[Recorded by Electronic Apparatus]
Thursday, October 10, 1996
.0803 
[English]
The Chairman: I would like to call the meeting to order. I understand we're going to be joined by Ron MacDonald a little later this morning.
Our first presenters, from the Tourism Industry Association of Nova Scotia, are Ms Ella McQuinn and Ms Susan Bartlett. Please join us at the table. We would ask that you confine your remarks to about 10 minutes to give the members of the committee an opportunity to ask some questions.
For the information of members, I've been informed their brief is being copied as I speak.
Ms Ella McQuinn (Chair, Transportation Committee, Tourism Industry Association of Nova Scotia): We're a little shy on numbers. We are just copying a few more.
The Chairman: The clerk will distribute them when they're available. Please proceed.
Ms McQuinn: Good morning, gentlemen. Thank you for inviting me on behalf of the Tourism Industry Association of Nova Scotia to speak to you on three critical issues linking tourism and transportation; namely, customs availability, motor coach regulations, and marketing to tourists.
.0805
Transportation is the cornerstone of the global industry called tourism. Tourism implies travel, and obviously travel means transportation. While tourism quite often encompasses accommodation, meals, attractions and much more, for Nova Scotia the critical links of air, land and sea together make up the largest and greatest revenue producer of these sectors of the tourism industry.
Transportation minister David Anderson, speaking in Vancouver on May 31 of this year, highlighted the key areas of interest and direction for the transportation industry, which he has called our strategic asset that can drive Canada's economy. Those areas include improving competitiveness through modernized transportation policy and systems, boosting tourism, and strengthening international links.
The Nova Scotia tourism industry contributed over $900 million in direct sales to Nova Scotia's economy in 1995. If we remain competitive and take advantage of the market demand, this could reach $1 billion early in the next century.
Tourism is expected to be the world's largest industry by the year 2000. It presently generates $263,000 a minute worldwide, according to the World Travel and Tourism Council. That's a lot of people flying, driving and sailing around Canada and other parts of the world, looking for unique and enjoyable travel experiences.
The tourism industry and the transportation industry must work together to ensure Nova Scotia remains at the top of the list of their options.
The amount of growth that the province of Nova Scotia experiences today and into the future is directly related to the level and quality of transportation services supplied to the market. I'm sure my colleagues will talk later, at length, about the critical issues of air, land and sea access into the province. So I'll therefore focus my comments on the above-mentioned issues of customs availability, motor coach regulations, and the dependence of transportation on marketing.
While the inherent growth in tourism demand for Canada and other regions of the world is very encouraging, we must be clear about what effects this demand will have on transportation services such as Canadian customs. If we're not prepared to meet the demands and service expectations of these international travellers, customs availability will have a stifling effect on our market.
Government must clearly recognize that adequate and, indeed, competitive customer service levels will either support growth and, in turn, private and public sector revenues, or it will help to limit revenue potential in tourism. The government must adopt an attitude of quality service in its goal to providing safe entry and exit points into the country. They must realize that money spent in delivering that service could in fact have a positive impact on future revenues.
If a traveller's first impression of Canada is seen as inhospitable, bureaucratic, and an inefficient place to travel due to inadequate customs service, today's traveller will think twice about making the decision to return. Potential delays, congestion and poor human interaction will have an impact on today's traveller's decision to return to the destination.
Customs can in fact provide an opportunity to make a positive impression on the traveller rather than a negative one. Just a couple of weeks ago on a trip through the Toronto airport, I encountered my first, very positive interaction with a customs agent. It left a strong positive impression on me. Having travelled for fifteen or so years internationally, one positive impression in fifteen years probably leaves some room for improvement.
Airlines and other travel and tourism companies view rapid passenger handling at national gateways as necessary to customer service and profitability. Quality service and ease of access are definite factors when a visitor is in contact with customs and immigration. Hospitality and efficiency are the hallmarks to guide us.
Many options exist today to improve the encounter between our customers and Canada's customs and immigration processes. We feel technology will continue to play a critical role in improved efficiency and quality. Automated border inspection machines are small, inexpensive and reliable.
The move to the extension of CANPASS for private watercraft and aircraft is extremely welcomed as we try to increase this market, particularly with fly-in vacations. Obviously, safety is a critical issue of customs inspections; however, technology improvements in this area that can also improve efficiency and convenience are greatly welcomed.
The use of biometrics, or smart cards, provides the ultimate convenience, saves time and assists travellers as well as the airlines, allowing quicker turnaround time and more customer satisfaction. Pre-clearance is also a vital issue that has a direct impact on the equality and efficiency of travellers coming into and out of Canada.
.0810
While technology is critical to achieving high levels of satisfaction, there is also a need for continued efforts placed on customer service. The paradigm shift from police to service agents must go a long way. The visitor's first impression of Canada from interactions with customs officials can affect the length of stay for that particular trip and the potential for a repeat visit by the traveller, as well as influence potential travellers that the person may come in contact with, using the critical marketing tool known as word of mouth.
The realization is that customer satisfaction with the overall destination does not necessarily distinguish between the individual components of the trip or rationalize the cause of the satisfaction or lack thereof. An overall impression is usually developed, and customs is just one of many opportunities to affect the overall impression. However, in most cases it also happens to be the first and last impression.
Moving into the service mode is more than a training program such as Superhost for all front-line employees. It requires a new philosophy at the top, one of innovation to grasp the latest technology and processes, and one of development of a service ethic and culture in order to service our international travellers while preserving the ultimate goal of security and safety. However, we do not feel these issues are mutually exclusive. As a government, it is possible to deliver world-class security and world-class service, but this starts with the recognition of the customer's needs while travelling in and out of Canada, and the realization of the benefit to public and private sector tourism receipts to deliver on those needs through superior customs processes and people.
Another critical issue facing our industry involves the state of motor coach regulations, not only within Nova Scotia but across the country. Overall, motor coach travellers contribute approximately 3% of tourism receipts in the province of Nova Scotia, with over 71,000 visitors arriving between May and October. However, while making up only 3% overall, this market is arguably far more important than that. There are some key characteristics of travellers coming to visit Nova Scotia by motor coach. They are all out-of-region and many are out-of-country visitors, bringing in important export dollars. Their trip expenditure is higher than that of the average traveller to the province, and they are often repeat visitors, returning on their own for more lengthy stays.
Despite the importance of this market, there is one major roadblock affecting the growth and service level of this market. TIANS continues to stress the need for economic deregulation in the motor coach sector to nurture the growth of this key area of transportation and tourism. Provision of product to meet the estimated growth in both the fly-coach and cruise-coach markets is essential, and private enterprise must be encouraged, and more importantly allowed, to provide the necessary infrastructure to meet the expected demand.
Fair practices and competitiveness on a national scale must be achieved for the Nova Scotia motor coach business to reach its potential. There has to be a national focus on deregulation to ensure that provincial regulatory bodies create a consistent and competitive environment for motor coach operators to move freely and easily from province to province as well as between Canada and the U.S. TIANS has been working closely with the provincial transportation department to provide input and support for the Canadian Intercity Bus Task Force, and it supports the recommendation tabled earlier this year. In particular, full economic deregulation of charter bus operations will allow a more competitive, market-driven environment for Nova Scotia's tourism industry.
The current state of regulations in the industry has a significant effect on service levels, quality and pricing. Obviously, moving from today's state of controlled access to an open market will affect existing operators and their service levels. However, many examples exist in the transportation sector of controlled transition from regulated entry to open entry while preserving safety and maintenance requirements for the overall benefit of consumers.
At the present time it is a most difficult and expensive process to obtain a motor coach licence in this province. This has limited the supply and quality of coaches available to serve the traveller to the province coming either by air or sea, in the case of fly-coach packages or cruise-coach packages. Just the other day I watched a rather uncomfortable group of cruise visitors drive through downtown Halifax in an old school bus. This was the only bus available on the market to meet their needs.
It is perhaps best said by one of the province's hotel operators:
- During the peak season there is a definite shortage of topnotch motorcoaches available to rent in
the province. If you walk around any property that takes motorcoaches, there is a very evident
range in the quality of motorcoaches. Is it not in the best interest of the province to put its best
foot forward and supply coaches of the best possible quality if the market demands?
While Nova Scotia has the ability to implement a new set of regulations that does not limit the type and number of coaches entering the market, and it is clearly looking at this option, TIANS strongly encourages the federal Transport Canada through the intercity bus task force to look at a unified approach so that there is freer movement within the various provinces.
It is clear that virtually all motor coach tours include multi-province itineraries, and as such should be able to move across provincial borders with consistent standards to make it easier and more competitive for us to market our product.
Finally, I would like to take a few minutes of the presentation to share some thoughts between the links of transportation and marketing to tourists.
As mentioned in my opening remarks, tourism and transportation are critical strategic partners. Without transportation links, Nova Scotia becomes what some Americans currently view us as - an island.
Tourists provide the many modes of transportation in and out of the province, such as airlines, roads and ferries, with valuable revenues to adequately fund and maintain these links. There must be a strategic link in our approach. Tourism and transportation sectors must move in sync with each other, be aware of each other's issues, and develop solid partnerships in order that Canada, and in particular Nova Scotia, remains competitive in the marketplace.
Without the competitive transportation services provided to meet the market needs, there is little point in marketing the province as a tourist destination.
A simple example perhaps best illustrates this point. This summer Nova Scotia has benefited greatly by having a major U.S. airline fly directly into Halifax from Detroit on a daily basis. As a result, the destination became a competitive alternative for millions of travellers in the Michigan area, as well as many markets easily serviced through this hub. However, as the summer season came to a close and traffic fell off, the airline made a decision to discontinue the service over the winter months, virtually cutting us off competitively from this huge market.
As a result, one of Halifax's major hotels and attractions not only lost out on the potential market they had been trying to develop, but also lost a $10,000 investment in an ad campaign that had been committed to in the Detroit market before they had heard that the airline would no longer be flying. This meant that the ads worth $10,000 were placed in the Detroit newspapers and there was no way of getting there from that market except through back-hauls and arduous connections through Toronto. The link between transportation and tourism marketing could not have been more direct in this case.
The same principle can be applied on a macro level when looking at tourism marketing. Whether it's a direct ferry link connecting a market of 2 million visitors in Bar Harbor every summer to the southern shores of Nova Scotia, or twice-weekly service between Halifax and Reykjavik, that has uncovered a whole new market opportunity with millions of dollars in revenues. Transportation links are often the critical element in marketing plans to decide whether to exploit a market. This is assuming, of course, there is inherent or latent demand for our product in these various markets.
The success that Nova Scotia will have in marketing to any traveller will be directly affected by the level and quality of transportation. That includes markets as close as our own backyard when new initiatives are being considered now to develop a winter tourism product. Road conditions have already been identified as a major issue when considering the potential effectiveness of marketing our product to the resident market. In long haul markets, air access is one of the single biggest factors when assessing our competitive position, not only the connections from various markets but the number of connections. Is there any point for Nova Scotia to market the destination to overseas markets in order to increase tourism receipts when existing demand outstrips supply before the season has started?
However, the reality is if Nova Scotia is not out in the marketplace building brand recognition, awareness and the desire to travel, those same travellers will turn their focus and dollars to other competing destinations and not put us on the list. While tourism holds huge opportunities in many markets for increased business, the fact is that competing destinations will be trying their best to get our potential consumers to spend their money elsewhere and the market will not wait for us. If we don't have a competitive product with transportation links to meet the needs of a market, they will go elsewhere. At that point, beaches, culture, kayaking, hiking trails, and great restaurants become irrelevant. If the consumer is saying, ``I can't get there from here'', it doesn't matter what's here.
Thank you very much.
.0820
The Chairman: Thank you very much, Mrs. McQuinn.
For the information of members, we have just about 10 minutes. Perhaps I'll start withMr. Gouk and then I'll go to Mr. Mercier.
Mr. Gouk (Kootenay West - Revelstoke): Thank you.
Very briefly, I listened to your three main points of customs, motor coach deregulation, and the problem with air transportation. You outlined the concept of some problems, but I'm not exactly sure what it is you're looking for the federal government to do. Particularly using the last example of the American airline that chose to fly in here this summer and then chose not to fly in here in the wintertime, I'm a little confused as to what it is you are looking to us for.
Ms McQuinn: On that particular one, probably the best example is Icelandair. They have applied for air access into Halifax and have received twice-weekly flights into the region. In their original proposal and subsequent efforts they have been trying to get increased access on a weekly basis.
For that particular market and carrier, twice-weekly flights are not sufficient in their minds to either service their market or make it economically viable. They have been limited by the response from the federal government to allow them to only fly in twice weekly.
If the federal government can work with the destination and the carriers servicing the destination, then we can in fact increase our tourism revenue by increasing the availability. As mentioned, in some cases in offshore markets, the demand outstrips supply before the season even begins. So there's little opportunity for growth aside from the number of seats coming into the region.
Mr. Gouk: That gives me some idea.
As for the other areas in terms of deregulation, customs and so on, it would be helpful if you had something specific and could maybe write something out and send it to the clerk. Then we would have specifics to go on.
Ms McQuinn: Certainly. If I could just respond to that, the motor coach regulations are specifically to support the intercity bus task force and the recommendations for economic deregulation.
Mr. Gouk: Thank you.
The Chairman: Mr. Keyes.
Mr. Keyes (Hamilton West): I just wanted to inquire, Ella, did you or the airport make representation to the minister's office or Transport Canada in regard to the two flights weekly from Iceland?
Ms McQuinn: Yes, TIANS has been working with the minister's office and has repeatedly supported that through written communication.
Mr. Keyes: We all know there are bilateral agreements between countries that are complicated affairs and we have to be cognizant of the airlines in Canada and their reciprocal arrangements being made with Iceland. So it all ties in together - as long as someone there is being informed of this.
Ms McQuinn: Yes, we've been working as hard as possible and will continue to do that.
Mr. Keyes: Thank you, Mr. Chairman.
The Chairman: Mr. Mercier.
[Translation]
Mr. Mercier (Blainville - Deux-Montagnes): Mrs. Brooks, approximately how far is Halifax Airport from downtown Halifax?
[English]
Ms McQuinn: It's a 25-minute drive, 40 kilometres.
[Translation]
Mr. Mercier: I asked you this question because Mirabel Airport is quite close to Montreal. Some think it is too far from Montreal and that it has a negative impact on the airport activities. Since Halifax Airport is it rather distant from the City, have you heard people say that it could hinder transport, that it would put travellers off and that the distance between the City and the Airport was detrimental in various ways?
[English]
Ms McQuinn: The information has been minimal. In fact, in a list of rank of issues, that's probably quite low on the list. The top issue, as far as the Halifax airport is concerned, is access - as we mentioned earlier, the number of flights coming in and out of the airport. Second is the whole issue of commercialization with the existing negotiations with the Halifax Airport Authority.
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[Translation]
Mr. Mercier: Is distance a problem?
[English]
Ms McQuinn: Not in my mind, no.
[Translation]
Mr. Mercier: All right. Thank you.
[English]
The Chairman: Thank you, Mr. Mercier.
Mr. Mercier: Thank you, thank you.
The Chairman: There is obviously another agenda being played out here. Mr. Cullen.
Mr. Cullen (Etobicoke North): Mr. Chairman, thank you.
Ms McQuinn and Ms Bartlett, thank you very much.
My riding is in the Toronto area so I'm glad you found a customs agent at Pearson. Maybe we can get his or her name when you're leaving. Maybe you've been luckier than the rest of us.
You talked about this improved process through Canada Customs and Immigration. As a country we need to be increasingly vigilant about illegal immigrants. Are those objectives compatible, or are there immigration processes that you have brought to the attention of the immigration department or that you could bring to us today so that your objective and the objective of the immigration policy can be met at the same time?
Ms McQuinn: It's difficult for me to speak on that particular issue. From a tourism standpoint, that's our primary focus as opposed to immigration. I can't really speak at great length about that except that in my mind I think the first critical issue for customs is just the human interaction with the traveller, and if it's a positive experience it shouldn't again be mutually exclusive from our immigration policies. An immigrant should be treated as hospitably as anybody coming into the country.
Second is efficiency of processing, and I don't think that's a matter of getting more people through without the diligent checkpoints. But I think it's just a matter of having a customer service orientation and looking at processes and looking at them differently, as I mentioned, breaking paradigms as any business does when they're looking at servicing their customers. How can we do it better while still providing the same or even better service quality?
Mr. Cullen: Thank you. I realize it's not an area of your expertise or the expertise of this committee, but if there are any specifics you have or that you could get and forward to the committee, maybe we could pass them on to the immigration department and work on that on your behalf.
Ms McQuinn: Certainly. That would be great.
The Chairman: Thank you, Mr. Cullen. Mr. Byrne.
Mr. Byrne (Humber - St. Barbe - Baie Verte): In the appendix to your submission you outline some other issues that seem to me to deal with some of the federal issues that are affecting the tourism industry in Nova Scotia and probably apply to Canada. You mention that with regards to highways a national highway system is required instead of province by province. Could you just relate plans, expectations or desires in that regard?
Ms McQuinn: Again, it goes to the issue of ease of access. We're faced on a provincial level with inconsistencies of the level of quality, in some cases relative to the federal highways, the 100 series. What we need is a consistent policy and an integration of policies between provincial and federal departments.
One issue that has come up for the province was the issue of tolls. There is a lot of confusion and lack of clarity in our minds as to what effect the eventual policy or the implementation of that toll highway that will be coming into northern Nova Scotia will have on the province. What we would like is stronger integration between the provincial and federal departments to -
Mr. Byrne: Just be very brief, because I know the chairman is going to rap our knuckles.
Ms McQuinn, you've also flagged ferries, that their continuance and maintenance are mandatory. Just very quickly comment.
Ms McQuinn: As mentioned in the paper, 2 million people alone visit Bar Harbor every year. We bring in about 100,000 travellers on the Bluenose ferry from Bar Harbor to Yarmouth alone. Many of those travellers would not be here without that ferry link. It speaks directly to ease of access. There are five ferries around the province that are critical links for Nova Scotia.
.0830
The Chairman: Thank you Mr. Byrne, Ms McQuinn and Ms Bartlett. Thank you very much. I appreciate the presentation, but to see everybody we're going to see today we've got to move crisply along.
From the Atlantic Pilotage Authority, Captain Anthony McGuinness and Michael McGrath.
Captain McGuinness, I believe you are familiar with the process. Please confine your remarks to about 10 minutes to give members an opportunity to ask questions.
Captain Anthony McGuinness (Chairman and Chief Executive Officer, Atlantic Pilotage Authority): Good morning. It's the first time I've attended the standing committee.
The Chairman: So you're not familiar with the process.
Capt McGuinness: No, sir, I'm not.
The Chairman: Well, then let me just take a second because we have about half an hour in total for your presentation. The more of that half hour you use in straight presentation, the less time there is for members to focus in on the issues they might want to have further clarification on. But by all means make sure you get on the table what you want to say. Don't let me cut you off from anything you want to get out here, because that's what we're here for.
Capt McGuinness: Yes, I understand that. That's fine. My speech is about 10 minutes long, so bear with me.
Mr. Chairman, on behalf of the Atlantic Pilotage Authority board, I wish to thank you for this opportunity to address the issues concerning the amendments to the Pilotage Act within Bill C-44.
As requested, the Atlantic Pilotage Authority submitted a number of concerns to the clerk of the House of Commons Standing Committee on Transport, which it was felt required further clarification or explanation. This submission amounted to the following five concerns: 1) the APA's viewpoint regarding the employment of the chairman; 2) the possible reversal of the tariff increase and the applied interests; 3) the concern about possible future indemnification costs for board members; 4) the possibility of there being no communication prior to or during construction phases of port facilities, and 5) the possibility of there being two port controls - for example, the present vessel traffic management system and a new traffic control set up by the port authority.
As I've already mentioned, these were our preliminary observations on reviewing Bill C-44. Should you want clarification regarding these concerns, I would be happy to discuss them further.
I would reiterate our appreciation of the efforts of the Standing Committee on Transport and those of the witnesses who have presented their diverse views before SCOT. As a result the report has provided much useful information.
The SCOT hearings have also served to raise the profile of the pilotage within our region and have emphasized the importance of the user-pay pilotage system. In saying this, however, there are several issues that need further regulatory administrative and minor legislative changes. They are: 1) compulsory pilotage areas and the mechanism for making such designations; 2) the criteria required to qualify the pilot, hold a pilotage certificate and basis for the granting of certificates, exemptions and waivers; 3) the need for a fair and realistic mechanism for setting pilotage rates; and 4) the absolute requirement for reduced costs.
I'd like to comment on those points. With respect to number 1, I would state that the authority presently has 16 compulsory ports and 14 non-compulsory ports. Many factors are used to determine whether a port should be compulsory or non-compulsory. They involve the degree of difficulty and hazard in the approach, the amount of traffic in the area, the size of ship, the nature of the cargo, and the incident of weather conditions such as fog, ice, strong winds, etc., the effects on the environment should a ship carrying hazardous goods or pollutant cargo suffer an accident; and changes in the structure of a port, i.e., berths or dredged channels, both of which may affect ship handling.
.0835
Point two is that the great majority of users of our services are fully satisfied with the current methods to qualify the pilots. Careful preparation goes into the process of granting any pilotage licence, and we are constantly improving our examination standards.
There are alternatives to having licensed pilots on board. The first is pilotage certificates. I would point out that to date the Atlantic Pilotage Authority has issued 102 certificates to candidates who have met all the required standards and have successfully passed the examination for the port certificate they have applied for.
The second alternative is waivers. These are only granted on a per trip basis, and generally apply to ports of lesser traffic volumes. As well, they are only granted to a master who is familiar with a particular port. Waivers are granted only when the conditions set out in the authority's regulations are met and can only be issued by senior officers of the authority, who must be contacted directly by the ship's master.
Third is exemptions. The conditions for exemptions are also set out in the authority's regulations and apply principally to the government-owned ships, Canadian ferries and Canadian ships of under 1,500 gross registered tonnage. The board of the authority is currently considering whether to increase this exemption for Canadian ships. However, there are many factors to be taken into account.
In following with this line of thought a master may well have attended simulation courses and have all the available navigational equipment on board - for example, GPS, LORAN, ECDIS - but we must stress that this equipment is subject to power loss. Equipment only displays; it doesn't think. It cannot make judgments or predict what the circumstances may be in 20 minutes' time.
The safest alternative rests with someone who has local knowledge and who can operate under situations of duress, i.e., strong winds, currents, poor visibility, high traffic activity, equipment failure, directing tugs and so on. Should a master feel capable of fulfilling the pilotage role, and if he meets the requirements of the authority's regulations, he may sit the examination to obtain a pilotage certificate.
In summary, the Atlantic Pilotage Authority believes the regulations currently in place regarding certification fulfils its mandate to provide public safety and environmental protection.
Point three is that it was determined that the working groups would like to see an improvement in the timeliness of tariff implementation, including the simplification and shortening of their regulatory process for publication of pilotage tariffs in parts I and II of Canada Gazette. The Atlantic Pilotage Authority is please to see such a recommendation proposed in the amendments to the Pilotage Act.
Four, the authority has taken steps to reduce costs, thus reflecting an improvement in the bottom line for 1995 over the previous year. Projected financial statements for 1996 show a continued positive trend. These areas of cost reduction can be attributed to the reduction of pilot numbers in certain areas, a salary freeze, a review of pilot boat contracts, administrative staff reductions and administration contracts for leasehold buildings and equipment. One of the primary goals of the Atlantic Pilotage Authority is to continue to operate on a self-sustaining basis in future years.
Finally, Bill C-44 requires that the pilotage authority be required to report to Parliament by December 31, 1998, on the progress regarding compulsory pilotage area designation, the licensing and certification process, vessel exemptions, training, financial self-sufficiency and cost reduction. This is viewed by the Atlantic Pilotage Authority as a very positive step.
.0840
The Atlantic Pilotage Authority is committed to improving, where necessary, the aforementioned and other issues, and will maintain its mandate to ensure public safety and environmental protection. In so doing, it will continue to provide one of the safest pilotage regimes in the world.
Before closing, I would like to address ECDIS, the electronic chart display and information system. Shipowners, ship operators and port authorities face mounting economic pressure to improve operational efficiency while maintaining a high level of safety. There is practical evidence that this electronic system can contribute significantly to these goals, particularly in confined waters and congested harbours. However, it is the opinion of a great number of North American experts in the field that this is an aid to navigation only and that it is only still in its adolescent stage.
Notices to Mariners states that ``ECDIS and ECS are aids to navigation only''. Similarly, the U.S. Coast Guard Research and Development Center...and the U.S. national transport policy statement reads: ``It will enhance both existing radar and visual navigation techniques''.
It is therefore the opinion of the Atlantic Pilotage Authority that for electronic chart systems to achieve their safety benefit, they must be considered as supplementary and not exclusive.
I would conclude by saying that despite significant advances in safety that may be achieved through the use of chart systems, an experienced and alert pilot will remain the most cost-effective way to ensure the safety of a ship in port approaches. For the foreseeable future, we must consider these chart systems as tools for the mariner rather than substitutes for experience.
Thank you.
The Chairman: Thank you very much. You are bang on time.
Mr. Gouk.
Mr. Gouk: Thank you.
I'm glad to see you're taking a very progressive attitude, shall we say, towards improving the service and the bottom line, as it were.
There are a couple of things I've been curious about. One is dealing with the examinations. We talk about a master being able to sit the examination, and if he passes it then he can obtain a pilotage certificate. In a lot of professions....
One that strikes particularly close to me is air traffic control. As an air traffic controller for a number of years I controlled at a fairly high level and even instructed in manual upgradings and refreshers. But even though I was a very competent controller, I could not go back and pass the licensing exam to be a controller unless I took time off work and went back to school and entered some period of full-time studies in order to do that.
It's been suggested that for a master, who is very competent in operating his vessel in a particular area he might frequently operate in.... The exam focuses on fine-tuned parts of the regulation, in honesty the same as it is in air traffic control or law or anything else. To pass the exam you have to know things that you're not likely ever going to use. It's just a matter of proving that you've hit the books, as it were.
Does this happen with pilotage? For example, someone who has to pass this master's certificate and hasn't taken the time to do all that studying can still safely operate the vessel but just can't prove it on paper.
Capt McGuinness: As you can see, we're not averse to issuing certificates to masters, and never have done in the Atlantic region. There are many ports in the Atlantic region, 30 of which we look after. As I said, there are 16 compulsory and 14 non-compulsory. To date we've done 102 certificates. We just passed two more up in St. John's. You have to achieve your master's certificate, no two ways about it.
You have to understand that a master can be at sea on a voyage and can go through many different mediums in that time, whether it be ice or poor conditions. He could be up many hours and suddenly be faced with coming into a port. He has to have local knowledge before he brings that vessel in. If he can meet that local knowledge and he meets the amount of times of coming into that port, we're prepared to have him sit down and try the examination. As I say, 102 people have been passed to date.
.0845
Mr. Gouk: Is that so he can go into a specific port? Is that the certificate you're talking about?
Capt McGuinness: It's for a specific port, yes.
Mr. Gouk: Okay.
Capt McGuinness: Just because you go into one port doesn't mean you can go into every other port. It's just impossible.
Mr. Gouk: Just one other area is getting into the electronic aids to navigation. As you correctly pointed out, they are aids. I do not want to suggest for a moment that I know anything about GPS as it applies to ships. I'm very familiar with it as it applies to aircraft. In the case of aircraft, it doesn't only tell you where you are; it does give you the predictions you were talking about of the 20-minute look ahead based on current wind and so on. It does that for an aircraft. I can only assume that it would do that for a vessel as well. Would that be correct?
Capt McGuinness: No. It's a different type of medium altogether. You can link it to radar, of course, and it can come in, but the way it's been perceived is that you can be just looking at a screen and you see your ship on that screen and it's just coming in. You can just put it alongside.
There are many other activities going on around that, whether they be very strong wind conditions, currents, or everything else that can affect it. You can also have a power outage. A fuse can blow, and suddenly.... You can have back-up systems, but there are also other factors that affect GPS, as you well know. Atmospheric conditions that are very bad affect GPS. I certainly am no expert on it.
We have an expert here who is very deep into it. He is one of our pilots and can certainly...in fact, he's just come back from Rotterdam after giving a major speech on this to scientists who are very deep into this. What has come from that is that it's a tool and that's all it is. We should be aware of that.
The Chairman: Thank you, Mr. Gouk. Captain McGuinness, Mr. Gouk is interested in aids to navigation. He's a big supporter of the AWOS system for air navigation.
Mr. Gouk: I'm about as big a supporter of that as I am of the Liberals being in power in Ottawa.
The Chairman: Mr. Jordan.
Mr. Jordan (Leeds - Grenville): When we listen to the shipowners - those who have invested a lot of money in their ships - we find that one of the big factors in becoming more competitive in the transportation industry is the cost of pilotage. It's a big item. We have to believe that, of course, and we're not trying to undermine the importance of your work. But do you see, with the technology that's out there today, a somewhat less or a greatly reduced need for pilots, or is all that technology just something we don't have to be concerned about and something nice to have around but, when it gets right down to the practical level, something that really isn't very important? It has to be a pilot. Do you see any?
Capt McGuinness: There have been great changes. When I went to sea 25 years ago, radar was in its infancy. There's been tremendous progress, but we still have to recognize that everything is a tool. You have a statutory obligation to go on the bridge and keep a lookout. There are so many things happening as you're bringing in a ship. You don't have full control of the ship as you do an aircraft. It's a totally different perspective.
In terms of cost, I'm not talking about the St. Lawrence or anything like that. I'm saying that the pilotage and costs in the Atlantic region are less than 1% of the total port costs coming into here - less than 1%. So I don't think that's a big factor to safeguard a ship that's worth literally millions. Not only does the pilot protect that ship; it protects every other ship and every other public facility around. That's a small cost to pay.
Mr. Jordan: But the person who owns the ship wouldn't want to put his ship in a situation in which it was put at any degree of risk, because he has a tremendous investment there.
Capt McGuinness: He's putting his ship at risk by making a master who could could have made a voyage and who is extremely.... I've been in this situation. You're making the coast and you could have been 48 hours on the bridge already. The best thing you're looking forward to is seeing that pilot boat coming out with somebody as qualified as you to help you put your ship alongside.
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Shipowners seem to forget that their masters are human beings and need sleep like the rest of us, and are also carrying the tremendous responsibility of bringing their ships to their various destinations. They're very, very glad when a pilot steps on board and assists them.
Mr. Jordan: I'm not arguing that point, but in every other form of transportation.... Take rail, for example. I and a lot of people here can remember when there was a man in the caboose at the end of the train. Something happened, I guess, because he's no longer needed. I hope that isn't putting our railway system at risk. I suspect that something happened with technology so that there was less need for that person to be at the end of the train. Is that kind of thing happening in the marine industry at all, where technology is seen as an advancement? The bottom line is cost.
Capt McGuinness: If I go back 25 years ago, when I went to sea we had 48 to 50 people on a ship. Today the massive ships coming into this port have 12 to 16 people, barely enough. Half of them are asleep because they've been on prior watch, and there are barely enough people to put the ship alongside and tie her up, let alone move her around and everything. They're pushing the extreme. They're watching the bottom line. They're looking at the personnel and they're reducing them. But there is a limit.
The Chairman: Thank you, Mr. Jordan and Captain McGuinness.
Mr. Keyes.
Mr. Keyes: Thank you, Mr. Chairman. Welcome back, Captain McGuinness. It's good to see you again.
Gentlemen, I notice that on page 7 you talk about ECDIS and how this is an aid to navigation only. There has been some argument, particularly over the last couple of years, that a pilot is nothing more than an aid to the master, that in fact pilots for the most part - even you, Captain McGuinness - were at one time masters on ships and are plying the waters.
In the most recent incident on the west coast, a cruise ship of very modern design came around a corner on a river and a barge was doing likewise in the opposite direction, and they came in close proximity to one another. The master had to take back control of his vessel from the pilot because the master knew how to work the new mechanisms on board this cruise ship and the pilot did not.
It's becoming increasingly evident that while the pilot may be very familiar with the waters, the pilot may not be so familiar with the new mechanisms for moving that ship quickly, turning it around on a dime and using the new throttle system that looks like the joystick on my child's Nintendo game. This is something I'm curious about as well, upgrading pilots mechanically on these vessels that have all these new technologies on them.
Capt McGuinness: We update most of the pilots as much as possible. They go to simulation courses. It's true that they gain experience. If they've been a pilot for many years, then obviously there are many changes to the bridge and they have to be updated, no two ways about it. But they're not there specifically to handle all the latest equipment. They're taking a huge ship and putting it alongside. They don't actually physically take control. It's a question of making the approach through very heavy traffic, and they know the currents and the wind and they're imparting that information to the captain.
My last ship was completely remote control, a joystick as you said, but I was still very happy to have a pilot come aboard and say, this is where you're going and this is the approach and you'd better be watching for this and for that. I still put the vessel alongside myself, but I needed his local advice.
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Mr. Keyes: So he's up there anyway, and he's awake and doing his job.
Specifically, I notice that on page 6 you mention that the bill requires pilotage authorities to report to Parliament by December 31, 1998. Some have suggested that December 1998 is a long way off. Given that there have been 17 working group meetings held in tender for the marine centres across the country, much work has already been accomplished.
