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37th PARLIAMENT, 2nd SESSION

Standing Committee on Transport

EVIDENCE

CONTENTS

Monday, June 2, 2003

1535

The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.))

Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance)

The Chair

Hon. Mark Wartman (Minister, Highways and Transportation, Saskatchewan Highways and Transportation)

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The Chair

Hon. Mark Wartman

The Chair

Hon. Mark Wartman

The Chair

Hon. Mark Wartman

The Chair

Hon. Mark Wartman

The Chair

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Hon. Mark Wartman

The Chair

Mrs. Lynne Yelich (Blackstrap, Canadian Alliance)

The Chair

Mrs. Lynne Yelich

The Chair

Mrs. Lynne Yelich

Hon. Mark Wartman

Mrs. Lynne Yelich

Hon. Mark Wartman

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Mrs. Lynne Yelich

Mr. Jim Gouk

The Chair

Mrs. Lynne Yelich

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

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The Chair

Mr. Jim Gouk

Hon. Mark Wartman

The Chair

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ)

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Hon. Mark Wartman

Mr. Mario Laframboise

Mr. Harvey Brooks (Deputy Minister, Highways and Transportation, Saskatchewan Highways and Transportation)

Mr. Mario Laframboise

Hon. Mark Wartman

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Mr. Mario Laframboise

Mr. Harvey Brooks

Mr. Mario Laframboise

Mr. Harvey Brooks

Hon. Mark Wartman

Mr. Mario Laframboise

Hon. Mark Wartman

The Acting Chair (Mr. Roger Gallaway (Sarnia—Lambton, Lib.))

Mr. Dick Proctor (Palliser, NDP)

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Hon. Mark Wartman

Mr. Dick Proctor

Mr. Harvey Brooks

Mr. Dick Proctor

Hon. Mark Wartman

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Mr. Dick Proctor

Hon. Mark Wartman

Mr. Dick Proctor

Hon. Mark Wartman

Mr. Dick Proctor

The Chair

Mr. Dick Proctor

Hon. Mark Wartman

The Chair

Mr. Marcel Proulx (Hull—Aylmer, Lib.)

The Chair

Mr. Marcel Proulx

The Chair

Hon. Mark Wartman

The Chair

Mr. Roger Gallaway

Hon. Mark Wartman

Mr. Roger Gallaway

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Hon. Mark Wartman

Mr. Roger Gallaway

Hon. Mark Wartman

Mr. Roger Gallaway

Hon. Mark Wartman

Mr. Roger Gallaway

Hon. Mark Wartman

Mr. Roger Gallaway

The Chair

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Mr. Sarkis Assadourian (Brampton Centre, Lib.)

Hon. Mark Wartman

Mr. Harvey Brooks

Mr. Sarkis Assadourian

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Hon. Mark Wartman

The Chair

Mr. Harvey Brooks

The Chair

Mr. Jim Gouk

Hon. Mark Wartman

Mr. Jim Gouk

Hon. Mark Wartman

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Mr. Jim Gouk

Hon. Mark Wartman

Mr. Harvey Brooks

Mr. Jim Gouk

Mr. Harvey Brooks

The Chair

Mr. Harvey Brooks

The Chair

Mr. Mario Laframboise

Hon. Mark Wartman

The Chair

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

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Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Marcel Proulx

Hon. Mark Wartman

Mr. Harvey Brooks

Mr. Marcel Proulx

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The Chair

Mrs. Lynne Yelich

Hon. Mark Wartman

Mrs. Lynne Yelich

Hon. Mark Wartman

Mrs. Lynne Yelich

Hon. Mark Wartman

Mrs. Lynne Yelich

The Chair

Mr. Jim Gouk

The Chair

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

The Chair

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Mr. Jim Gouk

The Chair

Mr. Jim Gouk

The Chair

CANADA

Standing Committee on Transport

NUMBER 031

2nd SESSION

37th PARLIAMENT

EVIDENCE

Monday, June 2, 2003

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.)): Ladies and gentlemen, this is Bill C-26, An Act to amend the Canada Transportation Act and the Railway Safety Act, to enact the VIA Rail Canada Act and to make consequential amendments to other Acts.

I wonder what making other amendments to other acts means considering what's been happening in the last little while, but that's a subject of another day.

I welcome very warmly Mr. Wartman, the Minister of Transportation for the Province of Saskatchewan. Thank you very much for coming with your colleague Mr. Brooks.

You're going to participate in the meeting, Mr. Gouk, are you not?

Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance): I'm here and will participate as anticipated.

The Chair: Thank you.

The usual procedure, Mr. Wartman, is to make a few opening remarks and then there will be some questions obviously from some of the committee members. So just feel comfortable. I hope this is as comfortable to you as Saskatchewan.

Hon. Mark Wartman (Minister, Highways and Transportation, Saskatchewan Highways and Transportation): Good afternoon, Chairman Comuzzi and members of the standing committee.

We had hoped you would be able to come out and enjoy our hospitality in Saskatchewan, but we've been enjoying our visit, short as it may be here.

On behalf of Premier Calvert and the Government of Saskatchewan, I would like to thank you for this opportunity to address the Standing Committee on Transport on Bill C-26, an act to amend the Canada Transportation Act.

The transportation sector has undergone profound changes in recent years. Perhaps nowhere have these changes been as profound as in the province of Saskatchewan.

While federal regulatory and policy reform, particularly in the 1996 and 2000 amendments to the CTA, have had substantial impacts on the entire transportation system, they have resulted in a radical transformation in the area of grain transportation.

The new policy and regulatory framework has contributed to mass consolidation and closure of elevators, abandonment of branch lines, and the elimination of the Crow benefit. These unilateral changes have cost and continue to cost our economy significantly. There is an ongoing loss of producer revenues and increased costs for this modal shift.

As a result of the changes, farmers have had to truck their commodities to delivery points over ever-increasing distances. This in turn has facilitated a massive shift from rail to road, from privately funded to publicly funded infrastructure, and from federally regulated to provincially regulated and funded infrastructure, which raises the cost far beyond the levels of compensation that were provided. The fact that more than 60% of the funds allocated by the federal government for western Canada under the prairie grain roads program are programmed for Saskatchewan grain-dependent highways and municipal roadways is an indication of the extent to which these shifts have impacted Saskatchewan.

Furthermore, the transportation system is of vital strategic interest to Saskatchewan beyond the area of grain transportation. Our economy is resource based. The market for these commodities is relatively small in western Canada; therefore, the majority of production is exported.

Our geographic location and distant proximity to water make us highly dependent upon transportation services. We are the most landlocked of all the provinces.

The bulk nature, large volume, and low value of the commodities to be shipped and the long distances to markets affect the choice of transportation alternatives available to shippers. Many of our shippers are captive to one carrier and the costs of transportation are a major component of the delivered price of the bulk commodities. Indeed, Saskatchewan is a trade-dependent province in this trade-dependent nation.

The prevalence of export industries--oil, gas, mining, forestry, tourism, and of course agriculture--means that a competitive, efficient, and sustainable transportation system is vital to our economic development. As such, our need for a transportation system that moves people and goods efficiently, combined with the impacts of changes to legislation and policy in the transportation sector in recent years, underscores our province's desire for a more rational and long-term strategic approach to transportation policy.

For this reason, both the province and our stakeholders have taken a keen interest in the transportation strategy articulated by the federal government in the “Straight Ahead” document and Bill C-26.

Within this context, Saskatchewan would like to put forward its analysis of Bill C-26, an act to amend the Canada Transportation Act, and the issues related to Canada's transportation system. Certainly, many provisions of Bill C-26 are positive. Saskatchewan supports the proposed framework of legislative and policy changes that serve transportation system clients, customers, shippers, and travellers, balanced with the interests of transportation service providers.

¹ (1540)

Changes designed to increase efficiencies through modal integration, create transparency, and encourage data collection as a performance measure are welcomed. On the whole, however, the legislative and policy reform envisioned by Bill C-26 and “Straight Ahead” has received mixed reviews from the stakeholders. They tell us they are pleased with many of the proposed amendments but have found some lack of clarity and they are demanding revisions to others. They are concerned that some of the proposed changes may weaken the conditions of competition in the rail and air sectors.

The major areas of concern cited are the lack of a transportation vision within the legislation, no long-term sustainable funding for transportation infrastructure, failure to adequately balance the interests of shippers and travellers with those of national carriers, and a lack of effective rail competition. These concerns form the substance of Saskatchewan's submission.

