EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 22, 1996

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[English]

The Chairman: Order. Welcome, all, to meeting 26 on Bill C-44, an act for making the system of Canadian ports competitive, efficient and commercially oriented.

Gentlemen, certainly you have presented here before. We ask that you take ten to fifteen minutes for your remarks, maximum. You have half an hour in total. That will leave time for a round of questions with the members on the issues they wish to focus on. Welcome, and you may begin.

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[Translation]

Mr. Claude Cantin (Executive Vice-President, City of Quebec): Thank you very much, Mr. Chairman. My name is Claude Cantin. I am the deputy mayor of Quebec City. I am here today to present to you the brief of the City of Quebec concerning the Port of Quebec and other components of federal policy that we would like to touch on.

I would first like to introduce the two officials of the Planning Department of the City of Quebec who are with me. They are Mr. Michel Campeano and Mr. Laurent Lampron.

The brief that the City is presenting today concerns a study on transportation, trade and tourism as well as Bill C-44. I have been assured that you are studying both questions at the same time.

The City of Quebec considers it essential to submit this short brief in conjunction with the study on transportation, trade and tourism and Bill C-44 because of the importance to the City and its surrounding region of efficient modern transportation infrastructures connecting them with other cities in Canada and the United States.

The greater Quebec City region is in the process of formulating an economic strategy based on four major development components: tourism, port and marine activity, technology and aid to entrepreneurship.

Our recommendations in this brief reflect proposals made by the parties we have consulted on this subject: the Quebec City Region Tourism and Convention Bureau, the St. Lawrence Economic Development Council (SODES) and the Port of Quebec.

We will discuss first the St. Lawrence River and Canadian Coast Guard costs. In particular, we have requested that an impact study be carried out before the charges are applied, and that this study should include a review of levels of Coast Guard services and less costly methods of providing them, adoption of a uniform cost- recovery method for the whole of Canada and development of a fair and equitable Coast Guard cost-recovery formula in cooperation with industry.

Despite these requests, the Canadian government has decided to implement a variable rate structure for five regions, effective June 1. At the same time, an economic impact study of the various marine reforms is being conducted by Fisheries and Oceans Canada and Transport Canada. The City intends to continue to monitor this issue closely to ensure that our area is treated fairly and remains competitive.

The objective is not to undermine the competitiveness of the St. Lawrence to the advantage of ports on the eastern seaboard of the United States, which are closer to markets. This is the position that SODES will put to you. We recommend improved consultation between the federal government and its regional partners.

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The City of Quebec wants the federal government to reach an agreement with the region to minimize the negative impact of the Coast Guard's cost-recovery policy and to maintain and enhance the role played by the St. Lawrence Seaway in trade and tourism.

With respect to the highway system, as was stated in the brief submitted by the Tourist Bureau, 77 per cent of the tourist traffic in the Quebec City region comes here by car. It is not hard, therefore, to understand the importance of highway infrastructures in the development of tourism in the region. In this sense, we would like to see improvements in the highway system to promote better access to the Maritimes, Ontario and the northeastern United States.

Our road connections with Montreal are relatively straightforward, but this is not the case when you are heading instead toward Ontario, or in particular from the East coast toward the Maritimes and the United States, where the roads are not consistently of the same quality. If you leave Quebec City to go to the United States, you quickly come to some secondary roads.

We support the recommendation made by the Quebec Urban Community that consideration be given under the Canada-Quebec agreement to making marked improvements in the quality, comfort and safety of highway infrastructures, especially those linking eastern Canada to the northeastern United States, and in the Toronto-Quebec City corridor.

With respect to the railway system, the City of Quebec believes that a high-speed train in the Quebec City-Toronto corridor is a pivotal project in the economic and social development of the Quebec City region and eastern Canada. In addition to creating jobs, this project will mobilize Canadians and stimulate the economy while providing governments with attractive spin-offs in terms of tax revenues.

In fact, the Canada-Quebec-Ontario tripartite study has determined that even in the least economically feasible scenario (the Quebec City-Windsor corridor), quite substantial operating surpluses of close to $500 million in the first year, increasing from year to year, would allow the governments to recover their investment over a thirty-year period.

Although the three governments have said that they are prepared to accept a proposal from TGV-Canada for a less costly project than the estimate produced in the most recent study, we must caution the Standing Committee on Transport against false economies. Often, and we are sure that this is true of the present project, so-called compromise solutions involve lower direct costs but at the cost of greatly reduced effectiveness and efficiency.

The first compromise to be avoided, in our opinion, is making do with less effective technology than the high-speed train over all or part of the route. The study showed clearly that only 300 km/h technology should be considered, failing which it will not compete with either planes or automobiles.

Second, the project must include the Quebec City-Montreal section. The Montreal-Toronto compromise is completely unacceptable and reflects a short-term concern for the bottom line. Governments, the provincial capitals and the major cities would not gain anything. It is pointless to reproduce here the data that have often been referred to concerning the potential for extensive travel in the Quebec City-Montreal corridor or to recall the strategic importance of an efficient rail link connecting Quebec City, Montreal, Ottawa and Toronto.

Although a review of the route may result in certain cost reductions, we believe that a new funding formula must be found that would reduce the need for government funds, as was suggested last April by Mr. Bernard Lamarre. TGV-Canada will therefore have to take a close look at this issue when it prepares its proposal.

Fourth, we will address access by air and in the first place the Jean-Lesage International Airport.

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As you know, this year Quebec City has equipped itself with a new, completely up-to-date Congress Centre. Obviously, if tourists and conventioneers are to readily access Québec, they need to have major airport facilities. The government had envisaged some significant improvements in the Jean-Lesage International Airport, including the expansion of the main runway, recognition of its international status, the ongoing expansion of the terminal and the new control tower.

However, other decisions have not been as fruitful. For example, the departure of the air traffic controllers resulted in the loss of 15 jobs. We were then promised that the Aviation Complex would be built on airport land. This complex, with an estimated cost of $14 million, would have included the new control tower, a technical services maintenance centre and administrative offices as well as a regional Flight Information Centre. The project has now been cut back to 9.5 million dollars and includes only the tower and offices. It appears that the flight information centre, which would have created about 55 new jobs, will not be completed, at least in the medium term. The City requests, therefore, that this decision be reviewed and that the whole of the Aviation Centre be completed as soon as possible.

The City does, however, support the move toward privatizing airport management and, as a designating body, it has appointed two members of the board of the Société aéroportuaire de Québec. The City is counting on the cooperation and goodwill of the representatives of Transport Canada in the upcoming negotiations. The aim should be an equitable agreement that guarantees the Corporation sufficient revenues without charging carriers and travellers too much. The federal government must aim to support the development of the region rather than merely seeking to obtain maximum possible revenues. We will not accept failure in the negotiations or a situation where the management of the airport is offered to some other group.

The City would also like to remind the government that it must make all the investments currently planned before completing the transfer.

The other component is the airlines. We note that despite the deregulation of air transport, the City of Quebec has connections with only two U.S. cities and service is only sporadic, using low- calibre equipment. The growth of the tourist industry and convention travel, which I referred to earlier, requires the establishment of direct jet aircraft connections with some U.S. cities, such as Boston and New York, without stops in Montreal. It is possible to develop these markets if the carriers such as Air Canada would make a firm and ongoing long-term commitment to develop such connections. An approach to Air Canada by the Minister of Transport could have a positive impact.

Fifth, we will talk about cruise ships. We look forward to the establishment in Quebec City of a cruise ship terminal. The stop- overs last between 12 and 24 hours, but Quebec City is not considered at present a port of embarkation or disembarkation, other than for river cruises on the St. Lawrence. It is a major market for the tourist industry in terms of nights stayed and traffic flow through the Jean-Lesage International Airport. We want to develop Quebec City as a departure point for marine excursions to Newfoundland and Labrador, particularly during the iceberg season. Creation of a cruise ship terminal in the Public Works Canada buildings could help to open up a new market segment. The anticipated cost of these facilities is less than six million dollars.

No doubt this is not the first time you have heard of a request for authorization to operate casinos on cruise ships. You know that casinos cannot operate when the ships are anchored in Quebec City, or even when they enter Canadian waters. You will appreciate, from the configuration of the Gulf of St. Lawrence, that entry into Canadian waters occurs long before arrival in Quebec City, and this penalizes cruise organizers who are counting on casinos to generate from 12 to 15 percent of the revenues of their companies.

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Consequently, we are asking that the federal regulations governing the operation of casinos on maritime waterways be reviewed as a matter of priority by the federal government. We are asking that the regulations be relaxed.

We come now to the question of the Port of Quebec and Bill C- 44. The Port is an essential facility in the community and the economic activities of the region. From the early days of New France to the present, Quebec City has played a major role as a port. From its origins in the narrow cove now defined by the rue du Marché-Champlain, the Quebec harbour has gradually spread out along its wharves.

Following the Conquest, in particular, the establishment of a whole range of port infrastructures was promoted: the development of the Bassin Louise and, around 1892, the northern jetty, followed, in the early part of this century, by the construction of the first grain elevators and, in 1970, of the Beauport bulk terminal.

A study by the Centre de recherches en aménagement et développement at Laval University shows that in 1994, in the greater Quebec City region, maritime industry generated overall economic spin-offs of about $350 million. These spin-offs made it possible to create or maintain the equivalent of 6,500 full-time jobs, and the government of Canada reaped approximately $40 million in taxes of various kinds.

Through recent decisions and legislation, including Bill C-44, the Canada Marine Act, the federal government is making substantial changes in the operating conditions of the port and the maritime industry, through creation of a port authority (a privatization similar to that of the airports), commercialization of the Seaway, amendment of the Pilotage Act, recovery of Coast Guard costs, transfer of dredging to local authorities, etc.

Here too, the government's objective must not be simply to confine itself to reducing its deficit. In all its actions and decisions, the government must ensure that the competitiveness of the port and its users is not compromised. In a context of market globalization, transportation costs play a major role and we should not place ourselves in a relatively weaker position than countries that maintain marine and port activities.

It will also be necessary to treat the St. Lawrence region (including Quebec City) fairly and to keep in mind that this access route benefits a large part of the country.

In cooperation with its partners, including the Quebec Port Corporation and SODES, the City of Quebec is closely following developments in this bill. It is also participating in the work of the Federation of Canadian Municipalities, of which I have the pleasure of being the second vice-president.

The City of Quebec wishes to draw attention to its position on Bill C-44, particularly as it relates to the following issues.

First, concerning the Canada port authorities, the City favours the creation of Canada port authorities and the granting of this status to the Port of Quebec.

Representatives on CPA boards: The City of Quebec is in favour of the structure for the board of directors proposed in clause 6 of the Bill, especially with respect to the appointment of a representative of the municipalities mentioned in the letters patent. This is something that should have been done a long, long time ago.

However, the City of Quebec objects to the exclusions in paragraph 14(a), given that mayors, councillors, officers and employees of the municipalities concerned are excluded. One can have a delegate, but it will not be someone from among us. In the specific case of the Port of Quebec, it will be necessary to take into account the importance and real weight of the Port's activities in the territory of the municipalities concerned when the time comes to appoint the representative of the said municipalities, since the Port is located in more than one municipality.

The ability of a CPA to borrow on the financial markets, in clause 27: The City of Quebec, together with its partners, feels that the principle of fairness must be applied. All of the ports concerned must be treated fairly and equally by the federal government.

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In this regard, the City is pleased to see that the Port of Quebec will enjoy the same treatment that the governments of Canada and New Brunswick have accorded the Port of Saint John, New Brunswick, by writing off its long-term debt of $38 million, as announced last July.

We assume that the Quebec Port Corporation's debt of $7 million as of December 31, 1995 will also be written off, especially since in the past the Port's surplus funds have been repatriated by Ports Canada.

Finally, we are also pleased that the Bill gives the CPAs the power to mortgage their assets in order to carry out new development projects relating to port activities.

Concerning the duty of port authorities to make payments to the government in accordance with a formula prescribed in the letters patent, the City of Quebec objects to the payment of any sums other than the charges provided for in paragraph 6(2)(h) that may be demanded by the federal government. In fact, since the federal government will no longer assume direct financing risks or provide collateral for CPAs, it cannot expect to receive any advantages in return.

Zoning and municipal taxes: Our position is closer to that of the Federation of Canadian Municipalities than it is to the Port of Quebec, for example, but I think there are some reasonable issues that must be taken into account.

The City of Quebec supports the position taken by the FCM that Canadian port authorities should assume their responsibilities as taxpayers and observe the municipal taxation rules, and respect municipal autonomy regarding zoning and urban planning. However, consideration should be given to discussions at the local level concerning the CPA's compliance with these obligations.

Finally, the City of Quebec is in favour of concluding local agreements, especially concerning security.

There, gentlemen, is our brief. We are ready to answer your questions. Thank you very much for your attention.

[English]

The Chairman: Thank you, Mr. Cantin. We will have a shorter period for questions than we might otherwise have had.

[Translation]

Mr. Crête.

Mr. Crête (Kamouraska - Rivière-du-Loup): I thank the City of Quebec for the quality of its presentation, particularly the overall approach to the transportation issue. It enables us to get a complete perspective on the issues in the coming years. I found it very interesting, but as we have very little time, I am going to ask you some questions on two fairly specific points.

First of all, I am given to understand from your presentation that if the government goes ahead with Bill C-44 but adopts in return some proposals in regard to icebreaking costs and navigation assistance costs such as buoys and dredging, which to some degree are killing the competitiveness of Quebec City, the Gulf and the St. Lawrence River, there may be some problems. Would you consider it relevant for the government to incorporate in Bill C-44 something that would help ensure that Transport Canada has some supervisory authority over the resolutions that Fisheries and Oceans Canada will make in relation to the issue of icebreaking costs, and the fact that two different government departments are involved?

My second question has to do with your recommendations concerning the issue of the highway system. You say you support the recommendation of the Quebec Urban Community, which states:

That consideration be given under the Canada-Québec agreement to making marked improvements in the quality, comfort and safety of highway infrastructures...

Would you support the government's implementation of the recommendation of the Quebec Automobile Club, which is touring across Canada on this, that 2 out of every 10 cents in tax collected by the federal government be devoted to renewal of the Canadian highway system?

Finally, may I express my support in particular for your recommendation concerning the connection with the Maritimes, because I think it is very important.

Mr. Cantin: With regard to the question on icebreaking and dredging costs, we have hoped from the outset that the study would be done overall on all the costs of using the port facilities in Quebec City.

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When we talk about an overall study, this includes not only the use of the port facilities but also the costs of access to the Port of Quebec and the start-up costs of the Port of Quebec, like transportation costs.

We're in a period when we have to look at things very comprehensively. It seemed to us that the federal government was giving Fisheries and Oceans and Transport Canada mandates that were not necessarily coordinated. The only coordination that was done concerned cost reduction.

I don't know whether it is Transport Canada or Fisheries and Oceans that should manage the whole thing, but it seems clear that there must be only one manager or one interlocutor that can synthesize all the programs and speaks with one voice in terms of maritime administration. If this is not done the port, as it is now or will be later, will be dealing with different government entities with somewhat different objectives, who talk to each other but not always effectively.

Second, with regard to the Canada-Quebec agreement on the improvement of highways and the position of the CAA, I don't think we have taken a position, as a city, on the federal government's position, which is that the 2 cents that are recovered on gasoline taxes should be made available, but it seems to me that it would be appropriate to reserve a certain amount of that money for the upkeep of the highway system.

Obviously, governments are always very reluctant to earmark revenues for particular things. This is true of the federal, provincial or even municipal governments, but still there must be an annual budget for highway repair.

I don't remember what your final question was. Did it concern the Maritimes?

Mr. Crête: Yes, that's it.

The Chairman: Thank you, Mr. Crête.

[English]

Mr. Gouk.

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

Gentlemen, I have three areas I want to touch on and then I'd invite your comment.

First, under your part on Bill C-44, clause 3, you mention that you're pleased the bill gives CPAs the ability to mortgage their assets. I would suggest to you gentlemen that contrary to that, as the bill stands now, it specifically forbids your ability to mortgage your assets.

Second, in section 1.4, ``Access by air'', you mention that there is an up to $14 million construction under way to do a new control tower, but in the same paragraph you mention that you no longer have controllers. I'm just wondering what the new tower is supposed to be for. I would point out also that the tower and the flight information centre, which you mention in that paragraph as well, are no longer a federal responsibility. They are now part of NAV CANADA.

Finally, on section 1.3, dealing with high-speed rail, if that is a financially viable project - and I'm sure if it is, Bombardier will find a way to turn a dollar at it, because they're very good at that... However, if it is not financially viable, would you anticipate that the deficit should be picked up by the region that benefits from this high-speed rail or that it should be picked up by all taxpayers of Canada?

[Translation]

Mr. Cantin: To answer the first question, we understand that Bill C-44 does not at present allow the port authorities to put the properties up as collateral or get loan guarantees, but we hope this is possible. We don't agree with the bill as it is, since we want the new port authority to be able to mortgage its assets in order to carry out new projects.

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Second, concerning the control tower, there are a number of controllers who have left. We don't think this is the best decision in the world. There must be a minimum degree of air control at the Quebec City airport. If the regional information and control centre were built, some air control could be done again by the Quebec region.

Third, with respect to the high-speed train costs, we think this is a national project, like the bridge linking Prince Edward Island to the mainland and other projects. Consequently, if ever there were a deficit, we think it should be assumed by the country as a whole.

[English]

The Chairman: Thank you.

Mr. Keyes.

Mr. Keyes (Hamilton West): Thank you, Mr. Chairman.

Good morning, gentlemen. Thank you very much for your presentation.

Mr. Cantin, at the bottom of page 9, you quite correctly say:

In all its actions and decisions, the government must ensure that the competitiveness of the Port and its users is not compromised. In a context of market globalization, transportation costs play a major role and we should not put ourselves in a position of weakness in comparison with other countries...

Yet on page 11, in point 5, you state that you support the position taken by the Federation of Canadian Municipalities to the effect that the port should pay municipal taxes.

In light of the remark that you don't want to put your port or yourselves in a position of weakness in comparison with other countries, and in light of the fact that we know some American communities don't collect taxes from their ports and in fact give their ports the power to tax, do you see some kind of conflict in your statement?

Mr. Cantin: As you said, the situation is different from one city to the other. Even in the United States you have some cities collecting property taxes from port authorities, and some don't. In Europe most of the cities are collecting property taxes from the port authorities. And in this country, all the cities are collecting taxes from the port authorities all over the country.

Mr. Keyes: Yes, but you stand to be corrected. They don't collect municipal taxes directly from their ports. What they do is collect the taxes from the leased properties that the port leases out to the users, so it's the users who are paying. You're not proposing that the Port of Quebec start paying municipal taxes on land that is not being used, are you?

Mr. Cantin: This is the position of the FCM as well. Every property owner pays taxes on his property, and we don't see why airports, ports or anybody else would not pay taxes. So we say the general law for everybody, even for the federal government, is to pay taxes.

Mr. Keyes: Sometimes I guess we talk too much in generalities. Yes, property owners pay taxes, but property owners per se, in Quebec City and elsewhere across the country, aren't huge generators of economic wealth, jobs and opportunities. Whereas your port, in this particular province and in this particular city, is the mainstay, the creator of jobs, the creator of economic opportunity. As a result, you wouldn't want to put them into some kind of difficult position by not only taxing their lessees - municipalities - and having the port pay grants in lieu of taxes if that were to be the case down the road, but on top of that, starting to pay municipal taxes on their properties. That would then cut into their ability to expand their port, draw business to the port, and be competitive price-wise, because ultimately it's the users who will pay that bill.

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Mr. Cantin: Yes, but the port is only one of the job-creating enterprises on our territory. The hotels and other industries are as well. And everybody is paying his taxes.

On the other hand, we say in our mémoire that we are ready to have discussions with the local authority to look at this problem. But it's not for the city to say no, we won't collect our taxes. About 85% of the income of a city is from property taxes. If we say the port is too important, we won't collect taxes there, the hotels are very important because we are a tourist city, and the government is very important because it's creating jobs, who will pay taxes? Only the residential people, and I don't think they can afford that.

Mr. Keyes: Mr. Chairman, just briefly, it's something that wasn't put into this report but I just wanted to touch on. With the adoption of this particular bill, Bill C-44, the Canada Ports Corporation is effectively dissolved, and with it the Ports Canada Police. The Canadian Police Association stated I believe as early as yesterday that it would be a dereliction of our duty not to provide for a port's police force. Today it's estimated only about 89 officers are left in about 6 ports.

Only the Port of Vancouver has so far raised the issue of policing. Other ports say they can handle the full security service by working with their municipalities, working with private sector police agencies, in order to save the port tens of thousands of dollars at the end of the day.

Have the Port of Quebec and the City of Quebec discussed this issue about policing at the port?

Mr. Cantin: Actually, we have arrived at an agreement in principle with the port to transfer the policing of the port to the city. It has been blocked somewhere in Ottawa, but otherwise it's already almost done.

Mr. Keyes: Is it blocked in Ottawa or is it blocked by the provincial minister in charge, who has to give his blessing to you in order to do that?

Mr. Cantin: I had that idea too, but after looking up the information I find it's not the case. This was the case in Montreal, but for Quebec City it has been blocked somewhere in Ottawa.

Mr. Keyes: With the passage of this bill, Mr. Chairman, it's good to hear they have an arrangement all ready to go -

Mr. Cantin: Yes, ready to sign.

Mr. Keyes: - and the municipality is prepared to take up the job.

Mr. Cantin: These agreements between the port and this city are the same models as the ones we have with other cities where we share benefits. Every city has to take some advantage from them, and that's the case with the port as well.

Mr. Keyes: Thank you very much.

The Chairman: Thank you, Mr. Keyes. I'm sure you can unblock things.

Mr. Keyes: This legislation will certainly do that.

The Chairman: Thank you very much, gentlemen. I appreciate your time today.

[Translation]

Mr. Cantin: Thank you very much, sir.

[English]

The Chairman: Our next presenter is the St. Lawrence Economic Development Council.

We have thirty minutes for each presentation. If you could keep your remarks to within about ten minutes, that will give us an opportunity to have some discussion.

[Translation]

Mr. Marc Gagnon (Executive Director, St. Lawrence Economic Development Council): That is what we are going to do.

My name is Marc Gagnon. I am executive director of SODES, the St. Lawrence Economic Development Council. We came previously and presented a brief to you. So I think you are somewhat acquainted with our organization. It is a coalition of corporations, firms and agencies devoted to defending the interests of the St. Lawrence and promoting economic development. We are, in some ways, the St. Lawrence Chamber of Commerce.

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Without further ado, I will introduce you to Mr. Claude Mailloux, the deputy executive director of SODES, and our presenter Mr. Alain Pilotte, who is a member of the board of directors of SODES and chair of our regulations committee.

Mr. Alain Pilotte (Member of the Board of the St. Lawrence Economic Development Council): Mr. Chairman, members of the committee, in the first place I would like to summarize somewhat the process that the education and regulation committee of SODES adopted in preparing the brief we are presenting to you today.

Our committee met with its members in Quebec City and Montreal, following consultation meetings that had been organized. The committee then summarized the points that had been raised by all the members. After reviewing the bill and all the recommendations of the members, we prepared this report, which was adopted by the board of directors of SODES.

Having said that, I hasten to explain to you that this report should not be seen as representing the unanimous voice of all SODES members. There are some cities, some port authorities that are members of SODES and some companies with interests that are widely divergent. I would not want you to think that SODES claims to be the spokesperson for everyone.

However, I can assure you of one thing: the content of the report represents the items that produced the greatest consensus on some aspects of the bill.

Having said that, I will summarize what I consider to be the essential points in the brief. First of all, we applaud the objectives of Bill C-44, we support them and they satisfy us. However, our fear is that the result you come up will not be fair to the CPAs and the regional ports.

The bill as it exists makes the ports that will become CPAs accountable, which is a good thing. But they must be given the necessary tools to make them self-sufficient and accountable and not have to come back and appear before the federal government in 15 years to ask it for some money because they are on the verge of bankruptcy. The bill, as it exists, does not provide these tools.

We know that, for each CPA, the letters patent will be drafted by a committee. What the report tells you, among other things, is that not only must the municipalities and provinces participate in the development of these letters patent, and be consulted in relation to matters that concern them, but everyone concerned - the maritime community, if you prefer, of a particular CPA - must be consulted and asked to give their views on the said content.

In other words, the letters patent will be as important as Bill C-44 when these CPAs come to act on a day-to-day basis.

In the SODES brief, we introduced the notion of a user ombudsman. This user ombudsman - the final formula is of course subject to the Minister's discretion - is essentially designed to guarantee that, from the standpoint of both professional ethics (in regard to directors' activities) and the day-to-day management of business matters, the users can rely on some safety mechanism to ensure that at all times a particular CPA acts fairly, within the framework of the Act, as is the case at present.

For example, I think clause 42 covers the case in which a CPA enters into a discriminatory contract concerning the volume or value of goods. We agree on the principles set out in that clause. However, since all the documents are declared confidential, and the Transportation Act is excluded in clause 142, we think it is important to give users access to these documents and, in case of doubt, some means of ensuring that someone can examine them on their behalf.

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With regard to the criteria for becoming a CPA - I am alluding to clause 6 - we recommend in the report, and I want to repeat this, that paragraph 6(1)(c) be withdrawn, simply because the other conditions referred to in clause 6 are quite sufficient, in our opinion, for deciding whether a given port may or may not become a CPA.

With regard to the composition of the board of directors, I will say two things. We have always maintained, and we still do, that the board must be composed in its majority of members selected from among the candidates proposed by the users.

As to the chief executive officer, we think that even if he must be present at meetings of the board of directors, he should not be entitled to vote. In this regard, I will point out that it is the board of directors that appoints the chief executive officer; it would therefore be a bit difficult to allow this same chief executive officer to participate in his own election.

With regard to the regional ports, I should say that on an initial reading of the bill, I was in a complete fog. All one can grasp is a clear and specific desire to hand over these regional ports, but without giving them any guidelines or defining any major guideposts, which is a source of great concern to us. Without getting into the regional problematic, let's just say that we have some regional ports, such as the ones in Quebec City or Montreal, that are very closely connected and are already interacting. They will continue to do so in future. It is necessary to harmonize the operating conditions of the CPAs with those of the regional ports so that, at the end of the day, they are not engaged in undue competition with the CPAs.

I will give you an example that is exaggerated, I hope. If, tomorrow morning, one of these regional ports should be snapped up at the last minute for a dollar, you can readily imagine that this corporation could compete with the Port of Quebec. The latter will have huge responsibilities in relation to its tolls to the federal government, which, we hope, will be based on net income and also on its financial capacity. They will have to be self-financing, and when you only have a dollar to finance, it is not the same cup of tea.

A second point has to do with the regional ports. We strongly recommend that the bill define the limits on transfers. It is necessary to impose some requirements on the transferees, not necessarily on all regional or local ports that will have to be transferred - we concede that - but the department will have to conduct a review and determine which are the commercially important ports, so the following criteria can be applied to them: protecting the vocation as a commercial port, maintaining the port facilities and, third, maintaining public accessibility to these facilities.

It would be too easy, believe me, for a given port, passing into the hands of a given company, to be completely cut off from the entire regional economy because of the intentions of a user who had managed to take over the port in question.

In support of these criteria, I say to you that it is necessary to protect the regional economies and ensure that they are not jeopardized because we have sold a regional port in a fire sale.

