TRAN Committee Meeting

STANDING COMMITTEE ON TRANSPORT

LE COMITÉ PERMANENT DES TRANSPORTS

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 19, 1997

• 1534

[English]

The Chairman (Mr. Raymond Bonin (Nickel Belt, Lib.)): Come to order. We are gathered here today for the main estimates of 1997-98.

I'd like to thank the minister for two reasons: for being here with us and for again coming on short notice. It seems this committee works so hard that we just keep piling the work. From one night to the next morning we're on a new issue.

I really appreciate you, Mr. Minister, and the department for responding so quickly.

I'd like to say to you, Mr. Minister, that the members of the committee, all members on all sides, have worked very diligently on Bill C-9, and it was completed last night. I want you to know that every member, with no exception, on all sides, has been very constructive and productive and has done an excellent job. I want to commend them and I wanted to do it in your presence.

• 1535

That having been said, I invite you to make opening statements, if you wish. Then we will proceed to questions from members and we'll see what goes on from there.

Mr. Minister.

Hon. David M. Collenette (Minister of Transport): Thank you very much, Mr. Chairman.

I would like to thank the committee for their hard and expeditious work on Bill C-9. I know all members were active. Certainly I know those on the government side were especially active. We worked together to ensure that the bill was thoroughly debated, and of course now it will go to the House.

As you know, I have my officials with me: Margaret Bloodworth, the deputy minister; Ron Jackson, the ADM of security; Louis Ranger, the ADM of policy; and Ron Sully, the ADM of programs and divestiture.

It's a pleasure to appear before the committee to discuss the estimates for 1996-97, the performance report, and also the estimates for 1997-98.

When we last met in late October, I set out what I thought were some of the longer-term challenges facing Canada in the transportation sector, namely the growth and demand for transportation, globalization, urbanization, and increase in private vehicle use and environmental sustainability. I also underlined the need for an integrated strategy to deal with these concerns, one that encourages the best use of all modes of transportation. My objective was to look at the future direction for Transport Canada. Today I want to look back over the past year and judge the success of what we have accomplished thus far.

[Translation]

As I note in my introductory message to the department's performance report, Transport Canada has undergone a remarkable transformation over the past few years.

From a complement of close to 19,000 employees in March 1995, Transport Canada has reduced to between 4,500 and 5,000 at present. And we'll be reducing further, to less than 4,000 employees over the next couple of years.

Our budget is dropping accordingly: Transport's gross budget in fiscal year 1993-94 was just over $3 billion, whereas our forecast for fiscal year 1999-2000 is for only $1 billion.

But perhaps the most significant change has been in our role: we are going from being a large operating entity to a smaller policy and regulatory shop.

It was not change for the sake of change. It was well thought out; the result of many months of study and consultation. We have reassessed the way we do business and have taken steps to maximize the benefits for all Canadians. The change reaches across all modes, instilling more discipline into the system.

We have changed our approach to regulation, giving the users more say in day-to-day operations and making the system more responsive to regional issues.

We continue to consult, working through partnerships with industry and other governments and stakeholders to find the best solutions.

Through all this, there is one overriding theme that has not changed, that will not change—safety. It is our highest priority.

In fact, by divesting operational concerns, we can focus on ensuring safety and security and on developing the right policies for our transportation system.

Let me now provide you with an update of our progress in each of the Transport modes. Most of the facts and figures I am about to present you will recognize from the performance report; where there are any discrepancies, it is because we've used more recent data or projections.

• 1540

[English]

Let's look first at air transport. Three years ago the government announced that national airports policy. Under that policy the federal government retains ownership of the 26 airports that handle 94% of air traffic in Canada but leases them to locally based airport authorities. These local operators are responsible for managing and financing the operation of these airports. By the end of the fiscal year 1998-99 we now expect that 20 of the 26 airports will have been transferred to local control.

I see Mr. Casey here. Let's hope Halifax is among them.

In addition under this policy, Transport Canada is transferring the ownership of regional airports to community groups and other interests. Of Canada's 70 regional local airports, 42 have already been transferred, as have 21 of our 31 small airports. Many others are in negotiation. The federal government will continue to fund the operation of 13 airports classified as “remote” to keep these communities accessible year around.

The national airports policy enables communities to take greater advantage of their airports. It also makes it possible to cut costs and attract new and different types of business. We're confident this is the route that will ultimately boost trade, tourism, and job creation.

Another important component of our restructuring in the air sector has been the transfer of the civil air navigation system to NAV CANADA. As you know, NAV CANADA had its first anniversary on November 1. Like the country's airports in the national airports policy, NAV CANADA can take a business-like approach to delivering the services that are demanded in today's competitive world. The not-for-profit corporation is developing and introducing a user fee structure and its financing is performing according to plan. By November of next year NAV CANADA will no longer depend on the federal government to collect revenues. The current air transportation tax paid by the travelling public will be cut by 50% in March of next year as NAV CANADA introduces its first new set of fees. The tax will be eliminated completely by November 1, 1998.

Finally, there's our government's open skies agreement with the United States and its transportation policy of 1994. Together, these agreements have led to the introduction of many new and improved air services. I would like to point out that Canadian carriers collectively now have more than 50% of the transborder market. I think that's an incredibly good result for Canada's airlines, not just the two larger airlines but smaller airlines, because they have had to compete with some of the world's giants and they've done it very well. The real test will be, of course, when the full open skies comes in at Toronto starting in February. That will be the big test, but I'm very optimistic they will meet that test and succeed.

[Translation]

With respect to marine transportation, you have already reviewed Bill C-9. This is an area where our government is working hard to increase the efficiency of transportation.

Bill C-9, which you are currently studying, will give effect to most of the major elements of our government's National Marine Policy.

Under the Canada Marine Act, Transport Canada will be able to move ahead with the hand-over of control of major ports to autonomous and self-sufficient Canada Port Authorities. The government's policy also calls for the ownership of more than 200 ports across Canada designated as regional/local to be transferred to other interests over six years.

Community organizations, provincial governments, municipal authorities and private interests are being offered the opportunity to operate these ports.

As of last month, Transport Canada had transferred a total of 108 of these ports to other interests and signed 100 letters of intent to begin the transfer process with marine users and other stakeholders.

The Department will help communities and other interested groups to take over their ports and harbours through a $125 million Port Divestiture Fund.

[English]

So far, despite the progress on port transfers, we've had to use only about $15 million of the new fund. That means more than $100 million is still available to assist the remaining ports.

Other elements of the national marine policy include plans to modernize the pilotage regime, commercialized ferry services, and operations of the St. Lawrence Seaway. No doubt you have reviewed all of these elements in the course of the last few days and weeks.

• 1545

We recently introduced Bill S-4, amendments to the Canada Shipping Act, another piece of important legislation. These amendments are designed to increase the compensation available to Canadian claimants for maritime claims, particularly for claims related to ship-source oil pollution damage. As a result of the amendments, the maximum compensation available to claimants in an oil pollution incident would more than double to $270 million.

We're also preparing for a complete overhaul of the Canada Shipping Act in two phases. Phase one of the overhaul is already in progress with the introduction of amendments in the House, Bill C-15. As you know of course, the Canada Shipping Act is as old as the department itself and is actually based on British merchant shipping law dating back to the 19th century. Modernizing the legislation will be vital to Canadian shipping as we enter the 21st century, so this is an important piece of legislation for you to study.

In rail transportation, I think probably the most significant change was the passage of the Canada Transportation Act in July 1996. We've now had 18 months to see how the new act has made sweeping changes that have really struck to the heart of the rail industry, mostly for the better. The changes were designed to move the industry to a more commercial footing, to make it more competitive, both nationally and internationally.

Critics of the legislation said that it would result in the abandonment of rail lines. In fact, the short-line industry is flourishing as never before. There are 3,700 kilometres of track that have now been taken over by the private sector and others as short-line railways versus about 800 kilometres of largely uneconomical track which has been abandoned. The ratio is certainly in favour of the legislation's intent, which was to give other interests the opportunity to take over these lines. In fact, almost as many new short lines have come into operation in the year and a half since the act was proclaimed as were formed in the years leading up to the act.

