EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 5, 1996

.1532

[English]

The Chairman: Welcome back.

After this morning's session we had a discussion about the possibility of an additional meeting tomorrow. We are going to meet today right through until the call of the votes. It's only a 15-minute bell, which will begin at 5:30 p.m. If it's possible to finish whatever clause we're on at that point we will. If it's not possible we'll simply adjourn and head over to the House for the vote and reconvene tomorrow afternoon at 3:30 in Room 701 in the Promenade building on Sparks Street. Notice will come to your offices. We'll start that meeting at 3:30 p.m. and we will end that meeting with the passage of the bill. In the intervening time we will take care that our people's nutritional needs are met.

I understand that because of a personal request from Mr. Gouk, as part of the discussion there has been an agreement to deal with.... This is five or six minutes, Mr. Gouk?

Mr. Gouk (Kootenay West - Revelstoke): I believe it's something like that.

The Chairman: Mr. Gouk, let me turn the mike over to you. You had something you wished to say to that. Then perhaps we can proceed with those amendments and then we'll come back to where we left off in the bill and move on with the rest of the bill. Perhaps your amendments will be so perfect that we will just pass the rest of the bill.

Mr. Gouk: It may be. I'd suggest to you that they are, but it will be for you to make that final decision.

Mr. Chairman, I just wanted to express that I accept with regret the need for a procedure in which we proceed now with my amendments so that I can get them in while I'm available. I also regret that I will not be here for all of the passage of this because I made prior commitments based on our schedule.

Unfortunately, this leaves me in a position where I will not hear an explanation of some Liberal amendments which I may accept after hearing an explanation, as I did with some today. I also will not have the ability to offer subamendments to those things. I guess I will just have to review them after the fact and if I deem it necessary, offer amendments at report stage. I go along with the procedure the committee is now going to follow.

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The Chairman: Thank you, Mr. Gouk. I appreciate your assistance with this.

Are we ready to proceed?

Mr. Keyes (Hamilton West): Ready, Mr. Chairman.

The Chairman: Mr. Gouk, in our orderly progression through this, we have just completed the proposed new clause 5.1. Would you like us to just go through each one of the clauses that has a Reform amendment assigned against it?

Mr. Gouk: That's what I gather our procedure is going to be. We're going to deal now with all of the Reform amendments and then return and pick up the rest.

Do you want to deal only with those amendments, or also with the clauses in which I have amendments?

The Chairman: We'll look at the clause as we come to it.

Mr. Gouk: Well, I have clauses 6, 7, 12, 21, 24, 27, etc. There are quite a few. I guess there's a clause for almost every one of them. It might be difficult to try to deal with each one.

The Chairman: I did offer to put them all into one motion, Mr. Gouk.

Mr. Gouk: If you will give me your undertaking that you'll accept them, I agree to that.

Some hon. members: Oh, oh!

The Chairman: Let's deal with Reform motion 3 on clause 6.

Mr. Gouk: I'm going from my own. Can you give me the pages?

The Chairman: I'm looking for that myself. It's on page 26.

Mr. Gouk: I thought we already did one dealing with that, but perhaps not.

Mr. Chairman, this is an amendment to alter the number, which is currently a minimum of nine and a maximum of eleven. Virtually every port authority we talked to, with one or two exceptions, came in and asked for a lower number. Some wanted seven, several wanted five, and one or two asked for three, pointing out that in some cases, to follow this or even to have only seven, they would have more directors than employees. They thought that in smaller ports, which will come under this act, it was excessive and an unnecessary expense.

So this amendment changes it to read:

(f) the number of directors, whether 5, 7, 9 or 11, required for the purposes of a port authority as determined by the needs of the port authority, to be appointed in pursuant to schedule I.1.

The Chairman: Mr. Keyes, do you want to respond to that?

Mr. Keyes: Yes, thank you, Mr. Chairman.

I think the member for the Reform will see that as part of this bill the government proposes to make an amendment where nine and eleven will be amended to seven, nine and eleven. He's right; we've heard representations from some ports that want to go to a number as low as five. We believe this would result in a user minority in all cases on these boards. As a result, we would reject the idea of five, but seven, nine or eleven is our aim in this particular bill.

Mr. Gouk: In order to expedite this, Mr. Chairman, and in order to seek government approval, I'm prepared to delete the five and remain with the seven, nine or eleven as required.

The Chairman: Mr. Keyes, I know the government has an amendment on this also, which I believe was seven to eleven. Does Mr. Gouk's amendment of seven, nine or eleven meet that?

Mr. Crête.

[Translation]

Mr. Crête (Kamouraska - Rivière-du-Loup): I would like to add that the Bloc also tabled a similar amendment, found on page 27, that recommends that the number of directors to be appointed be between five and nine. But if we go beyond that number, we must think of the consequences for Canadian port authorities. Indeed, the higher the number, the more difficult the situation will be as regards fixed costs for the small authorities that meet the requirements and could be declared Canadian port authorities. Let me give you a few examples.

[English]

The Chairman: Can we have one intervention?

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[Translation]

Mr. Crête: The examples that you were given during the presentation dealt with the case of the smaller ports wishing to become Canadian port authorities. The witnesses were saying that five directors would be largely sufficient. Here, in the Reform Party's proposal, we are talking of a number between five and 11, 11 being the maximum acceptable to the larger authorities.

Our amendment is suggesting that the number of directors appointed be between five and nine and the government has suggested a number between seven and 11. It seems to me quite pertinent to ask that five still be a possibility and that there be a maximum number. We were talking of nine because we believe that that is already quite a large number of directors. We will have to see if some agreement on that is possible. I would not like to exclude the possibility of a board being made up of five directors. That strikes me as reasonable and sufficient for some port authorities that are not very large but that may wish to have this status.

Furthermore, a question we might ask is who will appoint these directors and how these appointments will be carried out. A frequent argument has been that we must ensure that no one has control over the board. We therefore must consider the various elements and maintain the possibility of there being boards made up of five members.

[English]

Mr. Keyes: If I could assist, the difficulty, Jim, with your amendment R-3 is that you're asking that lines 6 to 23 on page 5 be replaced with your suggestion. Unfortunately, lines 9, 10, 11, 12, and through to 23 are necessary in the bill to put forward the representation on the board, and that's omitted with your particular recommendations. So just to change it from 5, 7, 9 or 11 to 7 or 11 would omit lines 9 through 23, which are also important to the bill.

For that reason I would suggest that this particular amendment be rejected, Mr. Chairman.

Mr. Gouk: One thing I would like to clarify. You say you intend to amend it to between 7 and 11.

Mr. Keyes: Just the number on the one line.

Mr. Gouk: I don't see that amendment here in this section.

Mr. Keyes: It's clause 6, page 5 of the bill and page 24 of the amendments. It's ``the number of directors, between seven and eleven, to be appointed under section'', so it replaces only lines 6 and 7, whereas your suggestion replaces lines 6 to 23. We need lines 9 through 23.

Mr. Gouk: We still have to vote and defeat it.

Amendment negatived [See Minutes of Proceedings]

The Chairman: Thank you very much. That was Reform 3, and now we move to R-3.5.

Mr. Gouk, this is another amendment to clause 6.

Mr. Gouk: Yes, but to a different part. This one actually is best read with the one that follows it.

We heard a lot of people concerned about the government taking fees. A lot of them were asking that the government not take any fees at all or, alternatively, if they had to take fees that they be based on net revenues rather than on gross. I think that is not an unreasonable request at all.

The subsequent amendment to the next clause is to bring it to net revenues. However, this particular amendment is a requirement that the port authorities adhere to generally accepted accounting principles in carrying out and reporting their financial operations. This means they cannot, by creative accounting, arbitrarily wipe out their net revenues so that there would be nothing left for the government to take a fee from.

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That's the intent of this particular amendment.

The Chairman: Mr. Keyes, do you wish to speak to that?

[Translation]

Mr. Crête: I am having trouble following. Are we indeed dealing with amendment R-3.5, on page 32, requiring that port authorities adhere to generally accepted principles?

The Chairman: Yes.

[English]

Mr. Keyes: Mr. Gouk, do you have a copy of the bill in front of you?

Mr. Gouk: Yes.

Mr. Keyes: Okay. Subclause 30(2) states that ``financial statements shall be prepared in accordance with generally accepted accounting principles and consist of at least the following''. It goes into a little more detail than you've outlined. The amendment would be redundant.

Mr. Gouk: Okay. I just want to ensure that when we go to the other one we have protected the government's interest so that creative accounting does not come up.

Mr. Keyes: Absolutely.

Mr. Gouk: I'll withdraw that.

The Chairman: The government thanks you, Mr. Gouk, both for withdrawing the amendment and for protecting its interest.

Mr. Gouk: When I take over after May, I want to make sure it's in good shape.

The Chairman: That's right.

Mr. Gouk: Whatever's left.

The Chairman: Next is R-4, on page 33. Again it's an amendment to clause 6.

Mr. Gouk.

Mr. Gouk: Like the other one I referred to, it's changing the fee taken by the government from gross revenues to net revenues.

The Chairman: Are you withdrawing this also?

Mr. Gouk: No.

The Chairman: Okay.

Mr. Keyes.

Mr. Keyes: Well, Mr. Chairman, I think we've been around the horn on this one both inside and outside with our witnesses and even in casual conversations on our buses, going across the country listening to our witnesses.