The year 1998 will provide an added incentive to pursue solutions in an expeditious manner. Yet December 1996 to December 1998 doesn't seem so expeditious. It's a two-year time period. There's been some suggestion that it be moved back to December 1997, which would give you a year and a quarter to do the work on top of the work that has already been accomplished. Would that be feasible?
Capt McGuinness: Certainly. We have no objection to 1997. In fact, we discussed this recently with our colleagues. Some people planned to make it for the year 2000. None of us advocated that. We're quite happy with 1997-98. It's a question of our getting out and addressing the community and hearing their concerns.
Mr. Keyes: My last question has to do with your latest contract. We know it's out on the west coast. In the Pacific authority they have a new five-year contract that included a dispute settlement resolution mechanism. Is that part of your latest contract, or will it be part of the new contract?
Capt McGuinness: It is presently part of the contract and it's good for at least another six years. Both sides are very much in favour of this. We don't have the FOS system here. We go by the ADM, and it's working very effectively.
The Chairman: Thank you, Mr. Keyes. Thank you, Captain McGuinness and Mr. McGrath. We appreciate the intervention.
Mr. Michael R. McGrath (Treasurer, Atlantic Pilotage Authority): Thank you very much, sir.
The Chairman: From the Halifax Shipping Association, we now have Mr. Fritz King andMr. Jim Stoneman.
Welcome. Are you familiar with the procedures in the committee? We would like you to take about 10 minutes for your presentation. We have a total of half an hour, so you could make your presentation and then give the members an opportunity for some questions.
Mr. Jim Stoneman (Secretary, Halifax Shipping Association): The Halifax Shipping Association, HSA, is an organization representing the various ocean carriers, stevedores, agents, forwarders, service providers and shippers at the port of Halifax. A complete list of the membership is available.
This long-standing Halifax organization was formed to keep its membership abreast of current issues at the port and to represent them with regard to policy impacting their operations. The initiative for a redefining of Canada's ports comes at a very significant time in the development of global trade and the transportation logistics associated with the world marketplace. In this context, we see the port of Halifax at a potential crossroads, at a time of significant opportunity for growth and development, with much to be gained or lost.
The changes in ocean technologies, such as the inception of post-Panamax vessels, growing ocean carrier consolidations, vessel sharing and a push for consolidation of traffic into hub ports, combined with the capital savings associated with reduced inventories and faster delivery times play directly to Halifax's strengths.
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The port has deep water, is located virtually on the great circle route, has excellent rail and vessel interface and can service the entire North American marketplace.
Halifax can be the shortest time gateway between both European and Suez markets and the Canadian and U.S. midwest markets; however, none of this potential can be achieved by maintaining the status quo. A dynamic program of infrastructure development and marketing must be defined and implemented if this potential is to be brought to fruition. More importantly, we believe this opportunity for significant growth requires immediate and decisive action. The downside could ultimately result in the port being relegated to feeder port status, serving the maritime marketplace only.
The impact that being relegated to a feeder port would have on the economies of Halifax, the province of Nova Scotia, the Maritimes and even Canada is better judged by others. However, the number of jobs lost in our industry in Halifax alone would be in the thousands. With this in mind, we have taken the opportunity of the introduction of the Canada Marine Act to examine the port and to try to define our vision of what the new port authority should look like. We have then examined Bill C-44 to see what lends itself to this vision and what detracts from this vision.
A vision of the new Halifax Port Authority is described as a low-cost, customer-focused, efficient organization, driven by the private sector to develop the vision and direction for the port, not only to maintain its competitive standing as a commercially viable east coast gateway but also to reach to the potential of tomorrow.
We recommend that the decision should be included in the letters patent as a defining factor for the new Halifax Port Authority. Most importantly, we believe that if the port is to achieve its potential, the direction and strategy must be driven by the needs and opportunities of the private sector.
The HSA sees the new bill as a positive force. It intends to reduce costs of operation by eliminating the Canada Ports Corporation and improving the local economy in order to pursue the best interests of the port. However, some changes to the bill as it now reads would be required to achieve the admirable objectives set out in the working paper on national marine policy of December 1995.
The bill currently does not ensure that this government or also any future governments would allow the port authorities free reign to pursue commercial goals, unimpeded by political agenda. It is most admirable in its attempt to ensure the Canadian taxpayer will not be left to pick up the tab for inefficiency and waste; however, if private sector investment is to be attracted to participate in major infrastructure development, investors must feel assured that the laws of commerce, within limitations known and spelled out in the bill, will be the governing factors on the return on that investment.
Most specifically, we are concerned with the following issues.
The first issue is in clause 3 on the national marine policy. The objectives of the bill are listed herein. Paragraph (e) states ``provide a high degree of autonomy''. The definition of ``high'' is left entirely open to interpretation. This term should be replaced with the phrase, ``total autonomy within the limitations stated in the Act''. The bill lists the activities and restrictions under which the authorities have to operate. Having the rules of the game spelled out in clear terms is the only way to encourage entrepreneurial development.
Second, in clause 12, ``Appointment of directors'', we note the difference in wording with regard to the directors appointed by the municipal and provincial governments...whereas the remaining directors are nominated by the minister in consultation with the users. Great pains are taken in the bill to describe the qualifications and restrictions placed on eligible candidates. In order to ensure the authorities are properly private sector driven, the bill should accurately state the qualities and restrictions of a director. The user group should then appoint the allocated number of directors governed by the criteria in the act.
Third, in clause 14, ``Persons excluded'', paragraph (e) states ``a person who, in the opinion of a Minister, is a user''. This terminology is unacceptably vague. The wording invites interference with the ability of the private sector to demand non-partisan business decision-making and lends itself to potential abuses and patronage.
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The definition of who is to be excluded must be developed and included in the bill. Paragraph 14(e) should be amended to read: ``a person who, as described in the Act, is a user''. This definition may be universal in scope or port specific. However, we would like to address what we believe is relevant to the port of Halifax.
While the HSA recognizes a potential for conflict of interest for the employees of the ocean carriers and other customers of the port to sit on the board, this may not be the case for some service providers. Most specifically, the port of Halifax and Canadian National have an extraordinarily interdependent relationship. CN's participation at the port is absolutely vital to the port's future. Conversely, any failure of the port to continue as a major east coast gateway to North America would seriously jeopardize the commercial viability of the main rail link between Montreal and Halifax.
We note in part III of the bill, which deals with the seaway, paragraph 67(c) recognizes the importance of protecting the long-term operation and viability of the seaway as an integral part of Canada's national transportation infrastructure. While we do believe that government has a responsibility to support and encourage maintenance and development of our transportation infrastructure, we do not believe the methods employed on behalf of the seaway to be the most productive.
The rail link between the port of Halifax and other major Canadian markets is also a integral part of Canada's national transportation infrastructure, contributing significantly to the Canadian economy. In this regard it is most obvious that we must consider the impact that the loss of the rail link with the rest of Canada would have on the Atlantic provinces and ultimately on the entire economy. The most productive way to ensure the long-term viability of the rail link is through good business principles. To this end, we recommend that the railroad be encouraged to play an even more active role than the port authority.
CN should be given one selection to the board of directors and be exempted from the restrictions associated with users of the port. With regard to the remaining directors, the Halifax Shipping Association, which is representation from Halifax's steamship community, must be part of the selection process. The restrictions on candidates and the definition of users must be refined and written into the bill before it becomes law and set so that arbitration exclusion is eliminated.
In closing, we would like to commend the task force for its initiative to improve the efficiency and competitiveness of Canada's ports and the spirit of non-partisanship described in the working papers on national marine policy of December 1995. We believe the changes noted herein would bring that spirit to reality under the new act.
We must mention our concern with regard to timing. The potential for a federal election in 1997 is very great, and the processes for enacting a bill into law are time-consuming. With the many challenges facing our ports at this age of almost daily advances in technology and infrastructure, we must encourage the government to proceed with all possible dispatch to amend and pass this bill, thus allowing the ports and potential private sector investors a clear vision of the playing field in their efforts to keep Canada in the forefront of world commerce and trade.
The Chairman: Thank you very much, Mr. Stoneman. If I can just comment briefly on your very final point, it's likely, given the way the hearings have gone - and we haven't completed the full round of hearings yet - we'll have this off our desks by the end of this month. What happens in the Senate, of course, has yet to be determined.
Mr. Cullen.
Mr. Cullen: Thank you, Mr. Stoneman and Mr. King. I have a couple of questions.
First, one of the stated objectives of this Canada Marine Act is to provide Canada's ports with the tools to operate commercially and efficiently. I'm wondering whether, with the amendment you proposed here, this new Canada Marine Act will meet these objectives and what it will do for you, in general terms, that will allow the act to meet those objectives.
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Mr. Stoneman: We believe it goes a long way toward meeting the objectives. We have significant concerns concerning the true autonomy of the port. The Canada Marine Act suggests that each port should be on its own and autonomous. We understand that, and support it. We're not convinced that the government, by divorcing itself from each individual port, would not be putting some restrictions that the individual ports cannot live with - for instance, the ability not to pledge assets against the borrowing of funds for infrastructure development.
It is very difficult for Halifax to live with. These post-Panamax vessels we talked about require very large cranes. I don't know the order of magnitude dollarwise, but I believe it's in the order of probably $40 million or $50 million, to say nothing of the terminal set-up required for those, and not being able to -
Mr. Cullen: What is a ``post-Panamax'' vessel?
Mr. Keyes: A big ship.
Some hon. members: Oh, oh!
Mr. Fritz King (Chairman, Halifax Shipping Association): It's a ship too large to enter the Panama Canal. They're very wide.
Mr. Stoneman: They're the largest ships afloat today as far as container vessels go, in the order of magnitude of 6,000 TEUs, or 20-foot-equivalent units. The largest to call at Halifax at this stage is about 4,000.
Halifax has very natural geographic advantages as it applies to the water mode. It's a deep-water, natural port, and its close proximity to Europe and the Suez augur well for it. But if Halifax is close to the European market, it is also far from the inland market. We have a much longer trip to the marketplaces of Montreal, Toronto and the U.S. midwest. For that we must have a partnership with our single railroad servicing Halifax. While we might want to have and promote the infrastructure at Halifax, we must also promote continued good service with CN to ensure that the goods get to the marketplace.
The Chairman: Thank you. Mr. Byrne.
Mr. Byrne: I want to pick up on one point. You were talking about the seaway in your presentation when you quoted from the bill:
- protect the long-term operation and viability of the Seaway as an integral part of Canada's
national transportation infrastructure;
- That has been built right into the act. Yet as a national policy, ports are to be autonomous,
self-generating revenue. Is there any contradiction here?
Mr. Stoneman: Not really.
Mr. Byrne: Do you find any contradictions, or do you find that preferential treatment has been given the seaway or the seaway ports in relation to the port of Halifax within the actual substance of the act as drafted?
Mr. Stoneman: It seems the federal government is giving some preferential treatment to not so much the operation as the continued viability. They recognize the continued viability requirement for the seaway. We don't argue with that. We understand that certainly for bulk trade, the seaway is extremely important to particularly Quebec, Ontario and the grain moving from the west. We have no argument with that. But if money is being provided to continue that operation of the seaway and to recognize the national importance, we want to make sure this committee understands how we feel about the importance of Halifax as a national port as well. If Halifax does not have the infrastructure development, it will - not can, but will - be delegated to a feeder port and not a hub port once these large post-Panamax vessels come into fruition.
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The present-day ships that call at Halifax also call at many U.S. ports, i.e., New York, Baltimore, Philadelphia and down the coast. As the post-Panamax larger vessels come into play, the number of those ports will be reduced dramatically.
Halifax already has a very natural advantage of very deep water. We want to take advantage of that, but to do that we have to have very great - and I can't put a number on it - infrastructure development in the way of these post-Panamax vessels, i.e., cranes and terminals to service the ships. For that we will have to have government support - I'm not suggesting subsidies, I'm saying support - in order to develop Halifax. If Halifax is not developed, even the present vessels will not call at Halifax the way they do today.
Mr. Byrne: Instead of operational support it's capital expenditure, or one-time infrastructure support.
Mr. Stoneman: That's correct. As we understand it, on a stand-alone basis under the new act the federal government would continue to own the assets, but the assets could not be pledged by the port authority for lending purposes or borrowing money purposes. It would only be on cashflow. We don't think that's a reasonable thing to do, particularly. I'm sure others will speak to you today about that.
It's a very difficult thing to put your infrastructure in place if you don't have the business, and you can't have the business until you have the infrastructure in place. So it's a chicken-and-egg thing.
Mr. Byrne: I have a supplementary.
The Chairman: That's it, Mr. Byrne. I appreciate the intervention.
Mr. Mercier.
[Translation]
Mr. Mercier: I heard you say that you felt that the quality of service provided by the railway network was important to the viability of the port. I would like you to elaborate on your apparent concerns about the quality of the railway service. For example, has the CN privatization had a positive or negative impact on the quality of the services provided by the railway?
[English]
Mr. King: Perhaps it's somewhat early to make a definitive comment on the service. I think for the sake of the users within the port at the present time the service has continued in the same fashion as it has in the past. In some ways, perhaps, there is potential for improvement, but the concern we're expressing is a longer-term one vis-Ã -vis the short line between Halifax, Montreal and Toronto, particularly, and the midwest as well.
The seaway is spelled out clearly as an entity within Bill C-44. However, the point we're trying to make is that while it's very viable, and we support that in terms of the service it provides, there is another linkage, and that is CN Rail. Right now that has no long-term commitment to its protection. The survival of Halifax is purely on hinterland cargo. The local market is not sufficient to guarantee the future of the port in any meaningful way. We need to ensure that rail will be there.
I guess that's basically the position we're taking.
The Chairman: Mr. Gouk.
Mr. Gouk: Gentlemen, I don't know what we can add at this time with regard to CN Rail. Many here...and I think you're aware as well. I tried twice under legislation that came before this committee to put in an amendment that would have ensured some period of continuance of CN. Hopefully, given that we didn't get the legislation, CN will see fit to do that anyway.
One area you touched on that I happen to essentially agree with - and I think you will find that a lot of input has been coming in to us on this - is the appointment of directors. There's a bit of an anomaly. As it is drafted now, the legislation says that the minister will appoint, and it also says ``nominated by the Minister''; he will nominate them. But when the minister came before this committee in Ottawa, he said he will appoint them from a list nominated by the users, which is a subtle difference.
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The only way we can get anything passed is for the majority of the people at this committee to agree with it. Therefore we all have to make certain compromises. Would it satisfy the main concern you have if it were amended so that it said that it left the minister appointing, but said that the nominations were by the users, as opposed to the minister? Would that satisfy the main part of your concern on that issue?
Mr. King: I think I'd probably have to digest that subtle difference.
Voices: Oh, oh!
Mr. King: The objective we had hoped to achieve in looking at a more direct role in appointing directors of the port was basically in relation to what Jim had said in terms of the future development of the port.
We would like the port to have the ability to recommend a number of people. Perhaps the legislation can't change and allow us to appoint a director immediately, but that list should not be able to be augmented or added to in any way; it should come from the commercial sector.
Mr. Gouk: Okay. That's basically what I was asking.
The one last comment I would make is with regard to your suggestion for a dedicated seat for CN. I believe you are the first port to ask for a specific dedicated user seat.
Later today we will have both the development commission and the Port of Halifax people here. So I will want to follow up and see what their position is on that as well. But certainly I'll keep your submission in mind.
Mr. Stoneman: Halifax is really tied to the service provided by CN. Approximately 90% of the traffic that is handled at Halifax goes inland by rail. The maritime provinces account for the other 10%.
As we can take credit for the development of Halifax over the years - and it has grown since containerization, particularly in 1969 - I guess we can take credit for geography, for the natural harbour and for a lot of things. But without the good service CN has provided to date, those alone would not have got the goods to marketplace in an efficient manner.
We want to ensure that the lone rail provider to the port of Halifax has a stake in the port of Halifax to allow it to continue that development we've seen to date.
Mr. Gouk: Do you think the other users of the port in general would recognize that as something viable from their perspective and concur with your position on that?
Mr. Stoneman: Yes.
Mr. Gouk: Okay. Well, hopefully, then, without the amendment we'll probably still be able to accommodate your wishes.
Mr. Stoneman: Thank you very much.
The Chairman: Thank you, Mr. Gouk. Mr. Keyes.
Mr. Keyes: I have a supplemental question, Mr. Chairman, on the board appointments just so our witnesses have a clear understanding of the intention of the appointments to the board.
The intention, of course, is that the appointments that are made would be one federal, then a provincial and a municipal. Then, whether it's nine or eleven board members - and there's been some consideration being given by the committee to reducing that to seven because of the witnesses we've been hearing from different ports across the country, and harbour commissions in particular - the remaining number of board appointments would be made by the minister in total consultation with the users or service providers on the port. So when the Port of Halifax sits down with its users and service providers and draws up a list of the remaining six names for a nine-member port, those six names are coming to the minister from you, from those who are users and service providers of the port.
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If your concern, for example, is that we should entitle CN as a service provider to be on that board, the opportunity is there for the user to provide the name of someone who in the past or present has had a close relationship with CN - a past CEO, a past member of the board, a retired VP or president, etc. The opportunity is there for the users and service providers to put forward their names so that the list can be of greatest benefit to the port.
Mr. King: I personally have some difficulty understanding the way the guidelines are set out for directors, the limitations. If indeed the intent is that you can enter the room by a different door - i.e., you can appoint someone who isn't a user under the description of the bill but has a close enough relationship with a user to represent their interests - are you establishing anything of value in the process?
Mr. Keyes: You're absolutely right that on the surface it looks that way, but the realities of conflict of interest and the realities of jurisdiction set in.
In Hamilton, for example, you have Stelco and Dofasco. If you decide to open it up to a board of users of the harbour, and you decide on an eleven-member board and Dofasco is on the steering committee of the board and Stelco is not, then one is privy to tariff pricing and those kinds of things while the other is not. To protect against that kind of thing in the rule of law, there has to be a separation made between the person who is a direct employee of the user on a board and a person who is affiliated and would have the greater community good in mind. Maybe because he's an ex-VP of CN he is sensitive to CN's obligations and opportunities, but at the same time he is also very cognizant of the community's needs and the port's needs.
Mr. King: And appointed from the community at large.
Mr. Keyes: Absolutely.
The Chairman: Thank you, Mr. Keyes.
For the information of members, that brings us to the conclusion of the time available for this presentation.
Mr. Gouk: Mr. Chairman, can I make one supplemental comment just for clarity? I know the parliamentary secretary to the minister does not want to mislead the witnesses. That is not his intention. No matter what the intent is, it doesn't state anything about submitting a list or getting names from the users. It says ``consultation''. It doesn't even say ``total consultation'', whatever the difference between consultation and total consultation is. It says he will consult and then he will nominate and they will be appointed.
The Chairman: Thank you, Mr. Gouk.
Mr. King, I must say that in a month's worth of hearings, you're the first person who has suggested there is any subtlety to Mr. Gouk's positions. Thank you very much.
Next, from the Halifax-Dartmouth Port Development Commission, we have Thomas Hayes and Wade Elliott.
Mr. Thomas Hayes (Chairman, Halifax-Dartmouth Port Development Commission): Thank you, Mr. Chairman. It's delightful to see you here in Halifax this morning.
The Chairman: It's delightful to be here.
Mr. Hayes: To all of you, these are very important deliberations in terms of how they may affect the future of the port of Halifax. We hope that our comments are useful to you in whatever advice you give the minister.
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I'm going to ask Wade Elliott to make our presentation this morning. I hope he can comply with the time limit and leave enough time for us to have some questions and answers and some discussion.
Mr. Wade Elliott (Executive Director, Halifax-Dartmouth Port Development Commission): Thank you, Tom, and good morning, everyone.
Just by way of background, the Halifax-Dartmouth Port Development Commission is an agency funded and supported by the Province of Nova Scotia and the Halifax Regional Municipality. We have an operating mandate to promote and develop business at the port, and we advise government on matters affecting the port's competitiveness.
We've been involved in port development issues for quite some time, including projects such as Autoport, the Halifax International and Fairview Cove container terminals, introduction of double-stack service, and initiatives to develop Halifax as a gateway for U.S. midwest traffic.
You've heard a lot of this already, so I won't go into a lot of detail. The port obviously is a very modern and diverse port. We handle a broad mix of different types of cargoes. Container traffic takes a lot of our attention. It has significant economic impact, accounting for roughly 2,000 jobs, $70 million in income and $100 million in expenditures. As the HSA has just explained, in addition to providing crucial global access for the region's importers and exporters it is the linchpin for the long-term viability of rail service in this region.
Halifax is a relatively modest local market, and our success as a main-line port of call for international shipping depends on our ability to competitively access inland North American markets by rail. Traditionally this has been limited to the central Canadian markets of Ontario and Quebec, but now, with the recent opening of Canadian National's St. Clair Tunnel, we've been able to expand our hinterland through to the U.S. midwest and beyond.
Developments in international shipping, as you've heard a bit about, that are working in our favour include: extensive vessel-sharing agreements between carriers and consortia arrangements; consolidation of services and ports of calls; and of course the introduction of increasingly larger post-Panamax container ships.
I should emphasize, Halifax is the only Canadian east coast port that can competitively accommodate these ships. They play perfectly to Halifax's natural advantage - 21 metres of depth, no dredging, and the shortest ocean voyage time across the Atlantic to Europe and southeast Asia via the Suez Canal.
We feel confident that given everything that's happening, and with the development of an appropriate port policy environment, Halifax can fully achieve its potential to become a major east coast load centre. We therefore endorse the vision for the new authority that the Halifax Shipping Association has put before you this morning:
- A low cost, customer focused, efficient organization, driven by the private sector to develop the
vision and direction for the Port, not only to maintain its competitive standing as a
commercially viable east coast gateway, but to reach to the potential of tomorrow.
We certainly see some positive things in Bill C-44. The decision to disband the Canada Ports Corporation should bring some reduction in cost and streamlining of decision-making. However, we're not persuaded, except for one major and negative feature, which we will discuss in a bit, that the new port authorities to be created under the bill will, in practise, differ significantly in role or performance from the local port corporations they replace.
While the minister will not be as free as he has been to make board appointments, the federal government will continue to retain substantial control. Therefore the bill retreats from the national marine policy as outlined in December 1995. At the same time, the bill will prevent access to the traditional primary source of funding for major capital projects, i.e., the federal government. This is the primary negative feature of the bill, the one sufficient, in our judgment, to make it, on balance, a retrograde step in Canadian port development.
Many port facilities are capital intensive - very capital intensive - and have to be built well in advance of user requirements. We've heard a lot of discussion about post-Panamax investment in Halifax recently. One of the speakers talked about the chicken-and-egg scenario whereby users often do not come until the facilities are in place. In the case of Halifax, at least, because very little of its traffic is captive, even when the users finally arrive there's no guarantee that they'll stay. Indeed, they will not stay if they find another port that provides cheaper access to the markets in North America and the interior they seek to serve.
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Under these circumstances, the funding needed for the construction of major port facilities can only be arranged in part, if at all, in the private sector. No private sector lender or investor can advance the bulk of such funding against user commitments, which may or may not materialize, when the facilities are completed. If they do then materialize, they may or may not continue until the funding has been repaid.
Under such a scenario, funding can only come from governments that have the necessary financial resources and can justify, in the interests of promoting the economy of their constituents, the assumption of the attendant commercial risks. This is true not only of most Canadian ports but also of ports the world over that do not have enough captive or near-captive traffic for their major borrowings to be bankable. Had Bill C-44 been in effect in the late 1960s, Halifax would never have been able to build and equip even one container berth, and the harbour would likely have fallen into disuse.
Lamenting this situation after Bill C-44 has been enacted is not the recommended course of action. Rather, the bill should be changed now by the deletion of the provisions intended to prevent the federal government from providing capital funding to the new port authorities. Now, we're not saying the federal government should necessarily provide such funding whenever it's requested - only that it be free to consider such requests. This is our primary concern regarding the bill, but we'd like to comment on some of its other aspects as well.
With regard to clause 3, on national marine policy, the commission supports the stated objectives. However, we have some reservations about paragraph 3(d), which states:
- base the marine infrastructure and services on international practices and approaches that are
consistent with those of Canada's major trading partners
- We feel Canada's size and diversity makes it quite distinct with regard to marine transportation.
We therefore recommend the following addition:
- while at the same time recognizing Canada's unique geographic characteristics;
We also believe port users should have the same rights and responsibilities as those of municipal, provincial and federal governments, and be entitled to appoint and not merely nominate directors. This clearly gets to the heart of the vision put forward by the Halifax Shipping Association. In fact, we also recommend that the HSA decision be incorporated in the letters patent for the new port authority.
It's our strong contention that protection of national interest concerns can be most efficiently achieved by spelling them out in the letters patent or through other regulation rather than through political appointments to the board. The federal government already has clear jurisdiction over interprovincial and international transportation. Furthermore, the considerably stringent rules governing capacity and powers, annual meeting, financial management, special examinations, etc., introduce far more accountability and transparency to the port system than exists at present, and would appear to be more than adequate to protect the national interest.
It should also be stressed, perhaps contrary to what some have argued, that retention of substantial federal control does nothing to assist the port's marketing function. We therefore recommend that subparagraph 6(2)(f)(v) and paragraph 12(1)(e) be removed and replaced by a section specifically allowing appropriate stakeholder and user groups to appoint directors.
The commission also has serious concerns over the exclusionary definition of ``user'' in the bill, that:
- in respect of a port, means a person that makes commercial use of, or provides services at, the
port.
Further to this concept, we believe the bill should contain the flexibility to allow for the creation of corporate governance in management structures tailored to better suit local conditions. As noted earlier, the significance of competitive rail service to Halifax's potential to develop as a load centre port cannot be overstated. In fact, interdependence of the port and the eastern main-line rail network is absolutely critical to the continued viability of both parties.
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Therefore, there should be the opportunity for the port's sole rail carrier to play an even more active role in port management, and to be encouraged to take a greater share of the risks and rewards of port activity by allowing for a structure that provides the railway with an incentive to invest and focus on the port's business - a sort of joint management agreement with CN, if you will. We strongly recommend that Bill C-44 and the letters patent for the new Halifax Port Authority be structured to accommodate such an outcome.
With regard to clause 21 on no appropriation, clause 67 on seaway objectives, and clause 70 on the consolidated revenue fund, the commission has serious objections to the bill's on the one hand denying any access whatsoever for ports to parliamentary appropriation of federal funds, while on the other hand continuing to offer access to the consolidated revenue fund for the seaway.
Paragraph 67(c) states the objective to ``protect the long-term operation and viability of the Seaway as an integral part of Canada's national transportation infrastructure''. Mr. Chairman, the port of Halifax, the CN gateway, is at least as critical a component of Canada's national transportation infrastructure as the seaway, and given industry trends, it holds considerably greater potential to expand its role in international trade for the benefit of all Canadians. It should also be noted that in many instances the seaway competes with Halifax for traffic, making the discrepancy of treatment that much more objectionable.
We therefore strongly recommend that Bill C-44 be amended to ensure that the major ports and the seaway are treated in a consistent and equitable manner regarding access to federal funds for capital investment.
Mr. Chairman, we greatly appreciate the opportunity to comment on this important effort to develop the legislative framework for Canada's marine industry. The commission feels that we have a limited window of opportunity to make changes, and we should be careful to ensure that the reforms introduced now are designed to be effective for more than just a few short years before they need to be realized.
Finally, if I might, we would like to spend a moment discussing an issue that relates more to the second reason the committee is here, the study on trade transportation and tourism.
If you will indulge us for a second, the terms of reference for this study are very comprehensive. They address such important issues as financing transport infrastructure, intermodalism, commercialization, etc., all with a view towards improving the competitiveness of transportation, trade and tourism. We believe that central to this study should be an assessment of commercialization options and cost recovery for government-provided services.
The commission has been actively involved in discussions surrounding the introduction of the coast guard's marine services fee. From the outset the coast guard has held the philosophy that the fee should be based on a perception of what users are able to pay, instead of being structured according to the amount of service consumed and then more appropriately determining who might be vulnerable. We are now faced with a situation where for an individual user, there exists no relationship between the fee and the amount of coast guard services used. This is best illustrated by the present ridiculous situation where a ship pays more for aids to navigation services when sailing directly from the open ocean to call at Halifax than if that same ship were to sail thousands of miles into the middle of the continent to call at Thunder Bay.
Without a user-pay approach, the fee has no built-in incentive for user discipline. Further, the absence of any direct link between the fee and the use and the cost of the service prevents any incentive for users to work with the coast guard to control its costs.
Over the course of the summer Halifax stakeholders have been working with the coast guard to analyse costs and levels of service in an effort to ensure that a port-specific user-pay approach, at least for the Maritimes, is introduced for year two. Your support for this philosophy, we believe, would be critical. It would ensure that non-users are not required to pay for services they don't consume and that modest users of coast guard services would pay proportionately less than heavier users.
In closing, we must stress a point we made at the beginning. In the absence of a significant local and hence captive market, the port of Halifax's future viability rests primarily on its ability to exploit its natural advantages, to lure traffic located a considerable distance beyond its immediate hinterland. If the port's customers are able to enjoy these advantages as manifested in lower costs for fewer coast guard services, Halifax will achieve its considerable potential for the benefit of all Canadians. If indeed these trends are not recognized in the fee structure, Halifax and indeed Canada will be the loser.
The Chairman: Thank you, Mr. Elliott. That's known in the business as a ``two-fer'', is it not?
Mr. Gouk, do you care to start this round?
Mr. Gouk: I'll start at the end because it's only a comment. With regard to your concerns about user-pay, I visited a number of locations last spring, yours included. I think you know well my position on user-pay, so I won't go further into it other than to tell you that I still hold that position and will still be working towards it.
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I would like to touch on two other areas you talked about: the ability of the port to make loans and the appointments to the board. One of the things I've had to learn, being in politics and in opposition, is what is often referred to as ``pragmatic compromise''. This is the difference between what I might ultimately like to have and what I think is agreeable to the majority, so that we can get things passed. It's all well and good for me to posture and say I want this or I want that, but if we're not going to get it, it does no good.
We heard a lot about loans, not from your exact perspective but from the idea of it being very difficult to borrow without being able to pledge anything other than cashflows that may or may not exist, particularly if a government fee structure gets first grabs at that cashflow. Would Halifax be in a viable position if it were able to go to the marketplace and pledge properties and equipment that it owned either before or purchased after the incorporation under this bill? Might it at least have the capability of pledging government-owned assets with the authorization of the minister? Would that give it enough flexibility to deal with the need to develop its infrastructure?
Mr. Elliott: You're going to hear more about this over the course of the day.
In any event, clearly, the ability to pledge assets would have an impact. It is difficult for us to say what the magnitude of that impact would be. It certainly would have an impact upon interest rates and undoubtedly would ratchet up the level of available capital. The real question is whether or not it would be significant enough to be able to truly prepare us for the potential growth that we might be able to benefit from in the next five to ten years.
Mr. Hayes: Could I just make a comment on that particular issue?
The concern I have is that certainly the ability to pledge assets would help from a security point of view in terms of what a lender would look for. However, the real concern here is that these are single-purpose assets. If, for whatever reason, the cost structure of the port changed and shipping lines decided to go elsewhere, these assets would have very little value to a lender in a receivership situation - worst-case scenario. So I think the ability to pledge would help, but I don't think it's enough. There has to be further underlying support from the government in that event.
Mr. Gouk: The other area you touched on was the idea of appointments. Notwithstanding what you're looking for in your submission, would it at least go some way toward resolving your concern if it were clear in the bill that the minister appointed from nominations made specifically by the users, as opposed to consulting with them and then doing whatever he might do? There are those here who would argue that his intention is...and I'm not going to argue. This may well be his intention. But this bill will be here further on after that minister changes. The next one may not be so benevolent.
Mr. Elliott: If there's an opportunity to clarify things, certainly we should seize that opportunity. If, for example, there are nine remaining directors to be chosen and you are suggesting that the users would get to submit only a list of nine, then clearly that gets around the issue of appointments rather conveniently. This would be acceptable, do you think?
Mr. Keyes: Absolutely.
Mr. Hayes: That's not the way it's written.
Mr. Elliott: If indeed that's the intent, let's see the bill clarified to make sure the uncertainty is removed.
Mr. Gouk: With that, I don't want to interfere any further.
Some hon. members: Oh, oh!
The Chairman: Thank you, Mr. Gouk. Mr. Jordan.
Mr. Jordan: The ability for a different approach to appointing directors - I think everyone has brought up that issue here this morning. I agree with you about the need for the railroad to have some sort of voice there. Indirectly, as I think the parliamentary secretary said, though, you'd have that opportunity to make sure that would be one of your nominees. He may or may not be chosen, but I suspect he'd have a good chance.
On the ability to raise capital, is what we're endeavouring to do in this bill a good thing for the port of Halifax? Is it timely?
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You said somewhere in here that you were glad it didn't happen years ago, because the container industry, which was built up largely with federal funds...I assume it wouldn't have been a good thing then, or you wouldn't have had a container industry at your port. But is this the right time to be moving on?
Mr. Hayes: We're suggesting this is a retrograde step in terms of the way the bill is currently written with respect to preventing the federal government from providing financing for capital assets.