Saskatchewan has a vision. Over the last number of years, the Government of Saskatchewan has worked in partnership with its key provincial stakeholders, municipal governments, other provinces and territories, first nations, and the federal government to identify mutually beneficial solutions to the issues facing our transportation system. Through this collaboration we have developed a vision of a truly effective and sustainable national transportation system that will meet the needs of Canadians from coast to coast now and for the foreseeable future. Saskatchewan envisions a national transportation system comprised of a safe, efficient, accessible, and viable transportation infrastructure.

The national transportation system would support the economic well-being of the provinces while contributing to the growth of Canada and all its regions. The province's vision is of a transportation system that fundamentally and primarily serves its clients, customers, shippers, and travellers, balanced with the viability of the national carriers. This vision includes a transportation system that is accessible to rural, remote, and northern areas with a reasonable choice of modes of transportation.

Saskatchewan's vision includes a true national highway system enshrined in federal legislation and supported by a national highway policy with sustained long-term funding. Such a policy would recognize the value of trade corridors and provide connections to regional roads with linkages to all parts of the country.

Saskatchewan's vision includes a rail system where the existing infrastructure is maintained over the long term. The majority of movements would be on the national rail system through federally regulated carriers, but the system would provide effective connections through regional and short line railways. Driving this vision is the primacy of competition and market forces as the primary agents in providing viable and effective transportation services.

Economic regulation occurs only in respect to those services and regions where regulation is necessary to serve the needs of the shippers and travellers. Such regulation would not unfairly limit the ability of any carrier or mode of transportation to compete freely with any other carrier or mode.

Finally, underlying this vision is a recognition of the role and jurisdiction of the provinces, territories, and the federal government, and a structure where jurisdictions work to create a transportation system that promotes the prosperity of individual provinces, regions and the nation as a whole.

This vision of a national transportation system is not one proposed by Saskatchewan in isolation. It is a vision supported by our key stakeholders, such as the Saskatchewan Association of Rural Municipalities, Saskatchewan Urban Municipalities Association, and our area transportation planning committees. It is a vision that is supported by the Council of Western Provincial Transportation Ministers. The council is composed of the ministers of Manitoba, Saskatchewan, Alberta, and British Columbia. It is a vision consistent with the national vision articulated by the provincial and territorial ministers of transportation in Partnering for the Future – A Transportation Vision for Canada.

¹ (1545)

From the Saskatchewan position, then, the question is not whether we should pursue this vision, but rather how to achieve the goals of this vision. In this regard, Saskatchewan views policy and legislation as the enabler of the envisioned transportation system. This brings me then to my specific comments on Bill C-26.

Vision statement. This legislation does represent a step forward but does not entirely address the recommendations of the Canada Transportation Act review panel that were formulated through a combination of independent research and the advice of shippers, travellers, and other stakeholders.

To be fair, stakeholders welcome some of the changes, but the consensus is that not only does Bill C-26 not go far enough, it may in fact weaken competition in the rail and air sectors. In this light, Saskatchewan has concrete proposals for amendments that would strengthen the Canada Transportation Act.

Our principal recommendation is the incorporation of a vision statement within the act itself. Transport Canada's blueprint for transportation, “Straight Ahead”, lists various system attributes and sets out a work plan but does not describe what the system would ultimately look like.

A vision statement enshrined in legislation would provide the federal government, provinces, territories, and stakeholders a standard by which to gauge the effectiveness of transportation systems, and in achieving the desired outcomes.

The required framework is one that encompasses a vision, clearly articulates what outcomes are intended, promotes competition both within and between modes, balances the interests of shippers and travellers with those of national carriers, represents regional interests, and acknowledges roads.

This last point, I believe, is especially important. An acknowledgement of roads within the Canada Transportation Act is necessary to have a complete representation of all modes and confirm they are of sufficient national interest to merit long-term, sustainable infrastructure funding.

It is important that we consider all modes, because they are already inextricably linked and one mode's activities often have impacts on other modes. Furthermore, a healthy degree of competition between and within modes is necessary to perpetuate competitive choices. With this in mind, our province has developed a number of recommendations that enhance intermodality on one hand and provide a more competitive marketplace on the other.

With respect to rail, the Saskatchewan government supports amendments in Bill C-26 that enhance competition by better balancing the market powers of carriers and shippers. Bill C-26 contains provisions aimed at preserving urban rail corridors by providing municipalities and urban transit authorities first right of refusal on abandoned and discontinued sidings. Saskatchewan applauds these provisions as they preserve infrastructure, thereby providing large urban centres the opportunity to expand mass transit services.

We propose similar processes be established for rural sidings. Local governments or other interested parties should be given the opportunity to purchase rail sidings through negotiations with the railway. The 60-day notice period for abandonment of rural sidings should be amended to be the same as that proposed transfer process for urban sidings. In addition, if agreement to purchase a siding cannot be achieved, the siding should be offered at net salvage value.

Those provisions would enable existing rural sidings to be retained to enable producer car loading, including retaining switches, spurs and interchange track, without encumbering the ability of carriers to abandon sidings that no longer fit within their business plans.

Another area where Bill C-26 could enhance competition and efficiency within rail is through addressing the issues of running rights.

In May 2001 and September 2002, the Canadian Transportation Agency refused an application for running rights by Hudson Bay Railway and Ferroequus Railway over CN and CP lines. The running rights provision has not been an effective mechanism for promoting rail competition because it is viewed by the agency as an extraordinary measure to be used only in cases where there is clear evidence that the railway providing the service is not acting in the public interest. In addition, the agency has determined that running rights may be applicable for bridging purposes but not for solicitation of traffic.

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As I was thinking about this, I was thinking about the situation of the CRTC rulings with regard to SaskTel. Most of you will know that SaskTel was our provincial telecommunications company, which had basically exclusive operations in Saskatchewan. CRTC ruled that SaskTel must allow competitors to use the SaskTel infrastructure for a reasonable access and use fee. The ruling also allowed the competitors to solicit SaskTel customers. I think in that same vein, we would find that competition in rail would be enhanced if joint running rights were available, not just for bridging but also for solicitation purposes.

In its submission to the Canada Transportation Act Review Panel on Competitive Rail Access Provisions, the Saskatchewan government recommended that the running rights provision be amended to allow any person to apply for running rights on trackage owned by another railway, subject to a reverse onus clause. Such a clause would shift responsibility to the owner railway to establish that a running rights order would be prejudicial to the public interest. Unlike the existing provision, where the applicant must prove that this remedy is in the public interest, the Saskatchewan proposal would require the owner railway to demonstrate that a running rights order is contrary to the public interest before the agency could deny the application.

Running rights provisions within the CTA could be enhanced if amended to enable any person to apply for running rights to the closet interchange point with a connecting carrier where inadequate rail competition exists. The onus should be on the railway owning the track where running rights are requested to show that the application is not in the public interest. Such a provision would provide a more competitive environment for shippers or short line operators captive to one rail company.

Similarly, the proposed reinstatement of the captivity test for final offer arbitration on freight valued at less than $750,000 would undermine market conditions from the shippers' perspective. Shippers have only recently been successful in having this captivity test removed, so reinstatement could cause problems.

The proposed requirement for an arbitrator to consider whether a shipper has alternative, effective, and adequate means of transporting goods before proceeding with the application is unacceptable. This requirement is costly and time-consuming and would impede shippers from obtaining relief under this process. If this captivity test cannot be removed from Bill C-26, it is recommended that the existing FOA process for transactions under $750,000 be retained.

Furthermore, the proposal to allow the multi-party FOA disputes only when the terms of a multi-party FOA submission will apply to all shippers equally will lessen the effectiveness of this recourse. It should be sufficient that the dispute submitted to the agency for FOA be common to all shippers and that a joint offer is submitted. Allowing a group of shippers to join in one proceeding when their offer seeks common relief and extending FOA to incidental charges and services would enhance the mechanisms for resolving rate and service disputes involving multi-party groups.

Similarly, impediments to obtaining a regulated access rate to an interchange with a second railway do not provide shippers with an effective competitive access mechanism to negotiate rates and services with the railways. Proposed entry and captivity tests associated with the proposed competitive connection rate provision will increase the administrative burden and the cost of using this measure.

