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SECTION II - ANALYSIS OF PROGRAM ACTIVITIES BY STRATEGIC OUTCOME

2.1 Plans and priorities by Strategic Outcome

This section identifies activities that Transport Canada will undertake over the next three years to addressing priorities toward meeting its three strategic outcomes.

2.1.1 Strategic Outcome: An efficient transportation system that contributes to Canada's economic growth and trade objectives

In an era of swift-moving global supply chains, transportation systems must connect us with a rapidly changing world. Indeed, transportation is at the heart of an efficient and competitive economy. Real or perceived impediments to a reliable supply chain, such as congestion and border delays, can negatively influence private sector investment decisions and impact entire industry sectors. As a country whose reliance on international trade is so critical to our economic growth, transportation networks that serve as gateways and corridors to foreign markets are especially important to our competitiveness.

The pressures facing our transportation system are both new and long-standing, which necessitates Transport Canada's continued effort to develop policies, legislative frameworks and programs, that are based on central principles of competition and market forces. Transport Canada's expertise in policy and program development related to transportation infrastructure and its consideration of the public interest is recognized throughout the federal government. A high-quality, modern transportation infrastructure that allows goods and people to move seamlessly and efficiently, is essential to support the competitive advantage that Canadian industry strives for. In this respect, the department must be strategic in developing appropriate policies and funding programs on its own and in partnerships with public and private sector partners to achieve the maximum benefit for the nation as a whole.

The Department:

• Supports federally-dependent facilities (ports, airports and ferries) as well as rail and ferry services to remote communities, including the constitutionally mandated Nova Scotia to Newfoundland and Labrador ferry services operated by Marine Atlantic Inc.;
• Administers the annual operating and capital subsidies to VIA Rail Canada;
• Supports and provides oversight to numerous federal bridges (Jacques Cartier, Champlain, etc.);
• Provides an annual grant to British Columbia and operating contributions to ferry operators for coastal, passenger and freight services; and
• Manages the Airports Capital Assistance Program (ACAP) that provides funds to airports in need of safety, asset protection and operating cost reduction assistance.

Keeping with its mandate of promoting market-based policies and programs, Transport Canada continues to implement its divestiture program for airports and ports. To date, this program has been very successful with some 94% of airports and 85% of ports being divested.

The Department must work in partnership with public and private stakeholders across all modes of transportation, as well as international governments and coordinating bodies. This is the case, for example, in:

• Negotiating bilateral air transport agreements or arrangements for international air services and representing the Government of Canada as a member of the International Civil Aviation Organization (ICAO);
• Co-leading the Canada-U.S. Transportation Border Working Group with the U.S. Federal Highways Administration;
• Coordinating its involvement in:

An extensive program of monitoring and analysis of Canada's transportation system provides feedback regarding the effectiveness of the Government's policies, as well as essential information to support future actions. While every effort is made to achieve the department's stated objectives, results are ultimately influenced by factors, such as global economic conditions, international crisis or the actions of other governments - that are beyond its control. Subject to the Canada Transportation Act,the department develops an Annual Report on the state of Canada's transportation system, and the indicators below are used where possible to track its progress in promoting an efficient transportation system.

Indicators of progress

• Increased productivity of the transportation system
• Price and service levels
• Financial viability of the different components of the system
• Reduction of cost to taxpayer
• Benefits to industry and consumers from improved harmonization

Efficiency: Challenges and Opportunities

The rise of trading blocs such as the North American Free Trade Agreement (NAFTA) and the European Union (EU) has underpinned a new integrated global marketplace. Coupled with powerful forces generated by the emergence of new economic powers such as China and India; the drive toward global marketplace integration is changing the pattern of business, the distribution of economic activity and the volume of world trade. Intensifying competition within this global marketplace among global supply chains, major cities and major integrated regional trading blocs has increased the pressure to achieve scale and efficiency in the infrastructure that support major trade flows. Other countries are recognizing the high stakes involved. Australia, the Netherlands, the U.S., China and Korea are among the key global trading nations refocusing their efforts on developing the transportation systems that support trade. Canada must respond decisively to this new global dynamic. In short, a more competitive and connected world means Canada must view its policy, planning and investment tools through new lenses.

In this context, the logistics of moving people and material - quickly, reliably and securely - are crucial determinants of competitiveness. The human and physical capital to support these movements is increasingly concentrated in a few geographic zones - "gateways" - connected to major markets by "corridors". Efficient intermodal transportation gateways and corridors are essential to Canada's continued success in international commerce and its future prosperity. An integrative policy approach that recognizes the interplay of trade, safety, security and other transportation issues is essential for Canada to remain competitive in this evolving global environment.

The air industry has always had a strong international as well as domestic dimension. Competitiveness and access to opportunities are as important as addressing the domestic public good through the availability of services on reasonable terms. The federal role with respect to this largely privatized sector of transportation is to ensure the public good through implementation of appropriate economic policy and legislative frameworks, while facilitating service opportunities in a rapidly changing global environment. Issues to be addressed in the near-term include: introduction of a legislative framework for airports to complement the new rent policy announced in May 2005, monitoring and research in support of international air policy development, implementing a new international air policy (Blue Sky) airport competitiveness, airport financial viability and continued refinement of the existing legislative framework for the sector.

Rail transportation contributes to national competitiveness through its role in the development of strategic North American gateways and trade corridors. The department is increasingly focusing attention, with others in the public and private sectors, in examining challenges associated with transportation capacity to meet ever-increasing trade growth. Particular areas of attention include the west coast - our Asia-Pacific Gateway -where the boom in trade with China is creating significant congestion, and in south western Ontario where work is underway to address short and longer-term challenges concerning congestion and capacity at the Windsor-Detroit gateway. Providing passenger rail services, including to those in remote areas of the country, is also a continuing area of interest for the department.

Trucking is the common mode for most forms of freight integration. Most freight is moved by truck at some point, and a significant amount of freight moves only by truck. Trucking shares the highways, urban streets and border crossings with all other traffic where volumes are highest. Consequently, trucking is a major beneficiary of policies and investments that support strategic gateways, efficient trade corridors and the modal transfer points that are essential to make them work.

The future of our economy depends on efficient trade corridors that allow all modes of transport to capitalize on Canada's competitive advantage as a gateway between North American and other global markets. Ensuring the secure and efficient flow of people and goods at border crossings and along corridors requires both infrastructure improvements and a coordinated approach to implementing enhanced border and transportation processes.

As mentioned under the priority "New Security Policies and Programs", Transport Canada is actively participating in the Security and Prosperity Partnership (SPP) of North America. In the area of security, the department is engaged in SPP work in the critical areas of surface, air and marine security issues, emergency preparedness and response, and border security and infrastructure (including bridge security). On the prosperity side, Transport Canada is working to improve aviation safety, to ensure safer, faster and more efficient border crossings through the use of new or enhanced mechanisms to support border planning, information sharing, and communications (working with such projectsas the Border Information Flow Architecture), to facilitate business aviation activity,and to enhance shortsea shipping through implementation of a Memorandum of Cooperation. Work under the SPP thus provides the opportunity to achieve key departmental objectives within the context of North American growth, competitiveness and quality of life.

The government's innovation strategy is focused on fostering innovation and developing the necessary skills for this innovation capacity to grow. Research and development supporting transportation innovation will continue to be central to maintaining a competitive and productive transportation system that is safe, secure and environmentally responsible. A steady flow of new ideas is required to advance technologies and science that support intermodal integration, improved infrastructure design, congestion management, supply chain logistics and environmental initiatives; and more public-private partnerships must be fostered to realize these objectives. There is also a need for the transportation sector as a whole to focus on skills development to ensure we have the people and the capacity to continue to operate and improve the system.

Efficiency: Program Priorities

To promote an efficient transportation system that contributes to Canada's economic growth and trade objectives, Transport Canada will focus its efforts on key activities and initiatives that support the three program priorities of a Market-based Policy Framework; Infrastructure, Gateways and Trade Corridors; and Innovation.

2.1.1.1 Market-based Policy Framework

Ensuring the continued improvement of transportation services by providing rules that allow transportation undertakings to adapt, innovate, remain competitive and serve the public -has been the successful focus of federal transportation policy over the years. Experience has demonstrated that competition and free market forces stimulate performance. When government interventions are needed, they should be targeted to situations where market forces are insufficient to achieve desirable outcomes. While much has been accomplished to provide a competitive marketplace and to better focus government actions, there still remains room for improvements.

The Canada Transportation Act(CTA) provides the basic rules that govern the economic behaviour of railways and airlines. Two earlier proposals to amend the CTA were introduced in the House of Commons on February 25, 2003, and March 24, 2005. Former Bills C-26 and C-44 died on the order paper. The intention of these Bills was to ensure that transportation services and capacity remain responsive within a stable policy framework and encourage a climate supportive of strategic private investment. The government is committed to proceeding, on a priority basis, with most of the proposed amendments to the CTA that were contained in former Bill C-44. The government has developed a legislative strategy to ensure the expeditious passage of these important amendments by separating the package into three Bills. To this end, Bill C-3, the International Bridges and Tunnels Act and Bill C-11 amendments pertaining to general provisions, air transportation, passenger rail, mergers and railway noise were introduced in the House in Spring 2006. A third Bill, dealing with rail freight provisions, will be introduced early in 2007.