Mr. Gouk: Such that we survived on.

Mr. Keyes: If you dare bring it up again in Hamilton you'll get the -

The net revenues of course provide an incentive and an opportunity to make some expenditures that in our opinion could raise some questions. That in fact could reduce the stipend. We've had the debate on gross versus net, and as far as I'm able to determine, Mr. Chairman, we're sticking with gross on this.

Mr. Gouk: I'll ask just one question, then, of the government.

When we hear from witnesses here in Ottawa and go on the road to Vancouver, Winnipeg, Thunder Bay, Hamilton, and on and on, through Quebec and Atlantic Canada, virtually everybody we hear from says the same thing. They say either you shouldn't be taking a fee or at best you should be taking net. There is no support for gross revenue deduction. If we're not going to listen to these people, why in God's name do we have hearings? Isn't the intent to find out the reaction of the public and to find out what all the players involved...?

I mean, it's one thing when one side says this and the other side says something else. When everybody says the same thing, how can the government come to this committee and say we heard what you said but we're not listening? What is the response to it? I'm going to have to go out and answer that, and I'd like to know what your answer is.

Mr. Keyes: I'll give an answer from a policy side and maybe Mr. McNeill can give an answer from the legislative side.

From a policy side there's no doubt in my mind that every port and harbour commission in this country would want to come forward and be unanimous on the idea of not paying the government any money during the operations -

Mr. Gouk: Can I interject, please?

Mr. Keyes: I'll finish.

Mr. Gouk: It was more than the port authorities.

The Chairman: Wait.

Mr. Keyes: No one wants to pay, and there certainly was unanimity around that circle. If the consensus is there to not pay -

Jim, I know you have at heart the Canadian taxpayers' interests, the people who paid the money to build the ports that we have today, and the people who made the investments in the interests of national infrastructure building. That's what they've done. Now the taxpayer says you know you're going to put them out on their own, that's terrific, but we'd sure like a little bit of it back while they're making their profits.

In order to do that, the government has determined that receiving repayment on gross rather than on net is a way of ensuring that taxpayers get a return on their money. So for the sake of national interest, for the sake of repaying the Canadian taxpayer, and for the reason that the ports and others would not like to pay any money, we're going to ask for a stipend from these ports and harbours to reimburse the Canadian government, who are the taxpayers, some of the money they've invested.

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Mr. Gouk: I have two points. First, it wasn't just the ports. I know you didn't say that it wasn't anybody else, but you specifically said the ports. It was the ports, it was the users, it was the municipalities, it was virtually everybody we talked to.

The other side of that question is that one of the concerns I have in this isn't just the raiding by the government of moneys that may or may not be in excess of the profits of the port or in excess of the residual amount of money the port needs to carry on a viable development for the future, it's the ability to borrow money. As the bill stands now and subject to further amendment, the government is saying it wants a fee taken from the gross revenue - in other words, it wants its cut off the top - and it won't allow them to mortgage anything. They can't put up any security except the revenue stream -

Mr. Keyes: Well -

Mr. Gouk: Wait a minute. They can't put up any collateral except the revenue stream, and the government wants its cut off the top in terms of the revenue stream.

So the question I have, beyond this amendment, is if this one does not pass and you're going to insist on getting your money off the gross revenues, are you going to allow an amendment to be passed that will allow them to pledge or mortgage or otherwise put up their property as security in order to deal with loans?

The Chairman: Mr. Gouk, thank you. I have about four interveners on this. Mr. Cullen.

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

I'd just like to say a few words briefly on this, because it's an issue that I've been quite keenly watching as well as participating in the discussion on.

Jim, you were saying that pretty well everyone supported the net. In fact, the Alliance of Manufacturers and Exporters of Canada, which is basically the old Canadian Manufacturers' Association and the old Canadian Exporters Association, came here and argued for a percentage of gross.

Some people argued for a dividend type of payment, given the fact that in any normal corporation you have a board of directors accountable to the shareholders, so there's some incentive to make the balancing act between dividends and reinvestment. In a Canadian port authority you don't have that kind of pressure on the board to repatriate a dividend to the Crown. It just won't happen. It will not happen. It doesn't have anything to do with trust or best intentions. There is absolutely no incentive for the CPA to give a dividend to the Crown.

The only way you could do it, in my view, would be to base it on a percentage of net, which is feasible. There'll be, I'm sure, creative bookkeeping. As I said before, there'll be creative bookkeeping on a gross basis as well.

One of the inherent problems, it seems to me, with on a basis of net is that you don't really have any way of dealing with ports that are efficient or ports that are inefficient. So once you go to a net basis - and I was more swayed to go in line with your thinking until I heard all the arguments and the very strong case put forth by the Alliance of Manufacturers and Exporters of Canada to base it on the gross. There's a big user group that I was fully expecting to say base it on the net, and they said base it on the gross. With that and other arguments, I was swayed to basing it on the gross myself.

The Chairman: Thank you, Mr. Cullen. Mr. Comuzzi.

Mr. Comuzzi (Thunder Bay - Nipigon): Thank you, Mr. Chairman.

As long as you have good auditors you trust, I don't think it matters a hill of beans whether you do it on the net or the gross.

What my concern has always been throughout this argument is that ports on the west coast have a separate set of competitors and from the time we started this process a year or two ago with Stan's committee, we lost a huge contract in British Columbia for the shipment of potash. We'll never get that contract back. I don't know how much we've lost on the east coast. Especially, I'm concerned abut the containers out of Halifax, with the thrust of the competition coming from Boston and New Jersey.

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All I'm concerned about in this, and I don't care whether it's on the gross or the net or it's a percentage, is that every port on the east and west coasts of this country is competitive with the people they have to compete with on a daily basis - the American competitors on the east and west coasts. If we can put in something like that, I don't think any member of this committee - given all the evidence we've heard - would dispute that process. How do we make ports in Canada competitive so that they can do business with the people they have to face in the marketplace every day?

The Chairman: Thank you, Mr. Comuzzi.

Mr. Comuzzi: One more point, Mr. Chairman. I hope the logic we heard from the parliamentary secretary on why we have to charge this or the other thing - I know that Stan is a very logical person - will prevail insofar as getting a return on this huge investment that we have in Canada as we go from clauses 66 through 90. We have a point on that logic now, and I suspect this logic would be consistent.

The Chairman: As you have pointed out, he is both logical and consistent.

Mr. McNeill.

Mr. Neil McNeill (Executive Director, Harbours and Ports, Transport Canada): To respond, most of the submissions did deal with switching it from gross to net and not paying at all. But you are conveying a brand-new unique corporate structure to these port authorities. They're getting the use of major investments from the taxpayers of Canada. As the notes that were tabled with the committee on the charge on gross revenues indicate, you have a return of less than $10 million a year across the system next year with the proposed sliding scale, where airports this year alone will return about $200 million in rental. So we're talking less than $10 million.

You are creating a board of directors that is specifically not directed at profit, and therefore dividends, as Mr. Cullen said. It's a board that is directed at reducing the cost of operation. So when Nesbitt Burns, our financial adviser, did the full financial viability test, they recommended our proposed stipend on gross. It was a known factor from the ports and the financial community, who could plan for it. They understood all of the other mixes of changes. We are preventing the government from ever coming in and doing the cash sweeps again. We're also proposing a number of other changes with regard to powers, capacity and the ability to pledge certain assets to lower their borrowing costs.

When you look at the mix overall, the charge on gross revenues is really small and payable.

[Translation]

The Chairman: Mr. Crête.

Mr. Crête: It is a matter that is very important and difficult to resolve because an awful lot of elements come into play. Even though comparisons are always a little faulty, I believe we might draw a comparison with payroll taxes. In several areas, we have come to the realization that when you only tax income, the effects are sometimes contrary and unpredictable.

In this act, we are establishing the way in which these directors will be appointed, but at the same time, we want to ensure that it fits with reality. I like Mr. Comuzzi's argument concerning auditors. But in Canada, auditors are very competent people who go about their work seriously.

I would also like to say that calculating the amounts based upon gross revenue will create a disproportion as far as expense control is concerned. We will not have the same approach with the port authority because the criterion that will be used is the gross income. I do not believe this is a happy initiative.

.1600

People will have so many taxes and so many fees to pay that authorities will soon develop a reflex such that they will prefer to not get involved in port development.

In any event, we have presented the same amendment as the Reform Party and I would like to say that we have heard all of these arguments ad nauseam, from one end of the country to the other and from all sectors.

It seems to me that if you want to commercialize an enterprise and run it like a private company, then you must evaluate it on the basis of the return on your investment and not on the number of sales. Indeed, one might be the best maker of hamburgers in the world, and still go bankrupt three weeks after having opened if no profits have been made. In the same way, we will perhaps see port authorities that have huge revenues in financial difficulty because of what we are asking them to pay on top of their major expenses.

I am not certain that there is a clear solution between the two, somewhere between net income and gross income. My impression is that we have not yet developed a satisfactory model. In any event, if we stay with gross revenue, at a given point in time we will be faced with situations where we will see the contrary effect I mentioned a few minutes ago. This is why I believe we must chose net revenue over gross revenue, because this will truly force port authorities to behave like private companies and to live with that. That is our argument in favour of this amendment, which is the same as that of the Reform Party.

