Standing Senate Committee on Transport and Communications (44th Parliament, 1st Session) (2024)

THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS

EVIDENCE

OTTAWA, Tuesday, May21, 2024

The Standing Senate Committee on Transport and Communications met with videoconference this day at 9:02a.m.[ET] to study BillS-273, An Act to declare the Chignecto Isthmus Dykeland System and related works to be for the general advantage of Canada; and to study the subject matter of those elements contained in Divisions 27 and 37 of Part 4 of BillC-69, An Act to implement certain provisions of the budget tabled in Parliament on April16, 2024.

Senator Leo Housakos (Chair) in the chair.

[English]

The Chair: I’m Leo Housakos, senator from Quebec and chair of this committee. I would like to have my colleagues briefly introduce themselves.

Senator Simons: I’m Senator Paula Simons, and I come from Alberta, Treaty 6 territory. [Indigenous language spoken].

Senator Quinn: Jim Quinn from New Brunswick.

[Translation]

Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.

[English]

Senator Dasko: Donna Dasko, senator from Ontario.

The Chair: We’re continuing our study of BillS-273, the Chignecto Isthmus Dykeland System Bill. For our first panel this morning, I’m pleased to welcome by video conference Chief Rebecca Knockwood from the Fort Folly First Nation accompanied by Derek Simon, Legal Counsel, from Mi’gmawe’l Tplu’taqnn Incorporated. We also have Jessica Ginsburg, Barrister and Solicitor, representing the Kwilmu’kw Maw‑Klusuaqn.

Welcome and thank you for joining us. We’ll be having opening remarks from each of our witnesses, starting with Chief Rebecca Knockwood for five minutes, followed by Jessica Ginsburg for another five minutes and then we go to questions andanswers.

Chief Knockwood, you have the floor.

Rebecca Knockwood, Chief, Fort Folly First Nation: Wela’lin. [Indigenous language spoken], good morning. I am joined today by the legal counsel of Mi’gmawe’l Tplu’taqnn, or MTI, Derek Simon.

MTI is a not-for-profit organization created by the nine Mi’kmaq First Nations in New Brunswick. Our objectives include promoting and supporting the recognition, affirmation, exercise and implementation of Aboriginal and treaty rights and the right of self-determination. Mi’gmawe’l Tplu’taqnn works on behalf of the eight Mi’kmaq communities on consultation matters. We are both presenting to you from the unceded and unsurrendered territory of the Mi’kmaq. Our people have occupied and cared for these lands and waters since time immemorial and have never ceded Aboriginal title of ownership and stewardship over the lands and waters.

Thank you for allowing us to present our thoughts on BillS-273 today.

My community, Amlamgog, is less than a 10-minute drive to the Chignecto Isthmus. The Chignecto Isthmus is a significant cultural area for the Mi’kmaq. The name Chignecto was a European adaptation of the Mi’kmaq term for much a larger region: Siknikt, meaning “the drainage place.” We know the Chignecto Isthmus is an important trade corridor for our country with goods passing through this area each day. This has always been the case. Studies show that it was one of the most densely populated areas of Mi’kma’ki and was a centre for travel and trade. Mi’kmaw, including members of my community, continue to harvest in the area.

Everyone agrees this is an important economic corridor, especially for the Maritimes. We agree that because of climate change, the dike system needs to be raised and strengthened. The only thing no one seems to be able to agree upon is who should pay to update this vital link for the Maritime provinces. We know you have had many witnesses speak to the economic implications if the dike system is not repaired. However, there are important implications or Mi’kma’ki rights you need to consider when deciding whether to support BillS-273. We will share some of these with you today.

Today, the isthmus is known to host 44 federal and provincial species at risk as well as over 250 species of conservation concern in Nova Scotia and over 170 in New Brunswick. Many of these species are of particular significance to the Mi’kmaq. While the federal government and governments of New Brunswick and Nova Scotia continue to argue over who should pay for the needed improvements, the Atlantic region is being told to prepare for an extremely active hurricane season with, as of now, five major hurricanes predicted for this year. Storms and the effect of climate change in this area will get worse. Action needs to be taken to protect this area.

Currently, there are real issues with how the Government of New Brunswick undertakes consultation. Under the consultation process in New Brunswick, we are often informed that a project has been determined to have little or no impact on Aboriginal and treaty rights or has been approved with little to no consultation with our communities. Provincial consultation to date on this project has been inadequate. Archaeological work has been conducted without full Mi’kmaq involvement. Likewise, the provincial environmental impact assessment process excludes First Nations from key aspects of the process, including the technical review committee.

As a result of these issues, we at MTI were forced to develop our own impact assessment process: the Mi’gmaq Rights Impact Assessment, or MRIA, Framework. While the federal government and proponents have had no issues in following this Mi’kmaq-led impact assessment process, the province continues to refuse to recognize it. Indigenous consultation under the federal guidelines and Indigenous inclusion under the federal Impact Assessment Act is more comprehensive than the New Brunswick process and aligns better with the MRIA process.

Deep and meaningful consultation is required for this project as well as a proper Mi’gmaq Indigenous Knowledge Study. For a project of this significance in our culturally significant area, we feel a federal impact assessment is necessary. We feel this bill will assist in ensuring that the federal government has a significant role in both the consultation and impact assessment processes and a greater likelihood that the process complies with the MRIA. Considering the significance of this area for the Mi’kmaq, considering that the federal government’s consultation and impact assessment process is more thorough and considering that we cannot afford to wait for the jurisdictional battle to be settled, the Mi’kmaq chiefs in New Brunswick would ask you to support the bill put forward by Senator Quinn. The land should be transferred to federal jurisdiction until this project has been completed. Wela’lioq.

The Chair: Thank you so much. Now we turn it over to Jessica Ginsburg for five minutes.

Jessica Ginsburg, Barrister and Solicitor, Kwilmu’kw Maw-Klusuaqn: Hello. Thank you for inviting us to appear before you today. As indicated, I’m here on behalf of Kwilmu’kw Maw-Klusuaqn, also known as KMK, which supports the Assembly of Nova Scotia Mi’kmaw Chiefs in the Mi’kmaq-Nova Scotia-Canada Tripartite process, working towards rights and title implementation.

The Mi’kmaw Nation has a general interest in all lands, waters and other resources of Nova Scotia, as the Mi’kmaq have never surrendered, ceded or sold their Aboriginal title to any of their lands and waters in the province.

The Mi’kmaq have a title claim to all of Nova Scotia and are co-owners of the lands, waters and resources of this province. Both Canada and Nova Scotia are aware of and acknowledge the title and rights claims of the Mi’kmaq and the fact that any potential impacts to Mi’kmaq rights and title are subject to the duty to consult and accommodate.

My comments with respect to BillS-273 are focused on its potential implications for the duty to consult. Specifically, two clauses of the bill create regulatory uncertainty and introduce the possibility of the Crown circumventing its consultation obligations.

To begin, I will speak to the regulatory exemptions clauseof the bill. Clause7(1) provides the Governor-in-Council with sweeping powers to exempt persons from federal permits, licences, approvals and other authorizations on any condition considered to be in the public interest.

This provision has clear implications for the duty to consult. As noted by the Supreme Court of Canada in Haida Nation v. British Columbia (Minister of Forests):

. . . the duty arises when the Crown has knowledge, real or constructive, of the potential existence of the Aboriginal right or title and contemplates conduct that might adversely affect it....

Key to this discussion is the contemplated conduct part of the Haida test. At present, there is a fairly predictable— though imperfect— array of federal and provincial approvals, which trigger the duty to consult on major construction projects such as the one being contemplated here. However, if exemptions are provided for a certain number of these approvals, there’s the potential for the bill to be used to circumvent the accompanying consultation obligations.

This type of concern was discussed by justices of the Supreme Court of Canada in Mikisew Cree First Nation v. Canada (Governor General in Council) in the context of whether the Crown owes a duty to consult when developing legislation. Justice Karakatsanis acknowledged that the following presented a valid concern:

. . . there may be situations where legislation effectively removes future consultation obligations by removing Crown decision-making that would otherwise have triggered the duty to consult.