In May 2006, the Government of Canada announced that it had decided to retain ownership of its fleet of hopper cars. Transport Canada is negotiating new operating and refurbishment agreements with the railways to ensure the cars will continue to remain available for the movement of western grain for the long-term.

On November 4, 2004, the government requested the assistance of the Standing Committee on Transport (SCOT) to conduct a review to determine if Canada should further liberalize its approach to the economic regulation of the air industry. On May 19, 2005, the SCOT delivered an interim report with recommendations. The government tabled its response to the recommendations in the SCOT interim report in August 2005. In November 2006, the government announced a new international air policy (Blue Sky), which calls for a liberalized approach to Canada's bilateral air transportation negotiations where it is in Canada's overall interest.

Canada had more than 70 bilateral air transport agreements or arrangements for international air services in place at the end of 2005. Having successfully concluded negotiations in 2006 to liberalize several important agreements (United Kingdom and Portugal), priority in the coming year will be given to agreements with which Canada can secure additional economic opportunities. The expansion of Canada's air agreements is intended to secure new operating rights for Canadian carriers as well as to provide Canadian travellers and shippers with better and more economic travel options. The department continues work with its partners to identify and remove impediments to ensure that Canadian industry and consumers can take advantage of new flexibilities.

Canada's Permanent Representative to the Council of the International Civil Aviation Organization (ICAO) is accountable for all aspects of relations between Canada and the 189 member states and the ICAO Secretariat. Key priorities for the coming year will be to continuously advance the agendas for safety, security and the environment; and to assist in the transition related to a new president of the council and a re-elected secretary general. Coordination will remain a critical element of developing Canadian positions.

A significantly revised Canada Airports Act was introduced in the new Parliament as C-20 in June 2006. The objectives of the new act include provisions to strengthen governance, transparency and accountability at the major Canadian airports - especially those operated by Airport Authorities. Work is also underway to better understand the competitiveness of Canada's National Airport System airports.

The Pilotage Act, enacted in 1972, is in need of modernization in order to improve the governance to the Pilotage Authorities and to give them a clear framework to become and to remain self-sufficient. In 2007-08, Transport Canada will review options regarding the governance of Pilotage Authorities.

The Aviation War Risk Liability Program was introduced in the aftermath of September 11, 2001, to provide an indemnity for third party aviation war risk liability that is no longer commercially available to air transport companies. The program has been extended several times, most recently to the end of 2007. The objective of the program is to ensure the continued operation, viability and competitiveness of the Canadian aviation industry. Over the course of 2007, the department will continue to monitor the aviation insurance market, and make adjustments to the program as appropriate.

Transport Canada has engaged in considerable consultation with stakeholders on Maritime Law Reform following the release of a discussion paper in May 2005. Stakeholders have expressed support for proposals to update the Marine Liability Act to reflect new and evolving international conventions on liability and compensation for marine pollution; and to update other aspects of Canadian maritime law to keep pace with modern commercial practice. Work is underway to develop proposed legislative amendments to give effect to these stakeholder supported proposals.

2.1.1.2 Infrastructure, Gateways and Trade Corridors

Creating the conditions that encourage investments in transportation and directly investing in transportation infrastructure that serves the national interest, supporting Canada's economic competitiveness and enhancing the quality of life in our communities are key departmental priorities.

Budget 2006 committed $591 million for the Asia-Pacific Gateway and Corridor Initiative (APGCI) to further develop Canada's Asia-Pacific Gateway and Corridor. The primary objective of this initiative is to strengthen Canada's competitive position in global commerce through further development and exploitation of a strategic transportation network facilitating global supply chains between North America and Asia. Specifically, the initiative seeks to: boost Canada's commerce with the Asia-Pacific region; increase the Gateway's share of North America bound container imports from Asia; and improve the efficiency and reliability of the Gateway for Canadian and North American exports.

The Minister for the Pacific Gateway (the Honourable David Emerson) and the Minister of Transport, Infrastructure and Communities (the Honourable Lawrence Cannon) are leading this initiative and are supported in this effort by Transport Canada.

On October 11, 2006, Prime Minister Stephen Harper launched the APGCI and announced that $321 million (of the $591 million), will be allocated to immediate measures, which include major transportation projects such as Pitt River/Mary Hill Interchange project, a Transportation Management Centre for Intelligent Transportation Systems and the twinning of the Trans Canada Highway in Banff National Park, Roberts Bank Railway Corridor Overpasses and Underpasses and South Fraser Perimeter Road - Deltaport Connector.

While transportation infrastructure is at the core of this initiative, the APGCI goes further to address other interconnected issues that impact how well the Gateway works and how well Canada can compete in the world. The initiative's competitiveness component focuses on security and border efficiency, innovation, governance, trade promotion and policy renewal. The APGCI is being implemented in partnership with several federal departments and agencies, namely: Foreign Affairs and International Trade, Western Economic Diversification Canada, Canada Border Services Agency and Parks Canada Agency.

In Budget2006, the government made a strong commitment to providing stable and predictable funding to the provinces, territories and municipalities to help them meet their infrastructure needs. Budget 2006 announced $6.6 billion for provincial and municipal infrastructure over the next five years. A key objective will be to cost-share improvements to the core National Highway System (NHS) - including rehabilitation, bridges, connectors to border crossings and intermodal facilities. Transport Canada and Infrastructure Canada are jointly developing the policy and program parameters for these funds. As per the Economic and Fiscal Update of November 2006, it is envisioned that the $6.6 billion will include a fair and transparent provincial/territorial allocation envelope to fund improvements to the core NHS; large and small-scale provincial/territorial and municipal projects such as transit and water. National infrastructure funds accessible on a merit basis would also be created for Public Private Partnerships and gateways and border crossings.

The Budget also commits to maintain the estimated $3.9 billion in current funding over the next four years under existing infrastructure agreements and maintaining the gas tax funding agreement under the New Deal for Cities and Communities. Over the next four years, federal support for infrastructure will reach $16.5 billion.

Transport Canada also works closely with Infrastructure Canada on highways, transit and border projects being considered for funding under the Canada Strategic Infrastructure Fund (CSIF) and the Border Infrastructure Fund (BIF). Transport Canada provides technical input, analysis and advice on the selection of transportation projects and joins with Infrastructure Canada to negotiate and seek Treasury Board approval of the contribution agreements with Transport Canada implementing the projects. Transport Canada will be providing federal oversight to ensure that the Canadian public receives value for money.

In 2007-08, the department will continue to manage and ensure the compliance of transportation infrastructure projects being constructed by our partners under the current funding programs. Transport Canada will continue to work with other federal departments and our provincial, territorial, municipal and private sector partners to develop and deliver these programs effectively and efficiently in order to meet federal objectives of cost-efficiency and ensure an acceptable level of return in the economic, social and environmental benefits in relation to the investment that is required (benefit-cost analysis).

Examples include:

• Studies and other preliminary work (phase 1) on Highway 30 to explore the potential for a public-private partnership to complete this section of highway, spanning 42 kilometres southwest of Montreal, in Quebec ($10.5 million federal);
• Improvements to GO Transit's rail network in the extended Greater Toronto Area ($385 million federal);
• Expansion and rehabilitation of Toronto's transit system ($350 million federal) in Ontario;
• Completion of the twinning of Trans-Canada Highway 1 between Regina and Winnipeg (over $50 million federal between Saskatchewan and Manitoba),
• Twinning of Highway 63 to Fort McMurray in Alberta ($150 million federal);
• Construction of the new Kicking Horse Canyon Bridge on Trans-Canada Highway 1 in the British Columbia Rockies ($63 million federal);
• Construction of a new international bridge and truck route (Route 1) between New Brunswick and Maine ($30 million federal);
• Construction of the Canada Line light rail transit system, linking central Richmond, Vancouver International Airport and downtown Vancouver in British Columbia ($450 million federal); and
• National corridors for Canada in the Northwest Territories ($65 million federal).

Transport Canada will continue discussions for a number of announced transportation projects, such as:

• Let's Get Windsor Essex Moving Strategy ($150 million federal);
• Highway rehabilitation projects on Route 1 of the Trans-Canada highway in Newfoundland ($24 million federal);
• Construction of a four-lane divided highway (Route 175) between Quebec City and Saguenay ($262.5 million federal);
• Rehabilitation of the Dorval interchange ($55 million federal); and
• Rebuilding of highway 185 ($85 million federal).

The November 2006 Economic and Fiscal Update stated that a core challenge regarding the funding of modern infrastructure is to ensure that federal spending has maximum impact. Taking advantage of innovative financing sources through public-private partnerships (P3s) is one way to achieve this. To that effect, Transport Canada will work with other federal departments to establish a federal P3 Office that will facilitate a broader use of and promote best practices for P3s in Canadian infrastructure projects. Transport Canada will also encourage the development and use of P3 by requiring that they be given consideration in larger transportation infrastructure investments that receive federal funding.

