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37th PARLIAMENT, 2nd SESSION

Standing Committee on Transport

EVIDENCE

CONTENTS

Thursday, October 23, 2003

0900

The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.))

Mr. Louis Ranger (Deputy Minister, Department of Transport)

The Chair

Mr. Marcel Proulx (Hull—Aylmer, Lib.)

The Chair

0905

Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance)

The Chair

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ)

The Chair

Mr. Dick Proctor (Palliser, NDP)

The Chair

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

The Chair

Mr. Louis Ranger

The Chair

Mr. Louis Ranger

0910

The Chair

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

The Chair

Hon. David Collenette (Minister of Transport)

0915

0920

The Chair

Mr. Louis Ranger

The Chair

Mr. Louis Ranger

0925

The Chair

Mr. Louis Ranger

The Chair

Hon. David Collenette

The Chair

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

0930

Hon. David Collenette

The Chair

Mr. Louis Ranger

Hon. David Collenette

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

0935

Mr. Louis Ranger

Mr. Jim Gouk

Mr. Louis Ranger

Hon. David Collenette

Mr. Louis Ranger

Hon. David Collenette

The Chair

Mr. Mario Laframboise

Hon. David Collenette

0940

Mr. Mario Laframboise

Hon. David Collenette

Mr. Mario Laframboise

Hon. David Collenette

Mr. Louis Ranger

Mr. Mario Laframboise

Hon. David Collenette

Mr. Mario Laframboise

0945

Hon. David Collenette

Mr. Mario Laframboise

Hon. David Collenette

Mr. Mario Laframboise

The Chair

Mr. Roger Gallaway (Sarnia—Lambton, Lib.)

Hon. David Collenette

Mr. Roger Gallaway

0950

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Louis Ranger

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

0955

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Louis Ranger

Hon. David Collenette

The Chair

Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)

Hon. David Collenette

1000

Mr. Joseph Volpe

Hon. David Collenette

Mr. Joseph Volpe

Hon. David Collenette

Mr. Joseph Volpe

1005

Hon. David Collenette

Mr. Joseph Volpe

Hon. David Collenette

Mr. Joseph Volpe

1010

Hon. David Collenette

The Chair

Mr. Joseph Volpe

Mr. Stan Keyes (Hamilton West, Lib.)

The Chair

Hon. David Collenette

The Chair

The Vice-Chair (Mr. John Cannis (Scarborough Centre, Lib.))

Hon. David Collenette

1050

The Vice-Chair (Mr. John Cannis)

Mr. Jim Gouk

1055

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. André Morency (Assistant Deputy Minister, Transport Canada, Corporate Services, Department of Transport)

Mr. Jim Gouk

Hon. David Collenette

Mr. André Morency

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

1100

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Louis Ranger

Mr. Jim Gouk

Mr. Louis Ranger

Hon. David Collenette

Mr. Louis Ranger

Mr. Jim Gouk

Mr. Louis Ranger

Mr. Jim Gouk

Mr. Louis Ranger

Hon. David Collenette

1105

The Chair

Mr. Stan Keyes

The Chair

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

1110

Hon. David Collenette

Mr. Stan Keyes

1115

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

The Chair

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

Mr. Stan Keyes

The Chair

Mr. John Cannis

Mr. Stan Keyes

Mr. John Cannis

Mr. Stan Keyes

The Chair

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

The Chair

Mr. Mario Laframboise

1120

Hon. David Collenette

Mr. Mario Laframboise

Hon. David Collenette

Mr. Mario Laframboise

Hon. David Collenette

1125

Mr. Mario Laframboise

Hon. David Collenette

Mr. Mario Laframboise

Hon. David Collenette

Mr. Mario Laframboise

The Chair

Hon. David Collenette

The Chair

Hon. David Collenette

1130

The Chair

Hon. David Collenette

The Chair

Hon. David Collenette

The Chair

Hon. David Collenette

The Chair

Mr. Joe Fontana (London North Centre, Lib.)

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

1135

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

1140

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Joe Fontana

Hon. David Collenette

Mr. Stan Keyes

Hon. David Collenette

The Chair

Hon. David Collenette

The Chair

Mr. John Cannis

1145

The Chair

Mr. John Cannis

Hon. David Collenette

1150

The Chair

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

1155

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

1200

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

Hon. David Collenette

1205

Mr. Larry Bagnell

The Chair

Mr. Larry Bagnell

Hon. David Collenette

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

Mr. Larry Bagnell

Hon. David Collenette

Mr. Gerry Frappier (Director General, Security and Emergency Preparedness, Safety and Security Group, Department of Transport)

Hon. David Collenette

The Chair

Mr. James Moore (Port Moody—Coquitlam—Port Coquitlam, Canadian Alliance)

Hon. David Collenette

Mr. James Moore

Hon. David Collenette

1230

Mr. James Moore

Hon. David Collenette

Mr. James Moore

Hon. David Collenette

Mr. James Moore

1235

Hon. David Collenette

Mr. James Moore

Hon. David Collenette

Mr. James Moore

Hon. David Collenette

Mr. James Moore

Hon. David Collenette

1240

Mr. James Moore

The Chair

Mr. Joseph Volpe

Hon. David Collenette

Ms. Karen Kinsley (President, Canada Mortgage and Housing Corporation)

Mr. Joseph Volpe

Ms. Karen Kinsley

Mr. Joseph Volpe

Ms. Karen Kinsley

Mr. Joseph Volpe

Ms. Karen Kinsley

Mr. Joseph Volpe

Ms. Karen Kinsley

Mr. Joseph Volpe

Hon. David Collenette

1245

Mr. Joseph Volpe

The Chair

Ms. Karen Kinsley

Mr. Joseph Volpe

Ms. Karen Kinsley

Mr. Joseph Volpe

Ms. Karen Kinsley

Mr. Joseph Volpe

Ms. Karen Kinsley

Hon. David Collenette

Ms. Karen Kinsley

Mr. Joseph Volpe

Hon. David Collenette

Mr. Joseph Volpe

The Chair

Mr. Joseph Volpe

The Chair

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

1250

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Roger Gallaway

Hon. David Collenette

Mr. Mario Laframboise

Hon. David Collenette

1255

Mr. Mario Laframboise

The Chair

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

The Chair

Hon. David Collenette

1300

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

Mr. Jim Gouk

Hon. David Collenette

The Chair

Hon. David Collenette

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

Hon. David Collenette

The Chair

Hon. David Collenette

The Chair

Hon. David Collenette

Mr. Jim Gouk

The Chair

Hon. David Collenette

The Chair

CANADA

Standing Committee on Transport

NUMBER 038

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, October 23, 2003

[Recorded by Electronic Apparatus]

¿ (0900)

[English]

The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.)): Pursuant to Standing Order 81(5), we are examining supplementary estimates (A) 2003-2004, votes 10a, 20a, 40a, and 45a under Transport, referred to the committee on Tuesday, September 23, 2003.

We welcome the Minister of Transport and Mr. Ranger. Maybe, Mr. Ranger, you would like to introduce your colleagues.

Mr. Louis Ranger (Deputy Minister, Department of Transport): Yes. With me are Jacques Pigeon, our general counsel; Jerry Frappier, who is our director general for security; Mr. André Morency, who is our ADM, corporate services. Later Miss Kris Burr will join us—she is ADM, policy—and Mr. Sully, who is our ADM, programs and divestiture.

The Chair: Thank you. Is there anybody left working at the department?

We have just a couple of housekeeping issues first. Mr. Proulx, you sent me a note today, but perhaps you would like to elaborate on it. This is on the issue of the airline attendants not falling under the regulatory control of HRDC. We were advised, as a committee, that they fell under the control of Transport Canada, and we wanted some clarification on that. Do you want to speak to that?

Mr. Marcel Proulx (Hull—Aylmer, Lib.): Yes, thank you, Mr. Chair.

Mr. Chair, as the note I handed to you says, this matter does not fall within the purview of Transport Canada; nevertheless, the department understands the concerns of flight attendants and is working with the Canada Customs and Revenue Agency and Human Resources Development Canada.

Transport Canada is currently developing regulations that will limit flight and duty times for flight attendants. The development of these regulations must follow a formal regulatory rule-making process, including consultation with stakeholders and interested parties.

Aviation safety, Mr. Chair, is one of Transport Canada's top priorities. In this regard, the establishment of regulations that will limit flight and duty times for flight attendants must be supported for reasons of safety, rather than to optimize employment benefits.

Please note that it is not known at this time whether the proposed flight attendant regulations will, for safety reasons, establish 35 hours or less per week as the maximum hours allowed for flight attendants.

My recommendation, Mr. Chair, would be for our clerk to check with the HRDC committee clerk to see where they are on this particular subject.

Thank you.

The Chair: Thank you, Mr. Proulx.

Is there any discussion?

Mr. Gouk, we are going into estimates, so I'm going to limit you to just one point.

¿ (0905)

Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance): I appreciate the minister giving us a few moments to settle this very important issue.

I would just seek clarification. Listening to what the parliamentary secretary had to say covered a lot of areas, but I understand the core issue is the designation: whether flight attendants are air crew or not. They have always been treated as air crew by EI. They assumed they were air crew, but then they discovered more recently that they were in fact not qualified as air crew, and that this designation falls within the purview of Transport Canada rather than CCRA, HRDC, or anybody else.

It is not going to alter their hours. It is simply going to recognize the pay structure by which they are paid and give them the qualification for EI that they so properly deserve, having paid the premiums, when they now find themselves in need of it because of the stress in the airline industry.

The Chair: Thank you, Mr. Gouk.

Mr. Laframboise.

[Translation]

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ): Mr. Chairman, we had asked for a written report to be tabled before the Committee. If it is limited to the report submitted by Mr. Proulx, he would have to table the report before each member of the Committee.

One should remember that we had to put the request during our discussions in the month of June. Considering the time granted to Transport Canada to carry out its research and to submit the report, I don't think today's explanations are satisfactory. Therefore I hope, Mr. Chairman, that we will get a written report.

[English]

The Chair: Thank you, Mr. Laframboise.

Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you very much. I appreciate the opportunity, because I am not normally a member of this committee, but I am here for this particular issue.

I really feel that by any objective standard, what we are realizing here is that with the flight attendants we're looking at a predominantly female workforce, and with the navigators and pilots we have a predominantly male workforce, and that should not be lost on any of us in this room. It seems to me, and I respect very much the comments from the parliamentary secretary, that to say we're going to check with the HRDC clerk is just putting this over and dragging it out. I note that this committee said back in June they were going to make a prompt decision on this and go forward to resolve it. What we've heard today seems to be doing anything but.

The Chair: Does anyone want to respond on this side?

Mr. Keyes, do you want to respond to those issues?

Mr. Proulx, do you have anything to add?

Mr. Marcel Proulx: We can certainly table that in the form of a bilingual report, Mr. Chair; there's no problem complying with the request of Mr. Laframboise.

The Chair: As the chairman, Mr. Proulx, I feel that this was an issue the committee had promised would be addressed before we adjourned for the summer, and for some reason or other it was not addressed. Let me make a suggestion. Later on this afternoon I'm meeting with some people who are in Ottawa today, but prior to that I would like to convene a meeting to decide how we're going to approach this problem. I would like you, Mr. Proulx, Mr. Laframboise, Mr. Gouk, and Mr. Proctor, if you would, to make yourselves available to attend at my office, where we can discuss this. Does that meet with everyone's approval?

Mr. Proulx, is that satisfactory?

Mr. Marcel Proulx: Most certainly, Mr. Chair.

The Chair: Thank you.

Mr. Ranger.

Mr. Louis Ranger: Just to confirm, Mr. Chairman, we will provide the committee with a report. We will clarify what the department did following the Moshansky commission, where we focused in the first instance on pilots and are now focusing on flight attendants. We'll explain how our work relates to HRDC.

Our main focus is on safety, but of course there are implications on whether flight attendants qualify for employment insurance, for example, and we'll clarify the relationship.

The Chair: I'm having some difficulty, Mr. Ranger, to understand why we collected employment insurance from them for so many years, and then when they come to claim we say they're not eligible. That just doesn't add up to me. Can you explain it, please?

Mr. Louis Ranger: This is not to pass the buck, but that's where it becomes truly an HRDC issue. I fully realize that whether they're eligible or not is driven by whether the time spent by flight attendants on board planes is regulated or not. If it's not federally regulated, then it does pose a problem in terms of the application of laws and regulations regarding employment insurance.

¿ (0910)

The Chair: Thank you, Mr. Ranger.

Will you converse with Mr. Proulx and pass that on to him so he can bring it to the meeting this afternoon?

Thank you.

Mr. Jim Gouk: Mr. Chair, can I just clarify something?

The Chair: No, we're going to move on, Mr. Gouk.

Mr. Jim Gouk: It's too bad. The minister and the department made us wait for three weeks; they can wait for ten minutes.

The Chair: You'll have an opportunity to talk, Mr. Gouk.

With the report on CUPE, there will be a vote at 10:15, so we'll have to break. Since this meeting may be a prolonged meeting, I've had the clerk order lunch for all of us.

I welcome the minister this morning on the supplementary estimates. Mr. Minister, do you have an opening statement?

Hon. David Collenette (Minister of Transport): Yes. Thank you very much, Mr. Chair, members of the committee.

I'm glad to come back here to talk about the supplementary estimates for Transport Canada. I want to remind members of this committee how important transportation is, of course, to the GDP, as 40% of our economy is linked to trade. Much of it is in merchandise that's transported by truck, train, ship, and plane between Canada and the United States and around the globe.

Obviously one of the big challenges that we have had as a government in the last few years is to reinvest in infrastructure so that we can enhance safety, security, and economic viability of the transportation system. The federal government recognizes this, and it has invested appropriately in all modes.

You know that we invested $600 million in the strategic highway infrastructure program in budget 2000, and $500 million of this is going to go to improvements in the national highway system. Another $100 million is available for system integration initiatives such as border-crossing transportation and deployment of intelligent transportation systems.

In addition, the government announced a total of $4.6 billion in the Canada strategic infrastructure fund and the border infrastructure fund. Of the $2.8 billion in projects announced to date, 79% has been allocated to roads and highways, border transportation projects, and public transit.

Perhaps germane to recent discussions in the press, the air industry has also benefited from financial support from the Government of Canada. We provided assistance to the industry, including $100 million in compensation for the loss of business resulting from the closing of Canada's airspace after September 11, 2001, and $35 million to assist air carriers in meeting requirements for reinforced cockpit doors.

In addition, as you know, this committee is particularly aware that we've set up CATSA, the Canadian Air Transportation Security Authority. That alone saved the airlines directly more than $70 million a year, and it continues to make annual contributions towards aviation security-related policing at airports.

One thing that is not appreciated is that since 9/11/2001, the Government of Canada has assumed the liability on war risk insurance for the air navigation system, for the airlines and for the airports. This is almost an incalculable saving, because we don't know what they would have had to pay. In fact, the insurance wasn't available post-9/11. This is something we're grappling with, but other countries around the world are also grappling with it and we're trying to have a global solution to that.

Obviously we continue to monitor the health of the air industry, and we continue to be very concerned about that. I'm sure you'll have questions on that.

That is assistance to the air industry.

Now, the marine sector has been targeted for strategic investment, and one of the things I'm very concerned about right now is maritime security. We have one of the safest, most secure transportation systems in the world. We worked hard at it, and we'll continue to take the required steps to keep Canada at the forefront. You'll remember that we announced $172.5 million for marine security improvements earlier this year, and it included initiatives that improve the security at sea and on land, particularly in our ports.

[Translation]

Passenger rail in Canada continues to benefit from the funding of $401.9 million announced by the government in April 2000 for VIA Rail. That announcement allowed VIA Rail to face its most urgent capital needs relating to rolling stock, infrastructure, and health and safety.

Obviously, the government recognizes the importance of transportation to ensure the prosperity and quality of life of all Canadians.

¿ (0915)

[English]

Before I respond to your questions, I'd like to set the stage by talking about the supplementary estimates, and I'd like to provide an explanation as to why this money is needed.

First of all, many of the items included in the supplementary estimates were included in previous budgets. As one example, you'll recall that three of the items included in the February budget of this year were extending the port divestiture fund, providing critical funding to Marine Atlantic, and providing operating funds for the old port of Montreal.

The items contributing funds to the Toronto Waterfront Revitalization Corporation and the air-rail link are projects announced under the umbrella of the Toronto waterfront revitalization initiative announced by the Prime Minister, the Premier of Ontario, and the Mayor of Toronto in October 2000, when each level of government committed $500 million to the project. The funding was highlighted in the December 2001 budget.

This year the budget plan 2003 was announced on February 18, and the main estimates were tabled in Parliament on February 26. This tight timing made it impossible to seek parliamentary approval for certain items as part of the main estimates process to access the funds we are seeking today in the supplementary estimates.

[Translation]

However, we still have to get parliamentary approval to get access to the funds requested, and that is why I am here today.

[English]

The $178,492,040 that has been requested will be used in many different areas.

[Translation]

Transport Canada is responsible for several Crown corporations that are accountable to Parliament through the Minister of Transport. Some of them have requested additional funds to the Department.