And referred to the earlier Yukon Court of Appeal case Ross River Dena Council v. Government of Yukon, which held that:

. . . Statutory regimes that do not allow for consultation and fail to provide any other equally effective means to acknowledge and accommodate Aboriginal claims are defective and cannot be allowed to subsist.

Moving now to clause4, which contains the declaration that the Chignecto Isthmus dykeland system and related works are for the general advantage of Canada. Bringing the Chignecto Isthmus and related works under federal regulatory jurisdiction again runs the risk of creating regulatory uncertainty and risks circumventing provincial decision points or creating regulatory gaps in areas that will currently trigger the duty to consult.

The question of how to uphold the Crown’s duty to consult in the face of potential regulatory exemptions and gaps needs to be addressed. The bill itself should contain a guarantee that decisions made pursuant to it shall be consistent with the goal of reconciliation and the Crown’s duty to consult obligations.

Any diminution of the consultation opportunities afforded to the Mi’kmaq of Nova Scotia is unacceptable. Before these lands were of significance to Canada as an economic and transportation corridor, they were of significance to the Mi’kmaq people as an economic and transportation corridor, with use and occupancy by Mi’kmaq since time immemorial. Today, the area continues to hold high significance for its long-standing traditional use, its archaeological potential both on land and under water and its spiritual significance in connection with Mi’kmaq legends. It is the focus of numerous consultations, and it presents economic opportunities for the Mi’kmaq associated with local infrastructure developments such as the new interprovincial transmission lines. It is therefore imperative that the Mi’kmaq continue to be involved with all of the multidimensional decisions affecting this important area.

While we understand the need to protect this important land mass from the effects of climate change, we have serious concerns with any bill that could be used to remove Crown decision-making that would otherwise have triggered the duty to consult. Thank you.

The Chair: Thank you. For our audience, Senator Prosper and Senator Aucoin have also joined our committee.

Senator Quinn: Thank you, witnesses, for being here this morning. I want to pick up on the duty to consult theme.

When the provinces of Nova Scotia and New Brunswick undertook their study to look at options and whatnot, were either of your organizations or both organizations consulted?

Ms.Knockwood: I believe not on the New Brunswick side anyway.

Senator Quinn: On the Nova Scotia side?

Ms.Ginsburg: That preceded my time with the organization, so I can’t provide a definitiveanswer to that.

Senator Quinn: Following on consultation— and thank you for your observations about whether perhaps the duty to consult should be within the bill— my understanding is that if this were to fall under federal jurisdiction, decided by the courts or by Parliament, that a project that is under federal jurisdiction automatically triggers the duty to consult. Is that correct? From both of you?

Derek A. Simon, Legal Counsel, Mi’gmawe’l Tplu’taqnn Incorporated, Fort Folly First Nation: There would have to be a decision to trigger the federal duty to consult. I don’t want to speak for my friend. The concern might be the ability to exempt certain federal decisions from permitting, which means that certain duty to consult triggers might not be there.

To expand on the chief’sanswer as well, there was some limited engagement around the project from the provincial end, but— as she referenced— there was not any significant Mi’kmaq involvement in the archaeological work, for example, like we would have expected. There was no funding for an Indigenous knowledge study despite the significant amount of land use in the area. There was some sort of minimal engagement, but not the deep, meaningful consultation we might have expected.

Senator Quinn: Would the bill be strengthened if we were to make an amendment that specifically noted the duty to consult? Would that be helpful?

Mr.Simon: I’ll defer to my friend Ms.Ginsburg on that.

Ms.Ginsburg: Yes, the courts have been increasingly critical of legislative schemes that remove the decision points that trigger the accompanying duty. Because this bill has such a far-reaching exemption power as well as the constitutional uncertainty or questions raised by shifting jurisdiction from the province to the feds, there is the potential for lesser consultation, although it doesn’t have to be implemented that way. But there’s the concern that there could be regulatory gaps or regulatory exemptions that would mean that the accompanying duty is not triggered. Because it is such a far-reaching— for example— exemption power, it would benefit from some sort of a guarantee that it would not be used or implemented in such a way that would diminish in any way the goal of reconciliation or the duty to consult, in our view.

Senator Quinn: Thank you. Last week, we saw that the federal government noted the importance of the Quebec Bridge that crosses from Quebec City over to the south shore. They’re investing considerable funds over a 25-year period. They saw that as a key transportation corridor. In fact, I think they’ve got it down the road of “for the general advantage of Canada.” How do you react to that when you look at the Chignecto Isthmus? Is the Chignecto Isthmus, in your view, important to Canada with respect to trade, transportation and protection of towns and farmlands? I’ll ask both of you to comment.

Ms.Knockwood: Thank you, Senator Quinn. To me it is very important environmental-wise as well as economic-wise because that’s the trade corridor. You have three provinces that the Chignecto Isthmus will run through.

You have New Brunswick, P.E.I. and Newfoundland. If that is cut off, you basically have no way to get there to deliver goods or anything. If the Chignecto Isthmus were to flood, in my opinion, my community would suffer greatly because we would have no place to hunt or gather our medicines.

Senator Quinn: Our other witness, any comments?

Ms.Ginsburg: I agree that it’s of critical importance and always has been. I know you’re asking in terms of the context of the importance to Canada as a country, but it’s always been a place of significance to the Mi’kmaq before there was a Canada to be concerned with. So I agree with Chief Knockwood that from so many different perspectives— from economic and environmental perspectives and very much from an archaeological perspective— this is a critical area and has tremendous value to the Mi’kmaq of Nova Scotia as well.

Senator Simons: Ms.Ginsburg, you raised an issue which I had brought up at our last hearing on this about section7(1) of the bill, which, as you say, offers an extraordinarily broad exemption power to exempt any person from obtaining a permit, licence or other authorization in connection to the construction— whether that’s to do with labour laws, environmental laws, as you talked about, archaeological preservation, duty to consult— and 7(3) is arguably even broader because it allows for an ex post facto exemption of anything that was found to be a problem. They can wave a magic wand and say that it didn’t happen.

I wonder, Mr.Simon and Chief Knockwood, what you make of those exemption powers in section7 and whether or not they vitiate a lot of Indigenous rights and a lot of environmental protections that could be afforded to this critical— I don’t want to call it an infrastructure piece, but to this environmentally sensitive corridor.

Ms.Knockwood: I’ll let Mr.Simonanswer that for you.

Mr.Simon: Thank you, senator. Obviously, I don’t think that the Crown can legislatively remove their obligations regarding the duty to consult. I think the honour of the Crown would still compel the Crown to engage with Indigenous peoples on this project regardless of what the legislation says. That being said, I share my friend’s concerns about the potential that if broad exemptions are granted for certain permitting requirements, it may limit the duty to consult in certain ways, so we may not get consulted on the aspects of the project we want to be consulted on. I return to the chief’s original comments. I think we feel that, overall, the project would benefit from federal oversight and federal leadership on duty to consult and impact assessment, so amendments that perhaps narrow down the scope of some of the exemptions in clause7 might be welcome.

Senator Simons: Ms.Ginsburg, one of the witnesses who testified before us the last time, Dr.Andrew Leach from the University of Alberta Faculty of Law, testified that he believed that if this bill came into force and effect, it would create a potential legislative vacuum because all provincial legislation from the governments of Nova Scotia and New Brunswick would be suspended by this. I’m wondering what you think of that analysis. Do you believe that if this bill were to pass that provincial regulations, environmental regulations and regulations around archaeological excavation would be effectively eliminated?

Ms.Ginsburg: Of course, that’s the concern, or that if they were eliminated that there wouldn’t be substitute federal decision points in their place. It’s not to say that the decisions have to be made provincially, but the federal government wouldn’t usually regulate in the areas covered off by the provinces currently. That’s the concern— that there would be a gap created.

I think it would be a question for your government counsel— how they view the constitutional analysis. When you’re looking at the division of powers between sections 91 and 92 of the Constitution Act, 1867, there are in other areas tests that apply such as the pith and substance test, double aspect doctrine, federal paramountcy, so various tests that apply to see if and when provincial and federal legislation can both apply or can concurrently apply.

