TRAN Committee Meeting

STANDING COMMITTEE ON TRANSPORT

LE COMITÉ PERMANENT DES TRANSPORTS

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 4, 1998

• 1534

[English]

The Chairman (Mr. Raymond Bonin (Nickel Belt, Lib.)): I will call the meeting to order.

We'll delay deliberations until we all have chairs. The reason we're only able to get a small room is because most committees want to sit on Wednesday afternoon.

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To the minister and members of the department, thank you very much for again on short notice appearing before us.

As you probably know, members are trying to select some area of study. There has been a discussion on highways and other issues. Some of the difficulty that I and members of the committee have is in understanding the areas of jurisdiction. It would be futile to undertake a major study only to find out that it was done two years ago. So questions in those areas will be addressed to you. We have made you aware of some of the questions that are coming.

After your presentation, if you have one, we will invite members to address their questions, hopefully starting with the ones that have been identified. On the list I have Mr. Asselin, Mr. Calder, Mr. Jackson, Mr. Casey, Mr. Sekora, and Ms. Desjarlais. After we've heard what you've said, we'll have even more questions.

Mr. Minister, please proceed.

The Honourable David Collenette (Minister of Transport, Lib.): Thank you very much, Mr. Chairman. This is the oldest political trick in the book; that is, get a small room and a small crowd and it looks like a great success as a meeting.

I'm very pleased to be back here for this information session on what I consider to be an important series of questions that have been raised in the House, largely by Mr. Casey, but I know other members have spoken to me privately about these issues. So we're quite pleased to be here.

With me is Mr. Louis Ranger, the assistant deputy minister of policy; Kristine Burr, the director general of surface policy; Ron Sully, the assistant deputy minister of programs and divestiture; and, just in case I stray, Robert Green, our department's general legal counsel.

I would propose to say a few words and to then entertain your questions.

One of the priorities of our government has been to provide and renew infrastructure across all sectors, from research and the information highway to community projects and transportation. Sustaining Canada's ground transportation system, including strategic highways, is a particular priority of mine, as you know from earlier discussions with you.

I appreciate how important highways are to our economic and social well-being. Highways are truly the backbone of Canada's transportation system. They are a unifying force that connects the country and a driving force behind our economic growth.

Since I became minister in 1997, I have taken part in three federal-provincial-territorial Ministers of Transport meetings, and at each of those meetings I've heard a unanimous call from all the provinces and territories for a new national highway program. At the same time, we all recognize that highway infrastructure is very expensive to build and maintain. This is particularly a challenge in times of limited public financial resources.

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So really it comes down to having three options in terms of paying for infrastructure, similar to the options I put forward a couple of weeks ago on VIA Rail: from the taxpayers now, meaning through general tax revenues or higher taxes; from future taxpayers, which means borrowing; or from users, which means user fees, such as tolls.

Now, one could argue there's no right or wrong answer on these options. It's a question of public policy choice to fit the times. But the reality is, as with everything in life, there's no free lunch, or for that matter, free highways. They have to be funded within the spending envelopes of the department and the priorities of the government as a whole.

There are, as I'm sure you're aware, competing priorities and some would say higher priorities, one of which I'm particularly keen on, and that is health funding. As you know, a few weeks ago the provincial premiers met in Saskatoon, and they declared that health care was to be our number one priority. They did so and are publicly on record as it being at the risk of putting transportation and highway infrastructure funding as a second priority with most of them but not all of them.

The Prime Minister has followed up on this, so let's not hear about unresponsive federal governments or federalism that doesn't work. The fact is that both the Prime Minister and the Minister of Finance have said publicly that the focus within the next budget is going to be health care.

So while all of us in the transportation sector, the provincial ministers and myself, will continue to work collectively to strengthen the case for renewed funding for transportation infrastructure, we recognize that it's very difficult to accommodate, given the growing needs and demands on the treasury.

We know that there are many pressures, and not just at the federal level, on government resources. I don't think any government really is enamoured with the possibility of increasing taxes. It's for this reason that governments are having to explore and use innovative funding mechanisms, such as the mechanisms put in place by New Brunswick, Nova Scotia, Ontario, and British Columbia in the area of public and private partnerships, P3 for short. We are doing this as well. We are levying user charges on many of our assets, including the Confederation Bridge, the ferry service to Newfoundland, international bridges to the United States, and the St. Lawrence Seaway itself. These are all, we think, key to the success of our economy.

[Translation]

The committee recognized that reality in the report published last year, the title of which is: "A National Highway Renewal Strategy".

Its second recommendation was as follows:

The federal government, in cooperation with the provinces and territories, encourage the application of Public/Private Partnerships where they can be justified in the renewal of our National Highway System.

To do that, a group of officials from the federal, provincial and territorial governments worked together to explore the public- private partnerships and to study the possibility of resorting to them to rebuild our highway infrastructure.

As those concepts will become more common, we can expect that more and more governments will explore those funding mechanisms for the highways, as well as alternative solutions in order to meet the growing needs for infrastructure.

[English]

In this context, I think the kind of discussion we're going to have today will be somewhat one-dimensional, because many of the questions that will be raised really have to be directed specifically to the provincial governments, and they are not represented. But I can assure you that we discuss these problems and issues as ministers, and I know that members of legislatures are addressing these questions to the provincial governments.

I've stated repeatedly that highways are a provincial responsibility. That's clear from the British North America Act and the Canadian Constitution Act of 1982, because section 92 gives exclusive jurisdiction over highways to the provinces. As such, decisions on their construction, operation, and financing are exclusively provincial. Provinces do not require the agreement of the federal government to adopt innovative financing practices, nor can the federal government prevent their implementation.

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That's not to say we don't have an interest in these provincial decisions or that we cannot put rules in place with respect to federal-provincial funding in the future. I'd like the committee's ideas on this, not necessarily today or in the next few weeks, but this is a long-term issue we have to deal with.

[Translation]

As all governments in Canada, we want to ensure a safe, profitable, integrated and continued transportation network that really meets the needs of shippers and travellers. We want to take away the barriers that prevent goods, people and services to move efficiently across borders in order to facilitate the internal as well as international trade and strengthen our economic union.

This is why the Agreement on Internal Trade was signed. It came into effect on July 1st, 1995. That agreement tries, among other things, to eliminate the barriers to internal trade in the transportation services, and more specifically in the trucking services. A profitable trucking sector is crucial to the competitiveness of Canada.

[English]

Since its coming into effect, all jurisdictions have worked collaboratively to reconcile differences among a variety of regulations related to the operation of commercial vehicles and toward harmonizing regulations and standards. Consistent with these efforts, and as part of the government's transportation policy—I think I mentioned this to you a couple of weeks ago—I will soon be introducing a bill to amend the Motor Vehicle Transport Act to coordinate at a national level the safety regulation of extra-provincial motor carriers.

While the federal government has the authority to regulate these carriers, we have delegated the administration and oversight of this act to the provinces. At the same time, the amendments will eliminate the remaining economic regulation of extra-provincial trucking. The Motor Vehicle Transport Act thus gives the federal government an active role in ensuring the safety of the motor carrier industry.

From 1988 to the year 2000 we will have provided $44 million to the provinces to help them implement the provisions to harmonize safety requirements under the national safety code. While our economic regulation will cease, our role on the safety front will continue.

Given this commitment to and the success of collaborative processes to improve the mobility of people and goods across provinces, I am somewhat intrigued, and quite frankly a little bit puzzled, at some of the recent comments that have been made on the question of jurisdiction.

I know Mr. Casey will elaborate on this, since he is the author of the meeting today. I'm sure we'll be looking forward to hearing where he's coming from, because it seems there's a bit of a coming down on two sides of the argument. In other words, as I understand Mr. Casey, he believes we need cooperation between the provinces. That is a mantra of the 1990s: we must cooperate; thou shalt cooperate with provinces. In the next breath what he seems to be saying, and I know his interim leader is now on record as saying this, is that he wants the federal government to act unilaterally to resolve interprovincial dispute. I think we should explore this particular trend of thought, because we really can't have it both ways.

[Translation]

As I said in the House of Commons, the Agreement on Internal Trade has established a process through which a province can ask for remedy if it thinks that an action taken by another province is not in keeping with the agreement. The first step in this process is a negotiation and discussions between the provinces. And it can be followed by the striking of an expert panel if it is not possible to resolve the dispute.

[English]

The federal government has no authority to resolve the disputes between provinces in this regard under this agreement on internal trade. We're not so sure we would really want to, because this is a collaborative effort, and we know the best success in dispute resolution is when the affected parties work out the differences through dialogue and compromise.

If, as Mr. Casey is suggesting, tolls are perceived to create an interprovincial trade barrier, the province seeking redress would have to demonstrate that the tolls restrict or prevent the movement of transportation services across provincial boundaries, and that the proposed tolls would discriminate between carriers of the non-complaint province and those from other provinces.

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He has also suggested the solution to the toll issue lies in a new federal-provincial funding program for highways. That's one point of view that should be explored. I'm just wondering whether the position of the Conservative Party is to advocate that the federal government raise taxes to fund highway infrastructure. That would be an interesting point to have on the record.

[Translation]

The provinces have already decided that the federal funds available should go to health care rather than highways. No government is in favour of a tax increase as a solution.

Given the growing needs for transportation that financially strained the governments face and given that the public is not in favour of a tax increase, do governments really have any other choice than looking for innovative funding mechanisms? This is a legitimate question and my answer is yes.