To wind up, let us talk about casinos. Please, for goodness' sake, ask the Minister of Justice to amend the Criminal Code at the earliest opportunity. Therein lies the future of the maritime tourist industry, in the St. Lawrence, among others. Thank you.

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[English]

The Chairman: Thank you very much.

Mr. Gouk.

Mr. Gouk: Thank you.

Gentlemen, I have just two quick points. There is nothing that you have in your brief that I do not agree with. There are some minor differences, but essentially we are going in the same direction.

One of my points is on municipal taxes. There is a move afoot by the committee, I believe, to amend the bill so that the ports get federal agency status. That in turn means they would pay grants in lieu. Many are already paying those, although some are not. I intend to offer an amendment so that those ports that do not pay grants in lieu now would move from the current amount they pay, whatever that might be, to full grants in lieu over a five-year period. I would ask if you think that would be acceptable.

Secondly, you opened the door on the Canada Labour Code, but nothing came through the door. I would like you to just mention a couple of points in terms of the specifics that you are looking for by way of changes.

Mr. Pilotte: First of all, dealing with the municipal taxes, we are well aware that one of the key issues put to us was basically whether or not there is a need to have the status of agency assigned to Canadian port authorities. Our position is that it may not necessarily be the answer.

We are well aware that the status of agency would answer this municipal taxation problem as such. We are hopeful, however, that the federal government, the provincial governments and the municipalities could reach an agreement between themselves so that tomorrow, when we pass the powers to the Canadian port authorities and the newly formed local ports, there will be an agreement in place - such as those for police, for example - for municipal taxes. The end result will essentially be that the ports will not have to face higher taxes than they do under the present system.

We have not studied in-depth whether or not the status of agency is the only answer, but we suggest that it should be looked into, because status may not be the answer as such.

Dealing with the Canada Labour Code, what we are saying is that maybe the Canada Labour Code in its present form - and I'm referring to section 34, which deals with the long-shoring industry as such - may not be the answer now. Maybe there should be adjustments so as to take into account the current reality, not only of the Port of Quebec but the Port of Montreal, the ports in the Maritimes and the ports on the west coast.

There has been an evolution since the time that Mr. Picard filed his report. We are not facing the same situation in the ports now, so section 34 should be reviewed. We're not suggesting at this stage an answer or a better solution. We're saying it is important that a commission studies this and tries to determine whether or not it should be changed and, if so, what the solution should be.

That's basically my answer.

The Chairman: Thank you.

Mr. Comuzzi.

Mr. Comuzzi (Thunder Bay - Nipigon): Thank you, Mr. Chairman.

On page 2 of your report, in the third paragraph, you state that you have left the task of addressing the issues of pilotage and seaway to others. Are we going to hear from those others today? If not, what would your position be? Who is going to make those representations?

Mr. Pilotte: Unless I'm mistaken, I think some pilotage authorities will be presenting later on.

Mr. Comuzzi: How about the St. Lawrence Seaway? Will someone else be making representations on that?

Mr. Pilotte: Not that I am aware of.

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Mr. Comuzzi: So you'll have no comment with -

Mr. Pilotte: It's basically what you find in the third paragraph of page 2. It's that you must be respectful of the final form that will be adopted to manage the St. Lawrence Seaway system. Everybody must feel comfortable with what it's going to be.

For example, we don't want those on ships from foreign interests that are in the St. Lawrence Seaway to feel that maybe their ability to do commerce might be in jeopardy or on less favourable grounds than others who might be more closely associated with the management of the St. Lawrence Seaway Authority. That's all we're saying. We're not saying it is the case and we have an actual fear. We're asking you to be careful, please.

Mr. Comuzzi: One more question. Am I to take it from your remarks then that you would concur with the reports that might be forthcoming today from the pilotage authority and any seaway reports that we receive?

Mr. Pilotte: Basically, as far as it concerns pilotage, we feel there are other interested parties who might have a better understanding of that.

Mr. Comuzzi: This is my last question, which is by way of an analogy. In the first paragraph you state that you represent all aspects of shipowners, ports, shipping agencies, cities, government agencies and so on. Analogous to that, can we take it that insofar as the operation of the Great Lakes-St. Lawrence Seaway is concerned, you would carry through with the philosophy that it shouldn't be administered by one group of those who are mentioned exclusively and that there are other interests involved in the Great Lakes-St. Lawrence system whose interests should be protected?

Mr. Pilotte: We're not saying that we have felt any fear regarding the way things appear to be going at this time. What we're saying is that, based on the consultations that we have had, the only point that was raised to us is that we just have to pass one message, which is that we want to make sure that the end result - the ministry is well on its way in terms of what it should do - should at least take into account the ability of everybody to do commerce in the St. Lawrence Seaway system. That's it.

The Chairman: Thank you. Roy.

[Translation]

Mr. Cullen (Etobicoke-North): Thank you very much, Mr. Pilotte, Mr. Gagnon and Mr. Mailloux.

You may not want to reply to my question, but I will ask it anyway. Can you inform us of the major points on which you did not obtain a consensus of all your members?

Mr. Pilotte: You will understand, since you do essentially the same work as we do, that there may not always be a consensus when you have to work in a committee and are trying to draw up guidelines, reach an agreement on representation and views, have a discussion among the members and, at the end of the day, insofar as possible, reach some conclusions.

The points on which there was not necessarily a consensus are not necessarily invalid. We simply wanted to identify the points that we considered most crucial. For example, Mr. Cantin of the City of Quebec participated in some of our meetings and presented his point of view to us concerning municipal taxation.

Not all the participants necessarily shared Mr. Cantin's opinion. That is why SODES expressed the opinion contained in its report.

.0935

This does not mean that SODES simply gave the back of its hand to the other points which do not appear in the report because of the priority we gave to certain other points.

The Chairman: Thank you. Mr. Crête.

Mr. Crête: Thank you for your brief. My attention is drawn to three major points, and I would like to you to develop your thinking on them.

I share your concerns about the lack of details on the status of the regional ports. It might be appropriate if you were to describe further the impact you anticipate if this status is not spelled out.

The second point has to do with the appointment of a user ombudsman. You summarize in one paragraph the duties that would be assigned to this person, but I would like you to come back on this and explain why you think this role is important.

Lastly, I will ask you the same question I asked the City of Quebec, but in your capacity as users, in relation to cost recovery. Don't you think there is an equally if not more significant threat in this than in the lack of a status for the regional ports? Do you think, as the City of Quebec was telling us earlier, that it is important for the decision making to be combined under one chapter or one heading, so that the impact can be fully assessed?

Mr. Pilotte: In terms of the regional ports, as I was explaining earlier, our biggest problem is that to all intents and purposes we are in the dark. We don't know how things will go.

Of course, we are fully aware that the process is under way. We have even heard, to our surprise, that some of the east coast ports would be sold. All we know for the time being is that the regional ports are to be transferred, but we don't know on what basis, financial or otherwise. We may find ourselves with some aberrations, although we don't think that was the intention. This is a source of great concern to us since all that the legislation says is that they can be transferred.

I provided a somewhat exaggerated example earlier as to the possibility that no buyer would be found and that some corporation would get hold of one of these regional ports for a dollar. We might find ourselves in a situation in which, since a port entity had absolutely no financial costs, it would attract cargo that would otherwise have transited through a CPA located nearby. We cannot afford that.

I hasten to point out that the system concept in the brief does not contemplate the formation of an official system. We say there is a group of ports that are important both to Canada and to Quebec or the other provinces and to the regional economy. We have to ensure that at the end of the day we will have a group of ports that can complement each other and not kill each other off. If we find ourselves in five years with regional ports that have eliminated two or three CPAs, we will be no further ahead. That is one example.

We make the suggestion in relation to an ombudsman as a result of representations from a number of parties who assured us this would be a good thing. Very often, in the past, we had some serious questions or doubts. The process was unclear; we didn't know what we could do.

Business records are confidential by law. But they are excluded from the application of section 142 of the Transportation Act, which previously allowed, if I remember correctly, complaints to the National Transportation Agency where difficulties arose. That will no longer exist. We will find ourselves with CPAs, with closed corporations, and we will be unable to do anything.

On the one hand, the documents are confidential, and on the other it is said that the CPAs shall act fairly, under certain banners, of course. For example, the rate may differ according to quantities, etc. That's understandable. It makes sense. But if a particular user thinks it doesn't, at what door does he knock? There is no mechanism at present.

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Mr. Crête: And the third point?

Mr. Pilotte: SODES' position on cost recovery is well known. I think that one of the major problems up to now has been that we have excessively compartmentalized the economic impact studies to the point that we wonder whether these studies will have any impact and be of any use.

As we stated in our report, it is necessary to combine in one study all the economic impacts, in terms of cost recovery, dredging, port reforms, or whatever.

We will find out whether we are going to have a ports system that is efficient and competitive by looking at the whole picture, not by looking at things in a segmented way. For cost recovery, we are talking about only $20 million for the moment. That's not bad, you say. But if we add to that dredging or this or that other thing, we may find ourselves with ports that, in terms of their ability to do the things... Perhaps we ought to give them an expanded vocation, because there may not be any more boats that will come into the ports.

Mr. Crête: You have implored the federal government to act on the issue of marine casinos. Why is this change not being made? Can you give me an example that would show us why it is important that you be given this tourist tool in the short term?

Mr. Pilotte: I don't know if you have ever looked at the official map of Canadian waters. You should. The casinos must be closed before the vessel enters Canadian waters. On board a boat, after eating and sightseeing, you have to do some things. There is the movie theatre and lots of other things, but when you are on a boat you are limited. A casino is one way for the ship operators to sustain their vessels. It is hard to explain to the passengers. The studies indicate that a passenger will go on several cruises over the years. In Canada, it's different: there are no casinos.

Now we have some land casinos. We are not asking that the vessels compete with the land casinos. Giving passengers permission to play on board up to a certain limit before the arrival of the boat won't harm anyone. It will simply help the economy. Believe me, the ship operators and the marine tourist economy very much need this, because we're playing a very tight game in this field.

Mr. Crête: Thank you.

[English]

The Chairman: Thank you, gentlemen. That issue of regional ports is something new. We'll look at that very carefully.

Mr. Keyes: Mr. Chairman, I just wanted to make sure Mr. Crête was aware of the fact that the Minister of Justice has been made aware of the complicated issue of gambling and the resulting amendment that would have to be made to the Criminal Code, and the government is currently examining that very option.

Mr. Comuzzi: Mr. Chairman, I could just add to Mr. Keyes' comments that it's also important that this committee has been aware of this issue for several years, and we're doing everything we can. We realize the importance of the cruise ship industry in Canada, not only on the St. Lawrence but on the west coast, and it's important that the legislation be changed. So what these folks are saying today about changing the necessary legislation we're aware of. But we appreciate very much their bringing it back to the table.

The Chairman: It's also what we heard from the Port of Halifax.

Thank you very much.

Now the Port of Quebec.

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Gentlemen, you are familiar with the procedures here. You have about half an hour, so try to constrain your remarks to provide opportunity for some discussion.

[Translation]

Mr. René Paquet (Chairman of the board of directors of the Quebec Port Corporation): Mr. Chairman, my name is René Paquet and I am the chairman of the board of directors of the Quebec Port Corporation.

I am accompanied this morning by Mr. Ross Gaudreault, the president and general manager of the Port of Quebec, and Mr. Alexis Ségal, vice-president, marketing.

I thank you for the opportunity you have given us to participate in your discussion of Bill C-44, tabled in the House of Commons last June.

It is not our intention to read the brief in detail. It is a document that you may read at your leisure if you have not already done so.

To allow time for discussion, we will limit ourselves to the main points that the minister asked you last September 26 to focus on in particular, namely, federal agency status, the structure of the future port authorities, the taxation issue, the powers issue and finally the issue of the fees to be paid to the federal government by the port authorities.

I would first like to tell you that the Quebec Port Corporation subscribes in principle to the reform proposed by the federal government in Bill C-44 to the degree that this reform will make an effective contribution to improving the Canadian ports system, which is still financially viable.

This system may be improved through the elimination of one bureaucracy. Bill C-44 already provides for the abolition of Ports Canada, an agency which, in the past, proved cumbersome and costly and failed to provide the port authorities with the support to which they were entitled.

Thus, when Bill C-44 has been adopted by the House of Commons, none of the major Canadian ports should be in a worse situation than it is at present. I think that is easy to explain.

We live in a world of globalization of markets, and must always bear in mind that the competition for the Port of Quebec is not the Port of Montreal or the Port of Halifax, but the U.S. ports.

We support the principle. However, you have had an opportunity to hear from the representatives of the other ports in this country. It is no accident if our comments this morning parallel those that have been made earlier by the major Canadian ports.

Bill C-44 will allow the various Canadian ports to talk to each other, to understand each other and ultimately to see that Canada enjoys a ports system that must continue to function effectively in Canada's best interests.

A port like Quebec's must be able to pursue its dual mission, which is to participate in the improvement and proper functioning of Canada's international trade and to contribute to the economic development of the greater Quebec City area.

I remind you briefly of the importance of retaining federal agency status for Canadian ports. You have heard the comments of the people who preceded me. You have heard them throughout Canada. The whole issue of federal status is extremely important.

This is a tool that the ports need. When we talk about the development of the ports and international marketing, it is extremely important to have federal agency status. This is also a status that we need in terms of taxation, in terms of zoning by- laws and in terms of the environment.

This does not mean that the port authorities are not acting as good corporate citizens. There has been much discussion of the issue of municipal taxation. You will allow me to remind you that present local port corporations, whether in Montreal, Vancouver or Quebec, are already paying contributions in lieu of taxes. The Quebec Port Corporation alone pays the City of Quebec 1.4 million dollars every year as a contribution in lieu of taxes.

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The users of the Port of Quebec pay it more than three million dollars. Thus almost five million dollars are generated by the presence of the Port of Quebec and its users, for the purposes of municipal taxation.

We now have a formula that works well. The relations between the Port of Quebec and the City are excellent. We have always reached agreement at all levels, whether in relation to contributions in lieu of taxes, the environment, or zoning.

Perhaps it should be added that federal agency status might also help facilitate the funding that the ports will have to provide themselves in the future for development or renovation of their infrastructures.

To deprive them of federal agency status is, in my opinion, to deprive them of a status that is essential to the survival of a Canadian ports system.

I would now like to speak to you about the structure and composition of the future port authorities. We subscribe without hesitation to the principle underlying Bill C-44. Moreover, our position is based on the Keyes report, prepared by Mr. Stan Keyes. In our opinion, that report should be the bible of the Canadian ports system reform.

We subscribe to the principle that the users must have an extremely important role to play in the port authorities. We add that no one group - users or representatives of public bodies - should have a majority on the board.

To obviate this apparent difficulty, the Port of Quebec proposes some flexibility in the boards. Whereas the bill would determine the composition or structure of the ports, we suggest a flexible structure adapted to the needs of each port, that can be discussed when the letters patent are issued for each of the Canada port authorities.

The Port of Quebec proposes in this regard a board composed of seven persons: three users, one representative each from the federal government, the Quebec government and cities affected by the port's activities, and, as the seventh person under Bill C-44, the Corporation's chief executive officer.

The chief executive officer has an important role to play; he is the chief official in the corporation and is responsible for operations. He is a man with substantial responsibility. If we hire a chief executive officer, we want the ports to continue to function as commercial undertakings. This person must assume his responsibilities as well: sitting on the board as a voting member.

With representation from all three levels of government, the presence of three users who will have a plurality of votes, albeit perhaps not the majority, and the presence of the chief executive officer, a balance will be maintained.

We want to make some quick comments on powers and the fees that will have to be paid to the federal government. I invite the president and general manager of the Port of Quebec, Mr. Ross Gaudreault, to take the floor.

Mr. Ross Gaudreault (President and General Manager, Port of Quebec): Mr. Chairman, good morning and welcome to Quebec. I would like to welcome in particular a few familiar faces that we see again in Quebec City today.

Mr. Keyes wrote a report, the Keyes Report. I have been president of the Port of Quebec for ten years and I have never seen so much support for a report as for that one.

We were all in agreement in Canada on the conclusions of that report, but your officials in Ottawa did not read it carefully and its recommendations were not translated into Bill C-44. Some things were forgotten. Everyone would have been happy if the report had been clearly understood and the bill properly drafted. If such had been the case, we would not have had to meet here this morning.

However, we have some things to correct, and this is the time to do it. We were speaking earlier of cruises; it is only five years that we have been talking to you about this, and it still isn't resolved.

So we should give you some amendments that will help us administer our ports more adequately.

With respect to powers, we have missed the boat. You want us to be better administrators and you tell us to limit ourselves to marine operations.

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As you must know, we have strips of land. The port lands are not in the midst of provincial parks. They are at the water's edge.

We want to continue to use them while waiting to develop them when we have some port projects. This enables us to go and look for further revenues. We need some buffer zones, Mr. Chairman. You can't build residential housing right at the port boundary. We're going to be kept cooling our heels. So we need some buffer zones. At present, it is the Port of Quebec that uses them. We are running marinas and making money from them. We run tennis courts and temporary parking lots.

This is what must be corrected. You have to give us the right to use these lands as good businessmen. If you want us to become good businessmen, give us the tools we need. Have you ever seen a company that pays royalties on its gross profits? Imagine that! Royalties are paid on net profits, not gross profits. That is what we recommend to you, like everyone else in Canada. If you are afraid we will hide things from you, there is no problem. We are good administrators. Like any good company in the world, we would prefer to pay you royalties on net profit and not on gross profit.

Mr. Chairman, we have been talking to you about casinos for five years. The other day, I was on board the ms Veendam of the Holland America line, a vessel with 1,367 passengers. Of the 250 ports in the world where Holland America vessels dock, there are four at which they stop over for more than 24 hours. The Port of Quebec is one.

They spend two days in Quebec City, one day in Montreal, and they come back for two days in Quebec City. That makes five days on the St. Lawrence. I was told:``Whenever I come to Quebec City, I lose $500,000.'' They have to like us to come to Quebec City! Whenever they come here, they lose $500,000.

I was in Vancouver last week. They now get 800,000 passengers. It's a $200 million industry, and casinos are tolerated.

Here they have to shut them down about 800 miles from Quebec City. The Code must be amended. It is not complicated. We have been asking you to do it for five years. It is important for tourist industry development of the St. Lawrence, in Quebec City and Montreal.

Quebec City is one of the most sought-after destinations in the world. We need a tool. We are told that next year, for the first time, we will have some boats from the Royal Caribbean line. This will be 2,500 passengers. Can you imagine the loss in revenues those boats will incur? We need a small amendment. It's no big deal.

We are very concerned about the cost recovery for icebreaking and dredging.

Do we have to be poor? We don't have a million dollars to dredge one of the biggest seaways in the world, the St. Lawrence. In the Coast Guard, with a budget of $800 million, they don't have a million dollars to dredge the North Traverse! One million dollars!

Last week, I was on board a warship in the Port of Quebec, and a young officer gave me a tour of his brand new boat. He showed me a cannon they use to fire missiles, and told me that whenever they fire one, it costs a million dollars. A million dollar missile! That's my dredging in the Port of Quebec that he's firing into the sea!

Dredging is very important. More than 15,000 vessels pass through the North Traverse, and we don't have one million dollars to dredge it. We are very concerned, Mr. Chairman.

I will turn the floor over to you, gentlemen, to ask us some questions.

[English]

The Chairman: Mr. Comuzzi and then Mr. Keyes.

Mr. Comuzzi: Thank you, Mr. Chairman.

I'm not going to comment on the cannon, although, Mr. Boudreau, I have some sympathy for you when it comes to user fees, but we'll save those for another day.

I was interested, Mr. Paquet, in your comments about governance of the new port structure. I don't want to paraphrase your words, but I think you said users have a very important role but they're not exclusive to the control and governance of the system. That would be insofar as your ports are concerned.

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I'm sure you're aware there is a move afoot to turn the entire Great Lakes-St. Lawrence system over to users. That would be contrary and contradictory to your philosophy. Is that correct?

Mr. Paquet: Could you repeat your question, please?

Mr. Comuzzi: Certainly. You have a philosophy, insofar as governance of the ports is concerned, that users should be very involved but not exclusive to the governance of your ports. There is a move afoot to turn the entire Great Lakes system over exclusively to users to administer. If your philosophy were applied to the governance of the ports, it would also apply to the governance of the Great Lakes-St. Lawrence system, would it not?

Mr. Paquet: I am aware that the government is coming forward with a policy concerning the St. Lawrence Seaway. As a matter of principle, to be logical my answer would be yes. We think the user should have a plurality of votes but should not have the majority. It should be a team effort. On a team everybody has a role to play, and I don't think anyone should have the majority of the roles. That's the basis of our reasoning. It could probably apply to the St. Lawrence Seaway, even though I am not involved in the St. Lawrence Seaway reform. I know it's well under way, and I think, as a principle, the answer would be yes.

Mr. Comuzzi: Although you're a deep-water port, would you mind explaining to us how important, in marine transportation in Canada, the Great Lakes-St Lawrence system is to the Port of Quebec?

Mr. Paquet: I think I'll ask Mr. Gaudreault to answer that question.

Mr. Gaudreault: We are a partner to the St. Lawrence Seaway. Our port probably uses the St. Lawrence Seaway more than any other port on the St. Lawrence. So whether it's iron ore in transit from Brazil to Chicago or grain coming in, the St. Lawrence Seaway is very important for us. If there were no St. Lawrence Seaway, the Port of Quebec would be in deep trouble. No grain comes in by ship in the summer and we can ship coal or iron ore, so we need the St. Lawrence Seaway.

Mr. Comuzzi: This will be my last question.

You mentioned the American ports of Chicago, Burns Harbour and so on. Does the Port of Quebec do a great deal of business with the American ports?

Mr. Gaudreault: We are a partner to the American seaway section also because we ship all the iron ore for Bethlehem Steel through the Port of Quebec from Brazil and on to Chicago and Burns Harbour.

The Chairman: Mr. Keys.

Mr. Keyes: Thank you, Mr. Chairman.

I want to thank Mr. Paquet and his staff for a very thorough brief and a nice summary for our purposes.

Mr. Comuzzi: Especially that part about the Keyes report.

Mr. Keyes: In fact, Jim, I want to thank Ross for his kind comments on the Keyes or SCOT report of 1995. He says it was masterful and had everything in it he ever needed. I'm not so sure the pilots would agree with you -

Mr. Gaudreault: I was talking about the port, Mr. Keyes.

Mr. Keyes: - on the content of that report, but we'll hear from them later.

I think it should be clear that when we speak of the coast guard, dredging and aids of navigation, they are not in the domain of this particular committee or even the Ministry of Transport, but that of the Ministry of Fisheries and Oceans. So as not to completely alienate ourselves from the issue of dredging, coast guard and aids to navigation, a report will be made shortly, and the Ministry of Transport and the Ministry of Fisheries and Oceans will be working together to closely examine those very issues.

On the matter of casinos, as was stated earlier by Mr. Crête, the Minister of Justice is being made cognizant of the need for an amendment to the Criminal Code. That's not something we can do through this legislation, but he is certainly being informed of the issue.

I wonder if Mr. Paquet could speak to us about the CEO being appointed to a board. Quite frankly, the majority of ports across the country are saying ``Don't put the CEO on the board''. We come to Quebec City and they're asking that the CEO be put on the board.

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Could you expand on the rationalization as to why a CEO would be put on the board, as opposed to the feelings of Vancouver that the CEO should be one step removed from the board?

[Translation]

Mr. Paquet: You are right to mention it, Mr. Keyes.

The presence of the chief executive officers on the boards of directors is perhaps one of the rare points on which there was no unanimity in Canada. I think that, in some cases, it may reflect particular situations. If the current structure were maintained for those ports and an additional person were not allowed, then it would not be necessary to have a chief executive officer.

In other cases, it may reflect personality conflicts between some members of the board and the CEO. I must tell you that the Port of Quebec approach was that of private enterprise, the big business corporations, in which the presidents and general managers of the firms sit on the board of directors.

As I mentioned earlier, the chief executive officer is responsible for the ongoing operations of the company. He is paid well to do his job and he has a lot a responsibilities. For the directors, it is important that the person who has control of the operations shares his responsibilities with the other directors.

The directors have responsibilities that, in some cases, can be enormous. One need only think of the directors' responsibility environmentally, which is a major concern for the ports. I think that in all fairness the CEOs should share that responsibility with the other members of the board.

Obviously, the board may appoint the CEO and, after hiring a good CEO, appoint him to the board of directors. This is something that is commonly done in the business community. Since we want the ports corporations to function like real business firms, we should apply the same principles to them.

[English]

Mr. Keyes: I have a quick question on judicial federal agency status for the port.

We spoke of the ties that bind. The Canada Ports Corporation, with all its faults and its slowness in the bureaucratic process of trying to make the ports as commercial as they can be, will be gone, but if it did anything, it brought the ports together under one umbrella, whether they were in Vancouver, Quebec or Halifax, and they were together as a team working with the ports across Canada.

Do you see the implementation of your suggestion of federal agency status as picking up from where the Canada Ports Corporation will be leaving off?

I know SODES is not so keen on the federal agency status. Their reasons aren't particularly clear as to why they do not want it, but as far as taxation goes, for the protection of the ports and for that tie that binds, do you feel that the federal agency status could accomplish that?

Mr. Paquet: The new marine policy and Bill C-44 gave us - when I say gave us, I mean gave the Canadian ports - a golden opportunity to get to know each other, to work together, to share common interests, and to bring up key issues to this committee and to this government. I think maintaining the federal agency status will help us keep that link, which I think is essential for the Canadian ports.

In some areas we might be in competition, but we have lots of common goals. We have lots of information to share together, and being part of the Canadian port system with a federal agency status will make things much easier.

Mr. Keyes: Thank you, Mr. Paquet.

Mr. Paquet: Mr. Chairman, I would like to add something, and I know Mr. Comuzzi can witness it. We sell around the world and we work as a Canadian port, as a Canadian system port, as a federal agency, but we work with the embassy also, and that gives us an awful lot of work. When we go to commercial missions we work with the local embassy, and they are helping us. If we lose our federal status, goodbye; we don't have that any more. I think this is another very important point.

The Chairman: Thank you.

Mr. Jordan, you have one very short question.

Mr. Jordan (Leeds - Grenville): With regard to the constitution of the board, we've had a suggestion in other meetings that labour should be represented on the board of directors. I'm in sympathy with what I think Mr. Keyes is suggesting, giving the chief executive officer a chair there.

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I can visualize a situation where you'd come down to a voting situation, where you're trying to determine whether you should proceed or not. I question whether the chief executive officer should be involved at that level, being so engrossed in it himself.

What do you think about having labour, one of their reps? It may mean expanding the board from - you're suggesting seven, including the chief executive officer. Maybe keep the seven and have labour one of those seven, and have the chief executive officer do just that. He's a resource to all aspects and probably the most knowledgeable one they'd have.

What about having labour represented on the board?

Mr. Paquet: I think there should be no exclusion. Anybody who could qualify as representatives of the users should sit on the board. If one of those persons happens to be a member of the labour force, why not?

Mr. Jordan: In that way, then, labour could conceivably have a representative on it if they were one of the users' appointees. If the users amongst themselves decide that Mr. Alcock, who's from the labour force, can be a good representative, he could end up on the board - maybe not as a union representative but as a representative of the users, if he qualifies.