However, in the case of 92(10)(c) of the Constitution, which is the sectionbeing invoked here, there have been more questions raised about how that constitutional analysis would operate. I think that’s a very good question to beanswered as soon as possible because you wouldn’t want to see those regulatory gaps where the provinces would usually have very significant roles and now there’s nothing.

Senator Simons: I think we’re all agreed that nobody wants the Chignecto Isthmus to sink into the sea, and everybody agrees that the federal government has to play a major role in funding the— I don’t know what you call it— the repairs and upgrades there. I’m worried that this piece of legislation will have unintended consequences. Thank you, all three of you, for your testimony.

Senator Dasko: Thank you to our witnesses. Your perspectives today are very valuable, and I’m very happy that you’re here to testify on the bill.

My questions are mainly for Chief Knockwood. I want to make sure I understand that the main reason— perhaps the only reason— to declare this federal jurisdiction is to pay for the project, from your point of view. Is that what I heard you say?

Ms.Knockwood: Well, that as well. For me, New Brunswick has a very narrow consultation in doing impact assessments whereas the federal government is bigger, and it would take more into consideration for First Nations than what New Brunswick would offer.

Senator Dasko: Right. But in terms of paying for the project, that is the purpose of passing this bill, correct?

Ms.Knockwood: For me, yes, to make sure it gets done right.

Senator Dasko: Yes, and paid for by the federal government.

Ms.Knockwood: I don’t care if the federal government pays for it or the provincial government pays for it as long as it’s done right.

Senator Dasko: Your expectation is that with this bill, the federal government will pay. Is that correct?

Ms.Knockwood: Yes.

Senator Dasko: You said something very interesting, and for me this is a novel idea. I think I’m quoting you correctly when you said that there should be federal jurisdiction “until the project is completed.” Are you suggesting, then, that there’s federal jurisdiction, but after they pay, then they leave? Is that what I’m hearing? Because I haven’t heard this idea before. Maybe somebody mentioned it, but I haven’t heard this before. I think about other projects, like the Quebec Bridge and so on, which have this declaratory power, but the feds didn’t leave after they paid for it. They stuck around and they still have jurisdiction in these areas. Are you proposing that federal jurisdiction is temporary? Because that is what is suggested to me by your comment— they should be there until the project is completed.

Ms.Knockwood: They can be there until the project is completed or for however long they want to be involved, yes. Either or.

Senator Dasko: So you’re not necessarily saying they should leave after it’s paid for?

Ms.Knockwood: No.

Senator Dasko: That’s great. I just wanted to clarify that.

Ms.Ginsburg, just one question for you. Do you feel that there must be an amendment to this bill to state that there is a duty to consult? Do you think this bill should go ahead as is without such a clauseor do you think it must be amended?

Ms.Ginsburg: My confidence is perhaps not as high as that of my friend that the honour of the Crown would compel the Crown to consult regardless. The bill as it is currently written could be subject to abuses in the area of duty to consult— hopefully not. We all want to assume the best. However, if there were problems— either regulatory gaps or regulatory exemptions that eliminated the accompanying consultations— we don’t want to have to go to court. Nobody wants to have to go to court to legislate these matters. Then there is the question of what kind of remedy or recourse would be available to First Nations who did take that step of going to court. It is an expensive proposition. So while there is no guarantee that the bill would be used in such a way as to eliminate or skirt consultation obligations, there is also no guarantee that it wouldn’t be used in that way.

In my view, the safer proposition is to amend it in order to provide some measure of guarantee and also to conduct an internal analysis— which may or may not have already been done— as to how to avoid these problems happening and to undertake that constitutional analysis to ensure there are no gaps where the province would formerly have had a role.

I don’t know, as you say, of unintended consequences. I do not know to what extent those consequences have been investigated. It is a bit like writing a blank cheque because that exemption clauseis so terribly broad that leaving it as is is a huge leap of faith, which has not always worked out in the favour of First Nations in the past.

Senator Dasko: Thank you.

[Translation]

Senator Miville-Dechêne: Good morning, everyone, and thank you for your remarks.

At this stage, I think I have understood your comments on the principles. What would you like us to amend in the bill? Do you want to eliminate section7 altogether? Do you want section7 to be replaced by something narrower in scope? If so, could you send us a proposed amendment that you feel would ensure that Indigenous peoples are consulted in the process?

Is it only section7? You also spoke about section4; does this sectionalso need to be amended to take into account the duty to consult?

[English]

Ms.Ginsburg: I could speak to that if that is acceptable with the others.

I think you are correct in indicating that it is not just section7, although section7 is certainly a focus of ours.

About the question around section4, I don’t know if it would be so much an amendment because in essence, the point of the bill is section4. Its wording is governed by the Constitution Act, 1867. I do not see, personally, a lot of leeway in how you would word section4. However, we could certainly propose an overarching provision that would apply to the entirety of the bill. It is not something that we could do on the fly, but if the committee is open to that, I could take that back to my organization.

Perhaps the other two witnesses— I see a shaking head from Mr.Simon, but that would be something that we could look into.

Senator Miville-Dechêne: It is not so much eliminating article7, but having another clausethat would talk about the duty to consult Indigenous people. Am I right?

Ms.Ginsburg: On the fly, it would be an overarching clause, potentially with also a condition on section7. I do think it needs to be broader than just section7 alone.

Senator Miville-Dechêne: You are right about the consultation of Indigenous people, but it seems to me— we were told that, for example, there could be absolutely no environmental impact assessment done by the federal government according to article7. They could just get rid of any impact assessment. This seems to me quite important, and I am wondering if this is a clause— because I was also told by other jurists that this kind of clauseis regularly put in bills.

Is it your understanding that with article7, the impact assessment done by the federal government— the very thorough one— would be put in jeopardy?

Ms.Ginsburg: I would say yes. Many bills do have exemption or exception clauses within them. This bill applies to all other legislation. It is not just with respect to an exemption within that act itself. For example, an act that had to deal with archaeology could contain an exemption dealing with archaeology. The exemption clausein this bill relates to all federal decision making. It is extraordinarily broad.

Senator Miville-Dechêne: You were saying that we should obtain clarification from the federal civil servants about applications of law. We have already had the testimony of federal civil servants. We didn’t have any details, except to say that once the constitutional clauseis invoked, federal laws are the only ones that apply. That is the only certitude we got. We did not get anything about provincial laws or whatever the situation would be on the ground.

Ms.Ginsburg: My follow-up question to that would be this: Does the federal government intend to pass another bill related to this area containing all the sorts of regulatory topics that would previously have been dealt with by the provinces so that there is not a gap?

In a way, this bill cries out for a sister bill that would explain how it is to be implemented on the ground.

Senator Miville-Dechêne: Thank you for that remark. It is quite interesting.

[Translation]

Senator Aucoin: Thank you to the witnesses.

My question is mainly for two of the witnesses and concerns the duty to consult. The environment certainly comes to mind. If the federal government takes on the project, are there other sectors on which you would absolutely want to be consulted as Indigenous peoples?

Mr.Simon: Thank you, senator.

[English]

One area of concern would certainly be archaeology as well. One area in which the Province of New Brunswick is ahead of the curve, legislatively speaking, is its Heritage Conservation Act, which provides, for example, for the fact that any archaeological artifacts found in the possession of the Crown are held in trust for Indigenous peoples. That is a very strong law. There is no federal equivalent.

Archaeology is an area of great concern for consultation and ensuring that Indigenous rights are protected. There are known archaeological sites in that area. The former CBC property, which is found in the Tantramar Marsh currently owned by the Mi’kmaq, has an archaeological site. There are numerous other archaeological sites in the area. Archaeology would be an area of key concern for consultation and protection of Indigenous rights.

Ms.Ginsburg: If I could add a subpoint to that list, we agree that archaeology is key in that area as well as underwater archaeology, which is an often overlooked aspect of the archaeological investigations. Especially in this area where there are enormous historic changes in water levels, there is a particularly high potential area for underwater archaeological artifacts. Parks, there are also protected areas in that region. Power lines, fish and, of course, the construction activities themselves.

