TRAN Committee Meeting

STANDING COMMITTEE ON TRANSPORT

LE COMITÉ PERMANENT DES TRANSPORTS

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 26, 1998

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[English]

The Chairman (Mr. Raymond Bonin (Nickel Belt, Lib.)): Good afternoon, ladies and gentlemen. Welcome.

Pursuant to an order of reference of the House dated Thursday, October 29, 1998, we will today examine the supplementary estimates (B) for the fiscal year ending March 31, 1999: Privy Council vote 15b and Transport votes 1b, 5b, 10b, 15b, 27b, and 30b. And pursuant to Standing Order 108(2), we will examine Transport Canada's performance report for the period ending March 31, 1998.

Mr. Minister, thank you for appearing again on short notice. This transport committee doesn't take six months to get to work. As you present things to us, we react instantly, and we really appreciate that you the members of your department are always available for us.

Do you wish to make a short presentation or would you like to go directly to questions?

Hon. David Collenette (Minister of Transport): Well, since all the officials here are the total Transport brass, I wouldn't want to upset them by not reading the speech. But I can be somewhat brief.

I'm very glad to be here this afternoon to answer your questions on the supplementary estimates.

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You know my officials: Margaret Bloodworth, the Deputy Minister; Ron Sully, the Assistant Deputy Minister of Programs and Divestiture; Louis Ranger, the Assistant Deputy Minister of Policy; Janet Milne, the Assistant Deputy Minister of Corporate Services; and Ron Jackson, the Assistant Deputy Minister of Safety and Security.

I just want to touch briefly on some of the highlights of the year that we feel are worth noting. We worked very hard on many fronts, and we certainly agree with you, Mr. Chair, that your committee works expeditiously. We thank you for the consideration of legislation that you've had before you and of course for doing the various studies.

[Translation]

I need not tell you about our successful activities and initiatives. You were a full participant in most of them and I have made several reports to you on the subject.

But the performance report we tabled specifies in concrete terms the progress made during the 1997-98 fiscal year.

As members of this committee, you will no doubt agree that we have succeeded in meeting our objectives and that they were in Canada's best interest.

[English]

The overall direction last year was of course to complete the modernization of Canada's transportation system. We passed the Canada Marine Act early this spring; it received royal assent in June. I have to say that I'm sorry we will not be able to commence with the CPAs on January 1, as called for in the bill. We are going to have to, via order in council, delay this a little bit. There's a myriad of legal issues and other matters concerning the letters patent, and we just don't have enough time. We didn't realize how difficult it would be. We have just written to the ports and the harbour commissions to let them know there will be some small delay, but it will not be a huge delay, so I hope people understand that.

We've also had the first draft of amendments to modernize the Canada Shipping Act, and as a result, we commercialized the St. Lawrence Seaway. The legal work to create the Canada Port Authorities, as I say, is under way, but we're not yet able to enact those CPAs on January 1.

We're developing a strategic safety plan for transportation.

During the reporting period, we were busy transferring an additional 22 airports and 14 regional or local airports to local control. The divestiture program is on track, but some of the airports and ports may take a little longer. They're more difficult, due to the concerns regarding financial self-sufficiency and third-party issues.

[Translation]

We have tabled our strategy for sustainable development.

We will be launching two new studies, one on the future of passenger railway service in Canada, and another on the grain storage and transportation system.

We have implemented a Canadian program for deactivating inflatable bags.

We tabled amendments to the Railway Safety Act that completely modernized the legislative and regulatory framework of the railway transportation system in Canada. I know that your committee is currently studying this bill.

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We have begun to draft the Transportation of Dangerous Substances Regulations in clear language.

We have introduced guidelines whereby the Minister of Transport can designate Canadian air carriers for regular international all-freight air service, and signed bilateral international agreements that provide Canadian air carriers with new opportunities to offer their services on new markets.

I think that you will agree that these achievements are in Canada's best interest.

[English]

To achieve all these goals we'd set for ourselves, we developed a strategic framework with four key elements that address all six of our departmental objectives.

The first of course is safety, which is very much a priority at Transport Canada. It's the foundation upon which all elements of any transportation system have to be grounded. The record is very good, and we're working both on our own and in collaboration with industry and other government departments to improve this further, with initiatives such as Road Safety Vision 2001 and Direction 2006, public and industry awareness campaigns, improvements to passenger restraint systems in vehicles—the list is quite a lengthy one.

On strategic investment, ours is one of the best in the world, but we're well aware that it needs to be maintained and modernized if it's to continue to be competitive. Our policies have focused on creating the right environment to support viable capital expansions.

Although there are many demands on our limited transportation dollars, we are setting priorities and finding creative ways to facilitate financing and support of strategic investment in Canada's transportation system. But there is another strategic investment that is often overlooked in discussions about government policies and programs, and of course that's the investment in people. We take our role as employer very seriously, and we have integrated La Relève program into its human resource policies. Our investment is returned in high-quality work on behalf of the people of the country.

Another priority is smart technology. We have to find ways to work smarter to make better, more efficient use of our systems. We have pilot projects that have used the latest in information technology, and they have proven quite successful in streamlining the flow of traffic, both freight and passenger. We hope to expand these.

We're very excited by the potential offered by intelligent transportation systems and are working with industry and other governments to develop tools that will reduce pollution, eliminate time-wasters in our systems, and improve safety and security at the same time. Some good examples are the new transponders used by truckers to speed up border crossings, and smart airbags. I know you're going to be looking into this between bills, and I urge you to take that work very seriously, because it is going to have more and more of an application to our transportation system in the 21st century.

Of course our transportation system has to be sustainable. I think you'll recall the theme of this year's National Transportation Week, which was transportation as Canada's national resource. This is a very apt description, because our system of transport, like any other resource, must be preserved and used judiciously. We are supporting research, both in the public and private sectors, into alternate renewable fuels and more efficient vehicles and public transit systems.

Steps are being taken to minimize the impact of transportation on the environment. For example, we are co-sponsoring, with all the provincial and territorial transport ministers, a transportation table as part of the process to develop a national strategy on climate change.

[Translation]

Our transport system will have to face another challenge in the very near future. As you know, the transition to the year 2000 holds potential hazards for the system's safety and efficiency. Transport Canada has taken specific steps to identify and evaluate the professional capacities and applications that are essential to its mission.

According to our schedule we should finish the trial phase of all applications as well as the emergency plans by December 1998, which gives us another year to make any necessary amendments or changes. The trial phase for our emergency plans should be finished by September 1999.

