FISH Committee Meeting

STANDING COMMITTEE ON FISHERIES AND OCEANS

COMITÉ PERMANENT DES PÊCHES ET DES OCÉANS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, December 1, 1998

• 0906

[English]

The Chairman (Mr. Charles Hubbard (Miramichi, Lib.)): We will call the meeting to order in accordance with the mandate under Standing Order 108(2). We are undertaking a study with respect to fees regarding icebreaking and other marine services.

We'd like to welcome a very large delegation here today. With that, we'd like to remind everyone that we have about two hours for this meeting. We want to hear your views, what you want to tell us, and we want to try to determine what we want to hear from you. There will be both questions and answers.

Mr. Dufresne, I'll try to look after this end of the table. Could you look after the other end? And try to bear in mind the time element. We'd like to welcome you. I'm not sure how you want to proceed. I understand you're trying to organize the different groups. The meeting time is yours to use as you see fit.

We're here for two hours, but please give us time for questions after your presentations.

Mr. Guy Dufresne (President, Quebec Cartier Mining Company; Chairman, Great Lakes-St. Lawrence Maritime and Industrial Coalition): Thank you, Mr. Chairman. Here's the way we would like to proceed, if it pleases the group. I'd like to make an introduction and give the overall view. Mr. Smith will then give you more specifics about the background of the problem we have. Then we'd like to have presentations of about five minutes each from carriers as to their specific problems, and we'd like to do the same thing with shippers.

Maybe I should start by introducing the group in front of you. Mr. Guy Genois, from Canadian Salt, is a shipper. Mr. Bryan Wilson is a carrier from Lower St. Lawrence Ocean Agencies. Paul Gourdeau is a carrier from Fednav. I'm also a shipper, from Quebec Cartier Mining. Doug Smith is the president of the Chamber of Maritime Commerce and is involved with many other associations.

Don Morrison is here from the CSA. We have several associations represented here. Frank Nichols is here from the federation. Marc Gagnon is from SODES, which represents a large group of people. Wayne Smith is a carrier from Seaway Self Unloaders. Jack Ross is here from Algoma Steel. Michel Desbiens is here from Donohue.

• 0910

Let me start by giving you the overall problem. When a ship comes to Canada, goes through the St. Lawrence and the seaway and ends up in Toronto or Windsor, in the winter months it pays 10 times more than the same ship going to the west coast. And if the same ship were to go through the St. Lawrence and the seaway to a United States port, it would pay zero.

How do we remain competitive? The problem is a problem of competition for businesses in Canada. When I've met with government officials, with ministers, I've been told that when they have the introduction of user fees, they have two objectives they'd like to preserve. First, they'd like industry to remain competitive. Second, they'd like the government to reduce its cost.

In this proposal for the icebreaking fees, industry is not competitive. We'll give you examples from the international field. It is very difficult for businesses across Canada to remain competitive when there's no level playing field.

For the first time, to my knowledge, in my career of 30 years in business, we have all the businesses in Canada from coast to coast, from Newfoundland to Vancouver, saying to the government that these user fees should be done differently. When we started with the first thing, the nav aids, or navigation aids, it was settled in such a way that there was no cross-subsidization, and it was manageable. It was not our preference, but at least it was at acceptable levels.

When they put the icebreaking fees on top of that, they did not follow the same principle of no cross-subsidization or the other principle that business could absorb it. When you look at it, 10% of the boats delivering goods in Canada in the winter months will carry 45% of the fees. And 45% for 10% of the boats is clearly not acceptable. I'll tell you about my own case a little later, about an ice-free port, same as Vancouver's, one of the 5,000 buoys we don't need— and I have the highest bill in Canada. Private port—

How do we stay competitive? That's the big issue. How do we stay competitive vis-à-vis other countries that don't have the same thing? Finland tried to put in some icebreaking fees and had to retract them.

How do we stay competitive when we already have some natural disadvantages? In my case, a natural disadvantage is that for the ore in the ground it takes two tonnes versus one tonne in Brazil or one tonne in Australia— I have to dig twice as much. Salaries in Brazil are one-third of ours. I have to compete with that. And there's a world price. And now, on top of that, I have to pay 10 times more than the boats going to the other end of the country.

Those are some of the things that make us non-competitive. That's the big issue. We'll come back to this.

Now I'd like to mention another thing. As far as I'm concerned, the coast guard has not properly consulted industry in this case.

• 0915

Yes, they may have phoned, and they may have done public meetings, information meetings, but it was not the kind of partnership with the present government that we have seen in many other projects in different fields. There have been some good partnerships with the government, but this one is not a partnership.

With that, I'll pass this on to Doug Smith, who will give you some background.

Mr. Doug Smith (President, Chamber of Maritime Commerce; Representative, Great Lakes-St. Lawrence Maritime and Industrial Coalition): Thank you, Guy.

Mr. Chairman and members, obviously you've heard from Mr. Dufresne how passionately industry feels about the coast guard cost-recovery system and these icebreaking fees in particular. Yet, I know you've had the coast guard here and they've told you that they've had extensive consultation with industry and that in fact what they propose represents the views of industry. So how can we be here today with this much concern and frustration when, in the coast guard's view, everything is pretty much on track, they've had all kinds of talks with us, and, in fact, they're implementing what we've asked them to implement?

Part of what I'm going to do today is show you where they are being selective in what they have told you and, we believe, selective in what they've told the cabinet and perhaps even the minister in terms of what industry has said and what they have chosen to proceed with. I'm not going to get into “you said, we said” for very long, but I do have a couple of instances where it's very clear that what they have told you is quite different from what industry has said to them.

As Guy said, I am president of the Chamber of Maritime Commerce. He's introduced other associates of mine around the room. I'm here speaking on behalf of all the various associations.

During the process of cost recovery and getting towards a cost-recovery regime, the coast guard has been meeting with industry for over four years to discuss these issues. The primary focus of that has been through what they have called the Marine Advisory Board, at a national level, and, at a regional level, the regional advisory boards. All of the associations in this room today have been represented at those various boards for the period of three or four years as we've talked about this.

We're here today talking about the Great Lakes and the St. Lawrence, but other colleagues of ours from British Columbia, the Maritimes and Newfoundland have also been participants in this process. And interestingly enough, a year ago, almost to the day, all of us came together unanimously and made a report to the commissioner of the coast guard and to the minister about where the cost-recovery scheme was and what we felt should go ahead. The coast guard has chosen to disregard most of that advice.

In our view, in spite of the Marine Advisory Board's intended purpose, which was to look at service levels, how service should be provided, what services were needed, what ways were needed to improve the systems of the coast guard and how to introduce new technology to make Canada more competitive— these are all things that were supposed to be a focus of the Marine Advisory Board.

Unfortunately, almost 100% of the time, the Marine Advisory Board has been focused on the cost-recovery issue. We've had concerns about how it was done and how much money the coast guard was trying to collect; the system really never matched up to one where cost would be matched to the fees so that there would be a direct relationship between the service provided and the fees charged.

In our view, the coast guard has been so focused on getting their revenue target, whatever number that is, that any industry view that might alter those targets has been discounted and industry input has been used selectively to move towards getting the revenue target. Now, this may be because they've been given no flexibility by the government—the target's been set and they feel they're caught—but whatever the cause, it means that this group has to come to this committee and to the cabinet to get our views known. We've had no luck in working with the coast guard, in saying to them that the amount of money they're trying to collect is creating a competitive situation in Canada that we can't afford.

There are major issues we've had and continue to have. And, if I may, I'll just refer you back to this industry group, which, in a much more protracted set of hearings on cost recovery, appeared before this committee two and a half years ago. This committee made recommendations on cost recovery and the coast guard. I must tell you that most of those recommendations have not been achieved in these two and a half years.

• 0920

Just one of them was that we—industry and the coast guard—were to come back to you with progress on cost-recovery issues. Only now are we coming back to you, after two and a half years. We should have been back to see you before this.

What your predecessors recommended has largely not been achieved. The issues have been and continue to be what services are needed and provided, what the costs of the services are and what they should be, and what the impacts of the fees are. Should the fees be based on full costs or the direct cost of providing the service? What should be the fee structure for icebreaking? What are the cost reduction efforts of the coast guard?

Most of these issues are outlined in detail in our letter to the minister, which you have a copy of, but for three or four of them, it is important to understand the context of our concern.

The first issue I'd like to talk about in a little more detail is the issue of direct cost or full cost. Industry has had a problem from the outset of cost recovery with using the full cost of service. This is because the costs include overheads of the fisheries and oceans department here in Ottawa, coast guard offices here in Ottawa, and high historical costs of depreciation and interest associated with assets that they acquired years ago at, in some cases, a ridiculous cost, such as the controversial refit of the Louis S. St. Laurent icebreaker, which cost $150 million. Those costs are being included in the fees we may have to pay.

We're concerned about the high crew complements the coast guard uses on some of their ships. And we're concerned that the coast guard provides services not only to commercial industry but also serves recreational boaters, fishermen— it performs all kinds of duties for the public good. And what that means is that the coast guard has to take their costs and allocate them on some basis to industry. We've never been satisfied with the allocation process.

So what we agree with and made some progress on over a year or a year and a half ago is that direct cost would be a more appropriate way to look at coast guard fees and costs. The coast guard agreed with us. We set up a subcommittee of the Marine Advisory Board to examine a direct-cost approach.

Now, one of the important things about direct costs is, the coast guard says—government says—that these fees should make users think about how they use the service and should make them ration their use of the service. Well, if it isn't on a direct-cost basis, if we decide not to use some service, the only cost the coast guard can eliminate when we do that is the direct cost, so there should be that relationship.