I have a second short question. This has come up before, and it's always an argument, whether it should be based on gross or net. My own view is that the difficulty in basing it on net is that there are some very ingenious ways of accounting to determine what net constitutes, whereas with gross it's fairly clear cut.

I think most of you are suggesting that you would pay a whole lot more if it were based on gross as opposed to net. Yes, you would, if the rate was kept the same, but my idea would be to lower the rate and base it on gross because there's more consistency in establishing what constitutes gross.

Net is a lot more flexible. There's more room for ingenuity in accounting practices. That may not be fair. I don't know how you would determine it. It would have to be applied equally to everyone. You'd have to get accountants to agree on how it was going to be established. That's the difficulty with it.

[Translation]

Mr. Paquet: I understand that it can create some difficulty, imposing a levy, a fee or a tax on the gross revenues. But you still have to ensure that all the business corporations and the ports are going to function as business corporations, are subject to annual audits of their books by chartered accountants, which are themselves subject to regulations and standards that are the same everywhere in Canada.

So, from the way in which the auditing is done and the way in which the monitoring and supervision can be exercised by some secretariat or office connected with the office of the Minister of Transport, you can easily audit the financial statements and see if a port authority is systematically, year after year, failing to post profits. At that point, you can easily identify the deficiencies in the accounting procedures.

It is necessary to rely on the people who will be appointed. Let's not forget one thing: the representation of the users reflects something, and that is the quality of the people who will be appointed to these boards of directors to administer and operate the port authorities.

[English]

The Chairman: Thank you, particularly given your invitation for me to serve on your board. I appreciate the endorsement.

Some of those issues, though - the executive officer, labour reps - can also be addressed through the structuring of your letters patent, as opposed to being done in the legislation.

As to Mr. Jordan's ingenuity in accounting, that's something else we'll have to discuss Mr. Jordan.

[Translation]

Mr. Crête.

Mr. Crête: Mr. Paquet's final words on the appointment of the directors are very relevant, in my opinion.

At page 6 of your brief, you say, and I quote:

The Quebec Port Corporation suggests that directors be appointed for three-year terms renewable as often as is deemed necessary by those responsible for appointments.

If I understand clearly, you are asking that the government have the same courage in this as in everything else, that it apply the Keyes report and translate the appointments into reality, because, in the present bill, there is a significant danger of politicization.

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Isn't the purpose of the suggestion precisely to allow the direct appointment of the directors by the users, instead of the Minister making the appointments from a series of names that will be suggested to him? I note also that you specify, later, that the chair and vice-chair of the board may be appointed by the Minister. Are you recommending that the rank-and-file directors be directly appointed by the users?

This is at page 6 of the document, in the fifth paragraph.

Mr. Paquet: When we speak of those responsible for appointments, we are thinking of the Minister. He should appoint from a list that will be supplied to him by the users.

Mr. Crête: You don't see a danger of politicization in that?

Mr. Paquet: There is politics everywhere. A particular government will appoint certain persons, another may appoint others. If the Minister takes the trouble to put a selection process in the act that allows him to choose from among the best elements, it is normal in that case that the Minister appoint them; ultimately, the quality of the persons suggested by the users will be such, in my opinion, that the Minister will have an easy choice.

It doesn't seem indecent to me, either, that the federal Minister of Transport himself make those appointments, because you have to bear in mind that in the proposed formula, as in the current formula, it is the Canadian government that remains the owner of the assets. When you are the owner of significant assets, it is essential that you keep some control over the corporation. As long as things are going well, there's no problem. But the day things are not going well, even if there is some withdrawal financially by the federal government, the one who gets a call telling him that it's not working in the Port of Quebec will be the Minister of Transport.

Mr. Crête: But don't you think that this is an important blow to the self-sufficiency of the ports? That the chair and the vice- chair of the board are appointed by the Minister, as you suggest, may seem attractive. As to the directors, the port representatives will suggest seven, eight, ten or fifteen names, from which the Minister is going to choose four or five. You find that acceptable?

Mr. Paquet: I won't lose any sleep over it.

Mr. Crête: All right.

In the past, we experienced some rather special situations. Often, the port authorities had major deficiencies because of the poor quality of the board members.

Mr. Paquet: You are quite right, but there are solutions to every problem; on the whole, you have to rely on the quality of the people. The users, I am certain, will select representatives who will be capable of representing them, who will have the qualifications, the experience and the availability that are needed to ensure that the port is managed in the public's best interest.

Mr. Crête: I agree with you 100 per cent that the users will suggest some worthwhile names. I hope the Minister makes his choices so as to allow lots of autonomy to the users in the suggestions they make.

In Vancouver, we met with people from the Port of Fraser River, which is twinned with the Port of Quebec; they have the status of a harbour commission, a status that exists for ports in Ontario and British Columbia.

If, tomorrow, you had a choice between the status quo, the present Bill C-44, and the status of a harbour commission, which status would in your opinion be more appropriate?

The people who came to tell us about the harbour commissions told us that this is the status that seemed the most attractive to them, compared with what there is in the bill. They were against the repeal of the Harbour Commissions Act.

Is this an approach you have envisaged for Quebec City? You are telling us politely today that Bill C-44 is fine in terms of principles, but that if there are no major changes, it may be hard to accept.

Mr. Paquet: I think that to ask the question is to answer it. I will remind you that the harbour commissions do not pay municipal taxes. That is already an enormous advantage in having harbour commission status.

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Mr. Lallier may not agree with me, but if we had a possibility of not paying any taxes or compensation in lieu of taxes, this would be of great interest to the Port of Quebec.

Mr. Crête: Some municipalities came and testified in Vancouver in favour of maintaining harbour commission status. It was the mayors of those municipalities who came and told us that.

I repeat my question. Between the status quo, Bill C-44 as it is, and harbour commission status, which would be the most attractive model for you? Have you looked at that?

Mr. Paquet: Bill C-44 amended would come a lot closer to harbour commission status. That is what we say.

Mr. Crête: Are you able to live with Bill C-44 unamended?

Mr. Paquet: Bill C-44 hamstrings us and limits our powers. We will have fewer powers than we now have with the Canada Ports Corporation Act, adopted in 1983.

Still, the ports have managed to do well financially. We wouldn't want to miss the boat this time around. When it comes to doing it, do it right. As they say in English, when it works, don't fix it. But you can improve it.

Mr. Crête: We certainly agree with you, Mr. Paquet. Thank you.

[English]

The Chairman: Thank you. If I didn't have to pay taxes, that would be a big benefit to me, too, Paul.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman. We could arrange for your income to be lowered to the point where you won't pay taxes and then you would obviously be a very happy man.

Some hon. members: Oh, oh!

Mr. Gouk: Gentleman, just now we heard my colleague from the Bloc ask if you like C-44 unamended, if that is acceptable. I don't think that's going to happen. I think there are going to be quite a few amendments that will get agreement around the table from all parties. Most of what you've put forward is very consistent with what we've heard and with what we're all contemplating in terms of amendments.

You have in fact followed the line many of the ports have. There are a couple of your points under ``Other Considerations'' where you have made reference to the Canada Ports Corporation Act. I will have to look at that because I'm not familiar enough with it. I will look at that as well. I'll see what your recommendations are and they will be taken into consideration.

Thank you.

[Translation]

Mr. Crête: Your concerns about Bill C-44 are understandable when you see what they did with the Keyes Report. You will have to be very attentive in future.

Mr. Paquet: We will be.

[English]

The Chairman: Are you answering the question for Mr. Gouk?

[Translation]

Mr. Crête: He didn't have a question.

[English]

The Chairman: Yes, I understand. Thank you very much, gentleman. I appreciate it.

Mr. Paquet: Thank you, Mr. Chairman. Thank you, gentlemen.

The Chairman: From the Port of Trois-Rivières... Mr. Crête, do you know anything about this port?

Captain Tremblay and Mr. Masson, welcome. You are familiar with the process. You can try to constrain your remarks and I will try to constrain the members. We'll have an interesting session.

Mr. Robert Masson (Project Manager, Port of Trois-Rivières): Yes. Mr. Chairman, we have a lot of things to say. This is the first time we have come before a committee. We haven't had any chances to explain ourselves. Now, if we may, we would appreciate fifteen to twenty minutes for our presentation.

The Chairman: Absolutely. We'll constrain the amount of questions. It's your time. You use it as you choose.

[Translation]

Captain Serge Tremblay (General Manager, Port of Trois- Rivières): I am Captain Serge Tremblay, general manager of the Port of Trois-Rivières. I am accompanied by Mr. Robert Masson, project manager at the Port of Trois-Rivières.

We would like to thank the Standing Committee on Transport for this opportunity to express our point of view on Bill C-44.

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The management of the Port of Trois-Rivières has always excelled in administering its port and in meeting the needs of its clients with efficiency and broad mindedness. Bearing this in mind, we are before the committee today to ask you to help us in pursuing our attempt to achieve a dynamic and efficient port management.

It is also our hope that proposed amendments will be put forward so as to present the best marine reform possible, as the Minister stated in his speech to this committee on September 26.

There are five parts to our brief: the port and its environment; the reasons for becoming a CPA; proposed changes in Bill C-44; the impact of Bill C-44 on ports; and the conclusion.

Located on the north shore at the confluence of the St. Maurice River and the St. Lawrence River, the Port of Trois- Rivières is halfway between the port cities of Quebec and Montreal.

The administrative region of Mauricie - Bois-Francs, of which Trois-Rivières is the central city, is the third largest in Quebec in terms of population. It is also important to note that more than five million consumers and 96 per cent of Quebec's manufacturing industries are concentrated within a 150-kilometre radius of Trois- Rivières.

Historically, the port has served as a major development tool in the region. Over the years, its growth has been based successively on furs, wood, grain, minerals, asbestos and paper products, all of which have played an important role in its development and growth.

The ports' hinterland has expanded over the years with developments in intermodal transportation, technology and the size of vessels as well as the development of world trade. The vocation of the Port of Trois-Rivières has altered accordingly, and is now focused on adjusting to these new realities. We can now say, in 1996, that the Port of Trois-Rivières has specialized and diversified into a number of products such as alumina, for example. Nowadays, in fact, a port is recognized not by its size but by the diversification in its products as well as its capacity to react and adjust to the context when some event occurs.

Over the last five years, 72 per cent of the total tonnage handled in the port has been international cargo. Overall, the port handles approximately twenty different products on a regular basis, and the total annual volume is around 2.5 million tonnes.

Activities stemming from the Port's operations have a very major impact on the local, regional and national economy. A study in 1996, based on 1995 statistics, showed the following economic impact: total jobs, 776; revenues, $48.5 million; direct salaries, $16.5 million; spinoff consumer spending, $47.5 million; and taxes, $15 million.

Financially, few Canadian ports are in such an enviable situation as the Port of Trois-Rivières. Over the years, sustained efforts in market development, product diversification, effective programs for preventive maintenance of port facilities and strict spending controls have enabled us to develop an efficient management that is an example for other public and quasi-public institutions.

For many years now, the Port has been able to finance its projects out of its own funds. For example, in 1978, when wharves 10 and 11 collapsed, the Port alone spent eight million dollars of its own reserves on their reconstruction.

All repairs and maintenance projects have been financed from the Port's reserves. The Port of Trois-Rivières has never received grants or loans from the federal government. It is entirely debt- free. Furthermore, in March and August 1986 and in August and December 1990 the Port of Trois-Rivières contributed $11 million, or 12 cannons, to the payment of the national debt. At present the Port's reserve stands at $12 million and we have also paid the government more than half a million dollars in dividends over the years.

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Our financial performance for 1995 is revealing. On revenues of $3.5 million, operating income was $1.1 million and net income $1.9 million. We are anticipating much the same results in 1996.

With the very specific goal of improving the quality of the port's management on an ongoing basis and efficiently meeting clients' needs, the Port, in 1994, initiated an ambitious ongoing quality improvement program. This extremely innovative port management program should result in the Port's obtaining ISO 9002 certification by the end of 1996, a major first in the annals of Canadian ports. Indeed, the Port of Trois-Rivières will become the first port in North America in which policies and work procedures are implemented in accordance with internationally recognized standards.

In its present status, the Port of Trois-Rivières is considered a divisional port, that is, a port administered by the Canada Ports Corporation. However, the statute and regulations governing it are the same as for the local port corporations. It is primarily at the administrative level, through the respective boards of directors, that they can be recognized.

When the ports reform was first proposed, some time ago, the Port of Trois-Rivières was already preparing to request local port corporation status, since it was financially self-sufficient.

Under subclause 6(1) of Bill C-44 the Minister of Transport may issue letters patent of incorporation for a port authority without share capital for the purpose of operating a particular port in Canada if the Minister is satisfied that the port is, and is likely to remain, financially self-sufficient; is of strategic significance to Canada's trade; is linked to major rail lines or a major highway infrastructure; and has diversified traffic.

Since we were convinced that the Port of Trois-Rivières met the above criteria, we submitted an official request last September 6 for the formation of a Canada port authority to the Executive Director, Harbours and Ports. The primary purpose of this request was to guarantee continuity in the development of the port in harmony with the local and regional community.

The Port's financial results show that it is capable of meeting its financial responsibilities for its development in the years to come. Supported by a financial reserve of $12 million and operations generating an annual operating profit of one million dollars, the Port of Trois-Rivières will be able to maintain its growth and finance its capital projects out of its own funds, as it has consistently done in the past.

In addition to its enviable financial situation, the Port of Trois-Rivières is a major tool in the development of its region and plays a strategic role for many of its users and clients throughout eastern Canada and the northeastern United States.

In fact, 1995 statistics show that more than $600 million in products were handled by our Trois-Rivières facilities, and the port generated $48.5 million in revenues, 776 jobs and $47.5 million in salaries and spin-off consumer spending for the various businesses, as well as $15 million in tax revenues for the various levels of government.

As the administrative and industrial capital of administrative region 04, the City of Trois-Rivières is serviced by excellent road and rail systems. Such efficient intermodal connections make it a hub comparable to the major North American industrial centres.

As for the diversity of our activities, the Port of Trois- Rivières is based on a wide clientele and a variety of products and specialized or general purpose terminals. To illustrate the scope of our diversification, we can say that our five largest clients account for 51 per cent of our revenues, a firm basis for the other sources of revenues originating from other activities.

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Proposed changes to Bill C-44: The comments we wish to make on Bill C-44 are based on a detailed analysis of the document presented to the House last June. We have also taken into account our status as a divisional port and the status of local port corporations, since we are governed by the same policies and regulations. We have also reviewed the arguments raised by the Canadian Port and Harbour Association. Thus we will comment generally on the bill and more specifically on the Port of Trois- Rivières.

We have no intention of reviewing the clauses in the bill one by one, since others have already done this or may do it - among others, the Canadian Port and Harbour Association, whose recommendations we support. We agree in principle with what has already been proposed by other ports with local port corporation status, but we would like to elaborate on three or four provisions in the bill that could actually be counterproductive for the Canada port authorities, particularly the Port of Trois-Rivières: the board of directors and the role of the chief executive officer; federal agency status; property transfers, property taxes, borrowing powers and clause 52.

We are, incidentally, disappointed that the recommendations contained in the report of the Standing Committee on Transport were not scrupulously followed and included in the draft version of Bill C-44.

Board of directors: We think the number of directors proposed in the bill is too high. In our opinion, it would be preferable to establish a number of directors for the larger ports and a lesser number for the medium-sized ports.

For example, the Port of Trois-Rivières, with a limited administrative staff of six persons, could make do with a five- member board, which would enable us to lower the operating costs of the board and be more efficient. With an 11-person board, we would be spending more on the board than on the staff.

The various stakeholders could be represented as follows: two representatives of the federal government; one representative of the provincial government; one representative of the municipal government; and one representative of the users appointed by the Minister in consultation with the users.

Why a users' representative? Because logically it would avoid any conflict of interest that could jeopardize the port's financial survival. In this regard, can one conceive of the CRTC with a board of directors consisting mainly of broadcasters' representatives, or a Wal-Mart with a board composed of consumer representatives, or a private company whose board was composed primarily of customers? Some obstacles are insurmountable.

In our opinion, all respectable and effective boards of directors are composed of business people with a successful record in the business community. It is high time that government institutions innovated, and here is the opportunity to do so.

The federal government should retain the prerogative to make appointments to the board of directors, but this does not prevent it from consulting the port's users when appointing their representative to the board. A three-year term of office is appropriate, in our view, with no more than two reappointments, to ensure continuity.

With regard to the role of the chief executive officer, we think that if he was not a member of the board he would be more objective and, if anything, a more effective port manager.

Federal agency status: Since it is our view that the federal government should maintain its interests in an improved national port system, it goes without saying that federal agency status is the indicated solution for ports obtaining Canada port authority status. The bill does not clearly indicate what the government's position will be in this regard, but this crucial issue will have to be resolved without delay.

If recognized as federal agencies, the ports would be in a better position to cooperate in carrying out the government's economic objectives. Such status would also enable the ports to discuss and negotiate more readily with other government agencies and departments in a simpler and more direct way, while preserving the federal government's assets, which are assessed at several billion dollars.

Finally, the federal government would thereby retain the power to intervene, which could be limited to specific circumstances, for example where there is a threat to the entire Canadian port system or where a port's survival was endangered.

In our opinion, the recommendations of the report of the Standing Committee on Transport should apply to this situation.

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Concerning the amount of the annual fees to be paid to the government, the mechanism for which is to be provided in the letters patent, it should be reasonable, in order to guarantee the profitability of the ports and their development over the medium and long-term. Accordingly, we propose that the payment be calculated on the basis of net income, and that there be no fee where net income is less than $3 million, with an annual remittance of 10 per cent at any higher amount.

Property transfer, property taxes, borrowing power, clause 52: If they are to achieve their objectives, the ports must have high- quality facilities, which are often extremely expensive to maintain. To manage these facilities efficiently and profitably, the ports must have flexible acquisition and disposition mechanisms, for example.

Under the current bill, real property transferred to the ports will be transferred under the letters patent. This approach could impede to some degree the proper management of the port. In our opinion, a transfer by order in council would be simpler and enable the ports to act or react more rapidly.

The approach to property taxes in the legislation could have disastrous consequences on a port's profitability. More specifically, if the Port of Trois-Rivières were not covered by the provision on grants in lieu of taxes, the annual surplus in taxes owing could become substantial. However, taxes paid for services rendered may be considered as another alternative.

Clause 24, as currently worded, would limit the potential activities a port could engage in in order to enhance its profitability. It is essential that under the new regime the ports be able to diversify their traditional activities as required by having access to any other activity indirectly connected with shipping, transportation of passengers and goods, and cargo handling and storage.

In the same clause, the restrictive description of the port in subclause (1) would limit a port to its current site. With appropriate authority and acquisition procedures, it is important that this clause facilitate territorial changes providing for an expansion of the initial port site as needed.

With respect to borrowing power, we believe that any port that becomes a Canada port authority should have a borrowing capacity sufficient to secure reasonable financing terms.

Clause 52 on port operations should be withdrawn from the bill and included in the regulations.

Impact of Bill C-44 on the ports: We also foresee some disquieting consequences of Bill C-44 in its present form. We believe that within 10 years, perhaps even less, many Canada port authorities on the St. Lawrence and elsewhere in Canada will have disappeared, for three major reasons:

1. Through their majority representation on the board, the users will be in a position to set fees and tariffs at such levels that the resulting competition will be fatal to the ports with fewer financial resources. These board members will be in a conflict of interest.

2. The failure to impose conditions on the transfer of ports to local or regional status may create a system with some very negative financial consequences for Canada port authorities. A user or terminal operator who purchases a port with that status and facilities of extremely high quality, on terms that may be extremely advantageous, could institute a rate structure on cargo movements that the CPAs could not match.

Indeed, unless firm infrastructure development and maintenance requirements are imposed on local or regional ports, the portion of the rate structure that is to compensate for these requirements could be nil. A CPA, which ought to have a longer-term vision, might be unable to cope with such competition.

On the other hand, when the time comes to invest in port facility maintenance in some local or regional sites, grants or subsidies from one or more levels of government in order to promote local or regional job creation will result in major market distortion.

3. On the St. Lawrence, and probably in the other regions of Canada as well, port users are also users of one or more other ports. So the same user will be represented on the boards of directors of various CPAs. Furthermore, the user might also be an operator or owner of a local or regional port. This situation will do more to facilitate the growth of a particular private business than to develop a property that can serve the interests of a community.

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In light of the points we have just raised, what basis is there for hoping or thinking that private sector users will ensure the establishment and development of a sustainable, efficient and competitive port system that will enable Canada to achieve its trade objectives?

Conclusion: There are three major aspects to the role of the port authorities: administration; owner's responsibility; and the operational function, which is almost always associated with the private sector in cooperation with the port authority.

The administrative function serves to coordinate the other two activity groups as well as make a port an entity that is responsible to the various stakeholders.

Our system is now undergoing a third reform, to define the most effective way of performing administrative functions. The purpose is essentially the same as it was in the previous reforms.

The purpose of the first reform was to correct problems in local administration, and of the second, to correct problems in central administration. The current reform is focused solely on administrative changes. It eliminates the fairness principle and the advantages of a more or less uniform system, and replaces them with strictly commercial principles. It takes us back to the situation before the first reform, albeit with much greater openness to the public than in the days of the Trinity Houses and the merchants who controlled them.

While relinquishing its role as an owner in favour of a group composed in its majority of users, the federal government will also be transferring to this group the administrative responsibility in addition to the operations sector it already controls. Those responsible for the present reform must also be aware of the immense power and authority that will be conferred on the users of public facilities owned by the government.

Many aspects of port management could become problematic, such as budgets and development plans, marketing and promotion, project planning and financing, general maintenance and dredging, negotiation of leases, easements, contracts and permits, navigation, safety and contingency plans, protection and monitoring of infrastructures, environmental auditing - which are within federal government jurisdiction - the planning and implementation of national objectives, the abandonment or transfer of facilities, the registration and visibility of property titles, land use and relations with the other government agencies and departments.

To conclude, we think the Minister of Transport's Bill C-44 is laudable in its effort to improve the efficiency of the Canadian ports system, provided that some major amendments are made to it.

Furthermore, in this new context the federal government will have to grant all ports fulfilling the criteria set out in the Act federal agency status as CPAs, to ensure the achievement of Canada's trade objectives. This was a recommendation in the report of the Standing Committee on Transport, and would guarantee a federal presence.

Decentralized administration with greater powers at the local level, management procedures that reflect local interests, and the obligation to be financially self-sufficient are among the factors that should enable the Canadian ports system to play a leading role in Canada's economic growth as the country heads into the 21st century.

As for the future of the Port of Trois-Rivières, we are awaiting a favourable response to our request that we become a Canada port authority. We meet all the criteria established by the Minister in his bill and our performance and financial results are simply concrete evidence in support of this request.

It is of the utmost importance that the Port of Trois-Rivières be given Canada port authority status as soon as the new Act comes into force, so as to avoid a period of uncertainty and speculation that could have a disastrous impact on the port's financial viability. As everyone knows, uncertainty and business do not go well together.

We would also like to add that if Parliament were to decline to change anything whatsoever in Bill C-44, notwithstanding the suggestions of all port specialists, we sincerely hope that your committee prescribes the original recommendations of the report of the Standing Committee on Transport and that these are introduced in full into the present Bill C-44, in the interests of the survival of Canadian ports and the economic growth of Canada.

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We hope that our brief will help you to understand our concerns regarding port reform and to become acquainted with the economic contribution of the Port of Trois-Rivières.

Thank you.

[English]

The Chairman: Thank you very much. I note three things. First, you have taken virtually all of the time we have available for this particular presentation.

Second, I want to congratulate you on your management of the port. It's been very active and a very important asset to this area. I note that you applied almost immediately for CPA status.

Third, I'm going to permit Mr. Crête some questions because it's his home area.

[Translation]

Mr. Crête: The brief is very clear and connected with the reality of the port.

For the benefit of the committee members, I would like you to say why you prefer to become a Canada port authority rather than retain regional port status.

You cite some things that clearly show that you fulfil the criteria of a port agency, but I would still like to know whether you have contemplated the other possibility, and why you have favoured this status instead of the other.

Capt Tremblay: First, the Canadian ports that will get this status are first-class ports. It must be acknowledged that a Canada port authority is a first-class type port.

The local or regional ports, to give them their due, don't have the same standing internationally. Today, the competition is at the international level. The people on the other side of the ocean are more attracted by international ports than by local or regional ports.

The local or regional port responds to the demand in a region, while our products are international. Seventy-two per cent of our products are international.

Another criterion has also influenced us. If you prepare a balance sheet of the Canadian ports, you will see that the Port of Trois-Rivières ranks among the top three or four, after Vancouver, Montreal and some other ports. Financially, I think we are one of the best in Canada.

Mr. Crête: Does this mean that since you are located between the Ports of Quebec and Montreal, which both have Canada port authority status, you would find yourself in the situation that you fear, namely, that of a regional port?

Capt Tremblay: We can maintain the momentum we have achieved financially and in product diversification. Our port is recognized internationally as being extremely efficient. The users who come to Trois-Rivières are delighted. We think that if we are to have some continuity in the future, we absolutely must get CPA status.

Mr. Crête: You have already submitted your application. If Bill C-44 was not amended, would you still prefer this status to the status quo?

Capt Tremblay: If Bill C-44 is not amended, I think we are performing very well at present.

Mr. Crête: So you can live with the status quo, but if the bill is amended satisfactorily, you will, because you are proactive, try to obtain CPA status.

Capt Tremblay: Provided that the government considers the ports as businesses that are there to make money. The port user is there to make money, but the port, too, must be a business managed by business people in order to make money, because it is not up to the public to pay for the ports. In that case, I have no problem with that.

[English]

The Chairman: Thank you, Mr. Crête.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

I have a brief comment echoing the words of the chairman, who commended you on doing so well financially. I would also like to comment on your bravery in bringing forward such a rosy financial picture to a revenue-hungry bunch of government representatives.

Some hon. members: Oh, oh!

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Mr. Gouk: Your comments are very in line with what others have brought forward. We'll certainly consider all the points you brought up and look forward to the favourable results for both of us.

Capt Tremblay: As I mentioned before, we have to be business-minded. Forget the government agency. We have to be a government agency to a certain extent regarding the land and everything, but we have to keep in mind that we are a business, and a business is there to make money.

The Chairman: Thank you very much.

Mr. Keyes: Just on a brief point of order, Mr. Chairman, and maybe for the benefit of the other witnesses in the crowd, an important part of the work the committee does, of course, is to interchange with the presenters and the witnesses as they come forward. I want the witnesses to understand that they do not have to read into the record the entire document. It can be asked to be included as read so that we can have the opportunity to ask questions of the witnesses.

So if the other witnesses are worried about the fact that they might not get through their presentation, it can be presented as read and we can get into a dialogue with the presenters.

[Translation]

Mr. Claude Munger (Chair, Conseil régional de concertation et de développement du Saguenay - Lac-Saint-Jean): My name is Claude Munger and I am the chair of the Conseil régional de concertation et de développement du Saguenay - Lac-Saint-Jean. I am accompanied by Ms Ghyslaine Collard, the general manager of Port Saguenay.

We wish to begin by thanking you for giving us this opportunity to present the position of the Saguenay - Lac-Saint-Jean region on Bill C-44 and its impact on our industrial structure and development.

