[Recorded by Electronic Apparatus]
Thursday, September 26, 1996
.0903 
[English]
The Chairman: We're ready to begin.
Mr. Minister, it's a pleasure to have you here. We are today talking about Bill C-44, the Canada Marine Act.
Hon. David Anderson (Minister of Transport): Thank you for the opportunity to speak on this bill, which I regard and indeed the government as a whole regards as a very important piece of legislation. I will give a presentation, which I understand you have copies of, and we will then proceed to any questioning you may wish to do with the officials who are here with me.
[Translation]
As you know, bill C-44 was tabled on June 10th and we have been meeting with the stakeholders all summer listening to their concerns.
Mr. Chairman, I appreciate your committee's willingness to hold hearings across Canada and to come forward with proposed amendments to ensure that we present a best possible marine legislation.
The new Canada Marine Act will enable ports to respond more effectively to the needs of their customers and will eliminate needless bureaucratic interference in the marine sector.
.0905
[English]
Modernization of the marine sector has a direct link to jobs and growth, the primary goals of this government. The stronger and more efficient marine transportation system would provide our international trade with opportunities that it does not have at the present time. That obviously means jobs here in Canada, jobs throughout the country. So this is very much one of the keystone pieces of legislation in the overall strategy of this government.
The legislation will make it easier for ports to operate in accordance with business principles, and it will enable the Government of Canada to commercialize the operation of the seaway and to improve the way in which the pilotage authorities and the ferry services operate in Canada. It obviously is going to enhance the competitiveness of our marine sector, preparing us for the highly competitive world of the 21st century.
I would be very remiss if I did not at this time acknowledge the great work already done by the committee of transport, which undertook a comprehensive study of the marine sector early in 1995, and the celebrated Keyes report, named after its illustrious chair, your predecessor on this committee. It contained a number of recommendations to improve the marine system, many of which have been addressed in legislation.
In a sense this is a double process. This committee and the people around this table have already in essence written the bill. We are now asking you again to fine-tune it and correct any misunderstandings that the government may have had about your original intentions or whatever it might be necessary to do.
The principal elements of the bill are:
[Translation]
The major ports in Canada will be managed by Canada Port authorities. These CPAs will operate under the following guiding principles:
Any port can apply to become a CPA and there is a process in place to evaluate criteria proposed in this legislation. I expect anywhere from 10 to 15 ports will meet the criteria and be eligible for CPA status in the near future.
Port authorities will be established by letters patent as non-share capital corporations and will pay an annual amount to the Crown.
The boards of directors will consist of a representative from each level, federal, provincial and municipal. The majority of directors will be nominated by the port users.
[English]
Boards of directors will have a defined code of conduct and conflict of interest provisions as set out in their letters patent and regulations. For the port users, local communities, and financial community, there is a new public accountability regime with new disclosure requirements that will ensure access to more detailed information.
This accountability is achieved by an unprecedented transparency of operations and through rigorous disclosure requirements. The following documents and procedures will be made public on a mandatory basis: first, the annual report; second, the annual audit; third, the public use plan, requiring public input into the development process and amendment process; fourth, the annual meetings; and fifth, the compensation and benefits of directors and officers, which will be reported in the annual report.
[Translation]
There are further aspects of the accountability regime which will be put in place by the proposed Canada Marine Act.
The port authority will be required by law to have financial audits conducted annually in accordance with generally accepted auditing practices. Furthermore, a special examination of the management, operations and final performance shall be conducted no less than every five years and the results reported to the minister of Transport.
Perhaps the most important accountability mechanism stems from the fact that ports will have to raise their financing in the private sector. Financing will depend on what the market sees as the realistic future cash flows of the port.
.0910
Their development aspirations will be subjected to ordinary measures of commercial risk. The government will no longer be responsible for their debt and, in fact, this means they have to be more efficient than they are today and the government will not be on the hook for their liabilities.
The end result is a system where port authorities will be accountable to their users and customers, their local communities, their financial community as well as federal, provincial and municipal governments.
[English]
We are moving the decision-making and the accountability out of Ottawa, although, as I just mentioned, there is some accountability still of course with Ottawa. We've moving it to the boards of directors of the new port authorities. We are ensuring that fiscal responsibility by having the financial community decide on new port investment. We will keep title to federal lands that are entrusted to the new boards, and we remain accountable for important framework issues, such as safety. We think these reforms are going to energize our ports, and they thus will contribute to Canada's growth of jobs and prosperity.
As you hear the submission from the users of the marine transportation system, I would request respectfully that you focus on the following key issues that have been raised in discussions with the department this summer.
First is the agency status for Canadian port authorities. Your report, Mr. Chairman, of May 1995 recommended that major ports remain federal agents. A question on which I think we would greatly value your advice is what are the reasons for this and how does it impact on the objective of being more commercial in their operations?
The second question is capacity and powers. Many stakeholders have indicated that we may be too limiting in clause 24, which currently says a CPA exists for port- and transport-related activities. The question, of course, is whether CPAs should have more flexibility in developing revenues and, if so, how much flexibility is appropriate.
Next is taxation. If you assume that ports are the economic generators for the region and not a cash cow, then what is the fair level of taxation and what is the appropriate process of taxation to obtain municipal government services? This is a very important issue, relating to the concept and principle of what a port is all about and its role in a local economy.
[Translation]
Fourth, there is the matter of governance. Many stakeholders have voiced their concerns about this legislation being too restrictive in defining board size and length of office; there are questions as to whether a chief executive officer of a not for profit corporation should serve on the board, how the chair is selected and how long the chair should remain in office.
As for the stipend aspect, Bill C-44, section 6.2(h) provides for a charge on the gross revenues to be paid annually to the federal treasury. I am sure you will not be surprised to hear complaints about paying anything to Ottawa. What I would like to hear from this committee is what would be a fair system.
These are some of the key issues I expect you will hear from the presenters with regard to ports reform.
For regional and local ports, the changes to the port system offers an opportunity for local interests in all provinces to manage ports in a manner more responsive to local needs with lower costs and better service.
This act enables these ports to be transferred as operating ports to local interests and, in some cases, other federal departments.
.0915
[English]
I'm pleased to report that since January Transport Canada has transferred 47 port sites in the Arctic. They have been transferred to the coast guard, and that occurred on April 1, 1996. Twelve fishing and recreational port sites were transferred to the DFO; that also occurred on April 1, 1996. By Order in Council 199 harbours were approved to be de-proclaimed in June 1996, and 57 letters of intent were signed as of September 6, 1996, with local or regional authorities or others who wish to consider taking over of such ports. Five port sites were transferred to local interests, including Weymouth, as of September 9, 1996, earlier this month.
The seaway poses a major challenge. We have a $7-billion asset, supported by a declining traffic base and only $70 million in revenue. Compare $70 million revenue with a $7 billion investment. We must take steps now to put the seaway on a stronger footing, or obviously, in a few years time, we're going to have an extremely difficult situation with the seaway.
