EVIDENCE

[Recorded by Electronic Apparatus]

Monday, October 28, 1996

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[English]

The Chairman: Let us begin.

Welcome to this committee's twenty-ninth meeting on this particular topic.

For the information of members, it is a particular pleasure for me to be at this end of the gavel with the Hon. Glen Findlay at the other end of the table. Glen sat in the provincial legislature with me and I was actually his gentle critic for a little while.

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We have with us the Hon. Glen Findlay, Minister of Highways and Transportation for Manitoba; the Hon. Andy Renaud, Minister of Highways and Transportation for Saskatchewan; and their respective deputy ministers, Mr. King and Mr. Horosko.

It's a pleasure to have you here. We've put aside an entire hour for this discussion with you, so you lead us down the path you want and we'll bring you back to righteousness.

A voice: Did you write all that down?

Some hon. members: Oh, oh!

The Chairman: Glen brings it out in me.

Hon. Andy Renaud (Minister of Highways and Transportation of Saskatchewan): Mr. Chairman, I want to thank you for inviting us to make our presentation. I thank all of the members of the House of Commons Standing Committee on Transport for this opportunity.

Mr. Findlay and I are pleased to present the prairie provinces' ideas on Bill C-44. Because we come from the prairies, a lot of people may well ask why we are interested in marine policy. I think it's understandable. We have a lot of shippers and farmers in the prairie provinces who certainly need to use the ports, so we're very interested in marine policy.

Unfortunately, Minister Fischer of Alberta was unable to join us today. I believe the committee members have received a letter from Mr. Fischer.

The new national marine policy will have far-reaching implications for prairie shippers who are major users of the marine transportation system. Efficient, low-cost port operations are essential for maintaining the competitiveness of our bulk commodity exports.

The prairie provinces account for more than 60% of the export volumes through the port of Vancouver and more than 25% of the total traffic on the St. Lawrence Seaway system. Saskatchewan alone exports about 13 million tonnes of grain and potash annually through the port of Vancouver and more than 6 million tonnes through the Great Lakes-St. Lawrence Seaway system.

Because the total transportation costs represent a significant component of the delivered price of many of our bulk commodities - frequently one-third or more of the world price - prairie shippers need affordable marine transportation services in order to be competitive in the global marketplace.

Continued growth in exports will put pressure on the Canadian marine transportation system, which will require flexible port planning to prevent bottlenecks and increased costs for the prairie shippers. If the proposed Canada port authorities cannot provide effective service at our major ports, shippers may be forced to use the U.S. ports to obtain service and reduce transportation and handling costs. I know there is already talk of that in Saskatchewan.

The prairie provinces therefore support the commercially oriented policy initiatives contained in Bill C-44 to reduce costs to shippers and foster cost-competitive port operations, but our shippers and our producers must share in the benefits of any marine policy reform.

We agree with the objective of making port authorities operate with commercial discipline. However, the prairie provinces are concerned that marine reform legislation would adversely affect our shippers unless revisions are made in key provisions of the Canada Marine Act.

Minister Findlay and I will comment on key issues associated with the new national marine policy in our presentation today. I will focus primarily on the corporate structure of Canada port authorities and on the financial issues.

First, incorporation legislation: The prairie provinces support the objective of allowing Canada port authorities to operate with commercial discipline, which I mentioned earlier. Increased flexibility for port planning is needed to enhance the competitiveness of major ports while reducing costs and improving service for port users.

We believe these objectives can be achieved without having port authorities retain federal agency status. However, the corporate status of port authorities is not clearly defined in Bill C-44, which raises important questions about their powers and responsibilities. Incorporation procedures for Canada port authorities must be clarified in the marine reform legislation.

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Bill C-44 appears to be inconsistent in defining the corporate structure of port authorities. Elements of both the Canada Business Corporations Act and the Canada Corporations Act are combined, although the new marine legislation states that the Canada Business Corporations Act is to apply to port authorities. A new framework for incorporating port authorities and defining their status should be included in the new act, utilizing the Canada Business Corporations Act to ensure that this process is clearly understood by all the stakeholders. A single, unique corporate model is required for port authorities to eliminate uncertainty concerning their capacity and their powers.

Second, the prairie provinces are concerned that the key provisions of the Canada Marine Act may constrain port planning and management activities. This could limit the flexibility of port authorities to pursue commercial activities required to make them financially self-sustaining.

Port authorities should be granted wider powers in managing property and assets under their jurisdiction, subject to necessary ministerial consent and increased public accountability. This could include powers related to marketing ports, diversifying their services, and consulting activities. This approach would encourage commercial port operations more effectively than the proposed legislation's restrictions on the capacity and powers of the port authorities.

Third, financial issues: Incorporation provisions for Canada port authorities could have significant financial implications for ports and port users. I will address three of the financial issues that concern us.

First, the prairie provinces are concerned that the provisions in Bill C-44 may make financial institutions unwilling to provide commercial funding to port authorities for capital projects and other port operations. Borrowing costs for port authorities could increase due to the provisions that would increase financing risks for potential lenders. The federal government must ensure that port authorities can obtain credit at reasonable rates from financial institutions to support financing of infrastructure improvements and other port operations.

Second, the stipend: We believe the levels of the stipend should reflect the federal government's reduced risk exposure and the increased infrastructure costs that will be borne by the ports. The stipend must provide a reasonable return on federal assets and be capped at one prescribed level to avoid unequal or excessive returns among ports. A formula based on net income is preferable to one based on gross revenues, which would hurt shippers at larger ports.

Third, taxation: The prairie provinces are concerned that the loss of federal agency status for port authorities may open the way for excessive municipal and/or provincial taxation of port facilities, creating extra costs for our shippers. We believe any change in the tax regime for port facilities should be revenue-neutral, given the loss of grants in lieu of taxes previously paid by the federal government to municipalities for port properties. National ports serve more interests and should therefore not be treated as revenue sources by the local jurisdictions.

The prairie provinces support the recommendation of the Standing Committee on Transport in its national marine strategy that a comprehensive review of assessment practices and other tax issues pertaining to port infrastructure is needed to ensure that the level of taxation reflects the service provided and does not threaten the viability and competitiveness of Canadian ports. Federal, provincial and municipal governments should participate in this review of port taxation issues, which should be concluded as soon as possible. Resolution of these financial issues is critical for maintaining the competitiveness of Canadian ports and providing shippers with the lowest possible costs.

Thank you for giving me an opportunity to address the committee, Mr. Chairman. Mr. Findlay will address some other issues.

Hon. Glen Findlay (Minister of Highways and Transportation of Manitoba): Thank you. It's a pleasure for me and my deputy, Andy Horosko, to be here. Not that long ago we were in front of you in Winnipeg talking about the broader issues of transportation.

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I'm sure the members of this committee are very aware that the prairie provinces are very far from markets but extremely dependent on trade. Trade is expanding in all directions, and certainly if our economy is going to grow, I think particularly in Manitoba, it has to be on expanded trade. Indeed, our standard of living depends on our markets. An efficient transportation system and fully competitive ports on both east and west coasts and the port of Churchill are important to the province of Manitoba and the prairie provinces.

Over the past two years, we have participated in the review of the western grain transportation policy, aviation policy and labour disputes at the port of Vancouver. Our purpose for participating then and now is to ensure that our shippers are afforded the lowest cost to move their products to export positions in order to remain competitive in the global economy we cannot avoid.

We hope members will be guided by the above principle and the consideration and formulation of a new marine policy for Canada, which we all agree is long overdue.

I now turn to other issues that the federal transport minister, the Hon. David Anderson, asked your committee to focus on.

I want to talk about governance. Paragraph 12(1)(e) of Bill C-44 states that directors of port authorities will be appointed by the Governor in Council based on nominations by the minister in consultation with the users. Clause 13 outlines the knowledge and experience required to serve on the board. The prairie provinces hold that boards should include broadly based industry representatives, not specific port users, from across the hinterland served by the board.

I think you can understand that when you're on the prairies and you're moving a product, you want to be sure it's moving through the port cost effectively. People around the port may be more interested in the revenue generated by the port than by the fact that it serves a very basic service for the betterment of western Canada.

We believe that changes are necessary to the governance section of the proposed bill to make the boards more accountable and effective. In this connection, we recommend the following changes:

1. The appointment of directors under subclause 12(1) to the board should be made based on published qualification criteria after an open competition process.

2. To reduce the delay and expedite decision-making, subclause 6(2) should be modified to allow the boards of port authorities to establish executive committees for fast decision-making.

3. To assist the executive committee and board to make their decisions, an advisory group should be created to reflect the more specific views of different stakeholders. Stakeholders could include shippers, producers, carriers, municipalities, labour groups and other interested parties.

4. Provincial representation on the boards of the Canada port authority should be determined by whether the port is of particular strategic importance to a province's trade and economic well-being. Clearly, in western Canada we have a natural interest in Vancouver, Prince Rupert and, certainly from the eastern part of the prairies, the port of Montreal.

Another issue I want to touch base on is pilotage. The Standing Committee on Transport, in its report entitled A National Marine Strategy, released in May 1995, recommended among other things the repeal of the Pilotage Act, discontinuation of pilotage authorities, and that the pilotage regulator develop a uniform set of criteria for exemptions from pilotage.

The prairie provinces are disappointed to learn that Bill C-44 proposes to retain pilotage authorities and that the provision to review the pilotage certification process, compulsory pilotage area designations and measures to promote cost reductions have been delayed until 1998.

Pilotage is a very significant proportion of the cost of transporting grain to our customers. The Ports of Vancouver and Prince Rupert, for example, estimate that it accounts for up to 20% of total ports charges just for pilotage alone. The seaway is one of the largest components of operating costs. We believe these costs should be reduced and action should be taken now to reduce them, as per the committee recommendation of a year and a half ago.

We are also concerned about the higher transportation costs to our shippers that would result in implementation of proposed section 132 of the bill. The section mandates the setting of pilotage charges ``at a level that permits the Authority to operate on a self-sustaining financial basis''. These charges would be in addition to the current recently implemented coast guard marine services fees.

We assert that the changes will reduce our ability to compete and will decrease the attractiveness of our major ports relative to American ports. At the end of the day, that's what it's all about: how can our ports be competitive enough to keep the products that are moving to export positions from going through American ports?

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The prairie provinces recommend that Bill C-44 be amended to incorporate the changes recommended by the May 1995 standing committee report regarding the issue of pilotage; and second, that the pilotage sector immediately consider the introduction of a new marine technology, such as a satellite differential global positioning system, otherwise known as GPS, to reduce costs. It is estimated that use of these systems could save the St. Lawrence Seaway Authority in excess of $10 million per year.

Another item I want to touch base on is commercialization of the St. Lawrence Seaway system. The prairie provinces are fully supportive of the federal government's commitment to commercialize the seaway. We are also supportive of the objective of financial self-sufficiency for seaway operations, provided that commitments can be obtained from the new operators to promote efficiency and control costs. Prairie shippers cannot remain competitive if they have to deal with further additional costs.

Under the provisions of Bill C-44, the Minister of Transport has the authority to invest in major capital projects for the efficient use of the seaway. It is estimated that capital and rehabilitation costs of the seaway will be about $30 million annually over the next four-year to five-year period. We strongly believe that any federal investments in the seaway infrastructure must have demonstrable benefits for shippers and other seaway users as well as for the national transportation system.

We also assert that any federal funding for seaway improvements must be fair and reasonable in relation to other ports. Here, in particular, I think of the port of Churchill. As well, we hold that consistent price signals must be maintained in the marine transportation system to ensure that the national marine policy does not benefit one port at the expense of other ports. For example, several seaway expenditures should not place the railways at a competitive disadvantage with marine transportation for eastbound movements of grain to get to the port of Montreal. Thank you.

Those are the official comments I have, and now I'm certain we'll get into some significant discussion in the questioning period to broaden our points and maybe touch on other things you may want to hear from us about.

The Chairman: Thank you.

Monsieur Mercier.

[Translation]

Mr. Mercier (Blainville - Deux-Montagnes): Mr. Findlay, in your recommendation concerning pilotage, you say that you would like us to follow the recommendations of the 1995 report in this area. The summary of your recommendations states that immediate action is required to promote competition in the industry. Could you explain this a little further? Do you want to put an end to a monopoly? What exactly do you mean by this recommendation?

[English]

Mr. Findlay: Thank you.

I guess when we say ``competition'' we do mean an end to a monopoly. We mean other people prepared to supply the service should be able to compete, or other technology should be able to compete. We think very highly of GPS technology and all the various electronic means of transmitting information today.

This has been a pretty big issue in the prairies for a long time, especially when at different times and places we hear that 20% of the cost of port activity is pilotage cost. It seems an unbelievably high cost, and we think that technology today allows an ability to.... Particularly, regular users of the seaway system, daily and weekly users, should be able to know the system and have the technology to be able to pilot their boats through there without a pilotage cost.