[English]

For example, one of the single largest sums in the supplementary estimates will go to Ridley Terminals Inc. to reimburse its credit facilities on or before the due date of February 10, 2004.

Ridley Terminals is located on a 55-hectare site on the northern end of Ridley Island in Prince Rupert. It's a sophisticated bulk-handling facility used for storing and moving coal from unit trains into ships.

In recent times Ridley Terminals Incorporated has faced some significant financial challenges. Some $77 million of the supplement is needed for the repayment of outstanding loans for the facility, and the government is the guarantor of these loans and is therefore responsible for the repayment.

In 2001-02, Transport Canada received unsolicited expressions of interest in Ridley Terminals and subsequently an RFP was issued to assist in the evaluation of options for this facility to determine the best course of action to deal with the challenges facing Ridley.

[Translation]

That process is not over yet.

[English]

Another crown corporation, Marine Atlantic Inc., will require an additional $16.5 million, due to a shortfall in traffic levels, higher fuel costs, and increased costs associated with vessel maintenance, workers compensation, insurance premiums, and pension plan contributions. The company has undertaken extensive internal resource reallocation, but it's unable to address this shortfall.

Marine Atlantic, as you know, provides a constitutionally guaranteed transportation link in Atlantic Canada by operating three passenger ferries between North Sydney in Nova Scotia and Port aux Basques in Newfoundland and Labrador...and Argentia in the summer.

[Translation]

Treasury Board has approved the 2003-2004 Business Plan for the Old Port of Montreal, another Crown corporation. However, that plan was provided too late and the funds could not be included in the Main Estimates. That is why we had to add $18.4 million to the Estimates to cover the operating costs of that Crown corporation.

[English]

Additional funds in the amount of $81,100,000 are required to extend the residential rehabilitation assistance program operated by Canada Mortgage and Housing Corporation, which is one of our largest crown corporations. The extension of this program was announced in budget 2003 and funding will be used to help preserve the existing stock of affordable housing.

I should say that Karen Kinsley, the new president of CMHC, is also in the room and she would be available for answering questions.

Another project that requires funding is the Toronto waterfront revitalization initiative. As I said, it is a partnership between the Government of Ontario and the City of Toronto. And the $500 million initiative is referenced in the December 10, 2001, budget plan tabled in Parliament.

The two amounts requested, $21.4 million and $20 million, are part of a $500 million federal commitment for the redevelopment of an area along the southern border of Toronto. The funding is going to be used for expansion improvements of public transit facilities at Union Station, for an environmental assessment of design work to transform the mouth of the Don River, for improvements to former industrial and port lands in the West Donlands area, and for the extension of Front Street from Bathurst to Dufferin Street. It's part of a previously announced $1.5 billion, multi-year project for the redevelopment of Toronto.

¿ (0920)

[Translation]

The Port Divestiture Program is related to the divestiture of Canadian ports to local parties. In some cases, the ports are divested as operating entities but, in other cases, when the facilities are not viable anymore, the lands and facilities are divested to parties wanting to put them to other uses. The Port Divestiture Fund has been created to facilitate this process.

So far, 450 Canadians ports have been divested under this program. Ninety-nine regional or local ports have still not been divested.

[English]

The government's recently announced three-year extension of the port divestiture program is in accordance with the national marine policy, and therefore an additional $25 million is being sought for the current fiscal year to continue divesting the remaining ports.

We also need to maintain our safety programs, such as the grade crossing closure program. As you know, this program empowers the Minister of Transport to enter into an agreement to close crossings in the interests of safe railway operations.

Similarly, parliamentary approval is required for a grant to the International Civil Aviation Organization for the universal security audit, in the amount of $42,000. We think this audit is a very important program and it's part of a larger program of an internationally recognized means of verifying the implementation of ICAO aviation standards worldwide. We made a $350,000 grant to the program in February 2002, and the additional funds requested represent the balance of Canada's commitment.

Both of these grant programs are being funded from existing Transport Canada reference levels, but they are required to be listed in the estimates, an undertaking that was not completed in time for the main estimates.

[Translation]

More and more, transportation is at the heart of our economic well-being.

[English]

Each year, the transportation system ships more than $1 trillion worth of goods across the country and employs more than 850,000 people.

As you know, our role has changed dramatically over the past ten years. And while Transport Canada no longer owns and operates a large part of the transportation system, it continues to play an important role in the strategic support of certain transportation infrastructure, oversight and regulation of the industry and the safety and security of important transportation infrastructure and its users and transportation policy. The expenditure of these funds through the supplementary estimates process will help us continue to fulfill the responsibilities.

Thank you.

The Chair: Thank you, Minister.

For clarification, Ridley Terminals at one time was owned by a consortium of grain elevators--is that not correct?

Mr. Louis Ranger: Ridley was a joint venture between the Canada Ports Corporation at the time and Fednav. In the early 1980s it was a very substantial investment, over $200 million. The government's contribution itself was fairly small, in the order of $28 million to $30 million. The rest was in the form of loans guaranteed by government.

It's a long story, but basically the business plan was based on the assumption that the price of coal would be maintained and increase over time. Exactly the opposite has happened. Over time that investment proved not to be as profitable as was expected. So now we have inherited this facility that is operating with minimum volumes.

We've started a process to sell the facility, trying to identify potential buyers, but in the meantime those loans that were contracted many years ago are coming to expiry; there's a $77 million loan that's due early next year, and we have to meet that obligation.

The Chair: The question was, was it not at one time owned by a consortium of grain elevator systems?

Mr. Louis Ranger: In Prince Rupert there's a series of elevators that are owned by a consortium of grain companies. It's about a mile away from the facility in question. But Ridley is a separate facility focusing on coal.

¿ (0925)

The Chair: But Ridley competes with One North.

Mr. Louis Ranger: Well, Ridley could eventually compete if the current installations are put to a use different from coal.

The Chair: Thank you.

What's the difference between the old port and the new port of Montreal?

Hon. David Collenette: The old port is the historic part of Montreal. I think they've done a remarkable job in preserving the old buildings, old infrastructure. Of course, the port of Montreal is one of the Canada port authorities under the Canada Marine Act.

The old port of Montreal is, in effect, a cultural, historic area in Montreal that attracts tourists.

The Chair: Thank you.

Mr. Gouk.

Mr. Jim Gouk: Thank you, Mr. Chair.

Minister, earlier in your speech you said the reason for these coming forward now instead of being included in the budget was that you were aware of these expenditures but there was no time to include them in the original estimates and that's why it's necessary to come before the committee now asking for additional sums of money. Is that essentially correct?

Hon. David Collenette: Yes, and it is not unusual.

Mr. Jim Gouk: No, and I accept that. But given that you knew of figures then, and we of course go through the estimates based on the figures that are presented, now we're faced with these additional figures. I accept your explanation of them, but I think before we consider what we should do with this and how we should deal with it, we should know if there are other figures, because this is the deadline for these estimates coming in. There are time constraints, not only when the original estimate is done, but even on supplementary estimates there are still time constraints.

I think it would be good for this committee to know if you know at this time of any future expenditures that may be coming before this committee, or expenditures being made by the Department of Transport that can't be included at this time because of time constraints or perhaps because some piece of the puzzle isn't in place yet.

Hon. David Collenette: No, there will be no more requirements for us, barring some unforeseen emergency, before the end of the fiscal year. Of course, whether or not additional projects in transportation or anything else in government are funded or not funded or reduced really is a subject for the next budget, which we expect early in the new year.

Mr. Jim Gouk: Nonetheless, it would be helpful to us if you give us some idea of future expenditures, beyond the normal scope of both the estimates that were brought before us previously this spring and the supplementary estimates now before us. Will this be in the normal flow of things, or are there some extraordinary things we should be contemplating for the future?

Hon. David Collenette: There will be no financial requirements for any additional transportation-related initiatives, barring an emergency, before December 31, 2004.

Mr. Jim Gouk: Okay, so the additional funding you are looking at for VIA would fall after that time.

Hon. David Collenette: That would follow in further years. In fact, what we're looking at is because of the changeover that is going on and the uncertain economy in the last few months, any additional funds would be ramped up so that the bulk of it would be in the latter years. It wouldn't be upfront. But there's nothing in this fiscal year, I can assure you.

Mr. Jim Gouk: One of the things this committee has done in the past is look at the aviation industry and seen it in crisis, as I am sure everyone else has as well. I don't see anything in this supplementary estimate that would apply to the aviation industry. There's nothing in these particular additional requests that would aid the crisis in the air industry at this time. Is that correct?

Hon. David Collenette: There's nothing more. But as I've said, government has done quite a lot.

There's one outstanding issue I'm sure members would want to talk about, and that's this whole airport rent issue. I have some personal views that I've expressed, and Transport Canada has certainly been leading the analysis on this file, but any adjustment of airport rents, particularly reduction, obviously, is a budgetary item; it's not within Transport's purview. I can give you my view as Minister of Transport and I can tell you the department's view.

Mr. Jim Gouk: Where I have a concern is that this committee heard from a lot of witnesses and listened to a lot of evidence as to the problem in the aviation industry and suggestions as to how it might be addressed. This committee made numerous suggestions. I've listened and followed the copy of your speech about the type of help that you say the aviation industry has received, but none of that follows the types of things that were recommended by this committee, one of those, of course, being relief on airport rent. There could be savings that could then be passed on to the aviation industry. We'd actually thought there were some initially, by the way it was expressed, but we've since discovered there's been absolutely nothing that helps the industry.

Why is there not something contemplated in these additional estimates? It would be fair to say that you didn't know about it during the original estimates, but if you were considering doing something in terms of providing relief on airport rents, or any of the other recommendations this committee made, you would have been able to include it in these supplementary estimates.

¿ (0930)

Hon. David Collenette: There was a measure for some airport deferral, interest-free, which has been taken up by certain airports. It largely benefits the bigger airports, Toronto, Vancouver, and Montreal. But that is not what the air industry wanted.

I was hoping to have this issue resolved by now, but it's very complex. All of the deals have been analyzed and all of the deals were somewhat unique. Again, this is not something that Transport Canada can change alone. This has to be a decision of the Minister of Finance in the budget.

I don't disagree personally with the need to deal with the airport rent issue. This was a regime that was put in place in the early years of our government when we brought in the national airports policy, a policy, by the way, that I think has worked very well. However, I must admit that the airport rent methodology and logic is somewhat difficult to understand--and, I think, difficult to accept. The five largest airports are paying $250 million a year right now, but other airports will come on stream.

There is a concept called “participation rent“ that my officials can describe to you, which the airline industry calls usurious methods, and I am not, frankly, in disagreement. Certainly my position has always been with my cabinet colleagues that we must do something on this.

On one hand, I say to the airport operators that they all signed deals knowing what they were getting into, though no one could foresee the downturn we had. On the other hand, the regime, as it cranks up later on, I think has to be adjusted.

The Chair: Mr. Ranger, you wanted to respond to Mr. Gouk.

Mr. Louis Ranger: On the specific question on whether there might be other items in the next supplementary estimates, there may be a technical adjustment precisely to deal with airport rent.

You know that this summer there was an announcement on airport rent deferrals, which means that this has reduced the incoming flow of money by $28 million. Revenues come to Transport Canada, so it means that we are short $28 million. That amount will be supplemented by the centre. This will come back to the department, so there may be a technical adjustment on that amount of $28 million.

If I could also comment on airport rent, the way the formula works is that when traffic is up, revenues are up from rents. But the converse is true. When traffic is down, revenues are down. It is especially true in the case of Toronto. The way the formula works is that when you go below the 25 million passenger threshold revenues from rent go down quite significantly.

The overall effect of this year is that it is down by $26 million in total compared to where it would have been if traffic had been stable or increased. So rents are down $26 million as a result of the formula itself, plus another $28 million due to the deferral, for a total reduction of $54 million this year alone.

Hon. David Collenette: There are bigger issues facing the air industry, and it is not just in Canada. It is worldwide in terms of the inability of full-service carriers to adapt to the new economic realities. That is an issue in Europe and an issue in the United States as well as in Canada. In those countries you don't have the same airport rent formula that we have.

Mr. Jim Gouk: That may well be true.

The Chair: This will be your last question on this round, Mr. Gouk.

Mr. Jim Gouk: I recognize that other countries have problems, but our focus is the problems in this country.

I will certainly be glad to get back to this again, but I have a final question.

If $28 million is forgone revenue for now--and we'll certainly come back to that aspect--in collecting money and it comes directly into Transport Canada and your rental revenue is down $26 million, I suppose depending on how much of that you forecast to happen, you're before this committee now for $178 million in additional funding, but we are talking here of $54 million that theoretically the department is out. Why are we not seeing any part of that? Where is this money coming from?

I do not think that when the budget was being set you were forecasting that you were going to do this rent deferral. I do not know how much of the $26 million you foresaw, but where is that money coming from, and why is it not part of the adjustment that you need at this time?

¿ (0935)

Mr. Louis Ranger: Basically, rents are down $54 million this year. The $28 million deferral will be reimbursed to us from the centre, from the fiscal framework.

Mr. Jim Gouk: What do you mean by fiscal framework?

Mr. Louis Ranger: By the Department of Finance.

Hon. David Collenette: From the CRF, the big government fund.

Mr. Louis Ranger: We are still short $26 million, which means that we have been scrambling for the last six months to adjust internally to either cut expenses or defer expenses to future years. We have tried very hard not to cut staff, but it's been very hard.

We are now in October, and we have had four budget reviews already in the department to try to cut everywhere we can. This is not to mention the additional amount that we have contributed to the reallocation exercise for the $1 billion. So in addition to this we had to contribute $16 million to the reallocation exercise.

So we are managing, but it is a month-by-month exercise, and we certainly will stay within our reduced budget.

Hon. David Collenette: I should just say, Mr. Chairman, that I think, frankly, one of the problems is that this airport rent policy is flawed. The fact the Department of Transport has to have its A base depend on the uncertainties and the vagaries of the market I do not think is sustainable. I do not believe it is generally followed throughout the government.

As Mr. Ranger has explained, the department is really up against the wall, as well as the airlines. So we have the same concerns as the airlines because of the way it is affecting us. We don't want to cut, for safety reasons particularly, any employees and programs. So it is serious, and this is the point that I have made to my cabinet colleagues. I was hoping to go back to committee before now, and I think it will be before Christmas. But this matter I believe must be resolved in the next budget.

The Chair: Mr. Laframboise.

[Translation]

Mr. Mario Laframboise: Thank you, Mr. Chair.

I will try to ask a few questions relating to other modes, even though I believe the air mode is very important. But, since we have the chance to speak to the Minister, I will try to broaden the scope of my questions. There is nothing for rail in what has been tabled, Mr. Minister. We know that a faster service in the Quebec-Montreal-Windsor corridor is very important to you but there was nothing about that in the last Estimates, and there is still nothing in these Supplementary Estimates.

Should we believe the rumour that the project is dead or can you tell us if it is still alive? If so, where and when will you get the money?

Hon. David Collenette: As you know, Mr. Laframboise, I have asked VIA Rail to submit other options for faster rail service. They have provided me with a document about VIAFast--high speed rail, which we have looked at. This matter has been discussed in Cabinet and I believe that my colleagues are a bit reluctant to make a major announcement such as this one at this time, because this would be a $3 or $4 billion project. So, I have asked my staff and VIA Rail to find another way to increase the funds for rail service while protecting the option, for the next government, to approve VIAFast. There have been lots of speculations in the press about that, in recent weeks, but we are ready to see what help could be provided to VIA Rail. However, as I said to the Chair of the Committee, Mr. Comuzzi, no expenditures are being planned at this time for this during this fiscal year.

¿ (0940)

Mr. Mario Laframboise: All right. So, this has been put on ice for the next government.

Hon. David Collenette: It means that the option is being preserved, which is logical, as far as I'm concerned, because it would be impossible and perhaps even irresponsible for Mr. Chrétien's government to make a $3 or $4 billion commitment that would tie the next government's hands. However, we still have to make a decision to help VIA Rail to face its capital and infrastructure needs while protecting the VIAFast option.

Mr. Mario Laframboise: Let's talk now about the marine mode, especially about the port divestiture policy. You are announcing an additional $25 million for that and we know that, in Quebec, barely 50% of the ports have been divested and that the needs for the 26 most important facilities or infrastructures are close to $70 million, which means that there will still be a gap.

Do you have a plan? Can you tell me today how many of those $25 million will be transferred to Quebec, and what port will benefit from today's Supplementary Estimates?

Hon. David Collenette: First of all, I have to say that I do not know what is the position of Mr. Charest's government. The position of the previous government, of Mr. Landry's government, was to take a big number of ports and to set up a regional and provincial port system. We did not agree with their requests, especially as far as funding was concerned. I have not had the opportunity to discuss the ports issue with Mr. Marcoux but we have asked our officials to start the discussions.

Mr. Ranger might have something to add.

Mr. Louis Ranger: Obviously, $50 million over two years is not enough. We have received $25 million per year, for the first two years, and there will be an extension to three years, but the third year is not yet funded. There are two provinces where work still has to be done, Quebec and Newfoundland. We know that, in both cases, it would take much more funding to cover all the ports. We have been very open with the provinces. We have told them that we could not start a global negotiation on all the ports, considering that the amounts will be much higher than those I have mentioned. We are working one port at a time and, in the case of Quebec, because of recent political changes, we have not yet started specific discussions.