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We are also evaluating the progress made by the transportation industry in solving this problem. In September, I held a meeting on the Y2K preparedness in Toronto with industry stakeholders to assess the progress made to date, and last Monday, I addressed NAV CANADA on its Y2K Solutions day at a conference in Toronto. My department is continuing to raise awareness, provide information and encourage all transportation stakeholders to make every possible effort to solve the potential problems well before the unavoidable deadline.

[English]

You know better than we do, because of the work you've done, that it has been a very busy year. We guarantee that you'll be equally busy next year.

On the legislative front, you're going to be asked to study a number of new bills. You have the Railway Safety Act before you. There's no rush for this. I think there was some confusion that because I wanted to get it into committee, the government was pressing you for this. Obviously we want it done as soon as one can deal with it, but this is not a matter of urgency. Take an extra day or two. The whips aren't on; the guillotine is not on. But we wanted to get it into committee, rather than just have it hanging around the House, because we feel that on a technical bill of this nature, the better debate is in committee.

A number of other bills are on the way: the Carriage by Air Act; the Marine Liabilities Act; the Canada Shipping Act, part II; and the Motor Vehicle Transport Act. Some of these will have some controversial aspects to them and will mean that you will have quite a load between now and June.

At the end of December we'll also get the final results of Justice Estey's research into grain handling and transportation in Canada's west. After all the extended consultations he's had, I know his report is going to be awaited with great interest by most people, because it's a very contentious subject.

The financing of our highway system and trade corridors is also a key challenge facing us today. I'm sorry Mr. Casey is not here, because he's been particularly active on this file. I know that with funding resources as scarce as they are and in view of the fact that jurisdiction over highways is provincial, partnerships are likely to play an increasingly important role in whatever solutions are developed.

But of course I need the views of the committee on some of the contentious issues, especially the application of tolls. We have a study, done on behalf of the federal-provincial council of transport ministers, which hopefully will be public soon. But we'd like your views, because it's inevitable that some funding will go into highways at some point in the future, and we want to make sure the rules are well established ahead of any funding allocation.

I mentioned ITS a while ago, and I know you've already passed a motion to look into these matters.

In conclusion, we're still on track to reduce subsidies, achieve greater efficiency, establish more say for users, and establish more business discipline across all the modes of transport at all times without compromising safety. We have made great strides in this direction, and we'll continue to position ourselves better to respond to the needs of Canadians.

[Translation]

Today I spoke of some of the major achievements of Transport Canada and I tried to show you how our strategic framework helps to ensure a constant improvement of our policies and programs. It allows proper and adequate investments to be made in the transportation infrastructure. It supports trade and tourism and contributes to removing the barriers to an integrated and harmonious system. It has provided for the best possible use of technology and an efficient use of all transportation modes. In addition, it contributes to raising the standard of living by providing safe and reliable transportation.

[English]

But the federal government cannot bear the whole load. We have to forge new partnerships, as I said earlier, with government, industry, stakeholders, and the public all working together to maximize our effectiveness through an efficient use of resources. And we will continue to rely on your support and advice along the way.

We have great faith in the fact that you will be working very hard in the next six months. It will be a heavy load, and I know from the work you've done since the election that this committee is equal to the task. We welcome your input on all of these studies and bills that will lead to a better transportation system in Canada.

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Merci.

The Chairman: Thank you very much, Mr. Minister. That was an excellent report, and it will assist this committee in the preparation of our work.

I want to take this opportunity, in your presence and in the presence of your department heads, to say to you how pleased I am with the work these members of the committee are doing. With five different political parties, at the beginning we thought it would be an impossibility to get any work done. I can tell you that every single member of this committee, on all sides, is here to be positive, to produce, and to make the country go better. I'm extremely proud of them, and it's a pleasure to be chair of this committee.

Also, to your department, in my riding we had an explosion of 40,000 pounds of explosives. A transport truck caught fire and exploded on the highway. Your department was extremely efficient when they came over, took control of the site, and coordinated the efforts of everyone around. The community recognizes the quality of work from your department. I wanted to mention that to you.

On Bill C-58, we will be hearing witnesses Tuesday. I'm impressed at how well informed members are on this bill. There's a possibility that we will do clause-by-clause Tuesday. We expect to have it done next week.

That covers my end of it. We will now open it to questions from Mr. Keyes, Mr. Bailey, Mr. Cullen, and Mr. Calder.

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

Thank you for your remarks, Minister. I welcome the members of the department you've brought with you.

I didn't see any direct reference to this in your remarks, but I was wondering if you could elaborate for us. There's been a lot of discussion of late about the U.S. dumping literally billions of dollars into their transportation system. It was worked out that every state in the U.S. will receive some $4.1 billion for transportation infrastructure.

First I'll outline my fear. My fear is that the U.S. will be moving quickly ahead to respond to the future needs of trade and how trade is carried out, not just in the U.S., but of course in North America. I see an opportunity, as do others I've spoken with, for us in Canada to take the initiative to make our transportation infrastructure that much more competitive with the U.S.'s and more integrated, in order to lure the business of trade away from the U.S.

Is the department doing any focus work or working in concert with, say, those involved in trade in order to identify where we can progress that much more quickly on our infrastructure and where we can improve our infrastructure to compete more strongly, to lure the truckers and not lose any shipping that might be going to the east coast, to the west coast, to American ports, etc.? Are we identifying where the infrastructure can be improved, how much that would cost, and then of course the inevitable question, how we pay for it? Is any networking going on between Transport and trade so that we can work with trade in order to identify these opportunities to carry out almost a visionary plan of what transportation should look like in this country?

Mr. David Collenette: That's a very good question, because you're absolutely right: the United States is ahead of us in terms of the amount of money it wants to spend. I think it's $275 billion U.S. over the next six years, of which $20 billion will be spent on smart technologies.

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The fear I have is that so many improvements will be made on the U.S. side of the border that we will have slow processing and jams on our side of the border. That's going to hurt us and certainly annoy the Americans, and it will be to the detriment of both countries.

A lot of the money that the Americans are putting in is going into the road network. Some of it is going into the rail network, but most of it is going into the road network. That of course comes back to the whole issue of a national highway program.

The federal government has been in the business of financing highways since the First World War, and on and off, it's ebbed and flowed. Right now it's ebbing a bit; there are no new dollars going in west of Ontario at the moment. That is a particular concern in western Canada.

On a daily basis, truckers choose U.S. routes to take their loads through, rather than going through Canada. That obviously has a harmful effect on our own economy, because those drivers buy fuel and provisions in the U.S., some of them stop overnight, and all the rest. It is harmful to Canada, because our road network is not as good across, east to west.

There is a problem with access to the border crossings and with speedy processing, and we are addressing that. We have a couple of pilot projects, I think in Fort Erie and Windsor, using new technologies to do quicker processing at the border, but obviously we're going to need a lot more money for that.

