EVIDENCE

[Recorded by Electronic Apparatus]

Monday, September 30,1996

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[English]

The Chairman: Everybody is here. We have a quorum. Let us get under way.

Welcome. The first presenters of the day are from the Fraser port.

Gentlemen, you have a half an hour. I'm going to attempt to keep things moving along. We have a number of presenters before us today. Kindly confine your remarks to about 10 minutes and give the members of the committee an opportunity for questions. Mr. Jones.

Mr. Mike Jones (Chairman, Fraser River Harbour Commission): Mr. Chairman and members of the committee, thank you for this opportunity to present the Fraser River Harbour Commission's submission on the proposed new national port policy and, more specifically, Bill C-44.

First, I will speak to the general topic. Second, Mr. Pearce will address the specifics. Third, we will pass to you our comprehensive written report for your later study.

Mr. Chairman, we are duty-bound to advise you that there are provisions in the bill that will increase the cost of operating ports and others that will lower their effectiveness. Those provisions, therefore, impede rather than aid the growth and prosperity of jobs in Canada. They are counter-productive. They do not energize; they burden. They will further tilt the field in favour of the United States ports with which we must compete.

When compared to the Harbour Commissions Act, Bill C-44 and the new marine policies are regressive insofar as their effects upon Fraser port. When the review of marine policy and legislation all began, we saw little wrong with the Harbour Commissions Act under which we operate. We were, and we remain, financially self-sufficient. Our board elects the chairman. All board members are part-timers. We have excellent community relations. The nine municipalities bordering our jurisdiction appoint two of the five members of our board. We are not burdened by a central bureaucracy in Ottawa, and while approvals are necessary from Ottawa for capital borrowing, we are virtually autonomous.

We are not aware of any complaints or any public controversy anywhere that recommend any change to the management style, legislation, or operations of Fraser port. In fact, the reverse is true. We believe that we have earned considerable respect for the federal port system under which we operate.

However, we did understand that the system of national ports and harbours cried out to be rationalized. That was because of the hundreds of ill-defined harbours and the complicated Canada Ports Corporation.

So we participated in all the proceedings leading up to and including the committee's last review of this matter. When its report was released, we were impressed. We could see in the recommendations that many aspects of our reporting system would be improved. We would have more autonomy, but the best of what we have under the Harbour Commissions Act would remain.

We saw many positives in the SCOT report. There was only one serious discordant note. This was the proposal to download the cost of dredging on the port, which would have devastating consequences to our bottom line. And any efforts we might make to collect it back from our customers would simply drive business away. But I emphasize that we were largely pleased with the SCOT report.

What is distressing to us now is how far Bill C-44 has wondered from the SCOT report. What was to remain of the Harbour Commissions Act has gone or been seriously compromised. This bill bears little resemblance to what this committee proposed. While the SCOT committee was sensitive to the delicate business considerations that must parallel any structural change, Bill C-44 could do great damage to Canada's ports and international trade.

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So, Mr. Chairman, we arrive at the current situation. The whole intent of this process was to create additional autonomy and less bureaucracy, and to put the ports on a more businesslike foundation consistent with a competitive environment. In fact, for Fraser port Bill C-44 lessens autonomy, increases bureaucracy, and adds many additional financial burdens that will make us both less competitive and inconsistent with international port practices, especially those of our U.S. competitors.

Regrettably, I must state emphatically that insofar as Fraser River Harbour Commission is concerned, Bill C-44 and the related new marine policies will hinder our effectiveness as a catalyst for the growth of Canada's economy, jobs and prosperity.

Mr. Chairman, I will now ask Rick Pearce to continue with our presentation by illustrating with specifics what I have just stated.

Mr. Rick Pearce (Port Manager and Chief Executive Officer, Fraser River Harbour Commission): I'm pleased to have this opportunity to present the rest of Fraser port's verbal presentation on Bill C-44.

I'm going to be referring to some slides illustrated in the front of the booklet that was handed out to you. Were there no papers distributed? We can use the slide information as well.... I will speak to the following issues: agency status, capacity and powers, taxation, governance, stipends and competitiveness.

As for agency status, our port serves international, national and provincial hinterlands. It is a key element in the nation's trade. As such, it is not a local entity and therefore requires a clearly defined federal authority to discharge these obligations. As Canada is an exporting nation it should not subject its national ports, which have recently escaped from an Ottawa bureaucracy, to a local one.

Addressing capacity and powers, while Bill C-44 urges ports to be financially viable, it imposes severe restrictions upon the kind of business we could do. Subclause 24(2) restricts port authorities to activities directly related to shipping, navigation, the transportation of passengers and goods, and the handling and storage of goods. This provision prevents the port from using its land for viable transportation-related industrial and commercial uses. This restricts the port's ability to earn revenue that would contribute to its financial self-sufficiency.

In the written part of our submission we deal with how the right to be more flexible would not be abused. You will see in the appendix to our brief the remarks of a respected American consultant, Professor Tom Dowd, who describes subclause 24(2) of Bill C-44 as ``...among the most restrictive port authority legislation'' he has ever seen. It is also ironic that despite a stated intent of making ports more autonomous and more businesslike, most independent observers see this bill moving diametrically in the other direction.

The bill is silent on taxation matters, and this void invites future problems. Perhaps it is not well known that the lessees of Fraser port pay full municipal taxes as well as corporate taxes. The issue concerns only land that we have not leased.

We have a policy of negotiating payments for services with our municipality. This is what SCOT was referring to in the earlier recommendations. Should Fraser port have to pay grants in lieu of taxes it would have an impact on our last year's net income of over 165%.

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On governance, often referred to as port boards, we take great pride in the fact that our port operates efficiently with 30 employees, management and staff combined. They report to a five-member commission, two of whom are appointed by the nine municipal governments along our jurisdiction.

We believe that expansion of the current board is unnecessary. Because of the variations among the ports, we recommend that the board contain a range of board sizes so that each port may adopt what is suitable. We believe the range to be from five to eleven. We further believe that no group should form a majority of members. We have prepared table 4, which is on the screen and also in front of you, as showing one example of how the seats could be allocated. You'll notice in each instance that no one group has a majority. They'll have a plurality, but they will not have a majority.

On the matter of stipends, Bill C-44 calls for a stipend on the port's gross revenue, irrespective of their financial help. We believe this priority lien on port revenues will have the following impact. It will seriously affect our credit rating, thus increasing the cost of borrowing. It will impair our ability to finance future capital projects by having to borrow greater sums. And all of the above will seriously affect our financial self-sufficiency.

We are not opposed to some form of dividend on net income rather than on gross earnings, providing it is related to the ability of the port to pay. Also, the ministry should maintain the ability to waive payments when a port experiences adverse financial situations.

On competitiveness, Mr. Chairman, we wish to show you two tables. The first table is table 1. It shows you the taxes collected by United States ports from the residents - I underline the word ``residents'' - and businesses in their respective port districts. All of these are within our competitive area.

You will note that at least one port has nearly 50% of its net income from taxes collected; all the others are well above that. In fact, in the case of Bellingham, it is 150%. Seattle is 132%. Portland is 111%.

While we are not looking to collect taxes from our local residents, your committee must realize the severe competitive disadvantage at which we and the other ports are put from the suggestion that we should pay grants in lieu of taxes, or even fees for service, when our competitors are collecting. I believe that slide will speak for itself.

Mr. Chairman, time does not allow me to cover in detail the macro situation in the United States, in which their national government assumes major costs in channel maintenance and provides massive aid in other areas. Secretary Peña mentioned that during his speech to the American Association of Port Authorities two weeks ago here in Vancouver.

Also, Mr. Chairman, there are decided advantages that the U.S. enjoys in taxation and other areas when one considers the seamless transportation system. This item is covered in far greater detail in our written brief.

The next table, table 3, gives the picture of the annual cumulative financial impact of Bill C-44, coast guard downloading, and the cost recovery on the eight federal Canada port authorities, as contained in Bill C-44. As you can see, all eight ports will be impacted negatively. Of the eight, five are not likely to remain financially self-sufficient, and the sixth is marginal. The only way Fraser port will be able to deal with some of the cost items mentioned above is that they will have to be phased in over a considerable period of time.

I'd like to briefly summarize the recommendations contained in our written submission.

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One, payments to municipalities by ports must be through a negotiated fee-for-service arrangement, as it was originally suggested by SCOT.

Two, ports must be able to pledge assets in support of capital development plans.

Three, parity must be rigorously sought between Canadian and U.S. ports relative to taxation, borrowing powers, dredging, and the framework for property development and management.

Four, any payment to the minister must take into account the port's ability to pay. Any calculation must be on net income, after all other port obligations are met.

Five, the federal government must honour the current channel maintenance agreement between Fraser port and the Canadian Coast Guard, while negotiating a new agreement.

Six, subsection 15(2) of the Pilotage Act must be repealed to reduce the cost of pilotage to the Fraser River user.

Seven, each port must retain the authority to establish what levels of policing are necessary for its purposes.

Eight, Bill C-44 must be amended to provide the ports with more latitude in their business opportunities, especially as they apply to transportation-related undertakings.

Nine, ports must be recognized as national economic engines and must be accorded the status of the agent of the Crown. Ports must not be subject to the Financial Administration Act either.

Ten, board size should be from five to eleven and no one group should have a majority on the board.

Our comprehensive brief contains these and other recommendations, and in appendix B we suggest specific language that would greatly improve the bill. Some of the people involved in the new marine policy seem to fantasize that we could simply pass on the increased costs to our tenants and customers. This is not so.

Mr. Chairman, we have touched on the highlights of our presentation only because of the time limitation. After you and the members have had an opportunity to read our detailed presentation, which we have made available to you, we will be very pleased to answer any questions or to prepare any further materials if you so wish.

I would, however, like to leave you with these thoughts. We believe that Bill C-44 should be redrafted and that if this is not possible it should be referred back to the minister for further work.

Mr. Chairman, we also want to leave you with a real sense of the threat being posed to Canadian ports by the U.S. ports and a sense of the implications of this threat. If Bill C-44 is implemented as proposed, we are of the opinion that should this bill lead to certain ports becoming financially non-viable and thereby lost to the system, their capacity will be absorbed by the United States. This will create a Canadian dependency on the U.S. transportation system for Canada's international trade and, indirectly, a national dependency on the United States.

Our final submission, Mr. Chairman and members of the committee, is that this boils down to the loss of well-paid, family-wage Canadian jobs at a time when the nation can ill afford it. Thank you.

The Chairman: Thank you, Mr. Pearce. Your minutes here in Vancouver must be longer than ours in Ottawa.

Some hon. members: Oh, oh!

The Chairman: Mr. Crête.

[Translation]

Mr. Crête (Kamouraska - Rivière-du-Loup): Thank you for your presentation. The document you gave us has a lot of interesting material and will have to be analyzed in detail.

You also raised points that, curiously, the minister himself also raised early last week at our committee's meeting in Ottawa. Mr. Anderson raised certain questions that could bring about changes in Bill C-44 and in that sense, what you are suggesting could be very useful to us especially concerning taxation services. The minister had a question similar to the one you're answering and another one on port activities.

I'd like you to give us some examples of activities that go on in your port and that are not directly tied in to its operations and that aren't part of a port's traditional, basic functions.

Perhaps you could also come back to parity with American ports to put a bit of meat on the bone to build a tighter argument. The picture is very significant, but I'd like you to give us concrete examples of your situation on that matter.

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There's a lot of material in your brief and in your presentation. You talked about implementing C-44 in stages. There would be certain amendments you could live with if they were staged in. How do you see that? Should the schedule be delayed for all ports and all authorities or would that depend on the kind of installation or whatever other criterion you might find relevant?

[English]

Mr. Pearce: Sorry, I may have missed a bit of your first question as I was trying to get this interpretation device to work, but if I understand it, you are asking what activities in the port would be affected should Bill C-44 come into play. In other words, what are we doing now that we might not be able to do in the future under Bill C-44?

In our port we have a very large automobile import operation. Because of this operation we employ, directly and indirectly, probably 2,000 people. This is an activity that would be precluded from our ability to do business under Bill C-44, under the present restrictions of subclause 24(2). We would not be able to do that business today. If we wanted to relocate the terminal to another terminal, which we have been thinking about, effectively, the way it's written down, we would be precluded from doing that business in the new terminal, because it's in a different location.

In other activities that are going on, we are doing distribution of cargoes that are not coming across the dock, that are going through port property, creating jobs for longshoremen, creating jobs for a lot of other people who would be impacted. We would not be able to do that.

All the revenues we earn from those activities go towards keeping the port financially self-sufficient.

On the item of parity with United States ports, maybe we can put the flag back up there with the taxes.

Two things. First of all, we're not looking to collect taxes. We're just asking that the taxes be taken into consideration when you're deciding what we're going to have to do here in Canada. But with other activities, dredging, for example, the United States Corps of Engineers dredges the channels for the ports and pays for 75% of that dredging. In Canada we're being asked to pay for 100% of that dredging.

The Corps of Engineers will do capital works. In our brief is a copy of Secretary Peña's speech to the American Association of Port Authorities, and he says right there that they are going to pay for the dredging, they are going to invest more in capital works, and they are going to support the infrastructure programs that move cargoes to and from the ports.

So these are the parity issues we're up against.

On the phasing in of Bill C-44, what I was talking about there was the phasing in of the cost items for us, such as the taxes and the dredging. If we were to get hit in one day we couldn't pay it, but if we could spread it over ten years we could do it.

The Chairman: Mr. Gouk.

Mr. Gouk (Kootenay West - Revelstoke): Thank you, Mr. Chairman.

First, I have about one hour's worth of questions. I'm going to try to compress them into a minute or two and hopefully you'll get back the same way.

First of all, about taxes, you talked about how you can't pay full taxes, as you mentioned, because they rent on a triple net basis. If the port starts a subsidiary business, does it pay taxes on that subsidiary business or is it an unused portion of the land base, as you've suggested?

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Mr. Pearce: That's not something I've given any consideration to. I suspect that if it were set up as a private company running as a subsidiary it would be a leased land situation and it would pay taxes.

Mr. Gouk: Right now we have CPAs, and you have to apply in order to become one. We also have regional/local ports. One of my concerns I mentioned in the SCOT report and in the small addition I made to it is that I think the port should pay a reasonable fee to the municipality so that supporting the port is not a cost imposed on the taxpayers. But by the same token, we should make sure the municipalities don't consider the ports a cash cow. I think it would be most palatable for everybody if no one particularly lost in this case.

The Canada Port Corporations are now paying grants in lieu. If we go to a fee for service, the municipalities who serve them may lose. On the other hand, technically the harbour commissions aren't paying anything. Some, like you, are paying negotiated fees on your own, and you have proposed that this be maintained. But then we'd end up with port corporations each handling things differently.

Have you given any consideration to or do you think there's any feasibility to having three levels of ports, CPAs for large national ports like Vancouver, regional ports like Fraser port and a number of others, perhaps Prince Rupert, and local ports, those that simply don't come under anything that anybody envisioned under the CPA? That way, the CPAs could pay grants in lieu as they have been paying, and the regional ports could pay a negotiated fee as some are doing now. Some may have to come up to speed, but only up to that level as opposed to grants in lieu of full taxes.

Mr. Pearce: That's an interesting question. As for being classified as CPA, we have been listed as one of the eight. We're the only harbour commission that has been listed in Bill C-44.

The concept of levels of ports was something we introduced in our original submission to SCOT last year. We are looking for a way of phasing into - if it is going to be grants in lieu of taxes - a way to get there. Whether or not you're going to create two or three levels of ports, we might be back to where we are now with a different -

Mr. Gouk: Could I just come at it this way? I have one short question and a comment. Obviously I have many questions I'm not going to be able to get answers to today, as I'm sure others do. If I could correspond with you and send some of these questions to you -

Mr. Pearce: By all means.

Mr. Gouk: Could you just address one last thing? You mentioned dredging. When I've been in eastern Canada, I have completely opposed having the west pay for ice-breaking costs. We're going to cost recovery. How can I go into Montreal and tell them that there's no way the west should be contributing to ice-breakers?

Or for that matter, how can I go to Halifax, with its big ice-free harbour, and tell Halifax that directly or indirectly they should have to pay the ice-breaking costs at Montreal? How can I go to Montreal and say that directly or indirectly they should pay for west coast dredging, since it's a subsidized thing? What rationale can I use?

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Mr. Pearce: We're not suggesting for one minute that dredging should be put into the coast guard cost recovery. We have an agreement with the coast guard now that says they will dredge for the next seventeen or eighteen years, depending on how long the agreement has to go. They are now telling us they want out of that agreement. We're being told we're going to have to pay for the dredging. We're saying they should honour the agreement or negotiate with us so we have a fair time in which to take over that amount of dredging. We're not asking for it to be caught up in the coast guard's fee-for-service cost recovery.

The Chairman: Mr. Fontana.

Mr. Fontana (London East): Mr. Jones and Mr. Pearce, you've raised a number of issues. Let me just get back to this thing of competitiveness, because at the end of the day I think the government wants ports and harbours to be economic engines for communities, regions, and nationally. Therefore your ability to compete with your competition, especially U.S. ports, is obviously very critical to becoming self-sufficient and economically viable.

Your tables here show me what's happening in the United States. Can you tell me where in fact you are on this chart? I have absolutely no way of being able to compare the Fraser port to Tacoma or Seattle or something like that, because you don't have that there. Maybe you expected I should know that. I'd have to look back.

Let me go to one area you seemed to bring up. You say you're prepared to pay a stipend and it should be on net income as opposed to gross revenue. You indicate that the government should continue in some way, shape, or form to subsidize some of your costs, hence dredging or others. But you made a false comparison. That was that while you suggest the Americans pay for certain things such as dredging, you forgot to say a value-added tax is added to every tonne through the harbour. They have this big fund there that Mr. Peña can use at his discretion and everybody pays for it. While they may not be contributing to it any more, simply because there are mega-millions in that fund, we've never had such a thing. We do it directly as subsidies. When coast guard recovers only 4% of its costs in this country, that's unsustainable for the Canadian taxpayer too.

While we want to give you all the levers so you can succeed, you can't turn around and say, well, we expect you to be here and to subsidize us. So I'm having a little problem with the philosophy of your wanting autonomy and self-sufficiency but also wanting to be protected by the Canadian taxpayer in terms of whether you should remain viable or not.

Let me just get to the crux of my question. It's all based on economics. What's the bottom line? You don't want to be taxed, because you say that would make you uncompetitive. You don't want us to impose any user fees, because that will make you uncompetitive. You want to be given total flexibility in using your assets, new lands, for whatever purposes in terms of land development and so on.

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Tell me, then, what the government should do with regard to Bill C-44.

Mr. Pearce: Our position is that if you cannot address these issues, then leave the ports the way they are. Leave them under the auspices of the harbour commission system as it exists now.

On the issue you raised earlier, Mr. Fontana, about our wanting to be subsidized and our wanting to be protected, we're saying that you are changing the ground rules under which our port is now operated. We are asking you to take into consideration what those changes and the ground rules are going to do and to allow us time to phase in the changes that you are going to do.

That's all we're asking. We're not asking you to allow us to collect taxes. We're not asking you to continue forever and a day to pay for the dredging. We're asking you from our port's point of view - because we feel that we play a national role, because we have an impact on the economy of our local area and on the economy of the country - for God sake's, to pay attention to what you are going to be doing to us and allow us some leeway to phase in.