Mr. Mario Laframboise: So, if I understand correctly, you're not ready to tell us that you are discussing about a specific port.

Mr. Minister, you said that you do not agree with the principle that the provinces should have a ports network. Is that really your position?

Hon. David Collenette: Not at all. Two years ago, for example, we were ready to divest ports to Newfoundland. Unfortunately, at that time, Mr. Tobin's government had put a funding request for ports management that, to our mind, was quite excessive. But we're not opposed to the idea that ports would be divested to the provincial governments or to a provincial network. The problem is the funding requested by the provinces.

Mr. Mario Laframboise: You're asking for a Supplementary Estimate for a Crown corporation. For the Housing Rehabilitation Program, $81 million is being asked for existing housing stock. However, from what I understand, there is nothing for building new housing.

Am I correct?

¿ (0945)

Hon. David Collenette: You are correct as far as the Supplementary Estimates are concerned but we did announce in the last Budget an additional $300 million for affordable housing, which is very important.

I have to underline, Mr. Chairman, that Quebec cooperated with us in a very efficient manner. As a matter of fact, I have to congratulate Mr. Landry's previous government as well as Mr. Charest's government. As far as affordable housing is concerned, we are true partners. That is not the case in Ontario but I hope that it will change under Mr. McGuinty's government.

What you find here is simply additional funds for the Housing Rehabilitation Program, which is extremely popular, especially in Quebec. In his Budget, Mr. Manley announced a four-year extension, with $81 million this year, $128 million next year and in 2005-2006, as well as $47 million in 2006-2007. This means that an additional $384 million has been announced for this program in the new Budget. All the funding had been used up but it is a very important program, with very high demand across the country. I believe that all the parties in the House support this program.

Mr. Mario Laframboise: If I am not mistaken, the last Budget gave you enough funds to satisfy the need for building new housing until the end of the year. Is that what you're saying?

Hon. David Collenette: Yes. We did announce—I believe that was in Mr. Martin's last Budget—$1 billion for affordable housing and we then started negotiating agreements with the provinces. We did negotiate one with Ontario but, unfortunately, the province is not using the funds. In Quebec, on the other hand, the program is very effective. We did announce an additional $320 million for affordable housing and that will be part of the next set of Estimates, next spring.

Mr. Mario Laframboise: Thank you.

[English]

The Chair: Thank you, Mr. Laframboise. We'll have a second round.

Mr. Gallaway.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Good morning, Minister. It's always a pleasure to see you here before the committee, and the platoon of officials you bring with you.

As I understood your response to Mr. Laframboise, if I go back, on February 25 this year, at a press conference, you released Straight Ahead, and you talked directly to the press of the VIA Rail high-speed project; $3 billion was the number that was reported at that press conference. What you said to Mr. Laframboise then is that that, at the moment, is being held in suspense; it is in abeyance.

Hon. David Collenette: Yes, we've had a number of discussions--I'm being very frank with you--and I think the consensus of my colleagues is that to make a commitment of $3 billion to $4 billion at this time, when the government is about to change, would not be appropriate. But there is a sentiment that VIA needs to have its capital needs addressed, and that is something we're working on. There have been lots of stories in the press, most of them wrong, about what may or may not come forward, but I'm hopeful that I will get approval to give some additional commitment to VIA for rolling stock, for infrastructure, as part of their capital plan, which has been public for some time.

Mr. Roger Gallaway: Okay. That clarifies what you said to Mr. Laframboise, that the high-speed project, if I can call it that, is in abeyance or suspense at this time but that you are willing to talk about what you referred to as infrastructure needs or infrastructure support for VIA.

¿ (0950)

Hon. David Collenette: What I would like, and I think my colleagues agree, is that anything we do for VIA Rail in the short run should preserve the option of VIAFast. In other words, if you're going to fix up the track, don't fix it up unless it's part of the VIAFast concept.

I guess what I'm saying is I'd like to have my cake and eat it too, to get VIA's capital needs addressed but preserve the option for the next government to decide whether they want to go the whole hog, if you will, for the VIAFast and commit to the $3 billion to $4 billion.

Mr. Roger Gallaway: In these supplementary estimates (A), there are no moneys for VIA whatsoever. Is that correct?

Hon. David Collenette: Right.

Mr. Louis Ranger: They have their money in the main estimates already.

Hon. David Collenette: And if I'm able in the next period of time, before the change of government, to make any further announcements, there will not be any money allocated in this fiscal year. I think that was the question that was raised. In other words, it would be in 2004-05, beginning there.

Mr. Roger Gallaway: So if I understand, when you're saying you're able, would that then imply that you would be able to take money from existing programs and announce it for VIA before a new budgetary year--in other words, transfer from a surplus or from a program that is expiring?

Hon. David Collenette: It would have to be new money that would be allocated out of the fiscal framework, but again, the Minister of Finance would have to agree to that.

Mr. Roger Gallaway: All right. When you say it would be money allocated out of the fiscal framework, are you talking about the next budgetary year?

Hon. David Collenette: Yes.

Mr. Roger Gallaway: All right.

In the estimates there is talk of the rail link, the 20-odd million dollars for the Union Station, and on May 23 you announced the four competitors who would bring in, essentially, a business plan. My reading of the estimates is that money is being paid to GTAA. Is that correct? Is it going directly to GTAA?

Hon. David Collenette: The cabinet made a decision, and the Government of Ontario and the City of Toronto concurred--because this is a joint venture--that $20 million out of the federal chunk of $500 million would go to incremental costs that the GTAA would need to support the strengthening of the pylons and the departures area to take on a DMU, a conventional train.

This is something I feel very strongly about, not just for Toronto but for the other airports in the country. The ones in particular that are germane here are Vancouver, Montreal, and Ottawa. If you go, as you have, around the world and to the U.S., most airports in large cities now are connected by rapid transit. I thought, you can't build a terminal that's designed for 60 million to 70 million passengers, ultimately, with the kind of congestion you have in Toronto, and the same with other cities, without providing for rapid transit links.

So we've said to the GTAA, look, this is a federal government initiative; the cabinet believes this is the right thing to do, but we don't expect you to pay the incremental costs for strengthening the columns on the approaches to the terminal. So they agreed.

In the case of Vancouver, under the infrastructure program, we've offered $300 million to the rapid transit between Richmond, the airport, and downtown.

Also, in any VIA Rail moneys, any infrastructure improvements dealing with VIA Rail, there's one particular part of it that would allow trains to exit off the CN main line on the approaches to Montreal into Dorval. The airport authority there has made provisions to receive a train.

Of course, there is also the option here in Ottawa, with a rail line that goes close to the terminal, that we can use the same program, or the same logic or policy, if you will, to assist the airport there.

Mr. Roger Gallaway: But at that press conference on May 23, you also said you would be releasing in the fall of this year the name of the “winner” of that competition among those four groups. We're well into the fall now, I understand.

¿ (0955)

Hon. David Collenette: Well, the fall ends on December 21, and that announcement will be made well before December 21. I was just briefed on it early this week. There is some other work to do, and I'm very enthused, because I believe we have an exciting announcement to come. But there has to be some fine-tuning done before we can make it public.

Mr. Roger Gallaway: This $20 million, is it paid directly to the GTAA?

Hon. David Collenette: Yes.

Mr. Roger Gallaway: What control do you have over that once you pay it to them, since they're not within the purview of Parliament?

Hon. David Collenette: It's a contribution agreement. As with any other, they have to satisfy the government auditors that the work is being done, the money is not just being put into their pockets and being spent somewhere else.

Mr. Roger Gallaway: Is this work at the new Terminal 2?

Hon. David Collenette: The new terminal. It's called Terminal New, as we say.

It will be very exciting. Because of the geological conditions at the airport, it was cheaper for them to build up rather than go into the ground, so this terminal is going to be a very high terminal and they will have a.... I forget, what's the terminology for the little train that goes between the terminals?

Mr. Louis Ranger: A people mover.

Hon. David Collenette: Yes, they'll have a people mover, as you see at many airports, especially in the U.S., and then there will be an interchange with an island platform with two tracks that will take up to five conventional coaches, potentially 400 people, that could come in on a rail link.

Initially it will be for downtown, but the option will be preserved for it to become a regional rail terminus to take trains from other parts in the region, because as we get more and more congested--and Toronto, as you know, is very spread out--we will have to offer rapid transit access to that airport. I think it would have been irresponsible for such a huge terminal to be built without making provision for rapid transit.

Mr. Turpin, the president, had gone through a rather unfortunate experience at San Francisco with the BART system, where the airport authority was left holding the bag for expenditures it did not foresee. That's why they were very reluctant, in the short run, to make commitments, not knowing if this train would ever get on the rails, if you will.

That's why we said we believed from a matter of public policy it was the right thing to do and we wanted to preserve the option. So this will certainly allow conventional DMUs--comparable weights to what go on Canadian main lines--to go into the airport terminal.

But it will be high. Actually, there'll be quite a spectacular view. You'll be able to see the CN Tower as you arrive at the top of the departures level.

The Chair: Thank you.

For the second round, we'll go to Mr. Volpe.

Mr. Joseph Volpe (Eglinton—Lawrence, Lib.): Thank you, Mr. Chairman.

Let me join my colleague in welcoming you to the committee, Mr. Minister.

I've been following your rendition of this rail link with great interest, because I, like Mr. Gallaway, was waiting for the announcement that was supposed to give us an indication of what we would be doing. While I find your rendition is quite encouraging, I'm just wondering in the back of my mind why that wouldn't have been part of the initial plan in the first place--why we would have to step in later on and say this is the government policy we wanted to pursue, and here is the $20 million to upgrade your facility so we can exercise the option later on.

Hon. David Collenette: When I became Minister of Transport in 1997 and started to work with the airport authority in Toronto, as with others across the country, I always held this view that you'd have to have the rapid transit link. The board of directors and the president did not hold that view, and I told you why Mr. Turpin was very skittish about it.

We were able to convince them it was in the best interests of the travelling public and public policy to do this, but we can't direct the airport authorities to make a certain kind of expenditure. That's not what the national airports policy is all about. The whole concept is to have these arm's-length organizations make their own decisions. It was a question of convincing them, and I was able to convince them. But they said “Look, we don't want to start expending a lot of money”--and as you know, Pearson has expended a lot of money--“so we're in effect left holding the bag for it if this service is not realized”. We agreed with them.

But the cabinet--and as Mr. Gallaway said, it's in Straight Ahead--talked about the rail links as part of this government's policy to encourage rapid transit links at major airports. So it will be done in different ways.

Actually, it will probably be a hell of a lot cheaper from the point of view of the federal government in the case of Pearson than it will be in Vancouver, where we've offered $300 million to the province to assist that line. But then, there are other factors there with the winter Olympics coming up.

In Montreal it will be about $20 million they will need. It will probably be VIA that will have to spend... Maybe it's not $20 million--I'll have to get the figure--but it will be a number of millions of dollars to connect the CN rail line with the terminal at the new Pierre Elliott Trudeau International Airport.

À (1000)

Mr. Joseph Volpe: Mr. Minister, while I guess I'm looking for encouraging signs in some of this, I wanted to voice some of the same concerns that Mr. Gouk had on the supplementary estimates. If you'll forgive me, I found that the presentation was in terms of you not having foreseen those kinds of expenses, so here you were, needing to have....

I see Mr. Ranger shaking his head, but the fact of the matter is that's essentially what he said, that other expenditures came up and that you needed to get parliamentary approval.

Hon. David Collenette: It's not unusual; it happens just about every year. You never know what's.... For example, he told you about the rent shortfall.

Mr. Joseph Volpe: Right. That's why I'm wondering about the $20-some million and how that's going to be.... You've given us an assurance that according to good accounting practices, somebody's going to be able to show you that they've actually done the work for this. There's no indication of a timeline and where they're going to put the enhancement of these pylons, so that we could put the appropriate structure in place.

As I went through the supplementary estimates, of more concern for me was, for example, the second item here on the Toronto waterfront revitalization project and the way some of the explanations came down for it. In the main estimates there was a reduction of about 57% from the previous year; so I guess there was an estimation that money was not going to be required. Then we find in the supplementary estimates an increase of 486% over the previous estimates just six months ago.

It's probably not for you, Mr. Collenette, but for you, Mr. Ranger, but I can only guess as to what kind of analysis you would be offering to the minister resulting in a 486% differential.

Hon. David Collenette: Mr. Volpe, you're absolutely correct in making the point, but the problem I have here is the fact that the contribution agreement was not in place. It was not in place because we were dealing with the Ontario government and the City of Toronto. Both the Ontario government and we found it very awkward dealing with the City of Toronto, whereby everything has to go to council to be debated, and you can't do the kind of forward planning that we do at the federal and provincial levels, by virtue of saying here's the government policy; here's a budget; here are the estimates. We have to go back to city council all the time.

So this was only approved by city council subsequent to the last estimates; therefore, once we knew what money had to be expended, they've come in the supplementaries.

Mr. Joseph Volpe: As I understand, with the use of the word “incremental”, which you've used and one of your officials was quoted in the papers as using.... I don't know whether it was Mr. Ranger or anybody else, because the quote didn't have a name attached to it. But if you have a government policy and you try to reflect that government policy in your estimates, presumably you can make the arrangements as you go along. I think Mr. Ranger explained that if there's a surplus situation, you reflect on it—and in fact this is reflected in the supplementary estimates, where you talked about the contributions and the CMHC. So I'm wondering whether this is an indication of an incremental approach to something else.

You said a few moments ago, Mr. Collenette, that what you planned or really wanted to do with VIA Rail were two things: to preserve for the next administration the option to exercise a policy decision; and to encourage the opportunity for VIA Rail and others to think in terms of an alternative plan for transportation, either on VIAFast or others.

So while the word “incremental” sounds positive from you, it is a little bit discouraging. I was listening to colleagues on both sides of this table, and I'm just wondering whether moneys are being moved from one place to another.

À (1005)

Hon. David Collenette: It's not a matter of being moved from one place to another.

On the question of the Toronto waterfront, one of the projects being funded, as agreed to by the Ontario government at our and the city's request, is the extension of Front Street in Toronto. It was all part of the waterfront plan; therefore, it comes into play. But the cost estimates for that extension have proven to be inaccurate, so more moneys have to be allocated to it. Part of the problem is that there was an under-estimation of the engineering feats that would be required to take that road underneath the lakeshore tracks that go along west of Toronto, or west of the exhibition area.

So it's not unusual for this kind of thing to come forward. We're not fudging policy. We have a commitment, but this is all a question of the management of cashflow. If it were a business, you'd do it on an ongoing basis; but government is a lot different, and correctly so, because you have the appropriation process subject to parliamentary scrutiny, which is what we're doing here. So it's a much more unwieldy issue.

On the question of VIA Rail, I personally believe, and I'm totally committed to the fact, that it is in the best public interest to develop a faster passenger rail option in the Quebec City and Windsor corridor, because of the growing congestion. That's why I asked VIA Rail for a plan. They came up with VIAFast, which was in the $3 billion plus range.

Frankly, my colleagues were quite positive about the concept, but there was a degree of nervousness about whether we should be committing this kind of money at this time. I think that's quite legitimate, so we've said okay, no. They said they'll come back with an alternative that is less of a large financial commitment, but which preserves the option and helps VIA Rail go forward with its capital needs.

That's the answer I gave Mr. Laframboise.

Mr. Joseph Volpe: Yes, I can appreciate that, but I hope you'll forgive the desire for greater specificity.

The newspaper reports over the course of the last couple of days have of course been replete with what I gather has been an ongoing negotiation in cabinet over $692 million or $696 million for this five-year plan to provide just the kinds of options you're talking about. As you know well, being from the Toronto area, this is at a time when it looks like the aviation industry and the travelling public through the airports of Toronto are at the stage of a crisis—as witnessed by Mr. Ranger's rendition on the shortfall in rents—and when it looks like we would be considering subsidizing a competing form of travel that logic would seem to suggest wouldn't be appropriate to do.

Then we have an official who says that you're looking at an incremental approach to do things without necessarily having to go through the mechanisms where you get the appropriate scrutiny--i.e., so that you can move some moneys around.

That is how I would read this.

Hon. David Collenette: I don't know what you're referring to in mentioning an official who said an incremental approach.

Mr. Joseph Volpe: What I'm referring to, of course, is that I'm looking at these estimates, and I see that during the estimates we did take into consideration the appropriate increases and shortfall and the cashflows, because as we go through them we find that there's an increase in almost every line item of about 5% to 6% and more.

Just in vote 10a, for example, we're looking at a request representing a 37.5% increase from the others. It's not strange that members of Parliament around the table, who would be asked to take a look at what these figures mean, would be skeptical about some of the changes that happened over the course of a three- or four-month period. To say that you didn't get these in time for the estimates process suggests either that the estimates establishment process is faulty or that a lot of decisions are made on the fly and then have to be rectified down the road.

Some people say that's flexibility. We don't object to flexibility, but I just wonder whether flexibility has also been fitted into this accrual process for building that alternative system to an aviation industry that has problems.