[English]

The Chairman: Thank you, Mr. Crête. Mr. Fontana.

Mr. Fontana (London East): Mr. Chairman, I think Mr. Comuzzi raised an important point. It really doesn't matter whether you go gross or rent, it is what rate you intend to charge on either the gross or the net. The fact remains that if you look at the rate being charged on gross revenues, it is minuscule. It's incredible to reap only $10 million out of the whole system. We're not talking a big charge on the gross, especially in light of the fact that we're saving.... The Canada Ports Corporation draw-downs that they used to take from the very ports where we are now turning over autonomy, giving them all kinds of opportunities to act and be much more entrepreneurial.... We're giving them the opportunity to pledge certain assets so that they can raise their own money.

This whole package hangs together, and at the end of the day the Government of Canada perhaps has more of an obligation than the opposition to try to please everybody. We used to play that game too. We have a responsibility to the Canadian taxpayer to get at least something out of this whole equation, and $10 million is not a big charge against the gross revenues. To ensure that we get at least $10 million, we make a very small charge on the gross, or sure, let's go to net. But at the end of the day, to make sure there isn't innovative financing - and we all know how that's done - you'd have to charge a hell of a big rate on the net revenues to get the $10 million that we've established as the baseline for the government. Come on, let's be fair.

The Chairman: Thank you, Mr. Fontana. Mr. Caron.

[Translation]

Mr. Caron (Jonquière): There was a lot of talk in the presentations about net revenues. At the end of the day, we commercialize ports in order to have a better system, a better return and better management. At the same time, we give them a board of directors where one director is appointed by the Minister, another by the province, a third by the municipality and others by the users.

Then we also add an auditing system which, I hope, will prove effective. I believe that we can feel quite confident in the directors who will be chosen and also with regard to the overall economic effect of the bill we are going to pass. I think that by adopting the proposal for charges on net income, we will give a better chance to the directors who will be appointed.

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I believe that our legislation has to be written in such a way as to be effective and to allow our ports to compete against other ports, particularly in the United States.

We are confident that the bill, on the whole, will work well and that the directors we will appoint will be of a high calibre and that nobody will try to play around with numbers and with the audits to try to lower net revenues to such an extent that no stipend will be payable.

So we need to have confidence in what we are doing. We also need to trust the directors we are going to appoint, to trust in the judgement of the Minister who will appoint the directors, the judgement of the director representing the municipality who will have the development of his port at heart.

We can try to figure out how much the government should be taking out of net revenues. If we find out that it does not work and that Canadian ports on the whole are not bringing in any profit in two or five years, then we will have to conclude one of two things. Either the directors did not appoint the right managers or they organized things so as to not show too much profit, or the commercialization of ports was not a good decision to make at the time we made it.

I, for one, am in support of the amendment moved by the Reform Party and our party. All considered, this can be viewed as a sign of confidence in the bill that will come out of here, in the people who came here to argue for a stipend on net revenue and also in the directors who will be appointed.

[English]

The Chairman: Thank you, Mr. Caron. You began to sway me when you talked about trusting the members of the boards that we appoint, but then you also suggested that we trust the judgment of the ministers who appoint them, and I'm afraid you lost me again.

I would like to make an observation and a suggestion on the process we're in right now. I allowed a fair bit of discussion on this because this is another one of those five big issues we talked about. But what we're attempting to do, and it's throwing us off a little, is to move through these Reform amendments. We should deal with this amendment. We will return to this issue, because there are still Bloc and government amendments on this one. I think we've had a good airing of the issue. Perhaps we could vote on this amendment - I'll let you have a final comment, Mr. Gouk - and then move on.

In the suggestion that we had six Reform amendments, Mr. Gouk was being a little liberal in his calculation. We have 18.

Mr. Gouk: That was your calculation, not mine.

The Chairman: It's going to take us some time to get through all of these if we're going to do it, so perhaps we could have a discussion on each one. If there's a willingness to accept it on the part of all parties because it meets the test we all want, or gets us to the point we all want to get to, great. If not, then let's have a discussion of the principle of it and bring it to a vote.

Fair enough, Mr. Gouk?

Mr. Gouk: I will expedite them wherever possible.

The Chairman: Thank you, Mr. Gouk. Did you want to make a final comment on this before I call the question?

Mr. Gouk: Yes, I have three short points.

First of all, with regard to the sliding scale, these are the amendments. At least half of these are government. Mine were available to the government last week. I'm seeing these for the first time. The sliding scale that was referred to, I haven't seen. It's difficult for me to determine if this is a reasonable sliding scale when the government hasn't seen fit to show it to me.

Second, with regard to the right of the taxpayer to get a return, I think the concept of that is fine. However, I remind you of the words of the government side - particularly the parliamentary secretary - when talking to the various municipalities who come before this board, telling them they should not get carried away with taxes, that they should be happy that the ports are surviving because they're such great economic generators. So what's good for the municipal goose should be good for the government gander.

Finally, when you say there's no difference between net and gross, I sure as hell don't want you people running my business. It doesn't matter what rate you take. If you take a percentage of gross revenue - for the sake of argument let's say 5%, and I know you're going to say we're taking much less.... If you take 5% of the gross revenue of a company that operates on a 4% margin, you drive that company into bankruptcy.

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Without specific explanation and certain very detailed guidelines, there is a hell of a difference between taking a percentage of gross and taking a percentage of net. No matter what percentage of the net you take, it suggests that they're left with some profit, however slim that might be.

Those are the principles of my amendment and I'm prepared to vote on it, having made those comments.

The Chairman: I won't call the question; we're going to come back to this issue as we come to other amendments.

Mr. Comuzzi: I wonder if our representatives at the front of the table would be able to give us some definitive answer as to whether this repayment scheme will allow us to stay competitive with our U.S. colleagues. Can we do that? I'd find that very helpful.

Mr. McNeill: It's in your financial report tabled by Nesbitt Burns. That and the stipend were tabled with the committee over a week ago.

Mr. Comuzzi: Thanks a lot, Mr. McNeill. I've been sick for a week, though.

The Chairman: Mr. Crête, you wanted to make a comment?

[Translation]

Mr. Crête: Are you saying there will be another discussion on this?

[English]

Mr. Keyes: Yes, without going on your amendment.

[Translation]

Mr. Crête: It is the same. I want to make sure I will not be told it has been defeated at the same time as that of the Reform Party.

[English]

The Chairman: It strikes me that if there's a willingness to accept the Reform amendment, if we all concur on that and we accept that amendment, then we withdraw your amendments and the government amendment. If there's not, let's deal with the arguments in each case and vote on each Reform amendment to dispense with them. Then we'll come back and revisit those issues.

Mr. Crête: Okay.

Amendment negatived [See Minutes of Proceedings]

The Chairman: Now we move to Reform amendment 5 on clause 7. That's on page 37 in the large package.

Mr. Gouk, would you like to introduce this?

Mr. Gouk: This is basically just adding the preamble upon application by the authority so that it is the port authority that would initiate the request to have the letters patent amended to issue supplementary letters patent.

Mr. McNeill: If you turn to page 35, the reverse is there. It says:

7. The Minister may, at the request of or after consulting with the board of directors, issue supplementary letters patent.

It covers both sides. If the minister is to initiate letters patent he must consult with the board, or the port may then ask for supplementary letters patent.

Mr. Gouk: Which one are we talking about?

Mr. McNeill: This is government amendment G-10 on page 35. It meets your requirement.

The Chairman: Yes, it does.

Mr. McNeill: It's just that it forces the government to consult if it's going to do any supplementary letters.

Mr. Gouk: Then he could still amend the letters patent without their initiating it or without their asking for it?

Mr. McNeill: Correct, but only after consultation with the port authority.

Mr. Gouk: That's a subtle difference.

The Chairman: Mr. Gouk, how do you wish to proceed?

Mr. Gouk: I think we can just go ahead and vote on it. I don't think we need further discussion.

Amendment negatived [See Minutes of Proceedings]

The Chairman: Reform motion 6 amending clause 8 is on page 38 of the large package.

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Mr. Gouk: This one deals with federal agency status, which has been essentially done. I assumed the government was going to do it, but at the time I was putting in my amendments I wasn't positive about that.

The Chairman: So we will withdraw this one?

Mr. Gouk: If I have assurance that it's taken care of, I'll withdraw.

The Chairman: Thank you, Mr. Gouk.

We then move to Reform motion number R-7, which is amending clause number 12. It's on page 51 on the large package. This looks like a consequential amendment, is it?

Mr. Gouk: Quite possibly. It's a relatively small change in conformity with the letters patent. Directors of port authority shall be appointed, versus appointed in conformity with the letters patent.

Mr. Keyes: Mr. Chairman, if Jim wants to look at our motion, which is very similar to his -

Mr. Gouk: What page is that?

Mr. Keyes: It would be G-14 on page 52.

Mr. Gouk: Amendment G-14 is on page 52 but it's an amendment to the French -

Mr. Keyes: Yes, there's a little bit of a mistake here.

The Chairman: Is that G-15?