We're not trying to shirk our duty one little bit and to hide under the skirts of the Government of Canada.

Mr. Fontana: Of course, and I understand that. We've had many discussions on ports and harbours and you've been good enough for that.

Believe it or not, the SCOT report, which Stan, Joe, and I were very much part of when we drafted it, and the recommendations of Bill C-44 are not that far off. Yes, they are a little bit different in terms of governance and, yes, they're silent on the grants in lieu of taxes; but I take it that you have no problem with where we are going philosophically with Bill C-44, because it means autonomy and self-reliance, being masters of your own house in your own area.

Mr. Pearce: We already are.

Mr. Fontana: Well, yes and no. You can't pledge your assets now in order to raise money. Right?

Mr. Jones: There's much that is good in the philosophy behind Bill C-44, and there is a great deal that is good about the philosophy of government in reducing the cost of government, the size of government, and increasing its revenues.

However, we live in a real world and we have to compete in the environment that exists internationally. If we seek the ideals with regard to ports too quickly, then we will pursue short-term gains but suffer long-term pains when the port will no longer be there.

So essentially we're saying the direction is right; can we talk to one another about some timing and some limits so we can get this thing right so we'll be here for the short and the long terms?

The Chairman: Mr. Comuzzi, you had one very brief question on taxation?

Mr. Comuzzi (Thunder Bay - Nipigon): I don't have a brief question, but I'll try to make it brief.

As you can see, unfortunately we're constrained by time, Mr. Jones and Mr. Pearce.

Let me just confirm in my mind that what you said earlier is that you are in favour of most of the recommendations, with the exception of dredging, that came out of the Standing Committee on Transport report that was done previously. Yes? Thank you.

You also stated that the user fees imposed by the coast guard since we were involved in that last report have created some concern for you. Is there something else besides dredging?

Mr. Pearce: The costs that the coast guard is seeking for the user fees are being paid by the users of the port, the shipping lines that are coming in. We're concerned that continuing to add to these costs will increase the total cost of the vessel coming into the country.

Mr. Comuzzi: That leads me to the third question. I understand that your competition is not mainly from other ports in British Columbia.

Mr. Pearce: That's correct.

Mr. Comuzzi: Your competition is for Bellingham, Seattle, and Tacoma.

Mr. Pearce: And Portland. Yes.

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Mr. Jones: Could I illustrate that for you?

Mr. Comuzzi: Certainly, if the chairman will give us time.

Mr. Jones: Mr. Pearce mentioned that we are west coast Canada's major automobile importer. Portland is the major importer in the Pacific northwest in the States. The number of automobiles coming to North America from across the Pacific is decreasing. The people running the ships can carry a load to one port; they'd like to make one call. Which of these ports will it be?

If you look at the year-end statements for Portland, you see that they collected $5 million in property tax, and if they hadn't they would have lost $1.8 million. Now we're competing with that and trying to hang on to this business in Canada for all the value-added that goes on.

Mr. Comuzzi: I'm going to ask you to answer the third part of my question, if you would, please. I don't want to put you to any more work, but we're going to need this. I would like to know, maybe through the clerk of the committee, where Fraser harbour is competitive and where it is not competitive with those ports in the United States. Will you take into account that those ports in the United States charge a value-added tax or a harbour maintenance tax?

Mr. Jones: Yes.

Mr. Comuzzi: Would you include in that the user fees that are presently being charged by the coast guard and the proposed charges of coast guard services? If you could get that to the committee for distribution, that would be very helpful.

Mr. Jones: We'll do that.

Mr. Comuzzi: Those were my questions, Mr. Chairman.

The Chairman: Thank you, Mr. Comuzzi and Mr. Jones.

Mr. Keyes, do you have a question?

Mr. Keyes (Hamilton West): I have just two very quick questions.

Rick, thanks very much for coming before the committee. Your brief, of course, is very thorough, and as we discussed back in Halifax, your proposed amendments are all listed here. We certainly appreciate the work you put behind it.

What would be Fraser port's reaction to the idea that this committee recommend to the minister that Fraser port not be put on the list of CPAs and that you be given the option to stay a harbour commission? Would you accept or become a regional/local port?

Mr. Jones: As you know, the bill presently says the Harbour Commissions Act goes, but if the bill were amended to say that harbour commissions and everything else in that bill remained as presently written, I would prefer to be a harbour commission.

Mr. Keyes: That's the question. There's a repeal section in the bill, but that repeal section is at the discretion of the minister, I remind you. It doesn't have to happen tomorrow; it could happen ten years from now if the Minister of Transport, whoever it is, decides whether harbour commissions should stay or not. Such is the case in my own town of Hamilton.

So you would say that you're prepared to stay with the status quo and stay out of the CPA loop?

Mr. Jones: We have done an assessment on our board and listed all the advantages and disadvantages of the Harbour Commissions Act compared to Bill C-44, and we would without doubt prefer to be a harbour commission. If that's the choice, that's what we'd take.

Mr. Keyes: I don't know how well you're going to do as a harbour commission in the status quo if business that wants to do business at Fraser port understands that at any time - and this has been described before - there's a knife hanging over its head that could come down and repeal you. I think you're going to have some difficulty with customers and potential customers who are going to say they aren't going to do business with you because they don't know what your position is any more.

The other alternative, of course, is that the minister be advised that Fraser port has to be given the option of becoming either a CPA or a local/regional. I just want to ask one quick question on the CPA status.

Mr. Jones: We'd have to consider that because we'd have to know the terms of going local/regional. I don't think anybody's described them. As you said, Mr. Keyes, if we wanted to stay a harbour commission, in fact the act probably wouldn't be left alone. If we go regional/local, some of these things in Bill C-44 are going to flow through too. We wouldn't make the choice without all the data.

Mr. Keyes: All right.

I didn't have a chance to look at all your proposed amendments, but one of the conditions you speak of often is that, for example, you're paying about $300,000 in fees for service, your tenants are paying the municipality over $2 million, and your private properties are paying the municipality $14 million. I'm saying the municipalities are probably doing pretty well without having to worry about coming to us and asking that the ports start paying municipal taxation on land, most of which at the Fraser port I understand is vacant anyway. I don't have a lot of tears to shed for any municipality on this particular issue.

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What's your position on the federal agency status as put forward by the SCOT committee in the past and on whether or not federal agency status would provide you with enough leverage to get you away from paying municipal taxes on harbour-owned lands and, for example, provincial capital gains?

Mr. Pearce: We're of the opinion that federal agency status would provide us with that protection. We would like to see it in the bill.

Mr. Jones: I think we should be clear. When we say ``federal agency status will avoid these things'', we're not really trying to avoid anything.

Mr. Keyes: No, I'm saying it would make you more competitive.

Mr. Jones: It would make us more competitive, and in dealings with other governments it would put us at equal power. Then we could negotiate things such as fees for services and protocols on zoning. If we are the weaker one, we will do what we're told, and we're afraid of this local bureaucracy taking over from the federal bureaucracy. All we want is equal strength so we can negotiate in good faith.

Mr. Keyes: Thank you, gentlemen. That's what I wanted on the record.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Keyes.

I'm advised by the clerk that we actually have a little bit of time, given the cancellation of one of our witnesses today. I noticed that Mr. Cummins is here. He knows something about the Fraser River. Would you like to ask a question, Mr. Cummins?

Mr. Cummins (Delta): Thank you.

Rick, I think the port itself in the last couple of years has undergone some tremendous growth. From your comments today, could you give us an indication or a brief overview of that growth? Also, in doing that, could you indicate how you feel Bill C-44, if it had been in place, would have impacted on this growth? Would that growth have been impossible if this bill had been in place?

Mr. Pearce: We have recently undertaken several interesting business initiatives with distribution companies that are not directly related to the port but are located on port property. We don't believe we could have done that under Bill C-44. As well, our present legislation has allowed us to develop our own permitting process, which has cut down on a lot of the red tape with the municipalities. We have still built to municipal standards, but we have been able to assist our customers in getting the job done more quickly.

Also, under the harbour commission system, we've been able to protect a lot of the extra land we have been able to accumulate over the years. Under federal agent status and with Bill C-44 going in the way it is now, that status would be gone and we would no longer be able to protect those properties. It would hit us considerably as far as a tax burden is concerned.

Mr. Cummins: I have one other quick question. You did mention the problem with the pilotage. Could you briefly detail what that problem is.

Mr. Pearce: At present on the coast we have two pilotage districts. We have Fraser River pilots and we have the B.C. coast pilots. Both are administered by the Pacific Pilotage Authority. We are very pleased with the competent service we get from our pilots; the safety record is excellent.

The situation we find on the Fraser River, though, is that we need to be able to reduce the cost of pilotage to the users that are coming into the Fraser River. So we're proposing that subsection 15(2) be repealed from the Pilotage Act. That section does not permit the river pilots, who are employees of the pilotage authority, to go into the entrepreneurial area, which is controlled by the B.C. coast pilots. We're suggesting that we would like to have it removed so that it would at least give us the ability to negotiate. At the present time, every time we bring that up, we get subsection 15(2) thrown at us. There's no point even talking about it; we can't do it because of the act. We'd like the act amended so we could do that.

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The Chairman: Thank you very much.

Thank you, Mr. Pearce and Mr. Jones. I suspect we'll have further discussions as this committee gets ready to report.

Mr. Jones: Thank you for your attention and time, Mr. Chairman.

The Chairman: From the Vancouver Board of Trade we have Mr. John Hansen and, I understand, Ms Jill Bodkin.

Good afternoon, Mr. Hansen and Ms Bodkin. Are you going to lead the presentation for today? Well, take it away. We'll try to move as efficiently as we can so we have time for questions.

Ms Jill Bodkin (Governor, Vancouver Board of Trade): Thank you very much, Mr. Chairman.

I'm the governor of the Vancouver Board of Trade and chaired the ports policy task force, which has been meeting over the period the government has been asking us for the business community's view. It is a great pleasure to have the opportunity to make representation at what we see as a very critical time in what has been quite a lengthy and careful process, as you are about to make recommendations on the details of your bill.

Basically the Vancouver Board of Trade represents some 4,500 members, business people in this community. Among our active members are the Vancouver Port Corporation, the Fraser River Harbour Commission, the North Fraser Harbour Commission, and the Prince Rupert Port Corporation, as well as many members who are involved in the port business. Indeed, almost all of our members, one way or another, are affected by the port business. We are a trade and an export city, and the smallest of businesses that are engaged in goods really do need to pay attention to what the whole transportation system does for them.

We believe the competitive issue is around the total price between the Canadian producer across western Canada and the purchaser, wherever the purchaser is. The transportation component in between is a very important piece of that pricing issue.

The Vancouver Board of Trade is also a member of the Canadian Chamber of Commerce. The Canadian Chamber of Commerce has passed several resolutions prompted not only by the Vancouver Board of Trade but also by a number of prairie cities, chambers, and other harbour and gateway cities such as Vancouver. There were two resolutions, one last September and one in the most recent meeting this month, on the issue of competitiveness of Canadian ports.

We did submit a letter to you, Mr. Chairman. I will briefly highlight some of those matters, but I hope the letter will go on the record of the committee.

We are very pleased to see the results of both your predecessor Mr. Keyes' committee and that of the two ministers who worked as vigorously as they have on this matter. We support the port restructuring and the removal of Canada Ports Corporation, which was very much a second-guessing and obstructing mechanism. Making local ports pay for a service was burdensome government without the outcome of the best of what a good public agency can accomplish.

The fact that the bill frees ports from having to seek approvals in most cases from the Minister of Transport, Treasury Board, and the Governor in Council will certainly expedite the ports' ability to operate on a commercially viable basis.

There's predictability in the rent paid to the Crown. We have always supported the fact that the lands must remain crown lands and that there should be fair compensation to the Crown for the rental.

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The accountability of the port to the economic region - and I stress that it serves the economic region of western Canada - seems to be well-developed in the bill, rather than through the political system.

The letters patent arrangement can be a good mechanism to set out a working arrangement between the Government of Canada and the port. The bill seems to be consistent with the policy stated by the two ministers of transport who have worked on the file.

Financial independence is very important. With ports not beholden to the Crown, a good application of user pay, without backstopping by the public guarantees and port debt outside the envelope of the national debt.... We are very strongly commending the government for those features of the bill.

I would just like to make a few comments on several details within the bill, which are more than details in terms of their consequence.

As for the criteria for the creation of the port authority, we fully agree with the first three criteria of financial viability, trade significance and transportation linkages. The last objective, diversity of traffic, appears to us to be perhaps of less significance, one of those public policy objectives that might be pulled out to harm the competitiveness of the port, when indeed very focused objectives may be more appropriate.

We think a board of directors with between nine and eleven members is a good workable board, consistent with the fiduciary obligation of the board of directors of an organization that has a financial impact of this size. Fewer directors may be required for some of the other smaller Pacific coast ports.

In terms of the composition of the board, we believe that the majority of the directors should be nominated from the business sector rather than from government. And as we look at the bill, the arithmetic does not necessarily work out - although it could work out that way - in terms of the designated sources of directors. We recommend that the act be explicit around a majority of the directors being those who are business-related directors.

With respect to the chief executive officer as a director, the committee may consider making this an option at the discretion of the rest of the board rather than a mandatory direction.

We believe the process for nomination requires more clarity. There are two reasons for this. First, you create some rigor in the connection between the director and the nominating entity, hence improving the accountability to the named communities served. We in the Vancouver Board of Trade have some experience in being a nominating entity and really exacting a lot of our nominated directors.

The second reason is to ensure that there are criteria that qualify a user as a legitimate nominating entity. In the absence of more structure in your nominating process, we are concerned that it simply results in a huge slate, which will be submitted to the federal government and again will be subject to what may be less than commercial interests in terms of the actual choice of the directors.

We think the government has certainly declared itself with regard to the spirit and the letter of the act to appointing knowledgeable, respected and business-oriented people to the board, but we understand the kinds of pressures that are always upon ministers as long as there is that tie.

With regard to provincial nominations to the board, we agree that the Province of British Columbia, as the host province, should be a nominating entity, but we certainly believe there should be some vehicle for some form of representation from the other provinces, so that the user provinces of the port have some special relationship to the regional significance of the port.

With regard to the chair, we think the word ``shall'' should replace ``may'' in describing the election of the chair from among the board of directors.

Those are our comments on the board. There's a direct relationship between those and the financial relationship to the Crown, which again we think must be very carefully written in the letters patent and in the bill, taking into account the likely response of the international financial community, to which the port needs to turn for financing capital expenditures.

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We agree that the port authority should be financially independent of government, with no call on appropriations and no protection under guarantees. There are two reasons for this. It clearly puts the onus on the port to manage within the discipline of the marketplace. Second, it keeps the borrowing by the ports outside the sphere and potential queues and potential credit-rating issues of the national public debt.

The ability to borrow depends upon sufficient cashflow, and the Crown-owned lands of the port will not be available to serve as collateral. So there is a significant relationship between the financial independence, the judgment of the financial markets that the structure truly is financially independent from the government, and the ability to finance.

We think the negotiation and the details of the letters patent is a very important process, one that should engage knowledgeable people from the financial and business community, obviously your port authorities and the people who are responsible. Great care should be taken, because as they say, the devil is in the details. In many cases it's the care that is taken with that process that will matter.

I have two final points. One concerns the powers of a port authority. We think it's very important that a port be focused on the business of a port, but that there be careful consideration of the subclauses under clause 24 such that they don't unduly restrict the port from port-related but not immediate transportation initiatives, such as the initiative the Vancouver Port Authority has already embarked upon with regard to a convention centre, which is very important to tourism in Vancouver.

The other point is public reporting. We think that as government moves to authorities that are much more at arm's length from government, and while we've been consistently an advocate of the independence of such authorities, there does need to be very careful public reporting. In many cases the public reporting for such authorities doesn't even approach what a publicly held traded company would be subject to. We think it's very important that there be good public accounting to the shareholders, who are still the public of Canada and the users of the port.

In closing, Mr. Chairman, I would like again to thank you for the opportunity for the Board of Trade, as a member of the Canadian Chamber of Commerce, to continue to make our views known. We understand how important and how well-operating our port is. You just need to look at the number of ships in English Bay. There aren't as many today as there have been all summer, but it's a good crop year. This port is continuing to attract what we need going through it, like the cruise ships you see out there.

It's always a great pleasure to welcome our members of Parliament who serve the public to actually come here and see things like our port in operation. Thank you very much.

The Chairman: Thank you very much, Ms Bodkin. As a representative of the great port city of Winnipeg, I appreciated your comments about the interest that the prairie provinces also have in these facilities.

[Translation]

Mr. Crête.

Mr. Crête: Thank you for your brief. Are you expecting to suggest specific amendments to the criteria in the bill defining what a user should be with a view to having users appoint administrators? Should the legislation or regulations specify the criteria for users?

You also mentioned the public report. Do you think the act should be reinforced to make it more transparent both for appointment as well as public reports?

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My other question concerns S.24 in your brief where you say that tourism-related activities and recreational projects, amongst others, could be undertaken by port authorities. Does this list limit anything in anyway or do you think that some ports could offer a certain number of authorized activities? Who could authorize the activities? Who could decide which are relevant? There may be ports where another kind of activity might be possible like the example given about automobiles before.

Mrs. Bodkin: Do you mind if I answer in English?

Mr. Bellehumeur: It's not up to me to decide.

[English]

Ms Bodkin: On the first question, yes, we do indeed believe there should be more structure in the naming of the nominating entities, at least a range of them, so it's explicit. There is a clear obligation on the part of those nominating entities to take seriously their responsibility for both the presentation of competent and willing candidates to stand as directors and for making sure the relationship between the directors eventually appointed and the nominating entity and their members is quite clear.

Again, we have put in place some very clear instructions to our nominated directors whereby they are actually responsible back to the board of directors of the Vancouver Board of Trade and they report to us. We think that kind of accountability is going to be lost in the shuffle of x number of nominations coming from a large number of entities and then the trade-off being made in Ottawa.

That really speaks to your second question, too, in terms of a very specific nomination of the directors and, either in the law or least in the letters patent - we haven't looked at the legal implications of one or the other - making clear who the nominating entities should be.

With regard to clause 24, we would prefer it to be less restrictive. It's a fine line between...you don't want to open the use of port lands and the port authority to go into the shopping centre business. On the other hand, if it's part of a tourist facility, that is a way of adding retail income. You might have a duty-free shop and entities like that.

We are just raising a flag that the words ``limited to transportation business'' might be interpreted at some subsequent date to be too restrictive. But we would not advocate inventing some new list. Somebody who has to run the commercial port will be able to invent that.

The Chairman: Mr. Gouk.

Mr. Gouk: Thank you. First of all, as I mentioned to the previous witnesses, there are going to be more questions than we can possibly hope to get answered during this time. I'm going to follow up some by corresponding. Perhaps you would submit one thing I would be corresponding with you about, if you would, if you have some notion of this through the clerk for all people, and that is what you see as an appropriate nominating process.

You mentioned you have developed some fine detail on this through your own organization. I would certainly be interested in seeing what it was. With regard to the nomination of users, the bill says the minister will appoint candidates nominated by the minister after consultation with the users.