Anyway, a committee of the MAB recommended a basis for future costing based on direct cost. The coast guard has rejected that and gone back to the full-cost concept. We think that may mean they want to get more money out of us.

The most important issue that you've heard about—and where a different view has been expressed by industry—is the icebreaking fee. The coast guard advised you, the minister and the cabinet that the icebreaking approach they are implementing, which has one region and a transit fee, is what industry recommended. And I'm here to tell you that it is not what we recommended. It's an example of selective use of industry input.

There were two major reports on icebreaking submitted to the coast guard and the government. One was from a subcommittee of the Marine Advisory Board, the Ice Route Assistance Fee Structure Committee, which is what we called that group. I'll quote from their report now:

Many members of the Ice Route Assistance Fee Structure Committee represent groups or associations that hold strong views against the implementation of any form of icebreaking fees in Canada. Their participation on the Committee and the development of a recommended fee strategy must not be viewed as support for the concept of icebreaking fees, but rather as advice to the Canadian Coast Guard that if, after fully considering the implications and impact of introducing a service-specific icebreaking fee, the Coast Guard intends to proceed with the implementation of such a fee, it should be based on the proposed recommendations included in this report.

They then went on to talk about how the report

does not address the important questions of whether cost recovery for icebreaking should be implemented, what amount or percentage of costs should be covered, or when the implementation of cost recovery should begin.

Also, they said the report did not address “the potential impact on marine transportation should icebreaking cost recovery be implemented”. They also recommended that any basis for the fee should be direct costs.

• 0925

Then they specifically highlighted a consideration, and I quote:

The report identifies unique circumstances associated with dual icebreaking service delivery—Canadian and U.S. Coast Guards—in the Great Lakes which the CG must address during its fee implementation considerations.

All of that has been disregarded. You weren't informed of that. So what we say is that the recommendation industry put forward about a transit fee was put in the context of, “If you insist on going ahead with a fee in spite of our advice, the lesser of evils would be a transit fee.”

Now, you're also aware that we had a national coalition of all the marine interests in Canada. We produced a report a year ago, which I mentioned before. The coast guard has also said we recommended one region for icebreaking.

Here's what we said. For icebreaking, at least two regions would be recognized: west and east. For eastern Canada, the industry and the coast guard should work together to develop a definition of regions as well as a fee allocation method acceptable to all. No icebreaking fee should be charged during the life of this agreement—1998 to 2001. The western region will not be subject to icebreaking fees.

We went on to say:

Discussions would also continue between eastern Canadian service users and the CCG as to whether eastern Canada should remain a single region for icebreaking purposes or be subdivided into a number of regions. If so, these will also need precise defining.

Furthermore, we went on to say:

Icebreaking cost recovery is enormously complex due to its impact on low volume regions and the fact that certain regions, zones, ports and ships would be exempted. This has led to disagreements and, in some cases, insurmountable difficulties. Some of the consequences would be catastrophic and render cost recovery completely unmanageable.

I wouldn't call either of these reports an endorsement of going ahead with the icebreaking fee the coast guard has put forward, and I certainly wouldn't say that industry recommended the fee structure the coast guard has put on the table.

In our letter to the minister, we outlined that one of the problems is about agreement on what services are provided and what is required.

A committee of the Marine Advisory Board looked at the services provided. We identified the icebreaking services needed by industry and costed them out, using the coast guard's method of costing, and we came up with $46 million. We also said that if it were based on the direct cost, it would be substantially lower than $46 million. The coast guard has told you that the cost of the services they provide to commercial shipping is $76 million and, on that basis, they say to you, “We're only trying to collect $13 million. The taxpayer is paying the rest of the bill.”

We have determined that the costs should be substantially lower than what the coast guard says they are. We don't accept the service allocation that they claim is provided to us, and we certainly don't accept the costs they identify as the ones that are appropriate.

We have continually said to the coast guard that part of the process of any fee structure is a look at the full economic effect of the fees. You'll notice that in our letter to the minister we have identified that, by the coast guard's own admission, there will be a 10% drop in traffic because of the icebreaking fee. We have put a value on that. The lost value to the Canadian economy is $20 million. The lost value to the economy exceeds the fees they are going to collect. We think that's a fundamental test for these fees, and it should be looked at.

The last issue I'll talk about quickly is the impact of the fees. You're going to hear from our members here about that.

We have repeatedly told the coast guard that the fees would have a major impact, particularly on industry competitiveness. The coast guard has told you that it did a big impact study, affectionately known by all of us as the Hickling study. That study said the impacts would not be severe. But the Hickling study didn't assess the impact of having 10% of the cargo paying 45% of all the fees. They spread the fees over all cargo and arrived at the conclusion that the impact would be relatively small.

Also, in spite of industry objections all the way along on this, they said that the real measure of impact is whether a business would close down because of fees. We said, “That's not a relevant measure. That's disaster.” What matters is this: what does it do to the competitiveness of industry, the profit of the industry, and the jobs that the industry provides? Those were not measured.

• 0930

As you know, Treasury Board is going to conduct a three-year study of the impact of not only the coast guard fees but all the other fees that the marine mode is incurring. We estimate those total fees to be in the neighbourhood of $400 million. That includes coast guard fees, but obviously it's greater than coast guard fees, and that's one of the points we've been trying to make to the government: all impacts should be assessed.

So we're going to get that study. They're going to look at the impact of all of these fees. Unfortunately, the study is going to take three years. That's not going to be much consolation to an industry that has to downsize its operations and lose sales to the United States competitors or to a carrier that has one of his shippers deciding to ship by rail. If the impact study comes back and says, “Oh, gee, that certainly would be one of the effects and that is something we wouldn't want to see”—

So part of the reason we have made a proposal to the government to lower these fees, to go more slowly with these fees, and work in partnership with industry, is to have time to have this impact study assess the full impact and allow us to sensibly look at the competitive response in Canada.

With that, I will close and thank you for your attention. We have made a proposal to the government. We think it's a constructive proposal, and I think Mr. Dufresne will deal with that in more detail at the end of our remarks.

Thank you.

Mr. Guy Dufresne: Thank you, Doug.

Now I'd like to have Wayne Smith to give some specific examples. He's a carrier.

Mr. Wayne Smith (Vice-President and General Manager, Seaway Self Unloaders; Representative, Great Lakes-St. Lawrence Maritime and Industrial Coalition): Thank you very much.

We're commercial managers of a fleet of 21 self-unloading vessels that operate on the Great Lakes and the St. Lawrence River. We're owned by two partners, Algoma Central Corporation and the Upper Lakes shipping group, Canada's two largest domestic flag carriers.

Last year, we moved over 30 million tonnes of bulk commodities and served a variety of important industries, such as steel producers, salt producers, aggregate and stone producers, and coal producers serving electric utilities. We moved a variety of other commodities, including agricultural products.

My purpose today is threefold. I want to identify three of our major concerns. First of all, I want to talk about the severe economic impact that the imposition of icebreaking fees will have on our market and our business. Second, I want to identify specific cases of discrimination against Great Lakes and St. Lawrence shippers which will be caused by the fee. Finally, I'd like to talk about some of the specific issues concerning the application of the fees.

By any measure, I think, this imposition of icebreaking fees is significant.

Marine service fees introduced in 1996 are presently at a level slightly in excess of $26 million. The icebreaking fees increased that by 50%. Exacerbating that problem is the fact that the icebreaking fees will apply to only about 10% or 15% of our business. Translating all of that into what the specific impact is for a shipper, we've estimated that across all our businesses and for our size of ship, a Great Lakes freighter, the cost impact is about 50¢ a tonne. Now, that level, 50¢ a tonne, is 10 times the level of marine service fees that have been implemented so far.

And it's very significant. Let me help you with a perspective on 50¢ a tonne. The businesses we serve are often lost or won on pennies a tonne. Even the coast guard's own study, the Hickling study, identified things such as the aggregate business, where a cost of more than 5¢ a tonne could mean a loss of business, and they instituted a cap. We don't believe that the impact of costs at the 50¢-a-tonne level has ever been properly assessed, and we think it will be severe.

When talking to each one of our shippers that have traditionally relied on marine transportation service during this now “deemed” ice season, we found that each and every one of them is now looking at ways to avoid this cost. Because of the timing, some can't avoid it. Those that can will try either not shipping or going to other modes or things like that. Those that can't or don't have alternatives will be faced with an enormous burden, so there's certainly the fairness issue.

Just in terms of the magnitude of how important this business is, during this season last year, our fleet, the Seaway Self Unloaders fleet, operated vessels on a total of 540 days. That was close to 15% of our business.

• 0935

Now, if all that business is lost, that's the equivalent of taking the productivity of two and a half vessels out of the system. That's quite a burden.

In recent years, we've seen the economy grow and strengthen, especially with salt producers, aggregate producers and Canada's steel industry. They have been able to grow stronger and expand their businesses. Our ability to provide low-cost, efficient, environmentally-preferred marine transportation for these customers has been absolutely essential to this growth. In the last three years, we've expanded our fleet through the conversion of older ships into more modern self-unloading vessels. We've added four vessels. If the effect of the icebreaking fee is to take away the business of two ships, that appears to us like it is about a 50% tax on our business.

I want to turn now to the issue of discrimination against the Great Lakes and St. Lawrence shippers. There are several ways to look at this issue, I guess, and I'm sure some of the other panel members will have their own perspectives.

We have done our own calculation in looking at the availability of Canadian icebreakers on the Great Lakes region. We allocated what the coast guard announced as the cost-recovery target. If that target were indeed a target and were applied fairly to our activity in the Great Lakes, the proposed fee that they expect to charge us—and for my company it's in excess of $1 million—would be less than half that amount. There's clearly an issue there: shippers in various regions are being penalized while others are being given an advantage.

