TRGO Committee Meeting

STANDING COMMITTEE ON TRANSPORT AND GOVERNMENT OPERATIONS

LE COMITÉ PERMANENT DES TRANSPORTS ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 17, 2001

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[English]

The Chair (Mr. Ovid Jackson (Bruce—Grey—Owen Sound, Lib.)): Good morning, ladies and gentlemen. Pursuant to Standing Order 81.(6), we have the minister with the main estimates for the fiscal year ending 2002. We have votes 5, 10, 15, 20, 25, and 35.

Appearing today is the Honourable David Collenette, Minister of Transport. With him are Margaret Bloodworth, Louis Ranger, William Elliott, Ronald Sully, Janet Milne, and Christine Nymark.

Mr. Minister, the floor is yours for your opening statement.

The Honourable David Collenette (Minister of Transport): Thank you. The rest of my officials are on their way.

We're actually starting a minute early, which is good. My deputy minister is out of Ottawa today, but our associate deputy, Louis Ranger, will be here, as will Christine Nymark, our acting assistant on policy. We have Bill Elliott here, Ron Sully, whom you've met before, and Janet Milne is coming too. They will be here, but they've heard my statement before.

I welcome the committee adjusting its timetable to fit my schedule. I'm very sorry to muck you around. It's been an impossible week in terms of travel—four days in a row being out of Ottawa and coming back late at night. So I apologize for that.

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I also want to thank you for the airline day you had last week. I thought it was extremely productive. And certainly the media are very attentive when it comes to airline issues. We covered it fairly well, but there may be some other questions you might want to deal with on that.

Also, because I'm not sure I'll see you before we break in June, I'd like to thank the committee for all the work you've done on the bills that have come forward. You've had the Shipping Act, the Marine Liabilities Act, and the Motor Vehicle Transport Act is coming after the break. Then you're doing the hours of service issue. The committee is doing a great job in these bills. They're not controversial, but they are very important bills.

I'm here to review our plans and priorities for 2001-2002 and to update you on various issues affecting the department.

[Translation]

As I said, I must thank you for your work on the Canada Shipping Act, the Shipping Conference Exemption Act and the Marine Liabilities Act. Once again, we will be making the most out of your work during the year to come.

[English]

There are two major pieces of upcoming legislation that I'd like to mention first. A bill establishing the multimodal Transportation Appeal Tribunal of Canada will be tabled in the House soon. It will replace the Civil Aviation Tribunal, giving the marine and rail sectors the same impartial and effective review procedures currently available to the aviation sector.

Secondly, we are working on updating the Aeronautics Act, which governs the development and regulation of aeronautics and the supervision of all related matters. My notes don't say it, and my officials may rap my knuckles, but I am talking with my cabinet colleagues about bringing in a bill on the framework for airports. It is going to be a very important bill to deal with.

We're also going to be conducting a review of the rents at these various airports, because some people think the kinds of arrangements that have been made are not satisfactory. By and large, we dispute that. I'm talking about the main NAS airports. Only eight of them pay rent right now, but others will be coming on in some smaller communities over the next few years.

So it's going to be a very busy fall from that point of view.

[Translation]

As I already mentioned, I have also invited this committee to examine the issue of commercial drivers' hours of service. Transport Canada has been working with the provinces, as well as with industry associations, researchers and other interested parties under the auspices of the Canadian Council of Motor Transport Administrators to develop proposals to change the existing rules.

Your review of these proposals will provide the opportunity for public input into this important issue. Your findings, along with any provincial or territorial consultations, will be incorporated into the review, with the ultimate goal of developing revised federal, provincial and territorial regulations.

[English]

Perhaps I could just digress. I've asked you to deal with this, because this is going to be a very tough issue for us. There's agreement with the provinces. All the provincial ministers want me to use the federal regulatory power to make the changes with hours of service. And that's great, except that there is considerable opinion by others in the transport sector that this is not the way to go.

We think the CCMTA work, of which we're part, has been well done. The consultations have been well done, and we are prepared to move on it if there is consensus. For that reason, I think some provincial ministers will be seeking to come here as witnesses. And I hope you will invite them, because, quite frankly, we are not going to take this on our own hook at the federal level.

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We regulate interprovincial trucking and interprovincial bus by virtue of a constitutional clarification in the 1950s, but we delegate the administration to the provinces. So in effect, quite frankly, we want to make sure that if we move on this, everyone understands that we're moving in unison with the provinces and there is a degree of harmony. There are people who will be difficult on this issue.

On bus deregulation, we want to proceed with regulatory reform, but only when there's a consensus. Because the hours of service issue is so difficult, tricky, and time-sensitive, I've asked you to look at that particular issue first, and the Senate committee has agreed to deal with bus deregulation. That doesn't mean to say that bus deregulation is any less important. In fact, it's very important, but the Senate committee is able to do that, while you're doing the hours of service review.

As you know, we have a CTA review going on and next month I'll receive the panel's report. It's examining many issues, including the option of opening Canada's rail lines to competing railways. There was an interim report released in January that really defined the issues. It didn't come to many conclusions. They determined that more work was necessary to fully assess the economic, regulatory, and legal impacts of increasing competition on the railway rights-of-way. So the panel's report I look forward to hearing very, very soon and with great anticipation.

On grain, we continue to make progress on this particular subject, following on the reforms to grain handling and transportation policies we announced last year. I know there was some controversy, but frankly, if there were no controversy, we wouldn't be doing our job. It's a very contentious issue, as you know from your study of Bill C-34 last year. I expect to be announcing the appointment of a monitor for grain handling and transportation in the near future.

[Translation]

Turning to airports, this government's National Airports Policy has established a framework that is proving successful for airports across the country. I recognize that this framework needs to be strengthened to increase transparency and improve governance and accountability.

Stakeholders have been asking for a comprehensive review of rent, among other issues. The government is considering whether to undertake a rent policy review, and I will announce our decision in due course. As I said, I will be introducing a bill on the National Airports Policy, in the House of Commons, in the fall.

[English]

On highways, we're committed to improving the highway system in the country. In the last budget $600 million was committed for the strategic highways improvement program and about $500 million is going to go to projects to enhance the national highway system with a focus on the east-west or north-south transportation corridors. The remaining amount will be spent on integrating the national surface transportation system, and that includes about $70 million for road, rail, and other improvements at the Canada-U.S. border. We're also working with Canada Customs and Revenue Agency and other stakeholders at the border crossings.

[Translation]

The final portion of the Strategic Highway Infrastructure Program funds—$30 million—will be invested in intelligent transportation systems. These include a host of different technologies that can improve safety, efficiency, reliability and environmental performance.

We will look at ways to use technology to optimize existing facilities at border crossings. A key goal will be to ensure that ITS architecture is compatible across jurisdictions so that systems can be used effectively across the provinces, and in the U.S.

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[English]

Our efforts with ITS tie in our work to make sure the transportation system is sustainable, which includes social, economic, and environmental impacts of transportation decisions. In February, as part of our efforts to address these issues, including climate change, smog, and water quality, I presented Transport Canada's second sustainable development strategy to Parliament. Ensuring the sustainability of our system is a major part of other key initiatives.

For example, increasing traffic congestion has serious environmental, health, and safety effects, including smog, pollution, and greenhouse gas emissions, and it has a real impact on trade. I know that you'll recall our commitment in the red book and the throne speech to work with the partners across Canada to help improve public transit infrastructure and to launch a dialogue on the challenges facing urban centres. A key role in fulfilling this commitment will be played by the task force on urban issues announced last week by the Prime Minister.

But in the meantime, because I think the committee is looking at more than the medium and long term, I've asked the department to look at options within federal jurisdiction to assist municipalities with their public transit challenges, largely on the commuter end, where we have jurisdiction over the railway, because the three biggest cities in the country, Vancouver, Toronto, and Montreal, are choking on traffic. We have to do whatever we can, even working ahead of our schedule in the strategy for assisting the municipalities with urban transit, to see if we can do some short-term things to improve the position of the commuter transit operators. So we're committed to working with these operators and other municipalities to improve our public transit infrastructure.

As you know, I'm a big rail fan, and I've always said that rail is going to play a bigger role in offering solutions to urban transit changes. Via Rail in particular do provide, in effect, an outer urban commuter service in the greater Toronto area, and I see them becoming even more part of the solution, certainly in Montreal, perhaps even in Vancouver, as time goes on.

