EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 23, 1996

.0903

[English]

The Chairman: Let us begin. Welcome to meeting number 27 on this particular bill, and welcome to the last day of meetings we're going to have on the road. There will be some additional hearings held in Ottawa before we go into clause-by-clause.

If I may have the indulgence of the witnesses for one minute, I want to clarify one thing for members of the committee.

Because of the amount of material that's been collected and because of our desire to move to clause-by-clause early in November, I would like to ask the researchers to release the material they have compiled and the analysis to date of the information we've had from witnesses so that members can get on with the work of looking at some of the drafting they might want to do. Instead of waiting until the end of the hearings when all of that material is compiled and releasing it all at once, we're proposing to release it as it compiled. Do I have the concurrence of the committee on that?

[Translation]

M. Crête (Kamouraska - Rivière-du-Loup): We would certainly concur. However, it is only when we have the full list of potential amendments that we can actually begin this work in earnest. If we can be given that material tomorrow or Friday - even if a full translation is not available, at the very least a complete outline of potential amendments - we could begin that analysis immediately, and thus have a good idea of what to expect next week.

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If we only receive that material at the end or in the middle of next week, that will clearly affect our dates. But we can certainly continue to operate in the interim.

[English]

The Chairman: Absolutely. Thank you, Mr. Crête. I understand the concern you are raising. We'll endeavour to get as much into your hands - Of course, it will be evolving with some of the testimony that's yet to come.

Are there any other comments? Do we have concurrence on that? Mr. Gouk, thank you. Thank you, everyone.

Our first witnesses for the day are from someplace called the Montreal Port Corporation -

Some hon. members: Oh, oh!

The Chairman: - and they are Mr. Lemay, the chairman, and Mr. Taddeo.

Welcome. We ask that you take about ten minutes to summarize the wisdom that is contained within this telephone book in order to give members an opportunity to ask questions.

Mr. Raymond Lemay (Chairman, Montreal Port Corporation): Do you want me to read now, Mr. Chairman?

The Chairman: It is whatever you would like, sir, whether you would like to summarize, to speak extemporaneously or to read.

Mr. Lemay: It looks a little like a telephone book but there are no phone numbers.

Some hon. members: Oh, oh!

The Chairman: I don't know - I talked to somebody just last night.

Mr. Lemay: That remains to be seen, I presume.

[Translation]

Mr. Chairman, distinguished members of the Committee, I presume that you all have an English version of my presentation, since it was circulated earlier. I am confident that there is no difference between the English and French versions. I'm sure you will have noticed that I am more comfortable in French, although I am certainly quite willing to answer your questions in English.

My name is Raymond Lemay and I am Chairman of the Board of the Montreal Port Corporation. Our President and Chief Executive Officer, Mr. Dominic Taddeo, will also take part in this presentation. We are accompanied by several members of our Board of Directors and management personnel.

Before beginning our presentation, I would like to thank you for inviting us to participate in the Committee's hearings on the new Canadian Marine Policy and, more specifically, Bill C-44 tabled by the Honourable Minister of Transport, David Anderson.

By way of introduction, let me briefly review the Montreal Port Corporation's mandate and accomplishments. The Montreal Port Corporation's mandate consists essentially of facilitating domestic and international trade and contributing to the achievement of local, regional and national socio-economic objectives.

Within our mandate, we have given ourselves the mission to provide our clients - shipping lines, stevedores and shippers - with facilities and services that fully satisfy their needs, and to stimulate activity on the port by taking all possible measures to increase and promote the Port of Montreal's competitive advantages.

Our Board of Directors is composed of seven members with extensive experience in business or public administration. All are residents of Montreal or its suburbs, and all have a deep understanding of the city. This board, like others before it, could not be more representative of Montreal.

At the end of our presentation, you will find a list of our current Board of Directors and a table showing a sampling of the business people who have been members of various Port of Montreal administrations since 1958.

We have examined Bill C-44 very thoroughly and reviewed each of its clauses in detail. The following are the main issues on which we will be commenting: changes to port authority capacity and powers; clarification of the federal status of a port authority; the general tax situation, as applicable to the port authority; composition of the board of directors and its appointment process; port authority borrowing powers and financing methods; security and police services within port boundaries and their relationship with the enforcement officer, and finally, payment of dividends.

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I will now ask our Chief Executive Officer, Mr. Dominic Taddeo, to continue our presentation.

Mr. Dominic J. Taddeo (Chief Executive Officer, Montreal Port Corporation): Thank you very much, Mr. Lemay.

Mr. Chairman and gentlemen members of the Committee, as we indicated when we appeared before this Committee on February 13, 1995, the Montreal Port Corporation has always operated in a commercially efficient and profitable manner since July 1983.

I would like to remind everyone that we are a financially self-sufficient Crown corporation. During the period from 1984 through to 1995, we generated total net profits of $148.4 million, with cash flows of $264.5 million. During the same period, we invested $180 million in order to expand and redeploy our facilities: container terminals, railway network, grain-handling facilities, and other facilities necessary to operate the port. Our infrastructures are thus about as modern and as efficient as they get.

I would like to emphasize the fact that the Port of Montreal is doing very well. At the end of September 1996, the Port of Montreal's total traffic had increased by about 3.2 per cent, and containerized cargo was up 6.2 per cent over the same period last year. For the first nine months of the current fiscal year, our net profit was $6.8 million.

However, we are looking beyond the success of the Port of Montreal. We are closely following the implementation of the new Canadian Marine Policy to ensure that the new structure will meet our needs and enable us to have an even more business-oriented, efficient and profitable administration.

We have thoroughly reviewed Bill C-44, but before sharing our comments with you, we would like to offer our congratulations to all those whose efforts and contribution led to this legislation.

First of all, we want to say that we are generally in agreement with the Bill, and as a result, our comments will touch on only a few specific subjects. I will now outline our position on the items listed by Mr. Lemay.

Capacity and powers: As far as we are concerned, this is the key to successful implementation of the new Canadian Marine Policy. Although the main goal of this exercise is to grant greater operational autonomy to port authorities, as we interpret it, sub-clause 24(2) of the Bill, as currently drafted, reduces the powers we now enjoy under the Canada Ports Corporation Act.

Under the present Act, the Montreal Port Corporation has the power to engage in business activities directly or indirectly related to port activity. We have companies that use our infrastructures for non-port purposes - for example, Canada Maltage Company Limited and ADM Agri-Industries Ltd.; rail service agreements with several companies including Lantic Sugar Limited and Sifto Salt; and right-of-way easements with companies such as Montreal Pipe-Lines Limited or Ultramar Inc., allowing them to transport their oil from their plants to their customers. These are activities that are not directly related to port activities within the meaning of the Bill. Nevertheless, they contribute to port business and are an asset to the economy of the City of Montreal and the Greater Montreal region.

Strict application of the powers provided for in the Bill would thus prevent us from continuing these types of operations. We therefore believe the Bill should be amended to at the very least afford us the flexibility we currently enjoy, if not more. That would respect the Minister's desire to grant greater operational autonomy to the Montreal Port Corporation.

Port authority status: Under Bill C-44, the status of the port authority is ambiguous; we therefore ask that it be granted federal agency status. It is important to remember that as a Crown corporation, the Montreal Port Corporation has certain rights that, unfortunately, are not part of the new Bill. Our position is clear: it is vital that the Montreal Port Corporation retain these rights. Indeed, federal agency status would allow us to retain our present immunity privileges. Elimination of our status would have a major, direct negative impact on our competitive situation.

I would like to remind the Committee that the Keyes Report entitled A National Marine Strategy, tabled in May of 1995, recommended that ports should be designated federal agencies, similar to harbour commissions. Canadian port authorities need a regime that, wherever possible, allows them to meet the challenge of subsidized U.S. competition.

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Taxation: Under both the National Harbours Board Act and the Canada Ports Corporation Act, the Montreal Port Corporation has always been subject to the Municipal Grants Act and has always paid grants in lieu of taxes. We care about being a good corporate citizen and we should contribute to the well-being of the region. We therefore recommend that port authorities remain subject to the Municipal Grants Act and continue to pay grants in lieu of taxes. Furthermore, we consider the grants in lieu of taxes method to be fair and reasonable.

To conclude this item, we would like to point out that some port authorities along the U.S. east coast, with whom we compete, receive subsidies from their cities and states. Above all, it is important to avoid increasing the tax burden of port authorities and harming their competitive position.

Payment of dividends and royalties: Since 1986, the Montreal Port Corporation has been paying dividends to the federal government calculated on the basis of the company's net profit. We agree that it is a standard practice for a company to pay dividends to its shareholders, and we recommend that this practice be maintained based on a similar formula under the new Act.

Real property: The approach taken by the legislator in Bill C-44 involves recording real property rights in Letters Patent; requiring additional Letters Patent for each real property purchased or sale transaction; and creating a distinction between federal lands and those belonging to the port that would receive different legal treatment over the years, depending on their status.

This approach seems to go against the intended purpose, which is to eliminate bureaucracy and make port authority management more flexible. When the local port corporations were created under the current system, the legislator provided for simple devolution by stating in the Act that any real and personal property controlled by the National Harbours Board would henceforth be under the authority of the local port corporation.

That is why we believe it is necessary to specifically provide in the Act either for devolution of property, or a transfer of authority and administration to the Montreal Port Corporation pursuant to an Order of the Governor in Council. Either process would fully meet our requirements, produce the desired legal effect and allow the Minister to retain his supervisory powers.

Governance: In conjunction with the goal of self-sufficiency and the transfer of decision-making powers to local users, it is absolutely essential that the Montreal Port Corporation be given the tools it requires to meet those objectives. We are therefore seeking the same funding flexibility enjoyed by private corporations, as well as related arrangements.

Consequently, we believe that the Montreal Port Authority should be granted the power to mortgage their assets, including real property, with the Minister's authorization. In addition, we believe we should have the right to maintain or create subsidiaries, wholly owned or otherwise, to give us the flexibility needed for our operations. This would also enable us to undertake new projects involving third parties, either directly or indirectly.

Security and police services - enforcement officers: The Act provides that the Minister shall have the power to appoint an enforcement officer within the scope of power listed in Sections 96 through 108 inclusively. Moreover, this officer would report directly to the Minister. Given the powers conferred upon the enforcement officer, we realize that the port authority itself cannot be empowered to appoint this officer. However, we do believe it would be fair and reasonable that this appointment by the Minister be made after consultation with the port authority to whom the officer would report.

Based on our experience, we recommend that the Act be clarified to establish unequivocally that the enforcement officer shall be appointed by the Minister, based on the recommendation of the port authority, and that the officer shall report directly to the port authority.

Also, in accordance with the Canada Ports Corporation Act, local port corporations have the authority to detain vessels, seize goods and sell goods for non-payment, as well as to engage in any proceeding related to each of these legal actions.

The rights associated with these procedures have always been accorded directly to the Montreal Port Corporation and not to one of its employees, and we consider it essential that the status quo be maintained in this area. We therefore are of the opinion that the Bill should be amended to state that these rights of detention, seizure and sale by court order will continue to be held directly by the port authority.

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Pilotage: We would like to inform the Committee that having examined Part VII of Bill C-44 dealing with amendments to the Pilotage Act, we are in overall agreement with the proposed modifications. More specifically, we support those dealing with the review of the tarification process and the review process for each of the pilotage authorities.