À (1010)

Hon. David Collenette: There are a lot of different—

The Chair: Mr. Collenette, I'm sorry, but we have to go to the vote, so we'll have that question reread on your return.

Mr. Joseph Volpe: Not the whole question, I hope.

Some hon. members: Oh, oh!

Mr. Stan Keyes (Hamilton West, Lib.): What time is the vote?

The Chair: It's eight minutes away.

Hon. David Collenette: So I have half an hour to think of my answer.

Some hon. members: Oh, oh!

The Chair: Absolutely.

À (1011)

À (1049)

The Vice-Chair (Mr. John Cannis (Scarborough Centre, Lib.)): We will reconvene the meeting.

Mr. Minister, I believe you were about to respond to Mr. Volpe.

Hon. David Collenette: Thank you, Mr. Chairman.

There is an issue, and you're seeing it played out now in public comments, especially this week with the IATA press conference about the problems with air. The airline industry worldwide has a problem, not of governments' making. It was the security issue.

Toronto has a particular problem because of SARS. Toronto was hit twice as hard by SARS as it was by 9/11; Vancouver, to a lesser extent. So there are real revenue shortfalls. They had planned in their forecast to have passengers up to, I think, $27 million and change. It's now $25 million, so they have to recapture that. But people are starting to go back into planes, and I think you will find some improved results. You're seeing this with WestJet, what they have said. I assume Air Canada will say there have been some improvements. People are starting to travel again. So it's going to come back.

What we can't do is look at one period of time and make a basic public policy choice simply because of certain events. I think it would be wrong to say that just because the air industry has been having a rough time in the last couple of years, we should change public policy to pull away from dealing with other public policy concerns such as congestion. Where I'm coming from here is on passenger rail.

Many governments around the world--I can think of Japan, France, and even in the U.S., with the Acela trains between Washington and Boston--have made public policy choices to invest in passenger rail over the air mode because it deals with congestion. If you want to go from London to Paris these days, I don't think you can fly. You have to take the train. Okay, you may be able to fly, but very rarely. You don't have many flights. If you want to fly from Paris to Lyon, you don't have any air service; you have to take the train.

If you want to go from Montreal to Brussels, you'll buy a ticket on Air France, for example, and they'll give you a train ticket when you get to Charles de Gaulle Airport, and you'll take the train to Brussels. Because of congestion, you need to have other modes.

The government believes developing passenger rail in the corridor as an alternative passenger mode and competition to the airlines--and don't forget that we've had a dominant carrier in Air Canada for the last few years--is a wide public policy choice. But that certainly doesn't deal with the issue you raise, Mr. Volpe; that is, the airlines are having a tough time, so why should they see passenger rail subsidized? But the passenger rail subsidy has always been there. The government agreed to a 10-year extension of a subsidy of $170 million, indexed to inflation, a few years ago. We agreed to $400 million in capital improvements, and we are trying to deal with more capital improvements, as I've described, which would leave the option for the VIAFast commitment to the next government. So I think it is good public policy to do this.

In fact, rail access to airports actually helps the air mode. It's becoming increasingly frustrating for me as a Torontonian to get from Pearson Airport to downtown in rush hour. You're in a taxi, you're in a rental car, or one of your staff is driving you. You know what it's like on the Gardiner Expressway; you're stuck in traffic. This is occurring around the world. So that's why we're looking at developing rail-air links. It will help the airport, it will help air passengers, and I think it will improve transportation.

On passenger rail, I've dealt with the issue. I think you can make the public policy choice and still have a viable airline system.

People were complaining to me after the merger with Canadian Airlines that there was no competition on the corridor. Well, in fact the competition to Air Canada on the corridor came from VIA Rail, which saw its VIA 1 passengers go up 30% last year, I think. It has been hit by SARS too, but everything is coming back.

On the second point you made, you had this word, “incremental”--I'm not sure where it came from--the implication being that somehow we are putting things in the supplementary estimates because of either poor planning or lack of authority, or we're sort of trying to get these expenditures in the back door. That is absolutely not true.

The way the system works, it's not like business. You have only the main estimates and the supplementaries. You just can't approve things on an ongoing basis like business.

À (1050)

A number of these items were held up for other reasons. Marine Atlantic, the Toronto Waterfront Revitalization Corporation, and the air link had to go to Treasury Board. The port divestiture fund of $25 million was subject to an evaluation of the port divestiture program to make sure that we were actually spending the money properly. And the corporate plan for the old port of Montreal had to go back to Treasury Board, a couple of times, I think, because the ministers at Treasury Board had some real concerns about this kind of funding.

That is why it's here in the supplementaries. It's not like we're trying to put something over on the committee. This is normal.

The Vice-Chair (Mr. John Cannis): Thank you.

Mr. Gouk.

Mr. Jim Gouk: As you might well expect, I have a lot of questions dealing with VIA Rail, but I want to go back to what we were talking about when my last session ended.

You were talking about a $54-million shortfall for Transport Canada from airports: $28 million, I think it was, from rent deferrals; and $26 million from reduction in rents.

I just want to be clear. First of all, the money you're asking for today is not a result of reduced revenues; it's a result of expenditures being higher than were originally projected. So you're looking for new capital, not to replace money that was already allocated and you just got a shortfall. Is that correct?

À (1055)

Hon. David Collenette: No. This is money that needs to be approved in the estimates but has already been announced in budgets. It has already been before Parliament in a generic sense, but we could not come for the actual requests of the dollar items until due diligence was done, as I described in the answer to Mr. Volpe.

Mr. Jim Gouk: All I want you to clarify is that this isn't like you had money already allocated for the old port of Montreal, but you suddenly found yourself short of money because of airport rental reductions, so you're trying to replace it. This is because the expenditure is actually increased over what it was in the original estimate.

I recognize why you're looking for the change, but it's because of increased costs to the port of Montreal, to Ridley Terminals, and so on, over what was in the original estimate, for reasons that you explained. But it's new money, not money to replace money that you've fallen short because of revenues from another area.

Hon. David Collenette: Perhaps Mr. Morency would address that.

Mr. André Morency (Assistant Deputy Minister, Transport Canada, Corporate Services, Department of Transport): If I may, Mr. Chair, with respect to the old port of Montreal, it was a situation where they did not have any funds approved at the beginning of this fiscal year, and the old port of Montreal had to put a corporate plan together to access the money that was announced in the budget in February.

So it's not new money. It was money that had to be programmed but had to go through the normal approval process before it could show up, and it could not be done, given the couple of weeks between the budget announcement and the main estimates.

Mr. Jim Gouk: I understand that. The only point I want to clarify is that this is not to replace a shortfall of revenue from other sources. This is because the expenses are a little higher, for reasons you've explained.

Hon. David Collenette: Absolutely.

Mr. André Morency: Absolutely.

Hon. David Collenette: In the case of the old port of Montreal, I should just tell you that Treasury Board ministers were concerned about sort of a knee-jerk application of $18.5 million without a real thorough justification for it and looking at the corporate plan.

I went back to Madame Robillard a number of times on this. She is from Montreal and she understands the problem, but she is also President of the Treasury Board, and ministers were concerned that you just don't give $18.5 million to the port of Montreal without really knowing what it's going for and what needs they're going to have in the future, what kinds of revenues they're going to generate.

Mr. Jim Gouk: I understand that, but my point is, why is it that you have to come before this committee to get the additional $18 million, using the example of the old port of Montreal, but you don't have to come before this committee when you end up reducing your revenue voluntarily by $28 million for airports and you go simply, as you put it, to the tax barrel and scoop out the money that you're missing? Why do you have to come here for the $18 million for the old port of Montreal, and not here when you come up $28 million short on your revenues and you just go to the tax barrel?

Hon. David Collenette: My officials can correct me if I'm wrong, but when you are talking about the old port of Montreal and these others, these are ongoing programs, ongoing expenditures.

You have a program that I think wrongly puts the burden on the Department of Transport with respect to a shortfall of airport revenues. I think it's unconscionable that a department, in effect, has to depend on the A-base that it needs for security oversight and for all the other good works that Transport Canada does, based on air traffic flow. That's what's happened here.

We've gone to the centre and said look, we can't operate as a department. We have to certify aircraft. We have to certify pilots. We have a safety issue. We can only cut so far. You need to make up the shortfall. So that is what the centre has done.

If you're saying that shouldn't be done, perhaps you should address that question to Mr. Manley as the Minister of Finance. I think most Canadians would understand that a department like ours, having this kind of shortfall and having made the $100 million worth of voluntary cuts, as asked by Mr. Manley, should not then be the victim of this...as we've seen.

Mr. Jim Gouk: We are still in a situation where you need $18 million more for some particular project. You have to come before us. You have a $28 million shortfall in your revenues because of a decision that was made by your department, and another $26 million as a result of lost revenues.

We're not talking about lost revenues now on the $28 million. That's separate. The $26 million is your lost revenue. The $28 million is your lost revenue because you deferred on the airport rents. Collectively it's $54 million. So why can you go and scoop money, in your own terminology, out of the tax barrel without coming before this committee, and yet you have to come before this committee for the $18 million, using, again, the example of the port?

I want it to be clear. I am not picking on the old port of Montreal. I am using it as an example.

Hon. David Collenette: Yes, I understand your point, and I will let Mr. Ranger deal with it.

Just so the record is corrected, Mr. Chairman, I never used the word “scoop”, and I never used the words “tax barrel”. I think I talked about--

Á (1100)

Mr. Jim Gouk: You did use the words “tax barrel”.

Hon. David Collenette: I used the word “CRF”, didn't I?

Mr. Jim Gouk: Yes, but you referred to it as the good old-fashioned tax barrel.

Hon. David Collenette: I did? Then I apologize, because that is a colloquialism that is foreign to my normal lexicon--on the record, that is.

Mr. Ranger was going to answer the question.

Mr. Jim Gouk: That is fine. I will still be here when this is over, because I want to come back to VIA.

Hon. David Collenette: We have lots of time, don't worry.

Mr. Ranger is going to answer your question.

Mr. Louis Ranger: Everything that is before you today was in the budget, but it had not necessarily been assigned to the department. It's a cashflow problem. It was in the budget, but then certain other steps had to be taken...largely, going to Treasury Board to fine- tune the exact amount that we needed.

Now that those decisions have been made, the process allows for those moneys to be allocated. For example, the money for the old port of Montreal was in the budget. And on the day of the budget, I checked with my counterpart in the finance department and asked, “Where's the money for the old port?” He said “It's in the budget, but you'll have to go to Treasury Board to make sure that they have a full debate and they understand what that amount is.”

Now that the debate has taken place the amount is given to the department.

On the $28 million, the deferral, this is a fairly recent decision. As I explained earlier, I assume that this $28 million will be part of the next supplementary estimates.

Mr. Jim Gouk: We were just told that this is the last kick at the can.

Mr. Louis Ranger: That's what I clarified here. That is why I intervened.

Hon. David Collenette: He talked about the technical amendments. He was up front about that.

Mr. Louis Ranger: When you ask where does it come from, I say it's the fiscal framework. That is another word for a “reserve”. There is an operating reserve in the government, the CRF, so there will be a technical adjustment.

The $26 million we have to absorb. That is why I explained that we are going through different rounds of budget reviews.

Mr. Jim Gouk: So you're telling me that the money that you're looking for now is a result of a “cashflow problem”, I think is the term you used.

I've been in business for a long time, and when your revenues are less than you expect, that's a cashflow problem, sir. So why are we looking at the committee and dealing with the additional money you need because of the cashflow problem and not looking at the lost revenues you have, which, I would suggest, is a cashflow problem?

Mr. Louis Ranger: I wish we were bringing it here. We are being asked to absorb it.

Mr. Jim Gouk: Not the $28 million, you're not. It's going into the tax barrel.

Mr. Louis Ranger: The $28 million will be covered the next time around. The $26 million is due to the normal working of that formula.

Hon. David Collenette: The $28 million is from an anomaly, I believe, in the policy. I would invite members of this committee to really bear down on that aspect of the national airports policy.

I found it really difficult as a minister, and I've said it at cabinet, for the rent structure to be devised in such a way. I think it is rough on the airport authorities and it is rough on the department, and I think it has to be changed. I cannot change it. All I can do is advocate the change and get consensus from my colleagues, but it has to be a decision of the Minister of Finance.

The Minister of Finance has all kinds of priorities to juggle. There's $250 million right now annually accrued from rent, most of it from Toronto and Vancouver, the two biggest chunks. And one could argue that if you wipe that out you wouldn't have the problem we are dealing with this week with the airlines saying that fees at Pearson International are going too high because of shortfalls in revenues.

I think there's a certain legitimacy to the complaints made by the airport community across the country, and that's why we've had this airport rent review. It's very complex. We've had lots of consultants and financial institutions involved in this. We're about to go to cabinet to try to get some resolution.

The big problem for the Minister of Finance will be, “Am I to forgo those revenues, or a portion of those revenues, because $250 million a year is a hell of a lot of money? And where will I get the money from?”

Everybody has a legitimate complaint here. As I said before, the fact is that we are dependent on, in effect, airline passenger revenues for a big chunk of our A-base. I don't think that's good governance, and I've said it internally. So I think these issues have to be looked at.

We're not trying to pull the wool over your eyes, Mr. Gouk, or over anybody else's here, but I recognize your issue about then going to the CRF. The alternative is this. If we couldn't go to the CRF with the technical amendment that Mr. Ranger's coming in with, we'd have to make incredible cutbacks, and this department cannot sustain more cutbacks without compromising safety.

Á (1105)

The Chair: Thank you, Mr. Gouk.

And Mr. Keyes.

Mr. Stan Keyes: Thank you, Mr. Chairman. Through you to the clerk, I am wondering if I can learn whether this committee has yet indeed received a copy of the VIAFast proposal that we requested some time ago. I think it was requested by Mr. Volpe.

The Chair: No, we haven't received that.

Mr. Stan Keyes: So I guess my question goes to you, Minister.

This committee has not received a copy of the VIAFast proposal. And you said earlier today that the proposal called “VIAFast” has the support of your colleagues. That's what you said. Can you tell me which colleagues you're referring to?

Hon. David Collenette: First of all, the reason that VIA hasn't sent you VIAFast is that it was a document that was sent as cabinet confidential to the government and it has been discussed by the government at cabinet. What I have said is that my colleagues generally are very favourable to the notion of faster trains and the concept of VIAFast, but there was real concern about making a huge commitment of finances at this time.

Obviously I don't talk about cabinet deliberations any further than the generic comment that I've just made. You don't say so-and-so said this and so-and-so said that.

I've been very pleased with the support I have received from my colleagues and their understanding on this particular issue. We have taken their views into account. We are saying, right, we understand.

You feel that it would be wrong to make a $3-billion-plus commitment, but VIA has needs, and we want to preserve the option for VIAFast in the future. So my colleagues asked me to come back with another plan, and that is what we did.

Mr. Stan Keyes: This is the nut I want to get to, Mr. Minister. You're saying that you're getting good vibes from your colleagues on a faster train service, and it speaks specifically to the VIAFast proposal, which none of us has seen or is aware of--and I'll get to that in a moment.

Is there any credibility to the rumour that you're hoping to acquire some funding for VIA Rail outside of the envelope of estimates or even supplementary estimates that we're discussing today?

Hon. David Collenette: Yes, that is what I said in answer to earlier questions.

Mr. Stan Keyes: And how much?

Hon. David Collenette: It is still under discussion, but it is significantly less than the $3 billion plus that has been put out in the media.

Mr. Stan Keyes: Ballpark, how much would it be?

Hon. David Collenette: It is significantly less and more closely mirrors the capital requirements of VIA in their corporate plan, which is less than $1 billion.

Mr. Stan Keyes: All right, then let's call it for the sake of argument $600 million, maybe higher, I don't know.

So recognizing that any infrastructure improvements would be certainly beneficial to CN and CP if they did spend this money, you also said earlier something to the effect that it is your hope that any infrastructure improvements at VIA would have VIAFast in mind when making those improvements.

So I am forced to split hairs. Call it hair-splitting if you like, but I have to ask the question. How much of that $600 million plus that you hope to get outside of the scrutiny of parliamentary estimates or supplementary estimates would you think would be dedicated or solely directed at improvements linked to VIAFast?

Hon. David Collenette: I really cannot answer that question off the top of my head.

Mr. Stan Keyes: We can't either, because we don't have the proposal to try to--

Hon. David Collenette: But if I'm in a position to make an announcement, then it will be evident as to what amount of money goes for rolling stock, equipment refurbishment, locomotive refurbishment, new stations and infrastructure.

One of the things--and I raised this when I came last time, and I know the chair is very sensitive to this, coming from Thunder Bay--is that I would like to see VIA have more of those Renaissance cars refurbished for a number of reasons.

Mr. Stan Keyes: No, no, I do not want to drift away. I agree with you on the refurbishment of cars and so on--

Hon. David Collenette: But that is all part and parcel of the approach I am taking.