A couple of days ago in Toronto, I made a speech to the Canadian Council for Public-Private Partnerships. I hope we can give all the members of the committee a copy of that speech, because one area for discussion in the speech was rail, not just freight but particularly the passenger rail situation and the potential for new ways to finance the acquisition of equipment that is going to be needing replacement in the coming years.

It's my hope that your committee, providing you could make time after you have all of your busy legislative duties attended to, could perhaps focus on some broader policy issues in transport over the next year. In particular, it's my hope that the committee could do a fast-track evaluation of where we should go on the reorganization of VIA Rail. Hopefully you can start that as soon as possible.

Mr. Chairman, I'll talk with you at a later date so that you can raise this with your colleagues on the steering committee.

One area where new legislation still requires our attention, however, is of course the provisions concerning grain transport. Under the act, the government is required to conduct a formal review of the grain transportation system by 1999. Obviously everyone here knows of the difficulties that were experienced last winter with the grain delivery in western Canada. This has caused considerable angst among stakeholders across the country. It was a unanimous wish from all stakeholders, including the provincial governments, that the grain review be held earlier.

First and foremost, we want to avoid all of the problems that plagued the grain delivery system last winter. I believe producers, railways and grain companies have largely met this challenge. In July I met with the stakeholders, along with Ralph Goodale and Lyle Vanclief, my colleagues with the Canadian Wheat Board and agriculture department respectively. I followed this up with other meetings with stakeholders and also with the provincial transport ministers. I think all of them are pretty well agreed that the contingency plan that we asked for in the July 29 meeting was indeed a good one and will meet the needs of grain haulage.

It's obviously still too early to gauge the success of the plan. We haven't really started the winter, although one would wonder looking out the door, but certainly so far things have been moving quite well. We've already exported 1.7 million more tonnes of grain this year than we did during the same period last year.

• 1550

[Translation]

Transport Canada plans to accelerate its review of the Canada Transport Act provisions, but we must proceed with caution in view of the "level of service" complaint currently before the Canadian Transportation Agency.

At the same time, however, I am committed to getting the process under way as soon as possible. For this reason, I will soon be announcing the name of the eminent Canadian whom I would like to appoint to begin the preliminary phase of an early grain review.

I also want to make sure that our rail transportation system maintains its enviable reputation for safety. That's why I have decided to delay the reintroduction of the Railway Safety Act amendments—to determine whether further adjustments to the legislation are required.

I have asked my officials to examine our mechanisms for overseeing safety and regulatory compliance and report back by the end of January—in other words, just in time for the House of Commons to begin another study after the break in February.

I would also like to touch on the issue of road transportation. Transport Canada is seeking ways to improve another mode of surface transportation-our nation's highways. There are 17 million vehicles and 21 million drivers in Canada and most of the country's surface freight moves on our highways. This extensive use of the highway system, combined with our extreme climate, is hard on our roads. And that's hard on our budget.

[English]

Currently, we spend about $100 million annually for federal highway and bridge infrastructure. We also make selective investments to help the provinces and territories with their infrastructure costs through 23 cost-shared highway transportation agreements, the federal share of which has reached about $270 million in this past year. That's why we have sought out and established partnerships with stakeholders in the transportation system—to help to share the cost burden, and to help where we can on issues such as infrastructure and safety priorities. Also, we've launched this initiative to benefit from one another's experiences.

Our current agreements with the provinces are just about up. Within four years, all of the agreements will have expired, with the exception of Newfoundland's and Quebec's. The federal government does recognize the need to upgrade our highway infrastructure. The government continues to discuss a national highway policy with the provinces.

I should say to those here, as I've said publicly this week, that we really do have a national highways program. We've had it since 1919. The federal government has always been involved in assisting with road building since that date, in some form, in one way or another. In fact, in the 1950s and 1960s it resulted the Trans-Canada Highway.

When some of the provincial ministers call for a national highways policy, I say that we have it. The questions are how to continue it, and how much money we have available. If we do continue it, do we continue it under the same auspices, which are in a sense ad hoc arrangements? I'd prefer a more integrated national approach in which there are certain expectations of both levels of government, in which certain policy objectives are met, and also one in which the money can really be used flexibly by the provinces. I think this is worth discussing with my counterparts.

Last February, this committee—and some of the members are here today—did table a report identifying the financing of the required highway infrastructure as a key challenge facing governments in the renewing of the highway system. The concept of a public-private partnership in the renewal was foremost in your minds, and it's a matter that I did address in my speech on Monday. As a follow-up to that, a working group of federal, provincial, and territorial officials was formed to examine this particular initiative. I have to admit there are a lot of skeptics out there who feel that this cannot be done.

When we talk about private involvement, we just don't talk about tolls. Some people have been quite outspoken about tolls. Mr. Casey has a lot to say about tolls, but that's only one way that you can use the private sector in terms of public-private investment. We can use other means, which we can talk about later in the question-and-answer period. In fact, for most of the national highway system it's impractical to talk about toll systems to finance improvements. We really have a lot to do in that one particular area.

• 1555

To conclude, and I know you are anxious with your questions, the last item I'd like to deal with is safety.

[Translation]

We have many goals as we work towards a transportation system for the next millennium—intermobility, efficiency, affordability and environmental responsibility, to name a few.

But among all our objectives, one is paramount—safety. Safety is our first priority at Transport Canada; it comes first in everything we do. Our system is one of the safest in the world, but we're working to make it safer.

You can see evidence of that work in all the transport modes I've discussed today. In the air sector, for example, we introduced last year the completely revised and updated Canadian Aviation Regulations.

In the marine sector, we introduced Bills S-4 and C-15, designed to strengthen the liability regime for marine oil spills and update the Canada Shipping Act.

We are also continuing with our rigorous port state control ship inspections, detaining vessels that aren't up to scratch until they've made the necessary repairs.

In the rail sector, as I noted earlier, my officials are even now studying ways to improve our already excellent safety record through amendments to the legislative regime.

And when it comes to road transport, we are working with the provinces and territories on Road Safety 2001—an ambitious plan to make Canada's roads the safest in the world by that date.

[English]

The performance report provides some hard statistics on just how far we've come on the safety front. The commercial shipping accident rate has been declining since 1990. The number of air accidents per hours flown have also shown a decline during the same period. In the rail sector several problems have arisen. Cold and track washouts last winter led to an increase in derailments in 1996. Overall, the accident rate in rail has also seen a drop in this decade. The fatality rate on highways continues to decline and there are a number of factors that are responsible for that, including stricter policing, the reduction of speed limits, and tougher drinking and driving laws.

It's a pleasure to wind up this speech and allow you to ask questions. I think in 1996-97, even though I wasn't the minister, the department was really a high performer within the government in its efforts to modernize the transportation system. We made strides in efficiency in all modes of transport, more for those who use the system and for communities, with a lower burden on the taxpayer. I think all these things have been achieved.

We have a lot of challenges ahead. We have a very good team of officials at Transport Canada ready to tackle those challenges. Hopefully a year from now we'll be able to look back on another year of accomplishment. But I want to underscore the fact that I'm going to need your help in dealing with all these issues, because there's a lot more that has to be done.

The Chairman: Thank you very much, Mr. Minister.

Before we go to questions and answers, I'd like to ask all members and our guests to be as brief and as succinct as possible because we want to get as many questions and answers in as possible.

I have Parrish, Morrison, Guimond, Casey, and Calder. I'll try to do it as open as we usually do. If it works, we'll continue the way we've done it in the past; if not, we'll become more rigid.

Ms. Parrish.

Ms. Carolyn Parrish (Mississauga Centre, Lib.): Thank you.

All little boys like to play with train tracks and trucks and now you get to be the big boy who does it for the whole country. I bet you're the envy of all the other ministers, because I think this has to be a really exciting portfolio.

My favourite—and I played trucks and trains when I was kid; don't laugh—is Pearson International. I have a couple of questions on that, Mr. Minister.

• 1600

You talked about being more responsive to regional issues. Pearson's a big problem for a lot of the MPs in the area. It's clearing up a lot because of Mr. Turpen. He's been an excellent choice and he's doing a good job there.