The consultation, essentially on any aspect or any works— there is nothing that should be presumed from the outset that won’t have an impact on section35 rights. We would encourage that conversation to take place before discounting any types of approvals or permits. As Chief Knockwood said, sometimes there is a tendency to assume or to conclude that those decision points won’t have an impact on rights without having that conversation, and often that is an incorrect assumption.

[Translation]

Senator Aucoin: Would Chief Knockwood like to add a comment? If not, I have another question.

[English]

Ms.Knockwood: Yes, I would. As Jessica Ginsburg had said, you have federal parks over there. Fort Beauséjour is one of them. That was the main contact point for First Nations in that area as well as underwater, as she said. The water is different there, and you never know. There are artifacts under water, there are artifacts on top of the water, in the lands and everything, and by having the federal government take over this area, we will have better consultation and better impact assessment process, more so than we would with the provincial government. Thank you.

[Translation]

Senator Aucoin: Thank you. If I understand your previous comments correctly, some experts have said that there would still be delays or gaps in the consultation process if it were the federal government instead of the provinces.

Given all the areas that should be consulted, do you have any suggestions as to how the bill could be worded to ensure that you will be consulted on those areas if it were to become a federal initiative?

Mr.Simon: Thank you, senator.

[English]

I would think that any amendment that might be proposed that addresses section7 may be able to identify some of the areas which might be priorities for consultation.

[Translation]

Senator Aucoin: Thank you very much.

[English]

Senator Prosper: Thank you to the witnesses for providing your testimony here today.

My question relates to section7 dealing with exemption powers, more specifically the wording of or the term “public interest.” I’m curious if any witnesses have knowledge with respect to any thresholds that involve the public interest when it comes to Indigenous issues. Are there any triggering mechanisms when one thinks of public interest?

As a secondary point, regarding the honour of the Crown and legislative gaps that are informed through provincial legislation, part and parcel of the honour of the Crown being the overriding factor, I am curious about a non-derogation clause. There is a presumption of constitutionality here, one would imagine, beyond any purview of federal legislation. They can’t legislate themselves out of that presumption.

I wonder if BillS-13, which provides for a general non-derogation clauseto apply to all federal legislation, would provide any further comfort to the witnesses with respect to ensuring no legislative gaps will occur or that Indigenous peoples will have their concerns involving consultation seriously considered. I hope that is clear enough, but I can provide further comments on that.

Mr.Simon: Thank you, Senator Prosper. I definitely feel that a non-derogation clausewould be beneficial here.

With regard to your question about the public interest, it is important to circle back to the point— which I think you know well, senator— that the Mi’kmaq are not dealing with asserted rights. They are dealing with proven rights, and we’re into a different legal framework when talking about proven rights. There is a requirement for the Crown to either seek the consent or to try to justify any infringement of those Aboriginal rights. There are more obligations on the Crown than simply duty to consult here.

We also know from the case law that broad public interest justifications will not cut it in terms of a justification for infringement of Mi’kmaq rights.

The courts have tried to limit the types of justifications that can be used: conservation, public safety and the regional economic fairness arguments that creep in with respect to particular rights.

That is part of why I feel that honour of the Crown— as you said, presumption of constitutionality— and rights are in play here. I do think that a broad public interest justification is not going to cut it, that the Crown could not simply say it is in the public interest to not consult here or to not issue this permit as a way of getting out of the duty to consult or the other Crown obligations.

That being said, I’m sensitive to the point that my friend Ms.Ginsburg made, which is “I don’t want to end up having to litigate that.” It would be preferred if there were protections in the bill.

Specific language around non-derogation of Indigenous rights, specific language that makes clear that the duty to consult is applicable and that the public interest cannot be used to simply override those legal obligations, those higher legal obligations— as you said, constitutional obligations— that the Crown has would be helpful.

Ms.Ginsburg: If I can add briefly, there are Supreme Court cases that specifically speak to that public interest wording. I’m thinking of Chippewas of the Thames First Nation, Clyde River, even Carrier Sekani. These cases have espoused the sentiment that a decision to authorize a project cannot be in the public interest if the Crown’s duty to consult has not been met. Accordingly, in the context of section7, it is interesting to see that kind of language appear because it is it unclear what kind of condition would be in the public interest if the effect of the order was to eliminate a decision point that would otherwise trigger the duty. I wanted to respond to that aspect of your question as to whether or not the courts have considered public interest in the context of duty to consult, and theanswer is, yes, they have.

I agree that a non-derogation clausewould be beneficial. Again, many pieces of legislation increasingly contain those kinds of clauses. While it is not a bad thing, the fact that there is still this uncertainty as to how section7 would be used and how the provincial decision points would be dealt with, my own feeling is that more is needed to provide thoseanswers and assurances.

The Chair: My question and the opinion I want to share before asking my question— obviously, fundamentally, I would like to have your opinions because that is what matters— is why are we here? Why are we even having this discussion? Why is it very frequent that we have these discussions when it comes to critical infrastructure in various parts of the country? It has been going on for years.

Why do we need to go to the courts and have senators and legislators apply pressure when it comes to infrastructure that affects more than— it is not a regional issue. This particular infrastructure is touching many provinces and many people in many areas.

The government last week announced in Quebec City that they took over a bridge that was operated for years by the Canadian National Railway. The Canadian government had no problems coming up with a billion dollars to repair that bridge, and legitimately so. It is an important piece of infrastructure that services a wide range of people across the country directly and indirectly.

My question to you is: Why are we having this discussion, and is the federal government just neglecting its responsibilities and playing politics depending upon the region and how many voters and seats are in play? I know Senator Simons finds it funny.

Senator Simons: I find it the question of the hour.

The Chair: I think so, yes.

Mr.Simon: Thank you, senator. I am not sure that I am fully equipped toanswer the question because there are political dimensions to it. I can speak to the fact that we are speaking here today on behalf of a nation whose territory crosses five provinces and into the United States.

So we often deal with a situation where projects like this are bifurcated, and we have to deal with it across colonial provincial boundaries, there are impacts on both sides of the border and one province only looks at one set of impacts and one province looks at the other.

Certainly, we see that issue frequently as well. We would prefer to see a more robust federal role for certain projects that cross provincial boundaries or have transboundary effects. I will limit it to that and defer to my friends.

The Chair: We have the lawyers’ responses. Is there a stakeholders’ response?

Ms.Knockwood: For me, that is a very funny question.

When you have a government like New Brunswick has to deal with, it is very difficult. To me, it is just like a kid saying, “Okay, I’m not going to pay for this. We will send it off to the feds to pay for it. They should pay for it, right?” As I said before, I don’t care who pays for this as long as it gets done and it is done correctly.

I would prefer the feds do it because they have a better understanding of consultation with First Nations, and their impact assessments are very thorough, whereas New Brunswick is, “Yes, we talked to the Indians— check. There we go.” So for me your question is very funny. It is. I agree with you. What are we doing here? Let’s just get over it, be on our way and do it the right way. Sorry, I’m not a lawyer.

The Chair: No.Youranswer was fine. It was a directanswer. Very legitimate.

Does Ms.Ginsburg want to weigh in on this one? We have the lawyer’sanswer and we had Chief Knockwood weigh in. Is that sufficient?

Ms.Ginsburg: I do not have much to add to what my friends have said. I agree.

I also agree with the chief’s earlier comments that in the areas in which the federal government regulates, there are some advantages. There are times when we are trying to get more federal involvement in consultations in areas under their jurisdiction, like fisheries, for example, or at the Impact Assessment Act level— the federal impact assessment. There are advantages at times to having more attention paid by the federal government, but it doesn’tanswer all of the questions that we have been posing here today.

Senator Quinn: I want to come back to BillS-13, which was a bill that came through the Senate six months ago and is now over in the House on second reading. It deals with section35 of the Constitution with respect to the duty to consult and the non‑derogation clauses, etcetera.

My comment before the question is that section35 has such an overarching fundamental raison d’etre for our country because it establishes and entrenches the rights of Aboriginal people that are far too often overlooked, whether it’s fishing, hunting or what have you. In this case, it is guaranteeing the link back to section35 and the duty to consult. The purpose of that bill would be to have non-derogation clauses which are not necessary in other legislation. It would remove it from existing legislation because it would become strictly focused.