Mr. Stan Keyes: All right. Given that we parliamentarians--I stress that, parliamentarians--have no knowledge of VIA's plans on VIAFast, and that any multi-billion-dollar plan would certainly need a full and thorough review to examine its benefits, if indeed there were any to be demonstrated.... If, for example, we would indeed see any kind of modal shift or in fact any environmental benefits beyond the negligible to justify some $3 billion or $4 billion in expenses, not to mention the competition that would be created.... I mean, you want a successful fast train service, so you're going to be in competition with other modes of transportation, such as the airlines, such as buses, such as other modes that are at this particular time going through very rough waters.

My question has to be, are we not putting the cart before the horse? Aren't you, Minister? This is your domain. Are we not putting the cart before the horse, asking, as you are trying to do, through the consolidated revenue fund, $600 million plus of unscrutinized additional funding on a plan that we haven't seen, that we haven't understood, that we haven't justified, that you are going to achieve by your wish through cabinet and sign-off of a prime minister, to get moneys on a project dealing with a transportation issue that is central to the concerns that this committee has been trying to deal with for two years?

Then all of a sudden, we don't have any control any longer. We cannot scrutinize this money. We don't know how much of that money and you don't know how much of that money VIA Rail will use specifically for improvements at VIA for a proposal we know nothing about. You hope that it would certainly be toward improvements in the direction of a VIAFast, because you say some of your colleagues think it is a great idea.

I would say I am pretty involved in transport, as every member on this side certainly has been, and we don't know anything about VIAFast or what its implications are on a train system called VIA. That is why I am saying I think we are putting the cart before the horse. If you are going to ask for those moneys, I think those moneys should be asked through estimates, through supplementary estimates, not the back door of asking the cabinet and the Prime Minister to give you $600 million for VIA.

If VIA needs money for infrastructure, if VIA needs money to do its job, then it should be in the estimates, scrutinized by Parliament, not through the back door because it is part of a VIAFast proposal that is yet to be adopted.

Á (1110)

Hon. David Collenette: Wait a minute. Mr. Chairman, perhaps we can just bring it back to first principles.

The role of Parliament is to scrutinize expenditures that have been authorized by government in the parliamentary system. Unlike the U.S. system where committees generate their own budgets, bring forward their own bills, and have the authority to generate spending proposals, no spending proposals can be generated in the parliamentary system without the royal prerogative, and the royal prerogative can only be discharged by cabinet. Therefore, a cabinet minister--and not just me but any minister--goes to cabinet, and cabinet makes a decision that a certain expenditure, a certain program, should go in the budget, should be made, and then we come to Parliament to justify that. In other words, first we have to make the decision at cabinet that this project, VIAFast, or something else, or any program, is something we want. Then, of course, the moneys are announced, and then, via the estimates, the actual scrutiny is done by parliamentary committees.

So I'm perhaps splitting hairs here a little bit, but in our system of government the committee's role is to scrutinize that which has been determined is right for expenditure by the executive.

Mr. Stan Keyes: Mr. Chairman, the minister speaks directly to what I've just asked him, and this is that if the Crown decides that it wants to proceed in some fashion to--and let's be specific--support a VIAFast proposal from VIA Rail, a crown corporation that takes one-third of all subsidized money in transportation, that only provides one-tenth of 1% of what it does for Canadians as a transportation entity, and then we can get into a whole argument there on VIA... I don't understand how it is that you can go now and ask for money from cabinet on a proposal that cabinet itself, if I read the papers correctly, has either not endorsed or about which it says “Not at this time, and it should be left to a future government to make decisions on it”. And VIA says, “We need the $600-plus million for infrastructure improvements”, but by the minister's own admission, a chunk of that money is going to go in the direction of improvements for VIAFast. Do you understand what I'm trying to get across?

Á (1115)

Hon. David Collenette: No. You see, I think we are having a very semantic discussion.

Mr. Stan Keyes: I don't think it's semantics at all.

Hon. David Collenette: There are no differences here, Mr. Chairman. The fact of the matter is I asked VIA for a proposal for faster train service, passenger service, following on this committee's original report a few years ago--when you were chairman, Mr. Keyes--calling for the renaissance of passenger rail. They came back with VIAFast. Cabinet and the bureaucracy have looked at VIAFast, and the conclusion that we've come to is, yes, conceptually this is a plus. For public policy reasons this would be good; however, we cannot make a financial commitment at this time of such a magnitude.

VIA also has capital needs in its corporate plan. So the question is then to ensure that its corporate plan needs are discharged in such a way that any expenditures made on infrastructure preserves the option for VIAFast. So any decision for VIAFast will not be made by this government. It will be made by a subsequent government.

I will give an example. You don't want to double-track the 25 miles between Smiths Falls and Brockville if you're going to build a 67-kilometre new line between Smiths Falls and Kingston. That's nuts. Therefore, if you're spending money, you don't spend it there; you spend it where.... In the eventuality that VIAFast is ever agreed to, then the money is well spent, but in the meantime, if it's not, you need it now. You need it with the existing scenario.

So there is no real disagreement between Mr. Keyes and me on this in the sense that VIA has ongoing capital needs. We have ongoing capital needs for VIA.

Mr. Stan Keyes: I'm going to--

The Chair: You're almost out of time.

Mr. Stan Keyes: I'm going to refute the last statement. Yes, there is a real difference between what I'm saying and what the minister is saying, in that my concern is that if the capital needs of VIA are there, and a portion is going to be needed for VIAFast or to ensure that whatever they're doing is geared toward VIAFast, then that capital need should have been included in the estimates or supplementary estimates for the scrutiny of this parliamentary committee and not outside of it.

Hon. David Collenette: But it will be, because if there is an announcement made on more money for VIA, that will have to come before this committee in the next estimates, Mr. Keyes.

Mr. Stan Keyes: I'm talking about the $690 million you want, not the $3.5 billion.

Hon. David Collenette: If you are correct, Mr. Keyes, about an announcement for more money for VIA, that money will still come out of the estimates, but it won't be estimates in the supplementary estimates before next year.

As I said to you, the plan we're working on is that there won't be any cash drawn down in fiscal 2003-04. It will be 2004 and on, and it will be ramped up.

The point is that there will be parliamentary scrutiny of that. Please don't leave the impression that somehow we'll pull out x hundreds of millions or billions of dollars and this committee will not have a chance to examine it. That is not true.

Mr. Stan Keyes: That is not what I'm saying at all.

Thank you, Mr. Chair. I think I made my point.

The Chair: Thank you. We'll have another round on that very important issue. I wish you'd stay here.

Mr. John Cannis: It was more than seven minutes, by the way.

Mr. Stan Keyes: I thought I was on a roll.

Mr. John Cannis: You were. That's why we let you go.

Mr. Stan Keyes: It wasn't a “fast” roll.

The Chair: Mr. Gouk, is this a point of order?

Mr. Jim Gouk: No. I thought we were--

The Chair: It is Mr. Laframboise's turn.

Mr. Jim Gouk: You're doing it that way? I see.

The Chair: No, it's just the rules we live by, contrary to what you do.

Mr. Jim Gouk: No, I mean those are the rules.

The Chair: Those are the rules.

Mr. Jim Gouk: They seem variable, that's all.

The Chair: Mr. Gouk, everybody gets a turn to speak.

Monsieur Laframboise.

[Translation]

Mr. Mario Laframboise: Thank you, Mr. Chairman.

Coming back to the previous discussion, if Mr. Keyes wants to suggest that the Estimates of the Department of Transport be prepared by the Committee, I will support him. As you know, I will not oppose him at all. I said earlier that I wanted to deal with all of the modes and I will now ask questions about the land mode.

You said in your statement that all the investments for highways will probably be used in the strategic infrastructure program. We have had the opportunity to talk about Highway 50 and you have always said it should have been included in the National Highway Network since there was money available. At this time, there is none left and I want you to notice that not a cent has been invested in the highways. There was a matter of improving grade crossings but we told you right from the start that there wasn't enough money in the National Highway Network program.

I see now that you are not adding any money to the National Highway Network program. Our colleague, Mr. Proulx, who is also your Parliamentary Secretary, leads a committee that will look at the issue of Highway 50. That committee has not yet met but, in any case, I don't see how we will be able to talk about any federal investment in Highway 50.

I want you to notice, Mr. Minister, that the federal government has already invested money in Highway 50; 14 kilometers, or a bit more, have been built up to the limits of Gatineau. Furthermore, 14 kilometers have been built in the Mirabel Airport area, even though that is not part of the National Highway Network.

What can we expect about Highway 50? Nothing, I suppose, or is there any type of opening?

Á (1120)

Hon. David Collenette: Mr. Laframboise is right, Mr. Chairman. Some money has been invested in Highway 50 under a program that existed under Mr. Mulroney's government. As far as we are concerned, we do not yet have any program that would allow us to invest in Highway 50, which is not part of the National Highway Network. I am stating here publicly that if the Government of Quebec wants to include Highway 50 in the national network, I will agree to that, as the Minister of Transport.

Furthermore, through the Strategic Highway Infrastructures Program, which comes under Mr. Rock, it will be possible to invest in Highway 50. But the federal government cannot make such an investment without the agreement of the Province of Quebec. We are not the ones making that decision, the provinces have to decide if it is a priority for them. So, the Quebec government could decide if it wants to invest in Highway 50 and I believe that Mr. Rock and his officials could negotiate with the Government of Quebec, with help from our own officials.

Mr. Mario Laframboise: However, when the Parti Québécois was in power and you were asked to invest in Highway 50, you said that you were unable to do so. I fail to understand. You are telling me that if Quebec sent a request, you would find the money without any difficulty. Of course, I will have no objection but I believe there should be some type of logic in these decisions.

Hon. David Collenette: When the issue was discussed in Parliament, no funds were available in the Strategic Highway Infrastructures Program. Today, we have a program that will allow us to invest in Highway 50 but, as I said, it is up to the Province of Quebec to decide if it is a priority for them. That province has very important priorities, especially in its eastern end, close to New Brunswick, and it will have to decide.

Mr. Mario Laframboise: I would conclude with the Mirabel Airport file, Mr. Minister. As you know, ADM is looking at the future uses of Mirabel. One hotel that belongs to the Government of Canada is closed. There is no money. I was wondering if it would not be better to give Mirabel its own airport administration. The airports in Hamilton and Toronto are managed by two separate administrations and I wonder if the time has not come to give Mirabel its own airport administration, in order to ensure its future?

Hon. David Collenette: The Canadian government has concluded an agreement with the Société des Aéroports de Montréal under which ADM is to manage both airports, Mirabel and the Pierre-Elliott-Trudeau Airport in Dorval. That is part of the agreement. That's the deal. It's up to ADM to decide what type of management system it wants and it has decided to redirect the flights to the Pierre-Elliott-Trudeau Airport. Finding the best possible use for Mirabel is a real challenge for the government and for ADM but the system is successful. Bombardier is there, and there is a program to encourage companies to use the airport, and there is also Air Cargo. So, it's up to ADM to determine its priorities for Mirabel.

Á (1125)

Mr. Mario Laframboise: How can you say that the system is successful, Mr. Minister, when ADM doesn't even know what to do with Mirabel. This is why I am telling you that the solution might be the creation of an independent airport administration that would be able to deal with the issue, in order to get out of the present impasse when nobody knows what to do with Mirabel.

Hon. David Collenette: In that case, we would have a problem with two weak airports. We want a strong airport in the Montreal region, an airport that will be able to attract passengers and freight. If another group were to manage Mirabel, there would be competition and everybody would lose. It is in the best interest of Montreal that all the air passengers use a single airport. That is the position of the government.

Mr. Mario Laframboise: Did you know that some business people were interested in managing Mirabel and to ensure its profitability? You know that some offers were sent to ADM. At least, I hope that you are aware of the offers made by independent companies that wanted to manage the airport for freight and for passenger traffic.

Hon. David Collenette: I was told that there was a call for offers for Mirabel because, if it is not used for air traffic, it has to be used for something else. ADM launched a call for offers but not for passenger traffic, for something else.

Mr. Mario Laframboise: Which means that you did not know that a company was interested. The only thing you know is that a call has been launched to get some proposals to use the airport for something else. Some people are interested but either you do not want to tell us anything about it or that information has not reached you yet. That answers my question. Thank you.

[English]

The Chair: Thank you, Mr. Laframboise. I am just going to call on Mr. Fontana, but to try to bring this argument into some succinctness, if I understand what you've said so far, Mr. Collenette, concerning a higher-speed rail system, you and your colleagues, in your wisdom, have made the determination that you don't want to commit a future government to the huge expense of $3 billion to $4 billion—

Hon. David Collenette: For VIAFast. But we are committed to faster passenger rail service.

The Chair: Yes, but you will commit and have every intention of committing the infrastructure that is needed for VIA Rail—and the number, as Mr. Keyes has said, is close to three-quarters of a billion dollars—to facilitate the VIA Rail upgrades for cars, and there is some discussion as to whether some of that three-quarters of a billion dollars will be spent in preparation of the higher-speed rail system. The repugnancy of the—

Hon. David Collenette: Yes, Mr. Chairman, I understand the point Mr. Keyes has made, but it shouldn't be repugnant, because what I'm saying is that any moneys we announce for VIA that are directed towards track infrastructure will be needed for VIA to improve its ongoing service, whether or not VIAFast is ever proposed. But what we don't want to do is spend on track money that, if VIAFast then is proposed, is a waste of money.

I gave the example of the subdivision between Smiths Falls and Brockville. It makes sense to spend money at Coteau, where there's a real bottleneck with CN. It makes sense to put a third track between Kingston and Belleville, because if there is a VIAFast, it can be used for that, but if there's not a VIAFast, it's still going to improve the existing passenger rail.

We're not trying to pull the wool over anybody's eyes. We're not trying to do anything by the back door. But we want to preserve the option in future for the government to say, “Yes, we like VIAFast and we're prepared to commit the $3-billion-plus expenditures.” It's good use and management of public money.

Á (1130)

The Chair: We're one step ahead of ourselves when we start planning the system. As I was saying, the repugnancy of what we're trying to accomplish here today through the transport committee is that there would be three-quarters of a billion dollars of taxpayers' money spent without the scrutiny of the House of Commons.

Hon. David Collenette: That's not true. First of all—

The Chair: The decision is made and then the scrutiny comes afterwards.

Hon. David Collenette: But it happens all the time. A minister of finance stands up and makes—

The Chair: Maybe we should change—then you wouldn't have a gun control.

Hon. David Collenette: Mr. Chairman, this is beyond us and the transport committee. You're talking about institutionalizing a congressional-type system, as in the United States. As Mr. Laframboise has said, that's not the way our system works. Parliament's role is to scrutinize decisions made by government and expenditures authorized by government. That's what we're doing today. So if we come forward—if, and I'm telling you the figure you bandied around is not necessarily accurate—with an announcement, that money will have to be analysed by this committee at some future point.

The Chair: Mr. Fontana.

Mr. Joe Fontana (London North Centre, Lib.): Thank you, Mr. Chairman.

Mr. Minister, I think a lot of this could have been avoided, and perhaps this is the new role the committees might play in helping the executive and governments deal with some important matters. I don't need to tell you that this particular committee has been very supportive over the years in trying to determine a whole number of different modal transportation systems and how we can improve transportation in this country.

On VIA, I think this whole argument about when accountability starts and finishes, when there is transparency, when in fact there is scrutiny.... It would have been nice if in fact VIA had been open, at least, or even if your department had put forward the VIA corporate plan—the business plan, the VIAFast plan. It could even have been mentioned in the budget—because it was not mentioned anywhere in the budget—at which point we could start to ask and ascertain whether or not we're going to be able to scrutinize, after the decision has been made, moneys you will be getting at some point in time from the centre, and that therefore are not part of these supps. I think some of us are saying maybe the decision should be made—or at least the committee ought to have an opportunity to talk—about those expenditures before the fact, not after the fact.

I'll leave it at that. It wasn't mentioned in the budget. It wasn't mentioned even in main estimates here. It may very well be in the main estimates of the government someplace, but you just don't reallocate $600 million or $700 million, wherever that money is going to come from, and put it into your department without somebody having an opportunity to look at whether or not that's good expenditure or bad expenditure, whether it should be done or not done, because that $600 million or $700 million you're asking for your colleagues has to come from someplace. It has to come from somewhere else in the overall global budget.

I have some other questions, and perhaps you might—

Hon. David Collenette: It can't come out of this budget, Mr. Fontana.

Mr. Joe Fontana: That's what I mean; that's why I'm asking you. Which budget is it going to come from? If it's not this budget, it's the next budget.

Hon. David Collenette: If we make an announcement dealing with VIA's corporate plan, the summary of which is made public every spring and is on the public record and is open to this committee to look at—and you can ask VIA to come forward and defend their corporate plan—then those moneys, I told you, will not be in this fiscal year. Nothing is coming out of there. It will have to come out of subsequent years and be factored into the fiscal—

Mr. Joe Fontana: Therefore, the finance minister of the day will have to make the determination as to whether or not to put $600 million or $700 million into VIA or Transport Canada and so on, right?

Hon. David Collenette: If we make an announcement, the finance minister of the day, who is Mr. Manley, will obviously have to agree to that.

Mr. Joe Fontana: Of course, because he would be agreeing to an expenditure before the next budget was prepared, which is where you said it would be announced.

Hon. David Collenette: That's assuming--

Mr. Joe Fontana: Listen, I have so many other questions, if I could....

Hon. David Collenette: Okay.