The point we were making was that if this proposed act had been in force back in the early 1960s we would not have been able to get the support we needed from the federal government to build the various assets we now have here in the port of Halifax.
Mr. Jordan: With reference to the seaway, that has another aspect to it. Of course, you understand it's binational; it was built with funds from two nations, and it is maintained and used by two nations. It has another dimension to it, which we wouldn't be free to change without a lot of dialogue and a lot of consideration of the other partner. It is not as easy to change as something we have total control over. You do understand that.
Mr. Elliott: We do, indeed. It should also be emphasized that Halifax has an international dimension. CN's access to Chicago clearly points to the growth and potential that Halifax has.
In terms of where the industry is headed, I think the port of Halifax-CN connection clearly has a stronger opportunity for growth in international trade than does the seaway.
Secondly, I think your point about directors and CN - and with regard to Mr. Keyes' comment about perhaps having somebody as a former employee or with a loose affiliation with CN - clearly doesn't get to the heart of what we're trying to achieve here. The bill wants to make a cookie-cutter approach to appointments, to try to anticipate all possible conflicts of interest, when indeed there should be some local flexibility. We really think CN should be a bigger part of what's going on.
The Chairman: Thank you, Mr. Elliott and Mr. Jordan.
Mr. Keyes.
Mr. Keyes: Thanks, gentlemen, for your report. On page 5 you get down to the nut of ``user''.
- The commission also has serious concerns over the exclusionary definition of ``user'' as,
I couldn't think of anything more inclusionary than that kind of definition. That aside, you make the recommendation that the phrase ``or provides services at'' be more appropriately defined. How would you define it?
Mr. Elliott: Perhaps the previous presentation by the Halifax Shipping Association had a more attractive means of addressing our concern.
We talk about better defining the user. If you were to make an exception in Halifax's case, given the interrelationship between CN and the port, then perhaps this is better left to the letters patent.
I appreciate that the situation in Hamilton is completely different from the situation in Halifax. You have conflict of interest problems that we've never dreamed of - and perhaps we have others here. But we should at least be able to tailor it to meet local needs and interests.
Mr. Keyes: So you're not professing that the list be wide open to direct user reps?
Mr. Elliott: I understand there are obvious conflicts of interest that arise, just as they arose in the airport authority boards. You clearly want to make sure that the contractual relationship between landlord and lessor and all that sort of thing, the big customer, needs to be appreciated. But I think that as a service provider and as the integral part - the umbilical cord, if you will - of the port of Halifax, CN falls outside that simple definition.
Mr. Keyes: I appreciate your recommendation on the idea of including it in letters patent.
The Chairman: Thank you, members, and thank you, gentlemen.
We now have the Metropolitan Halifax Chamber of Commerce, including Ms Mary Brooks, Mr. Don Elder, Ms Ann Janega, and Ms Valerie Payn.
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Good morning and welcome. You may begin.
Mr. Don Elder (Director, Metropolitan Halifax Chamber of Commerce): The Metropolitan Halifax Chamber of Commerce, as I'm sure you are aware, is a volunteer-based, not-for-profit organization resulting from a merger of the four local business associations that existed prior to the amalgamation. Each has a rich history and has represented the interests of the local business community for a very long time. We are a lobby and advocacy group with over 1,300 corporate and 2,300 individual members. We act as a single voice to represent our region's business interests.
As an aside, the chamber this week released our own vision for the port of Halifax. We believe that the global and local trends affecting the shipping industry and the port industry should lead to a very substantial increase in traffic volume at the port within ten years. We're conservatively projecting a sixfold increase in total traffic volume through the port of Halifax within ten years. This has come about through a task force that worked for three months and included participation from every sector of the port. This increase in traffic would create over 20,000 jobs in the Halifax area and would make Nova Scotia one of the ``have'' provinces in Canada, almost solely at the expense not of Canadian ports, but of U.S. ports. It would have very little impact on any other Canadian port. That is the background to our presentation today.
The overview to our presentation on Bill C-44 is that the Metropolitan Halifax Chamber of Commerce does support the need for greater autonomy for the port of Halifax, with more local control and flexibility over capital spending. We would be pleased to see a model similar to that proposed for Canada's national airports system in place for the port of Halifax.
For many years the Metropolitan Halifax Chamber of Commerce has supported the principle of greater local control for ports. We stated this view in our submission before the Standing Committee on Transport in March 1995; subsequently in correspondence with the then minister, Doug Young, following the release of the Keyes report; and most recently, in support of the Canadian Chamber of Commerce resolution on port restructuring in September 1996.
We wholeheartedly welcome the establishment of the port authorities, and we applaud the movement toward the creation of port authorities that can respond more readily to the needs of the marketplace they serve. The establishment of the port authorities will allow greater local autonomy and flexibility suitable to each local situation. This will be important for the port of Halifax, which must tailor its services to a wide range of Canadian and U.S. exporters and importers.
However, the Chamber of Commerce continues to have a number of concerns. We see the bill as a retreat from the national marine policy as proposed in December 1995.
The first point we wish to discuss is the board nomination process. We wish to ensure that there is a quality board in place. We believe the majority of directors on the new board of the port authority must be nominated from the local business community, and this should be entrenched in the legislation. Nominations from within the local community are an absolute necessity to capture the support and commitment needed from the community. The chamber does not see the process proposed in subparagraph 6(2)(f)(v) or clause 12 as guaranteeing the quality of directors needed to achieve this objective and ensure the continued success of the port of Halifax into the next century, in accordance with the vision we have released this week.
As the chamber representing the interests of the business community in this area, we are in a position to nominate qualified board members, as we have successfully demonstrated with the Halifax International Airport Authority. The HIAA board members have, and are seen to have, accountability to their nominators for decisions taken. Furthermore, we believe the local community is in the best position to know what board expertise is necessary to successfully manage a local transport entity, be it seaport or airport, and is in a position to secure the interest of individuals possessing that expertise to serve the community.
It is a matter of both mix and balance. This is not possible when a basket of nominations must be provided for the minister's selection. This process is unacceptable. We were pleased to hear the comment made in response to the previous speaker regarding that. We would like to see that entrenched in the legislation.
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Therefore, we request that the standing committee amend subparagraph 6(2)(f)(v) and paragraph 12(1)(e) of the bill to state in each case:
- the Governor in Council appoint the remaining individuals, endorsed by the Minister, based on:
(ii) three individuals nominated by the local business community
(iii) the balance of membership nominated by the Board of the local port authority.
Our second point is with respect to user participation, to make allowance for user contribution. Of concern in Bill C-44 are clauses 13 and 14, which define who may and may not be directors of a local port authority. Clause 13 is ambiguous. It seems that for a person to fulfil the requirements of clause 13, he or she must at some time have been a senior officer of a company regarded as a port user. But to satisfy paragraph 14(e), he or she must no longer be employed with that company. This appears to limit the choice of individuals to be nominated to persons who have retired from active business life. While there's no objection to using the experience and knowledge of such persons, it would be overly restrictive to have a majority of directors appointed under these criteria.
Clarification is also required in the bill of the definitions of ``user'' or ``service provider'' in relationship to organizations such as Canadian National or a company providing tug services or stevedoring services. They are important community partners in the success of the port.
We therefore ask the standing committee to amend clauses 13 and 14, as noted in appendix 2, first to clarify the definition of ``user'', and second to ensure that each port authority can have one local user on its board.
The third overall point in our submission relates to funding, to ensure that ports can secure financing. The first part of this addresses our port with respect to our profits and our problems. As we stated before, the chamber and the port stakeholders here believe passionately in a vision. With the prospect of 20,000 to 30,000 new jobs in the Halifax area and $2 billion more in spending, we don't believe financing is a problem unless artificial constraints are put in place that impede it.
With respect, therefore, to the financial relationship between the local port authority and the Crown, the chamber has particular concerns with regard to the treatment of this item in the bill, in particular paragraph 6(2)(h) and clause 37. It is the opinion of the chamber that these two parts of the bill are clearly in conflict. It appears that the bill is stating in clause 37 that the local port authorities can keep any revenues generated and need not pay any compensation. However, paragraph 6(2)(h) refers to a fee to be determined, which the local port authority must pay to the minister. If the local port authorities are expected to stand on their own as outlined in clauses 21 and 22, then the bill should ensure that all revenues generated by the port be available first to the port for debt servicing or other purposes determined by its board.
Therefore, the chamber requests that paragraph 6(2)(h) be dropped from the bill and the language of the bill be amended to ensure that the bill does not limit the local port authority's ability to acquire necessary financing to enable the port to stand on its own. The language of the bill should be amended to reflect the following. First, the bill should ensure that the local port authority's ability to borrow specifically allows for the acquisition of capital assets deemed necessary for the ongoing operation of the port. Second, the letters patent should be issued for a specific period, say 60 years, and the letters will not be revoked without some significant material adverse change or breach in the local port authority's fulfilling its obligations under the bill, including a right to remedy the breach. Third, the local port authority will have the right to establish a priority of claim on any assignment of lease or term revenue bond in order to provide a secure first charge against a specific flow of funds.
With respect to the same subject, funding and ensuring financing, the second submission relates to the same rules applying for all. The chamber is very concerned over the special treatment accorded to the St. Lawrence Seaway in Bill C-44, specifically paragraph 67(c), clause 68, paragraph 69(3)(g) and clause 70.
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Current national policy relating to infrastructure requires that entities such as airports, pilotage services, navigation systems and rail stand on their own. The act does not treat the St. Lawrence Seaway in this manner, and this contrasts considerably, in our opinion, with the current philosophy of this government towards self-sufficiency for transport entities in Canada.
The ability of the federal government to make grants and the seaway's access to the consolidated revenue fund reflect a double standard that is inconsistent with the principles of self-sufficiency that are espoused for other elements of the transportation system. This principle, enshrined in other government transport legislation, should not be denigrated.
Above all, a national policy as embodied in Bill C-44 should be fair and equitable for all key players. The special treatment afforded the St. Lawrence Seaway is neither fair nor equitable. We see this, again, to be a conflict within the act. It is the opinion of this chamber that the St. Lawrence Seaway should be required to adhere to the same requirements for self-sufficiency as the local port authorities.
Therefore the chamber requests that paragraph 67(c), clause 68, paragraph 69(3)(g) and clause 70 be deleted from the act, as they contrast considerably with the current philosophy of this government toward self-sufficiency for transport entities in Canada. They should be replaced with clauses that will afford the St. Lawrence Seaway equal treatment with local port authorities.
A fourth area of submission relates to port uses, and to the fact that future opportunities should not be stifled. The chamber is indeed in agreement with the policy that transportation must be the central focus of the powers exercised by a port authority. However, we see clause 24 as potentially restricting a port from entering into an alliance or undertaking joint projects that may involve multiple use of port water or lands.
We believe the act should allow for ancillary activities and services that are beneficial to the users and to the employees. Again, if the airport model were applied to the local port authorities for the development of commercial opportunities, this could provide revenue for both the port and the federal government through a share of the profits such non-port ventures might generate.
The chamber requests first, therefore, that the standing committee amend clause 24 to loosen the restrictions on port use. This would allow the local port authority board to develop ancillary services to port users and their employees.
Second, the chamber also suggests the standing committee allow in the act a process for non-port groups to make representations to the minister for future opportunities for possible port land usage, such proposals having been endorsed by the board of the local port authority.
To summarize, the Metropolitan Halifax Chamber of Commerce therefore recommends the following with regard to Bill C-44.
First, with respect to board participation, we recommend that the standing committee amend subparagraph 6(2)(f)(v) and paragraph 12(e) of the bill to state, in each case:
- The Governor in Council appoints the remaining individuals endorsed by the Minister based
on:
(ii) three individuals nominated by the local business community
(iii) the balance of membership nominated by the Board of the local port authority.
With respect to user participation, we recommend that the standing committee amend clauses 13 and 14, as noted in appendix II, to clarify the definition of ``user'' and to ensure that each port authority can have one local user on its board.
With respect to funding, we recommend that paragraph 6(2)(h) be dropped from the bill and that the language of the bill be amended to ensure that the act does not limit the local port authority's ability to acquire necessary financing to enable the port to stand on its own.
Specifically, the language of the bill should be amended to ensure, first, that the local port authority's ability to borrow specifically allows for the acquisition of capital assets deemed necessary for the ongoing operation of the port; second, that letters patent should be issued for a specific period - say, 60 years - and the letters not be revoked without some significant material adverse change or breach in the local port authority's fulfilling its obligations under the act, including a right to remedy the breach; and third, that the local port authority should have the right to establish a priority of claim on any assignment of lease or term revenue bond in order to provide a secure first charge against a specific flow of funds.
Our second recommendation in terms of funding is that paragraph 67(c), clause 68, paragraph 69(3)(g) and clause 70 of the bill be deleted in that the treatment of the St. Lawrence Seaway contrasts considerably with the current philosophy of this government toward self-sufficiency for transport entities in Canada. They should be replaced by clauses that will afford the St. Lawrence Seaway equal treatment with local port authorities.
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With respect to the uses, the standing committee should amend clause 24 to loosen the restrictions on port use. This would allow the local port authority board to develop ancillary services to port users and their employees. Also, the standing committee should allow in the bill a process for non-port groups to make representations to the minister for future opportunities for possible port land usage, such proposals having been endorsed by the board of the local port authority.
In conclusion, while the chamber supports the intent of the legislation and applauds the progressive approach of the legislation to improve the competitiveness of our major ports, we do have some significant concerns as the bill diverges from the national marine policy as presented in December 1995.
The Metropolitan Halifax Chamber of Commerce sees the port of Halifax to be fundamental to the economic health of our region. The economic spin-offs of the port of Halifax account right now for about 7,000 jobs and well over $300 million in annual direct expenditures. We believe within ten years this will increase to over 30,000 jobs and over $2 billion of annual direct expenditures if the Port of Halifax is allowed to do things its way.
The chamber clearly recognizes that to meet the changes occurring in the global shipping industry, the Port of Halifax must have the ability to evolve, to meet the competitive threat posed, not by Canadian ports but by U.S. ports. Continuing the current pattern of investment and management is simply not an option for the Port of Halifax in today's marketplace.
The chamber sees the move towards local management and control for the port, as set out in the national marine policy, as critical to meeting these challenges. However, we do not see that the spirit and intent of that policy has been restated in Bill C-44. The government must recognize the need and the necessity for ports in Canada to have the flexibility to meet such challenges at a local level.
The Metropolitan Halifax Chamber of Commerce shares a common vision for the local port authority for the port of Halifax as put forward by the Halifax Shipping Association and endorsed by the Halifax-Dartmouth Port Development Commission in its submission to the standing committee. It is:
- A low cost, customer focused, efficient organization, driven by the Private Sector to develop
the vision and direction for the Port, not only to maintain its competitive standing as a
commercially viable east coast gateway, but to reach the potential and our vision for tomorrow.
The Metropolitan Halifax Chamber of Commerce, as a stakeholder in the future of Canada's ports, thanks the standing committee for this opportunity to present our comments on Bill C-44 and how the bill can be adjusted to assist the Port of Halifax to ensure its competitive position in the North American port community and achieve the vision that we've released this week.
As an aside, it will come as no surprise to the committee that the chamber of commerce wholeheartedly endorses the position of the Halifax-Dartmouth Port Development Commission, as they've just stated, on the marine services fee.
Thank you very much. I would like to quickly identify the other members of the chamber of commerce here with me for the purposes of answering questions. There is Valerie Payn, who is the general manager of the chamber; Mary Brooks, who is the vice-president of policy, for the chamber; and as well Ann Janega, who chairs the transportation committee for the chamber.
Thank you very much.
The Chairman: Thank you very much.
For the information of members, we'll have about 12 minutes for a round of questions. I will start with Mr. Mercier.
[Translation]
Mr. Mercier: First of all, let me tell you how impressed I was by the quality of your document. I congratulate you. It really is outstanding.
I have only one question, as we don't have much time left. It deals with the summary of your recommendations. May I ask you what definition of the word ``user'' would be sufficiently clear for you?
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[English]
Mr. Elder: The appendix on page 9 of our submission does address the issue of user further, but the key issue here is that the users of the port, the direct stakeholders of the port, are also those who entertain the risk and receive the benefit associated with the port. So in general, ``user'' needs to be defined in such a way that anybody who either enters risk associated with the port or who receives benefit from the operations and growth of the port should be included in the definition of user.
Mary, do you wish to add to that?
Ms Mary Brooks (Vice-President, Policy, Metropolitan Halifax Chamber of Commerce): No, I don't.
[Translation]
Mr. Mercier: Thank you. It is quite clear.
[English]
The Chairman: Mr. Cullen.
Mr. Cullen: Thank you, Mr. Chairman.
Mr. Elder, I'd like to echo the comments of my colleague on the quality of your presentation and your brief.
I have two questions. I don't know if we'll have time for the second one, but I'll ask the first one.
In terms of the mandate of the authority, you talk about ensuring that it's broad enough to allow a broader range of economic activity that may go beyond the narrow scope of port or port-related activities. Given that, what is your view of the tax status of the authority vis-Ã -vis the municipalities? Do you see it as being normal property taxes, grants in lieu, or do you see some kind of situation where the authority would contract with municipalities for specific services? Could you comment on the tax status of the authority as you see it?
Mr. Elder: I'll quickly make the comment - and then ask Mary Brooks to continue - that the municipality here is totally on side with the stakeholders in their vision for the port for the future.
I'll ask Mary to explain the current situation and how that would be envisaged in the future.
Ms Brooks: I think the view of the chamber has been that the way the situation is unfolding for the airport authority is a model that's appropriate here. This means that ultimately if you have a private sector entity there will have to be a negotiation between that private sector entity and the municipality for a situation where grants in lieu of taxes is resolved. I don't see that this needs to be entrenched in the legislation per se.
Mr. Cullen: I'm not sure I follow what that means. Are you proposing, then, fees for services? What kind of tax status are you proposing for the authority vis-Ã -vis the municipalities?
Ms Brooks: We are suggesting that the model currently in place for airports in this country is the same model that should apply. In the situation with airports, grants in lieu of taxes is obviously no longer the way it will be handled. The airports in this country now are faced with having to negotiate their own municipal property taxes with the local municipality.
Mr. Cullen: Okay, thank you. I have a second question.
The Chairman: Well, I have three other questioners.
Mr. Byrne, a very short question.
Mr. Byrne: The point was raised that the individuals nominated to the board would be comprised of local business community representatives. I think the argument has been made that the port of Halifax is a hub port not only for the province of Nova Scotia but for all Atlantic Canada.
Can the chamber provide any sort of discussion or commentary about how it would build in, if it had the decision-making, the needs of other ports throughout Atlantic Canada, for example, St. John's, Moncton, Corner Brook and others? That's one of the things I think the minister might have been alluding to in his ability to make final decisions.
Mr. Elder: Maybe I'll start by addressing that. The vision for the port of Halifax is not that it's the hub port for Atlantic Canada. It's one of the hub ports, or the hub port, for the entire eastern seaboard of North America.
The competitors for the port of Halifax are not the Atlantic ports. Halifax is already a major world port. The competitors for the growth of the port of Halifax are the U.S. ports right down the eastern seaboard.
The local ports around the Atlantic Canada area will not be strongly influenced either way by the huge growth of the port of Halifax that we should see. Sure there will be some spin-off effects. It's the U.S. ports that will be affected by what happens to Halifax. It's the U.S. ports that we require the flexibility and the ability to be competitive with and to take the business from.
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We are very happy to work in any way with the local ports. In fact, as feeder ports for a huge hub port here, they may indeed prosper. We haven't looked into that in any further detail. But I want to make it very clear that we see the competitors as the U.S. east coast ports, and they're the ports we want the flexibility to compete with.
The Chairman: Thanks, Mr. Elder.
Mr. Gouk.
Mr. Gouk: Thank you, Mr. Chairman. I have just a couple of quick points.
First of all, you mentioned that the St. Lawrence needs to be treated equally. I agree. The only thing is, of course, that they operate differently from the way the ports have operated. Just as I tried to put some special provision in because of the unique circumstance with Halifax and CN Rail, I recognized in the case of the St. Lawrence that we have to take some steps in order to make it stand alone, and those are under way. The bilateral operation of the St. Lawrence is now in the works, and we also need to get the Americans to pay their fair share, which they have not been doing. So they need to be treated a little differently, with a goal towards taking them to the same end.
Mr. Elder: Could I perhaps comment on that?
Mr. Gouk: Let me just get one other thing out, because I think it's more pertinent, and that's with regard to the fees and the ability to make loans. You can then add something in there if you like.
In my view, at least, you were a little vague as to what you wanted. You said you wanted to make the ability to borrow viable, but you didn't say how. Would it answer a lot of your concerns if the port is able to pledge its assets that it bought either before or after this legislation, including its equipment, and if it has the ability to pledge federal rail properties under its control if it has the approval of the minister to do so? Is that going to deal with it? If not, what exactly are you looking for?
Mr. Elder: No, that does not go far enough. That is part of what is required, but the cashflow that's generated by a port that has five to ten times its current business volume is extremely substantial. We need to be able to tie the cashflow to the payback of investors.
Investors will first look for guarantees that they are not taking an excessive risk in the money that they are borrowing. Secondly, they'll look for the ability to be paid back. Underwriting the loan by pledging the assets goes part of the way, but in looking for the ability to be paid back, they want to be ensured that they have some strong, high-priority call on the cashflow. Right now, that is not guaranteed; that can be returned to the federal government. We require that the cashflow be available first to pay back those who are investing directly in the port.
Mr. Gouk: We are looking in that general direction. Most people are looking for payment made from net revenues as opposed to gross revenues. That has been the standard submission that we have received.
Mr. Elder: Yes, and I'll perhaps draw your attention back to page 7, where it says:
- that the local port authority [must]...have the right to establish a Priority of Claim on any
Assignment of Lease or Term Revenue Bond, in order to provide a secure first charge against a
specific flow of funds.
- But even ``net revenues'' does not necessarily go quite far enough.
The Chairman: Mr. Jordan, did you have a supplementary on this question?
Mr. Jordan: Yes, I did.
Just to follow up a bit on the seaway, does the port of Halifax not profit to some extent, or is it not a more viable operation because of the seaway?
Ms Brooks: Very little of the traffic through the port of Halifax and.... I'm sure that if you asked the Halifax Port Corporation or the Halifax-Dartmouth Port Development Commission this question, you'd find out that the port is not predominantly servicing the same kind of market.
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Mr. Jordan: The seaway too was designed, of course, as a nation-building exercise. Don't you think you have to give that some consideration? Or would you say, look, it's impossible to make money, so close it down? If we used that attitude toward railroads to Halifax, I don't think you'd like it, because railroads into Halifax for years I think have been heavily government-subsidized. If we had used that argument as a nation we'd say, no good; close it down; can't make any money there.
I think you're coming down a little hard on the seaway.
Mr. Elder: Perhaps I can comment on that. Our target is not the seaway per se. Our target is the unfairness. The point here is that the seaway receives support as part of our nation-building. We have a vision here for the port of Halifax that sees us taking a huge volume of economic growth away from the U.S. Let's be blunt about it. That's a fantastic nation-building vision. But to achieve that we need the same rules set for us as for anybody else. We don't need another part of Canada receiving nation-building when we have the ability to build a nation, a province and a part of the nation here on our own, without support.
So all we're asking for is equal rules. In the end, there are only so many dollars to go around. Don't build another part of Canada when we can build Canada here on our own at the expense of another country.
Mr. Jordan: Don't tell the guy at the Lakehead that, because he won't believe you.
The Chairman: Thank you, Mr. Jordan.
Mr. Keyes, you asked whether you could ask a 30-second question - and we're all anxious to see if you can.
Some hon. members: Oh, oh!
Mr. Keyes: Don, how was the chamber's position constituted? Was it based on the findings of this task force?
Mr. Elder: The chamber's position was constituted from a number of sources. We have a transportation committee with a port subcommittee that worked extensively over a long period of time on this issue, right back to last year. The port task force worked for three or four months this year and prepared the vision and certainly contemplated Bill C-44, but that was not the primary focus.
The normal policy route means those were combined to get it through the executive and the board of the chamber. Mary Brooks, as vice-president of policy, took the lead on that and worked extensively to amalgamate all considerations, including reflecting the entire voices, giving members of the chamber an opportunity to provide further input.
So this reflects the stakeholders, the task force, the transportation committee, the subcommittees and all the members of the chamber.
Mr. Keyes: Was the opinion put forward by all of them and the resulting submission you made to us today the result of a unanimous endorsement by all these players?
Mr. Elder: The task force report reflects the unanimous opinion and vision of the representatives on the task force.
Ms Brooks: To answer that a little further, the task force was a unanimous consensus. The process of developing this was not 100% consensus, because part of our membership also includes the port corporation and the port development commission. You've already heard that the port development commission would like still to have access to federal appropriation. You probably will hear from the corporation that same view.
But the majority of the members of the chamber did not feel this was in keeping with the chamber's policy of self-sufficiency. The chamber has always had a stance that if you ask for self-sufficiency in one area, you need to speak with a consistent voice in all areas. Therefore the chamber firmly believes we don't want the government to take money out if they're not going to put money in.
Mr. Keyes: So you had unanimity amongst the players...basically the chamber, but you didn't have unanimity between all players, including the Port of Halifax and the Halifax-Dartmouth Port Development Commission.
Mr. Elder: I believe we certainly do. The difference on the financing is a very minor, subtle difference. I believe the overall -
Mr. Keyes: Subtle or not, it isn't unanimity.
The Chairman: Thank you, Mr. Keyes.
Mr. Keyes: My questions are short. The answers are a little longer.
The Chairman: Coming from the great port city of Winnipeg, I also am very interested in your comments on the seaway.
Some hon. members: Oh, oh!
The Chairman: From the Halifax Port Corporation we have Mr. Merv Russell.
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Good morning to you both, Mr. Russell and Mr. Bellefontaine. You gentlemen are both experienced at this process and have been watching as it is carried out, so I will leave it up to you to confine your remarks to the period of time you think is sufficient to get your argument on the table. Then we'll start a round of questions.
Mr. Merv Russell (Chairman, Halifax Port Corporation): Thank you, sir.
Mr. Chairman and members of the committee, we thank you for permitting us to be present today to present the position of our board of directors on Bill C-44, the Canada Marine Act.
Our formal submission has been filed with the committee and contains a very thorough review of the key issues. However, we'd like to take just a few moments, if we could, to brief you on the major elements of the bill that we feel are most important for the future of the port of Halifax.
When we were last before the committee in March 1995 to suggest proposals for the Canada marine policy, the Halifax Port Corporation cited its full support for the decentralization of powers and maximum local autonomy for the port of Halifax. We were very happy to read the Keyes report, which recommended proposals almost identical to ours at that time to make Canada's ports more commercial and more competitive.
Our written submission contains detailed information on the Halifax Port Corporation as a federal crown corporation and on its cargo mix and volumes. We will therefore focus our remarks on the proposed Canada Marine Act to save the committee valuable time here this morning.
In general the bill lays the foundation for a more efficient, competitive port system in Canada, but it is inconsistent in a number of areas that we feel will constrain the port's ability to meet the objectives of the national marine policy.
David Bellefontaine will now outline those five areas of concern.
Mr. David F. Bellefontaine (President and Chief Executive Officer, Halifax Port Corporation): Thank you, Mr. Chairman and members of the committee.
The first point, a very important one, is with respect to the federal agency status. I know you've heard this across the country, starting in Vancouver. We would just like to make a few points with respect to that.
The present federal agency status for the HPC provides an exemption from federal and provincial income taxes, municipal zoning on port lands and business taxes. These exemptions have assisted the port in becoming less expensive and therefore more competitive with U.S. east coast port authorities.
If federal status is removed, the port will face higher operating costs, which will make us less competitive with U.S. ports. Federal status must be retained for the benefit of the port if it wishes to enhance its presence as a gateway to the North American market.
The second point is with respect to capacity and power in clause 24 of the bill. This is very restrictive and limits the CPAs to port-specific activities. It restricts the port's ability to earn revenues on its properties to pay for the very costs mentioned above, i.e. income tax, municipal tax and so on. Ports must be flexible and have the necessary authority to enter into agreements in an effort to remain competitive.
In the United States, port authorities operate trade centres, bridges, tunnels and airports - in fact, many are land developers - to enhance the economic development of a region. Ports in Canada have the opportunity to create jobs and, therefore, a greater economic impact.
Clause 24 will restrict ports from realizing their greatest potential.
The Port of Halifax is responsible for 7,000 jobs and over $230 million of income. We have property leases at the present time which, using clause 24 terminology, could be construed as being non-port-specific.
Ports must be able to operate in less restrictive environments. We have proposed revised wording in our written submission to address this issue. This is a major area that in fact conflicts with the port's ability to operate in a more autonomous competitive environment, which is one of the key objectives of the policy.
We ask the committee to recommend amendments to clause 24 to permit ports to operate in a less restrictive environment.
The third point is about financial issues. The bill contains several factors pertaining to financial issues: no pledging of assets in support of loans; no guarantees from government; and no funds from the Crown for any purpose. Although commercial banks may be willing to advance capital funds to the port based on its cashflow projections, it would be realistic to assume that without the pledging of assets or government guarantees, banks may be reluctant to advance a higher level of loan funding that otherwise might be granted to regular private sector investors.
Commercial borrowing will increase the cost of doing business as compared to the present system of utilizing government loans based on the crown corporation rate.
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I'd like to refer to an exhibit that I believe was handed out with the paper. It is called ``The U.S. Port Development Expenditures''. It is for 1995-99 and it is concentrated on the North Atlantic ports of New York, New Jersey, Massachusetts, Philadelphia, Delaware and Maryland. The total port expenditures in U.S. dollars would be $346 million in the next five years. In terms of financing, $14 million of the $346 million is coming from working capital. You'll see in this exhibit there are grants amounting to $50 million, $27 million in other unidentified sources of funds and $44 million in general obligation bonds. The Port Authority of New York/New Jersey decided not to identify their sources of funds, and this was $205 million.
What I'm trying to point out here is working capital comprises a very small portion of the total amount of funds required.
The committee may wish to review these issues during its hearings to determine whether the additional costs and borrowing constraints are in conformity with the policy objective of enhanced competitiveness.
There is an additional point. I have another handout here. It is called ``State Passes Tax Credit for Massachusetts Shippers''. Most of you know about the harbour maintenance tax in the United States. This is charged based on the value of the goods. The Massachusetts legislature had voted in favour of a dollar-for-dollar tax credit to reimburse its shippers for the cost of the harbour maintenance tax. Again, you're into a form of funding, in this case to support the port of Boston.
The Chairman: You must be talking to John Savage.
Mr. Bellefontaine: The fifth point is governance. The HPC feels that, as a shareholder, the federal government should retain control over the appointment of directors, including the chairperson. Additionally, increasing the number of directors from nine to eleven, as outlined in the bill, is not in conformity with the government's stated policy of reducing the size of agencies in Canada.
The number of directors of the Halifax Port Corporation is recommended to be five, which includes user representatives. This is reasonable when one considers the corporation's revenue base is $13 million. The general public might view a board of nine directors as being top-heavy and not required in today's environment of business rationalization and cost reduction.
I have another letter dated December 1994 from the Hon. Doug Young, then the transport minister. He had written to Merv Russell, chairman of our board, stating that under the Hon. Marcel Massé, the review would determine there would be a reduction in board members. He is recommending five for the Port of Halifax.
The next point is the charge on gross revenues, which you've heard this morning. Bill C-44 proposes to assess a charge against the gross revenues of ports as an annual payment to the shareholder. This creates a senior lien on the revenues of a port to be paid prior to debt service. Therefore, it may result in the port authority having less desirable credit, thereby causing a higher interest rate to be charged on loans.
The normal business practice is to pay dividends to its shareholders based on net income and not gross revenues. The bill should therefore be amended to reflect normal business practice and use net income as a base for any payment to the government. Of course, our preference would be to retain all surplus cash within the port for reinvestment.
As the final point on this issue, I would like to refer to a resolution adopted by the United States members of the American Association of Port Authorities at its recent annual meeting in Vancouver. I will quote from a section of that:
- WHEREAS, some state and local governments have sought to divest public port agencies of
funds necessary for the development and operation of port projects in order to meet their own
budgets;
- ...
- AND BE IT FURTHER RESOLVED, that the Association urges that state and local
governments refrain from any action that will deprive port agencies of their ability to finance
the development of public ports.
Mr. Russell: Mr. Chairman, we have commented on several other clauses of the bill in our written submission. I would suggest that in order to conserve time we not verbally present them.
In closing, the Halifax Port Corporation is fully supportive of a marine policy that promotes a higher level of autonomy for individual ports and less bureaucracy in support of a competitive port system for all of Canada.
Mr. Chairman, we feel that without certain amendments to this bill we may be faced with increased costs not anticipated at the time of the release of the Keyes report and therefore in conflict with the objectives of the national marine policy for Canada.
Thank you for hearing us.
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The Chairman: If we could just implement the Keyes report....
I notice the last attachment you quoted from is not part of your brief. Would you please give us a copy of this for circulation to members.
Mr. Cullen.
Mr. Cullen: Thank you, Mr. Chairman, Mr. Russell and Mr. Bellefontaine.