The federal and provincial ministers have been meeting for the last year, and there's a general agreement on what the national highway network consists of. I believe I've also got them to agree that if there is money to go in, then there should be some flexibility—that it's not just applied to straight highway financing on a fifty-fifty basis, as we've done in the past, but that money be applied to new technologies at the border, to improving the plazas for the processing of goods at the border on the road, and also to encouraging intermodal applications, getting goods from truck to rail.

On the question of water transport, we believe the commercialization of the seaway is really going to assist in improving the flow of goods through the waterways. We feel that the commercialization of the ports from Bill C-9 is going to be helpful in improving business flows.

And of course we are very hopeful that Maersk will designate Halifax a port of call, which will inevitably imply some degree of funding on Canada's part to help finance the super-port with the post-Panamax containers. Halifax is very well positioned, and if we get that particular deal, it's not just good for Halifax; it's going to be good for the entire country. It will result in a lot of expenditures, not just in the Halifax area, but on the rail link of CN from Halifax to Sarnia, because delivering goods in Halifax is at least a day shorter than taking those goods through New York and using the American rail system, going into the midwest markets.

Mr. Stan Keyes: Mr. Chairman, I can only—

Mr. David Collenette: If the answer was too long, I'll be shorter.

Mr. Stan Keyes: No, no, that was fine. It needed a longer answer.

The Chairman: Go for another four minutes, and then I'll allow 10 minutes to each member.

Mr. Stan Keyes: All right.

All I'm suggesting—and this would be something for the consideration of the entire committee—is that once we've studied the ITS system and its competitive advantages, etc., and how if we do not incorporate some ITS, we're going to fall behind, then, on a greater or a grander scale, we need to identify that we have to remain competitive globally with trade. Therefore we have to get our goods to market, and the only way we're going to be able to do that efficiently is if we are as efficient as or more efficient than the U.S. when it comes to the movement of those goods.

I would say that at one time or another, this committee should sit down and work with you to identify where those goals are and how we can bring all those ideas together and ask: Where are we falling short? How is that going to affect trade in Canada? Where are we going to put our resources? How are we going to put our resources there? Then we can go into the micromanagement of the issues you addressed just recently in your remarks—how we pay for it, etc.

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We have to move quickly on this front or we will fall behind. Once the market is lost, once the transportation of goods is lost to, say, a more efficient tolled highway that runs from one end of the U.S. to the other, it will be damn hard for Canada to get it back.

Mr. David Collenette: You make all the right points, and certainly we have no problem sharing some of our thoughts with you, through either written submissions or further at committees like this. The big problem we have is money. Everybody wants money.

Quite frankly, the cause of transportation wasn't helped by the provincial premiers, who got together in Saskatoon in August and said, “Yes, we want better roads; we want investment in transportation infrastructure. But health is our number one priority, and therefore we'll put that ahead of roads.”

Well, that's fine. I agree that health is the number one priority, and the government has responded. Who says the federal government doesn't listen? We're listening to Canadians. We're listening to the provinces. The Prime Minister and the Minister of Finance have said that health care is going to be a focus of next year's budget.

But there are other calls on new spending as money becomes available, and I hope the members of this committee become public advocates of spending on our infrastructure, because the payback is incredible in the easier shipment of goods and the improvement of our living standards.

Mr. Stan Keyes: Thank you.

The Chairman: Mr. Bailey.

Mr. Roy Bailey (Souris—Moose Mountain, Ref.): Thank you, Mr. Chairman.

For the information of the committee, I have a plane to catch in about a half-hour, to get home to a railway meeting tomorrow, Mr. Minister. It's a do-or-die, saviour type of thing. I don't know whether I'll be able to help the situation much or not.

I will be under the 10 minutes, Mr. Chairman.

I was interested, Mr. Minister, in your comments about the Canadian Transportation Agency. As you know, I come from the area where the major complaints come in. I can't help wondering whether the $750,000 that went into the increase for personnel and special and professional services had anything to do with the CTA hearings and the decision regarding the Canadian Wheat Board's complaint against the railways.

Mr. Minister, I hate to disappoint you, but with the closure of some 300 woodies, as we call them, coming down, and with several thousand miles of track going out, I really don't think the Honourable Judge Estey's report is going to be too exciting. It no longer has the same bearing as it had when it was initiated, because many of those lines of course are gone.

In the end it took 18 months and a large sum of money to get a confirmation that although the law requiring adequate rail transportation for grain applied, no penalty was required for the railways' past action. CN paid a fine. It was a voluntary thing on their part. I'm assuming it was paid to the Canadian Wheat Board. We don't know for what reason.

Mr. David Collenette: They settled out of court, if you will, but that's not the same thing as a fine.

Mr. Roy Bailey: Well, all right, but—

Mr. David Collenette: I don't believe they were convicted of any infraction. They decided to settle the grievance.

Mr. Roy Bailey: In other words, it was really a PR job, right? They weren't charged with anything, correct?

Mr. David Collenette: You should address that to Mr. Tellier, because—

Mr. Roy Bailey: All right. I will, Minister.

Anyway, the question I have for you is this. As far as we in the west are concerned at the present time, the CTA failed in its first real task. And why shouldn't they believe that the complaint under the Canada Transportation Act was very slow, very costly, and essentially a futile test, because it's a fait accompli now; it's all over?

Mr. David Collenette: I'm not going to reflect on the CTA's decisions. I don't think I should, given the fact that Judge Estey has to report. But I do take issue with you. The CTA looked at the Wheat Board complaint. In one case CN decided to in effect settle or pay compensation, and CP did not.

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The process went quite well. It was quite expeditious. This is a very complicated kind of argumentation, dealing with the delays of transportation and the costing that goes in. It's enormously complex. The agency is charged with doing a thorough job, and I think if they had been very quick, you would have been saying they did not give the proper time to all the arguments.

I'd also like to challenge you on your inference that somehow, in the course of 1998, while Judge Estey has been working, we have turned the corner and it doesn't matter what he says; somehow there cannot be remedies for the problems dealing with grain transportation.

On railway abandonment, I challenge you to give me one example from this year of where the railways have closed a line and there was no interest from local groups or other companies, short-line operators, in taking it over. The lines that have been closed have been ones where everybody more or less agrees there isn't an economic sense to keep them open. Sure, everybody would like to continue the lines; they got used to having them there. But give me one example of where the railways, in anticipation of Estey's report, have shut down a branch line where there has been interest in pursuing the matter.

In fact we have been squeezing the railways. I've talked to Mr. Tellier, Mr. Ritchie, my staff, officials of the department, and officials there. The railways have responded by saying they'll give the extra time for any local groups or for the provinces.

Your province is Saskatchewan. Mr. Romanow is a good friend of mine, and I've known him for many, many years, but I have to say, he huffs and puffs on this issue.