A very significant issue in the Great Lakes involves a treaty between Canada and the U.S. on icebreaking. Under that treaty, both the Canadian and U.S. Coast Guards work together to optimize the deployment of vessels. Typically, the Canadian Coast Guard positions one icebreaker in the Great Lakes regions during the winter, occasionally two, for the start and the finish. The U.S. Coast Guard deploys anywhere between five and six icebreakers.

These icebreakers then serve commercial needs based on this optimal plan. In effect, what happens is that Canadian fleets or Canadian shippers are very often served by the U.S. Coast Guard. And I think that's obvious: they have four or five times more vessels in the area than the Canadian Coast Guard does. And the Canadian Coast Guard very often serves U.S. vessels.

Under the proposed scheme, now we could have a Canadian icebreaker giving support to a U.S. ship carrying U.S. cargo to a steel mill or U.S.-produced salt to U.S. markets and providing assistance to that ship at no cost. Similarly, the U.S. Coast Guard could be providing support for a Canadian ship and a Canadian shipper. Or there could be, as is very often the case, no support at all, and the Canadian shipper or carrier would have to pay an icebreaking fee.

Now, how that can be the outcome of Canadian policy is clearly frustrating to us. Later we'll have some specific examples of how business can be lost. I don't want to pre-empt that discussion, but we have the very real possibility that U.S. shippers carrying iron ore to U.S. steel producers will be getting service at no cost, while competing Canadian companies, competing Canadian carriers, will have to pay a fee.

I think it's especially important for this committee and the government to consider that the U.S. government has spent a considerable amount of time considering this issue as well, and at times it is very controversial in the U.S. The U.S. government has decided—and has passed a bill—that there will not be any navigation service fees similar to ours and that there will be no icebreaking fees until September 30, 2001. We think that is very important. It really establishes the competitive playing field now, which gives a real advantage to U.S. companies. If our icebreaking fee goes ahead, it's going to be substantially disruptive.

The last point I want to touch on is the application of the fees. It seems clear to us that this deemed ice season, December 21 to April 15, has clearly been designed to recover the planned revenue target. It has no bearing on whether or not there is ice in the system.

• 0940

Last year, ships operated over 500 days in the absence of ice because it was a mild winter. In a severe winter, the commercial activity, shipping activity, declines rapidly just because of the ice conditions.

In my mind, these dates were established just to obtain this revenue target. Typically, the Great Lakes shipping operates around the seaway season, which is somewhere from late March or April 1 through to Christmas. By now deeming the season to be April 15 to December 21, the coast guard has the effect of frustrating all of the infrastructure that's been built—the vessel capacity, the docks, the production capability of salt mines, iron ore producers, steel companies—because this huge, tough tax has been layered on top of the system that's been established.

We believe that this icebreaking fee proposal is seriously flawed and will have significant impacts for not just shipowning companies but also for shippers. It will be very disruptive to the business, to the Canadian economy, and to trade, and we believe that it should be re-examined by government.

Thank you.

Mr. Guy Dufresne: Thank you, Wayne.

Now, Paul Gourdeau of Fednav.

Mr. Paul Gourdeau (Vice-President, Fednav Limited; Representative, Great Lakes-St. Lawrence Maritime and Industrial Coalition): Mr. Chairman and members of the committee, good morning.

Somewhat like my colleague, Mr. Smith, I am also involved in operating a large fleet of bulk carriers, but contrary to his fleet, which is occupied in domestic trading, ours is in international trading only.

I would like to try to stress again something that Mr. Dufresne said earlier, that is, how competitive our business is. It is competitive because our customers' business is competitive. They have pressure to compete. They put that pressure back onto us. Just to give you an example, over the last three years, the international freight rates have melted down by about 40%. Our business is strictly supply and demand. It's entirely competition driven. If one cannot compete, one simply dies. It's as simple as that.

There's another example. The going freight rate to carry Mr. Dufresne's iron ore from Port-Cartier to northern Europe is now at less than $3 a tonne. When we're talking about imposing fees that represent maybe 50¢, 40¢ or 75¢ a tonne, everybody thinks, “Well, 75¢— I have three quarters in my pocket and a tonne is very big, so what are you complaining about?” If you look at 50¢ over $3, one soon realizes that percentage-wise and over large volumes it is extremely important. One cannot disregard this.

Another thing one should always remember is that cargo will always flow where it encounters the least resistance. In other words, it's always going to go through the cheapest route. A very good example of that is grain movement coming out of the Great Lakes or the St. Lawrence to be shipped overseas. That grain can come through the seaway, go by rail, go through the east coast, go through the west coast, not be sold at all, or go through the Mississippi, which is a very important competing route for the St. Lawrence-Great Lakes system. And we're talking about dimes and nickels here, which will decide which way the grain will flow. This is extremely important.

In actual fact, your colleagues at the transport department have mandated Justice Estey to do a review on grain transport and grain exports in Canada, to review the whole Canadian grain transport system. And the Canadian Wheat Board—and we're talking about a government body here, we're not talking about industry whining—in its submission to Justice Estey, has clearly stated that the imposition of these fees will in fact push the cargoes for handling and shipping through the west coast, the Mississippi, the U.S. system and rail, to the detriment of the St. Lawrence and the seaway system. It's not industry saying that: it's a government body. Yet nobody seems concerned about this. This is extremely important.

• 0945

I'll be brief, since my colleagues took a little more time than planned at first.

Voices: Oh, oh.

Mr. Paul Gourdeau: If you don't mind, I'll just take my Fednav hat off and put my group/conseil hat on—that's an advisory group on the coast guard for the St. Lawrence region—and talk about the cross-subsidy issue a little before I conclude.

I think it's important for the committee to recognize that it is extremely frustrating for people who have to compete for a region to have a double standard system imposed. When this whole concept of cost recovery came in about three and a half to four years ago, when consultation first started, everybody within the St. Lawrence-Great Lakes system was of the opinion that it should be a unique fee, encompassing all services, for the whole country, so that the government wouldn't playing a role and be in a position to put people at a disadvantage from one region to the other.

This advice was ignored. It was decided to subdivide the fees according to the services rendered—a set of fees for nav aids, a set of fees for icebreaking. The coast guard was clearly told at that time that if they went that route, they would have a major problem on their hands when the time came to implement icebreaking fees. They decided to ignore that advice.

So now we have a system of nav aids fees which supposedly accurately calculates the exact cost per region, accurately calculates it to make sure that we're charged 15.2¢ a tonne and not 15.3¢ a tonne, to make sure that we are at exactly a 29.4% recovery level. Yet, when icebreaking fees come about, suddenly there are no more regions.

There are two regions: people who don't have ice and people who have ice. If somebody who doesn't have ice is meant to be in a position not to pay these fees because there is no ice—why should he pay for icebreaking?—one could see the point. Why is it that somebody who has more ice, less traffic and more costs pays the same fee as the guy who has little ice? What's the difference between no ice and little ice and little ice and a lot of ice? This whole system— it's all crooked from the start.

You've heard the coast guard tell you they cannot calculate how the cost is allocated, that ice moves and ships move and it's so terrible— and the rest of it. I have a staff of 15 people in my department. We operate 82 ships worldwide. I can tell you at any moment of any given day where any of these ships are, what they're doing, whose cargo is on board, how much is there, where she's going and what the plan is for the next voyage.

If you hear people telling you they cannot calculate this, that it's not possible because ice moves and ships move, I think you have to ask yourself whether that's a straightforward answer.

That's all I have to say.

Mr. Guy Dufresne: Thank you, Paul.

I'd like to ask Bryan Wilson—

The Chairman: Bryan, before you begin, let me say that we have translation. If any witness wants to speak in either language, he should realize that it's certainly workable, that it works very well for everyone.

Go ahead, Bryan.

Mr. Bryan Wilson (Vice-President, Lower St. Lawrence Ocean Agencies Ltd.; Representative, Great Lakes-St. Lawrence Maritime and Industrial Coalition): Thank you. I'll try to incorporate that into my presentation. Although I'm bilingual, my mother tongue is English, and sometimes I'll try to switch from one to the other.

Thank you for accepting to receive us here, Mr. Chairman and panel. I'd like to underline that I agree wholeheartedly with what my colleagues have mentioned. I'll try not to be redundant.

I represent the marine agency, Lower St. Lawrence Ocean Agencies Limited. We specialize in representing international carriers and shippers of cargoes. We handle about 500 ship movements per year from different types of vessels, from 2,000 tonne deadweight carriers up to 150,000 tonne deadweight carriers, from bulk, dry bulk, and liquid to passenger ships. We cover pretty well the whole gamut of everything that's transported in the St. Lawrence system. We do handle ships throughout eastern Canada, but the majority of the ones we handle are in the St. Lawrence system.

Although we're here today and the main thrust of our discussion has to do with the proposed icebreaking fees, we feel we can't discuss the icebreaking fees without discussing the majority of the other fees that are strapping the shipowners and cargo shippers. It's the composite result of the cost recovery within the different government departments that has a severe impact on the industry, the icebreaking part of it being the most onerous for the time being.

• 0950

We have cost recovery now in Transport Canada, with ship safety, port wardens, ship inspections and port-state inspections. Also, for quite a long time now, Agriculture Canada has had cost recovery at reasonable levels, but those levels have been increased. Within DFO now, we have three levels of cost recovery. We have dredging fees in the St. Lawrence River, marine navigational service fees, and the new proposed icebreaking fee.

[Translation]

With the privatization of Canadian ports, for those ports to become viable, we will have to charge municipal taxes and pay for costs, and port fees will no doubt be increased in these ports by an amount that we are not able to evaluate at the present time.