As the committee concluded in 1997, partnerships between the state and the private sector are not the only solution to renewing the highway system, but they have great possibilities and should be favoured and tried.

[English]

In this context, I would suggest that perhaps the most productive role for us at the federal level is not to intervene in interprovincial disputes, but rather, together with the provinces and the private sector, inform and educate ourselves on the merits of public-private partnerships for transportation infrastructure. We could also develop sample public-private partnership contracts with draft language to deal with complex issues. We could also explore the role new and innovative technologies can play in maximizing the return on infrastructure investments and generating economic and social benefits when applied to the rehabilitation, maintenance, and operation of transportation infrastructure.

Technology is an area where the provinces and the private sector would welcome federal leadership and support. We need only look at how our international counterparts in the United States, Europe, and Asia are using information technology to manage the flow of passenger and freight transportation on their highways. I'm referring here to what is commonly known as ITS, or intelligent transportation systems. This consists of new technologies in computing, sensing, and communications, which together are transforming the way we design, build, manage, and operate ground transportation systems.

[Translation]

Those advanced technologies make it possible to have highways that are safer, more efficient, more reliable and more ecological, without having, in many cases, to modify the highway physical infrastructure.

Intelligent transportation systems can increase the capacity of the present highway infrastructure for a minimal part of the construction cost of new highways, and also enable governments to implement regulations and processes in a less costly manner.

[English]

The potential of these systems is already being demonstrated across the country. For example, with the United States and Mexico we've been testing ITS to improve the flow of truck traffic across the border at Windsor and Fort Erie. The Province of Ontario has already deployed ITS projects such as the Highway 401 COMPASS management system; Highway 407, the first all-electronic toll highway in the world; and the Highway 401 Avion project that automates weight and safety compliance of trucks operating between Canada and the U.S.

British Columbia is working closely with Washington State to develop a tracking system for containers being unloaded off their ships that then cross the border into the other country. Saskatchewan is exploring the use of weigh-in-motion systems to monitor the use of heavy truckloads on rural roads. Next year, Montreal will begin operating its freeway traffic management system on the Métropolitain and Décarie highways, right in the middle of the city.

I would welcome this committee's assistance in exploring how Canada should go about incorporating these advanced technologies into the management system and the operation of our transportation system as a whole.

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There's good work that could be done by the committee, and some of the issues Mr. Casey is advocating in terms of future federal-provincial highway funding, conditions, agreements or methodology are useful exercises, but you have lots of time, quite frankly. I need some help on the ITS, and if you have any spare time I would welcome the committee moving on that. But as I said a few weeks ago, we have three major bills coming to this committee, and I would hope the committee will be seized of them.

Tomorrow I'm going to be introducing the Railway Safety Act amendments in the House, and I know Mr. Dromisky has initiated some discussions with the parties. I don't think everyone has been approached yet, but I would welcome your views this afternoon as to whether or not you would be agreeable to sending this bill straight to committee.

It's a very technical bill that you really can't deal with in the House, and you can save the speeches and principles for later when you come back. This is not to push the bill through, as we did with Bill C-9, where there was some urgency. Sure it's urgent, but this is not a tactic on my part to try to whip the measure through. I just think the Railway Safety Act amendments are better studied in the committee.

If there's agreement among all parties—we don't have to negotiate here, but I'd like to know by tomorrow—then we could send that bill right to committee, so when you come back after the break you can get right into the study of that bill and start calling witnesses.

I appreciate the chance to come back, and I look forward to your questions.

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

I just want to remind committee members that this is an information session. If you look at your agenda, there will be no votes today. If there are members who must leave at this time because they are on two committees, a quorum is not required. This is information we need to assist us in our future work.

As for any bills coming into the House, the policy of this committee is to give priority to any legislation that comes here. As soon as I can get a bill here I call a meeting and we get to work right away on it. So I hope we will get consent to start on this soon.

Before I go on, Mr. Cannis, we invited all these people here, we had a cake, we sang a song and you were held up somewhere else.

Mr. John Cannis (Scarborough Centre, Lib.): For my birthday?

The Chairman: This is for your birthday.

Mr. John Cannis: Thank you.

The Chairman: Happy Birthday.

Mr. John Cannis: I don't get to be twenty every day.

The Chairman: In my list I moved up Mr. Morrison from the official opposition because being seventh I thought the official opposition should have a question earlier. So we'll go to Mr. Asselin, Mr. Calder, Mr. Morrison, Mr. Jackson, Mr. Casey, Mr. Sekora, Ms. Desjarlais.

Mr. Asselin.

[Translation]

Mr. Gérard Asselin (Charlevoix, BQ): Mr. Minister, welcome to the Committee on transport.

You reassured us somewhat by saying that at the present time, the federal government has no intention of doing away with the maintenance of interprovincial highways in partnership with provinces.

I would like to talk more specifically about interprovincial highway 389, which goes across my riding and links Quebec to Labrador. The federal government had implemented a PSAR program which ended up in a deficit. So the government put an end to the program saying that it was not able to put more funding in it, even in partnership with the private business sector or provincial governments. The federal government is not putting one cent in the maintenance of the interprovincial highway system. The answer we are given is that the federal government has no more money. We have several letters indicating that, some of them bearing your signature as a minister.

The government of Quebec, through minister Jacques Brassard, sent you a request for partnership for the maintenance and upgrading of highway 389 between Baie-Comeau and Labrador. The answer of the government of Quebec has been positive: it is ready to commit to investing millions of dollars for the maintenance of highway 389.

It's a very dangerous highway. Every week, there are accidents; workers are injured and get sometimes killed going to work. As is well known, since we opened the road between Baie-Comeau and Labrador, many tourists take it and there lifes are also at risk. Tourists go and visit the Hydro-Quebec infrastructures and also go hunting and fishing. The Hydro-Quebec workers who maintain the hydro infrastructures travel on it every day; there's quite a lot of traffic on that section of the highway.

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There are also a lot of natural resources in that area, including lumber or timber. When you travel on the 389 between Baie Comeau and Manic-Cinq, you meet a truck loaded with timber every 10 minutes, and that's only one way. Those same trucks make the return trip.

There are two other natural resources, mining and hydroelectricity. This section goes across a resort area where people go fishing and hunting.

The Chairman: Sorry to interrupt you, Mr. Asselin. I would like to remind you that you have five minutes for the question and the answer.

Mr. Gérard Asselin: Okay, I will now go to my question.

Mr. Minister, is it the federal government's intention to answer favourably to the request presented by minister Jacques Brassard concerning the 389 file? I remind you that the government said that it had no more money, but that he is now expecting a surplus. As a minister, will you draw from that surplus and make every effort possible to include in your management portfolio the upgrading of highway 389?

The Chairman: Before listening to the answer, I would like to set the tone for this question period. This meeting is only to get information and help as to the studies we will undertake. I will allow you to answer that question, if you want, Mr. Minister, although it is not directly linked to the work we set to accomplish here. This session is not an exercise to put the minister on the hot seat and to ask him questions on the future activities of his department. We are trying to set the limit between provincial and federal jurisdictions and to get to know the studies that have been made so that we can determine what work we will undertake.

Mr. David Collenette: Mr. Asselin, I must say that the two highways you are mentioning are not part of the national highway system. According to the consensus that was established with the provinces, this highway system that goes across the country is 25,000 kilometres long. The two highways you mentioned today are not part of that agreement.

Besides, the two highways you talked about were eligible to the PSAR program, which has unfortunately run out of funds. May be you could suggest that the program become again a priority and that we allocate it the necessary funding. That would be a legitimate representation. When the program was implemented and funds were available, the province of Quebec had not identified the two highways you talked about as priorities that could have taken advantage of a funding under that program.

I talked several times with Mr. Brassard. I am usually in favour of allocating more funds to the highway system envelops from one end of the country to the other. But now, we have to admit that the federal government does not have any money. You had provincial premiers, including Mr. Bouchard, say that the financing of health care was their priority. We must therefore conclude that the transportation sector will have to be put on the backburner and wait for the next budget.

You raised a valid question. And I hope that in the future, may be next year, we will be able to give you a more positive answer.

[English]

The Chairman: Mr. Calder.

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

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Minister, it seems for the last five years that I've been here all we've ever talked about is money—fiscal restraint and everything else like that—trying to get our finances in order. I was very interested when you were talking about the intelligent transportation system. I guess what I'm wondering here now is how this is going to save us money if this is incorporated. Maybe you can explain that a little bit further.

Mr. David Collenette: Sorry, I don't quite follow.

Mr. Murray Calder: Regarding the intelligent transportation systems, maybe you could explain it a little bit further.

Mr. David Collenette: Right, okay. I was saying goodbye to Mr. Asselin on the way out, and I missed the ITS.

Well, the application of new technologies is going to mean you're going to be speeding up the processing of vehicles on the roads, especially at the border crossings. We have a problem in Canada right now in the sense that the United States has agreed to spend $275 billion over the next six years on transportation infrastructure improvements. Most of that money is going to the road system. Some is going into rail. Correct me if I'm wrong, but I think $20 billion of that is going into intelligent transportation system application.

What that means is we're going to have a problem if we don't invest in a commensurate fashion on our side of the border. As more and more of our trade becomes north-south—in fact 80% or more of our trade now is between the United States and Canada—it means there are going to be more and more crossings, not just trucks, but rail as well. If the U.S. is spending public money to facilitate transborder movements and we do not have the commensurate infrastructure on our side of the border, that's going to negate a lot of the effects of the money the Americans are putting in. It's also going to mean we're going to be facing even more congestion than we already have at our border crossings.