I should tell you, at the outset, that this is in the first place a summary which I will present as briefly as possible, so as to reply to your questions subsequently. We of course want to have Port Saguenay included as a Canada port authority. That is the objective of our presentation. At the same time, we are going to request a few amendments to Bill C-44.

In our opinion, Canada port authorities should retain their federal agency status. The activities of the Canada port authorities, as defined in the bill, may be too restricted. We think they should include, in addition to marine activities, all activities that are directly or indirectly linked to marine activities. CPAs should also be allowed to use some assets as collateral in order to obtain private financing.

Similarly, the number of directors on a CPA board could vary from five to eleven; the letters patent of each board could be adapted according to the context. Others commented earlier on this. We think no board should ever consist of a majority from a single group. There ought to be some heterogeneity within the board to ensure that no one controls it.

Allow me to briefly introduce to you the regional development board. The Conseil régional de concertation et de développement is a regional agency which, through consultations and concrete activities, plays a certain leadership role and defends and promotes the interests of the Saguenay - Lac-Saint-Jean area.

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Our members include more than 150 corporations, municipalities, regional county municipalities, private and public sector businesses, development corporations, labour organizations, educational institutions, private and public financial institutions, cooperative organizations, sectoral regional boards, etc.

This organization is administered by a 40-member board that is highly representative of all these communities.

Port Saguenay is at present a divisional port under the jurisdiction of the Canada Ports Corporation. It has filed a request for recognition as a Canada port authority with the Executive Director of Harbours and Ports. We firmly believe that Port Saguenay fully and adequately meets the four criteria with which a port must conform in order to be recognized.

Port Saguenay's mission is to implement, in conjunction with its regional partners, services and conditions that will promote the expansion of Canada's international trade.

Port Saguenay is a modern, multi-purpose port. It is an efficient and financially self-sufficient port authority. It has already proved its earning capacity. With an accumulated surplus of $6.3 million, as of September 30, 1996, it is already planning, with great optimism, some major development activities in the range of $8.5 million.

Budget projections for the year 2001 show an even better balance sheet. We think that by that date we will experience a 100 per cent increase in goods in transit.

Port Saguenay is a port that is strategically important for Canada's international trade. In the context of trade globalization, Port Saguenay plays a major role in the economic development of its hinterland. Although far inland, it offers businesses a competitive position in overseas markets. Thanks to Port Saguenay, regional businesses have improved their competitiveness, and their competitive potential on world markets.

The Saguenay - Lac-Saint-Jean region is strategically located within Northern Quebec as a whole. Its sphere of influence extends all the way to James Bay, and well beyond the immediately surrounding area.

The Canadian economy, which is based for the most part on natural resources development and the derivative products, is necessarily oriented to the outside market, and our regions have a duty to seek out foreign markets and export their products.

In addition to being a significant creator of direct and indirect jobs, Port Saguenay helps us to consolidate existing firms and develop new ones. The presence of this public port infrastructure has so far stimulated business expansion and we already have other business that are starting up and are there because Port Saguenay exists.

Port Saguenay also has excellent connections with all the other modes of regional transportation, highway or otherwise. It is an important link in the commercial system, since its hinterland location gives it an undeniable quality. Its facilities are linked to the Saguenay - Lac-Saint-Jean region and the entire area to the north, and thus to James Bay, particularly through the``Route du Nord'', which was built specifically to provide access to James Bay, to globalization, to the outside world, through Port Saguenay.

Thus, in light of its geographical location at the threshold of north-central and northern Quebec, amidst natural resources, Port Saguenay clearly complements the other Canadian port facilities.

We think Port Saguenay is an essential link to all Canadian ports. It has a mission focused essentially on marine operations with an increasingly diversified traffic, oriented to the export of natural resources and related products.

The emergence of new industrial projects over the next few years will further expand the range of products forwarded through Port Saguenay.

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With the development of globalization, our region needs this port facility. The creation of a Canada port authority will have many positive consequences. Financially, it will enable us to maintain the status quo to some degree in relation to municipal taxation. If we didn't have CPA status, there would be a very steep increase in production costs, with a resulting loss in competitiveness.

From an operational standpoint, CPA status will enable Port Saguenay to manage the Port Saguenay marine area efficiently. There is an environmental area somewhat similar to that of the Ports of Quebec and Montreal. So it will be essential to use the same regulations.

Community support for the establishment of a CPA is unequivocal. The users, the longshoremen and their unions, the major operator, the entire socioeconomic milieu in the Saguenay - Lac-Saint-Jean region and the James Bay watershed are behind this project. An agreement to create the Saguenay port authority will put the management of this major development tool back on the agenda of the community, thanks to the composition of the board of directors.

The unanimous support of the cities and towns, the RCMs and the industrial and commercial community in the region illustrates the interest among the area's stakeholders.

In closing, we ask that we be included in the schedule to Bill C-44 and that Port Saguenay be recognized as a Canada port authority, since we fulfil the criteria for obtaining that status.

[English]

The Chairman: Let me start by congratulating you. You are the first presenter who has made it within the ten minutes, so thank you very much.

I'm also interested in your conclusion. I understand that the port has been doing extremely well. You have a very energetic group of people.

[Translation]

Mr. Munger: I understood that part. Unfortunately, I am not bilingual, but I understand a little. I have a tourist's knowledge of English.

[English]

The Chairman: I hope I have more than a tourist's knowledge of French. I studied in the Saguenay region for a couple of weeks two years ago. It's a beautiful area.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

All I will add is that the changes you have asked for I have in draft form now - amendments that address each and every one of those in the manner in which you're looking for. I believe there is somewhat of a consensus here as well. I think once amended many people will be successfully applying for port authority status - you amongst them.

[Translation]

Mr. Munger: Thank you, sir.

Mr. Crête: Thank you for your presentation. I would like to ask you the question I asked the previous participant. Why do you want to become a Canada port authority instead of keeping regional port status? What are the reasons that lead you to make this choice? I am not asking you this in order to question your choice, but for the purpose of illustrating clearly to the committee what leads a port of significant size, albeit not as big as Vancouver or Montreal, to make such a choice. What is it that makes a regional authority take such a decision?

What amendments would you make to the bill for the type of port you represent?

Mr. Munger: I will begin the reply and I will let Ms Collard complete it, since your question has some major technical aspects.

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Like some of my predecessors at this table, I think there are some reasons why recognition of the port as a Canada port authority would give us an important status when the time comes to interact, to come to terms with world trade or even with other ports within Canada. That is extremely important.

It is also essential from the taxation standpoint. Recognition as a Canada port authority has some significant tax repercussions. If we want the port to continue to be competitive, it is absolutely essential that we have that recognition.

As to the other aspects of your question, Mr. Crête, I am going to ask Ms Collard to answer.

Mr. Crête: I would like to ask a sub-question before you reply to the others.

If you had to choose, do you think there would be a future in a Canadian port station that combined, for example, Quebec City and Cacouna? In your opinion, would it be worth while doing that or do you think that self-sufficiency is more important when it comes to the future of your port?

Mr. Munger: Personally, I think some self-sufficiency is essential for the port, because we have a particular geographical situation and we also have to meet some particular demands. We don't necessarily have the same clienteles as a port like Quebec or Montreal, and we don't have the same objectives.

Would some networking be possible, on some aspects? The people who work on it on a daily basis are better equipped to answer this question. I will let Ms Collard expound on this at greater length.

Ms Ghyslaine Collard (General Manager, Port Saguenay): In regard to the choice between regional port status and Canada port authority status, we believe that some amendments to Bill C-44 would give us, in day-to-day experience, some tools that would enable us to manage the port.

The port is the expanse of water. It is not simply the port facilities. We have the same commercial environment as the Ports of Quebec and Montreal. We service major Canadian industries and we do business with international shipping lines. So we are in the same context. Ninety per cent of the freighters that come to us are exporting or importing. So we are doing business with foreign markets.

In that context, we need to have the same regulations on water areas and be able to use the same tools.

In regard to a regional port, would it be public or private? There are so many unknowns in a port, such as the taxation and zoning status. We don't fully know yet what the definition of a regional port is. For you, a regional port may be more like a port such as Tadoussac, where the operations really are local. They are not involved in foreign markets. They conduct whale-watching excursions, things of a very local nature. So, at that level, perhaps you can speak of a regional port.

However, Port Saguenay - I think each port has be looked at case by case - is really involved in international trade. So we have to have the same tools and work in the same context as the big ports.

You were speaking earlier about the criteria that might be altered in Bill C-44. In the Keyes Report, there was a discussion of commercial ports and non-commercial ports, and not of ports that are connected by the railway. They were discussing two categories of ports: commercial ports and non-commercial ports.

Port Saguenay has already transferred a major portion of its operations to the municipalities. In regard to all tourist or urban activities, the old port was transferred to the municipality of Chicoutimi. The old wharves were rebuilt and transferred to the municipality of Ville de la Baie. So it is the municipalities that handle tourist activities. For our part, we are 100 per cent involved in transportation. I think we could speak of commercial ports and expand somewhat the way in which those criteria are going to be implemented. We could retain a Canadian ports system that would encompass fifteen or twenty or so ports.

Basically, what is important is not that each port be of national importance but that we have a national system that adequately services the country as a whole and our industry as a whole.

With regard to self-sufficiency for a system, I think that each authority is going to want to manage locally. Of course, there are some savings when you talk about legal services and technical services. Some services could be pooled. However, I don't think that the management could be pooled.

Mr. Crête: This is not what you favour as the road ahead.

[English]

The Chairman: Yes, the work that's been done along the old wharves in Chicoutimi is beautiful. It has really been a very nice development.

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The whole purpose of this bill is to support the energy and enthusiasm and hard work in a local region to maximize its capabilities. So I wish you all sorts of luck. Thank you very much. We appreciate your coming here today.

[Translation]

Ms Collard: Thank you.

Mr. Munger: We thank you, as well, for receiving us.

[English]

The Chairman: Now, from the Port of Sept-Îles, we have Jean-Marc Dion and Jean Maurice Gaudreau.

Gentlemen, when I used to grade papers at university, weight was an important factor. So you win.

I notice here you have many maps on which Sept-Îles is the centre of the world, but I have many maps with Winnipeg as the centre of the world, so there's some confusion.

Mr. Jean-Marc Dion (Mayor of Sept-Îles): We could twin together.

Some hon. members: Oh, oh!

The Chairman: You've been witnessing the procedure. Please begin.

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

Members of the committee, I'm very pleased to accompany Mr. Jean Maurice Gaudreau, our port manager, who is making a submission to the committee.

[Translation]

My name is Jean-Marc Dion. I have been the mayor of the city of Sept-Îles for 23 years. I have the pleasure of representing the users and the community of Sept-Îles generally. On their behalf, I have the honour of accompanying Mr. Jean Maurice Gaudreau, the general manager of the Port of Sept-Îles, whose efforts we are supporting.

The City of Sept-Îles, through the Chambre de commerce de la corporation industrielle et commerciale, has followed the evolution in the Canadian government's ports policy and the preparation of Bill C-44. We have met on many occasions with officials and representatives of the House of Commons to share our comments with them.

We think the Port of Sept-Îles is a vital port in the Canadian ports system. As you know, we are the port for the Quebec Far North and Labrador. Between 20 and 23 million tonnes of goods pass through this port every year on their way to the United States, Europe and Asia.

In 1970 the City, supported by the business community, asked to be recognized as a national port. In 1973 we became one of the ports in the Canada Ports Corporation and in 1995 we applied, again with the support of the community, to become a local port corporation. Unfortunately, the new policy was being prepared, and the Minister asked us to wait so that our case would be considered in accordance with the standards in the new legislation.

We strongly believe that the Port of Sept-Îles should be accepted as one of the major ports in the country, and should become a Canada port authority. Moreover, an official request has been forwarded to the authorities concerned. I would like to yield the floor to the general manager of the port. He will comment specifically on some changes he would like to make.

Mr. Jean Maurice Gaudreau (General Manager, Port of Sept- Îles): Mr. Chairman,

[English]

members of this committee, I thank you for allowing me to meet with you today and to express the views of the Port of Sept-Îles.

I will be brief. I will not read all the comments, because I have made suggestions to the effect of what we would like to see changed in Bill C-44. It's quite substantial; however, if we look only at the five basic points that I will elaborate on, the first one would solve the whole situation.

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[Translation]

Federal agency status, in our view, is essential in order to more effectively serve Canada's national interest. As the report of the Standing Committee on Transport, more commonly referred to as the Keyes Report, recommended:

the ports should be designated as federal agencies, with the same status as the harbour commissions;

and with the necessary powers to achieve self-sufficiency, the desire for which has been clearly expressed in the policy statement and in the policy of the Canadian government.

Thus, in our opinion, an administrative structure should be flexible, adapted to the needs of each port, and the government of Canada, which is the owner of the infrastructures, should retain some control through the board of directors.

Our U.S. competitors are indirectly subsidized and may even, in some cases, collect taxes. We should at least be released from such taxation at all levels. However, we should reconsider the issue of the municipal services supplied to the ports and perhaps provide the necessary money to offset their costs.

The boards of directors should satisfy the standards for representation, but those standards should also be realistic and adapted to the ports in question. In our view, five to nine members, including one representative of the federal government, one provincial representative, one municipal representative and one representative of the users or, as it was said earlier, the port's labour force, which is very important, would be sufficient to maintain local self-sufficiency.

In our opinion, the amounts payable to the Minister to maintain our letters patent or our status - for example, if we were a commission - should be based on a percentage or formula applied to net income, or the Minister should be given certain powers to limit them, alter them or suspend them, depending on the prevailing financial conditions at a given moment, for a port that is having problems in view of the world or domestic economy.

[English]

I will not go through them, but you will find a list of my suggestions for the bureaucrats as to how we should meet Bill C-44, should we go that way. I have been in bureaucracies for ten years, so I have made my myself useful. However, I believe it is essential that we become generally recognized as an entity with a lot of autonomy on the basis of commissions or something similar. I would be very happy, then, to serve on that.

If I can recall - I was very small then - we decided to have a series of ports in 1936. Ports were created then, and - this is just an association - I was also born in 1936. I hope I don't have to retire in 1996 because we demolish everything.

Do you have any questions?

The Chairman: Oh, I expect there'll be more than one.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

Gentlemen, I actually don't have any questions. You have listed five points in terms of amendments. As we have mentioned, these are amendments that have been brought forward by many others here today. I think there is some agreement on each of these things, so I hope you'll be very pleased with the final result.

Thank you very much, sir.

The Chairman: The references to the previous SCOT report and the Keyes report, and the need to look at some of the adjustments in light of them, are also interesting. There is a growing body of opinion that supports the positions you have taken.

The one debate that is less clear, I think, is the tariff on gross versus net income. I know Mr. Jordan has spoken about this in the past, and you might want to comment on it simply because if it's going to be on that income, it puts us back into your books. If a formula can be worked out under which it's based on gross income, it's a much cleaner relationship. We may want to adjust the formula so that we don't create an impossible burden, but...

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Mr. Gaudreau: This is why in my last recommendation, the last phrase, I say if we could not make it... It's on page 2, item (v). I say if we don't go on net the minister should have the necessary power to suspend, or, at his discretion, to limit for a period of time, these stipends. It could happen that occasionally a port may be in trouble. So put it on gross, put it in a formula that's acceptable, but also give the minister the possibility of saving somebody who may be in trouble for one year or two without having to disband him or create his bankruptcy.

Does that answer your question?

The Chairman: Yes. That's very helpful.

[Translation]

Mr. Crête.

Mr. Crête: Thank you for your presentation. I think your brief demonstrates above all the relevance of recognizing the Port of Sept-Îles as a Canada port authority. We will see what can function correctly in what you are proposing.

You proposed a number of amendments to Bill C-44 and I would like you to point to those that are the most important to you, the ones that, even if they are not essential, you would very much like to see made because they would make the obtaining of Canada port authority status more attractive.

Mr. Gaudreau: If we had to live with Bill C-44, it would be important to make some changes in clause 3 and complete...

[English]

The implementation of the national marine policy has to be changed. We would have to be very substantially respectful of clause 24, which restricts us, and we would have to add a couple of paragraphs that would give us the authority to do other things than just be landlord, such as administering a harbour with safe financial administration of the property.

I believe we would also have to look seriously at taxation, in clauses 50 and 52, and we would have to pay very strong attention to clause 119. There is a very big lack of protection for the personnel who have provided many years of service in Ports Canada and certain harbour commissions. I believe clause 119 should be amended in order to protect them by adding Bill C-44 to the schedule of the Public Service Superannuation Act.

To me these things are vital.

The Chairman: Mr. Keyes, one final comment.

Mr. Keyes: Mr. Chairman, I just want to lend my voice to the congratulations for Jean Maurice. He's been before this committee on different occasions and he has always been most helpful in cutting through some of the difficult issues and boiling them down to their common denominator.

I want particularly to thank Jean Maurice for his suggestion in his fifth bullet. I think it's valuable to understand that we move on a gross. It's valuable to understand that the stipend should be some type of formula, such as two-four-six, and then maybe it could come back down to four-two, to keep those ports competitive, and that the opportunity is there, based maybe on a line that also says it's on the ability of that port to pay. That consideration can be given to each individual port in the interest of the survival of that very port.

Thank you again, gentlemen.

The Chairman: Thank you, Mr. Keyes, and thank you, gentlemen.

Now, from the St. Lawrence Shipoperators Association, Mr. Benoît Massicotte and Captain Desgagnés.

Did you bring a written brief?

Mr. Benoît Massicotte (Director General, St. Lawrence Shipoperators Association): Yes, this brief was given to you when we arrived about an hour and a half ago, and I faxed one to Ottawa yesterday. So you should have it.

The Chairman: We should have had it distributed. But it will come to us.

You may begin.

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[Translation]

Captain Rosaire Desgagnés (Chairman of the Board, St. Lawrence Shipoperators Association): Mr. Chairman, Members, thank you for coming and consulting us in Quebec City. My name is Rosaire Desgagnés and I am the chairman of the St. Lawrence Shipoperators Association. I am accompanied by Mr. Benoît Massicotte, the executive director of the Association. Our association was founded in 1936 and has 22 active members on the St. Lawrence.

The subject we want to talk about today is one that affects our members: pilotage, and in particular the accreditation of captains of Canadian vessels in order to get pilotage certificates.

I yield to Mr. Massicotte, who will describe the present situation and present the Association's proposals.

Mr. Massicotte: Thank you and welcome to Quebec City. I am sorry that you were unable to study our brief before this morning. You have one copy. Keep in mind that the first part is in French and the second in English. So you have a copy of our brief in English.

As you are no doubt aware, it is Part VII of the present Bill C-44 that deals with pilotage. This part, from our members' standpoint, deals almost exclusively with the present financial problems of the federal government and attempts in various ways to solve some of them. Obviously, as ship operators and business people, we can hardly be against that. In fact, we support, as we have in the past, many of the recommendations in Bill C-44.

Of course, we would have liked the federal government to deal as well with some of the financial problems of the marine industry, and attempt to resolve some of them.

In Bill C-44, one of the clauses clearly states that the Minister shall announce his recommendations concerning the certification process for our officers, but only in December 1998, that is, in about two years and three months. Then there will, of course, be a consultation process, public hearings, a long process that will take us to the year 2000 and no doubt far beyond 2000 before some decisions are made in this regard. During this time, the traffic losses will accumulate on the St. Lawrence, or certain traffic losses will continue to threaten us.

From our standpoint, pilotage certification is the central issue in the questions affecting pilotage. There are two types of people who can pilot a vessel on the St. Lawrence River: licenced pilots, or professional pilots with some experience who can navigate vessels of all types, all classes and any origin, depending on their licence; and there are certified captains, who have studied for 10 years, who must have at least 10 years' experience in order to get their captain's licence, who pilot their own vessel with their own officers, with their own equipment and crew, with whom they can discuss easily in a language that everyone understands. So pilotage licences are one thing and pilotage certificates are another.

At this point, if a captain is to obtain his pilotage certificate, after taking his classes, studying and navigating for years and years, he must, for six, seven or eight months, while navigating and when he is not on shift, study his maps and local knowledge and review just about everything he has seen since he began navigating. That is the experience in recent years, from what is said by some captains who have managed to obtain their pilotage certificate.

Experience shows as well that the same captains, three or four months before the examination, have to stop navigating and study full-time, alone as a rule in their office or basement, surrounded only by their maps. This is of course an expensive thing for their business. They are not available to navigate. They lack stimulation; they are alone studying.

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Furthermore, they don't know where to go. They can be asked questions on any subject, to infinity. So there is enormous insecurity. You don't know where you should go when you are all alone studying. After that, the captain will try once, twice, or three times to write the examination that will enable him to get his pilotage certificate.

The St. Lawrence Shipoperators Association has never, but never advocated automatic pilotage certification. However, we think that Canada should recognize and promote some modern educational methods that it recognizes and promotes in other fields. These educational methods exist. Almost everywhere in the world there are navigation simulators - in England, France, Denmark, Japan, Poland and even in Canada.

The Quebec maritime industry is prepared to invest time and money in the training of its officers, provided however that these new pedagogic methods are endorsed in some way by the government.

Thus the proposal of the St. Lawrence Shipoperators Association is that experienced Canadian officers be given access to supplementary training to perfect their skills or at least verify them. We think that some of our captains would be ready immediately to pilot, but we agree that this should be verified by the government.

This supplementary training could be dispensed by a maritime school that is recognized in Canada, such as the Institut maritime du Québec, which is the principal one here on the St. Lawrence. This training should resort to modern teaching methods. And in relation to shipping on the St. Lawrence, navigation simulators are often discussed.

The maritime school, as in any course, would be responsible for informing Transport Canada that this or that student, a captain or officer, after so many weeks or so many months spent within its walls, has gone through this or that process and is or is not considered capable of piloting his own vessel on the St. Lawrence between, for example, Quebec City and Les Escoumins.

After that, the issuance of a pilotage certificate to this captain or officer would be the responsibility of Transport Canada, like the other navigation licences. This certificate would be valid only on the vessels of the company employing this captain or officer.

In our view, to answer one of the questions the Minister has put to you, it would not be necessary to amend the Pilotage Act. Section 20 of that Act gives the authorities, at this time, lots of latitude to implement some of our recommendations. Perhaps the distinction between pilotage licence and certificate could be improved. But that is a legal question that should be discussed among us.

This does not mean - and I emphasize this - that Parliament has no role to play in this regard. In fact, the present powers of the Laurentian Pilotage Authority - the Laurentians because we are on the St. Lawrence, under the Pilotage Act - have existed for 25 years. For several years, 10 or 15 years, the ship operators under the Canadian flag have been asking for changes that do not occur.

So from our standpoint you, the members of Parliament, have a certain power to make recommendations to the Minister. Get things moving. We have had virtually the same act, virtually the same regulations, for 25 years, and nothing is moving. To get things moving, there has to be pressure and there has to be a political will.

Incidentally, I know you were asked a question dealing with disputes resolution. Experience shows us again that negotiations have often been difficult between the pilotage authorities and the pilots' corporations. The St. Lawrence Shipoperators Association believes that a disputes resolution procedure would be useful, and would allow or in some cases force a rapprochement between the parties, and avoid extreme positions being taken by either party. This procedure would also limit the duration of negotiations and avoid the interruption of shipping on the St. Lawrence River. That would be important for both Canadian and foreign ship operators.

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That is all that I have to say to you for the time being. We are ready to answer your questions. Thank you for your attention.

[English]

The Chairman: Thank you very much. You're obviously very experienced.

Mr. Crête.

[Translation]

Mr. Crête: Thank you for your presentation.

I would like to ask you what is now preventing you from authorizing the Institut maritime du Québec or any other institution from providing this training.

What prevents the ship operators from paying for a course in an educational institution, administering examinations to become a pilot and get a certificate? I fail to see what, in the present legislation and practices, prohibits that.

And yet you are asking for an educational tool that would enable people to get their certification more easily. So why have you not done this in recent years?

Mr. Massicotte: It requires a certain investment that the companies are prepared to make but on condition that they can be sure they will get something from it in the end. They must be sure they will not be required, in addition to going to the maritime school, to go through a dual process, the Institut maritime and the present certification process, which is lengthy and requires that a certified captain is also a licenced pilot. These are two different things.

At present, the law says there must be some equivalence between a certificate and a licence. The ship operators are prepared to invest some money, but it must be said that this costs millions of dollars. The ship operators agree to invest some money, therefore, but they want to be sure they will get results.

Mr. Crête: Needless to say, you would want certification by the department of Education. That automatically provides entry or equivalence without the need to write the examination to obtain certification. Is that what you want?

Mr. Massicotte: What we want is an agreement, as for the pilotage certificates or captain's licence, for example. We want to have a maritime school under provincial jurisdiction but with a service contract with Transport Canada.

The Institut maritime gets some students. It trains them, taking into account certain criteria imposed by Transport Canada. After a course that can last six months, one year or two years, the Institut sends Transport Canada the file on the person it was instructed to train in order to obtain a chief petty officer's or captain's certificate, with all the observations and decisions along the way.

We want it to be the same for obtaining a certificate. Transport Canada, having recognized the validity of the pilotage certificate courses dispensed by the Institut maritime du Québec, would have to award this pilotage certificate to a student who had gone through the entire academic program of the Institut maritime.

Mr. Crête: You are suggesting, therefore, that the present authorization process for maritime pilotage be set aside. You would like the place of decision to be changed.

Mr. Massicotte: I think that before getting approval for a course dispensed by the Institut maritime, the Institut should go and get some input from Transport Canada, the ship operators and the pilots as well.

Mr. Crête: On the other hand, you say in your brief that Canada is lagging somewhat behind the rest of the world insofar as the implementation of new technologies is concerned.

However, is it realistic to think that technology will some day allow the replacement of pilotage? Sometimes I've seen, on some ships, the electronic device giving us the impression that we were beyond the river when we were still in the channel.

Would we be able soon enough to overcome this backwardness compared with other countries? Where on the planet should we go first?

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Capt Desgagnés: We are not asking that the candidates simply take a course on a simulator. The candidates who report for this kind of examination have some experience on the river. They will have certainly made at least 25 or 50 voyages on the river. It is a complement that will enable them to demonstrate to the authorities that they are capable of piloting their own boat in the restricted waters in certain areas. It doesn't just involve taking a simulator course to pilot a boat in a restricted location. One has to demonstrate one's experience by using a simulator.

Mr. Massicotte: To round out that reply concerning the quality of the simulators, I would like to say that these simulators are used most often by Canadians in critical situations, for example, when you need to berth a 150,000 tonne tanker at Quebec City, in some very complex situations. That's when you consider it useful to use these simulators. It is a very useful tool, particularly in the most dangerous situations.

[English]

The Chairman: I have two other questioners who want to speak in the time we have left here.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman. I just have a couple of comments.

I agree in essence with the direction you're going in. There are a lot of potential problems. As an air traffic controller, in fact one who used to instruct other air traffic controllers, even at the height of my career I'd have been hard-pressed to go back and write the licensing exam, because of, as you point out, the little subtleties that you don't use from day to day that they ask in the licensing. So something has to be designed that is apart from the regular course and addresses your specific needs.