On the notion of federal agency status, I'm going to be the devil's advocate. I'm new on the committee and I'm from Toronto, so I have those two marks against me.
With respect to my colleague from the Bloc Québécois, it sounds to me like wanting your cake and eating it too. Striving for autonomy but at the same time wanting federal agency status is like not really cutting the cord. It is wanting it both ways. This is my layman's view. Could you elaborate on this?
Mr. Bellefontaine: What we're trying to do is be autonomous but competitive. We feel federal agency status would retain the competitiveness of the port in Halifax. Right now we are not paying business taxes. We pay a grant in lieu of tax that is reasonable and based on a revenue base. The city is happy with this. We have a good relationship with them.
If you take away the federal status we would be forced to pay what they call business taxes. This would almost double our tax base. That doesn't make us competitive. Also, municipal zoning could confront us with respect to port properties. At the present time we have a good relationship with the city. We deal with them when we're undertaking different projects. We get their concurrence, but if it comes to a dispute we have the right at the present time to proceed and undertake projects without their concurrence.
Mr. Russell: Mr. Cullen, I wouldn't want you to go away thinking we don't pay any taxes here. Along with our tenants and with grants in lieu of, we pay in excess of $3 million in municipal taxes a year. Often, this isn't mentioned. It is said we get off buckshee. This is not the case at all.
Mr. Cullen: That's fine.
The Chairman: Mr. Keyes.
Mr. Keyes: Thank you, Mr. Chairman. I want to thank the Halifax Port Corporation for their submission today. I know the local member, Ron MacDonald, wanted to be here to participate. Unfortunately, a couple of legislative matters came up and he has been stuck back in Ottawa in the House of Commons putting these through the House.
I want to thank you for your suggestion and amendment to the bill in regard to federal agency status. What is important here is that the federal agency status would provide, as the original SCOT report of 1995 said, the opportunity to give the ports the needed exemptions from municipal, provincial and even, to a degree, federal taxation. Grants in lieu, I've heard you say, are appropriate and fair. There could be a balance between achieving federal agency status for the ports in Canada and applying grants in lieu, maybe even with the qualifier that this is as long as it doesn't impact on the bottom line of the port.
Beyond this, I am glad it was mentioned that the municipality, especially here in Halifax, gets some $967,000 in grants in lieu from the port. The tenants the port leases its facilities to pay some $1,793,000 back to the municipality. The municipality is winning as well. To be quite frank, I think this is going to be the crux of this legislation. Without federal agency status for ports, what is the point?
If federal agency status were to be incorporated into the bill, this federal agency status on its own is terrific, but there is the other side of federal agency status the government is concerned with. If a port ran into monetary or fiscal problems, it could come back on the federal government for the support it needed to stay alive. If there was a line in the bill saying federal agency status is there for you, but as a disclaimer to federal agency status the port could not come back on the federal government in a red line position, would this be acceptable?
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Mr. Russell: Mr. Keyes, you're going to hear more on federal agency status on October 30 at 4 p.m., because I'll be there with CPHA. I'm chairing that task force. But I remember having this argument with the former Minister of Transport - I was privileged to have a two-on-one with him one day - on this very issue. We proved conclusively to the minister at that time - and we had a letter from a major Canadian banking concern - that federal agency status did not make the federal government responsible for financial situations in an LPC. I feel confident that if that were written in we would have no problems with it.
Mr. Keyes: Thanks, Mr. Chairman. Thanks, Merv.
The Chairman: Of course, the problem with Doug Young is that even at two-on-one you're outnumbered. I know because I played baseball against him.
Jim.
Mr. Gouk: I just want to touch quickly on your points. First, I always thought I was kind of in lock-step with the thoughts and aspirations of the Port of Halifax, but I have to tell you I differ on governance.
Mr. Russell: We did agree, though, on the railway.
Mr. Gouk: Yes, we did, and with virtually everything else, although I have to say what I've heard thus far is a unique approach and I have some difficulty with it.
On federal status, you've heard what I think is likely going to happen: federal agency status without being a federal agent. I think that's the distinction.
On capacity and powers, I agree with you. I'll go out on a limb and say I think there's a general feeling in the committee that we are likely going to look at amendments on that part.
My final question is this. On financial issues, would it be satisfactory to you, in terms of your ability to borrow, if - as I have mentioned to others, but I'd like to hear your point on it - you could borrow against your own property that you've acquired either before or after the act, and any equipment or improvements you have acquired or will acquire, and the ability to at least approach the minister to pledge federal assets in a unique circumstance, with him having the authority to yea or nay that? Would that primarily satisfy your concerns in regard to financial issues?
Mr. Bellefontaine: That would certainly go a long way, Mr. Gouk.
We have met with our bankers and looked at our cashflow projections. They said they would advance significant millions of dollars, based on our cashflow, the credibility of the port and so on, so we have that in the bank. But when you're looking at major investments of $40 million or $50 million we need something else, and no doubt pledging of assets would be that something else - the crutch that would take us over that hurdle. So I think that's required, or guarantees from government. I think we need one or the other.
Mr. Gouk: I hope you get one, because I don't think the other is there.
The Chairman: Thank you, Mr. Gouk.
Mr. Cullen.
Mr. Cullen: Just following up on the point about the bankers, in Canada we sometimes struggle with bankers from time to time. The previous people who presented talked about the consultations they've had with bankers, and you just commented in terms of their ability or their desire to support, let's say, some cashflow loans or some operating-type loans. Do you think their position is a reasonable one or is it possible to somehow cajole the banks into getting more aggressive in terms of their loan-making abilities to port authorities?
Mr. Russell: The previous provincial minister approached us and asked us if we could come up with a quick summary for him just to see where the banks sat in regard to the port. I imposed upon the bank that owns me and my company - I thought I was in a pretty good state with it, but you'll find that you don't push banks very far, as you know, Mr. Cullen - and it came back and gave us a pretty good overview based on three or four scenarios in regard to our cashflow.
But you must remember that the Halifax Port Corporation is a small business. We only do $13 million in business a year. We have a cashflow in the range of $4 million and last year we had a profit of $500,000, so it really isn't big business. With the feeding frenzy that's going on with these millions of containers that are coming, in reality we wouldn't have the financial capability and we couldn't expect a bank to do it.
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Two of the major stakeholders in the port called me in the last two days and asked where these numbers were coming from. I said, well, we're just going to put New York out of business. They didn't know where they were going to get the money to create the infrastructure to do this. When you're talking 3 million boxes, you're talking infrastructure improvements of half a billion dollars. Now, we're a business of $13 million with a cashflow of $4 million.
So we've had to deal with the bank on a realistic basis. We've dealt from a cashflow scenario and I don't think we're privileged to say what the options were, but we felt we could get through the first phase of meeting the post-Panamax situation comfortably with some cooperation from all three levels of government and the stakeholders.
The Chairman: Thank you very much.
Mr. Russell: We have six minutes left. We were sort of looking forward to it.
The Chairman: I was going to use it up by telling a story about Winnipeg -
Mr. Russell: I would enjoy it.
The Chairman: - and the beauties of visiting that particular city.
I would like to say, though, that I appreciate the thoroughness of your position. We have met with other ports on the west coast and along the seaway, and some of the issues you are raising are very consistent with issues that have been raised by them. You'd almost think you guys had talked among each other.
Mr. Russell: We did, and we'll see you again on October 30 for another chat.
The Chairman: Exactly. I also want to underscore how seriously the committee takes its work and how hard we're going to work on drafting a series of recommendations at the conclusion of all the presentations so we can move this legislation along.
Thank you very much.
Mr. Russell: Mr. Chairman, I have just one parting thought. I have noticed over the three appearances I have made that there's a good feeling that prevails. It's one of compromise and of acceptance, and I think that fits well with the future of what we're going to do with the marine bill.
The Chairman: I think I should say, and it's been noted here, that there are obviously some very big issues that also highlight some regional differences. The seaway is one. I have some interest in a little port called Churchill.
Mr. Russell: I've been there.
The Chairman: But we have very good support from the opposition members, who work very hard and take these issues very seriously, and we try to keep a lot of the partisan stuff off the table and concentrate on the very hard work of building the kind of legislation that's going to allow you guys to build businesses.
Mr. Russell: Indeed.
The Chairman: Stan.
Mr. Keyes: Mr. Chairman, I just wanted to add that the legislation doesn't mirror the SCOT report of 1995, but I don't want to leave the impression with anyone that somehow it is contrary to it. In fact, what the bill does is void itself of certain aspects of the recommendations that were made in 1995, only to be able to glean from all the stakeholders across the country any opportunities or alternatives to what was presented in the SCOT report of 1995.
So it's not as though the bill is here and it says on certain issues, such as federal agency status or anything else, that it shall not happen or anything of that nature. It's void of it only so that we can glean all the information we need. Hopefully, as the chairman has said, we'll put together the solid amendments and recommendations that will more closely mirror what it is we heard from the ports in 1995.
Mr. Russell: Mr. Chairman, that took him only a minute and a half.
The Chairman: But it was excellent. Of course, being the new chairman of this committee, I am a little intimidated by every reference to the quality of the Keyes report.
Mr. Russell: We look forward to the Alcock report.
The Chairman: Thank you very much.
We will be adjourning for lunch and to sample the delights of the seafood chowder of this town. We'll be back here at 1:25 p.m., to begin at 1:30 p.m., with the City of Charlottetown.
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The Chairman: Let's start. I would like to start by welcoming representatives from the wonderful city of Charlottetown. I was there on Sunday and Monday for the TAC conference.
I appreciate very much your willingness to come to Halifax to present. I understand other representations are going to be made in Ottawa. The committee was not able to undertake extensive travel at this stage on this particular bill, so we very much appreciate your travelling some distance to be here.
You have witnessed some of the presentations, so you know you have half an hour to make the statement you want to make. Then we'll have at you with some questions.
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Mr. Clifford Lee (Councillor, City of Charlottetown): Ladies and gentlemen, we're pleased to join you today to represent the council and citizens of the city of Charlottetown in presenting our views with respect to Bill C-44. We thank you for the opportunity.
There are two reasons why we have chosen to appear. We believe this to be an important opportunity to place on the public record a context that we consider to be extremely important to the consideration, adoption and implementation of this legislation. As well, we have committed ourselves as a council to using every opportunity to advance the development of Charlottetown's unique waterfront development, which includes the active, dynamic reality of commercial port activity.
It is, and has consistently been, our position that the provision of core infrastructure fundamental to the workings of the economy, airports and marine ports, is a role basic to the federal government. We believe the marine policy, which in essence abandons that role by reducing it other than in remote areas to the establishment of standards, is mistaken public policy. Nevertheless, it appears that it is public policy, and we wish to consider with you its implications for our community.
First among them is the potential for costs to accrue to the municipality. We are completely opposed to any attempt to download port-related costs, as well as many other costs, to the municipal order of government. We want to be involved and to contribute, but not in a financial sense.
Charlottetown has recently been designated by the federal Government of Canada as the birthplace of Confederation. It is a designation in which we take great pride. It comes because in 1864, in an historic area immediately adjacent to the port that brings us before this committee, the delegates from Upper and Lower Canada came ashore and were taken up Great George Street to the Colonial Building. On the second floor, in a room that has been magnificently restored by Parks Canada, an initial meeting was held. From its discussions, eventually the great country of Canada was founded.
In 1864 these Fathers of Confederation would have found a bustling commercial waterfront area in a community that served then as an educational, governmental, commercial and service centre of the whole colony. In the intervening years, as was the experience of other communities in Canada, Charlottetown experienced the changes that inevitably led to the deterioration of its waterfront. It was a gradual and yet seemingly irreversible process.
In the early 1970s the three orders of government recognized the significant potential for social and economic benefits from a rebirth of the waterfront. Since that time all three orders of government, together with the community and the private sector, have worked together and planned together and struggled together and invested together to create what is today's waterfront.
Had your committee chosen to hold a hearing in Charlottetown, you could have had the kind of experience that was the founding fathers' in 1864 -
Some hon. members: Oh, oh!
The Chairman: For the benefit of the audience, what Mr. Lee has kindly neglected to read from his brief is: ``a choice which you ought to have made'' And we all agree.
Mr. Lee: - an experience of a waterfront area in a community that serves as the educational, governmental, commercial and service centre for the whole of the province.
What has been achieved includes: a new marina and related yacht club facilities; a mixed-use residential, commercial and institutional development known as Harbourside; a major hotel and convention centre complex; award-winning historic restoration projects; a quaint and specialized commercial/retail shopping area; a major park development, known as Confederation Landing, commemorating the 1864 arrival of the Fathers of Confederation; a new capital commission dedicated to advancing the birthplace theme; the completion of a new and modern access road connecting the waterfront to the Charlottetown arterial road; and the development by Transport Canada of a private road to serve the port facility.
We wish to give you a lesson in neither history nor community economic development, but rather to point out that all this has been accomplished within the framework of long-range planning and joint venture action. Our joint plans and investments and efforts have always included a major port bringing commercial marine action to and from the city and the province. Were anything to happen now to remove a federal commitment to the port of Charlottetown, a major blow will have been dealt to all we have done together over this last quarter of a century.
We understand and appreciate that this is not an immediate effect of the legislation, but we believe our comments bear on the legislation in two significant ways.
The legislation is founded largely on the principle of commercialization, which is outlined and defined in the national marine policy. Paraphrased, as we understand it, commercialization is a principle by which operations are made more efficient, costs are reduced, charges to users are more clear and transparent, users play a real role, and the private sector is involved. These are reasonable objectives as governments seek to redefine themselves during times of financial constraint.
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Another aspect of commercialization not referred to in the policy is what the private sector would call ``leverage''. In our 25 years of working together on the Charlottetown waterfront we have sought, and have achieved, some considerable success in leveraging the private sector involvement to create a larger whole that accrues to the benefit of the social and economic climate and ultimately to the governments themselves.
The second way in which it bears on the legislation is with respect to the principle of objectivity. Public policy and the legislation that gives it effect is complex and dynamic, never to be developed in isolation from those other activities and processes it might affect. In the legislation the minister is appropriately given authority within the act to administer the government responsibility for public ports. It is our contention that there needs to be reference in the act that would permit a reasonable interpretation requiring that choices in all areas, including the port assistance program, be made by an objective process conducted on what we would call a level playing field.
It must be recognized that the changes affecting our port and our broader transportation system in recent times have been dramatic. They include the following facts: the Atlantic Region Freight Assistance Act and the Maritime Freight Rates Act subsidies, valued at $1 million annually, have been eliminated; Canadian National Railway has been privatized, with net proceeds to the treasury of $2.2 billion, and in this process, rail lines were totally abandoned in Prince Edward Island; a new airports policy announced seeks to transfer the operation and maintenance of most airports to local municipal authorities; the air navigation system was sold to a non-profit group of former employees for a value of $1.5 million; there have been significantly higher user fees for travel and related services for all elements of transportation controlled by the federal government; and more recently, we will be dramatically affected by the changes to the federal role in the provision of aids to navigation.
It is our submission that this legislation, laudable as its objectives are in these times of difficult change, needs wording that requires that such considerations be part of the management of all public ports. While not legislative craftspersons, we would dare to suggest some specific changes to illustrate our meaning.
We suggest that the bill be amended with respect to its objectives in paragraph 3(e) to provide for a recognition of the relationship of ports to existing activities and to create a role by municipal governments.
Paragraph 3(e) currently reads:
- provide a high degree of autonomy for local or regional management of components of the
system of services and facilities and be responsive to local needs and priorities;
- If the wording were changed to include these elements, it might read:
- provide a high degree of autonomy for local or regional management of components of the
system of services and facilities and be responsive to the needs of the ports and its users, local
needs and priorities, municipal plans, and the role which the port and its facilities play in the
implementation of related public policy and development.
- and in accord with existing multilateral development investment in port and waterfront areas
- - or words to that effect.
- manage the marine infrastructure and services in a commercial manner that encourages, and
takes into account, input from users
- With the changes, it would read:
- manage the marine infrastructure and services in a commercial manner and in accord with
existing multilateral development investment in port and waterfront areas, so that users and
others affected will be encouraged to provide their input and so that their input will be taken into
account
- provisions to ensure that municipal authorities and those related to waterfront development in
which a port is included will be fully consulted;
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No major policy or legislative initiative such as this one can be properly considered apart from the context of a broad range of trends and changes that are developing daily. This legislation, in our submission, will be enhanced with words such as those that we have proposed. They will help to maximize the involvement of communities and the creative search for solutions and will enable objective judgments that will, in the long run, serve the interest of our ports. They take into account the reality that what is the least costly in the short run is not always what achieves the best efficiency in the long run. They require the analysis and calculation of such things as efficiencies and cost to take into account related public policy and investment.
Apart from this submission, we are making a presentation to the consultants who are currently examining, for the Atlantic Canada Opportunities Agency, the relative merits of the four Island ports. It is not our intent to engage you in that discussion, but simply to note that on a level playing field Charlottetown is quite confident of its ability to continue working with the provincial and federal governments in pursuit of positive economic growth.
Our port is the most open port in the province - free of dredging requirements - and ships more of the Island's goods than the other three major shipping ports put together. Ours is the only port that provides an operational surplus. Major public investments have significantly improved the access to our port. Fishers continue to use the port in concert with other commercial and tourism uses. The activities provide significant employment to the members of the Labourers Protective Union. Great strides have been made in developing its use as a cruise ship destination, adding another important dimension to its multifaceted use.
What we ask of you is simply references in the legislation that will ensure the objective and encompassing application of public policy. As the capital city of Canada's smallest province and the official birthplace of the nation, you may depend that we will work hard to ensure that result in our community.
Thank you.
The Chairman: Thank you very much, Mr. Lee.
I guess I'll go first to Mr. Gouk.
Mr. Gouk: Thank you.
I don't have too much to question you on per se. I wasn't quite sure in the very beginning of your presentation exactly where it was going to take us, but as we got to the end I didn't think your concerns were inconsistent with the intent of the legislation. It is the intent that both the municipality - because of the port being there - and the province will have representation. That should give you good input, but not control - and I personally don't think any one entity should have control. But as I said, you are going to have a lot of input and that, as near as I could tell, was the primary thing you were asking for. You wanted to input knowledge into what was going to happen in that process.
Mr. Lee: Yes, I guess the bottom line is that city would much prefer the Government of Canada just to maintain its involvement in the ports, as it has over the years, but it would appear that this is not likely to happen. So I guess we do recognize that we're not going to get what we really want.
Mr. Gouk: No, but the next best thing is what you've outlined.
I'll be interested to see what my friend Mr. Keyes has to say, but I think we're probably on the same wavelength on this. Basically, your concerns are pretty much addressed with this legislation, and perhaps with a few little changes that are going to be made.
The Chairman: I imagine Stan will be comforted to know that you're on the same wavelength.
Mr. Gouk: It doesn't happen all the time, so he should take advantage of it while he can.
The Chairman: Mr. Mercier.
[Translation]
Mr. Mercier: I thought I understood that, on the one side, you want more self-sufficiency and that on the other, you want Ottawa to remain financially present, so to speak. Don't you find that wanting more self-sufficiency and wanting Ottawa to remain financially present, is a contradiction in terms?
[English]
Mr. Lee: No, I don't think there is a contradiction at all. As I've tried to indicate, I think the City of Charlottetown's position is simply that we want to see the Government of Canada maintain its current level of involvement in the same way that it always has over the years. If that is not to happen, if Ottawa is going to basically not be involved in the port of Charlottetown any more, then we certainly don't want it left out there where nobody is involved. If it falls to the City of Charlottetown, the city may have to be involved, but I can assure you that the taxpayers of Charlottetown are not going to be able to subsidize or put money into the port of Charlottetown.
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The Chairman: C'est tout, Mr. Mercier?
Mr. Byrne.
Mr. Byrne: I was just a little bit confused about the exchange between Mr. Gouk and you with regard to exactly what your expectations are and if this legislation satisfies your expectations. You answered it, in the sense that your port is profitable and most of your concerns about the involvement of the municipality and local users can be addressed through very slight changes in the legislative itself. But I'm not completely certain as to why you need the federal government to maintain its presence in the port of Charlottetown.
Mr. Lee: Basically, the port in Charlottetown does make a surplus on the operational side. Quite honestly, the current infrastructure in the port of Charlottetown is not in good shape. I don't think you're going to find a private industry that is going to come in and take over that infrastructure.
We've made reference to a level playing field. In other P.E.I. communities with ports the Government of Canada has put substantial dollars into improving that infrastructure. For example - I think it was during the summer before last - in Summerside they spent millions of dollars putting in new infrastructure.
Mr. Byrne: But you have one of the largest infrastructure projects in the country going on right now. It's called the fixed link. How does that affect the port of Charlottetown?
Mr. Lee: Honestly, it doesn't affect the port of Charlottetown at all. I guess it would if all of the ports were to close down and everything was shipped in and out of the province by truck.
Mr. Byrne: So you don't see any sort of negative or positive impact whatsoever?
Mr. Lee: No.
Mr. Byrne: Thank you, Mr. Chair.
The Chairman: Thank you very much.
Mr. Keyes.
Mr. Keyes: Thank you, Mr. Chairman. I'm sorry for the interruption.
On page 10 we come to the relative merits of the four Island ports. You mentioned that it wasn't your intent to engage us in that discussion, but I guess the question begs to be answered.
You've obviously had discussions with the other three ports on the Island. Are the winds going in the direction of the...? What would be your reply to the suggestion that maybe the four ports could work together to form one Canada port authority, given the combination of the tonnage and the transportation and all of the criteria that are needed to meet that CPA status? Do you think that is possible, or does Charlottetown see itself and the other three ports going their own ways and adopting a local regional status?
Mr. Lee: To be honest, we have four ports in four different communities and obviously each community wants to see its port stay open.
The provincial government in P.E.I. has not taken a position on this issue. When a news release introduced the bill, the Minister of Transportation for the province at the time basically said that the Province of P.E.I. will not be involved with the issue. I suspect it's probably because they do not want to have to pick one of the ports over the other three.
So without some direction and leadership from the province, I don't really see that ever happening. As I've said, the City of Charlottetown certainly sees that ours is the best port in the province from an operational side.
I'm sure the City of Summerside - where Ottawa spent millions of dollars putting in new infrastructure a year ago - is saying it has the best infrastructure. I'm not sure you're ever going to marry those two identities.
Mr. Byrne: If Charlottetown and the other three ports were to sit down at the table somewhere one day and say, let's marry our agendas, combine our criteria and make CPA status, and if we're successful with an amendment and the bill produces federal agency status, which now exempts the ports from municipal and provincial income tax, etc., the province may suddenly take a new interest since their coffers may suddenly be impacted by the fact that the four ports have come together.
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Mr. Lee: It's certainly an interesting idea. It's something that Charlottetown will look at, for sure.
The Chairman: Thank you, Mr. Keyes.
I should say before we move to the next witness that I have had George Proud, Wayne Easter, Joe McGuire and Lawrence MacAulay on me like ticks on a dog over this issue. I think we'll be spending some more time on it in Ottawa. I appreciate you taking the time to come down here to talk to us about it. I think Stan proposes one aspect or one point of view on it that is probably worth exploring, but we're certainly aware of it.
Mr. Lee: Great, thank you.
Mr. Kenneth DesRoches (Consultant, City of Charlottetown): Mr. Chairman, just before we wind up, it's precisely your final comment that underlines some of what we're trying to say on the legislation. The existing federal role and the ACOA study comparing the merits of the ports do not promote the kind of discussion that Mr. Keyes is suggesting. It promotes the more traditional community rivalry. I think it's the same as the principle behind the brief itself: if the principle behind the brief is that you have to take into account all the rest of this federal activity that was done jointly with the provincial and municipal governments in order to advance Charlottetown's waterfront, there's a lot of other federal activity going on that's impacting on the kind of process that you're trying to promote. We think the amendments we've proposed to the legislation provide some jumping-off points from which you can get to different kinds of processes other than current political situations allow for - and I don't mean that in a partisan sense at all.
The Chairman: Well, as someone who has more than a passing interest in another smaller port, the Port of Churchill, I have some interest in this particular issue.
Thank you, I do appreciate your taking the time to come.
Mr. Lee: Thank you.
The Chairman: From the St. John's Port Corporation - I'm one of the only westerners who knows that St. John's means Newfoundland not New Brunswick - we welcome Mr. David Fox, and there seems to be another person here.
Mr. David Fox (Port Manager and Chief Executive Officer, St. John's Port Corporation): This is Mr. Sean Hanrahan, vice-chairperson of the St. John's Port Corporation,Mr. Chairman. He has joined me today.
The Chairman: Well, welcome to both of you. You're both aware of how we proceed here. Take it away and then we'll have at you.
Mr. Sean Hanrahan (Vice-Chairman, St. John's Port Corporation): Thank you,Mr. Chairman. I'll begin with the brief's introduction, if I may.
Prior to the drafting of the Canada Marine Act, Bill C-44, the St. John's Port Corporation made a presentation to this committee on Monday, March 13, 1995. A number of recommendations were presented to your committee by our corporation, some of which, we were pleased to see, were incorporated into the committee's report to Parliament in May 1995.
Our submission today, Mr. Chairman, will respond to the proposed Canada Marine Act, Bill C-44, which was of course tabled in the House of Commons for first reading on June 10, 1996.
The development of Canada's ports has been integral to the economic growth and diversification of Canada as a whole. Today, the Canadian port system serves commercial marine transportation, moving national and international cargoes via multilayered, intermodal groups. Three major federal government entities, all responsible to the Minister of Transport, handle over 70% of Canadian marine port traffic. Each of the federal ports is a significant economic generator, contributing greatly to some national and regional employment. However, most in the marine transportation industry have recognized the need to modernize and to streamline the hierarchy within the federal port system.
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The St. John's Port Corporation accepts the intent of Bill C-44 but takes issue with certain aspects of the draft as it currently exists. The Minister of Transport, in his presentation to this committee on September 30, 1996 stated:
- The proposed new Canada Marine Act will enable major ports to respond even more effectively
to the needs of its consumers and hopefully will eliminate needless bureaucratic interference in
the existing marine sector.
- Modernization of the marine sector has a direct link to jobs and growth. A stronger and more
efficient marine transportation system will improve Canada's international and regional trade
performance and will create even more jobs in Canada and the surrounding region to each of
these major ports. This proposed new legislation will make it easier for ports to operate
according to business principles. It will serve to enhance the competitiveness of our marine
sector preparing it for the 21st century.
Our comments will necessarily reflect those you may have already heard on topics that are of common interest among the ports. We have appended specific clause-by-clause recommendations for your consideration, but will briefly elaborate on the points of governance, port financing and self-sufficiency, capacity and powers, federal agency status, competitiveness, the concept of a ports desk and the issues surrounding human resources.
Being a lawyer, I'm better at form than substance. I'm lucky to have our president, Mr. Fox, with me, so I'll turn those issues over to him for elaboration.
Mr. Fox: Thank you, Mr. Hanrahan.
Mr. Chairman, before I get going I just want to make an apology to the chair in regard to this document. It was run off the presses yesterday and the translation into French has not been done. We will get that to you as quickly as possible.
The Chairman: I appreciate your mentioning that, Mr. Fox. Mr. Mercier has been very forgiving of the lack of translation here, so I appreciate that.
Mr. Fox: Okay, sir. Thank you.
With regard to the first item, governance and the proposed boards of directors, the proposed number of board members for CPAs should be more flexible and take into consideration the scope and size of a port operation. The final number of directors should be stated in each CPA's letters patent. As an example, the present SJPC board, which comprises five members, has been operating without any major corporate and administrative problems for 11 years. We would therefore recommend that paragraph 6(2)(f) be revised to reflect the realities of a port's size and scope and provide a minimum composition of five directors, and in the case of the St. John's CPA, a maximum of five directors.
On the positions of chairman and vice-chairman, we recommend that the chair of a proposed CPA be elected to serve for a two-year term rather than a one-year term. Further, a new position of vice-chair is recommended for inclusion in clause 15, again to be selected from the proposed CPA board for a similar duration of two years.
Presently, the port manager and CEO of the St. John's Port Corporation is not a director, and this division of power has functioned extremely well over the last 11 years. Particularly in the case of smaller ports, the CEO often initiates and recommends proposals for the board's consideration. To avoid any potential conflict, therefore, we recommend that the CEO not be a director.
On port financing and self-sufficiency and the issue of stipends, the federal government over the years has contributed greatly to the development of harbour infrastructure - in St. John's some $20 million in 1958 to 1965 - in all major ports across the country and is therefore entitled to a return on its investment.
As noted in remarks by Professor Tom Dowd, University of Toronto, ``to base a stipend on the gross income will cause a senior lien on the revenues of a CPA''.
He also states:
- the existence of this senior lien is considered by the rating agencies to be a negative factor in
rating a loan secured by a pledge of a port authority's revenues.
The proposed stipend to be paid by the CPA to the minister should therefore be based on net income rather than gross income.
Port assets, including all real property, should be available to be used as collateral when applying to financial institutions for loans relative to the long-term financing of capital works projects. The ability to pledge all property will assist and improve competitiveness by obtaining more favourable financial terms.
On properties, the legislation provides that on becoming a CPA, real property presently in the name of a local port corporation be considered federal real property and that all federal real property be entrusted to the new CPA under letters patent. This theme should continue throughout the legislation. However, the authority to acquire real property is still unclear in the new legislation under Bill C-44. We don't know whether after day two of a CPA we can go out and buy property or not. So I suggest that perhaps the committee could have a look at that particular aspect.
Therefore, it is recommended that property acquisitions be subject to the issuance of supplementary letters patent and that these acquisitions also remain federal real property entrusted to the port authority.
On grants in lieu of taxes, the St. John's Port Corporation recognizes and accepts that all property owners, including CPAs, should pay their fair share of municipal taxes. With regard to property within the port of St. John's, there are legitimate concerns among property owners and port lessees relative to present property taxation. It is for this reason that the SJPC agrees with the SCOT's recommendation number 6(b), in its May 1995 report to Parliament, which states:
- that the committee urge the federal, provincial and municipal governments to conduct a
comprehensive review of City assessment practices and all other government imposed taxation
practices for port infrastructure, to ensure that the level of taxation does not endanger the
viability and competitiveness of the CPA.
On capacity and powers, subclause 24(2) empowers the port authority to engage in activity within the port directly related to shipping, navigation, transportation of passengers and goods, and the handling and storage of goods. Competitive pressures have created an urgency to explore new ways of enhancing productivity and financing self-sufficiency. Ports cannot simply rest on their legislative mandates, but must use all their abilities to provide better services at fair and reasonable prices.
Many port authorities currently manage land that may not be immediately developed for purposes consistent with subclause 24(2). The inability to find new ways of responding to competitive pressures would create unnecessary expenses to port users who, at the end of the day, are the ones who must pay fair and reasonable fees. These fees should be based on an effective level of costs.
Property that may be strategic for future development but is presently not required directly for port or marine purposes should therefore be permitted for other short-term activities, regardless of the usage, which could be general parking, commercial, industrial and park uses.
Bill C-44 is silent on federal agency status for CPAs. After listening to evidence across the country, SCOT stated in its May 1995 report that:
- the overwhelming weight of the testimony was that the federal government should continue to
have a direct responsibility in commercial port administration.
Again, if federal status is accorded to a CPA, such ports will be vulnerable to provincial and municipal jurisdictions with potential far-reaching impacts. By preserving federal agency status, CPAs will have international recognition along with enhanced stature and prestige when promoting their CPAs in foreign countries. Ports must also have the ability to complete developments necessary for survival in a way that does not exclude municipal input but is not subject to controls by the municipality.
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The mandated ports have not been a burden on government and have provided a sound economic return to Canada. This has been accomplished in part because such ports are agents of the Crown. The challenge is to preserve federal agency status while at the same time eliminating the rigidities inherent in the present system. CPAs, therefore, must be granted greater autonomy, particularly in their dealings with central agencies.
Harbour commissions have for the most part operated outside such controls with very positive results for government and the national and regional economies.
In terms of competitiveness, it's too bad we don't have a chart here today with which I could illustrate where the port of St. John's is situated in Newfoundland. It's on the extreme east coast. Perhaps I could state that at any future meetings you have it may be of interest to parties around the table to be able to have a peek at a chart to know exactly where they are, since we're talking about a national theme here.
The key competitive strengths of the port of St. John's are: one, its location vis-Ã -vis both the population of Newfoundland and Canada's continental shelf; two, adequate facilities to accommodate existing general cargo traffic; and three, the fine reputation of our terminal operators in handling intermodal cargo.
With the cumulative costs resulting from Bill C-44, particularly taxation, combined with the imposition of marine service fees, the competitive position of the port of St. John's will be negatively impacted. Even though the port of St. John's is not directly affected by cost recovery for ice-breaking services and dredging, its main user, Oceanex, will be required to pay significantly higher user fees when transiting the St. Lawrence Seaway. As a result, the cost to transport general cargo to and from central Canada will increase. This would impact upon the port's ability to compete with the trucking industry, which utilizes the subsidized Marine Atlantic ferry service between North Sydney, Nova Scotia, and Port-aux-Basques, Newfoundland.
Needless to say, we are concerned with the direction of our business environment. We are disappointed that Bill C-44 as currently drafted will weaken our abilities to respond to the challenges that lie ahead.