Mr. Roy Bailey: Right.

Mr. David Collenette: I'd like to see where the province is. Why doesn't the province lay down some money and take over some of these lines? We were the ones who provided for the facilitator. It was Lyle Vanclief and Ralph Goodale who provided the money to help short-line operators get going in Saskatchewan. The province has to do its part. You can't just keep complaining about the federal government or the CTA.

As for Judge Estey, this is going to be the most complex, quickly done report in Canadian history. This man works. He's going to have his report in within a couple of weeks, and it will be public, and I hope we'll be quick in dealing with his recommendations.

Mr. Roy Bailey: Mr. Minister, I couldn't agree with you more as far as the provincial government's input into this is concerned. You're quite right about the railways.

What I fear in this whole thing that started in 1996 is that we're going be out slapping the wrists of the railway when other players on the scene are going to walk away from this inquiry. I hope not. I hope when it comes down next month, we see there's more blame in what happened in this event and what prompted this inquiry. It's not just the railways' fault. I hope that comes out in the report.

I have just one other thing.

Mr. David Collenette: But Mr. Bailey, excuse me. This inquiry was not prompted by the delay of grain shipments two years ago. It was a statutory review provided for in the CTA in 1996—

Mr. Roy Bailey: Right.

Mr. David Collenette: —which we have accelerated, because people like you and your party and farm groups asked for it to be done. That's why it's being done.

And Judge Estey is not going to blame anybody. He hopefully is going to analyze the problems and give us, as policy-makers, the choice to fix the system.

Mr. Roy Bailey: Okay.

Vote 27b of the supplementary estimates authorizes the Canada Ports Corporation to borrow up to $30 million. My understanding is that that corporation will be limited in January 1999, in just a few months. What kind of loan does the Canada Ports Corporation expect to take out and where is the money going to go? I would really underline that I hope it will be used to help the suffering Port of Halifax get its infrastructure up to to snuff so that it can be competitive.

What is this $30 million? What's the purpose of it? That's in vote 27b, Mr. Minister.

Mr. David Collenette: Mrs. Bloodworth is going to answer that.

Ms. Margaret Bloodworth (Deputy Minister, Department of Transport): If you'll see, Mr. Bailey, the actual vote is only $1, because it's authorization for Canada Ports to borrow from other than the government.

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Some loans do exist. Sept-Îles, I believe, is the main one. They have a loan from what's called the interport loan fund. And you're quite right: the Canada Ports Corporation will disappear, so it's necessary for Sept-Îles to place the loan with private firms. Because it's a crown corporation, they need to be authorized by Parliament to do that.

So it's not a loan from the federal government. In fact it's intended to replace some government borrowing, if you like, with some private sector borrowing. It's an existing loan by the Port of Sept-Îles, which will carry the cost of it, as they do now.

Mr. Roy Bailey: I have a final question. As you know, the Port of Halifax really needs the money. Of all ports, I would think they need to get it. Is any of that money going to them, do you know?

Mr. David Collenette: I don't know about the Port of Halifax needing all kinds of money. I could tell you the Port of Toronto needs money, the Port of Vancouver needs money, the Port of Montreal needs money, and the Port of Hamilton needs money. That's why we passed Bill C-9: to allow them the flexibility to go out there and finance their operations.

But if you're talking about the post-Panamax vessels, Transport Canada is not in the business of giving subsidies any more. It would have to come from another source in government. It would have to be a one-off contribution of the government. Again, we don't know whether Halifax has been chosen, and therefore we don't know if any money would be required.

The government would have to decide whether you'd have a one-off payment for the Port of Halifax to accommodate these ships, but certainly from Transport's point of view, the whole point of the devolution of ports to local authorities is so that we don't continue this particular kind of subsidy.

The Chairman: Mr. Cullen.

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

Thank you, Minister and officials from the department.

Minister, I'd like to talk about two items if I have a chance.

First, you'll recall that in the last Parliament, this committee did a report on renewing the national highway system. If I recall, the number to renew this system was $13 billion to $18 billion, and of course now it's probably $15 billion to $20 billion. Every year that goes by, it goes up a bit.

One of the issues we raised in that report was this notion of public-private partnerships, which means tolls and a whole bunch of things. If I recall, the rationale behind that was that if we were going to finance $13 billion to $18 billion, that would have to be the federal government and the provinces, and we'd really need to max out the private sector financing. To do that, we needed to really explore what could reasonably be financed through the private sector, what kinds of private benefits could be captured.

We recognized at the time the problems with low-density highways. We asked what sorts of private benefits could be bundled in a way that would make sense, what were the limits of public-private partnerships, what were the opportunities, and what were the constraints.

After going through that process and developing an agreed-upon model that would be used by the federal government and the provinces, it seems to me, if I recollect, the idea then was that we could go back to finance ministers and say, “This is the real extent to which we can employ public-private partnerships to renew our national highway system. This is the residual that needs to be financed publicly.” But at least then our federal and provincial finance ministers would know that envelope had been pushed to the limit.

I don't know where that process is going. I gather deputies have been meeting. I don't know if it's made it to ministers yet. I'm not sure. I gather there's some pilot potentially going on in Montreal, and if that's the case, it may miss the point. If I recall, from the committee's point of view, we understood that in high-density areas, toll roads, shadow tolling, and all that are more viable. It's in those stretches where the traffic densities are lower—

What kinds of private benefits could be scoped into any request for proposal? I wondered if you could tell us. I missed your meeting the other day, and I meant to ask this question. Where are we with public-private partnerships in our national highway system? What are the limits? What are the opportunities? What are the constraints? When will we know what is possible with public-private partnerships to renew our national highway system?

Mr. David Collenette: First of all, the estimate now is about $14 billion to $17 billion to bring the national highway network up to snuff, and that of course is the most ideal condition. Those are figures that come from the work we've been doing with the provinces.

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I was quoted in the Hill Times as talking about the federal government putting up that money. Obviously we wouldn't put up that kind of money. Any federal funding of highways is usually done on a fifty-fifty basis with the provinces, so that's not the federal exposure.

The work the committee did was very valuable and is now being looked at by deputies. Some final work is going into the report, and that should be made public reasonably soon. Then the committee can look at it and help me as we make some choices.

But frankly, we have to deal with issues such as the one Mr. Casey has brought up: do we allow tolls on the main trunk route across the country, from St. John's to Vancouver? Some people argue that we can allow it on parts of the national highway system perhaps, but not on the main trunk route.

Obviously New Brunswick and Nova Scotia have come to a different view. They said, “Look, we don't have the money. While we wait around for a new federal-provincial program, we have to get the highway built.” So they built a highway with tolls. As I've said to Mr. Casey ad nauseam, New Brunswick and Nova Scotia were fully within their rights to do that.