However, for the record, I just wanted to point out one thing. At the bottom of page 3 of the English version of your brief, you say that aircraft carrying hundreds of passengers are routinely landed electronically without a pilot, and occasionally the pilots must land. As a commercial pilot also, I can tell you I do not know of a single instance where a commercial airline with passengers was landed without the use of the pilot. The technology does allow for it and it has been done experimentally, but never, to the best of my knowledge, with passengers on board.

[Translation]

Mr. Massicotte: Thank you for your comments. I am going to pass on to you some information obtained from former flight captains who told me they once asked the pilot to not land manually in order to experience an instrument landing. They had that experience.

[English]

The Chairman: Mr. Keyes.

Mr. Keyes: Thank you, Mr. Chairman.

I want to thank the witnesses for coming before us today with their report, but some of the language they've used with us today disturbs me. I wrote down three quotes specifically: ``lack of motivation'', ``little has been accomplished'' and ``political will''.

Far be it from me to be a defender of pilotage authorities and the pilots, as evidenced by the SCOT report of 1995 and how we wanted to approach the pilotage issue, but at the same time I want to put on the record, Mr. Chairman, that this government hasn't been standing still on the issue.

In fact, back in June 1995, just after the SCOT report was released, the Minister of Transport of the day, the Hon. Doug Young, wrote to the four pilotage authorities and requested they establish regional working groups.

In all, over 17 working groups held meetings at 10 different marine centres across the country. They participated with over 120 reps of shipowners, shippers, pilots and ports and made the exercise the most comprehensive review since the act was established in 1972. The task force reaffirmed and revisited the current designated compulsory pilotage areas, looked at the administration and operation of the four authorities and proposed appropriate changes.

Much of the work has been done, and from watching what has transpired at that level and their participation, I believe the pilot authorities remain committed to resolving the outstanding issues as quickly as possible.

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They themselves have come before this committee and said that while the legislative commitment by the minister says the reassessment of the pilotage regime will be done by December 31, 1998, they're prepared to move it back to 1997, a year even sooner. So we're talking already about a year from December to get that done. When that is done, of course it comes back to this committee for assessment and examination.

Working group support and alternative dispute resolution mechanisms have been discussed and considered. Setting pilot rates, reducing costs - all things have been broached.

The pilot authorities are working hard with the shippers, the owners and the ports in order to establish and be part of the team in making those ports very competitive.

I wanted to make sure the witness understands there is no lack of motivation; there's a lot of motivation. There is no non-accomplishment; much has been accomplished. There is the political will to accomplish this goal.

[Translation]

Mr. Massicotte: Thank you for your comments, which I particularly appreciate. Please excuse me if I used the wrong terms. I am convinced that a huge job has been done. I am apprised that the cut-off date is no longer in December 1998, but in December 1997. That is already a lot and is consistent with what I was telling you 15 minutes ago.

Given that a big job has already been done and that some discussions have been held across the country, couldn't we now get on to the decisions? You have apprised me that it was no longer 1998 but 1997, and I congratulate you on that, since I think it is a big step in the right direction.

[English]

Mr. Keyes: Thank you.

The Chairman: I also want to thank you for taking the time to come and talk about this issue. It's one we've been struggling with right across the country. You've been very helpful. Thank you very much.

[Translation]

Mr. Massicotte: If you have further questions outside this committee, I urge you to send them to the St. Lawrence Shipoperators Association. Thank you.

[English]

The Chairman: Thank you.

From Baie-Comeau, we have Mr. Yvon Forest.

Welcome.

Mr. Yvon Forest (Conseil d'administration portuaire de Baie-Comeau): Thank you very much.

How much time do we have?

The Chairman: We ask witnesses normally to take about ten minutes for their comments and then allow members an opportunity for questions. Go ahead and summarize the central points you want us to address.

Mr. Forest: Thank you very much, Mr. Keyes, Mr. Gouk, Mr. Chairman and everybody, for allowing us to present certain comments and questions about this project.

Please do excuse Mr. Pierre Caron, who was supposed to present this paper, but he is kept at Baie-Comeau for a very important appointment. I was the back-up and I am now in the hot seat.

The Chairman: We'll try to keep it cool.

Mr. Forest: We are the city just next door to Sept-Îles. I heard they won the championship in the heavyweight category in paper thickness at least. We plan to win the championship in the lightweight category.

Some hon. members: Oh, oh!

Mr. Forest: In a less funny way, we are also in the lightweight category in the sense that this corporation, Corporation d'administration portuaire de Baie-Comeau, has just been formed in order to take charge and operate the harbour of Baie-Comeau.

We are brand-new in the business compared to Sept-Îles. We are amateurs. We have to learn quite quickly the tricks of the trade in order to be operational within the next six years.

So we have questions that are more naive, more in the amateur style, but we are the corporation that is called to take charge. You have to understand these are nonetheless very important questions, since we are to take charge.

Since my little paper is in French, I'll read it in French, if you please.

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[Translation]

The Corporation d'administration portuaire de Baie-Comeau was created in 1995 to assume responsibility for the management and long-term development of the public Port of Baie-Comeau and its port facilities.

We note that our group adopted this approach even before the federal government announced its intention to turn over the management of port infrastructures to local interests. That is an indication of how closely we adhered to the principle of decentralization of management responsibilities. Incidentally, we forwarded a brief along these lines to the Minister of Transport in 1995.

We might further note that all the major industrial users of the Port of Baie-Comeau are on the board of directors of our corporation: Cargill, Reynolds, Donohue Quno, etc. and all the equipment and infrastructure operators, as well as the municipal authorities and development agencies in our area.

I will now indicate to you our observations on the bill. We have studied Bill C-44 and we have even been briefed by officials of Ports Canada in our efforts to decipher the government's intentions. While the general intention behind the bill seems to be consistent with what we requested in our 1995 brief, we are concerned about certain provisions or the lack of certain provisions.

In the first place, is the government going to lease or sell its facilities? In our 1995 brief, we proposed that we become management agents for the public facilities in order to make them cost effective through suitable promotion and marketing of the services. However, as we conceived it, the federal government would remain the owner of the infrastructures.

In Bill C-44, particularly in clause 60 and clause 61, the government appears to be giving itself both options for the ports that will not be CPAs: that is, either transferring only the management or transferring the ownership of its infrastructures to a third party. Will this decision be made on a piecemeal basis or are there some criteria for it? The bill does not specify, and our principals, our companies would very much like to know whether we are going to be landlords or tenants. Will we be tenants or landowners of such harbours in the future? Will the port fees be abolished or transferable to the new purchasers?

In the bill the federal government retains the right to define the limits of a public port, under clause 54. In the old Act, some port fees pertained to the use of these waters and were a not- insignificant source of revenue. The bill speaks of transferring some port facilities rather than public ports. What will happen to port fees? Will they be transferred? Will they be maintained by the government?

I should explain that in the case of Baie-Comeau, most of the income of the Port of Baie-Comeau comes from port fees. The wharf charges are insignificant, since one company uses the wharf, but on the other hand the port is widely used for the simple reason that the private companies each have their own private wharf. Without the port fee revenues, there is simply no longer any CAPBC. It is crucial that the power to impose port fees be transferable to the new purchasers.

Another issue is public access to the port in relation to the privatization of the port infrastructures. We wonder how the federal government intends to guarantee the maintenance of public access to the port if these public facilities are purchased by a private company. Maintaining this public access is crucial, obviously, for the development and vitality of our region, but the privatization of these facilities must not result in the establishment of monopolies or little fiefdoms by one or more companies which, through exclusive rate structures, could forestall the arrival of any new competitor. We have, for example, the case of Tadoussac, which is not in the brief but could be cited as a risk case.

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In the bill the federal government has sought to keep all the doors open in regard to the type of purchasers it will favour. We think the federal government should mandatorily give priority to non-profit organizations comprising the various major users and the local, regional and public authorities.

With regard to the $125-million transitional program, the bill says nothing about this transitional program announced in the National Marine Policy. What exactly will this program cover? The costs of dismantling wharves that are to be abandoned? The costs of eliminating the deficits accumulated by the ports? The repair costs already planned prior to 1995 by Ports Canada? The costs of new repairs or improvements decided on by the local port authorities?

Can we go ahead on the basis of first in, first served, or with some comprehensive planning? Since we know that $125 million is far below the total need, it is necessary to adopt some minimal criteria, and the bill should spell them out. Moreover, I think many people have said this here in this hearing.

In our opinion, this $125-million envelope should be used only for the financing of repairs and improvements planned by the new local port authorities. It should certainly not be used by the federal government to fund dismantling, pay off prior deficits or assume responsibility for maintenance prior to the final transfer decision.

Finally, for the future, it is necessary to provide an ongoing program of support. In the longer term, we must also consider the financial needs of the non-profit organizations that will take up where the federal government left off. With extremely low revenues, a history of operating deficits in most cases, and a commercial value of their assets that is close to absolute zero, what sort of collateral can they give the banks in order to borrow for the long term the money they need for major repairs?

For example, in Baie-Comeau, in 1989-90,

[English]

we had to invest $27 million to improve the harbour infrastructures. Which bank would have taken the risk of lending the money with no guarantee?

[Translation]

And we are talking here of a port that is not unprofitable.

[English]

Baie-Comeau is profitable. Even then, no way can we get such a loan from a bank with the kind of equity we have now.

[Translation]

To ask the question is to answer it, and this answer is even more obvious for most of the ports in the system, which are unprofitable. Not one financial institution will embark on such adventures unless the federal government guarantees the loans in question. So it is imperative that the federal government maintain for more than six years an assistance program to support these ports.

We suggest a shared-cost program with the port administration agencies that could fund up to 50 per cent of the costs of the necessary improvements and repairs, to ensure the continuity of the infrastructures that are commercially viable, accompanied by a possibility of a guarantee on the loan taken out for the work.

[English]

I would like to thank the committee for hearing these comments.

The Chairman: I'd like to thank you very much for taking the time to pinch-hit on this topic. We haven't had many presentations on the impact of this legislation on the smaller ports, so I appreciate your being down here.

Mr. Crête.

[Translation]

Mr. Crête: Your presentation is particularly valuable when we know that Baie-Comeau has filed a letter of intention to have the management handled by a non-profit organization. However, in regard to the comments you made on the $125 million, without being indiscreet, I would like you to share your thoughts with us on how the money should be disbursed, particularly in the case of Baie- Comeau.

I would also like to tell you that I am very interested in the suggestion you make of a fund that would help ensure some continuity, with 50-50 equal contributions. That would speak to one of the concerns of the regional ports about what happens after the six-year period.

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Mr. Forest: I am going to add some things in reply to your question. About a month ago, we held a founding meeting with some companies such as Reynolds, Cargill and Donohue.

[English]

to incorporate this beast, this new corporation. Twice those companies, which are not the poorest in the continent, were tempted to withdraw. And I repeat, Baie-Comeau is so far a profitable port.

The question is very simple. If there is $6.5 million to spend for just rebuilding the port infrastructure owned by the federal government, this $6.5 million has been planned for five years now and there is no money right now to correct it, how can we have any kind of insurance that we will have money from the program of $125 million to pay for that? There is no such insurance.

[Translation]

I am not talking, of course, about the wharves, which are in worse shape, and the ones we have on the North Shore, because I also work for a regional development agency that covers Tadoussac, Havre-Saint-Pierre, etc.

Mr. Crête: Isn't it your impression that the $125-million fund, which can be valuable in the medium term, has the effect of freezing current investment in the regional ports and that there are some things that the government was prepared to do and decided consciously to delay in order to make the program more attractive?

Mr. Forest: We're sure of it, since the money was to be spent this year. Ports Canada had planned to fix dock no. 3 at a cost of $6.5 million, and this money will not be spent.

Mr. Crête: So, you want the work to go ahead but not necessarily by using this $125 million?

Mr. Forest: Imagine the pile-up of bills that could mean. We are one of 150 or 200 ports that will be privatized. If each one has a renovations program like that, and considering the arrears, how can we, with some amateurs, prepare these ports to cope with the challenge of the year 2000?

Mr. Crête: You mean you are awaiting a signal from the federal government so these things are clear?

Mr. Forest: Yes, in effect.

[English]

The Chairman: Mr. Keyes.

Mr. Keyes: Thank you, Mr. Chairman. I want to do the best I can to answer some of the concerns that have been put forward by the witness.

Baie-Comeau is a local regional port. Ownership of the port, development of the port, fee structures and tariffs - these are all going to be determined and calculated by the new owner of the port. So when the federal government sits down with Baie-Comeau or any other smaller local regional port that it decides, for many reasons, doesn't meet the criteria to become a Canadian port authority, they will sit down and go through the value of that particular port. The federal government may decide after good negotiation that it wants to give a particular community their port for $1 because it is prepared to try to make something of their small port.

The next logical step is that the new owners of that port would be free of the government bureaucracy it needed to do to pursue opportunities of investment and drawing shippers, etc., to their particular port.

What that will do, of course, is let the new owners go into private partnerships with some of those big names you were talking to, saying if this is strategically the best location you have to bring your product to our continent or move your product off our continent to other shores, then you will come together with us, as a free-from-government port entity, and create the partnership necessary in order to make this thing work as a profitable entity.

The port infrastructure program is going to be there. The number being kicked around is $125 million, but it could be more. The federal government right now acknowledges and understands that it wants to help smaller ports like Baie-Comeau get on stable footing in order to be successful. If it's going to take the establishment or clean-up of a particular wharf, or the establishment or construction of a particular piece of infrastructure, to take it over the hump, then that money will be there as an opportunity for Baie-Comeau or other ports to tap into to get over the hump and become stable when they take off.

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You spoke of the banks. The banks are going to be very interested, I think, in a port that is successful. The banks are going to be very interested in a port that has formed partnerships with the private sector in order to realize advantages, not just for the private sector partners but also the opportunities of profitability.

You yourself wouldn't lend money to someone you know if you weren't going to get your money back. The banks are going to be interested if the proper mechanisms are put in place now, with the support of the government through its infrastructure program, with the partnerships it will maintain and establish with the private sector, in order for that port to become profitable.

I hope, Mr. Chairman, I've been able to answer some of the witnesses' questions.

Mr. Forest: Just to make sure I heard you well, did you say that the authority to charge harbour fees can be given to this new authority?

Mr. Keyes: Absolutely. You will determine what you charge your shippers when they come to your wharf or your dock, because that port will be yours.

Mr. Forest: Okay. That's a key element, because this is a major point of revenue. We have a budget of $600,000, and most of it comes from harbour fees.

The Chairman: Mr. Forest, thank you very much. I appreciate your taking the time to come here today.

Mr. Forest: Thank you so much.

The Chairman: The committee will now recess until 1:30 p.m.

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The Chairman: Let us begin. First, let me apologize for delaying you for a few minutes. We went out to look at the city of Quebec during the lunch break. We won't shorten your time. We'll see you have the time you are entitled to in order to make your presentation.

Our witnesses are from the Chamber of Commerce of Trois-Rivières. Mr. Morin, would you please introduce the delegation?

Mr. Gilles Morin (President, La Corporation des Utilisateurs du Port de Trois-Rivières): I'll have Mr. Bïgué do that. He is the representative of the chamber of commerce. We're the representatives of the users.

[Translation]

Mr. Michel Bïgué (representative of the Chamber of Commerce of Trois-Rivières): Good afternoon, Mr. Chairman, members of the committee.

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We are from the Chamber of Commerce of Trois-Rivières and the Corporation des utilisateurs du Port de Trois-Rivières. Allow me to introduce the people accompanying me: Mr. Gilles Morin, president of the Corporation des utilisateurs du Port de Trois-Rivières; Mr. Édouard Rivard, the executive secretary of the Corporation; and Mr. Mario Côté, executive director of the Chamber of Commerce of Trois- Rivières.

Why is the Chamber of Commerce of Trois-Rivières presenting a brief in collaboration with the Corporation des utilisateurs? In the first place, because wherever there are ports in Canada there are chambers of commerce. A survey found that there was not a single port where there was no chamber of commerce. Furthermore, the chambers of commerce represent to a large degree the business community. The Chamber of Commerce of Trois-Rivières, for your information, is one of the most widely recognized chambers of commerce in Canada.

It has, in fact, been in operation since 1881. You will find in our brief a reference document showing that even back in 1881 the Chamber of Commerce was actively involved in the affairs of the Port of Trois-Rivières. The Chamber of Commerce has a standing committee that deals with the affairs of the Port of Trois- Rivières.

The users, who account for close to 90 per cent of the transactions that are carried out in the Port of Trois-Rivières, are, in particular, the grain elevators. I will name them so you can see what this group is: the Somavrac group, Lauralco, Kruger, Tripap, Trois-Rivières Remorqueurs, the Malone, Watson and Lower St. Lawrence shipping agencies, and Logistec.

I will begin our presentation by telling you that in the present context there is a choice to be made for the various port cities, between becoming a CPA or a regional port. Independently of the choice that we might make in Trois-Rivières and irrespective of the future management formula, we would like to recommend certain amendments to Bill C-44 to make it correspond more closely to our expectations.

We find Bill C-44 unacceptable in its present form, owing to a number of clauses that do not coincide with what we want. Although, overall, there are relatively few such clauses, they are in our opinion highly significant in terms of the future administration, management and operations of the Canada port authorities. In both his speech and the ensuing bill, the Minister expressed the desire to give the users an enhanced role. Within this context, here are various aspects or clauses in the bill that we wish to comment on.

With respect to the users, in Part I, clause 4 of the Bill, the term``user'' is defined as``a person that makes commercial use of, or provides services at, the port''. This definition is inappropriate because it is too broad and may, in some respects, create ambiguity. We suggest that the legislation be more explicit and, to that effect, we submit the following wording, which would describe more specifically who the users are. A user of a port is a:

person that makes commercial use of, or provides services at, the port. The letters patent of incorporation or the supplementary letters patent shall define who are the users of the port in question.

In terms of incorporation, under the heading``Incorporation'' in clause 6, where the bill spells out the content of the letters patent, some items are debatable, in our opinion, if not unacceptable. Accordingly, in paragraph 6(2)(f), we recommend that the number of directors be between seven and eleven, which is in keeping with the spirit of the new marine policy and its desire to give the private sector and the users a majority on the board of directors. We suggest that a representative of the local business community, recommended by the Chamber of Commerce, be appointed to the board of directors.

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The letters patent should provide that the Chamber of Commerce of the municipalities designated in the letters patent may appoint a director. Consequently, subclause 6(2) should be amended, as well as clause 12. There is already provision for a representative from each level of government.

In subparagraph 6(2)(f)(iv), we recommend that the chief executive officer not be a voting member of the board of directors.

With regard to the remaining directors, we recommend that subparagraph 6(2)(f)(v) stipulate that the Minister shall choose the remaining directors from a list jointly submitted to him by the users and the Chamber of Commerce, which would already be empowered to appoint a director.

In our opinion, paragraph 6(2)(h) is overly broad and we think that, in order to avoid possible ambiguity and debate, a precise framework for the payment of fees and charges to the Minister should appear clearly in that part of the Canada Marine Act dealing with the Canada port authorities.

Directors: In the chapter dealing with directors, paragraph 12(1)(d) should be removed if the Minister agrees to our request for amendment of subparagraph 6(2)(f)(iv). In addition, paragraph 12(1)(e) should read as follows:

(e) the Governor in Council appoints the remaining individuals nominated by the Minister from the list provided for in subparagraph 6(2)(f)(v);

That is, that the Minister selects the remaining directors from a list jointly submitted to him by the users and the Chamber of Commerce, which will already be empowered to appoint a director.

To keep within the meaning of the Act and keep it consistent with the intended role of the users, it will be necessary to remove paragraph 14(e), which reads:

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

We also recommend that the scope of subclause 19(1) be narrowed by replacing

19. (1) The directors of a port authority shall appoint a chief executive officer

with

19. (1) The directors of a port authority may appoint a chief executive officer and may appoint such other officers as they consider appropriate.

Fees: Under Fees, although we agree that in some respects contracts between the port authority and particular users might be treated as confidential or not made public (clause 44), we strongly recommend that consideration be given to including in the Act an arbitration process to deal with cases in which a party claims there has been collusion or abuse of authority or that its rights have not been respected under subclause 41(1) or subclauses 41(1) and (2).

Miscellaneous: In part VI,``Miscellaneous'', clause 126 deals with the consequences of the dissolution of Canada Ports Corporation, more specifically with the assets held by that corporation.

We strongly recommend that where ports have accumulated reserves, these reserves should be included in the transfer and remain at the disposal of the port in question. However, the future use of such funds should be clearly spelled out in the letters patent.

General remarks: In closing, we would like to make a few general remarks regarding the new Canadian marine policy.

The bill should include the traditional wording that follows, applicable to all types of port authorities:

Contracts between the users and the port authorities shall not be affected and shall be performed by the port authority in compliance with the rights and obligations contained therein.

Concerning the environment, we believe that whatever the future management formula, the new authority should be protected by a clause relieving it of any liability with respect to previous actions taken or directed prior to the transfer of the ports to the new authority. The Minister or some other federal body shall assume the cost of any work ordered under the terms of a government notice in relation to the presence of toxic substances affecting the soil, water or buildings erected on the premises if such substances were present at the time of the transfer, although an environmental audit may be performed prior to the transfer.

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Concerning taxation, although we agree that the port authority should continue to pay its share, we think the future port authority should continue to enjoy federal agency status.

We are aware that several clauses in Bill C-44 are applicable to the so-called``regional port'' management formula, and we greatly deplore the vacuum created by the lack of any indication of federal government expectations with respect to this category. Indeed, we are convinced that the so-called regional ports should respond to certain government expectations, meet certain obligations, exercise certain rights and promote Canadian marine activity, but there is no indication that this will happen.

To analyze clearly the available options, we need realistic data on current activities, movements, costs, operating methods, income, expenses, dues, contracts and transfers, where applicable.

At the present time it is virtually impossible to get access to the relevant information without first opting for one or the other of the available choices. The Minister should make this data accessible to responsible groups without further indefinite delays. We hope that this intervention will allow the Chamber of Commerce of the district of Trois-Rivières and the Corporation des utilisateurs du Port de Trois-Rivières to continue their efforts to establish the widest possible consensus within the community and thereby take a clear stand as to the future orientation of our port facilities. Respectfully yours.

[English]

The Chairman: Thank you very much.

Mr. Crête.

[Translation]

Mr. Crête: I listened to your presentation while reading your document diagonally. I would like you to explain to me whether, to your way of thinking, Canada port authority status is really the one that corresponds most closely to the situation of Trois- Rivières, and is really relevant, or whether the comments you make concerning the lack of knowledge you have about the future of the regional ports mean that you could be led to reconsider your positions. Would the situation look different to you depending on what was disclosed by the information you obtained? More specifically, what kind of information would you need?

You say it fairly clearly for the ports, in general:

we are convinced that the regional ports should respond to certain government expectations...

Could you talk about this more specifically in relation to the Port of Trois-Rivières?

Mr. Bïgué: At present, we are acquainted with the content of Bill C-44, which we have read and analyzed. In relation to the Port of Trois-Rivières, we do not know what regional port status would mean under the definition that would be given to it in some other legislation. As we say in our document, our group has not taken a position in favour of any particular status and will not do so as long as we do not know the differences that might exist between them. There will, of course, be some elements that are the same, and some overlapping between the two statuses. In our opinion, we should be in a position to know what the characteristics of regional port status will be if we are to make the fairest possible choice for our community.

Mr. Crête: This means that you want - you can tell me whether I'm right or wrong - in the last analysis, to know what these differences are before the legislation is adopted in its final version, insofar as this is possible. If I correctly understand what you are saying, these aspects should be incorporated in Bill C-44, so you will know the rules exactly when you have to make your choice.

Mr. Bïgué: To all intents and purposes, yes. Mr. Morin?

Mr. Morin: To complete what Mr. Bïgué says, there is another aspect in the brief that alludes to the data on the port's present costs, movements, operations, etc. The group has asked for information several times. As we point out in the brief, these things are an important factor in the choice. The Minister should therefore make them accessible to us.

Mr. Crête: Between your present status, which I would designate the status quo situation, and the status Bill C-44 would confer on you, as it is, which would you prefer for the Port of Trois-Rivières?

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Mr. Morin: The status of the Port of Trois-Rivières is that of a divisional port. In other words, it is not a port with local self-sufficiency in terms of administration. In the past we have indicated, through the Chamber of Commerce, and on more than one occasion, the desire of the community in Trois-Rivières that we become self-sufficient. That would, for all practical purposes, mean no longer being dependent on Ottawa's decisions, whether through Ports Canada or through federal civil servants. It would mean being locally self-sufficient. That is clear, to us.

However, we also say that the components of this economy and the way in which it is organized should take into account the environment, taxation, etc., irrespective of the choice we make. We will be able to choose in light of the final Act. Our case is a bit peculiar, given that we are a divisional port; it appears that this gives us some choices that other ports don't necessarily have.

Mr. Bïgué: I would like to add that while we have been trying to change the status of the ports throughout Canada, over the last year or almost two, the government has consistently been in favour of the regional groups and even regional businessmen's groups taking over the facilities. That is to some degree why we are inclined to prefer the establishment of this system.

[English]

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

I'd like to welcome Mr. Dubé from the great city of Lévis. I understand they're going to be on the agenda a little later today.

Mr. Keyes: What a coincidence.

The Chairman: Mr. Dubé has been with this committee a lot.

Mr. Keyes.

Mr. Keyes: Trois Rivières has indicated to the committee that it wants to be a Canadian port authority, a CPA. Why are the chamber and the users at odds with the port that feels it can maximize its opportunities as a CPA?

Mr. Morin: As you indicated, the Port of Trois Rivières, or the actual directors of the Port of Trois Rivières, or Ports Canada represented by their people in Trois Rivières, have asked that the Port of Trois Rivières be a CPA.

Today you understand there are other people, basically the user group, the business community, who are not sure that is the best option, who need to discuss amongst themselves what is the best option.

We have not taken that option as something definite. We would like to hear more information from the minister on what is the alternative. We would also like to know about the port administration. We were a divisional port before and we were controlled by Ottawa. We have no knowledge of the information concerning the operations of the port by Ports Canada.

Mr. Keyes: Mr. Chairman, this is the first group that has come to this meeting in all our days of travel, in all our meetings, that is not up on the fact of a CPA versus local regional control.

Quite simply, local regional control means it's your port. The CPA status, if amended the way it's been suggested to us by other ports, has its advantages.

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If Trois-Rivières meets the criteria to be a CPA, there are many more advantages for Trois-Rivières vis-à-vis taxation, provincial income tax, federal income tax, and all the other things that flow from a CPA. I'm surprised that I'm hearing from a user that they're confused as to whether they should be local-regional when they would be subjected to many more taxes and as a result would have to pay those taxes out of their profits.

Mr. Morin: In our brief we identified the fact that the taxation issue for federal status as an agent, and therefore protection against taxation, was not clear in the law. We did mention that.

If it were to become clear, if these suggestions were to become part of the law, obviously in our minds decisions on a lot of these issues would make it easier for us to choose that type of status.

Are we better as a regional port if we're not going to get any protection from taxation, or are we better to be a regional port if we're not going to have any environmental issues resolved? This is what we're saying.

We're not confused about the possible option. All we want is for the options to be clear before we choose one and support the port authority on the CPA status, or decide that we want to be a regional port and have an administration that will fit the business community, the municipality, and all the people involved in our area under regional port status.

Mr. Keyes: Thanks, Mr. Morin.

The Chairman: Thank you, gentlemen. We appreciate your time.