Transport Canada is currently reviewing the governance and operation of the international bridges within its portfolio to address the challenges associated with their ability to be self-sufficient over the long-term. Transport Canada will continue to develop key protocols and/or appropriate internal mechanisms to foster sound governance and good financial management practices by bridge operators and the federal Crown corporations that manage bridges. In April 2006, Transport Canada introduced legislation that would provide the federal government with the authority to approve the construction of new international bridges and tunnels, alterations to existing bridges and tunnels, the sale or transfer of existing bridges and tunnels, international bridges and tunnels over the St. Lawrence River; and to implement regulations to ensure the safety, security, and efficient operation of these critical components of the international transportation system. Bill C-3 received Royal Assent on February 1, 2007.

In 2007, Transport Canada will focus on the development of regulations related to safety and security, guidelines for approving the construction of new international bridges and tunnels and altering existing structures, as well as sales and transfers of these structures. As a result, our research indicates that Canada will be the first country to adopt bridge and tunnel security regulations. Stakeholders and the public will be consulted in the course of the regulation-making process. The department is currently examining options related to managing its portfolio of international bridges with a view to developing a long-term strategy.

Improving international traffic flows at the Windsor-Detroit gatewayis a key government priority. In addition to the Let's Get Windsor-Essex Moving Strategy, which is funding improvements to existing infrastructure in the Windsor area, the department continues to participate in the Canada-U.S.-Ontario-Michigan Border Transportation Partnership with the purpose of developing a long-term strategy to improve the movement of people, goods and services across the Windsor-Detroit gateway. Through a coordinated environmental assessment (EA) study process, the partnership is identifying the location for a new international bridge crossing, inspection plazas and connecting roads leading from Highway 401 in Canada to the Interstate Highway System in Michigan. The partnership is also looking at various governance structures of the crossing and possible models for private sector involvement on both sides. The challenges of building such new infrastructure are significant:

• It requires a partnership between governments in two different countries.
• It entails the construction of a crossing with customs plazas and access roads on both sides of the border.
• It requires that the interests of various stakeholders be balanced.

This study is expected to be complete by the end of 2007, at which time the partnership will have concluded consultations and developed a preliminary design for the new border crossing. The Minister of Transport, Infrastructure and Communities announced in November 2006 that the Government of Canada intends to explore the opportunity to partner with the private sector to design, build, finance, operate and maintain the new crossing that is expected to be in operation in 2013.

In terms of passenger travel, VIA Rail is responsible for the safe and efficient provision of inter-city passenger rail services in Canada. VIA receives an annual operating subsidy of $169 million and also relies on Government funding for its capital needs. In 2007, Transport Canada will continue to work with VIA Rail to develop a strategy for ensuring the sustainability of its operations, as well as to articulate a long-term vision and strategy for intercity passenger rail services in Canada.

Transport Canada is planning legislative and regulatory amendments that would provide the marine sector and Canada Port Authorities (CPAs) with enhanced financial and competitive flexibility so that they can better respond to economic opportunities and realize their potential as economic generators.

The Canada Marine Act (CMA) established the first single, comprehensive piece of legislation to govern many aspects of Canada's marine sector. Following a review of the Act and extensive consultations, amendments to the CMA were introduced in Parliament in June 2005. The Bill died, however, on the order paper in November 2005. The department has continued its open dialogue with stakeholders and has developed a new two-track strategy to stimulate investment in key infrastructure and national trade. In the short-term (2007), Transport Canada proposes to modify CPAs Letters Patent, followed by a complementing set of amendments to the CMA by 2008. Amendments to the Port Authorities Management Regulations, which would set out the mechanics for two or more CPAs to amalgamate and continue as one integrated CPA, are also planned for 2007.

Amalgamation of CPAs is seen as a way for them to handle changing economic conditions and concomitant impacts on the transportation system; especially in the British Columbia Lower Mainland. The department and port authorities of Vancouver, Fraser River and North Fraser will be collaboratively exploring the amalgamation of these three CPAs in an open and transparent manner while meeting the Government of Canada's due diligence requirements.

Transport Canada is working with the U.S. Department of Transportation, the U.S. Army Corps of Engineers and the Canadian St. Lawrence Seaway Management Corporation on a comprehensive study of the future infrastructure needs of the St. Lawrence Seaway, including the engineering, economic and environmental implications of those needs. The principal focus of the study is to assess the long-term maintenance and capital needs to sustain and optimize the existing Seaway infrastructure. A study report is expected to be released in the Spring of 2007.

Ridley Terminals Inc. (RTI) is a parent Crown corporation, which operates a bulk terminal on lands leased from the Prince Rupert Port Authority. This terminal was created to provide a direct route for the shipment of northeast British Columbia coal to Asian markets. RTI has experienced financial difficulties relating largely to the fortunes of northeast British Columbia coalmines and low volume of throughput at the terminal. In 2004, 2005 and 2006, the department provided financial support to RTI through contribution agreements. RTI would have become insolvent and forced to discontinue operations without continued Transport Canada funding. The operating and capital contributions from Transport Canada have resulted in RTI remaining operational and preserved as a going concern, giving access to the natural resource suppliers located in Northeast BC to a cost-effective and reliable bulk marine terminal service to ship their products. In addition, the contributions have resulted in allowing RTI management the ability to pursue opportunities for increased and diversified operations in an effort to protect and safeguard the Crown's investment and allowing the Corporation to continue its service to existing customers and effectively market the terminal to new customers.

Based on increased demand in world coal markets and new developments in the Canadian coal industry,Transport Canada expects that RTI will reach its break-even throughput level and will likely become self-sufficient and have financially viable operations in 2007, thus eliminating the requirement for any future contributions.

Marine Atlantic Inc. (MAI) is a parent Crown corporation that fulfills Canada's constitutional obligation to Newfoundland and Labrador (NL) to provide year-round ferry service between North Sydney, Nova Scotia and Port aux Basques, NL. MAI relies on Government funding for its capital and operating needs. In the coming year, Transport Canada will continue to work closely with MAI to develop a long-term strategy to address the corporation's financial requirements. The strategy will consider important elements for MAI's revitalization that include a renewed rate structure, governance and future capital and fleet requirements.

2.1.1.3 Innovation

Innovation is key to Transport Canada's objectives and, in particular, to reconciling the three strategic outcomes (safety and security, efficiency, and environmental responsibility) of the department's vision of a sustainable transportation system. Innovation and skills development can make the transportation sector stronger, more resilient, adaptable and responsive to changing demands and pressures.

Transport Canada has launched an initiative aimed at measuring the full costsof all transportation activities. Full costs include both economic costs as well as social costs. This initiative will help to develop an additional analytical tool to better guide decisions related to sustainable transportation.

Transport Canada continues to improve the department's ability to understand and respond to current and emerging challenges. Research and development (R&D) positions the department to optimize the safety, security, efficiency and environmental responsibility of Canada's transportation system. A new lens for R&D activity includes the design, building and maintenance of a smarter transportation system. This new focus will work to inform and protect the Government's infrastructure investments over the long term. R&D undertaken to support our safety and security mandate will be complemented by and/or integrated into other research work to improve transportation in gateways and corridors and the North, and to increase accessibility as well as energy efficiency.

Collaborative work with R&D experts in industry, academia and government will continue to be an important component of Transport Canada's R&D agenda as the department seeks to encourage the development, demonstration and commercialization of innovative technological solutions to Canada's transportation challenges.

Transport Canada will continue to accelerate research, development, deployment and integration of Intelligent Transportation Systems (ITS) in support of national objectives (e.g., the Innovation Agenda, Asia Pacific Gateway and Corridor Initiative, Let's Get Windsor-Essex Moving Strategy), as well as departmental priorities such as safety, security and efficiency of the transportation system. Priority activities include a review of the current Intelligent Transportation Systems Plan for Canada, En route to Intelligent Mobility. This will set the stage for future investments in ITS, including increased integration of intelligent transportation systems to generate greater efficiencies in the transportation network and an update of the ITS Architecture for Canada, ensuring the Architecture is modernized and strengthened to guide future investments. Work will continue on other elements of the existing plan, including the completion of several R&D and deployment projects.

A highly skilled workforce is necessary to optimize the performance of Canada's transportation system and to ensure its continued competitiveness. In 2007, Transport Canada will continue to work with federal-provincial-territorial colleagues and other stakeholders to identify ways to promote transportation-related skills development in both the industry sector and in academia. Wherever possible, activities will be aligned with the department's overall approach to innovation and policy development, articulating a coordinated response to the skills development challenges inherent in departmental initiatives such as the Asia-Pacific Gateway and Corridor Initiative.