Mr. Keyes: Yes, page 53. Jim, while you're on the right track with this particular amendment, ours doesn't leave it so open-ended and unpredictable a situation. Yours might put pressure on the minister as to the contents of the letters patent, whereas our suggestion -

Mr. Gouk: The one thing that jumps out immediately, Stan, on looking at your amendment, is that it still retains the written side of this debate about whether the minister shall consult and then make his own mind up as to who he appoints - consultation being whatever that happens to be - or that he will appoint from a list of nominees by the users. He came before this committee and said it was his intention to do it from the user nominations, but your amendment here just reiterates what was originally written in the bill, which contradicts what the minister said, that there will be consultation with the users. But then that leaves the minister clear to appoint whoever the hell he wants. He's simply consulting them.

Mr. Keyes: Yes, and we feel there's a necessity for this for matters of confidentiality, for other matters that we might see fit to.... If there's a list of names that comes forward, you still have to let the minister have the final say and he will be ultimately responsible because he will be making those appointments. So it gives the minister the opportunity to take a look at these names to ensure that there's no -

Mr. Gouk: There's nothing, though, in the concept of consultation that says he's even going to accept the list of names. I can consult with you all day and then do whatever I choose and it doesn't alter the fact that I consulted with you before I did it. But it doesn't mean what I did had any relationship between what you and I discussed.

Mr. Keyes: On government amendment G-14, it's the intention of the government -

Mr. Gouk: That's G-15.

Mr. Keyes: No, it's clause 12, pages 10 and 11 in the bill.

Mr. Gouk: On clause 12, all I have on both sides is French and I don't know what that means.

Mr. Keyes: Okay, G-15 in your book, on page 53. What you're addressing, I think, is part (a) of G-15. By replacing those lines on page 11 with that and with our change in part (d) of G-15, you'll notice where we're saying ``with users selected by the Minister or the classes of users mentioned in the letters patent.'' So where we're going, what we're hoping to achieve here, is that the list being presented by the users comes forward to the minister, the minister has the list of users and makes the appointments to the board of those user representatives.

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Mr. Gouk: Therein lies the subtle difference. This says the remaining individuals will be nominated by the minister after consultation. The minister sat at this committee and said he will make the final selections from a list of those nominated by the user. This says that the user doesn't get to nominate him, that the minister will talk to the users, but then he will nominate them, not the users. All I want -

Mr. McNeill: Nomination means that he sends it over for Governor in Council appointment. That's where we're going with this. The minister doesn't appoint; it's Governor in Council that appoints. So he nominates them.

Mr. Gouk: Okay, but he nominates.

Mr. McNeill: He'll work from that list of users.

Mr. Gouk: In the case of the municipality and in the case of the province, they nominate.

Mr. McNeill: They appoint, but they don't nominate.

Mr. Gouk: It still has to be done by the Governor in Council, does it not, from their selection? They actually appoint?

Mr. McNeill: They appoint.

Mr. Gouk: Before the minister sat there - unless the minister doesn't know his own terminology -

Mr. McNeill: He said he will work from the list of users.

Mr. Gouk: - and said that the users will nominate.

Mr. McNeill: Yes.

Mr. Gouk: This says that he will nominate.

Mr. McNeill: It's the same thing. He can't appoint. It's the Governor in Council that appoints, but he will work from the list of users. He will select from there and send it over for Governor in Council appointment. It's just the language.

Mr. Gouk: Anyway, that's doesn't deal with my motion. I just made that observation because you referred to yours.

That's fine. Let's just carry on a vote.

Amendment negatived [See Minutes of Proceedings]

The Chairman: That brings us to Reform motion R-8 on page 55.

Mr. Gouk, does the previous discussion allow us to come to a vote?

Mr. Gouk: This one clarifies that. The government may wish to take exception to the last part of that, and if so perhaps it would be easier if we considered a friendly amendment, as it's been referred to, to delete that part if only that part is objectionable. All this does is state that the remaining individuals - the user people or those other than the municipal and provincial people and the government representative - will be provided from a list provided by the users and, where applicable, labour unions.

They've already struck out the part that refers to the section that deals with labour unions, so they've essentially defeated labour unions. But this still then clarifies the issue that the minister will in fact make his nominations, if that's the correct word, from a list provided by the users, as opposed to the nebulous term of consultation.

The Chairman: Mr. McNeill.

Mr. McNeill: You've received representations from other areas of the country where they wanted railways and a guaranteed seat on the board. Some said they wanted labour unions on the board, and some wanted certain shippers on the board.

What we're recommending is that the users come together and make the best nominations possible and provide the list. Through the letters patent, the minister would then make the appointments by Governor in Council and let the users make those recommendations - but not specific categories - for appointment to the board. Let the users come forward. The users may decide they want more public interest or more different provincial representation.

I know in Vancouver they'll be looking for more appointments from the prairies than they will be from British Columbia. That's what we're hearing from the users. We're trying to create that flexibility in how people get appointed to the board.

Mr. Gouk: I don't believe my amendment does anything to defeat that intent.

The Chairman: You were suggesting, if I understood you, Mr. Gouk, that you would accept a friendly amendment that took out -

Mr. Gouk: - to put a period after ``users''. That just clarifies that the users, in whatever manner they make recommendation, will put forward a list for the minister's nominations.

The Chairman: Mr. Keyes.

Mr. Keyes: This list is going to happen anyway. The list will be created. Quite frankly, if you're saying remaining individuals from a list provided by the users.... Let's say that, in the community interest, the community at a particular port wants to submit a name for a list to be provided to the minister. They're not users, but they certainly would want to have a contribution to that list. But by definition, we would only be accepting a list provided by the users.

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I would rather not hamstring or tie or unduly restrict the minister in making an appointment to a board off a list provided by not just the users, but by the greater community at large.

Mr. Gouk: Mr. Chairman, I remind the parliamentary secretary that I'm amending a clause that already says ``the users''. We have already established by the bill that we're talking about the users.

Mr. Keyes: Exactly.

Mr. Gouk: All we're saying is that the list will be provided by the users as opposed to ``consultation with the users''. I want to have exactly what the minister said, nothing more - unless the parliamentary secretary is saying that the minister was in error in saying the things he did.

Mr. Keyes: No, because by amending this particular paragraph you are unduly restricting the minister's ability and discretion to hear from the community at large, as opposed to the users coming forward, creating a list, saying ``There's the list, that's who you appoint''.

Mr. Gouk: Are you telling me the intent is that he talks to the users but then appoints whoever he wants?

Mr. Keyes: No - in consultation with the port community at large. We don't want to exclude that opportunity.

Mr. Gouk: It doesn't say that.

Mr. Keyes: No, I know, but we don't want to exclude that opportunity for the minister to do it, and that's what your clause would do.

Mr. Gouk: Okay, but that still is contrary to what the minister himself said to this committee.

Mr. Keyes: No. He wants to consult.

The Chairman: Okay, whoa, gentlemen. Let me allow a neutral third party into this. Mr. Crête.

[Translation]

Mr. Crête: I think we need to look at the language of the bill and not try to guess an intent that might be read into the words.

The bill, as presently written, says:

e) the Governor in Council appoints the remaining individuals nominated by the Minister in consultation with the users.

Therefore, he could nominate someone who is not a user or use a list established by himself that he would submit for consultation to the users, and then proceed with the appointments according to the results of the consultation. At the extreme, the Minister could even submit the names of five persons for the consultation with users, and if users say no to all five, have them appointed nevertheless by the Governor in Council.

So it seems to me that the amendment moved by the Reform Party is important because it raises the issue of whether or not the politicians will keep control over the board of directors. And the Reform motion says that appointments should be made ``from a list provided by the users''.

The proposal of the Reform Party seems to me much healthier from the perspective of the organizations, since it requires appointments from a list provided by the users. It would be in their interest to submit names of competent people, able people who represent their interests, while leaving the Governor in Council the ability to choose from this list of names.

There is still some room to manoeuvre for the government while in the process set out in the bill as written, the Minister has far too much discretion. It has nothing to do with the present Minister. There will be other ministers coming after him. We simply need to avoid getting into the difficult situation we have been faced with in ports where some of the directors did not have sufficient abilities.

We should not lose sight of the fact that under the present wording of the bill, the base list could just as well be established by a political party and the Minister could use this list for his consultations. I do not think that would be right, in view of all the other requirements we are putting into the bill.

We decided earlier that we would tax the income of ports. If some directors are not as competent as they should be or, even if they are competent, are appointed against the wishes of the users, the objectives we have set out will not be met. This is why Mr. Gouk's amendment is very relevant.

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We are going through the amendments of the Reform Party at this stage and I think there will be lots of discussion about the appointment of directors. This bill, leaving so much room for political interference, differs very greatly indeed from last year's report of the Standing Committee.

I quite understand that the government does not wish a repeat of the situation at Aéroports de Montréal, where there was a board over which the government had no control whatsoever and whose members could do almost whatever they wanted.

But here, there is another extreme, and it is something that has occurred in several ports. There have been in the past rather political appointments where the abilities and the competence of the directors were not readily apparent. We are now moving to structures which are much more independent, without any oversight from Transport Canada, whose officials could provide some expertise and some protection and support to board of directors.

So, in my view, this is a very important issue. Before coming down on the Liberal Party's side, we should seriously consider the proposal of the Reform Party.

It is obvious that we will revisit this when we deal with the Bloc amendments because I believe we need to amend the bill on this major issue.

[English]

The Chairman: I'll call the question on Reform amendment 8.