From the Quebec Road Builders and Heavy Construction Association, we have Mr. René Brassard and Mr. Normand Pomerleau.

Now that you've been educated about ports, perhaps we can talk about roads.

Welcome, gentlemen. You know the process. We ask you to confine your remarks to about ten minutes so that we have time for questions and answers.

Mr. Normand Pomerleau (President, Quebec Road Builders and Heavy Construction Association): We're speaking today on behalf of the Association des constructeurs de routes et grands travaux du Québec. I would like to thank you for giving us the opportunity to speak and tell you our concerns and recommendations regarding the situation of the roads in Quebec and in Canada.

[Translation]

It was Professor Robert Reich of Harvard University who said:

The key characteristics of a country in the global economy are the skills of its workers and the quality of its infrastructure.

For 40 years now we have been building in Quebec a transportation system worthy of a modern society, as a base for our domestic economy and our trade with our continental partners. Yet we find that the governments responsible for the maintenance and development of the Quebec highway system are spending less and less on its preservation and development in relation to its real needs.

This is not a problem that is exclusive to Quebec; it has been observed in the other regions of Canada. Our association is worried about this situation. Aware of the importance of the highway system to the development of Quebec and Canada, and directly affected by the governments' taxation policies, our association wishes to make its contribution to understanding the problem.

We have therefore responded enthusiastically to the invitation from the House of Commons Standing Committee on Transport to inform you of our views on this important issue of transportation and its impact on trade and tourism.

The Association des constructeurs de routes et grands travaux du Québec is a voluntary organization of some 500 contractors working in the field of civil engineering, roads and streets, highways and energy transmission.

Among the major clients of our industry we note the departments of Transport, the Environment and Wildlife, Agriculture and Fisheries and Food, the Société québécoise d'assainissement des eaux, the urban communities of Quebec and Hydro-Québec. At the Canadian level, Supply and Services Canada, Defence Construction Canada, the CBC and National Defence are regular clients of our firms. The vast majority of the contracts obtained by our contractors are obtained through public tenders.

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The general construction industry, and the civil engineering sector in particular, have been an important driving force behind the Quebec economy over the last quarter century. We need only recall the accomplishment of such major projects as the construction of a hydroelectric dam...

[English]

The Chairman: Mr. Pomerleau, excuse me. I don't like to interrupt when you're proceeding, but I note that you're going through this brief page by page, line by line. It's 14 pages long, which means it will take all of the time we have available to do that, so there will be no opportunity for discussion. You're welcome to use the time that way. I just want to alert you -

Mr. Pomerleau: I will try to shorten it.

The Chairman: Thank you.

[Translation]

Mr. Pomerleau: In 1995, economic activity generated by the Quebec construction industry represented an investment of $15 billion or 22 per cent of the total amount for Canada, which was $62 billion. Almost 60 per cent of those investments were in non- residential housing construction and civil engineering and road system work.

The construction industry overall represents 16,600 employers and created 86,353 direct jobs in 1995, according to data prepared by the Quebec Construction Board.

In fact, the civil engineering sector includes 1,500 employers who directly support some 26,600 employees.

Moving on to the next section, the Quebec economy is open to the world. In 1995, our province had a gross domestic product of $175 billion, or 22 per cent of Canada's GDP.

Quebec's economy is dominated by the services sector. In 1995, that sector was responsible for 70 per cent of economic activity. The secondary sector represents 27 per cent of GDP, whereas 16 per cent of secondary sector deliveries originate in more intensive industries. This means that more than $30 billion worth of goods were shipped by Quebec companies.

Trucking companies haul 80 per cent of goods shipped within the province of Quebec.

If you look at a chart showing the different parts of the road system, you will see that we have a high grade system over some 29,153 kilometres, a local system covering 41,666 kilometres and a system of resource development roads covering 1,347 kilometres.

Through a study conducted in 1988 and 1990 on the national road policy, criteria were established for roads whose function and characteristics warrant national recognition. It was determined that 2 874 kilometres of Quebec's road system meet those criteria.

I'd like to spend a few moments talking about the current condition of the road system. Quebec road system shows a deficiency level of 24 per cent. One kilometre in four requires repairs. The average age of bridges in the province is 35 years old, and in terms of road safety, the average costs of victims involved in fatal accidents went from $55,800 in 1992 to $68,100 in 1995.

Use of the road network has also been steadily growing since 1982, yet the Quebec Ministry of Transportation's share of expenditures is constantly decreasing. According to our estimates, the Quebec Ministry of Transport's budget for maintenance and repairs will meet only 58 per cent of overall road work requirements, in order to reduce the level of road system degradation by 1 per cent per year.

Thus it is clear that the important legacy that our road system represents is deteriorating, resulting in considerable costs for our economy. This is having a major impact on Quebec and on the ability of its companies to compete worldwide.

I would like to briefly discuss the importance of the infrastructure program in relation to investments. The report published following the first infrastructure program concluded the following:

If one considers the program to be a countercyclical instrument to be used in periods of economic stagnation, the findings presented above clearly show the following:

. that funds under the Canada Infrastructure Program were properly used overall;

. that the condition of municipal infrastructures has improved considerably;

. that the jobs created for the most part benefitted individuals on unemployment;

. that the economic recovery, measured in terms of changes in GDP and total investment, is deemed comparable to what the debt reduction option would have produced;

. that the program has no short or long term negative effects on the economy;

. that the program has improved people's quality of life, a factor that many consider to be inherently linked to economic development prospects, but in a manner that is difficult to assess.

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These findings lead us to believe that a commitment by the Canadian government to repair and improve the national road system would produce similar results. There has been talk of a second infrastructure program.

In Quebec, there has been a drop in investment on the part of those responsible for public works. The need for additional road system investments has been amply demonstrated. The current slump in the construction industry is proof enough. Many studies have shown that improving transportation infrastructures is a good investment.

In terms of funding, the federal government has been raising considerable amounts of revenue for a number of years from road system users. For the country as a whole, including GST, Ottawa raised some $5 billion in 1994. The same year, Quebec motorists contributed $652 million. According to Transport Canada data, Quebec road system contribution programs represented an overall investment of $28.9 million. Road system users tax returns represent barely 4 per cent of the amounts levied. Transport Canada even expects that its contribution will drop to zero in the year 2001.

The inapplicability of the user-payer principle to the road system no longer has to be demonstrated. The federal government is not the only one to be using monies collected from certain groups in society for other purposes. The ACRGTQ sees the announcement by the Quebec Minister of Finance of a special fund to preserve and improve the road system as a step in the right direction. In future, this fund will serve to manage monies earmarked for the road system. Eventually, a number of specific revenue sources will be associated with the fund. The result will be independent and transparent management of monies collected.

In the current context of deficit reduction by both the federal government and the provinces, something we fully support, budget choices are not easy to make. Our association believes that governments must choose to invest capital in areas where they will generate the greatest productivity gains and economic production. Numerous studies conducted over the past twenty years show that public infrastructure investments foster significant productivity and economic growth.

In closing, improvements to the road system generate a series of benefits for individuals, businesses and governments. An in- depth analysis of Canada's road policy carried out between 1987 and 1990 thoroughly documented the subject. Getting provincial and territorial governments involved in development of this policy has made it possible to achieve consensus in an important number of areas.

The ACRGTQ is of the view that given short-term economic conditions and the amply demonstrated need for major investments in both Canada's and Quebec's road system, the national road policy developed between 1988 and 1990 should be central to any initiative in this area.

In order to provide funding for an infrastructure program, we believe the government should establish a road system fund using revenues from gasoline taxes paid by road system users.

In the years to come, road transportation will continue to be a major economic spur in both Canada and Quebec. It is expected that intercity traffic will grow by 3 per cent per year between now and the year 2000. Our road system currently supports 90 per cent of passenger transportation and 76 per cent of goods transportation in Canada. We cannot afford to risk harming the Canadian economy because of an antiquated road system. In a brief on the status of the road network dating back to 1941, the Quebec Deputy Minister of Transport wrote the following:

Road construction does not yet meet either tourism or transportation requirements. It seems improving the road system is a never-ending task.

Fifty-five years later, it is clear to all that he was right.

[English]

Excuse me, Mr. Chairman. We said we had roughly twenty minutes for our presentation.

The Chairman: Mr. Pomerleau, I must congratulate you. You did extremely well. I appreciate your patience.

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I appreciate the time you've taken and the attention you've paid to this issue. I know members have questions. I'm going to start with Mr. Jordan.

Mr. Jordan: With regard to the deteriorated conditions of our roads, you're saying it's a national problem; it isn't just a Quebec problem.

You would support, I think, a repeat of the infrastructure program as it was before, or would you suggest that it be a little more focused on road construction? That's my second question.

My third is with regard to the financing of maintenance, first of all, and then the financing of new road construction. It was suggested here earlier today that some of the excise tax money we now collect from fuel should be put toward new road construction and road maintenance.

Nobody likes more taxes, but if it could be demonstrated that this additional tax was explicitly for road construction or road maintenance - and it would have to be completely transparent - would you support the idea of an additional excise tax of perhaps 2¢ a litre, as has been suggested?

I have two or three questions mixed in there.

Mr. Pomerleau: I will answer your second question first. What we say, and we say also to the Quebec ministry, le ministère des Transports du Québec, is we want to have a road fund - not necessarily a new tax but a road fund coming from the actual tax. However, we have to be sure that the fund will be effective for increasing the situation of road infrastructure.

Mr. Jordan: But you wouldn't support a new tax, an additional tax.

Mr. Pomerleau: Not necessarily a new tax - and the same thing at the federal level.

[Translation]

Mr. René Brassard (Director General, Quebec Road Builders and Heavy Construction Association): With respect to your first question, the answer is yes. The Quebec Road Builders and Heavy Construction Association is asking that a second infrastructure program be put in place. We have made representations at both the federal and provincial levels in support of a second infrastructure program.

We believe a second infrastructure program should be based on a national road policy. That policy was developed in the nineties, more specifically from 1988 to 1990, and it very effectively addresses the issue of how to standardize the Canadian road system.

It is our view that the road policy developed five years ago should be part of the next infrastructure program.

[English]

Mr. Jordan: I have a short question.

The Chairman: A very short one.

Mr. Jordan: The difficulty there, though, is that the previous infrastructure program was one-third, one-third, one-third. A lot of the highways in this country are not controlled by the municipalities. They fall clearly under the jurisdiction of the province. That's why I was suggesting...

I don't think if you go with the old infrastructure program, outlined as it was before... The municipalities were involved because the costs of road construction down at the county level worked out okay, but if you're going to leave it as it was before, I don't think you're going to get a lot of municipalities enthusiastic about it. They think the provincial highways are out of their jurisdiction and they shouldn't be involved.

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There are problems with it if you're going to do it as it was done before, if you think it's going to be used to improve and build new roads or maintain existing roads.

The Chairman: Thank you.

[Translation]

Mr. Brassard: As for the matter of taxes, we believe the Canadian government should be focussing more on the road system. In the ports sector, for example, the user pay principle is widely applied. We would like to see the federal government apply that same principle to the road system and thus put more money back into it.

The federal government is already collecting some $5 billion a year. I'm sure motorists would agree to pay a new road tax if they had the government's assurance that this tax money would be used solely for road maintenance and construction.

[English]

The Chairman: Thank you.

Mr. Dubé.

[Translation]

Mr. Dubé (Lévis): For once, I'm going to feel completely at ease because I know I will be understood immediately. I want to thank you for coming and making your presentation. I know that your position is supported by the Quebec Automobile Club which, as you well know, has a great many members. I was able to participate in the Committee's hearings in Winnipeg and Thunder Bay, and as a result I heard a number of witnesses express pretty well the same views you have.

As far as taxes are concerned, in answering Mr. Jordan's question earlier, you talked about 2,874 kilometres of roads that you believe represent that part of the national road system that needs to be restored or rebuilt, which is quite a lot. I would like you to elaborate on that, because that is sure to please the people of Témiscouata who are hoping for a four-lane highway to be built between Rivière-du-Loup and Edmundston. And I am sure there are other places as well where people are waiting.

What do you feel are the highest priorities?

While I have the chance, I would like to put a second question to you as well. If the government or governments are reluctant to introduce a new tax, what are your views on tolls? For instance, when you fly over Toronto, you can see a whole network of highways within the Toronto area that are now private toll roads for which the government has signed a forty-year agreement. I would be interested in hearing your views on that.

Mr. Pomerleau: To answer your first question, I think what is needed is a two-stage process, because I referred earlier to the fact that the deficiency rate was 24 per cent, which is a source of concern, given that an acceptable rate is about 10 per cent. So, the first stage could involve repairing those roads, and the second stage, maintaining and improving the road network, including new construction.

We believe the first priority is to close the gap between 10 and 24 per cent, which is a disturbingly high rate because it indicates the infrastructure is being damaged; also rehabilitation costs are four to five times higher than the cost of making repairs as the need arises.

As for your second question, in a brief submitted to the Quebec Ministry of Transport, we suggested a whole series of potential funding mechanisms for a road system fund, including the possibility of tolls. Of course, that would involve installing machines, but that is easier now than it was before. But that could come at a later stage since simpler funding systems or mechanisms can be put in place.

Mr. Dubé: And what are your views on privatization of road repair work?

Mr. Brassard: We're open to any proposals.

Mr. Dubé: This morning, we talked about the possibility of privatizing the Port of Quebec, for instance.

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Mr. Pomerleau: We believe there will be mixed enterprises in the future and we are in fact quite supportive of the idea.

Thank you, Mr. Chairman.

[English]

The Chairman: Thank you, Mr. Dubé.

Let me take the prerogative of the chair to ask two very quick questions myself.

The American model, which is often used as an example of how we could do this, has established a trust, a national trust or a fund, that the road tax could be paid into and that the national highway system would be funded out of. There's been talk here of creating some sort of federal-provincial entity that might hold the funds and receive the dedicated taxes and then use that to bring the national highway system up to standard. Is this a model that would have your support, or would something along that line have your support?

[Translation]

Mr. Brassard: This year the Quebec government established a road fund which is essentially intended to ensure accounting transparency for all monies collected and expended. It's roughly based on the American Highway Fund model. If we're talking about road system funds, I think the main goal is to ensure appropriate transparency with respect to costs, incoming revenue and disbursements.

The Government of Quebec took a step in that direction when it created a road fund in this year's budget. We believe that it's a good solution - indeed, our brief recommends that the Government of Canada establish a similar type of fund.

[English]

The Chairman: I won't take the time then to deal with those questions right now. We've run out of time for this particular presentation. I'll read your brief and thank you very much. I appreciate your time.

Our next presenters are from the MRC Témiscouata. It's a regional municipal corporation.

Émilien Beaulieu.

[Translation]

Is he not here?

Mr. Dubé: Yes, they're here.

[English]

The Chairman: Good afternoon. Welcome. We would ask that you confine your remarks to about ten minutes so there's an opportunity for questions and answers.

Mr. Beaulieu, you are the one I have as the contact person here. Could you introduce your delegation and begin the presentation?

[Translation]

Mr. Émilien Beaulieu (Chairman, Regional County Municipality of Témiscouata): My name is Émilien Beaulieu and I am Chairman of the Regional County Municipality of Témiscouata. I want to introduce Paulette Griffin, Mayor of Cabano; Jean-Guy Lachance, Mayor of Ville Dégelis; and France Dionne, Member of the Quebec National Assembly for Kamouraska - Témiscouata.

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I would like to begin by saying that we eagerly accepted the invitation of Mr. Paul Crête, the Member for Kamouraska - Rivière- du-Loup, to present a brief before the House of Commons Standing Committee on Transport. Our eagerness has to do with the fact that this Committee is reviewing Bill C-44 and attempting to determine the means by which our national transportation system could better serve, support and promote national and international trade and tourism.

In contrast to current deterioration of the road system, a summary of federal government studies indicates the positive impact a significant improvement of that network would have. We would point out that a 10 per cent increase in public capital expenditures on the road system would result in increased production of between 0.8 and 6 per cent in goods-producing industries. In terms of logistics and production, those same goods- producing industries could also save up to 20 per cent in terms of transportation costs, travel time reliability and inventory reduction. Therefore, investing in the national road system clearly has a major impact on economic growth and regional development.

In Témiscouata, we have a direct interest in Highway 185, as it is an integral part of the Trans-Canada Highway that runs all across Canada from east to west. That portion of the Trans-Canada Highway originates east of Rivière-du-Loup, at the end of Highway 20, and runs right through the Regional County Municipality of Témiscouata, terminating at the point where the borders of the Municipality of Dégelis and the province of New Brunswick, in the Maritimes, converge.

From the perspective of the Témiscouata region, reviewing Bill C-44 means focussing on two major problems relating to Highway 185: a steady increase in heavy transport traffic and multiple accidentogenic sections that affect different aspects of public safety as well as economic, tourist and regional development.

Mrs. Paulette Griffin (Mayor of Cabano): With respect to the steady increase and heavy transport traffic, recent studies of trends and projections with respect to the transportation of goods show that heavy trucking could well become a strong growth sector in the short and mid terms, with an annual growth rate of 4.7 per cent between 1993 and 1999, and a rate of growth of 2.3 per cent for the period from 1999 to 2005. Similar rates are expected for transborder traffic and, to a lesser extent, interprovincial movements.

It is important to emphasize that no longer can the regions count on railway transportation to mitigate increased heavy transport traffic. The Canadian National Railway infrastructure in our area was recently dismantled and is now used for recreational and tourist activities.

In Eastern Quebec, the number of trucks in circulation has risen faster than the average for Quebec as a whole. For example, between 1988 and 1994, the number of trucks and road tractors increased by 12.6 per cent in the Lower St. Lawrence region, compared to 9.7 per cent for Quebec as a whole. That reality is very evident on Highway 185 where, in 1983, between 714 and 1,344 trucks per day were found to be using the highway, a figure corresponding to between 15 and 20 per cent of all traffic.

Recently, from August to September 1996, traffic counts revealed that between 500 and 1,500 trucks per day were leaving Saint-Antonin, near Rivière-du-Loup, and travelling to Ville Dégelis, meaning an average of 1,200 vehicles per day.

I now want to touch on the issue of multiple accidentogenic factors. In the interests of public safety, we feel it is just as important that exceptional corrective measures be taken to reduce the number of access point as well as the sharpness of certain curves on Highway 185.

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I would like to list the main areas where the most significant problems arise: first of all, the junction of Highway 185 and Highway 295 to Ville Dégelis; the junction of Highway 185 and la rue Commerciale in Cabano and the truck weigh station; the junction of Highway 185 and the route de l'Église to Notre-Dame du Lac; the junction of Highway 185 and Highway 291 to Saint-Honoré; the junction of Highway 185 and rue Raymond leading to Saint-Louis-du- Ha! Ha!; the junction of Highway 185 and of the first and second rural routes in Saint-Antonin.

We believe we can state without fear of exaggeration that most of these junctions require urgent corrective action.

M. Jean-Guy Lachance (Mayor, Ville Dégelis): There is a need to define the general and specific characteristics of different route segments - in other words, tourist routes to be enhanced, landscapes to be promoted, industrial and commercial corridors to be protected and structural changes required to ensure both public safety and road ridability.

We must ensure that land use adjacent to the road system is compatible with system improvement projects. In that context, the land development plans prepared by regional county municipalities and local planning regulations are essential tools if these goals are to be met.

We are therefore of the opinion that a large-scale project to rehabilitate Highway 185 is essential in order to solve bearing capacity problems and enhance road ridability; to solve public safety and accident related problems; to facilitate access for tourists from Ontario, the Maritimes and the United States to Témiscouata and the Lower St. Lawrence region; to allow for the efficient conveyance of consumer goods produced in Quebec to their respective markets.

Mrs. France Dionne (Member of the Quebec National Assembly for Kamouraska - Témiscouata): The Rimouski Regional Branch of the Quebec Ministry of Transportation is currently conducting an opportunity study. It should be finalized no later than early 1998 and co-operation between the Governments of Quebec and New Brunswick is expected for extension of the four-lane highway partially funded by the federal government.

Moving now to our recommendations, because of the situation we have just described and the opportunity study underway in our region, and considering the costs of such a project as well as the goals pursued by the House of Commons Standing Committee on Transport, we would like to make the following recommendations:

That the federal government treat as a priority the development and upgrading of Highway 185, a road that both levels of government recognize as being part of the Trans-Canada Highway, in consideration of problems relating to trucking and public safety, and to better serve and support economic and tourist development in Quebec and New Brunswick;

That the federal government maintain financial contributions to the provinces for improvements to the Trans-Canada Highway system, both for existing road networks and new networks;

That the federal government avoid creating economic distortion between the different regions of Canada by ensuring that the principle of equity shall prevail with respect to transfers to the provinces;

That the federal government maintain research and development in the road sector in order to enhance road safety, ensure safe transportation of hazardous goods, support regional and tourist development and foster technological innovation related to the upgrading, maintenance and development of road infrastructures.

In closing, we want to express our sincere thanks to Paul Crête, the Member for Kamouraska - Rivière-du-Loup, for informing the Regional County Municipality of Témiscouata that these hearings would be held, and the Committee for taking the time to hear us out. You can count on our full co-operation should you require any additional information regarding issues addressed in our brief.

[English]

The Chairman: We too would like to thank Paul Crête for having you come here. Paul.

[Translation]

Mr. Crête: I want to thank you for your presentation. As part of this consultation on the relationship between transportation, trade and tourism, I wanted to cite some examples that would help me demonstrate the need to invest in the Trans-Canada Highway. The concrete example you have provided is very helpful, because it addressed not only issues like safety, but also tourism and transportation of all kinds.

This morning, we had a presentation by officials from Quebec City who told us the road leading to the Maritimes must be upgraded, which certainly confirms what you have said.

I want to ask you, as regional stakeholders, whether you would be in favour of the federal government's following the recommendation made by the Canadian Automobile Club, that 2 cents out of every 10 cents collected in gasoline taxes be spent on the national highway system.

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Secondly, as part of a new infrastructure program, do you think it would be a good idea to create a special national highway system component? Do you see those as valuable suggestions, Mr. Beaulieu?

Mr. Beaulieu: Absolutely. That is very important. The main point we wanted to emphasize in our brief was that the portion of the highway linking Rivière-du-Loup to Edmundston in New Brunswick had always been considered to be part of the Trans-Canada Highway, since that is the road people take to go to the Maritimes.

That is also the route people take to go from the Maritimes to Ontario by way of Quebec. It is so important, in our view, that we will always be in favour of a program that recognizes that portion of the highway as part of the Trans-Canada, whatever steps may be taken to help us to upgrade it, whether it is through a royalty to be paid to us through one program or another, or some other means.

Mrs. Griffin: I would like to add something. I think it's a very valuable suggestion, because if we spend 2 out of every 10 cents to improve those portions of the Trans-Canada Highway, it will benefit not only the Maritimes but Quebec and the rest of the country.

The current highway system in the Maritimes has both two-lane and four-lane roads. However, the portion of the highway between Edmundston and Rivière-du-Loup, which represents a distance of about 120 kilometres, has only two lanes. But there are very high volumes of heavy transport traffic originating in the Maritimes and thus money must be found to make the necessary improvements.

Mr. Crête: I just have one more point of information for Committee members. It is exactly the same route as the one used for the Gaz Métro system, if the National Energy Board ever decide to complete the gas pipeline system into Nova Scotia.

Mrs. Dionne: I just wanted to add that as far as the infrastructure program is concerned, that possibility is the subject of a lot of discussion at the present time. I must say the infrastructure program was very much appreciated in the Lower St. Lawrence region, indeed all across Quebec.

We obviously hope that the program will continue through a second phase. I do think close attention will have to be paid to large scale upgrades such as those needed on that section that is part of the Trans-Canada.

I would also like to add that Transport Canada is currently considering construction of an intercontinental network in North America. Investing in the Trans-Canada, which is the national road system, would make it possible, as part of a future intercontinental network, to link up much of Quebec and the Maritime provinces to Highway 95 in Maine, allowing for much more extensive economic development in Eastern Quebec, the Maritimes and Maine.

I wanted to draw your attention to that because you will certainly be looking at this issue at some point and it would be an opportunity to kill two birds with one stone if funds could be set aside for this intercontinental system.

[English]

The Chairman: Thank you very much.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

I have just one question. I do support many of the things that were said by the committee. In fact, I wrote policy for our party dealing with those solutions.

However, I have one question directed primarily to Mrs. Dionne. I listened to you during the conclusions of the committee...and the wish list, if you would, including your supplemental comments. I'd just like to know for my own curiosity, which party do you represent?

Mrs. Dionne: I'm with the Liberal Party.

Mr. Gouk: That's interesting. Thank you.

Mr. Keyes: Is that clear enough for you, Jim?

Mr. Gouk: Yes. I always like it when we have some level of Liberals agreeing with some level of Reform.

The Chairman: Mr. Gouk, I thought that would have been self-evident.

Mr. Gouk: I'm trying to ``reform'' the Liberals.

The Chairman: Perhaps I could ask the question that Mr. Gouk really wanted to ask. There has been discussion about dedication of the taxes. The 2¢ is the current figure. It's been 1¢ from each level of government. For the national highway system - not for the rest of the roads in Quebec but just for the national highway system - one possibility is that each level of government... The province would put in up to 2¢ from its gas levy and the feds would put in up to 2¢ from its gas levy. That would create a fund that would then be administered independently of the two governments, although there would be cooperation in some form. This would serve to upgrade the entire system nationally, from coast to coast.

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Is that a mechanism you think would be supported in this region?

[Translation]

Mrs. Griffin: I don't believe that has been discussed with the provincial government. I know the Department of Transport has concerns about the situation in Quebec and is aware of the problems we're experiencing in our area. Corrective action must be taken, and I think we could probably negotiate a plan of action that would be achievable.

Mrs. Dionne: I just wanted to add that given the example you have just cited and the fact that major corrective action is required, people would agree to contribute to a fund to be used for road construction and upgrading.

[English]

The Chairman: Thank you very much.

Mr. Cullen.

[Translation]

Mr. Cullen: Thank you very much for your presentation. As you point out in your brief, upgrading this road will be very expensive. Do you believe the private sector would consider contributing to the costs of these upgrades?

Mrs. Dionne: Thus far, private corporations interested in investing in highway or road systems have done so in places where there are high traffic volumes, near major metropolitan centres such as Montreal. Our region is likely to generate less interest on the part of private companies. But even in the large metropolitan areas, these companies are still waiting for a response from the Quebec government. This is a proposal that is currently under consideration in Quebec.

Mrs. Griffin: It might be worthwhile soliciting the views of major trucking companies that use the highway to haul goods. Those companies might well be interested in having more accessible and comfortable roads on which to transport goods. We may want to consider that and ask the big companies what their views are.

Mr. Cullen: Thank you.

[English]

The Chairman: Thank you very much. I appreciate the time you took today.

One more time, Paul, thank you very much. Paul, I'm very pleased to see that you invited a Liberal. I think that's very good. Together we can make a difference in Paul's life.

[Translation]

Mr. Crête: In order to have a serious discussion about the kind of action that could be taken, there will need to be a consensus-building process that goes beyond partisanship, because partnership will be a must, whatever future Quebec chooses.

[English]

Mr. Keyes: The money will have to come from all Canadians.

The Chairman: Thank you.

We now have, from the City of Lévis, Dennis Guay and Gilles Lehouillier. You have about ten minutes for your presentation and then there will be questions and answers.