2.1.2 Strategic Outcome: A safe and secure transportation system that contributes to Canada's social development and security objectives

Transport Canada promotes the safety and security of Canada's transportation system consisting of the air, marine, rail, and road modes of transportation. A safe and secure system protects people from acts of terrorism, accidents and exposure to dangerous goods, enables the efficient flow of people and goods and protects the environment from pollution. It is an essential element for a healthy population, a high quality of life and a prosperous economy.

Policy development, rule-making, monitoring and enforcement and outreach activities support the safety and security objective. Through its policy development and rulemaking efforts for all the modes of transportation, the department establishes and implements legislation, regulations, standards and policies.

Monitoring and enforcement activities include issuing licences, certificates, registrations and permits, monitoring compliance through audits, inspections and surveillance, and taking appropriate enforcement action in instances of non-compliance. In particular, the department's inspectors monitor the system to make sure the rules are being followed, and, if required, enforce the policies and rules.

Through its Intelligence and Assessments programs, the department works in cooperation with Canadian intelligence gathering bodies to collect and analyze information about current security threats. These reports and assessments are shared with the various transportation-related industry stakeholders and various air, marine, rail and urban transit operators and authorities; as well as other government partners, as appropriate. The department also develops and delivers security programs such as the Air Cargo Security Pilot Program, the Passenger Protect Program, and the Transportation Security Clearance Program.

Outreach activities involve efforts to promote, educate and increase awareness of security issues and make users and industry aware of security requirements. Transport Canada is the designated national civil aviation security authority under the annex 17 of the Convention on International Civil Aviation (also known as Chicago Convention) and represents Canada in the development of International Civil Aviation Organization (ICAO) standards. The department also represents the Government of Canada abroad in international transportation security matters, seeking to ensure international cooperation by coordinating, liaising and supporting the Government of Canada's foreign policyobjectives of promoting prosperity and employment both at home and abroad, the protection of Canada's security and the projection of Canadian values and culture.

Transport Canada is responsible for the security of the Canadian transportation system and plays a lead role in the security of the travelling public. The department dischargesthat responsibility through activities such as establishing security rules and standards for transportation facilities; screening air travellers and their baggage, responding to security incidents and threats, restricting access to certain parts of airports to authorized personnel only, training and qualifying security screeners and securing aircargo and mail. Transport Canada also regulates the Canadian Air Transport Security Authority (CATSA), a Crown corporation responsible for the screening of passengers and their belongings and certain other specific initiatives to improve air passenger and airport security.

Transport Canada also establishes safety standards for rail transportation, the manufacturing of motor vehicles and aircraft, the navigation of commercial vessels through Canadian waters and the transportation of dangerous goods. In addition, Transport Canada maintains a small fleet of aircrafts for the non-military use of the Government of Canada.

Transport Canada works in partnership with other governments, industry, stakeholders and international organizations to develop the laws and rules that promote the safety and security of the transportation system. The department contributes to enhancing Canada's influence and reputation on the international stage by leading and participating in activities at international levels through organizations like the International Civil Aviation Organization and the International Maritime Organization.

The Federal Railroad Administration, U.S. Department of Transportation, and various chemical, railroad and tank car companies are developing a Memorandum of Cooperation to increase all aspects of safety and security in the transportation of certain dangerous goods by rail. Transport Canada, to promote public safety in the transportation of dangerous goods (TDG), will be entering into discussions with the participants in view of joining this group to develop the next generation of railway tank cars.

Under the Security and Prosperity Partnership of North America (SPP) initiative, Transport Canada has offered full acceptance of all containers for dangerous goods built to U.S. specifications when they are equivalent to a Canadian specification if reciprocally is granted. With a few exceptions for some gas cylinders, Transport Canada currently permits unrestricted use of containers for dangerous goods built to U.S. specifications and registered with U.S. DOT, although U.S. DOT does not grant this reciprocally. Mutual recognition of standards and certification processes for the transportation of dangerous goods would reduce costs for manufacturers and for cargo that relies on containers for dangerous goods.

Transport Canada works to ensure the safety of people in the movement of dangerous goods. The Canadian Transport Emergency Centre (CANUTEC) is the department's 24-hour response centre that assists fire departments and other emergency responders in handling dangerous goods emergencies. CANUTEC is currently involved in the production of the Emergency Response Guide 2008, an international emergency response guide published jointly by Canada, the United States and Mexico for distribution to the first responder community. The Emergency Response Guide 2008 is expected to be printed in Fall 2007 and distributed in January 2008. Previous versions have appeared in 18 languages.

An Audit concerning Transport Dangerous Goods Inspection practices was conducted and a report containing various recommendations was released. Documentation of follow-up and enforcement action will be examined in 2007-08 within the context of the Inspector Manual redevelopment, the re-design of the Inspection Information System and the development of a Quality Management System for inspection activities. The Inspector Manual reflects Transport Canada's policies, procedures and guidelines for the Inspector community.

Transport Canada TDG inspectors have various enforcement tools they use to ensure compliance. An important factor in determining enforcement response is the effectiveness of the response in securing future compliance. Currently, an available enforcement tool, prosecution in court, is seen as too severe for minor infractions. The provisions of the Contraventions Act will allow Transport Canada TDG inspectors to implement an adequate and fair ticketing scheme. It also allows offenders the opportunity of avoiding a court appearance when cases are not contested. Finally, this procedure reduces costs for the government, the courts and Canadians. It is expected to be implemented during 2007-08.

Transport Canada puts into place regulatory, educational and promotional programs that reduce the probability of an incident occurring and mitigates the consequences if one does occur.

In partnership with the Department of National Defence (DND) and the National Search and Rescue Secretariat (NSS), Transport Canada also supports and facilitates search and rescue activities by providing regulations for the carriage of emergency equipment to protect the survivors of accidents and alerting devices to find them. Transport Canada receives funding from the Search and Rescue New Initiatives Fund administered by the NSS to manage programs that contribute to search and rescue in Canada. In addition, Transport Canada annually contributes to support the Civil Air Search and Rescue Association (CASARA) and the Canadian Beacon Registry Database.

In the event of investigations after an accident, Transport Canada provides the required assistance to the Canadian Transportation Accident Investigation and Safety Board of Canada. These investigations help the department to better identify the causes of the accidents, further improve the rules and policies and increase protection of the public as required.

A safe and secure transportation system contributes to the quality of life for all Canadians and supports safe and secure communities, as outlined in Canada's Performance 2006.

Indicators of progress

• High level of public confidence in transportation safety and security
• Reduction in accident/incident rates relative to the increase in traffic
• Reduction in fatality rates relative to the accident/incident rates
• Progress in effectively implementing safety management systems and security management systems

Safety and Security: Challenges and Opportunities

Canada has one of the safest and most secure transportation systems in the world. However, the continuing growth of new markets and the changing dynamics of global trade represent immense challenges for the transportation system. Bottlenecks are developing at key ports and there are concerns about the ability of our rail and marine systems to meet current demands and future growth. New technologies will affect the way planes, trains, vehicles and vessels operate as well as their level of safety and security. These changes are putting new pressures on the transportation system and introducing new risks. Transport Canada continues to be challenged to ensure that, while traffic in all modes is increasing, the levels of safety and security are also continuously improving and that the department's policies and rules adapt to these changes. Transport Canada will continue to work closely with industry and other stakeholders to develop innovative approaches to research, rule-making, outreach, monitoring and enforcement.

A fundamental role of the federal government is to help ensure the safety and security of the nation's citizens, which is addressed in Securing an Open Society: Canada's National Security - a long-term strategic framework that provides a blueprint for action on national security issues, including actions in the transportation sector. The policy recognizes that everyone has a role to play in public safety and security. The policy also recognizes the essential nature of collaboration, including the mechanisms to ensure collaboration. Transportation security is addressed under the National Security Policy and is an essential component of a successful transportation system. Many of the major terrorist attacks of the last 30 years have been linked to transportation. Within this context, the Government of Canada has taken major steps to enhance the security of the aviation and marine transportation systems.

Every year, Canada Port Authorities generate more than $20 billion worth of economic activity. They are responsible - directly or indirectly - for more than a quarter of a million jobs and they handle $100 billion worth of goods annually. Marine security has been a particular focus of attention. Global movements of vessels, their cargo and their passengers, as well as potential threats to marine infrastructure, have resulted in major international security initiatives and associated securityenhancement projects at Canadian ports and marine facilities.

The tragic events in Madrid and London in 2004 demonstrate that rail and urban transit systems are not immune from terrorist attacks. The Government of Canada is committed to protecting citizens and their communities. Transport Canada has focused on establishing partnerships and building a common understanding within the rail and urban transit community of requirements as well as current and future priorities since 2004. As a result of these discussions, Transport Canada is currently implementing a two-year contribution program to address immediate high-risk security priorities in Canada's major urban transit systems. At the same time, work is ongoing with partners to identify future policy priorities.

The transportation sector is intricately linked across modes and regulated by multiple levels of government. Transport Canada has taken on an increasingly complex leadership role over recent years to support integrated and coordinated security regimes. Transportation safety and security is an essential requirement for a healthy population, a high quality of life and a prosperous economy. The department's challenge is to find innovative and cost-effective ways to identify and mitigate safety and security risks in the transportation system without harming the environment or hindering economic growth.