So the application of ITS is crucial to facilitating the swift movement of cars and trucks at border crossings. Also, it's going to help provinces manage traffic flows on provincial highways. I just mentioned what Montreal is going to be doing on the boulevard Métropolitain and Décarie.

Cities are now using sophisticated methods of tracking to ensure proper traffic flows. I'm not advocating this, but some jurisdictions around the world are talking about road pricing. They're talking about the application of tolls that are higher at certain peak periods and lower at others, to try to even out the flow of the use of vehicles on the roads. I'm not sure we're going to come to that in Canada at this stage, although I don't know. Cities like Toronto, Montreal, and Vancouver in particular have a massive congestion problem.

The city administrations, and the provinces as well, for the highways around those cities, will have to look at the application of these technologies to improve traffic flows in the same ways they have with highway 407 in Ontario on the tolling mechanism. In addition, provinces should be allowed to give information to motorists to use certain other routes if routes are full, or even to control the access to these routes and price access according to the peak demands.

The Chairman: Mr. Morrison.

Mr. David Collenette: Mr. Ranger is the real expert on this, so he should say a couple of words.

The Chairman: Keep it very brief.

Mr. Louis Ranger (Assistant Deputy Minister (Policy), Transport Canada): If I may, I have a few words.

First of all, in terms of linkage with the debate today, in the report of the committee, dated February 1997, annex 1 has a section on new technologies and specifically refers to ITS. There's a reference to work done in the United States. In fact, the United States is quite advanced on this and so are many of our other trading partners. Japan is very advanced. Many European countries are very advanced. We could probably catch up fairly quickly, but we need to coordinate the deployment of ITS technologies.

If I may just take another 30 seconds, traditionally we've looked at our transportation system as a physical network of roads, rail tracks, and ports. More and more we have to think of our system as that basic infrastructure on top of which we need a second layer, which is the electronic highway system. Those two layers have to work together. This is how other countries are thinking about their transportation systems now, and we need to do the same here.

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The Chairman: I will allow any time that you want to add information. I'll be more generous with my time than I have been. I think it's valuable.

Mr. Morrison.

Mr. Lee Morrison (Cypress Hills—Grasslands, Ref.): Mr. Minister, I'm quite interested in your comments with respect to ITS, but when you don't have roads to drive on, controlling the traffic by high-tech methods seems to be a little bit of a redundancy. This is like taking your 1965 pickup and giving it a brand-new paint job.

First build the roads, please, and help the provinces. Then, when the roads exist, put in your ITS. Sure it might work now in southern Ontario and Quebec, but it's kind of an irrelevancy when you're driving through potholes.

The other point I would like to make is that when you mentioned the possible avenues of joint financing for the provinces and the federal government, you failed to mention the one avenue I think is most obvious. This is the use of the fuel tax your government has already been collecting to the tune of about $4.5 billion a year. To me, fuel taxes are the most fair, perhaps the ultimate, user fee. I've discussed this with you before with respect to aviation, but it certainly holds true for roads as well.

I see a parallel here. This business of collecting all this money from vehicle operators and then giving them nothing in return and throwing it into general revenue is just like the EI fund, in that you collect it from specific people and then throw it back into general revenue. I don't think that's proper or fitting. It's not the right way for a federal government to act, in my opinion. I'd like your comments on that.

Mr. David Collenette: The Government of Canada has traditionally shied away from dedicated taxes. In Europe, this is called hypothecated taxes, whereby you pay specifically for a particular service.

There's some degree of truth in.... I'm sympathetic to your arguments and those made by people on this score, because until 1994, the amount of money collected on fuel taxes more or less matched what was payed out. But the previous government, over nine years, allowed that disparity to occur, which was really out of whack. It's up there, and you're right. But as you know, we came in and found the books in bad order, so we had to make some tough choices. We're still just getting out of the hole that has been bequeathed to us.

So even if one could accept that we should go back to more or less parity so that there is some equality between taxes raised and expenditures made for transportation infrastructure, the fact is that as for the $4 billion you're talking about, if that were to be put back into transportation infrastructure, it means that in the present context, $4 billion would be coming out of general revenues.

So what are you prepared to cut? I ask you and your party, what are you prepared to cut? We're talking about big dollars. I can tell you that if you're talking about cutting big dollars, like $4 billion, from somewhere else in the expenditures of the federal government, then you're looking at social programs. You're looking at health care at a time when we're trying to put more money back in health care. Then there are pensions.

You may shake your head, but you tell me, Mr. Morrison, where the big bucks go in federal expenditures. Pensions receive $21 billion. We have health care. We have other expenditures on the social ledger. This government has introduced child tax credits and other expenditures for lower-income Canadians on the tax system. You're going to have to make it up that way.

So while I accept the general thrust of your argument that it's something we have to work toward as we progressively get the books in order, I don't think it's in the cards at this moment.

• 1615

As for the first point you raised, I think I addressed it to some degree by even saying that Saskatchewan—you're from Saskatchewan—is using ITS on trucks, I believe. What's the example? It's used for weigh-in-motion systems to monitor the use of heavy truckloads on rural roads. But you know that not all the highways in Saskatchewan have potholes. Come on, you can't tell me that. You wouldn't want to insult your own province that way.

Yes, they've got a problem, but the point is that the application of ITS is as germane to Saskatchewan as it is to southern Ontario, because by using the intelligence systems, you can help direct traffic loads and flows into certain roads rather than others, depending on their state of repair. Saskatchewan has been innovative, as I understand it, in compensating for the increased use of roads in the haulage of grain. Southern flows are usually over better roadbeds than northern flows because the trucks go back empty, but when come back to go south, they're full of grain and other commodities. But I think the use of ITS is as applicable to Saskatchewan and other provinces as it is to the more urban provinces.

The Chairman: Now we have Mr. Jackson. Before I go to Mr. Jackson, I'll just say that if I'm successful in controlling the time in the way I'm going, we'll have time for a second round. That's my intent.

Mr. Ovid L. Jackson (Bruce—Grey, Lib.): Mr. Chair, I have a comment and then a question for the minister.

I have to say that I'm an automotive mechanic by trade. I'm a licensed automotive diesel mechanic. I taught automotive mechanics. I know a lot about cars and transportation systems in general.

When we build a lot of cars, we use up a lot of farmland to run these cars on. The more roads we build, the more land we're taking out of production. The more cars, trucks, and what have you on the roads, the more problems we have with congestion, acid rain, and the use of natural resources. For instance, for building the stuff, we use electricity, steam, and what not. I want to make the point to the officials here today that when you get into the transportation system, you have to bear the environment in mind and you have to be mindful that you use all the things you require.

Cars use a lot of sophisticated equipment. That's why the cars are fuel-efficient. The last one we saw with Honda was an electric-automotive type of car. A good model is coming out in Japan this year. It will give about 50 miles to the gallon. It's actually a good model simply because....

You know, sometimes we think electricity is a panacea, but if you start using electricity, you have to double the utilities by building more hydro dams and hydroelectric stuff.

I'm not going to elaborate on this car, but I think it's not a bad idea, because they're using technology. You've got an absolute pressure sensor in the manifold, so you know exactly how much air's coming into the car. The injectors are computer-controlled along with the oxygen sensor in the exhaust, so we get a stoichiometric compound, which is the ideal mixture to make sure they get the correct stuff coming out of the tailpipes.

The question I want to ask you is this. When I sit on these committees, we seem to go from one study to the next, but we never get any damn thing done. In 1997 you had a study on ground transportation. I want to know what we can do and what you can do with that study.

Mr. David Collenette: Well, it all comes down to money. The provincial ministers have been beating their chests at meetings and saying that they need to have money from the federal government for highways. I told them that before that they had to get their premiers and finance ministers on side to deal with these issues and make sure highway funding is a priority.

Then what did we get? We got the declaration made by the premiers on health care. I don't disagree with that personally in terms of public policy, but I say to people like the provincial ministers who say they want money for highways that they should go back to their premiers, because they decided on another priority.

Perhaps, Mr. Chairman, I could just ask Mr. Sully to briefly comment on what we're doing in terms of meeting our pollution targets emanating from Kyoto. Really, the preamble to Mr. Jackson's question dealt with the issue of sustainable transportation and the environment. Mr. Sully is known in the department as the “Kyoto man” because he is heading up that effort. He could perhaps tell you what we're doing.

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

• 1620

We are part of the national process to try to develop a response for Canada to its Kyoto commitments. Along with a colleague from the NGO community, I co-chair the transportation table. We have 26 stakeholders around that table, and we were looking at exactly the kinds of issues Mr. Jackson has raised. In other words, we are seeing rapid increases in transportation across all modes, particularly with regard to personal transportation. And unless we take action, the emissions from automobiles, light trucks, and heavy trucks will be very much higher by 2010 than they are today. We have a commitment to try to reduce those.

So we are looking at some of these issues. We are looking at technologies. We have one specific subgroup, which is looking at vehicle technology and fuels, and in that context they will be looking at the full life-cycle issues—that is, the life-cycle costs in terms of direct cost in pollution, or environmental impacts associated with producing new technologies, either with regard to vehicles or to fuels.

[Translation]

The Chairman: I have in my hands a document which was given to us in English only. Normally, we do not circulate documents before they have been translated. Since at least three of our members are francophones, I would ask them if they would accept all the same that that document be circulated. We are having an information session today and no decision will be made.