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Welcome, and please begin when you are ready.

[Translation]

Mr. Gilles Lehouillier (City Councillor, City of Lévis): Thank you.

We first want to thank members of the Committee for agreeing to hear us, despite the very short time frame involved.

I also want to convey the apologies of the Mayor of the City of Lévis, Mr. Denis Guay, who is convalescing. However, I discussed our brief with him again this morning and I can assure you that his views are shared by the elected officials of the City of Lévis. The City of Lévis came about as a result of an amalgamation of municipalities and has a population of 42,000.

The City of Lévis has a very direct interest in the future development plans of the Port of Quebec as it has the only deep clearance site still available in the Quebec metropolitan region for development of an industrial park and port zone.

For that reason, elected officials in Lévis as well as its city council felt it was important for them to make the Committee aware of their dissatisfaction with respect to the proposals contained in Bill-C-44, which our presentation will focus on.

Specifically, our comments will address two specific aspects of the legislation: the composition of the board of directors of Canada Port Authorities and their capacity and powers.

Although we are not directly affected by Bill C-58, an Act to amend the Canada Shipping Act, we see this as a good opportunity to make you aware of certain considerations with respect to the future of shipbuilding in Canada in general and the future of MIL Davie shipyard, which now goes by the name of Industries Davie Inc. and is located in Lévis.

[English]

The Chairman: Excuse me. I hate to interrupt, but I note that the presentation you're currently reading is 13 pages long, single spaced. I expect this will take the entire time we have if you choose to read the whole thing. You're welcome to do that, but then there will be no time for any kind of exchange with the members, as we only have thirty minutes per presenter. I would suggest you might want to summarize it. Focus on those points that you specifically want us to deal with to give members an opportunity to pick out the things they wish to focus on, if that's possible. Thank you.

[Translation]

Mr. Lehouillier: I will try to summarize it. I will move directly to our second point, which relates to the South Quebec Industrial Park and Port Facility Project.

With respect to this issue, it is important to remember that expansion of the Port of Quebec on the South Shore will eventually depend on the development of an industrial park and port zone located in the far eastern section of Lévis, in the former district of Lauzon.

I should point out that the zone where this development is being contemplated represents 15 per cent of the entire area of the City of Lévis, which is quite substantial because, as you know, three separate municipalities merged to form one entity. So, our main motivation in appearing before the Committee to discuss the legislation you're currently considering is our belief that port infrastructures will have to be developed on that site by the Port of Québec sooner or later and that strategic tracks of land must therefore be secured as quickly as possible.

Officials from the Port of Quebec have confirmed that they are interested in this option but that a lack of funds is preventing them from carrying out the technical feasibility studies.

As we all know, port facilities are costly infrastructures which can be complex to build, and because of their polyfunctionality, require a large number of feasibility studies. The result is higher costs and an average port cycle of five to eight years.

The first message we wish to convey to the Committee is that in terms of government policy, although there is a Canada-Quebec subsidiary agreement on industrial development, no funding is available to the planning of projected infrastructures.

We believe, first of all, that the federal government must be in a position to plan long-term development as part of its national policy. Indeed, using the example of the expansion of the Port of Quebec in the Quebec City region, it is clear that the City of Lévis is taking sole responsibility for``freezing'' an entire zone that represents 15 per cent of its overall land area while officials at the Port of Quebec try to raise a bit a money and decide whether or not to expand port facilities.

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That expansion may not be deemed necessary in the short term - our city is quite aware of that - but in the medium and long terms, it is essential. Given that reality and if amendments to the legislation are being contemplated, the federal government must be in a position to set its basic direction and continue to support the installation of certain kinds of equipment and infrastructure development in Canadian ports.

It should not be forgotten that it is governments that put environmental laws in place, laws that lead to long delays and require environmental studies that are extremely costly.

The problem we are facing is that the people of Lévis supported the idea of an industrial and port zone when the City did its urban planning, but we are not sure what the best site would be.

It should also be mentioned that the now defunct Interport Corporation which was responsible for developing the industrial and port zone, bought land that turned out to be inappropriate, something we only realized 10 years after the fact.

You may recall that the Interport Corporation has been abolished. Instead, we have established a corporation responsible for economic promotion in the Quebec metropolitan area and, as a consolation prize, established a small entity, the Quebec South Industrial and Port Development Corporation, to manage lands held by the Interport Corporation.

In our brief, we recommend eliminating redundant structures, and particularly one that is unnecessary eating up funds for salaries and without which the City could easily manage the lands that were purchased inappropriately, either by negotiating the sale of those tracks of land with the Port of Quebec, or by doing some promotion and buying appropriate land.

As for the legislation, we believe it should focus on providing a direction for the future. Basic public funding is essential for the planning of major infrastructures. That is something that must not be forgotten.

We are currently reviewing our 1998 development plan, and there is no doubt in our minds that the public will say that it is sick and tired of having 15 per cent of our land area``frozen'' and that it wants to be told what government and port authorities intend to do.

It is important to remember one thing: in the year 2000, will it be possible to continue to conduct dredging operations between Quebec City and Montreal, what type of vessels will we have and will Quebec not become the last stop for the shipping industry? With a view to finding answers to all these questions, we ask that the government determine the future direction of activity in this area.

As regards the Quebec South Industrial and Port Zone, without public funding, it will be impossible to secure the strategic sites that are needed to realize this project. We are talking about $4 million just to carry out the technical feasibility, architectural and environmental studies. The City of Lévis can certainly not afford to pay for that nor should it have to.

Secondly, as far as the length of the port cycle is concerned, the size of the land area involved is an important consideration. You must realize that for some 15 years now, that area has been ``frozen''. We did not go so far as to call it an industrial and port zone, because we would have been sued for disguised expropriation. We decided instead to designate it a rural zone, but the public's patience has worn thin. Something simply must be done in that respect.

So, we are waiting for the project to get underway, but in 1998, we will again have to make a decision. We do not want to continue to prop up a corporation that's been managing this issue for four years now, and we have thus set one last deadline for it to take action.

Just to conclude our comments with respect to the corporation, it is clear that the entity created to replace the Interport Corporation no longer represents the views of stakeholders. So, this would be a good opportunity for the federal government to get rid of a useless structure.

So, you discuss it, introduce some reforms and we will handle the rest. Right now, we are paying people a salary for nothing. The fact is, there are people sitting in an office somewhere - where, we don't know - supposedly representing someone - whom, we don't know - and who have been put there by governments, albeit not through any process that we are aware of. We think it's high time we got rid of that whole structure.

Give us the land to manage and we will negotiate with the Port of Quebec with a view to acquiring appropriate land. The lots acquired previously are inappropriate. Local people have already suffered the negative consequences of this acquisition. They want to buy back those lots, and the city is in a good position to look after promotion, since officials with the present corporation cannot do that. I'm sorry, but that is neither their mandate nor their mission.

I want to move on now to representation on boards of directors. We would have preferred to see a greater number of seats set aside for municipal representatives. If the legislation is intended to ensure that greater consideration will be given to local needs and priorities, it is our view that municipalities are in the best position to reflect those needs and priorities.

The City of Lévis would therefore have preferred to be given a full seat on the board of directors of the future Quebec Port Authority. I should also like to mention that the city currently has a very good working relationship with port authorities.

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However, port authorities are aware that in the mid term, land will have to be acquired on the South Shore and that is why we would like to have a strong voice and at least one seat on the board.

Whether we like it or not - and this is more a general comment- -no longer is it possible, in any community, to engage in any form of development on the sly without consulting the public. If a consensus cannot be reached, nothing more can be done. I believe the Port of Quebec has experienced that in the past. We all know that the public absolutely must be consulted.

Thus is it is important that the government be in a position to provide policy direction with respect to port activity; specifically, the federal government must tell us what areas it wants to target and what the chances are of future success. In our view, communities must be given the means to take control of port operations.

We would therefore like to see the City of Lévis designated as such in the Letters Patent that will eventually be issued by the Minister to the Quebec Port Authority. Also, for the reasons cited earlier, we would appreciate having a chance to participate in the drafting of the Letters Patent, via the committee that will be responsible for submitting the draft to the Minister.

In our review of Bill C-44, we noted a number of constraints that we believe may also inhibit future development of port operations in the Quebec region: I refer to the limitations the Minister is proposing to place on the powers of port authorities, particularly with respect to their borrowing power.

As regards their borrowing power, the legislator is proposing to prevent port authorities from mortgaging, pledging or otherwise creating a security interest in the property they manage or hold in any way other than to pledge their revenues. This provision is highly restrictive and revenues are, by definition, volatile.

We believe this provision should be reviewed, and that one possible solution would be to provide for a port authority to mortgage, pledge or create a security interest in the property only after receiving prior approval by the Minister.

Also, we noted that port authorities will not be able to dispose of any federal real property that they manage, except for specific purposes such as road allowances or easements. This is a position we support.

We also agree that federal real property should not be disposed of, because current port infrastructures were put in place by the federal government using our tax money. The federal government thus has a responsibility to ensure that those structures remain public property.

As for debts accumulated by port authorities, we believe that similar to what is done with airports, debts attributable to a port's capital expenditures should be deleted by the federal government prior to a transfer of powers to the new port authorities.

In that respect, however, the government must ensure that all port authorities are on an equal footing. It must thus avoid placing ports that have been lucky enough in recent years to receive funding for the purpose of making improvements, and thus have a relatively modern and efficient infrastructure, in a position of advantage in relation to others.

We all know that some ports received special grants in order to improve their infrastructure, while others did not.

We also believe public funding remains the cornerstone of all port development. Thus we feel it is absolutely essential to ensure that in the short term, heavy infrastructures still benefit from federal funding so that proper medium- and long-term planning can be carried out.

As for municipal taxation, we are very much aware of the current debate between proponents of a tax regime based on property values and those who favour basing taxes on the services provided.

I won't elaborate on that any further. I simply want to say that we agree that port authorities should be subject to municipal by-laws. As I stated earlier, development of any kind in 1996 is unthinkable where no consensus exists within our respective constituencies.

In our case, a consensus has been reached with respect to the industrial and port zone. Although no one asked this of us, we took it upon ourselves to draw up a strategic plan of action. We told the Port of Quebec that without overstepping legal bounds, we could reserve our lands for industrial and port purposes, but that we would not go as far as to designate them industrial and port zones. Planning is therefore required.

With respect to Bill C-58, we wanted to point out that Lévis has one of the largest naval shipyards in Eastern Canada, the one belonging to Industries Davie Inc., the former MIL Davie. You may recall that at its June 1993 Convention in Montreal, the Liberal Party of Canada set three specific goals in this area:

- first of all, to hold a national summit during the first year of the Liberal Party's mandate, once the party was in power, with a view to developing a national marine policy;

- secondly, to provide the Canadian shipping industry with comparative competitive advantages;

- and finally, to foster the consolidation of research and development in this industry.

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It is clear to everyone that no such summit has yet been held and that a federal election is just around the corner. We would also point out that rarely has an issue been the subject of such a broad consensus by decision-makers as is that of MIL Davie's recovery.

It is worth remembering that the MIL Davie shipyard is the last major shipyard to have such a large dry dock within the Great Lakes - St. Lawrence system.

Because of these important issues, we are asking that the government recognize the need to determine, as part of its overall policy thrust in this area, the major equipment and facilities that need to be maintained to provide a minimum level of service to users.

We are very much aware of the fact that under Canada's Marine Policy, Quebec is currently the only province to have rationalized its shipyards: only one remains. We know that there are several more in Eastern Canada and that large-scale projects, such as the Hibernia project, will soon be coming to an end. There will be problems down the road. It is therefore essential that the government develop a national marine policy that will allow those shipyards that are able to effectively penetrate world markets.

You also know that the Government of Quebec has adopted just such a marine policy, one that includes tax credits, financial guarantees for shipbuilding, a lower tax burden and a tax holiday for sailors assigned to international freight operations.

Coming back to Bill C-44, I would like to make a couple of comments about adequate representation. We support these provisions as long as management is put back in the hands of stakeholders. We believe the latter must have the broadest possible representation. We therefore recommend that political appointments by government and other authorities be limited and that due consideration be given to the need to ensure that port authorities are as representative as possible of stakeholders' interests. As far as we are concerned, that is a guarantee that the ports will be able to develop. We firmly believe - and we cannot emphasize this enough - that the days of developing major infrastructures without consulting stakeholders are gone forever.

I apologize if our presentation seemed a little disjointed towards the end, but we wanted to try and provide as thorough a summary as possible of our recommendations, as you requested.

Thank you.

[English]

The Chairman: Thank you very much. You did a masterful job of squeezing that down.

Mr. Dubé.

[Translation]

Mr. Dubé: Although we generally try to put specific questions to our witnesses, I would like to ask an open question of Mr. Gilles Lehouillier, who long acted as spokesperson for the Action Committee for MIL Davie, the largest shipyard in Quebec.

A city like Lévis, which has its own shipyard, cannot help but feel concerned about the future of the shipping industry and ports in general. This is clearly a very important issue and I want to commend them for their diligent efforts in that area.

Gilles, I guess we kind of rushed you with your presentation. Are there any important points in your brief that you didn't have a chance to address? Of course, I read the brief with great interest and I know other members will read it, because I think it is really well prepared. But are there any other issues you absolutely want to talk about? Here is your opportunity to do so.

Mr. Lehouillier: Well, we believe there must be complementarity between the two shores in terms of port operations in the Quebec region and in Chaudière-Appalaches.

As a result, it is our view that a city like Lévis should have a seat on the board of directors of the Port Authority. In future, port activity should reflect the situation throughout the region, notably the fact that there is a shipyard on the other side, and ensure that people can be closely involved.

A couple of years ago, the City of Lévis introduced a process whereby the public is consulted prior to any initiative, and I have observed through our own public consultation process that it is not true that people can't be convinced to support development and to set aside certain tracts of land for industrial purposes.

A problem arises, however, when you come along and say to them: «Such and such a port has made the following decision». That's when you start having problems. Given that reality, we believe that even if the federal government entrusts port management to stakeholder companies, it must continue to provide national policy guidance in this area. What is the national port and marine policy thrust for the Greater Quebec Region?

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Will the federal government, that owns the MIL Davie dry dock, decide tomorrow morning that it is closing the shipyard, that that's it, that there will be no more activity of this sort in the Great Lakes - St. Lawrence system, that vessels will no longer be repaired and that there is nothing more to be done? Those are issues that have to be looked at.

The other reality we are facing - and we make this point most emphatically given that the Lauzon industrial and port zone represents 15 per cent of our overall land area - is that no one can possibly predict what is going to happen five years from now. Although we realize that no one has a crystal ball, we feel we must have some idea of the direction we're headed in in order to be able to properly plan for the future. We don't know either where the Port of Quebec or the government are headed in terms of development. If we got rid of the structure we referred to earlier, as far as we are concerned, that would already be a good step in the right direction.

My colleague Philippe may want to add something about adequate representation, which we see as a very important issue.

Mr. Philippe Murat (Economic Advisor, City of Lévis): As Mr. Lehouillier was saying, ideally, the City of Lévis would like to have one full seat on the board. So, we don't think the number of seats set aside for municipal representatives should be limited to one. But were that to be the case - something we are not in favour of - we still have a strong desire to take part in the work of the committee that will be drafting the Letters Patent of the Port of Quebec or of the future Quebec Port Authority, as it will be known.

One thing we see as a priority is designating those municipalities that will be part of a consultation process for the purposes of choosing their own representative on the board of directors.

Mr. Dubé: There is one item you did not mention. You seem to think that all port development is occurring on the North Shore.

But one major stakeholders, Ultramar, has told us that their operation represents 25 per cent of overall activity at the Port of Quebec, and that operation is located on the South Shore. That conflicts with the argument made by representatives of the City of Lévis, who are on the other side of the river, to the effect that they need their own representative or at least to play a larger role in choosing a representative.

Quebec City being the capital, it is pretty certain that it will always be Quebec City. Yet only the South Shore offers an opportunity for future port development. That may be in a distant future, but it should not be forgotten. Now is the time to plan for it. Thank you.

Mr. Lehouillier: And let's not forget that a port site takes from five to eight years to develop.

If we don't get the environmental studies underway now, and if at some point the Port of Quebec decides to expand, how will our municipality be in a position to respond? What can you do when you're dealing with a two-year development plan? Ten years will go by and nothing will have been done. So what is the answer?

The public will just tell us to forget it. We might still be able to do some development, but in so doing, we would permanently jeopardize all potential development. It's quite true that this area has been designated a rural zone. We can live with that until the next public consultation, but I can assure you that people will come and make representations to us at city council, and when we table our next development plan, they will come back at us on this, because they want to move ahead with other kinds of development.

[English]

The Chairman: Thank you.

Mr. Keyes, do you have a short question?

Mr. Keyes: I just want to inquire of our witness what percentage precisely of port-related activity occurs at Lévis.

[Translation]

Mr. Murat: Lévis is lucky to have the Ultramar docks. I'm sure you know that it is one of the largest refineries in Quebec. Its presence there means that one quarter of all port-related activity in the Port of Quebec occurs within the boundaries of the City of Lévis.

As Mr. Lehouillier was saying, not only do we have the largest shipyard in Eastern Canada in our area, but the largest refinery in Eastern Quebec. We are also the only port site in the Greater Quebec Region to have a clearance.

So, we have a number of assets worth promoting.

[English]

Mr. Keyes: So the work of these particular port users in Lévis couldn't be entrusted to the best interests of the municipality if their user rep was put on the board. Is that what you're saying?

[Translation]

Mr. Murat: Well, we are not saying there is a conflict, just that not only do you have a company there that builds ships, you have the companies that use them as well.

Finally, as Mr. Lehouillier was saying, it's important to remember that this is the only site still available for long-term industrial and port development.

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So, it is the municipality that has prime responsibility, because it is directly affected.

[English]

Mr. Keyes: I think the point I'm trying to make with the witness is that the federal, provincial and municipal governments all have their seat, and, since it's municipal, in all likelihood it's the City of Quebec that would have a seat. Let's assume that you go with a low number of seven members on the board. That would leave four individuals who would also be selected from the list contributed by the port users to the minister. So if it were in the best interests of the users - MIL Davie on the Lévis side of the river or the users on the Quebec side - and the shippers in the Port of Quebec that three be designated from different users or shippers on the Quebec side, leaving room for one on the list being presented to the minister coming from a user representative on the Lévis side or someone who would take into account the community interest, the greater community good, then there's an opportunity there for a position.

[Translation]

Mr. Murat: In the Bill, you specify that the municipal representative or even the government representative, can be removed at any time, if the municipality or municipal board relieves them of their duties.

Thus the municipality's representative would be indirectly accountable - at least to the city council or municipal board that designated him. That is a big advantage. We have absolutely no way, not of controlling, but at least of ensuring that our interests are taken into account when a user is designated who has no contact whatsoever with us.

Also, the Bill is intended to ensure the broadest possible consensus, because that is what the Minister wants, if I have properly interpreted the legislator. Indeed, the board of directors should be able to reflect as widely as possible the concerns and issues facing stakeholders.

So, why limit the number of seats? That's unfortunate, from our perspective. You know as well as I do that municipalities transcend all interests. We're involved in all kind of things. So who could possibly be in a better position to represent the interests of stakeholders than the municipal representative?

[English]

Mr. Keyes: Therein could lie another problem of balance. If you shift all the control to the municipalities then the users are left out of the representation.

I'll be glad to take this up with Mr. Beaulieu outside, Mr. Chairman. We won't take up any more of the committee's time.

The Chairman: Thank you, Mr. Keyes.

Thank you, gentlemen, for your time today. I should tell you that you have a very aggressive representative in Mr. Dubé. When I was out here with the human resources committee, he would not let us eat until we had toured the shipyard.

Thank you. I appreciate your time today.

[Translation]

Mr. Lehouillier: Thank you very much. We fully agree that there must be balanced representation.

[English]

The Chairman: From the Corporation for Regional Economic Development for Rivière-du-Loup, Mr. Gilles D'Amour and Bruno Gagnon.

Mr. Gagnon, is Mr. D'Amour not here?

[Translation]

An Hon. Member: Yes.

[English]

The Chairman: You have been watching what goes on, so you may begin.

[Translation]

Mr. Bruno Gagnon (Director General, Corporation régionale de développement économique de Rivière-du-Loup, and Executive Secretary, Commission de développement du parc portuaire de Gros- Cacouna): My name is Bruno Gagnon and I'm Director General of the Corporation régionale de développement économique de Rivière-du- Loup and Executive Secretary of the Commission de développement du parc portuaire de Gros-Cacouna.

We would first like to thank the members of the Standing Committee on Transport for giving us this opportunity to take part in its hearings on Bill C-44, the Canada Marine Act.

The organization we represent, which is the Corporation régionale de développement économique de Rivière-du-Loup, plays a central role in regional economic development, not only through its contacts with land developers and business, but also by promoting the maintenance and development of infrastructures that support the manufacturing and tourist industries throughout the Lower St. Lawrence Region.

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As regards marine activities specifically, two years ago, our organization established the Commission de développement du parc portuaire de Gros-Cacouna which, jointly with our organization, tabled a statement of intent on August 1, 1996 with the Minister of Transport for Canada in order to initiate the process of transferring the seaport of Gros-Cacouna to a local authority representing regional interests.

Recently, our organization took part in establishing the Comité de consolidation de la traverse Rivière-du-Loup - Saint- Siméon. This committee, composed of representatives from both sides of the river, intends to play a role in developing solutions and establishing appropriate mechanisms for the maintenance and consolidation of this ferry service which is an integral part of the economic life of both regions.

Indeed, on October 16, the Comité de consolidation de la Traverse Rivière-du-Loup - Saint-Siméon tabled with the Minister of Transport for Canada and the Minister of Transport for Quebec a statement of interest which confirms our regions' desire to work closely, in a spirit of partnership, with officials from these departments with respect to all issues related to the future of the ferry service, a service which since 1972 has been recognized as essential.

You will surely understand that because of the significant port infrastructures in our region, the Corporation régionale de développement économique de Rivière-du-Loup felt it was essential that it take part in the hearings of the Standing Committee on Transport.

Our intention today is not to discuss all the provisions of the legislation, but rather to concentrate on a couple of items that we see as fundamental and that we believe the legislator should pay close attention to.

Our presentation will focus mainly on the new method of commercializing public ports through divestiture and transfer of port facilities to local authorities. We will thus be addressing the following items: regional development issues related to the transfer process; the ability of local authorities to manage and develop port facilities; recognition of port infrastructures with potential or considered to be providing essential services; and finally, use of the Port Disposition Fund.

Regional development issues related to the transfer process: Like the Canadian government, we believe Canada's marine system suffers from an over-capacity and depends too heavily on government subsidies. We also realize, however, that if such a situation exists, it is primarily because of the lack of a national marine policy, something that has allowed the maritime transport system to develop, not solely on the basis of economics, but instead on geo- political realities in a great many cases.

Also, the principle behind the granting process has meant that as regards marine infrastructure development, stakeholders have been confined to the role of presenting grant applications. Political representation was overwhelming and omnipresent in the majority of cases, such that the responsibility of stakeholders was limited to requesting marine infrastructures from the Canadian government, taking advantage of the fact that the grants requested involved no obligation of financial participation on the part of stakeholders and businesses and no obligation to justify the facilities being requested, in the context of an overall marine strategy.

The Canada Marine Act, which is currently under consideration, provides for a completely different way of doing things: at the same time that the Government of Canada is withdrawing from a direct operational role in port activity, the regions concerned are being forced to assume those responsibilities in conditions that can only be described as risky, if they are compared to those associated with the government system that prevailed until only recently.

We are aware that as part of that process, a great many port facilities will be abandoned, as they will no longer meet the commercialization principles set out in the legislation. This will send an initial shockwave through those regions unable to demonstrate the profitability of their port facilities or the need to maintain them.

Economic activity linked to maritime transport, however minimal, will be vigorously defended by these regions. Businesses will have to re-think their transportation arrangements and, in some case, consider relocating.

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These communities therefore believe the Canadian government should take part in impact studies and in developing alternatives, so that these regions are not left to redefine their transportation arrangements on their own.

Of course, some regions will benefit from this rationalization policy, as it will be demonstrated that their port infrastructures play an important role in fostering their economic development at the regional level, whether or not they are deemed to be profitable or essential.

At first glance, one might be tempted to conclude that these regions will benefit from that and will come out the winners. However, on closer examination, one realizes that these regions, which are now described as privileged, will find themselves forced to take on the new role of managing port infrastructures, to make their operations profitable and to plan investments needed to preserve and develop those infrastructures without the benefit of financial help from the Government of Canada.

This policy of divestiture, coupled with Coast Guard cost recovery plans, could have an effect completely opposite to the one intended if it is not coupled with a strategy sensitive to the needs of businesses that use those facilities, to shippers' ability to pay, to competition and to the need to modernize infrastructures. We believe that by increasing the burden and obligations of all marine stakeholders, ports which are now considered to be profitable could end up becoming non-competitive, compared to those in the Maritimes and the U.S.

If that were to happen, we would witness the demise of our marine transport system in Quebec and manufacturing firms that ship their goods would become extremely vulnerable, as they would not be able to remain competitive for long without the benefits the current shipping system provides.

[English]

The Chairman: Excuse me. Allow me to interrupt you for one minute. We're in the same position here as we were with the previous witness. We've now taken ten minutes and we're less than halfway through this report, which just means that members will be excluded from asking questions.

Where it's possible, could you try to summarize the points you are trying to make to give people a chance...? I know there's a number of questions that people would like to ask. Please proceed.

[Translation]

Mr. B. Gagnon: I will try to summarize our brief, so that there is time left for discussion with Committee members.

First of all, we hope that the federal government, through this legislation, will come to the realization that it is not in the public interest to proceed with the divestiture of port facilities, but rather to initiate a process that includes a transition period. That is something we see as very important.

As for the ability of local authorities to manage and develop port facilities, we certainly recognize that the regions, whether we're talking about the private sector or a local authority, can be very effective in administering port facilities. Indeed, the regions or private enterprise may be in a far better position than Transport Canada, for example, to carry out work at minimal cost.

In that sense, we are not in any way casting doubt on the ability of local authorities to manage and develop port infrastructures. However, it is important that the divestiture process include a period of transition for private enterprise and local authorities.

We believe it would be in the interests of the Canadian government to establish not only a disposition fund, but also a transition fund that would allow us to maintain operations and develop port infrastructures.

The third point we wanted to raise has to do with recognition of port infrastructures that have potential or are considered to be providing essential services. As far as the various categories of ports are concerned, we would especially have appreciated there being more precise and well-drawn distinctions between categories.

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We fully agree with the first category, CPAs, and we have a very clear idea of which ports will be deemed to be fit into that category. As for the other ports, which are to be identified as regional or local ports, we would have liked to see sub-categories here, because this broad grouping includes ports with potential, ports involved in import-export operations, ports that are only involved in local transshipment and ferry docks.

No distinction has been made between these different types of ports. Nor has a distinction been made for ports that no longer have active operations or have no development potential.

I would just like to conclude by saying that the Port Disposition Fund makes no such distinction either. It simply says that to assist with the divestiture of port infrastructures - there are 572 in Canada - a $125 million fund is being established that all ports will have access to.

This will inevitably handicap and complicate the transfer process, because all regions, whether or not they have highly effective port infrastructures, will inevitably apply, despite the fact that the divestiture fund should only be there for port facilities that have potential and for regional development.