I was just down to P.E.I. and saw how they're building the Confederation Bridge over the Northumberland Strait. The previous technology of surveying and using man to calculate isn't good enough for that. They use GPS. I figure that if they can use it there, maybe we could use GPS in a pilotage process. I don't know the exact way it could be done, but I've heard about it so often that we in the prairies think there are some gains to be made by decreasing the monopoly and allowing new technology to come into the system.

Mr. Renaud: I'll just add to that.

Part of the reason we're making a presentation here concerning shippers and the producers in the prairies is because one of the things we have to look at is how can we lower their costs so that our ports are used and not American ports.

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We have to look at every aspect of transportation, from field to ship. Pilotage is one area that we think should get some attention. If there are savings to be made there, we certainly should look at those savings. New technologies, as Mr. Findlay said, is perhaps one of the ways we can improve that service and lower the costs. Who pays the cost in the end? It's the shippers and the producers.

The Chairman: Mr. Ringma.

Mr. Ringma (Nanaimo - Cowichan): I should preface my question, gentlemen, with a statement that I'm a stranger to this committee. I don't have background, so I'm coming at it a bit naively.

I am interested in the consultation process here, particularly since you are representatives of the prairies. One thinks of both seacoasts, but it is important legislation. It affects even small ports in my own riding, so it's not just the ``biggies'' such as Vancouver and Prince Rupert.

What would your measure be of the consultation process that has been gone through here? It is obvious you are here to give your presentation. I know you've probably had opportunities, with the committee having travelled across the country, to give your presentation, but to what degree has the government come to you with what it is proposing and asked for your input, and over what period of time?

Mr. Renaud: I'll take it first.

I'm not sure if the committee met in Saskatchewan. I don't believe so. Originally the department and I believed that the marine policy - we still do - is the right way to go. I am referring to the commercialization and that aspect. However, I guess it was WESTAC in Vancouver and Richmond, B.C., a month or so ago...that Mr. Mulder brought to my attention more details of the bill. That's when the three prairie ministers got together and decided they'd better make a presentation, because they had some concerns.

So there has been consultation, but perhaps there could have been more.

Mr. Ringma: That's perhaps always the case, but it gives me a bit of a feel anyway.

The Chairman: Thank you, Mr. Ringma.

I should say we did meet in the great port city of Winnipeg.

Mr. Findlay: I would say the same thing as Andy. You'd like to have more advanced knowledge, but there are many things coming at us right now in transportation in terms of airport policy, port policy, WGTA. All this is happening. It's a fast-changing area. I appreciate that a lot of the thinking behind this has been in the bowels of the government for many years and it's all surfacing at once. There's a lot of change.

We're here now because we have looked at it, had a chance for staff to analyse some of the impacts, and are commenting on the most obvious areas that we feel need to be improved upon to ensure that at the end of the day we have competitiveness and the ability to reduce costs, so that our shippers can remain competitive in a global economy. To us, that's the bottom line: cost control; competitiveness; flexibility in operating the ports so they can serve the needs of the customer, who is the user; and keep the traffic flowing through our ports as opposed to elsewhere. Shippers look at trying to reduce costs. If they can find it through an American port, they ultimately might do that, even more than they do today.

Mr. Ringma: Could I have a complementary on that, Mr. Chairman?

I certainly think this committee and the House is going to make every effort to incorporate as much evidence presented as they reasonably can. But once that's done and the legislation goes into effect, what's your feel for the subsequent relations between provincial and federal governments on subsequent necessary amendments? Say we make a few real boo-boos here and it's not taken account of; do you have a reasonable sense that there will be reaction to it?

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Mr. Findlay: I personally believe that the committee is going to hear and has already heard a lot of representations on this bill. I think it will be very clear that the message is the same, so I would hope that the majority of the changes we're suggesting are incorporated.

Mr. Ringma: I have faith that they will be, too, but given that we will make some mistakes -

Mr. Renaud: Our provincial government never makes any!

Some hon. members: Oh, oh!

The Chairman: If I may also.... I mean, Mr. Ringma, in fairness, is sitting in for their critic. The committee has been seized of this issue for over two and a half years, so we feel no particular need for a fresh start.

Mr. Fontana.

Mr. Fontana (London East): Thank you, Mr. Chairman, and welcome, ministers. I know that in the course of three years you've been before this committee, as you said, on a number of transportation issues, but I want to talk about competitiveness and taxation and how you're directly related to making sure that our ports and the whole transportation system costs come down. Before any of your stuff can get to the port it usually has to go on a railroad or on roads, and as you know, the railroads have talked extensively about taxation vis-à-vis the provinces in terms of how you assess their properties and so on.

In talking to many port users or ports themselves as it relates to the provincial and municipal taxation, yes, we'll deal with either the federal agency...at which point the grants in lieu of will obviously come up. But as it relates to the competitiveness question on taxation, as you brought it up, yes, we have a responsibility and that's exactly what we're trying to do - keep those costs down. How can you also help the users and the producers of Canadian goods so that their prices are competitive too, as it relates to your taxation responsibilities in the transportation field, specifically in ports where in fact you may...? You have the assessment authority, as I understand it, in Manitoba, or Saskatchewan too, although I don't believe you have many ports in Saskatchewan. But maybe you can address the competitiveness in taxation issue in transportation.

Mr. Findlay: Let me comment first. Clearly, one of the strongest initiatives of the Government of Manitoba has been not to increase taxes, to realize that if we're going to have jobs created it will have to be by the private sector and they'll have to be competitive in order to do that.

One specific move we made was to reduce the diesel fuel taxes for railroads. We reduced them 13.6¢ a litre down to 6.3¢ a litre over about a three-stage process. So we brought it down significantly. We've gone through a number of reviews to the Municipal Act to try to be sure the municipalities stay in line with taxation vis-à-vis railroads. But the biggest one we've done is for the fuel tax. We practise, and we send a constant signal: increasing taxes costs you jobs; short-term gain, long-term loss.

Mr. Fontana: Thank you.

Mr. Renaud: I think Joe's question was likely more directed to Saskatchewan, which incidentally has a 15¢ per litre tax on fuel for railroads.

Mr. Fontana: Maybe you'll do the same thing as Manitoba.

Mr. Renaud: Well, we may. Certainly we understand the concern that's been brought to us on several occasions by the railways. In fact, we were able to reduce aviation fuel about a year and a half ago to, at that time, one of the lowest in the country. We would like to do that with railways at some point. But you have to understand, Mr. Fontana, that with the transfer reductions and equalization changes, as Saskatchewan becomes a have province, we certainly have to make sure we have enough money to handle our health care costs and our education costs and interest on our debt, etc.

The issue that I think we're talking about here is a wee bit different in that there is a grant in lieu of taxes at present in regard to the ports. But if the federal agency has gone from there, there will be taxation by municipalities and provinces, etc. I guess all we're saying is that it should be revenue-neutral so that there's no added cost.

Mr. Fontana: On the board competition, if I could, Mr. Chairman, on the governance issue, I think you pointed out an important matter. Obviously we have to ensure that there are qualified people to sit on the boards of these ports, in much the same fashion as airports, because they are economic development instruments and we understand that.

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Is it your view - and I won't ask something specifically on Churchill - that you should have some board representation on the Vancouver or Prince Rupert boards? As you said, it's your producers; it's your users. Would that make you feel more comfortable? Are you suggesting that you're sufficiently satisfied that people who should apply and/or who are appointed by the various stakeholders would be experienced enough to look after your interests, or are you asking specifically for designations of boards for Manitoba, or Saskatchewan, or Alberta to sit on the port boards of Vancouver, Prince Rupert, Fraser, or what have you?

Mr. Findlay: I think fundamentally we do want representation, and that's why we talked about a board maybe having to be a little bigger, having an executive committee of the board. Maybe an advisory council to the board would give a broader level of input opportunity.

We strongly feel that these boards are going to be looked at to develop economic activities to the port. To expand the activity, the port needs to have the firepower at the board table to do that. I think we need very, very competent people there and we need broad representation.

Some people may be concerned about the people coming in with vested interests because they represent the coal industry, or the grain industry, or the government. I'm of a belief that when responsible people get to a board table, they look at the bigger picture of why they're there and leave their vested interests outside. But they bring a lot of expertise, incredible expertise, to the decision-making process that these boards must go through to maintain viable, competitive ports.

We'd like representation. Because we're moving product through there, it gives us some comfort that the interests of our economic development are looked after.

Mr. Renaud: It's the same with us. We would like some representation from Saskatchewan, and certainly it would have to be an open competition almost, as Mr. Findlay said in his opening remarks, to get the best person you can, and self-interests should be as an advisory board. You may have a board person from Saskatchewan who has a self-interest and who's the best person for the job. However, I would hope that person would put that particular self-interest to the side and do the best for the port that he or she can. On the other hand, in regard to the interests of the elevator companies, of the other shippers, of farmers, of potash people, of sulphur people, I believe there may be a role for those people to play, but to me it would be a separate board and an advisory board.

Mr. Fontana: I have one final question, if I could, Mr. Chairman.

Would you suggest the same thing for the seaway? I don't know if you've read our proposal. I know you talked about some of the things with regard to the seaway in terms of its capital requirements and ensuring that it doesn't place anybody at a significant disadvantage. But with regard to the seaway, do you view that as something of a significant national interest and not necessarily a localized thing, that your role would be the same as if it would be in another port, along the advisory capacity and/or a board?

Mr. Findlay: For the port of Montreal and for the seaway, yes, they're very important to us and we see them as equal to the port of Vancouver or Prince Rupert in terms of our product that currently moves through and that will move through in the future. Anything that happens to the seaway in terms of downgrading its ability to compete hurts particularly the producers of Manitoba because it's the cost-effective way to get grain out of the country in many instances.

The Chairman: Mr. Jordan.

Mr. Jordan (Leeds - Grenville): I too would like to welcome you here as very important people in the transportation business.

I was encouraged to see that you're supporting the basis on which we would establish the stipend on the net cost. That has been a rather controversial one, but I like what you say about it on page 7, that ``to encourage efficient use of assets we feel it's important that you base it on the net cost rather than the gross''. So that's encouraging.

Mr. Keyes (Hamilton West): That's a qualified `we', though.

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Mr. Jordan: I guess so, but we who want to have our way would have it making more sense to put it on that, for the reasons you state.

It is called the Canada Marine Act, and in the hearings I've participated in it takes some rather strange twists and turns by the presenters. Several of them have gotten to their concern about highways.

No doubt highways would be very important to ministers of transportation from two western provinces, and I think most Canadians agree that the condition of our highways has to be considered. Whether you're talking about airports or the marine industry, very often the highway is involved. You can't separate them out that clearly.

The same suggestion seemed to be surfacing, that it's time Canada looked upon this seriously, and some suggest - although I guess highways traditionally have been considered a provincial matter - it's time the federal government should play a part.

A suggestion was, would you support the idea of using some of the excise tax that's currently collected, having it earmarked and specifically determined that it was going to be for highway reconstruction? That apparently has been tried and hasn't worked.

What would your reaction be to having an additional tax - and I know no one likes more taxes - put on fuel costs, an additional cent a litre or thereabouts on fuel costs, and have it so transparent that it couldn't be used for anything but highway reconstruction nationally?

I know it's a hard sell these days to increase taxes on anything, but the cost for rebuilding the highways is going to be enormous, and if we don't soon start.... On the figures we've been told, the reason it's going to be so costly is because we've neglected our highways and now we've reached the state where it's going to be very expensive. It's not going to get any cheaper, if we keep on neglecting it more and more, because of the amount of reconstruction that has to go on when you do that.

Would you give us a sense of your reaction? Would you support the idea of a tax on fuel, if it could be clearly stated and maybe put in a trust fund for no reason other than for rebuilding the existing highways?

Mr. Renaud: First, I would not support that.

I'll give you an example. Saskatchewan has a 9% E and H tax now. We have a 15¢ a litre fuel tax. Manitoba, I believe, has a 7% E and H tax. Their base may be a bit broader - but what's your fuel tax?

Mr. Findlay: It's 10.

Mr. Renaud: Alberta has a different tax altogether, so we all of a sudden find our borders becoming a bit of a problem as far as trans-border shopping and those kinds of things go. We believe taxation is right up here, and we have to look at ways of hopefully reducing that at some point in time. To add another tax now I think would not be appropriate for a province.

If the federal government decided to do that, we would have some problems with that concept, primarily because our taxes are to the limit right now, and surely there are ways of finding extra transportation money, in reducing the size of government, or whatever.

Incidentally, I believe Saskatchewan has probably the most efficient government of all, so I had to throw that in.

To put more tax onto the people I'm not sure is the answer at this point in time, and I certainly would have a hard time supporting that.

Now, if the federal government were going to put in more money from the fuel tax they take, that probably would be okay. I think the federal government now takes in around the $4 billion mark and probably spends on national highway systems in the neighbourhood of $100 million. All provinces spend on road infrastructure at least 50% of what they take in fuel tax now.