[English]

Mr. Bill Casey (Cumberland—Colchester, PC): Could I make a comment?

The Chairman: Just a moment. Claude.

[Translation]

Mr. Claude Drouin (Beauce, Lib.): Mr. Chairman, we cannot read that document. We should therefore comply with our usual way of proceeding and require that the document be available in both official languages.

[English]

The Chairman: During five minutes, we won't have time to go into the report. You know that. So we'll give you the floor. We have it for five minutes. It doesn't prevent the committee from coming back to this report at a future meeting.

Mr. Bill Casey: To my French-speaking colleagues, I apologize. We did send this to translation. It didn't come back. But perhaps in my defence, I didn't have translation in my earphone when we first came here either. Anyway, I do apologize. We did mean to.

My goal is to respond to one of the minister's comments that he would like to know about the merits of public-private partnerships. As the only member from Atlantic Canada, the only part of Canada that has public-private partnerships for trans-Canada highways, I could tell you right now in my province of Nova Scotia, the results are.... As a result of public-private partnerships, a company in the Cayman Islands has more to say over the speed limits on the Trans-Canada Highway in Nova Scotia. Hurricane Holdings has more to say about who drives on the Trans-Canada Highway than the Province of Nova Scotia, because of public-private partnerships.

I really believe provinces have signed agreements deliberately, and deliberately broken them. I believe they've accessed millions of dollars of federal money under false pretences. In one case of a public-private partnership, I believe they were in such a panic to do it they threw away $27.5 million of federal money.

I really would like the opportunity to go through these and the only way I can do it is if everybody.... Just look at the map. There are two toll highways now in the maritime provinces. They are both marked in pink. I'm going to talk about the one in Nova Scotia first, the one that's marked A to B, because that's the most incredible result of public-private partnerships.

Highway A to B in Nova Scotia is the only way into the province. You can go the old blue way, which is the perfectly good Trans-Canada Highway, or you can go the new pink way, the Cobequid Pass. The pink road was to be financed under a federal-provincial agreement funded 50-50—50% federal, 50% provincial. The province changed the route and the price went up to $80 million, so they brought in a private partner rather than increase their contribution.

That private partner had to borrow money. They had to borrow money, and they went to the market and borrowed it from a company. And that company demanded.... They said we will give you the money to finance the new toll road in Nova Scotia, but we want control over the old Trans-Canada Highway, the blue road. So this company that loaned the private sector partner the money now has control over both main highways into Nova Scotia. These are the only highways that go on into Newfoundland.

• 1625

The major shareholder of this company is Hurricane Holdings in the Cayman Islands. That company controls the speed limits on the blue highway. That's the Trans-Canada Highway that we all paid for twenty years ago, but because of their demands the Province of Nova Scotia signed over control of the speed limits on the old highway. They signed over the weight restrictions on the old highway so that only a heavy-duty half-ton can pass on the Trans-Canada Highway that we all paid for. They made the province agree to not upgrade the highway and they made the province agree to give them the total authority to establish their own police force on the old Trans-Canada Highway.

I hope you understand this. They didn't lend money on the blue highway; they lent money for the pink highway. But in a panic to sign the agreement.... And in this package I sent you on page 33 are the actual terms of the agreement. In this the bondholder's representative, that's Newcourt Credit—the largest shareholder of Newcourt Credit is Hurricane Holdings in the Cayman Islands—may in its discretion direct the corporation to increase the toll rates to an amount estimated by Newcourt Credit to achieve a bond service ratio of 1.2 to 1.

What that means is a company in the Cayman Islands can decide the tolls on the only highway into Nova Scotia and Newfoundland for trucks.

If you go over to page 35, this company that has the major shareholder in the Cayman Islands also said, on the second paragraph, the one marked ii, that they would only lend the private sector partner money if the speed limit on the Trans-Canada Highway is lowered by 30 kilometres per hour. It's right there on page 35. And the Province of Nova Scotia agreed to it. They were under tremendous political pressure to solve this problem.

The next paragraph says the company in the Cayman Islands tells the province they cannot upgrade the Trans-Canada Highway.

Paragraph 55 makes the province guarantee they won't build another highway.

Paragraph 56 says the province will enforce a restriction on trucks having a gross weight of five tonnes. That's a heavy-duty half-ton. This is the the full-fledged Trans-Canada Highway that the company that has the major shareholder from the Cayman Islands got control of.

Even crazier, on page 36, paragraph 59:

...the Province shall permit the Bondholders' Representative...to establish and enforce the Specified Enforcement Measures.... The Province agrees promptly to grant to the Bondholders' Representative

—that's Newcourt Credit—

or its designate all necessary power and authority to carry out the Specified Enforcement Measures....

What that means is Newcourt Credit can establish their own police force to police the blue road, not the one they financed, but the competition, the Trans-Canada Highway, if they think that trucks are using it. Then they can send the bill to the Province of Nova Scotia for 30 years.

The next paragraph says that even if they scare the trucks off the highway, they can continue to police the Trans-Canada Highway.

This is absolutely crazy that in a country like Canada the federal government cannot change the speed limit on the Trans-Canada Highway in Nova Scotia, nor can the provincial government change the speed limit. Hurricane Holdings in the Cayman Islands has more to say about that highway than the provincial government or the federal government. It's just absolutely ludicrous.

I'm so glad to have this opportunity to try to get this to you, because you wouldn't believe it if you didn't have the documents. The documents are here.

I also want to say that this highway was funded under a strict agreement that the minister just mentioned, and it is on page 16. This is the agreement that financed that pink highway, and it's between the Government of Canada and the Government of Nova Scotia. There are only two parties, not three. It's very distinct. If you turn over to clause 6.1 and 6.2 on page 19, it says that the Government of Canada shall pay for 50% of the total eligible costs of the pink road, and 6.2 says that the Government of Nova Scotia will contribute 50% of the total eligible costs of the pink road.

The province broke that agreement, because they are only investing about 24% of the total eligible costs on the pink road because they brought in the private sector partner.

• 1630

The Chairman: Mr. Casey, I will allow some time for a response if there's an interest in responding, and I will say that I have just allocated you your second round.

Mr. Bill Casey: And I appreciate it. Can I make another comment?

The Chairman: If you can say it in 15 seconds.

Mr. Bill Casey: I can.

This is a very serious matter. The one in New Brunswick is just as bad. It is not an interprovincial problem; it is a bilateral problem between the Government of Canada and the governments of the provinces where they are abusing the federal government. And the government, with all due respect, is not holding them accountable. Newcourt Credit and the Cayman Islands would not have a say in the toll highway in Nova Scotia or the Trans-Canada if this contract were enforced.

It's the same in New Brunswick. I'd be glad to share the information with anybody.

The Chairman: Thank you. Is there a response to this?

Mr. David Collenette: Mr. Chairman, I almost thought I was in a courtroom somewhere with Mr. Casey with his affidavits and coloured charts. I brought my own lawyer.

Some hon. members: Oh, oh!

Mr. David Collenette: I don't know whether we'll have time to deal with this today.

I think, as I said in the House, Mr. Casey has raised an interesting point of public policy that we all should be seized of in terms of determining the use of public-private partnerships in federal-provincial highway funding in the future.

Now what he's talking about is something under existing agreements, and I'd just like to make a couple of points. The Trans-Canada Highway was originally a cost-shared program between the federal and provincial governments, and it was a single highway linking St. John's to Victoria. Since then, many provinces have used the Trans-Canada Highway designation on other highways—for example, Highway 7 in Ontario and the Yellowhead Highway in western Canada.

The Trans-Canada Highway is not a federal highway. The only federal highways that exist are in national parks. The provinces own their respective portions of the Trans-Canada Highway except for those through federal parks. As such, they have the total jurisdiction to enter into agreement with whomever they wish concerning the construction, operation, and maintenance of their highways, including the federal government in terms of contributing costs.

In the case of the Nova Scotia toll highway—and I realize Mr. Casey is seized of this issue—the federal contribution was—

Mr. Bill Casey: Who wouldn't be?

Mr. David Collenette: —not for the total toll highway but for the specific contracts totalling $55 million, and it was cost-shared 50-50 with the province. The federal and provincial governments have equally shared the cost of the projects defined by individual contracts approved by the management committee. It was never intended that the $100 million plus project was to be cost-shared under the agreement. As I said before, the moneys we have put in and the province has put in have been taken out from under the tolling cost structure that has been developed.

I have to say—and I have a lawyer present and he might want to say it to back me up—that what the Province of Nova Scotia has done and what the Province of New Brunswick has done is entirely legal and within their right to do.

Mr. Casey has constructed an elaborate case here, which may or may not have some accuracy to it. But the place for him to take his case is not this transport committee of Parliament and not really to ask questions in the House of Commons on it beyond the ones I've already answered, which are legitimate. He should really be going down to New Brunswick and to Nova Scotia to ask the questions of those provinces. But I have to say that from our point of view we see those provinces doing nothing wrong with respect to the issue of federal contributions, and they have total control over the designing, building, financing and operation of their highway system. So these are provincial matters. The arguments I understand are being made at the provincial level, but they're not really applicable here.

The Chairman: Mr. Sekora.

Mr. Lou Sekora (Port Moody—Coquitlam—Port Coquitlam, Lib.): Welcome, Mr. Minister.

How do you feel about this year's budget and next year's budget in terms of transportation on highways, money in the budget for highways?