Requiring shippers to prove that a line haul rate exceeds a specified level before the agency will proceed with a CCR application creates an entry test that will discourage the use of this remedy. In addition, a captivity test that requires shippers to demonstrate that no competitive transportation options are available would impede their ability to apply for a CCR to gain access to a second railway.

The CCR provisions also impose unnecessary restrictions on access to final offer arbitration. To legislate measures intended to relieve the lack of competitive market forces while at the same time putting in place a requirement or requirements that impede or discourage the use of these remedies just makes very little sense from both a practical and from a public policy perspective.

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Saskatchewan proposes that the proposed CCR mechanism be deleted from Bill C-26 and replaced with a revised competitive line rate provision without the requirement for a prior agreement with a connecting carrier.

With respect to rail mergers, Saskatchewan has made the argument that the agency should ensure any shipper who has competitive access to two rail carriers prior to a merger should continue to have access to two carriers following a merger to maintain alternative transportation options. This approach, I understand, has been used successfully in the United States to protect shippers' interests under the Staggers Act.

Another area where amendments would strengthen Bill C-26 is road transportation. Although road transportation interfaces with all other modes of transportation, the Canada Transportation Act does not address this mode as roads are mainly under provincial jurisdiction. However, roads form the backbone of our transportation system and have an integral role in national and international trade corridors. Any attempt to develop a legislative and policy framework aimed at creating an integrated, efficient, and sustainable transportation system must include highway infrastructure.

“Straight Ahead” suggests that realization of the transportation vision for Canada will result in the appropriate level of investment being directed to transportation infrastructure through the right pricing signals. On a practical basis, many jurisdictions, like Saskatchewan, have extensive networks of rural roads and secondary highways connecting with primary roads that make user pay schemes such as tolls absolutely unworkable. They simply cannot be applied and workable in our network of roadways. Furthermore, our taxpayers are already paying a high price, much of which is being directed toward mitigating on-road impacts resulting from federal legislative reforms.

In our health care system, we have rejected the concept of user pay because we recognize that access to affordable health care is a public good. Similarly, the road network connects communities large and small, urban and rural for the public good. Our roads and highways not only facilitate the movement of goods, they allow Canadians to participate in and contribute to the social prosperity of our nation.

Clearly, government involvement in the operation, improvement, and expansion of the highway system is in order, just as it is in the health care system. Saskatchewan, like other provinces, has committed investment in the province's transportation system at a level that is equivalent to 90% to 100% of on-road provincial fuel tax revenues. Saskatchewan feels strongly, as do our provincial and territorial counterparts, that the federal government also needs to commit long-term predictable and sustainable funding to the national highway system that is equivalent to a significant portion of federal fuel excise taxes.

In terms of air transportation, proposed amendments to proposed section 85.2 are also of concern to Saskatchewan as the intent is unclear. Because this amendment appears to permit forced interlining agreements, our stakeholders have expressed concerns that this is anti-competitive and contrary to the move toward deregulation. Given the recent turmoil in the air industry and the restructuring of Air Canada, it would be premature to introduce these amendments at this time. Any future amendments need to focus on the pre-eminence of competitive choices for travellers and shippers and the maintenance of a minimum level of service.

º (1600)

I heard an interesting comment. Paul Martin was on the flight with us from Regina last night. After we bounced into Winnipeg on a Dash 8, got on the 737 to come here and arrived about midnight in Ottawa, he said, “I don't know how Ralph Goodale puts up with this”. I think the level of service for air is absolutely vital. As we seek to build our economy, we want to be able to have a smooth movement of people back and forth, and goods too, but primarily we're looking at people from major centres. So we do seek better service in our air transportation as well.

While an integrated, efficient, and competitive transportation system is essential, the system must also be safe, secure, and environmentally sustainable. The costs of maintaining and enhancing safety and security across the system are substantial. An example is the upgraded federal grade road railway crossing standards. Saskatchewan has 4,997 such railway crossings. Thankfully, the federal government granted a grandfather clause for existing crossings; otherwise, the cost to the province for simply upgrading these crossings would have run between $231 million and $277 million.

The transportation-related costs of implementing the Kyoto agreement are also quite uncertain. The federal government has an obligation to consult and work with the provinces and territories when it is contemplating legislative or policy changes that will have impact on our jurisdictions. The federal government should provide financial assistance to cover incremental costs associated with implementing legislation that will substantially impact the provinces and territories. As security is a national issue, national revenues should cover all the costs of maintaining a secure transportation system.

On remote and rural access, a vision of the transportation system must also consider the social aspects of transportation. Specifically, all levels of government must be committed to providing minimum levels of access to remote and rural areas. Northern Saskatchewan communities have traditionally been isolated, yet that region's untapped resources hold tremendous potential for both economic and social development. It's a little known fact that we have almost 100,000 lakes in Saskatchewan, many of those in northern Saskatchewan, with tremendous tourism potential, but the access to our remote communities and the potential for the people living in those communities to build viable tourism industries is very limited.

We know that access to remote and northern areas is essential. I believe, and our analysis would say, that it has a tremendous positive benefit for the federal government and for some of the costs the federal government is now carrying for sustaining some of those communities.

Communities, the province, and the federal government all have a role to play in putting in place an adequate transportation system that provides access to a reasonable choice of modes. I would also note that federal government investment in this area, especially in northern Saskatchewan, should be consistent with Ottawa's obligations to Canada's first nations. The federal investment should be proportional to the benefit the federal government will receive. I'll just give a brief example.

In one of our northern areas, we now have a seasonal road up into Stony Rapids in northern Saskatchewan and it's virtually impassable in the summertime. We've done some cost-benefit analysis on what it would take to put roads in through that area, and in terms of cost currently to date, 70% of that benefit would accrue to the federal government by making these communities accessible.

So we believe that when we're looking at providing access we should do these kinds of cost-benefit analyses, and the federal government should be putting in an amount proportional to what their gain will be over time.

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In conclusion, I would like to draw your attention to the themes that have appeared consistently in my presentation. One is dedicated, equitable investment in the transportation infrastructure, with the emphasis on investment. These are not simply expenditures: transportation investments are investments in a prosperous future for Canada. In addition, the pre-eminence of competition to provide an appropriate level of service and modal choice to shippers and travellers must be the cornerstone of future policy. Where the market does not produce a healthy competitive environment, regulation then must provide effective compensatory remedies.

Public investment in highway transportation infrastructure is essential for a seamless, integrated, intermodal transportation system. As I stated earlier, provinces and territories currently invest between 90% and 100% of the on-road provincial fuel tax revenues in their respective transportation systems. At this level of investment, the provinces' ability to facilitate expansion and innovation in either of these areas is significantly constrained. At the same time, we have seen recent examples where the participation of the federal government in the transportation system has achieved very important results.

The Canada strategic infrastructure fund, the strategic highways infrastructure program, the border infrastructure fund, and the prairie grain roads program are all making contributions to projects of national interest. However, these programs are time limited and dependent on matching funds from already heavily burdened provincial coffers.

A stable and dedicated funding environment is required to facilitate long-term infrastructure planning and development. Of particular concern is the lack of a funding strategy for the national highway system. To remain competitive in a global market, our transportation system can not fall behind in efficiency and effectiveness.

You will be aware that the U.S.A., our major competitor in goods requiring significant surface transportation, is now considering the replacement of its Transportation Equity Act for the 21st Century, TEA-21, with a new six-year TEA, called SAFETEA, of approximately $247 billion, yet Canada remains the only major industrialized country in the world without a national highway strategy.

In Saskatchewan, we are committed to building a wide open and prosperous future. I firmly believe that a meaningful investment by the federal government in long-term sustainable funding for a national transportation system will result in a wide open and prosperous future for Canada as a whole.

As the Prime Minister himself said during his recent visit to Saskatchewan in January to announce the joint funding that will enable us to complete the twinning of the Trans-Canada Highway in Saskatchewan, and I quote:

It's the right thing to do for the people of Saskatchewan. The infrastructure of the country has been neglected for too long and now that we have a balanced budget for the seventh year in a row and a bit of cash it's good to invest it in the security of the people who travel on the roads of Saskatchewan.

Once again, I appreciate this opportunity to meet with you to address your committee on this very important piece of legislation. I hope you will consider the recommendations I have made today, as I truly believe they would be a benefit to our nation.

Thank you very much.

º (1610)

The Chair: Thank you, Mr. Wartman.

Mr. Brooks, do you want to add anything to that submission?