Mr. Joe Fontana: With regard to the supps, on Ridley, there's another $71 million. How many more loans are coming due, and how much more are we going to have to pay before we decide what we're going to do with this facility? I know those are obligations the government has, but can somebody give me a look forward? How many more $71 million loan guarantees are we going to have to pay?

Hon. David Collenette: Mr. Chairman, we, the government, would like to get out of this as fast as possible, and that's why we've gone to an RFP.

Mr. Joe Fontana: I know, and so would we.

Á (1135)

Hon. David Collenette: Mr. Ranger, I think, can file a very quick, detailed report on planned expenditures so that you can get your head around this.

Mr. Joe Fontana: Okay. Thank you.

And I would agree with you, Minister, by the way, that your A base should not be determined on fluctuations in passenger loads here, there, and everywhere. That's not the way to operate a department that in fact has the prime responsibility for safety--or even a railway, for that matter.

On highways, two budgets ago we mentioned all of this great money--$600 million and $700 million on strategic infrastructure. How much money have we actually committed to and spent on highways? You have the supps and so on, but how much pavement have we actually done, and announced? I know you've had some difficulties. You've had some success with some provinces and not much success with certain other provinces.

Can you tell me how much of that original allocation has been spent?

Hon. David Collenette: I think Mr. Sully will give you the details on it. But I'll say that the overwhelming proportion of the transportation-related moneys with respect to infrastructure over the last number of years has been spent on highway improvements across the country. In fact, under the strategic infrastructure program, one of the few exceptions was the money allocated to Go Transit, which was announced earlier this year in Ontario.

But in all the other provinces, 79%, I'm told...and we can get a detailed breakdown if you want; Mr. Sully can give you some details. We'll give you a full report of where the money was spent, by province, by project.

So 79% of all those moneys has gone toward highway construction across the country, matched by the provinces.

Sorry, transport, I believe, has accounted for probably 70% of all the government's infrastructure moneys. So it's 79% of 70% of $6 billion--something like that.

Mr. Joe Fontana: There's no mention of the air side, and, Minister, you may want to comment on this. The situation with Air Canada doesn't appear to be resolved yet. There are a number of key issues that still have to be worked out with regard to the debt holders and their equity positions, and there's the big issue of pensions, whether or not that gets worked out.

There's nothing in the supps here with regard to a potential expenditure on the part of the government, if in fact the government is contemplating...if the government has any information as to whether or not an injection...if it chooses to save or protect our national flight carrier.

Would you comment on that?

Hon. David Collenette: We've always said there has to be a private sector solution. We now have the CCAA process, which has gone quite well, remarkably well. There is a difficult issue now before Judge Farley with respect to the funding of pensions, and in fact it was the Superintendent of Financial Institutions' concern and call, if you will, that accelerated the CCAA process earlier this year, although it was going to happen because there is a legal requirement by the Government of Canada to ensure these pension funds are properly funded. And there was a trade-off made, as I understand it, with the unions and management that they would take reductions in wages and benefits as long as pensions would not be touched.

So that is now a subject of discussion. The government is not involved in that. We are extremely interested in that, and I am working closely with Mr. Bevilacqua and my officials with the Department of Finance on that particular issue because it's one of great concern. But there has been no discussion at cabinet of the Government of Canada injecting moneys into Air Canada to keep it afloat.

You may remember with Canada 3000, we put up a loan guarantee with certain stringent conditions, which they could not meet, but we do believe that in the case of Air Canada there has to be a private sector solution. And I'm encouraged by Air Canada's announcement that they have two potential investors who are willing to inject money and have a share offering to deal with the issues. I'm hopeful that Air Canada will come out of this later this year or early in the new year. A lot of it will depend on the sustainability of its proposed business plan and the willingness of those potential investors to fund that particular business plan.

Á (1140)

Mr. Joe Fontana: I have a final question on VIA. Is there any difficulty with you tabling with this committee any information you have with regard to the capital requirements and plans that VIA may have, which may or may not include the VIAFast proposal, so that in looking at any future expenditures that are made on behalf of Transport Canada... Listen, we have a bill before us with regard to VIA, which, as you know, will bring it into the modern age of crown corporations, and then there will be some new requirements, as you know, with regard to crowns reporting and so on and so forth. But are there any impediments to sharing with this committee...? You keep saying you're asking your colleagues today, and we're still in the fiscal year 2003, for an expenditure that probably wouldn't occur until 2004-05 and therefore would have to be part of a new budget. To look long term obviously is positive, but I'm still a little confused, because you keep using the number $600 million or $700 million, but within that complement of--

Hon. David Collenette: Mr. Keyes did. I don't think there's any such number.

Mr. Joe Fontana: Within x number, will all of that money be spent and/or be budgeted after this fiscal year, or in fact is some of it going to be used in this fiscal year?

Hon. David Collenette: I answered that earlier. If I'm in a position to make an announcement, there will not be a nickel that will come out of this fiscal year. It will start April 1, 2004.

Mr. Joe Fontana: But then again, Minister, some would question what right you have to make an announcement that's out a year or two years from now. We have not had an opportunity of seeing the VIA plan. We have not had an opportunity to see VIAFast. Some of us are very supportive. Listen, I've supported VIA Rail for over 13 or 14 years--

Hon. David Collenette: Yes, I understand that.

Mr. Joe Fontana: --in all of its facets, so I don't have a problem, but I think for some who want to know.... You keep talking about this announcement you're going to be making at some point--

Hon. David Collenette: Could be making.

Mr. Joe Fontana: Could be making. But it sounds as if you want to make it, because I know you're very supportive of it.

Hon. David Collenette: I'd love to make it.

Mr. Joe Fontana: I know. Then why don't you share at least a little bit of this information with regard to VIAFast or what the requirements are? Some of us who may want to support you may in fact want to be patting you on the back, saying, good work, while somebody might be kicking you in the butt and saying, forget about it. You know what I mean?

Hon. David Collenette: Thank you, Mr. Fontana. I need all the allies I can get.

Look, I don't want to play coy. I'm not in a position today at this point in time at whatever it is, 11:45 on Thursday morning, to make a commitment. I have no authority to make any commitment or announcement. We've been working on this, and hopefully I'll be able to do it soon. And I'd love to do it, because I think it is the best use of public funds and it is good public policy, and it's consistent with what this committee under the chairmanship of Mr. Keyes--as you remember, Mr. Fontana--came forward with in regard to the renaissance of passenger rail. So I would love to do it. But the point is, if an announcement is made, not a nickel of that will be spent before the expenditures come forward to this committee in the estimates of that particular fiscal year.

Mr. Joe Fontana: I think some members--

Hon. David Collenette: So there's your guarantee.

If I were to make an announcement, we would be making an announcement of an allocation of moneys over the next few years to meet VIA's corporate plan, which you have a copy of from May 3. This is a public document, and if you want to look at any potential things that would be funded in such an announcement, it's all here.

Mr. Stan Keyes: There are enough moneys that we haven't been able to scrutinize yet.

Hon. David Collenette: Including, perhaps, some other, like refurbishment of the Renaissance cars at Thunder Bay, which the chairman is very interested in.

The Chair: We're very interested in that, Mr. Minister, but it can't be continued to be used as blackmail for us to vote this way.

Some hon. members: Oh, oh!

Hon. David Collenette: I would never use it as blackmail. Certainly not, no.

The Chair: Mr. Cannis.

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

I have two questions. For one, I just want a little bit of an explanation. You talked about Ridley Terminals Inc. and you talked about Marine Atlantic Inc. and the old port of Montreal, and I'm happy you talked about the Toronto waterfront revitalization initiative, which really concerns me, as does VIA and everything else--don't get me wrong.

I have two questions. One, you talked about the rent at the airports. What we're hearing, and I think you and other colleagues have as well, are comments such as: “These exorbitant rents”, “The government is killing us”, “We can't operate”, etc. I hear today how there is this “fluctuating” formula, if I may quote the word. If I understand it correctly, if traffic is up, revenue is paid accordingly. If traffic is down, then the rents are appropriately paid. So where are we hurting them? Can you explain that to me? The various airport authorities--to my understanding, from what I read, from what I hear--also generate peripheral revenue, whether it's what they charge the limousines for services, the various kiosks, etc., that operate there. So they have another stream of cash. That being the case, depending on the traffic and the rents, where are we hurting them, as a government?

In terms of the second question--and I'll close with this, Minister--you mention the Fung report and the Toronto waterfront revitalization program. Minister, I know you're aware of the film industry, which is doing very well out in B.C. and in Montreal, and we're trying in Toronto. There have been discussions with the municipality as well as with the now outgoing mayor of Toronto, Mayor Mel Lastman. The Canadian film industry there, a group of organizations, is concerned in terms of the land down there, especially the east part of the lots.

As a government, I'd like to ask you, what is our role in that, and can we play a role in determining studios, for example, because there's an industry there that has fallen behind? I think if we have an opportunity to sit around the table with our other partners--municipal and provincial--we could re-kickstart that industry as a revenue-generating source for the city.

Á (1145)

The Chair: Mr. Cannis, I think we're out of order. We're in the wrong committee. Are you asking--

Mr. John Cannis: No, Mr. Chairman, we're not in the wrong committee. We're in the right committee. He talks about the Toronto waterfront revitalization initiative. That's money from Transport.

This committee isn't just VIA , Mr. Chairman.

Am I correct, Minister? If I'm out of line, please correct me.

Hon. David Collenette: You're correct in the sense that the $500 million from the federal government for the Toronto waterfront flows through the Department of Transport. It's part of our estimates, and it's managed by VIA's Minister of Transport and my officials.

On the issue of the use of the land, there is a plan that Mr. Fung came forward with that we accepted with the province and the city. There is an arm's-length board where there are nominees from each level of government who determine the pace of development, the nature of development, consistent with the City of Toronto's official plan.

Your concern about movie studios or any other use of that land really is something the waterfront corporation has the authority to deal with in the context of their business plan.

On the issue of rents, we see that $214 million is going to be paid by the airport authorities this year for rents, and there are eight airports. There is a misconception that all airports in the country--including ones in your riding, Mr. Comuzzi, and in Mr. Fontana's riding--are paying rents. It's not true. The airports that pay rents are Montreal, Vancouver, Calgary, Edmonton, Toronto, Ottawa, Winnipeg, Victoria, and Halifax. Obviously, I don't mention Hamilton, which has done very well, and I know Mr. Keyes is very interested in that, because it is an airport that is no longer owned by the federal government; it is owned by the City of Hamilton and is operated by a third party for them.

This year we'll get $214 million, and that includes the rent deferral program we talked about earlier. The overwhelming chunk of that, $104 million, is coming out of Toronto, followed by Vancouver at $60 million, followed by Calgary at $21 million, Ottawa at $10 million, and Montreal at $7 million. It has to do with the various deals that were struck.

The interesting point is, as you say, well, for Montreal it's only $7 million and yet for Ottawa, which is a smaller airport, it's larger. That's the problem, because the Montreal deal was done by the Mulroney government, and we feel it was a flawed deal. Each of these rental agreements have to be analysed and scrutinized so that there is equity in the system. So I don't disagree with the Canadian Airports Council that there should be equity in the system and that the whole issue of airport rents should be looked at, because at a certain point in time it does become difficult to defend that, here you have an asset, you ask a third party to manage, finance, and operate that asset, and you're getting all the benefit of the capital expenditures--when I say “you”, I mean the Crown--but then you want to charge rent on top.

All of these authorities went into these deals with their eyes open; therefore, they knew what they were doing. On the other hand, I'm not sure the public would really fully accept it.

That's why I'm anxious to have cabinet deal with this issue, so that we can say to the airport authorities, “Look, we can make this adjustment”. But when I say “we”, it's the government as a whole, not the Minister of Transport. It would have to be a budgetary item, because you're talking about a lot of money that we get this year, even if there was a 20% reduction or adjustment.

Where I really have a concern is that a lot of other airports are going to start kicking in at different points over the next 10 to 15 years, including smaller ones, like Thunder Bay, Regina, St. John's, Saskatoon, London, Moncton, Charlottetown, Saint John, Quebec City, Gander, Fredericton, and Prince George. The question is, can these airports afford that kind of regime? I'm not sure they can.

Á (1150)

The Chair: Thank you, Minister.

Mr. Gouk.

Mr. Jim Gouk: Thank you.

Minister, I want to make sure I have understood this clearly. You explained that under our system the minister proposes, cabinet approves, and then the committee scrutinizes. Is that essentially correct?

Hon. David Collenette: Right.

Mr. Jim Gouk: Well, first of all, I'm going to start at the end, with regard to scrutiny.

This committee has taken its responsibilities very seriously. In the last estimates we had you and VIA Rail in here. We had VIA Rail explain how their revenues are up, their costs are down, and yet they wanted more money. They couldn't properly explain what they needed additional money for, particularly in light of what they said, so this committee decided it was inappropriate to approve that and exercised the assumed authority it has to cut that money out. The government immediately put it back in. Frankly, that takes scrutiny right out of this step.

Now we have the minister proposing and the cabinet approving. But you're telling us that when the minister proposes, he does it behind closed doors to the cabinet, as a member of the cabinet. Therefore, it's an internal cabinet decision.

So we've basically taken out this proposal and just had a discussion and approval at cabinet, in secrecy, and then it's a fait accompli once it comes out, because we can't even properly scrutinize it.

Hon. David Collenette: I disagree. I mean, look, this meeting and the ones I came to before are examples of how the committee system works.

I was first elected 30 years ago, and I can tell you that in those days, with people like Don Mazankowski, Les Benjamin, Mike Forrestall, and Jack Horner, the committees were like what you are going through today. We used to have ministers like Otto Lang and Jean Marchand, and we put them through the paces. That is the right thing to do. But over the last number of years the committees, I think, have fallen a bit into disrepute. I fully salute those who want to change this.

The nature of the system is such that whether you like it or not--unless we're going to have a revolution in the country, as in 1776, and change the nature of our government--under the British parliamentary system it's the government that proposes and Parliament that disposes.

The point is you need to get ministers or crown corporation heads here and have them justify the expenditures. That's what you're doing. That's right.

Mr. Jim Gouk: Yes, and just even on this one, we've been asking for the department to come before us here since the middle of September. Here they are finally, today, and we have to report to the House tomorrow. It gives us a lot of time to do something.

If the system is such that the minister proposes and the cabinet then approves, why can you not come forward with exactly what your proposal is? Your plan, your vision, as it relates to this $690-some-odd billion that you're asking cabinet--not billion; it's million. I'm sure you'd love to get the billion in there. But for the $690-some-odd million, why can't you go... You can't announce the money, obviously, until cabinet approves, but why can't you come out publicly and announce what your vision is and what you are going to cabinet for? It doesn't mean they're going to approve it, but it gives us an opportunity to say, “Good idea, we back you”, or “Terrible idea, don't even contemplate passing this through”.

Á (1155)

Hon. David Collenette: Look, without the whole VIAFast plan being on the table here...conceptually, I've talked about it publicly, and I thought I'd talked about it the last time I was here.

The VIAFast plan is essentially to improve journey times between Quebec City and Windsor. It's to shave Montreal-Ottawa down to one hour and 10 or 15 minutes, Quebec City-Montreal down to two and a half hours, and Toronto-Ottawa down to two hours and 20 minutes.

Mr. Jim Gouk: That's the concept.

Hon. David Collenette: No, but--

Mr. Jim Gouk: We want the details.

Hon. David Collenette: But these are the details. The point is I can't give you... the details are when the expenditures come before the estimates, if we make an announcement.

Mr. Jim Gouk: Well, surely you're not going before cabinet and saying, “I want the train to be able to travel between A and B in one hour and 10 minutes, so give me $700 million”. You must have to take details to them. Why don't we hear those details?

Hon. David Collenette: Because this is not cabinet; this is committee. I don't want to give a civics lecture here, Mr. Gouk, but this is the way the British parliamentary system operates. The fact is that I go to cabinet with confidential documents. There are confidential discussions. They agree or don't agree. I've been pretty up front. I've talked about the debate we've had on this.

My colleagues like the concept of faster trains, of higher-speed rail. They're not prepared to give us the authority to go ahead with $3 billion for VIAFast, but they've said “Look, if there's a way you can preserve the option with the existing capital needs of VIA, then go ahead and do it”.

You have their corporate plan. You have their details. If we make an announcement for whatever money, it will have to come to this committee, and then you'll ask the minister to justify why he or she is spending x millions of dollars on this--the $30 million, for example, to refurbish the Renaissance cars in Thunder Bay by Bombardier.

Mr. Jim Gouk: The problem, of course, is that once it comes out of cabinet, it's a done deal. The only time I've seen anybody try to change that is when the money that came out of cabinet for VIA Rail came before this committee. We did get you before the committee; we did get VIA before the committee. We were unsatisfied. We cut the money. And you just put it back in anyway.

Once it comes out of cabinet, it's a done deal and it's too late for us to do something about it. So we have to know something about it up front.

Going through Bill C-26, we've had several witnesses in already. We have heard from airlines, from airports, from bus companies, even from the major rail companies about problems with the concept of fast rail for VIA and the expansion of VIA's business right now. Why do we have to wait until you go before the cabinet and get this money all approved before this committee has the opportunity to properly study the impact of what you propose to do? We can't really do that until you come to give us a detailed plan as to what it is you propose to do.