Our sixth concern centres around the port desk or secretariat. In SJPC's March 1995 presentation to SCOT, it was recommended that CPAs be accountable to Parliament through a port desk with Transport Canada. This desk or secretariat would serve as a conduit for significant port issues. This would include items common to the port system, such as new legislation, statutory and regulatory requirements and policy developments. Most important, the port desk or secretariat will facilitate the efficient completion of amendments to letters patent and resolution of common issues.
In light of this importance, the SJPC now reconfirms that the port desk should be placed under the direct control and responsibility of an assistant deputy minister with Transport Canada.
Our last item of concern centres around human resources. The necessity for each CPA port to have its own benefit and pension programs is much too costly and administratively inefficient. It is therefore recommended that all CPAs remain in the current federal government programs relative to pensions and other benefit packages.
That's our presentation. We would like to take this opportunity to thank the committee for affording us the time to present our responses to Bill C-44.
If any member has a question, Mr. Chairman, they should please feel free to ask.
The Chairman: Thank you, Mr. Fox. I'm certain there will be questions. Before I open the floor to questions I'd like to thank you for taking the time to travel down here to make your presentation.
Mr. Byrne.
Mr. Byrne: Thank you, Mr. Chairman.
I'd like to thank my colleagues from Newfoundland for being here. It's nice to be in Halifax, but it's even nicer to have Newfoundlanders in the room. So I appreciate it very much.
Mr. Hanrahan: It would be nicer on that side of the table.
Some hon. members: Oh, oh!
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A voice: This sounds like a homecoming in Winnipeg, Mr. Chair.
Mr. Byrne: Your presentation was extremely thorough. It looked at several issues that I guess would impact on the port of St. John's and its future viability. I just want to get a clear indication from Mr. Fox, if I could, though....
You seem to have quite a strong knack for the operations side, Mr. Fox. Exactly how do you think the legislation will impact St. John's? For example, in the testimony that we received from the Halifax-Dartmouth Port Development Commission this morning, they said:
- Had C-44 have been in effect in the late 1960s, Halifax would never have been able to build and
equip even one container berth, and the harbour would long ago have fallen into disuse.
Could you provide some commentary on whether or not the port of St. John's is financially viable? In your expert opinion, would the port of Corner Brook or the port of Botwood be viable under this particular legislation?
Mr. Fox: I can only comment, Mr. Chairman, on the port of St. John's. The port of St. John's has been financially viable since 1980. I can't speak with regard to Corner Brook or the other ports. I don't know the figures at all. Is the federal impact what you're trying to get at?
Mr. Byrne: You've asked for specific stream lines within the legislation.
Mr. Fox: Yes.
Mr. Byrne: You haven't commented, though. I take it that if all those stream lines were in place you'd be completely comfortable with the legislation.
Mr. Fox: Satisfied. We see compromise as the name of the game. Issues in this particular legislation will hinder us in doing what we really wanted to do ourselves, recognizing that the umbilical cord will never be cut, Mr. Chairman. It's going to stay. But the best way to operate would be what?
I think that can be answered if we gave particular attention to those seven major items and to some of the comments we have attached. If these are addressed in a reasonable fashion and looked at in a way that concurs with what we're saying, I think it'll make the situation in St. John's - and I can only speak to St. John's - much better than it is today.
We will rid ourselves of some of the bureaucratic things going on right now that hinder our progress. There's no question about that. For example, we're down there trying to buy a piece of property through the current federal system. It's taken us four or five months to get from Transport Canada to Treasury Board to get an approval, which is really a little bit much in its way.
However, if we can get this kind of thing in terms of properties translated from where it is today under the CPC act into the new act, Bill C-44, it will make life much easier for us as a port and, I'm sure, for other ports as well.
I'm sure other ports have just as many problems, if not more. If you multiply our little port by what's going on in Vancouver or Montreal or Halifax or wherever, the problems are huge in terms of bureaucracy. And that's really all we're trying to do. We're trying to rid ourselves.... We will never get rid of us as bureaucrats, Mr. Chairman, but we can eliminate some of the walls we have to climb over from day to day, from week to week, from month to month, and then sometimes from year to year. That's all we're saying. This is basically what these issues are all about.
This document is a fairly good document. It's a modern document compared to the one that was contemplated back in 1980 by Mr. Pepin and company. Mr. McNeill was there at that point in time. Now he's really trying to do the things that were shifted out of that particular episode back in 1980 and 1982. Perhaps the timing was bad. We were too immature to carry on with the things that were envisioned in 1980 and 1982, but now we're not.
We've come to accept a little bit of independence through that CPC act. We've learned over the last sixteen years how to do that, and I think we're very capable of doing what was intended to be done back in 1980. And now we're trying to put it in here. It's just a matter of massaging it to bring it into 1996. It's not 1980.
Some hon. members: Hear, hear!
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The Chairman: Thank you, Mr. Fox. I have a sense you've been spending a lot of time with Mr. Keyes.
Mr. Fox: No, I haven't spent any time with Mr. Keyes, Mr. Chairman. I only know the gentleman from being at two meetings, this meeting and the one we had in St. John's last year.
But that's a fact. If you really want to get down to it...I won't use the terminology ``clean up our act'', but it's probably a very nice terminology to use at this point.
Mr. Keyes: I call it gobbledegook. Get rid of the gobbledegook.
Mr. Fox: In all fairness to the people in Ottawa, they are trying to do a good job. But they have their little boxes they're in as well.
The Chairman: There are some there who think four to five months for a decision is blindingly fast.
Mr. Jordan: When you said that, I thought you were going to say ``four or five years''.
Mr. Fox: Well, there have been situations where we have gone as long as four or five years. I could state one right now, but I'd better not; it has been going on since 1988. How do you like that?
Mr. Jordan: Four or five years is probably too long.
Mr. Fox: In my humble opinion, if we're trying to run something for a Canadian national, regional, and local economy, the sooner we can get on with it the better it is for everybody.
Mr. Jordan: I just want to mention, because it has come up before, how you arrive at the stipend that is being proposed. I suppose it doesn't really matter whether you base it on the gross or the net, except it depends on what amounts you're lending against the gross or the net. A low enough levy on the gross wouldn't be different from a higher levy on the net. I mean, you're talking about -
Mr. Gouk: You're never going to do my books, Jim.
Mr. Fox: Mr. Chairman, with all due respect for Ottawa -
Mr. Jordan: It's how you choose to arrive at the net and what is included in the net.
Mr. Fox: I don't think any of the ports have anything against paying a stipend. The federal government has put this infrastructure in place. That's you and I.
Mr. Jordan: That's right, and people on the west coast.
Mr. Fox: That's correct. We are due a share of that at some point, perhaps once a year or whatever the case might be. The thing is, how do you create the formula? We now have a formula in CPC that is acceptable to the fourteen ports that are there. It took some discussion to come up with that particular formula, but it is an acceptable formula, and it's based on net income.
Basically, after all is said and done, it works this way. Every port is given the freedom of $500,000 up front, if it makes $500,000. For instance, Vancouver makes about $20 million a year. The argument is that some of that should come back to Ottawa, through the net income. What happens there, in the case of our present dividend payment to Ottawa - in the case of Vancouver, for instance - is that the first $500,000 is free, because that has to carry on with.... For instance, small ports have certain expenses. For anything between $500,000 and $1.5 million, there's a tax on it at 10%, back to Ottawa. For anything over $1.5 million, there's a tax on it at 30%. So in theory, as far as a Vancouver is concerned, if it makes a $20 million net income - ``bottom line'', we call it - then it pays back about $6 million, which is not bad when you have a $20 million net profit.
That's acceptable throughout the whole system. We're not all Vancouvers. We don't profess to be.
Mr. Jordan: I'm just saying the gross isn't an easy figure to arrive at.
The Chairman: Do you want to come in on this one, Mr. Keyes?
Mr. Keyes: I have just a ``but''. The net is acceptable to the entire system, but some ports, unlike Vancouver, which might be making $20 million, are making far less. The net can always be reflective of a negative bottom line and thereby not.... With the creativeness of some of the books that are prepared at some of the ports, the reinvestment shows a negative bottom line on the net.
Given that, Mr. Fox, would you be prepared to accept it on the gross if a caveat, right behind the statement ``on the gross'', was the port's ability to pay?
Mr. Fox: Yes. At the same time, may I add to that?
The Chairman: Mr. Fox, please, I'd rather you didn't, just for a minute.
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On the question of the books, perhaps Mr. Gouk could get his question in.
Mr. Gouk: Actually, I was going to touch on that as one of several things.
You combined two areas. You split them, actually, but they are combined. You talked about taxes and your concern about how taxes would be dealt with. You also talked separately of federal agency status. I get the feeling amongst the committee that there is a move toward reintroducing federal agency status, which would automatically take care of the tax part.
On the fee thing - the stipend or fee or whatever you want to call it - with all deference toMr. Jordan, if you take 5% or even 1% of a gross, then you pay 1% of that gross. But if you pay on a net, you only pay based on the profit, which does control your ability to pay. As Mr. Keyes knows, you of course can specify exactly how those books will be kept in order to determine that.
I will make one other comment before I turn it over to whatever the chairman allows you to respond.
I think there is general agreement amongst the committee that subclause 24(2), on the subsidiary operations, is likely going to be changed to reflect more of what you have asked for in there as well.
Mr. Fox: Good.
The Chairman: Mr. Fox, I appreciate very much the time and energy you put into your presentation. I can tell you, sir, in my limited experience with Newfoundland, there is nothing humble about the opinions of Newfoundlanders.
Mr. Fox: You got it.
The Chairman: Thank you.
From the Halifax Longshoremen's Association we now have Mr. Nauss and Mr. Briand.
It's a pleasure to finally meet you. I got my agenda the wrong way around and called you to the table at about 10 a.m. You have half an hour in total for your presentation. We normally ask presenters to try to confine their remarks to about one-third of that to about ten minutes, to give members a maximum amount of time to ask questions and to engage in a bit of a discussion with you.
Please identify who is going to make the presentation and take it away.
Mr. David Nauss (President, Halifax Longshoremen's Association): George Briand is vice-president of the Longshoremen's Union. We'll have him present. He's a former member of the port board of directors here in Halifax. We thought he would be able to present our presentation today. It's very brief. It's mainly on one issue.
The Chairman: I'll ask one question, Mr. Briand. You are currently a member of the board?
Mr. George Briand (Vice-President, Halifax Longshoremen's Association): No, sir.
The Chairman: When you were, were you in the capacity of a longshoreman?
Mr. Briand: Yes.
The Chairman: So there is provision for staff representation on the board.
Mr. Briand: There was sort of a precedent set.
The Chairman: One might call it that, yes. Parliament was founded by precedent, you know.
Mr. Briand: It was?
Thank you very much for the opportunity, Mr. Chairman, and members of the committee. The Halifax Longshoremen's Association is an organization representing approximately 300 members. There are others who work out of the hiring-hall system as well.
Labour at the port of Halifax has long been represented on the board of the existing Halifax Port Corporation, not because of any statutory requirement but because it is widely recognized that they are a critical stakeholder with an important contribution to make. Port of Halifax labour has played and will continue to play an important role in improving the port's competitiveness in developing new business. Most recently this was demonstrated by labour's leadership role in offering incentives to assist the port's development of new container markets in the U.S midwest.
The Halifax Longshoremen's Association was therefore very concerned to learn that labour has been excluded from playing any meaningful role in the proposed Halifax Port Authority. It is our understanding that because of the broad definition of ``user'' in the bill - to wit:
- in respect of a port, means a person that makes commercial use of, or provides services at, the
port
- - labour is not eligible to participate in the nomination/appointment of directors of the new
port authority, nor are labour representatives themselves eligible to serve as directors. We
believe this exclusion is both unacceptable and unnecessary. Labour has the most to gain or lose
from the future success or failure of the port of Halifax, and therefore must be able to have a real
and effective voice in the port's strategic planning.
That is our short brief, Mr. Chairman. Are there any questions?
The Chairman: You promised me it would be short, and you delivered.
Mr. Briand: We don't want to waste too much time, Mr. Chairman.
The Chairman: Well, this is an important issue. It has come up in a number of locations, and it is one that the committee has certainly been considering.
Why don't I start with Mr. Gouk?
Mr. Gouk: Could you give me a ballpark figure in terms of how many people in total are employed at the Halifax port? And that would be for union labour.
Mr. Nauss: In terms of union labour, there would probably be around 500.
Mr. Gouk: What other organizations are there besides the longshoremen?
Mr. Nauss: The Checkers' Union - their president, Mark Campbell, is present here today - the Gearmen's Union, and the Watchmen's Union.
Mr. Gouk: If labour, as an overall entity, were to be given one seat, how would you choose one?
Mr. Nauss: We would choose amongst ourselves because we're all ILA. We're all members of the International Longshoremen's Association.
Mr. Gouk: So you all come under that umbrella.
Mr. Nauss: Yes, we have meetings amongst ourselves once a month. We would select or nominate someone from that body to represent labour.
Mr. Gouk: I've heard in the past - and I've certainly seen evidence of it - that the labour relations between the unions and the port authorities here are probably among the best in the country. Would you say that is accurate, or is it stretching it a bit?
Mr. Nauss: I'll tell you, boys, that we didn't have too many problems when George was on the board, but he has been off the board since June and things are deteriorating quite quickly.
Mr. Gouk: It's starting already.
Mr. Nauss: We're almost in an adversarial position now because we have nobody there. We have no representatives or contact people. But we have written them concerning this problem, and they have asked somebody to meet with us to talk to us about some of the problems we're having.
Before, the problems that arose were prevented, because to promote the port, they need the cooperation of all the stakeholders. Labour played a big part in promoting this midwest cargo; we were asked to make concessions and reductions to get this business, and we did. We also made an agreement to reduce our manning on the paper products in order to get forest products through the port of Halifax - an area that has quadrupled in the last year or so.
We've made meaningful contributions to the promotion of the port, and when we're not there it causes a lot of friction among the people.
Mr. Gouk: I have one last question. At the time when you were on the board, how many members were there in total?
Mr. Briand: I believe there were initially seven members, but I think that has now been reduced to five.
Mr. Gouk: You were still part of the board when there were five?
Mr. Nauss: Yes.
Mr. Gouk: So you were one in five?
Mr. Briand: Yes.
Mr. Gouk: Okay, thanks.
Mr. Briand: If I may, my term was extended by a year, so I remained there for the one year in spite of the.... I think there was legislation passed recently that said they reduced the boards to five-person boards, but my term was extended. I guess David Anderson forgot I was there.
Mr. Gouk: Thank you.
The Chairman: He can be a forgetful sort.
Mr. Cullen.
Mr. Cullen: Thank you, Mr. Chairman, and thank you, gentlemen.
There are some who argue for the port authority to be able to engage, perhaps in the short run, in activities that are not directly related to direct port activities; for example, aiming to get higher use out of land that may be needed for future use, but which is not being developed right now. Could you see a situation where there might be other unions involved other than those who are members of your union? Would there be others vying for this position if one was to make a seat available for labour? Could you see that they might be in competition with the unions that are most directly involved in port activities?
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Mr. Nauss: As I said, I think there are only the four ILA locals and the freight handlers. They have a steamship union, but I forget its name; I don't know if it's the transport workers or whatever. They do the freight on the rail cars. But those are the only other unions present on the waterfront.
Mr. Cullen: And you can't see any others coming forward?
Mr. Briand: There's never been any opposition to the ILA being represented on the boards, be it the Halifax-Dartmouth Port Development Commission or the Halifax Port Corporation, so I can't see any other local union in the port being in opposition to it.
Mr. Cullen: Okay, thanks.
The Chairman: Before I turn it over to Mr. Keyes, I have one question that comes up on this issue.
The issue of whether or not there should be organized labour representation on boards has been dealt with for a number years. What happens in situations where you're discussing the contract? Does the labour rep participate in that discussion, or is there an exclusion for that? What's the process that you have used on the Halifax board?
Mr. Briand: Discuss it with whom, Mr. Chairman?
The Chairman: When it's being discussed at the board.
Mr. Briand: In my time, it was never discussed.
The Chairman: You mean there was never a contract open.
Mr. Briand: Are you talking about the port corporation or the federal board? They never asked questions about union business, so I certainly didn't offer any information.
The Chairman: We're talking about your contract negotiations.
Mr. Nauss: They're not involved in them at all. We only deal with the employer. [Inaudible - Editor] That's why the shipping companies are represented by the employers association. We have no discussions on any contract doings with the port corporation.
The Chairman: Mr. Keyes.
Mr. Keyes: What we're quickly coming to understand - if not in the SCOT report of 1995, then in the course of the legislation that we're crossing the country with today - is that depending on what part of the country you're in, there are particular needs that have to be addressed. The government certainly wouldn't want to create a piece of legislation that marks out with a fence something that will be in the best interest of the country while leaving on the other side of the fence - on the outside looking in - parts of this country or ports that don't fit the particular criteria.
We could consider accommodating the wishes of Halifax just as we have put into consideration the idea of putting CN on the board through the letters patent, which of course would not be put in the legislation because it might not work for the rest of the country. In other words, there would be an agreement between the federal government and the port when they move to CPA. Would it be acceptable for Halifax, in their letters patent, to grandfather the tradition of a labour rep on the board as has already been established here?
Mr. Nauss: The only question is who would nominate the representative from labour under your provision.
The Chairman: It would be laid out in the letters patent, would it not?
Mr. Keyes: Yes, it would be laid out in letters patent that your group as an entire union would nominate amongst themselves.
Mr. Nauss: There would be a nomination amongst the union. Sure, that would be acceptable.
Mr. Keyes: I'm just talking off the top of my head here, but we need a provision of some kind. Of course, there hasn't been a consensus across the country that a labour rep be put on the board. To accommodate Halifax, we could grandfather the tradition here just to work it through letters patent.
Mr. Nauss: Sure.
Mr. Keyes: Thank you.
Mr. Briand: What are the reasons why labour was excluded from the structure of the port in the first place?
Mr. Keyes: That's a valid question.
Mr. Briand: We play a major part, in my opinion.
Mr. Keyes: Yes, but as we cross the country, we're not hearing any representation from all the ports, as a consensus, that they all want to have a labour rep on the board. In some cases, I think some of the ports understand that on the user list created by the community for presentation to the minister for consideration of who would to be put on the board - and Vancouver is fighting for more of what they call public accountability on the board - there would be a labour representative, although not a direct labour person.
They're putting their trust into the system with a policy that says if the list is going to be created by the community and they put five, six or nine names forward - depending on the size of the board - and if they decide as a community that one of those names is going to be that of a labour rep this name is on the list to the minister. We say here is the list of nine of nine. If there is no conflict of interest situation or problem, then we have our nine.
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Mr. Briand: There wouldn't be any guarantee, then, that -
Mr. Keyes: I'm not here to argue the point for the other ports. I'm just saying how the other ports feel.
Mr. Briand: Under this scenario, though, there wouldn't be any guarantee labour would be represented at all. We're still being political here. Labour can submit a name, but in the final analysis the politicians are going to make someone -
Mr. Keyes: No. You're going too far, because it's the community and the user group that will determine what names go on this list before it goes to the minister. So if the community group as a whole decides it is in their best interest to have a labour rep on the board or on the list of names to be presented to the minister for his consideration for the board, then my feeling is that in most communities they are going to look seriously at whether or not a labour rep should be on that board, or on the list to be presented to the minister for his consideration.
Mr. Briand: If you have an individual who is a strong opponent of the party in power, he might be nominated, all right, but that's as far as it would go, wouldn't it?
The Chairman: I can't imagine this ever happening.
Mr. Keyes: No, I can't either. As a solid, forward-thinking Liberal government, we wouldn't do that.
Mr. Briand: Right.
Mr. Keyes: I wish Mr. Gouk were here to reflect on this.
Mr. Briand: It is only since the Liberals are in power that we're not represented on boards in the port of Halifax.
Mr. Keyes: No. You are.
Mr. Nauss: It's a fact. Most of them didn't want the labour representative there. They wouldn't put him on the board.
Mr. Keyes: I'm sorry, I didn't -
Mr. Nauss: The way you presented it, what if the rest of them didn't want to nominate a labour rep? Who would they nominate?
Mr. Keyes: This is the community's decision. This is coming to us from the different port communities across the country.
Mr. Nauss: All I'm saying is if they want to exclude labour, they can do that, too.
Mr. Keyes: To tell you the truth, when you look down the list - we've already been once before to Halifax, Montreal and everywhere else - they welcome labour representation. They know it's important to have a labour rep. It's important at any port to work with labour to achieve your mutual goals. This is the new realization.
Mr. Briand: It makes sense.
Mr. Keyes: Yes, it makes sense and it is a new realization.
Mr. Nauss: It doesn't always work that way.
Mr. Keyes: I like to think there's a new generation of politicians that does believe in something.
Mr. Briand: I do.
The Chairman: I think it is a new thought for some people in some communities. I think it's a very worthwhile item for us to debate in this committee as we look at how these letters patent are arrived at.
I went through this back in the early 1980s, putting labour reps on a variety of organizations. Inevitably, those who have experienced it do feel it leads to a better labour-management environment. We'll give it some very serious consideration as we get down to the final moments of drafting recommendations for this bill.
Mr. Nauss: Thank you very much.
The Chairman: Thank you very much. I appreciate your brevity and your energy.
Now, do I have before me representatives from the Tourism Strategy Implementation Team, from the Alliance of Manufacturers and Exporters Canada or from the Nova Scotia Road Builders?
Failing that, we will take a 15-minute recess.
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.1352
The Chairman: We're back in session.
Gentlemen, welcome to the transportation committee. You have one half-hour for your presentation. You can choose to divide that half-hour in any way you wish. Our normal recommendation is we ask you to take about ten minutes for your actual presentation, to leave us twenty minutes to have at you with questions and to discuss the points we want clarification on.
So take it away. I'll try to keep everything rolling along.
Mr. Ged Stonehouse (Chairman, Golf Atlantic Canada; General Manager, Granite Springs Golf Club): I'll introduce our team. Bruce Anderson is the chairman who developed the tourism strategy we're working with. As a private sector person, he has been in the tourism business for 25 years. Paul Stackhouse participated in the development of the strategy as well and is now chairman of the implementation team that's putting this process in place. Paul is from the private sector as well, as regional director of Atlantic Cambridge Suites. I'm Ged Stonehouse, and I'm involved in the implementation group as well. I manage Granite Springs Golf Club and head up Golf Atlantic Canada and golf tourism for Nova Scotia.
The tourism industry, in partnership with both levels of government, federal and provincial, have put together a comprehensive strategy for tourism over the last couple of years, with a main focus on putting a plan together for us really to see where we should be going tourism-wise over the next three to five years. We have that program in place and we're now working to make sure it remains a live, working, moving-forward type of strategy.
Our reason to meet with your committee is that the transportation links to our province are crucial for the implementation of our program.
.1355
The implementation team, with the private sector partnering again with government, is focusing on the four different items or issues we're working with: developing marketing and product strengths - we're going to enhance those as we go along; improving the quality, both of our product and our service; then the big one, enhancing transportation access; and addressing seasonality.
Transportation is by far the most crucial to us. We feel that we can be successful in the other three, the marketing, the upgrading of the quality, the expanding of the seasons, but reality says that unless we have the transportation doing what it needs to, the others can't possibly be successful. Some of the important things we see are the improvement of ferry links, highways, and direct air routes, to preserve and also increase our tourism market share.
As to specific issues, the main focus will be on air access and commercialization or privatization of the Halifax International Airport. The private sector initiating the transportation strategy wants to put together a plan for transportation for the needs in the future. The strategy is important, but we can't sit back and wait for it. The strategy will take another while to get going, so we want to go ahead and get things into action now.
In a recent study, Nova Scotia came in first for Canadian tourists choosing to travel within the country. The Canadian Automobile Association, with their 3.8 million members, ranked Nova Scotia number one as the destination most driven to in North America.
Safety concerns are part of what we'll be looking at, with the ever-growing truck traffic, fueled by decreasing rail service. Even the truckers' association is concerned, as well, that we may have more and more difficulty with safety on the roads.
The ferry service is a concern too - the future importance of maintaining this service. With our maritime link, it's quite a part of the tourism experience to come one way or another, or at least have the option to go one way or the other, on the sea. It's also an important economic link with the U.S., especially for the Yarmouth area, and moving transport back and forth. We want to work with that and keep going.
The biggest area of concern for us is air access and the commercialization or privatization of the Halifax International Airport. For that part I'd like to turn it over to Bruce Anderson.
Mr. Bruce Anderson (Chair, Transportation Group, Nova Scotia Tourism Strategy Implementation Team): The airport, Halifax International, has very significant economic implications for our entire province - in fact, for the entire Atlantic region - since it serves as the hub for the Atlantic provinces. The past decade has seen the development of the airline hub-and-spoke route networks. Provincially, however, the airports at Sydney and Yarmouth are important in the ongoing development of Halifax International, and vice versa.
Research shows that effective transportation links on a global scale are required to compete for international investment, trade, and tourism. People are travelling longer distances. At the same time, frequency of travel is increasing as travellers take multiple vacations with shortened lengths of stay.
The business tourist and the changes to the meetings and conventions business has also had an impact on air transportation. The factors of distance, frequency, length of time, and business travel indicate air transportation is the growing vacation vehicle in the world of tourism, at least in our world of tourism.
We have seen this trend in Nova Scotia as our air visitation continues to increase. The province has also enjoyed the increase in tourism receipts indicative of air travellers. International visitors spend more than domestic travellers, and international air visitors spend $400 more per trip than automobile visitors. Increasing air visitation, and hence cargo capacity, to Nova Scotia has been recognized as one of the best opportunities available to promote economic growth in our province.
.1400
Many look at the air issue with a tourism focus. However, there are several issues that point to the overall economic impact.
Halifax already has three critical factors required to be an air transportation hub: we're geographically central, we have strong traffic, and we have frequent connecting services.
A recent Icelandair promotion and trade show resulted in significant business opportunities for other Nova Scotia economic sectors.
Because of the connecting services, increasing traffic to Halifax results in opportunities for Sydney and Yarmouth, as well as the other Atlantic provinces. They can piggyback on the effort here. For every 100 passengers using Halifax International as an origin or destination, another 84 passengers use Halifax as a connecting point.
Decisions that affect the airports at Sydney and Yarmouth will impact on Halifax International as two of the spokes to the hub.
Our Nova Scotia lobsters - I hope you've enjoyed some - are recognized worldwide. Currently, there is not sufficient cargo capacity to fly them to our key markets in the quality and the quantity that our customers require.
Halifax International Airport's hub status has benefited the community greatly. Businesses recognize that the international airport is the community's gateway to the global economy, and it contributes $851 million to our economy. That's not much less than our entire tourism industry here in the province. We generate, plus or minus, $900 million to the economy annually.
Halifax International also provides over 4,300 direct jobs and over 9,000 indirectly. On a typical day, the airport's economic impact to the city is about $1.5 million; provincially, it's about $3.5 million; and regionally it's more. Airports, once designed to serve air carriers, now see that shift to the customer and the community, with carriers providing the service that draws the customer.
Many progressive city airports now have marketing departments, hotels, shopping centres, multiple restaurants, and a wide range of travellers' services. Commercialization of our airport presents a great opportunity and the strongest case for community growth and leadership.
As we look at the potential opportunities for future growth of Halifax International, it's crucial that the airport terminal building is upgraded to meet the needs of the passengers. We have a 1960s airport. It's grossly inadequate and it requires serious capital investment. Changes are required - you've heard it, I'm sure - in passenger processing, ground access, counter space, aprons and gates, custom inspection facilities, cargo, baggage handling, and more.
Halifax's airport has been the fastest growing airport in Canada, and we need to ensure that it continues to grow at a rate we can reasonably handle and provide proper services to our visitors. We can't afford to turn off the customers with serious time delays, poor facilities, and inadequate services.
Halifax International's current runway utilization is well below the capacity of its existing two intersecting runways, and additional runway capacity actually will not be required until 2049. The terminal, however, experiences higher utilization than comparably sized airports, and congestion problems here are better alleviated through improvements to the existing Halifax International facility. Halifax therefore requires substantial capital upgrades and equal treatment by Transport Canada in providing the assistance to upgrade the airport as the other major airports experienced prior to their commercialization.
Nova Scotia faces many challenges in the coming months as the Halifax International Airport Authority negotiates with Transport Canada to take over operations at the airport.
There are issues like hub status. Our hub will be in severe jeopardy if major changes are not undertaken to position Halifax as a gateway.
Environmental problems that exist at the airport will be a major cost factor and must be considered in the negotiation process, and that's not happening right now. Problems such as the slate and acid run-off, building asbestos insulation and ground contaminants must be recognized in the evaluation of costs and factored into the negotiations.
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Plans to develop Shearwater...this is a tough point. Plans to develop Shearwater as the second airport in Halifax, supported by the Department of National Defence with military base closure financial assistance, are of very real concern to many. Recent studies indicate that in order for cities to have two airports they must have more than 25 million passengers. Two airports in a city with less than 25 million passengers are not successful. In Halifax the total passenger throughput is only a little more than 2.5 million passengers. We're not even close to the necessary threshold.
It's a commonly held understanding that splitting traffic between airports jeopardizes a city's ability to build commercial air services. We all know about the problems of Edmonton and Montreal and the loss of traffic from their airports to Calgary's and Toronto's. There must be an established firm position that unequivocally supports Halifax International Airport. Dividing the business between two airports will have a devastating effect on both and therefore on the region's economy.
Pre-clearance on transborder flights is imperative for Halifax in order for it to be able to compete globally.
Airport landing fees are also an issue that require closer examination, particularly when we look at Yarmouth and Sydney.
Finally, Halifax is the largest Canadian airport that has not had a significant upgrade. Ottawa, Edmonton and Halifax were identical airports when they were built, as I say, in the beginning. Ottawa and Edmonton have both had significant upgrades to their airports at a cost to the taxpayers of our country. Halifax did not receive the benefit of those federal dollars prior to the policy change. This puts Halifax in a very awkward and, I must say, unfair position during the negotiation process. Transport Canada's position is that there is no money for capital expenditures.
Our future lies in global markets and export dollars that can only be brought to us by increasing our air access and upgrading our airport terminal building. The long-term financial viability of an upgraded airport will make the tourism industry and indeed our entire provincial economy grow. It's of the utmost importance.
Our group, the tourism strategy team, has been charged with addressing the serious issues facing the industry with Halifax International and the impediments to a smooth commercialization process. The tourism industry recommends, requests and strongly urges that the Transport Canada negotiations with the Halifax International Airport Authority treat Halifax equally and fairly in terms of access to federal funding for the extensive upgrade of the airport.
I'm sure you have a lot of questions.
The Chairman: Is that it? From the province that's most driven to...I come from the province that's most often driven through - Manitoba.
Some hon. members: Oh, oh!
The Chairman: I should talk to you about that sometime.
Mr. Mercier.
[Translation]
Mr. Mercier: Mr. Anderson, your presentation is very interesting, but you talk mostly about air transport and airports. We are here to discuss Bill C-44 on maritime transport. As far as maritime transport is concerned, what do you think of Bill C-44 and what do you feel its impact will be on tourism?
[English]
Mr. Anderson: With regard to the marine policy?
[Translation]
Mr. Mercier: As far as maritime transport is concerned, what do you think of Bill C-44 and what do you feel its impact will be on tourism?
[English]
Mr. Anderson: Ged, you're the marine man.
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Mr. Stonehouse: I'm sorry, I'm not familiar with that particular package. I would have to check it and respond back to you on that.
Mr. Anderson: My position is that I've been charged mostly with looking at the airport and air transport, not so much marine.
About ferry traffic, I see that as an extension of the highway system of Canada. It has to be supported in the same way as we support the development and maintenance of highways. It's what joins us together in Atlantic Canada. It's probably what joins Vancouver Island, on the other side of the country.
The Chairman: Mr. Gouk.
Mr. Gouk: A couple of areas, gentlemen. First of all, do you know how the fees Halifax pays, the remittance to the government, compare with those of Edmonton and Ottawa, which you use for your comparison?
Mr. Anderson: Are you referring to landing fees?
Mr. Gouk: No, the lease fee to Transport Canada; the fee paid back to Transport Canada. You are one of the national airports.
Mr. Anderson: That's right.
Mr. Gouk: Do you not pay a fee to the federal government, a lease fee for the facilities?
Mr. Anderson: We are not commercialized yet.
Mr. Gouk: You are not yet at that point?
Mr. Anderson: No, we're not.
Mr. Gouk: I would think, first of all, if there is a difference in what you're getting, which means a difference in what you're leasing, that will be taken into account in the fees you pay. Vancouver obviously pays a whole lot more than Calgary, for example.
Mr. Anderson: Exactly.
Mr. Gouk: One hopes Pearson, assuming 1 and 2 survive, will pay even more than Vancouver, again because of its size, and depending on whether or not the government puts in some facilities, or someone else does.
You said your runways are in relatively great shape - you have about a fifty-year lead time before you have to do something major with that - but you have a big problem with the terminal building. You ended your presentation, which was a very good presentation, by saying you want Halifax to be treated fairly and equally. Well, I come from the west coast, and the fairness and equality we have there is called an ``airport improvement fee'', where people pay $5, $10, or $15, depending on whether you're travelling inside the province, outside the province, or outside the country.