Okay, Mr. Wartman, maybe you could answer just a couple of preliminary questions I'm sure all of the members of the committee would like to know.

One is, what is your major exit point in Saskatchewan to the United States?

Hon. Mark Wartman: Our major exit point would be the Highway 39 route through Weyburn and Estevan. We would see the traffic running down from the northwest of the province through from Edmonton and the Northwest Territories down number 16 through Saskatoon, down number 11 through Regina, and down number 6 to Highway 39 and then into the United States. That's our primary road corridor. The rail also runs through in the same direction and then across to the eastern centre. It runs through North Portal. That's our major exit point.

The Chair: Could you or someone undertake to supply us with a map of that corridor and your highway right down to there?

Hon. Mark Wartman: Absolutely.

The Chair: Okay, and also with what you would feel are the necessary additions to make that a successful route. Will you do that? Perhaps you could add on to that too the types of customs points you have in Weyburn and Estevan. That would be very helpful, I think.

The other thing is that this committee agrees with you entirely. We've also proposed a national highway system right across the country, with limited-access four-lanes from coast to coast and a particular emphasis on the major crossing points in Canada. Unfortunately, we're not doing it under a national program; we're doing it piecemeal, and that's not going to get us anywhere. We need the national program, so we're ad idem on that issue.

Hon. Mark Wartman: We tend to envy the TEA program in the States.

The Chair: Yes, that's very successful.

In your submission you say you participated in the Canada transportation review panel and made some substantial recommendations that you didn't find in the legislation. Is that correct?

Hon. Mark Wartman: The primary ones would be the joint running rights and the long-term funding of a national highway system.

The Chair: Those were the submissions you made in the consultative process that are not included in the final legislation.

º (1615)

Hon. Mark Wartman: Yes.

The Chair: Thank you.

Mr. Gouk.

Mrs. Lynne Yelich (Blackstrap, Canadian Alliance): I'll start.

The Chair: You'll start, Ms. Yelich?

Mrs. Lynne Yelich: Yes, because I'm from Saskatchewan.

The Chair: That's very good, because I was wondering what Mr. Gouk could add to the conversation.

Mrs. Lynne Yelich: Oh, I think Mr. Gouk has good questions too.

I just wish Paul Martin could drive around the province and see how poor our highways are. He would be wondering why Ralph Goodale hasn't brought more to the attention of the federal government just how poor the infrastructure is in Saskatchewan. We do say that our highway system in Saskatchewan is probably one of the worst in Canada, I'm sure.

Anyhow, a few years ago there was a suggestion about two cents out of every ten cents of the federal excise tax being collected for the national highway system. Would you support such an initiative to have a dedicated tax of some sort, dedicated to just the federal infrastructure?

Hon. Mark Wartman: We do not work with or believe in dedicated taxation as such, because we recognize that at given times there may be a variety of needs. However, that said, in terms of recognition of the primary nature of the transportation infrastructure in building an economy, we have recognized that we need to make a major long-term committed investment. To that end, we put somewhere between 90% and 100% of our collected on-road fuel tax into our transportation system.

In Saskatchewan, we look at a net revenue from fuel tax for the federal government of about $250 million per year. When we look at the national corridors and the national transportation structure, I think 20% of that would go a long way to helping meet some of the needs. In actual fact, it would be very important to move ahead a contribution greater than that to make up for what has been an infrastructure deficit, as the Prime Minister identified and we have identified. So when we're looking at the long term, rather than saying a dedicated tax, we might say in a long-term vision that for the next five years or ten years, in order to meet the needs, we would aim at 50% of the fuel tax that's picked up there, and then once we have the infrastructure in place, maybe 20%.

Basically all I'm saying is that I believe, with the way we operate and Canada operates around taxation and the way we distribute our resources, there are always priorities to be determined, but I think that does not preclude the possibility of making long-term commitments of a certain percentage.

Mrs. Lynne Yelich: Our highways are in terrible shape in Saskatchewan. I'm wondering, who do you put the blame or onus on? I realize you want the three parties working together--provincial, municipal, and federal--but right now, where is the weak link? I think our municipal governments are exhausted. That's why I'm wondering about the dedicated tax, because they're collecting this excise tax for highways. Isn't that the idea of collecting the excise tax? I'm wondering who is responsible, and who should be more responsible for this infrastructure for our highways in particular?

Hon. Mark Wartman: Highways, of course, are under provincial jurisdiction. You talk about our highways maybe being the worst in the country. Certainly there's a lot of disrepair, but we have a variety of highways. A highway isn't a highway isn't a highway. We have everything from very good four-lane highways in which we have invested significantly over the last few years. We have some very good two-lane highways.

We also have a series of thin-membrane-surfaced roads that were built some 35 to 40 years ago and they were never meant to handle a kind of heavy haul. When we talk about the shift from rail to road and the legislation--basically a unilateral decision was made to make these changes--and that move to heavy haul from our rail to the road, these TMS highways just break up. They were not designed to and cannot sustain the kind of load they have been compelled to manage. That happened, and then we have been, over the last six years, investing significant dollars in just trying to keep those up and maintain them.

Let me give you an example. On Highway 7, which you'll know is by Rosetown, there was a fatality. The traffic from Highway 7, which is a road between Saskatoon and Calgary, was diverted onto a thin-membrane-surfaced regional highway, which was Regional Park Highway, for three hours. In three hours, what was a very good thin-membrane-surfaced highway was completely devastated. There were big chunks of pavement. That was the most graphic example for me, as a new minister, of how quickly these roads will break down.

We look now at the millions of dollars we have been pouring into just maintaining these roads so they are passable and somewhat safe. We recognize there's a heavy haul and the road breaks down, so we go out and patch it up. You might have driven down it when it was broken down the first day. Three days later there's been another heavy haul over the road and it has broken down again. You drive down and you don't even know the repair has happened, because the road's in such abysmal shape again. But we've spent hundreds of thousands of dollars to try to bring it up.

So when you ask who's responsible for where we're at, it's a combination of things. It's also making up for years of debt from which we have had to recover, and we are now, just in the last three years, in a financial position where we have been able to invest substantially in these roads.

I talk about this not as a pay-out to these roads but as an investment in upgrading our roads, and we have done a lot of work. The department has done a tremendous amount of work in identifying the major economic corridors. We've invested in those corridors and we're seeing the returns.

As some of you may have heard recently, and I think it was said by the Dominion Bond Rating Service, Saskatchewan's economy is going to lead the nation. Its projected growth is 5.8%. We're looking at it as a government, and our finance department says possibly 6.8%. So we see that the investment does have a return. I mean, there are other factors as well, but we know it does have a return. The causes are myriad.

º (1620)

Mrs. Lynne Yelich: I'd like to continue questioning you on that because I have lots of questions, but I won't.

One more question on balancing formula. I'll let you talk.

Mr. Jim Gouk: Maybe, if I can. How much time is left, Mr. Chairman?

The Chair: Three minutes.

Mrs. Lynne Yelich: Go ahead and ask your question.

Mr. Jim Gouk: I come from British Columbia and I have a concern with our roads. As I'm sure you know, we have some serious problems with our roads both in terms of condition and in terms of design with winter. The federal government collects a little under $1 billion a year in excise fuel tax from British Columbia. It spends less than $300 million nationally. We don't expect the federal government to just switch that money. As much as we'd like to say “Hey, you took that for highways; you call it a highway tax to build and maintain the infrastructure; put it back”, there are constraints. However, what we suggested some time ago was that 20% of that money be put back in.

A study was done, and through this committee we heard a lot of witnesses who said that if that money was invested over a 15-year period we ultimately could rebuild the national highway infrastructure. Further, we heard testimony that I believe if you spend $1.65 in maintenance to keep the roads in good condition before they deteriorate to a certain point--there's a point from which they cannot return--you would save a $5 capital cost by spending that $1.65. It's a matter of effective return. While it seems like we're really squeezing ourselves to put that money in now, we could have a better, safer system.

Paul Martin, as Minister of Finance, appeared before this committee in 1965--

The Chair: 1965?

Mr. Jim Gouk: Sorry, 1995, Joe. The years just fly and you lose track. You know how it is. I am thinking of age.

However, in 1995, I believe it was, the Minister of Finance appeared and acknowledged that it was an idea that had merit, but the government, which was in a deficit situation at the time, said that it needed to be re-addressed when the books were balanced and when we started generating a surplus. We are now doing that.