I can consult with you until the cows come home and then do whatever I want, and I haven't done anything different from what I said I would do. But the minister came before our committee last week and said he would appoint candidates nominated by the users. That is a clear distinction, in my opinion.

If it were amended in such a way that it makes it clear the users would nominate the directors, as opposed to the minister, would that be better? In fact, you said you had concerns even about the nomination by users and then giving this big list for the minister to select from. Do you think perhaps he should only be in an arbitration type of mode where the users can't agree amongst themselves whom they would actually appoint?

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Ms Bodkin: Yes, indeed, we'll be pleased to do a follow-up submission on the nomination process. But there are a couple of key principles that come down to just the plain practicality of what happens in such nominating processes. One, we would agree with the minister, absolutely, that it should be a process of his accepting nominations rather than his consulting and making the nominations or of the Governor in Council making the appointments.

We believe exactly, as you say, that the consultations can happen forever. The users and the financial lenders through the port need the assurance that the people who are going to be appointed are going to be appointed on the basis of their business acumen and their ability to really understand the whole range of business interests in this court.

The second point around the nomination process is that we don't believe it should be a large number of users submitting a composite list. Rather, particular users should submit, in our view, ideally a nominee who becomes appointed. But if in fact there needs to be a process whereby the minister wants two nominees, will chose one and is bound to take one of the two, we think that would be preferable to a large slate being put before him, of which under the bill, as you quite rightly point out, he has the ability to reject all if he wanted to.

Mr. Gouk: I have just two other quick points, if I could.

One, when you talk of subsidiary business, transportation-related, if I understand it, for example, in the port of Vancouver they have revenues from a restaurant on land that is good for nothing else. So either they have revenues from that restaurant or they simply have no revenues and have no other use for that property.

Also, there are a number of parks that have nothing to do with transportation or tourism as such, but it is just good community relations because they have to develop that. They would not be able to do that under this bill even if we amended it so they could do transportation-related subsidiary business.

The other thing, if there's time - and I would take direction from the chair - is this. One thing I expect there to be some controversy on - it hasn't come up; mind you, you're only the second witness on this travel - is port policing. As you're a business organization, I would be interested in your comments as to what you think we should do with regard to port policing, whether it should be a dedicated, specialized force, or whether it should be municipal according to the various jurisdictions.

Ms Bodkin: First, whatever the wording, again, we can put down some thoughts beyond what we have to the port powers. Regarding any of the examples you give, we would want to continue to be available to the port.

Certainly one of the things the port has done very effectively is work with the municipalities and the surrounding area on provision of parks and so on. As I said, that will be a second thing, John, that we should provide some thinking on and indeed perhaps get some of our legal members to help us think through.

On the question of policing, again we have not done a lot of work on that area. We could take a look at it, but in principle what we would want is for the port to be free to negotiate with the most cost-effective and effective in terms of the particular needs of port policing. Because it's on the water, they are different from the needs of municipalities in some cases.

What you might want to create is some way in which they are obliged to require proposals from a whole range of potential suppliers. That is no qualitative comment on the existing ports police at all, but just consistent with the position we've taken. We think it should be commercially based.

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The Chairman: Thank you, Ms Bodkin.

Mr. Keyes.

Mr. Keyes: Thanks again, Ms Bodkin, for coming before the committee.

I want to get back to the nomination of the board, just to make it clear that I don't think it's the intention of the minister to go out there and solicit a group of twenty names and then make a decision based on six of those twenty names.

It's very clear in the legislation that it will be up to the users and the user groups of any particular port or harbour commission to come together and put forward six solid names - maybe even fewer...five, or four, if necessary - and then the minister will take those names from the user group. The check and balance always has to be there, of course, because the minister has to ensure that they are not somehow directly related in some way to the user, that all the conflict of interest code guidelines are met, that the individual is square so that we can put him in the hole.

I think it's the intention of the minister and this legislation to go to the users and have them provide him with those six solid names. There'd have to be a heck of reason why the minister would say, no, I'm not taking these particular names. I think the intention is goodwill, and it'll be incumbent upon the user groups to put forward those four, five, or six names and not just a host of twenty and say, pick six out of this list of twenty.

Beyond that, do you want to comment?

Ms Bodkin: The real world of being a user and having a business to run is that you can only put so much of your effort into the internal small ``p'' politics of the presenting of such names. I think the bill as it stands leaves a pretty cumbersome process on the user groups in terms of coming up with those lists.

Mr. Keyes: I can give you an example. In Hamilton there is a loose-knit user group that comes together on a monthly, bimonthly, or maybe even quarterly basis to discuss these kinds of matters. Quite frankly, it's in the interest of the users to be at that meeting. They can't get involved in everything that comes their way from a body that runs the harbour, but I would tend to think that any user is going to be serious about sitting down and putting forward that particular name, to be on that particular board, because it's in their best interest to serve not just them, but also their colleagues who use the port.

Ms Bodkin: There is indeed a more than loosely knit user group that exists in the port of Vancouver and takes this very seriously. I've also headed government agencies and I know some of the compulsions and pressures that sometimes get put on the best-intentioned of ministers. We're just looking for a balance.

Mr. Keyes: I would just like to divert my time to Mr. Fontana.

Mr. Fontana: Thank you.

I'm still in a state of shock. The last time we were talking about ports and harbours, I think your model was one of full privatization, so I'm happy to see that there must have been some meeting of the minds of all of the stakeholders in Vancouver for the Vancouver Board of Trade to essentially have no criticism whatsoever of this Bill C-44.

Either we've done a very good job, or I'm very, very suspicious that there's something wrong here.

Ms Bodkin: You're pretty close to a full privatization model, and we wanted to say we're delighted to see that.

Mr. Fontana: Is that how you see that? Okay.

Some hon. members: Oh, oh!

Mr. Fontana: Forget about the governance issue, because I think you addressed it, but I want to get back to this so-called subclause 24(2) that you brought up as well as the Fraser River Harbour Commission. It relates to the flexibility that a Canadian port authority should have with regards to lands under its jurisdiction and/or whether or not it can go out and acquire land for the purposes of so-called related transportation issues.

You tried to define it by saying that if it were tourism-based, then obviously someone could make a good case as to whether or not it would be an appropriate use for that land. Is condo development something you would view as tourism, or related to transportation? What about marinas, parks, and casinos?

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I need to better understand where everybody is coming from with regard to subclause 24(2), because if one is to put fences around what's allowable and not allowable, I think this committee values having some more insight, because that's been one of the problems. If you go across this country, some ports and harbours have gone from being ports and harbours to being big land developers and being able to put up great condo developments obviously in very scenic places. But that's not the intent of the port and harbour. So I'd like you to give me some more guidance on where you would see us go.

Ms Bodkin: I'm going to speak personally, and then we can follow up. I'll refer to a couple of board policies.

Mr. Fontana: What do you mean by ``personally''? Are you going to speak for the Vancouver Board of Trade?

Ms Bodkin: I'm speaking for the board of trade, but we haven't put a list together of what we mean by that.

Mr. Fontana: Do you mean you don't have consensus yet?

Ms Bodkin: We haven't even talked, really. I'll tell you the one area where we do have consensus...and you mentioned casinos, which is controversial.

Mr. Fontana: I like the idea of ``personally''.

Ms Bodkin: I won't speak personally on that.

Some hon. members: Oh, oh!

Ms Bodkin: We did have a policy task force when the question of casinos first arose. Our view was that there needed to be adequate public policy consultation and review around the question of whether a casino was appropriate for this community. We did not take a position on casinos on port lands or such specific proposals.

We would probably not be very excited about condos on port land. Again, this is a particular port where land is at a premium, and it's very important that there at least be some contribution to the port. But there may very well be some totally non-transportation-related but very trade-related business that would be appropriate for siting on port land.

I was meeting with the Port of New York authority a couple of months ago. The new World Trade Center is on port land, but they also have a trade promotion corporation. We wouldn't like to use the words ``to prevent'' for trade-related or joint-venture kinds of things between the port. But we will do some more work around that. I'll commit myself to this.

Mr. Fontana: Thank you.

The Chairman: Thank you, Ms Bodkin and Mr. Hansen.

From the City of Vancouver, I understand we have a number of persons from the Corporation of the District of North Vancouver and the Corporation of the District of West Vancouver, including two mayors.

Given the size of your delegation, perhaps you've sorted out who is going to speak first.

Mr. Philip Owen (Mayor of Vancouver): Yes, we have. Good afternoon. Thank you very much. It is a pleasure to be here.

With me today is Mayor John Northey, Port Moody; Vancouver city manager, Mr. Ken Dobell; the municipal managers from West Vancouver, Mr. Doug Allan, and Mr. Ron Campbell, Port Moody; Mr. Gord Howie, municipal manager of the District of North Vancouver; and also Councillor Nancy Chiavario, City of Vancouver. Inspector Max Chalmers and Dr. Jeanne Li, both of the Vancouver Police Department, are also joining me.

I just have a couple of opening remarks, and then Mr. Ken Dobell is going to talk about the city brief. Mayor John Northey will finish up, so there will only be three people making presentations. The others are here to answer questions or to be part of this general presentation, which we generally agree on.

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There's general support for this group also, as you can see, from Burnaby, Delta and Belcarra, plus the ones I'll mention. So we're here representing a group of half a dozen or more municipalities and we have general support for the concept of what you're doing and of Bill C-44.

We have concern on two perspectives. One is how it affects our municipalities, and second is the general operation of the port as a commercial entity.

I just have to slip this in right here. You just finished talking about destination gambling or gaming, and the City of Vancouver is totally opposed to gaming expansion, VLTs, or Keno or whatever it might happen to be, and totally opposed to any destination gaming in this city. That is from the results of dialoguing with our citizens.

Regarding how it affects the cities in the municipalities, we're concerned about grants in lieu and we're concerned about the whole issue around policing. Regarding the port, we're concerned about how it may respond to the realities of the marketplace and we think there may be certain things in here that are a little too restrictive that we'd like to talk to you about today. And in some areas there's some fuzzy language that's subject to various forms of interpretation that we think need clarification.

At this point I'd like to introduce Mr. Dobell next. He's going to be the main presenter of the brief, and with your permission perhaps Mr. Dobell could take over.

Mr. Ken Dobell (City Manager, City of Vancouver): Mr. Chairman, thank you.

I believe the brief has been distributed, and what I would like to do, since time is limited, is walk you through the recommendations.

The initial recommendation deals really with the question that Mayor Owen has identified, which is the flexibility of port operations. That recommendation urges that you provide a legislative framework for national ports that's flexible and robust so they can respond to the realities of the world in which they operate. Clearly one of the realities is that they operate within a municipality and their relationships and clearly they operate in a commercial milieu. If there is a need to impose limitations, then these should be in letters patent, which can be more flexible and more easily adjusted.

Under recommendation B, we would like to suggest that a direct financial return on federal land through a charge on gross revenues or other formula is inappropriate, given the financial constraints under which the ports will operate. It's a competitive environment in the absence of an obligation to pay full taxes to municipalities. If the port land is to be used for port operation for the betterment of Canada, it seems reasonable that like other federal operations it should not be producing a return, given the environment in which they must operate and given notably that they are not paying municipal taxes.

We noted that there is a group, or there will be a group that will advise on the implementation of letters patent and the implementation of the legislation in the port of Vancouver. We understand that the port, to date at least, is not represented on that group and neither are the municipalities. It's our very strong view that both the port and the municipalities should be represented on that group so that we can provide a perspective that is broader than the perspective of the users.

On point D, we would suggest that the provision of crown agency status through the legislation is appropriate, subject to the maintenance of financial separation that clearly the legislation wishes to keep between the port and the federal government, and subject to appropriate arrangements to manage land use and municipal regulations.

We note that in agreeing to crown agency status, we're ensuring that all the land managed by the port is excluded from formal municipal regulation. Nevertheless, the creation of a hodgepodge of regulation, in our view, is not rational and we see that there should be a common system. But we will in fact speak later to the question of land use and development of regulation.

In terms of the make-up of the board, I'm sure you will find some distinction between our position and the position of other municipalities. We are urging that the federal government provide for a director appointed by the City of Vancouver and a director appointed by the other municipalities and the port.

Our argument, I suppose, is self-evident. We see ourselves as the biggest friend of the port, with major dealings with the port, and when you hear from my colleagues - and you will hear briefly from my colleagues in the other municipalities - they will take a slightly different perspective to suggest that Vancouver should not get the pre-eminence that we believe it deserves.

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We would urge you to amend the legislation to provide that the chair of the board of a port authority should be elected by the directors. It seems to us a relatively simple point. There is local knowledge in the local board. It makes sense to see the chair elected by the local board. If there is some reason nationally why that's inappropriate, it would make sense then to us that for the Port of Vancouver at least that should be in the letters patents. But whichever route is taken, it seems to us fundamentally sensible that it occur.

We would also urge you to relax the criteria for directors to permit a broader range of expertise. It seems to me that you have probably defined the requirement for director more narrowly than most corporations would do and that there are a number of areas of expertise that would be of great value to the port, particularly in its dealings with other agencies that you have precluded from representation on the board.

Similarly, we note that the limitations on the user representatives to avoid conflict of interest do not seem sufficiently stringent. We would again urge you to ensure that the legislation sets a high standard for the avoidance of a real or perceived conflict of interest for those members.

On the issue of policing, there are indeed a number of concerns. It's probably important for me to note up front that we do not believe that the present level of policing provided in the port of Vancouver is adequate, that it is under-resourced, that indeed there are a number of levels of policing appropriate in the port that range from mere security to the full-fledged federal presence around drugs, organized crime, immigration, customs, and that balance is now inappropriate.

In that context, we understand that the Minister of Transport has convened high-level discussions around policing requirements. We would urge that the minister or the Solicitor General and the Attorney General of British Columbia convene discussions with representatives of municipalities to examine how policing responsibilities in the British Columbia ports can best be met, but - and this is a major but - with the clear understanding that municipalities will not be required to fund additional police services without full compensation.

On recommendation J, we would urge you to provide a mechanism and sufficient time for a smooth transition between the present Ports Canada police jurisdiction and the establishment of replacement policing. Clearly there is expertise related to port policing, maritime policing, that would need to be transferred in the event of a change, and that cannot be done quickly, so time must be provided for that transition.

On point K, Mr. Chairman, we would reiterate a position that we have previously taken and that the FCM has previously taken, that the new port authorities be subject to the same grants in lieu of taxes regulations that apply to other federal property, or that they become taxable.

We urge the federal government to ensure that the new legislation does not result in a net increase in costs to municipalities through any combination of additional responsibilities for municipalities and changes in the payments of grants in lieu. That's a very significant point in this major transition. There may be changes in responsibility, changes in taxation, changes in rules, and the position very clearly is that municipalities should not be required to contribute more.

In point L, Mr. Chairman, we urge the federal government that if grants in lieu are to be maintained, rather than implementing full taxation, the process must be revised to provide for year-by-year finalization of grants and an appeal mechanism to ensure certainty for both municipalities and ports.

We note simply in this context that Vancouver was recently advised by the port that they owe the port some $3.5 million relating to overpaid rents in lieu over a period of ten years. In a commercial context, that's simply unacceptable and whatever regulation is provided should certainly deal with that kind of issue.

On the question of land use, which is substantial to us in a number of ways, we believe that municipalities and ports must be able to agree on land use. We acknowledge the need for ports to develop as ports, but they are neighbours of a municipality. The municipality services them. There needs to be some way of ensuring consistent and compatible land use.

We would note that in Vancouver at the moment we have a good working relationship with the Port of Vancouver around development. We have a mutual understanding about process, and indeed it works well.

We would urge you to permit much broader land uses within the port. The question of parks has been raised. In Vancouver the port owns the entire waterfront east of Main, effectively. If there is to be access to that water for the citizens, it must be through port lands or what are currently port lands. Under the rules you have prescribed here, that could not happen and that seems completely unacceptable to us.

So we would urge you to permit broader land uses so long as they comply with municipal zoning or joint port-municipal land use agreements and to enable port authorities to enter into binding land use agreements with municipalities, subject to an override by the Governor in Council.

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Again, one of our issues in attempting to reach an agreement with the Port of Vancouver was that standard constitutional argument that the port can't bind itself in this way, and therefore we can't sign the document that you would like. We have a working system; it seems appropriate to formalize that system.

In a general sense, Mr. Chairman, we applaud the direction. We think it still constrains the port excessively both in terms of its operation and in terms of its land use policies, and that the legislation must be relaxed. I could point out a number of small examples where we have been on the other end of a transaction that has gone to Ottawa, that has been discussed at length, that has come back, that has gone again, and it is not a transaction that justifies anybody's attention to that degree.

We could speak perhaps in more detail to that if you wish, but I would note, if I may, that my two colleague managers have very small changes to note for you in recommendations that I've made, although they endorse the general thrust of this, if we may now allow them to speak briefly.

The Chairman: Go ahead.

Mr. J. Douglas Allan (Municipal Manager, District of West Vancouver): Thank you, Mr. Chair. The District of West Vancouver supports the initiative proposed by Vancouver with two exceptions. We believe that the Vancouver Port Corporation should have adequate representation to include all the stakeholders and operations of the port. Representation should exceed the local and regional levels of government to include other western Canadian communities in Alberta and Saskatchewan.

To that end, Mr. Chair, we would propose that the federal government provide for a director appointed by the City of Vancouver, two directors appointed by the host municipalities, and two other directors appointed by the western Canadian provinces.

The last, Mr. Chair, is a request that the federal government ensure that surplus revenue, when you are talking about your terms of reference, is first allocated to the maintenance and development of the Vancouver Port Corporation prior to any other uses that the new board may deem appropriate. Thank you.

The Chairman: Mr. Howie, are you the other?

Mr. G.M. Howie (Municipal Manager, Corporation of the District of North Vancouver): Thank you, Mr. Chairman.

The only two areas of concern for the District of North Vancouver with respect to Vancouver's brief are numbers C and E, and Mr. Dobell has already alluded to them.

The District of North Vancouver council requests that the minister include representatives from the port municipalities and the Port of Vancouver in any group advising on the development of letters patent and the implementation of the legislation in the port of Vancouver. Secondly, council urges the federal government to provide for two directors appointed by the host municipalities within the port of Vancouver.

In all other aspects of both the brief by the City of Vancouver and the general thrust of bill C-44, we're in agreement.

The Chairman: Thank you, Mr. Howie. Mayor Northey.

Mr. John Northey (Mayor of Port Moody): Yes, thank you Mr. Chair. I think it's important to note that although we have a number of municipalities here today - Vancouver, Burnaby, two North Vancouvers, West Vancouver, Port Moody and Belcarra - that although we have minor differences on the margin, effectively we very strongly support what the City of Vancouver has put together. We think this is a good capsule commentary on what we think is both right and perhaps could be improved in Bill C-44.

I might also add that both Mayor Owen and I are here today in dual capacities, both as mayors of our particular municipalities but also as chairs of our respective police boards. One of the things that does concern us very greatly, and I think as Mr. Dobell has mentioned, is the issue of ports policing and the rather strange and unfortunate situation that seems to be taking place as a result of the arbitrary announcement that the ports police would be disbanded with the disbanding of the Canada Ports Corporation.

