TRAN Committee Meeting

STANDING COMMITTEE ON TRANSPORT

LE COMITÉ PERMANENT DES TRANSPORTS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, February 17, 1998

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[English]

The Chairman (Mr. Raymond Bonin (Nickel Belt, Lib.)): Merci beaucoup. Thank you all for being here on time and ready to go. The transport committee always leaves on time.

Thank you very much for being with us, to those who are in attendance.

We have been requested to study, assess and make recommendations on the situation of passenger rail in Canada. Without having to consult Canadians on that issue, we know that it is a very important issue for all Canadians and it's high time that our legislators and administrators look at the issue in a view to saving a very important service to Canadians.

The message of the committee, Mr. Minister, went to you first of all; it's that we agreed to do the study and to undertake the work. The committee is committed to being creative, innovative, daring, forthright, and opening the door to all views and angles, because we have discovered as Canadians that when we use our imaginations we find solutions that serve Canadians very well.

I thank you for responding to our invitation. I can tell you and committee members the plans that I am working on for future meetings. We are asking CN to appear at 3.30 p.m on Tuesday, February 24—these are not confirmed; this is our aim and the contacts have been initiated—CP on Wednesday at 3.30 p.m., February 25; and VIA Rail at 8.30 a.m., Thursday, February 26. I will do everything I can to keep us away from Thursday afternoon meetings. That's my commitment to you, and I must admit that I have a self-interest in that commitment.

Therefore, Mr. Minister, thank you again. Please make a presentation, and then we will open it up to questions.

Hon. David M. Collenette (Minister of Transport): Thank you very much, Mr. Chairman. It's good to be back again and it's especially good to be back here on this file.

I have with me my assistant deputy minister, Louis Ranger, in charge of policy, who has been driving this from the departmental end; and David McGovern, who is a director of rail policy. They're working together on it and are very knowledgeable on this particular file.

I think this is going to be a very interesting and very positive exercise for the committee and it gives a chance for the legislative process to really work, because what I want is your ideas on the restructuring of the passenger rail service.

I was vice-chairman of this committee for four years in the 1970s and had a hand in the creation of VIA Rail, because we bothered the then minister, the Hon. Otto Lang, so much that he relinquished or decided to put forward a dedicated passenger rail vehicle, which was VIA Rail.

VIA Rail has served us well; it's kept the passenger system going over the last 20 years, but I think it has come to a point where we have to re-examine its role and try to help it into the next century.

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So I come here with some genuine history in this, and some genuine interest. I hope it will augur well.

I believe in passenger rail, and not just because I'm the minister. I do believe passenger rail, under the proper circumstances and conditions, does have a place within Canadians' hearts and within Canada's transportation sector. I think the job we have to do in a short timeframe is to help define that particular place.

I think you have a role to play as members of the committee, and a very big contribution to make. I'm sure the end result will be meaningful and beneficial to all Canadians. I believe this is a subject of critical importance to Canada's future. I also believe this committee is the right place to begin these studies. I've come here really, in a way, to challenge you—I sound a bit like a university prof—in your individual roles as members of Parliament, but more importantly in your shared responsibilities as members of the committee.

Now that you know what I hope for and expect from the process in general terms, I would like to move on to some specifics.

[Translation]

First, I think we should put on public record the very fine work done by the staff and management of VIA Rail in recent years. Since the late 80s, VIA has been a good corporate soldier that's done everything the government asked of it without fanfare. In 1992, VIA's annual subsidy was $349 million. In 1997, that figure had dropped to $212 million, and in the upcoming fiscal year, the subsidy will be further reduced to $170 million.

This was a significant contribution to the government's deficit reduction efforts. Moreover, this spending reduction was achieved without any reduction in service levels. In fact, some services were actually improved. VIA's performance is impressive.

However, VIA cannot continue along this path indefinitely. After years of striving to work with increasingly shrinking budgets, VIA has largely exhausted its ability to further reduce its costs.

[English]

VIA's current fleet, while aging, is still in good shape. But obviously an older fleet, no matter how well it is maintained, simply can't provide Canadians with the benefits that come with new technology. Technological advances have made contemporary passenger rail equipment more efficient to operate and more comfortable and attractive to the travelling public. Thus equipment renewal would potentially let us capture all the benefits of passenger rail. Currently most of these are lost to us because of the relative under-utilization of passenger rail.

VIA, as it's currently constituted and capitalized, can continue for a few more years, but just for a few more years. That means we as Canadians will soon have to make a choice about the future of passenger rail in this country. The sooner we examine all the options the better, as far as I'm concerned. While VIA is still in a relatively calm, rather organized state, it's better to do things now, make the reforms now, rather than later, when time constraints may limit our manoeuvrability.

[Translation]

So we're at a crossroads and the best thing to do in such a situation is to ask the fundamental questions that relate to where we want to go. We'll then be able to figure out the best way to get there. We have to ask the key questions, explore the critical issues and put everything on the table. And I'm emphasizing "everything".

[English]

What is the role of passenger rail in Canadat? Do we need a national passenger rail service? Will there be a greater need for passenger rail service in the future? Can Canada afford passenger rail? Can Canada afford not to have passenger rail? These are questions I hope you will answer. Are there better ways for passenger rail services to be provided, for example by making the system operate at the local or regional level?

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One of the most exciting success stories in Canadian rail in the last few years has been the enormous growth in short line railways. These operators provide excellent service because they are close to the customers, and therefore they gear their service to local and regional needs. Can this success be replicated in passenger rail?

Passenger rail is a dynamic sector throughout much of the world, and we would be wise to learn from these experiences. The most spectacular example of change in recent years has been in the United Kingdom. That is something I think we must examine, especially in the introduction of franchising for passenger rail, if that is an option. I would urge honourable members, perhaps during the break, to go visit Great Britain. I know there was some discussion.

People very often frown on trips as if this is not something meaningful for members. Somehow people think we just like to travel. The fact is that I think you have to go to Britain to see what they've done. Talk to Mr. O'Brien, the head of rail passenger franchising, Mr. Swift, the rail regulator, Mr. Horton the head of rail track, and some of the rail operators.

In one case, two Canadians own GB Rail, which has acquired a major franchise. They're willing to answer your questions. Go talk to them and see if there is an application of the British experience to the work we need to undertake here.

We have to recognize that what goes on elsewhere in the world may not work in Canada. Britain in particular is a small country with a population twice that of Canada, which you could fit it into southern Ontario. There's a different kind of dynamic.

But I still think there are lessons that could be drawn from that particular experience, both where they've been successful and where they haven't been quite successful, so as to apply that to the Canadian model. We're looking to develop a hybrid Canadian model by drawing from expertise around the world, as well as our own experience.

I intend in the coming months to develop my own views on this matter, but obviously nothing will go to cabinet without the input of this committee. Your consultations will be extremely important.

I mentioned earlier that I wanted this to be a meaningful exercise. In order to do that, I think it's critical for you to find ways to engage Canadians in the debate and for you to bring several core assumptions to the task.