So what I would like to see happen is certainly the federal government taking more of a responsibility in regard to the moneys they take in from a fuel tax and put it into the national highways infrastructure program, whether it's a 50-50 cost sharing process of whatever. But we certainly should talk more about it.

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Mr. Findlay: Can I make a couple of quick comments?

Clearly, we've been advocating since 1987 that there be a federal participation in our road infrastructure and national highway concept. We started to develop it then, but there is still no commitment at the federal end at this point. I think you mentioned that highways traditionally are a provincial responsibility, but we just can't avoid it. If the roads are there, we must spend the money.

If you go back over the last twenty or thirty years, there has been a lot of federal money at different times and places, and in different programs. We've recently had a two-year SHIP program in Manitoba. I think the expenditures actually take place over five years and terminate this year. So there has been responsibility identified in the past. We have put all our resources from the roads back into the system. We have a sort of user-pay, user-say system.

At the federal end, though, you take the money out, but it's not coming back to the system. It's starting to really hurt because our basic infrastructure is deteriorating.

If you look at the challenges we have - we have $100 million in Manitoba for capital every year - there is more and more demand for us to build on north-south routes, because the trade is going north-south to the U.S. from where we are. I really fear for the east-west link across this country, particularly over northern Ontario. If that road has a weak link in it and the trucking industry says it doesn't want to drive on it any more, and if it starts using the U.S. route to get from Montreal to, say, Vancouver or Edmonton, we lose the economic activity produced on that road by those trucks. So it's a big loss to us if we don't make sure we keep our east-west infrastructure in place. I don't see how you can avoid it. There is a federal responsibility if we are to keep an east-west link in this country.

On an additional tax, as I said earlier, we've governed for.... We're going into our tenth budget in which we're not going to increase taxes. We believe that's the message the public's giving. You must live within your means. We support some federal dollars rolling in, but it's difficult to think that we should increase taxes to do that.

Now, Reg is smiling, but in the 1995 budget, you guys increased the fuel tax by 1.5¢ a litre and it all went somewhere else. So the public's a little skeptical. If you add an additional tax, are they really going to see the outcome of it in terms of a commitment to the infrastructure? I think we have to take a broader view of it and say somehow, surely, in the reorganization of the degree of the expenditure reductions you're doing, you have some money that could be directed toward the basic infrastructure.

We could go on for great lengths about all the ways in which you're reducing expenditures, and about how it's impacting on us in the provinces on the health and education side, as I think Andy mentioned. And as the dollars shrink there, we have to figure out how we can backfill some of that within our existing resources, so it also hurts us on the economic development side.

Mr. Renaud: Mr. Jordan, I understand that the federal government has some debt and deficit problems at this moment. I think raising taxes now, however, would not be good for us, and I'm not sure it would be for the federal government either.

Mr. Fontana: That's why we're not suggesting it.

Mr. Renaud: That's fair enough. But roads are also important, Mr. Jordan. I'm glad you asked the question, because they're as important as the marine policy. So is rail. All of the logistics of transportation are equally important.

Mr. Jordan: But you're saying they're not important enough for you to raise taxes to improve them.

Mr. Renaud: Well, I think it's very difficult because of the tax rate.

Mr. Findlay: I'll just say that at some point we can raise the taxes on fuel to a point where we lose our competitiveness, and then we go backward instead of forward.

Mr. Jordan: I know what you're saying.

Mr. Findlay: You started the question off about stipend. You mentioned whether or not it should be on net. If there's going to be a stipend that's going to vary at all, it should be on net so that the port has some capacity to predict its future revenues.

Mr. Jordan: That's why we -

The Chairman: As interested as I am in the discussion on roads, Mr. Findlay, you cannot imagine the amount of self-control I'm exercising here to not respond to your comment about not having raised taxes. However, I believe Mr. Cullen has a question that is directed at Bill C-44 and the port authority.

Mr. Cullen (Etobicoke North): I believe it is, Mr. Chairman. Thank you.

Ministers, deputy ministers, thank you. I just wanted to make sure I was clear on your position with respect to federal agency status for the CPA. I thought I heard you say you didn't think this was necessary or that the port authorities should not be federal agencies, but I'm not sure I heard you correctly.

Mr. Renaud: Yes, that's correct. We don't believe it has to be. If it's not going to be, however, then there have to be other changes made as far as the corporations and the way they are incorporated are concerned, and on the taxation part there would have to be something done as well. But we don't believe it's necessary to have it as a federal agency.

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Mr. Cullen: If you had your druthers, how would you see it playing out - as a federal agency or not?

Mr. Renaud: I think otherwise.

Mr. Cullen: You think otherwise.

Mr. Renaud: Yes.

Mr. Findlay: And that's provided you didn't put them in a position where there would be municipal taxes or provincial taxes, or we'd really be starting to hurt them.

Mr. Cullen: My colleague here wants to know why.

Mr. Findlay: I think there are several reasons.

The Chairman: I'm also interested in this. I was going to raise this question myself. What's the nature of your concern about federal agency status?

I'm sorry, Mr. Renaud. You may not have heard the supplementary question there.

In your brief, you raise a concern that is very similar to one that has been raised by a number of the port authorities, harbour commissions and the like, and that is the concern about a national asset, which you have certainly agreed with. These ports service not just the city of Vancouver in that example, but all of the prairie provinces.

There was a concern about hurting the competitiveness by raising the cost structure through municipal taxation, even though that taxation might be directed at local needs. One of the solutions to that has been recommended across the country: extend federal agency status to the ports to allow us to move into a feeder service or grants in lieu solution. You are rejecting that solution, so will you please help us to understand why?

Mr. Renaud: I don't believe it's necessary. I think there can be a group that can take a look at municipal and provincial tax issues and in fact handle it that way. If we look at the Vancouver International Airport Authority, I think it has moved away from federal agency.

An hon. member: No.

Mr. Renaud: It hasn't? I thought it had.

Mr. Fontana: It's a national airport.

The Chairman: That's the dilemma we've been talking about.

Mr. Renaud: I know that, but I don't think it's necessary to have a federal agency and to still look after the tax issue.

A voice: You're quite right.

Mr. Renaud: I think Vancouver International Airport has moved away. I think I'm correct on this.

Mr. Fontana: I think we're both right. You're right that it's not a federal agency. But then again, the federal government still owns the airport and leases the federal asset. Therefore, there is still -

Mr. Renaud: There's still the grant in lieu.

The Chairman: So there is still some ability to control the level of levy.

You do reference a lot of concerns here about capital taxes and others that will have an impact on the competitiveness of the ports. Do you recognize the need for an instrument to provide some control on that?

Mr. Renaud: Yes.

The Chairman: It's just not the instrument of choice.

Mr. Renaud: That's right.

Mr. Cullen: I'm certainly glad I raised that on behalf of my colleagues, Mr. Chairman.

Some hon. members: Oh, oh!

The Chairman: Mr. Cullen, would you like to have more time?

Mr. Cullen: No, that's all for me. Thank you.

Mr. Findlay: The solution might not be as easy as we might all like it to be. I think we all agree on what we want as an end result, but how do you get to that end result? I guess we would prefer that it wasn't a federal agency, but if you can't get there any other way, the choices then become very limited.

The Chairman: Given that I've got a couple more minutes, what is the problem with it being a federal agency? What leads you to prefer that it's not a federal agency?

Mr. Findlay: I guess you want it to be free of government and to have the ability to really respond competitively, aggressively. I don't know whether or not the connotation of being a federal agency is a bit of a detriment, but if we want to get free and be competitive, we have to move away. Maybe that's not a problem, but -

Mr. Fontana: Outright privatization wouldn't be what you're in favour of.

The Chairman: Mr. Keyes, do you have a question?

Mr. Keyes: It may just be a supplemental.

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If we're talking about federal agency status for a port, what we're addressing here is what this committee has been addressed with by each and every one of the major ports in the country: Federal agency status provides for them the opportunity to network globally and in a more efficient manner with, in a nutshell, ``Canada'' on their business cards. At the same time, on the other side of the ledger, it provides them with protection against municipal taxation, against federal and provincial income tax grabs, and against all those things that would seize funds from their organizations and would possibly make them less competitive, especially if you're the port of Vancouver and you're competing with Seattle, or if you're in Halifax and are competing with the eastern seaports of the U.S. So this not only gives them opportunity globally and allows them to network with embassies, etc., with the Canadian calling card, it also gives them the protection that they need against levels of taxation that would ultimately put them in the red instead of keeping them in the black.

The Chairman: Mr. Findlay.

Mr. Findlay: As I said, we all want the same end result, which is what you have just described: protection from taxation, the ability to get out and to compete. That's the big issue.

Mr. Keyes: And that's a balance, of course. Some people will ask about what you mean by municipalities not getting any money. Well, they will, because this committee will be seized with amendments to the bill that would apply, say, a grants in lieu situation for the municipalities so that fees for services are paid through grants in lieu.

Mr. Findlay: And those are not currently provided for in the bill.

Mr. Keyes: That's right, but the amendments are being considered.

Mr. Findlay: Another point that is not currently provide for is somewhat related. It has to do with getting out in the world and having the ability to have members from outside of the country on the board for the purpose of increasing economic development activities. I think of Vancouver and -

Mr. Keyes: If the list provided by the port community to the minister for consideration includes a name of Mr. X from Hong Kong, it will certainly be considered by the minister.

The Chairman: Thank you, Mr. Keyes.

I appreciate very much the presentations, particularly those from the prairies. As the lone prairie member on the committee, it's nice to have a prairie point of view presented here.

I can say I was impressed with the recognition by port authorities right across the country of the importance of the inland economies to their business, with how much they understood that. I'm not certain that was understood as well by some of the other interests, which is why this question about federal agency status and national interest is important to us.

Thank you. I appreciate the time, energy and thought.

Mr. Renaud: Thank you, Mr. Chairman and committee members. I really appreciated the hearing.

The Chairman: And Glen, you got off easy on the taxation question.

Mr. Findlay: May I add just one little supplement? It's just two seconds' worth of commercial, I guess.

An hon. member: It must be Churchill.

Some hon. members: Oh, oh!

Mr. Findlay: All I can say is that I remember our discussion in Winnipeg. Clearly, in terms of what is going on right now behind the scenes, it never looked better than it does right now in terms of a commercial solution that's viable and is without a burden on the federal government or a burden on the two provincial governments. The options never looked better; you may know some of them. It sometimes takes a long time to find a solution, but suddenly maybe one is reasonably close at hand. I'd say the same thing applies here. Whether we get it right or wrong, I'm sure we'll always be around trying to change it to be sure we've maximized our competitiveness.

Mr. Keyes: I'd like to quickly respond, if I could, Mr. Chairman.

Thank you, Glen, for the optimistic note. I can assure you and our colleague from the Reform Party that between the Standing Committee of Transport report in 1995; the seventeen task forces that have gone across the country on a consultative basis; the visits by the department, the deputy minister, two different ministers and myself that followed; and a committee that has now been seized with more than seventy witnesses on the subject, I think we've done a lot of talking.

Thank you.

The Chairman: Thank you.

Mr. Findlay: I want to give you one little statement I heard this morning on that note, Stan. Confucius say, eternal surveillance is the price of freedom. That's why you have all the meetings.

Mr. Keyes: Yes.

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The Chairman: We now have the Canadian Merchant Service Guild.

From Mr. Keyes' comments, I note you have been here before.

Captain Maury Sjoquist (National President, Canadian Merchant Service Guild): Yes, we have been here many times before.

We would like to congratulate you as the new chairman and thank the committee for this opportunity to put our position forward.

With me today is Captain Michel Pouliot, who is the president of the Canadian Marine Pilots' Association.

The committee has had our brief for some time now, so we'll give an overview type of presentation of our thoughts on the bill rather than going through or reading a brief. I'll begin our presentation today with some brief comments on the general nature of the bill and the marine transportation economy. Then Michel will follow with more specific comments on pilotage issues.

The organization I'm president of is the Canadian Merchant Service Guild. It represents over 5,000 masters, mates, deck officers, and marine pilots in Canada, all of whom have a direct and personal interest in the health and growth of Canada's marine economy. As a representative of these front-line workers in a key portion of Canada's transportation infrastructure, I'd like to commend the government and the committee in particular for the work that has been undertaken over the last two years to review marine transportation. In general, Bill C-44 represents a strong effort at reforms that will ensure an already competitive transportation system is improved even further.

The performance of the Canadian economy over the last few years has been directly tied to international trade, and in particular to exports. Canadian resources and manufactured goods are carried to the rest of the world on ships, making Canada's marine transportation system a key component of the economy. This system has been and will continue to be competitive with marine networks around the world, and in particular the United States. Nevertheless, the review of the industry that has been undertaken over the past two years has highlighted that improvements can and should be made.

Bill C-44 represents progress in several areas. I would like to focus for a moment on two, the St. Lawrence Seaway and Canada's system of ports.

The St. Lawrence Seaway is a vital link in Canada's transportation system. It provides a low-cost and efficient means of transporting goods from the heart of North America to the rest of the world. The maintenance and improvement of this system must remain a primary concern for the government.