More and more cities are looking to rail and light transit options as a solution to the congestion on their roadways, and some of the busiest and most congested roads in major Canadian cities are the roads between the airport and the downtown core. In Toronto, for example, we're working with the private sector, as well as local and provincial governments, to establish a rail link between Pearson Airport and Union Station, which is in the core. That's going quite well. We've had about 50 major companies, transit operators, engineering companies, equipment manufacturers, financial houses, express interest. There was a bidders conference a couple of weeks ago. They're going to come back with responses to our solicitation of interest, and we hope to move with an RFP in the near future.

I also want to move along the notion of the links to the airport in Montreal and the airport in Vancouver, and I'm very encouraged that here in the national capital region there is a plan to extend the new light rail, which is opening up in August, to the Macdonald-Cartier International Airport.

[Translation]

Last year, the Government of Canada provided $400 million in new funding to VIA Rail for major capital investments over the next five years to create a more modern, attractive and competitive service for Canadians. We have already seen some of the dividends of this investment, including renovations to stations and the purchase of new rolling stock.

[English]

In fact, there will be some developments very shortly on the new rail cars that have been bought by VIA for a steal, if I may be so bold as to say so, from Alsthom in the United Kingdom.

Finally, I think the committee is aware that I've launched a new process to develop a transportation blueprint to take us to the next decade and lay the foundation for developments even further into the future. I just want to clarify what we're up to here.

Obviously our goal, which I'm sure you all share, is to have the best national transportation system in the world, one that is safe, efficient, integrated, affordable, accessible, and environmentally friendly, a system that supports our economic growth and our trade, stimulates competition and productivity, and puts Canada in the forefront of technological innovation. It has to be a system that flows smoothly through our cities and across our borders to link us safely and efficiently with our trading partners and that flows smoothly and seamlessly from one mode to another, from ship to train to truck, from plane to public transit.

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[Translation]

How well Canada deals with our transportation challenges will determine the breadth of our economic growth, our place in the world as a leader and innovator, and the quality of life we enjoy.

The key to success will be partnerships we build to find solutions, because it is going to take all of our expertise, our ideas, and a lot of good will to ask the right questions and find the right answers to guide our deliberations over the coming months and, ultimately, our actions over the coming years.

[English]

To gather ideas and options on how we can achieve this, I'm going to be holding a series of ministerial round tables with interested stakeholders, as well as consulting with the provinces and territories. This is going to be building on the CTA review panel's report. We're not duplicating the exercise. They have a particular focus on the act, but transportation policy in its wider sense goes way beyond that. It builds on the work they've done and will be reporting on in the next few weeks.

We'll make sure that an appropriate role, obviously, is defined for this committee as part of the overall process, to ensure that the views of those who represent Canadians are taken into account. My parliamentary secretary will be talking with you, Mr. Chair, and other members of the committee about how the committee can fit into this process, because you are the one body that can receive witnesses, hold hearings, and get the views of Canadians on this new policy development.

So we're working together on many fronts. We're guiding and maintaining Canada's transportation system. We're setting our sights on the future. Obviously, in all the changes that are going on, we're not going to compromise safety one iota. As you know, and I've said it many times, safety is our top priority. It has to be. The integrity and safety of the existing system has to be maintained, and even enhanced.

So with that, I welcome your questions.

The Chair: Thank you, Minister.

We have Mr. Hill.

Mr. Jay Hill (Prince George—Peace River, Canadian Alliance): Thank you, Mr. Chairman.

Welcome, ladies and gentlemen. It's a pleasure to have you before the committee this morning, and I must perhaps add that it's a pleasure for me to be here. It might be my last committee meeting, but at least for the moment there appears to be a glitch in the process, so I'm going to continue as I have in the past and fully participate.

I think I'll try to touch, for the opening round at least, on a couple of issues. I noticed that you said during your opening remarks “we're committed to improving our highways”—this is a direct quote I wrote down. Yet I think the travelling public and the people who use the highways in the country for their business would have to disagree with that, because they don't see the resources being put into place to live up to that commitment.

You spoke about the $600 million over four years, roughly $150 million committed to a national highways system for improvements in infrastructure, and yet every report we see says it's the tip of the iceberg. It won't come anywhere near to addressing the problems in our highway system. When they look at the fact that the federal government—never mind what the provinces collect—is currently collecting some $4.5 billion a year in fuel tax, and they see $150 million allocated to go back, they would have to call into question, as I am, the government's commitment to improving our highways. I wonder if you'd respond to that.

Mr. David Collenette: I agree with you and I disagree with you, or at least I should clarify our position.

The federal government's been involved in assisting highway construction using its spending power, with the consent of the provinces, since the First World War, and it's ebbed and flowed depending on resources available. It peaked in the 1960s and 1970s with building the trans-Canada highway system, and it's slowed to a trickle in the last few years because of the deficit problems of the federal government.

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I know your party, the party you perhaps belong to, or the people you've associated with, support our deficit-cutting efforts. Now we are in a surplus position and are paying down the debt. We are now reinvesting.

What are the priorities? The premiers were united a couple of years ago on health care being the priority. I think now there's more of a focus on transportation infrastructure.

Some provinces, like my own province of Ontario, nailed the federal government for not investing in highways, and blame every ill on us. I think that's absolutely ludicrous. The provinces are responsible for their own highway systems. The federal government has contributed fifty-fifty through cost-share programs for many years. If there's a particular problem, a bottleneck or a dangerous stretch of road, I think it's incumbent upon the province to deal with it, not to blame the federal government or use us as an excuse.

On the issue of taxation, I think you're right, it was generally assumed that revenues collected and expenditures made on roads were more or less even. It was never quite even, but it was always somewhat like that. I think I've told you that before. Starting with the Mulroney government in 1984 the gap widened, and it has been kept there. We have not narrowed the gap because of our deficit-cutting exercises. Quite frankly, I've made the point at cabinet that notwithstanding all the other priorities of the government, we need to narrow the gap.

Giving a portion of the tax over to provinces or municipalities for their infrastructure needs is something to which I don't believe the Minister of Finance will agree. We don't believe in dedicated taxes. We're not a great admirer of the kind of system in the U.S., where you have these pots of money that are set and tied. We believe in having flexibility in the treasury. All taxes collected go in the pot, and expenditures are made for whatever good work needs to be funded.

There's no question I'd like more money in highways. The provinces would like more money in highways. Hopefully we can convince the Minister of Finance it should be a priority. There seems to be a head of steam growing to that end.

Mr. Jay Hill: Okay. I think we're all in agreement there needs to be a lot more money put into our highway infrastructure.

You referred to deficit cutting. I think all of us recognize the country needs to be, as you said, on a sound financial basis. I remind you the government has been in a surplus position for at least a couple of years. When Canadians see that the priorities of this government seem to be fountains and hotels in Shawinigan versus safe roads, they would call into question the priorities.

At any rate, the other issue I'd like to raise very briefly in the opening round you have touched on, Mr. Minister. It is the issue of what I understand your department to be working on, a new Canada airports act. I don't know what it's going to be called, but it's something like that. You referred to it.

I had the pleasure of attending the Vancouver International Airport Authority's annual public meeting—the only avenue, I might add, where the public has access to the operating authority to try to hold them accountable. There were a lot of concerns, obviously too many to go into here today. A lot of them dealt with the unaccountability you referred to in your opening remarks, the use of the airport improvement fee, and the fact it's there. It's basically taxation without representation. There's no direct access for the public on an ongoing basis to hold the airport authority accountable for how they expend the money.

The facts came out that they're investing in Santiago, Chile, in airports in Bermuda, and around the world. Again, all of the revenue from rents, landing fees, or the airport improvement fees goes into the common pot. Then the board decides how to expend the money without an accountability process in place.

I made the statement, as I think I did at one of the last committee meetings, that this process seems to work quite well in smaller communities. The board member representing your interests on the airport authority lives down the street. If you read in the little local paper that they made a certain decision, you can stop him in the grocery store and hold him to account.

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In the big centres, like Vancouver, it doesn't seem to work as well. As I said, there was a myriad of complaints raised at the one open public meeting by the public, the contractors, and people employed there. There were concerns about the baggage facilities at Vancouver International Airport. I'm not sure those complaints are being adequately addressed, because of the unaccountability in the way the board operates.

I wonder if you could expand briefly on when we can expect your legislation. How will it bring into the process a higher degree of accountability in how the airport authorities operate? What is the timeline and the content of your proposed legislation?

Thank you.