Safety and Security: Program Priorities

To promote a safe and secure transportation system that contributes to Canada's social development and security objectives, Transport Canada will continue to focus on the three program priorities of New Security Policies and Programs, Smart Regulation and Safety and Security Management Systems.

2.1.2.1 New Security Policies and Programs

In 2007-08, Transport Canada will continue working with other government departments and key interested parties on ongoing initiatives, such as continuing to implement aspects of Securing an Open Society: Canada's National Security Policy, including a comprehensive Transportation Security Action Plan.

The Transportation Security Action Plan identifies transportation security priorities across all modes of transportation, which include formal threat and risk assessments that will be integrated with departmental policies, regulations and enforcement activities. This broad, multi-modal strategy is being implemented to guide long range planning and priority setting. This initiative will take stock of our progress in improving the security of transportation in Canada, look ahead to future challenges and set priorities for investing our security resources throughout the entire transportation system.

As an efficient transportation system is closely intertwined with its safety, Transport Canada continues to support programs instrumental in improving aviation safety worldwide. Specifically, our continued participation in the International Civil Aviation Organization Cooperative Development of Operational Safety and Continuing Airworthiness Program will enable designated areas of the world to improve their air transport safety oversight capabilities. This program will provide financial and in-kind assistance to developing states. Through the provision of international technical cooperation, Transport Canada continues to advance its policy objectives as well as open opportunities for Canada's aviation industry in international markets.

Transport Canada will continue to implement transportation-related aspects of the Canada-U.S. bilateral Smart Border Declaration and its companion 30-point action plan. This includes participating on the working group for the protection of critical infrastructure such as airports, ports, bridges and tunnels. This working group serves as a forum for identifying critical infrastructure of shared interest that crosses the border and for sharing of information.

Building on the success of the Smart Border Declaration, Transport Canada will develop and implement new transportation security policies and programs under the Security and Prosperity Partnership (SPP), a trilateral initiative among Canada, the U.S. and Mexico. The SPP is designed to further enhance the security of North America and to promote the quality of life of citizens. Transport Canada, in close collaboration with other government departments, provinces and territories, Canadian stakeholders and the U.S. and Mexico, will play a key role in developing and implementing North American transportation security strategies addressing issues such as aviation security, marine security, emergency preparedness and critical infrastructure protection.

Transport Canada will also continue to coordinate the international transportation security initiatives and programs to establish a common approach to security initiatives, including the coordination of Counter-Terrorism Capacity Building (CTCB) initiatives and the Group of Experts on Aviation Safety, Security and Assistance (GEASA), among others.

Transport Canada will also continue to enhance Canada's influence and reputation on the international stage by working with organizations such as the International Civil Aviation Organization (ICAO), the European Civil Aviation Conference, the International Maritime Organization (IMO), the North Atlantic Treaty Organization (NATO) and other governments (e.g. the United States' Department of Homeland Security). An example of Transport Canada's significant international security achievements is the collaborative effort being made under the Security and Prosperity Partnership (SPP) of North America.

Transport Canada will also continue to focus on advancing security technologies within the Canadian transportation system. To support the harmonization of security standards, Transport Canada will continue to collaborate with technical experts within Canada and internationally, to identify gaps in security technology and to harmonize technical direction.

Transport Canada will support the Commission of Inquiry into the Investigation of the Bombing of Air India Flight 182. In May 2006, the government set up a Commission of Inquiry into the Investigation of the Bombing of Air India Flight 182 for the specific purpose of evaluating any deficiencies in the investigation and response to the incident and to make recommendations to improve the Government of Canada's response to an act of terrorism and issues of national security. In preparation for the hearings and to meet the Commission's requests for information, Transport Canada and other affected departments and agencies are identifying and reviewing relevant documents and information in the context of national security. The complexities and sensitivities of the subject matter require extensive legal and interdepartmental consultation.

Transport Canada will continue to develop an integrated, multi-modal transportation security regime to support the Vancouver-Whistler 2010 Olympic Games. This work will include developing a transportation concept of operations to ensure that the aviation, marine, rail and urban transit systems in the Games area of interest operate in a safe, secure and efficient manner for the Games period. Transport Canada's planning for this significant world event is being coordinated at both the headquarters and regional levels.

To further advance air security, Transport Canada will continue working with other government departments and key interested parties to expand the Canadian air passenger assessment program. This Passenger Protect Program provides an additional layer of aviation security by preventing individuals who pose an immediate threat to air security from boarding aircrafts. As well, the department will continue to implement a comprehensive program for enhancing air cargo and airmail security.

Emergency Preparedness and counterterrorism capabilities continue to be a focal point for the department in 2007-08. The department will lead, or collaborate on, a number of high profile training exercises to assess Canada's ability to act quickly, decisively and effectively in concert with other partners in the event of a terrorist attack, a security-related threat such as radiological contamination or other emergencies.

Transport Canada will also continue to collaborate with its stakeholders to implement the Transportation Security Clearance Program. The objective of this program is to prevent the uncontrolled entry into a restricted area of a listed port or airport. The Seafarer's Identity Documents issued by Transport Canada will be modernized to include a transportation security clearance. This will strengthen marine security and will reduce the risk of security threats to the transportation system.

Internationally, Transport Canada will enhance transportation security and implement new security policies and programs to establish a common approach to security. Efforts include initiatives to: improve aviation security (including air cargo); establish comparable standards for screening (e.g. of passengers and their luggage) and background checks; and improve container security.

Transport Canada has developed a two-year contribution program targeted towards the high volume passenger areas of commuter rail and urban transit, with a focus on major urban transit systems and equipment. This program will provide financial assistance to commuter rail and public transit operators in designated major metropolitan areas to accelerate the implementation of new and enhanced security measures. Over the coming year, Transport Canada will work with partners on a Rail and Urban Transit Security Review, established to engage other federal departments and agencies, provincial and territorial governments, industry and key stakeholders in a review of rail security issues, and to develop options for a more robust, risk-based security regime in Canada. The review was expanded to consider high volume urban transit security and its results of the review will be incorporated into the Transportation Security Action Plan.

Marine security continues to be a high priority for Canada as a secure marine transportation system supports vital trade corridors that connect Canada to the world. Since 2001, the Government of Canada has invested almost $930 million in marine security initiatives involving several different departments and agencies. As part of this investment, the InterdepartmentalMarine Security Working Group (IMSWG) was formed under the leadership of Transport Canada to coordinate Government of Canada marine security efforts.

Over the next three years, the IMSWG will continue to facilitate and expand cooperation and coordination among its 17 member departments and agencies to enhance information exchange and to improve interoperability among members. It will also continue to identify federal government actions in support of national and international marine security obligations, enhance effectiveness in delivering marine security initiatives and facilitate communication with other levels of government, the private sector, and regional-based committees with interests in, or responsibilities for, marine security. Through its facilitation efforts, the IMSWG seeks to ensure that Canada's marine security initiatives are effective and efficient; leveraging the resources and expertise of numerous departments and agencies, without duplication of effort, towards one common goal: the security of the marine transportation system. To support this goal, the IMSWG will develop in 2007-08 a Horizontal Performance Framework for Marine Security with associated performance measures.

The security at Canada's ports and marine facilities will be enhanced under the Marine Security Contribution Program that began in 2004-05 as a three-year, $115-million commitment to assist ports and other marine facilities with security enhancements. In June 2006, the Government announced that the program would be expanded to include domestic ferry operators and would also be extended by two years for all facilities, other than Canada Port Authorities. In 2007-08, the program will continue to fund projects to strengthen security at Canada's ports and marine facilities.

The Department's contribution program for marine simulators ($7.2 million federal) will assist the provinces to modernize marine training simulators. The program directly supports and advances the departmental mandate and strategic objective by financially contributing to the provision of state-of-the-art marine simulator training equipment that will in turn ensure the level of regulatory training and certification of seafarers, thus contributing to the safety of the marine transportation system in Canadian and international waters.

Effective marine security relies upon a compilation of sensor data and information gathered from Departmental and open sources to create a marine centric picture. The function of the Marine Security Operations Centres (MSOC) is to enable departments and agencies to work collaboratively to collect and analyze information in an effort to develop a solid awareness in their area of responsibility with regard to transportation security in general but marine security specifically. By bringing together civilian and military interagency staff, the MSOC will provide a much clearer marine picture of the identification, intent and movement of vessels, personnel and cargo destined for, or already in, the maritime approaches to Canada. Achieving an integrated environment where consistent and timely information on vessels of interest to the Government of Canada can be quickly and efficiently compiled in the MSOC, will be in place to inform the appropriate decision makers. At present the core Departments, Canada Border Services Agency, Canadian Coast Guard, Royal Canadian Mounted Police, Transport Canada and the Department of National Defence are working collectively to implement a concept of operations in order to develop an integrated marine picture.