There will be more response to you tomorrow. As you are aware, a joint municipal and provincial police subcommittee will be reporting to you at 1:30 p.m. tomorrow, so I won't go more into that. I think the points they will raise are very much the concern of all of us.

I think the other thing to note, and as Mr. Dobell mentioned, is that over the years we have had a very good relationship with the Vancouver Port Corporation. We meet now in a liaison committee with the mayors, the administrators, and the executive and board of the Vancouver Port Corporation. We don't always agree on everything, but we have a forum in which we can discuss many items. We think there are many characteristics of how we actually do work in the port today that are worth copying.

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Before one looks to the next draft of this act - and I'm sure the chair of the port corporation, who I think is with us today, would agree with that - we have a lot more going for us together than not.

We're very supportive of the effort to bring local control to bear on the Vancouver Port Corporation and obviously the other port corporations around the country, extremely so. We see the example, not very far away, of how successful the Vancouver Airport Authority has become in the model that's being used there. We're not suggesting necessarily that is the model you may wish to follow for the port of Vancouver; however, it has been a very successful model and one that perhaps has certain points that we can emulate.

In closing and perhaps responding to some of your questions, I have to reiterate Mr. Dobell's comment that no matter what happens on the change to the organization of our ports, they cannot downgrade services or transfer those services or download those services as a cost to the municipalities to maintain that service. Specifically, we remain concerned about payments in lieu or grants in lieu.

I have letters, for example, from two ministers, both the Minister of Transport and the Hon. Marcel Massé of the Treasury Board, that really say two quite different things. We thought this issue had been looked after, but it would appear that there are still some questions outstanding as to how this is to be handled.

Secondly, we are extremely concerned about the handling and the solutions reached to ports policing.

Thank you. I am open for questions.

The Chairman: Thank you, sir. I thank all the presenters. I'm pleased to note that our government covers all issues comprehensively when it writes to members of the municipality.

I am particularly interested in your comments on the importance of the federal agency. That'll be very helpful.

[Translation]

Mr. Crête.

Mr. Crête: I would first like to point out to the members of the committee that you sent me a copy of your document in French. I thank you. It's an interesting mark of respect.

On page 5 of the document you list at least six activities that ports could not do if they restricted themselves to the strict definition in the act:

(2) Authorization given to a port authority in operating a port is restricted to those activities within the port related directly to shipping navigation, the transportation of passengers and goods and the handling and storage of goods.

The members of the committee should examine this question because concrete examples of operations would be questioned.

I'm more specifically interested in the matter of fees for police services. In your recommendation, you say that you might be interested in full and total compensation. Have you drawn up any comparative studies of costs that would allow the city or the different municipalities to take over police services? At what cost? Do you think you could do this for less than what Maritime police services now cost in each one of the ports?

I'd also like you to explain the matter of subsidies. On page 13 of your document, you explain that the present system of grants in-lieu does not really pay the equivalent of full property taxes. There are all kinds of exclusions that led to an overpayment in excess of $ 3 million to the City of Vancouver.

Could you be more specific about your recommendation concerning the provisions for a year by year finalization of grants and an appeal mechanism to ensure a high degree of certainty for both municipalities and ports? Thank you.

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[English]

Mr. Owen: On the first one, the costs would not be less. The costs, I believe, would be more and fairly substantially more.

We think it's inadequate at the moment, but we believe that the Vancouver Police Department is well equipped to do this. We have a new police station, a new $400,000 police boat, a chief constable and six deputy chiefs. The structure is all there. But as to what it would cost, I can't give you a hard number, but it would be more. Perhaps Mr. Dobell has some calculation in that regard.

Mr. Dobell: Mr. Chairman, there were two questions. I'll answer about the police first and then I'll come back to the question of grants in lieu.

In policing, as the mayor has pointed out, the detailed work has not been done. It would be significantly more expensive, but there are a number of policing issues associated with the port. It's not like policing a city; a port has special problems. The federal government has a special role. We would argue that the federal role is not now being adequately met.

If you look at the question of security services, they could be provided within the budget, obviously, with some level of municipal policing. But when you look at the special character of the port, that would be a significant increment, and should be today, in our view, so the issue is current.

On the question of grants in lieu, and I believe the reference was to exclusions, the $3.5 million reference for the city of Vancouver is in fact an adjustment for grants in lieu over a period of 10 years as a result of errors in exclusion or errors in including property, and it is an administrative problem.

But there are a number of exclusions that would substantially increase revenue. I have read that tenants pay full taxes, which is true. However, when the Port of Vancouver leases a facility to a major tenant it excludes, for example, the docks because those are excluded under the grants in lieu legislation. So the fact that the tenant is using the land does not mean that taxes would be paid on the docks as they would be if it were a private owner. So it is those kinds of exclusions and a rather long list of exclusions in the Municipal Grants Act to which we're referring in the document.

Mr. Northey: Mr. Chairman, on the question of policing in particular, the change in job description, if you will, of policing and the type of thing that I believe the police community feels is actually needed will actually come before you tomorrow without costing numbers. I think what the committee intended to do was to put the actual type of work down before you without trying to put a number on it at this point.

However, in our small city of some 21,000 people, with a 31-sworn-member detachment, our calculations are that it would add another two sworn members in order to take over the work from the port.

The Chairman: Thank you. Mr. Gouk.

Mr. Gouk: On most of the points your brief actually is similar to the way I've been thinking on this, so I'm going to take some time to read this over. What I would like to do instead on the issue of ports policing particularly is to pass it to my colleague, who has his jurisdiction inside the Vancouver Port Authority.

Mr. Cummins: I just have a brief question in regard to policing. Given that there are some 14-odd municipalities and the port is resident in that many municipalities at least, is it possible that the municipalities can provide adequate and cost-effective policing? It's as simple as that, I guess, and that's really the question that has to be answered.

Mr. Owen: The answer is yes.

Mr. Cummins: You believe that it could.

Mr. Owen: Yes. That is in dialogue with the chief of police, Ray Canuel. I think Inspector Chalmers will agree that they're quite familiar with what the port is doing and they're relating it to the way the Vancouver Police Department is functioning and operating. There's a great flattening going on in the organization, from eight ranks to five, and they're empowering people in lower ranks to have responsibility. They're going extensively into the community-based policing mode and they can see them delivering good efficient police service for the port.

Mr. Cummins: That means, then, that you would dedicate people to the port rather than bringing people in on an ad hoc basis.

Mr. Owen: I think that's it. However, it's probably best to ask the chief tomorrow. As chair of the board, we engage the chief and set the budget, but the deployment of the forces is the chief constable's responsibility solely, so I don't get too active in that area.

Mr. Cummins: I guess we will get into that more tomorrow.

The other question I have has to do with fire protection. Are adequate arrangements being made with regard to fire protection?

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Mr. Owen: That has never been a problem. We have a very advanced system in the port of Vancouver with adjoining municipalities. We have five quick response fire boats, which are very fast and efficient, operated by land crews, so there's a great relationship there. The crew that does the vehicles on land then responds to any marine activity with one of the five boats that are stationed around the whole port, and it works very effectively. There have been no complaints from the port that I'm aware of that they're not receiving adequate service from the Vancouver fire rescue service.

Mr. Cummins: Where there may be a problem, I guess, and we should probably hear about that more tomorrow, would be with Delta, which is sort of separated from Burrard Inlet.

Mr. Owen: Delta is quite different, yes.

Mr. Cummins: Yes.

The Chairman: Thank you, Mr. Cummins. I heard no problems with police or fire.

Mr. Keyes.

Mr. Keyes: Not yet, you haven't. Mr. Chairman, my comments are directed toward Mayor Owen and Mayor Northey, and either one can answer. You're advising that the federal government not download its services. Can you tell me what these services are?

Mr. Owen: I guess there could be a huge long laundry list, because we're at the municipal level.

Mr. Keyes: Let's just say the ones that the municipality is paying for at the Vancouver Port Corporation. What are those services that we're talking about?

Mr. Dobell: To begin, Mr. Chairman, clearly if the port police are removed and that policing responsibility is picked up by adjacent municipalities, that's a downloading of an existing federal function in that sense.

Mr. Keyes: I agree with that, Ken, but I'm just asking you, aside from policing, what are all these services that you fear the federal government is going to download on you as a result of this bill?

Mr. Dobell: The second item, Mr. Chairman, was not a downloading of service, but I think we indicated that by the federal government taking revenue off the port at a time when the port is not paying full municipal taxation, that is essentially downloading of federal costs onto municipalities.

Mr. Keyes: Can you give us a list of these services that the federal government is providing for you now that you are paying for?

Mr. Dobell: That we are paying for or would be paying for?

Mr. Keyes: Yes. What services are being provided to the port of Vancouver that the municipality is paying for currently?

Mr. Owen: I think it goes the other way around. It's what the federal government is paying for in the operation of the port that you're going to back away from and leave us to pick up, and that's downloading and it could be any number of things.

Mr. Keyes: What number of things, Mr. Owen? Can you give me some more other than policing?

Mr. Owen: The main thing was the police, and that's what got us all going when you talked about reducing the number of constables from 29 to 14 and then getting out of it.

Mr. Keyes: Maybe you can sit back and provide us with some information on just what services we're talking about.

Mr. Northey: Perhaps I could do that.

Mr. Keyes: Great, Mr. Northey, could you do that for me?

Mr. Northey: I think the important thing is that it's probably the same thing as has been said to you by the Federation of Canadian Municipalities, that the principle out there is that every party in a municipality pays according to the same rules. And the port is an industry amongst many others, and industry pays industry rates.

You don't necessarily equate the services the industry gets to the money it pays. It's part of an overall complex and those rates are calculated amongst the municipalities. Industry pays either a six or seven times rate; residential pays one or two. That's been done over a great many years, and it's the way in which effectively all municipalities in Canada operate.

What our concern is, and what the bill or the policy before it tended to say you were going the route of, is that somehow pulling the ports out of this general picture and dealing with payments for services that were rendered rather than being part of the overall picture -

Mr. Keyes: Mayor Northey, I agree with you 100%. I don't think there's anyone at that side of the table right now who wouldn't agree with me if I said that the port of Vancouver is a huge generator of wealth in this particular community, that the port of Vancouver is a huge generator of jobs for this community.

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Mr. Northey, I have to argue with you when you talk about the arbitrary nature in which the Canada Ports police were suddenly being decided to be dissolved. It was your organization, when we were here in Vancouver doing the SCOT report on marine, that agreed with us - I think it even came as a suggestion from you - that the Canada Ports Corporation be dissolved because of the bureaucratic nature of the organization and the time it takes for decisions to be made.

Quite frankly, gentlemen, let's make sure that everyone in the room understands that the Canada Ports police are employed by the Canada Ports Corporation, which you recommended be repealed. The Canada Ports police, of whom there are only between 85 and 100 in the entire country, and who play a very valuable role here in Vancouver, are doing a job that in other municipalities across this country is being done, quite frankly, by regional police departments across this country.

I dare say it can be proven that these police departments in place across the country in other ports and harbour commissions across this country are doing it for less money then for what the Canada Ports Corporation was paying its ports police.

On top of that, let's make it clear that the Canada Ports police, who worked for the Canada Ports Corporation and of whom there are only 85 to 100, are getting paid not by moneys coming from the federal government to the Ports Corporation but by the lessees in your particular port who are paying the municipal taxes in order to pay for their pay cheques. So let's make that very clear off the top as well.

There's one thing I think we have to understand. There are the services that you say are being provided by the municipality to the port. I'd really like to know what the cost of these services are, in your estimation, that are being supplied to that particular port. Do you have a ball park on that?

Mr. Northey: Sir, there are just a couple of points I'd just like to clarify. We are very much for getting rid of the Canada Ports Corporation. That's absolutely clear. However, there was not the same support at that time, certainly, nor was it even mentioned, to my knowledge, that the ports police would be removed.

Mr. Keyes: If you get rid of the employer you get rid of the employees.

Mr. Northey: They're two very different situations.

Mr. Keyes: It's a bad time to be splitting hairs.

Mr. Northey: Well, no, it's not. The fact that they happen to be the employer of the ports police is true, but that was not the connotation at the time.

The other point that I do want to mention - and it's exactly the same as with any other, albeit smaller, industrial operation in any one of the municipalities - is that they pay according to the system in place that supports the infrastructure of every municipality. We do not necessarily cost things out on the basis of dollars received and services obtained. That's not the way the system works.

Mr. Keyes: Oh, and I'm glad it doesn't, because I'm sure that because of the wealth generation and the job generation by the port you would probably have to be paying the port.

That aside, Mr. Chairman, I'm wondering if these gentlemen know what they're getting from the port in grants in lieu.

Mr. Dobell: Certainly, Mr. Chairman, we're aware of what we're getting from the ports in grants in lieu. It's about $3 million this year.

Let me perhaps respond, if I may, to the question of policing/downloading/federal role.

Mr. Keyes: Can I just finish this series of questions? I just want to know these three figures. You say it's $3 million in grants in lieu.

Mr. Dobell: Ball park, yes.

Mr. Keyes: It's $5.6 million.

Mr. Dobell: I'm talking about the city of Vancouver, Mr. Chairman.

Mr. Keyes: How about municipal taxes from the port of Vancouver, the tenants?

Mr. Dobell: I don't know. We have taxes from a number of properties. Approximately 80,000 properties pay taxes in the city of Vancouver.

Mr. Keyes: Thank you, Mr. Chairman.

Mr. Dobell: In terms of policing, the issue is an interesting one in that there clearly is a major federal role for policing in Vancouver. That federal role is not, in our opinion, being met adequately now. The effect of removing the port police is to transfer that role somewhere, either with the federal RCMP presence and other federal agencies or indirectly to the adjacent municipalities. That is clearly the major concern.

If it was currently our responsibility to police the port, we would be policing it more intensively than it is policed today. We do not want to see that responsibility transferred to municipalities.

The Chairman: Thank you, Mr. Dobell.

Mr. Comuzzi, do you have a question?

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Mr. Comuzzi: I will yield to my colleague from Vancouver if she has a question, Mr. Chairman.

Mrs. Terrana (Vancouver East): I have a question.

Mr. Comuzzi: If she leaves me one question.

Mrs. Terrana: Thank you very much.

My question has to do with port policing. It's been a big issue in Vancouver. You said that it's not adequate, and we have been determining that.

Did you ever put together some kind of amount that would cover the policing of the port in an adequate manner? Do we know how much we need? Do we know how many police officers we need? Do we know where we are going if the port's policing is disbanded? What are we going to expect from the city, from the Vancouver Police Department?

There are lots of questions that probably will be answered tomorrow. Unfortunately, I will be on a plane. I would like to know if you have a little more information on what we are facing with the disbanding of the police....

Mr. Owen: There were some three dozen constables on the port and that's now been reduced to 29. It was going to go to 14 in June. Our chief of police has used a number in the high forties. I think on the original number of 35, it was at least 10 more constables, to take it from 35 to 45. If you take it from the 29, it's roughly 16 more than what's there now.

Mrs. Terrana: If we do disband the port policing, will the Vancouver Police Department be able to look after the needs of the port?

Mr. Owen: Yes.

Mrs. Terrana: So the extent would have to be debated. It would be negotiated -

Mr. Owen: To increase it. You have to understand that this port is growing tremendously. It's a huge economic generator. There's a huge movement of drugs. You've seen the pictures of containers full of stolen automobiles going off to the Orient. Certain criminal elements are active in there and they're operating in a way that is different from the way they used to operate.

It's a whole new mode. Our police department is getting very contempory, with electronic computer systems, and it's able to approach these changes in the criminal world and respond to them better from the size of the Vancouver police budget, which is $102 million, with 1,100 sworn officers and 300 civilians. I think they are willing, ready and able to do it, but we don't think we can bear the total brunt of that cost as an off-loading base, because we get our revenue from residential property taxes, which are regressive. People in Vancouver are asset rich and cash poor, and squeezing more money out of them for that is not appropriate.

Mrs. Terrana: Thank you.

The Chairman: Thank you, Mayor Owen.

Mr. Fontana.

Mrs. Terrana: I have more, but -

The Chairman: Mr. Fontana, very quickly.

Mr. Fontana: Mr. Chairman, I have a supplementary to what Anna and my colleague Mr. Keyes were asking. It revolves around taxation, your revenues and what the ports have to pay.

I heard you talk about how very important it was for ports to become competitive and viable, because at the end of the day if the port of Vancouver is not viable or competitive, customers will go elsewhere and we all lose.

The Government of Canada, the port itself, and the tenants of the port generate something in the neighbourhood of $40 million to $45 million a year for all of your municipalities. So when we start talking about who should pay for policing costs - because that's something we as a government are now paying through the Canada Ports Corporation - and you say let's.... Obviously you're not very satisfied with the money you're getting from the Canadian government.

What my colleague was trying to get at, and what Anna asked you, was who should pay if in fact the policing is turned over to the municipalities or to the regional police forces. It's much the same situation in other communities across this country - Hamilton is one - that in fact decided to make their police forces regional some time ago, as opposed to the port police.

Here's the question. For $40 million or $45 million - because we obviously can't impose a charge on the port because we'll make it very non-competitive - who do you think should pay for the policing when in fact the port and the government and the tenants of the port are now giving your municipalities $40 million to $45 million in taxes or grants each and every year?

.1900

Mr. Owen: That is not coming directly into our cash register. How do you think the goods move in and out of the port? How do they get there? Go to Broadway and Commercial Drive right now. We're spending $35 million on left-turn and right-turn bays and widening intersections so that Knight Street can be the truck route in. That is totally a strain on city services. We provide the roads, the sewers, the support services and the infrastructure that feed the port. We're continually improving access for goods movement and the port roadway and the McGill overpass and so on. It is disrupting neighbourhoods, and we get a lot of complaints from a lot of residents about these massive 60-foot trailers screaming through residential areas. We have to deal with all that and we do deal with it, at our cost.

Mr. Fontana: I agree with you. That's why when my colleague asks you what services you provide the port for the moneys that it or we are paying you, then infrastructure is a very important matter.

Mr. Owen: We're spending about $30 million per year now replacing the sewer system in Vancouver. We're replacing 1% of it from a single-sewer pipe to a double-sewer pipe, new water lines, new filter systems for chlorination, etc., to provide the ability for the port to function - at our cost.

Mr. Fontana: The other alternative in Bill C-44 is for us not to give you grants in lieu of tax at all. Perhaps you should tax the port directly yourself and have the port pay you as opposed to paying the government a stipend or a dividend and we in turn having to pay a grant in lieu.

Mr. Owen: Let's remember that the money all comes from the same taxpayer. The people in Canada are sick and tired of 54% tax when you get 37% and 35% in -

Mr. Fontana: Well, which would you rather do?

Mr. Owen: We don't feel we should have to nail our residential property taxpayer, our widow who has lived in the same house for forty years, to deal with the fiscal problems of the senior governments.

Mr. Fontana: Which would you rather do? That's all I asked you, whether you want to tax directly or get the grants in lieu. I'm not trying to be argumentative.

Mr. Owen: We'll supply a number for you on the city services that we supply, and it's going to be huge.

The Chairman: Mr. Comuzzi.