We are also talking about the costs for response organizations in case of pollution by tankers transporting oil products. Those are huge costs which, in certain cases, are higher than $1 per ton of product.

[English]

Revenue Canada Customs is looking into—or should be sometime soon—converting into a Revenue Canada agency and will no doubt embark on the cost-recovery bandwagon—at what level, we don't know. For a recent shipment we had out of Trois-Rivières, we had cost recovery that was 51¢ a tonne more than the cost recovery was three years ago—for the same size of shipment.

The Transport Canada invoice for about 16 hours of work on that ship was $4,500—for one man. We had an inspection from Agriculture Canada for $800, a fee that has increased 100% over the last three years. Coming back to the Transport Canada inspection, the increase is over 300% over the last three years, since these inspections were taken away from the coast guard. Before, it was handled by the coast guard. There were other fees in there. The marine navigational service fee, at a rate of 15.2¢, is something that previously didn't exist. There are the RO fees, the response organization fees.

With all of these combined, it is 51¢ a tonne more than what we were paying three years ago. This does not take into account the increase for pilotage charges, port dues, or tugs or whatever. This is strictly the cost-recovery fees.

Contrary to what we hear a lot of people saying, it seems that the ports of Halifax and Saint John are continually arguing that there's no ice in the Maritimes. I'm sure you're all aware of it and that we don't have to tell you here today, but I think we should underline the point that there definitely is ice in the Maritimes and in the New Brunswick ports in particular.

As a little sidebar, there was a question with regard to the coast guard based in Halifax. Some people don't quite agree with the fact that we're going to be paying fees and that the positive economic impacts of those fees are going to be reaped by areas where there is no ice. There have been questions for years now, as I guess you've been hearing, about these bases possibly being moved. Possibly they should be moved to an area where they would best serve the ice zones. Then the benefits of the fees we're going to be paying would be reaped within the ice zones by the people paying the fees.

There is a quite recent example of the possible impact that the fees are going to have. Just last week we were contacted with regard to a contract for fish meal, which is presently moving out of Iceland into the east coast of the U.S. There's a serious attempt to have that brought into the St. Lawrence River. Right now we're competitive, although it's very close; the margins are cents. If we incorporate the proposed icebreaking fee on top of that, we lose it, we just can't get it. This is one example. I'm sure we could find examples of that throughout the St. Lawrence in almost any port.

• 0955

As I mentioned before, we're at 51¢ more than what we were at three years ago on cost recovery. If we incorporate the proposed icebreaking fee, which, for our shippers and carriers, averages out to about 40¢ a tonne, that brings us to 91¢ a tonne in cost recovery. The Hickling study, which was referred to earlier, mentioned that something in the vicinity of 35¢ a tonne would be detrimental to Canadian trade and Canadian business. We're way above the 35¢ level and, so far, nobody seems to find it a problem except for the industry.

The proposed icebreaking fee incorporates multiple transits. They don't take into account a vessel voyage. They want to impose a fee every time a vessel calls into a port within the zone. With regard to a lot of the trade in the small ports in the St. Lawrence and in the gulf, they've tried to consolidate shipments and use the same carrier for small parcels of cargo. These carriers that are calling into the small ports are very well ice-classed. They can manoeuvre very well in the ice. Under the proposed fee, they would be paying up to $20,000 per voyage for icebreaking services.

Calling in at the port of Baie-Comeau on your way up to Montreal has no effect on the cost of icebreaking. The port of Baie-Comeau is basically ice free. It's the same situation in the port of Pointe-au-Pic. There's no ice in the port of Pointe-au-Pic in the St. Lawrence River. If you call in there, that doesn't incur any extra fees, but the coast guard wants to impose a separate fee each time your vessel stops. It's not tied into what you're using. As was mentioned earlier, it's just a means of attaining the goal. It's not tied to the actual use, and this is detrimental.

That's about all the time I'll use. I'll leave you with some time to ask questions.

Mr. Guy Dufresne: Thank you, Bryan.

Now I will ask Michel Desbiens, CEO of Donohue, to say a few words.

[Translation]

Mr. Michel Desbiens (President, Donohue, Great Lakes St. Lawrence Industrial and Maritime Coalition): I am not here to represent the industry, but rather Donohue and, therefore, shareholders of Donohue.

In 1997, during the ice-breaking season the pulp and paper mill industry shipped 1.2 million tons from Eastern Canada. This does not include certain related industrial products. Of these 1.2 million tons, 20% came from Donohue, from three ports, mostly on the St. Lawrence.

Competitive access to overseas markets is crucial for our industry, especially for such regions as Baie-Comeau, Matane and Clermont. These are factories, as you well know, which have a very limited access to the North American market.

I would like to speak more specifically about Baie-Comeau. As Bryan indicated, that is a factory which supports the economy of the city of Baie-Comeau and the surrounding region. Baie-Comeau cannot ship its products otherwise than by water. They are too far to allow for trucking. Therefore, we have two modes of transport, but both of them involve using water. We have the train, and for that we have to use a ferry service, and we have the ocean.

We have developed an overseas market. We are one of the major exporters of newsprint in Canada for overseas markets, especially for Europe. For this reason, we were able to negotiate transportation fees that are competitive with certain other countries.

Baie-Comeau, Clermont and Matane cannot afford to lose these overseas markets, because they are too far from other markets due to the transportation difficulties.

Supplementary costs in 1997 varied between $3 and $7.50 per ton during the ice-breaking season.

• 1000

We looked at a breakdown shipment by shipment. In 1997, it totalled $430,000. In 1998, we did the same type of breakdown and, for ice-breaking fees alone, it worked out to about $3,000, in other words $427,000 in total.

At the end of 1995 and at the beginning of 1996, Donohue invested $1.2 billion to buy factories so its production would be exported. We expected to have installation fees, but that is now creating problems for us. We always hear talk about ice-breaking, but I think it's more than that. To give you an example, we were given a quota on lumber, which limits our exports into the United States. We must pay customs fees for the tons of newsprint that we ship to Europe.

Nobody mentioned this, but we are going to have to face very high costs for port installations, and then add to that ice- breaking fees.

We find this unacceptable. The pulp and paper industry, which is one of the largest exporters and which exports from Canada towards other countries, cannot work under such conditions. Bryan mentioned it and I have here examples that we can leave with you if you're interested. We almost never ship from one single destination. The ships stop at Baie-Comeau, they then go to Clermont and they often stop in Matane for other loads. In every case, they pick up paper; sometimes they take paper and pulp, sometimes paper, pulp and lumber. So we are faced with surcharges which vary from $5,700 to $22,800 per ship when we go through three ports.

Some impacts have been mentioned, but others have not yet been spoken of. For example, there is the Baie-Comeau ferry. During the ice-breaking season, 5,500 railway cars cross the St. Lawrence. What will the fees be for that? No one has said anything about that yet.

Furthermore, there's the containers that are shipped by rail to the Port of Montreal. The government hasn't said what the fees would be for that. It hasn't been included in our $430,000.

In some cases, we have some decisions to make. We just acquired some operations in Texas. On average, our shipping costs in Texas are $35 U.S. less per ton as compared with the cost of our Canadian operations. Now we are talking about a $3 to $7 increase, which will make our Canadian facilities far less competitive.

Under these conditions—and I'm not threatening you, I'm just stating facts—we will certainly be making changes to our modes of transportation. During the icebreaking season, products being shipped to South America will certainly not leave from Baie-Comeau; they will leave out of Texas. The change won't be overnight, it will be a gradual one.

We have to ask ourselves the following question: is the Baie- Comeau plant going to remain competitive in the long term? We make enormous investments, but we are going to keep on investing in places where we can be competitive.

I would like to repeat this for those who may not be aware of this. Baie-Comeau has the largest newsprint plant in Canada. The plant produces 500,000 tons of paper per year. Of this amount, 350,000 tons are shipped directly by sea, which represents 68% of the plant's capacity, but the other 150,000 are shipped by rail and take the ferry. So, 100% of the paper is shipped by water one way or another.

The Clermont plant produces more than 300,000 tons, and 62% of its production is shipped by sea. In the case of Matane, the figure is 61%. It's pretty much an open secret that we are currently working with the government of Quebec to find alternative solutions for the Matane plant. We are talking about building a paper plant.

• 1005

So, 75% of the production would be for overseas markets. I really can't see myself making investments under such circumstances, given the additional costs involved. I'm not saying that we will do that, one way or another, but that certainly puts pressure on Matane.

Let's take a look at the other problems. We do not believe that the regional municipalities or the towns will be able to maintain the port facilities. This problem may not even be relevant when we discuss icebreaking. I must tell you that shipping is crucial for Donohue. Distribution and costs will play a very important role in our future decisions.

Mr. Guy Dufresne: Thank you, Mr. Desbiens.

[English]

The Chairman: Excuse me, Mr. Dufresne. We're really encountering a very significant problem here in terms of our two hours.

I think witnesses know that after you conclude all your presentations we go party by party in asking questions in order to explain your concerns and to try to develop some of our conclusions. With that, of course, it means that we begin with the Reform Party for 10 minutes. Then it's the Bloc for 5 minutes, the Liberals for 10 minutes— we go back and forth.

As this is developing now, I can see that some of our people won't have any opportunity at all to question you.

Mr. Guy Dufresne: Ten minutes?

The Chairman: Even then, it may be— But the message we seem to be getting—and I may be getting a little bit confused—is that you're opposed to any fees, that the $13 million or $15 million today isn't acceptable, and that, in the long run, any additional fees will certainly cause great troubles in your business and with the economy of Canada.

Peter, by the time we get down to you and Bill, I don't know if there will be any time left.

So if there are points over and above that, maybe we could hear them. Otherwise, we'd like to give you about five minutes to conclude and then try our system—

Mr. Guy Dufresne: Okay. We'll try to do that, but it's so important for our businesses— it's the guts.