My question is: Were you folks involved in consultations on BillS-13 when it was going through the process? You have been consulted on that particular bill— BillS-13— which is now in the House? Either witness.

Mr.Simon: I am not aware of any consultations, senator.

Ms.Ginsburg: No.

Mr.Simon: We’re generally supportive of the intent of having language that makes it clear that all federal statutes are intended to uphold Aboriginal treaty rights. To the best of my knowledge, we were not consulted on that particular statute.

Senator Quinn: The second question I have is that the bill before us today is looking at the use of section92(10)(c) declaratory power. The Senate cannot initiate money bills. Knowing that they can’t initiate money bills and that all the federal government does is to give Parliament the right to make a decision to refer it to the cabinet— and it is to cabinet where it would go— are you comfortable that this bill does not require the government to do anything financially? Are you comfortable with that?

Right now, there is a negotiated deal with the provinces for 50%. My understanding is that that may be the maximum under the authorities now in place for a specific program. How do you feel about the fact that it doesn’t require the government to do anything more than what it has done now, and, in fact, cabinet in its wisdom could do something less? How do you feel about that? I could ask the representatives of both provinces to comment? First, New Brunswick.

Ms.Knockwood: I will pass that question to Mr.Simon.

Mr.Simon: As the chief mentioned, I think we’re agnostic on the question of who ultimately pays for the project. There is concern about who has the lead on the project with respect to consultation and Indigenous rights, so I am not sure we have particularly strong feelings. Obviously, it should be subject to negotiation between the provinces and the federal government as to how those costs are apportioned between the various levels of government. We would expect Indigenous governments to be engaged in some way in those discussions as well to the extent that it impacts on Aboriginal and treaty rights.

Ms.Ginsburg: I agree with my friend. I think it is part and parcel of the discussion that we’ve been having— that the bill could be used in a productive way to enhance the quality of the work, level of scrutiny and extent of consultations with respect to this very important region or it could be used to exempt it all. Obviously, I’m not saying it would be used that way, but exempting it all from regulatory oversight or requirement would be a very inexpensive option for both the governments and proponents.

To the extent that is a possibility within the bill overall, that is of concern. I agree that the point is to ensure that the work is done well, and that the types of impacts that would typically fall to those levels of government are not missed. The archaeological impacts, parks impacts, impacts to fish and fish health and environmental impacts— all of the different types of impacts should be covered off and funded to the extent they need to be funded, and the consultations should take place accordingly. However that is accomplished and by whomever, that’s a positive outcome.

The Chair: Chief Knockwood, Ms.Ginsburg and Mr.Simon, thank you for being with us this morning and for sharing your views.

We will now begin our study of the subject matter of Divisions 27 and 37 of Part 4 of BillC-69, the budget implementation act. This morning, we are pleased to welcome officials from Innovation, Science and Economic Development Canada, or ISED, to discuss Division 37, which amends the Telecommunications Act. From the branch of Telecommunications and Internet Policy, we are joined by Andre Arbour, Director General, and James Nicholson, Director. Welcome, and thank you for joining us.

We will first hear your opening remarks for five minutes and then turn it over to questions andanswers.

[Translation]

Mr.Arbour, the floor is yours.

[English]

Andre Arbour, Director General, Telecommunications and Internet Policy Branch, Innovation, Science and Economic Development Canada: Thank you, Mr.Chair, for the opportunity to speak to the committee today. I would first like to acknowledge that I am coming to you from the unceded territory of the Algonquin Anishinaabeg people. I would also like to thank them for being stewards of the land and waters in this area since time immemorial.

[Translation]

Budget 2024 announced proposed amendments to the Telecommunications Act. They are intended to support consumers in the telecommunications marketplace and are complementary to other initiatives under the government’s telecommunications agenda, including issuing a renewed policy direction to the CRTC, and setting out pro-competition rules in the forms of set-asides in recent spectrum auctions.

[English]

Multiple sources of data show there has been progress to lower prices. In the past year alone, Statistics Canada data shows that mobile service plans have declined 26%. Efforts to further improve consumer outcomes continue. For example, the Canadian Radio-television and Telecommunications Commission, or CRTC, is conducting a review of its rules for wholesale access and internet competition with the goal of improving prices for consumers while allowing for the modernization of networks. The proposed amendments to the Telecommunications Act are intended to help consumers better take advantage of the increased competition and improved pricing we are seeing in the market.

First, these provisions would mandate that service providers offer a self-serve option for customers wanting to change or cancel their service instead of being forced to speak to a live agent. While many carriers already have an online portal for customers to make changes to their account, the options there can sometimes be limited to those of equal or greater value. The self-serve option will be available for any change, not just for switching to more expensive plans.

Next, service providers would be required to send customers a notification when their contract is ending, along with information on current plans in the market. This will make it easier for consumers to navigate what options are available when their contracts are up.

Finally, these provisions would prohibit fees that discourage consumers from switching providers or adjusting services. The intent here is to remove arbitrary fees that create friction in consumer decision making but not to prohibit legitimate charges for equipment or complex work that is sometimes needed for physically installing network facilities.

[Translation]

To ensure that these provisions will meet the needs of Canadians, the CRTC, through stakeholder consultations, will be responsible for determining the specific details and parameters for each of these proposed measures before they come into force.

I hope that these opening remarks were helpful in contextualizing the proposed amendments and I would be pleased toanswer any questions the committee may have.

Thank you.

[English]

The Chair: Before I turn it over to my deputy chair, one quick question. Every time we hear officials from the Government of Canada or from the telecommunications industry, they’re always telling us how much progress we make. Yet, the fact remains that when you look at analyses that are being done, Canada is still paying seven times higher rates than Australia, 25times higher than Ireland and France and 1,000 times higher than Finland and countries of that nature. We’re still among the highest nations in the world when it comes to connectivity and gigabytes on our cellphones compared to other Western industrialized countries.

Despite all of this progress, when you look at those facts, you must agree that we’re doing something that’s completely wrong. How can we justify where we are vis-à-vis our rates compared to some of our friends and allies around the world?

Mr.Arbour: Thank you for the question. It’s a fundamental question in telecommunications policy and I appreciate that it’s on many people’s minds.

First, I would point out that while Canadian prices are often higher than peers and skewed towards the bottom third of the Organisation for Economic Co-operation and Development, or OECD, the statistics that can be quoted or cited that talk about multiple times higher are generally looking at outlier plans that aren’t chosen in the marketplace— very high-usage plans, for instance, a 100-gigabyte plan when the average usage is in the 8to10gigabyte range. That’s not to say there isn’t an issue here, but the issue is in the order of 30 to 50% more expensive than the OECD median than multiple times higher.

Next, I would say that this is a challenging sector to promote competition in that is inherent to the sector. We’re talking about very expensive infrastructure. It is challenging to construct this infrastructure— in particular, in a country the size of Canada, with the climate of Canada and when we’re trying to balance multiple other goals.

The objective as set by the government is to improve competition and improve results along a number of dimensions. That means bringing down prices, but it also means boosting investment in rural areas and investing in the quality and reliability of our networks.

Canada compares quite well internationally in terms of network speeds by a range of different dimensions and network quality. Despite our size, Canada also compares quite well in terms of network coverage on an absolute basis. That’s not to say there aren’t very specific challenges in rural, remote and Indigenous communities. For those communities, it’s irrelevant that we compare well internationally on certain metrics. If they don’t have needed services, that needs to be fixed, and there are a range of programs and measures under way to improve that as well as, as I mentioned, improving price.

Those objectives are somewhat intention. There are European countries, for instance, that have driven prices extremely low but then, as a result, have under-investment and long-term profitability issues in their sector that is a short-term benefit but a long-term problem. These countries are now in the process of trying to improve investment in the sector.

I appreciate that was a longanswer, but it touches on a range of different policy issues within the telecom sector. Thank you again for the question.

[Translation]

Senator Miville-Dechêne: I’d like to continue along those same lines, but my question will be more direct. Will the changes you’re proposing to the Telecommunications Act make telecommunications services more affordable?

Mr.Arbour: Thank you for the question. First, I would say that the impact of these changes to the act would be to improve the ability of consumers to find and modify their services with respect to the plan or package appropriate for their needs.