The key to the future viability of the seaway lies in achieving efficiencies, reducing costs, and making the system more competitive. Part III of the Canada Marine Act enables the Minister of Transport to enter into agreements with a non-profit corporation or any other private sector interest to operate and maintain all or part of the seaway. We now have, I'm pleased to report, an agreement in principle for a new operator to be put in place, perhaps as early as January of next year. The existing seaway authority would be dissolved at an appropriate date.
[Translation]
Pilotage: Maintaining an effective pilotage regime to ensure safety and environmental protection is the primary concern of government, users, the pilotage authorities and pilots alike.
The Canada Marine Act includes amendments to the Pilotage Act which will allow for faster setting of tariffs; to prohibit appropriations from the government and to provide for ministerial review and consultation with the authorities and users in 1998. These changes will serve the users better and ensure that the authorities operate in a more efficient and cost effective manner.
The changes proposed to the Pilotage Act are the result of the most comprehensive review of the present legislation since its inception in 1972.
There are two unresolved issues which were highlighted during the consultative process and upon which I would appreciate the views of the committee. The first concerns the process of awarding pilotage certificates to qualified masters and mates.
[English]
Some industry representatives feel that the present certification process in some regions is in fact too onerous, and they have argued and will argue before you that their ships should be exempt from compulsory pilotage, provided there are appropriately qualified officers on the bridge of the vessel. The department does not feel that outright exemptions would be in the best interests of safety; however, we do feel that the present certification process can be modernized and improved. While most changes to the process could be achieved within the current legislation, I would be very grateful for the assessment of the committee as to whether any further legislative amendments might facilitate the goal.
The second issue has to do with the inclusion of some sort of alternative dispute resolution mechanism - ADR, as it is known - in the legislation. We have heard from the industry that the certainty of the provisions of service is one of their major concerns, and considerable progress has been made in this regard, with all but two pilot groups having voluntarily agreed to the inclusion of the ADRs in their current collective agreements or service contracts. So the question I would pose to you is this: if a voluntary ADR agreement is not achieved between a pilotage authority and their pilots, should the legislation be amended to impose one on them?
.0920
Mr. Chairman, members of the committee, safety and environmental protection will continue to be this government's highest priority when making decisions with respect to marine pilotage, as indeed it is in all aspects of Transport Canada's activities. The changes in the delivery of pilotage services will ensure that the safety of the marine transportation system is maintained.
[Translation]
Ferry services: Finally, with respect to ferry services the Canada Maritime Act will permit the minister of Transport to enter into agreements with the private sector or other levels of government to provide the constitutional or other services that are currently provided by Marine Atlantic.
These provisions are included in the act to facilitate the increased commercialization of ferry operations as outlined in the national marine policy.
Again, the government will maintain its regulatory role for safety. And it will continue to support constitutionally required services.
[English]
Members of the committee, Mr. Chair, this is a quick overview of the marine act. The goals of our marine policy are reflected in the legislation. If I may recapitulate, we want our marine sector to be more competitive, more commercially driven, freed from the Ottawa bureaucracy, more responsive to users, and more responsible to the needs and opportunity of Canada's regions.
We believe the legislation that has been proposed, based on the work done by this committee, I might add, will help us to achieve those goals and prepare our marine sector and transportation system for the competitive demands of the 21st century.
Thank you very much.
With me, if I may, Mr. Chairman, are André Pageot, the director general of marine policy; Neil MacNeil, executive director of harbours and ports; Gerard McDonald, the director of pilotage; Bruce Bowie, director of marine policy; and Brenda Baird, director of programs for harbours and ports.
All these people are waiting eagerly to answer your questions as best they can. I certainly will be happy to answer if you have anything specific for me, but perhaps they would be more knowledgeable than I am on any specific aspect of the legislation.
The Chairman: Thank you, Mr. Minister. Let us put that to the test.
[Translation]
Mr. Crête (Kamouraska - Rivière-du-Loup): Thank you, minister, for your presentation. This is a dynamic document. It could be said that the federal government is late in coming to realize the importance of decentralization, but at least it will be done.
You have raised a number of interesting matters in your presentation. I would like to mention others which, in my opinion, could become important in the context of this committee's review. I will list them and perhaps you could react when I'm through.
The first matter concerns the devolution of ports and more specifically regional ports. The policy was announced last December and implemented this fall although devolution is to occur in six years. There is now a lot of uncertainty in the community in determining the time required to do all that and there are especially many questions as to the adequacy of the $125 million or $140 million fund. I have heard that requests for $300 million and maybe even more would be forthcoming. With regard to future economic activity, it is important to see something concrete actually done. If it were possible to give us figures on the possibility of increasing the fund, it would be very useful to us to get them as soon as possible.
The second frequently raised question has to do with the length between that and what Fisheries and Oceans is actually going to do in the area of icebreaking and navigational aids. In almost all cases where there is interest in taking over a port, serious concerns abound. It might seem interesting to sign a contract with Transport Canada, but the concern lies in being criffled by future fee structures and there are questions on how they will apply in the case of navigational aids and icebreaking. I believe there is joint action. I know that a joint committee has already been set up to that effect. We need clarification on its operation otherwise local authorities will dig in their heels and won't go any further.
.0925
My third question concerns pilotage. I have been made aware of this area. One of my colleagues went up onto one of the ships and he was shown that present technological equipment could hardly replace the human factor. He was asked to read out the ship's position on a piece of technological equipment. According to that equipment, the ship was in the field next to the river whereas, in actual fact, it was in its proper place in the channel. So there's still something to be done on that side.
My other question deals with protection and access to information. Will your suggestions and the information to be disclosed be adequate? Should there not be a requirement to comply with the Access to Information Act as a whole? In this respect, I hope that the marine sector will learn from the negative experience of ADM "Airports of Montreal", and you will ensure that not even a bird is put in the air unless you have complete control, as such control was not there in the case of ADM. It is always helpful to learn from past experience.
My penultimate question is more technical in nature. I would like us to be provided with a list of the ports affected by measures taken since last January, letters of intent, as well as transfers to Fisheries and Oceans and to the Coast Guard. Would it be possible to obtain that list and updates, not necessarily each time a port is added, but periodically, every month or two months that new measures are taken?
Lastly, do you intend to have a two-speed track, one for regional ports such as the commercial port of Cacouna and another for ferries? The wish of the regions to take over ferry ports obviously entails far higher economic risks since revenue is much lower than in the case of a commercial port site which may enjoy a certain level of profitability. Is there a two-speed process here? What will be your priority criteria for allocating the $125 million budget or the supplementary funding which will no doubt be necessary?
I'm sorry to ask so many questions, but we wish to take advantage of your presence here.
Mr. Anderson: Thank you very much, Mr. Crête.
There are a number of questions to which I would ask the experts to respond. I have counted six so far.
It might perhaps be preferable for me to address the question of Ottawa's control and responsibility. It is quite clear that we are proposing a change. Direct political control, which has been the case for several years, would be changed. We want local control to be increased and even for the provinces to also become involved in port and harbour management. We cannot both allocate powers to port administration and also at the same time retain them. You cannot do both of those things at the same time.