But we have also said, because of the concerns that have been raised by him and others at this committee, that before we institute a new program, we want to make sure this issue is dealt with: Should we have direct tolls on any parts of the national highway network, or only part of it? That's a public policy decision we should make up front before we spend.

On the question of public-private partnerships, that doesn't necessarily mean tolls. You referred to shadow tolling, which as I understand it is a concept used in some countries, such as Britain. This is a mechanism to flow public funds for the construction of highways but using the private sector to design, build, finance, and operate highways. They receive in effect payments on throughput based on the economy in the area and all the rest. This is another way to get the private sector to build the roads, but in effect the public treasury is sponsoring or funding these highways. That's one route.

There is the direct route, which we have in Ontario with 407, a direct-tolled highway. That is probably a good example of giving people choice. The public highway is 401, which is overcrowded, as we know, but it's there, and the operation and maintenance are paid for out of general revenue. But 407 gives you a faster route across the top of the city, and if you really want to save time and you can afford it, then obviously you'll pay. There's an example of where public-private partnerships can work out.

The Ontario government wants to sell the highway. It's a bit controversial; I won't get into that. But there's a role for the private sector in the designing, building, financing, and even operating of highways, as they have in airport reconstruction or on the bridge to Prince Edward Island.

Private money is available, but let's not kid ourselves; this is not a cheaper way to do things. This is a way of allowing government to be not directly exposed to the payments on their books. Some would argue that this is a more expensive way to construct infrastructure, because the private sector has to get its return, and this is part of the issue that's going on right now in New Brunswick and Nova Scotia.

Mr. Roy Cullen: Thank you. Just to pick up on that point, what we also heard is if it's to design, build, operate, and maintain, a lot of efficiencies can be built into that as well, in how these all balance out in the end.

The other notion was that if you're dealing with a national highway system—and we dealt with it at a very conceptual level, and that's why I'm looking to the more detailed response from the department and from you, when it's ready—the idea is that you'd have a choice. You'd either pay the toll or do the shadow tolling, but in a national highway infrastructure, you'd have the choice of doing one or the other.

These were just some thoughts we had that, in terms of us moving forward, are going to be integral to the solution: What are the opportunities, the limitations, etc.? So I look forward to the report on that.

I'd like to switch gears for a moment, Mr. Chairman.

The Chairman: You have about a minute and a half left.

Mr. Roy Cullen: Okay.

Minister, you have a very clear and strong vision for Toronto in terms of linking Pearson Airport to downtown, to Union Station and the bus station—this link to downtown. I wonder if you could tell us how that's progressing. What are the obstacles, if any? What are the opportunities? Is the timetable moving forward? Are people basically onside and on board to make sure this comes to fruition?

• 1620

Mr. David Collenette: Everybody wants us to move ahead, and it is moving ahead. The railways want to sell Union Station. The Toronto Terminals Railway Company wants to sell it, with the attendant trackage from the Don Valley Parkway to Strachan Avenue. We believe CN could be prevailed upon to sell the Weston subdivision, which is from Strachan Avenue up to Malton Station, which would allow a rail-air link.

The problem we have is that the railways have been in litigation with the City of Toronto, which owns most of the land underneath the station, for back rent. That has prohibited any movement on this file at this time. But there are discussions going on, and I think with a bit of creativity, ingenuity, and hard work, we will have a solution. The solution might involve the establishment of a public authority in consultation or in conjunction with the private sector so that the federal, provincial, and municipal governments can come to the table, but most of the money can come from the private sector to refurbish and restore the station, much in the way Grand Central Station has been done, or Union Station in Washington.

And of course the issue is whether or not we would then be in the position of having a concession. If the railway line from close to the airport were part of any deal, then there would be a concession whereby the authority could call for proposals to build a rail link to the airport. So it's very exciting. There's a lot of discussion going on, involving the federal government, the province, the City of Toronto, Go Transit, VIA Rail, and the private sector, which has exhibited some interest—and of course the two railways.

Finally, for those at the table who are not from Toronto, there are applications on rail-air links in Montreal, which I'm quite excited about. A lot of work has been done, and it's going to be a lot cheaper than Toronto. And as I said before, there is very much interest in Vancouver in alleviating the overcrowding from the Vancouver Airport to the city core using a rail link.

The Chairman: Thank you. I have five more names on the first round, at 10 minutes each. Because we're taking our full 10 minutes, we'll be here until 5.10 p.m. on the first round only. I've allowed 10 minutes each, and that will continue, but maybe if we can shorten the questions a bit, we can proceed faster.

Mr. David Collenette: I'll shorten the answers, Mr. Chairman. As you know, I have to leave at about 4.45 p.m. I have to go to Montreal. My officials, though, will stay all night if they want.

Voices: Oh, oh!

The Chairman: If we shorten the questions and the answers, we can all be out of here very early.

I'll read the list: Mr. Calder; Monsieur Mercier, Mr. Dromisky, Mr. Price, and Mr. Anders.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Minister, as you know, in the Standing Committee on Agriculture and Agri-Food, we're taking a look at what's going to happen when we start the negotiations of the WTO. The preliminary will start next August and then we'll get serious about it in the year 2000.

So when you make the statement that you don't want to have the U.S. transportation system get ahead of us, which I agree with totally, I have to ask this. If we wanted to compare the St. Lawrence Seaway with the Mississippi system, I know that army engineers are doing a lot of the maintenance on that, and the United States is able to get around that by saying they do that because that's the only thing they have in place to train them. But obviously it's a transportation subsidy, because they're not charging for those services rendered, and obviously the cost of using that system goes down, because it's being maintained by the government. We don't do anything like that within the St. Lawrence system, and that's just one example I can think of.

When we get into these negotiations with the United States, how are we going to have our system stand up against their system without them applying unfair subsidies?

• 1625

Mr. David Collenette: This is a little bit out of my territory. In dealing with the United States, they're the great free enterprisers, and it reminds me of the line from George Orwell's Animal Farm: “All animals are equal but some animals are more equal than others.” The way the Americans work is that there are supposedly rules, but they get around them.

Mr. Murray Calder: Yes.

Mr. David Collenette: You mentioned the core of army engineers, which does a lot of work. We don't have the same luxury of having our defence department do it, and that's a subsidy to industry. It's a question of trying to expose and root out these subsidies and deal with them in the forum of negotiations. But you'll have to talk to Sergio Marchi about that. That's really his area.

If you take rail, for example, Canadian Pacific and Canadian National think of themselves as North American railways. With the acquisition of Illinois Central and with some of CP's work recently in opening up a new line in Pennsylvania that will connect on the east coast of the U.S., they're really serving notice that they are competing with the U.S. railways head-on. Maybe CP will acquire a company as well.