Mr. Comuzzi: These may be the more mundane issues, but Bill C-44, which we're here to consider, refers throughout to user groups, whether in the port of Vancouver or any port in British Columbia, or a port on the east coast or on the St. Lawrence Seaway. If I direct your attention to your submission, item G refers to the restrictive nature of having users appointed to any group because perhaps we need broader-based expertise, whether it's a port or a seaway or so on.

Mr. Chairman, I'll leave this to the mayors and anyone who wants to make a contribution for our guidance. I too am nervous about exclusive user groups. What other areas of expertise do you think would be needed in your ports or harbours in Vancouver so that you can get the best administration possible?

Mr. Dobell: There are a number of areas where it's obvious that the port would benefit from expertise. Those could be local government issues, community issues, first nations issues. The port is a part of the community in which it functions, so all of those areas of interest would be valuable to the port at some point. But I assume there are also specialist areas, foreign affairs, perhaps Asian cultural information, that may be valuable to the port given the developing economic activity.

The point, I suppose, is what skills and capabilities would be valuable to the port, and the way in which the legislation is drawn is very narrow. There would perhaps be a lot of people in the business with that kind of expertise; the leavening of other interests would be very valuable. It's hard to be specific because it would depend on what the world is doing ten or fifteen years from now.

Mr. Comuzzi: Do you think labour should be included?

Mr. Dobell: Labour would be a potential. Computerization and electronics might well be useful to the port as it becomes more automated.

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The Chairman: Is there anyone else who would care to comment? It's not argumentative. We have run over time, but because of the size of this delegation and the interest in this particular topic I have allowed us to go a little further.

Mr. Gouk: I have a question with regard to policing, given the level of expertise we have here, including the inspector.

When you start looking at the model for costs and the numbers you feel you would require, are you including in that policing for the purposes of immigration and smuggling, which would still properly be a federal responsibility as opposed to municipal?

Mr. Owen: I think those have to stay with the federal Crown. Constitutionally it's the federal Crown's responsibility.

Mr. Gouk: I just wanted to know.

The Chairman: Mrs. Terrana, do you have a final question?

Mrs. Terrana: Thank you for coming. Welcome.

I am concerned. Are they going to remove the little houses that now house the port's policing? If we disband port policing, that is a very important.... I think it's good for people to know it's there. It seems to give more confidence both to the port and to the people around the port who know, as you said before, it's full of problems.

Mr. Owen: I think that's a decision that will be made at a later date, but I assume it will mostly be controlled from 312 Main, which is a secondary facility. The main police station is at 6th and Cambie; that's where it's centralized. But we do have community-based police officers and something may be done in the port. It hasn't been worked out.

Mrs. Terrana: A crime prevention office?

The Chairman: Thanks to all of you. I appreciate the time. It's been an interesting discussion.

We have Mr. Wilds from the British Columbia Maritime Employers Association, and Mr. Brian Mitchell.

Mr. Bob Wilds (President and Chief Executive Officer, British Columbia Maritime Employers Association): On behalf of the 77 members of the British Columbia Maritime Employers Association, we thank you for the opportunity to appear before the committee, to comment on certain aspects of Bill C-44.

We've provided copies of our submission. Our initial review of Bill C-44 confirmed our belief that the former Minister of Transport, Mr. Young, and his successor, Minister Anderson, took careful note and consideration of the many recommendations of the Standing Committee on Transport, which were based upon its extensive consultation process undertaken prior to the drafting of the proposed legislation with respect to the establishment of new port authorities.

The safeguarding and promotion of Canada's competitiveness and trade objectives are essential for us to maintain our place in the international market, as well as for the protection of our standard of living and social safety net, which have made Canada the envy of most, if not all, other countries.

Our membership is particularly pleased to see the elimination of the Canada Ports Corporation's role in the administration of Canadian port authorities. We were also relieved to see the proposed elimination of special draw-downs from ports, the elimination of non-profitable ports, and as a general rule the elimination of government backing for port borrowing.

One of the other encouraging recommendations of great interest to our industry centres around the method of appointment of members to the board of directors of the new port authorities and the subsequent selection of the chairperson for the board.

It's our view that the new structure being proposed will allow Canadian west coast ports to be more competitive, responsive, and cost-effective in the new global economy. It also appears to be consistent with the concept of user pay, user say in many cases.

We have not addressed many of the proposals that are directed at what we would call technical day-to-day operating or administrative matters, but we have tried to focus our attention and concern on issues of a more general and broader nature and will therefore confine our comments today to only a few of the areas we have commented on.

.1910

The first area we would comment on is part I, clause 6, which deals with the issuance of letters patent for incorporation of a port authority.

We fully endorse the establishment of the autonomous authorities that meet the criteria of having financial self-sufficiency, being of strategic importance to Canada's trade, being linked to major rail and highway infrastructure, and having diversified traffic.

We would add, however, that these authorities must be established in such a manner that they are afforded protection from becoming an easy source of tax revenue by various levels of government. These authorities must also be able to redevelop existing facilities and establish new facilities required to meet the needs of Canadian importers and exporters.

Urban encroachment is a major concern and threat to the future viability of ports today. These new port authorities must not be prohibited from proceeding with needed development or redevelopment, recognizing the need to undertake such activities in a responsible and safe manner, having regard for the real estate concerns of the public.

There continues to be an interest expressed by some that these new authorities should remain as federal agencies. It's our understanding that some of the benefits of agency status would include exemption from federal and provincial taxes on income, exemption from provincial corporate capital tax, which in the case of the port of Vancouver would be about $1.5 million, exemption from municipal zoning for all owned real property, and favourable treatment on property tax under the Municipal Grants Act, whereby grants in lieu of taxes are paid.

Issues of this magnitude must be handled in a manner that will prevent any negative impact on existing port operations, leading to increased costs and further possibility of diversion of Canadian cargo to other ports.

In the area of board governance, it's our view that the nine directors being proposed would not be necessary for ports such as the Prince Rupert port and the Fraser port. We believe their interests could properly be served by a smaller seven-person board, which would also be less expensive for those port authorities. We believe the situation would be different with respect to the port of Vancouver.

There should also be some provision for the board to continue to operate with fewer than the minimum designated number in the event that an unexpected vacancy occurs or a delay is encountered in the appointment of a director or directors.

We are at a loss, however, to understand why it's being suggested that the Port of Vancouver be required to have two provincial government appointees. We recognize that the majority of cargo handled through the port of Vancouver comes from other western provinces. However, other ports besides Vancouver handle significant volumes of import or export cargoes for destinations other than the province in which the port is located, such as Halifax and Montreal, yet the suggested legislation does not suggest that there be provincial appointments from other than the province in which the port is located.

We believe the users are very cognizant of the need for board representation from other than the local port area. Any possible concern can be dealt with in a manner other than that proposed for board appointments for the Port of Vancouver. As a matter of fact, our organization proposed to the Minister of Transport a list of nominating organizations, which included shippers organizations whose members are located across the western provinces, and we are confident that their interests will be reflected in any list of proposed nominees.

We also see no reason why the chief executive officer needs to be a voting member of the board. It is important that such a person attend meetings and actively participate, but we see no reason why the status of a director with a vote is required.

The very nature of port organization is such that, in our opinion, it may in some cases be more detrimental than beneficial. However, a possible alternative would be to allow the discretion for that to be with the board of directors; they would determine whether or not the CEO should hold director status. If it is determined that should be the case, we believe it should be in addition to the specified number of directors, but it would be imperative that user appointees remain in the majority.

.1915

With respect to paragraph 6(2)(h), any payment obligation of a port authority must be carefully and specifically designed to ensure that the competitive position of the port or Canadian importers and exporters is not jeopardized. While we believe that the best method of contribution is through economic generation as opposed to a direct payment to government, any form of required payment should be based on net income as opposed to gross revenue.

We cannot afford to lose sight of the fact that our competition, U.S. northwest Pacific ports, operate under very different arrangements, which in many cases have allowed them to attract Canadian-destined cargo. This, of course, has been at the expense of Canadian jobs and tax revenues through all levels of government. We caution against any action that encourages further erosion of our cargo volumes.

As well, as we understand it, the port authority's ability to borrow for developmental purposes will be totally dependent upon cashflow. Since the authority will not be permitted to pledge the real property, excessive or unpredictable levels of payment to the federal government could very easily prohibit the authority from entering into required loan arrangements on a commercial basis to do required developments for the benefit of Canadian importers and exporters. This would not be consistent, in our opinion, with the stated objectives of the act.

We fully support the principle of part-time directors, as suggested in the proposed legislation, and believe that the wording with respect to the fixing of remuneration should be changed from ``may'' to ``shall'' fix the remuneration of the directors, the chairperson and the chief executive officer.

Consideration should also be given to limiting the number of days per year that may be claimed by a director for attendance at board and/or committee meetings - for example, not to exceed twenty in any calendar year.

We also believe that clause 15 should be amended to read that the board of directors ``shall'' elect a chairperson from among members for a term of one year, with the chairperson able to be re-elected for further terms of one year.

Under clause 18, we think it should be modified to clearly establish the director's role as oversight and policy only, not operational. This would be consistent with the issue of part time, as referenced in clause 12. Limiting the number of days that can be billed would, we believe, also ensure directors maintain an oversight and policy role.

While we fully support the concept of eliminating government guarantees given on behalf of port authorities, we question the additional financial burden that likely will be faced by the new Vancouver Port Authority. Successful negotiations were concluded to finance a new Delta port development. These loans amounted to a total of about $140 million, repayable over a ten-year period.

It is likely that refinancing of this arrangement as a new port authority could result in a higher rate of interest on such loans in the neighbourhood of fifty basis points, which could increase financing costs by about $700,000 in the first year.

Since this major development was approved, based upon the existing financial arrangements we believe there is justification to grandfather current arrangements of this magnitude. This is particularly true in light of the significant drawdown payments the Port of Vancouver in recent years was required to make in addition to annual dividend payments.

It is our view that all future financial arrangements should be on a fully commercial basis with no government guarantees. We also question whether or not these two clauses have considered the possible need for federal government intervention in the event of a catastrophic event, such as an earthquake. Based upon our interpretation of those restrictions, a special act of Parliament would be required to assist the port authority even under such extraordinary circumstances.

Next, as worded, subclause 24(2) may preclude the port authority from establishing satellite operations for port promotion or for marketing port-related products that have already been developed with commercial value. We believe this needs to be looked at. Elimination of the words ``within the port related directly'', with the addition of a reference to information and the processing of transportation and passengers and goods, would, we think, resolve this problem.

While we support limiting the focus of a port authority to those activities authorized within the letters patent, it will be necessary to ensure that such restriction will not impact negatively upon the ability of the authority to successfully borrow from financial institutions in order to complete required development of facilities in future years or the acquisition of new land and/or facilities when and where required.

.1920

We also have some concern with paragraph 41(1)(b) in that there may be some ability to interpret that provision as allowing a port authority to involve itself in commercial rate-setting between the terminal operator and/or stevedores and their customers. We do not believe the port authority should have any role to play in the commercial arrangements between service providers and customers.

We also believe there should be a time limit specified as to when the annual meeting should be held with respect to releasing the financial report of the port authority. We suggest within six months after year-end.

Although I haven't commented on all of the contents of our brief, those are the areas we wanted to highlight today.

The Chairman: Thank you very much. Monsieur Crête.

[Translation]

Mr. Crête: I thank you for your specific amendments especially the one for "users", the status of the non-voting president and the sectors where ports could get involved.

My question has more specifically to do with clause 46. You say you have important reservations about the fact the Governor in Council could certify the dissolution of a port authority. I'd like you to explain what you set out on page 9 of the brief. If I'm right, a port authority could have made medium or long-term arrangements and that decision would be suspended like the sword of Damoclès over the heads of the directors.

[English]

The Chairman: Please repeat the final part of the question.

[Translation]

Mr. Crête: What's the exact danger you see with clause 46? Is it the fact that the federal government is giving itself extraordinary power to dissolve or not dissolve a port authority and has sort of a control over the situation or is it simply because long-term financial commitments might have been made by the port authorities and that the government could dissolve that authority without necessarily having to take those long-term commitments into account?

[English]

Mr. Wilds: Our concern is that the Governor in Council could dissolve the port authority, and there's no reflection in the proposed legislation that takes into account the fact that long-term commercial agreements may be in place. If that were to be done, how do those commercial arrangements get dealt with? We have no idea. That's our concern. How would it impact our members?

[Translation]

Mr. Crête: In its present form, wouldn't the effect of that provision be to force a port authority to almost automatically go get a commitment from the government before making any long-term commitment? As it is presently written, wouldn't that decision have a slightly centralizing effect?

[English]

Mr. Wilds: I don't know if that is the effect then. As long as the commercial responsibilities in the contracts are dealt with, we don't have a concern. In reading it, we didn't see that to be the case, but if the intent is for those commercial contracts to be dealt with in a fair manner, then we don't have the concern about dissolution. But if it's not indicated or spelled out to us, we have that concern. That was what prompted our question.

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

.1925

Mr. Gouk: Thank you, Mr. Chairman.

I have just a couple of areas. Dealing with users, first of all, in its broadest sense do you envision that amongst the users should be the employee groups, that they should have representation in the operation of a port?

Mr. Wilds: We did not include them in our list of users. They are a service provider but not a user. They provide labour, but they're not a user in our interpretation of user, as we understood the concept. What we put forward is that groups of users included terminal operators, major shippers such as Potash Corporation, Saskatchewan Council of Forest Industries, Sultran, the petrochemical industry, the grain industry. There were about 15 different organizations that we suggested we would consider to be ``users'' of ports ranging right across western Canada.

Mr. Gouk: I just wanted to clarify that.

As well, perhaps you could just clarify for me your position on clause 10. As I understand it, you say that ports shouldn't be burdened with taxation by local governments. Is it basically in its entirety that they should be tax-exempt? Is that your proposal?

Mr. Wilds: We believe it should have been the case, although it isn't the case.

Mr. Gouk: I realize it isn't. I just wanted you to clarify that this is what you intended to say.

Mr. Wilds: What I intended to say was that in putting in this new legislation we do not want to see the port facilities subjected to levels of taxation and appear to be a source of tax revenue for all levels of government. At worst case, they ought not to be any worse than we are now - which we're not overly pleased with.

Mr. Gouk: I agree wholly with the comments you've made, but I find them to be a little different from the comments you made within your brief. I understood your brief to say that they shouldn't be taxed period. You're saying that they shouldn't be taxed unreasonably. Is that actually your position?

Mr. Wilds: Our position is that it should be no worse than today.

Mr. Gouk: That clarifies it somewhat. Thank you.

The Chairman: Mr. Fontana.

Mr. Fontana: I too want to talk about taxation. I hope all the municipal politicians haven't hightailed it out of here. Usually when we start talking about taxation they like to pounce all over the feds and the provinces, but as soon as we start talking about their levels of taxation none of them want to hang around.

Jim just asked you the question about level of taxation. This is very important. We're going to get a competitive environment in this country, especially as it relates to ports and harbours and transportation. Taxation is part and parcel of that. When $40 million to $45 million is being given to municipalities by either the employers that are in the ports or by the ports themselves, and at the end of the day it's the user, I get a little concerned about that.

Your submission says if in fact the port authorities be required to negotiate fee-for-service arrangements for municipalities, there must be a mechanism for resolving these disagreements. Then you go on to say that the federal government must retain its current priority status on this matter.

Do you believe the better system of taxation would be having the municipality be able to quantify what that service is to the port, and hence to the employer and/or the users so that one can essentially get to a fairer user pay system? If I understood what the mayors before were saying, if they had to levy the taxes, the taxes would probably be higher, and therefore they expect the federal government to subsidize what would be required from services from them. I would like your opinion as to what kind of tax regime should be put in place so that our ports and harbours are much more competitive.

Mr. Wilds: In its simplest form, my answer to your question is that I do not think the standard form of taxation should apply to facilities that exist for the purposes of facilitating international trade. Those facilities should be viewed as generators of economic wealth. They provide jobs, the movement of Canadian cargoes, inboard and outward, and imports inward, and they effectively generate jobs right across the country.

We think we have to move away from the perception that these facilities are a source of revenue to provide all the services in every community in which they happen to be located, and in some in which they're not located.

.1930

Possibly there should be a different form of taxation on port properties that are not used for international trade that is comparable to what other people operating in that same environment are involved with in paying taxes.

But as far as the facilities in and of themselves that are used solely for the purposes of receiving, storing, and moving cargo in and out, technically we don't believe they should be taxed. But if they are taxed, then it ought not to be at the same level and ought not to be perceived as a significant source of tax revenue, whether it is revenue for the municipal, provincial or federal government.

Mr. Fontana: Can you give us some information in terms of competitiveness, in terms of who we're competing with? Obviously it's the ports and harbours next door to us. Do you have some information that could enlighten us as to the impact of taxation on your group in the United States so that we'll be able to compare?

Mr. Wilds: We have documents that have been prepared through an organization of which we are a part, the Greater Vancouver Gateway Council. It does those specific comparisons and we will certainly make them available to you if they aren't made available to you in the council's presentation.

Clearly, we're looking at the ports of Seattle, Tacoma, and Portland, which obtain in excess of $40 million a year in tax revenue from citizens of those counties. We're providing tax dollars to the tune of some $40 million in the port of Vancouver and we wonder why we're not competitive.

The Chairman: Anna, one small question.

Mrs. Terrana: In fact, that's really what I'm quite concerned about, because of the fact that we compete with the south rather than with the rest of Canada, and we have heard that we will not be competitive if we implement this particular bill. Do you think Bill C-44 will make the ports competitive or do you have concerns in that respect? You don't seem to have expressed that.

Mr. Wilds: We are very supportive of Bill C-44 as far as it is moving us in the direction of competitiveness.

We are concerned with what happens with the whole issue of taxation surrounding the changes that are talked about in the bill. And depending on what form the port authorities take when they are put in place, it will make us either more or less comfortable, depending on whether or not they become subject to municipal, provincial, and every other form of taxation.

If that happens, we won't be competitive and our cargoes won't move out of our ports. If we don't put the protections in place around those areas, and if governments at all levels don't recognize that transportation is not a source of tax revenue but is a generator of wealth in this country, then we're in serious trouble.

The Chairman: Thank you, Mr. Wilds, for your presentation, and thank you, Mrs. Terrana.

Our next group is from the International Longshoremen's & Warehousemen's Union, with Mr. Tom Dufresne. And from the ILWU's local 517, we have Michael Gorman and Stephanie Nenadic. Since there are three of you, perhaps you could indicate who is going to lead the discussion and introduce the group.

Mr. Tom Dufresne (President, International Longshoremen's & Warehousemen's Union): My name is Tom Dufresne. I'm president of the ILWU Canadian area. Michael Gorman, the president of local 517, will be making a separate submission along with ours. Stephanie Nenadic will be making the presentation with Mr. Gorman.

The Canadian area has put in a brief submission just touching on a couple areas of Bill C-44. The area that we would like to address is paragraph 14(e), the ``Persons excluded'' clause, which reads:

(e) an individual who is an officer or employee of a person who, in the opinion of the Minister, is a user.

.1935

Our concern is that many persons with knowledge and experience may be excluded from serving the community because of this provision. Stakeholders who rely on the port for their livelihood, or those who represent them - unions - would, I believe, make decisions that ensure the continued viability and commercial feasibility of Canada's ports. The definition of user, as I read it, might preclude this possibility and could be detrimental.