We want to reduce control by Ottawa. I agree with you on that point. We have quite clear objectives in terms of flexibility, marketing and the advisability of acting as the economic centre in a region. In the light of your report, we now see, as did your committee, that there are currently shortcomings in these areas.
Yes, a change is being made in terms of control and power. I think that this change will be positive for Canadians and for the economy of our country.
Your question concerning regional ports is twofold: one part deals with the time required and the other on the adequacy of funding. I would leave that question to the experts accompanying me today.
Ice removal is also a very complicated issue. I said in Montreal four or five days ago that the ports in British Columbia did not have enough ice to charge vessels the same amount as would be required by their counterparts in the East.
.0930
Mr. Crête: That is because two departments have responsibility for this issue.
Mr. Anderson: Yes, but don't forget that we are trying to end that situation where all Canadians have to pay for those services. We want the users to pay the costs of the services concerned. There are significant differences between ports which are free of ice in winter and those with a navigation season of only about 60 days, as is the case with Churchill.
I would now ask Mr. André Pageot and Mr. Neil MacNeil to provide you with further details.
Mr. André Pageot (Director General, Marine Policy and Programs): I will share your list of questions with my colleagues. I will answer the first one, where you ask whether funding of $125 million is adequate.
First, we must remember that 80% of commercial traffic goes through about 40 ports. A choice will have to be made. We will have to see where there is real commercial activity and not invest in places where a commercial ship has not been seen for ten years.
The cost will decrease with the new structure. In a decentralized structure, where you don't have to go through the bureaucracy and three levels of departments and approval, the municipalities and people from the community will be able to invest at a far lower cost than is the case at present.
Obviously, choices will have to be made because there are many places where there is not really any commercial or other activity. That is in fact one of the reasons why we "deproclaimed" 199 harbours, because there was no activity there.
In answer to your question on the work with Fisheries and Oceans, I can inform you that we are finalizing the most comprehensive study ever conducted on the subject. It is being carried out by both departments and Canadian and American experts from Hickling and Booz-Allen. The findings should be available within a few weeks.
We will analyze seven initiatives in the marine sector, including aids to navigation, ice-breakers and the services of Transport Canada. It must be remembered that the railway sector, the air sector and all other modes are now operating on a commercial basis.
Canadian National has been privatized. We cannot give preferential treatment to the marine sector. The whole process must take into account the aspect of competition. Part of the equation in remaining competitive is to have sound fiscal management, to address government deficits and do our share. The study will be able to identify the pressure points and determine whether adjustments are advisable. It should not be an obstacle for port management.
Mr. Crête: Transport Canada will have to act as a watchdog to some extent since Fisheries and Oceans does perhaps have some in-house cleaning to do, particularly as regards icebreaker services. If costs remain high, the local authorities may no longer wish to purchase the facilities.
[English]
Mr. Pageot: As we can say in English, competitiveness is the name of the game. We want a competitive transportation and marine system that goes with varied dimensions. But we fully agree with you.
[Translation]
We have to ensure that the steps taken maintain the competitiveness of the country and of the ports. I think we will be able to find a happy medium.
As regards piloting, you are right; technology is not the complete answer. We need the human aspect. Our pilots are competent, but overly monopolistic approaches cannot be laid down since we must ensure that the pilots are partners in the industry and in the competition.
We have no illusions about this. It is not a satellite or technology which will replace the human factor in the short term, but the ideal situation would be if we could improve the work of pilots with technology.
As regards access to information, this marine draft legislation provides extremely detailed mechanisms for accountability, quarterly reports, community involvement and the tabling of annual reports on our harbour transfer activities.
We will have tools for accountability and access to information, but we will also have to protect the commercial activities of companies which have to deal with the banks and American competitors. We have to find a balance in the area of access to information.
.0935
[English]
Mr. Anderson: I would like to have a word on that, Monsieur Pageot. That could also be affected. The provisions of the access to information legislation could be affected by the decision you take and what ultimately is decided by the House of Commons on a federal agency.
Mr. Pageot: Neil, maybe you want to add a few things.
Mr. Neil MacNeil (Executive Director, Harbours and Ports, Department of Transport): At the moment the bill does provide for the Canadian port authorities to be outside the access to information. So in the future the Port of Montreal would be outside.
As the minister said, if this committee decides to bring back the designation of an agent for these Canadian port authorities, we think it would be wise to put back a provision that they would be required to be subject to the Access to Information Act. But we're looking for your committee's recommendations.
On the port divestiture fund, when it was designed as $125 million over six years, it was our best guess. We have deproclaimed 200 of the 500 ports or harbours. We have now transferred over 60, and we have not had a draw on the fund yet. We expect serious draws in the coming year, and we know we may be short, depending on the demand. We expect we would then ask the minister to go back and seek more funding. But at the moment we think we have enough for the next couple of years.
Mr. Anderson: We do expect fairly vigorous debate. Naturally, if someone wishes, or is being encouraged, to take over a port there is a tendency to wish to - if I may use the military term - gold-plate it before it is transferred so there will not be any maintenance of all that new capital equipment over the next few years. And that is perfectly understandable.
So there will be vigorous discussion on many of these ports as to the appropriate level of assistance from that fund of $125 million. But, as Mr. MacNeil has said, that is a projected figure. If there is necessity, or obviously a good commercial reason for expanding that, I can see no logical reason for not applying to the Minister of Finance for more money to increase that fund.
[Translation]
Mr. Crête: I had asked if ferry ports could be treated somewhat differently from commercial ports. My other question concerned the lists available.
Mr. Pageot: Not really, the distinction has to be made between ferries. There are constitutional commitments, such as at Port aux Basques, which we will fulfill completely.
In a number of cases, the ferries are tourist ferries whereas others are commercial and operated by private companies, such as those here on the Ottawa river. We don't intend to make a distinction between the various commercial activities. In the case of provincial services, it will be up to the province to indicate its preferences on how it wants to carry out a transfer.
Mr. Crête: And the lists?
Mr. MacNeil: Yes.
[English]
We produced this briefing for you, and we can have a briefing before you go to Vancouver, listing all the ports by name, by region, where they have been transferred, and who has signed a letter of intent. We'll have that for you by Friday.
The Chairman: If you could get that to the clerk, he can circulate it to the various members.
Mr. Gouk (Kootenay West - Revelstoke): Good morning, minister. I found part of the way you made your presentation very interesting. My work background is transport, but my educational background is psychology. I find it really interesting that when the minister comes before us to be questioned, in his speech he poses all the questions that we intend to ask him, to us. It is an interesting approach, I must say. I'm going to go back to those questions, and return them once again to you.
The number of directors is a concern. I have gone out and talked to several port authorities. I know that while some of them may agree to the size of board you envision, there are several that want smaller boards than what the legislation would permit, down as small as five. In fact I know one that wants three. And they made a very good case for it. Will you consider that as a possibility?