I think that would be a far better system, still working within the structure we have now, not going to an American system of saying “Look, here's what I propose, here's where the money's going to go, here's what they're going to do to tracks, with their cars, their western fleet reconfiguration”, which is part of what you're proposing right now--all of these things. Just say, “This is my plan and these are the areas I want to take to cabinet”. Let this committee then go out and find out how that is going to play in society with all these other modes of transportation, companies, and everything else.

And it's not in that silly little book.

Hon. David Collenette: It's not a silly report!

Long-term corridor fleet renewal, reconfiguration of the conventional HEP sleeping cars--the western transcon fleet--infrastructure, Renaissance cars...it's all here. It's a public document.

Mr. Jim Gouk: Well, I hope that if you went to cabinet and said only that you wanted to improve the cars and then just put a dollar figure down—a dollar figure we don't even have—they would say, “With those kinds of details, sir, you do not get your money”. You obviously have to go with a much more detailed plan.

So let us know what you propose to do, so that we can properly go to all the people who are going to be impacted and say, “Here's what is proposed. What is the impact on you? What is your counter proposal?”

Hon. David Collenette: Again, Mr. Chairman, this is the nature of the system of government. When the government actually decides on a certain course of action, it has to be presented to Parliament for scrutiny, and that's when you bring in all the stakeholders—

Mr. Jim Gouk: We'll see what happens.

Hon. David Collenette: I should tell you that you're wrong if you think committees can't make governments recant their decisions. I've been around here a long time and I've seen governments, especially in the Trudeau years, that actually had to withdraw proposals because when the committee got at them there were a lot of unanswered questions.

I mean, look at the Bonaventure refit. It was a bit before my time, in 1969, when basically one of the committees forced the government to totally back down. That's their role. It's not too late.

Not a nickel of any money will be spent until this committee examines any expenditure.

Â (1200)

Mr. Jim Gouk: But there's a time constraint put on us, a time constraint that primarily prevents us from doing anything other than just saying no, without even doing the study to back it up.

Hon. David Collenette: Hold more meetings; make a minister come around the clock.

Mr. Jim Gouk: Just going away from VIA for a moment, one of the other things you said earlier, when we were talking about the airports, was that we can't tell airport authorities how to spend their money. You patted yourself on the back very early on in your speech about how you're saving the airlines $70 million a year because of the security thing you're doing. But with no remuneration whatsoever, the airports have to provide space and equipment to the government, primarily to Transport Canada, CATSA, and others.

Ottawa said it had to put $30 million worth of space and equipment in its new terminal. The other airports have told us of similar circumstances, where they have to give up revenue-producing areas. Collectively, amongst all the airports, it probably costs more than the $70 million the airlines save.

Who do you think makes up that money the airports have to forego to fork over free services? In fact, you are telling the airports how to spend their money, because you're saying, “Create this revenue space and give it to us for no revenue”. So there goes the $70 million.

Hon. David Collenette: You know something, Mr. Gouk, you're bang on. You're absolutely right. I think it's unconscionable that we expect the airport authorities to operate on a commercial basis and then the government comes along, as it did here at the Ottawa airport, and demands a doubling of space for immigration or customs, or whatever it was, without the justification for it.

I have taken this to cabinet, and as a result, we have a committee chaired by Kristine Burr, our director of policy, with the other departments, because you can't operate a business that way. You're absolutely right.

We got it right with the national airports policy, basically. We're building the best airport infrastructure in the world, and we're going to get over this blip in airline fortunes, and it's going to work out all right. But you know, this was a new policy, and it's not perfect. The airport rent issue, as I've told you, is not perfect. And I've given you my views and what I've gone to cabinet with.

On the issue you just raised, you're absolutely right. Mr. Benoit, the president, came to me some months ago and said, “We can't have this. We have one department that's prepared to pay us some money and another department that says we're obliged to give them the space, so we have to give them the space.”

This can't continue, which is why we're trying to sort this out. So you're absolutely right.

The Chair: Mr. Bagnell has a few minutes, and then after Mr. Bagnell's intervention, we will break for lunch.

All of you are invited to lunch. The transport committee is going to buy you lunch.

Mr. Bagnell.

Mr. Larry Bagnell (Yukon, Lib.): Thank you, Mr. Chair.

And thank you for coming, Minister, and for bringing enough people here to deal with all the areas you have to deal with.

As you know, I'm a big supporter of rail and have always voted that way in the past, because I think we have to be competitive in a global world in trying to get tourists from Europe, which has such rail subsidies, and given that our executives are working in a global world.

We're just on the verge of the biggest industrial project in history, the $20 billion Alaska pipeline. The standards are that a railway would take about $4 billion off the cost of that.

I'd just like you to repeat for the record--and in case some people are no longer here--how visionary it would be for Canada to join the Alaska railway, the great Canada-Alaska railway, and how visionary an advancement it would be for our economy, tourism, and resource extraction.

Hon. David Collenette: This, I think, is a visionary proposal, and personally I am in favour of it. I'm not sure I have the support necessary from my colleagues or in the bureaucracy. It is an incredible expense, but this country was built on national dreams—the railway, the seaway—and I think this could be a new national dream. In the same way, building a tunnel under the Strait of Belle Isle between Newfoundland and Labrador could be part of a national dream.

I don't think we should be so acquiescent to the bean counters in life that we do not talk about grand concepts. I'm trying to keep this alive. It is not something you're going to get a decision on out of this government. If there's an issue about VIA Rail, here you're talking about really, really big dollars. I think the subsequent government should take a tough look at it, work with the Americans, and perhaps move forward.

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Mr. Larry Bagnell: Just for a point of clarification, I'm only looking for $6 million to match the Americans for study in the private sector; it could build the railway.

I want to go on to another area, and that's northern airports.

The Chair: I knew you were going to come up with Air North.

Mr. Larry Bagnell: Yes, everyone, please fly Air North. But in northern airports.... Thank you for coming this summer and hearing our presentation in the Yukon on airports and seeing them.

Related to these supplementary estimates, you know we have two proposals put in. One was to keep 130,000 caribou off the airport strip in Old Crow, and there was another one. I'm hoping there's enough money in that airport improvement plan that you don't need to reflect money in these estimates to cover such projects.

Hon. David Collenette: Mr. Sully may have the answer to that.

Mr. Ronald Sully (Assistant Deputy Minister, Programs and Divestiture Group, Department of Transport): The requirements for ACAP, which the Old Crow proposal would fall under, are in the main estimates. There is no request to enrich it here. It averages $38 million a year over five years, so there's $190 million in total.

I knew you were interested in Old Crow, so I've looked into it. Old Crow actually is eligible for funding under ACAP, but as in the case of a number of other projects, there wasn't sufficient funding to fund it this year. It's now on something called the reserve list, and if it should happen that funds become available, it would be reconsidered, or it could be reconsidered in a following year.

Mr. Larry Bagnell: Thank you.

On the marine liability related to container ports, I remember we were talking about security in earlier meetings, noting that only something like 5%—I can't remember the percentage, but a very low percentage—of containers can be checked in any country in the world. I'm wondering if, without giving any information that would help the criminals, these supplements for marine safety are leading to improvements in that area.

Hon. David Collenette: Marine safety is something that's really preoccupying me, because we've spent a lot on airports. A huge amount of cargo comes into Canada bound for the U.S. The Americans are very concerned about it.

I was at a conference last week in the U.S. dealing with transportation security and some innovative ways to bore microchips into containers to ascertain the security worthiness of those containers. I'm at a conference next week in New York on this with our colleagues in Homeland Security.

This is a particularly difficult issue. I think both the U.S government and the Canadian government are getting their act together on marine security. There are a lot of improvements that need to be made. I think we have to spend a lot more money.

There are some competitive issues that concern me with respect to U.S federal government investment in American ports for security reasons, which we are not making here, that skew the economics, particularly on the west coast. I'm very worried about the competitiveness of Vancouver, which is the best and biggest port on the west coast.

These are issues that we have under examination. We have the public safety committee chaired by Mr. Manley that deals with these issues. We are making improvements. In fact, I think—I have to ask my staff: has that release gone out on the marine stuff? I'm going to scoop myself. We're putting out a release this afternoon at two o'clock.

Why is it at two o'clock?

Mr. Gerry Frappier (Director General, Security and Emergency Preparedness, Safety and Security Group, Department of Transport): We're going to meet with the U.S Coast Guard.

Hon. David Collenette: Okay.

I hope the committee doesn't take this as an insult. I can't give you the release right now, but I'll give it to you at two o'clock, because we're coordinating this with the U.S. Coast Guard. But these are improvements being made on marine security.

The Chair: Thank you, Mr. Bagnell.

I always give you your time. I fail to see what Air North and Alaska Rail and the ferry have to do with estimates, but you've had your say.

Lunch.

We'll reconvene at 12:25 p.m.

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Â (1228)

The Chair: Ladies and gentlemen, we'll reconvene.

We can't take any more speakers. We hope we'll have Mr. Moore, Mr. Jackson, Mr. Gallaway, and Mr. Keyes. By that time it should be shortly after one o'clock, and hopefully we will vote on the estimates at that point.

Mr. James Moore (Port Moody—Coquitlam—Port Coquitlam, Canadian Alliance): Thank you.

I just have a couple of questions.

One thing is, since Mr. Laframboise is back, as I mentioned to the minister before we broke for lunch, we were very happy to hear you not call it the Pierre Elliot Trudeau Airport. We're thankful for that.

Hon. David Collenette: I did talk about it three times while he was here. He acknowledged that.

Mr. James Moore: Also I note that it is clear you have an enthusiasm singularly for the rail industry above other industries, based on the passion you have for this issue.

Hon. David Collenette: Not true.

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Mr. James Moore: I'm wondering whether, with regard to the Windsor to Quebec City corridor, you could table with this committee any study you or the department have done, not financed by VIA Rail, that says there is excess capacity, that rail is needed. Have you done an impact study on what this corridor would do to the air and bus industries?

Hon. David Collenette: There are studies we have had done. They are, I assume, subject to access to information requests. Personally, I have no problem, at an appropriate time, making those public to save people going to ATI. Any discussions we have had on VIAFast have been based on independent analysis that has helped us bring this forward.

Just on the last one, yes, I'm interested in rail—freight, passenger—but not to the exclusion of other modes. I think there has to be a rebalancing, and I think there has to be a rethinking of the use of modes in certain parts of the country.

I can tell you, coming from Canada's largest city, I am really concerned about the growing congestion. It doesn't make me anti-air. This country can't exist without a proper airline fleet and capability. But I am very concerned in the corridor about rebalancing modes of increasing intermodal use from road to rail, and also enhancing the use of the seaway.

So yes, I'm very much pro-passenger rail—but as an alternative, from a public policy point of view, to relieve congestion. It's not that I go to bed at night thinking of passenger trains. It's just that I think, unlike Mr. Young, who said rail didn't make him go pitty-pat, it's a question of rebalancing the use of modes.

Mr. James Moore: One of the concerns here is that this is—and I don't want to stray too far away from the immediate estimates—a cultural thing as well. It's not a case of “if you build it they will come”.

Before you venture down a road of potentially a $3 billion expenditure—but as we all know, it will probably be dramatically more than that—and perhaps with money at the front of close to $700 million to go down the beginning of this road when the new Premier McGuinty may not have any fiscal room at all to venture with it, and yet you're asking taxpayers to ante up on it, you have to have the appropriate studies done—stuff that's not in a glossy dossier put forward by VIA Rail—that would indicate there is a cultural shift of people away from cars and away from air. It's not a case that if you build it they will come.

I would think this is the appropriate venue for you to have that ammunition, to shut people like myself and Mr. Gouk down, and others who are very leery of this plan, which could become an excruciatingly painful boondoggle for taxpayers.

Hon. David Collenette: Look, first of all, this has nothing to do with the Ontario government. Any expenditures we make on the rail front have nothing to do with Quebec or Ontario; it's a 100% federal initiative using VIA Rail.

I challenge the point you made: prove that if you build it, people will come. If you look at what's happened in the U.S. between Washington and Boston with the investments in the Acela Express and their incredible increase in ridership, in France with the TGV, in Germany with the ICE, and in Britain similarly with investments that have been made in certain corridors, you will see that if the service is there, people will use it.

There have been improvements made on the Alexandria subdivision between Coteau and Ottawa that have enabled faster trains. Right now I think it takes one hour and thirty-five minutes to go from Ottawa to Montreal. It's proven so popular, VIA is going to put, I believe, a seventh train on the route. People are using it.

If you offer an hourly service, people use it. GO Transit has proven that for nearly 30 years, with hourly service on the Lakeshore route. It's so popular that the route was extended to Burlington, and there's now talk of all-day service to Hamilton. It only serves Hamilton in the rush hours. In a congested area, people will use rapid transit if it's available.

Mr. James Moore: But there is also a cost associated with that. Let me allow you, then, an opportunity to beat down the perception that is legitimately building out there.

We saw the data from IATA and all the graphs comparing Pearson to Heathrow and to all the other large international airports, and the cost relative to Pearson. Then you put forward Bill C-26 and Bill C-27, in concert. What they allow for is a steady stream of tax dollars going into VIA Rail, dramatically disproportionate relative to other modes of transportation.

There's increased security on rail, on ports, at border crossings, and at airports, and the only industry where there's an increased tax is the air industry.

There's all this money going to VIA Rail. Gas tax dollars go into general revenue, which then go to other places but don't go to infrastructure, not in a way that is relatively adequate compared to the tax revenues that come in. You have all this money going to proposed projects on passenger rail. If you do that, then of course there will be decreased capacity in the air. Therefore, the subsequent fees in order to finance the expansion of Pearson will then be put even further on passengers.

I argue, from your perspective, there is a clear perception of a clear bias against all other modes of transportation, and in favour of rail. I know you think that's a rebalancing, but without adequate studies, without adequate documentation that the Canadian public is really planning for this and is willing to pay for it, I just think this is really an example of you having a real passion for the rail industry to the detriment of almost all other modes of transportation.

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Hon. David Collenette: With great respect, Mr. Chairman, that's absolute nonsense. The fact is that the rail mode has a cost-efficiency and is environmentally sound.

I can tell you, we have a real problem between Toronto and Windsor, accessing the border, and we're going to require, basically, massive infrastructure on Highway 401 to accommodate more trucks unless we can have increased use of intermodal. It's something that I'm very concerned about.

Regarding Canadian Pacific, I think you had Mr. Ritchie in here last week. He probably told you that Chrysler is extremely satisfied with the parts transfers between Brampton and Windsor and wants to increase that. The trouble is we're running out of capacity for both CN and CP.

The fact is, it's not a question of having an incredible passion for rail. Passenger rail, as a means of intercity travel, does not make sense in many parts of the country. If you want to get from Winnipeg to Saskatoon, or Winnipeg to Calgary, or other city pairs, it doesn't make sense to invest money on a rapid rail there, because you don't have the population base. But it does make sense in central Canada.

This is not unique to Canada. I'm talking about the northeast corridor in the U.S., European cities, and Japan. As we become more and more congested, we're going to have to make a public policy choice.

Yes, you're right that there are two standards here: one is that there is public money going into passenger rail; and on the air side, yes, we put money in, as I've described earlier, on security and all the rest, but we have adopted a policy of user pay. It's a question of public policy choices; it's not a question of bias.

Another time, it could be to the contrary, but as I've said, 79% of the 70% of infrastructure moneys expended by this government have gone into highways. That is a lot of money that doesn't give evidence of bias.

Mr. James Moore: It's a funny way of saying that of the amount of money you're allocating for infrastructure, that money, percentage-wise, is going to—

Hon. David Collenette: That's a hell of a lot of money. Look at what we've announced for the A30 in Montreal, Highway 175, and the highways in New Brunswick. We're talking about billions of dollars going into highways, and I think everybody on this committee agrees that--

Mr. James Moore: It's 2.4% of all gas tax revenues.

But I would encourage you not to draw comparisons of Canada relative to the northeastern United States, because you're talking about 100 million people in the United States in the northeast sector and people who would have access to that.

Ours is much more suburbanized. It's not as dense, and it's not a direct comparison.

That aside, I know we have to get on with the direct estimates, but I do want to ask this question, because it does pertain to financing.

Almost 14 days ago, I guess, the House of Commons voted 202 to 31 in favour of the federal government starting immediate conversations with provincial governments in order to transfer gas tax points to provinces and municipalities. Given that it was immediate, how are those conversations going?

Hon. David Collenette: That is a matter for the Minister of Finance, but I'm glad you raised that, because there has been a great evolution on this file in the last 18 months, and I'd like to think I led the way in going to the FCM executive in April 2000 and saying we should do this, and having my knuckles rapped by the Prime Minister and the then Minister of Finance, Mr. Martin.

In June, Mr. Martin saw the wisdom of the point I was putting forward and went to the Hamilton meeting and adopted the position that I had taken publicly. Unfortunately, for reasons that remain unclear, he has not remained in the cabinet to effect that.

Mr. James Moore: Oh, all right.