With respect to subclause 24(2), it is our opinion that this clause's scope and interpretation should not restrict the ability of the port authority to market the port and its operations. The Port of Vancouver has actively promoted the port in the past, and in my opinion it has performed well in establishing Vancouver as the premier port in Canada. It has done this by bringing stakeholders together for the common good to the benefit of all Canadians, and to interfere with the formula would hamper the continued improvements needed in the next century.

On subclause 36(4), we believe that the generality of the subclause needs clarification as to the disposal of lands, which is covered elsewhere in the bill.

Under clause 96, on enforcement, with respect to designation, the ILWU is concerned that this provision not be used to eliminate the current Ports Canada police force. The National Harbours Board police, the precursor to Ports Canada police, has through the years provided service that has allowed Vancouver's reputation as a relatively crime-free port to develop. By eliminating their presence or lessening their impact, the government would be sending out the wrong signal to international criminals, which would be causing a disservice to Canada that might be irreversible.

When Canadian cities are moving to community-based policing to increase effectiveness and contact, it would be foolhardy to destroy a true community-based police force such as the Ports Canada police.

Clause 119, local port corporations, reads:

On the continuance of the local port corporation under section 10 as a port authority, sections 44 to 46 of the Canada Labour Code apply as if

Local 517 will be touching on that in their brief.

In closing, on behalf of the membership of the International Longshoremen's & Warehousemen's Union Canadian area, I'd like to thank the committee for this opportunity to address these issues. It is the desire of our members to ensure that Canada's ports remain a viable cargo-handling asset for all Canadians.

I'll answer any questions you might have.

The Chairman: Thank you, Mr. Dufresne. I'm going to hold questions until we've had both presentations.

Mr. Michael Gorman (President, Local 517, International Longshoremen's & Warehousemen's Union): First, Mr. Chairman, I'd like to thank you and the committee for this opportunity to come forward to present the concerns of the membership we represent. As indicated on our submission, I am the president of ILWU local 517. Ms Nenadic is a member of our local's executive and also a member of the committee that put together our submission to this committee.

We are obviously part and parcel of the Canadian area. However, we are a fully autonomous local within the Canadian area and that's why we wish to come forward with a presentation separate from that of Mr. Dufresne.

We feel we're in a somewhat unique situation. Within our local there isn't a full-time elected officer. Anybody who stands on the executive or as president of the local does so strictly on a volunteer basis.

Stephanie and I are full-time employees of the Vancouver Port Corporation. We feel that lends us something of a dimension in coming forward with concerns on the labour relations issue and also with concerns as employees of the Vancouver Port Corporation. I think that's somewhat reflected in the submission we put forward to the committee.

Our concerns surrounded the human resource issues in Bill C-44, but we also felt they went beyond that. We had concerns that if VPC was stripped of federal agency status it could very well inhibit the ability of the corporation to conduct business as it has in the past. It's our feeling that the business of the VPC has been very successfully conducted over a number of years. We feel we have very good labour relations with the Port of Vancouver. We'd obviously like that to continue.

We have a number of concerns with the bill. We felt the bill was silent on transition. There was no mention of federal agency status. We felt it would potentially impede the ability of the port to continue to conduct business as it has in the past, which would have an adverse effect on us, the unionized staff of the Vancouver Port Corporation, as well as the non-unionized staff.

.1940

In our submission we indicate that an example of one of our primary concerns was pertaining to our pension plan. We laid out the percentage of employees who have been under the Canadian Forces Superannuation Act for a good number of years. We have very grave concerns there as well as elsewhere, and we feel that if the bill is going ahead without strict guidelines as to how we would transition from the present entity to a new one, that would be extremely problematic for the Vancouver Port Corporation and consequently for us, the unionized staff of the corporation.

That is about all I have to say on the matter, Mr. Chairman. I'd like to thank the committee once again for allowing me to come forward.

The Chairman: Thank you, Mr. Gorman.

[Translation]

Mr. Crête.

Mr. Crête: I thank our guests for their presentation.

Just to have another look at the definition of user, I think I understand that you wanted to include the fact that an employee be considered as such and possibly be elected or chosen to sit on the board's of the port authorities. Is that actually what you want to do?

My second question is on clause 119, "Local Port Corporations". You're generally repeating the wording of the clause in your brief, but you take no position. Are you favourable because the situation is properly described or would you like corrections brought? Basically, clause 119 is sort of the equivalent of clause 45 of Quebec's Labour Code; it has to do with the transfer of installations, if I understand correctly. I'd like to know whether you find the wording satisfactory.

[English]

Mr. Gorman: Actually, I'm assuming the question was to Mr. Dufresne. Was it to me, sir?

[Translation]

Mr. Crête: For the first part, it's for Mr. Dufresne because it was in the brief he presented but whoever can provide me with the relevant information is welcomed to do so.

[English]

Mr. Gorman: If I may, I'd like to answer the first question at least. I do feel the employees within the industry are users and I feel it would be appropriate that they be represented on the board of directors. As much as that can sometimes bring potential or perceived conflicts of interest, I think it does lend better and more total relations within the industry at large.

[Translation]

Mr. Crête: On that point, I would simply add that there were all kinds of experiments in many concerns where employee participation in fact did help improve productivity in a major and interesting way. This participation brings in a point of view that the employers cannot necessarily have.

[English]

Mr. Gorman: I'd have to say I fully agree with that.

[Translation]

Mr. Crête: There was a second question on clause 119. I wanted to know if the wording used in the bill and that you express again in your brief seems correct or if you would like to see it corrected and get a new version or look at it more attentively.

[English]

Mr. Gorman: I personally feel, and our local feels, that the way the bill is laid out in that particular section is appropriate. We just didn't feel it went far enough, and our concerns lay in that it was silent on certain issues that we felt could have rather wide-ranging ramifications if not addressed.

.1945

We feel, in the human resources section of Bill C-44, as we indicate in our submission, very appreciative of the fact that successor rights were addressed. We felt that spoke on a given, but took care of what could be a potential issue with us. We had concerns about the silence on other issues that we brought forward in our submission...if incorporated in the bill, would be helpful.

The Chairman: Thank you.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

One of the things you brought up that I'm really interested in is this transfer of benefits, or the lack of transfer of benefits. Whenever a big bill like this comes out, we immediately start focusing on a couple of things that leap out at us. I haven't heard this mentioned. To be honest with you, I haven't considered it or noticed it.

I think probably we're going to be in a position - we've already had a briefing from the department and of course we then get to ask them all the questions. I wish we'd known about this then. I wish I'd known about it, and I'm sure the others do too. We have may in fact have to try to get them back to find out what their position is on this. But I appreciate that you brought it to our attention. We can't deal further with it now, but I will certainly look into it when we get back to Ottawa.

That's all I have, Mr. Chairman.

The Chairman: Thank you very much.

Mr. Gorman, you wanted to comment on that.

Mr. Gorman: No, that's fine, Mr. Chairman.

The Chairman: Mr. Keyes.

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

How many unions, Mr. Gorman, say, operate at VPC?

Mr. Gorman: We have slightly in excess of 100 unionized staff at VPC.

Mr. Keyes: Members of how many unions, though?

Mr. Gorman: That's one union.

Mr. Keyes: It's all one union.

Mr. Gorman: There are no other unions. It's strictly ILWU, local 517, of which there are about 105 members at the present time.

Mr. Keyes: Thank you, Mr. Chairman.

The Chairman: Thank you very much. Mr. Comuzzi.

Mr. Comuzzi: When you go through the.... I had it at one time, but it's gone from my mind. You don't deal directly or you have no contractual arrangements with the Vancouver Port Corporation. Is there an intermediary there you bargain with and then they deal with? Explain to me the process, please.

Mr. Dufresne: The Canadian area is a group of autonomous local unions formed under a structure called the Canadian area. Each group within that - they have the longshore division, which is the longshore unions up and down the west coast. We have the Vancouver Port Corporation employees, which is local 517. They also cover people who work at some of the various terminals, such as Roberts Bank or Squamish terminals and Fraser-Surrey. They negotiate separately outside the Canadian area for a collective agreement, then use the Canadian area for resources and sometimes for help in negotiations, but mainly conduct their own business.

Mr. Comuzzi: Local 517 wouldn't contract directly with the Vancouver Port Corporation, would it?

Mr. Dufresne: They have a collective agreement with the Vancouver Port Corporation.

Mr. Comuzzi: They have a collective agreement.

Mr. Dufresne: Yes.

Mr. Comuzzi: Do either of you have any association with any United States unions?

Mr. Dufresne: The International Longshoremen's & Warehousemen's Union has a fraternal relationship with the international. We send no money down to the U.S. in that regard, but we have a fraternal relationship that dates back to the late 1940s. We're a totally autonomous, self-serving body - self-servicing, I should say.

Mr. Comuzzi: There would be something wrong if you weren't self-serving.

That's fine. Thank you.

The Chairman: Mrs. Terrana.

Mrs. Terrana: I just want to bring to the attention of everybody that we have a new president of local 517. Welcome and thank you for coming.

Mr. Gorman: Yes, thank you. Actually, I've been president for almost five years now.

Mrs. Terrana: So where was Denny Allan?

Mr. Gorman: Denny Allan was local 500, which is the local -

Mrs. Terrana: Oh, it's 500, I'm sorry. Anyway, welcome. I've never met you. That's why.

.1950

Mr. Gorman: Thank you very much.

Mr. Chairman, would I be allowed to go back to follow up on the earlier question. With the Vancouver Port Corporation, the collective agreement is between ILWU local 517 and the Vancouver Port Corporation. In the past, when required, we've availed ourselves of the services of the Canadian area, of which Tom is presently the president. As a local, we took great satisfaction in our last set of negotiations. We took it from start to conclusion with no assistance from the area office of the day. It is our desire to continue that in the future. We feel it's showing a maturing of our local and the relationship we've come to enjoy with the Vancouver Port Corporation.

That's not to cast any disparaging comments on Tom or the Canadian area. We appreciate the help we always get and we're both in agreement that this was a positive development in our relations with the Vancouver Port Corporation as well as with the Canadian area, and it's one we'd like to continue.

Mr. Keyes: Just as a quick follow-up, Michael, your question is that you think the bill is silent or doesn't answer fully the question of whether or not, when the transition is made from the Vancouver Port Corporation to a CPA...you think there's some question as to the collective bargaining agreements that are existing or in place. Is that your picture?

Mr. Gorman: No, we feel this is spoken to in the bill on successor rights. Our concern is the fact that it's silent on transition and it's silent on any reference to our pension plan, which is the superannuation act. The indication we're getting is that it puts us in danger of losing our pension plan as well as having no structure on which to make a transition, for example, as at the airport. We feel that would potentially severely strain the relationship we enjoy with their employers and also put them in a potentially uncomfortable situation.

Mr. Comuzzi: Mr. Chairman, this is alluding to the same situation as we experienced with transferring the air service, NAVCAN, where we, the Government of Canada, severed all of its associations and then rehired immediately. Is this basically what you're thinking of, for greater clarity, Mr. Gorman?

Mr. Gorman: No, I think we feel the situation is quite different. There'll be basically continuous employment between the staff and VPC. There won't be a direct severance. There'll be no severance pay-out. It will just be business as usual, as implied too with successor rights.

The Chairman: Thank you, all three of you. We appreciate the presentations. If there are some other questions, I'm sure they'll contact you directly.

Mr. Gorman: Thank you.

The Chairman: From Prince Rupert Grain Limited, we have Mr. Roth.

Okay, sir, I'll let you begin. You've been here and watched the process. If you confine your remarks to about 10 minutes, it will allow the members to ask some questions.

Mr. Clarence J. Roth (Chief Executive Officer, Prince Rupert Grain Limited): Thank you very much, Mr. Chairman.

Prince Rupert grain terminal is owned by the six major grain companies on the prairies, that is, the three pools in Alberta, Saskatchewan and Manitoba, and Pioneer Grain, Cargill and UGG.

The reason we're here is the recent elimination of the Western Grain Transportation Act. This has meant that the costs to farmers for the transport of grain has increased very significantly - frankly, about double what it had been in the past prior to the elimination of the act. This means that farmers are approaching their industry, of which we're a part, to reduce our costs and to try to get offsets for that significant increase in cost that farmers have had.

The result is that farmers are looking into the United States and various other places in order to see whether they might find other places that they can transport their grain to and reduce their costs.

.1955

A National Marine Strategy, produced by this committee in 1995, clearly identified the problems in the marine transportation system and proposed some pretty aggressive action to deal with them. We feel, though, that Bill C-44 falls short of the aspirations expressed within the marine strategy, and that's why we'd like to make some comment today.

The creation of a port authority gives more flexibility in meeting user needs. We think that's important, particularly in Prince Rupert where they have the opportunity to grow and expand to handle further volumes that can't be handled here on the lower mainland. We believe it's important that the ports no longer be required to pay large dividends as they have in the past and to essentially subsidize less viable operations.

Prince Rupert has concern about paragraphs 12(1)(e) and 14(e) of the bill. This has to do with the sections dealing with representatives who would be nominated to the boards of directors of Canada ports associations. In particular, in paragraph 12(1)(e) it mentions the fact that the Governor in Council may make nominations through the minister ``in consultation with the users''. There's no definition with what ``in consultation'' means. We have a concern that the perception may be that it's really political acceptability that may be the important criterion as opposed to a user's experience, knowledge, or other pre-qualifications to be a director.

The other, then, is the fact that an individual who is an officer, an employee, or a user, in the opinion of the minister, may not be a director of the authority. We are concerned that what you're doing is eliminating a whole lot of people who really have some pretty intimate knowledge of the international marketplace, and know and understand what customers' needs are as well as other shippers.

If there is a concern about the fact that they may well have an issue that comes to the table that deals with their particular company, they can always abstain from such discussions. We think their input is far more important than the concern of conflict of interest.

With regard to subclause 27(3), this deals with the fact that a port authority may not mortgage the property that it's managing. Again, we have the concern that the legislation prevents the Canada port authority from using the property it manages as security for capital development. What would then happen is that the cost of financing any development actually will be higher, and as a result the fees that are charged to users will be higher.

What we're saying is that the outcome will be that users who are paying are going to, in effect, be paying from the cashflow, even though they don't have any benefits derived from that particular investment. I think it's important that this be looked at again.

Clause 41 deals with fees that may be set by a port authority. We feel there needs to be some clarification in the legislation with respect to cost recovery rules. Stipends, remuneration, the CPA's jurisdiction with respect to grants in lieu of taxes, all of these kinds of things are costs that affect fees that the CPA ultimately has to charge.

In regard to subclause 42(1), this relates to unjust discrimination among users of the port, and here we simply draw to your attention an example. In the case of Prince Rupert Grain, we feel there is a significant economic rent being extracted that is beyond the value of the land. It's important that users not find themselves in that kind of condition with no recourse in order to overcome what could be a commercially absurd situation.

On amendments to the Pilotage Act, part IV, in the transport committee's recommendations in its report, the new national marine transportation act was to provide for the commercialization of pilotage services. We simply want to note that this has not been done in this case. What we did was we put the pilots in charge of the review, and we found they were unwilling or unable to take a look at their rotational dispatch system and to find other ways to provide pilotage services that would be on a commercially competitive basis instead of on the basis that exists.

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We give an example here that shows the situation coming into Vancouver: it takes some 16 hours, versus 8 hours into Prince Rupert. And when you work it out on a per-hour basis, you find that the charge for pilotage on a one-move basis within the ports is double in Prince Rupert than in Vancouver.

With regard to the fact that the pilotage authority has legislated powers with respect to the provision of pilotage, the setting of safety standards, testing and negotiating of fees, it's frustrating that through the marine transportation system and the available technology, global positioning systems have not been readily accepted.

This is a technology that could completely eliminate pilotage services, or simply improve upon them, or reduce the need for pilotage services in a significant way. We believe this technology would certainly lead to no reduction in marine safety, and certainly could provide an improvement in terms of cost-effectiveness.

Proposed subsection 33(3) reads:

The tariffs of pilotage charges prescribed by an Authority under subsection (1) shall be fixed at a level that permits the Authority to operate on a self-sustaining financial basis and shall be fair and reasonable.

We have a concern about the meaning of fair and reasonable. What are the definitions? Basically it looks to us that this is a provision that provides for a cost-plus system, so there's no requirement for pilotage services to be competitive or cost-effective.

Under clause 134 there's the opportunity for the Canada Transportation Agency to make a recommendation to the authority with respect to a notice of objection on fees. Again we think that there ought to be some direction to the CPA with respect to the fact that recommendations should be provided that would lower costs and achieve a cost-effective marketplace solution.

Clause 137 introduces the Pilotage Act requirement for a number of elements of pilotage service to be reviewed by December 31, 1998. We wonder whether in fact there is anything new to be brought up.

So, Mr. Chairman, with that we'd like to thank you for the opportunity to have appeared here today. We believe that Bill C-44 doesn't go far enough, and this is the opportunity to introduce some cost-effective measures.

The Chairman: Thank you very much.

[Translation]

Mr. Crête.

Mr. Crête: In the introduction of your brief, you allude to the supplementary costs that will flow from the proposals on pilotage and recovery costs for the Coast Guard. Would you prefer Bill C-44 to define that concept in a certain way so that the two government policies wouldn't develop on parallel paths without any links to one another? Would that seem one way of solving the problem?

My second question is on clauses 12(e) and 14(e). What you're saying, finally, is that anyone representing the users should automatically be appointed by the users. However, I don't think you're eliminating the possible representation of the federal government. Is that the true sense of your amendments?

[English]

Mr. Roth: Mr. Chairman, I do believe that if pilotage and coast guard services are each dealt with independently, that would be a better solution.

With regards to paragraphs 12(1)(e) and 14(e), it was not my intention to suggest the elimination of appointments by the federal government and provincial governments, but rather to simply deal with the one issue of users having the opportunity to be on the board of directors as well. I wanted to make the case that I think it would be beneficial to the board of directors to have users on the board, in addition to the other appointees.

[Translation]

Mr. Crête: In your conclusion, you refer the committee to the report produced last year. Besides the recommendations you've made on different clauses, there are one or two recommendations in the May 1995 report that you would particularly like to see taken up again by the committee and that are not contained in the current version of Bill C-44.

.2005

[English]

Mr. Roth: We have basically highlighted the two recommendations that we note, and feel those were the key ones. There are other ones, but I haven't brought the report with me today, so I'm unable to refer to them, Mr. Chairman.

The Chairman: Mr. Gouk.

Mr. Gouk: Mr. Chairman, I just have one comment, and then I'll pass to my colleague who has a question.

This is with regard to paragraph 12(1)(e), where you talk about your concern with the term ``in consultation with'', and this is in deference to my colleague across the way who pointed out that he doesn't feel that's the intention of the minister.

Given that he came before our committee and said that was not his intention, I accept that, but as long as those words remain, some less altruistic minister in the future, perhaps from a different party, may put on a different interpretation.

So I agree with you that that wording has to be corrected.

John.

Mr. Cummins: Thank you.

I don't take issue with your efforts to reduce pilotage costs, but I was just curious about your reference to the cost savings to be realized from global positioning devices. Knowing where you are is one thing, and yet getting from point A to point B is another, so I'm just rather curious about how you expect to realize a cost saving from these global positioning systems.