.0940
Mr. Anderson: Yes, certainly, Mr. Gouk. We would be open to any suggestion your committee may make on that, and in fact that goes to your initial comment. Yes, we are looking for your direction. If this is an unusual way of proceeding, I think it is appropriate. I would say that the reason for our - I hope - openness and willingness to consider very carefully anything you may propose is that this legislation comes out of your deliberations already.
Mr. Gouk: I mean, what -
Mr. Anderson: If I may finish, there is a certain level of respect for the expertise the committee developed and for this initial report, which bears the name of my parliamentary secretary, the Keyes report.
Mr. Keyes (Hamilton West): [Inaudible - Editor].
Mr. Gouk: I thank you for that, Stan, because I have to tell you, I take issue with you pushing that so hard.
I have a lot of respect for Mr. Keyes, but it was not the Keyes report; it was a report of the people who were members of this committee at the time. I would take issue with both sides. Liberal and opposition alike worked on that. It was a team job, as the member has said himself.
Mr. Anderson: Yes, I would certainly agree. I hope I again made that point. It is known as the Keyes report, but it would obviously be the report of the committee as a whole.
Mr. Gouk: Now also, with due respect, I would point out to you that in past legislation, when we have made amendments, it's common knowledge that those amendments they don't reject out of hand go upstairs to see whether or not the minister's office will support or reject them. And if he doesn't, then they don't have a hope in this committee.
Now, the reason I ask you these questions is not to hear you say that it's up to the committee, but rather to give the committee some understanding of whether or not you actually are prepared to consider these things, or whether you have put nine to eleven down in terms of the numbers, for example, because that is what you want. If you're amenable to looking at a smaller number, then please give us that indication so that my colleagues on the opposite side may be free to support an amendment to that extent.
Mr. Anderson: Well, if as a result of the representations that come to you and as a result of your deliberations as a committee you can come up with appropriate formulae that deal with the problem, for example, of provincial representation, municipal representation and the alleged federal representative on the board plus the majority for the users, that will be fine. I would certainly be very interested in that, because we do not want to saddle a small port with the cost of the board being way out of proportion to the cost of the actual operation of the port itself. And that can happen.
For example, one prairie province I shall not name wrote to me suggesting that they wanted a representative on the Port of Prince Rupert. Well, if you give one prairie province that representative position, you probably have to give it to all of them. Of course we have to have British Columbia represented, and even before you get out of the provincial gate, you have four members on that board, and the board at the present time only has five. So it doesn't leave much room for local people or for user groups. So I would be very happy to consider it.
I do have to say that, yes, it's an open system, and just as you are going to hear these representatives, we have heard them. No doubt, after your report we'll hear them again, and that's the question of open government.
We are not saying we will not hear anybody, we'll only listen to the committee. That would be inappropriate in an open democratic system.
Mr. Gouk: Hopefully what we bring forward is going to be a result of what we hear as we travel.
Mr. Anderson: Yes.
Mr. Gouk: I would like to stay on the subject of directors. I have quite a few comments on directors, and hopefully I'll get a chance to get in some of the others as well.
You mentioned the make-up of directors. I just will give you for comment - and this is after brief consultation with some other users and port operators - that I do not really agree with the idea of the majority of the board being made up of users. Maybe there should be more users on the board than any other group, but there should be no majority for anybody whatsoever on the board. Otherwise, you almost get into a situation where you go to hear what they're going to do, but they're going to make that decision.
I think there should be more consensus required on these committees, and you're not going to get that if any one group has a majority. That's my feeling. It will be interesting to see what we hear as we go out.
On the appointment of directors I have a problem. In your notes you said they would be nominated by the users. The bill does not say that. It says that you will appoint in consultation with the users.
.0945
Now, I can consult with you until the cows come home, and then go and do something that might be totally different from anything you want, but I have in fact consulted with you. So if your intention is that the users will select who goes on that board, then I'm not quite sure where your role comes in.
I would suggest that it might be better if we let everybody else appoint their own people. Let the users come to agreement and appoint theirs, and have the minister as arbiter if the users cannot agree upon who is going to represent them by a submitted list from each of the disputing parties. I think that would be a much more democratic process.
I have one short question on the cancelling of some of the directors under the harbours authority. I don't remember the actual numbers. This bill gives the government, the minister, or whatever, the right to ignore any kind of contract agreement with anybody who has been appointed to any of the boards, etc., and basically remove itself from any obligations whatsoever that they have. These include certain legal obligations that, according to this legislation, will no longer come back. The government will transfer it to the new boards, which is kind of a nice way of sidestepping responsibility, if any is there.
Do you not feel that is basically passing legislation to break a contract, a legally binding contract? Is that not what that is?
Mr. Anderson: To start with your final point, no, I don't. The current system is essentially where a body can in fact run up debt, and ultimately we have to pick up the tab. And you've noticed in fact that in the newspapers there are stories about us wiping out various debts to clear the decks. This is debt run up by a body, for which we ultimately find ourselves responsible.
This is going to reverse the system and give a more normal commercial system, whereby those who are responsible for running the port are indeed responsible for its debts. The port itself is responsible.
Mr. Gouk: In terms of the future, I agree. I'm talking about the time before these boards are formed. Any existing liability passes to them, and anybody who has an employment contract severance agreement, package - whatever - is wiped out by this legislation.
Mr. Anderson: Well, I would put this to André and to Neil. But in any transfer of employees of any group - company to company or government to company, or whatever the direction may be - there will always have to be some element of goodwill. One doesn't try to use the transfer to simply avoid responsibility or contract, and we certainly have no intention of doing that. But, by the other token, you can't be held to ransom by people who see an opportunity of exploiting the situation to dramatically improve their position.
So there's a certain balance that had to be looked at here. This is not unusual. There are many transfers of organizations, many company reorganizations, sales of units. There are many changes that have gone on within government, not just in the last three years, but previous to that as well. So the practice is reasonably well established.
Certainly there is no intention whatsoever of avoiding contract or attempting to disadvantage individuals materially by the transfer. That is not the objective of the exercise.
Perhaps André would like to comment further.
Mr. Pageot: Well, the bill is designed for continuity of operations, and that covers a couple of things. The human resources section, part V of the bill, provides successor rights or continuity of employment for current employees in all our ports, and so on, for all our corporations affected.
The second dimension is that we want continuity of operations. Ports have leases on land. You may have some issues dealing with pollution on such land. We want to make sure that the people who manage the port continue these responsibilities, and don't just clean the books, keep all the assets, and send all the liabilities to us. So this is the base of the bill.
But there is another dimension: we have very strong protection in part V for all the employees, all their rights and fair treatment in terms of buyouts, pensions, changes and job continuity. We have a reserve clause, which is probably the one you are raising. If people see the writing on the wall with a bill that will pass in a few months, we don't want everybody to work out for themselves a bunch of sweet deals before they shift to another regime.
.0950
The bill is very strong on providing continuity of operations. That includes land, people, and so on.