Mr. David Collenette: In terms of the timeline, I've been discussing this with my colleagues. We have to produce a draft bill. Once we get approval for it, then we can proceed to the next stage.

What we did on the Canada Shipping Act was unique: we made this public to the community for their input. It worked quite well.

I don't know whether cabinet would agree to doing this with the airports, but it's an issue. When it comes to committee, a lot of the kinks have been worked out. It helps the members focus on some key policy issues.

The point you raise about accountability is a good one. The same kind of concern has been raised in other large cities—Montreal, Toronto, and of course the Vancouver International Airport. Edmonton, Calgary, and Montreal were airports transferred outside of the national airports policy. They were under the local airport authority regime of the previous government. When we bring it in, the goal of the bill will be to bring all the airports under the same umbrella. Some of them have gone some way toward that with naming nominees from the federal government to the board. Montreal has totally accepted the accountability principles in Canada airports, the CAA model, voluntarily because of the discussions we've had recently. We welcome that.

There is somewhat of a misunderstanding in the way the airport authorities should work. The notion of responsibility is a delicate one. The members who are named to these bodies have a fiduciary responsibility to those authorities. They must have a fiduciary responsibility to those authorities. After all, they go out there and borrow, in the case of a place like Toronto, billions of dollars. The people who are lending the money have to know the money and the interest is going to be repaid in a business-like fashion, and there is going to be no political interference in the operations of the airport as a business.

With the larger cities, I see it in Toronto, you're right. The individuals are nominated by the nominees, regional council and city council. They go away and don't tend to do as good a job of explaining things. They become somewhat apart.

The most radical authority model, which we never, ever want to emulate, is the The Port Authority of New York & New Jersey. It was established in the late 1930s or early 1940s and has become virtually another level of government in the United States.

In fact someone was telling me last night that the authority in the late 1930s wanted to build a bridge over the East River, and the federal government was opposed to it. The only way the federal government could use it was by presidential decree. President Roosevelt said the bridge contravened national security because aircraft carriers couldn't get under the bridge.

This is the most extreme form of an authority that is totally unaccountable. We don't want that.

I think our authorities, especially the port authorities where the users have been part of this, are operating quite well.

You're absolutely right, there needs to be more accountability. The goal of this legislation will be to improve accountability and transparency. One of the ways it will be dealt with will be through some modifications to the governance structure.

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The Chair: Thank you, Minister.

You're out of time, Jay, by volumes of minutes.

We'll go to Mr. LeBlanc of the Liberals.

Mr. Dominic LeBlanc (Beauséjour—Petitcodiac, Lib.): Thank you, Mr. Chairman.

I have a brief question for the minister and then I'll yield some of my time to Mr. St. Denis.

Thank you, Minister, for your presentation, and thank you for the work you've done in reinvigorating passenger rail in Canada. You've been a consistent champion of a renewed rail transportation network for passengers.

In the community I represent in New Brunswick, passenger rail is an important part of moving people around the region. I was, like a lot of others, very happy with the new money you announced for VIA and the potential that has to really modernize and improve passenger rail service.

My concern is about how the work will be spread out. You have been sensitive to this in the past and have in fact been a strong advocate of making sure that some of this work that VIA will undertake is spread around the country and that it's not all concentrated in a few areas where VIA may have traditional suppliers.

As you know, Moncton, in southeastern New Brunswick, was a railway town, and all the areas around Moncton. There are thousands of workers there who had major experience at rebuilding locomotives, rail cars, who have been displaced.

There are some businesses around there that are trying to start up now and do some work for VIA, for example, and for other private sector customers. For example, there are the Budd cars, the self-propelled train cars. Some businesses have purchased from VIA a number of these cars and are rebuilding them.

Do you have any sense in your planning of what VIA's needs might be, or how some of these businesses in that part of Atlantic Canada could participate in some of this procurement?

Mr. David Collenette: First of all, I think it's very exciting that northern New Brunswick and the Atlantic provinces, where the transcontinental goes through, will benefit from the $400 million significantly, in that the new cars, the sleepers, the night-stop equipment and new locomotives, which are being ordered by VIA, which will be ready very quickly....

It is public about those, the new locomotives? I guess it is now. Anyway, they're getting new locomotives. We've talked about it before, but I don't want to give you all the details, because we have to talk to VIA about it.

Mr. Louis Ranger (Assistant Deputy Minister, Policy, Department of Transport): Don't say how many.

Mr. David Collenette: I won't say how many and how much.

Anyway, there are going to be new locomotives pulling these state-of-the-art trains on that service. For people in the Atlantic, who often think they get the short shrift from central Canada, they're going to be the ones who are going to see the new equipment first. That means you're going to have a more reliable service and probably speeds will be improved and the ride will be improved. I think people will use it more. If you get into a brand-new train with a restaurant car, with a bar car, with sleepers and coach, and you have a very smooth ride, I think that's going to be very attractive to getting riders. It goes right through your riding, among others.

On the issue of the facility at Moncton, where Mr. Carpenter has invested a lot of money, I'm quite excited about that, because here's an entrepreneur who's taking over basically an abandoned CN yard and trying to start a new business. He is starting a new business in the refurbishment of rail cars. It's a big business in North America, not just in Canada. But Amtrak is expanding too, so there are a lot of opportunities. Certainly VIA is aware of his ability to do that work and specifically on the Budd cars.

Most people remember the Budd cars, which came in in the 1950s. They're self-propelled units, which a lot of people say is old technology, but they're so well built. They're stainless steel and structurally they're very good, but the motors need replacing, among other things. VIA has about 21 of them sitting in the Point St. Charles yard in Montreal gathering dust, because of the cutbacks early in the 1990s.

I said to them, why are we selling them off at bargain-basement prices to places like Dallas-Fort Worth, where they put a million bucks a car in and you have self-propelled units for commuter service, when in cities like Toronto and Montreal and Vancouver you need more commuter service?

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They are looking at the option, but we're going to have to get more money to fix all of those cars up. That is something I've asked them to look at with a commuter strategy, and if it's more money, then I have to go on my hands and knees again to get more money for the commuter strategy.

In the meantime, I believe they are looking at fixing up six of them, three for the Esquimalt & Nanaimo Railway on Vancouver Island, the other three for the Sudbury-White River service in northern Ontario. So that will be a good start.

VIA's going to be in a position, actually, with the 139 new cars coming in, to have a lot of surplus rail cars, most of them stainless steel stock from U.S. companies that were built in the fifties but are really structurally quite good.

I would hope that before we dispose of any of those cars, we could make sure we're not cutting off our nose to spite our face in the sense of the requirements for enhancing services in remote areas with them. Take for example up the line to Saint-Hilaire in Quebec, which I think could be an incredibly great tourist line, adding more cars. And there are also commuter needs.

So I think it's an exciting time in passenger rail, and we're slow to catch up to this. The Americans are ahead of us in the investments they made in Amtrak, and of course the Europeans are light-years ahead of us in use of passenger rail, but it's becoming more and more a viable option, especially in the congested areas of Canada.

Mr. Dominic LeBlanc: Thank you, Minister.

The Chair: Mr. St. Denis.

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chair.

Dominic raised the question of the spinoff work down in the Atlantic area for those involved in the rail industry and those Budd cars. There are a few that ply the Sudbury to White River, or through Chapleau, route, which is in my riding. So I know those folks are really glad about the work down in your area of fixing those Budd cars up.

Still on the rail issue, Mr. Minister—and thank you for being here with your officials—I think the public tends to forget that even though we hear about the micro issues, the very occasional rail accident or bus accident or so on, the macro picture, when it comes to rail or air or roads or marine, is a huge area of concern.

In the area of rail in particular, we saw recently the U.S. Surface Transportation Board tell CN they're going to deem the takeover of Wisconsin Central as a small deal, a minor acquisition. Maybe you can't comment on that because you're the minister, but I'm wondering generally, where do you see the freight rail going? The Canadian rail industry is quite strong in the area of freight and is obviously playing a major role in the U.S. market as well. So I'm wondering if you have, in my share of the last moment or two here for this round, any comments on the big picture when it comes to rail in North America.

Mr. David Collenette: I think we have the two best freight railways in the world, in CN and CP. They haul, as I've said before, the heaviest loads over the longest distances in the worst terrain and climate that is unimaginable, and they make money doing it.

Their expertise is certainly being shown in the U.S. Both CN and CP have operations in the U.S. CN has grown very quickly in the last few years with Illinois Central, with Wisconsin Central, and with its alliance with Kansas City Southern, and it has become a really big player. But CP has alliances too, especially in the eastern seaboard, and has I think recently opened an abandoned right of way through Pennsylvania, which is going to be very advantageous to shipping.