Mr. David Collenette: Mr. Sekora, we all live in hope in everything in our lives, and I live in hope that the Minister of Finance will find a few bucks for the transportation infrastructure system. I do think that given the consensus that's been developed nationally between the provinces and the federal government, and what the Prime Minister said, what the premiers have said, we shouldn't be looking at massive federal-provincial highway funding renewal in the next budget.

• 1635

That's not to say Mr. Martin won't be able to find some funds for specific initiatives, but I think the work we are doing now is going to be valuable, because at some point we will have to re-fund these programs. It's useful to get ideas, especially on the use of private-public partnerships and how that impacts on federal-provincial highway agreements. I think it's useful to have these discussions and do the kind of work we're doing today.

The Chairman: Are you through, Mr. Sekora?

Mr. Lou Sekora: Yes.

The Chairman: Ms. Desjarlais.

Ms. Bev Desjarlais (Churchill, NDP): In spite of everything that might be perceived from Mr. Casey's presentation, I think he raises concerns that put a real fear in a number of people. I certainly believe Canadians feel the Trans-Canada Highway should be something that operates in the same manner right across Canada, and I think there is a belief out there that it does. What we see here is a situation that seems scary, not just to myself but to a number of other members as well.

In spite of where you feel it should be dealt with—and you might get tired of hearing about it in the House of Commons—sometimes that's the only manner we have to make Canadians aware of something we find extremely unsavoury for our country. If we're really working to ensure we are trying to keep Canada united, we need to keep pushing the issues of national systems and funding those systems, because that's all part of keeping us a united country.

Quite frankly, most Canadians, most people I meet with, not just in my own riding, believe strongly in that and don't mind seeing some of their tax dollars go to that. I will agree with Mr. Morrison on this issue, because it comes up all the time. They want to see some of those gasoline tax dollars spent on the highways.

This summer the issue came up about part of the Trans-Canada Highway being washed out because the beaver dams overflowed. When I read that in the paper I had to chuckle and thought, my God, when we're blaming the beavers because the highway is under water something is seriously amok here.

We need to do whatever we can to maintain a highway system that is in decent shape—certainly the Trans-Canada, but the rest of the roads as well. People want to be able to have the opportunity to see other parts of the country by travelling on the highway system.

On the issue of the private-provincial partnerships or government partnerships, I'm curious how liability would fall. It's probably good that the lawyer is here. It's in the questions, so I just want to hear your answer.

Mr. David Collenette: On the first point, you are essentially making a philosophical statement, and I must admit I find much of what you say to be quite valid; it reflects my own personal views. You're really saying that if we have a national highway system, certainly the main ribbon of that system from coast to coast should be publicly accessible without charge. In an ideal world that's quite a valid proposition, but that's not to say that's the only way one can do it. If there's a national consensus on that, it's something we have to work toward.

Some of the premiers have mentioned—I think Mr. Tobin has come out on record and maybe the other Atlantic premiers have—that there shouldn't be tolls on the Trans-Canada Highway. But as I've said before, the Trans-Canada Highway is not a federal highway. This is a highway that was built 30 years ago as sections of a national network. The program ended. In fact the bill was repealed in 1972, and these highways are provincial highways. The question now is whether or not we, as a matter of public policy, should say the main road from coast to coast should be free of tolls. That's a legitimate thing we should be talking about, and I have some degree of sympathy with it.

On the question of liability, provincial highways, as in the case of Nova Scotia and New Brunswick, are matters for the legislatures in those provinces. Any liabilities, I would assume, are covered under the agreements. When you talk about liabilities, are you talking about dealing with the construction of the highways?

Ms. Bev Desjarlais: That's part of it.

• 1640

Mr. David Collenette: I assume, and I will ask my legal counsel to mention it, that's all within the ambit of the agreements that are quite legally entered into by the provinces and these private companies.

Mr. Robert Green (Departmental General Counsel, Transport Canada): That's a broad question.

Picking up, Minister, from the comments you made, first there's a contractual relationship, so obviously there will be issues of whether there has been a breach of contract, for example. But if you're getting to the other issue of an accident, for example, occurring on the road, then speaking generally one would look to the owner-operator of that road if you can attribute some wrong to them that was a factor in causing the accident. So they would be in the same position as the province. If you can attribute the fault to the province, you can attribute the fault to the owner-operator of the road. Then you would go after them if you suffered harm.

Mr. David Collenette: Mr. Ranger has a point.

Mr. Louis Ranger: The question is interesting, because it was raised in the context of PPP. Traditionally, departments of transport or departments of public works would have their own group of engineers who would design the highway and then the construction would be contracted out. If an accident happened at a later time and the cause could be traced back to poor design, then obviously the government had provided its own engineers, who are liable. What's interesting now with public-private partnerships is that can be contracted out. More and more you have the design-build model where you contract out the design and the construction, and if something goes wrong with the design, the contractor is liable.

The Chairman: Mr. Anders.

Mr. Rob Anders (Calgary West, Ref.): Thank you very much, Mr. Chairman.

I'd like to thank Mr. Casey for providing this documentation today.

Mr. Bill Casey: You're entirely welcome.

Mr. Rob Anders: Mr. Minister, I have to say I believe the federal government has a fiduciary responsibility to enforce its own contracts here, so I don't think it's easy to pass off in terms of saying this is a provincial responsibility. The United Fruit Company would have been proud of the efforts here on behalf of the governments, like the contracts they negotiated in Honduras and Guatemala years ago.

Keeping on that vein, Mr. Minister, can a province charge a fee on a highway that was already 100% paid for through a federal-provincial agreement? If not, what are you going to do about it?

On my second question, I'm going to quote a former colleague of yours, Brian Tobin. He said:

I believe the national government has to have a policy in effect that says if they're going to participate in the funding of highways, be that in New Brunswick or anywhere else, then a condition of that participation is that no tolls can be implemented.

I'm wondering what you think of your former colleague's statements and whether or not you agree with Premier Tobin on that in your thoughts.

Another question I have is on the fuel taxes. You said you agree with the idea of hypothecated taxes or directed fuel taxes because, as you know, you generate far more money in terms of fuel taxes than you put into transportation infrastructure in this country. Then you went ahead and blamed the opposition for your deficit budget crunches, yet you continue to spend $4 billion a year on corporate welfare in this country. You continue to go ahead and transfer money to foreign governments and fund the crown corporations of your will, yet for some reason transportation doesn't seem to be of a high concern.

I'm going to wrap up with question—

The Chairman: You should ask questions in order, because there hasn't been one. We're here for a purpose.

Mr. Rob Anders: The question, therefore, is what percentage of fuel taxes go toward highway construction and maintenance, and why is the minister taking more than is required to build and maintain roads?

The fourth question has to do with a commitment the minister made in December 1997, when he agreed with the Federation of Canadian Municipalities that more funding was required for the national highway system and this needed to be addressed in the near future. When is that money going to come, and how much will there be? Is there a delay between what the minister says and what the minister thinks on that issue?

The last thing is why does the minister talk about intelligent highways when there are contests in this country for having the worst highways and when we have crumbling two-lane highways?

The Chairman: Keep in mind this is not question period, by the way. We are not here to ask the minister what he will be doing or why he is not doing something. We are here to get information to assist us, the committee, in planning our future work. So most of the questions are relevant to the reason we are here.

• 1645

I will open it up for responses or reactions, if you wish.

Mr. David Collenette: There are a series of rhetorical questions there that are good for a parliamentary debate.

Some of the issues I've already dealt with, such as the issue of dedicated taxes. I don't know if Mr. Anders was in the room when I gave my answer, but certainly what he said I said is not borne out by the transcript. I think I was pretty clear on that. I talked about the fact that in the past, tax revenues and expenditures on transportation infrastructure were more or less equal and that starting in 1984 it really got out of whack. Nothing much has changed, but that is because our priority has been getting down the deficit and balancing the books, which I thought the Reform Party also had as a priority.

I'm interested to see this afternoon that both Mr. Anders and Mr. Morrison have revealed themselves and their party to be outrageously big spenders, because they want us to take $3 billion or $4 billion and spend it on highways. I asked them what they're prepared to cut. It doesn't appear that they're prepared to cut anything. Therefore, we're going back to deficits.

But to get away from these rhetorical issues, which I don't think are serving the committee well in the context of today's reference, the one point my officials and I can just touch on is this whole issue of what is done now under federal-provincial agreements and what is to be done in the future. I think a valid point has been raised that when these agreements were signed in the past we did not anticipate the use of public-private partnerships. As a result of the debate we have had recently and with the most recent agreements we've signed, we anticipated this, and perhaps Mr. Sully or Mr. Green would like to comment on it.

I think what really the committee should be doing, and is doing, hopefully, is helping us to come forward with a model for future federal-provincial highway funding agreements, not just years from now, because we've already taken it into consideration, but how we can deal with this initiative in the future. That's one issue.

The other issue is what Madam Desjarlais said, which is whether or not we should be exempting certain portions of the national highway system from allowing P3 involvement where there is a federal contribution. So there are two separate questions here.

Perhaps Mr. Sully could just mention what we've done recently to ensure that this issue, which is a valid one, is addressed.

Mr. Ronald Sully: Thank you, Minister.