Amendment negatived [See Minutes of Proceedings]

The Chairman: I have just received notice that Reform amendments 9 and 10 have been withdrawn. That takes us to Reform amendment 11 on page 58, which is amending clause 12.

Mr. Gouk, would you like to introduce this?

Mr. Gouk: Right now the clause reads: ``The board of directors may fix the remuneration''. That doesn't make any sense. They may or they may not. Does that mean that if they don't, nobody gets paid? I think there has to be something more definitive: ``The board of directors shall fix''.

Mr. Comuzzi: Rest assured that there will be remuneration. There will be a fix. Is that correct, Mr. McNeill?

Mr. McNeill: It's absolutely correct and it's also been covered in amendment G-15 with the same wording. The final line on page 53 says ``The board of directors shall fix the''. So it covers the same thing.

Mr. Gouk: There isn't much doubt that you will manage to squeak that one through somehow, so I will withdraw mine.

The Chairman: Thank you very much, Mr. Gouk. That moves us to Reform amendment 12 on page 84 of your large package and takes us all the way. It's amending clause 21.

Mr. Gouk, would you like to speak to this?

Mr. Gouk: We've heard considerable evidence on this. No payment is made to the ports. That's all fine, but we should leave the government an out in its own control. In the event of some extraordinary circumstance where the government may wish to make a payment to a port by special resolution, we should leave them the ability to do so. If the government chooses not to do it there's nothing there to force them, but in the event of a declared emergency defined by the regulations, they should have that ability.

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Mr. Keyes: If a port authority needs money for an emergency, it, like any other entity that falls in the same structure or same entity across the country, should be able to receive funds in the same way as any other beneficiaries of emergency funds. Why make the ports a special case and not make rail, air, or any other mode of transportation go for emergency funds in the usual way? I don't know why you identify ports to be different.

Mr. Gouk: The response to that is that the government saw fit to put in a clause in the beginning stating that no payment made to a port authority may be made by an expropriation of Parliament.

Now you have taken something that isn't there for anybody else. You're not going to give them any money unless they have some kind of catastrophic disaster or emergency. Now we have looked into the act, and we have specifically said that Parliament does not have the power under this act to give them money for any reason.

Mr. McNeill: It refers to discharging any obligation or liability; it doesn't refer to emergency.

Mr. Gouk: What else will they use the money for, even after an emergency?

Mr. McNeill: What clause 21 says is that the port authority is not going to come to the treasury or the consolidated revenue fund to finance projects. But in the case of an emergency.... If a tidal wave sweeps up the Fraser River and knocks out one of Rick Pearce's wharfs, that's a different issue. He can apply for emergency funds the way any other agency can.

Mr. Gouk: It's one of these grey areas I've interpreted that way. All I'm putting in here.... There's nothing in there that says that if they want to do some special project, they can apply or anything like that. It says it's very clearly for declared emergencies as defined by the regulations.

The Chairman: Mr. Byrne, would you like to be heard on this?

Mr. Byrne (Humber - St. Barbe - Baie Verte): To follow up on Neil's point, they can still apply to existing government programs for disaster relief. But as a federal agency under the real property program, can they actually do so to replace existing structures that are owned by the federal government, say under emergencies relief? I think that's what you're referring to, isn't it? If there's some sort of catastrophic problem.... The federal government is self-insured. Would they still actually be able to receive financing or funds for federal government properties to resolve -

Mr. McNeill: For a declared emergency.

Mr. Byrne: And for other things. But what other things?

Mr. McNeill: That's a very good point.

Mr. Byrne: Can I get an answer to that?

Mr. McNeill: We believe clause 21 is really set for discharge of any obligational liability with regard to port operations.

If there was a declared emergency, a port authority could apply through the emergency funds for relief, as with any other community or organization. It does not prevent it in this case.

Mr. Gouk: I think that clause should be in there; otherwise, I would simply have tried to delete the clause instead. I think now that we've given them federal agency status we have to be very clear that they can't come to us for money for regular discharge of obligations or liabilities, except in the circumstances of a declared emergency.

Mr. Cullen: I think that we've all agreed here that we need to somehow limit what the federal agency provides to the port authority. This makes it absolutely clear, with no ambiguity, that the federal government is not there to backstop their loans or debts. I think it's absolutely essential, and it's one we've all agreed upon.

The Chairman: Thank you, Mr. Cullen. Mr. Crête.

[Translation]

Mr. Crête: Would section 21, as presently written, not preclude any form of assistance to a port authority in an emergency situation?

The clause says:

21. Notwithstanding any authority given under any other Act...

This means that no payment to a port authority can be made, even under exceptional circumstances provided for in any other legislation.

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Suppose a major accident occurs in the port of Churchill, like an earthquake or something of that order, and the government wanted to provide some form of compensation. This would be impossible due to the way section 21 is written.

[English]

Mr. Comuzzi: I promise not to comment on Churchill if you don't, okay?

[Translation]

Mr. Crête: I just wanted to give an instance of a difficult situation. We might just as well look at a disaster like the one we had in Quebec last year and which affected ports, among others. This is why we are very sensitive to the consequences of such disasters.

If we pass section 21 as presently written, there will be no way for the government, ``notwithstanding any authority given under any other Act'', to provide any kind of support to the port in such an emergency.

I do not know if an exemption could be made to this prohibition, but I must admit that the amendment of the Reform Party at least leaves the door open, by way of a special resolution of the House of Commons. Such a resolution will not happen every day, but I find it interesting.

So I put the following question to the experts: would section 21 as written not preclude any possible form of relief?

[English]

Mr. McNeill: The intent of clause 21 in Bill C-44 as now drafted is simply to prevent a port authority seeking revenue from the consolidated revenue fund to discharge any obligation or liability in normal port operations. That's the intent. It does not prevent a port from coming in cases of emergencies like earthquakes, tidal waves, nuclear or whatever. It does not prevent them from seeking special emergency funding.

[Translation]

Mr. Crête: Let me just finish my question. On what basis do you say that this would not prevent them from applying? The first part of section 21 says:

21. Notwithstanding any authority given under any other Act...

I am not a lawyer and I could be wrong, but this seems to say that there can be no exception. Am I right in saying that this language means that no exception can be made?

[English]

Mr. McNeill: ``...to discharge any obligation or liability'' to port operation.

[Translation]

Mr. Crête: I did not get the translation.

[English]

Mr. McNeill: The intent here is that the port authority isn't going to be seeking funding through manpower programs or other government programs to assist them with their normal port operations, with the normal discharge of their obligations. It doesn't prevent them from seeking relief in case of an emergency.

[Translation]

Mr. Crête: Suppose there were problems last Summer at Port-Saguenay, that some infrastructure was destroyed. Assuming that the port has facilities in order to discharge its obligations, would section 21 as written not prevent the federal government from providing any form of special assistance? However, the Reform Party motion would leave a door open, at least through a resolution of the House of Commons, which is quite an exceptional procedure.

[English]

The Chairman: Okay.

[Translation]

Mr. Crête: I would just like to add one thing. If, for example, in a region where the infrastructure program were carried forward, money were available to a local municipality wishing to use this funding to build a new wharf at their local harbour, would this be precluded by section 21?

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This is not a hypothetical situation. It is a very real possibility that might come up next year in a riding I know very well, the most beautiful in all of Canada.

[English]

Mr. McNeill: I'd have to stand this one and seek further legal opinion for you. The intent was purely to deal with current port operations and liabilities. Whether there's an infrastructure program and concurrence from municipal, provincial and the federal government to do a specific new project, I'd have to get a ruling for you on that one.

The Chairman: I have a number of interveners. We're spending an inordinate amount of time on this item. I will go quickly to Mr. Cullen and Mr. Byrne, and Mr. Gouk, I'll give you a chance to make a final comment.

Mr. Cullen: Thank you, Mr. Chairman.

The way I understood it was that if we make a distinction between debt.... If you have a home that is ravaged by flooding or whatever and that home has a mortgage, this says that you could not access consolidated revenue to pay off the mortgage, but the people who were ravaged by this disaster could be supported through consolidated revenue to get back on their feet. I think this clause simply makes the distinction. I think it's absolutely critical that anyone loaning money to a port authority know absolutely, categorically and clearly that the loan is not guaranteed to any extent by the federal government, notwithstanding the federal agency status. I think we're making a distinction between a debt and normal operations or helping in an emergency, and they're two different things.

Mr. McNeill: Right.

Mr. Keyes: But at the same time, Mr. Chairman, there's a supplementary. I understand that too, but I'd probably ask that this matter be stood down until we get more advice on it. Like Mr. Crête, I want to ensure this does not prevent the government, if there was a second infrastructure program, from deciding on a particular case, in a particular port, in a particular harbour, in a particular situation, that it wouldn't be able to somehow work with that port to create that opportunity for it, or that in the event of an emergency such as a tidal wave coming through and tearing out the wharf -

A voice: In Hamilton?

Mr. Keyes: The tidal wave is at the other end of the port.

Mr. McNeill: We can prepare that and report back tomorrow.

Mr. Keyes: So I'd ask that this be stood down and further discussed once we get some legal input to ensure that these are not being exempted because of this particular clause.

The Chairman: Thanks, Mr. Keyes. Mr. Byrne.

Mr. Byrne: I have another technical point for Mr. McNeill.