Transport Canada will work closely with stakeholders to implement the Marine Transportation Security Clearance Program (MTSCP). The Marine Transportation Security Regulations were amended on November 30, 2006, to establish a risk-based program to ensure the security of persons at ports as well as the prevention of unlawful acts of interference with marine transportation, by ensuring that persons who have an ability to affect the security of the marine transportation obtain a security clearance. Over the coming year, operational guidelines and systems will be put in place to implement the MTSCP at major ports as per Phase I of the above regulations. A new Administrative and Monetary Penalties regime will also come into force in December 2007 to expand the tools required to provide an effective oversight and enforcement regime.

In 2007, TC proposes to initiate the regulatory process to develop amendments to the Marine Transportation Security Regulations (MTSR) for both Ships' Security Officers certification, and domestic ferry services.  Development will begin on the following important initiatives, as identified by the International Maritime Organization (IMO) as coming to the fore of international marine security.  Internationally, Transport Canada will enhance transportation security and implement new security policies and programs to establish a common approach to security.  Efforts include initiatives to:  improve aviation security (including air cargo); establish comparable standards for screening (e.g. of passengers and their luggage) and background checks; improve container security; and consider security requirements of non-SOLAS vessels.  In addition, over the next three years, in collaboration with other government departments as well as international partners, Transport Canada will create a compatible maritime regulatory environment with a consistent approach to vessels and cargo destined to and within North American waters.

2.1.2.2 Smart Regulation

In the coming year, Transport Canada, as a major regulatory department, will continue to support the government's Smart Regulation Initiative. In practical terms, this means regulations that are more focused on safety and security results with targeted interventions, and with the flexibility to be innovative in meeting outcomes.

A key initiative in Transport Canada will be to sign an agreement with the automotive industry concerning the manufacturing and use of in-vehicle telematics devices such as navigation, Internet access and cell phones. This agreement will include a safety standard and the general principles and process elements that will guide product design and evaluation. Producing safer telematics devices will help reduce incidents of driver distraction and collisions. The agreement will give industry more flexibility and opportunities for innovation in product design and will not require the department to issue new or adapt old regulations to respond to new technological advances. Consultations on the terms of the agreement are progressing well and should be completed in 2007.

In 2007, The State Operators Program, a new performance-based regulatory framework, will be introduced. This program will apply to any State Operator providing air services on behalf of Her Majesty in Right of Canada or of a province or territory, and is designed to address the unique and diverse operational realities of state operators. The day-to-day management of the State Operators Program will be jointly undertaken by the newly created Canadian State Air Operators Association (CSAOA) and Transport Canada; and will be dependent upon a robust Safety Management Systems structure. The CSAOA and Transport Canada Civil Aviation have jointly developed the draft regulations, which are currently undergoing technical review.

In 2007, Transport Canada will adapt and coordinate communications to enhance the transparency of the Civil Aviation program by educating travelers and industry on shared safety responsibilities. This will be achieved byconducting a national awareness campaign for cabin safety issues such as unruly passengers, flight attendant ratio and child restraint systems.

As Transport Canada moves into fully implementing the Government Directive on Regulating, the Civil Aviation Regulations Advisory Council process will be of key importance as a means to keep stakeholders informed of issues that could affect them. Inter and intra-departmental and inter-branch sharing of information is essential to keep stakeholders abreast of various issues. As a result of the new Government Directive on Regulating, the Civil Aviation directorate will explore how its current regulatory process can partner more effectively on issues such as aviation occupational health and safety and the transportation of dangerous goods.

Transport Canada will continue to develop responsive marine security regulations, which will keep Canada in step with a continuously evolving marine security regulatory environment. This approval has fostered rapid implementation of new security measures while maintaining marine security regimes by industry.

Transport Canada is working with the Canadian Standards Association (CSA) to develop a new CSA Standard for the design, manufacture and use in Canada of Portable Tanks based on the latest United Nations (UN) Recommendations on the Transport of Dangerous Goods. CSA expects to publish the standard late in 2007 for subsequent adoption in the TDG Regulations.

This standard will harmonize Canadian requirements for the Transport of Dangerous Goods in portable tanks with international requirements. Such requirements include rules for the design and manufacture of UN portable tanks in Canada and their approval by Canada, as well as the selection and use, inspection, test and repair, in Canada, of UN portable tanks regardless of where they were approved and manufactured. This will help promote safe and efficient domestic and international movement of dangerous goods in portable tanks.

Canadian proposals concerning performance requirements of intermediate bulk containers (IBCs) have been adopted in the UN Recommendations on the Transport of Dangerous Goods. Development of the appropriate Canadian Standards is underway to implement the requirements of the UN Recommendations related to UN IBCs, standardized packaging, and cylinders. This will help promote safe and efficient domestic and international movement of dangerous goods in these various means of containment, regardless of where they are designed, approved or manufactured.

Other key aspects of Transport Canada's regulatory strategy are the creation of rules that align with the rules of other regulatory agencies, both within Canada and internationally, and having meaningful consultations with both industry and the public. Rigorous and thorough consultation processes have helped to ensure that upcoming reforms associated with key acts will result in rules that reflect the needs and concerns of both industry and the public:

• The Aeronautics Act, 1985,will be amended to address fatigue management, liability insurance, aviation companies management systems, analysis and reporting of safety data, protection for voluntary non-punitive reporting and new compliance, and enforcement tools;
• The review of the Transportation of Dangerous Goods Act, 1992, continues. Amendments are expected to be proposed in 2007;
• The review of the Railway Safety Act, 1985, will be undertaken in 2007 and will provide an opportunity for the federal government to identify and address all of the major deficiencies with this act including limited enforcement powers, lack of baseline safety requirements, problems with delegated powers, inconsistent rule application, unclear engineering requirements and jurisdictional limitations;
• The Canada Shipping Act, 2001, will encompass up-to-date requirements of the International Maritime Organization and International Labour Organization Maritime Labour Conventions and bring clarity and consistency, more rapid adaptability and general applicability of maritime instruments; and,
• The Motor Vehicle Safety Act, 1993, will include modernized provisions regarding regulatory efficiency and harmonization, certification and enforcement, and importation.

2.1.2.3 Safety and Security Management Systems

Safety management systems (SMS) and security management systems (SeMS) are formalized frameworks for integrating safety and security into the daily operations of a transportation entity. They involve establishing clear responsibilities and authorities, setting clear goals and performance targets, managing risks and threats and regularly conducting internal inspections and evaluations. In the larger sense, this leads to a more thorough identification and resolution of potential systematic safety or security problems. Transport Canada believes that safety and security management systems will further improve the safety and security of the transportation system.

Working closely with industry, labour and other stakeholders, the department will develop plans to implement SMS/SeMS where appropriate. The implementation of safety management systems in aviation, rail and marine organizations is the cornerstone for improving the safety, security and economic performance of industry. In 2007-08, the department will continue to actively implement this approach.

In September 2006, a Safety and Security Management Systems Working Group was created with the mandate to foster a common understanding of SMS and SeMS and develop a consistent approach within all program activities of the Safety and Security Group in Transport Canada. The working group will continue working on the development of a strategic plan: Moving Forward: Changing the safety and security culture, in conjunction with Civil Aviation, Rail Safety, Marine Safety, Marine Security, Road Safety, Transportation of Dangerous Goods, Security and Emergency Preparedness, Rail and Urban Transit Security, Aircraft Services and Strategies and Integration directorates. This strategic plan will outline Transport Canada's vision and strategic direction with respect to the regulatory oversight program for safety and security over the next five years. The benefits of this working group are enhanced communication and strengthened linkages between modes on the application of SMS/SeMS and improved decision-making and collaboration on related projects and applications.

As safety management systems offer the most promising means of preventing civil aviation accidents, Transport Canada will continue to enhance the Canadian Aviation Regulations (CARs); particularly relating to airports, water aerodromes, and approved maintenance organizations. Transport Canada will also put in place the infrastructure necessary to fully implement SMS, such as the application of Fatigue Risk Management Systems on a trial basis in selected organizations. Transport Canada Civil Aviation will continue steps undertaken in 2006 to restructure itself and its services to adapt to both a changing workforce and a changing regulatory environment. Externally, implementing SMS in aviation organizations will require specialists in all disciplines of the civil aviation directorate to interact with safety partners in the aviation community through multi-disciplinary work teams. As a result, a phased-in approach to organizational changes is underway. The focus of the National Organization Transition Implementation Project for 2007 will be the detailed organizational structure design.

The railway safety management system regulations, which came into effect on March 31, 2001, require railway companies subject to the Railway Safety Act to implement and maintain safety management systems. A stakeholder forum on the experiences to date on implementing SMS in the rail industry will be held, and a review of the department's rail SMS regulations and guidance material will be conducted in 2007-08.

Canada was one of the member countries of the International Maritime Organization that was instrumental in implementing requirements for safety management systems on all ships trading internationally. The systems were mandated for Canadian international shipping through the Safety Management Regulations, which introduced the International Safety Management (ISM) Code in 1998 and expanded the scope of its application in 2002. Transport Canada has had some success in promoting voluntary adoption of the ISM Code by domestic shipping companies. The department has also developed guidance material for small passenger vessels operating internationally for which a full-blown ISM would not be feasible.