With regard to the most recent extensions of agreements with both New Brunswick and Nova Scotia, we have inserted wording into those agreements that basically prohibits the province from levying tolls on those highways that we are providing funding for without the prior approval of the federal government. In other words, it's not that they could never levy tolls, but before they did they would have to enter into discussions with the federal government. This is to allow us time to finish the work the minister was talking about that was started in the past year with the provinces, whereby we're trying to work out a common approach and agreement on private-public partnerships, including the question of tolling. So that prohibition is there for a time. It's up to 30 years, and, as I say, it remains there until such time as we reach agreement on how these tolls would be treated.

The Chairman: Mr. Cannis.

Mr. John Cannis: Thank you, Mr. Chairman.

Minister, it's good to have you here.

I want to make a comment first, Mr. Chairman, before I ask my two simple questions. The comment starts off mentioning a little bit about what we have and the work you've done in this committee and the spirit of cooperation that exists between our side and the opposition side and leads up to Mr. Casey's presentation. I must express that he and every member of this committee will recall the purpose of this meeting, and that is to gather information and not to become another question period, as the minister mentioned. I think Mr. Casey and every member who was at the last meeting recall how willingly and with a spirit of cooperation we wanted to look into this matter.

I personally found it very distasteful—and I will state it here—to pick up the paper and see the cacophony of condemnation that is so exploited and the rhetoric that goes on.

• 1650

I say this to you directly, Mr. Casey. There are a lot of good intentions on this side to listen and to try to come up with some solutions, some suggestions. I personally don't appreciate it when I read an article and it condemns the government and so on. I think from my side you're going to start seeing some more resistance to questioning the intent of bringing this issue forward.

I'll get to my question now. Minister, you said in your statement that “highways are a provincial responsibility.” Then you went on to say that we want to harmonize, we want to bring forth regulations, we want to standardize, etc. The problem I think most people have, myself included, is that there's really no clear definition here. If the provinces are responsible, then what role do we play as a federal government? What are we going to be harmonizing? What are we going to be standardizing? What regulations are we looking to implement? If we can clarify the responsibilities of the federal government and the provincial governments, then I think we can build on that.

My understanding growing up was that we indeed had a highway system that acted as a bond to keep our country together, as vast as it is. We have in the greater Toronto area, for example, the 401, Highway 7, and the 407, and there seemed to be options there. When I look at the examples we experience in the greater Toronto area—and this is where Mr. Casey and this issue has my ear—I choose not to use 407, but I can use Highway 7 or the 401.

When I look at the discussions and some of the points you made—and I haven't read this, but I intend to do so—for me, the issue we at least must lend our ear to is who has the jurisdiction. It might be a legal question. Maybe the onus falls on the provincial representatives, Mr. Casey.

Minister, perhaps you could just take two minutes and elaborate on what you meant when you said “highways are a provincial responsibility”, yet we want to standardize, we want to regulate together, we want to harmonize. What are we going to be harmonizing if we have no say? And if we have a say, what say is that?

Mr. David Collenette: It's a legitimate question, because a lot of Mr. Casey's public statements have been predicated on ambivalence on the issue of constitutional jurisdiction.

Under section 92 of the Constitution Act the provinces have exclusive jurisdiction over highways. In fact, I'll read section 92:

In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say,—... Local Works and Undertakings...

There was a Supreme Court decision in April 1900 by Justice Sedgewick of the Supreme Court of Canada, and it's useful to read a sentence from that judgment:

It has never been doubted that the right of building highways and of operating them, whether under the direct authority of the government or by means of individuals, companies, or municipalities, is wholly within the purview of the provincial legislatures. And it follows that whether they be free public highways or subject to toll authorized by a legislative enactment, they are nonetheless within the provincial power.

This is a Supreme Court judgment that was made in 1900 before anybody was really driving much. There were hardly any cars around. The first cars came in in the early 1890s, and yet we had a judicial interpretation, which has guided us for the last 98 years.

The federal government does have constitutional jurisdiction under paragraph 92(10)(a) of the Constitution Act over truck and bus companies that regularly operate across provincial boundaries. These are extra-provincial carriers.

The Motor Vehicle Transport Act, which you will be amending in the next few months, does allow the provinces to regulate these companies under their own legislative and regulatory framework within the confines of that act. It is a national statute, not unlike the Criminal Code, where it's enacted by Parliament, but its application is by agreement with the provinces in carrying out the administration of the Criminal Code. So there's an analogy there.

The federal framework legislation can be used—and these are interesting arguments that will come up in your deliberations—to restrict the application of provincial law to extra-provincial carriers, as it currently does, by forbidding provinces to apply economic controls and to create tariff regulations and the like to extra-provincial trucking operations. But the act does not have any bearing on highways themselves. It simply deals with the interprovincial carriage of those trucks and buses.

• 1655

I understand where Mr. Casey is coming from. Again, it's something legitimate that we have to talk about. The proposed tolls he is talking about would apply to all traffic on the highway, not just to extra-provincial trucking operations.

So it's not as if the province of New Brunswick or Nova Scotia is singling out an area that is exclusively within the jurisdiction of this Parliament to legislate on, but that is administratively operated by the provinces. And that is interprovincial trucking, extra-provincial trucking, and bus operations. Also, the tolls he is talking about don't really discriminate between New Brunswick carriers and those from other provinces.

Again, this is something that I think really underscores the fact that the provinces are being catholic, in a small-c sense, in the application of the regime on these tolls.

But, you know, there is an agreement on internal trade that I mentioned in my speech. There is a mechanism within this agreement to deal with these disputes. If Mr. Binns and Mr. Tobin feel aggrieved, and in the case of Mr. MacLellan with respect to New Brunswick, if he feels aggrieved, then they should really use the process we have set up to deal with these particular disputes. I've read there's an Atlantic premiers conference coming up. I think Mr. Binns has been quoted as saying this. So why don't they talk about this at that level?

In other words, where I object to Mr. Casey's tactics is where he is sort of leap-frogging over a whole set of agreements and procedures we have negotiated with the provinces and appealing to the use of extraordinary powers within the Constitution. These matters should really be dealt with first in the provincial legislatures, secondly by the Atlantic premiers, and thirdly by the agreement on internal trade and its adjudicative mechanism.

Mr. John Cannis: Thank you. You clarified the answer to a question we all had.

The Chairman: Mr. Dromisky.

Mr. Stan Dromisky (Thunder Bay—Atikokan, Lib.): Thank you very much, Mr. Chairman.

Thank you, Mr. Minister, for this type of information. That's getting us back into the academic realm in our effort to gather information. This is what we're here for; we are not here for political rhetoric.

Much has been said about the situation in Nova Scotia. I know there are legal aspects here that are going to be dealt with, so I don't really want to get into this area.

There is a lot of money involved here. We have examples south of the border where there have been toll highways for a great number of years. I'm just wondering if there's any information within our department on several things. First, we should see whether or not states and neighbouring states have had the same kinds of concerns that are being raised by the people in Nova Scotia, Prince Edward Island, New Brunswick, and Newfoundland. The second point relates to the money being raised. I'm wondering if we have any information about the number of entrepreneurs in the private sector who have been rushing to all of the transport offices in each of the provinces trying to swing a deal to have a very profitable enterprise, possibly in cooperation with some of those departments. I wonder about this, because as our newspapers indicate, this is a very lucrative enterprise.

I don't know whether we have any other models we could take a look at in the United States, for instance, that will give us some of the information pertaining to which is the best kind of model. Where are the best models and the most effective models that are catering to the transportation industry without raising the kinds of concerns that have been raised here? There are parallels and a great deal of similarity between the two. Do you have any information at all in the ministry?

Mr. David Collenette: I have been doing too much of the talking. I would ask Mr. Ranger and Madam Burr to deal with these answers.

Mr. Stan Dromisky: Okay.

Mr. Louis Ranger: The U.S. Congress not long ago passed a new bill called the Transportation Equity Act for the 21st Century, which they call TEA-21. For the next six years, they will have a budget of over $200 billion for ground transportation, much of that money going to highways. Much of that money will be available because it will come out of an existing trust fund, the Highway Trust Fund, which is replenished year after year, day after day, from fuel taxes. Every gallon of fuel consumed in the U.S. generates 14¢ that goes right into that fund, not to mention the taxes on tires, vehicle registration, and several other things.

• 1700

Needless to say, with that kind of money available there is pressure on this side of the border, because part of that money obviously will go to so-called NAFTA corridors, or big north-south corridors, so there will be a expectation that some moneys will be available on this side.

I'd like to say a few words about tolling in the U.S. There was this practice that generally speaking you would not have tolls on the interstate highway, but that is evolving. For example, under the TEA-21 legislation, there will be a number of instances where states will be allowed to actually charge tolls on sections of interstate highways, not to mention the tolling that is widespread on intrastate highways. In fact there is a special fund precisely to help fund toll systems for highways, bridges, and other facilities where tolls can be collected. So there is widespread use of tolling in the United States.

Mr. Stan Dromisky:

[Editor's Note: Inaudible]...indicate that consumers or citizens have been complaining about the tolling system because it has a direct effect on the price of goods that are being transported by trucks or whatever. I'm just wondering if the same kind of thing has been happening there as is happening in Nova Scotia—the same kinds of concerns being raised.

Mr. Louis Ranger: I think gradually we're moving from this notion that highways are a public good, like health and education, and we're seeing people accepting that—as the minister said—there's no such thing as a free highway. It has to be paid for somehow, either through general taxpayers or through users. And user recovery is more and more a practice. So people are becoming accustomed to that. There's quite a culture in Europe, for example, for tolling. This is new for North Americans, but slowly but surely that concept is being accepted.