Then it gets into taxing regimes and inequities between the way the railways are treated from a tax point of view, which can help or hinder the railways. Of course the railways want a fairer capital cost allowance regime from the finance department. They also want lower municipal taxes in Canada. They also want lower fuel taxes. In Saskatchewan, for example—I don't want to pick on Saskatchewan this afternoon; I quite enjoy going to that province—the fuel taxes are among the highest in the country. That's harmful to the railways.

In terms of water transport, we do have somewhat of a disadvantage, for the reasons you've mentioned, and we've tried to deal with that with the commercialization of the seaway to make the facility better and more competitive in the way it's managed.

A lot of the issues you raise really have to be discussed in the context of international trade negotiations, but you're right to put your finger on it: no matter what we do, it just seems the U.S. has other ways of getting around things.

Mr. Murray Calder: Okay.

My next topic is Y2K. You say in your presentation that you have taken definite steps to identify and assess business functions and applications and that you're going to test contingency plans by December 1998. What does this mean for Pearson Airport, for instance? Does it mean sometime this year you're going speed up the clock so that it's the year 2000 and we're going to see how the system works, if it flies or crashes? How are we going to do that?

Mr. David Collenette: The deputy or Mr. Jackson will deal with those issues.

We have been extremely conscientious. We're very much aware of the problems in the transportation field. We're dealing with the stakeholders. We've had the conference, as I mentioned, which I convened. NAV CANADA Is particularly concerned, and Monday in Toronto they had experts from not only Canada but the U.S. and Europe deal with the air navigation system. We have a good story to tell in government generally, but especially in transport.

Ms. Margaret Bloodworth: Perhaps, Mr. Calder, I could back up just a minute before dealing with that to say I see us dealing with the Y2K issue on three levels.

First of all, the department as an organization has a number of systems that we have to make Y2K-compliant. The December 1998 actually refers to when we will have all our internal systems tested. A few will slip over into January, but our intent was to make sure that we had a full year, because everyone who's tested has found there are some things to correct afterwards. So that's one level, and in our case, it's not a huge system. We're not one who has a huge system, but we do have a large number.

The second level is as a regulator, and the minister has referred to the steps. Certainly he personally has taken a big role in making sure that the industry is sensitized and that we're ready to make the call if there is a safety problem. We're cautiously optimistic there won't be, but we're taking all the steps we need to.

• 1630

Part of that is contingency planning, and contingency plans are to be ready, including having reviewed them and tested them, by next September. We're part of feeding into the overall government system, which is being headed by a group in the national defence department. We will lead in the transport field. While we hopefully will not have to shut down Pearson Airport, there's no question we will be testing systems. For example, Halifax Airport is an airport we still run, and we will be testing those systems. We'll pick times that don't disrupt people, but it may have some implications if some particular system doesn't function. Our intent is to test the systems individually before January 1, 2000 so that we'll have a small problem rather than a big one.

The third level is the level of the transportation system as a whole. The safest system would be one that didn't operate at all; we'd have a very safe day, but it wouldn't be very good for the country. So we're also interested in the whole business continuity, and a lot of that relates to the role as a regulator. We're helping industry share best practices and we're encouraging them to set up forums, such as the one the minister chaired in September and the one he was at with NAV CANADA. There will also be a marine one and so on. We're encouraging all partners in the transportation sector to address all of the issues.

Ron, did you want to add something on the safety side?

Mr. Ron Jackson (Assistant Deputy Minister, Safety and Security, Department of Transport): I would only add, Deputy, that we are looking at the Y2K risk in the transportation system, which we regulate from a safety perspective, as we would any other transportation safety risk.

As you know, the system today is largely made up of embedded technology, computers, and so on that make it run, and they can fail at any time today, notwithstanding the fact that there may be a Y2K problem down the road. But we do have the regulatory tools today to make sure that if the system is not safe, we can take steps to mitigate the risk and make it safe. In our dealings with the industry with respect to Y2K, we will be dealing with that exactly in the same manner.

The Chairman: Mr. Mercier.

[Translation]

Mr. Paul Mercier (Terrebonne—Blainville, BQ): I have two questions. Here is the first one.

Among the recommendations we made to you, there's one that you could not respond to positively. It is the one where we asked that Ottawa agree to pay its share of the $25 million to implement the second phase of the high speed train study. I suppose that there are perfectly valid financial reasons for that, but it is equally obvious that without a second phase, the money we invested in the first phase will be lost because the study will remain incomplete.

May we hope that in the next budget, for 1999-2000, money will be found to continue this study? This is my first question. Currently, Canada is becoming the only G-7 country without a high speed train and without a plan for an HST. In this sector, the United States are also ahead, as you just said.

The Hon. David Collenette: Mr. Mercier, I already answered this question several weeks ago, but it is an important question. As I already said, my dream would be to have an HST between Montreal and Toronto or between Quebec and Windsor. The question however is the following: are the governments of Canada, Quebec and Ontario ready to fund such an undertaking? This undertaking will compete with airline companies. In addition, many other things are putting pressure on provincial and federal budgets, like health or highways.

In my reply to the Transport Committee, I said that before spending another cent on another study, we wanted to discuss the matter within our department to assess whether we can really fund such a system and if starting this would be in Canada's interest. If we provide $25 million for a study with Quebec and Ontario, it will be a great step towards carrying out the project.

• 1635

We're not only talking about $25 million. With contributions from private companies, the total amount could be $100 million. This is a big step to take. Before taking this step, we want to be sure that the project is in the best interest of Canadians.

Mr. Paul Mercier: Do you have a timeline?

The Hon. David Collenette: Excuse me?

Mr. Paul Mercier: Have you envisaged a date for this study—

The Hon. David Collenette: It should be in a few months, perhaps in January, February or March. The work is currently being done in our department.

Mr. Paul Mercier: Here is my second question. Without an HST or while waiting for an HST in the Quebec-Windsor corridor, passenger trains are handicapped as they find it hard to co-exist with freight trains. Moreover, along this whole section of track, there is a CN line and a CP line as well. Basically, the question could be solved if the two companies agreed to share passenger and freight transportation. However, if the companies do not come to an agreement, I believe that the government will have to intervene. Is the process on its way? Are both companies discussing it? Where are we with this issue that is so vital for the future of passenger transportation?

The Hon. David Collenette: The two railway companies are well aware of this committee's recommendations and they know that I accepted your recommendation on access to tracks. As I said, we must strike a committee before March 1st to solve the problem. I spoke with the two railway company presidents about our government's position and they know that if there is no agreement regarding railway passenger transportation, the government will step in. We have the necessary means and constitutional or legislative authority to intervene. I am very pleased with the attitude of CN and CP. They are well aware of our position and are currently trying to find routes, between Montreal and Toronto, for instance. Discussions are currently going on between VIA and CN in order to find a way to provide more express trains per day. This is a sign of goodwill from CN.