Mr. Genois.

Mr. Guy Genois (Director, Marine Transportation, Canadian Salt Company Ltd.; Representative, Great Lakes-St. Lawrence Industrial and Maritime Coalition): I am director of marine transportation for North America for the Canadian Salt Company. We operate three underground salt mines in Canada, one in the Magdalen Islands, one in Pugwash, Nova Scotia, and one in Windsor, Ontario. During the year we move about 4 million tonnes of salt via water.

During the period of icy conditions, we move about 500,000 tonnes of salt. Just to give you an idea of the problem we have, with respect to the Magdalen Islands, in order to move salt during the icy conditions, we have a vessel going there that will have the icebreaking fee imposed on it. And in order for the vessel to enter the channel of the Magdalen Islands, which is a six-mile channel, 10 kilometres long, we need to charter a tug.

The tug only breaks the ice in the channel. The tug does not push the vessel at all or have the vessel on a tow line; it only breaks the ice to take the vessel in and to take the vessel out. That tug will have a charge of $11,400 imposed on it for each trip, which is then doubled; it's twice the amount for the two vessels. So since the tug is there only to break the ice, it doesn't make sense to be charged for icebreaking. The same thing will occur at the Pugwash mine if we want to operate during the ice season.

In the Great Lakes region, at the Ojibway Mine in Windsor, Ontario, we have the movement of about 250,000 tonnes of salt during the icy conditions. There again, it's the same problem, not with tugs, but with the passage—

• 1010

One specific thing in the Great Lakes area is that we have a tug/barge unit during the winter months moving from Windsor, Ontario, to Detroit, carrying 1,300 tonnes of salt per trip from Windsor to Detroit. The revenue for the owner of the barge and the tug is about $2,000. A fee of $11,400 will now be imposed on him for that trip, so that tug/barge is not in business any more.

Overall, for us, all these costs represent 65¢ a tonne. There is no doubt that we will look for a different mode of transportation, because we cannot be competitive with such a cost.

Mr. Guy Dufresne: Thank you. I think that's a good example. Mr. Jack Ross from Algoma Steel also has a good example.

Mr. Jack Ross (Manager of Traffic, Algoma Steel Inc.; Representative, Great Lakes-St. Lawrence Industrial and Maritime Coalition): Thank you. It's a pleasure for me to address the committee today. I'll take five minutes or so. With that in mind, I have a presentation that has been given to the clerk and can be circulated. In this presentation I refer to exhibits that you'll see later which cover some of the areas I want to talk about.

Algoma Steel is an employee-owned company located at Sault Ste. Marie, Ontario. We're a fully integrated steel producer. We manufacture finished sheet, plate, structural and tube products for markets primarily in Canada and the United States. Algoma is a major employer in Sault Ste. Marie, with 4,997 employees on the roll at the beginning of November 1998. As a demarcation, that's in a city of 79,000 people, so we're the General Motors of Sault Ste. Marie. Our location at Sault Ste. Marie places us 340 miles from the nearest U.S. market, which is Detroit, and 430 miles from the nearest domestic market, which is Toronto.

As can be seen, we have a significant cost disadvantage moving product into these markets when major competitors, like Stelco and Dofasco, are located right in the centre of those markets. In 1997, Algoma produced 2 million tons of finished steel product. An exhibit attached to this indicates the raw materials that we flow in to support the production of that steel. Algoma traditionally moves raw materials between late March and the first week in January each year, by water transportation exclusively. The ore move is the segment that moves for the longest period of time between March and January, in order to get all of our requirements in before the winter freeze-up.

The imposition of the icebreaking fee will catch both ends of that movement in April and December/January. We expect the extra cost of this fee to be around $322,000 minimum per year to us, for an icebreaking service that has never been provided by the Canadian Coast Guard to us in the past, nor do we expect to see it in the future.

Algoma's raw materials move mostly in U.S. waters, where the U.S. Coast Guard provides the icebreaking in the channels we use, as do the U.S. shippers. We have an exhibit attached that will show the relationship between our location and the U.S. channel. What it will depict is that there are only about 9,100 feet of channel in Canadian waters on all of the iron ore flow locations that we have.

During the ice navigation periods, the U.S. Coast Guard breaks the ice in the channels from the U.S. locks downriver and upriver into Lake Superior, including the ore shipping points of Marquette, Michigan, and Duluth, Minnesota. The attached exhibit shows those locations. They cover all of the vessel traffic moving in the U.S. waters. In other words, the U.S. Coast Guard breaks that channel for American steel producers as well as ourselves. The 9,100 feet left in the Canadian waters that we're looking at today into our facilities is broken by a local tug operator, Purvis Marine. This service is paid for by us on an as-needed basis.

Algoma's distance from the steel-consuming markets is significant, and substantial freight must be absorbed daily by us to be competitive with producers located in the centre of those markets. This competitive disadvantage dictates the need for Algoma to pay only for what the company needs and uses in order to stay viable and continue to provide good secure jobs for our employees.

• 1015

As can be noticed, Algoma will be subjected to an icebreaking fee for a service that will never be used—nor can we afford it. Since Algoma must continue to explore ways to keep our costs down to survive, we are reviewing the transportation of our ore from Marquette, Michigan, by rail instead of water on a year-round basis. The Wisconsin Central Limited, a U.S. company, has recently purchased the rail lines in the western upper peninsula of Michigan and will allow them to deliver ore into our plant through their ownership of the Algoma Central Railway.

Beginning in January 1999, we plan to move 300,000 gross tons of ore over the winter months to test the viability of the all-rail option at costs that are competitive with those of vessels as they stand now, before the imposition of an icebreaking fee on the vessel traffic. This tonnage is volume that vessel carriers would normally handle.

As this test dictates, vessel transportation into Algoma could well become a non-competitive issue with direct rail on ore moves in the future if any additional charges are placed on the water move.

In exhibit 1, we show that the total volume coming out of Marquette, Michigan, is 3.3 million tons. That's what could be up for grabs between the rail and the vessel.

To summarize, I'd just like to say that with Algoma's distance from the steel-consuming markets and the absorption of the extra freight against the producers located in the centre of those markets, any additional cost penalties imposed without careful evaluation to ensure a least-cost approach will further impact our ability to be competitive and force us to look at other modes of transport on our iron ore business.

Just to give you one small perspective, in that five weeks, on the tons that we would need icebreaking for, the icebreaking would bump those fees by 58¢ a ton or 21%. That's significant.

Thank you.

Mr. Guy Dufresne: Mr. Chairman, those are just a few examples. We could bring many more to you. The proposal we've put to the government, to Minister Anderson, is not a proposal for no fees, but for a fee that is halfway while we're making this study and for a partnership that will allow the government to reduce the costs while keeping industry competitive. Canada has the largest percentage of exports of all the developed countries of the world, and now, with this system, with the icebreaking fees, we're putting this system in jeopardy of not being competitive on a world basis.

I'll stop there.

The Chairman: From that, do I take it you're saying you could afford half the fees?

Mr. Guy Dufresne: The proposal we're making here is not what we would like, ultimately, but is the proposal we're willing to live with—to go halfway—while we find a system to reduce the costs further. That's the proposal we've made to the government.

The Chairman: From the Reform Party, Mr. Lunn.

Mr. Gary Lunn (Saanich—Gulf Islands, Ref.): First of all, just in the interests of time, and because all these gentlemen are from the province of Quebec, I'm going to give the Reform ten minutes to the—

Mr. Guy Dufresne: No, they're not.

Mr. Gary Lunn: I apologize.

Mr. Guy Dufresne: You have some Maritimers, some Ontarians—

A voice: It's the whole Great Lakes and St. Lawrence.

Mr. Gary Lunn: I apologize for that.

Anyway, I'm going to give the first ten minutes to the Bloc. They are very familiar with that. I'll take their five minutes and waive our second five so that the Tories and the NDP can get on and everybody will get a chance to speak.

A voice: What a nice guy.

The Chairman: I assume Mr. Rocheleau will have the lead.

Please, Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau (Trois-Rivières, BQ): I would like to thank my colleague from the Reform Party for his co-operation and courtesy.

Secondly, I would like to briefly remind the committee of the Bloc Québécois's action on this issue. So far, the Bloc has played a key role, and this has been very important for us and for the industry.

For nearly three weeks now, we have been holding the government's heels to the fire every day. In our view, the government's position is indefensible. Consequently, we have formed a coalition of members who represent ridings along the St. Lawrence river. Members of the Bloc Québécois represent 26 of the 29 ridings along the St. Lawrence river. We are asking the government for a moratorium. Last week, we got an answer, somewhat arbitrarily. I wanted to mention that, because it's very unpleasant to hear the Minister say that we are dealing in falsehoods when in actual fact, we have been working in co-operation with the industry, with the people most directly affected.

• 1020

I have high hopes for today's meeting, which we have been looking forward to for a long time, hoping that it would not take place too late. We know that in the calendar there is a date called December 5, which is fatal in the administrative process. To my mind, what is at stake is the role of parliamentarians and committees and their importance vis-à-vis the administration. I hope that we will be successful as parliamentarians in influencing the executive so that reason and legitimacy are given greater weight in this issue.

Mr. Chairman, I have three questions for the witnesses and I think that given Mr. Dufresne's mandate, he's well placed to answer them.

When the Minister tells us repeatedly, in order to legitimize his position, that he is simply basing himself on the recommendations of the industry, among others, that were presented to him following the consultations that took place, what are we to answer, we in the opposition, to what we will be hearing here today? What can we answer the Minister? We can sense there is a gulf between what you are saying and what the Minister thinks. The link that is supposed to exist between the two is called the recommendations from the sector.