Senator Miville-Dechêne: My question is quite specific. Based on your calculations, will your changes lead to a decrease in the rates being charged?

Mr.Arbour: It’s possible, but only indirectly, because when consumers have more freedom to change service providers, it encourages providers to offer more competitively priced packages. When consumers have a provider and changing providers is difficult, there’s a possibility that their provider won’t offer a more affordable package to that consumer.

Senator Miville-Dechêne: It’s incredible that the government has to intervene in its budget to force those companies to provide decent, honest customer service. In this case, people who want to change providers aren’t being given all the information; they’re only permitted to accept a higher rate or keep the same rate. What’s more, if I understand correctly, no oneanswers the phones, hence your call for more efficient platforms. By offering such rotten service, if I understand what you’re saying correctly, are the platforms respecting existing rules in Canada?

Mr.Arbour: Thank you for the question. I would say, first of all, that not all consumers have the same experience in the marketplace. There are a number of CRTC policies aimed at protecting consumers when it comes to fundamental issues. For example, there’s a consumer code for mobile services that includes certain requirements, such as transparency in contracts.

Senator Miville-Dechêne: You’re forced to create legislation in the budget to change that, which means regulations aren’t working and companies are doing whatever they want, however they want.

[English]

My fundamental question is this: Why do you have to have in the budget— which is really serious considering this is a consumer matter that normally should be solved by regulation or by good faith. Here, if I understand you well, we have companies that are hiding products that are cheaper and companies that are notanswering the phone or have little service on the phone because they don’t want you to change your package. I’m speaking from having tried myself. It’s not an easy journey.

I am wondering, is there bad faith from the companies we are dealing with?

Mr.Arbour: I would say that, again, the experiences can vary depending on the circ*mstances of the consumer. I can’t speak to every single experience.

I do know certainly that there are not good experiences in the marketplace. There are a set of measures that the government has taken to improve outcomes for consumers. The policy direction issued to the CRTC last year sets out a set of expectations and objectives in this zone. The measures announced in the budget are intended to complement those measures under way.

Given that we are seeing improvements in competition and improved measures in the marketplace, the question is how do we better support consumers? People will say, “I hear you say 26% reduction in plan prices. My bill didn’t go down 26%. What are you talking about?” Oftentimes— frankly, most of the time— the appropriate plan is there on the website. It’s just people have busy lives, understandably, and they haven’t actually entered into the marketplace to shop for a new plan.

Oftentimes, things are functioning reasonably well. It’s just a question of a helpful support to the consumer to better take advantage of what is available in the marketplace. That’s what’s behind the measures proposed in the budget.

Senator Quinn: Thank you for being here this morning. Thanks for the question from my predecessor. I’m going down the same kind of avenue. I’m not an expert in this field by any stretch of the imagination.

These seem to be really important changes. They affect consumers. I don’t see the linkage to the budget. But I do see the linkage to consumer and policy decisions that will be made through these changes.

Wouldn’t it have been better to have a more complete discussion so we would have had input from others? Again, do these things go far enough? What is the reaction of the consumer and the companies? It seems we’re putting something buried into a budget that typically we’re going to pass, and this is part of it. Wouldn’t this have benefited from a more complete, thorough examination?

Mr.Arbour: Thank you for the question.

The measures proposed in the budget are the product of an ongoing agenda that has been subject to consultation at multiple different stages. For instance, in the development of the policy direction in 2022-23, those were subject to consultations.

The measures proposed in Budget 2024 set some high-level objectives in response to common consumer frictions that we see in the marketplace. It sets out a framework for the CRTC to implement.

Each of the provisions that I talked about set a high-level objective, for instance, a type of notification mechanism, the frequency of that notification, what should be the content and scope of it; all of that will be subject to consultation by the CRTC before the rules are finalized. In that way, the provision will provide a nimble way to respond to developments that we’re seeing in the marketplace. The marketplace moves reasonably quickly hence the opportunity to provide some benefit for consumers.

There is scope. The CRTC will be consulting on how to translate the objectives into the rules.

Senator Quinn: Will this help consumers, particularly young people? I hear all the time from younger folks about how they can’t get out of their plan because they signed a two-year contract or whatever. They bought the phone on some sort of a lease-to-own program, yet if they find a better deal they’re unable to leave without big penalties and whatnot. It sounds like they feel trapped. Will this alleviate that? Will this fix that?

Mr.Arbour: Thank you for the question.

This specifically will not. However, there are existing codes of conduct that govern that type of issue. In the instance of wireless services, there’s a wireless code of conduct that sets out, for instance, the restrictions on the type of contract that can be offered.

I would further note that the policy direction announced last year directs the CRTC to review its codes of conduct in terms of how it can better help consumers.

Senator Quinn: It doesn’t help that specific case that a person, whether it’s a senior citizen or a young person, gets a cellphone and they’re unable to get out of it because they’ve got a contract; they’re stuck until that contract is up? Is it that simple?

I see, Mr.Nicholson, you’re nodding your head yes. Is it that simple? People get trapped into a contract. A better deal comes up and they’re unable to take advantage of it. They have to see that contract through? Is that the way it is?

Mr.Arbour: First of all, you’re correct that these measures are pretty specific, targeted and aren’t intended to address the full set of issues. I’llanswer in a second part, and then turn to my colleague Mr.Nicholson if he has anything further toanswer.

Generally speaking, the issue we are seeing with consumers is simply that they haven’t evaluated the offers that are available in the market. There’s a sense of friction inertia.

I’m not saying the issue you’re talking about in terms of being trapped in a particular contract doesn’t exist. Oftentimes, it’s just not even knowing that there are choices out there when they come to the end of their agreement or many people are not on a contract, period.

Under the wireless code of conduct, there are limits on what can be charged in terms of if someone were to end their contract early, I believe— I’ll turn to Mr.Nicholson to correct me if I’m wrong— for instance, making the service provider whole if they haven’t paid for the device upfront.

Sometimes this can feel like a big payment if you bought a device with zero upfront and it’s a $1,200 device; if you leave, you need to pay off the balance of that device. That is simply paying for the cost of the device that you acquired if you are leaving the contract early.

Mr.Nicholson, do I have that right?

James Nicholson, Director, Telecommunications and Internet Policy Branch, Innovation, Science and Economic Development Canada: Yes, that’s really it.

Many of those payments, it is essentially paying for the balance of it if they’re trying to leave the provider. It’s a financing agreement.

To the question of the amendment, specifically what we’re seeing is, at the end of that, it becomes then what’s next? After the two years, how do we make it easier for folks, especially young folks, to get into better plans that are more suitable?

The amendments here really do target trying to eliminate some of that friction we see and observe in the market between what’s actually out there— what prices are available— versus what people are paying, whether or not those are suitable and how to better match.

Senator Quinn: Thank you.

Senator Simons: I want to pick up where my colleagues Senators Miville-Dechêne and Quinn have taken us. Like Senator Quinn, I suspect like most of us, I’m uncomfortable with omnibus legislation that shoves all sorts of things into the budget where we don’t get to have a proper debate. Like Senator Miville-Dechêne, I’m frustrated this even needs to be in the budget. I want to pull back and ask a philosophical question.

Should the CRTC have within its powers the ability to make regulatory changes like this without needing federal legislation? Often, I don’t like omnibus legislation because it puts big things in. This is like little pettifogging details that surely a regulator should be able to have within its purview without requiring this kind of legislative amendment.

Mr.Arbour: I’m taking from your comment a question as to why are we doing this.

Senator Simons: I understand why you’re doing it.

Mr.Arbour: Okay.

Senator Simons: The question is why do you have to do it? Why can’t this be done on the CRTC’s own initiative? Should the regulations be changed to give the CRTC more power so that this doesn’t need to come from government when this is basic consumer protection that I think could be dealt with in regulation?

Mr.Arbour: Thank you for the question.

The CRTC does have a broad set of authorities to regulate in this space. They have multiple codes of conduct that set out a whole set of expectations. They have a range of regulatory authorities.

The proposed amendments have had some progress in the marketplace, but there is more work that needs to be done.