The Chairman: Mr. Keyes.

Mr. David Collenette: I have just one point, Mr. Chairman. In terms of actual mileage, to back up Mr. Ranger's point, in the United States in the interstate system—this is comparable, one would say, to the Trans-Canada in the fact that it was built through federal-state dollars, and in fact it was largely federal dollars—there are over 41,000 miles of free highways and 2,300 miles of toll roads, which is relatively new. Now that's not on intrastate highways, that's on interstate highways, largely funded by the federal government.

If you extrapolate that and put it in the Canadian context, that means there is a movement in the U.S. to the kinds of things Mr. Casey is objecting to in New Brunswick and Nova Scotia, sections of an “interprovincial highway” being tolled. It doesn't make it right. This is just to let you know the Americans are doing it.

Mr. Bill Casey: Could I just respond?

The Chairman: No. I allowed you 13 minutes. I have to be fair to everyone.

Mr. Keyes.

Mr. Stan Keyes (Hamilton West, Lib.): Thanks very much, Mr. Chairman.

I'd like to follow up on what Mr. Ranger and the minister were referring to, and hopefully get an answer from the minister. I'll go beyond our own borders to the U.S., where, as Mr. Ranger has indicated, they are investing huge sums of money on international trade and transportation corridors and the planning of those corridors, as well as some cross-border infrastructure. Is the department seized with any of that kind of activity? And if not, should the committee be seized of any of that kind of activity?

Because of limited funding, there probably would have to be a balance between whether you're looking at international trade and transportation corridor planning or cross-border infrastructure, and what you're going to do with a part of the Trans-Canada in Saskatchewan. Which comes first? Where is the money going to be allocated first?

The second part of my question comes on the heels of what the minister said. Looking at it in its broadest terms, the U.S. is going to plan to have, and eventually will have, very expensive wonderful highways. We in Canada, through public policy, decided that we would rather have a free health care system.

• 1705

Minister, do you ever see the day when...? Maybe you can add to your comments. Do you ever get a feeling from the provinces about our national highway system that the province would say that if you, the feds, want to take this road back, then that's fine with them, because it's costing them a hell of a lot of money?

Say one day the federal government seizes control of an entire—this is maybe even from sea to sea to sea—national highway system and we take a cue from some of the dedicated funding. I guess that's what it's popularly called coming through the U.S. in terms of its fuel taxes. So my constituents, or anybody's constituents around this table, understand that if money is being put into the general revenue fund at present, with the taxes being generated by fuel taxes, an additional one cent to two cents per litre would be dedicated solely to the reconstruction of a national highway system. This would be in order to have a better economy, better transportation system, and more jobs created, etc. Do you see the day when we would either take control or work in partnership with the provinces in order to dedicate funding in order to ensure a better highway system? It's sort of a twofold question.

Mr. David Collenette: As for the whole notion of the federal government “taking control”, we have enough spats in the federation as it is without using whatever extraordinary means to do this.

Mr. Stan Keyes: It's just the willingness.

Mr. David Collenette: You're wondering whether the provinces would seed this. I just don't think that would ever happen. You're talking about a specific national highway ribbon.

Mr. Stan Keyes: I mean like the Trans-Canada.

Mr. David Collenette: Yes, it would be like the Trans-Canada.

I'm not sure that would ever happen. I'm not sure it would even be desirable. It's probably better for the provinces to continue to maintain and operate these highways. I just don't think that would ever happen or be desirable.

Now the point you raised about the dedication of any future tax increases to specific highways as such is an interesting one. It's something we've never really done, although you could argue that we did dedicate part of the fuel tax for the reduction of the deficit, which is still in play. That's a legitimate debate, and I suppose the Minister of Finance would be interested in hearing arguments pro or con. But based on past evidence, I don't see that we would go that route.

Now on the interesting point you raised about the corridors, maybe Ms. Burr could talk about this, because this is an area of her expertise and she's been doing a lot of work on it. It might be of interest to the members.

Ms. Kristine Burr (Director General, Surface Transportation Policy, Department of Transport): Thank you, Minister.

This is an area we're looking at quite closely. As some members may be aware, one of the points in the new U.S. legislation, the Transportation Equity Act, is a major provision of funding for what they're calling corridor planning and border crossing planning. There's a condition actually in the legislation that says groups on the United States side of the border who want to access this funding have to strike up partnerships with groups on either the Canadian or Mexican side of the border. So there are groups of interested Canadian stakeholders right across this country who are trying to figure out what this means for them, their part of the country, and their border area.

What we're doing at Transport Canada on a couple of fronts is trying to prepare to deal with the pressures we're going to get for assistance from these groups to help them deal with the American situation. We're providing information on a range of issues dealing with the actual freight system and passenger transportation system in each region of the country, because often what people are really concerned about are bottlenecks reaching the border.

We're also working very closely with Foreign Affairs, Revenue Canada, and Immigration to be assured that from a federal standpoint we're providing all the assistance and support to ensure that the transportation issues are dealt with in a streamlined way by government and that we're not part of any impediment to transportation.

• 1710

We've also developed a consultation strategy that we intend to take to our provincial counterparts, because we think this is one area where it's not just a question of the federal jurisdiction being involved. We have to figure out a way to ensure that we have people in the provinces, federal government, and even indeed municipalities in some cases—we're talking about border crossings like Windsor, for example—working together to resolve any corridor or border-crossing issue that might come up.

Finally, I'll just mention that in many cases the real issue is the border crossing itself. We have to make sure congestion is dealt with. This takes us back again to the question of intelligent transportation systems and new technologies that can help make sure that transportation moves as quickly as possible.

Thank you.

The Chairman: Thank you.

This completes the first round. We have 20 minutes left. On the second round, Mr. Casey has used up his time. There may be a third round.

For Mr. Morrison, Ms. Desjarlais, and Mr. Jackson, we have three-minute rounds.

Mr. Lee Morrison: Mr. Minister, you've expressed a degree of sensitivity to provincial jurisdiction, provincial rights, in the case of roads. But I haven't noticed your government being that sensitive in certain other endeavours—for example, health, the environment, or the registration of firearms. It seems to be a little bit selective. I'd like you to comment on that.

I would like to make a comment to you, Mr. Minister, with respect. You're a witness, but you looked across at me and asked what I would do. I have to respond to that. You asked, effectively, where I would get the money for other programs if I took the excise tax out of general revenue and put it into roads.

I'm sure you have in your files a rather detailed proposal presented by my party for cutting 10% of the federal budget without touching health, education, or welfare. We think it's sound. It's certainly actuarially sound. Obviously many would disagree with our methodology, but it's possible. So when you bring in these red herrings and start to bring health care to the table here, I don't think that's really the proper thing to do.

Anyway, there's also my question about jurisdiction.

Mr. David Collenette: On the last point, that's something for general debate. We don't think your party's platform holds up in the clear light of day, actuarially or otherwise.

In terms of sensitivity to constitutional jurisdiction, I think one of the hallmarks of this government is that we have been extremely sensitive to dealing with the provinces in a fair and equanimous way. The social union talks, for one, show that we're trying to bring some order to social spending to deal with the constitutional prerequisites of both levels of government in a proper way to deliver services to Canadians.

You mentioned health care and firearms. These are areas where there's no question that the federal government has some jurisdiction. In the case of firearms, it has the entire jurisdiction. The Criminal Code comes to the Parliament of Canada. In health care, there's a shared role.

But in the case of highways, the designing, building, and operation of these highways are clearly, as I said, from Supreme Court judgments, within the ambit of the provinces. But the provinces have required federal funding, and since 1919 we've been involved.

I guess it's not wrong to say that wherever federal dollars are implicated, we then reserve the right to set certain conditions on federal financial participation based on federal concerns. That has been reflected in existing highway agreements, and certainly will be a feature of any other transportation funding. In other words, we're not just going to write blank cheques.

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The federal jurisdiction has legitimate constitutional prerequisites, or rights and policy goals, in transportation for the movement of goods and people. I think it's not unfair for us to demand certain conditions in any federal-provincial highway agreements. So I think our position is entirely consistent.

The Chairman: Ms. Desjarlais.

Ms. Bev Desjarlais: I have two questions. One is on number six, about the trucking industry and whether or not there will be a move towards national trucking standards. I think you had it in the questions. Did you have a copy of our questions?

Mr. David Collenette: Yes.

Ms. Bev Desjarlais: The other question is in regard to Operation Respond. If we can have an intelligent transportation system, how can it be so hard to implement Operation Respond and put the safety of Canadians just that much further along the line?

Mr. David Collenette: Operation Respond is something I'm not going to deal with today, because I think a lot of members have been taken in a bit by certain lobby groups, and just about every member of the House has written on this to me. I've written a letter, which I can make public, to tell you why the federal government takes the position it does on the movement and identification of these hazardous products.

The Chairman: Mr. Minister, may I interrupt to say that this issue was not presented by any member of this committee as a possibility for study.

Ms. Bev Desjarlais: My understanding is we were free to ask any other questions in regard to whether or not we decide on what we were going to do later on.

The Chairman: You can ask any question you want when the time is yours. I'm just saying that it's not appropriate. If the minister wishes to respond, it's up to him. In the list of issues you have selected that does not form part of the list. It has never been brought up as an issue that this committee may be looking at. So that has been said.

Mr. Minister.

Mr. David Collenette: The question is are we moving toward a standardized and harmonized set of safety standards across the country for the trucking industry. The general answer is yes. I'll give Ms. Burr the chance to give the specifics there.