We are happy to note that Bill C-44 takes steps to secure the future of the seaway while at the same time opening up new options and more flexibility in how the system can be operated and made more efficient. The CMSG commends the government for taking this initiative. We certainly think the stakeholder groups that make up the board of the proposed new set-up are credible people and people who should be able to do the job.

Canada's ports are key gateways to the world and the beginning and end points for the marine transportation system. As the committee well knows, the vast majority of all commercial trade on Canadian waters passes through only a handful of ports.

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Bill C-44 will rationalize Canada's port system, helping to ensure scarce investment resources flow to the places that will most benefit marine transportation overall. In addition, the creation of Canada ports authorities, with representation from users and marine communities, will help ensure ports remain responsive to and engage with key stakeholders. Improvements in port management and development will directly benefit all participants in the marine transportation system, including our members. We commend the government for taking positive steps in this area.

Now, Mr. Chairman, I would like to turn the presentation over to Captain Michel Pouliot, president of the Canadian Marine Pilots' Association.

Captain Michel Pouliot (President, Canadian Marine Pilots' Association): Mr. Chairman, on behalf of Canada's 415 marine pilots, I too would like to extend our thanks for the interest of the committee and the government in marine issues. There are always opportunities for improvement of services, and pilots have been and continue to be supporters of open discussion of the ways in which the marine transportation system can be made even more competitive than it already is.

In addition to being the president of the Canadian Marine Pilots' Association, I am the president of the International Maritime Pilots Association. That body brings together marine pilots from around the world and helps to coordinate international sharing of information and new technologies. More importantly, I remain an active professional marine pilot. Last week, for example, I worked a regular shift in my area, piloting ships from Quebec City to Les Escoumins in the Gulf of St. Lawrence, a ten-hour trip. I can tell you that over the last two years there has been a substantial increase in traffic on the St. Lawrence River, with ships of all sizes and from around the world carrying huge quantities of goods to and from Canada.

We have an excellent, competitive, and safe marine system in Canada, one that is in many ways the envy of the world. Bill C-44 as it appears in its current form goes some way towards improving what is already a very good thing.

About pilotage, the changes that are envisioned by the bill are positive. I would like to comment on three areas in particular: regional governance, efficiency and cost effectiveness, and safety standards and professionalism.

The current Pilotage Act was introduced in 1971 after the most extensive review of pilotage in history, the nine-year Bernier commission. A regional pilotage system was created by the act, with most of the management of pilotage being delegated to regional pilotage authorities: the Pacific, Great Lakes, and Laurentian-Atlantic. The reason behind this structure is simple. Pilotage is essentially a regional service, dependent on expert knowledge of local waters, weather patterns, geography, and traffic.

Also in Canada, a country with two official languages, the regional system allows for the use of the appropriate language in each region. In the Laurentian authority the working language of marine communication is French. A regional pilotage authority that naturally ensures proficiency in French as well as English is a mandatory part of the licensing and certification process.

The regional nature of the pilotage system means adjustments in service can be made by the people who know local conditions best. Regional decentralization and stakeholder participation in decision-making may be the buzzwords of today, but the Pilotage Act incorporated these concepts 25 years ago.

Wisely, Bill C-44 does not seek to make changes to this structure. What is not broken should not be tampered with. The government, after having undertaken extensive consultation on pilotage issues, has clearly understood the importance of maintaining a regional system.

In a global economy, efficiency and cost-effectiveness take on important meanings. International trade has become an ever more important part of Canada's growth and economic success. Marine transportation, as Maury has said, is a key part of trade. Pilotage services, for all you may have heard about costs from other witnesses who have appeared before you, represent no more than 2% of the total cost of marine transportation for a ship.

Nevertheless, the system has to be as efficient as possible. Already pilotage services in Canada are more competitive than services available in the United States; and we keep on improving.

Two major steps are in fact being taken now. First, Bill C-44 dramatically improves the financial stability of pilotage authorities by changing the way tariffs are set and collected. In particular, clause 133 of the bill will allow tariffs to come into force thirty days after they are announced, making it impossible to delay changes through frivolous appeals. Also, clause 136 of the bill gives pilotage authorities the power to obtain loans, which can be used to bridge temporary revenue shortfalls. This makes the authorities fully responsible for their operations and will eliminate their dependence on the public purse.

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The second and arguably more important step is a move towards long-term stability in pilotage services through the development of alternative dispute resolution mechanisms in the contracting process. The most common example of these mechanisms is final-offer selection, which has been used successfully in several jurisdictions across Canada already. All pilot organizations represented by the Canadian Marine Pilots' Association have either accepted one of these mechanisms in their contracts or are now in the process of doing so.

The CMPA's position is one we support: the use of dispute settlement processes to avoid labour disputes that disrupt pilotage services. The importance of this change in pilotage services cannot be overestimated. Pilots have recognized they play an integral role in the marine transportation system and have committed to ensuring that system will be run fairly and through defined practices. Given the modern practice of just-in-time-delivery business systems, the absence of work disruptions is critically important and the Canadian Marine Pilots' Association has worked hard and in good faith to ensure all pilots accept the new system.

Finally, I turn to the issues of safety and professional standards. I purposely joined these two issues together because safety cannot be ensured without the highest professional standards and constant vigilance that they are met. Marine safety is not an issue just for businesses or insurance companies that may want to calculate the risk of accident costs. Safety is an issue of paramount concern to the public. A single accident involving an oil or chemical tanker could have disastrous results for human health and the environment. Moreover, the committee should not overlook the fact that even less serious accidents can still involve significant danger to the lives and well-being of seafarers. Safety is, and should be, the key concern for pilots, pilotage authorities, and the government.

Safety can be ensured only if pilot licences and certificates are given only to those masters and deck officers who have demonstrated themselves capable of navigating what are often extremely treacherous waters by successfully passing written and oral examinations. These examinations are, and should be, open to public record, thus ensuring there can be no compromise or favouritism in the process. Some witnesses who have come before the committee may have accused pilots of maintaining a closed shop or keeping ship's masters away by insisting on onerous and unnecessary exams. In fact, pilots and pilotage authorities have already gone to extreme lengths to ensure the examination system is above reproach.

In the Laurentian authority, for example, a coast guard examiner participates in the preparation and administration of all examinations. Oral examinations are observed by a current pilotage certificate holder, nominated by and representing the Canadian Shipowners Association. Oral examinations are even taped so any complaints about the examinations can be reviewed.

In response to concerns about duplication between pilotage examinations and examinations administered by the coast guard for captains and deck officers, more changes have recently been announced. The examination syllabus for captains wishing to obtain a pilotage certificate has just been reduced by over 50%, in recognition that captains have been tested on many of these matters on other occasions. For deck officers the examination has been reduced by over 30%. These changes reflect an effort by pilots and pilotage authorities to ensure examinations are as focused as possible on the knowledge and skills absolutely necessary for safe passage through compulsory pilotage zones.

Even before all these changes, it was clear that the system works if it is approached in good faith. Since the inception of the system, over 100 pilotage certificates have been awarded in the Atlantic Pilotage Authority. In contrast, in the Laurentian Pilotage Authority for over fifteen years few masters and deck officers even tried to take the examinations, because doing so was actively discouraged by the Canadian Shipowners Association.

Recently, two captains sought pilotage certificates in the Laurentian authority. In September the results came in: one passed, one failed. As you may already know, the observer on behalf of the Canadian Shipowners Association wrote to the pilotage authority and commented that the process was above reproach.

Mr. Chairman, I have addressed this point at some length because I believe it is imperative that the committee have the most up-to-date and correct information on pilot licence and certification examinations. The bottom line, however, is that the system as it exists at present is flexible enough to remain current while firm enough to ensure no slippage in standards will go unscrutinized.

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Several witnesses have come before the committee and have suggested Bill C-44 does not go far enough in deregulating pilotage. It has been said the bill should include amendments to clauses that currently guarantee the standards and integrity of the examination and certification process. I cannot urge you more strongly to resist these advances and allow the bill to stand as it is currently written. Pilotage authorities, and in particular the Laurentian Pilotage Authority, have demonstrated their willingness to respond to legitimate concerns on the part of shipowners. There is no reason to suggest this willingness will change.

Mr. Chairman, on behalf of the Canadian Marine Pilots' Association and the Canadian Merchant Service Guild, I would like to thank you once again for the opportunity to speak to the committee today. Maury and I will be happy to answer any questions you may have.

The Chairman: Thank you very much.

Mr. Ringma.

Mr. Ringma: I have a very short one. I presume, sir, you represent pilots on both coasts and all between, the Great Lakes and everything else.

Captain Pouliot: Yes, I do, sir, with the exception of a group in the mid-St. Lawrence; but I'm authorized by them to speak to you today.

Mr. Ringma: I have heard you say - correct me if I'm wrong - you're completely satisfied with Bill C-44 as it stands now.

Captain Pouliot: Yes, we are. We support Bill C-44 as it stands.

Mr. Ringma: That's all I wanted to know. Thank you.

The Chairman: Mr. Keyes.

Mr. Keyes: Thank you, Mr. Chairman.

As a corollary to the remarks made by Mr. Ringma, there's always room for improvement on a bill.

First, I think it only appropriate to admit that, quite frankly, the Standing Committee on Transport report in 1995 caused some great excitement in the area of pilotage when it was released. I won't say what direction the excitement was in, but it was a very exciting time. I want to take the opportunity to congratulate the pilotage groups, particularly the four across this country, for the participation they've taken since that time in the seventeen workshop meetings that have taken place across the country. Sometimes little things such as some suggestions that were made in the report cause the groups to come together and speak to one another in a way they had never done before. To that end, I think many situations were resolved. There has been great cooperation from the pilotage authorities. But Bill C-44 would even look better, I suppose, if we were to make particular amendments to this bill.

Captain Pouliot, I'll ask you, given that the working groups supported some form of alternate dispute resolution mechanism for contracts between the pilot authorities and the pilots to ensure the labour and pilot costability you were speaking about, would you have any reservation about an amendment to the bill that would include that kind of a resolution mechanism within the body of the bill?

Captain Pouliot: At the very outset, you're quite right, you did shake us pretty hard; but it had a good side to it. You forced us to have a look at our pilotage system and we discovered a hell of a lot of good things about it. But there were improvements, and one of them to which we gave our word as the Canadian Marine Pilots' Association was a dispute resolution mechanism, because we felt that was protection, because of the regulated monopoly that exists in pilotage, which we think is important for safety. The other side of it was that if we accepted a dispute resolution mechanism, this would in fact alleviate the fears people would have that we would use the monopoly. So we totally agree with it.

Unfortunately, not all pilots have signed this agreement. The main group which is not part of the Canadian Marine Pilots' Association is still working at this moment. We would certainly hope that this would be the way we would go, that all pilots would have an agreement. The only one, as I say, is they're still working on the opportunity to do this in the Laurentian region.

But we stand by our word. We agree there should be dispute resolution mechanisms. So the answer is yes.

Mr. Keyes: In the body of this bill?

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Capt Pouliot: Yes, unless we can do it otherwise.

Mr. Keyes: On the issue of certificates for the the St. Lawrence Seaway in particular, I was heartened to hear your remarks on the opportunities for the masters of vessels who ply the waters on a regular basis. If that too is incorporated in the bill, would the pilots association support it?

Capt Pouliot: On the question of certification, maybe I didn't come on strong enough. I must tell you that quite a bit of work was done by the certification committee. They're still working on ways to do further work.

I can tell you that in my opinion and in the opinion of many pilots right now, we are as low as you want to get, unless you want to start looking at safety. I suggest to you that by decreasing by 50% the syllabus.... I think the incorporation of the different elements that ensure the pilot examination system is correct makes it very clear that the government supports a bill that supports safety. And I think safety on the St. Lawrence River is extremely important.

I have to mention to you again that I have this report of examinations held four weeks ago, whereby a member of the Canadian Shipowners Association who was there representing the Canadian Shipowners Association had very glowing remarks about the way the examinations were held.

Sir, we've gone to the limit if we're going to continue assuring the same level of safety that we've known. We could not accept going any lower.

Mr. Keyes: Most certainly, the criteria of safety would be the number one priority. I was heartened to hear of your acceptance of the masters' receiving their certificates provided that they meet all the proper examinations and testing. I think we're both on the same playing field here, and if it's incorporated in the bill it would only serve to solidify that opportunity both for us and for you.

Capt Pouliot: If I may add to this, over the years the part that the pilots objected to, that was most severely attacked, was certification, but over the more than ten years in which these examinations have been held and where members of the Canadian Shipowners Association have come for examinations, not in one instance has anybody ever been able to say that these examinations were unfair, either in the conduct or the content.

In addition to that, we have - at your prodding - looked at it and really tried to bring it down even further. We cannot go any further. I suggest to you that you have what it takes now. The authority has what it takes now to ensure that these conditions for safety are met. That's as far as we can go.