Transport Canada is examining ways to increase the implementation of such systems and is assessing various shipping sectors for opportunities for increased participation. Transport Canada will continue to work with the marine industry over the coming years to identify opportunities to utilize an SMS philosophy in the continued enhancement of the marine safety and security regime in Canada.

The implementation of security management systems is a coordinated effort amongst the aviation, marine and rail security groups. In 2007, the department will continue conducting research, as well as consultations with stakeholders to assess the state of industry's security readiness to implement SeMS. In addition, in 2007, the department will concentrate its activities on policy development and program design in order to have program implementation well underway in 2009.

2.1.3 Strategic Outcome: An environmentally responsible transportation system that contributes to Canada's sustainable development objectives

Although transportation provides many economic and social benefits, the movement of people and goods can have significant environmental consequences, which in turn have social and economic repercussions. Effective sustainable transportation decision-making necessitates that the environment be considered alongside economic and social factors. Environmental impacts from transportation include air, water and noise pollution, greenhouse gas emissions, and the loss of agricultural land and wildlife habitat. These stresses are caused by various transportation activities such as: construction of infrastructure; airport and port operation; road system operation and maintenance; production, operation, maintenance and disposal of vehicles; and consumption of energy.

Transport Canada will continue to promote a sustainable transportation system through developing and implementing programs and policies in support of sustainable development to protect the natural environment. As sustainable transportation is a shared responsibility, the department will work with its partners and stakeholders, including the general public, the transportation industry, other federal government departments, provinces, territories and municipalities as well as international organizations.

For 2007-08, an important area of focus will be on clean air and the reduction greenhouse gas emissions. TheClean Air Regulatory Agenda will enable the federal government to implement measures to reduce the emissions of both air pollutants and greenhouse gases from the transportation sector. To this end, the Government will take immediate action to address air emissions from transportation sources. More specifically, Transport Canada will develop new regulations that will limit emissions from new motor vehicles and railways and ensure that international emissions standards for marine transportation and aviation are applied domestically. In addition, the Government has introduced new programs as part of its ecoTransport Strategy, announced by the Government in February 2007.

Transport Canada tabled its fourth successive three-year Sustainable Development Strategy on December 13, 2006. For this strategy, Transport Canada chose to focus on three themes at the heart of sustainable transportation: urban transportation; commercial freight transportation and marine transportation. These themes allowed the department to focus its efforts and to make a smaller number of meaningful and results-oriented commitments. The 2007-2009 SDS action plan is structured around seven strategic challenges, which were retained from the 2004-2006 strategy. Over the 2007-08 fiscal year, the department will implement the commitments and targets that it set out for the 2007-09 strategy (see SDS Table 11 for details on 2007-08 commitments). A new element of the 2007-2009 SDS is a commitment to establish an internal SDS Fund of up to $1 million per year for the three years of the SDS. The Fund will support innovative projects that make significant contributions to sustainable transportation and approved projects will be considered SDS commitments. Projects for the 2007-08 fiscal year will be selected in early 2007.

Transport Canada, in its Sustainable Development Strategy 2004-2006, has included a key challenge involving the improvement of environmental management on Transport Canada lands and in their operations. The department has met this continuing challenge through its Environmental Management System (EMS). The EMS helps the department better understand the nature of the environmental impacts of transportation. It has led to the development of programs in the areas of environmental assessment, site remediation, environmental protection and real property management. In 2007-08, EMS will continue to aid the department in facilitating an understanding and management of the environmental impacts of transportation.

In 2007-08 Transport Canada will implement new programs under the ecoTransport Strategy to reduce greenhouse gas and air pollutant emissions. These programs will foster the implementation of clean technologies for personal vehicles and freight carriers across all modes and expand the range of sustainable transportation options for individual Canadians. The programs will work with businesses, governments, industry associations and with Canadian consumers to reduce the environment impact of the transportation sector through demonstrations, pilot projects, showcasing of alternatives and capacity building. More details on these programs are described below.

The following are high-level performance indicators that will be used to track progress towards the department's sustainable transportation goals.

Indicators of progress

• Reduction of total greenhouse gas emissions per mode (road gasoline, road diesel, aviation fuel, rail diesel and marine fuel)
• Average fuel efficiency for light duty vehicles, light trucks, heavy duty trucks, locomotives and aircraft
• Reduction of freight greenhouse gas emissions by tonne-km for light trucks, medium trucks, heavy trucks, locomotives and vessels
• Light duty vehicle air pollutant emissions per kilometre
• Decreases in total air pollutant for for-hire-trucking, marine, rail and air
• Reduction of greenhouse gas emissions from Transport Canada activities
• Number of Transport Canada contaminated sites that have undergone remediation or risk management

Environmental Responsibility: Challenges and Opportunities

Multiple factors from passenger and freight transportation affect the interplay with the environment, specifically in urban areas, where about 80 per cent of Canadians reside. Poor air quality is a growing dilemma as there are numerous social, economic and environmental impacts that accompany it. Greenhouse gas emissions reduction also remains a challenge for Canada and the transportation sector in particular. In 2004, about 25 per cent of greenhouse gas emissions in Canada came from the transportation sector; about two-thirds of which are generated in urban areas. In 2002, transportation accounted for about 53 per cent of all NO_X emissions, 59 per cent of carbon monoxide, 24 per cent of VOCs, 3 per cent of sulphur oxides, and 5 per cent of particulate matter (PM_2.5) - the major constituents of urban smog.

Given the concentration in urban areas, a transportation system that is efficient, safe, secure and environmentally responsible remains an integral component of sustainable communities. Although the rapid rate of urban growth has provided considerable economic and development opportunities with respect to an increase in employment, neighbourhoods and physical structures, the effects remain quite significant.

Freight transportation makes a significant contribution to the Canadian economy both in terms of its actual share of economic activity and through the enabling role that it plays in moving products to market. Growth in trade and changes in patterns of freight activity, such as just-in-time delivery models, are leading to significant increases in activity in all modes. Overall, freight movement is expected to increase by 60 per cent between 1990 and 2020 with the greatest growth in the air and trucking sectors.

There is a continuing need to address systemic challenges and opportunities to make certain that there is greater integration where possible. Efforts to influence both transportation supply and demand will be critical in terms of forging a more sustainable transportation system. Future efforts will continue to focus on ensuring the efficiency of the urban transportation system, relieving congestion and improving air quality.

Influencing the transportation choices Canadians make through initiatives that support greater awareness and knowledge transfer is a key way in which the government can make significant reductions in transportation emissions, demands on infrastructure, and improvements to the health of Canadians through alternative and active modal choices. Other important elements include advancing new technologies in support of sustainable transportation and investigating opportunities related to research and development for sustainable transportation. The federal government will continue to promote vehicle fuel economy and will work with the auto industry in the realization of emissions reduction targets set forth in the voluntary government/industry Memorandum of Understanding to reduce greenhouse gas emissions.

Transport Canada will also continue to lead a centralized effort to organize and improve the collection, dissemination and analysis of sustainable transportation information in all modes. This includes the development of new data and analytical tools to improve decision-making. The current proposal will build upon Transport Canada's capacity to deliver policy analysis and develop advice on environment and sustainable development issues related to transportation. Specific objectives of this proposal will include developing analytical frameworks and/or conduct studies useful to develop these frameworks on critical environmental issues to improve decision-making. The development of analytical tools will improve assessment of climate change and clean air mitigation options, cost and impact, including co-benefits such as congestion reduction benefits, when suitable.

The fundamental challenge is to adopt a systemic approach to achieve a sound integration of environmental issues into transportation policy. To this end, Transport Canada will take an integrated and comprehensive approach in developing and managing policies and programs to address government-wide sustainable development and environmental issues as they relate to the transportation sector. The department will work with its partners and stakeholders to overcome the challenges outlined above.

Environmental Responsibility: Program Priorities

To promote an environmentally responsible transportation system that contributes to Canada's sustainable development objectives, Transport Canada will focus its efforts on key activities and initiatives that support the three program priorities of Climate Change and Clean Air, Environmental Assessment and Environmental Protection and Remediation.

2.1.3.1 Climate Change and Clean Air

The Government of Canada is committed to the development and implementation of an Environmental Agenda for reducing greenhouse gases and ensuring clean air, water, land and energy for Canadians. The Environmental Agenda will be effective, realistic and will focus on achieving sustained reductions in emissions in Canada while ensuring a strong economy. The Government will develop solutions that have clear environmental and associated health benefits to Canada and improve our ability to market new technologies around the world.

The first part of this environmental agenda will be regulatory, policy and program measures to address air pollution and greenhouse gas emissions. The government's intent with respect to regulatory actions was announced in October 2006 with the tabling of Canada's Clean Air Act.

Transport Canada plays a lead role on climate change and clean air policy as it relates to transportation. It works with other government departments and stakeholders to develop and analyze new policies and measures for reducing emissions from the transportation sector.