As you are aware, review of the conditions to be met to obtain a pilotage certificate, awarding of pilotage licenses, mandatory pilotage zones, and financial self-sufficiency and cost reduction are provided for under Sub-section 53(1) of the Pilotage Act. We believe that this exercise will meet users' expectations and contribute to operational efficiency while ensuring the safety of people and goods.

Finally, we would like to add that we are in favour of including a dispute resolution mechanism in the Bill to ensure continuity of services at all times in the current difficult competitive environment.

In conclusion, we would remind you that our comments are intended to support greater autonomy and an even more business-oriented focus, as we indicated to the Committee when we appeared before it on February 13, 1995.

I will now turn it over to Mr. Lemay.

Mr. Lemay: Thank you, Mr. Taddeo. I would like to briefly address Sub-clause 12(1) of the Bill, relating to the composition of the Board of Directors.

Since 1983, our Board of Directors has been composed of seven members with extensive experience in business or public administration. If we look at the history of the composition of the Board, it is clear that the Montreal Port Corporation has always had board members representative of the business sector and the local and regional community, something which is already in keeping with the spirit of the new Bill.

We believe that the federal government, as the Port of Montreal's sole shareholder, should be better represented on the Board of Directors than it would be under Bill C-44. In our opinion, it would be quite natural for the federal government to be allotted two seats on the Board of Directors. In addition, the Chief Executive Officer's experience as well as his vision of the port's future represent a major asset for the Port Authority, and we believe he should be an integral part of the Board of Directors.

Given the present corporate trend to reduce the number of directors, we recommend that the composition of the Board be limited to nine members, rather than eleven.

Mr. Chairman, distinguished Committee members, we thank you for the consideration you have given us during our presentation and we ask that you grant us as much autonomy as possible, thereby providing us with the tools we need to ensure the Port of Montreal's continued success. This will allow us to remain Canada's number one container port and a leader on the North Atlantic; to maintain our competitive edge and strengthen our role on the international scene; and to continue to contribute to the economic activity of the City of Montreal and the Greater Montreal region. Port activity in Montreal provides 14,000 direct and induced jobs and generates $1.2 billion in economic spin-offs every year.

We hereby officially submit a copy of the detailed analysis we have made of the Bill, with the amendments we are proposing and accompanying comments. This concludes our presentation, which was approved by our Board of Directors on October 2, 1996. Thank you, Mr. Chairman and members of the Committee.

[English]

The Chairman: Thank you very much, Mr. Lemay and Mr. Taddeo. Mr. Keyes.

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

Good morning, gentlemen, and thank you for appearing before us this morning. Congratulations on a very thorough report. The summary you provided is most helpful. I want to congratulate you, too, on your financial self-sufficiency.

I want to touch quickly on three items. I don't want to use up all of the question time.

With the adoption of this particular bill, the Canada Ports Corporation is dissolved, and with it, the Ports Canada Police. I've taken into account your expressions on the empowerment of the enforcement officer, but the other day the Canadian Police Association came before us and stated that it would be a dereliction of our duties not to provide for a ports police force. Today, of course, that ports police force is serving about six ports and has about 89 members.

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So far only the Port of Vancouver has raised the question of policing. Other ports, like Quebec, say they can work with their municipalities to provide the necessary full security and with the private security forces employed at the different private sector facilities on their ports to look after the ports, and by doing so save tens of thousands of dollars in the process.

Has the Port of Montreal resolved this issue? Has it been speaking with the police in the community of Montreal?

[Translation]

Mr. Taddeo: Indeed, Minister Young asked us last year to sit down with the R.C.M.P., the Montreal Urban Community, the Quebec Provincial Police and myself, as C.E.O., to look at the policing and security issue at the Port of Montreal. The Committee met on three occasions and we submitted our report to Mr. Young, a report that was approved by the Board of Directors. The Board's position is that there will be policing service at the Port of Montreal and we will have no difficulty co-operating with the City of Montreal in that regard; indeed, the City of Montreal had even made us a proposal. One way or another, documents that are supposed to be confidential ended up in the hands of the media.

I was interviewed last week. I make no secret about that. I asked the media how they were able to obtain information stamped "Confidential", but the fact is they obtained it anyway. The position of the Port of Montreal's Board of Directors is that -

[English]

yes, there will be police services.

[Translation]

We agree that there is probably an even more modern and effective way of providing those services and making the most of the skills and experience of the Montreal Urban Community Police Department. Since we will always have the CARE system as well as direct links to the R.C.M.P., Customs and Agriculture Canada, we clearly need appropriate security at the Port of Montreal.

However, security at the Port of Montreal must focus more on the Port's specific needs. At the present time, a so-called national police force is no longer needed to the same extent it was 15, 20 or 25 years ago.

[English]

But we will always continue to have a presence. We will have visibility. We have the intention of creating - once we get approval - the position of liaison officer, a security officer of the port who will report directly to the port, through the board to me and my VPs.

Mr. Keyes: This legislation was of course brought forward by the minister. When he did so he said that it would make it easier for ports to operate according to business principles.

There's been some discussion at the different ports about the stipend and whether, as in the legislation, the stipend should be on the gross or, as is being suggested by some ports, on the net. Of course some of us would say the gross, with maybe a qualifier that might say ``on the port's ability or capacity to pay''. But other arguments that the net makes more sense have been brought forward. What is the position of the Port of Montreal?

[Translation]

Mr. Taddeo: Our position on that is also very clear. In any business concern, it is always based on net profits, according to generally accepted accounting principles. We pay dividends because our financial statements are certified by auditors. We cannot include ridiculous expenses in that calculation in order to try and reduce our net profits.

If you take net profits for the Port of Montreal for the period from 1990 to 1995 and calculate total profits over those years, you arrive at $53.3 million; we paid dividends of $13.6 million to the federal government. If we take gross operating revenue - Gross revenue probably would not include investment income, at least, that is how I understand it. On the other hand, investment income is included in net profits.

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If you take gross operating revenue for the Port of Montreal for that same period from 1990 to 1995, you get a total of $326.3 million. A stipend of 4 per cent would amount to $13 million, or if it were 5 per cent, $16 million. Based on my experience and the financial statement I have seen, dividend reporting is always based on net profits. That is the reason why the Port of Montreal is strongly recommending that the stipend be based on net profits.

[English]

The Chairman: Thanks, Mr. Keyes. Mr. Jordan.

Mr. Jordan (Leeds - Grenville): Congratulations on a fine presentation. Mr. Keyes has touched upon something that I was going to address, so I won't pursue that.

Mr. Taddeo, you're the chief executive officer of the Montreal Port Authority. Are you a voting member?

Mr. Taddeo: Under the present structure, no, sir, I'm not.

Mr. Jordan: Both have been suggested. In some situations they wanted the chief executive officer to be a voting member. In your case, you're not. Do you want to be?

Mr. Taddeo: Yes, very much so. I look at CN and Paul Tellier is a voting member, at Air Canada and Mr. Durrett is a voting member, at Domtar and he's a voting member. I look at other corporations and the CO is a voting member, so it seems to me that since I'm an active participant and involved actively with the port I should have a vote.

Mr. Jordan: Yes, I understand what you're saying. Do you think you would lose any of your objectivity as the CEO if you were a voting member?

Mr. Taddeo: No, not at all.

Mr. Jordan: We've had some criticism of the bill for what we've tried to present in reference to pilotage. Some have even suggested that we just tickled the thing or that we just tinkered with it, that we didn't really - You people seemed to suggest that what we're proposing in pilotage is okay. You would leave things pretty much as they are. I noticed that you have some mechanism for final offer selection or something like that so pilots couldn't tie up the industry, but basically you agree with what the bill says with regard to pilotage.

Mr. Taddeo: Yes.

Mr. Jordan: Okay. That hasn't been the case across the country. Most of them think we haven't done anything.

Thank you, Mr. Chairman.

The Chairman: Mr. Comuzzi, for a short question.

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

My question is for Mr. Lemay. On page 20 of your report you talk about the philosophy and the composition of your board, which is made up of people from the business sector who have a lot of local and regional community involvement. As you know, the St. Lawrence Seaway is very important to Quebec City and to Montreal, and there is a move afoot to turn the St. Lawrence Seaway exclusively over to users. That is diametrically opposed to your philosophy of the composition of the board. Is that correct? What you're saying here is diametrically opposed by what is being proposed for the Great Lakes and St. Lawrence Seaway.

[Translation]

Mr. Lemay: Are you referring to page 20?

[English]

You're talking about the composition of the board.

Mr. Comuzzi: Yes, of your board of directors.

Mr. Lemay: Oh, of my board. I thought you were chatting about the pilotage again.

Mr. Comuzzi: No. These guys talked about pilots. I have nothing to do with them.

[Translation]

Mr. Lemay: Well, the position I am presenting today has been approved by our Board of Directors. Because the federal government is the sole owner of the Port of Montreal, we find it rather unusual and even strange that it should be represented by only one person on the Board of Directors and thus be in an extreme minority position, particularly since the federal government's representative, who used to be automatically appointed Chairman of the Board, thus giving him a certain authority, is no longer appointed by the federal government but elected instead from among his colleagues. This could lead to some rather unusual situations. For example, if the federal government representative is absent for one reason or another from a board meeting, the Board of Directors could in fact sit without the owner actually being present.

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I think it's important that the owner be represented by at least one person at every board meeting. We cannot ask the same person to attend every single meeting, because that is sometimes impossible.

That is why we felt the Port of Montreal's owner should be given two seats on the Board of Director to ensure that he would always be represented. We believe one person is needed to represent the federal government's interests, and if the Chief Executive Officer appointed by his colleagues is also on the Board, that will make for a better balance and a much more representative Board, which would certainly not be the case under what is being proposed here. We want to avoid having users there on a permanent basis, as this might weaken our majority.

[English]

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

Mr. Comuzzi: I'm not sure I got an answer, Mr. Chairman.

Some hon. members: Oh, oh!

[Translation]

Mr. Crête: Having read your brief, I see that you agree with the principle that underlies the legislation, although you do mention the need for amendments several times. For example, you discuss the need for federal agency status for operations other than those directly related to port activities, and you also address the taxation issue.

If Bill C-44 were not to be amended as you have suggested, would you be in favour of maintaining the status quo or would you rather see Bill C-44 pass without these amendments?

Mr. Taddeo: Mr. Keyes produced the original report dealing with these issues, and yet Bill C-44 does not act on the recommendations contained in Mr. Keyes' report.

We want greater autonomy. We want greater commercial freedom. As far as maintaining the status quo is concerned, if we are allowed to remain a Crown corporation and are given full authority to run that corporation, there is no problem. What we really want is more autonomy and less of the sort of Ports Canada bureaucracy that over the years has cost us between $2 million and $3 million annually. There was this big structure in place from which we gained absolutely nothing. That's the reason we try to commercialize the port and make it profitable - not just to make profits - the fact is we've been making a profit since 1988 - but to be in a position to reinvest and ensure that the port could remain competitive, rather than being a burden for taxpayers.

Mr. Crête: Your position reflects the views of a variety of witnesses to the effect that Bill C-44 does not really reflect the Keyes Report.

Mr. Taddeo: Exactly, and that's the reason why we're proposing amendments that would give us all the latitude that we believe we need. When I asked whether there was a chance we could really be privatized, I was told that that was not an option for the time being.