Mr. Keyes: Thank you very much, gentlemen.

The Chairman: Thank you, Mr. Keyes.

Mr. Mercier.

[Translation]

Mr. Mercier: Captain, I would like you to give us further details not only on the issue of certification of captains but also on the language aspect.

Secondly, do you believe that one day it will be possible to operate without pilots thanks to the use of satellite-based technologies ?

Capt Pouliot: As I just explained to the committee, the pilots in the Laurentian area have made tremendous efforts to ensure that the captains and first officers of Canadian ships have access to this type of examination and obtain certification. It is obvious that shipowners would like to have access without having to worry themselves about examination issues. We believe that safety in the St. Lawrence is very important and that it is equally important that the people charged with piloting ships be able to prove that they have a very good knowledge of local conditions.

As far as the language issue is concerned, I always hesitate to talk about it. I should underline that as far as the St. Lawrence is concerned, bilingualism is key to safety. This is why this requirement appears in the rules of the Pilotage Authority. In the 1970s, when it was decided that the bilingualism requirement should be included, a good many of the people who were going up and down the St. Lawrence spoke only French.

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It is therefore very important for navigation safety.

I fully understand the point of view of Great Lakes shipowners, 80 per cent of whom at least are probably unilingual anglophones. It is unfortunate. For safety reasons, this language ability requirement is very important, and even more so today because there are more and more small ship operators, for example with the whale-watching boats of Tadoussac, who speak only French. It is a growing industry and the knowledge of French is therefore essential for navigation safety.

As for your second question, we have always used the available technology to give even better service. When the gyroscope was replaced by the magnetic compass and when radar appeared, we were able to use these technologies to bring boats safely to port. In my humble opinion, humans will never be replaced. Technology will only enable us to give better service and to safely guide larger ships in smaller spaces.

Mr. Mercier: I would have one final comment to make. I would have been very happy if part of your presentation had been made in French.

Capt Pouliot: Our brief was drafted in both French and English. I fully understand you and I respect your point of view, as a French Canadian from l'île d'Orléans.

[English]

The Chairman: Thank you, gentlemen. We appreciate your time.

Now, from the Seaway Self Unloaders, we have Mr. Smith.

I'm sorry. I neglected to note there are in fact three different organizations presenting right now: Seaway Self Unloaders, Algoma Central Marine and Upper Lakes Shipping.

Thank you, gentlemen, for being organized enough to come forward without my suggesting it. Again, as Mr. Keyes has pointed out on several occasions, we've all been working on this for a very long time, you included, so you know the process. Again, please try to confine your remarks to give us enough time for some questions. Please begin.

Mr. Wayne Smith (Vice-president and General Manager, Seaway Self Unloaders): My name is Wayne Smith. I'm here representing Seaway Self Unloaders and our sister company, Seaway Bulk Carriers. I'm the vice-president and general manager of Seaway Self Unloaders. Joining me here today is Jim Pound of Algoma Central Corporation and John Greenway of ULS Corporation.

The main purpose of my presentation today is to bring you the perspective of Seaway Self Unloaders as primarily a marketing company. Seaway Self Unloaders and Seaway Bulk Carriers are partnerships of the Algoma Central corporation and ULS Corporation, and we're responsible for the marketing, vessel scheduling, and administration of the vessel pools of both companies.

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The Seaway Self Unloaders' pool includes a fleet of 18 self-unloading vessels. Seaway Bulk Carriers includes 25 gearless bulk carrier vessels. Each company is the largest carrier of its type in Canada in bulk commodity movements.

The primary operating areas of our companies are the Great Lakes, the St. Lawrence River, and the Gulf of St. Lawrence. In addition, Seaway Self Unloaders has vessels capable of operating on the east coast of Canada.

In 1995 Seaway Self Unloaders carried about 25 million tonnes of cargo, Seaway Bulk Carriers about 15 million tonnes of cargo. Commodities include, in the case of Seaway Bulk Carriers, primarily grain and iron ore. Seaway Self Unloaders carries these commodities and, in addition, stone products, salt, coal, and fertilizer potash.

I think the issues of marine reform in Canada are very important in many respects, certainly to all the jobs that are dependent for the production of these commodities and their processing in the industries in Canada. The important point we want to make is that the issues go beyond simply the movement of goods within Canada. They go right to the heart of the competitiveness of Canada in the international economy. Seaway Self Unloaders, for example, is primarily involved in international trade. In 1995 about 75% of our activities involved carrying cargoes to and from the United States.

I'd like to talk a bit in the beginning about ports. From a market perspective port reform is the most significant component of Bill C-44. The point I would like to make is that in the marketplace at this time, and despite the development and all the consultation that has gone on, there remains a great deal of uncertainty and concern among the various stakeholders over what port reform will mean. I think this concern goes to those with port facilities, shippers, vessel-operating companies, and the various governments that will be involved in the reform process. You see the instances where this concern is already creating conflict. It would be our submission that this should be addressed through the legislation.

The two areas of greatest concern for port users right now are, first, that existing commercial activities will be maintained through port reform - in other words, that existing users will maintain rights to continue to use the port facilities - and second, whether port reform will mean material changes in the cost structures that these industries that depend on ports will see.

Bill C-44 also raises the possibility of, in our view, unnecessary cost increases. One of the situations we touched on here earlier this afternoon was the issue of the changing municipal taxes. I think the harbour commissions have represented that the change to a port authority will cause an increase in taxation for them which they do not see at present. I think the port authority and the issue you talked about earlier of whether there should be federal agency status to avoid the tax issues are one solution. The important point that has to be made is that the adverse tax consequences from a structural change have to be identified and have to be avoided, by whatever means.

The other issue that has been raised is the issue of the annual fee for port authorities. We are concerned, as many other shippers and users of the systems are concerned, that this annual charge is really a tax and it should be eliminated in its current form.

I'll quickly touch on some other issues about port reform. One of concern is that the restrictions on financing in place in terms of mortgaging properties we believe will constrain the ability of ports to raise funds. I think one of the objectives of the May 1995 SCOT report suggested the financing ability of ports should be enhanced.

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I think another restriction of Bill C-44 will restrict the activities of port authorities to existing activities or activities related strictly to the transportation and movement of goods. This has the effect of eliminating the possibility where ports can efficiently utilize their facilities and develop other revenue-generating activities that ultimately will offset the costs of ports.

In terms of users of public port facilities, I'd like to emphasize that they are very concerned about the potential for substantial cost increases. Over the last two years they've seen significant cost increases in the tariffs they pay for port use, I think in the order of magnitude of about 25% each year. Further, last year there was a methodological change that saw the increase in harbour dues paid by some of our ports increased by as much as 600%.

I think the impacts of changes of this order of magnitude we haven't fully seen yet. Clearly it's going to be detrimental, and I think there's a big concern about public ports that over the last two years government has taken too big a piece or bite out of their costs.

In the future, as the government disposes of these ports, the concern then turns to what the controls or the mechanisms will be that will protect users of public ports from unreasonably high increases. I think the precedent or the standard that's set in place for the seaway and for port authorities, that the financing must be self-sustaining, that is, that it couldn't be for profit, or municipal tax grabs, or things of that nature, probably offers the best protection for users of ports that ultimately fees will stay fair and reasonable.

I think the issue has certainly been raised before that more user say in ports is very important. The issue of the board of directors is a concern amongst our customer group. The common feeling in the marketplace is that the legislation should establish the procedure or the process for the election of directors. Clearly the government is committed to the consultation process with users. I think the users would feel more assured if the process or the consultation that will take place is set out.

On another related issue, it seems the legislation provides for the government appointment of harbour managers and wharfingers for a six-year term. Clearly, if ports are reformed and the process of reform entails disposing of ports, those appointments should be only for the term the port remains in federal hands.

On the issue of seaway reform, Seaway Self Unloaders and Seaway Bulk Carriers clearly support this initiative, and our parent companies, Algoma Central Corporation and ULS Corporation, are part of the users group. We think the formation of the user group amongst major shippers and carriers and the fact that this group has achieved an agreement with the federal government is an excellent, very positive outcome of the marine reform process, and it shows or provides a reasonable target. I included in my submission that this type of consultation and partnership between users, key stakeholders and the government is an excellent example for the Canadian Coast Guard - even though it's the wrong department, I still want to make that comment. I think the other example is, in terms of port reform, that this type of involvement between users and the various municipal governments will be very important.

In the area of pilotage reform, Seaway Self Unloaders and Seaway Bulk Carriers support the positions of the CSA, Algoma Central, and ULS. My associates here will be talking more about that today.

From the market perspective, I think the important thing to remember is that the marketplace has been hit with significant cost increases through the marine reform process. The reform of pilotage, the elimination of mandatory pilotage requirements, offered a legitimate, real offset to the cost increases we've seen. To ignore that, or not to pursue that wholeheartedly with the same amount of emphasis with which all the other cost recoveries and cost reductions have been pursued, is a shortcoming of Bill C-44. The recommendations of the May 1995 SCOT report were the right direction to go, and we believe they should have been incorporated in this legislation.

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That's the extent of my comments. I want to thank you for allowing us the opportunity to speak to you today.

The Chairman: Is there anyone else? Your time is growing shorter.

Mr. John Greenway (General Manager, Upper Lakes Shipping Corporation): Thank you. Mr. Chairman and members of the committee, my name is John Greenway. I'm with Upper Lakes Shipping, ULS Corporation, and I'd like to take this opportunity to thank you for hearing our presentation.

ULS, probably better known as Upper Lakes Shipping, has 65 years of experience operating 22 full-sized vessels on the Great Lakes, the St. Lawrence and in the Maritimes. We employ 800 employees directly in the marine end of our business. In conjunction with that, we own a bunkering facility, grain elevator on the St. Lawrence, and a deep-sea fleet as well. Joint partnerships with Canada Steamship Lines have encompassed the only major drydocking left on the Canadian side of the Great Lakes, and a pool you've already heard from with SSU has combined marketing and chartering expertise with Algoma Central Marine to pool 44 ships. We feel that this background gives us some expertise to speak to you today.

I believe the bill we have before us achieves a long modernization need for the Canadian maritime policy. It addresses ports and harbours issues, the seaway, and other areas that bring legislation into the business sense of today's world, facing the 21st century.

However, there is one area for domestic shipping that has not been adequately addressed in the bill, and I believe it leaves us with a competitive disadvantage and an unnecessary financial burden on Canadian domestic shipping. We've been working at this for 25 years and have not achieved any gains in it. It's one word, and it's ``pilotage'' for Canadian domestic ships.

To clarify an important point - and I do want to clarify this - we recognize the expertise and vital needs for pilots, and the legislation must remain strong to ensure that all foreign vessels entering Canadian waters have on board the expertise and professional navigators we need to protect our waters. However, the same criteria do not apply to the Canadian domestic vessels and crews.

We've heard from several sources over the last couple of years - our former minister, Doug Young, stated that we needed to modernize pilotage services - the often-quoted statement: ``Status quo is not an option.''

Our previous SCOT committee recommended major overhauls to the Pilotage Act, pilotage authorities, looked at commercialization, and looked for a review of compulsory pilotage areas. Unfortunately, nothing happened.

Mr. Anderson, our current Canadian transport minister, recently stated that marketing gains in the marine sector will not move ahead if the marine sector is bound by protectionist rules and trade policies, and I submit to you that unless we change some of the pilotage legislation as contained in Bill C-44 and the Pilotage Act, we are being hindered by these protectionist rules.

We believe it's the federal government's duty to empower Canadian ship masters and officers to be responsible for the navigation of their own vessels already certified under certificates of competency by Transport Canada. We've demonstrated this over many years. It does work and it works safely.

Safety and protection of the environment are the arguments put forward by pilotage authorities and pilots on why we need the status quo. As a representative of a major Canadian shipping company, as a former master who has sailed these waters in question...we too believe in safety and protection of the environment and we also believe our masters and mates are capable of doing this.

Do you really think a Canadian shipowner and a Canadian master would risk a $50 million asset with inadequate skills to sail down the St. Lawrence River? I don't think so.

Do you believe our masters and mates are untrained, unskilled, incapable of conducting their own vessels in waters transited on a regular basis? Again, the answer is no.

The master remains responsible and liable for the conduct of the vessel, and we are prepared to conduct our pilotage with resources and training commitments we've already made. These initiatives are many: mandatory frequency of trips, river books, training programs, electronic technologies such as position-fixing and electronic charts, simulator training and bridge resource management. These are the items that are already in place and that can provide protection of the environment and safe transits of our vessels.

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Upper Lakes invested $1.4 million over the last couple of years to put improved technology on our ships, such as ECDIS and electronic charts. We've committed another $200,000 in specially designed training to make them proficient on ECDIS and to improve their skills in bridge resource management.

A recent Transportation Safety Board...acknowledges that 80% of marine accidents are due to human error. Unfortunately the pilots attacked this study, whereas the Canadian domestic shipping industry accepted the report, accepted our shortcomings and implemented things such as mandatory bridge resource management training and ISM compliance on our ships. ISM is international ship management, a safety management system.