What it would really mean is that there would be no A-base funds that could be applied from within the main estimates of the Department of Transport. So if there was a Halifax explosion, for example, we would have to repair the port of Halifax from every other source of funds but emergency funds.

But what if a port authority was in a situation where there was a high likelihood of liability? For example, if there was a wharf that was in a high state of disrepair and was considered a probable legal liability, and the port authority refused to dismantle it because that would mean an expenditure of funds that they want for something else, would this prevent the Department of Transport from coming in and expending funds to take out some piles to prevent a potential for liability to them? Could you refer that one to...?

Mr. McNeill: I will.

The Chairman: Given the length of time I have been sitting here, the use of the word ``piles'' is unfortunate.

Voices: Oh, oh!

The Chairman: Actually, I think this discussion has been quite useful and most interesting.

Mr. Gouk, are you prepared to have it stood pending -

Mr. Gouk: I have no problem with that if I can make two short comments, Mr. Chairman.

My concern is about the use of the word ``intent''. Intent says that's what we mean but not necessarily what we clearly said - this is how we intend to interpret it.

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I don't want to take any of this out. Mr. Cullen mentioned a valid point of putting in something to ensure that we have told the lenders and anyone else that we do not have a liability. That's why I'm not trying to resolve what I consider to be a problem by simply saying remove it. I'm saying leave it in, but clarify that in the event of a declared emergency, the government can, by special resolution, make that payment. It's simply giving the government an option. I don't see where the government has anything to lose in passing this.

The Chairman: Thank you, Mr. Gouk.

We have an undertaking from Mr. McNeill to come back to us tomorrow. You will be here for the 3:30 p.m. to 6 p.m. meeting, so we'll revisit this at the start of the -

Mr. Keyes: We'll be here until midnight looking at the rewording.

Mr. Comuzzi: What's the specific question we're asking Mr. McNeill to come back on? Is he clear on the specific question?

The Chairman: Mr. McNeill is crystal clear on it.

Mr. McNeill: We're going to get a clear answer on whether emergency funding is already covered or whether we need this kind of an amendment, and whether other projects not related to the normal obligation of liability can be funded through the consolidated revenue fund. We will get those two rulings and report back tomorrow afternoon.

Mr. Comuzzi: My friend here had the most succinct question to you.

Mr. McNeill: That was it.

The Chairman: Fine, Mr. Comuzzi. I think we've got a sense of where we're going.

We're going to move to clause 27 and Reform amendment 17 on page 107 of your package. This is on the issue of pledging assets. There are Bloc and government amendments against this issue also.

Mr. Gouk.

Mr. Gouk: This is a particularly important amendment, given the government's determination to take the fee from gross revenues. This would allow the ports to pledge their own properties and assets other than federal real property as collateral for a loan, and would also give the minister the discretion to allow a port to pledge, mortgage, and so on, federal real property, if he deems the circumstances appropriate. It doesn't commit him to do it and it doesn't give the port the right to do it, but does leave the door open should the minister make that decision.

The Chairman: Mr. Keyes, do you want to respond?

Mr. Keyes: I have two before me here. I'm just trying to figure out which one it is. Are we talking about mortgaging federal real property?

The Chairman: We're talking about borrowing money against assets other than federal real property.

Mr. Keyes: If that's the case, government amendment G-33 on page 110.... I'm just comparing the wording of the two.

The Chairman: Jim, do you see G-33?

Mr. McNeill: Amendment G-33 clearly says that the port may not pledge federal real property - that is, federal crown land - but it may pledge fixtures or create a security interest in fixtures on federal real property to the extent authorized in the letters patent.

Mr. Keyes: So it's basically the same thing, Jim, except ours is a little more clear vis-à-vis fixtures and the letters patent.

Mr. Gouk: Actually, it's not the same thing. While I'm not giving them authority to borrow against federal property, I am giving the minister the authority. Should he decide for some special project that it is appropriate, at his sole discretion, he can do that. The second thing mine does that yours does not is give them the right, which the bill restricts them from, to mortgage their own property other than federal real property. For example, your own Port of Hamilton owns all of their property.

Mr. Keyes: That's right.

Mr. Gouk: They never got it from the government in the first place. They bought it and paid for it themselves, with no grants or anything.

Mr. Keyes: And they'll be able to pledge it.

Mr. Gouk: Why will they be able to pledge it?

Mr. Keyes: Because it's not federal property.

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Mr. Gouk: The bill says you can't mortgage any property.

Mr. Keyes: No, federal real property. The harbour commission lands are property bought in their own right, not federal property.

Mr. Gouk: Your amendment, like all the others, is coming to me new.

The Chairman: While you figure that out, Mr. Gouk, Mr. Cullen wants to speak.

Mr. Cullen: Thank you, Mr. Chairman.

I wanted to make a couple of points. First, the danger, to my mind, of leaving this open like this or creating this possibility is that a lender, if it's possible to get that kind of pledge, is going to try to seek it out.

We heard in Halifax, for example, that bankers typically like to loan on assets and are not so keen to loan on cashflow. That is changing. In fact, when the Nesbitt Burns report was tabled - I'm not sure if it was public testimony or me chatting with them - I chatted with them later and asked them to what extent the financial feasibility of these ports depended on the ability to pledge federal real property. In their view, based on their study, it was not necessary.

So I would put that flag in the sense that if you put it there, the lenders are going to try to seek it out.

Mr. Gouk: Could I ask for clarification from the parliamentary secretary, which might expedite this? Am I understanding correctly that by government amendment G-33, the ports would be allowed then to pledge their own property other than that owned by the federal government?

Mr. Keyes: That's correct.

Mr. Gouk: I withdraw mine.

Mr. Keyes: Along with the fixtures on federal property.

The Chairman: Thank you, Mr. Gouk. Before motion 17 is withdrawn, that takes us to Reform motion 18 on page 109, again an amendment to clause 27.

Mr. Gouk?

Mr. Gouk: The difference here is it allows the directors to establish a committee they think appropriate, yet whose members aren't necessarily directors themselves.

Mr. Keyes: I think the government can live with that amendment, Mr. Chairman.

Mr. Gouk: No sense beating it to death, then.

Mr. Keyes: You can vote on that one.

Mr. Gouk: Yes, if the government's happy, then let's do it.

Amendment agreed to [SeeMinutes of Proceedings]

The Chairman: We'll call it the Gouk amendment.

Mr. Gouk: A small clause in the Keyes report.

The Chairman: That takes us to Reform amendment 19, also amending clause 27, on page 112. It involves deleting lines 21 to 25 on page 15.

Mr. Gouk: Is it part of your amendment, Stan, to take that out?

Mr. Keyes: Yes.

Mr. Gouk: I withdraw it.

The Chairman: Withdrawn. That moves us to Reform amendment 20.5 on page 147 of your package; it's amending clause 37. Mr. Gouk.

Mr. Gouk: What this one is doing is now that we have given the ports federal agency status, they are now required to pay grants in lieu. What this amendment says is those that are already paying grants in lieu, which are the Canadian Port Corporation ports, will continue to do so. Those that are paying something less than that, either fee for service for some other arrangement, will pay, for starters, not less than they're already paying and will transition to full grants in lieu in five equal instalments over a five-year period, to give them time.

Some ports that aren't paying anything now would be suddenly hit with quite an impact by this. The municipalities haven't been getting anything anyway, so we're saying phase it in.

Mr. McNeill: Is this known as the Rick Pearce amendment?

Mr. Gouk: No, this is known as the Jim Gouk amendment. The fact that I'm not the only wise person in the world cannot come as a total surprise to you, Neil.

The Chairman: It certainly comes as no surprise to me, Mr. Gouk.

Mr. Comuzzi.

Mr. Comuzzi: Mr. Chairman, through you, can I ask Mr. Gouk a question?

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The Chairman: Please do.

Mr. Comuzzi: It's not on his wisdom, but on the substance of what he's saying here. I would never challenge his wisdom.

When you talk about that, Jim, are you talking about the ports that are already in place and the harbour commissions that will be in place? You're referring to it as a port authority that formerly was a harbour commission.

The Chairman: Mr. Gouk, if you'd like time to consult with your research assistant there, please feel free.

Mr. Gouk: Port authority is covering existing Canada Port Corporation ports and harbour commissions, but what I'm saying simply is those that are already paying it keep on paying, those that are paying something less pay not less and convert from where you are now to full grants in lieu in equal instalments over a five-year period.

Mr. McNeill: This is requiring Parliament to dictate provincial assessments, which is something I caution you on. We clearly understood that when the grants in lieu would come in it would take a period of time for the harbour commissions to adjust. So we're making the other provisions on the application of the stipend. But each of the harbour commissions has been informed that if they apply for CPA status and receive it, they must deal with the provincial assessments office of each provincial government on how their property is to be assessed.

They'll deal with Public Works on how the formula is applied, and they must deal with their own individual municipalities to see if they can get a break - and some of them do get breaks. In the LPCs, some of the ports got special provisions in the application of the assessment, but the onus really falls on the ports to make the arrangements with the provincial assessments and their municipalities.

I would highly recommend that Parliament not legislate how the province applies its own tax.

Mr. Gouk: There's something else I want to ask. A lot of the municipalities came and said they don't want grants in lieu or anything else, they want full taxation. There are going to be some that say that if it's grants in lieu then so be it, pay up.