Today, we are being given more autonomy, but there are still links with Ottawa. We would like to enjoy the same kind of latitude that other businesses do. That's why we want federal agency status.

Mr. Crête: As I understand it, the autonomy you now enjoy is in fact greater than what Bill C-44 would give you if no amendments were made.

Mr. Taddeo: In some cases, yes.

Mr. Crête: I see.

I am very glad to hear you say that and I do hope the Liberal Party's amendments will be drafted accordingly.

I have one specific question for you. In your detailed analysis of the Bill under Clauses 47 to 49 dealing with port traffic control, you are recommending, since regulations are already in place, that a whole series of clauses be deleted from the legislation. Is this merely a technical matter or are there aspects of these clauses that might inhibit your flexibility?

.0940

Mr. Taddeo: For the time being, we have quite a broad scope of activities and enjoy considerable latitude. As a result, the idea of spelling out in the Act the procedure to be followed for seizures and detentions strikes us as quite ridiculous.

Mr. Crête: If you had to describe the Port of Montreal's future prospects over the next five to ten years, would you say that the markets you're most interested in are the New England-Chicago area, or do you want to focus more on north-south or east-west development?

Mr. Taddeo: Well, I'm very glad you asked that question. I'm sure you're aware of the debate that has gone on about NAFTA, free trade, and so forth. Without wanting to boast, I would remind you that the Port of Montreal was an early practitioner of free trade. Since 1980, we have increased our penetration in Ontario and the U.S. In the material we provided to you, we have laid out our vision for the 1997-2001 period. Indeed, our expectation is that all things being equal and provided that all stakeholders pursue their efforts, the Port of Montreal will not encounter any particular problems of any kind.

The future of the Port of Montreal is a bright one. We will be expanding our penetration, particularly into the U.S. The shipping lines that depart from Montreal use our marine, rail and land system with confidence. Canada Maritime has just spent more than $150 million at the Port of Montreal to build vessels that are especially designed for the St. Lawrence. And at this time, close consideration is also being given to the possibility of building three other vessels with a 2,600 container capacity that would start operating in 1998 and compete with the larger vessels that use the ports of New York, Baltimore and Halifax.

Mr. Mercier (Blainville - Deux-Montagnes): Earlier, you drew a comparison to A.D.M. You said that A.D.M. had links with the government. But I can tell you that there is no government representative within A.D.M. The fact is, when the Minister is criticized because of an A.D.M. decision, he answers that A.D.M. has complete autonomy and that the government is not in anyway involved in its decisions.

Mr. Taddeo: I could be mistaken, but I believe they have signed a 60-year lease. It's in that respect that links remain.

Mr. Mercier: Yes, and in 60 years, they'll be able to cancel it.

[English]

The Chairman: Mr. Gouk.

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

Good morning, gentlemen. I'm going to make this fairly short.

It puzzles me that each time the Bloc starts by asking if you would like the status quo, Bill C-44 without amendments. We all know that there are going to be amendments. I've drafted many of mine already. And you'll probably be happy to know that they agree primarily with those things you have asked for, and I believe the sentiment around the room in general is the same. There are going to be substantive changes to this that I think are in line with your recommendations or requests, for the most part.

There are some subtle differences. I want to ask you about one of them, which deals with the mortgaging or pledging of property and assets. The amendment that I propose would deal with your ability, on your decision, to pledge or mortgage your own assets, including real property owned by the port, whether bought before or after this act, and to pledge federal properties with the approval of the minister.

You have basically put the whole thing in the minister's lap. Would you prefer it the way you have asked for it, or would you prefer to be able to mortgage any real properties that you own outright, exclusive of federal properties, without the authorization of the minister?

Mr. Taddeo: The way we presented this thing, we were under the impression that everything would continue to remain federal even after we received our status as an agency. But since you asked the question, if we are to be given powers where any additions after day one would belong per se strictly to the Montreal community, well, then, we'd pledge both.

Our comment is based on the assumption that as an agent we will continue to be federal, and therefore for any purchases we make after we have our status we should continue to go to the minister. I don't see any difficulty in the minister granting us approval.

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Mr. Gouk: Do you have any property now that was purchased by the port authority separate from federal lands?

Mr. Taddeo: No, we can't, not under the present statute. Everything we do now must receive approval from Treasury Board. We have purchased pieces of land in the 25 years I've been at the port. We purchased land in Contrecoeur and land on the Island of Montreal, but we always have to go to Treasury Board to justify it. That process would be eliminated. That's what we're looking for.

Mr. Gouk: Okay.

Mr. Lemay: May I just add that any system would be better if we could mortgage our properties, even those of the federal government, with the approval of the federal government? It will be cheaper from a financial point of view to mortgage than to use our revenue, because the interest rate would be cheaper on a mortgage than it would be on a revenue basis. It would be easier for us to go to the bank and do what we have to do.

Mr. Gouk: The operative word might be that it might not only be cheaper to get mortgage funds, it might be possible.

Mr. Lemay: It would be easier to mortgage than it is to use our revenues.

Mr. Gouk: Okay.

The Chairman: Thank you, Mr. Gouk.

Gentlemen, I should tell you that I come from the great port city of Winnipeg -

Some hon. members: Oh, oh!

The Chairman: - but we too are very interested in the Montreal port. A lot of the goods from the prairies move in and out of that port and we think it's extremely well managed. It's important to us that it function efficiently and cost-effectively. I congratulate you on the current management of the port. We'll see what we can do to respond to some of the concerns you've raised.

Mr. Lemay: Thank you very much, Mr. Chairman and gentlemen.

The Chairman: Thank you very much.

And now, from the City of Montreal, we have Mr. Melançon.

Welcome. You will note two things. If you were here at the very beginning you would have heard me say that we ask witnesses to confine their remarks to ten minutes so that we may confine the entire presentation to thirty minutes. We broke both of those rules with the very first presenter. We would like you to be efficient so that members have a chance to ask questions, but we will make sure that you get all of the time you require within that limit.

[Translation]

Mr. Pierre-Yves Melançon (Executive Committee Member, City of Montreal): Thank you. I want to thank the members of the Committee for giving us this opportunity to present our views. I will try to stay within the time allocated, out of respect for both the Committee members and the next witnesses.

The City of Montreal's presentation will mainly address matters pertaining to the establishment of Canada Port Authorities, as we understand management of the Port of Montreal would be entrusted to this new entity.

Of course, it was under the stewardship of the former federal Minister of Transport, Mr. Douglas Young, that the National Marine Policy was first drafted. However, the main guidelines were taken from the report of the Standing Committee on Transport chaired by Mr. Stan Keyes.

The Keyes Report clearly recommended the dissolution of the Canada Ports Corporation and rationalization of the National Ports System based on business principles while maintaining government responsibility for the system as a whole. It also recommended the commercialization of the St. Lawrence Seaway.

In June of 1996, the Minister of Transport, David Anderson, tabled the Canada Marine Act in the House of Commons. However, this in no way prevents the Department from implementing its national marine policy before the legislation is passed. Indeed, negotiations have already begun and agreements to transfer regional and local ports are already in the works. In July of 1996, the Minister signed a Statement of Intent with respect to the transfer of St. Lawrence Seaway operations to a user group.

Let us begin by discussing the importance of the St. Lawrence Seaway and its port activities for the City of Montreal. Clearly, thousands of jobs are linked both directly and indirectly to the Port of Montreal's activities. Indeed, the economic vitality of the entire region depends to some extent on the economic soundness and dynamism of the Port of Montreal. The City of Montreal also thinks it's important to emphasize the point that since its creation in 1983, the Montreal Port Corporation has more than adequately fulfiled its mandate of facilitating domestic and international trade, as well as attaining socio-economic objectives within the community while strictly adhering to business practices and thus achieving financial self-sufficiency.

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Of the the highlights of Bill C-44 is clearly the legislative scheme the legislation sets up for the establishment of Canada Port Authorities. The latter will constitute the main links within the Canadian port system. Currently, there are eight candidates. In theory, all applicants are welcome, as long as they meet the conditions laid out with respect to financial viability, their strategic importance, land accessibility and diversification of their activities. In fact, most other Canadian ports are excluded from the pack because of either their low profitability or their high degree of specialization.

By establishing a network of Canada Port Authorities, the federal government is specifically aiming to establish commercial discipline and force financial self-sufficiency on the primary port network. It is thus refusing to make any kind of commitment with respect to the latter's funding.

The proposed regime is likely to have the effect of simplifying the structure of the Canadian port system. The quirks of history are such that a variety of regulatory systems, each with their own mandates, cost structures and operating rules, have evolved and co-existed in Canada.

The Port of Montreal, currently administered by a local port corporation, would inevitably become a Canada Port Authority. There is absolutely no doubt that the Port of Montreal would meet the conditions set by the Minister to be part of the group. The Port is financially self-sufficient and will remain so, given its strong competitive position continentally. It is of major strategic importance to Canada's external trade, being the usual home base for vessels travelling between Canada and Europe, as far as both imports and exports are concerned. Furthermore, it is generally thought of as a model of land-sea modal integration.

As for the diversification of its activities, that diversification is increasingly evident in the extraordinary growth of general cargo traffic, supported by stable bulk cargo traffic.

The Montreal community supports a greater autonomy for the Port of Montreal. However, it does have a number of criticisms, particularly with respect to local control.

At this point, I would like to deal with the issue of representation on the Board of Directors. The Canada Marine Act reflects an unwillingness to provide for proper representation of the local community on the Board of Directors of the Port Authority. Under Clause 12, the three levels of government - federal, provincial and municipal - will each be allowed to appoint one director. The Chief Executive Officer is to be designated by the other directors. Users, on the other hand, are given the lion's share, as they will be in a position to propose the appointment of five other members, even though the final decision rests with the Government of Canada. The final result is that the region ends up with one voice only on the Board of Directors.

This method of representation is very different from the one advocated for airport systems, where agreements provide for an actual transfer of responsibilities to local control. In the case of the Montreal region, appointment powers have been granted to the two main municipalities, groups of suburbs, a para-municipal organization and the Board of Trade. In order to avoid conflicts of interests, users, and particularly air carriers, are denied the power to appoint directors.

The new legislation clearly reflects the maintenance of links between the federal government and Canada Port Authorities at the expense of real local involvement. In that respect, there are in fact few differences between the regime proposed by the Bill and the one currently in effect, under which all members are appointed by the Government of Canada.

Also, the federal government is giving a leading voice to users. The proposed legislation provides that users will hold the majority of seats on the Board of Directors. One cannot help but question the wisdom of such a move, given the risk of conflicts of interest and potential impacts on the Port's latitude as far as conducting its business activities is concerned. The major Canadian ports often deal with a limited number of carriers and stevedores, both of which represent a significant proportion of a port's activities.

The independence currently enjoyed by the port authorities in relation to their clients make for healthy co-operation, particularly in terms of the physical layout of the facilities and business strategies. It is in the interests of a port authority to be sensitive to its users' needs. It would thus seem unnecessary to provide that port authorities be subject, either directly or indirectly, to majority control by its customers.

The City of Montreal therefore suggests that the scheme proposed for board representation be amended while still maintaining adequate and appropriate representation.

We suggest that the federal government maintain its right to appoint one member. The same would apply to the provincial government.

As for the municipalities, we are proposing that they be allowed two members. It is important to remember here that because the Port of Montreal is located for the most part within the boundaries of the City of Montreal, the two members we are recommending would be appointed by the City of Montreal in consultation with other affected municipalities.