Last year our company paid $2.4 million for pilotage services we do not need. A ULS vessel sailing from Montreal to Escoumins pays $5,220 for pilotage services for a 22-hour voyage, a cost of $240 per hour. That's equal to the entire cost of the crew for the same period.

We have to start looking at the principle of user-pay, user-say. Over the past five years, eight of our company officers have attempted varying levels of examination under the LPA certification process for the Escoumins to Quebec area. Two successfully completed this examination process.

Since then they have left to work for the pilotage. The pilotage they work for is not the pilotage that certifies them, because they've refused to work for them because of an unfair process and an unworkable system.

Over the past two years Upper Lakes has supplied seven masters and mates to the various pilotage districts we travel, and yet this is the same pilotage philosophy that contends we are not qualified to do our jobs.

I've tried to give you a flavour of our major concerns. We feel there's a need for change.

Specifically, Bill C-44 requires amendments to provide a process by which the masters and mates of Canadian domestic vessels can achieve pilotage equivalency based on criteria and safety standards such as frequency of trips, simulator training and bridge resource management. This could be achieved by an amendment to subsection 22(1) of the existing Pilotage Act without any major rewrite, but it has to be reflected in Bill C-44 to allow that to happen.

Transport Canada and the pilotage authorities need to acknowledge, without undue influence from political pressures or self-interest groups, the competence of Canadian officers under existing certificates of competency, and in conjunction should recognize training and improved navigation technology for Canadian ships in Canadian waters.

Safety and protection of the environment remains paramount amongst Upper Lakes and certainly the Canadian Shipowners Association, but economic competitiveness should not be hindered by legislative standards that require amongst most people acknowledged changes.

Thank you. I'll turn it over to Jim.

The Chairman: Thank you, Mr. Greenway.

Mr. Pound, you have 10 minutes left.

Mr. Jim Pound (Director of Operations, Algoma Central Marine): Thank you very much, Mr. Chairman. My remarks will be brief, primarily because they will echo Captain Greenway's remarks. I fully support what he has said and what Mr. Smith said in his remarks regarding ports and harbours and the seaway.

Algoma Central Marine has been operating for 97 years, and presently we operate 23 ships. We also own a ship repair firm and a marine engineering firm, which recently became our technical services department. With Upper Lakes we have a marketing arrangement with 44 ships.

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Our commitment to the future is forged by our experiences from the past. That is why I am sitting here today and talking to you.

Our main concern about Bill C-44 is the clauses on pilotage, as Captain Greenway mentioned, in particular clauses 129 to 138. In his opening remarks the minister said the safety of the environment and environmental protection are a primary concern of government and users. He went on to say he did not feel outright exemptions would be in the best interests of safety. I find these two statements mutually exclusive, because on the one hand he's saying our primary concern is safety and then by asking for exemption he's saying our concern is not safety, or it is not a safety concern. Algoma wouldn't be a successful company if safety were not a priority. A competitive industry and safety are not mutually exclusive.

As Captain Greenway again mentioned, the former minister said the status quo is not an option. The SCOT report asked for the repeal of the Pilotage Act, commercialization of pilotage services, immediate review of all compulsory pilotage areas, and a uniform set of criteria for granting exemptions in compulsory pilotage areas.

Pilotage services must be managed using business principles and from a national marine policy. The bill proposes another two years of study on the subject. The cry of ``safety of navigation'' to the environment is unacceptable to Algoma and the masters and officers who sail our vessels. Two more years will not change the reality that the masters and officers of the domestic fleet, with the proper training and a fair validation mechanism, can safety navigate all waters in Canada.

As a master sailing Algoma ships for ten years before coming ashore in 1994, I'm fully aware of the skill and dedication it takes to navigate a $50 million vessel safely. No person takes that responsibility more seriously, be they pilot or government official. Not only does the master of a ship have an ethical responsibility; he has a financial responsibility and is liable for the conduct of his ship. A pilot's liability is capped at $1,000 by legislation.

Navigation in the upper St. Lawrence River west of Montreal is performed by our masters and officers without the aid of pilots. Our safety record is second to none, yet the skill and knowledge required are equal to, if not greater than, what is required for the river east of Montreal. Our masters have a ship-handling skill that is envied throughout the shipping world, and this ability does not stop at St. Lambert or Montreal, as some would have you believe. It's only the political will to let it be utilized.

Algoma's training program has been established over years and modified to reflect changing technologies. We use simulators, and have used them for many years. We also have on-board experience under the tutelage of experienced masters, and it's documented and reviewed annually. Over the last two years Algoma has spent $1.5 million on an electronic chart display and information system, and also $300,000 for specially designed training in bridge resource management. Both of these, we believe, are the way the bridge of the future will be run.

Last year Algoma paid $1.6 million in pilotage fees. The combination of Algoma and Upper Lakes was in excess of $4 million. In a competitive environment it is essential that assets be used to their best advantage, helping Canada have a more efficient marine transportation system, one that will improve Canada's international trade performance, as the minister stated in his opening remarks...yet be unable to use one of our primary assets, the masters and officers, to the optimal potential.

The present certification program is controlled by the same people who will lose more than $4 million if our ships are not subject to compulsory pilotage. Safety of navigation is not their only concern.

If you examine the pilotage members, you will see the domestic fleet is where they turn to get their personnel. Algoma Central Marine has lost five masters and mates in various pilotage districts. These are the same fleets where the pilots maintain we're not qualified to do our own pilotage.

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Algoma Central Marine's compensation package is based on competitive market forces. We're losing people to the pilotage, which is based on a monopoly. We can't compete with that sort of system.

Legislation must remain strong and not stagnant in recognizing the expertise of Canadian pilots. We recognize they are skilled professionals. It is unfortunate that Bill C-44 does not recognize the fact that the masters of our ships are also skilled professionals.

In summary, I'd like to thank the committee for listening to my remarks and also say that to improve the way pilotage authorities operate in Canada, changes must be made to Bill C-44. They must better reflect the recommendations of the SCOT report. Also, the Pilotage Act should be amended to remove the power of pilotage authorities to make regulations on compulsory pilotage areas and pilotage certificates.

There should be national standards that would eliminate the St. Lambert east-St. Lambert west duality imposed on the domestic fleet. A validation program should be established that will meet the test of pilotage equivalency. It would be based on approved training, including the use of simulators, frequency of trips and a company verification program. Subsection 22(1) of the Pilotage Act should be deleted or amended to allow for this regime of certification.

It must also be recognized that the domestic industry, safety of navigation, and the environment are our primary concerns.

Thank you. I welcome your questions.

The Chairman: Thank you very much.

We have virtually no time for questions. However, given the importance of this particular topic and the lack of representation on it to date, I'm going to allow one very brief, efficient round, starting with Mr. Keyes, who is known for his brevity.

Mr. Keyes: Thank you, Mr. Chairman.

I want to thank the witnesses for their presentations. A Rolling Stones song came to mind: You Can't Always Get What you Want.

The Chairman: Don't start me up.

Mr. Keyes: The SCOT report of 1995 certainly did not say that when it came to pledging of assets, the crown lands, for example, would be part of that pledging. However, I want to ask Mr. Smith this, because he touched on it. If an amendment were provided in this bill pledging assets at the port, or - and you touched on it in the case of harbour commissions - if properties that were acquired in trust beyond crown lands were permitted to be pledged or pledgeable, would that enhance what you're advocating vis-à-vis pledging of opportunities?

Mr. Smith: I think it would. The point there is to not create an impediment to the ability of ports to raise their own funds for port activities.

Mr. Keyes: So this would enhance that opportunity if those amendments were struck.

Mr. Smith: Yes.

Mr. Keyes: I have one question on pilotage for the other two gentlemen. I find it interesting that if you're going from Thunder Bay to the other end of the St. Lawrence it takes four or five days, and if you're in the St. Lawrence River it takes 22 hours to ply those waters. Is the master awake that whole time doing the safety watch on the bridge? He can't possibly be, right?

Mr. Pound: No, if the master's not on watch we ensure that we have trained officers, in addition to the master, in areas where restricted navigation is taking place.

Mr. Keyes: Do these trained people have certificates?

Mr. Pound: They have certificates of competency from Transport Canada.

Mr. Keyes: It's been said sometimes it would be cheaper to have two masters on board a ship than a master and a pilot. Is there any truth to that as well?

Mr. Greenway: Under the current costs for pilotage that's very true. On what we are allowed and what works in the Great Lakes from Thunder Bay - that's also compulsory pilotage. Just because we suddenly stop at St. Lambert doesn't mean we're not qualified from St. Lambert to Thunder Bay. That's all a compulsory pilotage area. Through company training and company certification to the GLPA it is verified that our masters and mates are certified and equivalent for pilotage to navigate in those waters.

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Mr. Keyes: I can certainly sympathize with both sides on this particular issue of pilotage, but I have to say part of the reason why the minister wants to do a full and thorough review...and we've had representation from the pilotage authorities, who say yes, if you want to bump it down to December 31, 1997 instead of 1998, that could be workable. You could have a bill as thick as the one we're working on, dealing with pilotage. As a result there are many questions that have to be answered in this particular field.

We certainly are not wholeheartedly disenfranchising ourselves from the opportunities to be had in the bill vis-à-vis pilotage, but at the same time, bearing safety in mind, etc., the thorough examination can take place in a year's time and then be brought here to this committee for its consideration and adjustments can be made. That work is going to be done, beginning with the ministerial review.

The Chairman: Mr. Ringma.

Mr. Ringma: Gentleman, thank you for your presentation.

I heard a pilot representative sit here and say Bill C-44 is just fine the way it is. I hear you saying very much the opposite. I can detect from that there's quite a lobby out there that will put pressure, or already has put pressure, on the government, this committee, etc., not to change things, or to change things their way.

This committee is going to be faced with clause-by-clause review of Bill C-44 within days. I can imagine myself sitting there with the amendments I know should be put in there, but in all the presentation I have heard from you you have said clauses 21 and 22 should be revised, but in a very vague way. My specific question to you is would you be prepared to give this committee a specific change you'd like to see in place in clauses 21 and 22, so at least it could be considered when clause-by-clause comes about in a few days?

Mr. Greenway: Yes, we would be pleased to provide something. I'm not sure of the exact clause numbers - perhaps clause 128. It's right in that area. For pilotage equivalency we can give you something in writing before the end of this day if you can leave it with us for a couple of minutes, absolutely.

The Chairman: Mr. Byrne.

Mr. Byrne (Humber - St. Barbe - Baie Verte): You mentioned you've lost five captains or officers to the pilotage. Do you have instances where officers or captains on your vessels or other shipping companies are currently employing qualified pilots? Do you know of any instances where people who have been certified as pilots are now working for shipping companies as captains or senior officers?

Mr. Pound: Not in our company.

Mr. Byrne: In any other companies?

Mr. Greenway: No, not that I'm aware of either. Basically the reverse is what happens.

Mr. Byrne: That's just what I wanted to ask.

The Chairman: Thank you, gentleman.

From the Saint John Marine Community we have a rather large number of people in attendance. Perhaps the leader of this group could indicate who they are.

Mr. Bob Youden (Saint John Marine Community): Yes, I'll introduce the others.

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We have Jane Madsen with us today. She represents Maritime Canada Shipping Services Limited. She's an authorized agent for Troll Shipping Line. Pat Riley of the International Longshoremen's Association represents all the labour in the port of Saint John. Don Roberts represents the New Brunswick division of the Potash Corporation of Saskatchewan. Pat Gaudet represents Irving Oil, Limited. Tor Bordevik represents Star Shipping Canada Ltd. Don Hall represents Kent Line International Ltd. Mr. Joe Day represents J.D. Irving, Limited and Saint John Shipbuilding.

I'd like to just take a few minutes to introduce our remarks here today, but I'd like to make sure we have enough time at the end of the session so you can ask these people some questions. These are the people who are the port of Saint John, and we'll explain a little bit more about each of them.

Thank you for the opportunity to be in front of you here today. First of all, who are we? We represent the Potash Corporation of Saskatchewan, Potacan Mining Company, Furncan Marine Limited, Forterm Terminals, all the port labour, International Longshoremen's Association, Irving Oil, Irving Forest Products, Maritime Canada Shipping, Troll Shipping, Star Shipping, Kent Line, J.D. Irving, and Saint John Shipbuilding.

You have heard from other interested groups from Saint John. I believe the mayor was looking for some more money while she was up in town. I believe port management wanted the status quo, which is that everything is okay. We're here to tell you today that everything is not okay.

You have the customers of the port in front of you today. These people and their businesses are dependent on the port of Saint John for their viability. They employ approximately 5,000 people directly in their businesses and indirectly support another 15,000 employees. These are the people who need a competitive, efficient and commercially oriented port.

The companies represent more than 90% of the traffic moving through the port of Saint John. We also represent all the people working in the port of Saint John. Our position has the support of the board of trade, from which you've already heard.