I think it is unreasonable to ask the ports to go from in some cases nothing, or relatively small fees for service, to full taxation without having the opportunity to trim their operations, to develop their revenues, whatever it takes. The municipalities are not going to lose from this; they're going to get the same or more. In no case are they going to get less. I think this is a fair way to go to ensure the viability of the ports and still treat the municipalities fairly.

Mr. Keyes: I'm sure, Mr. Chairman, that whether we're talking about Thunder Bay, Hamilton, or any other port community, and specifically a municipality, that municipality ought to have the leeway to negotiate with its port the best way for that port to pay back the municipality for expenses or fees that are being incurred by the municipality.

I say that, Mr. Gouk, because for example in Hamilton during the negotiations for letters patent between the federal government and say a CPA application by Hamilton, there are going to be negotiations that will take place, just as there will be negotiations that will take place between the harbour commission or the new CPA at Hamilton and the municipality where the municipality says we can come to a deal on this stuff; we need a piece of land that's at the western extreme end of your harbour, we'll take that over, and in lieu of taking that over, because you won't be paying to dredge it out anyway, we're going to try to give you some relief over here on this particular -

If we start to legislate how much municipalities pay across the board, it leaves no room for manoeuvrability and negotiations between the municipality and the CPA.

Mr. Gouk: If municipalities negotiate extremely reasonably then obviously you don't have a problem, but we've heard a lot of municipalities - and you commented very testily on it - that said to hell with this grants in lieu, we want full taxation the same as everybody else pays.

Mr. Keyes: Sure.

Mr. Gouk: Why do you think they're going to negotiate, and what's going to happen to those ports?

Mr. Keyes: I think the port communities are going to make it very clear, because let's remember that the new governance on these particular ports are going to be the representatives of users of the port. The representatives of the users of those ports will be going back to their municipality and saying that Dofasco or Stelco created 9,000 or 10,000 jobs at each plant where the municipality is dependent on the clean, clear operation of that port and the liveliness, strength, and viability of that port.

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It's certainly going to be made very well known to the municipality. I wouldn't want to risk hamstringing a municipality and its potential negotiation with a particular port or harbour association or commission by saying this, when I think the other has a much stronger opportunity of happening when the municipality understands that this particular port or harbour commission is an economic jewel and a generator of jobs and wealth in their community.

Mr. Gouk: I have just one comment, Mr. Chairman.

In my riding we had a 60-mile CP Rail line that was paying $1 million per year in taxation to the three levels of government. They went to the three levels and said they needed some relief on the taxes because they didn't have $1 million in revenues from the line. They said they needed to get down to at least their cost.

Nobody, none of the levels of government, would give them any relief, so they applied for and got abandonment, and now we don't have a rail line in there. Instead we have heavy trucks pounding over the highway, which cost us. We've lost most of the taxes in any case because of the approved abandonment and the ripping out of that railway.

I think there has to be a clear guideline. I don't think the ports are going to be hurt by this, but by the same token, municipalities, keep in mind, are at the very least going to get the same amount they're getting now and then progress upward. In many cases they'll be getting more. In no case are municipalities being penalized by this amendment.

The Chairman: May we call the question?

Mr. Keyes: I understand where he's coming from, but you've got to question whether it's out of order.

The Chairman: Mr. Gouk, we're going to call the question.

Mr. Gouk: Okay.

Amendment negatived [See Minutes of Proceedings]

The Chairman: Reform amendment 21 on page 148 also amends clause 37.

Mr. Gouk: It's a very minor amendment; it already says for a term of not longer than 60 years. This just gives the minister the ability, where it is appropriate, to have a longer term.

Mr. McNeill: We've canvassed most of the ports and very few wanted anything beyond60 years. Right now, the LPCs can do 10- or 20-year leases without ministerial approval. We went to 60 years. We thought it was acceptable after our consultations with all the ports. Most ports didn't look for a 99-year lease.

Mr. Gouk: The operative word again is ``most''. We're not saying give them more than60 years, we're saying give the minister the authority to approve it if they present a good case.

Mr. McNeill: They can go for 60 years, and then in year 50 come back and get another 60 years.

Mr. Gouk: That gives a lot of security for the first 50 years.

Mr. Keyes: If it's 50 years, I'll take it.

Mr. Gouk: Yes, you think a little smaller than some of the big corporations; they have multi-billion-dollar investments in there.

I can understand why you're afraid to give the minister -

The Chairman: As you said earlier, Jim, we're listening to all the ports and the majority point of view on this issue.

Mr. McNeill: If you want to go either through the letters patent or to the minister.... We were trying to be sensitive to some of the comments that there was a steady parade to the minister of people looking for guarantees or whatever.

Mr. Keyes: I don't understand why you'd turn down something where there's no injury inflicted on anybody, other than to give some discretion to the minister.

Amendment negatived [See Minutes of Proceedings]

The Chairman: We are now moving to Reform amendment 22, which is on page 154, amending clause 38. It has something to do with federal real property.

Mr. Gouk: I'm looking up what exactly it has to do with. It simplifies it. They can take their own land and, if they wish to, dispose of it without going to supplementary letters patent.

Mr. McNeill: The letters patent process, though, to establish the corporation.... We're trying to find out what federal real property and what other real property they have. That's how the corporation is established.

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If they go ahead and sell other real property, they should at least amend their letters patent. That's our argument on that one.

Mr. Gouk: I'm just saying why go through that process? If it's their land, let them deal with it.

Mr. McNeill: When we're creating them through the letters patent, we identify what it is they start with. They're going to start with some federal crown land and some other property, and we're going to list all of that in their letters patent.

If they sell it, they should at least change their letters patent. That's all we're saying. It's to close the loophole.

Mr. Cullen: Are there any materiality issues, such as if it's $150,000?

Mr. McNeill: It's a paper exchange only. It's only a notification of their letters patent.

Mr. Cullen: No, I didn't mean that. I meant if it's real property worth $5,000 in the original letters patent and they dispose of it, they have to come back.

Mr. McNeill: The only change we recommended was that if they did road easements and other small exchanges with municipalities or with a user, they not have to amend their letters patent.

In actual disposal of assets, the sale or transfer of property, they should change what it is they have on their books or their letters patent.

Amendment negatived [See Minutes of Proceedings]

The Chairman: We are moving to Reform amendment 23 on page 157, which amends clause 40.

Mr. Gouk: What the bill is calling for is a land use plan that includes objectives and policies for the physical development of the real property that it manages and occupies, taking into account social, economic, and environmental matters. And they're supposed to do all of this in 180 days.

I think that's a little fast, so instead of six months, I say let's be realistic and give them12 months.

Mr. McNeill: The only reason we recommended six months is that we thought - first of all, most ports do have a land-use plan now.

Mr. Gouk: Most.

Mr. McNeill: Again, not all. Second, if the bill is proclaimed on July 1, 1997, they certainly can get on with doing their land-use plan now. Six months later, being the end of 1997, they will have had time to have completed it.

If you think twelve months is required...we were just trying to keep the pressure on to make sure that a land use plan was available to each community where there is a port. That's all.

Mr. Keyes: Yes. Our amendment is calling for eight months, and Mr. Gouk's amendment is calling for six to twelve months. Is that right?

Mr. Gouk: Twelve months.

Mr. Keyes: So four months doesn't matter one way or the other. We'd accept this amendment.

Amendment agreed to [See Minutes of Proceedings]

The Chairman: You got another one, Jim. I don't know about this; it's getting too friendly for my liking.

We're now dealing with Reform amendment 24 on page 166, amending clause 43.

Mr. Gouk: This should be a fast and easy one. Legislation requires ports to give users thirty days' notice of change in fees. I'm saying that's a little light. When you change the rent on an apartment in Ontario, you have to give sixty days' notice.

Mr. McNeill: Your CTA requires the railways to give twenty days' notice. We thought we were being generous in giving thirty days' notice.

Mr. Gouk: Well, I'm extra generous. I don't think sixty days is an unreasonable amount of notice to give somebody on a rate change.

The Chairman: If we're doing that, could we take subsection 27(2) out of the CTA as a consequential amendment?

Mr. Gouk: I'll drink to that.

The Chairman: Is this going to impede any port operations?

A voice: No.

Mr. Keyes: The Gouk amendment, Mr. Chairman.

Amendment agreed to [See Minutes of Proceedings]

The Chairman: Agreed. That's another one passed. We're obviously moving too fast or the air is giving out.

Mr. Keyes: Mr. Valeri wants to know whether Jim and I want to change spots for a while.

Mr. Valeri (Lincoln): Mr. Gouk would like to act as a parliamentary secretary to you.

.1715

Mr. Keyes: What page are we on now?

The Chairman: Now we're moving to clause 117. There is Reform amendment 25 on page 231 of your large package.

Mr. Gouk: For some reason mine doesn't have amendment 231. I go only to 185. Not only do you not give me the information you're privy to, you don't even give me my own information.

The Chairman: Now wait a second. Hold it, Mr. Gouk. Isn't it an oxymoron that we should give you your information?

Mr. Gouk: Only if you want to do it with the same reference numbers that you've placed on them yourselves.

The Chairman: In future meetings of the committee I'd be prepared to provide you with all of your information.

Mr. Gouk: You took my information and added reference numbers to it.

What was the number again?