I have a couple of questions on the grand transportation issues, night flights and the distances between planes landing and leaving. Are we still regulating any of that or has it all been handed over to the GTAA? What are the areas we've maintained?

The second one I'd like to ask you about is the whole concept of rapid transport to Pearson across the top of Toronto, connecting in with VIA Rail and going across the bottom. I think it would be pretty exciting. Is that the direction you're going in?

Mr. David Collenette: I'm glad I have the opportunity to answer the question from Ms. Parrish. I know she represents a constituency close to the airport and she's been very supportive of Pearson as it strives to become one of the great airports in the world. I believe it's one of the great airports in North America. It's going to become even greater with the capital program that has been announced. That's not to say there won't be some problems along the way whenever you massively redevelop any infrastructure. I do think they're on the right track. I'm sure that the board and the president of the Greater Toronto Airport Authority will be very cognizant of the ability of the wider community to finance this particular structure and they'll keep that in mind. They'll keep in mind that the health of the industry as well as the community around it is paramount in their plans.

On your question with respect to what we still do, all that's been done is that a 60-year lease has been signed with a group of people nominated by local authorities, municipalities, and the federal and provincial governments to manage, operate and develop a public asset. This airport doesn't belong to the GTAA. It doesn't belong to any one individual. It belongs to the people of Canada. In effect, they are trustees on behalf of the people of Canada to bring commercial discipline to the organization and operation of the airport. All matters of safety and other regulation, noise, everything along those lines, all the issues you raised, are still the responsibility of Transport Canada.

There are night-time restrictions at Pearson. There was a modification made in the Canada Air Pilot by the previous government in the later 1980s, I think 1988-89 or somewhere around there, to reflect the fact that perhaps there could be some room for adjustment to allow certain flights in using the newer aircraft. That's why there are the odd take-offs and arrivals in what we call the shoulder areas, the areas between midnight and 1 a.m. and between 6 a.m. and 6.30 a.m. or somewhere around there in the morning. All the noisier aircraft are indeed restricted.

What I have to say is perhaps a little bit controversial. The fact is that this is a world-class piece of infrastructure and it's in the interest of everyone, not only in the area of Toronto but in Canada, to make sure Pearson is developed properly. It's an engine of great growth. I believe 50% of all air movements in Canada move through Pearson. I think local residents should take that into account when they sometimes perhaps feel there are too many encroachments by the airport. That having been said, I think the airport authority has to be really sensitive to the fact that people live, and they want to sleep, next to this big giant of the airport.

There was a little bit of a fuss a few weeks ago about certain flights being allowed in. The airport president felt that under the regime he inherited from Transport Canada he had the right to make certain adjustments. I think there was a bit of ambiguity, and I believe our officials have informed him that this ambiguity has been dealt with and that we are not about to lift restrictions for night flights at Pearson.

That having been said, there can be some adjustments. But there is a committee that deals with noise and I believe the president of the authority is consulting widely to make sure that if there are to be further changes there has to be a buy-in by all the stakeholders, including the people in the area around.

• 1605

On the question of rapid transit, I did talk about this on Monday and it's in my speech. But it seems to me to be folly to spend a number of billions of dollars on a massive world-class air terminal that will accommodate 50 million passengers plus and not have a high-speed rapid transit link to other parts of the region.

As you know, the CN north main line that runs to London, Ontario, through Guelph, Kitchener and Stratford, does go by the airport; it almost touches the airport at the corner of Dixie and Airport Roads. I think 10 years from now when we have this terminal up and running with 50 million passengers, if we don't make provision for rapid transit access, people are going to say, what did those people do 10 years ago?

The highway system around the airport is becoming very clogged. The access roads to the airport are good, but once you get on Highway 427 and Highway 401, it becomes a nightmare.

I was in Frankfurt recently. With 38 million passengers there, they're on line to local rail. They've been that way for a number of years. They now are linked to the high-speed national network.

You know, Toronto is getting in Frankfurt's league. I think we're at a volume of 24 million or 25 million. Somebody told me it's going to be higher, maybe 29 million in the next year.

We're not talking about a small-potatoes airport. We're talking about being in the big time. I think we have to not only build a world-scale development within the airport precinct but also make sure there's a means to communicate that with the wider area, and not just downtown. I'm talking about linkage with the existing rail lines so that you would be able to get on a train in Oshawa or Markham, using the CN bypass line at a later date, and go to Barbados or Paris or Dallas, wherever you want to go with your family, and not have to worry about driving on clogged highways. You would go right into the airport terminal or right on the shoulder of the airport terminal.

We've engaged an engineering company to look at studies. They've already been done. It's a matter I've already raised in a preliminary fashion with municipal officials and with the provincial government because we all have to work together on it. I think it's worth doing.

Sorry for the long answer, but—

Ms. Carolyn Parrish: No, I'm excited. I think it's great. Thank you very much.

Mr. David Collenette: She doesn't get any supplementary.

Ms. Carolyn Parrish: I'll skip a supplement. That was fabulous.

The Chairman: There will not be a supplement. Thank you very much.

I'd like to remind us that, as chair, I have to look for a relationship between the debate and the estimates.

Mr. David Collenette: But there's so much good news to tell, Mr. Chairman—

The Chairman: But not all in one breath.

Mr. David Collenette: —especially if you're from Toronto.

The Chairman: I think my message is clear. I would like us to be more succinct and more to the order of business.

Mr. Morrison, please.

Mr. Lee Morrison (Cypress Hills—Grasslands, Ref.): Thank you, Mr. Chairman.

Welcome again, Mr. Minister. I hope these monthly appearances are the shape of things to come.

Mr. Minister, you passed rather briefly over the question of the speech that you made a few days ago to the Canadian Council for Public-Private Partnerships. In that speech you seem to have taken a rather radically different approach to privatization than did your party or your recent predecessor.

We have the CNR, the regional and local ports, the Port of Churchill, NAV CANADA. You seem to be saying that previous ministers of transport and the Minister of Finance made mistakes in pursuing privatization or mistakes in streamlining services, mistakes in subjecting railways, ports and air traffic control to market forces and competition. I wonder if you could begin your appearance by explaining in detail these mistakes that you believe were made in the past or that are being made by your party. How is it that you've been going down the wrong road?

The Chairman: One moment, before we carry on, the purpose of this reunion is not to assess former ministers. If you have questions about the operations under the direction of the present minister, I think it's appropriate. I don't think it's appropriate to assess the performance of others, especially those who are not here today.

Mr. Lee Morrison: Does the minister reply, or do I go directly to—

Mr. David Collenette: I'm pleased to answer that, because I assume from Mr. Morrison's question that he hasn't read my speech, that he read the news report in the Ottawa Citizen. Perhaps if he reads my speech and I come back next week his question might be a little bit different.

The fact is I'm very proud of what this government has done, involving the private sector in the devolving of its transportation network. I posed certain questions and raised certain cautions in the speech. In fact, I gave that speech to the Canadian Council for Public-Private Partnerships in Toronto and I gave a number of examples where we could engage in further work with the private sector to improve Canada's transportation system.

• 1610

So I will send Mr. Morrison the speech and I'd be pleased to discuss it with him. As far as I'm concerned, our government has done a tremendous job in dealing with the deficit. We've done a tremendous job at reorganizing government and reprofiling a lot of the work the federal government has done, especially in the area of transportation. I certainly have no hesitation in saying my two predecessors did an outstanding job.

The Chairman: I'm still looking for a relationship to the estimates.

Mr. Guimond.

[Translation]

Mr. Michel Guimond (Beauport—Montmorency—Orléans, BQ): Thank you, Mr. Chairman. Unlike my two colleagues who spoke before me, I will try to stay on topic. We're going to talk about the estimates, but in order to do so, we have to talk a little bit about what's been done in the past. I want to discuss the privatization or commercialization of NAV CANADA.

On page 23.11 of the Public Accounts of Canada for 1996-97 under Transport, there is mention of payments made to NAV CANADA during the transition period of $291.7 billion.

However, the 1997-98 estimates that we are now reviewing refer to payments to NAV CANADA during the transition period, pursuant to the legislation we passed to establish NAV CANADA, of some $716 million.