These people have taken the time to be here today because this is very important to them. They're going to have to live for the next ten to twenty years with the direction that's laid out by Parliament. If you had been in Saint John, you would have had quite a larger crowd to see you, but I guess the air fare weeded us out a little bit.

Don and his counterpart ship 2.5 million tonnes a year through the port of Saint John. Pat Riley and his association have more than 200 people working in the port. Pat Gaudet's company ships almost 17 million tonnes a year through the port of Saint John. Star Shipping, Troll Shipping Line and Kent Line have all been in the port of Saint John for in excess of 25 years. We worked together to put forward our concerns.

First of all, we're very supportive of the legislation and the intentions that are in it.

The first concern relates to the governing of the port. The legislation states:

13. Directors of a port authority shall have generally acknowledged and accepted stature within the transportation industry or the business community and relevant knowledge and extensive experience related to management of a business, to the operation of a port or to maritime trade.

It continues on in paragraph 14(e) to say that users cannot be on the board. When we talked about this, we kind of wondered where that came from. Why is it that we don't want users on the board? Perhaps another way of looking at this would be: if it had not been in the legislation, who would have been in front of you telling you that we should be excluded?

In New Brunswick, the provincial government has a daring new initiative this year to have parents involved with schools. They have a parent committee in every school. It's most interesting to see the active involvement of all the parents. It's also interesting to see that the educators are struggling with this new, unwelcomed user.

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Kimberley-Clark, Abitibi-Price and many other companies put users on their boards. The concept of putting customers on boards is a well-accepted commercial practice, which is again another objective of the legislation.

Look at these people here today. They're involved in school boards, boards of trade, associations, church boards, industry advisory boards and corporation boards, but we don't want them on the port boards. I guess we're having trouble understanding that.

As a matter of fact, the Canadian Coast Guard asked this group to lead the way and set up an advisory board in Atlantic Canada to represent industry. The Saint John representative of that group, the chairman of the group, and the national representative are at this table today.

Why is it that one department of the government wants us so heavily involved, and then another department says that they really don't want us being involved?

The bill specifies that ports and the seaway are to be operated on a commercially oriented basis. To achieve this objective, the seaway is being turned over to the users. We just don't understand. What is so different about these people from seaway users? What's the problem with this group? Why are they being treated differently?

One of the reasons we've heard is conflict of interest. The first question we asked ourselves was: do directors not have a fiduciary responsibility as a director? Will a local law firm that does significant business with one of us have any less conflict, or will the conflict just not be visible? How about a retired individual who's worked for us for twenty years and gets a pension from us every month? Is he going to have any less conflict? One could probably disqualify a certain number of our existing board members based on those same criteria.

We suggest that Saint John is a small community and that conflict of interest has to be dealt with irrespective of who's on the board. So why exclude users?

Another reason not to have them on the board is that one of the group could take over the board. Can you imagine now if we appointed seven longshoremen or seven potash people? Even worse would be seven Irvings.

Would the minister, when he appoints seven members to the board, take them from all one company or all one interest group? We think he'd probably use reasonable judgment. As for the Shipping Federation of Canada, the Halifax marine community, Alliance of Manufacturers and Exporters of Canada, and Canadian Pulp and Paper Association - earlier this afternoon we heard from the prairie provinces - everyone seems to be struggling with this exclusion.

At the table with me today is a vast amount of marine transportation experience. Troll, Star and Kent Line visit hundreds of ports every year. The potash producers are shipping in Canada and to the U.S., South America and Europe. The oil company is the largest shipper in Atlantic Canada. The port unions have affiliations on both coasts as well as internationally. Stevedoring companies have operations along the eastern seaboard. Why can we not take advantage of this wealth of market information and the knowledge of these people?

Last of all, in Saint John we have many businesses and shippers that are captive to the port. When we say they are captive to the port, it means that this is their only choice. They cannot financially go somewhere else. If at the end of the day there are bills to be paid, these are the people who will have to pay them.

The potash shippers and the forest products people have to get their product to market. The oil refinery needs the port to get its raw materials. Stevedores, stevedoring companies and shipping lines earn their living from the port. Isn't one way of increasing the economic success of that port to include those people who have something at stake? Nowhere in the legislation is there any formal process for today's customers to have any ability to directly impact the success of the port.

The final board, we suggest, needs a mixture of labour, business people, port people, lawyers, accountants and customers. We feel that we should put the best board of directors forward and deal with the conflict of interest separately.

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Our second point of concern relates to restrictions put on the new authority to deal with land use other than marine transportation. The new port authority needs the ability to maximize the use of the assets, especially in ports such as Saint John where there is a huge overcapacity. At the same time, any permanent land use for other than marine purposes should be subject to review by the new port authority and the federal government.

The third area of concern relates to the payment of dividends to the federal government. This may be appropriate for ports that make a lot of money. For example, during 1994 and 1995 the ports of Montreal and Vancouver had more net income than Saint John had gross revenue. Last year Saint John made only $168,000.

One might argue that the write-off of the debt would save $2 million every year in interest, and that's right, we will have $2 million more to spend. Unfortunately, the folks in coast guard decided we should pay about $1.8 million each year in dredging costs. So we really haven't come out very far ahead. Last week the City of Saint John was here, looking for more money.

All this is new money from private industry to the government. We suggest that any dividends need to be net of all these increased costs. With issues such as port police, property tax, and land use not clarified in the bill, it is difficult to see where we'll be able to cut those expenses to pay a dividend, without pushing the costs up further. Where will expansions or capital improvements be paid from? We suggest the funds need to be left in the port to pay for this growth.

The fourth area we feel needs attention would be to tailor things to suit each port. Each port is different. For example, nine to eleven directors may be appropriate in Vancouver but surely would be overkill in a small port such as Saint John. It may be better stated as that each port will have between seven and eleven directors. Board size is only one area where there should be some local board flexibility.

The fifth issue relates to ports not being federal agencies, and therefore being subject to further taxes. We would ask that you not leave the door open to it costing more to do business in Saint John.

We are very supportive of the legislation. We think it goes a long way towards meeting those competitive, efficient, and commercially oriented objectives. But we do feel five things could be made better. Put the best people on the board, period. Other than long-term land use for non-marine purposes, give the local authority the ability to maximize its revenues. Leave any surpluses in the port. Give each port flexibility to do what's best for that port. Solve the property tax issue.

Today you have the Saint John Marine Community in front of you, and we are encouraged by the bill. We are prepared to get involved and to work together to help make our port more competitive, efficient, and commercially oriented. Please do not legislate us out of the way.

Thank you.

The Chairman: We have a bit of time. I would like to ask a question before I turn it over to the members, because it touches on something you dwelt on at some length, this question of users on the board. That has been raised by a number of different groups.

The issue, though, as it's framed for us, really covers two things. Certainly people say, well, you want to have somebody who doesn't care or have any interest in the port. That's the extreme at the other end. But if you have a number of terminal operators and you put only one of them on the board, yes, there's a potential for conflict of interest. Don't you create some unease in their competitors because they now have access to specific contract information relative to their competition? You have three shipping lines here. If only one of them is on the board, are they not concerned? I ask the question.

That's the in-harbour competition. Let me give you the other dimension, just one dimension. In the case of a shipping line, they may be moving from port to port to port and may have representation or involvement in those other port authorities. Do you not run the risk of having information shared with competing ports? Is that not of concern? Your competition isn't with the port of Vancouver but maybe with a port in Portland or whatever. Are you saying the fiduciary responsibility of a director satisfies that concern and you have no concerns about that?

Mr. Youden: We've talked a fair amount about how you deal with that. If an issue comes up that relates to stevedoring companies, I think all the stevedoring companies have a conflict. You can't just excuse yourself from the particular issue that relates to your company.

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There's a bigger issue. The lines that serve the port have been there for in excess of 25 years. There's obviously an interest. The rest of us at the table are from companies that have been there for a long time. You don't move a potash mine and you don't move a pulp mill. It's a small community. It's not one where you can easily put your own interests ahead of others all of the time.

As a group of people who have experienced good boards and bad boards, we can say that periods of time spent with bad boards can be an awfully frustrating way to do business when the only choice you have is through that port. We don't have choices. It's not like other ports where people may be able to divert their traffic to another area.

The Chairman: But nobody is suggesting that you would be excluded from the choice of who is on that board. The question is, though, and I may as well be specific about it.... You have the Troll Shipping Line, Star Shipping, and the Kent Line. I think you mentioned in your presentation that they're all long-time users of the port. So you're saying that if one of them was on the board it would not cause the other two any concerns whatsoever.

Ms Jane Madsen (Saint John Marine Community): I think the people from the prairie provinces put it quite nicely. They said the bigger view has to be considered here. And I think that any responsible business person who's involved in this industry is willing to look at the longer, larger picture and put their own interests aside in this case.

Mr. Don Roberts (Saint John Marine Community): I'd like to speak to that point. This is an issue we've struggled with for the past twelve months, since this legislation on marine policy first came out. We know what some of the intent was. We know of the concern by some about the extent of the Irving control inside Saint John. We are non-Irving.

There are two potash mining companies in New Brunswick at the present time. There's a property for a third. Both companies have contracts with the port corporation. Our company has built a potash terminal in Saint John and has invested some $36 million in property in Saint John for that purpose. We have a contract with the other potash company to load product through the port of Saint John. That causes us to have a fiduciary responsibility with them in carrying out that particular work. That's something that we hold very carefully...we have been involved with board of directors at different levels and we hold the fiduciary responsibility dearly.

Looking at the marine policy statement in terms of the objectives that were laid out there, we fully agree. Being results oriented, it causes us to think about how we can get to that result most effectively. We've looked at it in terms of criteria for the directors. We've looked at and thought about the potential conflict of interest issues. Frankly, to be able to reach the objective of having a cost-efficient, effective port, we must have the best-qualified directors.

We have no choice but to move product through the port of Saint John. If we are going to be competitive with our western sister divisions and western competition, we must have an effective marine transportation system. That's where we come from.

The Chairman: Let me turn it over to the members. Mr. Mercier, do you have any questions? Mr. Ringma.

Mr. Ringma: I have one quick comment, if I may.

First of all, I'd like to say your message is very clear. You've said it loudly and clearly. It's remarkably like the testimony I heard in my own riding of Nanaimo - Cowichan. I went to visit the Nanaimo Harbour Commission a week or two ago to hear them out, and what you're saying was duplicated by them in large part, even to the point of saying, for goodness' sake, all ports are unique and different in some way or other, and that has to be taken into account in the legislation.

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I thank you for your presentation and I will look very seriously at it, as I'm sure the committee will.

The Chairman: Thank you, Mr. Ringma. Mr. Byrne is next.

Mr. Byrne: Thank you, Mr. Chairman.

Of the companies that are sitting at the table right now, are any companies currently involved in providing goods or services to the port of Saint John, in terms of construction services either through affiliated companies of the Irving Group or through other services?

Mr. Youden: Probably, I would think. Probably affiliates of some -

Mr. Byrne: So if there were someone sitting on the board, you would probably have access to the budgeted contractual amount that the authority would be willing to pay for those future services? Would that be fair to say?

Mr. Youden: Yes.

Mr. Byrne: Okay.

Next, the companies represented at the table here today own land in the Saint John port area. Is that fair to say?

Mr. Youden: We lease land.

Mr. Byrne: You lease from whom?

Mr. Youden: The port corporation.

Mr. Byrne: But not just in the port corporation area; we'll call it the Saint John waterfront.

Mr. Youden: I don't think any of us do.

A voice: It's federal land.

Mr. Byrne: It's not adjacent or anything? This is an important question, so I need -

A voice: The shipyard, I don't know -

A voice: You're asking if Kent Line owns their own terminal?

Mr. Joe Day (Saint John Marine Community): Irving Oil owns Canaport property, which is really outside the harbour.

Mr. Byrne: If there were a decision to purchase additional lands, your lands would conceivably be up for sale.

Mr. Day: No.

Mr. Keyes: Everything's for sale at the right price, I've heard.

Mr. Day: You haven't heard about the Irving organization.

Some hon. members: Oh, oh!

Mr. Keyes: Oh yes, I've heard a lot about the Irving organization.

Mr. Day: Maybe we should invite you down one more time.

Mr. Byrne: If that's your answer, fine.

Third, if the management at the port authority in the future were to take disciplinary action against any one of the individual companies for non-payment of fees or for bringing in substances that may be harmful or for other activities, on an annual basis, who would be reviewing the performance of that port manager if there were users on the board?

Perhaps I'll use that as a rhetorical question. It would probably be some of the members sitting on the board who would have been chastised or who would have had disciplinary actions taken against them. They would be responsible for reviewing the performance of the police officer, in essence. Would that be fair to say?

Mr. Day: In essence your questions are all going to the same lack of faith. You believe that an individual who agrees to serve on the board can't act in a professional manner, the same way that an individual who is appointed to the board of the Royal Bank of Canada and is also a customer.... If he serves on that board, he learns some information that could put him in a lot better position.