Based on your figures, you tell us there are about 2.5 million passengers a year. The figures you gave me suggested 42% of them travel through. If you travel through on the same day in Vancouver, you are not charged a fee. So if we go with the remaining 50% plus, depending on whether they pay $5 for travel inside the province or $10 for travel outside the province, and if we forget out of the country for a bit, you're looking at between $7 million and $14 million a year. If you use this airport improvement fee in order to be equal, treated the same as Vancouver and presumably soon some other airports, would a capital injection to your airport of between $7 million and $14 million a year solve your terminal expansion problems?
Mr. Stonehouse: I've flown through Vancouver recently and that's working very well. It has been kept up to date in the meantime. One of the big difficulties we have is that Halifax is so far behind that it's not just a facelift it needs. It needs some major activity. We're more than willing to pay our share, but we also feel there needs to be a bit of catch-up with it.
One of the other things is that a major construction project is going on now to remove asbestos. It seems when the two need to be done at the same time and they say there's a year and a half left of work to be done, it would only make sense for us to do some of these corrective measures at the same time. If we're going to go in and take the asbestos out and put up a nice new wall that next year we're going to remove in our adjustments, I think there needs to be some cohesion in that project.
Mr. Gouk: Vancouver, in terms of lead time or preparedness, has built a huge new terminal in addition to the existing facilities. The old one opened in 1967 and it was too small the day it opened, literally. The only significant expansion it had was to change its underground parking for international arrivals. Other than a few modifications, that's the way it existed until a few months ago when the new building opened, and it's a huge new facility. They built that and a major two-mile-long runway with all the connecting taxiways. That was paid for out of the airport improvement fee.
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Again, I would say if you had an injection of capital - given the relative size of Halifax - of between $7 million and $14 million a year, do you not think you could deal with your airport terminal needs out of that kind of fund?
Mr. Anderson: I believe it would certainly help deal with the airport needs.
Mr. Gouk: Well, I'd sure like the contract. If you're prepared to put all of that into the kind of facilities an airport the size of Halifax would need, I'd be more than happy to keep up with your needs for $14 million a year.
I do not in any way want to seem like I'm trying to be sarcastic with you. You brought a real issue forward, and maybe you haven't viewed it in these terms, but I would suggest you think about that for a bit.
Mr. Anderson: We certainly looked at the possibility of a user fee, and we raised that with the Halifax International Airport Authority, which is negotiating right now. Its position is, however, that it would like to discuss it further, all the while recognizing that it's comparing us to Vancouver, when in fact we're talking about being compared to Ottawa, size-wise and terminal-wise. As I said, we had the very same terminals to start with. What does Ottawa have now compared to what we have now? That ain't fair.
Mr. Gouk: Some of the people here had to dine in Ottawa's terminal last night because they couldn't catch their flight out. I would suggest that if I had the choice of being stuck in Ottawa's terminal or your terminal, I'd take yours.
Mr. Anderson: For dining?
Mr. Gouk: You don't know what they have in Ottawa.
The Chairman: I'm sorry, gentlemen. I get fascinated with where Mr. Gouk is going with a particular issue and tend to follow along and lose sight of the fact that I'm supposed to be controlling this.
Mr. Gouk: I'll pay you later.
The Chairman: Thank you, Mr. Gouk. I always enjoy hearing about how hard-done-by Vancouver is.
Mr. Cullen.
Mr. Cullen: Thank you, Mr. Chairman.
Picking up on Mr. Gouk's point, not to belabour it, but if your capital demands are less than Vancouver's, let's say, if you're looking at an airport improvement fee of two to six instead of five to ten, there may be some merit in exploring it.
I have an academic question. If you were going to locate the airport in Halifax today, would you put it where it is?
Mr. Anderson: Yes. It serves the province very well where it is. It is relatively easy to get back and forth from the airport to downtown. Compared to the number of times I'm in downtown Toronto and have to go to Pearson, or if I'm in downtown Montreal and have to go to Dorval, I think it's pretty easy, and it's an easy drive into the city.
Mr. Cullen: Do you have any statistics on such things as down time at the airport because of weather conditions? Is that a problem, or is it a question of the worst of a number of evils? No matter where you put it, you're going to have weather problems from time to time, obviously.
Mr. Stonehouse: I think any time you're that close to the ocean you will have weather problems, but the down time there is probably less. I don't think it's a significant amount and hasn't been a major problem to this point.
Mr. Cullen: Okay. Thank you.
Mr. Anderson: I'm not in the air an awful lot. Personally, I've had more trouble getting into Pearson due to weather.
Mr. Cullen: It could well be. I just don't know what the statistics are.
The Chairman: Okay. C'est tout? Thank you very much, gentlemen. I appreciate the time.
Mr. Anderson: Thank you very much.
The Chairman: Keep negotiating.
We will take a five-minute break.
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The Chairman: We're in session. We have Mr. Williams and Mr. Eisner with us now from the Nova Scotia Road Builders Association.
You have one half-hour. You may split that time as you choose. We recommend that you take about ten minutes for comments and remarks you want to make and the points you want to cover and leave us the other twenty minutes for questions and some debate on the topics you raise.
So if you'll take it away, we'll see where we end up.
Mr. Malcolm G. Williams (Managing Director, Nova Scotia Road Builders Association): Thank you, Mr. Chairman and gentlemen of the committee. My name is Malcolm Williams. I'm the managing director of the Nova Scotia Road Builders Association. Mr. Jack Eisner is the current president of our association.
When we received notice of the committee coming to Halifax, we felt it would be opportune for us to present some of our views to you. In that vein we have submitted the brief, which I will go over here and probably read. We have some statistics that are not in the brief that we can talk to in the last few minutes, I think. I don't expect to require half an hour, but we'll see where we go.
The Nova Scotia Road Builders Association is pleased to appear before the Standing Committee on Transport to present our views through the presentation of this brief. Our association, now celebrating fifty years as an active association, represents some 110 member companies employing well in excess of 4,500 persons. The Nova Scotia Road Builders Association has been an active member of the road information program, commonly known as TRIP CANADA, which has been sponsored by the Canadian Construction Association over the past decade, and has been an active lobbying group within the province of Nova Scotia for the establishment of a national highway program.
Our brief is structured on the importance of highways in the province of Nova Scotia as the pivotal means of transport for both the commercial and tourism industries.
In the early 1970s, and again in the early 1990s, Nova Scotians were shocked to learn that their proud ambassador to the world, Bluenose II needed hundreds of thousands of dollars worth of repairs to maintain her in a seaworthy condition. Although she was well-maintained during her life, with one refit in the 1970s, age again took its toll when the vessel needed a second major overhaul in 1994. Today, because the necessary work was completed, Bluenose II continues to thrill both visitors to Atlantic Canada and those who are fortunate enough to see her as she carries the Nova Scotia flag to foreign ports.
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Of course nothing lasts forever; not people, not buildings, and certainly not roads. Time, usage, and sometimes neglect all contribute to the deterioration of everything in our physical world.
We counteract this deterioration in various ways. Personally, we may diet or exercise to delay, at least in our own minds, the aging process. We reroof our homes at regular intervals. Yet when it comes to the single biggest investment we as a society in this country have made, our record is not as good. The logic we apply to ourselves and our personal properties does not seem to extend to our collective responsibilities for our highways, roads, bridges, and other infrastructure.
The Trans-Canada Highway, originally built as an instrument of national policy, is often thought of as a federal facility. Originally constructed primarily as a two-lane highway on a joint-funding basis between the federal and provincial levels of government, this highway, however, is a provincial facility. Each province has jurisdiction over and is responsible for the maintenance, operation, rehabilitation, and expansion of the highway beyond that originally constructed. Nonetheless, this road has increased in significance as the single most important facility that ties not only this province but this country together.
The province of Nova Scotia has some 26,000 kilometres of two-lane highway under provincial and municipal jurisdiction. Of this total, some 10,500 kilometres are gravel, 13,500 kilometres are paved, and some 1,500 kilometres are considered to be freeway.
With the removal of the entire railway system within the province of Newfoundland, and to a great extent within the province of Nova Scotia, truck traffic by necessity has substantially increased, particularly on the Trans-Canada Highway. The increased truck traffic required to move goods both within and through the province has had a major detrimental impact on most of our provincial highways.
The Canadian public in general is very much aware of the deterioration of our existing highways, mainly through various media and television reports. They are also aware of the pressing need for governments not only to invest in new road infrastructure but to reinvest in the existing road infrastructure.
In Nova Scotia, our association spent considerable money a few years ago in obtaining public opinion for the adoption of a dedicated fuel tax to be spent on top of existing budgets to improve the provincial road systems. Having obtained positive polling results, we promoted the idea through the media, radio talk shows, and speaking engagements at business and public forums.
The former provincial government adopted this idea, imposed the tax, and began collecting some $35 million per year dedicated to road improvements. However, the government soon decreased the original highway budget by roughly the same amount as the dedicated fuel collected, and then eventually placed the funds in general revenues. We succeeded only in having an additional fuel tax imposed upon the residents of Nova Scotia. Actions such as this should never be allowed to happen again.
About tourism, Nova Scotia is known as Canada's ocean playground. However, there is no question that in order to attract tourists one must be able to obtain adequate access to the many bays, inlets, and other facilities of this beautiful province, not only by having a first-rate national highway system but also by having a secondary highway system of which we can be proud.
Over the last several years the Government of Nova Scotia has mainly concentrated its efforts on twinning the Trans-Canada Highway, together with the upgrading of the worst sections of the existing two-lane facility. By far the most dangerous section of highway, through an area known as Wentworth Valley, is now being replaced by a public-private partner arrangement. It is the Nova Scotia Roadbuilders' position that the secondary road system within this province has been sadly neglected in recent years.
It is a well-known fact that the federal government receives a staggering amount of money from road taxes, in excess of $5 billion per year, yet it returns less than 10% in expenditures to the highways under its control. Sufficient statistics exist to show that funding spent by all levels of government in financing our roads and highway systems has been decreasing over the past two decades, while the intensity of use of the highway system has significantly increased.
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Trade, tourism and the general economy fail to grow or become competitive without adequate investment in our road infrastructure. A national highway system funded by the federal government primarily from existing resources will, by its very nature, provide more provincial money to be spent on provincial highways and our rural road systems. All of this can only have a positive impact on the commercial and tourism industries of this province.
Bluenose II continues to sail because Nova Scotians would not let her rot away. The rot destroying our public road and highway infrastructure must similarly be reversed if we are to continue and prosper as a province and a country.
The Nova Scotia Road Builders Association believes the federal government must adopt a national highway program, which will not only improve the economic well-being of our country but should also greatly assist in promoting national unity throughout Canada.
I respectfully submit this at Halifax today, October 10, from the Nova Scotia Road Builders Association.
I think, gentlemen, on top of this, I would like to make a few comments. We have indicated here that the national highway program is a must from our point of view, but we believe the funding of this national highway program can be done from existing resources. We believe if the federal government set aside 2¢ of the 10¢ of tax it receives on every litre of gasoline, this would be sufficient to fund a national highway program in this country similar to those in other countries such as Britain and Germany. Two cents of the 10¢ of the national gas tax would yield something like $1 billion a year. This would be our pitch as to how this system should be funded.
In addition, the national highway system studies have shown it would provide some 220,000 jobs in this country. It would save something like $360 million in vehicle and fuel costs. It would save something like $400 million in UI payments and significantly increase tax revenues for the federal government.
The last point I'd like to make is there are a lot of government studies and reports that have been done on the Canadian roads system. They show some 38% of Canada's roads and 22% of bridges are badly below standards and need improvement.
So with these statistics and this brief, this is the position of the Nova Scotia Road Builders Association. The national highway program is something the federal government should take a very strong look at and, hopefully, it will adopt a program.
This is the end of our submission and we'd be quite happy to answer any questions.
The Chairman: Okay.
Mr. Cullen.
Mr. Cullen: Thank you, Mr. Chairman, and thank you, gentlemen.
I have two questions. The first relates to the infrastructure program our government launched. I guess the first one was in 1994. Now there is some discussion about whether we should undertake an infrastructure II program. Did you participate in this program? Were there any highways programs initiated under the first one? What was your assessment of it and should we go ahead with a further one?
Mr. Williams: Yes. We participated in the infrastructure program and it was an excellent program. It was well carried out. It provided a significant number of jobs and significant work within the province of Nova Scotia.
I do not have the figures with me on just how much highway work was done. There is no question the secondary infrastructure such as water, sewer and this type of work benefited from this program. We would certainly like to see another program.
Mr. Cullen: Is what you are saying that the amount of the program dedicated to highways was minimal? You don't have the numbers.
Mr. Williams: I can certainly get them for you and get back to you. I don't have those figures on just what percentage of the infrastructure program went to highways.
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Mr. Cullen: On the question of tollroads, we had a presentation in Ontario the other day. The presentation was from Mr. Palladini, the Minister of Transportation. He made the point that tollroads might be something for new construction of roads. For existing roads his position was it would be very difficult, if not impossible, to convert existing roads to tollroads to pay for the maintenance. Would you subscribe to this as well?
Mr. Williams: No. I think we would certainly be in line with the minister. It would be extremely difficult to put existing road infrastructure in place for tollroads. I believe the new highway in Nova Scotia is certainly going to be a tollroad. This public-private partnering of the 52 kilometres through the Wentworth Valley will be a tollroad. It can only really be done with new infrastructure and with new works planned into the initial opening of the highway.
Mr. Jack Eisner (President, Nova Scotia Road Builders Association): You have a system now in place with a dedicated fuel tax. If you can implement the dedicated fuel tax for every litre of fuel that's being utilized by vehicles on this roadway, it is a way of acquiring the funds to look after this, much as was said in our brief.
Mr. Cullen: Thank you.
The Chairman: Thank you.
Mr. Gouk.
Mr. Gouk: You're probably aware the Canadian Automobile Association is right now undertaking a campaign, starting in the west and moving this way, that echoes what you have said. They'd commit 2¢ of federal fuel tax revenue to a dedicated fund.
Mr. Williams: Yes, we are aware of this.
Mr. Gouk: I think it is a great idea. British Columbia has now come on board, and I haven't heard what else has happened as the convoy proceeds this way. British Columbia has committed 2¢ to a dedicated fund. But you brought up a very valid point. We have to make sure that it doesn't become a new, added 2¢ and that it continues to be there and doesn't subtract from other moneys paid.
I would like to see just that. We talk in terms of user-pay. You'll hear user-pay in the main topic during our visit here, which is the Canada Marine Act. The user-pay concept is in the marine sector and the airport sector, and of course they talk of user-pay in the highway sector as well. But before we can go to user-pay, we first have to determine what the user is already paying. It has been suggested the user pays enough.
What caution would you want to have so we don't end up at the federal level in the same situation you found yourselves in here in Nova Scotia? You get 2¢ given to you with this hand and 2¢ taken away with that hand.
Mr. Williams: Initially, we never dreamed this would happen. We made our original lobbying effort and we expended funds trying to produce this on top of existing budgets. This was always the intent and it was so written.
I guess our purpose here in bringing the point to light is that while I think most Canadians would go for some small dedicated fuel tax - certainly Nova Scotia did - even if it is not completely funded out of existing gas taxes like the national highway system, I would hate to see this same trick being used. You can call it a trick or call it what you like, but I would hate to see this same manoeuvre used by the federal government. Again, all we seem to be doing is putting a further gas tax on.
Mr. Gouk: As I said, I've been a proponent of having this dedicated revenue, but I'll take a word of warning from your presentation today and make sure I put the additional necessary caveats onto it.
Mr. Williams: Thank you.
The Chairman: Thank you, Mr. Gouk.
Mr. Cullen.
Mr. Cullen: I'd just like to pick up and make a comment on the dedicated fund. What happened in Nova Scotia is not dissimilar to what is happening all over the place. In British Columbia, in my colleague's province, the government there is taking a forest resources commission, a fund set up exclusively for managing the forest after the fund before failed. That fund was sort of converted into general revenue. This fund was set up with ironclad provisions and eventually it ended up, or it is going to end up, balancing the budget in B.C.
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Notwithstanding the intentions of our government, if we set up something like that I'd have the same concerns that we'd be any better. But there are so many temptations to undedicate it, I think, it's a difficult area to....
I mean, I hear what you're saying, and I support it in concept, but it's very difficult to implement.
Mr. Williams: I would like to comment, Mr. Chairman, on the comment made by these gentlemen about the Roads Work for Canada campaign, launched by Premier Clark in British Columbia on October 4. That program is going to have a very significant impact on the Canadian public through television and print media over the next six weeks. It ends up in St. John's, Newfoundland, in mid-November. It's here in Halifax on November 5, Guy Fawkes day, I think.
We believe this program across the country is going to garner sufficient support. We hope everybody will jump on board with the national highway program.
Mr. Jordan: I agree with what you're saying, that some of the taxes being collected on fuel should go back into the highways. But in these times, when all provinces and the federal government are trying to meet some tough objectives, how realistic do you really think it is to move money that's already in there and being used for something else and applying it to highways? From what would you take the money?
Mr. Williams: Not knowing the intricacies of the tax system, of course, or the total tax revenue vehicles that are available, I would say this. If even part of it could be financed by some of the existing tax, from our experience in this province I don't believe for one moment that the Canadian public would be averse to paying a small dedicated fuel tax in addition, as long as part of it was shown to be coming from maybe some of the existing source and the small tax on top - providing it's dedicated and not undermined, as took place here in this province.
It was certainly positive in this province some five years ago when we did it. We had excellent support from the public. I believe it would be the same across the country.
Mr. Jordan: It could be put in some form of trust or something, with the understanding that it could not be touched. I know you went through this with great disappointment, but I don't really see how realistic it is to think they're going to take money out of something else and put it into highways just at this time, while our highways continue to deteriorate.
I'm with you. I think the public would be found to be accepting the idea of a small fuel tax destined for highway improvement if they could be assured that this is where it was going, not as happened before.
Mr. Williams: I think you're right.
Mr. Jordan: There must be some way of handling the mechanics of that to prevent what happened before. I don't know.
The Chairman: It's often difficult for a government that doesn't bind its own hands from year to year.
Mr. Keyes.
Mr. Keyes: I get a definite opinion that the dedicated fuel tax is...and you're talking about additional and not existing? Is it an additional 2¢ or 1¢ a litre?
Mr. Williams: It would be preferable, of course, if ways could be found to take the 2¢ out of the existing 10¢ the federal government is now getting.
Mr. Keyes: We're now talking about $1 billion, as you estimated.
Mr. Williams: At the moment, they take in $5 billion in gas tax. That's based on 10¢, so 2¢ would be -
Mr. Keyes: Let's not forget, though, that this $5 billion is of course part of the overall revenues of the government in order to pay for the programs that are necessary and that are being called for by the Canadian people. It's going into a pot to pay a bill, and the bill keeps going up in price every day. As a result, there is the problem that, yes, it receives $5 billion, but we receive taxes from many other locations as well, and that goes into a fund to pay the bills that keep going up in price.
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But that aside, I think part of the message - and this is not at all to put down your submission to this committee.... Rather than asking for the federal government to spend money to implement a program, what you're asking the federal government to do is to invest $8 billion back in the Canadian economy for reasons of jobs, for reasons of revenue, for reasons of everything else. Correct?
Mr. Williams: Yes, that's correct. That's really what we're saying.
Mr. Keyes: Thanks, Mr. Williams, for your presentation.
The Chairman: Thank you, Mr. Keyes. It's an interesting or useful change in terminology to talk about ``investment'' rather than ``expenditure''.
This is a difficult problem. I don't need to tell you that. You've been working on the national highways policy for a good many years now.
I'm intrigued by the fact that the original proposal was for 1¢ from each level of government; 1¢ from the provincial and 1¢ from the federal. That would give us the 2¢, which would give us an expenditure level of about $1 billion a year. The proposal originally called for some $13 billion to $18 billion of expenditure over ten years, so you brought it up to a lower standard nationally or you went to the highest possible standard. When they tried to get 1¢ last time at the council of ministers, while the highways ministers were eager to do it, the provincial finance ministers were not eager to do it. So there's a question about the public's willingness to accept it.
Mr. Keyes and Mr. Jordan are absolutely right. We can look at that money and we can say yes, $5 billion comes in from that particular tax, but x comes in from GST and x comes in from other sources of income, and that gives us the total amount of revenue, which is still some $17 billion or $21 billion short, depending on which cycle you're looking at.
One of the reasons why we're spending any time thinking about this is to wonder about whether or not there aren't other models for it. The public willingness to accept an additional 1¢ is one question. Another is whether there is a different way, by using a combination of public and private involvement and some design-build-operate models that may allow for sections of the road to get built and for spreading the costs over longer periods, rather than paying for it in the first year.
That's the issue we're struggling with right now. We're going to try to report to the finance minister by the end of November. At the bottom of the day, somebody has to pay a big bill.
Mr. Williams: There's no question about what you're saying. The impression I have is that user-pay is the system most people in the country would accept.
The Chairman: And there's a certain consistency to that in terms of what we've been doing and currently are doing with other modes.
Thank you very much. I appreciate the time and energy you have taken to come down and make the presentation. We hope we will achieve the wisdom of Solomon on this question at some point.
Now, would a Mr. Elwood Dillman be here?
Mr. Dick Smyth (Vice-President, Alliance of Manufacturers and Exporters Canada, Nova Scotia Division): He's not here.
The Chairman: Are you Dick Smyth?
Mr. Smyth: I'm Dick Smyth, yes.
The Chairman: That's why Elwood Dillman is crossed off: because he's not here. Well, my condolences to him.
You are with the transportation committee of the Alliance of Manufacturers and Exporters Canada.
Mr. Smyth: I'm vice-president of the Nova Scotia Division of the alliance.
The Chairman: Okay. Just for your information, you have half an hour.
Mr. Smyth: We have a very small brief.
Mr. Chairman, members of the Standing Committee on Transport, ladies and gentlemen, as I say, I'm representing Mr. Dillman because he's ill. He called me around 11 a.m. and he didn't sound very well at all, even on a cellular phone. He was headed off to a doctor immediately.
I would just like to go through the background of the alliance. I believe the alliance will be appearing in November as well, in Ottawa, but they will be attacking some national issues, as opposed to provincial ones.
The Alliance of Manufacturers and Exporters Canada is a national organization of 3,500 manufacturers, exporters, and research organizations, representing about 75% of Canada's industrial output. It was founded on May 30, 1996 when the Canadian Manufacturers' Association - or the CMA, as it used to be called, founded in 1871 - and the Canadian Exporters' Association, founded in 1943, merged.
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More recently, we also merged with another one called the Association of Provincial Research Organizations. So we've become a fairly broad-based organization.
Members of the alliance in Nova Scotia employ just over 30,000 Nova Scotians - it keeps going up every year - which is about 70% of all manufacturing employment, generating an impact on provincial GDP of $1.8 billion.
Members add value to many natural resources, as well as manufacture products ranging from electronics, newsprint, textiles, dairy products, fish products, metal working, automobiles, automotive parts, petroleum refining, construction materials and many other products.
Members also contribute to the service industry employment through activities related to our export and research sectors.
The alliance focuses on critical issues that affect its manufacturing, exporting and research members, and works at all levels of government to build a milieu that fosters long-term growth and stability for the manufacturing and exporting sectors in Nova Scotia and Canada.
We represent many diverse industries, as you can see from the list above, within manufacturing and exporting, and the views expressed are the general consensus of our members.
Members of the alliance are very dependent on economical and competitive transportation links to the rest of Canada and the global marketplace. Such links include all aspects of transportation - air, water, rail and road.
Today we'd like to address just two key aspects of transportation in Nova Scotia. These are ferry services, in particular the Yarmouth-Bar Harbour and the Digby-Saint John services, and the importance of many small ports and harbours in Nova Scotia.
On ferry services, we support the move to privatization of the ferry services between Yarmouth and Bar Harbour, as well as between Digby and Saint John, New Brunswick. Our support, however, is based on a premise that privatization will lead to an improvement in service by providing more regular service on a full 12-month period, which will benefit shippers in Nova Scotia. Further, the cost to use the service must not be prohibitive to those who are moving goods to the U.S. via Maine or to markets via New Brunswick.
There's a need to ensure that such service is available on demand for a full calendar year and that it not be curtailed for the winter months, as in the case of the Yarmouth-Bar Harbour ferry service today.
The industry can cope with such closures, but once the industry makes new plans to move goods, it may not return to the original transportation link unless it's assured of the economics of such a change.
Recent improvements introduced by Marine Atlantic, allowing advanced booking for commercial vehicles up to three months ahead, have helped shippers take advantage of the new marketing technique to control their shipments. In some instances - for example, lobster shipments - these are known in advance and pre-booking can help move the goods to the New England market in an expeditious manner.
Privatization should bring further marketing innovations such as more flexible schedules, new ferries, hopefully, and lower administration costs. The private sector can also implement new marketing plans more quickly, as has been shown by the short-line rail operators who have delivered a superb service in two areas of Nova Scotia.
The annual subsidy currently enjoyed by Marine Atlantic in the delivery of ferry services will likely be reduced over time. We are not recommending retention of subsidies at the same level as currently enjoyed, but short-term adjustments will be necessary to enable the ferry services to be introduced under a private operator. In fact, the support may have to continue for some time in the future. We would not want the services to be short-lived and end up with either no service or Marine Atlantic being asked to take back the service. That is our main concern on that one.
On small ports and harbours, we realize the government must look carefully at the total number of wharfs, ports and harbours it currently maintains across Canada. Current numbers I've seen indicate some 550 or more under Transport Canada control and approximately 2,000-plus under Fisheries and Oceans Canada.
The alliance is in full agreement with Transport Canada's positioning of the Port of Halifax as one of the key ports of the national port system. This port is essential, not only for the economic viability of Nova Scotia but also for eastern Canada. It's one of the few natural deep-water harbours in North America, connected to the industrial midwest via the CN Rail system.
We support the current initiatives being advanced by the Port of Halifax, including the absolute necessity for more autonomy. This was probably delivered earlier this morning as well. However, the alliance is concerned about those ports and harbours that fall outside the national port system.
Nova Scotia, and indeed all Atlantic Canada provinces, have a number of small ports and harbours that service industries strategically located nearby. The key examples of these are Pugwash and Hantsport, just to name a couple. These regional-local ports are expected to be transferred to provincial governments, municipal authorities, community organizations, private interests, other groups, or even other federal departments. The provision of a port assistance fund of $125 million to ease transition may not be enough.
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Our members and other manufacturers and processors are concerned about the process of transferring these small ports and harbours from Transport Canada to other groups. No schedules have been established for these sites, as far as we know. A sense of apprehension therefore exists in those companies that require these ports to move their goods to market.
We urge your committee to recommend that ports that are important to the development of Nova Scotia not be moved into a new regime unless and until there is an alternate plan that will work.
In summary, this presentation has been very brief. We trust it will lead to some discussion of the two issues, namely ferry services and small ports and harbours. The alliance supports privatization if the end result is an improved transportation system and market opportunities for our members and other manufacturers and processors.
The alliance urges that prior to a final decision on either issue, the users of the Yarmouth-Bar Harbor and Digby-Saint John ferry services, and those of the small ports and harbours, are consulted on the potential impact of the transfer of these from the federal government to private operators. Only then will we be able to fully agree with and accept this change of ownership.
Thank you.
Are there any questions? I'll try to respond as best I can. I'm not a transportation expert, asMr. Dillman is, but I certainly can try.
The Chairman: Thank you very much, Mr. Smyth.
Mr. Byrne.
Mr. Byrne: Just to follow up on some of the points you made with regard to ferry services,Mr. Smyth, I'm particularly interested in your comments about what are currently the Marine Atlantic-run Yarmouth-Bar Harbor and Digby-Saint John operations. Your organization sees privatization as a strong move toward enhancing services. Would that be correct?
Mr. Smyth: Yes, and that's because of the flexibility that would probably come about because of the private operator.
Mr. Byrne: Just to clarify some of the points that you're making on the subsidization issue, under the main estimates, part III, there has been a description that the Marine Atlantic subsidy is going to be reduced from - I had better be careful of the actual numbers I'm quoting here - approximately $160 million per year. Over a five-year period it will be reduced substantially.
Under a private enterprise, you're looking for a 12-month period during which that ferry service would be operated. How can you relate your concurrence or agreement with the fact that subsidies will be reduced in the future, yet you're moving to a system with a 12-month program, which currently cannot be undertaken with a higher degree of subsidization in place? Has your organization thought about whether or not that's practical?
Mr. Smyth: Having the private operator will probably introduce a lot of cost reductions within the system itself, essentially, so that may help. I know there will be a discrepancy even if you do it pro rata, based on what it is right now by moving from, say, a 7- or 8-month operation to a 12-month operation. I don't think we've gone into that one fully at this point in time, though, so I can't answer your question definitely.
Mr. Byrne: Just to follow up on it a little bit, what kind of inhibition to trade activities is there in those particular areas in terms of not having a 12-month service, particularly in the Digby area and the Yarmouth area?
Mr. Smyth: As I mentioned, we essentially find alternate routes if it gets cut back - and alternate routes might mean shipping by other means, such as by road.
Mr. Byrne: But you would be relying on those alternate routes.
Mr. Smyth: Yes, and once those are established, it's essentially very difficult to get processors to move back to the original links, unless there is a real big savings to them. So it probably doesn't help, because it further degrades that service and gets more and more uneconomical.
Mr. Byrne: Thank you, sir.
The Chairman: Thank you, Mr. Byrne.
Mr. Cullen.
Mr. Cullen: Thank you, Mr. Chairman.
I have a question that's not dealt with in your brief, sir. I don't know if you want to take questions other than on these two issues.
Mr. Smyth: Try me.
Mr. Cullen: Okay. I was trying to get this out earlier with the Chamber of Commerce, but we ran out of time. If you can't answer it, or if you don't want to answer it, that's fine.
In terms of my own thinking, in trying to get more clarification around what the bounds should be for a port authority in terms of the kind of businesses it should be in - port-related activities and others - certain groups have argued that it should be able to develop ancillary services. For example, if you have some real estate that is in the area of the port authority, it needs to have the ability to put that to its highest and best use. That may mean, for example, manufacturing widgets and shipping them offshore.
.1505
Given that this port authority will probably have some kind of tax regime different from that of, let's say, a widget company two miles down the road, is it possible for you to define for me and perhaps for the committee - if they're interested - what sort of bounds we should put on the authority in terms of the kind of businesses it can get into without creating competitive problems and competitive issues vis-Ã -vis companies and organizations that might be close by, or companies that want to get into the same kind of business? What is the potential for creating an uneven playing field, if you see what I mean? Also, could you comment on the potential for the authority to perhaps grab a piece of just-adjacent land for a future expansion and to convert it for ten years into a highest and best use, which might mean manufacturing dog sleds or something?
Was that politically correct?
Could you comment on that? If you don't have the answer, or if you're not prepared to answer, maybe you'd prefer to give us some thoughts later.
Mr. Smyth: Essentially, I think they'd probably have to do that anyhow if they want to earn enough revenue to upgrade the port itself. Otherwise, they'll have to look for handouts elsewhere and they won't be available. So that's probably helpful in that way.
As far as offering this thing tax advantages or other advantages is concerned, there are already manufacturers in the port area right now. They're mainly in the fishing industry and other industries, but they're there. It's no different from any other advantages that you get from other areas of Nova Scotia or other areas of Atlantic Canada, or even the rest of Canada essentially, with people trying to attract industry. In fact, we used to see this kind of thing here among our various industrial parks. They were vying with each other for awhile, trying to attract....
Mr. Cullen: So you don't foresee any sorts of negative comments, or you don't foresee any negative impacts from other members who may not be able to participate. Maybe part of the difference is Atlantic Canada. If you did something like this in Toronto, you'd probably get attacked quite viciously by companies that were in a competing business next door.
Mr. Smyth: They would perhaps probably say the port authority should look at the whole Halifax municipality, because a lot of industry is in that area - it is a fairly large area - with a number of other ones outside of it. The majority of them are in this area, though, so they'd be pretty happy about it.
Mr. Cullen: Okay.
The Chairman: Thank you, Mr. Cullen.
Thank you for your support of another Port of Churchill industry.
These questions of the powers and capacities of the ports, and whether or not we're going to be able to draw some bounds around the kinds of activities that can go on port land, are very important questions. This is particularly the case if they have federal agency status, because that does impart to them some rights and privileges that a normal industry would not have, including part of an advantage to that company. So it's a very tricky question that we're going to have to resolve.
We could ask Mr. Gouk to give us some guidance on this question, I'm sure.
Mr. Gouk: Knowing how much you enjoy my tales from the west, I will be most happy to,Mr. Chairman. In fact, I have another one for you.
Some time ago, CP Rail had a line operating between two towns in my riding and was paying $1 million a year in taxes. They said they only took in about $1 million in traffic over that line. They asked for tax relief, which in some people's minds, I suppose, would have to in essence be interpreted as a subsidy. All levels of government that they approached refused, so they applied for and got abandonment, and they pulled the line out. The taxation is almost gone, and they've now transferred that traffic to the highways, which the province and the municipalities must now pay for. So they've had a major net loss.