In the performance reports prepared by your department based on a new approach suggested by the Auditor General, the following statement appears in Section 3.4, page 27 of the English version:

During its first two years of operation, NAV CANADA will receive transitional period payments, up to approximately $1.2 billion, until it can fully implement its own fee structure.

Minister, I have two questions about that. Do you agree with the Auditor General who has said-we're going to talk about the Old Testament now—that things were not being done by the book, that everything was not clean, clean, clean and that there were serious management problems?

Secondly, I would like to know, in relation to the stated maximum of $1.2 billion of transitional funding, what your best estimate is of what the actual amount will be? I'm not asking you to tell me with absolute accuracy, but could you give me as close an idea of possible of what we're talking about in terms of a transitional payment of $1.2 billion?

Mr. David M. Collenette: Thank you very much, Mr. Guimond. If you don't mind, I will answer in English, because this is quite a technical matter.

[English]

It kind of baffles me where the Auditor General is getting his evaluations from in this area. In fact, our officials were allowed to respond to his critique and were able to supply information that I think demonstrated that the government did very well out of the sale, so I don't know why he pursued that certain line of argument.

The fact is the government negotiated a reasonable price and accomplished the policy goals at the same time. That means it kept a seamless, well-managed and safe system and at the same time relieved the taxpayer of the obligation of financing new equipment, which will be needed in the years to come.

There were a number of evaluations made, and yes, there was an evaluation of $2.6 billion as one mark. But another evaluation of $1.1 billion was made, on the other hand, by the financial advisers. So the range of estimates for the worth of the navigation system was about $1.1 billion to $2.6 billion and we sold it for $1.5 billion, which we think reflects a pretty good price for the sale of the assets.

We could have walked away from the table with the group at NAV CANADA and spent five or ten years segregating the system and doing more evaluations, which the Auditor General implies should have been done, but where would that have gotten us? We would have still had a navigation system that would have been hamstrung by bureaucracy and unable to respond to the new technological developments I spoke of.

• 1615

The British have been at this for eight years. In fact, when I went over there in September, the entire board of the Civil Aviation Authority marvelled at what we had done, marvelled at the kind of price that we got. The British are now re-evaluating their own commitment to fully privatize the system, and are using our experience as a model. So you'll have to ask the Auditor General why he made certain evaluations. I don't agree with him.

The Chairman: Mr. Casey.

Mr. Bill Casey (Cumberland—Colchester, PC): First of all, I would just like to pass on a little kudos after coming to Parliament and seeing the profound changes that the Department of Transportation has implemented without a lot of problems. I think it's an incredible accomplishment for the staff to have done that, and I just think they deserve a—

An hon. member: Hear, hear!

Mr. Bill Casey: It is a great degree of change. It impacts communities and people all over the country. If you take all the things into consideration, it's quite an accomplishment, and I think they all deserve tremendous recognition.

I also want to say, too, that I read your speech after you made it, and it had no connection with that article in the newspaper. I was going to ask you a question in the House, but there was no question to ask after I read the speech.

Anyway, moving right along, considering that you've privatized so many things and been so consistent with your approach, the port of Hamilton does jump out at us. I have asked a couple of times about it, but could you just run us through the process that exempted Hamilton from the list of ports, and then the process that put it back in last night?

The Chairman: Unless the committee members think I'm misreading it, I don't think that has any rapport with the estimates.

Mr. David Collenette: Mr. Chairman, in my day, going back 23 years, the estimates were just a hook to ask any question. I wouldn't want to offend any new process, but I don't mind answering the question.

The Chairman: I'm throwing it open. I will continue to allow everything, but I want committee members to know that there was a request for us to meet for estimates. This is your meeting. If you want me to allow the latitude to talk about all things, so be it. Unless someone recommends to me that we go back to estimates, the door's open.

Mr. Minister.

Mr. David Collenette: It's a good question, and I'm glad you raised it. This bill was two and a half years in the making. There were lots of consultations, and I think it's a remarkable consensus in a country that's very difficult to administer. But there were some cases in which, for a variety of reasons, there was really not a sign-off in making changes. One was in my hometown of Toronto.

As you know, I guess at the report stage an amendment was accepted by my predecessor to include Toronto on the schedule of harbours for Canadian Ports Authority status. That was because the members in the area had thoroughly debated it, but had not come to a conclusion before the bill was drafted and brought into the House.

On the question of Hamilton, there have been a lot of outstanding issues going back, I think, to 1947 on the transfer and ownership of land and certain uses of land. They effectively resulted in a lack of agreement between the City of Hamilton an the Hamilton Harbour Commission, and those matters were ongoing. There were some people who believed one could and should move Hamilton to the CPA schedule, and others felt these issues should be resolved first.

When I came in as minister, I was determined to try to get to the bottom of this, and to try to bring the various...I wouldn't say interests together, but to encourage the various interests to see whether or not there could be any accommodation. At our end, this is dealing with the Hamilton Harbour Commission and the city.

What has happened is that discussions have gone on. I don't know all the details, but I do know that a lot of those outstanding issues are on the way to resolution, so much so that generally everyone agrees that now the environment is right to put Hamilton on the CPA schedule. I think everybody should applaud that.

The Chairman: Mr. Calder.

• 1620

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman.

Minister, thank you very much for coming here today.

My hook is on page 34. It's entitled “air bags”. We heard a lot of interest about this since the United States announced yesterday that it's going to put an on/off switch on air bags. That one paragraph in here tells about Transport Canada and the U.S. National Highway Traffic Safety Association and the co-research program, smart air bags, improved test dummies, etc.

What is Canada's position on the on/off switches for air bags?

Mr. David Collenette: Safety is a top priority for all of us at Transport Canada. I think it's recognized that air bags do save lives. They have saved lives. In fact, the estimate is that there have been about 150 lives saved in Canada since this technology has gained widespread use back in the early part of this decade.

What the U.S. government announced yesterday is that it will allow air bags in passenger cars and light trucks to be turned on or off in appropriate circumstances.

You know what those circumstances are: rear-facing infant carriers that can't be used in a rear seat, children who can't use a rear seat, drivers who can't avoid being closer than 10 inches from the steering wheel, and certain medical conditions. We certainly applaud this.

This is consistent with the position we have taken here in Canada. We have been working very hard with the provinces and manufacturers to develop a Canadian approach to deactivation that will address all of these safety concerns.

As you know, the auto industry is considerably integrated in North America, so we work in concert with our American counterparts on a day-to-day basis on safety issues.

We have a different structure in terms of government and governmental responsibilities. There's the provincial responsibility for enforcement, but we don't anticipate any problem. We haven't found any problem. The provinces are very concerned about this.

This is an approach that's to be welcomed. It's certainly consistent with our policy that in certain circumstances, not obviously most circumstances, there are requirements for the deactivation of air bags.

But I wouldn't want to leave anybody with the wrong impression. Air bags are like seat belts: they save lives, and they're very vital to ensure safety in motor vehicles.

The Chairman: Excuse me, Mr. Mark, before we go to you, I have seven on the list, which is why I'm going faster. Just make an indication to me and your name goes back on.

Mr. Inky Mark (Dauphin—Swan River, Ref.): I'll defer my question to Mr. Morrison.

Mr. Lee Morrison: Thank you for the offer of your speech, Mr. Minister, but I do have a copy here.

The Chairman: Have you read it?

Mr. Lee Morrison: Of course. In response to the admonition of our chairman, I'll stick strictly to business from here on in.

In a sense, with the recent election and your appointment, there has been a pretty dramatic increase in the amount of money being requested by the department. In the main estimates, which were tabled before the election, there was an item for $111 million under vote 1 for operating. With the supplementary estimates, which were tabled after the election of course, it seems now that the department needs another $107 million to operate, which is almost double the original estimate. It strikes me as a little odd that the department would make such an incredible miscalculation in operating costs.

However, I want to ask you not about operating costs but about capital costs. According to the supplementary estimates, Transport Canada really misjudged its cost for capital expenditures this year. This includes more than $1.5 million for the relocation of your offices here in Ottawa. Other specific cost overruns were $3 million more than estimated for air terminal development building in Halifax and $1.5 million more to restore the runway in Quebec City, which by the way is more than double the original estimate.