I think we're looking at a truly North American rail market and industry. I'm concerned about the consolidations and how they're done. It comes as no surprise for a guy who is basically, like in Custer's last stand, trying to protect the Canadian airline industry that I want to protect CN and CP as Canadian companies. I'm an unapologetic, unabashed Canadian nationalist, which is not fashionable sometimes with today's media in the globalized world where we want to sell out everything we seem to believe in.

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So I would hope that if there's rail consolidation in North America, Canadian National and Canadian Pacific will be the ones doing the consolidating and remain as key players.

Now, that's one of the issues the CTA panel is going to be looking at: where is the broader public interest here, and how is it defined in any mergers? In the Burlington Northern and Canadian National proposed merger, we saw shippers having to go to the STB in Washington to make their case. In fact I asked this committee to have some hearings, but then the STB put the moratorium on, so it became redundant.

The notion that you would have that kind of a merger involving the largest rail company in Canada, Canadian National, and our shippers have to go to a foreign country to plead their case is offensive to me. That's why I think we have to have some merger review provision put back in the act. It was taken out in 1996.

I don't know whether my cabinet colleagues will agree with me. You're not supposed to get out on a hook on these things, but my views are pretty well known. I think we have to have some way to safeguard the public interest over and above the Competition Act concerns, which are dealt with very competently by the commissioner.

I think it's going to be an exciting time on the rail front, and I think Canada is well poised through CN and CP, especially now with the CP holding company, CP Limited, letting their business units in effect be free-standing companies. I think it's an exciting time for Canadian entrepreneurs in the rail industry to do the taking over and lead the way. Our two companies are better than any of the other companies in the U.S., even though most of them are bigger than CN and CP. We're more efficient.

I don't want to take a shot, but that runaway train we saw the other day in Illinois, or Ohio, or wherever it was, is extremely unlikely ever to happen in Canada. In fact, I think Terry Burtch, our director of rail safety, has been quoted as to the reasons why that could never happen. We run a much, much better, more efficient, safer regime in Canada, and I think we are well poised in this consolidation phase.

The Chair: Okay, that's a good place to end that.

I'll go to Mario Laframboise of the Bloc Québécois for ten minutes.

[Translation]

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ): Thank you, Mr. Chairman.

My first question pertains to the $600 million Strategic Highway Infrastructure Program that you announced.

Mr. Minister, at the outset I will tell you that you will doubtless have no difficulties whatsoever in persuading your Cabinet colleagues of the need for such investment, because during the election campaign in Quebec, if you were not the one making the announcements, they were. The Minister of Public Works, the President of the Treasury Board and the Prime Minister himself came to Quebec to make these announcements. Recently the minister Chevrette wrote to you about the more than $3 billion that had been announced. I am convinced that you will manage to make great gains during the upcoming discussions on how to distribute the budgets throughout the country.

However, as regards the announced 600 million dollars, I want to make sure that I understand these figures properly, and I have the details pertaining to the transfer payments. Let me take an example. This year, you contributed $5 million to the Highway 50 construction project. You said so in the House, yesterday. This is an $11 million project; $11 million were invested in this project.

According to the 2001-02 budget, I see, under the heading of contributions to provinces, that $5 million have been earmarked for an agreement on developing the highway network in the Outaouais. Is that part of the $100 million that was announced, Minister?

Mr. David Collenette: First of all, I should point out that Highway 50 is not part of the national network and our Strategic Highway Infrastructure Program was established specifically for the national network. The definition of the national network is the definition used by all of the provinces and the federal government.

However, as I said in the House of Commons, we have made other investments. To answer your question, I would say that we have already spent 100 million dollars on Highway 50 over the past 30 years and that we now have a program for which we have allocated $11 million.

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This is about expanding the national network and, this time around, Quebec is interested. This is the first time that I have been told that Highway 50 must be included in the system. It is understandable that more money is needed for the major highways, and I hope that my colleagues are listening to me.

Mr. Ranger has...

Mr. Louis Ranger: To answer your question specifically, I would say that the $600 million will be available for a four-year period starting next year.

Mr. Mario Laframboise: Starting next year. So that will not cover 2001-02.

Mr. Louis Ranger: That's right.

Mr. Mario Laframboise: Hence the announcements made in the budget are not part of this $600 million. For example, it was announced that New Brunswick would be receiving $20 million, the regional highways in Newfoundland would be receiving $11 million and $34 million would be earmarked for the Trans-Canada Highway. That is not part of this $600 million.

Mr. Louis Ranger: That is right. The only little clarification I would make is that this year we will be withdrawing small amounts of money from this 600 million dollar fund for planning purposes, for environmental assessments and so on, but these are very small amounts.

Mr. David Collenette: And we begin with the funds for each province. I think that we will soon have an agreement.

Mr. Mario Laframboise: That is great. Obviously, that means that, for instance, Highway 30 and the two bridges on Highway 30 will be part of...

Mr. David Collenette: If you wish to discuss Highway 30, we have a good news story here. During the election campaign, my parliamentary colleagues, and candidates in the region, said that they intended to ensure that the federal government participated in building the two bridges and the 14 kilometre extension to Highway 30. We are currently going ahead with this project, and I invited management advisors to prepare reports on a partnership with the private sector to build two bridges and 14 kilometres of highway. This is the only thing that Mr. Chevrette has asked for publicly. He said: if the federal government is prepared to build, perhaps in partnership, the two bridges and 14 kilometres of highway, Quebec is prepared to look after the rest of the construction.

We have simply responded publicly to the requests made Mr. Chevrette, and now he has changed his mind. He wants us to share the total cost. As we say in English,

[English]

it's not part of the deal.

[Translation]

Mr. Mario Laframboise: Moreover, Mr. Chevrette sent you a memorandum of agreement on the completion of Highway 30, on 30 kilometres. Mr. Chevrette suggested that you and he talk to the private sector and if the private sector was unable to meet the total cost, that you and he could split, on a fifty-fifty basis, that portion which the private sector was unable to pay for. In my opinion, this was a very reasonable request. You were prepared to pay for a portion of this cost and he told you: let's complete the project, and once the private sector has paid for part of the costs, we will ask you to pay for half of the remaining balance. In my opinion, this was a very interesting proposition.

Mr. David Collenette: What is reasonable is that we responded to Mr. Chevrette's request to start planning the construction of two bridges and 14 kilometres of highway. It is as simple as that. We agree, and that is why we hired management consultants to prepare a private sector partnership plan to build two bridges and 14 kilometres of highway. It is as simple as that. It is up to Quebec to complete the rest of the project. That was his original request, his original statement, but he changed his mind. We have always remained firm at the federal level.

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Mr. Mario Laframboise: I do not think that you should hold anything against Mr. Chevrette. As for completing the 30, it must be completed. That is your proposal to Mr. Chevrette: we will build two bridges and 14 kilometres of highway. There are 30 in all; you might as well complete it. I think that is in the best interest of everyone on the South Shore. Perhaps that is something you could examine in the future...

Mr. David Collenette: I know that he has other concerns, because he is preparing for a provincial election, but from my point of view, I must protect the interests of Canadian taxpayers.

Mr. Mario Laframboise: You also prepared for a federal election; you made a host of announcements. That makes me laugh.

Here's my second question, Mr. Minister. As regards the airports, if we set aside political discourse, the problem with Mirabel and Dorval airports, the problem of air transportation in Montreal, is hard to understand.

Personally, I agreed with changing the board of directors and with having two representatives from the federal government and one representative from the provincial government, in accordance with your new vision for the board of directors.

However, you are aware that ADM, during its last annual meeting, made some major decisions, including the decision to transfer all flights from Mirabel to Dorval, once again to please an airline company. It has already been announced. At any rate, the study has been conducted and that is what they want.

I do not understand. For the past several years, decisions by ADM and the federal government have not been good for the Montreal region in light of what is happening elsewhere in Canada. Before your representatives get to the table, Minister, why not put a moratorium on all present and future decisions to be made by the ADM board of directors? It is a bit complex, and you know that the situation is difficult. You have your way of explaining it, but you will not fool anyone. Over the past decade, federal government action has led to most flights being transferred to Toronto. That is the harsh reality, Mr. Minister.

Why not start over? I agree with you that there must be representation from the federal government. We must be able to get a good grasp of the situation. Many people have pointed out the poor management in the past at ADM, as you did. Why not tell ADM to wait for the representatives to arrive and to stop making these statements?