So I would hope that people in a position like you fully recognize the constraints, the problems of highway building in this country and of value for dollar, that $1.65 spent now would save you $5 and perhaps someone's life as well.

When there are talks between you and your fellow transport ministers, is there an initiative to try to develop some kind of fund so we can get into a program like this? This would not be in some partisan way, like “Give us the money, you crooks”, but by presenting a case and saying “Look, there's a real problem here. We need to sit down and develop a plan, because if we don't, it's going to cost lives, it's going to cost quality problems on highways in our provinces, and ultimately it's going to cost us all money”.

º (1625)

The Chair: Is there a question there?

Mr. Jim Gouk: I thought I just made one, Joe. I'm sure you can read the transcript and you'll see it.

Hon. Mark Wartman: Yes, we have, and we will continue to work together to try to present a very clear case as to the value of the investment. You're right in terms of the timing around fixing and repairing roads, and if you keep ahead of it, your costs are significantly lower.

We have formed a western council of ministers, as I alluded to in my presentation, and we are of one mind around the funding and support for a national highway system. I believe you will also see in the document that all ministers across the province put together--I don't have the title in my mind right now--which was submitted to the federal transportation department, that we are indeed asking for this kind of committed funding for a national highway system.

The Chair: I need an undertaking from the members present. There's a vote on the orders of the day, to move to the orders of the day. If the four members of the opposition agree to sit through the vote and Mr. Proulx, Mr. Gallaway, I myself, and Mr. Assadourian agree to stay, then we don't have to suspend the meeting and we can carry on. Do we have agreement on that?

Some hon. members: Agreed.

The Chair: Good, now we can carry on.

Mr. Laframboise, please.

[Translation]

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

Mr. Minister, I am glad to see that you are emphasizing Canada's obligation to establish a national transportation plan. From your speech, we clearly understand that you favour the idea that Canada, like other industrialized countries, should have a national transportation plan together with recurring investments. Is this not a part of your message?

You told us that this plan deals with every kind of transportation: by air, by rail and by highway. Please tell me what percentage of freight is transported by rail and what percentage by highway in your area.

º (1630)

[English]

Hon. Mark Wartman: The breakdown would be that most of our commodities would at some point be on-road. Most of the grain spends some time moving on-road. Potash might be an exception in that it is primarily loaded into rail cars. It was trucked for a number of years. I would be guessing, but I would say--you know, a bit of an educated guess--about 75% of our goods would move out of province by rail and most of the rest would move by road.

[Translation]

Mr. Mario Laframboise: Did you not tell us that the proportion of freight carried by rail and by highway has noticeably changed since transportation was deregulated?

[English]

Mr. Harvey Brooks (Deputy Minister, Highways and Transportation, Saskatchewan Highways and Transportation): Traditionally our system had been structured where we had a large number of elevator delivery points very close to each other, in around the 7- to 10-mile radius. With the changes in the National Transportation Act and the removal of the Crow benefit, there was a large-scale restructuring of the industry to a much larger-scale elevator system, some of which will draw in a 60-mile radius and some will draw from several hundred miles away.

Now, when grain goes on a truck destined for market, it is not really looking for delivery to a point that might be 7 to 10 miles away. It would depend on the individual shipment, but it would probably be going an average of 30 miles. Probably a lot of the shipments end up going several hundred miles. Some of them are trucked directly from Saskatchewan to Alberta for feeding or to B.C. for feeding.

Once the grain entered a truck, it used to find its way to local delivery points very quickly. Now the routes are rather uncertain. It depends on the competitive environment at the moment. They are dramatically increasing the amount of tonne miles on the system, and a lot of that system that it's travelling on wasn't seeing that type of heavy-haul travel. While it might have been travelling on smaller trucks and smaller distances, it's now on large super B trucks or larger.

That type of system is affecting our roads, for the most part. For the primary commodities we see that type of movement up to 75%. It's still leaving by rail, but we are seeing a lot more truck traffic in the initial phase. For the finished goods, the secondary and tertiary produced products, a larger component of them leave the province by truck.

[Translation]

Mr. Mario Laframboise: Can we gather that this caused heavy damage to your highway network? Yes.

You were asked whether you would agree to a special transportation tax, and you did not seem to agree. You want the government to be free to... Last weekend, unless I am mistaken, Mr. Martin said that he was ready to hand over a part of the gasoline tax to the municipalities. What is your reaction to this? Does it make sense to you?

[English]

Hon. Mark Wartman: I think part of it may be just semantics in terms of a dedicated tax and a commitment to use a significant portion of the provincial revenue. When we're looking at what the needs are, we could simply say the amount, recognizing that we operate with the general revenue fund where all of the tax resources go. We use for a reference point the amount of money that is brought in by fuel tax because it is road related.

What we're really trying to get to is that we need substantial investment. We look for a reference point, but we are saying we need substantial long-term investment in order to really help build our economy.

We have seen throughout the world where those investments in the transportation system have had such a positive impact on economies. We could simply say, yes, we'll dedicate a portion of this fuel tax, but there are times when our priorities are that we may have a special need in education or health. Since we fund out of the general revenue, it allows us to look at that larger pie when we're making a decision and we're not captive to a particular dedicated tax. We can say that rather than this coming from the fuel tax, we may have a change in our fuel structures and it changes the amount of tax that is coming in; we just need to commit a certain amount. So we use the fuel tax for a reference point more than saying, well, if we're putting money into the fuel tax, we're taking it out of there.

It's partly around setting a precedent, if I understand from the arguments and discussions that we've had about using dedicated taxation. As a reference point, it's fine. If a person isn't plagued by precedent, then there is no problem in saying that it's a dedicated portion of the fuel tax.

º (1635)

[Translation]

Mr. Mario Laframboise: Did you calculate what your needs would be according to a long-term strategic plan? Have you evaluated the needs of your integrated transportation network? Have you an idea of what your long term needs would be?

[English]

Mr. Harvey Brooks: As a department, we certainly have a long-term strategic plan that outlines our three-year capital plan or five-year strategic direction, and a notional idea of where we go in ten years. A lot of that takes into account a lot of uncertainty around air access and our hopes for more presence of multi-model facilities within the province and some direction with regard to our northern access programs.

We have worked quite steadily with our Council of Western Provincial Transportation Ministers and other groups across the country and we feel reasonably comfortable. Funding in the neighbourhood of 20% of the federal fuel excise tax is reasonable and would accomplish most of the goals and objectives that we're laying out for ourselves. That type of funding would address the infrastructure deficit that we're facing, both in terms of just maintaining the current infrastructure, which is a large capital requirement, and also allowing the extension and building of new capital projects, which all of society is demanding at this point.

[Translation]

Mr. Mario Laframboise: Could a fair participation by your province bring in half of the investments?

[English]

Mr. Harvey Brooks: The ultimate number we're looking at would require provincial participation as well in that 20% box.

Hon. Mark Wartman: Suffice it to say as well that in terms of actually building the system, it would be important that we maintain the current levels that we are using for transportation infrastructure investment. Then what was coming in for a national highway system would be incremental to that.

[Translation]

Mr. Mario Laframboise: How many million dollars does this 20 per cent mean for your province?

[English]

Hon. Mark Wartman: About $50 million a year.

The Acting Chair (Mr. Roger Gallaway (Sarnia—Lambton, Lib.)): Thank you, Mr. Laframboise.

Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Welcome, Mr. Minister and Deputy Minister Brooks.

Sorry, I was thinking it was going back across the way and I wasn't expecting to be on for a minute or two.

I did want to pick up on the dedicated tax that Mr. Laframboise mentioned. Maybe it is a question of semantics, but Mr. Martin did indicate over the weekend that this was something he was looking at. I was struck by that and with your presentation today.

As you know, Saskatchewan has relatively few cities in the province. Dedicated fuel tax or a portion thereof that would go to cities, which is the way I read the news story, would probably impact negatively on a province like Saskatchewan, unless there was a commitment that rural municipalities got rolled into that somehow. Do you have any initial thoughts about that?

º (1640)

Hon. Mark Wartman: There are a couple of aspects of that I would want to consider.

There certainly would be a need for support for the rural municipalities, because so much of our heavy traffic runs over roads. We've had not just tremendous luck, but tremendous cooperation, in working with the rural municipalities setting heavy-haul routes alternate to the thin-membrane highways. We're trying to upgrade those highways, particularly the ones that are major corridors. I would hope that there would be significant consideration that this funding would also be supportive of rural municipalities.