The most important of these assumptions is that whatever you recommend at the end of this process must firmly recognize that Canada is not yet over the difficult fiscal realities that have constrained all governmental actions in recent years. While much progress has been made in dealing with our finances—certainly Transport Canada has played its role in that process—we, as a government, are not at the point at which we can begin to write blank cheques to anyone as a response to policy pressures. Everyone here knows how to write a cheque. I'm not asking you to give me direction as to how to fill one out. If I had an unlimited bankroll, I wouldn't need the committee, and you wouldn't expect to be asked, because we would just be able to spend where we think the expenditures are required. But we don't live in that kind of environment.

When I talk about engaging Canadians, I would hope that you would not be drawn into a very long, tedious public hearing kind of debate whereby all of the grievances that have been addressed in the past or raised in the past will be brought up again. There have been enough studies done on passenger rail.

I hope the committee would focus in on some specific aspects of this reorganization. I'll come to that a little later.

[Translation]

I would like you to be creative to look at how we get to where we want to go without having to spend more money than we do now.

Let's first look at getting the private sector involved here. I believe very strongly in the future of public-private partnerships in Canada. They provide benefits to both sides and both sides learn from the other. Is there any private sector interest in passenger rail? I don't know. Let's see how it can be made attractive. Again, let's look at how other countries have done this and at how it could work in Canada.

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[English]

Another core assumption that I think you might want to keep in mind as you discharge your duties is that the conditions we have in Canada today that might make passenger rail uneconomic might be very different in the future.

Think about the environment and passenger rail. Can we take so many cars off the road with such and such a system of passenger rail? Would that improve our quality of life? Would that change the economics of the passenger rail equation?

Think about our urban centres and passenger rail. Obviously, as a member from Toronto, along with those around the table from other cities, such as Montreal in particular, and Vancouver, just to name two, we know about congestion. We know how difficult it's becoming to live in those cities. Congestion will devastate any city when it gets to the point at which people and goods can no longer get from point A to point B.

Where it will end, who knows? But some cities in the world, including in the United States, are trying to address these particular issues.

Beyond the economics of the environment and congestion on passenger rail, I think we also have to look at these issues as they affect our quality of life.

Do we want to live in cities where the very act of breathing endangers our health? In Toronto, in the summer, we have a problem with the increased emissions from cars. The more roads you build, the more that's going to add up. That particular area has 4.6 million people, which will grow to 6 million within the next 12 years, so the situation can only get worse unless alternative modes of transportation are promoted.

I believe rail is the solution. That means commuter rail, public transit generally, and also, of course, there's VIA's role. In areas like Montreal and Toronto, VIA overlaps with the commuter systems. In effect, it provides a type of commuter system for the outer suburbs.

More and more people tend to live in outlying communities, as modern technology, a fax machine, and the rest allow them to operate from their homes and go to their businesses two or three days a week. So you'll see more and more of a need for people to travel from places like Kingston, London, Quebec City, Montreal, or elsewhere, as commuters over longer distances. The airlines will have their role, but in certain markets they will not be the solution; rail is the solution.

So the question we should ask is: do we want to live in places where congestion is so great that we can't get from our home in one end of the city to work in the other end without incurring daily aggravation? Are these the kinds of trends we want to continue?

I'm not saying that the passenger role is the panacea for all the ills and could solve the problems of urban development and urban sprawl. I am asking you to consider questions of this kind as you go about your work. Hopefully, you'll incorporate this into the list of your considerations.

Environmental considerations will become increasingly important issues across all government policies, and I'm sure you will take that into account in your discussions.

I'm saying today that I would like you to look at the role passenger rail can play in Canada's future while creating that from the limited financial resource base that we have today. That's difficult to charge any committee with. I want you to know that I'm fully aware of the extent of the difficulty of that which I'm asking you to deliver. But as I said earlier, I'm here to offer you a challenge. I know that you will soon, and ultimately, discharge this task with the same high hopes as I have in asking this of you.

To conclude, to come back to my earlier point, the timeframe is short; it has to be short. Governments and ministers don't last forever. I know that only too well. I think the public expects action from politicians.

In this particular case, we have a number of studies that were done by the previous government that have gone on over the years. There are organizations like Transport 2000, which I think is represented here today in the audience. These things have helped contribute to the debate. I think everybody agrees this is an issue that has been studied ad nauseam.

But there is one area where there is a new element. It's in the financing of the infrastructure requirements for transportation generally. We've addressed this with airports, the navigation system, and we're addressing it with ports through Bill C-9.

• 1555

But we have to address it here with the passenger rail service. I just can't go to cabinet, as ministers have in the past, and say give me x dollars for track upgrading and for new equipment. I just can't do that. We're just not living in that kind of environment, and I don't think we have to. I think there will be a way to involve the private sector, and I hope you will give me options on involving the private sector and not just come forward with one model. I hope you will look at a number of components and tell me, these are the kinds of things you can do.

This is, in effect, not so much a policy mandate that I'm asking you to discharge, but more a mandate for business reorganization and financial reorganization as it applies to passenger rail service, so it's a little different from normal, where committees generally get involved in the broad-brush policy strokes.

I think we all have good ideas of where we could put train service and what we could do here and there in terms of specific routes and communities that have to be served, but it's my contention that if we get the organizational structure and the financing right we will be able to use the benefits of private sector money and business management in order to use the existing government moneys to provide a much healthier rail service, one that actually expands.

What's happened in Britain is absolutely phenomenal. The growth rate in passenger traffic is about 7% or 8% over the last 18 months, and freight has gone through the roof. Freight's a little bit different over there; it's the poor kid on the block. Over here, passenger service has been the poor kid on the block.

Over there, one commuter line that feeds London from up to 50 miles away has experienced a 15% traffic growth. That is phenomenal. They have ordered 2,000 new units of rolling stock, largely diesel multiple units, some electrical. This is brand-new stock that the government hasn't had to finance. And the financing is one area that I think you have to look at; the government financial assistance continues, but you're able to use the private sector to finance rolling stock, station improvements and other equipment improvements against the revenue streams projected over the life of any arrangements that are entered into.

I think it's really exciting, and I hope, and I know, judging by the quality of your work on the previous Bill C-9 and discussions I've had with you, that you certainly will assist us and get this done as quickly as possible.

Thank you. Merci.

The Chairman: Thank you, Minister, for an excellent presentation.

I'll take a moment to say that in my view—and I have some experience in travel because I worked for an airline for 25 years—had we done this work ten years ago it would have been the wrong time. But there's never been a better time to do this study and to do something about passenger rail. The opportunities—and the opportunities for growth—are there and we should seize the moment.

Colleagues, I have four from the government side who have indicated that they want to speak, so in fairness to the committee I'll start with the first one and alternate with the opposition. Fair enough?

Mr. Keyes.

Mr. Stan Keyes (Hamilton West, Lib.): Thank you, Mr. Chairman, and thank you, Mr. Minister, for your passionate presentation.

I'll speak for myself and say that I agree with you when you say we need the continuance of passenger rail in this country. There is a place for passenger rail in Canada. As you say, it's critically important to our future.