In my opinion, for the time being our goal is not to completely destroy Mirabel airport. There isn't even a management plan for Mirabel airport, Mr. Minister. It is inconceivable that there is still no management plan for Mirabel airport as we speak. There is none. We are on the second version of the management plan for Dorval, but there still isn't even a management plan for Mirabel airport. They do not know where they are going, but they continue to transfer flights. Some airline companies have changed airports, because certain flights cannot fly over Dorval at certain times during the night.

In any case, there are some strange decisions being taken. I think that it is time that the federal government had its own representatives in order to see what is going on and to make management more transparent. However, until your representatives take up their position—which I have been told will happen in September, decisions and announcements will continue to be made. The outcome of that is that the situation at the two airports is deteriorating. We are talking about their future here.

[English]

The Chair: Mario, you are out of time. You took a long time to ask the question, but I'll allow the minister a short response.

[Translation]

Mr. David Collenette: I will try to be brief, Mr. Chairman. The goal of our airport policy is to transfer the entire decision- making process over to local management.

We set up the Aéroport de Montréal authority, and this authority decided to transfer some flights from Mirabel to Dorval airport because there was not sufficient air traffic to ensure the profitability of both airports. The authority recently stated that it was looking at the possibility of transferring more flights, but in our view, under the terms of lease that the authority signed, it is required to keep some international flights at Mirabel.

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You are saying that we are running Mirabel airport down. This is not the federal government's objective. I think that Mirabel plays a key role as a support airport for the area's industry, such as Bombardier, for example, in terms of freight operations. I believe that Mirabel can play a key role.

We are now looking at the possibility of transferring a large number of passenger flights to Dorval, and the Aéroport de Montréal authority is entitled to do this, in our view. I am certain that we will be able to maintain two airports in the Montreal area, which will contribute enormously to the economy of both this region and the entire country.

[English]

The Chair: Thank you very much.

Mr. Hill, you have the floor. I'll give you ten minutes. It seems we don't have the NDP or the Tories, so we'll try to give you as many questions as possible.

Mr. Jay Hill: Thank you very much, Mr. Chairman.

Monsieur Laframboise raises the same issue we were discussing at the opening of the question period, Mr. Minister, in the sense of accountability of the boards.

One of the issues that came up at the annual public meeting of the Vancouver International Airport Authority was the issue of rents. You mentioned it during your presentation. I know there's a bit of a complicated formula for how those rents are arrived at. My understanding is that there's sort of a base rent—and I'm not sure how that's decided and how it varies from airport to airport—and then there's a sort of percentage, based upon the profitability of the particular airport, that is over and above that.

One of the concerns that was expressed by the airport authority board and CEO themselves at the annual meeting was that it seems to be almost punitive to those boards that are attempting to run an economically well-run, effective operation. It's sort of like the income tax system: the better they run their operation, the more they're penalized and the less money they have to expend on improving the airport itself. I think it's a valid point.

I just wonder if you could elaborate a bit more. You say you're intending to review the rent structure. Are you intending to come forward, as Vancouver International Airport Authority was suggesting, and perhaps figure out some framework, instead of just a base rent and how much money actually goes through their hands becomes irrelevant for the setting of the rent and the amount of money that then flows to Ottawa?

Mr. David Collenette: I think Mr. Sully can answer the technical aspects of the rent issue.

Essentially, I think we have three different kinds of regimes, and that's not appropriate for the 26 NAS airports. We need to standardize them, and that's why we're reviewing them.

The fact that we're reviewing them doesn't automatically mean that somehow there will be changes that will give more money to the airports. I get a little annoyed when these airport authorities, including the Canadian Airport Authority, start going public with beating up on the federal government because of deals that were signed with the government over the last number of years. All of the people who purport to run these airports are supposedly local business people, and when you make a deal in life, you don't come around five or seven years later and say “Oh well, we made a bad deal. We can't do the job, so you have to give us some more money.” It doesn't work that way in real life.

I would say to these airport authorities, work with us, and if there are anomalies in the rent structure, we'll correct them. It may result in some modifications, but don't give the impression to the Canadian people that somehow the federal government is hosing you. We're not. These are public facilities that were paid for by the taxpayers of Canada, and it's the policy of the government that the taxpayers of Canada should get some fair return on their investment over the last number of years.

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We have to be careful that these airport authorities aren't using the excuse of trying to get the rents reopened to get more money for themselves simply to justify the overbuilding they are doing in these airports. I'm not pointing my finger at any one airport. All I'm saying is that if you enter into an agreement, you're over 21, you're mature adults, and you sign on the dotted line, then if you can't run an airport under those auspices, we'd better get some other people to run it. That's the way it operates in life.

Mr. Jay Hill: The problem, Mr. Minister—and I'm not disagreeing—therefore comes right back to the issue that both Monsieur Laframboise and I are raising, which is the unaccountability of these bodies.

As I was trying to point out at the public meeting in Vancouver, because of the unaccountability and the lack of transparency, there's nothing to prevent an airport operating authority from using the argument that because they have an escalating scale for their rent to Ottawa, therefore they keep an airport improvement fee in place or they have to increase it—or as Toronto is now doing, actually start charging connecting passengers, at the same time as the virtual air monopoly in Canada, Air Canada, is increasingly using Toronto as a hub. So the poor passenger ends up footing the bill because of either expanded airport improvement fees or keeping one in place.

When Vancouver Airport brought in their airport improvement fee, like the income tax brought in in 1916, it was a temporary measure. They revealed at the public meeting that in all likelihood, because of the billions of dollars they're now projecting they're going to have to expend over the next few years in Vancouver, the poor travelling public is going to be stuck with that airport improvement fee forever. In fact, they're suggesting now that they're in consultations with the airlines to see if it can't be put onto the passenger's ticket, much as government at one point in time was arguing that perhaps we should try to hide the GST so that people didn't know they were paying it.

I think that all of these types of things, with respect, Mr. Minister, come back to the unaccountability and the fact that the public and the businesses that do business with these airport authorities have one opportunity a year to basically stand up and raise their concerns, and that's at their annual public meeting.

On this whole idea of the devolution of airports, although I agree with it in principle, something has gone tragically wrong with the major airports in how they're being run. I appreciate the fact that you intend to address that in this new Canada airports act, or whatever it will be called. I certainly hope that if there's anything that can be done to try to speed that process, because there are some real unaddressed concerns....

Take an example of an individual business at Vancouver or any other of the major airports that are trying to do business with these boards: they really don't have a proper appeal process, other than to go to the Competition Bureau, or something like that. I think that's another thing that we have wrong in the system: they have nowhere to go if the airport authority actually says “If you don't like our ruling, buzz off”. And they've invested, in some cases, millions of dollars in their own infrastructure, and they can't simply just buzz off if they don't like some ruling the board makes.

Anyway, I'll stop there, and allow you to respond in the two minutes I have remaining.

Mr. David Collenette: Funnily enough, and perhaps this is because of Mr. Hill's new status, I agree with him. I'm not agreeing with the official opposition; I'm agreeing with his independent point of view. However, I wouldn't say they're unaccountable. That's not fair. They are accountable, but we have to improve the accountability.

I think the point you make about an appeal mechanism is a good one. Should we use the CTA? The Competition Bureau has a narrow focus. Perhaps the CTA should get back involved. And then everybody says “Oh, there goes Collenette again, he's reregulating the whole system”. Well, you have to be flexible in life, and the deregulation of the last number of years has by and large worked. It doesn't mean to say you cannot have some use for regulatory bodies such as the CTA.

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Where I do differ from Mr. Hill, Mr. Chairman, is that I don't think it's in disarray. I think we have an incredible amount of great airport construction going on. Vancouver and Calgary are two of the best models. In fact, I think both airports have won awards internationally. The construction going on in Toronto is stupendous.

Where I agree with him is that the airport authorities have to be held more and more under the microscope, to make sure they're just not saying, all right, we'll raise the AIFs and go after the government to change the rent formula, to cover up their expansion plans, which perhaps could be trimmed. We don't want to overbuild. That's why in my earlier answer I was pretty tough, and I am pretty tough with these airports. We get this from Moncton, we get this from Ottawa, we get it from Winnipeg—we got a bad deal. Give me a break. If you thought it was a bad deal, why did you get into it in the first place? It doesn't mean to say there won't be some modifications.

The Chair: Okay.

Mr. David Collenette: Mr. Ranger asked to speak.