I think also a recognition that the federal government's directly funding municipalities is a pretty significant change in the way our governments operate. Generally municipalities have been funded by provincial governments. I would want to put some caution flags around that because of some of the administrative aspects that I think you rightly point to.

The other piece is that we have also found a fairly high level of cooperation with our major cities around not only the maintenance but the building of connecting roadways around those cities. We have partnered with them on bridges and major bypasses over the years. We are continuing to talk and work in partnership with them.

I can see some pluses to it, but there would also be some cautions. If it was primarily focused on urban centres, or if it was a population-based analysis, it might not meet the needs as aptly as it should.

Mr. Dick Proctor: On rail transportation, Mr. Wartman, I was struck with what you were talking about, having the same rules and regulations for the possible abandonment of rural sidings versus those located in urban areas. I think I heard you say that we also wanted a different timeframe. I think you said it's currently 60 days. What would it be if we were to go to the urban one?

Do you know that, Mr. Brooks?

Mr. Harvey Brooks: No.

Mr. Dick Proctor: No, okay. While they're looking at that, tell me, where do you think we are with hopper cars right now? There has been a proposal in the works for some time that the federal fleet of hopper cars be turned over to the FRCC. Do you have an update on that? Have you been in touch with the federal minister?

Hon. Mark Wartman: We have worked fairly closely with the group called the Farmer Rail Car Coalition. We also have almost 1,000 provincial cars that the Saskatchewan Grain Car Corporation administers. The corporation has been supportive of the Farmer Rail Car Coalition in their bid for the federal cars. The recognition is that these cars, from their perspective--and we support them in this--have basically been paid for by the producers. They are looking to administer and upgrade these cars, which will, from their analysis, provide a better return to the producers. There is some recognition that the cars need to be upgraded and they have plans for doing the upgrading as well.

There were concerns raised--and some of you may have been part of the discussions--about the possibility of trade action being taken by the United States if the cars were sold for a nominal fee. Basically we recognize that history has been pretty clear that whether the cars are given, sold, have changed hands or not, the United States is going to take trade action whenever and wherever it can, and this is one more reason for it to take trade action. The United States may or may not do it, but with a fully accountable system, with accurate record keeping, we believe that, whether the U.S. takes action or not, a case can be made. We believe that the position of the Farmer Rail Car Coalition is solid and they can and should have the opportunity to administer these cars on behalf of producers.

º (1645)

Mr. Dick Proctor: Is this threat of trade action from the United States one of the reasons, in your opinion, this decision-making process seems to have slowed to a crawl on this issue? We've been expecting an announcement on this for many months now and it has not happened yet.

Hon. Mark Wartman: It's one of the factors that were raised. I believe there are other factors that are playing out.

Mr. Dick Proctor: Just a quick question. What is the Government of Saskatchewan's position on a passenger train through the southern Prairies? As you know, it has been 13 years and counting now since we've had a train that ran through Moose Jaw and Regina and on to Calgary. Does your government have a position on that?

Hon. Mark Wartman: Yes. We've been supportive of the reinstatement of southern VIA Rail. We've written letters to the minister on that issue. Hopefully with the ever-expanding economy, with development of the tourism industry and the response that we have been getting to the Our Future is Wide Open program, it is our expectation that we will see more traffic. If we can facilitate the movement of people through a southern VIA route, I would like to see that happen.

Mr. Dick Proctor: I have a short question.

The Chair: Very short.

Mr. Dick Proctor: On the four-lane highways at each end of the province, I travelled to Winnipeg last week and I noticed that there seems to be good progress being made. What about on the western side? What is the projected finish date for both ends?

Hon. Mark Wartman: We anticipate the western side being done this season. At the end of our road-building season, you should be able to run straight through to Calgary at 110 kilometres per hour. The eastern side of the province will be finished in 2007, as will the Trans-Canada number 16 in the north end from Saskatoon through to Edmonton.

The Chair: Thank you, Mr. Proctor, for those questions.

I am supposed to go to Mr. Assadourian, but with his permission, Mr. Gallaway has indicated that he has an appointment at 5 o'clock and wants to ask questions for about three minutes. Would you mind?

Mr. Marcel Proulx (Hull—Aylmer, Lib.): On a point of order, what is the schedule for this afternoon, Mr. Chair? Are we going until 5 p.m. with these witnesses?

The Chair: Yes, and from 5 p.m to 6:30 p.m., in camera, we should address some issues that have happened in the last little while.

Mr. Marcel Proulx: My question is, are these witnesses with us until 5 p.m. only?

The Chair: Yes.

Mr. Gallaway.

Thank you, Mr. Assadourian.

Hon. Mark Wartman: Our schedule following this meeting is very flexible, so if there are other questions and it's your will that we stay a little longer, we're willing to do that.

The Chair: Thank you, Mr. Wartman.

Mr. Gallaway.

Mr. Roger Gallaway: I think the minister just answered one question. You can't get out of here and back to Regina in an evening. Is that correct?

Hon. Mark Wartman: I'll be getting up at 4 o'clock, which is 2 o'clock my time, and our Harvey will be dragging me to the airport around then.

Mr. Roger Gallaway: I have a couple of questions for the minister, and we're very pleased you're here.

You could say we're having our own consultation here today because we've heard a lot from department officials that they were out consulting.

You've mentioned the Canadian Transportation Act Review Panel, and as you know, there were some other mechanisms prior to that. But one of the matters that we've been hearing about, and you confirmed it again, is that there are provisions in this bill that appear to have emanated or appeared out of who knows where. You mentioned your counterparts, the council. Did you have conversations with the federal minister and/or his officials with respect to what you saw should be included in this bill?

º (1650)

Hon. Mark Wartman: It was really one of the concerns that we had.

From the very beginning, an issue of great concern and one of the points that were raised by the council of ministers from across the nation when we met in Winnipeg--and for me as a representative of Saskatchewan--was that we were not really treated as partners in the nation in trying to build a unified and strong transportation system. We were treated as a stakeholder out there and not consulted except for closed sessions and informed late in the day as to the direction that things were going.

That being said, we did try to make our concerns known through communications that we, as ministers from across the country, delivered in our document, Partnering for the Future - A Transportation Vision for Canada, and also in letters and communications from the western council and from individual ministers as well. But in terms of any kind of clear and full consultation, it simply was not there.

Mr. Roger Gallaway: Okay, I want to recap what I think you just said.

Would it be safe then to say that either the council of transportation ministers or you as minister of transportation in Saskatchewan would not have had the opportunity to put forward, either to the federal Minister of Transport or his deputy or whoever was charged with this task in his department, a comprehensive made-in-Saskatchewan point of view that encompassed all of the things that you've talked about today? Or was it simply by letters, bits and pieces, addressing one sector or one factor?

Hon. Mark Wartman: We prepared two very detailed papers making our views known to the CTA review panel, and there was a third, a response to their recommendations as well.

Mr. Roger Gallaway: Would you say that Bill C-26 reflects your position or the position of your western colleagues?

Hon. Mark Wartman: It is on some, but not on others. In the presentation I tried to point to those areas where we felt that it was and areas that it wasn't.

Mr. Roger Gallaway: One final question. You've raised something that many members of this committee feel strongly about, and that is a national highway program. Do you foresee this as a partnership between the federal government and the provinces? Or do you see this following the American style, where 50 years ago President Eisenhower declared certain roads to be federal roads, federal highways, and therefore co-opted, taken over, expropriated, or whatever the term was, by the federal level of government?

Hon. Mark Wartman: Primarily, we see it as a partnership. The reason for that is that there must be mechanisms for maintaining as well as building. So there are aspects of partnerships simply inherent in putting a national system together.

I'd have to say, having had the opportunity as a minister for two years now to struggle with budget issues, it would be awfully nice not to have to pay the 50¢ dollars if we were guaranteeing that our part was still going to be put in there. Having said that, we see the value of a good transportation system and therefore would struggle to meet those demands in a partnership because we know that this will help build the economy of the nation.

Mr. Roger Gallaway: Thank you.

The Chair: I want you to know, Mr. Wartman, that I'm not familiar as much as I should be with respect to how the House in Saskatchewan operates, but this committee had every intention of going through the consultative process in some depth. It was on our agenda. I don't know how your House leader operates, but ours chose not to approve the budget to allow the committee to cross Canada on this very important piece of legislation. That's why we're sitting here today in Ottawa, rather than listening to a lot of your colleagues in the west.