Mr. MacNeil: As André said, Mr. Gouk, the intent was purely to avoid providing the new port authorities with onerous contracts when the old board is leaving. That was the sole intent.
Mr. Gouk: Let me move off directors. One of the things in there is a restriction on operating subsidiary businesses. This is one of the questions you threw out to us, and I have a lot of difficulty with it.
Fraser port, for example, operates a partial assembly of cars, as does Halifax. There's a similar operation there, a value-added type of approach. It's a very good operation, and provides revenues.
You've said in here that you want the ports to operate in a businesslike manner. I think that's a very responsible, businesslike thing for them to do, and yet this legislation would stop them from doing it.
Are you agreeable to an amendment that would allow them to operate reasonable businesses that would provide the revenues? As long as they're not subsidized or backed by the government, they're businesses, and they should be able to operate like any other business.
Mr. Anderson: Yes, I certainly understand the position you have. I think it also has to be recognized, however, that these are, in a sense, public utility types of businesses, and it is appropriate that they focus very clearly on what they're meant to do.
I think of the Port of Victoria, for example, with some $70 million worth of land, much of it prime potential condominium sites. It could well be that the board sees such financial attractiveness in becoming a real estate developer that they neglect the work of the port. Now, I say ``could well be''; that's very theoretical, because we're not going to allow that type of thing to happen. We want them to focus on the port.
If indeed there are other operations that can be hived off to subsidiaries elsewhere or other commercial operations, we think that's more appropriate because the opportunity to cross-subsidize is so different across the country.
In some ports there may be land opportunities for development, which simply allows them to essentially reduce the charges for the port use to a proverbial dollar, a token dollar. Another port may not have that opportunity and they have to face the true cost of providing the services of a port. Of course, they will be materially disadvantaged by another port that is doing that cross-subsidization.
So this is our concern, and it's a real dilemma. It's not an easy decision. It's not one where you can take the theoretical and apply it directly in every instance of a port.
The subclause you're referring to, subclause 24(1), reads:
- A port authority is incorporated only for the purpose of operating the port in respect of which its
letters patent are issued...
So I think there are concepts out there that have to be looked at further, and I appreciate the point you're making. I do not want to limit a port from legitimate entrepreneurial port-type activity at all. I want to make sure they do that, because that's the whole purpose of freeing up the ports.
You will have to listen to conflicting views and I hope provide me with recommendations that will be helpful. I do not pretend this is the simplest section, or that you will find unanimity of opinion on that.
The Chairman: Mr. Gouk, I note that we have the minister just until 10 o'clock.
Minister, you have to leave? But the officials will be able to stay for a while, correct?
Mr. Anderson: Yes.
The Chairman: So perhaps, Mr. Gouk, you could ask one final question. I have some questions on the other side, and then we'll go for a second round with the officials.
Mr. Gouk: If I get one question, I want to make sure it's the right one. Actually, it doesn't matter, because we're going to get to all these things.
Let me turn to the seaway. I have one straightforward, simple question: Are we going to insist the United States pay their fair share for a system that they benefit from by a factor of at least 50%?
Mr. Anderson: We are trying to work with the Americans in a joint analysis of all the seaway activities with the hope of having some binational saving of money that might be out there. About four months ago I met with Secretary Peña, the United States Secretary of Transportation. We had a working group of officials set up to do that very thing.
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Your point goes further with respect to costs. The American position - I must be very clear with you on this - is quite different from ours. It's one of the great ironies that the Americans, who were held up as the example of free enterprise to much of the world, including us, in this instance are using tax revenue from ports around the country to subsidize the seaway. We, the Canadians, these terrible left-wing people who perhaps you comment upon yourself from time to time as a member of the Reform Party, are there talking about commercialization. We are taking about costs borne by users. So it's a complete reversal of the usual position.
I have to say to you, Mr. Gouk, that the American position is reasonably firm, and I think I will ask for advice as to when their legislation was passed. It was not that long ago; it was the Republican administration that did it, I believe. They are going in a very different direction in that regard.
So our efforts to try to harmonize our system with theirs to reduce costs...our efforts are definitely there with respect to, for example, fees, to say there has to be some relationship to services provided and fees paid and if it's necessary to have increases, these must be considered.
I would be misleading you if I suggested there was absolute unanimity of view between Mr. Peña and me. In addition to the meeting four months ago I met him two weeks ago, and I met him some many months previously. In all three meetings we discussed the seaway. In all three meetings we agreed in a very constructive way to explore our differences as best we can to make the seaway more effective. In the final analysis we both have the same objective: making the seaway more effective, increasing the traffic in the seaway.
Mr. Gouk: I'll leave it at that. Thank you.
The Chairman: Thank you, Minister.
Mr. Cullen.
Mr. Cullen (Etobicoke North): Thank you, Minister.
I'm new on this committee, so please excuse my naive questions, if they are that.
I have two questions, one in relation to the taxation that you mentioned, and one in relation to the seaway.
You mentioned the fair taxation of ports for municipal services. Do you expect this to be an issue that will come up frequently in our consultations, and is there...? I've received the package of briefing. Presumably there is some briefing in there in the sense of some of the issues you've presented. I'm curious on that point.
Second, with respect to the seaway, I'm wondering whether you or any of your officials could comment on the linkage, if any, between a more competitive seaway and the balance of our ports in Canada. What are the linkages you see? In other words, if we had a more competitive seaway, what does that do to us? Other ports and harbours in Canada...what does it do to us economically and competitively? Conversely, if we don't have a competitive seaway, what does that do to us?
On that point as well, there is the question of an operator. You mention that there is an agreement in principle with an operator for the seaway. Does that fit within the concept of a binational agency? That has been discussed within this group, and I'm wondering what your thoughts are on it as well.
Mr. Anderson: Thank you for your questions.
With respect to taxation, you are going to hear a great deal about municipal taxation. The taxation of infrastructure by municipalities is not just a concern of the federal government. For example, in the province of British Columbia, Bill C-55 has been under savage attack in the last few days at the Union of B.C. Municipalities convention. That essentially caps municipal taxation on railways.
There are some rather interesting examples of taxation, with no benefit whatsoever provided by the appropriate municipality.
You will find that the Gateway council in Vancouver will talk of taxes paid to the various municipal authorities adjacent to the port of Vancouver, which in their view are double the amount of the services provided.
You will have people tell you about the fact that they pay taxes for police services, but in addition they have to pay all police costs through the port of Vancouver.
This is a very thorny issue, and you are going to be thrust in the middle of it. There are philosophical positions that totally differ, one of which is that this is a utility service and there is no more reason to tax the port than there is to tax a firehall - it's a utility for the public. The other, of course, is anything that is of value within the municipality should be taxed on the same mill rate basis.
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I simply leave it to you. You're going to have a very interesting time. Ultimately, however, we must recognize that taxation should be related, in my view at least, to services provided. That's what municipal taxation or indeed our own taxation is all about. In a global sense, while you may on one hand get very little for a particular tax or a particular type, in a global sense for any level of government...there should be some concern over quality there.