• 1625

I wonder, Mr. Minister, if you could explain what system the department was using to estimate the cost to contract out this work. Were the estimated costs wrong because the department was in error, or did the department get ripped off by its subcontractors?

Mr. David Collenette: Mr. Morrison is correct to ask these kinds of questions, and I can ask the deputy to address them in general. But I think we would undertake to get a specific written answer on each of the projects he raised, because it may take too much time to go into all the details here.

The Chairman: Is that acceptable, Mr. Morrison?

Mr. Lee Morrison: Yes.

The Chairman: Okay. Give the response to the clerk so every member gets a copy, and if you have any comments, please add them.

Ms. Margaret Bloodworth (Deputy Minister, Department of Transport): Let me just make a general comment about contracts overall.

Contracts can go through several stages, one of which is a rougher estimate than others. They do get more precise as we go down the line, there's no question about that. When the estimates come, what goes in there is the best estimate we have at that particular time. Sometimes before the contracts are actually signed we have estimates going, so we can certainly provide you with the details on every one of those projects.

In terms of the cost of moving our offices, I believe that is our Ottawa consolidation. We have reduced the number of office buildings we need for the number of employees, and therefore we have consolidated the employees into one tower, whereas we used to be in two or perhaps three buildings. But there is a cost initially to move people, although the cost over time is reduced.

[Translation]

The Chairman: Mr. Drouin.

Mr. Claude Drouin (Beauce, Lib.): Thank you, Mr. Chairman.

Minister, we know that Transport Canada commercialized the Blainville Motor Vehicle Test Centre last year. My question deals with safety: are automobiles in Canada still just as safe?

Mr. David M. Collenette: Yes, there's no doubt about that. The facilities have remained safe even though the Bainville Centre has been commercialized. I don't think there has been any lapse in safety for investment reasons.

It's very important for us to ensure that we have a system and procedures in place that guarantee the safety of a facility such as this. But perhaps I could ask Mr. Jackson to reassure you in that regard.

[English]

The Chairman: Mr. Jackson.

Mr. Ron Jackson (Assistant Deputy Minister, Safety and Security, Department of Transport): Thank you, Minister. I will respond in English if that's okay.

We transferred the Blainville test centre to PMG Technologies, to provide the same excellent test capability the test centre provided when we owned and operated it, but we wanted to reduce the costs and increase the scope of operation at the test centre. That could be achieved by the contractor, who could seek business other than Transport Canada's to expand the revenue base, provide the same amount of testing, or more testing at a lower cost to government, but to the same high quality.

[Translation]

The Chairman: Mr. Guimond.

Mr. Michel Guimond: Thank you, Mr. Chairman.

In volume 1, page 9.47 of the Public Accounts of Canada for 1997 appears the following statement with respect to Hamilton Harbour, and I quote:

Loans have been made to the Hamilton Harbour Commissioners to assist in the development of the harbour.

The total amount authorized to be outstanding at any time is $4 million.

The remaining loan bears interest at the rate of 4.125 per cent per annum and is repayable in semi-annual installments over thirty-nine years, with the final installment on March 20, 2004.

Is that common practice in your department? With respect to the loans made to harbour commissioners to operate the port, I would first like to know whether this is common practice and also whether these costs will be repaid, whether or not Bill C-9 comes into effect?

• 1630

Mr. David M. Collenette: Thank you, Mr. Guimond. I don't see any problem as regards the figures you've quoted and the status of that particular harbour. But if you would like to receive a detailed answer, we would be pleased to send you a letter outlining the facts as soon as possible.

Mr. Michel Guimond: I have another question in a different area. With respect to security and emergency planning, the performance report mentions that the RCMP's services were withdrawn from international airports effective April 1, 1997, and I would just quote the following passage from your department's performance report:

Effective April 1, 1997, RCMP services were withdrawn from Vancouver, Calgary, Edmonton, Winnipeg and Ottawa International Airports. Transport has negotiated contribution agreements totalling $19 million with most of the airport authorities to provide transitional funding...

When will this be done at Dorval and Mirabel—at least what's left of it?

Mr. David M. Collenette: I believe I already answered those questions in the House of Commons. We have reviewed the situation and have reached an agreement with the Montreal airport authorities to keep RCMP services in place while changes are underway. We have a consensus on that. This was very much appreciated by the airport authorities, and I think the RCMP's reputation is such that we can continue to do this for the time being.

[English]

The Chairman: Mr. Casey, Mr. Cullen, Mr. Fontana, Mr. Calder and Mr. Mark.

Mr. Bill Casey: Thank you.

Mr. Minister, in your speech the other day in Toronto and here again today in your opening remarks, you made a comment that I know you wouldn't make without doing a lot of homework and research. The comment is that for much of the national highway system traffic levels are such that it would be impractical to consider tolling systems to finance highway improvements. Could you tell us what you concluded is the threshold traffic limit that is practical for tolling a highway, and could you provide the committee with the back-up homework that I know you've done on this?

Mr. David Collenette: I think this reflected a very subjective thought process, which really meant that in many parts of the country there aren't the traffic volumes that would enable the usage of tolls to be a practical alternative.

Mr. Bill Casey: What is the threshold amount?

Mr. David Collenette: I think it would vary from region to region, from circumstance to circumstance and from provincial government to provincial government. It's something you examine on a case-by-case basis. There is room for tolls in certain parts of the country, in certain circumstances. The Confederation Bridge is one that comes to mind. But in other cases it's not the appropriate approach.

One thing I put in the speech is that we might want to look at what the Brits have done in terms of how they design, build and manage operations there with shadow tolls, whereby I understand the national government—in our case, the federal-provincial governments—perhaps using national highways money, would then pay a per-vehicle fee based on traffic projections over the life of the franchise to the builder and to the operator. That way you don't get people having to fork out x dollars at junction points or get, as with the case of Highway 407 in Toronto, a monthly bill saying that your transponder has been recorded.

There are other alternatives. I know you're very keen on this, and I would hope you could perhaps work with the other members of the committee and give some leadership because of your interest and experience in coming up with some alternative solutions. It appears, from the questions you posed to me in various places, including the House, that you share a little bit of a hesitancy as to the efficacy of tolling.

• 1635

Mr. Bill Casey: My view of it would be greatly enhanced if you could provide us with any information you have on this subject.

Mr. David Collenette: I'm sorry, Mr. Chairman. We can certainly undertake to work with Mr. Casey when the committee studies this in more depth.

The Chairman: Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chair.

Minister, I have two questions. Greenhouse gases are very topical at this time and I'm wondering if you could share with us your thoughts on what contribution the transportation sector might make to the reduction of greenhouses gases in Canada.

Secondly, with respect to dangerous goods, at any point in time there is a large volume of dangerous goods being transported across Canada, in areas where I live and you live and others live, highly urbanized areas like Toronto. As the volumes increase, dangerous goods and spills are increasingly an issue, or they will be. Do you believe we have the right policy regime and the right tools to prevent and respond to dangerous goods spills?

Mr. David Collenette: Why don't we take the last question first? Perhaps we can ask Mr. Jackson to deal with that particular matter since we're talking about something that's very serious, especially, as you say, for the greater Toronto area where you have such heavy loads going through on both road and rail.

Mr. Ron Jackson: Thank you, Minister.

The regime for regulating the transportation of dangerous goods and mitigating the risk is, as you know, regulated by Transport Canada through the Transportation of Dangerous Goods Act and through attendant regulations to that statute.

These regulations call up restrictions on what can be carried, the containment of these particular materials and the way in which they can be moved. They mandate emergency response plans in the event of an unintended spill or release, and they provide for regulatory enforcement on the part of our inspectors, who inspect the rail mode, the air mode, the marine mode and the points of transfer from one mode to another, for example, if something arrives by ship and goes by train. Or we indeed have delegated responsibility to provincial inspectors who do the same sort of thing on the highways.