Mr. Assadourian.

º (1655)

Mr. Sarkis Assadourian (Brampton Centre, Lib.): Thank you very much.

I, too, want to join my colleagues in welcoming you to sunny Ottawa. By the way, I'm a new member on this committee; I'm a substitute.

My first question is this. In your point of view, do you think this bill removes any provincial barriers we have because transportation is a main component of provincial trade? Would this bill remove any of those provincial barriers, if there were any?

My second question deals with border crossings. We hear so much about border crossings in Ontario and Quebec. We never hear anything about the west or Saskatchewan. Can you brief us or give us any news on whether this will have any impact on transportation issues between the Canada-U.S. border crossings?

Hon. Mark Wartman: We've been working to get a harmonized transportation system across the nation. We're working on harmonized weights and taking down whatever barriers we can. We do this as a western council, but we also do that more broadly when we meet as council ministers from across the nation. We don't really see that addressed in Bill C-26 in any significant way. It is something we are working on, and we've had cooperation as we've worked at that.

Harvey will answer the second question on border crossings.

Mr. Harvey Brooks: We have had our challenges with border crossings as well. Saskatchewan's border crossing at North Portal, just looking at highway traffic, is the tenth busiest border crossing in Canada. When you consider both rail and highway traffic, it is number five. It is one of the border crossings that will receive designation under the FAST treatment to enhance the speed of the border crossing. We're very happy for that.

When traffic is moving more in an easterly direction, it moves through Highway 1 to Winnipeg and south through the Pembina crossing. That has certainly been congested as a result of the ongoing security actions at the border.

For product that's moving to the west coast or western U.S., it can go via Highway 1 through to Highway 2 in Alberta and down through the Coutts border crossing. That has been a subject of congestion, but also the subject of some non-tariff barrier on the primary products side as well for some period of time. But certainly we have the capability to move our product into the United States.

Most of what you would have heard about our products having problems getting to the export market would have been affiliated with our west coast ports, which are a very critical link for us in terms of reaching our end-use customer. Aside from the last two years with drought-reduced crops, those ports have certainly had their challenges in keeping up their capacity to handle the volumes that we would like to see moved.

Mr. Sarkis Assadourian: We have been told many times in the past that we have more trade barriers between provinces than we have between Canada and the U.S., especially after free trade. Wouldn't this be a good opportunity for Saskatchewan and for other provinces to come up with some sort of solution to provincial barriers concerning ground or rail transportation? I don't know if you have done that or not.

» (1700)

Hon. Mark Wartman: One of the areas on which we have been working very diligently with the Council of Western Provincial Transportation Ministers is breaking down any barriers that exist. I think we have made some significant strides to date and will continue to do so. In terms of Bill C-26, at this point there is nothing that directly applies to harmonization.

The Chair: Mr. Gouk, you have two short questions.

Just before that, Mr. Brooks, regarding that undertaking that we had on the highway system, could you give us as much information as possible on North Portal and on the type of access you have there? I don't think there are any water crossings there, are there?

Mr. Harvey Brooks: No.

The Chair: What kind of facility is there and what kind of facility is on the other side in North Dakota? Are there two lanes or four lanes? That would be very helpful to the committee.

Mr. Gouk, then Mr. Laframboise, and then Mr. Proulx.

Mr. Jim Gouk: Mr. Chairman, I have two fairly short questions regarding rail. There's no reason for them to be long.

You talked earlier of getting value for the money the people of Saskatchewan spend. VIA Rail, of course, runs through Saskatchewan and since 1993 has cost Canadian taxpayers approximately $10 billion—just shy of that—which works out to about $10 million per riding. With 14 ridings in Saskatchewan, that means proportionately the taxpayers of Saskatchewan have paid $140 million for the operation of VIA Rail, aside from any fares that are paid.

Do you believe that is good value for the province of Saskatchewan, looking at it from that perspective, given the availability of long- and short-haul air carriers, buses, and other modes of transportation?

Hon. Mark Wartman: In terms of value, it is very important to note that there are certainly other investments that would give us a quicker and better return. Over the long haul we would hope that if in fact the decision is to continue to run VIA Rail and to run it through the provinces, we'll see an increase in traffic, which, of course, will mean that we are getting a better return for the investment. But it's the long haul where we hope to see that return. In terms of priority of investment, I must say that the return is not there on VIA Rail that we would see in other areas.

Mr. Jim Gouk: On the other point that you brought up in terms of competitive access for shippers, that is certainly a big factor. We hear both sides of that story. We hear from one side, the shippers, that they want open access and ideally would like to have that on a very cheap, no-cost basis. We hear from class one carriers that they have a business to protect and an infrastructure that they have developed. They want to see the cost and they want to see protection.

You have suggested that you want access for your shippers. Does the province have any kind of formula or dollar figure in terms of the remuneration of class one railways for that access? Do they think it should be free? Do they think it should be high end, or do they think it should be based on a formula? What kind of balance, if you have one, do you see between the needs of the shippers and the needs of class one railways?

Hon. Mark Wartman: I would reference again the decision the CRTC made on SaskTel, where SaskTel was basically ordered to allow other providers to use the infrastructure that SaskTel had developed. A formula was worked out within the system that the providers would have to pay for the use of that infrastructure. The other providers were also able to solicit customers along that infrastructure. In terms of examples and in terms of federal decisions, I think that probably would be the best parallel we could get.

So when we're talking about this, of course the class one railways would like to retain their almost exclusive control, but we believe a more competitive environment really will, and we've seen examples where it leads to better pricing and return to the shippers and producers.

What we're saying is that we're not presenting the formula in terms of the costing, but we know a formula can be arrived at for use, we believe, in a competitive structure. We've highlighted a number of components that would need to be in that kind of structure. We believe it will be healthy overall for the transportation system.

» (1705)

Mr. Jim Gouk: Would you look to the CTA to provide that formula, or who would provide it?

Hon. Mark Wartman: Go ahead, Harvey.

Mr. Harvey Brooks: I would say the type of notion that was put forward by the CTA review panel is not the type of remuneration that we would see as acceptable, because it would remove all the incentive that would be there in terms of an ultimate service provider.

I think the type of formula we would look at is one that remunerates the provider of the capital stock with a return to his equity investment, a return to profit,and a capability to maintain and sustain the capital base that's there. As long as that is a reasonable and well worked-out concept and the people are satisfied that it is the remuneration that's being provided and not something--

Mr. Jim Gouk: If I may--because I know time is very short--if you don't like the proposal the CTA made and you don't have one yourself, who is going to come up with this?

Mr. Harvey Brooks: We did put a proposal forward on that to the CTA and absolutely included all those aspects in it. The one that came back from the review panel in terms of a recommendation included all the opportunity costs that the railway owner would have enjoyed had he been exclusively running that.

The Chair: Would you undertake to provide that table?

Mr. Harvey Brooks: Sure.

The Chair: Thank you very much, Mr. Brooks.

Thank you, Mr. Gouk.

Mr. Laframboise.

[Translation]

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

In your answers to our questions and in your presentation, you mentioned the fact that provinces invested between 86 and 100 per cent of their gasoline tax in highways. I know that in Quebec, it was 96.7 per cent last year. What was the percentage in your province in your last budget?

[English]

Hon. Mark Wartman: Directly it's about 93%, but over an above that, we do have additional funds, like the centenary fund and the transportation partnership fund, which also go into highway development and costs.

The Chair: Thank you, Mr. Laframboise.

Mr. Proulx, who will be the last questioner.

Mr. Marcel Proulx: Thank you, Mr. Chair.

Thank you for appearing here in Ottawa today.

You talked about interlining. Am I to understand that you've got opposition to interlining from companies in your province?

Hon. Mark Wartman: As for the companies that operate in our province, WestJet certainly is not keen to interline.

Mr. Marcel Proulx: Do you have smaller companies in your province?

Hon. Mark Wartman: Some of the smaller airlines that originate in Saskatchewan have not indicated any problems with interlining.

Mr. Marcel Proulx: No, of course not, and that's why I was asking the question. How many small airline companies do you have in Saskatchewan, and what's their position? Did they let you know what their position is on this?

Hon. Mark Wartman: We've had discussions and they are not opposed to interlining.

Mr. Marcel Proulx: They are not opposed.