I think, though, that the crux of this issue has to be approached as well. The crux, in my opinion, given my past experience with different studies of rail, etc., deals with commitment. I agree with you when you say everything has to be on the table. I agree that everything else being said, the government has to commit itself. In the past, I think, VIA.... My colleague Phil Fontana and I rode the rails for VIA Rail while in opposition, etc., ensuring that we maintain passenger rail in Canada...but our experience provided us with an understanding that what passenger rail, and in particular VIA, is looking for—or any structure, whatever we create in this country is looking for—is predictability, sustainability, and for commitment from the government.

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You mentioned the amount of money that the federal government subsidizes the operations of VIA at falling to $170 million, based on the terrific performance of VIA in the past. Are we, as a government, prepared to commit ourselves to a sustained, predictable level of subsidy for operation to ensure that passenger rail stays alive in this country?

Mr. David Collenette: You're asking a wider question. Obviously I believe the answer to that question can be positive; otherwise I wouldn't ask you to give us all the input.

I think in fairness to ministers of finance in the past, they have viewed ongoing subsidies to the passenger rail service in the same way as they regard it to CN, as almost a sink-hole where you get a basic level of service.... I think that VIA service, by the way, is excellent. You compare it with a lot of railways around the world and it's terrific.

There wasn't any end to the level of subsidy and there wasn't any growth, if you will. That's why ministers of finance, in general, have been pretty tough on the subsidies. I think the work that VIA's done, especially in the last four years while we've been in government, has shown that the views of people in the Department of Finance until now have been right, that there were a lot of costs that could be squeezed out, that management had to improve. The management at VIA Rail has done a great job at squeezing those costs out.

That having been said, there's not one passenger rail system in the world that operates without a subsidy. We're fooling ourselves if we think we can make it work that way. I suppose if you take the cream of the cream routes, if you take a Washington-New York or Montreal-Toronto, you might be able to operate it without a subsidy after a lot of investment and track and equipment, but frankly, we're talking about a public service here.

I think that if my colleagues felt there was a light at the end of the tunnel, that we had a way to improve the service, to finance the capital acquisitions off the government's balance sheet, that would augur well to saying if you want to operate this service you have to keep up the level of subsidy at $170 million.

Program review, of course, put us to the $170 million and I'm operating on the assumption that $170 million is a steady state of money that will be available for these operations.

The Chairman: Mr. Morrison.

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

Mr. Minister, I'd like to touch on a couple of areas. First, I'd like to refer to the report of this committee in 1992 on rapid rail transit where they refer to what's called the “switch-over myth”.

Broadly translated, that means even if you have the trains, how do you get people on them? This isn't like the field of dreams—if you build it, they will come. There are some good economic reasons for that, aside from the question of convenience. Right now, the cheapest way you can travel from Ottawa to Toronto and return, as an individual, is by bus. It's cheaper than VIA and of course infinitely cheaper than air.

Mr. David Collenette: What about car?

Mr. Lee Morrison: If there are two people, a rented car is the cheapest way to go from here to Toronto and return.

This is a built-in financial disincentive. How do you deal with that particular problem?

The second thing I would like you to address is that you have talked today and previously at various times about public and private participation. When you're dealing with, as you say, a facility that by its very nature demands a subsidy, it makes me nervous. How do you decide what lucky private company is going to get into this particular business and share in the largesse of our own government?

Those are the two questions that I'd like you to address.

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Mr. David Collenette: On the first one, there are different passenger rail transit requirements or needs depending on where you are in the country. Those of us who live between Quebec City and Windsor, in the most populated part of the country, with a population of probably 11 million right now, are facing a big problem with congestion. Now and again I drive back to Toronto, and the 401 is becoming saturated. There is heavy truck traffic, cars at peak periods, and of course when you have bad weather, which is frequent in the winter—we've just seen it in recent weeks—it makes driving quite hazardous. More than that, that highway goes right through the middle of Canada's largest city, and at one point it is 16 lanes, which is almost hell, not just in rush hour but in many parts of the day.

When you get west of Toronto, you get to other communities, which are becoming more built up. The population is becoming more built up whether you live in London, as Mr. Fontana does, or Windsor or the Niagara Peninsula.

So there is obviously an attractive scenario to get people out of cars, because in the next ten to fifteen years we won't be able to keep building 401s and 407s. We just can't keep up with the cost, the use of land, and the dysfunction it brings to urban redevelopment.

If you're from western Canada, as you are, it's a different matter. If you want to go from Regina to Vancouver, you're not going to take a train unless—

Mr. Lee Morrison: You can't.

Mr. David Collenette: You would take a plane. Those large distances mean most people in western Canada would either drive or take a plane.

The potential in western Canada is to combine where people really do want to go by train, for smaller communities—and some people do want to take the train—with a real revenue generator, and that is tourist services. There are incredible opportunities for tourist services, especially as you go through the Rockies, but also in other parts of the west. That requires a different kind of structure, a different kind of view.

When you come down to Atlantic Canada, you find most of the people who travel the trains there are people who travel that way because they don't own a car or they can't afford to come up to Montreal for the day by air. They choose to travel by train.

There are also, of course, remote services, which if they are to continue require a subsidy.

There are different kinds of services throughout the country. I think I mention them in the guidance document all the committee members have.

On the second point, about the franchise, you're talking about public moneys being used by private companies. We have got into that with the New Brunswick highway issue. I think it's a valid policy question, which is being looked at by the council of deputy ministers.

This is a question you can easily get answered in Britain, where franchises are very tight, very disciplined; where level of service performance is regulated; where the subsidies are used by the operators, but in return they give better service, better management, and go out there and finance new equipment. There is a way to do it, but it has to be effectively managed. I think they have done it reasonably well in rail there. If we get into this on the highways, as has been demonstrated recently, we have to make sure all the questions are answered, so the public doesn't feel it's giving money to some private outfit that wins a bid to have a rail franchise, or, in the case of roads, to build a road.

The Chairman: Before I go on, we can mention that this is one of the challenges the committee will have. If we recommend a mix of participation, we'll have to talk about funding. It will probably be more important for us to answer this than for the minister.

Mr. Cullen.

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

Mr. Minister, thank you for your introductory comments.

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You make what seems to me a fairly strong case, where you allude to the need for new, innovative approaches to passenger rail in Canada, a sort of “thinking outside the box”, as we used to say in the private sector.

If you look at the data, the information, I'd refer the committee back to the report in 1989, which coincidentally was in a previous watch, but that's neither here nor there. The conclusion of the committee says:

In fact, the Committee fears that the “new VIA” will be caught, yet again, in a vicious cycle of service cuts, decreasing ridership, rising fares, higher costs, higher per passenger subsidy, service cuts...

Basically they held out not very much hope for the plan that VIA had at that time—that was in 1989.

Here we are nine years later, in 1998, and it seems to me that although the mix of problems may have changed somewhat, VIA Rail may have been able through some creative management to avoid some of these negative aspects.

But the other reality is, if you look through their numbers, their corporate plan, they've really taken the subsidy and applied it to a good portion of their operating deficit, which has meant that reinvestment in equipment and rolling stock, in their infrastructure, has suffered incredibly, it would seem to me.

If you look at 1996 and 1997, we're looking at about a $30 million capital program and an operating cash requirement of about $224 million, and a capital plan of about $25 million. So in order of magnitude, the renewal of the assets has really been very minute in relation to the operating expenditures.