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Two other members would be chosen by the urban area's Board of Trade, and two members would be chosen by the federal government from a list of candidates submitted by users. Finally, the Chief Executive Officer would be designated by the eight other members.

In this way, neither governments nor users would have an absolute majority. At the same time, this scheme ensures that a majority of directors will be from the business sector and that regional interest will be better represented.

The Montreal proposal also distinguishes itself by the fact that users themselves would identify candidates and submit a list of names to the Minister. Under the proposed legislation, the process is exactly the reverse, since the Governor in Council proposes candidates and asks for users' approval.

The City of Montreal also has doubts about the relevance of Clause 14 which, among other things, excludes as potential directors any individual who is a mayor, councillor, officer or employee of a municipality mentioned in the Letters Patent. This is something that will equally apply to potential directors working at the federal and provincial levels. An individual's abilities and expertise in the field should be the main criterion for membership on a board, rather than his title and affiliations.

I would just like to digress for one moment. If a government or municipal authority is to be asked to appoint someone, that government or municipality should have full latitude to appoint the individual they deem most appropriate, whether he or she is a public official, an appointee or someone representing business or another sector. I believe the independence of those making the appointments must be respected.

I would now like to move on to the issue of property. The intent to keep Canada Port Authorities within the federal realm is again expressed in provisions dealing with real property, particularly sub-paragraph 10(3)(b) that provides that the Canadian government continues to own any such real property.

Indeed, Sub-clause 27(3) states that a port authority may not mortgage, hypothecate, pledge or otherwise create a security interest in the property it manages given that it is federal property. It can however pledge revenues against that property, but only the actual amount of revenues it generates. This provision seems to quite considerably restrict the port authorities' borrowing power, particularly in cases where major investments are required. In addition, financial markets will be off-limits to them because as non-profit corporations, they cannot issue shares.

As far as royalties are concerned, as a general rule, we are in favour of port revenues being completely reinvested in the maintenance and development of facilities, so as to guarantee the port's long-term competitiveness. It would therefore be our hope that royalties paid to the federal government could be eliminated altogether.

Clause 24 includes a variety of provisions, including restrictions on port activities. It states that the power of a port authority to operate a port is limited to the power to engage in activities related to shipping, navigation, transportation, and the handling and storage of goods. We are in general agreements with this restriction, as it would prevent port authorities from deviating in any significant way from their mandate.

However, since no one can predict the future, we believe this clause should be drafted in such a way as to provide more opportunity for a port authority to engage in related activities, as long as they do not contravene either the port authority's mandate and licence or municipal by-laws.

Municipal taxes: Canadian port cities, including the City of Montreal, took a united stand in opposing the granting of this unjustified privilege which is also unfair to other taxpayers. Furthermore, implementation of a negotiated regime would contravene current practice, gradually developed over decades, under which the Government of Canada administers a program of grants in lieu of taxes which are roughly equivalent to full property taxes. Finally, this would be contrary to the agreement reached in March of 1996 by a joint committee composed of representatives of Public Works and Government Services Canada, the Treasury Board of Canada and the Federation of Canadian Municipalities. The resulting report reasserted the fundamental principle underlying municipal taxation, namely that municipalities fund the services they provide by distributing costs among owners based on the value of their properties and not their use of services. We therefore hope that the Canada Marine Act will include a provision clearly stating that Canada Port Authorities shall be subject to the same municipal tax system as any other federal organization, namely the current grants in lieu of taxes regime.

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As Mr. Taddeo mentioned earlier, the Municipality is currently negotiating with the Port of Montreal and the Police Department for the gradual withdrawal of the R.C.M.P.

As far as land use is concerned, it is our wish that port authorities be required to obtain special municipal authorization for any initiative that could contravene current municipal by-laws and policies.

In conclusion, I would just like to mention that our brief also addresses the issue of regional and local ports and the St. Lawrence Seaway. Thank you very much.

[English]

The Chairman: Thank you very much. I appreciate the limiting of the remarks.

Monsieur Mercier.

[Translation]

Mr. Mercier: Mr. Melançon, I have two questions: the first has to do with the Board of Directors and your recommendations as to its composition. You are suggesting that of the nine directors, two be chosen by the municipality or municipalities where the port is located. Could you tell me what the other affected municipalities would be?

Mr. Melançon: Well, there is Montreal East, for example, the mayor of which is already a member of the Board.

Mr. Mercier: Only Montreal East?

M. Melançon: I am not talking about mayors of other municipalities, such as Contrecoeur; as far as the island of Montreal is concerned, Montreal East is the one currently represented.

Mr. Mercier: So, as regards this Bill, you are really only talking about Montreal East?

Mr. Melançon: Yes, but if activity increased significantly on the South Shore, dialogue with the mayors of Contrecoeur and other municipalities would be a possibility.

Mr. Mercier: When you say "dialogue", what exactly do you mean? Are you talking about more than just consultation? In other words, would these other municipalities have any powers or would you simply be consulting them?

Mr. Melançon: Well, the process for consultating other municipalities would be pretty similar to the one we use within the Montreal urban community. The idea would be to talk about whether only people from the City of Montreal should be appointed, or whether, because of port operations in the Montreal East region, we should agree on potential candidates who would be acceptable to both parties.

Most operations are carried out within the boundaries of the City of Montreal. What we're saying is that we will consult other municipalities in order to get agreement, if need be, on two individuals to sit on the Board of Directors. We can only hope there would be no conflict. I don't suppose there would.

Mr. Mercier: As I understand it, you are currently paying municipal taxes -

Mr. Melançon: The port is, yes.

Mr. Mercier: - and you prefer the idea of grants in lieu of -

Mr. Melançon: No, no. What we want are asking is that their tax status to remain unchanged, that the federal government to provide grants in lieu of taxes and that there be no change with respect to municipal taxes. There was some discussion of allowing the Port of Montreal to pay only for those services it actually uses. We are totally against that idea. We believe that would be unfair to other corporate and residential taxpayers.

Mr. Mercier: On page 8 of your brief, you say:

Consequently, the City of Montreal requests that:

(3) The Canada Marine Act include a provision clearly stating that Canada Port Authorities will be subject to the same tax regime as any other federal agency, i.e. the system of grants in lieu of taxes.

Mr. Melançon: In other words, the status quo.

Mr. Mercier: Oh, I see! I was about to ask you if you paid taxes.

Mr. Melançon: As a municipality, Montreal receives financial compensation of about $3 million, but as a general rule, there are also taxes of about $3 million a year on local port property.

[English]

The Chairman: Thank you, Mr. Mercier.

I just want to understand. With the combination of grants in lieu and taxes raised from port tenants, you are currently receiving about $10 million or $10.5 million.

[Translation]

Mr. Stéphane Brice (Research Officer, Economic Development Department, City of Montreal): At the present time, the tax account is about $3 million for the local port corporation. But other municipalities also receive some, particularly Montreal East. You mustn't aggregate them. Port tenants also pay taxes. Often the figures are rolled-up.

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[English]

The Chairman: Perhaps Mr. Keyes wishes to reply.

Mr. Keyes: Yes, let's get to the nut of this thing. Grants in lieu are just over $6 million and there's $4,593,000 in municipal taxes from the tenants the port leases the properties to, so you're collecting over $10 million from the Port of Montreal.

[Translation]

Mr. Brice: No, at the present time, we are not receiving $6 million from the Port of Montreal. There was already one -

[English]

Mr. Keyes: No, grants in lieu coming to the municipality are $6 million. You don't agree with that?

[Translation]

Mr. Brice: I don't have those figures.

[English]

Mr. Keyes: All right. I'll provide the witnesses with the numbers if they like, Mr. Chairman.

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

[Translation]

Mr. Cullen (Etobicoke North): Mr. Melançon, Mr. Brice -

[English]

I will speak in English because there are some subtle points here that I will have difficulty expressing in French.

I just wanted to clarify two items. One is the notion of the activities of the port. You touched on that point, and if I understood you correctly, you said with the activities of the port you have no major difficulty with the way it's written in Bill C-44 as long as it complies with the overall mission of the CPA.

I'm just wondering about ancillary businesses or activities. For example, the port could say its mission is to ensure that it get the best value from its real estate and to develop properties that can generate revenue for the port. How would you see narrowing the definition of the mission of the port so you're in agreement with the kinds of activities that would go on within a port? How would you narrow that mission so it would suit your objectives?

[Translation]

Mr. Melançon: At the present time, relations between the City of Montreal and the Port of Montreal are generally excellent. There is no doubt that because of its location within city limits, the port has a definite impact on the urban community. We consider the port to play an essential role in the economic development of the island and of the region as a whole, and thus we want to be sure that development can proceed under the best possible circumstances.

However, as a municipality, we also recognize that because of increased cargo handling volumes have affected local trucking. So, we are trying to find some way of mitigating the negative impact of these increased volumes on trucking, for example.

Because of the volumes it handles, the Port of Montreal might require more space and would have to come to an agreement with the City before expropriating land in its main area of operation. As I say, relations have been very good thus far. A City-Port committee has been put in place. As a responsible municipality sensitive to local needs, we have an obligation to foster the Port of Montreal's competitiveness, to support its development and to minimize the negative impact of that development on urban life in Montreal.

[English]

Mr. Cullen: Thank you. Are you confident then that with this act, letters patent and your rapport or relationship with the port, you'll be able to work these things out satisfactorily with the CPA?

[Translation]

Mr. Melançon: Generally speaking, yes, but I think things would be better still if the Board of Directors more closely reflected the interests of the local community.

[English]

Mr. Cullen: Thank you.

The Chairman: Thank you, gentlemen. I appreciate you coming here today.

[Translation]

Mr. Melançon: Thank you.

[English]

The Chairman: Is there a representative of Transport 2000 here?

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Good morning. I'm sorry I do not have the names on my current list.

[Translation]

Mr. Luc Côté (Chairman, Board of Directors, Transport 2000 Québec): Good morning. My name is Luc Côté and I am Chairman of the Board of Directors of Transport 2000 Québec. I am accompanied today by my colleague, Richard Beaulieu, Director of Research with Transport 2000 Québec.

[English]

The Chairman: I'm not sure if you're familiar with the process here. You have 30 minutes. If you can confine your remarks to about 10 minutes that will give us an opportunity for some questions.

Mr. Côté: Okay. I will just read our memoir.

[Translation]

First of all, I want to thank you for giving us an opportunity to appear before the Committee. With your permission, I will read the summary of our brief.

In a decentralized economy, the government's role is to provide transportation infrastructures that ensure the free circulation of people and goods. In most industrialized countries, railways constitute the backbone of the national transportation system. Transportation is an activity that supports both the economy and social and cultural life, and tourism is one of its key aspects.

Infrastructures represent a structural investment and play a catalytic role in fostering growth in the private sector, employment and added value, especially mass transportation infrastructures.

In a continental context, American transportation policy has for almost five years now encouraged intermodality, that is the integration of all modes of transport, rural and urban. All levels of government are now part of that effort, and the economy has achieved almost full employment.

In Canada, there is no federal contribution to land transportation capital projects, and VIA Rail, which is helping to create a tourist boom, has seen its operating budget cut every year for the past six years. The new Transportation Act, passed in June, made no provision for the acquisition of rights-of-way that CN and CP plan to dispose of.