Thank you.

The Chairman: Thank you very much.

Mr. Crête.

Mr. Crête: Thank you, Mr. Gagnon.

The Corporation régionale du développement économique de Rivière-du-Loup got out of the starting gate in good time, so I think congratulations are in order.

If you had to describe the conditions that would have to exist in order for the divestiture process to be a success over the next few years, what would those conditions be for Gros-Cacouna, for example? What are the essential ingredients, from your perspective, and at what point should those conditions be present in the region?

Mr. B. Gagnon: Once the transfer process is initiated, we will be in regular contact with the divestiture team at Transport Canada, which will be providing us with all existing data on the costs of operating a port, residual dock activity, transshipping rates and the cost of renting space. All of that information exists and will be made available to local authorities during finalization of the transfer process.

But we want to go even further. The Canadian government is talking about a new maritime transport system that requires that infrastructures be rationalized and privatized. It is clear that all infrastructures will not remain in place. Some rules will have to change, if only those dealing with Coast Guard cost recovery of navigational aids.

All of that must be clear before we proceed with divestiture. To that end, we would like to be supported by Transport Canada throughout the process in order to ensure that the transaction proceeds in as clear a manner as possible. We can prove that an infrastructure like the one at Gros-Cacouna, which ships some 500,000 tons of goods per year, is required for regional development and for our shipping firms, and that it is profitable. But all of that information has to be clearly established so that local authorities are able to operate port facilities on a cost- efficient basis.

It is also important to know that these facilities can solicit capital funds for the purpose of improving port performance. I'm thinking in particular of Gros-Cacouna, where certain improvements must be made. In that case, an application will have to be made not only to the Transition Fund, but to the Port Disposition Fund in order to access those funds.

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Before any transfer can occur, there will have to be some guarantee that the work is truly required in order to make the facilities profitable.

Mr. Crête: All day we have been hearing from witnesses who talked about large ports operating on the international market, but you also spoke of the different categories of ports.

I would like you to elaborate on the specific nature of Gros- Cacouna's international activities. I think that would demonstrate that even a small port can be active on world markets without necessarily having huge volumes. That is an important point and I would appreciate being given additional information in that area.

Mr. B. Gagnon: The main activity in Gros-Cacouna is transshipment of lumber from sawmill industries in Quebec. It is recognized as being the port in Quebec for transshipment of lumber.

Naturally, in addition to lumber, other goods, such as ferrous metals, are also transshipped to be sent overseas. There are also pulp and paper products, because in Eastern Quebec, we have the pulp and paper industry that supplies the overseas market via Gros- Cacouna. The profitability or competitiveness of these businesses is directly tied to the presence of the Gros-Cacouna port infrastructure.

Gros-Cacouna is a regional port whose impact goes well beyond the immediate region of Rivière-du-Loup. It is important to the entire region of Eastern Quebec, the Lower St. Lawrence and particularly the Gaspé - indeed, to the entire province as far as lumber is concerned.

So, it is clear to us that as far as the new Marine Act is concerned, stakeholders have an obligation to work in partnership with the Government of Canada during the transfer process. For our part, we are anxious to work in close partnership throughout this exercise.

[English]

The Chairman: Thank you, Mr. Crête.

Mr. Keyes.

Mr. Keyes: I thank the witness for his presentation. I would add that the real partnership, when it comes to local regional representation, has to not only take place during the negotiating process between the federal government and the local regional port; the local regional port also has to be cognizant of its needs.

So it is Mr. Gagnon and others who will have to sit down and determine exactly what the port needs to put it on a sound and stable financial platform. Once this is determined, it would make its application to the fund in order to apply for the moneys needed to help it get over the hump. On the day when this particular port signs the document to take ownership, it has not only completed a partnership with the federal government; now it must move on to make a partnership with the private sector involved - with the logging company and the exporter, for example - to ensure the facility is kept up to snuff so this particular port can be of use to the private sector.

[Translation]

Mr. B. Gagnon: I'm glad you mentioned the various stages of the process. As a first step, the Commission de développement du parc portuaire has already established a local assistance fund. We will obviously require specialized resources during the transfer process, in order to access the information we require and decide what we, as intervenors or as a region, want to do with our port. That is why we see the assistance fund as the first step in implementing a local plan of action.

Naturally, all intervenors with an interest in maritime transport have been involved in the work of the Commission de développement du parc portuaire. In addition to the Commission, shipping companies, carriers, and the longshoremen's union are actively involved and even sit on the Commission, local and municipal authorities, federal and provincial government officials sit on the Commission as observers, and technical assistance is provided by Transport Canada and Transport Quebec.

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Stakeholders are clearly fulfilling their responsibilities, but at the same time we know full well that as the process moves forward, it will be difficult to apply for funding from Transport Canada under the Port Disposition Fund, because a great many other ports or port-related facilities of varying size will also be making applications.

The Port Disposition Fund will generate tremendous expectations among various stakeholder groups, and that is why we recommend that Transport Canada establish more categories, including a category for ports with potential and services recognized as essential.

Thank you.

[English]

The Chairman: Thank you, Mr. Keyes.

Mr. Cullen.

[Translation]

Mr. Cullen: Mr. Gagnon, does Gros-Cacouna have facilities for drying wood?

Mr. B. Gagnon: At the present time, lumber industries have their own dry kilns for treating, pasteurizing or drying lumber. As you know, lumber that is exported to Europe, in particular, has to be not only dried but in some cases pasteurized. Gros-Cacouna does not have the facilities for that.

Mr. Cullen: Thank you.

[English]

The Chairman: Thank you, Mr. Cullen.

Thank you very much, Mr. Gagnon. I appreciate your ability to accommodate us and I appreciate the time.

We have Mr. Richard Michaud from Traverse de Rivière-du-Loup/St-Siméon.

You have been waiting patiently and watching what is going on. You know the procedure. I took the time to check your brief in advance. It looks like you could probably do it within the ten minutes. Please proceed.

[Translation]

Mr. Richard Michaud (Director General, Traverse de Rivière-du- Loup - Saint-Siméon): Good afternoon, Mr. Chairman and members of the Committee.

I will be summarizing our brief - one that we tried to make as short as possible while at the same time clearly expressing the problems we are currently experiencing.

I shall thus attempt to present you with an overview of the Rivière-du-Loup - Saint-Siméon ferry service and in so doing, draw your attention to an area that you haven't talked much about to- day, namely ferries. It is an area that presents special problems.

The Rivière-du-Loup - Saint-Siméon ferry operates in an area located halfway between the Matane and Quebec City ferries. It has been in existence since 1930 and is operated by Clarke Transport Canada. I guess you could say it has a certain amount of history or experience behind it.

Between 1930 and 1972, the ferry was operated on a limited seasonal basis - in other words, mainly during the summer season, which is about four and a half months a year. In 1972, the Government of Quebec, via the Cabinet, recognized the ferry as a priority route.

It was only afterwards that the season was extended from four and a half to nine months of the year, which was basically the period during which the ship could provide service, given ice conditions in the river in January, February and March.

The main ship in operation is the N.M Trans Saint-Laurent, which has been providing ferry service since 1963. The Trans Saint- Laurent was supported for a number of years by the N.M Radisson, a chartered vessel belonging to the Quebec Ferry Corporation which has not been available since 1992, because the Corporation needs those ships to meet its own requirements during the summer season.

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So, this is the third ship that Clarke has been operating on that route. Naturally, it is inspected annually by the Canadian Coast Guard and Lloyds classification society. It is in excellent condition as a result of careful maintenance and is licensed to carry 446 passengers and 100 motor vehicles.

Our company has approximately 50 regular employees and almost as many casual workers. The ferry is licensed by the Quebec Transport Commission, which also approves rate adjustments.

The crossing is 24.6 kilometres long and currently takes 65 minutes. Various customized services are available on board. They are what have made our ferry's reputation and what set it apart from other companies operating on the St. Lawrence.

Our ferry handles 185,000 passengers and 75,000 vehicles per year. Our clientele are mainly tourists, as this service provides a link between the Charlevoix region and the Lower St. Lawrence - Gaspé region and the Maritimes, which have heavy tourist traffic, particularly during the summer season.

But because our ferry service is also used by many business customers, we transport trucks as well. We're talking about 3,000 to 4,000 trucks per year, which means that we provide an appreciable level of service to businesses in the region nine months out of the year.

We would have liked to present you with the findings of an economic impact study of ferry service conducted by the Corporation régionale de développement économique, represented earlier by Bruno Gagnon, but it has not yet been completed. We can tell you, however, that there is a good chance the spin-offs will confirm that ferry service acts as a strong economic stimulus in the region.

Also, the revenues governments collect from this service should prove that the money invested in it is more an investment than an expenditure.

I would also point out that the Rivière-du-Loup - Saint-Siméon ferry has also been an example of partnership, for the simple reason that a number of stakeholders are working together on the site. Clarke owns the ship, the Government of Quebec operates the information and service centres and the Government of Canada, via Transport Canada, looks after - or has until now - the ferry docks and user parking. So far, we have been able to work together and reach consensus in a spirit of mutual respect to ensure maximum efficiency.

That brings me to the heart of the matter under discussion today, which is our reaction to the national marine policy and its implications for our service. I want to say from the outset that we see the national marine policy as more of a government decision to withdraw from the maritime transport sector on the basis of a formal, organized process.

While we understand that some infrastructures are obsolete and that some operations have outlived their usefulness, we deplore the fact that the government is abandoning its role of supporting the industry without having drawn up a business plan that identifies alternatives and describes the new roles and responsibilities. We do not want to see our role reduced to simply asking for hand-outs and clinging to the coattails of government.

We clearly understand that major changes are needed. The regions, at least as far as we are concerned - and I believe Bruno Gagnon clearly pointed this out - are perfectly willing to do their part and to cooperate with the government to ensure a more equitable sharing of responsibilities.

However, this marine policy strikes us as mainly an exercise intended to reduce public expenditures in this area. There does not seem to be a detailed plan in place - in other words, it is not clear to us what the national marine policy will be over the next 10, 15 or 20 years. That is certainly an issue that was raised with you this morning by the St. Lawrence Ship Operators' Association, of which I'm also Vice-Chairman.

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We believe the government should have invested more energy or at least have made better use of the consultation process to try and convince average Canadians that divestiture of wharves, abandonment of infrastructures and recovery of Coast Guard costs were needed. We would have liked to see the beginnings of a real discussion on the makings of a partnership between marine stakeholders and governments, particularly the federal government.

In our view, it is not enough to simply withdraw; on the contrary, the government needs to be a little bit more dynamic in looking at ways of stimulating the national maritime transport industry.

A variety of possibilities exist with respect to taxation that have not been thoroughly explored. Rebates for efficient operations are certainly an option to consider, as well as better co-operation between different levels of government. I'm sure that when I describe the problems we are currently experiencing and tell you that none of this is particularly helpful, I am not telling you anything that you don't already know.

The situation is particularly difficult for industry stakeholders. We believe governments should consult each other more often with a view to reaching consensus on policy directions, potential solutions and the framework in which stakeholders will operate.

The federal government should continue to play an active role in order to receive its fair share of global maritime trade, which goes well beyond the basic role of passing laws and regulations which, while necessary, often hinder industry development and dynamism in general.

In the more specific area of ferry service, which is the one that is of direct interest to us, the national marine policy's lack of vision could well have far-reaching consequences.

As far as wharf divestiture is concerned, it is clear that this could have a very negative impact on the Rivière-du-Loup - Saint-Siméon ferry. While the wharf at Saint-Siméon still has a respectable useful life of about 20 years, the same does not apply to Rivière-du-Loup, where the wharf's useful life is only about five years.

According the estimates of experts with Public Works Canada, wharf rehabilitation would cost between $15 million and $20 million. I'm sure you can understand that this is a considerable amount of money for a municipality like Rivière-du-Loup which is not a large community and consequently has only a limited budget.

Earlier, Bruno mentioned the creation of the Comité de consolidation de la Traverse. This committee was struck to see what could be done to ensure the survival of the ferry service. And it is indeed a question of survival. If we cannot make repairs to the wharf, we will clearly have a major problem. When a plane no longer has an airport to land in, you have a problem. When a truck no longer has a highway to travel on, you also have a problem. Similarly, when a ferry no longer has a wharf to dock at, you have a serious problem.

We believe that the parties have to get together to find a compromise solution and that each must contribute whatever technical and financial support it can to that end.

This is not something that only concerns the federal government, intervenors, or the province. Everyone must get involved in finding a solution to this problem.

In conclusion, we do agree with the idea of abandoning certain structures that are no longer in use. However, I have tried to make the point that the problem affecting the Rivière-du-Loup - Saint- Siméon ferry should not be treated lightly, because we're talking about a means of transportation for some 200,000 passengers.

Since our main priority is extension of the highway, this is of direct concern to governments that have a responsibility to put basic infrastructures in place.

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Over the past ten years, federal intervention has often been unfavourable to us. I would mention, by way of example, the fact that the ferry sector is exempted from GST, which deprives us of input tax credits thereby increasing our annual expenditures by $150,000.

There is also the matter of cost recovery for aids to navigation, to which will soon be added part of the cost of ice- breaking operations on the St. Lawrence. All of that costs a lot money. It is said that these regulations are among the strictest in the world. I would point out that as a passenger carrier, we fully support the government's stringent safety regulations. But all of that is extremely costly, as an aging fleet means ongoing investment in vessel maintenance.

Although we realize that all of that is necessary and these regulations have already been passed, we ask for your assistance in securing the necessary cooperation to develop a solution to the problem that the wharf divestiture policy will mean for continued operations of the Rivière-du-Loup - Saint-Siméon ferry.

We are therefore asking the Committee to help us find a compromise, because we are talking about passenger transportation and this service amounts to an extension of the highway.

When one considers that $125 million is to be set aside for the disposition fund, and that repairs to one wharf alone - and there are approximately 245 that need rehabilitation - will cost between $15 million and $20 million, it is clear that there is a problem.

We are obviously going to try and find some way of avoiding substantial costs such as those I have referred to, but we need your help to find a compromise that will allow us to maintain our operations.

[English]

The Chairman: Thank you, Mr. Michaud.

You either have been or have in your future a career as a politician. Mr. Gagnon took a very long presentation and made it very short. You took a very short presentation and made it very long, but there's a lot of interest.

I have four or five members who wish to ask questions. Mr. Keyes, you can start.

Mr. Keyes: Thank you, Mr. Chairman. I want to thank the witness for bringing forward his remarks.

I want to split my questioning into two areas. One has to do with his comments on Bill C-44 and his remark that there has to be more discussion, more dialogue; we have to discuss the issues more, etc. Mr. Michaud, we've spent two and a half years talking about this issue. First there was the 1995 report of the transport committee after it went coast to coast and brought back a consensus to government that this is what is in the best interests of the country on the marine sector.

Then, I personally went out half a dozen times across the country. The deputy minister of transport went out a half a dozen or more times across the country. Two ministers of transport, at separate times, have gone out across the country. They've all come back. Mr. Michaud, we've discussed up to our eyeballs and finally it's time to make decisions.

Granted, this legislation, even in my humble opinion, doesn't meet the requirements and the consensus that was reached in the port community, as witnessed by the SCOT report of 1995. That's why we're meeting again, as a transport committee, going across the country listening to how we may better this legislation to meet the consensus viewpoint that was made in 1995.

Have we been discussing with industry representatives? Absolutely. Have we been across this country in all the ports? Absolutely. Have we been talking with the user groups, shippers and managers? Absolutely. So I want to take issue with your comment. We've talked enough. It's time to make the legislation right.

On the other side of the coin, I wanted to ask about this ferry service. It is an intra-provincial ferry service. Am I correct?

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[Translation]

Mr. Michaud: Yes.

[English]

Mr. Keyes: That means you don't qualify for federal funding as a result. You don't get federal subsidies. Correct?

[Translation]

Mr. Michaud: No.

[English]

Mr. Keyes: Do you get provincial subsidies?

[Translation]

Mr. Michaud: Yes. For the purposes of our operation, we receive a subsidy intended to cover deficits resulting from extension of the season - in other words the four and a half months that were added to the shipping season in 1972.

[English]

Mr. Keyes: At the end of your fiscal year, what is your net? How deep in the hole are you?

[Translation]

Mr. Michaud: Right now, we're talking about financial involvement on the part of the Quebec government to balance our budget. But these budgets mean nothing, since profits for the operator come from chartering the vessel.

[English]

Mr. Keyes: Let me understand this correctly. The federal government provides a subsidy to this ferry service for the wharf and the ship. Maybe you can correct me. Exactly how much money is it and where is the federal government money spent?

[Translation]

Mr. Michaud: Federal government money does not actually find its way into the hands of the operator, which is what we are. Federal money is directly invested in maintenance of port facilities, in other words wharves and user parking. We don't receive a cent directly from the federal government.

The provincial government provides an annual grant so that we can balance our operational budget, given that we operate at a loss during certain months of the year.

I don't know whether that really answers your question.

[English]

Mr. Keyes: Yes, in part. How much money is the federal government providing to you for the wharf and parking lot, and how much money is the Quebec government providing for the operation?

[Translation]

Mr. Michaud: Perhaps you should check this directly with Transport Canada people who are present here today if you want to know exactly what the cost of the wharves is, because there are different stages.

[English]

Mr. Keyes: Is it $1 million, $5 million or $20 million? Give me a ballpark figure, an estimate.

[Translation]

Mr. Michaud: For the wharf, it's $350,000, according to Transport Canada.

As far as the provincial contribution is concerned, we are talking about a little more than $1 million. The amount is about $1,100,000.

[English]

Mr. Keyes: Do you take any revenue from your parking lot? Do you charge people to park in your parking lot?

[Translation]

Mr. Michaud: No, absolutely not. But are there any other ferry services in Canada where it isn't free? Is there a charge elsewhere, such as in the Maritimes on the West Coast, for parking made available to ferry service users?

[English]

Mr. Keyes: This is part of the mindset that will have to change eventually.

The Chairman: Mr. Comuzzi, do you have a question?

Mr. Comuzzi: I think they've been answered. Thank you.

The Chairman: Mr. Cullen.

Mr. Cullen: Thank you, Mr. Chairman. I have a question for Mr. Michaud.

If there were no federal government to turn to, would your ferry survive, and how would it survive?

[Translation]

Mr. Michaud: That is sort of what I was saying earlier. There is no doubt that if federal government assistance is not longer forthcoming, nothing will be certain anymore, including our ferry's survival. As I said, if there is no wharf - a wharf being an infrastructure the community is responsible for, just as it is responsible for highways and airports - how can carriers operate?

I don't want people to think that I'm just asking for hand- outs. We're not here to ask for charity. All we want is economic development in our regions and to work with you in partnership.

You have to realize that we are not here to ask for charity, but that we make a vital contribution to economic development.

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We make that vital contribution to economic development by generating activity that has a not insignificant impact on the tourist industry as well as bringing money into government coffers.

I would also point out that in our region, just as everywhere else, people who work pay taxes. But I guess everyone tells you that.

Beyond those considerations, we would point out that by providing a transportation service, we are contributing to this country's economic growth. The transportation infrastructure is not inconsiderable, and I think that by disengaging itself and telling us that it's now our responsibility, the government is being rather cavalier, especially since all we want is to work as partners.

[English]

The Chairman: Last question.

Mr. Cullen: Mr. Gagnon, I really don't want to be partisan, but in the province of Quebec right now there's a government that wants to separate this province from Canada. I didn't mean withdrawing from the program in the sense of the federal government not standing up to this program. If the government of the day here succeeds in its enterprise, Quebec would be separate. How would this ferry survive?

[Translation]

Mr. Michaud: I don't claim to have the answer to all the political problems facing Canada and Quebec. I am only looking at this from the perspective of the carrier and operator who provide a service to some 200,000 passengers who travel by ferry. It is not up to me to resolve the political debate.

I just want to say that whatever the future of our political system in Canada, there will still be people living here and people using basic services such as transportation.

I was making the point earlier that we have to talk to one another. The fact is, beyond the political system, there is also a technocratic system in place. I believe we have excellent officials at Transport Canada and in Quebec who are doing a very good job and providing very strong support.

I can assure you that if they could talk to the people who want to try and solve the problem, we would make considerable progress, and quickly.

If we want Quebec to fully comprehend the scope of the problem with respect to maritime transport, and particularly passenger transportation, we first have to have a proper discussion. It is difficult for us to take the initiative and ask you to take part in such a discussion, since up until now, you have been the official owners of port infrastructures.

It is up to you to decide whether Quebec should play a role in maintaining the ferry wharf infrastructure. If you say the word, I can assure you that we will do whatever we can to advance those discussions.

[English]

The Chairman: Thank you, Mr. Michaud.

Our final question of the day goes to Mr. Crête.

[Translation]

Mr. Crête: Just for the benefit of Committee members' political culture, I want to point out that wharves are a federal responsibility and that the federal government thus has an obligation to ensure that appropriate services and infrastructures are available.

That is one of the main arguments that Quebeckers unhappy with the federal system could make, because we are talking about infrastructures that in many cases have not been rehabilitated. Rivière-du-Loup is a very obvious example of that, because its wharf now has a useful life of only five years, and the ground rules are being changed with this new policy.

We have nothing against changing the ground rules, but I do have a specific question about that very issue. We just learned today that the wharf has a useful life of five years. In five years' time, it will no longer be possible to operate the ferry if the wharf is not repaired.

What do you see as a realistic scenario under Bill C-44? Do you not agree that we need to find some solution whereby ferry wharves can be treated differently from ordinary wharves? Gros- Cacouna is a special case because there are significant revenues involved. But we are dealing with a situation here where the infrastructure alone makes it possible to maintain the service. As Mr. Michaud so aptly put it earlier, a ferry cannot operate without a wharf. So, there must be a wharf.

And one last point of information about the parking. People who use the ferry service cross with their automobile. No one stays in the parking lot for one, or more days. That just doesn't happen. Everyone gets on the ferry. Those ferries are almost like a highway.

If the government doesn't invest in that ferry, it will be forced to build an additional bridge in Quebec City because the Quebec City bridge is not adequate to meet demand.

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What potential solutions do you see under Bill C-44? What kind of action must the federal government take to ensure the viability of that facility? What action should it take if divestiture turns out to be the preferred option, and what action should it take if the decision is made to keep the facility?

Mr. Michaud: You touch on a very important point in the sense that we are not operating a commercial wharf in Rivière-du-Loup or Saint-Siméon where there are a number of users. We are the only ones that use that wharf. Consequently, the revenues generated are too modest to expect stakeholders alone to take responsibility for rehabilitating a wharf like that.

I think the solution lies in the kind of compromise that has to be reached by Ottawa and Quebec with respect to jurisdiction over ferry wharves. I know that discussions along those lines have been ongoing for some time now.

Now I think it's now time to wind up those discussions and agree on a compromise with respect to who is going to be responsible for what in the future. As stakeholders, our role is to provide passenger transportation services aboard safe vessels. We are clearly fulfilling that role, but we do not feel we can take on responsibility for the wharf. It would be like asking carriers to take responsibility for the entire highway system.

On the other hand, I do think Quebec will eventually have to come to some decision about this. I cannot speak for the Government of Quebec, nor do I mean to criticize it, but I do think we have to arrive at a compromise together. Discussions must be initiated to address the specific case that concerns us, the wharf at Rivière- du-Loup.

I am not against adopting a policy, as Mr. Keyes said earlier. We will eventually need to put a policy in place, but I think we have to be a little more proactive and open to the idea of consultation in order to resolve a number of obvious problems like the one we are raising with you today.

As I said earlier, it is important to recognize that officials at both Transport Quebec and Transport Canada, like stakeholder groups, have already done quite a lot.

What we need to do is draw their attention to the fact that a ferry wharf is not a conventional commercial wharf, and that the issues here have to be viewed from the perspective of the industry as a whole.

[English]

The Chairman: Mr. Dubé, do you have anything to add?

[Translation]

Mr. Dubé: I think I already know the answer, but I would like some clarification.

From Quebec City, there are two bridges to cross over to the South Shore, as well as a small ferry, but as far as going to your area is concerned, there is no other ferry operating between those two points.

Mr. Michaud: That's correct.

Mr. Dubé: And what is the distance from here to each of those points?

Mr. Michaud: The distance from Quebec City to Rivière-du-Loup is 210 kilometres. The distance between Rivière-du-Loup and Matane, the closest crossing point, where the service operates on a permanent basis, is 210 kilometres.

So we're talking about a well-integrated system. Matane and Quebec City provide service 12 months of the year, whereas we operate nine months of the year. As you can see, they're complementary. Otherwise, people would have to drive 420 kilometres up one side and then another 420 kilometres down the other. We're talking about almost 1,000 kilometres.

It's important to realize that this ferry service is not just there for entertainment, without there being a real need for it. In fact, it's exactly the opposite.

The question you asked in relation to the region's geography was very much to the point.

Mr. Dubé: I also want to say that this does not only affect the smaller region of Rivière-du-Loup and Saint-Siméon. It provides a link between the two shores. There must be some way of crossing the river.

Mr. Michaud: Just to make sure every one has a good understanding of the situation, I should add that Rivière-du-Loup is located on the transportation axis that links up with the Maritimes. Mention was made earlier of the Trans-Canada Highway in the Témiscouata region. Well, Rivière-du-Loup is the end-point of Highway 185.

On the other side, you have the Saguenay - Lac-Saint-Jean area with a population of 250,000, and we also talked earlier of the Lower St. Lawrence - Gaspé region, which is a well-known tourist area with not insignificant commercial development in Eastern Quebec. There is also the County of Charlevoix which is a real jewel as far as tourism is concerned, because of its National Wildlife Sanctuary.

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I was a little surprised to hear you talk about having users pay for parking earlier. I wasn't expecting that question.

I think you should really come to the site to see how it works. You cannot charge people for parking, then charge them for ferry service, then charge them again before they get off, and so forth. This is a public service. When you take the bus, you are not charged to sit in the waiting room. It's a similar situation here.

It seems to me that all you are really considering at this point is the money the federal government invests in maintaining the wharves. You don't realize that this service costs us money too. We invest some $700,000 a year in maintenance to ensure that the ship is safe. So, there is no doubt that we are doing our share.

We are perfectly prepared to cooperate, but we cannot bear the burden of those costs alone.

Mr. Dubé: What would happen if you stopped operating?

Mr. Michaud: If we stopped? In 1972, the Government of Quebec determined this to be a priority transportation axis. If we were to stop everything now, there would be serious highway congestion because there would automatically be 200,000 more people using the highway.

First of all, it would clog the highway, and secondly, it would hinder socio-economic development in the entire region. There I'm not talking only about Rivière-du-Loup and Saint-Siméon, but of the entire North Shore and South Shore.

Mr. Dubé: Thank you.

[English]

The Chairman: First let me thank you very much. This is actually one of the only presentations we've had on an issue of this sort: a single user of a small facility providing an important service. Obviously the world is going to change.

We won't hold you accountable for the future of the country, but we will look to you to help us think through how we can ensure the people in this area have service. There may be a number of other options that will need to be explored at some point. Thank you. I appreciate the time. I appreciate your coming down here.

[Translation]

Mr. Michaud: Thank you for your kind attention, Mr. Chairman.

[English]

The Chairman: For the information of members, that ends the day. This meeting is adjourned.

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