Your lack of faith in humankind is what's coming out in all of those questions.

Mr. Keyes: Okay, admit you're wrong there and keep going.

Some hon. members: Oh, oh!

Mr. Byrne: But do you agree with me? I'm not picking; I'm just trying to find out what you think. That's all. I have no lack of faith in humankind. I have quite broad and strong faith in humankind, sir. I'm just trying to get to the truth here.

So without ascribing motive to my questioning, perhaps leave your testimony at that.

Thank you.

Mr. Youden: Perhaps the question should go to the full group. When was the last time we dealt with a discipline issue at the port of Saint John with respect to any of the people at the table or anyone we can think of?

A voice: That doesn't mean it will never happen.

The Chairman: Mr. Riley.

Mr. Pat Riley (Saint John Marine Community): Thank you very much, Mr. Chairman. I'd like to address this issue from a labour perspective, if I may.

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I feel somewhat like the odd man out rather than the odd man in, here amongst my colleagues at this end of the table. I say that because I think it's important to note that we made an effort to come to an agreement on these specific points we've put before you today, and if there is one that ranks number one in importance, it's this business about users participating on port authority boards.

From a labour perspective I'll say this. We work for all of these people assembled at this end of the table and it's very important to us that all of them do well, that not one of them goes down the drain, so to speak. It's very important within a marine community that everybody works together. That's why we do not fear that an individual company or an individual user will be allowed to dominate. We think that's very important. That's why we support the concept of the federal overview of ports.

It's also important to note that we're not proposing that only users be on the board, just that users not be excluded. So you won't have to deal with users only; we're just saying you shouldn't exclude that very important participation. If situations arise where there may be a conflict, there are other members of the board who can deal with those particular issues. Again, I think that's very important to note.

Mr. Cullen: I must say I'm quite sympathetic to the case you've made here today. Given the circumstances involved - the fact that you could get together and reach that kind of consensus - and the unique characteristics of Saint John, I think it says a lot about the position you're taking on the board representation.

I don't know what would happen if it was an Irving company representative at the board, but that's an issue for you to ponder.

I would take issue, though, with one point of your presentation where I think you're saying this stipend to the federal government is not appropriate. I'm just wondering, from the point of view of the federal government, which is granting the right to operate this port to an authority and someone who is providing some assets.... In any kind of normal business venture there's sort of an in-kind contribution and there'd be some recognition of that. I can understand your need to plow the cash back into reinvestment. I'm just wondering, though, if you could comment on that and the rationale for your position.

Mr. Youden: One of the differences in Saint John is that when the coast guard undertook its cost recovery initiative, it decided to recover, I believe, 25% this year for navigation aids and a like amount next year for ice-breaking - and that's an access to a harbour issue. But for those ports across Canada that had dredging, it decided that wasn't a cost recovery item but a budget cut item, and 100% of those costs would be put into those ports that had dredging done.

We struggled with why dredging was different from ice-breaking, because without both services you can't get into an area. There were two parts to it. First was the fairness issue, but the second part was where does the money come from.

The port of Bayside, which is 40 miles from Saint John, is under a different set of rules and it is dramatically cheaper to ship products through it. That's part of what this bill is addressing. But we were hopeful that this bill would not make the two ports equal by making them more expensive.

Mr. Cullen: As I understand it, the legislation as it is written now may be written in such a way to accommodate the capacity or the cashflow to pay. I don't know if that's under consideration now, but the port, if I recall, came forward and made a case for allowing the netting of dredging against the revenues. I think it was Saint John. That sort of opens the gate, of course, to a whole bunch of exceptions.

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Your position is basically driven by the capacity to pay and some cost burdens that have been put your way, not necessarily on the principal. Is that correct?

Mr. Youden: The ability to pay and the fairness issue in cost recovery and other areas.

The Chairman: Mr. Jordan.

Mr. Jordan: That has come up before: the difficulty there will be, for a while anyway, in costing out dredging and ice-breaking and what portion of it.... I think you'll have to be a little patient with that until we get into this a bit. It will never be easy to do that, I think we can all agree.

I just want to get back to the users for a minute. Until we define ``user''.... That has always bothered me a bit. Who is not a user, for example?

I'm in sympathy with you there on that one. You're trying to get the best possible people. I don't suppose it will carry too much weight, but I personally wouldn't be against leaving that out. I think you're finding it a bit of an irritant, almost a bit repugnant, to say users can't be on the port.

I don't know what we're gaining here. Someone probably has a reason for it. I just say you are not going to eliminate problems on a board by trying to define that. If you're going to have problems on the board, there are probably some deep-down problems that kicking off the users isn't going to correct.

I would support that concern. There has always been a bit of puzzlement associated with why you would say we want it to work, we want you to get the best expertise possible, but don't touch these people; don't let them near you. It isn't that those people on the board.... They're going to draw on the expertise as board members, I hope. Surely they wouldn't be there just representing themselves, with their own narrow view. There are only seven of them, aren't there? It could be eleven. That's a pretty small sampling. I think if they are really acting as board members they will draw the whole community to the table with their representing the community for which they should be speaking.

So I would agree. I'm not strong on this idea of saying users, because I'm having difficulty deciding who it is you're eliminating. You may have trouble finding seven to go around. Which seven are not users? Almost anybody in Saint John is a user of the port.

The Chairman: Mr. Jordan, I noticed earlier today you came out in favour of the tariff on net. I think you've been sitting down at that end of the table too long.

Mr. Keyes: A reasonable, hard-working member of the government who is open-minded - that's what we need.

Mr. Jordan: No, I haven't changed my position on net.

The Chairman: No, that's true.

Mr. Jordan: I've been consistent.

The Chairman: Yes.

Mr. Jordan: I haven't spoken on this before, but I've heard it brought up many times. I think what they're saying, as I said, is just that they are reacting to its saying they can't be on it. That's all. Why don't we write it in such a way as to eliminate that and say you want to get the best possible expertise and trust the people to put the best minds they can get on there - do away with this idea of identifying some who can't sit on it?

That's my little speech.

The Chairman: Thank you, Mr. Jordan.

Mr. Ringma: Let me just add to your statement, Jim. You describe going out to the community to get the representatives on that board and they are in turn responsible back to that community. That's the big point. They can't deviate too much.

The Chairman: I do feel somewhat uplifted by all this discussion of trust. Perhaps we'll turn it over to Mr. Keyes.

Mr. Keyes: And therein I think is a supplementary.

It can have a difficulty. It's that the user of the particular facility, being on the board of the particular port, now has a responsibility not just to the company that pays his or her pay cheque but also to the port and marine community.

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I want to make it clear that the way the legislation is structured, every one of you sitting here at this table would have great input into the list of who would be nominated to that particular board, or that list that would be submitted to the minister for nomination to that board. You would have an incredible influence on who would be elected to that particular board. Beyond that, that individual has a sole fiduciary, focused obligation to make sure that port works. You don't have to worry about what's going on over here on the other side and where their pay cheque is coming from. All they're going to do now is concentrate on that port.

But beyond that, my question, Mr. Chairman.... Ms Madsen made a comment that she didn't mind this particular company being on and she's not on. Which company do you represent?

Ms Madsen: I represent Maritime Canada Shipping Services. It's a company that I'm part owner of, and we represent Wilhelmsen Lines Troll Service, a specialized forest product service that has been servicing the port for over 25 years.

Mr. Keyes: So you and Troll are sort of together on this thing.

Ms Madsen: Yes, my company is the agent for Troll carriers.

Mr. Keyes: That's really one then.

Ms Madsen: Yes.

Mr. Keyes: Maritime and Troll are together there. I see the name Irving here three times on the list, but how many of these other companies are Irving affiliated? Can you tell me, Joe?

Mr. Day: Kent is.

Mr. Keyes: Kent's an Irving. Is that it?

Mr. Day: Irving Forest Services, J.D. Irving.

Mr. Keyes: No, the three Irving names on here I see.

Mr. Day: Saint John Shipbuilding is an Irving company. They just completed the 12 frigates for the Canadian navy.

Mr. Keyes: But they're not on your list here.

Mr. Day: It was mentioned by Mr. Youden at the beginning of his presentation.

Mr. Keyes: So Saint John's on it. That's five. How about these other ones here, Furncan, Forterm, Star?

Mr. Day: No.

Mr. Keyes: None of those? Okay. I'll ask you directly, Joe.... I'll call him Joe because I know Joe, Mr. Chairman. I'm not being disrespectful. We've discussed these things in the past.

So you've got Irving Oil, Irving Forest, Kent Line, J.D. Irving, and...what was it called?

Mr. Day: Irving Forest Services.

Mr. Keyes: Irving Forest Services. All right. So there are six companies on the list. What if this community of users decided that the Potash Corporation, Potacan, Forterm and another company -

A voice: Troll.

Mr. Keyes: No, not Troll, because Troll's already with Maritime. Let's go with Furncan. Let's say those are the four on a board of seven that come forward and Irving's not on the list. Is that going to bother Irving at all, that these four are there and Irving is not on the board?

Mr. Day: The community has come forward with that list of names to send to the ministry, and Irving is not on the list.

Mr. Keyes: Yes.

Mr. Day: Absolutely not.

Mr. Keyes: No, no. I mean the users decide that these four users are going to be the board reps, but Irving is not one of those four.

Mr. Day: We can live with that. That's why we're all here together. Absolutely. That is the other side of Mr. Cullen's question that he didn't ask a reply to. What would happen if Irving were on the list; how would the other people feel? I think the fact that we're all here together is recognition of the fact that we can work together and that whoever goes on the board can act professionally in the best interests of the community.

Mr. Keyes: Thank you for your information, Mr. Day.

Mr. Day: Thank you for the opening.

The Chairman: An assertion of faith in humanity. It's a nice thing to happen at a parliamentary standing committee. It doesn't happen very often.

Mr. Keyes: I just want to make sure that when this happens, I'm not going to get any complaints back from Irving that they're not on the board. Not that it might happen.

The Chairman: We dwelt on this topic for a reason. It's been a helpful discussion today, because this is an issue that has come up. These ports are national in scope. The entire country has an interest in their efficient and effective operation, and if that can be achieved.... This concern you're raising today is not unique to Saint John. It's been raised by others across the country. We had quite a discussion coming out of the port of Montreal on this same issue and it was pointed out that the fiduciary responsibility does limit the concerns.

There are some concerns about - and I'm not speaking of the Irvings here - the family compact, the old boys' control. Does the new potash company get a shot at the port if the old potash company is sitting on the board with older infrastructure? Do they get a competitive advantage? There are concerns about that.

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On the other hand, you're quite right. You want people in charge of these ports who have a real interest in seeing them run effectively and run efficiently.

So we will think very hard about this as we move into amendments. I want to thank you for taking the time to come down, and I want to thank you for the discussion we've had today. It's most helpful.

Mr. Day: Mr. Chairman, I'd be remiss if I didn't, on behalf of the entire group, invite you and your committee to come to Saint John. I know every delegation that comes here invites you to Saint John, and I think that would be -

The Chairman: I actually would like to make a comment, because I have suffered a grievous attack from Saint John.

I am the new chair of this committee. I have neither the depth of experience nor understanding of the subtleties of this country that Mr. Keyes has. But we made the decision not to go to Saint John. The list of ports we made the decision not to go to is much longer than the list of ports we decided to go to, and we did it strictly for financial reasons. We'd been there. We decided to spend two days in a region. We specifically wanted to spend some time on the seaway because it is a big concern. That was the only reason.

Nobody in Saint John, when we first checked, raised a concern. We talked to the professionals about what was doing. Everybody said, that's fine, we know this bill, it's been around for three years, people are working on this, it's fine.

It wasn't until a particular member of the House of Commons had a rather dyspeptic moment and exploded all over me. I would have credited that explosion had that member ever attended a meeting and ever expressed a concern or interest in this issue.

We take this work very seriously. We're working really hard on trying to produce a really good piece of legislation. I really appreciate your being here. I spent a week in Saint John just last year. Thank you.

Mr. Day: Come and see us again.

The Chairman: Now, for the information of members.... Oh, I'm sorry, yes.

Ms Madsen: I'd like to make one last comment. As being one of the companies that is not Irving-owned, not Irving-associated, and in fact competes against the Irving-owned forest products service in the North Atlantic, as does my colleague Captain Bordevik's company, Star Shipping, I think although we are competitors, we respect the knowledge the Kent Line people have and would feel quite confident in having them represent us from a shipping knowledge point of view.

Captain Tor Bordevik (Saint John Marine Community): I'd rather be on the board, if that should so be, and discuss it right across the board with the Irvings rather than having them appoint somebody and we appoint somebody else. I think that is more a conflict of interest than if we all sit on the board, should we so be elected. We can have more input by direct input rather than through somebody else.

The Chairman: Okay. You almost tempt me to run down this road again, but I won't.

For the information of the members, tomorrow's meeting starts at 9:30 a.m. in this room. Thank you, all.

The meeting is adjourned.

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