Here, then, is the approach we favour. Centralized planning and decentralized management are essential ingredients of an effective intermodal transportation system. Transportation infrastructures, whether rail or road, must be treated as community services or public utilities. Setting fees for infrastructure use, rather than constituting an unreasonable management initiative, makes sense from the perspective of internalization of externalities.

The rail network represents a tourism investment of primordial importance. If actively promoted, it can help to reduce outbound tourism and increase inbound tourism while generating domestic economic spin-offs. The government cannot ignore its social responsibilities with respect to our national transportation system.

Finally, without a national transportation policy, Canada will inevitably fall behind its main trade rival, the United States. We therefore believe that implementation of such a policy within the next couple of years is an absolute must. Thank you.

[English]

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

Mr. Gouk: Good morning. There are a couple of areas I want to delve into.

Far be it from me to defend the government documents, but you mentioned in here that Bill C-14 made no provision for the acquisition of rights of way. I would suggest it does primarily deal with that. First of all, if the railroad took the land from the government - I believe that's the wording - then the only disposition of that land is to give it back to the government.

In all other cases, if it does not sell it as an active railway, it has to be offered first to the federal government, then to the provincial government and then to local regional governments, at net salvage value. So there is some provision in there - as much as I think we can realistically put in.

You also mentioned that because because VIA Rail is such a boom to tourism, you're concerned about its subsidies being cut.

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I'm from British Columbia, and we have in British Columbia a tourist rail line that was operated by VIA and lost great deals of money. They sold it off to the private sector. At that time it was carrying 6,000 passengers. That was the tourism boom provided by VIA. Under private enterprise, it has grown to a very profitable net taxpaying line. This year it carried 42,000.

So perhaps the answer isn't to shovel more money into VIA but instead to turn it over to the private sector, where they can really market it properly. Then perhaps you will have a real tourism boom here, as we've seen in British Columbia.

Mr. Côté: Are you talking about the former Canadian rail line, the train from Calgary to Banff and then Vancouver?

Mr. Gouk: Yes. It's called the Rocky Mountaineer.

Mr. Côté: The Rocky Mountaineer, okay.

[Translation]

Perhaps I should briefly remind you of the facts. Those services were operated by VIA Rail previously but no money was invested in modernizing equipment. A few years ago, the government proceeded with a facelift for the Canadian, which now passes through Edmonton and Jasper. On some lines, the service generates a profit. That is the whole point of our submission. We have to continue to invest in equipment. It's all very well to turn things over to the private sector, but there must be continuing investment. Thank you.

[English]

Mr. Gouk: In conclusion to that, I would point out that in the case of the Rocky Mountaineer, the private sector has made substantial investments at no cost to the taxpayer and in fact, as I mentioned, is a net taxpayer. They have done wonders for tourism in British Columbia. I would like to see that opportunity given to you here as well.

[Translation]

Mr. Côté: It's a service that might be called Love Boat on Rail. It's there for tourists. We are talking about investing in VIA Rail not only for Japanese and American tourists who come to see the Rockies, but for Canadians as a whole.

[English]

The Chairman: Thank you, Mr. Gouk.

[Translation]

Mr. Crête.

Mr. Crête: I would be interested in hearing your views on what occurred as a result of changes to railroad practices legislated last year. Now companies can close their books without having to hold public hearings. The example I would cite is the Gaspé.

Two years ago, there were plans to close a VIA Rail line between Matapédia and Gaspé. There were community hearings, and hearings in the affected sector, and we were finally able to get them to agree to maintain the service. Under the new legislation, hearings are no longer held. Canadian National simply announces that it's closing the line. It's selling the line between Matapédia and Chandler because it has a buyer, and there are other users. That is something that is occurring in many regions across the country.

When there is only one user and that user is VIA Rail, CN offers it to VIA Rail, but of course VIA Rail can't buy it because it isn't profitable. Do you think the government has some responsibility in cases like this, particularly when we're talking about lines in an area like the Gaspé, which often provide the only link between communities during the winter months, links that are especially important if people have to go into the city to get medical treatment for health problems, and that sort of thing?

Mr. Côté: I believe the public should continue to be consulted on such issues. Under the new regulations, these lines will quickly be offered to the municipalities right away. But the municipalities are not interested in buying them because they see it as nothing but off-loading by higher levels of government. So, a fund is needed through which to provide these services to municipalities.

In the State of New York, for example, the Adirondak service comes as far as Montreal. Its operating expenses are subsidized by the State government, and it's thanks to that subsidy that the service can be maintained.

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If provincial governments - such as Quebec, Ontario and British Columbia - were willing to invest in operations and infrastructure at the provincial level, those investments would be greatly appreciated. We talked about the Chaleur case, but there is also the Lévis station. Even though the infrastructure has been offered to the municipalities of Lévis and Charny, they don't seem particularly interested in maintaining rail service; on the other hand, they might be interested in buying the rights-of-way to make a bicycle path.

Mr. Crête: Yes, the Municipality of Lévis seemed to be a lot more interested in a bicycle path.

Mr. Côté: My personal view is that you can't turn every single right-of-way into a bicycle path.

Mr. Crête: People only realize how useful the railroad track is once they've lost it.

Mr. Côté: Yes, exactly.

Mr. Crête: There is one example that affects us directly. We talked about it yesterday in the Committee. A railroad track between Rivière-du-Loup and Edmonton was turned into a bicycle path, and now there are so many heavy transport trucks using the road that it no longer meets existing needs.

Mr. Richard Beaulieu (Director of Research, Transport 2000 Québec): There has been talk of an integrated corridor for the Rockies. It would be sort of multi-purpose. There is a very strong tourist market in the Rockies and Vancouver. So in that case, there are obvious benefits.

As for the Gaspé, the question is always whether to privatize or not. Is this a similar kind of product that can therefore be privatized? I'm sure people in the Gaspé would be delighted to have a well-integrated system for tourist travel - sort of a closed corridor. Right now in the Gaspé, everybody in the outlying areas depends on that service. Perhaps we could consider boosting tourism at the same time?

In the media last week, it was mentioned that a significant number of tourists go through the Gaspé and like taking VIA Rail. The kind of service available to tourists here doesn't exist in their country. It's great for them to be able to take the train all across Canada, from east to west, to see all the different landscapes, to be able to stop in different communities, have a few good meals, and then leave. For them, seeing a country the size of Canada by train is an absolutely unique experience. Thank you.

[English]

The Chairman: Thank you very much.

Mr. Cullen.

[Translation]

Mr. Cullen: Thank you, Mr. Côté and Mr. Beaulieu. Perhaps you could help me. In your opinion, is there a difference between a national transportation system and a national transportation policy?

Mr. Côté: Well, the national transportation system refers to the physical infrastructures that are in place, whereas the policy lays out the overall direction in this particular sector. A policy can provide for the creation of an infrastructure or capital projects fund. That's the difference that I see between the two.

Mr. Beaulieu: What we mean by a national transportation policy, like the one that people are talking about more and more in the U.S., is an integrated policy - in other words, an intercity system that is well integrated with urban systems, which are experiencing some problems these days.

Let me concentrate more specifically on three major metropolitan areas where there are problems: Toronto, Montreal and Vancouver. If I can make one specific suggestion, it would be that a committee such as yours examine the specific problems those three major metropolitan areas are having. A group like Transport 2000 Québec would very much support that. And there are problems. In the urban core of Toronto, 31 per cent of people do not own a car, whereas in Montreal, it's about 47 or 52 per cent.

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So, there are urban systems that we want to see brought within the framework of a national policy, so that we can deal effectively with the problems connected to them.

Thank you.

[English]

The Chairman: Mr. Jordan.

Mr. Jordan: Thanks, Mr. Chairman.

Mr. Côté, in relation to the disposal of the rights of way of these abandoned railways, I think there might be problems if the bill had spelled out in very specific terms what you had to do with them. You'd lose your flexibility entirely, don't you think? Or if you feel that it was handled poorly, what would have been a better way of doing it?

First of all, there's no obligation to dispose of them. You can sit on them, and if you feel they are surplus, a pecking order is established where they are offered to federal agencies. If federal agenices aren't interested, provincial agencies get a crack at it. If they aren't interested, the municipalities get a crack at it. If no one shows an interest, it could be disposed of.

It's a fairly long process and I know it's cumbersome to work with that when you're not sure, but don't you think you'd lose something if you spelled out too clearly that these had to be disposed of in a very specific kind of way?

I think there's strength here in being a little bit fuzzy about it, really, so that the local people eventually get a crack at it. Otherwise you may find yourself sort of tied with the requirements of the regulation or the law on it. I think that's why it was done the way it was. How do you think it should be handled?

[Translation]

Mr. Côté: There is no integrated transportation policy in Canada. We have railway rights-of-way that could be extremely useful and could help to improve Canada's economic productivity.

As I mentioned earlier, they can be offered to municipalities and provincial governments, but the latter only see this as somebody else trying to off-load their costs or infrastructure on them. Holding a fire sale is probably not the best way to be productive.

[English]

Mr. Jordan: Of course there's no obligation for the province to take it or for the municipality to take it. They're not obligated. It would only be -

[Translation]

Mr. Côté: No, they don't have to take them. Under the legislation, they are given the opportunity to buy those rights-of-way, but no amounts are mentioned. If at least there was mention of an amount for rebuilding infrastructures, it would be a lot more attractive to municipalities and provincial governments.

It's also important to realize that we're talking about a system. For example, the Harlaka Subdivision includes several municipalities. If one municipality decided to by the right-of-way and the neighbouring municipality decided not to buy it, we would end up with nothing.

Mr. Beaulieu: Mr. Jordan, I do not completely disagree with you. In the absence of an integrated policy, the way you have spelled things out in the Act is probably consistent with your approach. In that respect, I agree with you to a point.

However, the approach we are recommending involves adopting an integrated policy and then taking action based on that philosophy. Allowing the different levels of government to fend for themselves is not necessarily inconsistent, but what we are proposing is that the government first adopt an integrated transportation policy and then take action based on that philosophy.

[English]

Mr. Jordan: Thank you.

The Chairman: Thank you, gentlemen. I don't know whether it's appropriate to tell tales out of school, but one of our consultants, Mr. Cuthbertson, has been urging us for some time to take a look at the whole question of passenger rail, so we may want you back here soon. Thank you.

There, David, you're on the record.

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Mr. Jordan: You're on the record. Does that make you feel good?

The Chairman: That brings us to the Canadian Pulp and Paper Association: Mr. David Church, Mark Mazerolle, James Black, Russ Lewis, and Melvert Nunweiler.

A Voice: Mr. Nunweiler is not here today.

The Chairman: Okay. But there's also a James Foran. Hi, Jim.

For the information of the committee members, Mr. Foran is a Winnipegger, so watch out.

Gentlemen, you have thirty minutes, which you can use in a variety of ways. We recommend you try to confine your remarks to about ten minutes, to give us a maximum amount of time for questions. But the time and the floor are now yours.

Mr. David W. Church (Director, Transportation, Recycling and Purchasing, Canadian Pulp and Paper Association): Thank you, Mr. Chairman.

Good morning. I'm the director of transportation, recycling, and purchasing for the Canadian Pulp and Paper Association. We thank you for the opportunity to appear before this committee today on Bill C-44, the proposed Canada Marine Act.