Hon. Mark Wartman: They are not opposed.

Mr. Marcel Proulx: Can we talk about running rights? It's my understanding that you would want to expand running rights. Are you not concerned that expanded running rights might have an adverse impact on the viability of the national system?

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Hon. Mark Wartman: No.

Mr. Marcel Proulx: None whatsoever?

Hon. Mark Wartman: No.

Mr. Marcel Proulx: If there were negative sides to expanded running rights, wouldn't this be of concern to the shippers?

Hon. Mark Wartman: If it were a matter of the national railways having to give up the use of their infrastructure, that would be one thing, but in terms of viability, when we talk about a formula for use of the infrastructure, it has to take account of the cost of providing that infrastructure as well.

The same arguments could have and probably were made when we were talking about the telecommunications infrastructure, but we found there that our telecommunications company was able to remain competitive and has continued to remain very healthy.

We do believe that the rail carriers would also remain healthy and we think that shippers would actually benefit from some greater competition.

Mr. Marcel Proulx: What about short line rail development? Are you not afraid that expanded running rights would have an adverse effect on the development of short line rail?

Hon. Mark Wartman: First of all, short line rail companies generally are on tracks that the main lines have abandoned and have not had use for. They operate in a different and more efficient way.

If the main lines decided they wanted to compete directly and have a joint running right, a right to run on the short line, they would have to compete. I think the short line would also have to show that it would not be in the public interest for them to do that. According to our proposal, there's a reverse onus provision that we put in there in terms of joint running rights. So they would have to make a case. For the main line to come on to the short line, they'd have to be able to show that it was not in the public interest to do so.

Mr. Marcel Proulx: Are you aware that no existing short line railway wants or advocates expanded running rights? Are you aware of that?

Hon. Mark Wartman: No, I was not aware of that. In fact, counter to that, we have heard that they would like to see joint running rights. We have had Ferroequus and Hudson Bay Railroad both apply to the CTA for joint running rates.

Mr. Marcel Proulx: Really? Okay.

One of the concerns expressed by the Canadian government about running rights is the chill that such a provision might have on future investment in rail infrastructure. The fact that you think there should be expanded running rights...how do you think this would address the investment question?

Hon. Mark Wartman: I think the railroads, if they reflect on their own history and life in relationship with rail transportation in the United States, where they themselves have applied for and received joint running rights and it has not killed the companies that are down there, they would recognize that the competition is healthy and it might make them even more efficient. So I'm not sure I'd buy into their chill. I think it's an attempt to pressure and continue to maintain a monopoly on rail transportation and limit competition.

Mr. Marcel Proulx: One last quick question, Mr. Chair.

Are you aware of any businesses in Saskatchewan or elsewhere that have been forced to close primarily because of high rail freight rates or of poor rail service?

Hon. Mark Wartman: Most recent was the Naber Seed and Grain Company in Melfort. Well, that's most recently. We'd have to check and see. I don't have them in my head, but absolutely we can.

Mr. Harvey Brooks: I think the point on Naber Seed is that it appealed to the CTA on several different occasions to try to get an enhanced level of service from the class one railway. By the time it ultimately was successful in proving the case that it had suffered financially because of the lack of attention to service, it essentially was in bankruptcy proceedings.

Mr. Marcel Proulx: Can you report through the clerk any other situations or similar situations?

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The Chair: We will take that, Mr. Brooks.

Ms. Yelich, on a very short question.

Mrs. Lynne Yelich: Yes, just one quick question. How much federal fuel excise tax is collected in Saskatchewan for your highway?

Hon. Mark Wartman: Road-based net federal fuel tax, and I say net because you get GST rebates, etc., would be $250 million a year.

Mrs. Lynne Yelich: Provincially?

Hon. Mark Wartman: Provincially, $290 million to $300 million.

Mrs. Lynne Yelich: Is that right? What goes back into the province's highways per year?

Hon. Mark Wartman: Directly we are now investing the equivalent of about 93%, plus we add to that. Right now we'd be closer to 100% with the other additions, with centenary fund investments and the others.

Mrs. Lynne Yelich: Thank you very much, and thank you again for coming.

The Chair: Thank you, Ms. Yelich.

On the agenda we had, after the witnesses we were going to move in camera. I should explain to the members of the committee that this was put on the agenda because we thought the Speaker of the House would be rendering a decision at 3 p.m. today with respect to an issue our House leader raised after we submitted our report on the estimates. Quite truthfully, that decision will dictate whether we have any further meetings, which is why I put on the agenda that we will consider whether we should have any further meetings.

I'm not going to speak any more, but we will have to consider that after the decision is made.

Mr. Jim Gouk: Are we going in camera now, though, Joe?

The Chair: No. The decision, I understand, will now come down at 10 a.m. tomorrow. We will review the decision and then the decision will be reviewed by the committee at it's Wednesday meeting, if that meets with everyone's approval. Therefore, we'll go ahead with the witnesses as called on Wednesday, but we'll refrain from calling any other witnesses at this point in time or having any further meetings until we meet in camera as of Wednesday.

Does that meet with everyone's approval? Mr. Proulx.

Mr. Marcel Proulx: Do you know who the witnesses are on Wednesday morning, Mr. Chair?

The Chair: Yes, on Wednesday we have Mr. Bélanger, Greater Toronto Transit Authority. Is that the airport? Greater Toronto Transit Authority, Rail Services. West Coast Express, Air Canada Jazz.

What are you doing to us here, Georges? Please, we worked until midnight last week. We are not going to do the same this week.

Mr. Marcel Proulx: I'm sorry, but I still don't know who are the witnesses.

The Chair: I have just read them to you, Mr. Proulx. The witnesses are the Saskatchewan Association of Rural Municipalities, Air Canada Jazz, West Coast Express Limited and SkyTrain, Greater Toronto Transit Authority.

We can't hear all those guys. That is the list as it is now. We're not sitting beyond 5:30 p.m.

Mr. Marcel Proulx: Is that a two-hour meeting on Wednesday?

The Chair: It is a two-hour meeting on Wednesday. We will readjust that schedule.

Mr. Marcel Proulx: On the same question, what happens this afternoon to the discussions in regard to the motion of Mr. Keyes and the budget for witnesses' expenses on Bill C-26? Are you sending all of that to Wednesday?

The Chair: Yes.

Mr. Marcel Proulx: Thank you.

The Chair: Just to conclude, I want to thank you, Mr. Brooks and Mr. Wartman. It has been an extremely helpful intervention you have made today.

One of the things I got out of the witnesses as a result of Mr. Gouk's questioning--and it's something this committee has never addressed--is that with the amount of money that's being invested and subsidized by the taxpayers of Canada on passenger rail service in this country, I don't think the question was ever asked of provincial transport ministers that, as necessary as people think rail passenger service is, is there an alternative that you would rather have in the priorities of expenditures?

I think that is the first time we've ever heard that evidence. That is worth pursuing.

As you know, Mr. Wartman, with limited financing you're going to do the very best you can. I thank you very much for that.

I also thank you and Mr. Brooks for something much more important. You've put forward Saskatchewan's position very forcibly to this committee and the consultative process on what we're trying to do with Bill C-26. More important, throughout the whole presentation you not only put forward Saskatchewan's position, but you put forward all of Canada's position. You talked as a country. I thank you both for having that perspective. Thank you for coming.

Mr. Gouk.

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Mr. Jim Gouk: I agree with what you're saying with regard to the Wednesday meeting and the indecision we have. That notwithstanding, I would like to point out that I'm not even supposed to be here today; I'm supposed to be at home, sick. I came in because this was the third time we had scheduled in camera future business so we would have some sense of what we're doing, notwithstanding the constraints you mentioned. It's the third time that I've left the meeting without knowing what our future business is.

The Chair: I apologize for that, Mr. Gouk.

Mr. Jim Gouk: No, no, I understand the constraints, Joe. Because we don't even have a quorum here, I'm going to suggest that next time, no matter what, we talk about future business, subject to it being changed if something different comes up. At some point I've got to have some sense of what my schedule is going to look like and the things I need to prepare for in order to be effective at this committee.

The Chair: At the same time, Mr. Gouk, can we implore the clerk to take into consideration that we can't hear eight witnesses in one day from 3:30 to 5:30 p.m.? Maybe we could look at that as part of our future business.

Can we handle that, Mr. Clerk?

I appreciate these comments.

The meeting is adjourned.