With respect to the seaway - I'll turn this question over to others very shortly - we have put $180 million into seaway improvements in the last ten years. If we have the seaway functioning at a higher level of freight, we will pick up a lot of traffic through the Canadian transportation route, the St. Lawrence and Great Lakes system, which is from American inland ports. I think that would be beneficial. It's not if we're subsidizing the ships, as Mr. Gouk has correctly pointed out. It can be a cost, but much of the costs of the seaway are fixed costs, not variable costs; therefore, more traffic, in my mind, generally speaking means an improved economic position.
I am like you, a neophyte in the business, so I will turn it over to the experts on either side of me.
Mr. Bruce Bowie (Director, Marine Policy, Department of Transport): Thank you.
In terms of the linkages between the seaway and ports' competitiveness, certainly the seaway system has an enormous economic impact on the area it serves. It's in the area of $3 billion to $4 billion on an annual basis. That's on the Canadian side. There are similar economics on the U.S. side.
Those economic impacts relate as well to the ports that operate within the system, and there are a number of ports whose futures rely on the competitiveness of the seaway as well. So we have to look at it on a systematic basis. We have to look at it in terms of regional economic impact, and that's what we're trying to do with this policy. Competitiveness for the seaway means competitiveness for the region as well as the ports in the region.
In terms of the commercialization initiatives and the relationship with the discussions with the United States on the binational agency, certainly we view these as completely compatible initiatives. The overall objectives are exactly the same, as the minister mentioned before: to bring traffic into the system, to make it operate more commercially and more effectively in response to local needs. We're proceeding with these initiatives in tandem, with those objectives in mind.
We know through commercialization that we have an opportunity to move very quickly to allow those savings and efficiencies to happen, and we want to move quickly in doing that. We recognize that there may be similar opportunities on a binational approach, and we are certainly pursuing them very actively, but the concern is that they may take longer than the immediate opportunities we have right now. We have to proceed on that basis. We have to discuss it with our partners in the seaway system to the south. We have to move forward and try to make it happen, but we have to proceed with our commercialization at the same time, recognizing the amount of time it would take to do it.
The Chairman: Thank you very much, Mr. Cullen. Perhaps we can continue with that in just a moment.
Minister, I note that the time has come. I'm being signalled desperately that you have to leave now, and I wish to thank you. Thank you for coming and taking this time with us. We'll meet with you again. The staff work on this has been terrific. I have broken my back carrying the various books around. By weight, they get an A plus. We'll see what the contents hold. Thank you very much. It's a good start and we'll see you when we return.
Mr. Anderson: Thank you.
The Chairman: Mr. Cullen.
Mr. Cullen: Actually, that deals with my questions very adequately. Thank you.
Mr. MacNeil: Mr. Chairman, may I answer Mr. Cullen's question on municipal taxation? You're going to receive a lot of representation, as you travel across the country, on this issue.
What happens in the system now is that the local port corporations under the Canada Ports Corporation pay grants in lieu of taxes under the Municipal Grants Act. Most of the harbour commissions do not. Some of the public harbours pay grants in lieu.
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Bill C-44 repeals all that legislation, those three acts. It is silent at this moment. In Bill C-44 there is no reference to the Municipal Grants Act, so most municipalities and the Federation of Canadian Municipalities should be before you asking for that certainty again; in other words, that the Canadian port authorities be subject to the Municipal Grants Act.
Following the Scott report in May, we looked at the notion of competitiveness of ports with U.S. ports. Most U.S. ports do not pay municipal taxation and in fact get a levy from the mill rate, from the municipality to the port, for capital development. It is a competitive factor in place in British Columbia, in the Maritimes, and in Quebec.
We looked at the notion of providing the ports with the ability to negotiate fees for services, because most ports do not receive a lot of services from the municipality. They do their own snow plowing, their own water, their own zoning. They do depend on fire services, but in some places we have our own police service.
Most ports will come before you and I think most municipalities will come before you and say that fees for service are just not negotiable, that it's too difficult a negotiation and there's no dispute resolution mechanism. They will look for municipal grants. So that's what you're going to face, and I think on that issue we're asking for your best advice on how to proceed in this bill in providing fair taxation to the municipalities.
Mr. Pageot: If I may add to that, municipalities receive most of their tax revenues from business activities conducted at a port. The grants in lieu represent only about $18 million around the nation - Montreal, Halifax, and the crown corporations we have. In some sites 80% to 90% of the revenues are derived from the taxes on the leases and the commercial activities at the port. This is not being modified by the legislation, so the main sources of revenues for the municipalities remain in the bill. We are talking only about how we tax the federal property.
Mr. MacNeil: Thanks.
Mr. Cullen: Thanks.
The Chairman: I have a small question on this side and then we'll go another round. Mr. Jordan.
Mr. Jordan (Leeds - Grenville): On the stipend, page 19, article 5, we're hoping to hear as we have these hearings about a fair system of paying that. You must have some idea of what would be good news for you in this respect. What do you anticipate hearing from the point of view that you think they should be paying something to the government? My own view on it would be that no two situations are exactly alike. I don't think you can make a ruling and apply to it to some very remote port that has a tremendous impact on the viability of the community, as opposed to some very highly commercialized port. I don't think you'll get away with that.
On the other hand, doesn't the stipend you're going to charge have to have some correlation...? First of all, they won't want to pay anything. You know that. I know that. But they're going to pay something. Wouldn't it make sense to think, though, there has to be some correlation between the money generated in that port and what you expect to receive and what they are liable to pay? Factoring in the first thing I said...
Mr. MacNeil: One of the first things I'll tell you is that in all of the briefing material you have, the one note you do not have at this point is about the stipend. In the bill, clause 6, where it says there will be a charge on gross revenues... That's the proposal you have before you. Our expectations are modest. We have not set a specific dollar figure, or a target. What we would like to present to you before you leave is one final briefing note on the issue of stipend, on how we see the charge on gross revenues.
We do believe the government deserves some kind of payment for the use of these facilities and the historical investment in those facilities. You will receive a lot of representations on how it should happen, not only on designing a national formula, but also on whether to charge gross revenues, whether to charge operating revenues, or on net income...
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We chose not to propose net income, a dividend, because this is a no-share capital corporation - that's partly the argument under the Canada Business Corporations Act - but more specifically, over the years since the Canada Ports Corporation Act, 1983, ports have become very good at sheltering net income and the dividend return to the government has dropped from an annual take of $10 million or $11 million to $2 million. So a fair share wasn't being returned to a corporation that's running the deficit of $26 billion this year, or $20 billion this year, and has a debt of $500 billion. We think those assets should get some return to the federal treasury.
You're going to hear from the local port corporations that they would like to see a dividend arrangement on net income. You're going to hear from harbour commissions who have never had to pay that they shouldn't pay.