These amendments set out specific expectations to ensure that they happen because they haven’t happened yet or they have happened in an incomplete manner for certain services but not others. Ultimately, it sets out these expectations for the CRTC, but it is up to the CRTC to fill in the details.

Senator Simons: The question here is whether the CRTC came to you and said, “We need this legislative authority in order to act,” or whether the government is saying to the CRTC, “What are you doing? Get to work and do this.”

Mr.Arbour: The CRTC did not request these changes.

I would say that the CRTC has been making progress in the marketplace. That said, the government has tools to give further direction to the CRTC to further respond to changes in the marketplace and consumer needs. Hence, the policy direction of last year, as one example. This is another example of giving direction to the CRTC in the form of legislation in terms of expectations that are needed to respond to the needs of Canadians.

Senator Simons: To be clear, this is the government’s way of saying to the CRTC that it has not been doing its job properly?

Mr.Arbour: Thank you for the question.

Senator Simons: It is not a fair question. I will pass to the next senator. Thank you. The reading between the lines was what we needed.

Senator Cardozo: Thank you to the witnesses for coming here to discuss this. Mr.Arbour, you were here just a few days ago, it seems. Welcome back.

I am having a bit of déjà vu here because at the turn of the century— the recent one, not the other one— I was at the CRTC as a commissioner and it seems to me that we were doing these things back then. Maybe not the letter of the law, but similar kinds of measures were taken to ensure competition and to ensure people could get a better deal, and so forth.

Let me ask you a slightly different question. You have explained this quite a bit. I tend to agree with my colleagues in terms of the fact that this is quite a small piece of what we are doing here.

Can you tell us about some other issues that either you have considered or people have been talking about and what can be done to bring down prices for consumers in a serious way? One of the things that comes to mind is allowing foreign companies to provide those services in Canada. Are there other big measures that governments could be taking? I ask that in the context of the fact that we are a Senate committee that deals with transport and communications. From time to time, we have the ability to think big and outside the box. In a sense, setting this aside, what are the big things that Canada could be doing to change the competition framework and bring prices seriously down?

Mr.Arbour: Thank you for the question.

I will start with big picture things that have been done or are under way and then I will take on your foreign investment question specifically. This is an area that has been marked by considerable activity. I can tell you how busy my team has been and a range of others. I would say it is only in the past year that those measures are translating through to the marketplace and taking root. It is a journey. There has been some progress. We have seen the most progress in just the past year. Consumers do not change their plans very frequently.

The metric of churn is a measure of changing provider. It is in the order of 1% per month, so there is a lot of inertia in this space.

Examples, for instance, using spectrum authorities under the Radiocommunication Act, a range of measures have been taken in spectrum auctions or spectrum policy to support the development of a fourth mobile wireless competitor with the scale to compete against the three national players. It is with the creation of Vidéotron and Freedom in early 2024 supplemented by set-aside or pro-competitive measures in spectrum auctions and some network access rules that have really seen the most progress. That progress is continuing to translate through the marketplace.

The measures today are small but are intended to facilitate and complement those measures by making it easier for consumers to access those plans. Another big picture set of measures was the policy direction that the government issued last year. It is quite comprehensive in terms of measures that it sets out. For instance, it goes down to issues like improving access to telephone poles so that competing providers can better attach their fibre cables to telephone poles; how we can consider using our programming in rural areas, so that we can bring down the prices in rural areas when we are funding certain projects.

A big issue that is still under way that I mentioned in my opening remarks is a review of what is referred to as the wholesale framework. Wholesale services are when the CRTC regulates the large, former monopoly players to share their networks with smaller competitors who then use those access services to provide their own retail services to consumers. It is a proven tool that has had benefits in the past, but those rules need to be revisited for more modern technologies. The policy direction included a set of considerations for improving the wholesale framework. The CRTC launched a consultation to implement those rules in 2023 and is in the process of translating that into regulation. That is another point where we should see improvements in the marketplace. Big picture things have been done and are under way.

In terms of your question about foreign investment, the Telecommunications Act was amended in 2012 to remove most foreign investment restrictions. Foreign providers can enter the market whenever they want, and we have seen that. They can acquire any existing operator up to 10% market share in the marketplace. That threshold only applies to three companies. It is not to say that those limits don’t exist, but they only apply to Bell, Telus and Rogers. They are not binding elsewhere.

Senator Cardozo: Could a foreign company come into Canada on its own?

Mr.Arbour: Yes, absolutely. Starlink is one example in rural areas. But Xplore is a fixed wireless company that was acquired by American investors. Zayo is another example of an enterprise fibre company that was acquired by American investors. It would also be possible for someone to start brand new tomorrow in the marketplace.

Senator Cardozo: These big players coming in from outside are not having an effect on the price point?

Mr.Arbour: Canada hasn’t seen large-scale foreign entry. Of the companies that I mentioned, Starlink is certainly large but its offering is targeting a relatively small slice of the marketplace.

Satellite and low Earth orbit satellites, specifically, can be a good option, but it is generally not competitive to where you have an existing, good quality wireline infrastructure. We have that for 85% to 90% of the population. With respect to the addressable market for Starlink, it is not to say that you cannot sign up for Starlink in a more urban area necessarily, but generally it is not competitive with the price for good quality wireline infrastructure.

Although the rules were changed in 2012 and we have seen some foreign entry— and that foreign entry does have benefits to the marketplace— it is not on a hugely substantial scale that it is driving competition for the average consumer.

Senator Cardozo: In terms of Starlink, then, it is filling in some of those rural areas that the others are not doing, which is great, but it is not price competitive. Is that what you are saying?

Mr.Arbour: Yes. The combination of price, speed and capacity is just inherent to the economics of the underlying technology. Where you have a good quality wireline network, if it is a coaxial cable network or a fibre optic network built to a different given geography, the price and speed characteristics will be superior to satellite. It goes down to fundamental laws of physics of how much data you can transmit over satellite capacity relative to the more focused, high capacity that is available over a direct wired connection to a home.

Senator Cardozo: Overall, the entry of foreign competitors has not changed the price point for Canadians? Is that because we have restricted it to the 10% restriction that you were talking about?

Mr.Arbour: The Telecommunications Act does not stop anyone from entering the telecommunications market.

What I would say is that large-scale foreign players haven’t chosen to enter the telecommunications market at scale.

Senator Cardozo: Why is that?

Mr.Arbour: It is hard to say for sure. One thing I note is that the Canadian telecommunications market is relatively mature in that there’s only a handful of people who don’t already have an internet connection or a cellphone plan. Entering the telecom business is a large-scale, capital-intensive business. You have to invest substantially to enter at scale. That means that it can take a while to pay off those investments.

If it is harder to attract customers because there are no new customers to have and you are trying to take every new customer from someone else, it can make that payback more uncertain. It is easier in the telecommunications context to enter a market segment that is growing more rapidly rather than mature.

Senator Cardozo: Thank you.

[Translation]

Senator Aucoin: I’m going to pick up where Senator Cardozo left off.

It seems that when we talk about amending legislation, it’s a highly restricted sector, as you said yourself. If I understand correctly, it won’t do anything to improve services in rural regions. I want to believe that this legislation will give people the option to change their service. However, as you just indicated, for rural and remote regions, even if Starlink can do it, it’s more costly, slower and more difficult to access.

What will you do or what have you done in that regard to improve service, to ensure there’s a real option for Canada’s rural regions?

Mr.Arbour: Thank you for the question, senator.

Of course, service quality and access in rural and remote regions is challenging for many Canadians. In this context, it’s not necessarily about a lack of competition, or that would be a challenge too, but the problem is that it’s not profitable to have a single service provider with a good quality network. That’s why there are huge investments, such as the universal broadband fund, which, by investing billions of dollars, are helping to build good quality networks with specific requirements set out in the program details to offer affordable packages to consumers.

The level of infrastructure is appropriate for most Canadians, so it’s about improving competition. However, for underserved areas, it’s more about investing in the necessary infrastructure, at an appropriate price in that context.

Senator Aucoin: To follow up on youranswer, what is the government doing in terms of policy direction to the CRTC on this issue?