In the event of an unfortunate occurrence of a spill or a release, we also have a system in Transport Canada called “CANUTEC”, which provides a response service 24 hours day, seven days a week, so that first responders to the scene of an accident will be able to call up the emergency response plan via another party who will deal with it, and in addition they will be able to get real-time advice in terms of what should be done to counteract the consequences of the spill.

We receive some 30,000 calls a year at this centre. Not all of them are dangerous goods transportation occurrences; some are other events of a chemical or hazardous material nature.

Mr. David Collenette: The question of greenhouse gases is very topical. The government is very concerned about dealing with this issue. You know about the Prime Minister's commitment that he will take to the Kyoto summit, and certainly the transport department has to do its bit.

Twenty-seven percent of all the greenhouse gases produced in Canada come from transportation sources, and there are a number of things we can do in terms of encouraging new technologies to come on stream. This is not something that's going to happen tomorrow. In fact, if somebody said to me, “Collenette, how can you try to ask for money for highway construction when you want to get vehicles off the road and on to rail?”, the simple answer is that the greenhouse gas strategy is a 20-year strategy, but we live today and we live with the needs of today to transport our goods and people on the existing roads. There's no intellectual divergence between those two particular points of view.

Certainly it's a matter that we're concerned about and that Transport Canada can assist with, but I think that when the committee looks at some of these issues you can perhaps help us with some recommendations that would be politically saleable, in effect, and that would encourage greater intermodality, where loads go off trucks and off roads and onto rail, and in the same way, to get people out of their cars.

• 1640

I met yesterday with one of the short-haul line operators. They were all around yesterday meeting members. He said look, we're making money, but you know, we have the earliest generation of diesel locomotives and they're real pollutants. We need measures that give us the ability to deal with this, and of course one of the elements they're asking for is to deal with the capital cost allowance as it affects rail equipment. The big railways want that too. So there's an example where you can make the railways more competitive, get greater revenue for Canada, but also reduce the exposure of pollutants.

Mr. Sully is our Kyoto point man. He has not only divestiture, but he deals with this issue and he might want to say a quick word.

Mr. Ronald Sully (Assistant Deputy Minister, Programs and Divestiture, Department of Transport): Thank you, Minister.

If I could just add, the 27% that transportation contributes now could be as much as 40% by the year 2010, by current projections. That is because transportation fuel consumption is increasing with the growth in incomes, and people are generally driving greater distances. Of the 40%, about 65% of the problem is in the personal automobile and light trucks, in other words, personal transportation. So we certainly have a good sense of the magnitude of the problem ahead of us.

We have to look at probably a variety of solutions, including new vehicle technology, which the minister mentioned, choices of alternative fuels, and consumer attitudes and behaviour. I think that's certainly a key area we have to get at, to educate people at a relatively young age as to how in making their personal decisions they themselves can contribute to solutions in this area.

We don't know yet what kinds of reductions we can achieve. The government is committed to a step-by-step approach to work with the provinces, industry, NGOs and other stakeholders to determine what makes the best sense in each sector. We should be looking at the most cost-effective solutions across the board, not a fixed percentage in each sector.

The Chairman: Mr. Fontana, Mr. Calder, and Mr. Mark.

Mr. Joe Fontana (London North Centre, Lib.): Thank you, Mr. Minister. I hoped in discussing the short line, you might have mentioned that GM Diesel makes the best locomotives in the world.

Mr. David Collenette: Where are they made?

An hon. member: Windsor?

Mr. Joe Fontana: London.

I want to follow up a little bit on speaking about the future, because I think our government has dealt with the past in a very, very effective way, in moving Transport Canada from an operator to a regulator, and hence I think we've laid the framework on rail, marine, road and air to essentially do that.

As you know, Minister, unfortunately with this country, we are very, very big geographically and very, very small in population. As it relates to moving people and goods and services, transportation is a key component cost in order to be competitive in the world. Unless we can get our transportation costs in line, it doesn't matter what the rest of the costs are; those global buyers are going to buy wherever they can, and transportation has to be a competitive factor in that.

I know in your speech, as it relates to the estimates, that as we prepare for the future, in terms of high-speed rail as looking forward, or more passenger rail services, or for that matter, marine and rail as it relates to transportation, the road network.... I know that for the first time transport ministers across this country identified the national highway system because, like it or not, and taking global warming into account, people like to use their cars and people will continue to use trucks to move their goods and services because that's the most competitive under the existing tax regimes, or whatever you want, that we have. As it relates to the needs of transportation for Canadians, looking down the road 10 or 15 years, the national highway system requires $14 billion worth of investment.

I like your idea, and I think this committee has already looked at bringing in the private sector as a way of being able to achieve some of those objectives. But if you look at high-speed rail, that's another $10 billion or $12 billion, depending on what technology and infrastructure you put in place. Even looking at dealing with rail issues, they're private sector driven, but sometimes taxes make it impossible for them to build additional infrastructure.

• 1645

Look at the estimates and what Transport Canada does or doesn't do in the area of highways, as an example. The Americans are building this super NAFTA highway and at some time we will have to connect to it if we want to continue to be competitive, because we are so reliant on trade in this country.

I know that we only have $200 million on an annual basis devoted to highways. I know the highways are provincial and we have a little bit here in rail or VIA. In my opinion, VIA is the way to go if we want to promote people getting out of their cars. You have to give VIA a heck of a lot more than $270 million worth of subsidies each and every year. It has done a hell of a job, as you know, for the past four or five years.

In terms of public policy, to what extent will we have to be involved, either by building partnerships or putting more money in to achieve some of the transportation goals we need in this country if we are going to remain competitive, attract a lot more people and tourism, and do what we do best in this country, which that's trade? But we have to be competitive. So the bottom line is, how are we going to achieve the things we need in the next 10 or 15 years in transportation?

Mr. David Collenette: I think you have made a very good case and I agree with your premise totally.

On the question of the requirement to move goods, the U.S. is spending $275 billion in U.S. funds over the next six years to improve the transportation infrastructure. A lot of that will be spent on accessing the border crossings into Canada. Frankly, it's going to be crazy if the Americans spend all that money and find there is no commensurate kind of service on this side of the border.

Then you have the analogy of the Eurostar train. Once you whip through the French countryside and come out of the tunnel into Britain, you amble along at about 120 kilometres an hour. So that's not really the way to go. I think we're going to be forced into it.

A lot of it is really a priority setting exercise in terms of how much money the government can put in. If anybody thinks that government can get off the hook in terms of assisting with transport infrastructure, I think they're wrong. We have done our bit on the highways and we're going to have to continue to some degree. The question is with how much money.

As you know, we just announced an extension of the Canada-New Brunswick agreement. That is a case in point, where making the highway between the Quebec border and Fredericton into four lanes will facilitate the haulage of goods. It will facilitate the use of private automobiles, not just for New Brunswick but for the whole Atlantic region. That's the lifeline for the Atlantic region.

The question is how much money do you have and where are you going to spend it? The Minister of Finance reminds us that the surpluses to come aren't going to be big in the early years, so any money that comes to the Department of Transport has to be directed to specific areas. One that comes to mind is highways. There's no question we will have incredible pressure from the provinces. In effect, we have 80 years of history of these contributions.

The other area where you can spend big money, but not in the hundreds of billions of dollars, is on the promotion of smart technologies in transportation, especially in dealing with border crossings and border movements. I think Windsor at the Ambassador Bridge is the busiest transfer point in all of North America. I see Mr. Pickard is nodding because he's from that area. Just imagine 7,500 trucks a day going in both directions in total just at that one point. Then you have all these other areas that will require investment.

The long and the short of it is that this comes down to money and priorities. This committee can help me in making arguments with my colleagues as to why certain money should be invested and where it should be invested. But the key point I made in my Toronto speeches is that we have to get the private sector involved in equipment replacement and other areas, as we have done with airport renewal.

• 1650

The Chairman: Mr. Calder.

Mr. Murray Calder: Thank you very much, Mr. Chairman.

I'm very glad to have heard about the capital depreciation in your response to Mr. Cullen's question on the environment. I know that is very important to the railways right now, especially when we still have GP9 from 1955 rolling around on the track. The emissions that come out of them are at that level, and I think that's great. We can move in that direction.