We think a formula should be applied across the country. A charge on gross revenues would be the first charge, almost like a franchise fee. We are going to propose a formula to you, hopefully before you leave for the west coast. That briefing note, I'm sure, will be one of the most used during your road trip, because the ports and the port communities haven't gotten a final answer from us yet. They haven't been unanimous either on their response.
To give you a specific answer, Mr. Jordan, we may be proposing a sliding scale of x percent for the $5 million, y percent for the following $10 million, and scale it up. That way the large commercial ports, namely Vancouver and Montreal, would be paying far more than the smaller ports such as Fraser, Nanaimo, and Port Alberni. That is our proposal. We are trying to get that document before you leave. Hopefully, we'll get it to your clerk by Friday.
Mr. Pageot: I think it's important to add that the ports would be better off than they are under the current regime. They now contribute about $10 million for a head office in Ottawa. Over the last five or six years there have been special money grabs, which were determined by the crown. In the future the rules of the game will be more predictable and everybody will be treated the same rather than having ad hoc decisions. Globally they will probably pay less.
Mr. MacNeil: In every case they will pay less. There'll be no office allocation for Ottawa. There will be a lower than a dividend charge. This bill prevents the government from going in and doing special cash sweeps. So there is more predictability for the ports.
Mr. Jordan: I just want to avoid the Churchill Falls thing in reverse. Do you know what I mean?
Mr. MacNeil: Exactly.
The Chairman: Okay. Mr. Mercier.
[Translation]
Mr. Crête: I hope it's because I have the maturity of Mr. Mercier before having reached that chronological age.
I am told that you drew up a type of assessment of all the ports and harbours and, in the case of the regional ports, considered their intrinsic value and relevance. Therefore, you would have already assessed the ports along the St. Lawrence river which might have priority in the future and determine that Cacouna would be preferred over Rimouski or other ports as regards the type of assistance which might be given to it.
Are you able to confirm that for me?
[English]
Mr. MacNeil: No, we have two categories of ports in our system. One is the future Canadian port authorities. Just to give you an overall view, they are Montreal, Quebec, Sept-Îles, and Trois-Rivières. The regional ports are not categorized or prioritized, they're all listed as Transport Canada ports, and we have the same system for divestiture for each port.
We speak first to the community and the users, the municipalities and users, to see whether the community wishes to take the port by way of a not-for-profit corporation. If they do, we have a process. We will do a land title search, an environmental study, an engineering study to see that the structure is sound, and we will do a business case.
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We provide all of that material to the local community and we negotiate a transfer. If the community decides it does not want the facility in that format, we do a public tender. There is no classification of A, B, or C ports. They're all the same.
Mr. Pageot: You are probably not referring to priorities for transfer.
Mr. Crête: No.
Mr. Pageot: We have to know the value of the land. We are talking about taxpayers' assets, national assets which we assemble over 100 years or more. We have to know the value of the land because we don't want a local group where there is no commercial activity to buy the land for a dollar and then sell it for cottages. We have to know what the value of the land is, and then the value of the assets, the liability, and the environmental responsibility will determine the negotiation position we take. If it's worth $20 million, we are not going to give it away for a dollar.
In other cases, we will have more liability than value, but this is probably what you're referring to. We have to know what we want to transfer, but that does not determine a priority in saying a port is more important.
[Translation]
Mr. Crête: Therefore, there is no qualitative and quantitative assessment list containing priority choices for investment purposes.
[English]
Mr. Pageot: All the ports where you have commercial activities are important.
[Translation]
Mr. Crête: That does not exist.
[English]
Mr. Pageot: It's like cities; you don't say a small city is not important or a large city is important. They are all important if you have traffic.
[Translation]
The Chairman: Is that all?
[English]
Mr. Gouk, do you have any further questions?
Mr. Gouk: Thank you. I have a couple of things.
At one point you mentioned something that legislation is silent on. Another thing it's silent on is policing. This is quite a controversy again between municipalities and the ports themselves. Right now we have the Canada Ports police, but they don't really work for the ports; they work for the Canada Ports Corporation, which is finally going to go where it should, into the trashbin. What is the department's position on port policing as opposed to transferring it to the municipal authorities?
Mr. MacNeil: Our position at the moment is that if you repeal the Canada Ports Corporation Act through this bill, then the authority for maintaining the ports police is also repealed. There are six police detachments. There are 100 ports police, individuals, across the system, and they're only in six ports.
What our proposal has been for over a year now is that we are now in negotiations with justice, the Solicitor General, and we've brought in the police associations, the municipal police, the attorneys general, customs, and RCMP. We are trying to determine the best level of policing in each port and how it's to be delivered in the future before we repeal the act. Those committees are being formed now. We've done studies and audits in each of the six port communities where we do have Ports Canada police. We are now determining what is the best level of policing and how it's to be delivered and paid for. That will be in place before you repeal the act.
Mr. Gouk: So we will have some indication from you as to what your proposal is prior to the time we deliberate on this.
Mr. MacNeil: Before report stage, yes.
We have asked the police associations to come before you. I believe your clerk was good enough to contact the Vancouver Port police and the police associations to come before you and give their point of view.
Mr. Gouk: With the number of people I know who will want to talk, it will be interesting to see how much we'll get done in the time we have. We'll see how it works.
One of the things the minister said is that this act is intended to make it easier to operate according to business practices. Where loans are concerned that might be difficult, given that the port authorities are not going to be able to mortgage any of their properties as are the businesses we're supposed to be using for a comparison for business principles.
Can they buy land that they do not already own? As I understand it, they can't own anything that isn't already in their letters patent. So at minimum they would have to amend their letters patent every time they wish to purchase or sell additional land. Secondly, are they going to have the authority to do that? Finally, are they going to be able to mortgage? For example, if there's a piece of industrial property that they think they should add to their portfolio, are they going to be restricted on having a mortgage on that as well, or are they going to be able to mortgage that?
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Mr. MacNeil: Our financial analyses show in each of the ports we think will become Canadian port authorities, all of whom are financeable - and that's one of the key criteria: their financial viability... We've had an outside investment house provide us all of the data on each of the ports, and we should have that available to you before the end of October when the report is ready. I offer to you that if you wish to have that investment house come before you in Ottawa, they're prepared to do so and walk you through each of their analyses on each port.
We believe there are two or three large ports that will actually go for public financing. The rest of the ports are going to be into institutional private bank financing. The public financing really does not need to pledge assets - land or crown facilities. That financing is going to be based on cashflow, a committed and dedicated stream of cashflow.
The smaller ports, the St. John's, Newfoundland, or the Port Albernis, who are, again, financially viable and who will fit into the CPA model, in our assessment, if they all apply, will probably have to pay a premium because they will not be allowed to pledge the assets. That's our proposal.
Mr. Gouk: That includes new property they may acquire?
Mr. MacNeil: No, they may acquire property in their own right.
Mr. Gouk: And mortgage it?
Mr. MacNeil: And mortgage it.
Mr. Gouk: But they would have to amend their letters patent each time in order to do that.
Mr. MacNeil: No, what we're saying is when you... Yes, but without Governor-in-Council approval you cannot mortgage or sell federal real property.