The department has examined new opportunities for reducing air pollutants and greenhouse gas emissions, in support of the government's Environmental Agenda. In 2007-08, the department will introduce new initiatives and expand existing programs as part of the ecoTransport Strategy. The Advanced Technology Vehicle Program will end March 31, 2007. As part of the ecoTransport strategy, the Minister announced on February 14, 2007 the new ecoTechnology for Vehicles Program that will build on the lessons learned from the ATVP. The ecoTechnology for Vehicles Program will expand its work to evaluate and test a range of emerging environmentally friendly technologies for use in light-duty vehicles. Showcasing the cleanest and most efficient personal vehicles from around the world will raise awareness and help provide Canadians with the facts they need on vehicle purchases in the future. The program will work closely with the auto industry and will look to addressing the reducing the barriers for introduction of a broader range of technologies for possible introduction into the Canadian market. The Freight Technology Demonstration Fund and the Freight Technology Incentives programs will end March 31, 2007. On February 15, 2007, the Minister announced six new ecoFreight initiatives to reduce the environmental and health effects of freight transportation through accelerated adoption of emissions-reducing technology. The Marine Shore Power initiative will help reduce emissions from ships in port. The ecoMobility, announced on February 13, 2007, will help to increase the availability of convenient sustainable transportation options for Canadians interested in reducing personal car use.

On April 5, 2005, the Government of Canada and the Canadian automobile industry signed an agreement to act on climate change. Under the agreement, carmakers will voluntarily work to reduce annual greenhouse gas emissions from light-duty vehicles by 5.3 Megatonnes (Mt) in 2010. The agreement reached gives consumers fuel-saving choices, focuses on immediate action to achieve greenhouse gas reductions and provides a cost-effective solution for government, industry and consumers.

A joint government-industry monitoring committee has been established to track the Canadian automotive industry's performance under this Memorandum of Understanding (MOU). Transport Canada, Environment Canada and Natural Resources Canada are represented on this committee. Emissions reductions will be monitored year by year, with interim goals in the years leading up to 2010. The annual reports from the committee will be available to the public as well as the MOU.

The Government of Canada intends to regulate the fuel consumption of road motor vehicles after the expiry of the Memorandum of Understanding between the auto industry and the Government of Canada. The Minister of Transport, Infrastructure and Communities, with the Minister of Natural Resources, will develop regulations that will build on the voluntary commitment the auto industry made collectively in 2005. These new regulations will be developed and implemented under the Motor Vehicle Fuel Consumption Standards Act, as amended by the proposed Canada's Clean Air Act,to take effect for the 2011 model year.

Transport Canada and Environment Canada will support a Memorandum of Understanding that has been negotiated with the Railway Association of Canada that ensures that the rail industry reduces its emissions of air pollutants consistent with the United States Environmental Protection Agency air pollutant standards; and continues to improve its greenhouse gas emissions performance between 2006 and 2010. Transport Canada will develop and implement new regulations under the Railway Safety Act to take effect in 2011.

The Arctic is extremely vulnerable to climate change and its impacts. Historically, the harsh environment has made resources difficult to access. However, in the past half-century changing climate conditions, coupled with technological advances and increased demand for resources, have increased accessibility and the rate of development in the North. Needless to say, climate change has become a major force shaping the future of the North. While an increase in accessibility and marine activity will require greater support and pose increased environmental risks, it will also lead to social and economic development through increased investment, infrastructure and improved access to goods, services, and supplies. Under the PAME (Protection of the Arctic Marine Environment) working group, Canada (Transport Canada), Finland and the United States will lead a three-year study called the "Arctic Marine Shipping Assessment" to study current and future marine activities in the Arctic and the related social, economic and environmental impacts increased marine activities may have on Arctic residents. The final report is to be presented to the 6^th Arctic Council Ministerial in Autumn 2008.

Transport Canada has partnered with municipal and regional governments to demonstrate innovative and integrated approaches to reducing greenhouse gas emissions from the urban passenger sector through the Urban Transportation Showcase Program. These showcase demonstrations are encouraging modal shifts away from single occupancy vehicles by offering residents a wider variety of sustainable transportation options. The lessons from these demonstrations and from other successful Canadian case studies are being disseminated to encourage broader uptake of successful approaches. In 2007-08, the program will continue to support existing demonstration projects and share the lessons-learned and results through the programs Information Network.

Since 1999, Transport Canada's Moving on Sustainable Transportation (MOST) program has funded innovative, smaller-scale projects to expand the range of sustainable transportation options for Canadians. The program aims to improve air quality and health, and realize other benefits by supporting the work of non-profit organizations across Canada. In 2007-08 the department will work to renew the program.

In January 2007, a joint MOU was signed by Transport Canada, Environment Canada and Railway Association of Canada (RAC) to reduce Locomotive Emissions and Greenhouse Gases. This MOU is to remain in effect until 2010 and regulations are to be introduced in 2011 under the provisions of the Railway Safety Act. Transport Canada, in conjunction with Environment Canada and RAC, plans to organize a government/industry workshop on locomotive emissions during the currency of the MOU.

2.1.3.2 Environmental Assessment

During 2006-07, the conduct of environmental assessments pursuant to the Canadian Environmental Assessment Act for projects requiring a Navigable Waters Protection Act approval continued to represent a significant workload for both headquarters and regional personnel. Environmental assessments are underway or completed for many projects; including bridges, dams, liquefied natural gas facilities, mines, aquaculture and pipelines.

In light of this workload, a Strategic Review of environmental assessment resource requirements was undertaken in 2006 that included identification of measures for increasing efficiency. In 2007-08, the department will continue to review procedures, implement measures to improve efficiency and develop guidance documents to deliver the environmental assessment program in the most efficient manner without compromising the high quality of the environmental assessments completed.

During 2007-08, the Director General level Environmental Assessment Project Committee will implement an interim approach to scoping (which may be in place until the Canadian Environmental Assessment Act can be amended) and an interim approach for engaging with aboriginal peoples in the environmental assessment of project (which will be in place until a time when a federal government policy is implemented).

In addition, Strategic Environmental Assessment (SEA) allows decision makers to contribute to the department's sustainable development objectives by integrating environmental considerations in the development and analysis of policy, plans and program initiatives. Environmental Affairs intends to work closely with the Offices of Primary Interest in order to improve the SEA process and compliance, through tools such as SEA training sessions and a computer tracking system that also includes an earlier integration of SEA in the decision-making process.

2.1.3.3 Environmental Protection and Remediation

In 2007-08, Transport Canada will renew its commitment to the Partnership for Air Transportation Noise and Emissions Reduction (PARTNER) Center of Excellence, which is led by the U.S. Federal Aviation Administration (FAA) and the National Aeronautics and Space Administration (NASA). PARTNER is a long-term partnership of academia, industry and government established to create a world-class consortium, closely aligned with national and international needs to foster breakthrough technological, operational, policy and workforce advances for the betterment of mobility, the economy and the environment. The group conducts basic research and engineering development to reduce uncertainties associated with aviation's environmental impact and prototype solutions to mitigate these impacts. The knowledge and capability gained from this research will provide critical information to government, industry and community decision-makers to tackle environmental impacts; which may represent the single greatest challenge to the continued growth and prosperity of civil aerospace.

In 2007-08, Transport Canada will also continue to undertake work detailed in its departmental Contaminated Sites Management Plan. The plan is a Treasury Board requirement that outlines the department's five-year strategy for managing its contaminated sites and identifying suspected contaminated sites. In addition to funding from within the department, the Federal Contaminated Sites Accelerated Action Plan Fund will be utilized to initiate or accelerate assessment work and remediate high-risk sites.

Transport Canada keeps a watchful eye over ships transiting Canadian waters through its National Aerial Surveillance Program (NASP). The NASP is the primary tool for detecting ship-source pollution in waters under Canadian jurisdiction. Evidence gathered by NASP crews is used by Transport Canada and Environment Canada to enforce the provisions of all Canadian legislation (including the Canada Shipping Act and the Migratory Birds Convention Act) applicable to illegal discharges from ships. Aerial surveillance is widely adopted internationally, and is considered to be the most effective method for the detection of oil spills.

Transport Canada has undertaken a number of initiatives to further enhance its NASP. Transport Canada has secured additional funding to improve the frequency of pollution patrols, which has resulted in the expansion of pollution surveillance to areas not normally patrolled such as the Arctic. Other initiatives include multitasking with other government departments to ensure each surveillance hour is as productive as possible and upgrading its mission specific surveillance equipment. In 2004-05, Transport Canada contracted the first of two integrated suites of marine pollution surveillance equipment to aid in protecting Canada's ocean resources. The pollution surveillance aircraft flew its inaugural mission on November 29, 2006, with its newly equipped surveillance equipment. Transport Canada will strive to continuously improve the effectiveness of the NASP. In the fall of 2007-08, the second system is scheduled to be operational with trained crews. Transport Canada's goal is for Canada to be recognized as one of the most capable nations in aerial marine reconnaissance.

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