So I suspect what happens as well, as I know in the business I was involved with, if you're not renewing your assets your infrastructure starts to suffer. It also means that in many of the reinvestment programs, you can increase productivity, and in some cases productivity is the road to either profitability or reducing the operating deficit.

I'm sure we'll hear something from VIA Rail next week, but if we look at the subsidies, in fairness, the subsidies have declined, but I think the other reality is, as you have pointed out, that from $170 million, I suspect our government wouldn't be terribly interested in upping that subsidy.

If we're working within a finite set of constraints, it seems to me that you're right that we have to start being more creative about what we do with passenger rail service in Canada or we're going to be at this committee again, if we're lucky, 10 years from now, debating and mired in the same problems.

You alluded to public-private partnerships. There is off-balance sheet financing. There are entrepreneurial approaches, the experience in the United Kingdom.

Other than an injection of more subsidy from the government, given the current structure, how can we possibly work out of this situation and maintain and create a viable passenger rail service in Canada?

Mr. David Collenette: I have lots of ideas, and hopefully my biases won't be taken as instructions to the committee.

I think you pointed out some interesting points in looking at the key operating financial statistics. But good management, efficient management, has been able to make some real gains.

If you look at the table you were referring to, annex A in the guidance document, you'll see that at a time when the management was squeezing costs, revenues have actually gone up to 49.3% from 32%, passenger miles have actually gone up over that period of time, and the operating subsidy by government per passenger mile has gone down from 42¢ to 22¢.

I think that really supports the arguments of all those people—and I don't want to pick on the finance department—who in the past were reluctant to put more money into rail and said, wait a minute, you go and operate more efficiently.

I found that in Defence, with a lot of the contracting that was done there, you had to apply private sector management techniques and rationalize and restructure. But you can rationalize and restructure only to a certain point.

It's the same with companies these days. You downsize, you lay people off, but at a certain point no one is going to be working.

• 1615

You can go only so far, and I think VIA has come to that point. I don't know how much more they could cut if this $170 million weren't there, because they have cut just about everything. Then you have to start eliminating roots.

I think there are a lot of good statistics here, and VIA should be proud of them. The question is how do you improve the situation? How do you expand the service? How do you recapitalize it? How do you bring new equipment on? The newest piece of equipment they have is 15 years old. They just got rid of steam-heated cars built in the 1950s.

I don't know whether they still do it, but at Smith's Falls the conductor gets out and manually switches the train onto the track. I haven't been on that route for a while, but I don't think that has been automated. That's the horse-and-buggy days.

You have to have some money to make capital improvements. As you pointed out, the operating subsidy that has been given by the government has just been eaten up, with very little room for capital improvements.

[Translation]

Mr. Paul Mercier (Terrebonne—Blainville, BQ): Minister, I think everyone agrees that passenger rail service must be maintained end even improved. You have raised two points that are self-evident and the first one is pollution. In terms of kilometre per passenger, it's clear that trains pollute less than the other two modes of transportation, air and road.

Another factor that must be taken into account even though it's hard to put numbers on it and it's an imponderable, is quality of life. If I go from Quebec City to Montreal by train, it's of course more agreeable than when I'm sitting behind my wheel, especially when the weather is bad. It seems to me that those two arguments come down on the side of maintaining passenger rail service.

Now we have the matter of costs. I don't think that, anywhere in the world, there's a passenger rail service that doesn't require subsidies unless you stick to the most profitable segments, as you were saying before, say from Montreal to Toronto, and that's not acceptable. Although we agree that passenger service must be subsidized, we must also, in a way, subsidize road transportation.

When I'm driving over a road, I'm using that road and it's the public sector, with public sector money, that's going to have to repair it. When I'm driving over a road, I'm polluting and this also represents an economic cost for the public service sector. From the cost point of view, when you compare both modes of transportation, we shouldn't say that rail requires subsidies whereas roads don't require any. Roads require subsidies because the public sector must maintain roads and we must take into account the effects pollution has on health. And that is an important factor.

The cost of public transportation is lower when the ridership is high. The ridership divides in two big categories: regular ridership, that's people taking a train to go to work, for example, and tourists. It seems to me we can only make our ridership more faithful by improving punctuality. If an employee is always walking into work a quarter of an hour late, he finally just won't take the train anymore.

I don't know if it's true, but I've been told that on CN and CP lines, the freight trains are given priority over passenger trains. If that's the case, it's clear that it's impossible to ensure passenger trains stick to their schedules and I suppose negotiations would have to be undertaken with CN and CP.

There's also the matter of speed. Speed of these trains would have to be increased, and that of course represents costs. It's a matter that should be examined.

To attract tourists, you'd also have to improve comfort. You've probably travelled like I have in a sleeper car. You can't say that it's very comfortable. You're very happy to leave it finally.

Those are a few considerations I had.

• 1620

The Hon. David Collenette: Mr. Chairman, I agree with most of Mr. Mercier's comments. He raised a good question when he addressed the speed of trains. It's a matter that affects the activities of CN and CP themselves.

As for the question you raised about the priority that seems to be given to freight trains, it could possibly be settled in Quebec and particularly in Ontario by understandings between the two companies. For example, things could be arranged so that the slower trains could use CP railways while all the express passenger trains and freight trains could share CN railways. That kind of agreement could be interesting for the rail companies. It's a matter the committee could examine and could even make recommendations about.

In my opinion, CN and CP have shown themselves very interested in cooperating with a view to serving the real interests of the passengers. For example, as I was mentioning, concerning certain lines in Ontario and Quebec on Montmagny, for example they were very fair with me. I think they accept practical solutions with a view to improving passenger rail service.

The Chairman: Mr. Calder.

[English]

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

Minister, I think this whole thing is going to boil down to what this committee looks at; the key word is going to be “co-existence”. We have to have flexible schedules that can deal with passenger and freight. I like your analogy of coupling fast passenger with fast freight.

I think we also have to take a look at this from a regional application perspective too, for passenger policy. Obviously there are going to be different types of trains that are going to be running on high-density lines and trains that are going to be running on lower-density lines; in other words, a full train versus a rail liner, for instance.

You mentioned British Rail. I'm confused here a wee bit. Is British Rail like ours? I thought they were all high-speed trains over there. Are their rail trains about the same? Obviously we need to go somewhere where we can, if it's possible, find somebody that went through this and learn from their mistakes and benefit from them.

Mr. David Collenette: There are some analogies with British Rail, in the sense that it was created in 1948, after the war, as an amalgamation of four private companies that basically lost their shirt as a result of the Depression and the war. The 1923 reorganization was in itself an amalgamation of all the other smaller companies, some of which had difficulty. It created a big state railway that was inefficient and that succumbed to the British disease in the 1950s and 1960s, in labour relations. There was lack of investment, and all the rest.

So there are some analogies with what we had here. I'm not reflecting on the employees of CNCP or VIA Rail, but there was a similar structure of a state-owned railway, of not being totally accountable, of management not having the flexibility you have in the private sector.