The Chairman: As I understand this, these are all new clauses.

Mr. Gouk: This is one big new clause. What this is about is the fact there is no dispute settlement mechanism legislation.

The Chairman: Oh, right.

Mr. Gouk: Basically I have taken the final offer arbitration dispute settlement mechanism out of the Canada Transportation Act. The only changes are that where it used to say ``rail'' now we say ``port'', and where it used to say ``shipper'' now it says ``user''.

The Chairman: I understand.

Mr. Gouk: Other than that, it is right from Liberal approved policy.

The Chairman: It must be good policy then.

Mr. Gouk: I hope you certainly think your own policies are good. We'll soon find out.

The Chairman: Let me first turn for technical assistance to Mr. McNeill and let him sketch this in for us.

Mr. McNeill: The first point we'd like to say is this has been lifted out of the CTA. The difference between rail and port is that rail deals with individual shippers. Ports always deal with publishing rates for a host of consolidations. So there's little opportunity here to get into negotiation or final offer arbitration.

Mr. Gouk: Then we'll rarely have to use it.

Mr. McNeill: Secondly - that's right - we recommended government amendment 55, page 169, to address the issue that you received in submissions about no appeal, that appeals or complaints would go to the Canadian Transportation Agency on unjust discrimination of a fee fixed. That's the way we would address it.

The Chairman: What's the reference on that one?

Mr. McNeill: It's G-55, page 169, in the big package. We propose a new clause. This would allow any individual to come to the Canadian Transportation Agency with regard to their issue of fees.

Mr. Gouk: Does that fall under the final offer arbitration?

Mr. McNeill: No.

Mr. Gouk: Or does it fall under that wonderful 27(2)?

Mr. McNeill: No, it's not the 27(2).

Mr. Gouk: What does it fall under if it isn't -

Mr. McNeill: Under this bill it says that you can come to the Canadian Transportation Agency and make your case on the question of discrimination on fees fixed. You can make your case and they'll rule on -

Mr. Gouk: Whether you've been discriminated against or not.

Mr. McNeill: Then the port authority must govern itself accordingly, which is the language we've been assured says that they must follow the instructions of the Canadian Transportation Agency.

Mr. Gouk: Am I correct that the government amendment simply says that they they have an out if they feel they're being discriminated against -

Mr. McNeill: That's correct.

Mr. Gouk: - but where there's a disagreement on the rate, they have no mechanism unless they can prove discrimination?

Mr. McNeill: That's correct.

Mr. Gouk: I stand with mine then.

Amendment negatived [See Minutes of Proceedings]

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The Chairman: I note I have one final Reform amendment, but I'm wondering, Mr. Gouk.... Reform amendment 26, which is on the final page of this, is actually a new schedule. Is that not consequential to -

Mr. Gouk: The defeated motion, yes, so you have now done.

Mr. Keyes: All except for one that we stood down.

The Chairman: We have dealt with this entire list of Reform motions most expeditiously. I thank you, Mr. Gouk, for your willingness to do this; I thank you, Mr. Crête, for your patience.

We have a few minutes remaining, so let's step back to where we left off this process. We are now looking at Bloc amendment 5, on page 19. Mr. Crête.

On clause 6 - Letters patent

[Translation]

Mr. Crête: We are moving this amendment because we heard from various witnesses wanting to become port authorities that many do not necessarily meet all the criteria. The applications from these various ports to become port authorities are not included in the government amendments to the Schedule.

So we move to delete sub-paragraphs c) and d) which say that in order to receive port authority status, a port must meet the following conditions:

c) it is linked to major rail lines or a major highway infrastructure;

d) it has diversified traffic.

This is very restrictive in the case of some facilities, like the port of Sept-Îles which does not really have diversified traffic and whose rail line is a local line hauling ore from the mine to the harbour. There is no major rail line or major highway. But, in any event, how do you define a major highway infrastructure?

In our view, the criteria to be met to become a port authority are too restrictive. Sub-paragraphs a) and b), which would remain, require a port to be and to remain financially self-sufficient and to be ``of strategic significance to Canada's trade''.

As for items c) and d), they deal with very specific features that quite a few facilities will have difficulty meeting. I think this is why we do not find these in the list of Canadian port authorities set out in the amendments.

Item d) is especially intriguing. There could be a port that is financially self-sufficient and likely to remain so, which has strategic significance for Canada's trade but which does not have diversified traffic. Such a port, not meeting condition d), could not gain port authority status.

This is quite a significant aspect, especially since more facilities of this kind are going to be developed in the future. There is talk about diamond mines and all sorts of mining operations all over Canada that might require the development of large port facilities.

I do not remember if it is Belledune, in New Brunswick, which is the latest example of a similar situation where a port infrastructure has been built for a mining operation. Under this definition as presently written, such an infrastructure could never gain port authority status.

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So I raise this question and I would need further information since I did not have time to look closely at all the amendments we received this morning. Did we add new port authorities in the latest government amendments and could the experts provide further information regarding two port facilities, that of Port-Saguenay and that of Sept-Îles?

Do these facilities have the slightest chance of gaining port authority status? If we deleted sub-paragraphs c) and d), would they not have a greater chance of being recognized as port authorities? I would like to know what the situation is with regard to these facilities and other similar ones.

[English]

Mr. Keyes: Mr. Chairman, I think we want to make it clear, from the government's point of view, that there are some fundamental criteria for the determination of a port. We want to make it clear that these are an important part of the list to ensure that credibility of the port.

But now I want to ask the officials.... Mr. McNeill, does the minister, in a case that's been provided as an example by Mr. Crête, have the power to waive criteria in the event that he sees it is 99% of the way there, but its sole produce is diamonds? Does the minister have the power to waive criteria and say ``Well, given that they meet 95% of the criteria, I can waive the fact that this is only a single-product port, because the single product is probably larger than six products at some other port''?

Mr. McNeill: Clause 6 says if the minister is satisfied that the port meets these criteria.... We have applied the criteria to all the applicants, and in some cases the diversified traffic issue is not as strong as some of us would like, but the minister has decided that the port will get CPA status because it's financially self-sufficient, it's significant to Canada's trade, and it has the major links. So there is some flexibility in the application.

To be specific to you, Mr. Crête, last week the recommendation was that Sept-Îles would be a CPA. We have not yet finished the evaluation for Saguenay, so in the province of Quebec there are at least three - Montreal, Quebec, and Sept-Îles - that will be seeking CPA status, and will probably be granted it if the minister is satisfied.

We are still anticipating to report back - hopefully this week, if we can get the evaluations completed - for about 12 ports to be CPA-status.

Mr. Crête: Twelve more?

Mr. McNeill: Twelve in total.

[Translation]

Mr. Crête: Does this complement the answer to the question I asked with regard to the eligibility of other ports that have applied for CPA status?

Could you give us the full picture as of today? There have been eight applications. You just provided information on Sept-Îles, which is good news, but there is also Port-Saguenay and there may be others in Canada. There is also Trois-Rivières which is in a slightly different situation, apparently.

Could you give us the full picture?

[English]

Mr. McNeill: I can provide that tomorrow at 3:30 - a list of who has applied and who has been granted status.

[Translation]

Mr. Crête: Thank you.

If I may, and if the government agrees, I would like to request adjourning this committee until we receive this information which I consider to be of the utmost importance. This is of the greatest importance because, before we pass this bill, we need to know what is in the schedule and the complete list of ports recognized as Canadian port authorities. In this way, there would be less insecurity among these people and it would be easier for us to resolve the issue of the criteria to be met to become a port authority.

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So it seems advisable to resume this discussion tomorrow, when we know the facts, as this would allow us to proceed more expeditiously.

[English]

The Chairman: Thank you, Mr. Crête. Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

I think the amendment is sufficient to vote on even without that information, because when I look at an amendment like this, I look at what the downside of it is. Is it self-sufficiency? Yes. That makes sense. Obviously they should have and be able to maintain self-sufficiency. If it's strategic to Canada's trade, I think it's important. Who cares what they run through the port? If you've already put two criteria on.... If it's strategic to Canada's trade and if it's going to allow them to be and remain self-sufficient, who cares if they put 100,000 different products through or they run a significant volume of wheat or coal?

Mr. McNeill: If we have a downturn on that one commodity, your port is no longer financially self-sufficient. So that's why we put the criterion of diversified traffic.

Mr. Gouk: If we have a downturn to the point at which we don't ship wheat out any more, I'd say we've got a lot more problems with viability -

Mr. McNeill: Or coal, or any particular terminal. So we have applied the criterion of diversified traffic religiously through the 12 applications we've received.

Mr. Keyes: Will you call the question, Mr. Chairman, please?

[Translation]

Mr. Crête: I asked if we could adjourn the meeting. I thought the meeting was supposed to end today at 5:30 p.m.

But if you want to deal with the issue now, I can discuss it for a very long time. We can spend several hours discussing this issue.

[English]

The Chairman: You have demonstrated, Mr. Crête, an ability to discuss many things at great length, and I suspect that the committee would like to adjourn and reconvene at 3:30 p.m. tomorrow. Before we do that, I should point out a couple of things. We are not going to be back in this room, so take your papers. We will meet in Room 701 in the Promenade building tomorrow promptly at3:30 p.m. to dispose of the rest of these items, I suspect, within two hours.

The meeting is adjourned.

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