In your speech—and I am very interested in this—you made the statement that your budget in 1993-94 was just over $3 billion, and that your forecast for 1999-2000 is only for $1 billion. That's a $2 billion drop over that period of time. I'm just wondering how Transport Canada plans to decrease its spending by that much.

Mr. David Collenette: That's an interesting question.

There's no question that the department, under the present regime, won't require the same level of expenditures as it has in the past, because it won't be operating major portions of the transportation system. We talked about NAV CANADA, and we're turning the ports and airports over to local control. That obviously means we have a reduction in person-years required to administer the various programs, so there are a lot of savings. But if the implication in your question is that you're quite worried that the amount's going down, I would gladly receive more funds from my colleagues to increase this for the kinds of projects we talked about in reply to Mr. Fontana's question.

The Chairman: The list is Mark, Guimond, Morrison and Casey, at which point any other questions will have to be directly related to the estimates, unless the committee disagrees.

Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chairman.

Welcome back to the committee. I have two questions on estimates, but first I would like to commend the department for the direction they're taking in regard to general aviation. I've been a private pilot for almost 30 years, and it's amazing that we still have a general aviation sector after the last 25 years. I just hope your department continues the direction it is following and can carry out practical solutions to problems. Just make sure you consult all the stakeholders all the time.

With regards to my two questions, the first one has to deal with the Transportation Safety Board. As you know, Mr. Minister, there's currently a bill in the Senate that would amend the Transportation Accident Investigation and Safety Board Act, which will provide for part-time board members. In the estimates, however, I see that you've increased the budget allocation for the Transportation Safety Board by a little over $100 million.

The Chairman: If you have two questions, please ask them both together.

Mr. Inky Mark: The other one deals with passenger rail service subsidies.

The main estimates show that taxpayers are subsidizing rail passenger service by about $222 million. In the newspaper article from the Globe and Mail, it was reported that you wanted to bring that figure to $300 million by reinstating $80 million worth of passenger rail subsidies that had been cut from the previous budget.

Mr. David Collenette: I read that article, and I don't know where these people get some of these figures from. It's news to me. The fact is that we have a program review regime that ends next year. It will, I assume, continue VIA Rail subsidy at a steady state of $170 million a year, so I don't know what that was referring to.

If one makes the assumption that passenger rail will require some level of subsidy—there's just no way on God's green earth that you can make money on some of the remote services—then the question is how that $170 million, to use the notional figure, is best spent. Until now, it's just been to cover the operating deficits. It leaves no money left over for VIA to buy new equipment.

One of the main things I mentioned in my speech on Monday was that on the franchising kind of regime, those subsidies still carry through, as they have with the British government. But the key is that the private operators, or the operators of VIA if we were to go that route, then raise money from the private sector against the projected revenue streams over the life of the franchises for the new equipment.

• 1655

It's one of the areas that I would hope the committee could look into to give us options on.

On the question of the TSB, Mr. Dion is the minister responsible for that. You should talk with him. It's under the President of the Privy Council because it is in effect a quasi-judicial body that examines this department. It would be improper for it to have an administrative relationship with the Department of Transport.

[Translation]

Mr. Michel Guimond: Thank you, Mr. Chairman.

I have two short questions for you, Minister.

This information may not immediately be available, but I would like your officials—and heaven knows they are legion—to let our Committee Clerk know how much the departure of the former chair of the National Transportation Agency, Mr. Gilles Rivard, ended up costing Canadian taxpayers. If you already know the answer, you can give it to me right now; otherwise, I would ask that you send it on to the Committee Clerk.

My second question is also related to the Public Accounts. The Public Accounts of Canada for 1996-1997 indicate that your department authorized ex gratia payments, using Canadian and Quebec taxpayers' money, of $12,374,097 for the payment of claims relating to severance benefits following the bankruptcy of Highways Canada. Are there any other expenditures still to come in 1997-1998 as a result of Highways Canada having gone bankrupt?

I would just like to end with one comment. For any government, this is certainly an example of privatization gone wrong; the employees were not protected. That's why it's important to ensure in Bill C-9—since this is not a case of privatization—that employees working for the new Port Authorities will continue to be covered by the government's superannuation plan.

Minister, you can still have your say before third reading. I do hope you will try to convince the President of the Treasury Board to be reasonable. Speak up and bring your political weight to bear on this issue, because these people are suffering the consequences of both an aberration and a colossal error. You have lots of advisors: ask them how things went yesterday.

Mr. David M. Collenette: First of all, Mr. Guimond, I see that you take a great interest in the superannuation plan of Port Authority employees and I must say I share your sentiments. At this point in our consideration of the legislation, however, we do not have to resolve the major issues.

However, Mr. Ranger has received instructions to pursue the discussions with his Treasury Board counterparts, and I do hope a way can be found to meet the real aspirations of these employees before the legislation is finally passed.

Secondly, with regards to Mr. Rivard, we will send you a written response to that question, as those details are not available to us today.

As for your question on payments relating to Highways Canada, I believe Mr. Ranger would like to answer that.

Mr. Louis Ranger (Assistant Deputy Minister, Policy Group, Department of Transport): I just want to mention briefly that the amount you have quoted is accurate. But this is an isolated case; nothing similar is expected in the future.

For those of us working at the departmental level, it has been extremely difficult to actually get in touch with all the employees affected. We have nearly completed that task now, and almost the entire amount has been paid out.

The Chairman: When you do send back your response, could I ask you to address it to the Clerk of the Committee, so that all members can receive a copy?

Mr. Morrison.

• 1700

Mr. Michel Guimond: That's exactly what I asked them to do.

The Chairman: I just wanted to make sure that all members would receive a copy.

[English]

Mr. Morrison.

Mr. Lee Morrison: Before I proceed with my next question, Mr. Minister, because I have a rather long list of questions regarding the estimates I have written you a letter with questions in both official languages, which I'm going to table with the clerk. I hope that in due course the committee can receive written replies to those.

My next question is very specific. It is with respect to a hotel that was demolished at the Halifax International Airport. In part III of the estimates there was an allotment of $1.5 million for that demolition. The hotel is already gone. It stood empty for six years and the taxpayers were of course during that period of time left with the cost of the lease.

The demolition contract was awarded to Maritime Excavators for $188,490, yet the department has allocated in total $1.5 million plus $300,000, $1.8 million, for the destruction of this thing. So my question is why did you need $1.8 million to demolish a hotel when the demolition contract was for not much more than 10% of that?

Mr. David Collenette: Again, this is a very specific question and we will provide a written response.

I should remind members that they don't necessarily have to wait until I come here to appear before committee to get these kinds of questions answered on an ongoing basis. We answer Order Paper questions very promptly and they're there on the public record for everyone to see the members' interest, but certainly in this case we'll get the answer.

Mr. Lee Morrison: It's also in my list, Mr. Minister.

The Chairman: We have just received a copy of a letter from Mr. Morrison listing a fair number of questions. Mr. Morrison, I suggest that you address your letter directly to the department and ask your questions directly.

We have a meeting to make public our concerns and get answers if we have questions. I don't think it's one member's prerogative to put a load of work on a department in the name of the committee. If individually you have lists of questions, you can direct it directly, and the response can go directly unless it's something that is tabled. This is doing the work that we've been trying to do since 3.30 p.m.

I don't think it's reasonable to ask that, because then we can have 16 members come with a request like this. I think this should be done directly, and unless the committee members don't agree with me this is going to be my ruling.

Mr. Lee Morrison: It's your call, Mr. Chairman. I just thought the committee as a group would be interested in the responses to these questions.

The Chairman: We would be, but I don't want to risk having 16 of these next time we do estimates. I don't think it would be appropriate, and if one is appropriate 16 are appropriate, and that's why I ruled this way.

I will accept questions directly on estimates. Does any member have a question directly on estimates? Yes, Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chairman.

Perhaps I just need an explanation. I noticed that NAV CANADA will become a non-profit private enterprise and yet we still put in the estimates $8.7 million for aircraft maintenance and flying services over the next three fiscal years. Is there a purpose behind that?