What the previous Conservative government did was to go back 100 years and take 25 of the old rail operating companies that existed and in effect it used them as models of service and created train operating units within British Rail for two or three years. Then they franchised out those routes to the private sector.

• 1625

So today British Rail is almost a paper company. It owns very little in the way of assets. It's different from rail in Canada, because the track was privatized with a company called Railtrack. The rolling stock was privatized with rolling stock companies they call ROSCOs. The franchises were given out on these train operating company routes that I mentioned over seven- to fifteen-year periods.

They prorated the public subsidy per route and gave it to the private companies. I think the total subsidy over the life of the next 10 years has actually increased a little bit. The government gets a good deal because all this new equipment and improvements are being financed using the private sector pledged against revenue streams.

The situation over there is quite different. You're looking at a small country. The trains that travel between Toronto and Montreal match the top speeds you get in Britain. It's not a fast railway. It's not like the French or Germans. It's a smaller country than both France and Germany and the population is concentrated in the south.

Their express trains run at 110 to 120 miles per hour while VIA runs some of its trains between Toronto and Montreal at a top speed of 120 miles per hour in certain sections. But we have such large distances, and that's the difference. So go and look at them and talk to them. They're not the answer for Canada, but they have some useful ideas that could be applied.

Mr. Murray Calder: Okay, very quick one.

The chairman has said that we will be talking to different railways here in the very near future. What do you think about the idea—you mentioned it—of higher-speed passenger and freight on one line and lower-speed passenger and freight on the other line? We get into this mish-mash of how to make schedules work, because other than sidings, there are no passing lanes on a railway line.

Mr. David Collenette: This is a problem that you have. As I said earlier to Mr. Mercier, I think railways will be flexible. I think they might even accommodate each other not just for passenger but for freight. It may make more sense to share certain routes and things like that. That's something they may come to a decision on by themselves.

As I mentioned, one option in southern Ontario is to have slow traffic on CP and the fast traffic on CN. But CN and CP are interested in making money and hauling freight. If they want to get back into the passenger hauling business, it has to be worth their while. Passengers have to be viewed almost like a commodity—like coal or lumber or automobiles—so that they can make a buck at it.

If you bring the railways in here they'll tell you—specifically CN, which carries most of VIA's traffic—that they feel they're not being compensated for the service they provide with VIA, although VIA will probably dispute that.

So these are the questions I hope you will examine to give us a true picture.

The Chairman: Thank you. I should clear up that when we say 120 miles an hour in Canada, I hope we're talking kilometres.

Mr. David Collenette: I still think in miles. I'm one of those guys who was schooled in miles. I'm sorry, I'm not going to change.

Mr. Joe Fontana (London North Centre, Lib.): In other words, he's travelling 200.

The Chairman: So we're talking approximately 75 miles per hour.

[Translation]

Mr. Guimond, please.

Mr. Michel Guimond (Beauport—Montmorency—Orléans, BQ): Minister, I have two comments and then I will put a question to you.

Here's my first comment. As I'm not hypocritical, I will repeat to your face the comments I made to my colleagues across the way last week when we were examining the letter you sent us where you said it would be desirable that the finance committee examine passenger railway service in Canada.

• 1630

To use a down home expression, I wouldn't want to be tripping over the flowers in the carpet, but I did trip up over that sentence:

[English]

“in this context, I am hereby requesting that the standing committee....”

[Translation]

I've been a member since 1993. We questioned Doug Young and David Anderson. When we questioned you, you raised specific points. You say it's up to the transport committee to draw up its own agenda and it's not up to you to interfere. Your letter astonished me. I'm sure that you didn't write it personally, but when you put in the words "I am hereby requesting", the person who wrote it seemed to be giving us instructions. The Transport Committee has the right to be master of its own procedure. But despite all that, we—

The Hon. David Collenette: That is not the intention.

Mr. Michel Guimond: No?

[English]

Mr. David Collenette: In English “requesting” is a nice way of saying I'm asking you. I'm not telling you; you decide.

Mr. Stan Keyes: Michel, you said “hereby”—that's the one you don't like.

[Translation]

Mr. Michel Guimond: In French, we would say: "C'est pourquoi je demande par la présente."

The Hon. David Collenette: "Demander", in French.

Mr. Michel Guimond: "Je demande par la présente", in any case. You are suggesting that we... It is just a small detail, perhaps.

The Chairman: I will clarify the situation anyway. The Minister is not a member of this committee. It is the committee that will make the recommendations. The Minister is here today because we have invited him and he will not come back to the committee unless the committee invites him. It is quite difficult to influence a process if you can participate in it only by invitation.

Mr. Michel Guimond: But I would remind you, Mr. Chairman, that the Parliamentary Secretary is there. He is the Minister's eyes and ears.

Minister, I am not saying that to be impolite; you know that I am polite. Perhaps I was just tripped up by...

The Hon. David Collenette: Your question is a long one, Mr. Guimond.

Mr. Michel Guimond: Perhaps.

The Hon. David Collenette: Yes.

Mr. Michel Guimond: Still with respect to the letter, you asked our committee to write a report by April 30th. I do not know if our Chairman, our Clerk or our Parliamentary Secretary has told you that, given the work involved, that the date of April 30th seems to be unrealistic.

I am now coming to my question. Given that our committee is not under the authority of the Minister and that you are open- minded, I would like you to give us a thumbnail sketch. Where are you going with transport? Will you table a bill before June or do you want legislation to be passed? What is your strategy or your scenario? In your presentation today, that did not come out. Where are you going?

You said: "Over the next few months, I intend to start to form my own opinion on this issue..." What does that mean?

The members of the Liberal majority are very undisciplined. Look here, no one should be talking while I'm talking.

You are going to start to...

[English]

A voice: We lost our whip.

Mr. Michel Guimond: Where is your whip? You need your whip. You need a whip.

[Translation]

Open up and tell us the whole scenario.

The Hon. David Collenette: I think that that is an urgent question, Mr. Guimond.

Mr. Ivany, who will be here next week, will tell you that VIA Rail urgently needs some indication on financing for new equipment. I agree with him. It is impossible to continue without a major investment to acquire new equipment.

I also feel that it is an urgent matter. I have asked for your ideas. As I said, I asked the committee to look into certain issues, but I did not demand that it do so. The word "request" in English means the same as "demander" in French. It is the same thing and, in my opinion, it is polite, and it is urgent.

After receiving the committee's report, I intend to discuss the situation with my Cabinet colleagues because amendments to the existing legislation, tabling of a new bill or new provisions for financing new equipment for VIA Rail may be necessary. I need the views of my colleagues on restructuring VIA Rail.

• 1635

If we do study after study, nothing will happen. That is why I mentioned earlier that time is short for ministers and for the government. We now have an opportunity to change the face of passenger rail. That is why I have asked the committee to study the issue by the end of April, although that timetable might be pushed back to the end of May or the end of June. I need to talk with my Cabinet colleagues right away.

[English]

The Chairman: Mr. Fontana.

Mr. Joe Fontana: Thank you, Mr. Chairman.

