfortunately.

The Chairman: Senator Banks has a short supplementary on this point.

Senator Banks: To which you can answer yes or no, Mr. Balnis. Did I correctly understand you to say that if Air Canada put forward a believable two-day program for flight attendants, that CUPE would agree that the flight attendants would undergo that at no cost to Air Canada?

Mr. Balnis: If they justified it as incremental costs meeting the requirements of September 11, yes, we would be open to that. We would not say, ``Hang on, the one- or two-day annual recurrent training now is going to be paid by the government,'' no; but if they said we have to train our flight attendants, to have better initial training in the security procedures and unruly passengers and it was a choice of having it or not, I think we would be sitting here with Air Canada. We are not adverse to that. We rarely do so, but on that one, because training is such a high priority, we would. Like I say, we do it rarely, but we have common ground and we try to find friends.

Senator Wiebe: If I were 19 years old and applied to Air Canada to be a flight attendant and was successful, how long would my training period be before I start working?

Ms. Pelletier: Five weeks.

Senator Wiebe: I imagine that you have given this some thought. How long a period will be required to train that same attendant to be able to recognize whether something is a bomb or not, or to be able to recognize air rage? What kind of a program have you people thought of?

Ms. Pelletier: In order to be able to sort of look at a passenger and to identify a possible terrorist, or the whole —

Senator Wiebe: The whole bag. You were saying one of the greatest things needed now is training.

Ms. Pelletier: Yes.

Senator Wiebe: I do not believe very strongly in these add-ons, where someone goes for training for half a day, or one or two days. It is a waste of time, to be honest with you, and you do not get proper training. I think you should have either a complete refresher course that takes a fair length of time or the basic training right at the start. How long a period would that be?

Ms. Pelletier: That is a very good question. Based on some of the training that I have seen, one very good, comprehensive one was about five days training for somebody who has never — let us say as an initial course.

Senator Wiebe: Would you say then, if someone gave you five days, that you would feel comfortable?

Ms. Pelletier: I would feel much more comfortable and much more confident in my ability to be able to deal with the situation.

Senator Wiebe: Are there exams or things to pass in order to qualify?

Ms. Pelletier: Right now, we need to pass 100 per cent of our annual training, so I would say that there would have to be some sort of exam, some sort of drills. We do drills now in a simulator. We do scenarios with fires and noise and our simulator moves and all sorts of things. I would say scenarios, and teach us how to put on restraints if we have to. We have equipment on board; teach us how to protect ourselves. Give us the confidence in ourselves.

Senator Wiebe: As a union, what would happen then if we got our wish and there was a five-day training period required? What would happen if a flight attendant who has been in the employ of an airline company for 10 years is not able to pass that training? What then happens to that individual?

Ms. Pelletier: What happens now is, if you don't get 100 per cent on your marks, depending on if you had two or three mistakes on the exam, then you would have a rewrite, or if you did not meet the criteria for program evaluation when we do our actual drills — we do actual drills in the simulator — they make you redo it, and even after a second try, if you are not successful, then they give you an opportunity to attend another training. Then, if you fail that, you don't meet the requirements; therefore, you are no longer competent as a flight attendant.

Senator Wiebe: So then you would lose your job?

Ms. Pelletier: That is correct, but that is what we do now.

Senator Forrestall: Who should do this training? Should the airlines do it or should the government do it?

Ms. Pelletier: I would suggest professionals who are used to teaching that sort of thing, because we are having this discussion for other kinds of training; first aid, for example. We believe that first aid training should be done by somebody who has been certified by a recognized organization in first aid training. We are having still a little bit of discussion on that with Transport Canada. Giving a training syllabus to a flight attendant off the line and saying, ``Here, go teach this,'' is not what I consider requirements to properly train. And from the people I have spoken to, especially the law enforcement people, they have people that are specifically trained to teach how to do verbal judo and how to put on restraints and that. It would have to be some people who are professionals in that area.

Senator Forrestall: You would then include, perhaps, officers of a national police force?

Ms. Pelletier: The RCMP or some other — yes.

Senator Forrestall: Do you get any training in your own self-control?

Ms. Pelletier: No.

Senator Forrestall: That is so important in the military and police and what not; you do not have any of that?

Ms. Pelletier: It comes from experience, and I guess they sort of screen you when they hire you, but there is no training like that.

The Chairman: I would like to thank you both for appearing before us. We found your testimony to be very helpful. We may come back to you with further questions in the future.

To those of you at home following our work, please visit our Web site by going to We post witness testimony as well as confirmed hearing schedules. Otherwise, you may contact the clerk of our committee by calling 1- 800-267-7362 for further information or assistance in contacting members of the committee.

The committee continued in camera.

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