The Chair: Go ahead.

Mr. Louis Ranger: From the department's perspective, if anything, we have to respond to some observations the Auditor General has made, observations about the level of rent, how we determine whether there's fair value for taxpayers' investments. Second, as there are inconsistencies from one airport to another, are there ways of realigning rental charges? So, if anything, we have to respond to the AG on those two points.

Mr. David Collenette: But that said, the Auditor General is not always right. On Moncton, for example, he made, we think, some flawed arguments. When it comes to getting fair market value for the transfer of these airports, how do you get fair market value for assets when you have no idea what they're really worth? They've never been transferred before. There had to be a notational worth given. In the case of Moncton, I think the deal was done on 100,000 passengers a year, and they're up to 350,000. They're going crazy with all the new traffic. They're a success story. We sent down Mr. Bell, our director general, to look at it. They're analysing the Moncton deal. We're looking at all the rent deals. We want to be fair, but we're not patsies. We the government, you as members, are the protectors of the taxpayers' dollars. We've got to make sure those dollars are spent properly and wisely.

The Chair: I'll go to Marcel Proulx. We'll stick with the ten minutes. Your colleagues, Mr. St. Denis and Mr. Szabo, would like it if you want to share time. If not, we'll switch back to Mario.

Mr. Marcel Proulx (Hull—Aylmer, Lib.): Certainly. Thank you, Mr. Chair.

Good morning, Mr. Minister, ladies and gentlemen. Thank you for being here this morning.

I have a disclaimer to start with, Minister. Contrary to what you might have read about me, it doesn't matter if you answer in French or in English.

Mr. David Collenette: I never follow Air Canada's advice.

Mr. Marcel Proulx: There we go. I don't either.

[Translation]

Mr. Collenette, Mr. Laframboise takes great pleasure in telling you that the Quebec government has taken a number of positive steps in this area and that the Canadian government has not followed suit. I would just like to point out to him that if he looks carefully at the Estimates for 2001-02, he will see that in the transfer payments from Transport Canada, $5 million have been earmarked for the agreement on the development of the highway network in the Outaouais region. Indeed, this follows on from $5 million last year.

Could you, for the benefit of my colleague, briefly explain to us what the $10 million—$5 million last year and $5 million this year—represent? This follows on from the money that was signed before, and there will be more money in the future.

Mario, listen up, now.

Mr. Mario Laframboise: Yes, yes. It is the “in the future” which interests me.

[English]

Mr. Ronald Sully (Assistant Deputy Minister, Programs and Divestiture, Department of Transport): Mr. Chairman, my understanding is that within the estimates we do have money to cover our share of the extension of Autoroute 50 between Finlay Road and route 309 under the Outaouais road agreement. In addition, I believe we also have money in there to cover our share of the McConnell-Laramée project in Hull, Gatineau, and Aylmer.

Mr. Marcel Proulx: For 2001-2002. Of that particular project, $5 million would not be your total share.

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Mr. Ronald Sully: It would be enough to cover our share for those two projects within this fiscal year.

Mr. Marcel Proulx: Okay. Thank you.

The Chair: Do you want to go to Mr. Szabo, now?

Mr. Marcel Proulx: Give me half a sec. Mr. Minister, we're into year number two of the changes in the air industry, as far as the competition is concerned, Air Canada having bought out Canadian Airlines. Briefly, can you tell us how Transport Canada feels the industry, competition-wise, is at this stage and where it's going within the next year?

Mr. David Collenette: Of course I did cover this last week, but I'm pleased to say it again.

I really do think the competition is coming on. The National Post ran a poll yesterday saying Canadians want cabotage. With great respect, I don't think most Canadians understand what cabotage is, and you cannot have such a simplistic answer to a very complex question.

The fact is that at the time of the merger Air Canada-Canadian had 82% of capacity. We know that around early December the capacity was down to about 71%. Mr. Milton has publicly stated that Air Canada's market share is at 73% of domestic passengers. We think it's closer to 70%. Some analysts I've spoken to in Toronto believe it's below that and going down around 65%, and maybe by the end of the year will be closer to 60%, where it's expected to level off. If we have Air Canada's domestic market share at 60% to 65%, it's not perfect for the Competition Bureau, but this is a difficult industry. I would say the policies of the government, the bill that was passed in Parliament, and the work this committee did are having a beneficial effect on competition.

Some people have said Royal has been taken over by Canada 3000, CanJet, therefore competition is fading. It's not fading, there's real consolidation going on. Canada 3000 is becoming a stronger, what I call second-tier, carrier—and I don't mean to demean them, because they don't want to be another Air Canada. One mistake that was made by Canadian Airlines—there were lots of mistakes—was that they tried to be all things to all people and match Air Canada on just about every route in the country. They had the debt structure, they had older equipment, they didn't have a prayer of succeeding. Canada 3000 is not going to make that mistake.

Then you've got WestJet. You ask Robert Milton—and I think he said it publicly—about yields on western Canadian routes. They're really under the gun. When Canadian was in business, I believe prices in the four western provinces were 11% to 14% lower than in eastern Canada, and that was because of WestJet. So now Canadian is out of the mix, you've got Canada 3000 in there with a different cost structure, a leaner operation, more modern equipment. There'll be some consolidation hiccups, such as Air Canada had, but you've got two very good national competitors in WestJet and Canada 3000 for Air Canada.

We've got I don't know how many other smaller airlines in the country.

Mr. Louis Ranger: I think there are 600 or 800 companies.

Mr. David Collenette: Some of them only run one plane. Mr. Hill is gone, but up in his neck of the woods, Terrace-Kitimat, I think Hawkair is getting another plane, and they're running full loads. They're really socking it to Air B.C. on that route.

We were up in Prince George the other week, he was there with Mr. Harris, and we did some of the airport transfers. And what do we hear from the management? They're becoming a regional hub. I think I used this before, but the other week the mayor of Quesnel told me he's lost one of his Air B.C. flights a day. People from his town are driving to Prince George because they're getting cheaper fares. You've got, I think, Canadian North, you've got Air B.C., you've got WestJet, all in there competing, and prices are going down. You're developing these regional hubs across the country. Seventy-five percent of Canadians live within driving distance of airports where there's competition. That's not perfect, but that's pretty good, when you consider it.

Compare prices in the last year to the prices in the previous five years, and you'll see some incredible deals. I would submit that we have a much more competitive system.

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The trouble is, you have a lot of commentators out there who nailed their souls to a certain idea that the only way you could have competition in Canada was to invite the Americans in. How pathetic that there are people who say we can't develop our own competition. We have faith in Canadian entrepreneurs.

Funnily enough, and I say this particularly for Mr. Burton, who is here, the principal shareholder in WestJet, Mr. Beddoe, is from Calgary. The principal shareholder in Canada 3000, Mr. Lecky, is from Calgary. I'm proud of the fact that our government retained all those jobs with Canadian Airlines, many of them in western Canada, and that we've created an environment for two Calgary entrepreneurs to develop profitable airlines in competition to Air Canada. We should be proud as Liberals that we are supporting western Canadian businessmen in this way.

The Chair: Thank you.

Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): Mr. Minister, transportation safety is a fairly big issue these days. We have this issue of the Owen Sound tour boat.

Recently the issue of marine navigation fees came up. I understand the freeze on increasing those fees expires and they'll be reconsidered in October. I'm advised by the marine industry that the fees are substantial. There are also industry allegations that the fees are in fact not necessary in some places where pilotage is required, and yet in the St. Lawrence there are areas where the navigation challenges are far more severe, and pilotage is not required.

I'm not sure of too much of the history, being a new member of this committee, but I would be interested to know from an estimates standpoint what your assumptions have been with regard to revenues from marine navigation fees. Also, is there any response being considered to the industry with regard to the necessity for pilotage, particularly in some of the less risky areas of the St. Lawrence?

Their allegation is that this is just a revenue generator for the department to use in other areas where it's not absolutely necessary for safety reasons.

Mr. David Collenette: There are a number of things in Mr. Szabo's question. First of all, we don't get much in the way of revenues from marine fees. I think he's referring to the coast guard fees, and the coast guard, of course, was transferred to the fisheries department. You might want to ask those questions of Mr. Dhaliwal.

We could perhaps give you some advice. Mr. Elliott used to be the deputy commissioner of the coast guard. I don't know if it's appropriate to put him on the spot. He might want to give you some clarification from past history, but he's not here as an apologist for the coast guard.