In the case of Yarmouth, I've taken a particularly good look. The Province of Nova Scotia did a study, and when they looked at it they said fine, if we cut that thing from running for four months, or whatever the period is, we're going to save x number of dollars, but that means we'll have higher highway use and we'll have some economic downturn because of people not being able to ship the alternate route. Some of the wood products people were going to be forced to sell to a local company a product that they would like to be able to export, because it's the only way in which they could get the local company to agree to take the other product that they would have as a by-product.
.1510
When you take all of these impacts into consideration, the net cost of shutting that service down for that four months, or whatever the period was, was a net loss to the combined levels of government.
So I think we've got a much broader problem. You're absolutely right to bring it forward, but I think the solution is very complex. In part, it deals with a need to bring things out of the federal spectrum and get them back with the appropriate tax systems - or whatever you want to call it - to a more local level so they can deal with it, not in terms of cross-subsidization, but in terms of rationalization for the net good of the people who, in the end, are paying the bill. It's certainly something I'm looking at, and I'm sure others are interested in looking at it as well.
I know you want a fast fix. So do I. But I think if we're going to have the right fix, we're going to have to recognize the problem first and then look for long-term solutions that are really going to work for situations like Yarmouth's and for all of the other situations you've mentioned.
Mr. Smyth: It's not going to be short term. I don't know if it was mentioned already, but we are embarking on coming up with an overall transportation strategy for the province. We can look at all modes of transportation. I think that's badly needed, but it's going to be a long-term thing. It's not an immediate fix.
Mr. Gouk: We're trying to find a short-term fix that will keep things going, recognizing that we haven't solved the problem and trying to find a permanent solution as well. I think that's the direction we may have to take as far as transferring things down to the impacted level.
Mr. Smyth: The short-term fix is probably a lot more money, but there isn't any money locally or from the federal government, so forget it.
Mr. Gouk: Yes.
The Chairman: I would like to ask one question. I realize this isn't your brief, so maybe it's not...
Mr. Smyth: I did write it. I'm sorry, but I am the editor.
The Chairman: Oh, you are the editor.
Mr. Smyth: It's just that my other friend has the 30 years' background in transportation.
The Chairman: I see. It's about this statement:
- The Alliance supports the move to privatization of the ferry services between Yarmouth, Nova
Scotia and Bar Harbour, Maine and also between Digby, Nova Scotia and Saint John, New
Brunswick. Our support, however, is based on the premise that privatization will lead to an
improvement in the service by providing regular service....
Mr. Smyth: It closes down this week, I believe.
The Chairman: Surely that's volume-driven. If privatized it would continue to be volume-driven.
Mr. Smyth: It's volume-driven, but it may not be marketed properly. Maybe that's the key word. And that's probably going to offend my Marine Atlantic friends.
The Chairman: Do you think there's additional market that could be -
Mr. Smyth: I know there are a number of shippers right in Yarmouth that are shipping via the Digby ferry off to Maine and New England, which is kind of strange to me. Why wouldn't they continue to go through the Yarmouth area?
The Chairman: So the guaranteed service may be an artifact of the privatization. Privatization, by its very nature, would not contain a guarantee unless there were some further public sector involvement or some subsidy or buydown.
Mr. Byrne: Mr. Chairman, to build on that point, would the market be based on or driven by a subsidized market? That's really what you're saying in your brief. You're stating a market exists but you need to keep the subsidy intact so that this market will indeed exist. Isn't that a contradiction -
Mr. Smyth: There may be a need to help the private operator get going. I don't think you can just turn over the ferry service as is and say ``It's all yours''. Even if you turned over the Bluenose...it probably needs major repairs. They're already going to be in a down position. They may need some help just to get started. I don't think I'd go as far as the fixed link, but they need some help.
The Chairman: The flex link?
Mr. Smyth: The Confederation Bridge.
The Chairman: Thank you very much. I appreciate your time and the information you gave us.
Mr. Smyth: Thank you.
The Chairman: I understand we've got a couple of groups that are still waiting for people to appear, but I understand Peter Vuillemot is here.
Mr. Peter A. Vuillemot (General Manager, Atlantic Provinces Transportation Commission): I am.
The Chairman: Would you come forward and start, please? It's a little ahead of when you were planning to present, but if you're here....
Mr. Vuillemot: That's fine.
The Chairman: I understand you've driven in from Moncton.
Mr. Vuillemot: I've driven in from Summerside, P.E.I. I was in Moncton yesterday.
The Chairman: Good Lord! And you've driven here?
Mr. Vuillemot: Yes. I took the ferry across and then -
The Chairman: Yes. I built that into my calculations. I've seen the pictures of the fixed link at this point, and it's difficult to drive sections of it.
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Mr. Vuillemot: You can only drive halfway across right now.
The Chairman: I do appreciate your taking the time and energy to come here. You've been watching here, so you have a sense of the process. You have half an hour, and you can make the comments you wish. Then we'll have at you - in the kindest possible way.
Mr. Vuillemot: That's fine. I've appeared before this committee - not the members here; as a matter of fact, most of the members are new to me - on several occasions, and I'm willing to listen to your questions and do my best to answer them.
The APTC appreciates this opportunity to appear before you in Halifax to present our views on transportation, trade and tourism.
I'm the general manager of the Atlantic Provinces Transportation Commission. My chairman, Joseph Hutchings of Corner Brook, Newfoundland, wishes to express his regrets that he is unable to attend. However, given the relatively short notice, he was unable to rearrange his schedule because of previous commitments.
The Atlantic Provinces Transportation Commission provides transportation information and commentary on transportation policy and issues to business and governments in Atlantic Canada. The APTC also fosters the application of innovative transportation technologies in support of economic activity in Atlantic Canada.
As a regional organization, our submissions reflect a broad viewpoint. We have presented your committee with two separate submissions on each of the two topics you have been considering here today.
While we did submit two submissions - and I'll be pleased to answer questions on either of the two - I'm going to direct my remarks here to the transportation, trade and tourism issue.
Transportation has historically been of significant concern to business and industry, governments and private citizens in Atlantic Canada. This continues to be true today. Given the increasing globalization of markets for goods, services and tourism, the impact of transportation on economic activity in Atlantic Canada is greater today than ever before. The small and scattered population of the region relative to other more densely populated areas of Canada and the reliance of our economy on distant markets in North America and globally make transportation services and facilities of relatively greater importance to this region than they may be in other parts of the country.
The federal government for the past several years has been pursuing a policy of withdrawing from the provision of operation and maintenance of transportation services and facilities. Additionally, transportation-related subsidy programs have been eliminated.
The intent of these changes is to relieve the federal treasury of the financial burden of these programs and services. While the APTC generally supports initiatives of the federal and provincial governments to increase efficiency and reduce costs for users of the transportation system in Canada, we are concerned that fundamental changes are being made to Canada's transportation system on an ad hoc basis.
There is, or appears to be, little examination or understanding of the long-term effects these changes might have, either individually or collectively. The federal government, as indicated in recent studies by Transport Canada, has contributed significantly to highway funding in Atlantic Canada over the last 15 to 20 years. However, these contributions have been on an ad hoc basis, through cost-shared agreements of fixed duration with the provincial governments.
More importantly, the federal government's contributions have largely been accomplished through a diversion of funds from other transportation-related programs.
Canada is one of the few developed nations that does not have a national highway program. The APTC believes the federal government, in cooperation with the provincial governments, should develop a program to ensure the provision and maintenance of a regional highway system.
The federal government should continue to contribute a major share of funding to highway projects. These contributions should come from existing revenues the federal government collects in excess of $3 billion annually. I think I heard a figure mentioned earlier of $5 billion. So it's somewhere in between. I was really only able to pin down $3 billion by the Transport Canada studies, but I'll accept $5 billion if that's the case. It returns, however, only approximately $300 million on an annual basis, or one-tenth of its revenue collection.
It is the view of the APTC that no new federal taxes or user fees need be imposed to support a national highway system.
While the APTC has commented on a number of other issues in both of its submissions, I will conclude my remarks with the comment that the federal government has significant responsibilities in the development and enforcement of appropriate transportation safety standards to ensure the protection of passengers, employees, and the public. It is important that national uniformity of safety standards and enforcement be achieved, to ensure transportation is not a barrier to interprovincial or international trade.
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With that I'll conclude my opening remarks and I'll accept any questions you may have on either of our two submissions.
The Chairman: To start with, this committee is particularly sensitive about safety right now, since the bus we were travelling in got hit by a car the other day.
Mr. Jordan.
Mr. Jordan: I think it's entirely agreed.
Were you sitting in here a couple of presentations ago?
Mr. Vuillemot: Yes, I was.
Mr. Jordan: Well, we don't want to repeat that. I think it's generally agreed that the federal government has some responsibility in maintaining our transportation system. The question is where the money is coming from, and I think I'm hearing you say no additional taxes. Well, then, the question goes further. From what do you want it to take the revenues to put into highways?
Mr. Vuillemot: In our view they've already taken it. First of all, they have eliminated all subsidy programs, the WGTA, ARFAA-MFRA, free trade assistance. They're getting out of airports. They're getting out of ports. They're getting out of ferries. They've already taken the money.
Mr. Jordan: And they're still operating with a huge deficit.
Mr. Vuillemot: The federal government may be operating out of a huge deficit, it's true, but I don't believe, and the APTC doesn't believe, that consideration should reflect on a program that is badly needed in the country. We think the program of transportation should be looked at on its own merits.
On the deficit question, I guess I could say accountants and financial people come up with some of the most innovative solutions to problems in this country. I think with the cooperation of the provinces and the federal government solutions are there. On this particular issue, we feel the federal government, in cooperation with the provincial governments, would have to come up with a program, but sufficient revenue is being generated now from various taxes the federal government levies on various transportation-related business components and industries that they have sufficient funds to devote to the program.
Mr. Jordan: So no new taxes -
Mr. Vuillemot: That's correct.
Mr. Jordan: - just give us more money.
Mr. Vuillemot: I'm not necessarily saying give us more money. We believe the moneys you've taken out of the system over the past five years.... Even with this program you would not be returning to the level you were at then, if you examine the moneys that have come out from all those subsidy programs and other reductions.
The Chairman: Could I just follow up on that for one second? Let's for one wild and crazy moment assume the money was there. You said something else I think is interesting, and it's at the heart of one of the questions we're struggling with on this one. I agree with you when you say there may be other innovative ways of funding this. It's the level of cooperation between the provinces and the federal government and the willingness of the provincial governments to partner with the federal government that I wonder about.
You're the Atlantic Provinces Transportation Commission. Do you have a sense that the four Atlantic provinces are ready and willing to partner, to share some of that responsibility with the federal government?
Mr. Vuillemot: I don't speak for the governments of any of the Atlantic provinces.
Quite simply, the indications we have...and I think it's true that when the discussions were last under way, which I believe was around 1994, there were some serious discussions between the provinces and the federal government on a national highway program and ways to fund that. It was my understanding at that time that most of the provincial jurisdictions, at least through their departments of transport, and most of the provincial jurisdictions through their departments of finance, had agreed to some formula that was put in place at that time. I do not know what the particulars were of that formula, but I do understand the federal government was not happy with it at that time.
The Chairman: It's interesting. There have been some suggestions about the creation of a national highways authority. If you're actually going to dedicate a tax, if you're going to take it - let's leave aside all the complexity of doing that and putting it into something - you'd be creating another entity. When we discussed this at the TAC conference on Monday, the Province of Alberta immediately took me by the lapels afterwards and marched me off into a corner and suggested they weren't particularly interested in getting involved in anything like that.
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Mr. Vuillemot: I'm not surprised they weren't. I don't think you'd find any provincial jurisdiction willing to give up that much authority over its highway network. I'm not sure that, constitutionally, you could arrange it.
The Chairman: So you want us to come to the table with a billion dollars, but you're not certain whether you want to partner with us.
Mr. Vuillemot: No, I want you to partner with the provincial governments. You have to do it in cooperation with the provincial governments. There has to be an arrangement there.
As to the previous discussions that were held on the national highway system and all the work that went through in identifying it and identifying the needs and so on, the final step of that was a recommendation for several funding formulas, and then there were discussions subsequent to that. Probably it would be opportune to renew those discussions, to charge the people who came up with the original formulas to see if, two years later, there were some new formulas that could be added to the discussions and get on with it.
The Chairman: I'm sorry; I don't mean to monopolize the witness.
Mr. Mercier.
[Translation]
Mr. Mercier: What do you think of using toll roads as a financing method?
[English]
Mr. Vuillemot: Our view is that tolls will pay for certain particular projects in certain particular instances. It is beyond the realm of possibility to think you could toll a national highway system from coast to coast.
We in fact are going to have sections of it tolled. There's going to be one here in Nova Scotia. There's going to be one in Ontario, I think very soon, although I don't know exactly how that fits in with the national highway system. And for example, the bridge to Prince Edward Island is going to be tolled.
On a project basis or a location-specific basis, those tolls have their application. I'm not sure how much revenue you are going to generate from those tolls or whether the revenue generated from those tolls is going to cover all the financial requirements of a highway system now and into the future. In other words, is it going to cover your capital costs, your depreciation, your maintenance, your renewals down the road and so on, or is it merely going to cover one of those areas? I don't think tolls have an application beyond certain specific projects.
The Chairman: Mr. Gouk.
Mr. Gouk: Part of the problem, as has been said, is if the government is prepared to commit 2¢, then how do you utilize it? Do you create a new commission or what? I certainly would hope that's not the answer. That's the last thing we need.
If the government were prepared to dedicate 2¢, instead of setting that money aside for entering into joint projects or whatever else, what if they cut the federal fuel tax by 2¢ a litre, thus allowing the provincial governments to increase theirs by 2¢ at no additional cost to the consumer? Would that bring the solution back closer to where the problem needs to be solved, and if so, could it be dealt with better at a local level?
Mr. Vuillemot: That's an interesting proposition.
From my point of view, what I'm interested in is that there is no net tax increase, because we believe the moneys are there now within the existing rate of taxation. If that is the type of funding formula the provinces were willing to agree to across the country, that sounds workable to me, on first view.
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Mr. Gouk: But given that you're sponsored by the four Atlantic provinces, would you think they would be -
Mr. Vuillemot: They would be interested -
Mr. Gouk: - interested in that, and do you think it would be a solution to the highway system of Atlantic Canada?
We heard from the previous gentleman that Nova Scotia put an additional tax on with everybody's agreement -
Mr. Vuillemot: Yes.
Mr. Gouk: - and eventually said, thanks very much, and kept it.
Mr. Vuillemot: You've asked several questions there.
I don't know and I can't answer whether that would be a solution for the highway network in Atlantic Canada. I say that because of the magnitude of the requirement in Atlantic Canada, the length of highways, the density of traffic that we deal with, and the amount of transitory traffic that is dealt with in some jurisdictions, for example, in New Brunswick. Somewhere between 35% and 45% of their traffic is transit traffic, merely going through. So I can't answer whether that would be a solution that would provide sufficient funding or not. That would have to be looked at, and I think it's worth looking at.
Mr. Gouk: Thank you.
The Chairman: Chagrined as I often am by Mr. Gouk, it strikes me that under the original Trans-Canada Highway program, didn't they have to move to a 90:10 federal-provincial share in order to get it built in Atlantic Canada?
Mr. Vuillemot: Yes, at one point.
The Chairman: If it was just built on user-pay, if it was just built on the fuel tax revenue from the Atlantic region, would not the Atlantic region fall inexorably behind the rest of Canada in the quality of its roads -
Mr. Vuillemot: That's correct.
The Chairman: - whereas provinces that have higher volumes have benefited there? Goods that run over some of those roads do benefit the economies of other provinces.
The Port of Vancouver makes the point that an awful lot of the business that goes through that port is generated from other provinces in Canada.
Mr. Vuillemot: Some of it is from Atlantic Canada.
The Chairman: Perhaps some redistribution of that money would be in order. But that would be kind of nation-building and tying us together, and that's not popular these days.
Mr. Cullen.
Mr. Cullen: Thank you. On that point, I wonder if we could move to your paper, sir, on Bill C-44?
Mr. Vuillemot: Yes.
Mr. Cullen: On page 2 you make a couple of statements - and I haven't had a chance to read through it completely. You say you believe a marine policy that gives priority to the needs of Canadian trade and business and provides a high degree of autonomy is needed.
Then in the next paragraph you say a stronger emphasis should be placed on implementing a national marine policy that gives priority to Canadian needs in trade.
That concerns me, because it seems to me that this is sort of linked to one of the prime objectives -
Mr. Vuillemot: It is.
Mr. Cullen: - and it seems to me you're saying that it doesn't meet that, in your view. In what specific ways does it not?
Mr. Vuillemot: That comment is related to one of the policy statements in the paper. I'm not sure whether it's paragraph 3(b) or (c).... As a matter of fact, I can tell you which one it is, because I have a copy of the bill right here.
Mr. Cullen: You say here that paragraph 3(b) should be deleted. Is that the one?
Mr. Vuillemot: Yes.
Mr. Cullen: What does that state?
Mr. Vuillemot: That states:
- (b) base the marine infrastructure and services on international practices and approaches that
are consistent with those of Canada's major trading partners;
I think the focus of that statement is absolutely wrong; it's in the reverse.
Mr. Cullen: I don't know that I know the detail of that clause, but I wonder if the intent was not to recognize the fact that we're in an international marketplace and we need to be globally competitive.
You're interpreting it as meaning that we should tailor our infrastructure to, or model it after, our international competitors.
Mr. Vuillemot: It says, and I quote ``base the marine infrastructure and services on international practices''. If international practices are not correct for Canada, why should we base our practices on theirs?
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Mr. Cullen: Okay, thank you. Maybe we need to go back and look at that ourselves to see what the intent is and make sure it's -
Mr. Vuillemot: If the intent is to give a global focus to our thinking, as far as I'm concerned, that does not do it. You need a rewording of that. That's our position.
The Chairman: Thank you. Any comment?
Mr. Byrne: You mentioned that it's the APTC's point that some of the money that is collected from the conduct of transportation, the gasoline taxes and so on, should be returned to the transportation infrastructure system.
Mr. Vuillemot: Yes, that's correct.
Mr. Byrne: We're having a bit of a free-form discussion around the table. An argument has been put forward that this money is going toward paying the national services of our country, not just transportation.
I see in your submission on Bill C-44 that you do take a certain objection to the St. Lawrence Seaway being subsidized from the consolidated revenue fund in isolation of any other ports in Canada.
Mr. Vuillemot: Yes, we do. We're saying in that statement that if it's good for the goose, it's good for the gander. Level the playing field. Don't isolate one particular facility for special treatment.
Mr. Byrne: I would like to just point out that there is some merit to that in the sense that the arguments that have been presented to you as to why transportation taxes should not go back into transportation are probably the same - what's good for the goose is also good for the gander - for other ports in Canada.
Mr. Vuillemot: Fair enough. What we're saying is that we believe there's enough money there such that a small portion of the $5 billion, or whatever it is, can be returned to the road and highway system, because that's what it's coming out of. You are probably also getting some revenues from other modes. You're certainly getting revenues from the marine mode, and so on. If that wants to be turned back into that system, fine.
Mr. Byrne: But you're saying - it's laced throughout your submission - that you want a level playing field for everybody.
Mr. Vuillemot: Yes.
Mr. Byrne: Basically, even if you're in the St. Lawrence, money should be going back into the transportation system.
Nobody has really articulated to me a view on some of the ports that don't fit in with the national ports policy or system, such as those like Port Hawkesbury or Stephenville, Newfoundland. Has APTC formulated a position on whether or not those ports are going to be viable in the future without any subsidies or return of transportation investment?
Mr. Vuillemot: Some of those ports will be viable and some will not.
Mr. Byrne: Have you done an analysis on which ones will be viable?
Mr. Vuillemot: Yes, we have a pretty good idea of which ones in this region will be viable and which ones will not.
Mr. Byrne: Would you be able to submit your analysis to the committee?
Mr. Vuillemot: Yes, we certainly could. I don't know that it will help you very much, but we can certainly submit it. We think the policy with regard to local and regional ports that is in the act and is being put forward is the correct one. Essentially, it's that they should be supported by the traffic through them.
Mr. Byrne: Mr. Chair, I just want to make a point to clarify my original comments. The taxation dollars that are coming from the conduct of transportation, the gasoline taxes, are going to the consolidated revenue fund and not going back into transportation; however, the consolidated revenue fund on the part of the St. Lawrence Seaway is paying for the operations or subsidizing partially the operations of the St. Lawrence Seaway, which is really the point you're making in your submissions. Is that correct?
Mr. Vuillemot: Yes, that's correct.
The Chairman: Thank you, Mr. Byrne. It's a very interesting question. The railways will argue that we subsidize the roads, which are increasingly in direct competition with those who pay for their own roads, etc.
This has been very interesting. I appreciate you taking the time to drive yourself all the way here and share it with us. As you can see, there's a fair bit of thinking going on right now on both these questions.
We're going to deal with Bill C-44, the marine bill, first. We'll try to clear it from this committee by the end of this month, then it will go back to the House for disposition.
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There's the question of how we fund or pay for a national infrastructure, particularly the trade-off between regions. This brings me back to this question of the provinces' willingness to participate. It's going to be one that's going to gnaw away at us for a while, I suspect.
Mr. Vuillemot: I'd suspect so.
The Chairman: It's been very interesting.
I am informed by the clerk that we have two presenters left this afternoon. I'm told that both of them are short one individual because we are running about twenty minutes ahead of time.
We'll take a quick break. We'll reconvene within about ten or fifteen minutes, or earlier if one of the other presenters arrives.
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The Acting Chairman (Mr. Jordan): We'll resume now. The next presenters are from the marine and cruise division of Tourism Cape Breton.
George Wheeliker is the director. Tom Fleming is with him.
You're scheduled to have half an hour. We're a bit off schedule, but it's still half an hour.
Mr. George Wheeliker (Director, Marine and Cruise Division, Tourism Cape Breton): I don't think we'll be half an hour.
The Acting Chairman (Mr. Jordan): If you present for ten minutes or so, we'll then have a few questions for roughly ten minutes. We'll see how it goes.
Mr. Wheeliker: Thank you, Mr. Chairman, ladies and gentlemen. With me is Tom Fleming, marketing director for the Cape Breton Development Corporation, DEVCO. He'll speak to you on that side of it.
I'm going to talk to you about marine fees. I think you all have a brief summary in front of you.
The marine and cruise development sector of Tourism Cape Breton appreciates the opportunity to come before you to comment on transportation issues as they affect trade and tourism on Cape Breton Island.
The marine and cruise development sector provides transportation information in the industrial area of Cape Breton. We also seek to encourage economic development in the industrial area in cooperation with trade groups or associations.
The federal government, for the past several years, has been pursuing a policy of withdrawing from the provisions, operations and maintenance of transportation infrastructure. The marine policy will be implemented by the enactment of Bill C-44, the Canada Marine Act. This will relieve the federal government of financial obligations in regard to the operation and maintenance of ports, pilotage and ferry services, with the exception of constitutional ferry services and remote ports in this bill. The federal government will retain financial responsibility for the capital expenditures related to the operation of the St. Lawrence Seaway.
In addition to being relieved of any financial obligations under the new policies, the federal government has also eliminated all transportation-related subsidy programs over the past several years. Also, the federal government is discontinuing other transportation-related services or shifting it's cost burden to users, such as dredging, marine navigation, ice-breaking, etc.
We generally support the initiatives of the federal government to increase efficiency and reduce costs for the users of the transportation system in Canada; however, there is little examination or understanding of the long-term effect these changes might have on transportation modes.
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An example of this is the tourism industry, with reference to cruise ships. This is a growing industry in eastern Canada, and we hope it will continue to grow. If the costs, for example, of $845 per ship visit are put in place, as well as the other costs we already have, it will deter the cruise ships from coming into our waters. If the government is going to charge the $845 for a cruise ship visit, maybe it would consider only doing this once per month per port instead of the three-visit maximum per month.
Another area of concern is smaller ports in our area and the Bras d'Or Lakes. We are finding that a number of smaller ships are using our waters and are staying overnight. These ships, for example, carry less than 200 passengers and will be charged the $845 per visit. If this could be reduced for the smaller ships, and they would pay only so much per person, this would encourage them to come into our area. For example, they stop at St. Peters and Baddeck now, and we hope they will continue to do so.
Another area of great concern for the cruise ship in our waters is casinos. When a cruise ship enters Canadian waters, they are required by law to close down their casino. It would only take a minute amendment to section 207 of the Criminal Code to meet the desired objective.
The following is the suggested wording:
- Any vessel navigating in Canadian territorial waters for the purpose of an international cruise
may operate a casino on board the vessel for the benefit of passengers, provided that:
the casino is closed at least an hour before the vessel arrives in a Canadian port and opens at least an hour after the vessel leaves a Canadian port.
A large number of the cruise lines rely on the casinos on board to make money.
The cruise industry is one of the fastest-growing industries in the world today. It is growing by 8% per year, and it has touched approximately 5 million in North America. With approximately 15 new ships coming on stream between now and the year 2000, they will certainly be looking at new destinations to deploy their ships.
This brings me back to the new marine fees. We must get the cruise lines coming here. Once we have them, we can gradually increase their fees. If we discourage them, they will go elsewhere. The areas of Europe, Asia, South Africa and South America are looking for this business.
Tourism is one of our major industries in Cape Breton, and we must encourage these ships to come into our area and discover the new frontier.
Gentlemen, 57% of first-time cruisers that come into our area return within four years to stay in another mode of transportation. We certainly encourage them to do this. We want them to come in our waters and we want them to be part of our system. Our harbours have to be encouraged to do that.
Thank you very much.
Tom.
Mr. Tom Fleming (Marketing Director, Cape Breton Development Corporation): Thank you, George.
My brief today deals with the more industrial aspects of business in Cape Breton.
As many of you know, the Cape Breton Development Corporation is a coal mining company. It is located in Sydney, Nova Scotia. Our annual production is 3.3 million tonnes, of which 2.5 million tonnes are sold domestically and about 0.08 million tonnes are sold internationally. The Cape Breton Development Corporation is also one of the largest employers in the province, with approximately 2,000 employees.
As the corporation derives a substantial amount of revenue from the international markets, the changes taking place in the marine area are of great interest to us. These changes will have a significant effect on our competitiveness in this marketplace.
The first issue I want to highlight is our situation with regard to the port today. The Cape Breton Development Corporation owns the port facility in Sydney, Nova Scotia. It's solely owned by our company and it presently has the capacity to load Panamax-size vessels up to 53,000 metric tonnes. Although these vessels have a carrying capacity of approximately 65,000 metric tonnes, CBDC is unable to fully utilize their carrying capacity due to draft limitations in our harbour channel.
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For several years CBDC and the Sydney Harbours Board lobbied most levels of government, as well as the coast guard, to dredge the harbour to a more practical depth of 42 feet. This would allow us, the Cape Breton Development Corporation, to fully utilize the carrying capacity of a 65,000-tonne ship. At the same time it would, in my opinion, help the marketability of the Sydney harbour for other projects.
Those attempts over the years have been unsuccessful, and therefore CBDC is unable to fully utilize the advantage of its location as the closest North American coal port to the European and Brazilian coal markets.
Over the past number of years, our competition on the U.S. east coast has recognized the importance of the water depth to the economics of coal transport. In this regard they have had their harbours dredged to handle cargo vessels capable of carrying up to 120,000 metric tonnes of coal at a time. Of course, this gives them a substantial transportation advantage over us. Where we basically have a 53,000-tonne load rate, they can go to 120,000, and that makes a substantial difference to the cost of the product getting to the same customer in a European or Brazilian destination.
However, my main concerns today relate to the marine service fees, in particular the Canadian Coast Guard's plans with regard to ice-breaking fees.
Navigational aids fees, for example - CBDC has been very concerned right from the outset with regard to these fees. I have made submissions to the minister and so on over the last year with regard to these issues and have made our feelings known.
We do believe the user should pay their fair share of the costs of the transportation and the navigational aids. But it's very difficult for us to understand why, being only a very few miles from the North Atlantic shipping lanes, we have to pay the same rate for marine navigational aids as a shipper located further inland.
We feel that these fees must be more carefully reviewed. At the same time, the coast guard should provide a detailed report of the actual costs of such service to each port in the region. This will enable the users to have input into determining how to get the cost of service down.
The mere charge for service will not be a long-term incentive to reduce costs. It is only after a user knows exactly what he is paying for that he will have second thoughts as to the level of service required and the cheapest way to provide this service.
Regarding ice-breaking fees, through recent readings of the minutes of the Maritime Seacoast Advisory Board and the latest edition, progress report number 5, of the economic impact study of marine initiatives, CBDC believes that these fees could have a substantial effect on the shipping activity in and out of the Port of Sydney.
As a user of the port, the magnitude of these fees will require CBDC to change its marketing strategy in order to avoid shipments during the ice months. This type of strategy, while effective in eliminating these fees, will make the selling of our products more difficult. Although the coast guard classifies Sydney as an ice port, CBDC does not feel that ice substantially affects the shipment of coal during the winter months and we should therefore not be charged such a fee.
Again, in this case, we feel it is extremely important for the coast guard to give the users the details regarding the costs of service so that the user can determine their needs, as well as have some input into the least cost of providing such service.
In closing, any additional fees to be levied upon the users will affect their export markets. A very thorough review of these fee structures must take place before any new fees are initiated. However, in order to make the system more efficient, it is necessary for the users to determine the services required. They must then work with the service provider to come up with the least costly method of providing that service. It is only through this process that our marine services will become most efficient.
Thank you very much.
The Acting Chairman (Mr. Jordan): We thank each of you for your presentation.
We have a few minutes to kick around some ideas that you have presented to us here. We'll start with Mr. Gouk.
Mr. Gouk: Thank you.
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On your first presentation, and particularly the portion dealing with casinos, if we can get any kind of evidence that making that change you've suggested will in fact attract more cruise ships and make it more viable for them to come here, then I think that's an excellent thing you've brought to our attention. It certainly needs to be followed up on. Any time we can enhance Canadian port viability without it costing us anything, I think it's just a wonderful idea.
Mr. Wheeliker: The Carnival Cruise Line, for example, is one of those lines that rely heavily on the casinos for their dollars. Although they have come as far as Halifax, they haven't come up the whole eastern seaboard. The reason they come only as far as Halifax is that when they're coming into Halifax they have to close their casino after leaving an American port and they can't open it until they get back into international waters. If they came right up into the gulf, their casinos would have to stay closed and they would lose a substantial amount of revenue.
Mr. Gouk: That's a good point and I appreciate your bringing it to us.
To move into the other presentation, you started first with dredging. As I understand it, in looking at this, what you're looking for is to have the harbour dredged out to a more suitable depth, so you can take advantage of the larger ships.
Mr. Fleming: We've been fighting the dredging issue for quite some time. George was a member of the harbours board trying to get that in place. We had a study back in Cape Breton I believe the coast guard did, I don't know how many years ago. George has the details. We've run it up the flagpole a number of times and through the jibs and reels. People thought our analyses weren't sufficient or whatever.
All I'm trying to do is to bring to the attention of this committee that in fact transportation has a very significant effect on the livelihoods of 2,000 employees.
Mr. Gouk: I don't doubt that. You really haven't asked for anything here per se; you've simply brought it to our attention. But tell me if I'm wrong. I'm reading in the implication here that you would like to have that dredged out.
Mr. Fleming: If we could have the harbour dredged, we certainly would -
Mr. Gouk: You obviously wouldn't say no to it. But you see, where the problem comes, what becomes difficult.... I happen to agree with you very strongly on your other two sections, the nav aid fees and the ice-breaking fees: why are you being charged so much? For somebody who travels inland and uses a lot more nav aids, why are you paying for ice-breaking if you don't need ice-breaking services? But by the same token, you have other harbours that don't require dredging. Their argument would be, well, wait a minute, we have to pay for ice-breaking, but we don't need dredging, so why are we paying for ice-breaking and they're getting dredging and not paying for it?
This is where the catch-22 of this comes in. We have it either one way or the other. We can't say we don't want to pay for what we don't use, except just the one we need, in which case.... It makes it awkward for you, because I understand your argument is that it should have been done a long time ago, before this kicked in.
Mr. Fleming: Precisely. That's my point. We have other issues in our corporation. If you look at some of the things we're doing there, perhaps the money could be better spent in trying to improve productivity than in dredging.
My concern is to highlight to the committee that in fact transportation has a big effect on the delivered cost of our product. At the same time we have to recognize that if the port of Sydney - and I haven't dealt with the port of Sydney - just from my own personal knowledge of the shipping business, is to utilize its capacities or abilities fully, it will have to do so on a deeper draught than it has at present.
Mr. Gouk: What is the depth right now?
Mr. Fleming: It's 38 feet.
Mr. Gouk: Do you have to dredge at that point? Do you have a certain amount of silting?
Mr. Fleming: From what I understand - George actually knows more about it than I - down to 42 or 45 feet the harbour is basically silt. It doesn't require blasting or anything like that.
Mr. Gouk: But in order to maintain 38 feet -
Mr. Fleming: No dredging is required.
Mr. Gouk: No dredging at all. Okay. You have an interesting situation. I had a particular line and you guys have foiled it by not dredging.
Have you made a specific proposal to the government?
Mr. Fleming: We've been making a number of proposals.
Mr. Gouk: But now that user-pay has come in....