On the panel with me today is Jim Black, vice-president of MC Forest Products in Vancouver, with operations in British Columbia and Alberta. He is also chairman of CPPA's marine committee. Mr. Russ Lewis is director of transportation for Stone-Consolidated Corporation and Stone Container (Canada) in Montreal, with operations in New Brunswick, Quebec, Ontario, and British Columbia. Mark Mazerolle is director of logistics for Abitibi-Price in Toronto, with operations in Quebec, Ontario, and Newfoundland; and they have two mills in the United States. Jim Foran is CPPA's transportation counsel and has been for the past 25 years.

You have received copies of CPPA's submission in both official languages. I will speak briefly to that submission. In addition, we have filed a supplementary submission in both official languages this morning. It more fully deals with the creation and operation of Canada port authorities. The supplementary submission addresses certain key issues the Minister of Transport asked you to consider in his recent appearance before this committee. Mr. Foran will speak to our supplementary submission.

As we state on the first page of our submission, CPPA is a national association that represents 51 member companies, located throughout Canada. The Canadian industry is the world's largest exporter of pulp and paper. Approximately 11 million tonnes of the 29 million tonnes we produce annually is shipped to offshore markets or by water to the United States.

CPPA supports the establishment of Canada port authorities as outlined in part I, but we do not agree with the manner in which directors will be appointed. Users should be able to appoint directors from a list nominated by the users. Moreover, users should not be disqualified from sitting on the board of directors.

About part II and public ports, we state on page 7 that at least 21 regional or local ports are used extensively by the industry's mills and the closing of a number of these ports could have an adverse impact on the competitiveness of these mills. Moreover, these mills may be located in communities that are dependent on their operations. Therefore public port closures could have a significant adverse effect on those communities and those regions in which they are located. Accordingly, we recommend the Canadian Transportation Agency be given jurisdiction to recommend that a public port not be closed when it finds it is in the public interest to keep it open.

On page 8 we make reference to the aids to navigation and ice-breaking services provided by the Canadian Coast Guard that are or will be subject to cost recovery in the near future. While CPPA supports the principle of cost recovery for such services in theory, the impact on our industry's members is unknown at this time. This is a matter of great concern to those members who require ice-breaking services, particularly those members whose mills are located in Newfoundland, northern New Brunswick, and the Gulf of St. Lawrence.

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As we state at the top of page 9, until the cost of these services is determined, it is not possible to assess whether a port would be economically viable in the private sector. We therefore recommend that clause 61 of the bill not be enacted until such time as the consultation process is completed and the costs are known.

About pilotage services, we strongly support the recommendations made by this committee in its National Marine Strategy, dated May 1995, and urge you to recommend to the House of Commons that your pilotage recommendations as contained in that document be implemented without further delay.

I will now ask Mr. Foran to address our specific concerns in CPPA's supplementary submission.

Mr. James E. Foran (Canadian Pulp and Paper Association): Mr. Chairman and members of the committee, CPPA supports the commercialization of Canada's port authorities for the purpose of enhancing our international trade performance and our competitive position with United States ports. However, CPPA is concerned that Bill C-44 fails to provide the environment to achieve those objectives. The provisions for the creation and operation of Canada port authorities are confusing, contradictory, and very likely unworkable.

Part I of Bill C-44 endeavours to combine two corporate structures which don't fit with each other. A Canada Business Corporations Act corporation is incorporated by a certificate and articles of incorporation. It has the capacity and powers of a natural person and may carry on business for any purpose unless it is specifically restricted from doing so. The CBCA is the federal legislation of general application to corporations with share capital.

The federal legislation of general application to companies without share capital is part II of the Canada Corporations Act, which provides for incorporation by letters patent. This type of company may do only what its letters patent authorizes it to do or what is truly incidental thereto. It may be wound up or dissolved if it strays beyond that scope.

Bill C-44 contemplates incorporation by letters patent in a manner similar to that of a part II CCA company with the utilization of the CBCA provisions. The bill does not provide for members or shareholders of the corporation, which in my view is unheard of, and compounds the confusion by the restrictions contained in clauses 24 to 28 of the bill. By combining the provisions of the CBCA and the CCA in the incorporation of a Canadian port authority, the bill fashions a square peg for a round hole.

Under subclause 27.(3) of the bill, a port authority may borrow money only by the pledge of its revenues. However, the minister, in the letters patent of incorporation, is required to impose a charge or stipend on the gross revenue or a formula for determining that charge of stipend. That charge or stipend may be increased through supplementary letters patent.

Pursuant to clause 46 of the bill, the port authority may be liquidated or dissolved at any time. No appropriations or guarantees may be given to the port authority by the federal government, by virtue of clauses 21 and 22 of the bill. It is accordingly highly questionable whether any financial institution will be prepared to make a loan to a port authority under these circumstances.

The port authority will be obligated to assume all liabilities of its predecessor and will be responsible for all previous obligations, however arising, without any recourse to or assistance from the federal government. That's provided for in clause 10 and in clauses 20 to 22. Notwithstanding these impediments, a port authority is required to be a commercially viable operation. This may well be an unattainable objective as the bill is currently drafted.

CPPA accordingly urges the Standing Committee on Transport to recommend that the amendments set out on pages 7 to 10 of our supplementary submission be implemented.

Thank you, Mr. Chairman.

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Mr. Church: Mr. Chairman, we are now ready to answer any questions.

The Chairman: Let me start off by saying I very much appreciate your being here today. We've been looking for more input from users of the ports on some of the very questions you have addressed today.

I'll start the questioning with Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

It's going to take some time to digest all the information you've provided us with this morning, but I can assure you we'll all be having a good look at it.

I would like to ask you about two areas specifically. The first one is the appointment of users as directors. The bill says the minister will nominate the directors after consultation with the users. I'm not clear what exactly that means. I take it to mean he will talk with the users but he may or may not take any of their recommendations. The minister, however, came before the committee and said he will appoint from a list nominated by the users. I think it's necessary to amend the bill to reflect that, but I would like your input on that, on whether you're satisfied the minister will nominate and appoint after consulting with the users or you feel the users themselves should specifically be able to nominate those board members.

Mr. Russ Lewis (Canadian Pulp and Paper Association): Mr. Gouk, I'd like to state a couple of things. First, we feel the users should specify and nominate the names and the minister should simply appoint. It should not be left discretionary for the minister to do that.

The users should also include the shippers and exporters who use the port. They should not be excluded, as it currently reads in the proposed legislation. We think the shipper who uses the port has a high level of expertise on transportation issues and can bring that to the table. He should not be disqualified or prevented from sitting as a director of a port.

I think that answers your question, sir.

Mr. Gouk: Yes, it does.

There's one other area I'd like to ask you about and the bill is silent on. Most of the witnesses who have come before us have been silent on it, much to my surprise, I have to say. In the case of rail shipments, the users, the shippers, have a dispute settlement mechanism if there is a dispute between the railway, in this case, and the shippers. But in this case there is no dispute settlement mechanism for users - shippers - and the port authorities, which are also basically a monopoly, because you either ship it with them or you don't ship it, unless, of course, you go out of the country. Do you feel this is not a problem for you, or would you like to see something in the bill that provides for some mechanism in the event you cannot come to an agreement between yourselves and the applicable port authority?

Mr. Church: Mr. Gouk, I think it's one of those issues such that in principle we're not really opposed to any mechanisms that would give shippers additional options but I think we'd have to take it under advisement whether or not we would need some sort of arbitration process. But certainly we would support those kinds of provisions in principle.

Mr. Gouk: Just as a closing remark, I would advise you that I'm contemplating an amendment like that, and I can assure you, although it is based on the Canada Transportation Act dispute mechanism section, subsection 27.(2) will not be in my amendment.

Mr. Church: Hear, hear! That's something we definitely would support.

The Chairman: Could it be said we're making a fresh start, Mr. Gouk?

Mr. Gouk: Someone has to, Mr. Chairman.

The Chairman: Mr. Lewis, you commented on a clause of the bill we've been looking at. It has been of some concern to us. On the one hand we on the committee - and I think it's fairly unanimous on the committee - want very much to have exactly the kind of representation you're talking about: people with commercial interests, with extensive knowledge of the system. That's certainly something Mr. Keyes has advocated. The concern, though, is given the size and diversity of interests in the shipper community, do you not create conflicts and some competitive imbalance when you choose someone who is currently active in that community? If one of your competitors is on the board of the very port you're using, are they not then privy to information that can give them a competitive advantage over you? Part of what you see there is an attempt to resolve that. I wonder if you could respond to that.

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Mr. Lewis: Mr. Alcock, I think that when looking for directors and people to deal with those issues you have to select the most qualified candidates. I don't think you should preclude anybody from the overview of making the selection. I think the people who serve as directors have an obligation to deal with the issues in an unbiased manner. I think that's a point of law. Maybe someone else on this panel who is a little more adept at legal issues could talk about that. But I basically would say that generally people who accept those positions recognize they have to leave their biases at home and deal with the issues of the company in a legitimate way.

Mr. Foran: Mr. Chairman, perhaps I might add to that too. I would like to remind the committee of subsection 122(1) of the Canada Business Corporations Act, which says that:

Every director and officer of a corporation in exercising his powers and discharging his duties shall

(a) act honestly and in good faith with a view to the best interests of the corporation.

We have many situations, Mr. Chairman, where there are users of transportation services on the boards of the transportation undertakings themselves. It was just recently pointed out that the president of General Motors is a director of CN. Taking into account the obligations under the Canada Business Corporations Act, these people understand their duties and exercise them honestly and in accordance with the law.

The Chairman: So if two pulp and paper companies are both actively using a particular port and one of them gets appointed to the board of directors, you're saying to me that, as shippers, you would have no concerns about that.

Mr. Church: I would say that we have no concerns about that. I think the people who are presidents and in leadership roles in the pulp and paper companies within our industry would recognize their responsibilities as directors of other corporations. We don't see that as being a problem.

The Chairman: Thank you. That's very interesting. That's the foundation of some of the section of the act that you see.

Mr. Cullen.

Mr. Cullen: Thank you, Mr. Chairman.

Gentlemen, I was involved in the forest products industry for a number of years before I became an elected official. In fact, on Monday I was on a panel with Ms Lachapelle in Ottawa. But I know before I was elected in March there was a big issue on the transportation act and running rights. It's a little off topic now perhaps, but as a new member of this committee I'd find it useful maybe to get updated by you on that point.

On the question of the stipend payable to the Crown, which you mentioned in your brief, there's been a lot of discussion back and forth whether the stipend should be based on a percentage of net, or a percentage of the bottom line, or dividend, etc. I don't know if you have views on that. You talk about it being subject to negotiations with the port authority at least once every five years. I wonder if you could elaborate on that in the sense of whether you were looking at negotiating a stipend sort of retroactively based on financial results. What sort of framework would you put around that?

Mr. Church: The concern we had was that the stipend was essentially, as we understood the bill, to be mandated by the federal government or by Transport Canada; that the federal government would essentially determine what that stipend would be on an annual basis and it would be what was required by the port to pay to the federal government. We don't object to taxpayers being reimbursed for the funding they've already provided to the ports. The concern we have is that with the limitations - and we indicate this in our supplementary submission with regard to the limitations of ability to generate revenue and to borrow funds from the private sector - that stipend could be a significant factor for that port's viability, and we think it should be subject to negotiations.