Minister, thank you for the opportunity to ask this committee and parliamentarians to be creative as to what we do with passenger rail in this country. As one of the authors of the Liberal task force on VIA back in 1989 or 1990 when the former government slashed services to VIA by 50%, and what we've had to do over the past four or five years in terms of cutting the subsidy...two things have remained fairly constant in these nine years.

One is that VIA itself, employees and management, has done a fantastic job in maintaining the system. The second thing that has remained constant is that an awful lot of Canadians out there demand passenger rail service. Even with half a system, not having to cut any service in the past four or five years, it has maintained something like 4 million passengers every year. So those have remained constant.

Unfortunately, the finance department and sometimes Transport Canada have not been as cooperative with VIA, but I think the minister has finally given us an opportunity to look at how we are going to do what I believe Canadians want. In this country $6 per person per year is not much to ask of Canadians for passenger rail service. Six dollars is what it comes down to. Having travelled this country from coast to coast to coast and talking to Canadians, they want an alternative to cars and highways. They want an alternative and we have to provide that vehicle.

Mr. Minister, in order for this to happen—and I love the idea of public-private partnerships; I think there are a number of areas we can look at—a number of things have to happen. Stan asked the first question. In any public-private partnership there has to be a continuing commitment from the federal government so that you can leverage the private sector to invest money, especially in infrastructure or equipment. If I was a private sector investor, I sure as heck would want to know what the Canadian government's involvement will be for the next 10 or 15 years before I invest a dollar, because I want a reasonable return on investment.

I think a commitment on behalf of the Canadian people is going to be an important equation. I won't ask you what that number is because I'm sure there are all kinds of dynamics. But predictability and stability are important keys to any public-private partnership, so one needs to do it.

I also think all these governance issues are important. We handcuffed VIA back in 1990. I don't know how they've been able to do it, because they're really an order in council creation. They're not even a crown corporation. They're not an agency. They're not anything, yet they've managed to survive.

So creating this new public-private partnership—I'm sure you envision that VIA will have to become something else. Will it be a crown corporation? Will it be an agency that can operate at a certain arm's length from the government? Will it be a private sector company in the true sense of the word—much like perhaps the British model—because I think that mechanism will be able to trigger a number of things. I don't know if you have the answers to that, but obviously that's something we're going to have to look into.

The other thing that is really important—all of the infrastructure is private infrastructure. Even though Canadians helped build CN and CP to a certain extent, there's private infrastructure. Unless we are thinking of creating a new infrastructure for passenger rail, any company or any entity has to access private infrastructure or help build some additional infrastructure, because as you said—let's face it—in this country freight comes first and passengers come second. In Europe it's exactly the reverse. Passengers seem to have the right of way, and freight has to wait.

• 1640

Therefore, by way of some public policy issues, Minister, I think there is going to have to be not only negotiations between passenger rail and the freight companies, but there may have to be involvement.... I know when we studied the rail bill, we talked about access and how short lines can have access onto main lines. I think those kinds of things are going to be important.

Lastly, I think there is going to have to be a whole host of public policy issues. We talk about how—and I think you addressed it—there's no way in this world, in Canada even, and around the world, we are going to be able to build as much infrastructure as people are buying cars. In fact, there's a big deficiency of infrastructure now for cars.

Something that I think we have to learn is that there may have to be some public policy issues that make it possible for passenger rail, which Canadians want to use, and will use...because of the big subsidies that we provide for highways that nobody seems to work into the equations, or the big subsidies that we provide to other transportation modes. We have to take all those public policy issues into account if in fact, once and for all, we're going to create passenger rail service—whatever entity that may be: franchises, agency, call it what you will.

There is a whole host of issues. I have mentioned some, Minister, and I'm just wondering whether or not you have the answer to some. If not, and if those are going to be part of what you want us to look into, then that's fine too.

Mr. David Collenette: As I said earlier, everything is on the table. I agree with all the points you raised. I don't have the answer. I think it requires a lot of discussion on the part of the members of the committee.

Let's start with VIA Rail as a corporate entity. I guess the question is should it continue as is? I guess what I'm saying is I don't think it can continue as a crown corporation that is continually subsidized by the federal government over and above what is being given on the $170 million. Where are they going to get the money for their new equipment? Does VIA become, in effect, a holding company for routes that are franchised?

We're not talking about privatization here. I don't believe our government would want anything but a seamless national passenger rail service under one corporate entity. But how that's operated, how that's delivered, is something that can be open to a lot of discussion. You would have to decide whether you'd want to franchise out—if that's an option—the whole system or parts of the system, or whether you would want alliances with equipment manufacturers.

Since I have made some public musings, we've had at least half a dozen calls from serious corporate entities in Canada interested in financing and in operating the system. There is the potential out there. The question is how we do it. You can even come back with names of how you market the service. Do you want to call it VIA Rail or do you want to call it something else?

Everything is really open for discussion—anything that's going to make a better service and make it better financed. I think if you achieve those objectives, we could expand the service, rather than see what we've seen over the last 20 years, which is a contraction.

The Chairman: Mr. Mark.

Mr. Inky Mark (Dauphin—Swan River, Ref.): Thank you, Mr. Chairman.

This country is so large, and the needs are so different, that when we try to throw it all in one hat it's very difficult. The minister indicated he felt that the level of service was excellent. Certainly if you're from southern Ontario, the level of service is probably excellent. But in terms of out west and where I come from, Manitoba, I would say their level of service is terrible.

One positive note I certainly can make is that your subsidy has been reduced substantially. That's good news. But the service that's rendered and necessary for northern Manitoba needs upgrading. There's no doubt about it.

• 1645

One of the concerns I have in terms of the franchising is that without a subsidy, much like Omnitrax with the Hudson Bay line, no one will take the operation unless it's feasible. If you're not familiar with the people who live up north in Manitoba, for many people that's the only way in and out, that's their highway. Therefore I believe subsidies have to exist and probably franchising is the way to go, if not privatizing it altogether. Perhaps the level of service will improve.

The question I have to ask of the minister is this. Because this really is a public transportation initiative and issue, perhaps it's time provincial governments and municipalities paid part of the bill instead of relying on the federal system. Looking at rapid transit and at the heavy corridor from Windsor to Quebec City, this is where the people live, and perhaps the people who live here should pay the brunt of the bill because they're the users of the service.

I agree that passenger rail could be a national infrastructure and needs to be sustained and maintained, but when you look at the realities of how people are changing their travel practices today, we don't have time to wait for anybody. Most people will fly if they can. As far as transcontinental services are concerned, I really wonder if that's necessary or not.

The other question I have is will you be taking the same procedures in this privatization as you did with the airports? Perhaps you may retain the successful ones and lease them out.

Mr. David Collenette: I don't think there's the same analogy with airports. I would hope that the committee doesn't keep using the word “privatization”. That's not what my mind-set is. I'm looking at a public service that is discharged using private sector methods perhaps, private sector operators, but a public service, not privatizing chunks of rail line.

You represent a constituency where you have one of Canada's longest remote lines going through it. There's no way that line can stand on its own, it requires government subsidy. You raised a point about getting the provinces and municipalities involved. We talked a lot about the British experience today. The American experience is useful because Amtrak provides commuter services and passenger services that are to some degree subsidized by states or municipalities. Where it doesn't make sense for Amtrak to run trains, a certain state legislature or government will come along and say they are prepared to fund that, they are prepared to assist. That may be an option you would want to address. Right now, on the lines going to The Pas and to Churchill, it's the federal subsidy that subsidizes this.