Ms. Kristine Burr: Thank you, Mr. Minister.

The federal government is working closely with the provinces on the implementation of the national safety code, which is an undertaking that has been under way for quite some time. The Senate actually had requested that we implement a national safety code as a condition for approving the Motor Vehicle Transport Act back in 1987. The jurisdictions have been working toward this end ever since. This is a fairly complex area, covering a range of very technical issues, such as hours of service, driver profiles, and other issues that have tended to reflect individual provincial practices over a long period of time. The effort to harmonize these areas has taken a while, but progress has been made. As a result, we now have national safety code provisions in a range of areas.

This summer in fact progress was made on establishing a facility audit code element, which I think is one of the areas that was of most concern to the trucking industry. So we are moving forward and in fact will be incorporating the national safety code as our basis for safety regulation under the amendments to the Motor Vehicle Transport Act, which are coming to this committee we hope very soon.

The Chairman: Mr. Jackson.

Mr. Ovid Jackson: Mr. Chair, being a nice guy, I'm not going to use up my full three minutes; I'm just going to ask a question that I think will maybe help fully answer some questions we've been fiddling around with.

We've been talking about the taxes on gas that we collect, in excess of some $4 billion. All that money was used for building roads. Who inspects these vehicles? Toxins come out of the tailpipe such as NO₂ emissions and hydrocarbons, and carbon dioxide and carbon monoxide, tire dust. Is none of this money used for the environment, in terms of how people get sick with emphysema from the things that come out of the tailpipes of vehicles? Is this money just going to be used for building roads?

• 1720

Mr. David Collenette: Well, in terms of determining safety standards, any new vehicle in Canada has to have safety approval from Transport Canada.

Existing vehicles are ones that have come under the provinces. And you're right. The impression has been given that all the money collected on fuel excise taxes should therefore be plowed back to roads. But there are a lot of expensive regulatory functions that are undertaken by the federal government in the transport domain.

Aside from the fact that the taxes that go into general revenue are used for other programs, there are other areas such as the one you mentioned, the regulatory oversight of the federal government, not just for new vehicles, roads, and all the rest, but also for inspections on planes. Our regulatory environment on planes is very, very important, especially these days. There has been a lot of concern about that with the various accidents. There has also been concern about rail safety.

The whole safety regime, the oversight, all has to be paid for, and it has to come out of general revenues to pay for the department's budget. I think you're right to raise the fact that the impression is given that somehow all money raised from fuel taxes should go back to building roads.

The fact is, the federal government has other transportation regulations and they have to be paid for somehow. Therefore, these moneys go into general revenues and fund not only other government priorities, such as health care, pensions, and the like, but other transportation-related endeavours.

Mr. Ovid Jackson: The fact of the matter is that people could get sick from the stuff that gets into the atmosphere, and it is also based on how much you use a vehicle. We know the new vehicles are not contaminating the atmosphere as much, and one of the best things we can do is remove the old vehicles from the road, because of the good standards.

Notwithstanding that, the more you drive a car.... The fuel tax is a good way, as a consumption tax. If you don't use your car, you don't pay anything. If you use a car, obviously you are using the highways, you are polluting the atmosphere, you are throwing tire dust into the atmosphere, and all the other stuff. So that has to be taken into the equation as well.

The Chairman: Mr. Dromisky.

Mr. Stan Dromisky: My question is a short one and it has an indirect relationship to tolls.

Much has been said in the immediate past about franchising certain sections of railways. Naturally, you can jump to conclusions and say the portions of the railway that are going to be franchised, or the ones the private sector will be most interested in, are the portions of the railway that have the heaviest traffic, where they could make the greatest amount of money.

I want to know, from the legal viewpoint, is it possible for provinces to franchise to the private sector certain portions of highways, or even certain highways, within their jurisdiction? Is that possible?

Mr. Robert Green: Yes.

Mr. Stan Dromisky: All right then. Fine. Thank you.

The Chairman: That completes the second round. Did you wish to continue? You still have time.

Mr. Stan Dromisky: No, no.

The Chairman: That does complete the second round, unless there is someone who hasn't spoken for a second time. We have five minutes. We will take two minutes for Mr. Casey, which will be the complete third round.

Mr. Casey: Thank you very much.

The Chairman: Sorry, we are still on the second round.

Mr. Cannis.

Mr. John Cannis: Minister, I just read a statistic the other day about trucks on the highways, which indicated that up until recently, trucks made up about 27% of traffic on our highways, and now it's up to about 37% or 38%. That's an alarming figure. I know in the past you yourself expressed the question of how we address this problem. What can we do in terms of safety, rail usage, and what have you?

I was wondering if there is an update, or if there are any comments you might express on this increased usage of our roads by the trucks, and if there are any future possibilities we might anticipate to alleviate some of this traffic.

• 1725

Mr. David Collenette: The fact is, modern trade and manufacturing practices and requirements of modern-day living mean that in many cases the best way of transporting goods is by truck. For example, in the winter a lot of fresh vegetables and fresh fruits come up from Mexico and the United States, and they come by truck. They couldn't go by rail; they would spoil or they wouldn't be as fresh. So obviously that's a demand of modern society.

Just-in-time delivery, especially in industries like the auto industry, requires flexibility, which you cannot get with some other modes of transport.

Certainly the railways are trying to become more and more competitive on shorter hauls. They're becoming very successful in places like Europe, but even in the U.S. and in Canada the application of new technologies on the railway enables faster turnaround of loading and unloading, and distribution then to trucks that take the goods to the final destination.

I think as a society we should try to encourage the more fuel-efficient modes, such as water transport and rail transport, not to the detriment of trucks but to try to work in a harmonized system. I believe you're getting more cooperation in the U.S. between rail and trucks. Long-haul trucking companies are recognizing it is more efficient to put a lot of goods on rail, and because of these new methods, new technologies and heavier horsepower trains, the rail is able to guarantee overnight delivery to certain markets, because it's becoming tougher to get truck drivers to continually take the wear and tear on their nerves and physically on the highways, and also because the highways are becoming more and more crowded.

So as a society, whether it's in Canada or the U.S. I think we have to move to more of a planned movement of goods to ensure that the various modes are utilized. Of course, that does help in terms of greenhouse gases, because as Mr. Sully will tell you, 27% of greenhouse gases in Canada and 34% in the U.S. are due to transportation, and overwhelmingly that is from cars and trucks.

The Chairman: Thank you.

Mr. Casey.

Mr. Bill Casey: Thank you.

I want to make a comment on the highways around North America that you brought up, Mr. Mercier. There's a fundamental difference in the two toll highways in Atlantic Canada. The province has passed legislation to force all trucks on them. There is no option, and that's the difference. You won't find that anywhere else.

I have a question for Mr. Green. You mentioned a contractual relationship. I want to talk about the Atlantic Freight Transition Program, which is a contract between Her Majesty the Queen in right of Canada and Her Majesty the Queen in right of New Brunswick under which the feds agreed to put $16.2 million into the highway between Moncton and River Glade on the condition the province put it in. They both signed this contract and agreed to both put $16.2 million into the highway. The contract expired on March 31, 1998. In January 1998 the province sold to a private company the right to charge a toll on that highway and got all of their money back. The federal money is still in there; the province got all of their money back. Now instead of Her Majesty the Queen in right of New Brunswick as a partner with the feds, it is a private company.

The Chairman: May we have the question, please?

Mr. Bill Casey: That is an absolute breach of this contract under sections 6.1 and 6.2. The question is, how come the feds don't require the province to put the money back in or at least demand to get your share back, the same as they did?

Mr. Robert Green: First of all, Mr. Casey, I think your question goes a bit beyond trying to provide information. You are going the area of legal opinions here.

I don't purport to advise you legally, but I can say, with the thing we're looking at here, my understanding of the situation is that there was a particular project, the Moncton-to-River Glade project. It was funded in a particular way, and it took place. My understanding is that once that project was concluded relevant to the agreement, not the agreement in its continued existence but that project, our rights came to an end once we signed off. I understand we signed off before the event you are alluding to took place. Therefore, at that point in time, if I were advising the minister, my advice would be that our rights under that agreement relative to that situation came to an end.

• 1730

Mr. Bill Casey: The agreement says—

The Chairman: That's it, thank you. This concludes the questions.

This was very interesting and profitable for our education and training. We want to thank you very much. If you have closing remarks, I would—

Mr. David Collenette: Look, I just want to say again to Mr. Casey that if he has argument with these arrangements—-as Mr. Green said, our contractual obligations have been discharged faithfully—or with the application of these agreements, it's really a subject that should be dealt with by the provincial governments and legislatures.

This is highly subjective. You have politics involved at the provincial level as well as at the federal level. But we've come here in good faith to tell you and the other members of the committee that the Government of Canada's undertakings have been legally and faithfully executed in the case of these agreements.

That doesn't mean to say that some of the issues he raises aren't useful to take into consideration when we look at future federal-provincial highway agreements. We're always interested in hearing representations.

I can give him the same answers day in and day out in the House of Commons. But New Brunswick and Nova Scotia have operated in good faith according to our legal understandings and the terms and conditions of the federal contributions.

If he has any other problems with the application of these highways or he doesn't like what the provinces are doing, then he has to pick that bone with the provinces, and that comes down to a question not just of legality, but of politics. He should take his political arguments to the political arena most concerned, which is the legislatures of those provinces.

The Chairman: Thank you very much.

The meeting is adjourned.