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Whether it's subject to negotiations based on the previous five years of port activity, revenues, and costs - I think that is certainly part of the negotiation process, but so is what the port would like to do in the future. If it believes that it will need to expand its operation, either in the grain sector or whatever, to generate additional revenues, then that should be part of the negotiation process. It shouldn't be an amount set by the government. We didn't get into the details of how that should be developed.

Mr. Cullen: You're not suggesting it would be sort of retroactively determined, because not knowing what it would be would be just as destabilizing for a lender. You'd have to establish the stipend and then review it.

Mr. Church: That's right. You'd have to establish, let's say in the year 2000, for the following five years what that stipend would be.

Perhaps I could ask Mr. Foran to address that issue.

Mr. Foran: Mr. Cullen, one of the things that really concerns us for the viability of the CPA is the way the act reads now. It goes into a bank and says it needs money for its undertaking and all it can give the bank is a pledge on its revenue. Under the letters patent, there's a stipend payable to the minister, and he could change that at any time by supplementary letters patent. If we don't conform, we could be dissolved or wound up at the instance of the Governor in Council.

They've got nothing to give. No one is going to loan any money. Where's the money going to come from? It's going to come from the users. That's the problem with the bill the way it's drafted. There's no security to give.

Mr. Cullen: Thank you.

The Chairman: Mr. Jordan.

Mr. Jordan: I have just a couple of quick points.

I suppose it's pretty natural that you would be concerned about such things as ice-breaker costs and how they are going to reflect on your costs, and you'd want to be concerned. But don't you think that's the kind of thing that will need some dialogue with the users? It's probably hard to arrive at a breakout of those costs at this time, but I think you're wise in being concerned. You don't want to shoulder any more of those costs than is your share.

But the difficulty would be to spell that out in advance. You couldn't. I don't know how you could. Even with the best of intentions and cooperation from all, it's not going to be an easy cost to determine, but we just hope you'd kind of keep an open mind on it and try to appreciate the problem when user pay is the mentality that's associated with all of this. It's going to be a tough one.

That wasn't my main one.

Mr. Mark Mazerolle (Director, Logistics, Abitibi Price Inc.): I can comment on that. My name is Mark Mazerolle, from Abitibi Price.

As a very significant user of marine services, namely ice-breaking and aids to navigation with our Newfoundland-based operations, we're well aware of the ongoing dialogue within the Marine Advisory Board trying to establish the actual portion of the cost of marine services that is attributable to commercial interests.

But in like mind, it's very difficult for us to assess the true business value of a remote port operation, which is a very large portion of where our business is exported. It's difficult for us to make a business decision based on the true valuation of that operation, not knowing what the total cost or the revenues are going to be in the longer term.

We have had some initial conversations with some of the local Transport Canada officials, but without that knowledge it's difficult for us to go ahead and assess the value of the port.

I guess the request we would have is that a moratorium be given to the privatization of some of these local port authorities until those fees are well defined.

Mr. Jordan: Yes, or at least slow it down a bit.

Mr. Mazerolle: Yes, sir.

Mr. Jordan: I can appreciate that.

The other thing was my concern about your suggesting that you support what the bill is doing regarding pilotage. We're getting all kinds of concern, though, from the shipowners. The cost of pilotage is a very major part of their operation. I can understand your point of view. You want to get the product there safely, and pilotage is an important component of it.

Our view on it is that the qualifications - those who can become qualified to be responsible pilots - are very hard to explain in these times in which technology has sort of taken over a good deal of what used to be thought of as the work of the pilot. It's regarded as a pretty closed shop to get qualified for this activity. I just hope you will keep an open mind on that.

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I don't think it was an endeavour to lessen the importance of the work and the need for safe pilots and pilotage. The way of becoming qualified to be a pilot in this country is what we're getting criticized for. They don't think we've addressed that aspect of pilotage in the bill.

Mr. Church: We certainly understand that pilotage is a significant and important issue in terms of safety for employees and protection of the environment. We believe it's important, though, that there be some form of commercialization for pilotage services. Notwithstanding the safety aspect of it, we believe it is possible to commercialize or at least have competition available for those lines that require pilotage services. There are vessels out there, as I understand it from talking to the members of CPPA, that do have the capability and the technology on board so pilots aren't required.

If that's the case, we believe, as the standing committee recommended, compulsory pilotage should be looked at to determine whether there are areas in the country or specific situations where compulsory pilotage is not required. We're urging the government to take those initiatives that were put forward by the standing committee and move forward with them.

The Chairman: Thank you, Mr. Jordan.

[Translation]

Mr. Crête.

Mr. Crête: I want to thank you for the quality of your brief. I know the Chairman has already said this, but I think it's worth repeating that users have to convey a clear message to us, as you have in your brief. What I find particularly interesting about it is that you clearly show that the government is creating a kind of two-headed monster, because it hasn't made a clear choice. It could decide to commercialize the sector, based on your suggestion. You refer in particular to the Business Corporations Act. I think that is an avenue we should explore, and we will certainly take the time to give it due consideration.

You also make a recommendation regarding the appointment of Board members. You say the Minister should be required to appoint those directors nominated by users. That, too, is an interesting suggestion. My question concerns the part of your brief that deals with public ports. I represent the riding of Kamouraska - Rivière-du-Loup, where one of your members, F.F. Soucy is in precisely the situation you have described. The Port of Cacouna is in the area, and that is one of the realities people are pointing to. I think you express it very well in your conclusion, where you say:

CPPA supports the principle that ports which cannot be economically viable under federal jurisdiction should be transferred to the private sector or to provincial jurisdiction, where this would permit the continued operation of the port on an economically viable basis.

As I see it, that means the process would have to move forward quickly and in a way that's beneficial to all. It must not be a fire sale. However, I would like you to elaborate on that point. Also, could we be given the list of the 21 regional ports that you mention on page 7 of your brief? You refer to 21 regional or local ports that are used by one of your mills. It would be useful for us to have that kind of information. I didn't find that list in your material, but it may be there. So, could you please elaborate on the impact of these policy changes on public ports and on port users, such as your members.

[English]

Mr. Church: We could provide you with a list of the 21 ports and I can identify a few of them here if you would like, to put it on the record.

[Translation]

Mr. Crête: Yes, just give me some examples.

[English]

Mr. Church: There's Stephenville, Botwood and Corner Brook in Newfoundland; Bathurst and Miramichi in New Brunswick; Liverpool and Port Hawkesbury in Nova Scotia; Baie-Comeau, Chandler and Matane in Quebec; Campbell River, Crofton, Gold River, Powell River, Nanaimo, Port Alberni -

[Translation]

Mr. Crête: Are you the primary user of the port in those communities, or does it vary from one community to another?

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[English]

Mr. Mazerolle: I can speak to that. Relative to some of the public ports we currently operate out of, namely Stephenville and Chandler on the Gaspé, we would represent probably in excess of 90% of the cargo moving through those ports. We have a vested interest.

We are exclusively dependent on the ports in Newfoundland for exporting because those mills sell exclusively to the offshore markets and we have a dependence on those local ports - Gaspé specifically. Out of Chandler we do have some options, but the most cost-effective means for us to distribute our product into those offshore markets is through the local port.

Reiterating my earlier point, we are dependent on those local ports continuing to operate, but our primary concern relates to understanding what costs and revenues can be expected so we can make appropriate business decisions. We do not, in my understanding, have that information yet.

[Translation]

Mr. Crête: It would be useful to have a chart showing the different industry sectors and the link between them and your industry, if that is not asking too much. The future of regional ports is not clearly spelled out in the legislation. Very few details are given. We have to put something in the Bill to provide more of a framework. Thank you.

[English]

The Chairman: Mr. Keyes.

Mr. Keyes: I have just a quick supplemental to Mr. Crête's question. As you said, Mr. Mazerolle, you do 80% of the work out of a particular port or harbour. Some of the other large companies that work out of other large, single-user ports have expressed interest in purchasing these ports from the federal government and literally taking them over and claiming them as their own.

Has Abitibi-Price given any consideration to the outright purchase of a wharf or dock that it uses 80% anyway and putting it under its name?

Mr. Mazerolle: At the port of Botwood, we currently own the shed and the wharf. All of those facilities are currently owned by Abitibi-Price. Our primary exposure currently relates to the ports in Chandler and Stephenville, relative to not owning the facilities. Yes, it is something we would give consideration to, but I have to reiterate that our primary focus as a very capital-intensive industry is on investing in resources to manufacture paper. To be perfectly honest, ownership of a port is not our primary focus.

If we were to consider investment in a port it would be out of necessity. From what I'm hearing from the legislation as it's coming toward us, it's going to become a necessity. But for us to be able to properly assess the value of that port, we need to have a clear definition of what all the costs and revenue streams will be, going forward. We're not prepared to have serious discussions about that until we can understand what all those costs and revenues are going to represent.

Mr. Keyes: Thank you.

The Chairman: Yes, thank you very much. I certainly appreciate you taking the time to come in. Your brief will be most helpful. We'll have to reflect somewhat longer on this question of the board composition. In a competitive world, I didn't realize we were all so comfortable.

Mr. Foran, it's always a pleasure. I didn't realize you had 25 years of experience at this. But certainly from the quality of your interventions it's not always this -

Mr. Foran: I'm still young at heart.

The Chairman: Thank you.

Mr. Foran: Thank you very much.

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The Chairman: From the Mohawk Council of Kahnawake we have Grand Chief Joseph Norton and Chief Billy Two Rivers.

We have two separate groups that have agreed to combine because they wish to talk about essentially the same issue, Mr. Jordan, and we wanted to give this topic some airing. So we've given them an hour rather than our usual half hour.

Welcome. We are looking forward to this presentation with some interest, as you are talking specifically about the commercialization of the St. Lawrence Seaway, which is part of this bill on the commercialization of the ports. Mr. Comuzzi has undertaken some work on that, and I know there's a great deal of interest in what you might have to say.

I'd like to respond, however. Prior to coming here you sent me some letters and raised a number of questions. Some of them were contained within resolutions that the various councils had passed. We passed those on to the minister for a response, and I do have a letter here from the minister that deals with one aspect of that. I would like to read it to you, and we'll give you a copy of it at the end of this. It was Mr. Keyes who took this issue forward. Mr. Keyes is the parliamentary secretary to the minister and he took this issue forward to the minister.

I'm writing in response to your facsimile of October 16, 1996, and the attached letter from the Mohawk Council of Kahnawake to Mr. Reg Alcock - regarding the commercialization of the St. Lawrence Seaway.

At the outset, I should emphasize that the commercialization of the St. Lawrence Seaway operations will not change federal responsibilities concerning First Nations. The commercialization initiative will solely establish a not-for-profit corporation to manage the daily operations of this marine transportation route. The Seaway lands and fixed assets will remain with the Federal Crown under the proposed agreement with user groups and, as such, the activities of the Mohawks of Kahnawake should not be affected by the commercialization project. I believe this move will allow the Seaway to become more responsive to future commercial challenges.

I'll see that you get a copy of that. I thought you should have that information at the outset.

Chief Norton, will you start?

Grand Chief Joseph Tokwiro Norton (Mohawk Council of Kahnawake): [Witness speaks in his native language].

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We're here this morning out of concern with regard to the process that's been established in the issue of the seaway itself and the privatization of it. The people in Kahnawake are quite concerned about the situation and the circumstances. Our brothers and sisters from Akwesasne are concerned about this situation in the same manner as we are, and we're here today to bring you our thoughts, positions and opinions regarding what's taking place now and what will happen in the future.