On the issue of pilotage, there have been allegations made that pilotage services aren't totally necessary in certain parts of the country. We have instituted a new procedure, which Mr. Elliott can tell you about, that has the support of the marine industry. It will move towards perhaps a rationalization of the use of pilots and therefore improve the competitiveness of the companies. It's a tough issue, because any move to curb pilotage is met with the charge that you are harming safety.

I don't know whether you want to comment, Bill.

Mr. William J.S. Elliott (Assistant Deputy Minister, Safety and Security Group, Department of Transport): Thank you, Minister, and thank you, Mr. Chairman.

To clarify some of the kinds of fees the marine industry pays, as the minister says, marine services fees are actually under the responsibility of the Minister of Fisheries and Oceans and the Canadian Coast Guard. Broadly speaking, those include fees relating to aids to navigation that include both floating aids and lighthouses, for example, vessel traffic services, and ice-breaking fees.

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The costs associated with pilotage are not paid to the Department of Fisheries and Oceans or to the Department of Transport, but those services are provided by the five pilotage authorities in the country.

We have developed, in cooperation with both the authorities and the industry, the pilotage risk management methodology. It is being used to assess the various questions around pilotage, including to examine whether changes are warranted with respect to compulsory pilotage.

The minister has recently restated to the authorities the need for them to work cooperatively with industry, the authorities, and the pilots to apply that methodology to make appropriate changes to pilotage, based on a very studied, factual, open, transparent approach. That work is under way.

Mr. Paul Szabo: In terms of the priority to make intermodal transportation productive, efficient, etc., if it is the representation of the shipping industry that the fees, whether they be fees through the Department of Fisheries and Oceans, the coast guard, or through various delegated local authorities, would be very significant in terms of the cost of business, is the transport department involved in representations on how to ensure that these are in line with necessary costs to ensure that the economies of shipping are not impaired by conflicting objectives?

Mr. Louis Ranger: We're always concerned about the death by a thousand cuts. In other words, we're concerned about the cumulative impact of all those fees. There may be a 2% increase of tolls in the seaway, combined with a slight increase of port fees, combined with a dredging fee. So we do work together, and a number of studies are under way to try to be sensitive to the cumulative impact of all those fees, because at the end it is the shipper who absorbs all those costs. So yes, we certainly are very much aware of this and we are involved in various working groups.

The Chair: Thank you, Mr. Szabo.

Mario, you're on.

[Translation]

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

My question is for Mr. Ranger. Firstly, I would like to come back to transfer payments to the provinces, and more particularly to the money which in the 2001-02 budget has been earmarked for the issue that I was talking about earlier: the agreement with New Brunswick, and provincial highways in Newfoundland. Which items might possibly not be included in transfer payments, but rather in the new $600 million budget?

Mr. Louis Ranger: There are programs which exist already and which are ongoing. The best example is Newfoundland. Newfoundland, for historical reasons, receives and will continue to receive major funding. The $600 million is in addition to money that has already been pledged.

Mr. Mario Laframboise: However, in 2000-01 this funding stood at $102 million. This year, it has come down to $70 million. I have noticed that this funding is going down.

Mr. Louis Ranger: Yes, and it is precisely to boost funding that $600 million is to be made available as of next year.

Mr. Mario Laframboise: That, then, is the $600 million you were talking about. Fine.

It is not a very large gain. There are elements that you lose and then there are new ones which come from the $600 million. But we do lose some, because we had $102 million for 2000-01 and that will fall to $70 million. It is possible that that will continue decreasing and that the $600 million will be added. In any case, I think that we could have kept this money and added additional funds. But that is a fight that the minister will have to fight with Cabinet.

Mr. Louis Ranger: Very well.

Mr. Mario Laframboise: Regarding airports, I would just like to say one last little thing. I have one last, brief question.

Minister, my comment regarding the Montreal Airport and the information that you provided to Mr. Hill, is that what is of great concern is the management. I reiterate that there is still no management plan, no development plan for Mirabel Airport.

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Therefore, we are managing two airports and we are dealing with the development plan for Dorval, but there's nothing for Mirabel. I think that is up to the Minister of Transport to issue those types of instructions, to tell the Montreal airport authority that they must also deal with the other airport.

I know that we are currently discussing the possibility that Air Canada would buy control of the gates. That is a study that we are working on, yet again, if it were to happen, Air Canada would take control of the gates at Dorval and could charge a fee to other carriers. I have questions as to competition in those circumstances. It is these types of decisions, which are not transparent ones, Minister, which require government intervention...

As far as I'm concerned, I am happy that you are sending people to sit on the board, and in the meantime I would hope that the Montreal airport authority will be more logical in its operations, because what those people are doing are commercial operations: they're selling the control of the strip or they are studying the possibility of selling the gates in order to make money and repair airport infrastructures. Is that a logical decision? That's the situation and you are correct. We make business decisions in order to make money. You challenge a lease. You want more money and at the end of the day it's not necessarily to the advantage of those who use the airports. Those who see themselves with a future in politics must see to the future of this infrastructure, which does belong to the federal government.

Mr. David Collenette: First of all, Mr. Chairman, Mr. Laframboise's question touches upon a large number of issues. The management of the Montreal airport administration, in my opinion, is better than before and it is concerned with the future of both airports. I must indicate that in the budget we are forecasting, I believe, expenditures to the tune of $90 million for Mirabel, for improvements to Mirabel, but it is up to the management of the Montreal airport authority to determine where it would be preferable, for passengers, to take their flights. And the Montreal airport authority has determined that it is preferable to concentrate passenger flights at Dorval.

As to the issue of departures, all airport infrastructure is under the control of the airport authorities, and the Aeronautics Act also contains provisions giving the Minister of Transport authority to ensure access to airports and slots. It is not true that Air Canada can dominate and that they can determine access to the Montreal airport or to any other major airport. That is not true. It is natural when you see a carrier as large as Air Canada, which holds 70% of the domestic market as well as international flights and flights to the USA, that the majority of the flights, the majority of the airports and the majority of the slots are used by Air Canada.

I believe that with the change in management at the Montreal airport authority, with the changes set forward in the bill that I will be tabling in the fall, all the concerns that you have raised will be addressed.

Mr. Mario Laframboise: Thank you.

In conclusion, I would like to return to the issue raised by Mr. Szabo. There is no money for marine transport. There is nothing in the expenditures, in the budgets for 2001-02 for marine transport, which is an area where major safety-related expenditures have to be made. I had the opportunity to ask these questions regarding safety at the Sainte-Catherine locks, as to the cost of the Coast Guard, that do not come under your department, but I asked the question anyway, on the fees that the marine transport industry pays, an industry which is currently in stagnation. There is no growth, and we don't foresee any growth within that industry. However, they must pay for just about all of their expenditures, because the government did not intend to participate in any major way. In any case, I hope that you will be able to clarify the issue. Nevertheless, the marine industry is fearful of its future given the rising costs, and they fear that they will be less and less competitive. In your presentation, I see that you are talking about railway transport, air transport and roadways, but there is no mention of marine transport. Minister, the industry is getting worried. I don't understand that your department is not worried as well.

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Mr. David Collenette: No, that's not true. I have made public statements on this issue. Yes, I am concerned for the marine industry. I think that we could use marine transport increasingly in the future, that it will be one of the solutions to reduce congestion in the Montreal-Windsor corridor, one solution would be a better use of our railway system, but also of our maritime system. We are currently studying how we can arrive at such an improvement. One of the objectives of the policy review that I announced in the blueprint, in our framework, is improving marine transport.

I am sorry that in my speech, there was no large section dealing with marine transport, but the industry is well aware of my concerns and of my determination to improve the sector, because it is another option, instead of using the highways.

Mr. Mario Laframboise: If you will be so kind, I have one final question.

I had asked the committee to hear from the parties involved in the issue of locks and their safety throughout Canada. Obviously, the committee refused. That order probably came from your department.

Voices: No.

Mr. Mario Laframboise: Minister, the decision of the St. Lawrence Seaway management corporation to reduce personnel... The locks, as you know, are also tourist attractions and somewhere in Coroner Laberge's report on the Sainte-Catherine accident that is indicated clearly. He is recommending more supervision, and what is difficult to understand is that the St. Lawrence Seaway authority decided to reduce the staff even before the coroner's conclusions were made public, and that they make amazing statements saying that it is a bad report. We are, after all, dealing with the safety of individuals.