Mr. Gouk: Okay, that's a little clearer, then, in terms of the intent.
There's one last thing I'd like to ask you. You mentioned ``if they apply.'' Is it the understanding, then, that any port doesn't have to apply for this? And if they don't how would they be treated? Would there still be a transfer of land? How will they differ, then, given that there's no government funding, no government backing? What is the difference between a local or regional port as opposed to one of the CPAs? And what advantage is there for even applying?
Mr. MacNeil: At the moment we have about 14 applications in from the ports, and we have a process of evaluating and presenting to the minister. And then, of course, we'll just wait until the bill becomes an act before we enforce our evaluations.
Any port can apply at any time, no matter what its status. But if you're a harbour commission and you do not apply at this time and your Harbour Commissions Act is going to be repealed, you will revert back to a regional local port and you will be up for divestiture within the next six years.
Mr. Gouk: Can you explain that?
Mr. MacNeil: Under the current provisions, we would change the status of - pick a port - Nanaimo, which is now under the Harbour Commissions Act.
Mr. Gouk: How about New Westminster, Fraser Port?
Mr. MacNeil: Fraser Port is under the Harbour Commissions Act of 1964, amended in 1983. When you repeal that, we would then make provisions that it would be returned to the regional local port status, if it didn't apply for a CPA, or if it applied for a CPA and was not awarded CPA status it would then revert to a regional local and it would be up for divestiture, and we would follow the divestiture process, as we do with the other 296 small ports.
Mr. Gouk: Is that different, then, from what you're doing with local and regional airports, where you're transferring it to the local authorities who apply for it - such as in my case, Castlegar - where you transfer it to the local thing and they run them?
Mr. MacNeil: It is different. When we went to Treasury Board on our plan for divestiture, we asked to be outside the Federal Real Property Act provisions and policy, which in airports requires that it be offered first to the province - there's a right of first refusal - then to the municipality. We asked to be out from under that policy because we believe ports are different from airports.
In no single port do we own the entire property, do we have all of the activity in the community. Therefore what we wanted to do was to save our tenants and the business operation and provide the users and the municipality an opportunity to take it over. If the municipality and the users did not want to take it over in some joint venture, then we would put it up to public tender.
The Chairman: Mr. Keyes.
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Mr. Keyes: Thank you, Mr. Chairman, and thanks, Mr. MacNeil and ladies and gentlemen, for coming before the committee. I want to make a statement and then ask a quick question.
I want to mention how the Bloc - Paul - may have left somewhat the impression that the government was considering replacing pilots with technology through this particular piece of legislation, or potentially trying to achieve that end. But I want to make sure that the exemptions or certificates is the focus, is where technology of course would enhance the work of the shipmaster who may qualify because he has plied the waters more times than anyone else and may have a working knowledge even greater than the pilot who may hop on board the vessel.
My question to Neil is on this business of federal agency status. From the calls some of us have already been receiving, I'm sure there will be many representations from the potential 14 CPAs that have already applied to ask us to grant them federal agency status. I wonder if you could explain for the benefit of the committee exactly what federal agency status is, what that gives the particular CPA at the end of the day, and why it might be an advantage or disadvantage.
Mr. MacNeil: You will receive, mostly from the port administrations themselves and some of their key customers, a request that you go back to your recommendation of May 1995, which is to make the federal ports federal agents, agents of the crown for the purposes of this act.
What that generally provides is a whole range of consequential amendments in Bill C-44, with regard to intergovernmental immunity more than anything else, and on taxation, whether it's provincial capital taxation or whether it's municipal grants.
They're looking for certainty in their operations. If they're under the Municipal Grants Act, they'll know exactly what the formula is and how they can budget that taxation, and then the municipalities want to know that. There's that demand.
There's also a range of demands that come from the agency status, such as priority in environmental law, regulatory authority on the water for our harbour masters. All of it flows if you're an agent. At the moment, the bill is silent on that.
Our proposal was that we wanted to try to drive the ports into a much more commercial nature, and we felt at the time that if we declared it an agent it would impact on their financeability. We have since learned from our investment house that it would have very little impact on their financeability, whether it's a crown agent for the purposes of this act.
That's why I think the minister had asked you to hear the representations from the community and find out whether we should go back to the agent status. If it's your decision to recommend that, then we would be looking at placing a number of proposals and amendments before you, that these Canadian port authorities would be subject to the Municipal Grants Act, the Access to Information Act, the Official Languages Act, the Canada Labour Code - all of those provisions would come back in. We don't think it would hurt their commercial viability now.
We would recommend two major things to look at and opine on, if you will. One is sections 21 and 22, where we propose that no Canadian port authority have access to the federal treasury by way of special loans or even loan guarantees, that there would be no call. We think that's still a viable request to make of Canadian port authorities, even if they're an agent.
Mr. Keyes: Now, on that point, is it possible for the government to give federal agency status to a CPA and benefit from all that flows from the advantages of being a federal agency, but at the same time protect the government against any claims of liability against the port that would normally flow in that federal agency status situation?
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Mr. MacNeil: Since we tabled on June 10, we've heard lots of representations. We're now seeking legal opinions on that very question and we hope to have them for you before report stage.
Mr. Keyes: Right, thank you.
Mr. MacNeil: But the number one issue you have before you is if you come to agency status or listed as a federal agent, what provisions of the Financial Administration Act prevail.
One of our key objectives was to get Ottawa bureaucracy away from the ports. You've all heard the story about it taking eighteen months to get approval in Vancouver to purchase a crane.
Under the Financial Administration Act, part X, a crown or a crown agency is required to do a host of reporting and approval levels from corporate plans, capital budgets, delegated authority on spending... We were trying to get out from under that and let the ports have more local autonomy and more freedom from Ottawa.
If you bring back the agency status, does part X of the FAA prevail, or can this Parliament exempt them from the part X? Then what control or directive power do you want to have to correct certain difficulties that come along from time to time with port administration? That is one of the key issues you're going to face in the next three to four weeks as you travel.
Mr. Keyes: Certainly the ports are excited at the prospect of being more commercially oriented. The opportunities are there for them, and they understand them and are willing to go after them.
The ease of bureaucracy from Ottawa, and so on, is very welcome. But at the same time, they don't want to be completely cut from the apron strings, because there are huge advantages, according to them, of being a federal agent: the Canadian flag on their business card, going abroad and getting the business. These are all advantages that come with this federal agency status, of course.
At the same time, we as a federal government have to be very careful that we are not suddenly sitting in the same breadbasket with a different name, being captive to any liabilities that any particular CPA might come back on the federal treasury for. So we want to accomplish both ends and certainly we'd like to know, as soon as possible, if we can have the best of both worlds in this particular case.
The Chairman: C'est tout? That satisfies all the questions?
I would like to thank you for two things: the time and the quality of the work.
Mr. MacNeil: Thank you, sir.
The Chairman: I no doubt will be calling upon you a lot in the next little while.
The meeting is adjourned.