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Mr. Fleming: No, there hasn't been a proposal. I just wanted to highlight the fact that in the past we have done such a thing. My main concern today is the navigational aids and the effect they could have day in and day out.
Mr. Gouk: I understand. I have some sympathy with you there.
If you dredged to 42 feet - I gather you're not going to dredge the entire harbour.
Mr. Fleming: No.
Mr. Wheeliker: There's a shoal there.
Mr. Gouk: Okay. Given that you have a shelf now that's four feet above, would there be periodic silting from that?
Mr. Fleming: To the best of my knowledge - and again, the coast guard has done that whole area - it's very minimal.
Mr. Gouk: You said it's pretty stable.
Mr. Fleming: Yes, it's pretty stable.
Mr. Gouk: So you're looking for a one-shot investment. Why don't you make that pitch? I know you've done it in the past, but given the impact now and the need for it, make it a direct pitch. Let them turn it down, specifically, but get that response under the current program.
The Chairman: Gerry.
Mr. Byrne: On the navigational aid fees and the ice-breaking fees, have you made the pitch yet to the Standing Committee on Fisheries and Oceans? That's actually more in its jurisdiction, isn't it, Mr. Chair?
What was the estimated cost of the dredging?
Mr. Wheeliker: It was $10 million.
Mr. Byrne: What would the benefits be, in terms of the corporations?
Mr. Fleming: I haven't put it in there because the main reason for my being here was just to explain the transportation side of the business, but you're looking at somewhere between $1.50 and $2 per tonne.
Mr. Byrne: That's the difference in the freight rate.
Mr. Fleming: Yes, plus it also gives Sydney the opportunity to perhaps develop some other things.
My concern, which I haven't addressed here because I'm not involved with the port itself, is the privatization of ports down the road. In my opinion, if Sydney is to maximize its chances of survival as a port - an economic entity - whoever runs that port is going to need deeper water in order to market the facilities.
Mr. Byrne: So at a cost of $10 million, even though it enhances your bottom line, it's impossible for you to actually pay this fee as a cost of doing business.
Mr. Fleming: That's absolutely right today. If you have so much money, you can only invest it in certain places.
Mr. Keyes: Just as a supplemental to Gerry's question, four feet is a lot of dredging material. Is that material environmentally safe? Does it have to be cleaned up at all?
Mr. Wheeliker: Yes, when it was done it was environmentally safe.
Mr. Keyes: But if you have to dig up four feet of material today, is there anything in that soil that has to be contended with now?
Mr. Wheeliker: There's nothing that we know of.
Mr. Keyes: Is the Cape Breton Development Corporation prepared to pay some money toward the $10 million?
Mr. Fleming: I couldn't commit to that, but we would have to take a look at it. Again, we have other more critical areas that we have to use our funds for these days than dredging.
Mr. Keyes: I see. Have you approached ACOA as well?
Mr. Fleming: No, we haven't approached ACOA lately.
Mr. Byrne: Have you approached Industry Canada?
Mr. Fleming: This comment has nothing to do with what's happening at Little Narrows and what not. I have to compliment them. If they can satisfy the requirements and explain their needs, that's fine.
Mr. Keyes: Of course, your concerns in this brief are more appropriately addressed directly to DFO rather than Transport because of the break-up now of coast guard to DFO.
Sometimes I get the impression we should really be hearing from witnesses not on the subject of dredging, but maybe on the establishment of the Army Corps of Engineers in Canada. As you know, in the United States it carries out most of this work and it comes out of its flash fund over there called the Army Corps of Engineers. All this work gets done and everybody is happy. So I have to wonder in which direction we're going.
On the matter of casinos and the rules that apply to when they open and close, this isn't a new matter at all, Jim. I just thought I'd bring that to your attention. The cruise lines have brought that matter forward to a few of us, and the Minister of Justice has been advised of the odd nature. It really didn't even begin here, but on the west coast. The west coast has that problem as well.
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Your recommendation is taken in hand and will be added to the other representations made to Allan Rock on that issue.
Thank you.
Mr. Wheeliker: All the fees will be looked at too, sir - the cruise ship fees.
Mr. Keyes: Cruise ship fees?
Mr. Wheeliker: Yes, they're very important.
Mr. Keyes: That's coast guard, DFO. Wrong committee.
Some hon. members: Oh, oh!
Mr. Keyes: You're asking an electrician to do a plumbing job.
Mr. Wheeliker: Well, he can start it, eh?
Some hon. members: Oh, oh!
The Acting Chairman (Mr. Jordan): Is there a further comment from either of you?
Mr. Fleming: Thank you, gentlemen, for your time.
Actually I just got out of the car. I now know how long it takes to get from Sydney to Halifax. I just came up the elevator and sat down. It's four hours and forty-five minutes from Sydney to here.
The Acting Chairman (Mr. Jordan): Thank you very much. We've enjoyed your presentation and we appreciate your coming.
Mr. Wheeliker: Thank you, Mr. Chair.
Mr. Fleming: Thank you.
Mr. Keyes: Thank you for your input.
The Acting Chairman (Mr. Jordan): We now have Transport 2000. Mr. Pearce is the president and Mr. Garnet is the vice-president.
I'd like to welcome you here, Transport 2000. We have 30 minutes for your presentations and for questioning, so we'll split it up, with about 10 or 12 minutes for your presentation and something similar for allowing us some questions.
Yours is the last brief of the day. We appreciate very much your being here.
You're on.
Mr. John Pearce (President, Transport 2000 Atlantic): Thank you very much.
This is a tandem presentation. When we talk about intermodality, we like to talk about a seamless system. This isn't as seamless as we'd like to have it, but I'm going to address some discrete issues that illustrate some of the concerns we have, and then Mr. Garnet is going to address the issue of tourism in a more integrated policy sense. Following that, of course we'll be willing to answer questions.
Most of you are familiar with Transport 2000. We have groups across the country, and you probably will hear from some of them as you travel around.
Mr. Keyes: At every one of our meetings.
Mr. Pearce: I remember, Mr. Keyes, you addressing us in Hamilton, Ontario.
Mr. Keyes: In Ottawa as well.
Mr. Pearce: Yes.
In any case, we're a volunteer organization, an advocacy group that addresses the issue of public passenger transportation. We're most known for our concerns with passenger rail service, but we are in fact involved in many other aspects of transportation right across the country, and for that matter, in many countries of the world.
I am going to present these discrete points very quickly.
Under aviation, the first thing I want to draw to your attention - and you've probably heard this before - is we have been receiving some comments from people involved in airworthiness inspections. The new, smaller airlines operating in Canada are using older aircraft, for which there are more requirements for maintenance, and also, because they are a little older, they are technically a little more complex.
There is a concern that with budget-cutting in Transport Canada, we're not keeping up with the number of inspectors needed for the variety of airlines and circumstances we have. We are concerned that safety not be jeopardized, either by companies cutting corners or by the lack of airworthiness inspection available from Transport Canada.
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The second item - the airport improvements at Vancouver - arises from a trip I made this summer. I think it has implications for all of us across the country. I had some correspondence with Mr. Gordon Lancaster, who's a senior vice-president at the airport's YVR. The concern, I think, is not that there's a charge being made, but that it is not integrated with the rest of the airport fees. His suggestion was that Calgary, Edmonton, Montreal and, I think, Halifax - or any other newly commercialized or privatized airport - may be looking at this. This sort of unintegrated fee may arise at quite a few airports across Canada and we think it's a disincentive, especially to tourists and the occasional traveller.
He did point out that these sorts of fees were charged in the U.S., but the difference there is that they are integrated and not openly visible to the traveller. They're much simpler. I was distressed to see that these fees were being collected in at least two places in the Vancouver airport in what I consider a very time-consuming or very clumsy way.
I'm expressing the hope here that this method of separate financing at airports will not occur at other airports across the country, that a way will be found to harmonize it with the rest of the airport charges. In the long run, the air traveller will pay the shot, but it's much simpler if you can integrate the whole thing with your ticket price.
The issue I'd like to move on to is intermodality. Much more can be done to share information between the passenger transport modes and the hospitality industry. Aircraft, bus and train schedules are too rarely coordinated. Tickets and hotel accommodation often must be purchased for each leg of the journey. These are areas where we might achieve real improvements.
This is something we support, but it's not a Transport 2000 policy statement. This is a statement that the Hon. David Anderson himself made in Vancouver at the end of May. I think it's important to see modes working together. We do have our provincial bus line here calling at the airport and making Halifax airport accessible to other parts of the province by bus and air intermodality, but there are many more examples where this sort of thing is disintegrating.
Marine Atlantic's service to Newfoundland, with their two large ferries, is one example. In the ice season and in refit season, they now very frequently run only one ferry and therefore there's no night boat. The night boat is essential, because the bus services on both sides of Cabot Strait are daytime services. Without the night boat, it's extremely inconvenient. It involves stays on both sides of the strait, even for a hundred-mile trip. The intermodality breaks down. I understand Marine Atlantic's need to cut costs, but here we have a traditional connection, which I suppose is almost a century old, and it's breaking down.
Another very significant problem is that we lost all of our regional rail service, much of which was very well used. We lost that in 1990 due to cuts by Transport Canada. The idea was that the bus system in New Brunswick, Nova Scotia and Prince Edward Island would feed the long-distance VIA train, but the bus industry has subsequently set up high-speed bus links. It's linking a $20 trip from Halifax to Montreal, fed by their own bus services. Of course, it's logical. To maximize profits they want to feed their bus services.
Subsequent changes to the feeder buses have meant that the feeder traffic to VIA rail has pretty well dried up. There are long waits for passengers who still insist on using these feeder train services, whereas they connect directly with the bus services.
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So what we are seeing is that modes are operating individually; they're not cooperating. I think we see this nationally with the Greyhound bus system, where traffic has been dropping 50% a decade - each decade there seems to be a 50% drop in bus traffic - but they've sought to overcome this by integrating with long-haul air. For some while they've tried to integrate with the major Canadian airlines, but to no avail. The airlines seem to feel once they've delivered their passengers to the airport, somebody else should take over. Of course now we see that Greyhound is operating its own airline.
It's an unfortunate thing that we don't seem to be able to achieve cooperation between different modes. We have to have one company running the whole thing, apparently, to get a seamless sort of transportation. That certainly is a failing.
The other point that comes to mind is that in the corridor, high-speed rail services - by ``high speed'' I mean services that are running at the speeds they are now, 100 miles per hour or 160 kilometres an hour - connecting with airports such as Montreal and Toronto and making it convenient for travellers to use the train to access major airports for their longer trips...that is not being done at the moment. It would certainly relieve airport congestion to offer an alternative short-haul rail service, so we would not have the requirement for so many short-haul air services. We could concentrate on air for the more appropriate long-haul services, where it fits best.
So Transport 2000 is asking the committee to bear in mind and encourage the minister actively to promote his thesis proposed in Vancouver in May. We don't feel goodwill or market forces are doing the trick. In fact, market forces have forced companies to try to integrate within their own system, such as this bus feeder system to a long-haul bus system down here rather than the VIA Rail long-haul service.
I want to speak a bit about the privatization of Marine Atlantic ferry services. I know this has been discussed several times.
Marine Atlantic has made some substantial progress in cutting its costs on the Bay of Fundy and the Gulf of Maine services. The very rapid move to privatization of these services, much more quickly than we were earlier led to expect, seems to be motivated more by a sort of political ideology to get the government out of any involvement with transportation than by a really efficient or global costing approach.
I would like to add that we hope politics doesn't get involved to the extent that we try to maintain the Yarmouth-Bar Harbour service in the wintertime. This may be a shock to some of our cohorts who have been appearing, but really, the traffic statistics on that service in the wintertime are not good.
On the other hand, we would say the Saint John-Digby service is very well utilized in the wintertime. If we have to make choices, we should make sure it's a sensible economic and social choice, where that Digby-Saint John service is used well all winter, and our energies should go into preserving that and keeping it up to capacity.
I think Marine Atlantic did the right thing in cancelling the midwinter service last year. Whether or not it can operate in the shoulder season, October into November, I'm not sure, but in midwinter certainly the traffic doesn't justify the service. Some of the refit patterns for the vessels mean we have to interrupt that service in the wintertime in any case.
We're quoting studies many people have come up with - and it was mentioned earlier - when we say the global economic effect of further cuts in these ferry services is very negative. In other words, you may save Transport Canada a couple of million dollars in its ferry subsidy budget, but when you budget in the losses to tourism, fisheries, forestry, and other industries, let alone the environmental pollution and the social costs of these cuts, the cost to the province for maintaining highways for heavy trucks to drive around when they could make a 30-mile short cut instead of a 200- or 300-mile drive.... The global economic look at these cuts is very important, and we're certainly suggesting that any changes to the Digby-Saint John service would impact negatively if you look at the global impact.
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That leads to my fourth point, and it touches on tourism. In 1990, when the double-spine transcontinental service was cut, especially in the west, the Tourism Industry Association of Canada told us, well, you did save $100 million by cutting out the train service on the CP route, but in general the loss to the Canadian tourism industry was about $600 million. In other words, there was a much greater loss in the money that tourists spent on the ground, in restaurants, hotels, the souvenir industry, local tourism, and that sort of thing, than the savings on that train.
What we're concerned about is that Transport Canada is looking quite good, but the total travel industry as a whole is suffering. So we're asking for a global look at the accounting when we do some of this cutting.
Finally, I want to point out that while we've had some disappointments in the open skies cross-border airport services in Halifax because a number of the carriers - at least three of them, I think - have fallen by the wayside, I should point out that the only remaining train service between the Maritimes and Montreal has traffic that is up 23% this year over last year. I don't think that's very well known, but I think that should be reflected in the support that rail services get in the Maritimes. It's quite striking, and it's substantially above any change on other routes across the country. The problem now is that at many periods of the year we cannot get everybody on the train who wants to get on. We're running trains of up to 27 cars, and that is just not practical for passenger train service in many ways. But in any case, I think the performance is outstanding.
That train is based on travel for the masses. It's not a tourism train and it's not high-priced like the western silver and blue services, but it's based on tourism for the masses and travel for the masses, for social reasons, and it's turning out very well. I think it's an interesting example to bear in mind.
Now I'd like to turn our presentation over to Marcus Garnet.
The Acting Chairman (Mr. Jordan): Mr. Pearce, I want to thank you for your presentation. If we could have comments on your aspect of the presentation now, then we'll move to Mr. Garnet.
Mr. Pearce: We'll be pleased to do that.
The Acting Chairman (Mr. Jordan): Jim.
Mr. Gouk: Thank you.
I have a couple of things. I'd like to make some comments. I'll go through it as quickly as I can and then let you respond.
Starting with your first one, with regard to air safety, you specifically mentioned Greyhound and WestJet. There has been some concern because they use older aircraft and that we should be particularly cautious of these types of airlines. Also, you haven't said it here, but something that often parallels that is the funding, the potential of cutting a corner with new start-up airlines.
I would point out that Air Canada and Canadian both use...in the case of Air Canada, DC-9s, and in the case of Canadian, 737s, and they have cycle times approaching that of WestJet and Greyhound. When we talk in terms of safety, WestJet has a paid-up fleet with $10 million in the bank. Compare that to some of our national airlines and you'll find an interesting comparison.
With regard to the method of collection of the airport improvement tax, the passenger facility tax in Vancouver, you're absolutely right that it's an intrusive way of collecting it. The airlines were asked to collect it and they flatly refused.
If you're looking for an alternative, one airport in my area - it happened that it was not run by Transport and it's now one of the national airports - said they didn't have enough money and were going to hit a deficit in the near future. It went to the airlines to raise their fee and the airlines said, let us look at your books. If they could show them where to cut, they'd cut, and if there was a net cost after that, then they'd pay it. It was done, and the airlines did agree to do that.
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I'd like to comment with regard to VIA as well before I turn it back to you. VIA does of course get subsidized. You mentioned, under your second item, in the case of Greyhound...in the face of a rapidly shrinking long-haul bus traffic. We have a situation where VIA runs trains between Kingston and Toronto. Round-trip, their deluxe service with meals in both directions, including a multi-course dinner with wines, liqueurs and the whole bit, costs under $100. Maybe that's why some of the buses are running empty and why I for one have a particular problem in many cases with the VIA subsidies.
I can tell you right now, there is a very successful private rail operator in British Columbia looking at the possibility of making an offer for VIA, running it as a private enterprise on a pay-as-you-go basis.
So I'll just give it back to you for whatever comments you have on that.
Mr. Pearce: I think you're perhaps referring to Great Canadian Railtour, although the Rocky Mountaineer terminology is used as well. That service was started by VIA Rail. In fact, it was just about profitable. I think it was recovering 97% of its costs -
A voice: Not even close.
Mr. Pearce: - when VIA was operating it. Because it was very close to being profitable, the government of the time decided to privatize it. It was something that could be privatized, and it was worthwhile.
The other thing is the talk about the Toronto-Kingston rail service. In fact, I understand the Toronto-Kingston-Ottawa service is between 90% and 100% avoidable cost recovery. In other words, one can begin to talk about adding extra services on that route, given that it's already established, at no additional cost to VIA or government subsidies. So that particular route, Toronto-Kingston-Ottawa, is probably one of the most viable VIA has.
I'm certainly pleased to hear that there are moves afoot to integrate the airport taxes in some way so that they can be collected in a seamless fashion, and we don't have to have separate booths, where you go one place to pay the GST, another place to pay the airport improvement fee and so on.
Mr. Gouk: If I can just add one comment, Mr. Chairman, with regard to that VIA run between Kingston and Toronto, I've seen the menu. I would suggest that most restaurants in Halifax would have a great deal of difficulty providing just the meals, with the liquors, for the price VIA charges for that round trip.
The Acting Chairman (Mr. Jordan): Thank you very much, Mr. Pearce. We're going to turn now to Mr. Garnet.
Mr. Garnet, if you could limit it to about 10 or 12 minutes it would leave us a few minutes for questioning.
Mr. Marcus Garnet (Vice-President, Transport 2000 Atlantic): I'll give you a bit of a change of pace. I'm not going to throw around a lot of statistics or numbers. Rather, I want us to think for a few minutes about the future, particularly the future of the tourism market in Canada. I want to draw from, rather than hard statistics, clear impressions I've had in my experience as a professional urban planner. When we look at some of the trends around us I think we get a sense of where the future may be leading us in terms of potential new niche markets for our tourism product.
There seems to be three trends that are likely to affect recreational or leisure travel demand in the future. The first of those is very well known - what we might call the baby boom generation, which would include most of us here. That generation has affected all sectors of the economy as it moves through its life cycle. What we are going to be seeing is that as large numbers of this generation reach senior management positions and approach retirement age, they're going to be looking for specific aspects in their leisure travel.
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Among those, one of the important ones, I believe, is going to be seeking an escape from stress, particularly as people are now involved in senior work responsibilities and are looking for a change of pace.
Another thing we're going to see as more people reach retirement age is an increased interest in winter and shoulder-season travel.
We're also going to be seeing people more interested in meeting people as part of their vacation experience. That stems from what we might call the ``empty-nest'' phenomenon and having more time to meet people and socialize with people outside one's immediate family.
Besides the aging population, another aspect that's going to be affecting the future is what I've called a craving for character. This is a reaction, if you like, to what our modern society has brought us. Our modern society tends to standardize, rationalize, and isolate. It's a society of sameness, from our suburbs to our computer-generated letters. The individual touch is hard to come by. So when people travel for leisure they're going to be looking for something different, for something they can't find at home. They're going to look for places with character and experiences that affirm individuality and community.
The third thing I think we'll see - and we're already seeing it - is what I call the ``return to nature''. I don't mean by that a deep-green, beards and sandals idea of deep ecology. What I do mean is a desire to experience nature as part of one's everyday life. As an urban planner, I come across that a great deal in the demand for greenways and urban parks on a scale we've never seen before. I think that's going to show itself in tourism, and it's already showing itself in the phenomenon known as ecotourism.
In responding to these trends Nova Scotia and the Maritimes in general are well positioned. We're renowned for our slower pace, our friendly people, our community spirit and natural beauty. So when we think about transportation, we should ask ourselves how we can improve our transport facilities and services in such a way as to complement these great advantages we already have; in such a way that we can offer a complete tourism package.
That means we have to ask three key questions. The first is what are the strengths and weaknesses of our existing travel options? Secondly, could the mix of our travel options be improved to increase the appeal of our tourism product to these growing markets? Thirdly, if so, what changes should be made?
Those questions have to be answered with reference to the changes we see in the interests and the age and characteristics of the population.
I want first to have a look very briefly at the travel options we have here in the Maritimes, and their strengths and weaknesses. Then I want to have a look at how the total mix of travel options could be optimized so as to build on the strengths we have and capture new niche markets for tourism. In particular I should be stressing the international tourism market.
The best-known travel option and the one I understand this task force is focusing on is the freeway. It's a high-speed road. It offers speed and safety for covering long distances in relatively little time. There's some reduction in stress compared with conventional roads, but this tends to diminish as more people use the route. Off-season travel by freeway can be especially stressful if winter conditions are encountered, as they often are in the Maritimes. Anybody who's travelled Mount Thom or any of our other famous mountains, so-called, would attest to that.
Opportunities to meet the local people are minimal on the freeways, except when you're at a truck stop or motel. Local character is not readily apparent, because freeways typically avoid communities and are built to similar standards throughout the continent. You can see some fine vistas from some stretches of freeway in Nova Scotia, as we all know, but road width, travel speed, and alignment are not conducive to tourism. In fact, our own Nova Scotia ``Doers and Dreamers'' map advises people to get off the freeways if they want to see ``the real Nova Scotia''.
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That brings me to the second mode, which is other roads. In general, the less travelled the roadway, the lower the stress due to traffic and the greater the opportunity to experience the communities and the landscapes through which the traveller passes. The price you pay, of course, is in the time taken to get around. It's a tradeoff. Winter travel is also more difficult on secondary roads.
Tourists are still isolated in their cars, but they can stop at any point along the road to meet local people and go to businesses, guest houses, church suppers or what have you. Local roads provide ever-changing vistas, and they pass through the hearts of communities that offer a strong sense of heritage. These are the backbone of the Nova Scotia tourism product.
The Acting Chairman (Mr. Jordan): It's an excellent paper and it's giving us a different slant on trying to tailor your transportation needs to a different world, but do you think you could summarize it a bit? Some people have to catch planes and so on, and I'm afraid if we don't move it along I won't have many here to ask you questions.
Mr. Garnet: Yes, I'll try to touch on the main points.
The Acting Chairman (Mr. Jordan): We'll take the paper and read it, but maybe you could move it along a little faster.
Mr. Garnet: I will do my best.
The next mode we looked at was tour buses. We're all familiar with the strengths and weaknesses of those. You basically are buying into a fixed product. You do have relief from the stress of driving, but you have the constraint of a predetermined itinerary.
The scheduled bus is worth spending a minute or two on. In Nova Scotia we have recently seen massive changes to scheduled bus routes. Now the emphasis is on freeways, whereas before the scheduled bus provided a low-cost and affordable way of getting to know what you might call the down-home Nova Scotia. Now its advantages are very similar to those of the freeway.
The airline, of course, is synonymous with vacations. It's symbolic of the high-speed getaway. There's a romance attached to flying, but it's very much a point A to point B mode.
The ferry has some contact with local people who may also be using the service. It also has access to scenery and on-board amenities.
Finally, the train is an interesting mode, because it isn't usually associated with tourism in any of the publicity. If you look at the recently prepared New Brunswick tourism brochure, the train service through the Maritimes isn't mentioned once. In the Nova Scotia brochure it receives passing mention on a very utilitarian page about how to get there.
The thought is absent that the Maritimes have a world-class transcontinental train service. It is used extensively by foreign tourists. It has strong cultural connections to the history of Canada and to the culture of the Maritimes. It goes through communities and some of the best of our scenery while at the same time providing a good A to B transport, because it doesn't stop during the night. You're able to continue travelling while you're in bed. This advantage is one of the best-kept secrets, perhaps, of the Maritimes and of Canada in general.
The weakness of the train, of course, is its inflexibility upon arrival. Therefore it works best if it's combined with car rental and a seamless connection to other modes.
As we've seen with that brief overview, no one particular mode provides all the things you need in order to cater to the potential market growth. However, the car, in our opinion, comes across the most strongly in its ability to deal with both freeways and local roads.
There is one other mode that also has important advantages and that, in our opinion, is particularly well positioned to take advantage of the trends we envisage, which I outlined at the beginning of my presentation. That mode is the passenger train. It provides access to scenery, people are able to meet each other as well as other tourists and have access to a local population, and they are able to continue to travel through the winter without concerns about the weather.
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If, however, we are to build upon the advantage that our one remaining world-class passenger train service provides, we have to be able to integrate it with other forms of transportation, and this really has not happened.
An important aspect, we believe, of the future of surface public transportation, if it is to answer to expected market growth and the development of new niche tourism markets, is its integration with bus services as well as other links such as air and rental car.
If we fail to do this and fail to provide the leadership necessary to achieve this integration, we're going to lose a tourism product that puts us on the international map, along with the many advantages that we already have. We are gradually going to lose our leadership among other countries, simply because they are continuing to show leadership in developing integrated surface public transport systems, whereas our own federal government has announced that it is getting out of the transportation business. In doing that, our present federal government is following the lead of its predecessors. Those predecessors emphasized competition over integration, and we believe this is a serious mistake.
By suggesting that, we're not recommending a return to bureaucratic straitjackets and bloated government overspending. What we are recommending is a strategic look at our surface public transportation system - considering how its various parts fit together - and on that basis a strategic investment choice in certain modes, in certain routes, and in getting those modes and routes integrated, particularly at the terminal and schedule level, so as to provide a seamless transportation network that will not only get you to the Maritimes but will allow you to enjoy the many scenic and cultural amenities that we have to offer here.
The sobering truth is this. If the federal and provincial governments carry out their avowed intention to withdraw completely from what they call the ``transportation business'', Canadians will increasingly have to withdraw from the tourism business. Why? Because our competitor countries support those travel options that have the greatest untapped potential for an aging population seeking an escape from stress, an opportunity to meet people, and an experience to write home about. If we do not do the same, this growing market will still find somewhere to go, but Canada will become less and less appealing. There are plenty of other countries for them to see.
That's all I have to say at the moment. The rest is there in my presentation.
The Acting Chairman (Mr. Jordan): Thank you.
Mr. Mercier.
[Translation]
Mr. Garnet: I understand French pretty well but I'd rather answer in English.
Mr. Mercier: I agree with your observation that in Canada the train is under utilized and comparatively unknown as a means of transportation and tourism promotion.
There are now new ways of attracting certain groups of tourists: long distance bicycle routes, bridle trails and foot trails. In Quebec, provincial authorities are contemplating the development of a ``green road'', a bicycle trail with by-pass zones that would cross Quebec from East to West.
In Europe, notably in the Vosges mountains, bridle trails allow you to practically travel through the whole of Europe on horseback or by foot. Inns, along the road, are set up for this type of tourist. Does the development of bridle trails, foot and bicycle trails for young tourists strike you as a good idea?
[English]
Mr. Garnet: I think there is tremendous potential in the use of regional and interprovincial trails. In fact, it is the very same factors in the population and in the general tourism demand that give rise to the interest in trails that I argue are also giving rise to the interest in the passenger train and other non-traditional modes of transport.
In fact, one of the advantages of the rail service is that it allows the transport of bulky items such as bicycles, which can be brought to the nearest trailhead, taken off the train, and then you have access from there to the trail system.
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I agree with you, I think that's a very exciting and a very complementary aspect to the tourism product, but what we have to do is provide linkages between these modes instead of considering them in isolation.
The Acting Chairman (Mr. Jordan): Mr. Keyes.
Mr. Keyes: Thank you very much, Mr. Garnet, for your submission to the committee. I'm quite fascinated by your philosophical approach to transportation, particularly on page 8 when you talked about the sobering truth, that:
- If the federal and provincial governments carry out their avowed intention to withdraw
completely from what they call the ``transportation business'', Canadians will increasingly
have to withdraw from the tourism business.
Mr. Garnet: I agree with your comment that infrastructure is expensive. For example, for 1989, the Royal Commission on National Passenger Transportation estimated that our road system alone cost us $4.1 billion, I understand, in book-value subsidy, after allowing for the federal excise tax.
Mr. Keyes: But the question is, who would pay for your suggestion of the integrated transportation network?
Mr. Garnet: I'm suggesting that the same people invest in integrating our surface public transport as also invest in developing our road and highway system. We understand that road and highway infrastucture is a necessary layer, if you like, that feeds our private sector and our potential for new businesses.
Mr. Keyes: In other words, what you're telling me, Mr. Garnet, is that you think the federal or provincial governments should pay for the infrastructure.
Mr. Garnet: I'm suggesting that the taxpayer should invest to some extent in the infrastructure, but also in services, but that this be worked out strategically instead of politically. There's a big difference.
Mr. Keyes: The object, of course, is to try - and it always has been, since I became an MP and fell into this committee back in 1988 - to create an intermodal-multimodal system of transportation in the country. But you don't just look at the whole and then start costing out the parts, because unfortunately it would just cost too damn much money. The taxpayers in this country aren't prepared to pay for some of the infrastructure you're speaking of.
Mr. Garnet: May I ask you how you know that?
Mr. Keyes: Because they feel they're overtaxed already, and we're already running up a huge deficit.
Anyway, beyond that, we look to the private sector to try to help government out in order to create this multi-intermodalism, and Mr. Pearce himself said it. When you say that Canadians will increasingly have to withdraw from the tourism business, quite the opposite is happening in Vancouver, where in fact the old government-run VIA Rail system on the southern line in B.C. is now being operated at profitable margins - profitable margins, where they never used to be - by the private sector, and supplying the tourists who travel the Rocky Mountaineer train route, the southern route, exactly what you're professing we should be doing.
Mr. Garnet: If the private sector is able to provide that, then let's go for it. But the issue is, do we know that the private sector will be able to provide some of these facilities if they are being invested in by other governments in other countries and we have to compete against them? That's the issue: international competition. If they are doing it there and we fail to do it here, there are going to be consequences.
Mr. Keyes: I've just given you one example of where it is being done here.
Mr. Garnet: Certainly, and we're very encouraged to see that.
Mr. Keyes: This is also what is happening with different short-line opportunities that are being presented to the rail lines, so taxpayers are paying less, the private sector is moving in, and they're becoming more intermodal because they have to, to be successful.
The Acting Chairman (Mr. Jordan): One short question before we end the discussion,Mr. Gouk.
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Mr. Gouk: I have one or two comments further to what Stan was saying. You talked about global accounting. You have to look at a bigger picture when you talk about transportation in this country. Maybe you have to talk in terms of having higher costs because we're not subsidized the way some other countries are. If you go to Japan or anywhere in Asia, where a lot of our west coast tourists are coming from, a meal you could get in Vancouver for $25 or $30 costs you $300 U.S. Many of your tourists here probably come from Germany. While you get a hotel room that runs probably $100 Canadian in Halifax, it is costing $350 to $400 U.S. in Germany.
Before you can really say they're not going to come here because our transportation costs might be a little higher in some areas, I think the global picture you have brought up today shows that overall in this country we offer a pretty attractive package.
Mr. Garnet: I agree that we are, but so is the United States. I suspect many of the price differences that apply between those countries and Canada would also apply between those countries and the United States. The United States does take its surface public transportation seriously.
The other point is that in a recent survey done a couple of years ago by Statistics Canada and the Conference Board of Canada, international tourists rated Canadian accommodation and transportation lower than any of the other criteria measured. This suggests tourists are already beginning to perceive there is something wrong with transportation in Canada.
The Acting Chairman (Mr. Jordan): I want to thank you.
Mr. Pearce, do you have a quick question?
Mr. Pearce: Yes. I just wanted to talk about who is going to pay for the infrastructure. Highway 427 is 12 lanes wide going into Lester B. Pearson International Airport, for example. My suggestion is it may well be a lot cheaper to try to link Pearson airport with downtown, or with southwestern Ontario for that matter, using a rail link. This might be cheaper than it will be to go to 30 or 40 lanes of road leading into Pearson. There are alternatives and I think we need to explore the alternatives.
The other thing I would mention is in regard to the Rocky Mountaineer train. I think it is an excellent train. I've been on it. But it operates once every five days in the warm season of the year for four or five months. As I mentioned, with the Ocean, our only long distance train down here, we have to look at transportation in the off season. This is what will keep a lot of our tourism alive and what people in Nova Scotia are studying very hard. Also, we have to look at transportation for our own people.
Mr. Keyes: Mr. Pearce, I know Mr. Armstrong of Rocky Mountaineer would love to operate more often, except in order to do so he has to have the passenger load. In order to do this, he has to put out the tickets. In order to do that, he has to buy the trains. If he buys too many, then he goes into debt. Then they're not making any money and then we're right back to where we started.
The Acting Chairman (Mr. Jordan): I want to thank you, Mr. Pearce and Mr. Garnet. You've caused us to -
Mr. Pearce: We've livened up the last five minutes.
The Acting Chairman (Mr. Jordan): Exactly, and it is a tough assignment when you're the last one in a long day. You've helped us all tremendously here by keeping us alert and causing us to think a little bit about some other things we may not have thought about. Thank you very much. We appreciate it.
The meeting is adjourned.