Mr. Paul Mercier: Do they have until March 1st?

The Hon. David Collenette: Yes.

Mr. Paul Mercier: Thank you.

The Chairman: Is that all, Mr. Mercier?

Mr. Paul Mercier: Yes.

The Chairman: Thank you.

[English]

I'd like to thank Mr. Dromisky for allowing opposition members to ask questions while the minister is still here. Mr. Dromisky has passed.

Mr. Price.

Mr. David Price (Compton—Stanstead, PC): Thank you very much, Mr. Chairman. I'll make mine quite short anyway.

Mr. Mercier has covered part of my question on the Quebec-Windsor corridor. Just to finish up on that, at one point ABB and Bombardier were both working on projects. Are they both still working on projects or propositions to present?

Mr. David Collenette: ABB, as I understand it, wanted to use existing tilting train mechanisms—a technology deployed in Europe—on the track we have now. This solution is being used in Britain and I believe perhaps in Italy or Spain, one of those countries.

Mr. David Price: And somewhere in the States.

Mr. Ron Jackson: Amtrak.

Mr. David Collenette: Yes, and Amtrak in the U.S. That of course is a cheaper way of getting faster times.

But the LRCs have a tilting mechanism. It didn't work too well at the beginning, but it does work. It's been more refined since Bombardier worked on it 20 years ago.

The other proposition of course involves Bombardier and I guess Lavalin, Gec Alsthom of France, and some financial houses, which is in effect to put the TGV, as you see it in France, into Canada. That's what Mr. Mercier is talking about.

• 1640

As I said, before we spend a nickel on further studies, we want to make sure it really is going to be the right thing to do. I have an open mind, and as I said—

Mr. David Price: But have they brought forth actual propositions on it yet?

Mr. David Collenette: Well, they have a concept in mind. They've certainly talked to me about it privately and they've talked to a lot of people around Ottawa and elsewhere. They've done their homework. In fact it's been public. But they want $7 billion from governments—$3.5 billion from us and $1.75 billion each from Quebec and Ontario. The question is, should we be spending that kind of money in direct competition with private airlines?

France had it easy, because the government owned Air France and the government owned SNCF, the state railway. So they made a public policy choice on, say, Paris to Lyon and elsewhere that they would finance trains rather than run airplanes. We don't have quite that luxury, because we own the passenger system, yes, but we don't own the rail beds any more and we don't own the airlines.

Mr. David Price: Of course the other question I had was on the highway system, but Mr. Cullen covered it fairly well, so I'll leave my time to someone else.

The Chairman: Thank you.

Mr. Anders.

Mr. Rob Anders (Calgary West, Ref.): Mr. Minister, I just want to say that deputy ministers are often a very convenient thing. One of my colleagues asked you earlier about the up to $30 million that is allowed to be borrowed by the Canada Ports Corporation. The deputy minister brought up that there was only $1 in terms of the votable amounts, and yet when I check the financial summary tables on page 45 in the performance report, I notice that the entire outstanding loan balances of the Canada Ports Corporation are actually to the tune of $46 million.

The intention in the answer that was given was that the government money would be replaced with private money in terms of the loans. Even if you take that into account, that still leaves more than $16 million unaccounted for.

So my question is, why do we have something that's only going to exist for a very short period of time having an ability to go ahead and borrow $30 million? And if the intention is to transfer the public loans to private loans, why do we have a $16 million discrepancy? That's the first question.

The second question is this. At your last appearance, you stated that no new tolls would be levied on any future jointly funded highway built with federal money without federal consent. In fact you told us you'd already amended the Canada-New Brunswick highway development to reflect your resolve. Will these new appropriations fall under the new amended contract?

Those are my two questions.

Mr. David Collenette: On the last one, we have, as I said, brought this into play with the new agreement we have with New Brunswick for the $150 million on the twinning of the Trans-Canada Highway between Fredericton and the Quebec border. We've already done that.

We don't have any more money anyway, other than that agreement—we don't have any new money—so it's a bit academic. What we're saying is that until we get the public policy issue resolved on where tolls would be allowed, if at all, we will not allow federal money to go into arrangements where tolls are levied. We've been pretty clear on that, and we hopefully will be able to come up with our view on that by summer.

I'll let the deputy answer. It's convenient to have deputies, because deputies are there with the officials doing the minutiae of work, whereas ministers concern themselves with the broad policy.

• 1645

But as I understand it, yes, the Canada Ports Corporation will cease to exist at a certain point in time, once we establish the CPAs, but there will be continuing liabilities, because of loans that have been made in the past by the CTC.

Maybe the deputy could answer the question more fully.

Ms. Margaret Bloodworth: Mr. Anders, one thing listed there is the interport loan fund. That is a fund that the Canada Ports Corporation has, with which they loan money out to some of their ports. Whatever is left in that fund will return to the Government of Canada when it's wound up. We don't know the exact amount of that, but we expect it to be a significant amount; I'm talking about tens of millions of dollars. We will know at the end of that. That will happen because money originally went in from the federal government.

But in addition to that, there are a number of other loans, one of which is a loan that the Port of Sept-Îles has, and that's the $30 million. In the process of moving to a Canada Port Authority, they are going to place that with private lenders. That's not a problem for the Port of Sept-Îles. They're quite capable of carrying it. They carry it now effectively, but they are going to move it to private sector funding.

There are other debts that will not disappear, at least not right away. There is a debt on Ridley Terminals. That doesn't show in our books, I believe because it's through the Export Development Corporation, but Ridley Terminals does have a fairly significant debt on it. There's also a debt on the Port of Belledune. It's not yet been decided what will happen with that debt, and I'm not sure the exact amount of that. Perhaps Louis knows the amount.

In the course of settling and eliminating the Canada Ports Corporation, they will no longer be there as a federal government entity, if you like, to loan to ports. So the loans either have to be put in to private lenders—which those ports that are commercially viable will do, because they can finance them—or they have to return to the government in some way to still hold.

The two I'm aware of that will not disappear at the end of Canada Ports are the one on Ridley Terminals, which would show up in the Export Development Bank's books, and the Belledune.

I'm not sure of the amount of Belledune. Do you know, Louis?

Mr. Louis Ranger (Assistant Deputy Minister, Policy, Department of Transport): I don't have it here.

Ms. Margaret Bloodworth: We can certainly get that amount for you.