Secondly, I would like to hear your comments on what I'm about to say. If ever the federal government maintained its decision to impose duties, as it has done up until now, what would be the medium and long term impact for the industry in the St. Lawrence—Great Lakes corridor? I'll give some practical examples. Where are we going with regard to competitiveness? This has often been demonstrated. It is said that the game is not played between Montreal and Halifax, but in relation to ports on the east coast of the United States and on the Mississippi. I would like this to be stated once again because it's the key to the whole situation.

Lastly, should we simply give up on the thesis that circulated at the outset of the debate, two or three years ago, regarding the application of a standardized tariff for ice-breaking from coast to coast? Should we just kiss this goodbye, or should we come back and try to find some kind of solution?

Mr. Guy Dufresne: I will answer these three questions quickly and directly.

With regard to the Minister, I think he received erroneous information. We have the industry's response in a letter that I sent to Minister Anderson. It's not what we'd like to have, when the United States, Brasil and Australia have no such fees, but it's something we can live with. Moreover, it's something that will enable us to work in a long-term partnership to help the government reduce its costs and keep us competitive.

We have the industry's response in our letter. It's very rare to see all industries in Canada get together and tell the government what they think unanimously. With the coalition, we managed to do that and we will continue. We want to work constructively with the government. I will go on to your second question, concerning the long-term impact.

In the long term, there could be significant repercussions. You have heard people say that in the salt industry, they can no longer continue because they are not competitive. You also heard that the paper industry was not competitive. My European clients told me that they would not ship to us in winter and that they would not ask us to ship to them. Building up inventory and capital means tens of millions od dollars. We will no longer be competitive with this. This means that in the long term, the competitiveness of many industries will be seriously affected.

Will we shut down tomorrow morning? I hope not. However, we will certainly be affected, and as Mr. Desbiens said, we will certainly think twice before investing in the long term. We are endangering competitiveness, which is already very difficult at the global level. That's what's being done. In the coming years, Treasury Board will conduct an impact study in which we will be participating. We will be able to clearly demonstrate that this has an impact. As Mr. Smith said, are we going to wait for negative impact before we react? We're telling you ahead of time. We're telling the government before it imposes this. We have told you we are unanimous about this throughout Canada.

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Thirdly, will a standard tariff solve the issue? The answer is no, because the standard tariff will already be too high. Therefore, this will not solve the problem, and that's not the solution we're putting forward.

Mr. Yves Rocheleau: You gave an example in your document that I would like you to explain further concerning transport from Sept- Îles to Hamilton which will significantly increase costs. I don't remember the percentage this represents, but it had struck me at the time.

Mr. Guy Dufresne: It is significant, Mr. Rocheleau, when you look at the tariffs, to realize that 10% of ships will pay 45% of the tariffs. That will be the case for us, but also for everyone else, that is the representatives who are here and all the others who ship merchandise. With regard to those who ship merchandise, let us not forget that in terms of percentage, Canada ships much more than the United States, far more than Japan and much more than all other countries in the world. This affects us greatly. We transport 100% of our production by ship, and the same is true of Donohue and the others. We have no railway. We have no other choice. It must also be remembered that marine transport is the most ecological.

On the one hand, the government said in Kyoto that we have to reduce the amount of CO₂ produced in Canada. On the other, through its policies, the government does not encourage the marine industry. Not only does it not encourage it, but it penalizes it by imposing these tariffs. This contradicts the government's policy.

Mr. Yves Rocheleau: Is it possible that the Americans are looking at all this with veiled amusement and that they will soon go on the defensive by making offers to shipbuilders and other players to attract them even more systematically? Is there a risk that this will happen?

Mr. Guy Dufresne: I don't know, but you know that in the business world, the economy is the driving engine. When you change the tariffs, the industry adjusts to those changes. If we are disadvantaged here, as Mr. Gourdeau said, there is no doubt that the wheat will be shipped by routes other than the St. Lawrence and the Great Lakes. That's obvious.

[English]

The Chairman: Thank you, Mr. Rocheleau.

Now, I know Mr. Provenzano has just been waiting to talk about steel.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): Actually, I only have a couple of questions.

The Chairman: You're going to share your time, then, with—

Mr. Carmen Provenzano: With Mr. Easter. Certainly.

First, with reference to the length of the study that was indicated, the three-year study, is it currently underway?

Mr. Guy Dufresne: Mr. Massé told us he's getting that underway but that it's going to be three years before we get the results. I don't know if anybody knows if it's underway.

Mr. Doug Smith: We're doing a scoping study at the moment. We have very strongly said to Mr. Massé and his people that industry should be involved in this study right from the beginning. We've criticized the Hickling study many times. We were not on the steering committee. We were not authors of the terms of reference. And when we made input to the study, it was filtered. We have urged Mr. Massé to include industry from the very beginning in designing the study to make sure they get the proper input.

In fact, we've told Mr. Massé that if industry isn't involved from the very beginning, industry is so fed up with working away at these things and giving input to them without it having any effect that he probably wouldn't get appropriate data.

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That's not by way of a threat; it's just on the basis that if an economist is going to measure impact by asking you if you are going to close your plant because of these fees, that's a stupid question. The questions should be the following. What's the impact on your competitiveness? Is it going to affect your profit? Is it going to affect how many jobs you have ten years from now? Is it going to affect your business decisions? Are you going to lose some of your market share?

That's the kind of problem— We've tried over and over again. In particular, the salt companies have tried to make the point that “it's not that I'm going to go out of business, but I have a competitor that I'm going to lose market share to in the United States because of these fees”. That's what matters in these fees.

But yes, we've talked to Minister Massé, and we've urged him, in fact, to try to shorten the study, because one of the problems is that it's three years' worth of study before we know that the impacts are large. He's agreed that if it can be accelerated, it should be accelerated now.

Mr. Guy Dufresne: He's also said that he's listening to our point, and he seems to be favourable to us getting involved right at the start. We're encouraged by that, and that's why we've put in the proposal saying that we'd go for half the fees, that we could make that study and in three years try to find some solution to this thing.

Mr. Carmen Provenzano: Just to follow up on that, is there an actual commitment on the government's part to undertake the study?

Mr. Doug Smith: Yes.

Mr. Carmen Provenzano: There is a commitment?

Mr. Guy Dufresne: Yes, there is a commitment. But if the patient dies in the interim—

Voices: Oh, oh.

Mr. Guy Dufresne: —what's the use of a study?

Mr. Carmen Provenzano: Exactly.

Wayne Smith, if you wouldn't mind indicating this, with regard to Seaway Self Unloaders, what are we talking about in terms of the number of ships represented by that entity?

Mr. Wayne Smith: It was 21 self-unloading vessels. Of all the American and Canadian fleets, it is the largest fleet of self-unloading vessels. We carried roughly 30 million tonnes of bulk commodities last year.

The Chairman: Wayne, do you have any questions?

Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.

In regard to Mr. Rocheleau's question, I just want to clear up one thing. The minister has not accused the Bloc of lying. What the minister has said is that there has been consultation with the industry, and he has said that consistently.

You indicate, Mr. Dufresne, that you believe the minister may have been misinformed. Can you be specific with us? That's the crux of this whole issue. The bottom line here in cost recovery is this: how do we develop and enhance our ability to perform as an economy, whether it's with natural resources, shipping or whatever? And what's the impact going to be of all these various new cost recoveries on our ability to be able to compete and perform? That's the bottom line.

The consultations with industry by the coast guard were supposed to address that problem and come forward with a solution acceptable to all parties. Can you be very specific for us? Did consultations occur? Were they satisfactory? If they weren't, why not?

Mr. Guy Dufresne: Let me ask you one question. Do you think that all the industries in Canada would spend so much time on this if it was a lousy $6 million difference? Why do you think we would all come here and all the associations of all the businesses across Canada would take the time to sign a report if they thought that this was not very important?

It is an important matter for us in all industries. Yes, there was some form of consultation, but it was not the form of consultation that the government has done in many other projects. It was pick and choose and certain things and taking things out of context—by the coast guard.

I'd like to stress that the consultation done in many other projects was not the same type we are accustomed to from the government. In this case, it hasn't borne the fruit. It hasn't given the same kind of results as those we had for the seaway and for many other areas, and that's what we're pointing out.

You can consult in many different ways. You could just ask a question in passing or you could go and ask for a report and take whatever suits you in the report without giving the context.

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Doug Smith has given you some examples. We could be more specific in terms of reports and give you— But I just want to give you the overall frustration of all industries, because for them to take the time to gather together and sign one thing, means, to me, that we have a problem as Canadians. If you cannot get the partnership between the government and industry, how do we compete in the world?

Mr. Wayne Easter: In terms of “all industries”, though, are you talking about all industries in the Great Lakes and St. Lawrence region or about all industries on the coasts as well?

Mr. Guy Dufresne: I'm talking about the coalition. We have several coalitions and one national coalition.

Mr. Wayne Easter: Look, we get complaints from Halifax, say, which says it's non-competitive as a result of the advantages the St. Lawrence Seaway gets. That's the kind of box that we find ourselves in. So my question really is, are you representing that area as well? I understand you are, but are you?

Mr. Guy Dufresne: Yes, we're representing all of Canada.

Let me make a comment here. Do we have different classes of citizens across Canada? In other words, we are competing, we're looking at the Canadian government in a partnership in order to see that all businesses across Canada can be competitive vis-à-vis the world. We're not asking to charge more to one region so that the other region can be favoured. We're saying, “Put a Canadian system in Canada that allows us to compete versus Brazil, Australia, the United States.” That's what's at stake.

Mr. Wayne Easter: Now I'm going to run out of time, Mr. Chairman, and that really relates to my next question.