Hon. David Collenette: However, I am delighted to know that he will be our next leader and Prime Minister and will be putting into practice the plan I advocated some time ago.

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Mr. James Moore: Well, I got more in that answer than I anticipated. Very good.

The Chair: I thank you both.

Mr. Volpe.

Mr. Joseph Volpe: Thank you, Mr. Chair.

I was reflecting on not only the politics but also the history, and here the question started off as a finance one.

But if I may just take your attention back to the line item on CMHC, I'd like you to explain a little bit more clearly for me a situation that sees, obviously, a corporation that's making money, because it made a contribution in excess of $200 million in net profits into the revenue fund, and it still increased.... It received an increase in allocation for operating expenses--that is, to make further investments to take into consideration the plans the Minister of Finance announced in the last budget--yet today they want an additional $81 million. I thought the additional expenditures, all those expenses, were already taken into consideration. You're telling us today, no, they weren't; this $81 million is something completely different.

Hon. David Collenette: These are moneys that came out of the budget announcement last year, and we need to flow the funds. But perhaps the president of the CMHC, Ms. Kinsley, could answer the question in detail for you.

Ms. Karen Kinsley (President, Canada Mortgage and Housing Corporation): Thank you, Minister.

Mr. Joseph Volpe: You've been waiting for three hours to get a chance to speak, so--

Ms. Karen Kinsley: Give me a minute.

The $81 million that's included in the supplementary estimates is in fact the extension of a housing renovation program, as the minister indicated, that was announced in the February budget. So this is the first year of the three-year extension.

The total allocation is $384 million and in the current fiscal year would amount to $81 million. These are program expenditures to low-income Canadians to help them repair their homes that have health and safety issues.

Mr. Joseph Volpe: So the way that system works, then, I guess, is that notwithstanding the fact that they already have net profits, they bring them back into the consolidated revenue fund and then come back and ask for an additional amount of money under operating expenses in order to extend the programs you referred to. Is that the way it works?

Ms. Karen Kinsley: No, not at all. What happens is these are program expenditures. These are actual grants to homeowners. They are not operating expenses for the organization--just to be clear on that point.

Secondly, we run a commercial operation. The moneys do not go back to the consolidated revenue fund. In fact, they're maintained in a fund to pay for, ultimately, claims that we expect our business will generate in poorer economic times down the road.

So we have a commercial business, mortgage insurance that has an income, that is reserved for possible future losses. We also have a responsibility to subsidize low-income Canadians for their housing needs, and this expenditure is for that.

Mr. Joseph Volpe: So that expenditure comes out of an approval from the taxpayers, but the money that goes into the reserve is the profits that come from the commercial venture?

Ms. Karen Kinsley: Yes. So homeowners who have the need for mortgage insurance pay a premium. Those premiums—

Mr. Joseph Volpe: How much is in that reserve now?

Ms. Karen Kinsley: Last year it was a little more than $514 million. I can give you the exact number in one moment.

Mr. Joseph Volpe: Mr. Chairman, I don't need to know the exact figure. I was looking your way because I wanted to ask a question about the Renaissance cars, but I didn't want to fall into disfavour. There appears to be a private discussion going between the chair and the minister on Renaissance cars of Thunder Bay.

Hon. David Collenette: Mr. Chairman, it's not a private discussion. It's an absolute, total public lobby on behalf of the citizens of Thunder Bay.

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Mr. Joseph Volpe: I was going to say there's an effort to purchase loyalty here, and I wonder whether I should intervene.

The Chair: Are you all through with those comments?

Some hon. members: Oh, oh!

The Chair: Ms. Kinsley.

Ms. Karen Kinsley: The answer, sir, is $1.6 billion.

Mr. Joseph Volpe: That's considerably more than the $500 million. I was expecting to hear a figure like $600 million, but it's—

Ms. Karen Kinsley: No, $500 million was last year.

Mr. Joseph Volpe: Now it is again for $1.6 billion....

Ms. Karen Kinsley: That's the cumulative total since the fund has been in existence.

Mr. Joseph Volpe: It's $1.6 billion?

Ms. Karen Kinsley: Correct, cumulative. That is the total amount of reserve we have available for future-year claims.

Hon. David Collenette: Perhaps I can ask a question. Is that carried as an asset in the government's books in terms of determining the debt and surplus?

Ms. Karen Kinsley: Yes, it is. It is consolidated with the consolidated revenue fund in the overall books of the Government of Canada. But the actual funds or moneys rest with CMHC to pay the claims.

Mr. Joseph Volpe: Thank you.

Hon. David Collenette: What was the question on the Renaissance cars, Mr. Volpe? I'm anxious to give an answer.

Mr. Joseph Volpe: I actually have a very long question. I don't want to pursue it just yet. As I say, I don't want to lose favour with the chair.

The Chair: Go ahead. Really, how can you lose favour with me? You've already lost favour.

Some hon. members: Oh, oh!

Mr. Joseph Volpe: Thank you, I'll pass.

The Chair: Mr. Gallaway, then Mr. Laframboise, then Mr. Keyes.

Mr. Roger Gallaway: Minister, we've heard witnesses in recent weeks from airport authorities who pay rent, the ones who pay rent. I would like to hear if there's any discussion then, in light of what you have said to us this morning and this afternoon, within your department, or as between your department and Finance, not to defer rentals but to lower rentals.

Hon. David Collenette: I've been mandated by cabinet to come back with some proposals. I've been back two or three times. We had a discussion--I believe it was in May or June. I'm due to go back in the next few weeks with some proposals.

I do believe that the airport rent policy bears examination. I think many of the concerns the airport authorities voice have to be listened to, especially when you get to that point in the rent policy of participation rents--my officials can explain in detail the intricacies of that--because I'm not sure the airport authorities can sustain those kinds of rents indefinitely.

So I do think it's not inappropriate for airports to pay the Crown rent. After all, these were federal facilities built by the taxpayers' money and we should get a return. The question is, what is a fair return? Are we asking too much? I think that's a legitimate question the airport authorities have, notwithstanding the fact that they signed these deals.

In business, as you know, Mr. Gallaway, you just don't make a deal for 60 years and then come around and say, wait a minute, I made a mistake, I want you to reopen that. But we're dealing with the public interest here. I think we should look at it: whether that means reductions, whether that means capping the rents, or whether it means doing away with the participation rent aspect, which is an acceleration that will kick in at a certain time, or whether you actually limit the rent to the big airports based on passenger volumes and exempt London, Thunder Bay, and Prince George and all these other smaller communities that may not be able to sustain the rental payments. There are lots of options available, but that is a cabinet decision.

Really, the Minister of Finance is going to have to make a determination, because as I've said, we collected $214 million this year. So if you cap it or if you reduce the rate, it's foregone revenue to the treasury.

Mr. Roger Gallaway: I understand that, but if we work on the principle that a deal's a deal, then we'd probably not have the supplementary estimates that we see, would we? Many programs are premised on an expenditure of x dollars when in fact ministers come back and request x plus y dollars. A deal isn't always a deal, even in government.

Hon. David Collenette: You're right. In business it is, but in government....

That's why I say that even though these airport authorities made deals with us, and in the private sector they'd be stuck with those deals, we are dealing with the public interest here and we can't afford to do that.

Mr. Roger Gallaway: In terms of the proposals you would take to cabinet, we have seen deferral of rent, but would this then envision a reduction of rent?

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Hon. David Collenette: That's an option.

Mr. Roger Gallaway: All right. Having regard to the fact that these are essentially triple net leases, then would you foresee a renegotiation, or a real negotiation process, occurring between your department and the various airports that in fact pay rent?

Hon. David Collenette: I think we've actually been involved in working with the airport authorities and our consultants to get a handle on what the finances are. Each of these deals is different. The Mulroney government structured them in such a way that, in the case of Montreal, they have gotten off lightly in the early years, but they're going to get hammered in a few years. In effect, we have been negotiating with the airport authorities. We have a pretty good idea of the various options. I think the airport authorities would be happy if we went to them and said we wanted to reopen the deal. And we have to make it equal. There has to be some equity between all of the rental payments, and there isn't that right now. So there is going to be some standardization, and if that envisaged a reduction or capping, I'm sure the airport authorities would be there tomorrow. That is an option.

Mr. Roger Gallaway: Could you tell us what the blended rate of return is on the book value of airports across the board?

Hon. David Collenette: I could get that figure for you. It's not something I have on the top of my head.

Mr. Roger Gallaway: My final question is, are you aware then that bondholders have greater control over payments, specifically fees charged, that is, AIFs, than your department does?

Hon. David Collenette: The AIFs are determined by the boards of directors of the various airports, and obviously from the financial community's point of view, they think the national airport policy has been a success. I, too, believe it's been a success, and a lot of the problem we're having is that there were some flaws in the rental aspect of the policy that need to be adjusted. But we've also had the downturn in traffic, as we know, in the last couple of years, with 9/11, with the softening of the economy, and especially with SARS, as it has impacted on Toronto and Vancouver. I think all of that has to be taken into consideration when we are examining this.

In terms of the actual setting of the fees, that's done by the airport authorities. All of the airport authorities have pretty good ratings. Toronto was downgraded slightly, but still has a pretty good rating--maybe it was an A, or whatever rating.

One of the issues we have to deal with, and I'm just digressing, but it comes to your point about the airports.... Yesterday IATA had a press conference, and they want an independent third-party to, in effect, adjudicate the deals between the airlines and the airports. The problem then is you are really fundamentally changing the rules in mid-stream. All of these financial houses have gone out there and people have invested, the bondholders. They have all put their money up on the assumption that there would not be any interference in the finances of these airport authorities, either by the government or a quasi-judicial body like the CTA.

That's why, for Bill C-27, which we have in the House but you have not had in committee yet, we went through this debate in the department as to whether or not we should make the agreements between the airlines and the airports appealable to the CTA. But that would really undermine the basis on which these airport authorities have gone to the markets for the money. That's why we said we would use the NavCan process, which has been successful, to have the charging principles of the methodology subject to appeal. In other words, it is not a questioning of the base amounts but the way the fees are set. That will be an improvement when we get Bill C-27.

[Translation]

The Chair : Mr. Laframboise, you have the floor.

Mr. Mario Laframboise: Thank you, Mr. Chairman.

These past few weeks, Mr. Minister, we have heard a lot about a plan to widen the Seaway. I don't see any additional funding for that in the Supplementary Estimates.

Here is my question: where do you get the money for the studies? Has there been any funding for that and, if so, how much are you planning to invest either in the studies or in the implementation of the project?

Hon. David Collenette: Originally, the U.S. Army expressed the idea that the Seaway should be widened and it suggested that an amount of $20 million be put into some studies by Canada and the U.S. together. We discussed the issue in Cabinet, we discussed it with the Americans and we have decided not to go any further, for the time being. We are going to invest $500,000 in some studies, and the funding will come from the Department of Transport. We are looking at the idea but, as I explained to your colleague Mr. Bigras, I believe that the Standing Committee on the Environment and Sustainable Development has some concerns about the environmental impact of such an operation. Is that the best way to use the funds of the U.S. government and of the Canadian government?

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Mr. Mario Laframboise: Thank you, Mr. Collenette.

[English]

The Chair: Thank you, Mr. Laframboise.

Mr. Gouk, you have one question, if you can draw yourself free from your colleagues.

Mr. Jim Gouk: I actually have three, but I'll have to do them all in the one, because there has been so much said that we could deal with.

If I only have one question, I would have to go back to your statement where you said, in questioning about your ties to passenger rail, that your promotion of passenger rail is strictly on the basis of relieving congestion, that this is your primary drive for promoting passenger rail in general. But I have a letter from you stating that you were very much in favour of backing VIA Rail in going on the southern route in the Calgary-Vancouver route. That's not to relieve passenger congestion. In fact, it's a boondoggle of congestion already on the line, in terms of utilization. It is to allow VIA Rail to cash in on the tourism business that's been built up by the private sector there.

So why are you backing VIA Rail going on that western route, for which undoubtedly they're going to be coming for money because they want to reconfigure their fleet and buy new cars and do all kinds of other stuff? Why would you back that when it's contrary to what you said your reason was for backing passenger rail, to relieve congestion? In fact, it's nothing more than an attack on the private sector.

Hon. David Collenette: Mr. Chairman, there's a bit of revisionism about the Calgary-Vancouver passenger rail service. The fact is that this was Canadian Pacific's passenger service, and it then became part of VIA Rail. I believe the Mulroney government made a tremendous error in privatizing this service.

What they did was take one of the few lines in the country that actually made money out of VIA's revenue base. They made a five-year deal with Rocky Mountaineer, who, yes, invested money, but also forced VIA to shoulder a lot of the costs in terms of maintenance and providing cars at a nominal sum for five years. That of course just added to the operating subsidy required by VIA Rail.

With program review, we cut the operating subsidy from about $540 million in the Mulroney years to $170 million, without the benefit of the revenue of the most popular tourist passenger service.

Mr. Jim Gouk: Don't put any money on that, David.

Hon. David Collenette: I'm sorry, Mr. Gouk. Mr. Chairman, I could give you figures to show that VIA Rail was making money on that service.

Mr. Jim Gouk: With 4,500 passengers per year?

Hon. David Collenette: I've had this discussion with—

The Chair: Excuse me, Minister.

Mr. Gouk, you asked the question. Let the minister answer. Then I'll give you one more opportunity to respond.

Hon. David Collenette: In any event, it's a bit academic, Mr. Chairman, because CP doesn't have the capacity on the Vancouver-Calgary run. I think Mr. Ritchie was in here last week with his officials, and he probably told this to you. It's widely known.

The fact is it's the most heavily travelled, and in engineering the most difficult, piece of railway in the world, and there are capacity constraints. There is only one train allowed, and that is the former VIA path, which now Rocky Mountaineer has.

There are ways you can deal with it. I have said to Mr. Armstrong of Rocky Mountaineer and I've said to VIA, why don't you guys make a deal? Why don't you hook up with Rocky Mountaineer on that train path? If you run 54 cars for Rocky Mountaineer, given that you can run 200 freights, you could run 100 passenger cars. You could hook up a VIA passenger train coming across the prairies to his service.There's a slight problem in the sense that his service is not a through service; it's one that overnights in Kamloops. But there is more than one way to skin a cat.

To have Mr. Gouk sleep tonight, the restoration of an exclusive service from Calgary to Vancouver is not realistic without the expenditure of $100 million by the treasury, and we're not going to do that.

· (1300)

Mr. Jim Gouk: Just with regard to a supplemental on that, Rocky Mountaineer under VIA carried about 4,500 passengers a year. I can't see how that was making money, unless there was a lot of cross-subsidization inside of VIA, which is of course very easy to paper over. We've seen it in Canada Post and we've seen it in a lot of other areas. So I would dispute that.

And in terms of them going back on—

Hon. David Collenette: I have an answer to that—

Mr. Jim Gouk: In terms of them going back on that southern route, they are going there for only one purpose, to compete directly against the private sector.

Hon. David Collenette: I've said it's not on. Okay? It's not on.

Mr. Jim Gouk: That's not what your letter to me said.

Hon. David Collenette: No, because at the time we did not have the benefit of CP's engineering studies.

When was that letter written to you?

Mr. Jim Gouk: I don't recall the exact date.

Hon. David Collenette: Well, you must have it; you have it right there.

Mr. Jim Gouk: I don't have it right here.

Hon. David Collenette: Okay, well—

The Chair: As of October 23, at 1 o'clock in the afternoon, at this particular meeting, I heard the minister and his deputy say that because of the expenditure involved in whatever has to be done on that run, that run you're talking about is not under consideration.

Am I correct on that?

Hon. David Collenette: Right.

Mr. Jim Gouk: It's not under consideration at this time.

The Chair: Well, how long do you want?

Mr. Jim Gouk: Forever.

Some hon. members Oh, oh!

Hon. David Collenette: Mr. Chairman, can I just say one thing in rebuttal?

Mr. Gouk is comparing apples and oranges when he's talking about.... It wasn't called the Rocky Mountain, but The Canadian, the former CP train on the southern leg. It went from Montreal, with a hook from Toronto, into Vancouver via Calgary. So what he's comparing is--

The Chair: And from Thunder Bay.

Some hon. members: Oh, oh!

Hon. David Collenette: And Thunder Bay, where I'd like to see it go.

The Chair: Oh, thanks a lot.

Some hon. members: Oh, oh!

Hon. David Collenette: But the fact is that it, of course, didn't make money, or as much money, on the entire run compared with the Calgary-Vancouver portion.

The Rocky Mountaineer isn't running from Montreal or Toronto to Vancouver. They have the cream of the crop, and I told that to Mr. Armstrong.

Mr. Jim Gouk: It's still 4,500 passengers a year; that's what they carry.

The Chair: Thank you, Mr. Minister.

I thank all of your colleagues.

Hon. David Collenette: We have another hour.

The Chair: The committee gave me instructions: “When Collenette gets on a roll, stop the meeting”.

Some hon. members: Oh, oh!

The Chair: I thank all of you.

I thank Ms. Burr, Mr. Pigeon, Mr. Frappier, Mr. Sully, and Mr. Morency. Thank you all for coming out today and helping us get through this process.

We will now discuss the estimates in camera.

[Proceedings continue in camera]