I had asked this committee to hear witnesses, to hear those who participated and Transport Canada, who carried out the inquiry, as well as the Seaway management corporation in order to try to understand why they wanted to cut back on staff, even though there had been an accident last year. I hope for everybody concerned that there will not be any accident in any of the 13 locks managed in Canada this year because the St. Lawrence Seaway management corporation decided to cut back on staff even though there was a coroner's report which stated that supervision should be increased, given the number of tourists who watch the boats go through the locks.

Mr. David Collenette: When we commercialized our transportation system, it was in order that management be turned over to the private sector. Private sector methods are more efficient and provide better management. I think that in all sectors, whether it be airlines, railways or the marine sector, we have brought about improvements, while maintaining safety.

Mr. Elliott and his team are responsible for overseeing safety in all these areas, and I think that he will understand what is at stake. He is talking about a safety system in the marine transportation area that was not compromised, even though it was transferred to private companies. But perhaps Mr. Elliott would be able to respond.

Mr. William Elliott: Thank you, Minister.

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[English]

Certainly we are concerned about maritime safety, and I think much has been done in this area. You speak about the industry and the importance of the industry, and the minister has mentioned a number of matters in his remarks.

In the Canada Shipping Act and all the work that's been done in relation to the Canada Shipping Act, much of that is related to safety. That is a very significant achievement that is well recognized and well supported by the industry.

I'm afraid I can't give any specific response this morning, in addition to what the minister has already said, with respect to the situation at the locks. As the minister has said, it falls directly under the responsibility of the authority. But I would certainly be happy to look further into that situation.

Mr. David Collenette: But we are responsible for overseeing the safety procedures, and we have no reason to believe that safety has been compromised in any way at that particular lock because of the reduction in manpower.

We have had this reduction in manpower right across the system. Take the air navigation system. There's been an incredible reduction in manpower, but safety hasn't been compromised; there's been better management of this system. But at all times, safety has to be paramount.

The Chair: Okay, you're out of time, Mario.

I'll move to Mr. Burton for ten minutes.

Mr. Andy Burton (Skeena, Canadian Alliance): Thank you, Mr. Chairman.

Under your strategic highway infrastructure program, Minister, I notice there's about $70 million committed to improvements at Canada-U.S. land border crossings. One of my colleagues asked me to ask this. It's fairly site-specific, but I'll ask the question anyway.

Part of Highway 37 is designated as national highway system, but a portion of it that hasn't been designated is the border crossing at Monte Creek. It's between Osoyoos and the United States border. I believe one of the objectives of the premier-elect for B.C. is to travel to Ottawa fairly soon to seek money for highway infrastructure. Is it possible that particular highway crossing will be targeted?

Mr. David Collenette: I'm sorry, I don't think we have the specific answer for that crossing. But if there are to be changes made to the national highway network, we'll need to have unanimous agreement. We don't particularly want to open up that particular formula. I mean, to get all the provinces and the federal government on the same page on any issue is tough at any time. We've agreed on what the national highway network is, so I would be surprised if that crossing is not part of the national network, but if it is, then maybe it's not a main one.

Mr. Louis Ranger: The $70 million will be managed differently than the money for highway construction.

Mr. Andy Burton: That's what I'm sort of referring to.

Mr. Louis Ranger: In this case, we're not going to say that out of the $70 million, Quebec will get $15 million, British Columbia will get $12 million, and so on. It will be based needs, on requirements. So there's $70 million available. We will issue a document that outlines the criteria that will guide the selection. Obviously, we won't be able to satisfy all the requirements. We'll just look at all the applications we get.

Mr. Andy Burton: Could I possibly ask you to provide the criteria, and I can pass that on to my colleague?

Mr. Louis Ranger: Yes, definitely.

Mr. Andy Burton: Thank you very much.

I have a few relatively minor questions here, but they are of interest to smaller northern communities.

A number of airports in my riding—Terrace, Smithers, Prince Rupert—and I'm sure many airports across Canada have fairly recently been devolved. They're now operated on a local basis, and I think relatively successfully.

There is some concern about possible changes. I know it was raised a while back, and I'm not sure what the situation is now, in terms of the fire protection requirements. Can you bring me up to speed on what your position is on that, and if there are any changes pending?

Mr. David Collenette: You're talking about what we call the Canadian Aviation Regulations 308, CARS 308, which was gazetted last year.

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We've been analysing the responses from stakeholders. I hope to have this somewhat resolved by the fall.

This is a tough issue, and we don't want safety compromised. On the other hand, we don't want to place an unfair burden on these airports or the municipalities. So we've made some modifications. I think a lot of people are still attacking the original regulation and not CARS 308 that was gazetted. So it's like still shooting the enemy that's dead, instead of looking at the change that's been made.

Mr. Andy Burton: I wasn't shooting at anybody, Minister—

Mr. David Collenette: No, I wasn't accusing you in this case, but a lot of people are still using arguments we've already addressed in CARS 308. They haven't done their homework. I'm not saying that's you at all, but a lot of people don't understand what CARS 308 will do and how it's an improvement over the earlier regulation that was proposed.

Mr. Andy Burton: That's okay, as long as my concern is understood that the burden on some of these municipalities, if it were to occur, would basically cause the airports to be non-operational. They couldn't afford to do it.

Mr. David Collenette: I agreed with the president of the FCM, who is from up your way, that before we went ahead and made a decision, we would work with them; we'd sit down with the FCM, take them through our thinking, and get their final input. We want to make sure we do the right thing here.

Mr. Andy Burton: That's all I'm asking.

On the pilotage, it's interesting that was brought up. They're a pretty autonomous operation, as I understand it, at arm's length from government and so on. Again, the accountability is possibly something that might be of interest to others.

For instance, in the area where I come from, the little port of Stewart, when ships come in to load ore or logs for export, they pick up their pilots out at Triple Island or thereabouts, which is out of Prince Rupert. But they always manage to pick up the pilots in an area far enough out that they need two, rather than one. Maybe it's only an hour extra, or whatever, but it's an extremely heavy cost burden to some of these small ports. You try to encourage shipping in and out of your ports, yet they add this cost burden. There seems to be no way of addressing that sort of issue. They do as they please. They say, “Well, we're picking up the pilots at Triple Island”.

Is there some mechanism or formula in the wind that would deal with those kinds of problems and get some more accountability into the way they operate?

Mr. William Elliott: With respect to pilotage matters, I guess a couple of issues are relevant here. First of all, with respect to the requirements for pilotage and the nature of services that are provided, that is something we are concerned about. We are working with the industry, the pilotage authorities and the pilots, to look at applying this risk management methodology.

With respect to accountability, more broadly, I'd say a couple of things. First of all, the pilotage authorities are at arm's length from the department. They are required, through the minister, to file their reports annually with Parliament, and their fees are subject to review by the CTA. So when they propose changes to the tariffs, as was recently done in the Pacific, if there are any objectors to those changes, there is a public process in place for the CTA to review the proposed changes and to make recommendations that are binding on the authorities, with respect to the level of tariffs.

Mr. Andy Burton: I guess my point was not so much the level of fees—I understand the need for fees—but that they'll pick up two pilots instead of one, by just moving out a few miles, or whatever. There seems to be no way of addressing that. That was my point. Anyway, that's fine.

I have another really quick question on the devolution of federal wharves on the west coast, and I don't know if it's been happening right across Canada.

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The small community I'm very familiar with, Stewart, has a federal dock that's probably 30 years old. When I was mayor there, several years ago, we spent a couple of years trying to resolve this whole issue, and I know it's still up in the air, three or four years later. I think there are other communities along the coast that are having the same difficulties. I don't know how many different negotiators we went through in a period of two years.

What's the status and the position of the government on these federal wharfs?

Mr. Ronald Sully: Sir, I can't comment on the specific facility you're talking about.

Mr. Andy Burton: No, it's the overall—

Mr. Ronald Sully: I can say that over the last two years we have made significant progress. In fact, we've accelerated the rate of divestiture in British Columbia. We had some difficulties with the British Columbia transfer process, and we've resolved that with the government there. That helped to speed things up.

In some cases we've been very successful in transferring groups of facilities to local regional governments. Now, I don't know if this would apply in your case.

We are continuing on. We have just under a year to go with this program. The sense I have is that we have been more successful recently in British Columbia.

Mr. Andy Burton: Okay.

Thank you, Mr. Chair.

The Chair: Thank you.

I don't see any further questions of our guests. Are there any further questions?

I want to thank you very much, Minister, and your staff, for being here.

We're adjourned until Tuesday, May 29.