I just wonder if you can provide this answer by other means. I don't expect that we have the time to provide it here.

But I think that's what important. Is there any documentation you've already presented to government or to the coast guard or to anyone that we can access which will outline the various costs in Brazil, in Chile—I know on the taxation side and that—in those other countries, and which will clearly show that we're putting our industry into a non-competitive position through these fees? And just think about that for a moment, because I have a specific question for Mr. Genois.

Can you explain a little more about the tugboat question re les Îles-de-la-Madeleine? Are you saying that you use a tugboat to break ice in that six-mile strip? So the coast guard has no icebreaking service there that they're providing to you, yet, under this fee structure, the coast guard is going to charge the tugboat icebreaking fees when it in itself is in effect breaking the ice?

Mr. Guy Genois: That's correct.

Mr. Wayne Easter: Okay. Thanks.

Mr. Guy Dufresne: I'd just like to come back to your questions. This is part of the economic studies. We have the numbers, but this is what Mr. Massé wants to do, the impacts, and show them. But I'd like—

Mr. Wayne Easter: That will be too late. That's one of the problems. I don't know why—

Mr. Guy Dufresne: This is what we've been saying to the government from the beginning. We have those studies. Paul Gourdeau has just come from Brazil.

Paul, in 30 seconds, say what you saw in Brazil.

Mr. Paul Gourdeau: I was just telling Guy about this the other day. I went to a place called Sepetiba Bay. For the mines there, the Brazilian government is pouring $250 million, I think, into building a brand new iron ore and container terminal, with 10 kilometres of conveyer belts and state-of-the-art export facilities. The whole thing is government-financed and they don't charge a dime. They just charge your normal port fees. They won't charge these people for user fees. And he's competing with them.

Mr. Wayne Easter: But we did that 20 years ago.

The Chairman: Mr. Easter, I'm going to cut this off here. If there's other information, maybe you can get it privately, but after the Washington meeting, I wonder about Brazil.

I will go now to Mr. Lunn from the Reform Party.

Mr. Gary Lunn: Thank you, Mr. Chairman.

On my own behalf, I first of all want to thank you for coming here today. Your presentations were excellent. I had a number of questions, and as we progressed through all the speakers, my questions eventually got answered.

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What I've recognized here is that time is of the essence. This is coming down the pike this month. As we sit here, action needs to happen immediately, not tomorrow and not the next day. Something has to happen right now. I recognize that.

So I'm going to ask the indulgence of the committee—I know we've done this in the past—and ask the committee to immediately recommend to the minister to accept the proposal submitted by Guy Dufresne, Chairman of the Great Lakes-St. Lawrence Industrial and Maritime Coalition, that for this coming season they establish a transit fee which is 50% of that suggested by the coast guard—in other words, that they accept your recommendation and that we make this recommendation to the minister today on behalf of the committee.

Beyond that, I think it's essential that a true partnership arrangement be worked out, because you've raised a number of very important issues, which I accept are very real. There's no way that those can be resolved before this season, so I think that's an excellent compromise on your part for this coming season. Then something can be done thereafter.

Mr. Chairman, if we could make that letter to the minister immediately— I don't know if I have the support of the committee or not, but I think that because this is coming up on December 23, it's absolutely crucial to move on this now. There is no time to wait, as these gentlemen know. They have, as one of the gentlemen pointed out, their whole shipping plans. Telling them on December 22 does not help. They needed this information yesterday or a month ago or two months ago. Their contracts, their bids, are all very much conditional on this information. I think it's incumbent on us as a committee to move today and make that recommendation to the minister.

Thank you.

The Chairman: And now to the—

Mr. Gary Lunn: Mr. Chairman, do I have the support of the committee to make that motion to waive the 48 hours' notice—I know we've done that in the past—due to the time crunch we're faced with?

The Chairman: Mr. Lunn, I think you should probably put that in writing for the clerk. We want to be very sure of what we would be dealing with.

Mr. Gary Lunn: I could do that while the next speaker's talking and give it to you in a few minutes. I'd be happy to.

The Chairman: And now, from Nova Scotia, Mr. Stoffer.

Mr. Peter Stoffer (Sackville—Eastern Shore, NDP): Yes, Mr. Chairman, I should probably say hello to Mr. Gourdeau from my wife.

Voices: Oh, oh.

Mr. Peter Stoffer: She worked at Fednav in Montreal for many years.

Mr. Paul Gourdeau: She left. I can understand that.

Voices: Oh, oh.

Mr. Peter Stoffer: She went to the Yukon with me.

A voice: That's an excuse.

Mr. Peter Stoffer: I understand how critical your situation is. I've always believed that as a government or as a country we should be providing the infrastructure so that our industry can work together with labour and provinces and municipalities in order to export our goods—because we are a trading nation—in the most cost-effective way we possibly can in the extremely competitive environment that you're in—as my wife said when she was at Fednav. Even at half, which you're willing to pay or agree to pay, it still will put you at a disadvantage with many countries.

Mr. Guy Dufresne: Yes.

Mr. Peter Stoffer: I can appreciate that.

But my concern is that there are an awful lot of people— the underlying tone—you haven't said it yet, although you mentioned it just once, Mr. Smith—was the fact that if this goes through we're facing the possibility of a tremendous job loss in the future. And I'm thinking of my brothers and sisters at Algoma Steel with the steelworkers, and I'm thinking of my brothers and sisters in the lumber industry and in the shipping industry and things of that nature.

So first, are there any labour representatives here with you, and if not, why not?

Secondly, I have a letter here from Mr. Hargrove, who is representing 550 unlicensed crew members on vessels and is indicating the concern about what is going to be happening to those 550 people if these fees go through. I suspect that's just the tip of the iceberg of the job losses that will be going on.

And thirdly, if the United States can place a moratorium on their fee structures till 2001, why, in your opinion, would Canada not do the same?

Mr. Guy Dufresne: Well, on the first thing, we have support from the unions, and letters have been sent and will continue to be sent on that, because they're fully supportive of this coalition position.

Mr. Peter Stoffer: And the mayors from the municipalities of Sault Ste. Marie—

Mr. Guy Dufresne: Mayors of municipalities too.

The second question that you have, in terms of half the tariff, this is going to— We're not on a level playing field. This is going to put us at some disadvantage, but we're trying to find a compromise route and, through the study with government, show what the impact is and adjust accordingly.

• 1045

Third, on your question about the United States moratorium, if the government would put on a moratorium for three years rather than our solution, we'd go along with that for sure. That would be an even better solution, because that would keep us competitive in the interim until we get the impact of the study. And if that solution should be chosen by the government, we would certainly continue to help to reduce the cost.

Mr. Peter Stoffer: Lastly, you said there was a letter signed by all the industries which was given to the minister.

Mr. Guy Dufresne: That's the coalition letter—

Mr. Peter Stoffer: Right.

Mr. Guy Dufresne: —which you have.

Mr. Peter Stoffer: Okay. Very good. Thank you.

Mr. Doug Smith: Mr. Stoffer, if I could just add very quickly to that, the industry position, the position of the national coalition, which is right across the country, in British Columbia, Halifax, Newfoundland, unanimously recommended—and I quoted from it in my presentation—that icebreaking fees be deferred for three years. The coast guard and the minister turned that down and have gone ahead with their proposal to go to $13 million.

In our efforts to go around the table and talk to a number of people, we have been told repeatedly that while we make all our arguments about competitiveness and impact, the perception here is that because we're unwilling to pay a dime, or we're saying we shouldn't pay a dime, all we're after is the money and we're just trying to avoid defeat.

So in the interests of being constructive, we put forward a proposal to lower the fee and eliminate some of the problems, while working with the government. But our proposal a year ago was signed on to by everybody across the country, including British Columbia, which isn't going to pay icebreaking fees, ever. They unanimously said not to implement icebreaking fees, but, in the effort to be constructive and to try to meet the government need for revenues—the coast guard's problems in other areas—and to form a partnership, we have put the proposal for half the fee on the table.

And you are going to have representation later this week, I believe, from Newfoundland and the Maritimes. They support this proposal.

Thank you.

The Chairman: Mr. Steckle.

Mr. Paul Steckle (Huron—Bruce, Lib.): I'm very interested in what I'm hearing here. I have a tremendous concern about the fact that government has made a decision to move in a certain policy direction. That decision should have been predicated upon certain realities. One of them, of course, is the profitability, the competitiveness of industries within the framework of those decisions and directions that were being taken.

Do you feel that your message was understood in your presentations to the ADMs or the junior ministers or to the minister himself? Or, if it was given to the junior people, was it given to the minister? And does the minister clearly understand the serious ramifications of a policy that would ultimately put this industry out of business if we took it to its ultimate conclusion?

Mr. Guy Dufresne: Just last week, I met several ministers. As a group, we've met several ministers with economic functions in the cabinet. We gave them exactly the same message we've given you today, which is not different from what we said some months ago, but so far we haven't had any change in the policy.

That's why we're going to use every means possible, because this affects the number one principle: the competitiveness of industry. And rather than wait until we have some casualties, we're coming here in advance and we're saying that loud and clear. And it's going to be louder and louder, until we get something that we can live with, a system where we're going to be able to compete.

Mr. Paul Steckle: In their preoccupation to meet their budget targets or the cost-recovery targets, what is their response to the argument made by you that simply going ahead in this direction is going to put you out of business?

Mr. Guy Dufresne: The response has been that the principle of user fees has to be applied and that this is one of many areas. That we understand. That's why we've made the counter-proposal even though a year ago we said “no icebreaking”. We're trying to find a compromise to ease that.