The Chairman: Before we carry on, I'll just make a comment. I know some members are required at other places. There will not be amendments. Any amendments from this morning would have to be brought directly to the House. So we don't have to have a quorum. You're welcome to stay, of course.

Mr. Anders.

Mr. Rob Anders: Thank you.

According to the 1997-98 public accounts, Transport Canada spent $10,777,284 on bridges in the Montreal area. If you want to follow along, this is on page 132 in the supplementary estimates. The supplementary estimates call for an additional $1,304,000—a 9.6% increase. I'd like to know how the handouts for these bridges are managed, exactly why we need the additional funds this year, and whether or not there are any plans to commercialize these operations along with the ports, the seaway, the airports, air navigation systems, etc.

And if I can touch on this as well, I'd also like the minister to explain how subsidizing the costs—meaning keeping them artificially low—of Montreal suburban commuters is helping alleviate urban congestion, something the minister has referred to many times.

Mr. David Collenette: There are historical reasons that these bridges are with the Government of Canada, and there has been some discussion about divesting ourselves of the bridges to the province. There's another argument that says we should keep these bridges.

Obviously they are main arteries into Montreal, and while we have them, they require a lot of money for the upkeep. You may remember the bit of a fuss last Christmas around the Victoria Bridge in Montreal, which is two wings attached to the railway bridge owned by CN. Under a complicated arrangement, CN owns the bridge, but the Government of Canada provides for much of the upkeep and was required to repair the bridge. We struck a fifty-fifty deal whereby those repairs should be split between CN and the government.

• 1650

We do have other bridges in the system. We own the bridge in Vancouver, the Arthur Lang Bridge, which is the one that is close to the airport.

For various reasons, 40, 50, or maybe even 60 years ago, the federal government was in the bridge business, but we've been getting out of it. Yes, we'd like to get out of a lot of this kind of infrastructure, because as you correctly state, this is an interurban or interprovincial operation. But it's a question of how we get out, and if a province is willing to take it over, how much money we are prepared to pay.

The federal government also has a stake in bridges across the Ottawa River into Quebec—the Interprovincial Bridge and the other bridges as well. I'm not sure whether we have one of them. I think the National Capital Commission has them and Public Works has them. This is an issue we're going to have to look at as to whether we centralize the administration of all these bridges in Transport Canada, pending some resolution or devolution to provinces and the like.

I don't know if the deputy has a specific point, but I have to leave now; I apologize. But I'll always come back, Mr. Chair.

The Chairman: Mr. Minister, this 10 minutes was for Mr. Anders. We do appreciate your presence and we understand that you have to leave. Everyone who needed to speak to you or ask questions got their 10 minutes. We will continue if there are members who have other questions of the department, but thank you very much, Mr. Minister.

Ms. Margaret Bloodworth: I could answer the specific question about the Mercier Bridge and the Melocheville Tunnel, which Mr. Anders referred to. Those ones are two particular facilities that have come into the Jacques Cartier incorporated company, because they used to be part of the seaway. When the seaway authority was commercialized, they came into that organization.

The costs of running them are actually more than covered by the revenue that comes from non-navigational assets that will also go into that corporation. But this is the authorization to continue to maintain them for this year.

Over a period of five years, the revenue from the non-navigational assets is about $23 million, whereas the cost of maintaining those two facilities will be about $11.3 million. So overall, by taking those two structures into the Jacques Cartier Bridge corporation, which is a crown corporation, the federal government won't be out money on that. They will be covered. But there's no question that we have to have authorization to pay for the maintenance for the rest of this year, because the Jacques Cartier Bridge corporation took them over on October 1.

The Chairman: This completes the first round. Is there a need for a second round, colleagues?

Mr. Anders.

Mr. Rob Anders: I have a question.

The Chairman: Could you ask it in one minute?

Mr. Rob Anders: Okay.

The Chairman: And we'll ask our guests to answer it in two minutes.

Mr. Rob Anders: Sure.

I'd like a more detailed explanation of the following passage from page 12 of the performance report:

Conveying federal property to local operators could take longer and cost more than anticipated due to third-party interests, provincial issues and unforeseen costs, such as environmental work. Some of these factors may restrict the economic viability of the facilities to be transferred.

That excerpt brings a few questions to mind. Which federal properties are slowing the commercialization process down? Secondly, why will commercialization cost more? Thirdly, how much more? Fourthly, why didn't the department anticipate the costs as well as the third-party interests? And lastly, how will these factors restrict the economic viability of which facilities?

Ms. Margaret Bloodworth: Let me start and then I'll turn to Mr. Sully to complete.

Whenever we divest facilities that have a cost to us, there is usually an upfront cost. When we're divesting them, we may see and we often do see savings over time, but there is an upfront cost. For example, with the port divestiture fund, we often transfer ports with some money out of the federal purse, which may in fact, in that given year, be more than it cost us to actually run it. We're doing it because we've divested it forever to somebody else.

In terms of the third-party interests and the provincial issues, in some of the ports, the provinces own the harbour beds, for example, so there has been some complication of issues in finding out exactly who owns what and what they're prepared to transfer. And some provinces have not been keen to transfer. We've had some prolonged discussions with Newfoundland, for example.

• 1655

Another example of a third-party interest is the aboriginal interest. The Delgamuukw decision did cause us to relook at some of the facilities we have, particularly in British Columbia and some in the Maritimes, although affected elsewhere.

Overall—and it's referred to several times in the performance report—yes, there is a cost to divestiture, but we're doing it for long-run savings, if I can put it that way. But the immediate cost in many cases—and that's why we have a port divestiture fund of $125 million— In many cases we are divesting these ports with some money along with them.

Do you want to add anything, Ron?

Mr. Ronald Sully (Assistant Deputy Minister, Programs and Divestiture, Department of Transport): Only to address your last question, Mr. Anders, which was why didn't we know about it going in?

I'm sure you can appreciate that in the case of NAV CANADA, for example, where we were transferring over 500 properties, leases, or instruments we had on the properties, and in the case of ports, where we're transferring over 500 smaller ports and harbours, it's difficult to know with any precision, going into a process, exactly what it's going to cost when it comes to issues such as environmental remediation. Just in the case of Nav Canada, for example, we have found that it is costing us more and it is taking us longer. We have to do a baseline survey on every one of those properties, and then we have to negotiate with NAV CANADA on what will be the extent of the remediation we will carry out.

That's what adds to the uncertainty, that's why it's taken longer, and that's why in some cases the costs are up.

The Chairman: I will accept another one-minute question from anyone.

Mr. Anders, do you have another?

This concludes our study then. Thank you very much again.

I'd like to tell everyone that on Wednesday of next week there will be a presentation in room 371 West Block on intelligent transportation systems. It's a public meeting, and you are all invited.

Thank you very much, everyone.