Is the kind of service provided there now an efficient way of providing the service? First of all, just about all of the trains that VIA runs are conventional trains. They use locomotives, which are terrific; they're freight locomotives basically that haul passenger cars. You don't need all that horsepower for that particular conveyance. That's why in European countries most of the trains now are diesel multiple units, double-enders. They're like the old Budd cars but have more sophisticated technology, where they are propelled from either end.

Those kinds of pieces of equipment are the answer. Are they the answer on a line like the ones going through your constituency? As the railways move more and more to scheduled freights, maybe the answer is providing the passenger cars on scheduled freight services, so you have a combination. That brings up other questions: whether you have dangerous goods being conveyed and whether that's possible. There are all these kinds of options that should be explored but I think there are more efficient and cheaper ways to obtain the desired service.

• 1650

I'm with you. We're lucky in southern Ontario and Quebec. We have the top-of-the-line equipment. We have the best service. I haven't been on the line in your riding, but I understand it doesn't travel that quickly and the level of service isn't as good as what we're used to in central Canada.

The Chairman: We have 25 minutes before the bells start ringing for a vote. I would urge committee members to shorten the questions and shorten the answers so we get more of them in.

Mr. Cullen, please.

Mr. Roy Cullen: Mr. Minister, when, in the last Parliament, this committee looked at the national highway system, one of the challenges that faced us was that you have very high volume areas through Ontario, through Quebec, and then you have very low traffic areas across the prairies. I suspect when we look at passenger rail we're going to be faced with somewhat of the same challenges; in a different mode of transport, of course. Through the Rockies, passenger rail probably is quite viable. In fact, some would call it tourism, not really passenger rail. The Quebec City-Windsor corridor probably can be profitable. When you look at some of the other stretches, across the prairies, for example, that might be more difficult in terms of economics for passenger rail.

When you looked at the U.K. model, presumably when they went to this franchising system there were parts of the passenger rail system in the United Kingdom such that some were more profitable than others, or some needed more government subsidy than others. How did they deal with that? How did they deal with that problem? Even though they don't have the larger distances, they undoubtedly had some services that were more profitable than others. How did the British government deal with that?

Mr. David Collenette: They divided the system up into these train operating units, they evaluated the yields on the routes, and they factored those yields and revenues and potential for growth into the franchises that were left. The level of subsidy reflected the anticipated profit level that could be achieved. You have these lines where you have a principal line fed by rural services, which don't make any money but have to take the rural services. So they try to operate the rural services as feeders in the best way possible. That was factored in, and they were compensated by the level of subsidy they had.

So they had an incentive to go out and make efficiencies. For many of them—not all of them; it's not all a wild success, but by and large I would say so far it's been successful—it has resulted in more service, better quality of service, better marketed, more flexible, and of course new equipment is on order.

Mr. Roy Cullen: Have passenger rail service prices been affected at all, in one way or the other?

Mr. David Collenette: Prices have probably gone up a bit. We would have to get that.

Mr. Louis Ranger (Assistant Deputy Minister, Policy, Department of Transport): Just to clarify, they took the previous network and broke it down into 25 routes. So there were 25 franchises. Actually, 24 routes or franchises out of 25 still require subsidies. There's only one, to Gatwick, that is covering its costs.

About prices, I guess what is novel is that now the new operators have considerable flexibility in getting every passenger they can. Some have very ingenious promotional schemes, where for a few dollars they attract students, and then deep pricing for business people at other times during the day.

Mr. David Collenette: The situation is a little different there again, because you have different routes that compete against each other. Here the competition is other modes of transport, the road in particular.

The Chairman: Mr. Morrison.

Mr. Lee Morrison: Mr. Minister, in your presentation you made the statement that everything is on the table, but you just now told us privatization is not. I'm just wondering whether it am or it ain't, and what we're really doing here.

• 1655

I think this might be one organization that could stand a little privatization. I don't agree with Mr. Fontana that it is so marvellously managed. There are ways in which innovative thinkers can make money with things that lose when they are under government operation.

You mentioned one yourself very briefly. You talked about passenger service on these remote lines going to something like a Budd car instead of running full trains.

Out west we've had some experience with putting highway tractors onto rail. If we can do it with them, certainly you can do it with an ordinary bus. You might make money that way.

On the corridor, if these people are on the ball and trying to make money, why aren't they hauling a little bit of express or mail? The reason Greyhound is able to offer such cheap fares is because they haul express; that's where their money is. But these guys are locked into one piece of business: we're going to haul passengers. That's all they know.

They have that big maintenance shop in Toronto, the Toronto maintenance centre. They had a contract with CP, which I believe was quite successful—I see we have a CP representative here. They made money at it. They had a potential laid on their plates to take on a really big maintenance contract for General Electric, and they blew it. Mr. McGovern is well familiar with this whole sad tale, I'm sure.

So I don't know why we're not looking at privatization, because these people are not balls of fire, in my humble opinion. I'd like your comment on that.

I'd also like you to address a second matter. I know you travelled extensively in Europe last year, looking at the rails and talking to railroaders. Is it possible that you have your committee reinventing the wheel here, that you've already done what you wanted to do and got the results you're interested in? We may be just following around in your footsteps making this study. I'm not casting aspersions; don't get me wrong. But maybe it would be helpful if we had access to your briefing notes and anything you brought back with relation to the work you did, because we're in a vacuum here.

Mr. David Collenette: On the last point, I think you probably should go and see for yourself, but that's up to you as committee members to do.

My mind is not made up. The only thing it's made up on is that the status quo can't continue. The president of the railway will be here in a few days, and he'll tell you something has to be done. He has to be able to get the money to buy new equipment and improve the level of service. So we have to restructure.

I can assure you it's not window dressing. In fact, all the thoughts I have so far, by and large, are contained in the guidance document I gave to you. I may be wrong; we need your help in formulating what is the most appropriate way to go.

When I talk about privatization, the trouble with the word “privatization” is that it conjures up a lot of things to different people. One in particular is that somehow you sell off. But I suppose privatization could be applied to, say, the franchising, which is the phrase that has been used in Britain.

As to contracting out certain services, such as maintenance, VIA probably has done that in certain instances now. That's privatization. It's a word that really is quite big in its definition, but to a lot of people it somehow....

I remember after I made a couple of speeches there was a line in the Canadian Press that said: privatization, the selling of the railway net. Well, wait a minute, we don't own the track. What are we selling? Are we're selling all the coaches, all the locomotives, all of that equipment? No, privatization is a much broader term. It's involving the private sector, involving private sector financing, but I see the service being one that is a seamless national service.

Maybe there should be variations. Right now we have a private railway that operates the tourist cars through the Rockies, the Rocky Mountaineer. They've done a pretty good job. Maybe the committee will say, well, look, on certain routes you allow the Rocky Mountaineer or other derivatives to continue.

• 1700

I mean, you give me advice on this.