Mr. Roth: We have the situation in Prince Rupert that basically, when the weather is too rough, we'll find that instead of the pilots boarding where they normally would board, farther out, they'll simply board farther in.

We believe that rather than having this kind of thing happening, it's important that ships be required to have this kind of technology. With the mapping that can be done and the ability then to follow your way in, I believe significant improvements can be made with respect to a ship being able to traverse the routes in, and reduce costs.

Mr. Cummins: Okay. The other question I had for you deals with these lease costs that you suggested were double in Prince Rupert. Would you care to elaborate on that?

Mr. Roth: Our situation is that with both property taxes and lease costs in Prince Rupert we've been faced with double or more than that in our particular situation.

With regard to the lease costs, they were established through the period prior to 1982, which means that interest rates were up in the high teens or even low twenties.

Because of the high inflation cost, a rate was set at that time, and there is no mechanism within our lease document to allow us to go back and open it up. That doesn't mean the port can't do it of their own volition, but there is nothing in there for the user to be able to get a hearing and be able to arbitrate, or whatever.

In our case, we are paying for a lease on a Greenville site that has been developed, but it has no greater value than just that, and we're paying double what terminals in Vancouver are paying, where the land values obviously are very much higher.

Mr. Cummins: Is there anything in Bill C-44 then that's going to help you overcome the loss - if I could use that term - of the crow rate in that whole system?

Mr. Roth: We think it needs strengthening, and particularly in terms of the appeal provisions, so that in fact you can address these kinds of situations where the user feels that the charges are improper.

The Chairman: Thank you, Mr. Cummins. Some of us in the west view the crow rate as a subsidy to eastern businesses.

Perhaps I could turn to Mr. Fontana.

Mr. Fontana: Well, Mr. Chairman, I'm happy you said that about the crow rate. I'm sure you would want to correct the record that while the adjustments with regards to the WGTA were necessary, there was a substantial pay-out to the producers, generosity from the Canadian taxpayer to the tune of some billions of dollars, as well as adjustments in terms of rates to Prince Rupert, I might add.

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So while, yes, it has cost you a little more, the fact is that I think you forgot to mention the other part of the equation, that substantial dollars were paid out to the producer. But that's not what I want to ask you.

Mr. Roth: I would like to respond, though.

Mr. Fontana: I'm sure you will.

With regard to the board of directors and the inclusion of users on the board of directors, can I just ask you, first, how will we deal with the conflict of interest preoccupation? Obviously we needed to draft it on the basis of conflict of interest, so if you have one specific user that in fact can be on a board, how can we effectively deal with that conflict of interest and give confidence to that board? After all, we want it to be transparent and open and to be seen by all. Second, if you allow one user on the board, how do you say to potentially 20 or 30 more users of that port that they can't be on the board?

So I think you can understand where we and the minister were coming from. That is, to deal with the conflict of interest and to deal with numbers - otherwise, you could have boards that have 20, 30, or 40 directors - ask the users to choose representatives, a representative of the user groups, but not necessarily directly a user himself.

I wonder if you could tell us how we would deal with both of those scenarios.

Mr. Roth: I believe you would obviously have to work through user group associations. In other words, you have a coal association, a potash group and a western grain elevators association. Through those associations you would obviously be able to achieve the nomination of a user. I believe you'd have to rotate them. As you say, I don't think you want to have a huge number of people on the board. It's inappropriate. You can get the numbers down to a reasonable number.

You also asked the question as to what happens in terms of conflict of interest. I've indicated in my prepared remarks that were distributed that where it is then a situation of dealing with that user's industry, or more particularly his business, obviously he would have to abstain. It's only appropriate.

Yes, $1.6 billion was paid out to farmers. Certainly that was very important in part of the settlement. It was far short of what the total amount would have been had you capitalized the entire cost of moving grain as it was seen in perpetuity under the crow rate. But that's a totally different matter.

The one thing I want to touch on is your comment about freight rates to Prince Rupert. Yes, they've been altered to a mileage rate. They're now $4.50 a tonne higher than coming to Vancouver. That's been a significant impact, creating that port as a residual port.

Mr. Fontana: Thank you.

The Chairman: Mr. Comuzzi.

Mr. Comuzzi: Mr. Roth, I'm going to get to that freight rate difference in a moment.

I have two or three points for clarification. I know Prince Rupert has the highest municipal taxation of any grain facility in Canada - it is substantially higher, which puts you at a disadvantage - but I was not aware of the lease cost to which you referred. Do you want to explain that? Is it the property or the elevator? What do you lease?

Mr. Roth: The property on which the elevator is situated is leased from the port corporation.

Mr. Comuzzi: From the Prince Rupert port?

Mr. Roth: Yes. This was done originally in the days of the National Harbours Board, but today it's transferred to the local port corporation.

Mr. Comuzzi: Do you envisage this act as changing any of that?

Mr. Roth: I guess what I'm pleading for is the opportunity for users to be able to have an opportunity to make their appeal, to be able to, if necessary, go to arbitration or whatever so that you can reach a resolve. I think it's important that it be seen as having a balance within the legislation.

Mr. Comuzzi: When you built the elevator.... It's owned by the six major pools, Cargill and somebody else.

Mr. Roth: UGG and Pioneer.

Mr. Comuzzi: Is Paterson in there too?

Mr. Roth: No, not Paterson.

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Mr. Comuzzi: Was any federal money supplied, any federal loans or anything of that type, in order to assist in the building of the Prince Rupert grain terminal?

Mr. Roth: Yes. When the terminal was being proposed there was an offer at that time from the federal Minister of Transport to pay for part of the site clearing and grading. At the end of the day 25% was paid by the federal government, 25% by the Government of Alberta, and the other 50% was covered by the six major grain companies. The amount of money the federal government put in was $7.13 million for their share of that site clearing and grading.

Mr. Comuzzi: Was that a loan or just an outright grant?

Mr. Roth: It was an outright grant.

Mr. Comuzzi: Thank you.

To get back to Mr. Fontana's question and to carry on with it, Prince Rupert has been bound in the past by statutory regulation. On the one hand, the WGTA, to which you referred, said, in some section toward the end of the act, that for the purpose of construing this act, Prince Rupert shall be construed as equidistant from any point in western Canada as the port of Vancouver. I think there's a difference on the CN line of 421 kilometres or miles, I don't know which.

Mr. Roth: It's 176 railway miles, sir.

Mr. Comuzzi: That adds to the $4, etc.

Mr. Roth: That creates the $4.50.

Mr. Comuzzi: On the other hand, the other statutory regulation is through the Pilotage Act. You stated in your remarks that the cost of pilotage into Prince Rupert, although closer than the port of Vancouver, turned out to be double what it would be into the port of Vancouver. Did I hear you correctly?

Mr. Roth: Yes. My example demonstrates that.

Mr. Comuzzi: So on the one hand you were regulated, which is a benefit under the WGTA, and on the other hand, through the Pilotage Act, you were penalized, and that balanced it out.

Mr. Roth: No, you're penalized in both instances. We have a National Transportation Act, which provides for a mileage rate from the prairies into the ports. That creates a higher cost. Likewise, we have the situation of the Pilotage Act where in effect they have a monopoly position. We feel it's not a competitive situation that would help to lower costs.

Mr. Comuzzi: But you weren't penalized under the WGTA when it construed the distance to Prince Rupert from any point in western Canada -

Mr. Roth: If I may, sir, 1927 is when the board of railway commissioners provided for the freight rates to the west coast to be at the level of the Crowsnest Pass rates. CN voluntarily provided that there would be port parity through that period from 1927 to 1983, until the creation of the Western Grain Transportation Act. At that time they became subsidized.

Of course, last year when the act was eliminated you had the situation where they no longer were receiving subsidy. They forgot their generosity of the past, so no longer are we receiving that same benefit - albeit CN provided an incentive last year that covered a portion of that higher $4.50.

Mr. Comuzzi: The essence of the question I'm trying to ask is, how do you anticipate that you can become more competitive by a change to the Pilotage Act?

Mr. Roth: If those costs are reduced, hopefully they'll get passed on back through. When they increase, they certainly are costs such that a farmer is receiving the world price less all the costs back to his farm. So any of those costs in between get passed on to him and reduce his income.

Mr. Comuzzi: Thank you. I'll talk to you after the meeting. There are a couple of other things I'd like to discuss about the pilotage thing, but the chairman would like to get going.

I will do that, Mr. Chairman, and if you'd like I will report in the morning.

The Chairman: Thank you, Mr. Comuzzi, I'd appreciate that.

Thank you, Mr. Roth.

Mr. Roth: Thank you, Mr. Chairman, for the opportunity to appear.

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The Chairman: Next, from the Port of Nanaimo, we have Gino Sedola.

Mr. Sedola, you've been sitting very patiently all day. We will benefit from that observation, I trust. Perhaps you could now introduce yourself and your colleague.

Mr. Gino Sedola (Chairman, Nanaimo Harbour Commission): Thank you, Mr. Chairman, for allowing us to appear before the committee.

I'm the chairman of the Nanaimo Harbour Commission. With me is Mr. Bill Mills, who will be making the presentation on our behalf. I will be joining him along with a couple of other members of our commission. If there are questions, we would be most pleased to answer them.

Mr. Bill Mills (Port Manager and Chief Executive Officer, Nanaimo Harbour Commission): Chairman Alcock, members of the Standing Committee on Transport, it's a pleasure to speak to you today and present the Port of Nanaimo's recommendations with respect to the proposed Canada Marine Act, Bill C-44. We have prepared detailed comments with respect to individual clauses of the bill. However, in the time available to us today we would like to make some general comments on key areas that are of importance to us. More detailed comments are included in our brief.

The six areas we would like to comment on at this time are: agency status; capacity and power, clause 24; grants in lieu of taxes; governance; stipend to Ottawa; and property matters.

First with respect to agency status, in May 1995 I understand the Standing Committee on Transport, under chair Stan Keyes, issued a report entitled A National Marine Strategy. Among the recommendations was a statement that ports should be designated as federal agencies similar to harbour commissions.

Currently Bill C-44 remains silent on this issue. We believe it is important that this designation be made in order that ports can effectively deal with other federal departments and agencies, provincial governments and their ministries and adjacent municipalities from a position of at least an equal, which protects, we believe, the federal national transportation policy interests.

With respect to capacity and power in clause 24, upon reviewing this clause we believe that capacity and powers are far too limiting for ports. In fact, for most commission ports, they severely restrict the autonomy to operate that they enjoyed previously under the Harbour Commissions Act. The Harbour Commissions Act says a port:

...shall regulate and control the use and development of all land, buildings and other property within the limits of the harbour, and all docks, wharfs and equipment erected or used in connection therewith.

The act also states that the port is an effective instrument of support for the achievement of Canadian international trade objectives and of national, regional and local economic and social objectives.

Bill C-44 limits the power of a port to those items:

related directly to the shipping, navigation, the transportation of passenger and goods and the handling and storage of goods.

It goes on to say that for any real property, if the port ceases to use it for the purposes it was being used for on June 1, 1996, the port authority may not reinstitute the use.

In our opinion, it appears the draft bill is trying to stop time and ultimately progress. The harbour commissions, Nanaimo in particular, have been very successful in both serving the national transportation policies of the country and making significant contributions to the social and economic development of the areas they serve.

With respect to grants in lieu of taxes and the SCOT report of May 1995, it was recommended that individual ports should negotiate with the respective municipalities appropriate fees for the services provided. The Port of Nanaimo, while not paying grants in lieu of taxes, has undertaken a number of port-related waterfront projects, which has significantly added to the tax base of the municipality. In fact, the port has worked with the municipality in achieving a number of amenities for enhancement of the waterfront, which could have been difficult for the city to achieve had they tried to do it with tax revenues generated through the port.

We believe it is reasonable to pay some form of grant in lieu of taxes or fee for service to our adjacent municipality. However, we think it is important that general guidelines be developed if fee for service is the desired approach of government. If the grants in lieu of taxes scenario, which is currently in place at Canada Ports Corporation ports, is implemented, then for those ports that have not previously made such contributions there should be a phase-in process that does not create immediate financial hardships for ports.

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In terms of governance, Bill C-44 proposes a major change in the make-up of boards of commissioners or directors for ports. Of particular concern to us is the number of members on a board and the manner in which the appointments to the board are made. In our opinion, the size of boards should be between five and nine people, and each port should individually negotiate the size of its board during the development of its letters patent. We also believe the chief executive officer should not be a member of the board.

There has been much concern that the users of the port, currently defined as people who make commercial use of or provide services at the port, should have their representatives be the majority at the board table by appointment of the minister.

We support user representation at the board table but strongly feel that this group or any other group should not have plurality on the board. In protection of the federal interest, we also believe the minister should retain the right to the majority of appointments to each port board.

We are supportive that board members should serve no more than two terms of appointment, serve on a part-time basis, and have the right to fix the remuneration of the chairperson, board members and the CEO.

In terms of the stipend to Ottawa, we are supportive of the concept that it is reasonable for each port to pay an annual stipend to the federal government based on criteria clearly understood in advance by each port. The criteria should include that it is based on net income of the port, be capped, be reasonable, and that a form be negotiated in advance providing for flexibility in payment, if required, to meet changing circumstances of individual ports.

It is important, when introducing such items as the stipend and the grants in lieu of taxes or other charges, not to lose sight of the purpose of the national transportation policy of the country, to ensure that Canadian goods and products will be carried to international markets with transportation costs that are competitive in the world market. It is also important to remember that most of our American neighbouring ports have the ability to raise taxes or are highly subsidized in carrying out their mandate. Canadian ports are directly competing in this milieu.

On property matters, it is important that clause 27 of Bill C-44 be amended to provide for the ability of ports to pledge their own assets, including real property they may own, in order to secure financing for port-related development. This clause currently provides for borrowing to be secured based on revenues alone. It is our opinion that any attempt to borrow for port development on this basis will result in less funds being made available by lending institutions and higher rates of interest charged. This will directly relate to a port's ability to develop the port in a businesslike manner and maintain a competitive edge.

Clauses 36 to 40 of the bill appear to significantly restrict the ability of ports to manage, acquire and dispose of properties in the day-to-day operations of port business. It goes so far as to say, in subclause 36(5), that it may only hold real property that is defined in letters patent.

We recommend that these clauses be rewritten to create a flexibility that commission ports have under the Harbour Commissions Act. In fact, an additional clause should be added dealing with the port's right to expropriate lands with the approval of Governor in Council, similar to the powers that exist for expropriation under the Harbour Commissions Act.

There's one last point we would like to make about property administration in general. What ports like Nanaimo have done for their communities over the years has resulted in the general public perceiving the port as the trustee of the waterfront to safeguard this asset for the benefits of the community and ensure that the balance between cargo and non-cargo activities is effectively maintained.

In conclusion, I can report to you that the Port of Nanaimo has successfully operated as a harbour commission for some 35 years without being a financial burden to the federal government. We have carried out our mandate as being an effective instrument in the achievement of Canadian international trade objectives and the national transportation policies of the country, as well as making significant contributions to the social and economic development of the area we serve.

In recent years, we have participated in or been the catalyst of over $100 million of redevelopment in our harbour, including some large parcels of land that had virtually sat dormant on the waterfront for the last twenty years. These developments allow the port to resurrect revenues from vacant water lots, provide public amenities and develop a cruise ship pier for purposes of diversifying our revenue base by pursuing the cruise ship business.

If the committee looks at the Vancouver waterfront, you will see that the development of the cruise ship facilities required the ability of the port to be involved in multi-functional activities, such as convention facilities and hotels. These things are all part of developing and operating a port as we head into the 21st century.

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The board of commissioners of the Port of Nanaimo, together with the board administration, through our annual strategic planning exercises effectively balances the cargo and non-cargo activities of the port and has continually ensured the port has a sound financial base to serve its clients well into the next century.

The board believes our port is a fine example of one of Canada's major ports. Provided the Canada Marine Act, Bill C-44, is appropriately amended, we see ourselves applying to be a Canada port authority.

If government sees fit, however, to leave the bill basically intact as it is currently drafted, then our preferred position would be to be left alone, and let us function as a harbour commission, as we have successfully done for the past 35 years under the Harbour Commissions Act.

Thank you very much.

The Chairman: Thank you, Mr. Mills.

I'm going to turn the questioning over to Mr. Crête.

[Translation]

Mr. Crête: Thank you for your presentation. I have a bit of an egotistical question because it only concerns the situation in my riding. If, today, you had to go about setting up a regional type port which had been the property of the federal government for several years and which might possibly be handed over to local authorities, what would be the three or four main conditions you would suggest to us for this to be a success over the next five, ten or fifteen years?

[English]

Mr. Mills: The question is what three or four conditions I would recommend in starting up a new regional port. First of all, I think you'd have to have a source of revenue, whether that is in the form of water lot leases, movement of cargoes, and a reasonable base to perhaps have an opportunity to diversify your revenue base in time.

Depending on the agencies that would be involved in a new facility...I can look at Victoria as an example. There's a number of interest groups there. It's a matter of coordinating activities or concerns of interest groups so that you could work in unison for the better of your particular port.

Mr. Sedola: I would answer that by saying to allow us to continue as we have in the past. We've long been held by people in Ottawa as a paragon of what a port should be, and it has been because we've been able to work with the community to diversify our economy to a certain extent, and to perform successfully. Although we support generally what has been proposed, there are a lot of retrogressive steps that will not allow us to be the successful port that we've been in the past.

[Translation]

Mr. Crête: I have a short supplementary question. You mentioned leases on lots. Could you be a bit more specific? In the four conditions, the second one you mentioned was the matter of having leases on lots, if I understood you correctly. Could we have another look at this second condition?

[English]

Mr. Mills: With the harbour commission, one of our responsibilities is that we have federal administration and control of the water lots within our harbour boundaries. This involves leasing these lots to various businesses, from marinas to public markets to shipyards. What we do there is work with the lessees to define the use.

What we have done with our port is try to maintain a balance of social activity on the waterfront and an ability for the public to access the waterfront, while at the same creating economic opportunity for businesses to function on the waterfront.

In Nanaimo, for example, with our water lot leases we have a harbour-side walkway that runs from one end of the harbour to the other. At the same time, though, the walkway skirts around some of those businesses that it would be obviously dangerous to have the public walk through. A shipyard, in a lease we have with them, has built an observation platform around the shipyard so people can stop and watch vessels on the marineways. But it's again creating economic opportunity for the community and at the same time administering the water lot.

Mr. Crête: Merci.

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

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Mr. Gouk: Thank you, Mr. Chairman.

One of the interesting parts here is paragraph 6(2)(f), regarding the appointment to the board. I find it interesting that you're the first one who has presented today, or who I've talked to prior to this, who believes the minister should have that complete authority. I suppose it suggests that maybe you have a little more faith in not just this minister's but in all future ministers' benevolence - even perhaps dealing with the users.

Mr. Fontana: Because they're all going to be Liberal ministers.

Some hon. members: Oh, oh!

Mr. Gouk: No, there's hope in the future, Joe; it's if he destroys it before we get there.

The rest of your brief I was quite in agreement with. There's one area that everybody keeps coming up with in terms of cashflows. That has two connotations. One is the amount of money you would pay to Ottawa, and the other is with regard to loans you might make. If it's only those cashflows that are pledged to repay that loan, if the government is able to take the first demand off you, then you may not have any cashflows to pledge in order to borrow.