Mr. Ron Jackson: Yes, at the time of the sale of the air navigation system there were three airplanes that NAV CANADA purchased as part of the deal to do flight calibration. I'm sure you know they're calibrating the air navigation system. They entered into a maintenance contract with Transport Canada to provide maintenance on those airplanes.

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The second aspect of the $8 million was a contract with Transport Canada to provide proficiency flying to the pilots who work for NAV CANADA. There were a number of pilots formerly with Transport Canada who are now with NAV CANADA and who require aircraft to maintain their proficiency.

The Chairman: One last intervention—Mr. Morrison.

Mr. Lee Morrison: Thank you, Mr. Chairman. I'm a little concerned about Marine Atlantic. This is an organization whose services are being cut very radically. With the building of the Confederation Bridge they don't provide the service direct across Northumberland Strait. With the, I believe, $340 million payment to Newfoundland, they're not going to be required to do the ferry service to Newfoundland. Yet their subsidy in the estimates has increased over the previous year. It's not a big increase, but it is indeed an increase.

Can anybody explain that one to me?

Mr. David Collenette: The $340 million payment of course was to obviate the ferry service, I believe, to Labrador. Marine Atlantic still will be required to fly between North Sydney and Port aux Basques, and that would require an ongoing level of subsidy.

Is there any reason why that's gone up?

Mr. Louis Ranger: Why the subsidy has gone up?

Mr. David Collenette: Yes, as to....

We're probably going to have to get you a detailed answer for you on that.

Mr. Lee Morrison: Thank you, because it seems to me that as an organization it is being slowly phased out, its cost to the taxpayer should be less.

Mr. David Collenette: It's not being phased out. Marine Atlantic will be staying to offer that constitutionally sanctioned ferry service. The other services have gone, but Marine Atlantic will stay on that one service. They have three ships and they have a big obligation to fill.

Mr. Lee Morrison: I'll rephrase that. I shouldn't have said Marine Atlantic is being phased out, but rather its services to a large extent are being phased out. Major services are being eliminated.

Mr. David Collenette: I think Mr. Ranger has a comment.

Mr. Louis Ranger: Marine Atlantic's budget has gone down, because a lot of the ferry services are provided in other manners by the private sector. As for the North Sydney-Port aux Basques service, our constitutional obligation is to meet the demand. I know for a fact that the number of sailings this year is higher than last year for that very reason, so the subsidy would go up accordingly.

Mr. Lee Morrison: Thank you.

The Chairman: Thank you very much. Mr. Minister, thank you again for spending over an hour and a half with us. It was very informative and I'm sure the members are satisfied that they have received answers to their questions. We will await the response for Mr. Guimond's question. Thank you very much.

Mr. Michel Guimond: Point of order.

The Chairman: Yes? Members, I will have another point before you leave.

[Translation]

Mr. Michel Guimond: Will the Sub-committee on Agenda and Procedure be meeting soon, Mr. Chairman? And what is to be discussed?

[English]

The Chairman: That's exactly what I wanted to recommend to members. I'd like to suggest to members that we meet at 3.30 p.m. on Tuesday to discuss if you want to assess, study, or evaluate VIA Rail, or other issues. I guess that's my way of saying could we have a steering committee of the whole on Tuesday at 3.30 p.m. to do what I suggested, or anything else that you might want to suggest now? Is that acceptable?

Mr. David Collenette: Mr. Chairman, can I state something here to make it easier for you? What I was planning to do was perhaps have the department draft a guidance document of issues that we think you might wish to look into, that certainly we need your assistance on, including as a priority the restructuring of passenger rail. I don't know whether we can get that done by Christmas.

The Chairman: We're working on that.

Mr. David Collenette: You're working on that.

That will enable you to perhaps plan your activities for the new year. We'll get that to you as soon as possible.

The Chairman: Could I ask you if on the list you suspect that there are other more pressing issues than VIA Rail? We are—I hate to say this—out of work right now.

Mr. David Collenette: You have the legislation to deal with, and that's important—the Canada Shipping Act in particular.

Mr. Michel Guimond: Bill C-15?

Mr. David Collenette: Yes. It's very important.

The Chairman: Can you tell us when it will be sent to us?

Mr. David Collenette: Non-legislative issues—certainly the whole question of financing of passenger rail would be very, very welcome.

The Chairman: We will discuss all these issues plus the list of subjects that have been presented to date.

I suspect you will be presenting one, Ms. Desjarlais?

Ms. Bev Desjarlais (Churchill, NDP): That was my question to you. Do you still need it in writing or can I just tell you what the issues are now?

The Chairman: It should be in writing.

Ms. Bev Desjarlais: Okay.

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The Chairman: You can present it on Tuesday.

Mr. Minister, thank you very much. Now we're going to do some housekeeping.

Mr. David Collenette: Thank you.

The Chairman: Thank you.

I have a motion. It is moved by Mr. Morrison that vote 20, Transport Department...are you all are getting copies of this?

Mr. Lee Morrison: Excuse me. I will withdraw that. The minister answered my question on that adequately.

The Chairman: We don't have that motion.

Mr. Lee Morrison: I have another one.

The Chairman: Okay.

Mr. Lee Morrison: There's another one there on vote 5.

The Chairman: Could we make sure everyone has a copy of this one? I will read it. It's moved by Mr. Morrison that vote 5, transport department capital expenditures, in the amount of $106,193,000 be reduced by $1,611,510—less $79,646,000 voted in interim supply—to $24,935,490.

Mr. Fontana.

Mr. Joe Fontana: Does that have to be seconded? I guess it doesn't matter but—

The Chairman: No.

Mr. Joe Fontana: —can I just ask you where you picked the numbers? Did you pick them just out of the air or what?

Mr. Lee Morrison: You know me better than that, Joe.

Mr. Joe Fontana: Okay. Give me an explanation of it.

Mr. Lee Morrison: Okay. It was the question that I raised with the minister with respect to that derelict hotel at the Halifax airport. There is a $1.8 million item in the estimates for that. We know that the total contract was for less than $190,000. Therefore I am moving that the estimates be reduced to reflect that.

Mr. Stan Keyes (Hamilton West, Lib.): Without an explanation.

Mr. Lee Morrison: I asked for one and didn't get it.

Mr. Joe Fontana: My point is that I think it was rather unfair to ask a very specific question, and I think it would be.... With all due respect, the question is a good one. Maybe we should allow the minister to at least give you a response to see what exactly happened under that transaction before we just vote on whatever. I think you've posed a very good question, and it's one that we also want an answer to. That's not a problem.

Mr. Lee Morrison: Unfortunately, with the fast tracking, we're facing a deadline if we want to get any amendments to the estimates in. Otherwise I wouldn't have even brought this with me today. We're under the gun here. I'm sorry, but that's the way it is.

The Chairman: Do we have until December 5?

Mr. Stan Keyes: Yes.

Mr. Lee Morrison: Maybe.

The Chairman: We have until December 5.

Mr. Stan Keyes: It's December 5. I don't know why everybody keeps saying maybe.

The Chairman: The committee will decide if we vote on it today or if we wish to defer.

Mr. Fontana.

Mr. Joe Fontana: Mr. Chairman, may I make a suggestion? If the only question is vote 5, how many other votes do we have? We could move all the other estimates save and except this one that we're waiting for a question on or—

The Chairman: There's no need to vote on them, only if they have amendments.

Mr. Joe Fontana: Only if we have amendments.

The Chairman: This is the only one.

Mr. Joe Fontana: Maybe it's due courtesy to the minister to give this committee.... I think the minister has indicated that he intended to give either Mr. Morrison or the committee a response, at which point we can deal with this a little more, maybe by Tuesday of next week.

The Chairman: On Tuesday there is steering committee, committee of the whole, and we should have a quorum—

Mr. Joe Fontana: So we'll all be here.

The Chairman: So do you wish to deal with it on Tuesday?

Mr. Lee Morrison: If you can assure me that we can deal with it on Tuesday, that's not a problem.

The Chairman: I can assure you that I will have it on the table on Tuesday.

Mr. Michel Guimond: Will you have your answer?

The Chairman: We will have an answer. At that point, if we don't have an answer you will decide how you want to proceed.

(Motion allowed to stand)

The Chairman: Thank you very much.