• 1050

But I have a lot of difficulties. We have suggested ways to save hundreds of millions of dollars, like the GPS, which we use in our own operation in mining, which they use in planes; they use GPS to locate things. We were told by the coast guard that this is unsafe. They use that in every plane. According to the experts, we could save hundreds of millions of dollars. And we're trying to collect $40 million here? We could save $100 million by using that. There are many other examples I could give you if we get into this thing.

Why is it that a buoy costs 10 times more when it's done by the government rather than the private sector? Why is it that we have one person following the ship in the St. Lawrence River when for airplanes we have one controller controlling several planes? Is this more dangerous than a boat? I could go on if we want to get to the nitty-gritty as to how we can run this thing.

Mr. Paul Steckle: I'm glad you mentioned that. Are the Americans using GPS, global positioning systems?

Mr. Paul Gourdeau: Yes.

Mr. Paul Steckle: They are? Why are we not using it?

Mr. Guy Dufresne: Sir, I don't know. We're just asking the question.

Mr. Paul Steckle: It's a great issue you've raised. The other part of that question is, have you any idea where the Americans think this fee schedule could go to if they, in terms of three years from now, implemented a cost-recovery system?

Mr. Guy Dufresne: Let me tell you something. Finland tried to impose that a few years and then had to reduce it to almost zero for their own fleet because they were not competitive.

And now we're going that same route. This is a very dangerous route for a country that has the highest percentage of exports.

Mr. Paul Steckle: Yes.

Mr. Guy Dufresne: That's why all the industries in Canada are very worried.

Mr. Paul Steckle: Thank you.

The Chairman: Paul, probably on that same note, maybe the question would be, when you talk about Port-Cartier and a boatload of iron going up to the lakes— For icebreaking, you gave us a figure on that. And Mr. Dufresne, you referred to pilotage. Could we compare the two costs? What does the pilotage cost from Port-Cartier to Hamilton? Or what does the icebreaking cost? Could we relate those two figures just in our own minds here today?

Mr. Guy Dufresne: I don't have the exact numbers, but I could give this committee—

The Chairman: I'm sure someone, though, among your group must have that figure.

Mr. Guy Dufresne: The pilotage cost—

The Chairman: Yes.

Mr. Paul Gourdeau: From Port-Cartier to Hamilton? On a domestic fleet, like Mr. Smith's, I would say it's probably something like $3,000 to $4,000, and on an international ship, which requires you to keep a pilot on board all the way and not just up to St. Lambert Lock, you can probably, say, double that.

The Chairman: About $8,000. Now, icebreaking would be how much?

Mr. Paul Gourdeau: I guess $5,700 would be the cost, for just one movement. You have to get into the port, so it's $10,000 for icebreaking.

Mr. Guy Dufresne: May I suggest, Mr. Hubbard, that in looking at pilotage I would ask the question, why do you need two pilots in the thing?

The Chairman: Now, Mr. Dufresne—

Mr. Guy Dufresne: You're opening a can of worms there. We, as shippers, want you to look at that too, but one problem at a time.

The Chairman: But you're the person who brought up the can of worms a minute ago.

I'll go to Newfoundland now, with Mr. Matthews, from the PC Party.

Mr. Bill Matthews (Burin—St. George's, PC): Thank you, Mr. Chairman.

I'd like to welcome our witnesses. I guess there's not too much more to question. I just want to say to the witnesses that as a result of your being here I certainly have a better understanding of the issue and of your concerns, and I admire your determination. I commend you for that.

Consistently in the House over the last number of weeks, the minister basically has led us to believe that this is happening with the support of the industry. Thank you for clarifying that for us this morning. I just want to piggyback on what Mr. Lunn said. I think it's incumbent upon the committee to make a recommendation to the minister.

But having listened to you say that you've met with some pretty high-powered ministers, I'm not so sure what the result or benefit will be of the committee making a recommendation. But if you've gone through this extensive process— And it seems to me that we've run into the same situation here as we have had with the big problems we've had with the fisheries on both coasts: DFO has gone out under the guise of consultation but hasn't listened to what they've been told.

• 1055

And I can directly relate that to the crisis we have on the east coast with our fish resources. They went out, but they didn't listen to those that were directly involved in the industry, and consequently we have a disaster.

So there are really no other questions I can ask you, except to say that in the House the minister has consistently said that government will still pay 83% of the cost, I think he said, and he's asking industry to pick up 17% of the cost. Am I correct on those figures, by the way? Is that what it amounts to? He says the taxpayers will still pay 83%, and he's asking industry to pick up 17%. So you're telling us this morning that you've made an offer to pay half of the 17%. Is that my understanding? Correct me if I'm wrong.

Mr. Doug Smith: We've offered to pay half the amount of revenue they're trying to achieve, which is about $6.5 million instead of $13.5 million. With respect to the 17.5% of costs, I could give you reams of information to demonstrate that it's a red herring. That's based on their assessment that the costs are $76 million.

We do not accept that the costs are $76 million. We think they're $46 million. We think that the share for the Great Lakes-St. Lawrence might be $23 million, and the way the fee is set up, Great Lakes-St. Lawrence is going to be paying over $11 million of the $13 million. So on that basis, our share of cost recovery would be 50%, which is nearly double the level of cost recovery on the marine service fee. So it's numbers—

We do not accept that the costs are $76 million, and one of the concerns we have is that the coast guard repeatedly trivializes the issue by trying to use numbers which nobody in industry supports or agrees with to demonstrate that we're only being charged a small percentage of the costs.

The Chairman: Mr. Easter, very briefly, and then Mr. Stoffer.

I'm sorry, but we only have about three minutes left.

A voice: Five minutes—

Mr. Wayne Easter: Just one point on the difficulties—

Mr. Bill Matthews: No—

The Chairman: We had your five. We only have about three minutes left for the whole thing, and they're rushing us here—

Mr. Bill Matthews: I'd rather listen to him than have us talking, Mr. Chairman.

Mr. Wayne Easter: Just to make a point, Mr. Chairman, it was mentioned that there could be a lot of savings on the GPS, and I think you have to understand that what we're talking—

The Chairman: Wayne, again, I don't want to get into that. We're talking—

Mr. Wayne Easter: But this is very relevant, Mr. Chairman.

The Chairman: I'm sorry.

Mr. Wayne Easter: Mr. Chairman, it's very relevant to this discussion, because this committee recommended that we couldn't move it totally to a GPS system to protect the fishermen. Now, if we're agreeing with this group here today that we can do away with the GPS system, then what about the—

The Chairman: We have an agreement, Mr. Easter.

Mr. Wayne Easter: —committee recommendation?

The Chairman: That's enough now.

Mr. Wayne Easter: There have to be trade-offs.

The Chairman: That's enough for that.

Mr. Stoffer, one minute.

Mr. Peter Stoffer: You were mentioning, Mr. Dufresne, that it's going to get louder.

Voices: Oh, oh.

Mr. Peter Stoffer: I would encourage you to bring labour on board immediately, because they can be very loud as well and they can assist you in your cause.

Mr. Guy Dufresne: They're already on board.

Mr. Peter Stoffer: But they're not here.

Mr. Guy Dufresne: They're not here.

The Chairman: I'd like to thank the witnesses. I'm rushing because another committee comes in here at 11 a.m., and they're at the door here telling our clerk that we have to be out by 11 a.m. I do apologize for that. It may seem rushed, but we will be meeting again on Thursday to consider further representations.

Mr. Gary Lunn: Mr. Chairman, can I just intervene for a minute? Do I have the indulgence of the committee to vote on that motion at this—

The Chairman: If you'll give me a minute here, I plan to get to your motion, if we don't get thrown out beforehand.

Mr. Gary Lunn: Thank you.

The Chairman: In any case, gentlemen, it's a very complex issue and we certainly appreciate the effort that you've put in.

Also, I can't help but hear that maybe the government system is not the most efficient one in terms of icebreaking and that if you want to become partners in it, you may want to look at how to reduce the costs and how our icebreakers might become more cost effective.

With that, I will consider the two motions that I do have on the table here this morning. I will take them both, Gary, as notices of motion, and it would mean that by Thursday, when we have our second meeting—

Mr. Gary Lunn: No, Mr. Chairman. I'm asking that we waive the 48 hours' notice due to the time constraints of this—

The Chairman: I'm afraid that in terms of that, Gary, I would have to say that we do have a method of operating. It is for 48 hours' notice.

Mr. Gary Lunn: But, Mr. Chairman, just if I may intervene for a minute, at the last committee— We've done this in the past; if we have the indulgence of all the committee members, we can waive that 48-hour requirement. We can get around that. And because time is of the essence, I suggest that we have to act now. I ask that you waive the 48 hours' notice and that we vote on that motion today.

The Chairman: As chairman, I would rule that we have to abide by our own rules, and—

Mr. Gary Lunn: But that wasn't the case—

The Chairman: —secondly, Gary, in terms of the fact that we will be having a completion of these hearings on Thursday, it does give us ample opportunity.

• 1100

I would not mind informing the minister of your concerns in terms of of the Reform Party being opposed to this type of cost recovery, but in terms of how we operate, we've always had a 48-hour system of notification. I do take your motion under advisement: that our committee would approach the minister by letter asking him to accept the proposal submitted by Mr. Guy Dufresne, Chairman of the Great Lakes-St. Lawrence Maritime and Industrial Coalition. We'll decide on that on Thursday.

There is a further notice of motion from Mr. Easter: that the committee commence its study of the P.E.I. report on Tuesday, December 8, in the hope of concluding it on that day and presenting it before we go home at Christmas.

Those are the two notices of motion, and we will look at both of them on Thursday. We have rules to follow. As chairman, I do try to follow them in most cases, Mr. Matthews.

Again, thank you for coming here today. You've made a strong presentation. Go back to your members and say that. We too are concerned about what we've heard.