Mr.Arbour: Thank you for the question, senator.

There is a sectionin the directions to the CRTC on this particular issue. Some of the objectives relate to CRTC’s broadband program review. The CRTC has a program whereby private sector service providers pay a small percentage of their revenues to contribute to those investments.

The directions to the CRTC indicate that it should consider making certain changes to this program, notably with a view to supporting export costs rather than capital construction costs. In some rural and remote areas, there are significant operating costs. For example, some communities aren’t connected to the provincial power grid, so the capacity cost is significant.

The CRTC can change its program details to support these loans, thereby reducing costs to consumers.

[English]

Senator Dasko: Thank you for this helpful preview of this legislation.

I want to clarify to make sure that I understand with respect to whether the substance of this bill could have been in the regulations to the CRTC. Would they have had the ability to do this on their own? I want to make sure that I understand that.

Then I have another question.

Mr.Arbour: Thank you for the question. The CRTC has certain authorities, including, for instance, setting conditions of service. That means if you are offering a service within Canada, it needs to meet those conditions. Some existing rules, for instance, include participating in and following the rules of the Commission for Complaints for Telecom-television Services, or CCTS. There are other mechanisms there. Therefore, the CRTC does have a broad scope to act in this space.

Senator Dasko: Could they have done this is my question; that’s all.

Mr.Arbour: I think that this was within the scope of their existing authority. It would be subject to consultation and a set of considerations there.

Senator Dasko: Okay.

Mr.Arbour: However, this does set out a set of expectations.

Senator Dasko: Yes, thank you.

I have another question. I wonder whether these changes have been resisted by the companies. I ask that because I think you said that some of these changes to the substance of the bill have been implemented by some of the companies before this legislation. I would like you to elaborate on that. Does this already exist in the marketplace? Also, if you could comment on whether the companies have actually resisted what you have put in the bill.

Mr.Arbour: Thank you for the question. The types of objectives that the proposed changes seek do exist in the marketplace to certain degrees. For instance, it is very common to have some type of self-serve portal. In some cases, the service provider offers all of its plans within that portal, and if you want to shift to a cheaper plan, that option is populated there. For some providers, they may choose not to offer that. They will offer you what they see is a better value in that it is a faster plan or a bigger data plan but not necessarily a cheaper one. They ask you to call in if you want to change. It does depend. It is very context-specific, and that exists across these provisions.

It is quite unusual that there is a fee associated with changing your plan. There are already some restrictions on this that the CRTC sets, but it does not necessarily apply in all cases or for all services. There are some providers that may offer or charge certain fees in certain contexts. This is about raising the bar and ensuring a certain level of consistency across the board.

Senator Dasko: Have they pushed back on these?

Mr.Arbour: I am not aware of specific pushback. I have been working in the telecommunications space for quite a while. No change like this is greeted with ringing enthusiasm. Their argument is that the marketplace is functioning well, generally speaking. The larger players in particular will argue that the marketplace is functioning well and that this type of intervention is not needed. However, these provisions have been established to support market functioning and make it easier for consumers to navigate the marketplace.

They are also subject to considerable leeway for the CRTC to translate into more detailed rules. If any service provider does have concerns that can be worked out in the CRTC consultation. The CRTC can tailor the rules. It can exempt certain classes of provider or that sort of thing. If there are concerns, there is a mechanism to find an appropriate resolution in the CRTC consultation.

Senator Dasko: You mentioned that there is a lot of consumer inertia in this space. Are you expecting this legislation to shake up that inertia to some extent?

Mr.Arbour: Thank you for the question. I would expect improvement. It depends upon your definition of “shake up.” There are certain fundamental issues. People have busy lives, they have jobs, families and other concerns. Across OECD markets— it is not just specific to Canada— there is a tendency, on a day-to-day basis, to not be thinking about the price of your cellphone plan. However, for example, in the notification settings, these will provide a prompt to consumers to consider this issue. The self-serve mechanism and the restriction on any type of fee for switching facilitates that.

It will facilitate the progress in the marketplace. The pro‑competitive measures are having the most substantial impact, but these are complementary and will help to further assist consumers.

Senator Dasko: Thank you.

The Chair: Mr.Arbour, inanswering Senator Cardozo’s question earlier in regard to competitiveness and how we can open up the marketplace to more international players, you referred to some of them already trying to be more active in rural parts of Canada where we have been having chronic difficulties in providing services there because they are not profitable. These are spaces where the large players have refused, for a variety of reasons, most of them economic, to go and play in those spaces.

In the most profitable regions of the country, some suburban and urban centres where the giants are large players, like Rogers, Bell, Telus and Quebecor have been dominating, is it fair to say that they’ve been dominating because they own the cellphone towers? The vast majority of the tower capacity in these regions are owned by a very small number of large corporations that, for a variety of reasons, have managed to do that. How will we be able to open the marketplace to other players, domestic or international, if there is a stranglehold right now on those towers?

Mr.Arbour: Thank you for the question. It is also fundamental to telecommunications policy. The issue is that, given the cost of building the infrastructure, any given market can only support a relatively small number of competing infrastructures. For instance, if you have a community with 100homes and you want to provide service to those homes, you need to build a network that covers those 100homes. If you are a monopolist, you have all 100homes to yourself. If you add a second infrastructure, you have the same costs. You need to build a network to all 100homes, but you might have 50%market share. Add a third, add a fourth, etcetera. Generally, in the cellular market, four networks is the maximum you will see. But it also tends to be, with the right context, a pretty good context for competition. We see that in multiple OECD markets when you are doing those types of comparisons.

In a home and business internet context, generally, you can see two networks being built out. You will generally have a cable network and then the telephone provider offering their own network.

How do you improve this? That is where we get into wholesale access and the terms of access are the sharing of those existing network infrastructures.

The Chair: If I may interrupt, I did not ask how we are going to improve it. I asked if I’m correct that the towers actually drive the market. In youranswer, you have confirmed that whoever controls the towers drives the market.

If you look at those most profitable regions in the country, urban and suburban centres, especially over the last seven or eight years, have been growing exponentially. Unfortunately, housing starts have not been growing at the same capacity as the population, but Bell, Rogers and the rest of them have been selling cellphones with the growth of that population. As that market continues to grow exponentially for those companies, the prices continue to stay the same. Supply and demand usually drive economic forces, so why?

It seems to me that the solution to this problem is to not have companies share towers, it is to actually put up more towers for sale in the marketplace, put them out and make them available to new competition. I know that these large conglomerates will not like it, but if you want to bring down prices, build more towers, put out more auctions for towers in these profitable places and open them up to other players in addition to the existing monopolies that are in place. If I’m wrong, correct me.

Mr.Arbour: Thank you for the question. I would say that this gets into the fundamental challenge that building more towers isn’t profitable, generally speaking.

Once you get to three or four networks, building a fifth network of towers separate from the existing infrastructure— it is not just the towers, it is the fibre optic cables that connect the towers and a bunch of back-end stuff. Building a fifth competing network, you are just not going to pay that back. So what happens? A lot of people would argue that it doesn’t make sense for the government to subsidize a fifth competing player. That’s not financially sustainable and doesn’t ultimately help consumers because that money for subsidy has to come from somewhere.

Therefore, you run into this fundamental issue, which is that you can only build so many competing infrastructures. That’s why the way you share the existing infrastructure is a core consideration if you’re going to improve competition. For instance, there are tower-sharing rules that say you don’t have to build a separate tower. You can bring your existing radios and attach them to an existing tower. There are also rules in the mobile space called “mobile virtual network operator access” that provide for competitors to essentially rent space on the existing network to offer competing services. There are similar rules regarding wholesale roaming access that help an existing provider extend the reach of their network.

There are similar rules in the internet space. Those existing network infrastructures are wired cables that have been built over decades. Outside of some downtown condo towers— or very high density— it’s generally not profitable to build out a third competing wire. You’ll never make back that capital investment. That’s why there are rules about forcing the sharing of the existing infrastructure to offer that competing service to Canadians.

The Chair: I wish we had more time, but we have run out of time. I’d like to thank our guests for sharing their views with us today.

Colleagues, we will be adjourning until next week.

(The committee adjourned.)