The Chairman: Mr. Guimond.

[Translation]

Mr. Michel Guimond: I would just have a short comment about the Rocky Mountaineer. Now that it has been proven that the line is profitable, VIA wants to jump back in to compete with them. That danger was one that I already raised before the committee two years ago. It shows that things can sometimes be nasty.

Since everyone is making comments, I would like to come back to a comment that Mr. Mark made earlier to the effect that if people in the Quebec City-Windsor corridor want some kind of train, it would be up to them to subsidize it. I would remind Mr. Mark that is an example of how wonderful our country, Canada is. People in the East subsidized western farmers for years through grain transportation subsidies, even though there is very little farming in Newfoundland. But Newfoundland taxpayers subsidize western farmers for their grain transportation. That is the beauty of your country, Canada. Yes, that period is over now, but we paid for a long time. Now that it is over, people in the East will be told to pay for their own trains because people in the West are no longer getting grain transportation subsidies. A number of things were paid since 1867, since the Crow's Nest rate was put in place.

Minister, in your opening statement, you said very little about the high speed train. You alluded to commuter trains, to the problem of access to Toronto, etc. I read somewhere that Bombardier was to submit its pre-feasibility study in the spring, while our committee will be sitting and working on its final report. Would you like to make a "request" for us to devote one chapter of our report to high speed trains? Should we look into that matter? It will come up. That was my first question.

My second question is whether you are also asking us to look into rail safety. Given what we will hear about the future of VIA Rail, what responsibilities in the area of safety will a revamped version of VIA Rail be left with? I imagine that VIA will still be subject to the basic rules of rail safety.

As I know you are aware, there is a plan to close the Lévis station. The VIA people want to have the Ocean and Chaleur trains back up on the Québec City bridge; these trains would back up through three level crossings. The deadline was set for February 21 and all means of recourse have been exhausted. I do not want to ask you a question here that I would not be able to ask you in the House, but I would like to hear what you have to say on rail safety and on the future of the Lévis station.

The Hon. David Collenette: Rail safety will always be the responsibility of the Canadian government, as is aviation safety in airports. We are talking today about the activity and financing of passenger rail services.

Your first question dealt with high speed trains. I think that the rail system in France is perhaps the best in the world, because of the high level of investment by French taxpayers. It would be marvellous to have high speed trains here in Canada. But what concerns me is that we would have to count on the involvement of the private sector, not only to build the railway but also to operate it.

• 1705

If Bombardier's proposal includes an operational role,

[English]

a total package—

[Translation]

that is built around private sector investment and operation, without counting on federal government subsidies, I am interested. I think that the federal government and the government of Quebec or Ontario would have a difficult time subsidizing the building of a new railway. I do not know if there would be a positive reaction on the part of my colleagues.

I must say frankly that I have had discussions with private sector representatives. I think that it is possible to build a railway line in Canada for a high speed train similar to the French rail lines, without having to count on major subsidies from the federal or provincial governments. I think that is a reality.

[English]

The Chairman: Mr. Calder.

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

Minister, I am trying to work my way through this. We're talking about the possibility of a franchised rail operation that runs right across Canada. It would probably run with the same rules right across Canada, which I think is a good idea.

But then we're going to be working with this franchise. It will probably have to work within a regional aspect, too, and that regional aspect is going to work at different population densities. Therefore, there's different equipment, etc.

We're going to be a partner in this to the tune of $170 million. We're going to try to partner maybe with the private sector, with whoever comes in. Of course, that partnership will work between class ones, short line operators, and everything.

Can you think of any existing example out there that is close to what we've just discussed here?

Mr. David Collenette: No, but they're going to find it, if the committee does its work.

There are all these ideas out there. Mr. Guimond has talked about the TGV. As I've just explained, we'd love to have a high-speed rail TGV in Canada, but it has to be financed. How can you, on the one hand, say we can't find the money for VIA's capital requirements, and then go out there and spend a bundle of money on building a new railway?

So I think the Bombardiers of this world will hopefully come back and show us a way it can be built without that kind of public money being expended.

We've talked about the franchises. We've talked about the involvement of municipalities or the provincial governments as they are in the United States with respect to the subsidy of Amtrak.

There are all these ideas, and I hope the committee can look at them thoroughly, and bring them together. This puts paid to the idea that the committee's work is somehow window dressing. It's not window dressing. You have the time. You have the expertise and wherewithal to say, look, this will work, this won't work, and give us a model.

You can't necessarily apply the British, French or American model to Canada, nor should you. It's a country that's spread out. It has regional needs, different types of service, tourist services, the transcontinental services, the outer suburban services, the inner-city services, and the remote services we've talked about up there in Manitoba, Quebec and other places like northern Ontario.

So there are a lot of different variables, and I hope the committee can try to come up with some ways. You don't want to feel put on the spot, that you have to come up with the magic solution: this is the Holy Grail. But you can say, look, this kind of option might work, or this kind of option might work.

I mean, give us some options to take back and mull over. Then I can go to my colleagues, and get their reaction.

The Chairman: Thank you very much, Minister. We appreciate your openness and keen interest. It's evident that you feel very strongly about this issue, and for the good of Canadians.

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The message we receive from you is that, yes, you do have a keen interest in passenger rail, but that the report of the committee will be the report of the committee. I have not sensed that you tried to influence the work we will do, although with the knowledge that you have, I would like to have you as a committee member—for input. I'm convinced that members may wish to call you back to contribute because of the knowledge you have of this area.

Committee members, I can tell you that I've asked research staff to produce a document of every witness session we have so that when we're at the point of tabulating a report everyone will have the same information.

So, Mr. Minister—

Mr. David Collenette: May I just say one thing? Yes, I'm enthusiastic, because we have perhaps one time to get it right. But I don't want you to think I'm not enthusiastic about air, marine, or a national highway system. It's just that right now this is the priority.

I think we owe it to the country, and we owe it to the people who are operating the railway now, to give them some kind of future stability and regime in which they can operate.

The Chairman: And we are realizing that there is not one mode of transportation in Canada that can stand on its own. Instead of competing now, we have a situation where former competitors are complementing one another. There's room for everybody, and one is as important as the other.

If some committee members are under the impression that this could be a futile report, that the decisions are made, I can tell you that if it is—and I know it's not—the minute I find out that it is, I'm out of here.

I don't have time to work...and I'll give all the hours I have, because I know there's a commitment here, and that we can make a difference. That's why I'm here, and I know that's why you are here, and we will make a difference.

So that's our commitment to you, Mr. Minister. We will show you a report that will exceed your expectations.

Committee members, I'm working on trying to attract railroaders next week. We can't railroad all of them into coming here. I know that VIA will be here on Thursday. I understand CP is not able to be here on Wednesday. We're waiting for a response from CN. But we will be pushing very soon for CP and CN to be here.

You may recommend companies like Bombardier, and things that we can start lining up; I have been giving a list. I will consult you as we progress, and if you have any other names we will accommodate them.

Mr. Stan Keyes: We don't have to have the rail lines first—whoever is available.

The Chairman: That's right.

Did you want to make another point?

That's it. Thank you very much. The meeting is adjourned.