So the concept of going to a net basis seems to make sense. The only problem I have with it is that if you say, okay, we'll have to pay 10% or 25% or whatever of our net to the government, let's build a new dock or terminal. Let's refurbish, let's do that this year and that next year. You may never have any net profits from which the government can then take their fee.

How do we get around that? How can I justify going to this committee and saying that I want to do this? If they're wise - and I think they are - they're going to come back to me and say then they'll probably never get paid because of a little creative bookkeeping.

How do I respond to that?

Mr. Mills: I think as any accountant will tell you, if you ask him what's two plus two, they'll ask what you want it to be. I think that's the concern you have. But any capital expenditures would obviously only result in a certain charge of depreciation against the accounts annually. I would think probably there could be a monitoring process built in to see exactly what the ports are doing.

Mr. Gouk: You say capital and I say O and M.

Mr. Mills: Generally the ports currently file a five-year business plan, or at least the commission ports do, and we identify what we intend to spend our capital funds on. I would see that type of process continuing, so I don't think ports, with the ports history I've seen, would just spend money for the sake of spending money to avoid a stipend.

I think the key thing is that the stipend be a reasonable amount, and I think everybody can live with that.

The Chairman: We are reasonable people.

Mr. Fontana.

Mr. Fontana: I'm happy to hear that the Reform Party wants the government to get its fair share. Thank you, Jimmy, for raising that point.

There's no doubt that harbour commissions have served this country very well. My two colleagues on each side will point to Thunder Bay and Hamilton. Yours is a perfect example. There's no doubt that this model served this country very well.

When you're trying to create a new hierarchy of the commercialization of ports and harbours, then to come up with something similar to that of the airports.... As you know, we have CPAs, local/regional ports and then others. I know you alluded to this right at the end of your statement, saying that you would apply for a CPA status - and I'm sure you probably would qualify on the basis that you're self-sufficient, you have commercial traffic, whatever the threshold we established - but I'm curious as to whether or not you have not looked at the benefits of regional and local on the basis of this. One can form a not-for-profit organization to avoid certain taxation regimes, as you know, but under the regional and local you own everything.

The government will sell you land, port, whatever, and also will participate in the capital restoration program, perhaps as it relates to your needs as a port. I'm just wondering why you have totally discounted the regional/local model, which in fact gives you ultimate autonomy to do as you please under that regime.

To tell you the truth, most of the harbour commissions, even though some will obviously want to be CPAs for a number of different reasons, haven't considered the regional/local option, which I believe has an awful lot of benefits that go along with it, even under the taxation regimes.

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Mr. Mills: Perhaps one of the concerns is the actual detail of what the regional local option is. If you're going to sell it to us for a dollar, then maybe we'll think about it. If you want $100 million for it, then maybe we'll think about it twice.

Mr. Fontana: Of course. I realize that, but I'm just wondering why you discounted it off the top.

Mr. Mills: I think our concern is perhaps some of the local interests. I shouldn't say we use Ottawa as a scapegoat, but I think the distance sometimes protects some of the local interests in wanting to do things that I.... Being a federal agency allows us to sort of slow the process down and stop local concerns from perhaps overriding things on a short-term basis.

Mr. Fontana: So you don't want total autonomy. You want to make sure there's always the federal government stopgap or safety mechanism -

Mr. Mills: To be able to deal with the municipalities, the province or other interests as an equal.

Mr. Fontana: I understand that. Thank you.

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

I think that's it for this presentation. Our next presentation is from the Port of Alberni, with Mr. Garnet Reynolds and Mr. Denis White.

Gentlemen, you are our last presenters for the day. I appreciate your patience. Will Mr. Reynolds start the presentation?

Mr. Garnet Reynolds (Chairman of the Board, Port Alberni Harbour Commission): Yes.

The Chairman: Take it away, sir.

Mr. Reynolds: Thank you very much, Mr. Chairman.

The Chairman: Do we have copies of the submission?

A witness: We have them here.

The Chairman: Perhaps we could ask the clerk to distribute them.

Am I to assume that the rest of the people in the audience are taking notes for their presentations for tomorrow?

Mr. Keyes: Moral support.

Mr. Reynolds: Mr. Chairman and members, the Port Alberni Harbour Commission is very pleased to have this opportunity to make a submission to the House Standing Committee on Transport for Bill C-44, the Canada Marine Act.

My name is Garnet Reynolds, and I'm chairman of the Port Alberni Harbour Commission. Accompanying me is Denis White, our port manager and chief executive officer.

The Port Alberni Harbour Commission has been following this draft legislation for Bill C-44 and cross-referencing with SCOT's report to the House of Commons in May of last year. Many of the items in the SCOT report to the House were thought to be solid recommendations leaning to the harbour commission system. In many cases, the draft Bill C-44 legislation does not follow this report and would create a serious handicap for those of us who manage a port on a day-to-day basis.

We are recommending that SCOT impress on the minister the need to effect the changes being sought by the port community. Should these changes not be made, we are requesting SCOT to recommend to the minister that Bill C-44 be abandoned. Should Bill C-44 go forward without the necessary changes to guarantee that our ports remain functional and competitive, we are requesting that paragraph 8(2)(d) ``the Harbour Commissions Act ceases to apply'' be removed from Bill C-44. Having reviewed all options available to date, the retention of the Harbour Commission Act is the only viable alternative in our opinion.

We are attaching a brief outline of our port's history and activities to our submission, which will assist the committee's understanding of the port operations.

Denis White, who has been with the harbour commission for 30 years, will briefly cover our suggested changes to the bill, after which we will be pleased to attempt to answer any questions.

Thank you very much, Mr. Chairman.

The Chairman: Thank you, Dr. Reynolds. Mr. White.

Mr. Denis White (Port Manager and Chief Executive Officer, Port Alberni Harbour Commission): Thank you. With regard to paragraph 6(2)(f) governing board size, for Port Alberni Harbour, we recommend that board size be set in accordance with the size of the port. In Port Alberni, the number of directors should be set at five, to be chosen as follows: three individuals nominated by the minister in consultation with the users; one individual nominated by the minister in consultation with the Province of British Columbia; one individual nominated by the City of Port Alberni. The chief executive officer should not be a director.

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With regard to finance, under paragraph 6(2)(h) on federal government dividends, any stipend or dividend should be determined on net income. The minister should retain discretion to suspend, alter or delay this payment in the event of adverse financial conditions. The stipend should be staged to permit the port to adjust. The stipend should be capped, should be reasonable, and should be negotiated between the port and the minister in order to assist the port and customers to adjust to this change. As recommended by SCOT in 1995, the new legislation should protect the ports from further ad hoc demands for cash contributions to service the government debt or other government cash requirements.

Clause 21, appropriation, should be amended to allow for federal government assistance during disaster emergency situations, such as the tsunami that struck Port Alberni Harbour and the city of Port Alberni in 1964.

As for subclauses 24(1) and 24(2), capacity and powers of port activities, subclause 24(2) is too restrictive as written and will place our port in a position of revenue loss. The following wording from the 1964 Harbour Commissions Act should be considered. A port system that:

is an effective instrument of support for the achievement of Canadian international trade objectives and of national, regional and local economic and social objectives

Under subclause 27(3), borrowing powers, the port should be able to pledge property, land and new assets to allow for harbour development.

Turning to clause 31, the preparation of quarterly financial statements for inspection by the public is excessive. One public meeting per annum would disclose the information required.

Subclause 38(1), restriction on the sale of federal property, should be amended to allow the sale of federal property with the minister's consent. With regard to taxation for ports with federal status, CPAs must retain federal status. Our concern is about the rezoning of port lands' federal, provincial and municipal taxes. Payment of taxes should not make ports financially unstable.

On municipal taxation, individual ports may negotiate grants in lieu of taxes with their respective municipalities. In Port Alberni, we have practised a voluntary form of taxation by contributing to community projects with the City of Port Alberni on the waterfront, such as roads, parks and people places.

Thank you.

The Chairman: Thank you very much, Mr. White.

Monsieur Crête.

[Translation]

Mr. Crête: From reading the covering page of your brief, I understand that unless the vast majority of your amendments are accepted, you'd prefer to remain a port commission. You believe that port commissions have a better future than the port authorities provided for in the bill. Is that actually what you are recommending? Could you also give us two or three examples of the damage that might be done, in your opinion if the model provided for in Bill C-44 were to prevail?

[English]

Mr. White: It's our opinion that Bill C-44 is written for ports that are the size of Montreal and Vancouver. It's not drafted for a port the size of Port Alberni. There are several revenue sources in our harbour that produce a great deal of our revenue and net profit but would not be allowed under the existing bill, such as the operation of marinas and campsites.

With regard to regional ports, we'd like to point out that any details regarding the local/regional port are unknown to us at this time. We can read the draft of Bill C-44, but where is the draft on the regional/local port? It's also our understanding that we would be cash-stripped if we became a local/regional port or if we were under divestiture. We have $7 million in our harbour reserve fund, and it's our understanding that we would lose that harbour development fund.

[Translation]

Mr. Crête: So I conclude that the amendment to the Port Commissions Act proposed in Bill C-44 should be set aside to allow you to continue to act in a third capacity somewhere between the big national ports and local ports. Either you would remain as port commissions or the name would change, but there would have to be an intermediate group enjoying the same latitude you have had.

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[English]

Mr. Reynolds: Yes.

Mr. White: It is our opinion that the Harbour Commissions Act has served our port and our community very well since 1947. I'm positive that we could give you letters of support from our city, our regional district, our community, and from our major customers, that would support our staying with the status quo and remaining a harbour commission.

The Chairman: Thank you, Mr. Crête.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

We've heard a bit today about the idea of possibly wanting to stay as a harbour commission. The idea was also brought up that maybe you'd be better off as a local regional port. As you have said, I have not heard any definition as to how this would work other than having had the minister state before the committee last week that it would not be done the way it has been with an airport, whereby it was offered in succession to the provincial and local governments for a dollar. It would in fact simply be disposed of in a highest-bidder-type operation. Based on what the minister said, you would have some concerns in that area unless there are changes.

In keeping with what has been said, one of the things I have looked at is another level, as it is with the airports. There should be different-sized ports. Maybe we should have national ones, like Vancouver and Montreal and perhaps Fraser port. Then, at some point, for those who did not wish to become part of that, there would be a regional port. And local ports would be the ones where they're up for grabs. This would be much the same model as was followed with the disposal of the airports. I don't know whether you really need to comment on this; it sort of just follows on what you said.

The one area I wanted to ask you about is under municipal taxation. You say here that individual ports may negotiate grants in lieu. This suggests that you will choose whether or not you want to do that. Maybe you don't want to pay, so you won't. As a small port, would you really want to negotiate grants in lieu under those guidelines, or a fee for service that would likely be lower and would relate directly to the cost that the city had?

Mr. White: I think we can negotiate a fee for service with our municipality. We do favour some municipal taxation. As others have mentioned here today, all of our lessee tenants pay $300,000 to our city now for port property that they are leasing. We pay for our own water and garbage collection on harbour commission property. The words ``may negotiate'' could be strengthened. The minister could instruct the harbour commissions to negotiate a fee for service with their municipalities.

Mr. Gouk: I just wondered about ``negotiate'', because grants in lieu are pretty much set in terms of negotiating what you would have for fees for services as opposed to grants in lieu.

Mr. White: Fees for service would be fine. All we're hoping for is that we're not too badly hurt with having to pay a stipend and taxation, with having all of these added-on costs. That could come out of our net profit without having us go back to our customers, without having to pass the costs on to port customers who have been hit very hard over the past few years with shipping costs.

Mr. Gouk: Thank you.

The Chairman: Thank you, Mr. Gouk.

Mr. Comuzzi.

Mr. Comuzzi: Mr. Chairman, I just have a short question for Mr. Reynolds or Mr. White.

I gathered through listening to your presentation that in choosing to be something other than a port corporation while knowing full well that harbour commissions will be a thing of the past, the stumbling block you may have is the $7 million you have in the kitty and which, in your estimation, would have to be returned to the federal government under the new structure. That's one of the considerations.

Mr. White: That's a consideration. I haven't received anything in writing that tells us that, but I've heard several times that our harbour development fund, which was net profit that was made locally and which we believe should stay local, would be lost. That's my understanding of it.

Mr. Comuzzi: My next question is this: if it was decided in the transition period that any money, such as this reserve that you have at the harbour commission in Port Alberni, was to stay in the harbour commission, would it alter your thinking at all?

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Mr. White: If it would stay in the harbour commission?

Mr. Comuzzi: Or with you folks.

Mr. White: I think that would have a great bearing on any decisions our board of commissioners would make.

Mr. Comuzzi: Thank you very much.

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

Mr. Keyes: Thank you, Mr. Chairman.

Thank you, gentlemen, for your report. Excuse my ignorance about Port Alberni. It would not qualify for CPA, correct? You have one principal user, MacMillan Bloedel, so....

Mr. White: It's my understanding recently from Mr. MacNeil in Ottawa that we would have a good chance of becoming a CPA, because the Nesbitt Burns financial report has recommended us for CPA. We may not meet some of the other criteria in the bill, but I'm given to believe that we would be accepted if we applied now.

Mr. Keyes: I guess my question has to be almost well-rounded, because the fact is, you have a port that the Canadian taxpayer has aided you in creating, and has subsidized to some degree.

Mr. White: No, we have no subsidy, and we have -

Mr. Keyes: I'm talking history now.

Mr. White: History? We have $18 million in assets at cost, and only $2 million of that was federal government money through the Small Craft Harbours program funding for marinas, which was available to any individual in Canada who wished to apply for it. So we've had very little federal help.

Mr. Keyes: Dredging?

Mr. White: No dredging.

Mr. Keyes: No dredging at Port Alberni?

Mr. White: No subsidy.

An hon. member: No ice-breaking?

Mr. Keyes: I say this because this just demonstrates, Mr. Chairman, how every port is so different from the next. To try to put into legislation something that may well apply when you're going to divest, say, a port on the east coast of Canada, where that particular small town or port would form a partnership with, say, their principal user, and take over that port from the federal government on a local regional basis, the divestiture of the port completely, and then there comes an agreement between the federal government and that particular port, user and municipality, who have formed a partnership to try to come to the best arrangement if they have money in the pot, if they don't have money in the pot, do we give them a dollar, do we ask fair market value, and so on?

In Port Alberni's case, if MacMillan Bloedel is your chief principal user and you have $7 million in the pot, and it's determined that over the years $2 million or $3 million from the federal government has assisted Port Alberni to become the port it is today.... So you say to Port Alberni, why don't you become a local regional port? Why doesn't the port, the municipality, and MacMillan Bloedel work together in partnership to buy that port from the federal government? It may not necessarily be at fair market value, because you have $7 million in the pot. So if it only took a $2 million federal contribution to get it where it is today, then it just takes back the $2 million.

Do you see what I mean? There's a negotiation that can come about. So you don't want to be so stringent in the regulations or the legislation as to block any opportunity that might be had for your port or a port on the east coast.

Mr. White: I've been asked that question before. I think the people asking it were maybe only aware of the deep sea terminal in the city that MacMillan Bloedel ships over. They weren't aware of the fact that our harbour limits are 24 miles in length. We have 100 leases. We have industrial roads that we manage. We have three marinas, a fourth under construction, and many projects, such as fire boats and parking lots with the City of Port Alberni. So it's not simply the case of selling the terminal to MacMillan Bloedel.

Mr. Keyes: No, I'm not saying that. I'm saying that you go in partnership with the municipality, which has excellent services from the port and relies on that port, and that you, the port, and MacMillan Bloedel come together to take over that port from the federal government.

Mr. White: I guess the only way I can answer that, Mr. Keyes, is to ask you how soon we can read the detail of this port you're talking about.

Mr. Keyes: My response would be to go to the federal government and begin the negotiating process. Port Stanley is already doing it. Another port on the east coast has already established negotiations with the federal government with its principal user.... The name of the port escapes me.

A voice: Bayside?

Mr. Keyes: It might be Bayside. There's one principal user at that port. The municipality likes the port because of what it has to offer. So the port, the municipality and the user have come together, and they've begun negotiations with the federal government.

You don't have to go to a book to find out what they have to offer. You can just go there and make your case as best you can, and then come away and say either it was good or the federal government was full of crap.

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Mr. White: It's difficult for us to understand why we would not become a CPA or remain as a harbour commission and pay a dividend to Ottawa. Why would they want to give away a port that's financially successful and able and willing to pay a stipend to Ottawa?

Mr. Comuzzi: I think the port he's referring to is Belledune.

Some hon. members: Oh, oh!

A voice: No, it's not Belledune.

Mr. Reynolds: We have already met with our users in the city and the regional district, and they don't want any part of it. They want to leave it the way it is. We met with MacMillan Bloedel, our principal user, who likes it the way it is.

Mr. Keyes: But it's not going to remain the way it is. Now you have to go back to your municipalities and say, guess what? We're not going to be the same.

Mr. Reynolds: If you give us the right type of harbour commission and write it into the act, it will continue that way.

Mr. Keyes: No. That's what I'm saying. There is already a -

Mr. Reynolds: Because we're not a burden on the federal government.

Mr. Keyes: Yes, Garnet, I know, and that's fantastic, and that's all the more reason why I would encourage the port municipality and the principal users to go together as a team to the federal government and say, we're going to take this over; how much is it going to cost you? What are you going to charge us to take this off your hands?

Mr. Reynolds: We don't see it that way.

Mr. Keyes: But you could try.

Mr. White: With regard to that, we have everything to lose and nothing to gain. We have a very effective system now and we're going to throw it out. We're taking a risk that the new one may or may not work, and for what? Why are we taking that risk?

Mr. Keyes: Because there's a repeal section in the bill.

Mr. White: In our submission we're asking for that repeal section to be taken out. If it's not, then we'll have to deal with it when it's not taken out.

Mr. Keyes: I have just one more other question, Mr. Chairman.

You mention the stipend or dividend on net income, and then you go on to say:

The stipend should be capped, reasonable and negotiated between the Port and the Minister...to adjust to this change.

Couldn't we do the same thing if it's based on gross rather than on net?

Mr. Reynolds: If you make low it enough.

Mr. Keyes: This is what I'm saying. I'm trying to find a saw-off here. We're coming to communities to get their impressions. If we made it gross on the one side and then applied the ``capped, reasonable and negotiated'', etc....

Mr. White: You could take the percentage on the gross. There's no problem with that, providing that when we have our net line at the bottom we have enough cash at the end of the year to pay it.

Mr. Keyes: Thanks, Mr. White.

The Chairman: Thank you, Mr. Keyes. I do think the one piece of information that may be different is the Nesbitt Burns study that suggested Port Alberni may be eligible for CPA status, that it may meet the criteria. It would be useful to see that study.

Mr. White: That's in the hands of Ottawa. We don't have a copy of the study.

The Chairman: Really?

Mr. Reynolds: It's very useful to us, and we're going to use it.

The Chairman: Thank you very much.

Members, the room will be secured so you can leave papers here. Please leave them on the side tables so people can clean up.

Thank you to all who came to present, and to members for being so patient and listening and participating. We'll see you all tomorrow morning at 9 o'clock for our first presentation.

The meeting is adjourned.

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