The contemplation and overall process of transferring, if you want to call it that, responsibility from a public entity to a private entity is of interest and concern to us. I will not go into too much of the historical situation with regard to the Kahnawake situation - what has transpired over the years - but it is important to be able to reflect on the situation with regard to that. You may hear or have heard from others from across this country who will bring a very different perspective in terms of being able to benefit commercially, and that may be their whole presentation or attitude towards you. You may have had environmental groups come in and give their opinions, thoughts and whatever else, and you may hear from them again in the future.

Those of us from the Mohawk Nation who have lived along the river since time immemorial, since the Creator put us there, have a very different approach. Maybe history repeats itself to a certain degree and the original expropriation of the seaway, the original construction, is still fresh in our memories. I was only six years old when that happened back in the 1950s, but others were young men. You'll hear from them and they'll tell you what their experiences were in relation to that, and a lot of our parents, grandparents and great-grandparents are still around and have explained to us what happened at that time and the effects we're still feeling to this day.

I'm not here today to try to correct the past, but I think we're here today to give a clear message that we don't want to see the past repeated. The Kahnawake situation is such that the seaway is there and is a reality. We were told in the past - I heard it from the elders in the community and from my parents, who are still alive and were around when the land was expropriated, when the seaway passed - that this was to be for our good. We heard that it would enhance the community. But it has caused nothing but a great deal of problems and misery as far as we're concerned.

Part of our reason for being here and approaching the committee is to make you aware that the seaway is a reality and there is this transition that's taking place and there needs to be recognition for certain rights we have at this point in time that we don't see reflected in your law.

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There is the question of treaty and aboriginal rights, the question of our right to try to address some of the things that have happened to us in relation to the seaway. We maintain that right; we have never relinquished it.

In regard to anything that may happen in the future, we also want this committee to be aware that we are very vigilant and observant in terms of the issue of what you would consider to be land claims. There are certain lands out there that were also part of the expropriation. Officially, they weren't considered a part of Kahnawake, but we are in a process of settling with Canada and Quebec the question of lands that are outside of the present identifiable boundaries of Kahnawake and are part of the seaway. It's an issue that's still outstanding as far as we're concerned. I'm referring to what we call the Seigneury of Sault St. Louis. This is something that may or may not have an effect on this transition that's taking place at this point in time, but the committee should be aware of those things. It's information we wanted to bring forth.

We don't consider this process we're involved in by any means to answer all of the problems we have with regard to what has happened to us in the past, what is going on today, and what's going to happen in the future. But we felt it was a unique opportunity for us to deposit something on record that all sectors could look at when the time is appropriate. It's directed towards the government of the country, not just necessarily towards the promoters of this transition that's taken place to specifically the Department of Transport and any other interested parties. It's to the whole Government of Canada and it's to the whole of Canadian and Quebec society, if you will, in order for them to understand what our situation is.

We have to look at the historical dimension also. I brought along a replica of what's known in our language as the Kahswentha Tekeni Teioha:te - or, as it's described in English, the two-row wampum. This is a replica of an original treaty belt, if you want to call it that, for an arrangement that was made originally between the Dutch, then the French, then the British, then the Americans, and to a certain degree Canada - although Canada has never fully accepted this concept and maybe that's why we find ourselves sitting here. Had this happened, maybe there wouldn't be any seaway through Mohawk territory.

Basically, the two rows represent the two societies. The one row is the path of our people, the Iroquoian people, the Mohawk people, in their vessel, in their canoe with all the things that are dear to them, with all their religion, with all their laws, all their people, all their spiritualness and everything that they consider to be a part of their culture and their society - in one vessel, in one row. The other row represents the European, who at the time was a visitor to our territory, and all his laws, all his people, and all his religions and everything that is dear to him in that vessel, in the tall ship. The background is white, representing the land, representing North America, or Turtle Island, as we call it, and the life running together continuously, forever.

The belt itself has strings that one could build on and represents the eternity for which the two societies would live side by side: the two societies living side by side forever and travelling the river of life together, and one not imposing on the other. Neither will we cross into your vessel and neither will you cross into our vessel and impose your laws or your religion or anything of that nature on us. Neither will you take from us, neither will we take from you. There is a chain together continuously, for as long as there will continue to be what we consider to be onkwehonweh, or our people in this vessel, and for as long as you will continue to be here, we will travel together.

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This chain links the two, and if we are going to have any kind of relationship it's through the chain - if the chain is polished between the two parties. In other words, what we are talking about is treating with each other, or having treaties, and that if we don't polish that chain, the chain rusts, and the chain breaks, and that means war between the two parties. This symbol, this philosophy, was introduced by our ancestors to your ancestors to ensure that we would live in harmony and peace throughout your existence and throughout our existence, in what you consider to be North America, what we consider to be Turtle Island.

We still follow those principles. We still follow those concepts. We still believe in them very strongly. We still consider Canada, or this part of the country, Mohawk Nation territory. We still consider a much broader territory of the Iroquois Confederacy as being our territory. Unfortunately, Canada, Quebec, Ontario, and whoever else has put their concept over the top of ours and has said this is now their territory. In Quebec it's now maîtres chez nous.

We still believe very strongly in this concept over here, and it is based on that relationship, because it is a co-existing relationship that goes back to over 400 years ago, that we are sitting here today and explaining to you our understanding of any particular problem that has come up between us. In this instance, it is in relation to the seaway. To you, the seaway may be considered a done deal, a fait accompli. It's over and done with, it's there, it's in existence. To us, it is a problem and it always has been a problem.

To this day, we have no access to the river; five miles of riverfront has been taken away from us. Where at one time we could walk to that river without having to cross any boundaries or anything of that nature, today we can't do this. The use of the river to us has been restricted.

I'm not here to say there must be a way of our being able to use the riverfront to our advantage as we did in the past, but I'm here to explain to you that it's an example of what has happened to us, and a lot of things within the interior have gone wrong. Even the mentality of the people has changed a great deal as a result of the seaway and its imposition on us. So that broke this understanding we had with our people, because Canada had assured our people, our grandfathers and our fathers and our grandparents, that they would never impose upon us and never take land from us, yet they unilaterally expropriated land from us. We fought that. Our people went to the United Nations. They went all over the place, and to this day we have never accepted that it was legitimate. But that happened. That is done.

We're here today to talk about what our position is, in terms of the seaway, and what the future will be. We are concerned about any physical changes that will take place on the seaway itself, in terms of the widening of it, the deepening of it, and any thought of further taking lands, of what we consider to be our territory. We don't see anything in the law that protects us, or at least any opportunity for us to use your law now to protect what we have in Kahnawake and elsewhere.

The future economic situation within Kahnawake is linked to the seaway. We look upon it now as being something for us to be able to benefit from, because for too long now, since its existence, we've been denied the use of the seaway as something that is beneficial to us. We were told it was going to help our community. It was going to do so many things for us, yet it hasn't done them.

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On the other hand, we are on an economic move at this point. There are many things that could be done in order for us to utilize the infrastructure in Kahnawake, and the seaway is part of this infrastructure. We have bridges, highways, hydro-lines and railways, all intersected within our community. The seaway is a part of this infrastructure. It could be a very integral part of our economic development. There are many things that can be done in order to use it as a means of transporting goods for our use. We don't want the privatization of it denying us this right. For too long now, we've been more or less not allowed to use the seaway as part of our economic situation.

There are a number of other things we view as being important and integral to the future. We are preparing to meet with the committee members who are the representatives of the nine member companies administrating or operating, if you will, the seaway. We are prepared to meet with the Minister of Transport to discuss these matters. We want people to understand and realize we're serious and sincere about this situation.

There are longstanding grievances out there and we don't expect this committee to resolve them. We don't expect the company or the group taking over to resolve them, but we're not relinquishing those things. Somehow, some way, they will be dealt with somewhere down the road in the very near future.

I'll stop at this point and I'll turn the other portion of the presentation to my colleague, Chief Two Rivers.

Chief Billy Two Rivers (Mohawk Council of Kahnawake): My name is Kaientarokwen, Billy Two Rivers. I welcome the opportunity to speak to the board, Mr. Alcock and fellow members.

I attended a court session just last week where another one of our issues, what we believe to be our inherent right, was being processed through a court in Ottawa. In a press statement, the legal representative for the Crown stated the Mohawks were naive and may have been foolish to believe the words of the white man and the promises given to us in the past. It is with this attitude that I come to this table. The whole process should be looked at with skepticism on our part.

As far as I am concerned, the self-serving process in place within this country for the dominant society is lingering in the forefront of this process. I can still hear the voice of the great promiser, Lionel Chevrier. He came to Kahnawake and said ``Let us expropriate your land. Let us come there. Let the seaway pass and you will have this and you will that.'' We are yet to see any of the promises the minister made at that time come true.

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There are two levels we're dealing with in this present situation. There is an administrative level. I look at the administrative level as being this new corporation, this new group of financiers that are coming through. And I look at them as being very dangerous, because their priorities are profit. Again, is that profit going to be taken at the expense of native lands and native people? I say no, and our community says no, and our nation says no. That doesn't mean that we cut off all working relationships, but certainly the interests of the Mohawk people have to be looked after, and it's our responsibility.

Administratively, the requests for profitability of that process again will be gone, directed toward the federal government, in terms of possible expansion, possible deepening of the seaway, etc. How will that affect our lands? We have concern about this.

As I came into the room, I think there was some discussion - and correct me if I'm wrong - on some of the profitability of taking over some parts of harbours or ports, etc., that I understand to be under federal jurisdiction. In our communities we do have concern about this.

Then you look at the law, and that's the political side of it. I think it's insulting that as an afterthought, and after bringing forth our positions, the government deemed that maybe it would give some consideration to the Mohawk concerns at Akwesasne and Kahnawake, and that it would include its fiduciary responsibility to continue to the same extent that it continued when the first expropriation of the seaway came through. I wonder. I wonder if our land is endangered.

We want to continue to remind ourselves that again, maybe that defence lawyer for the Crown was right, that we may have been naive. But we're sure as hell not naive today.

I still have before me some photographs of one of the last families to be forcibly moved by the seaway. Their only connection to the mainland, what had become the mainland, was a plank to walk on and off what remained of their homestead. They were told that if they were not out of there by tomorrow morning they were going to be bulldozed away. That's the Diabo family over here. We don't forget these things, and we are no longer naive.

I think we are going into the 21st century as people who are going to be part and parcel of the economic growth of our own land and our own resources, and the seaway is a resource that we intend to utilize. We would like the cooperation of this new administrative body that is going to be there. I certainly hope they don't think we will be relegated to a secondary position, in terms of economic development and economic growth, because we intend to be part and parcel of it.

As for the federal government, we are concerned about Bill C-44 and how it does not include or mention any binding responsibility to the relationship between the Canadian Crown and the Mohawk Nation. Words are fine. Chevrier is still floating around somewhere - maybe he's here, I don't know - but it still echoes in my ears when he came to Kahnawake and made those promises that we naively accepted at that time.

Gentlemen, don't think that we come here in an adversarial situation, but we're certainly here to remind each and every one of you that we are here, that we're not an afterthought and we're not an added clause in an agreement, or a reminder from the Minister of Indian Affairs that our interests will be looked after. We have too long seen that the government, in looking after our interests, is not looking after them at all and that it's our responsibility to look after our interests. That's what we'll be doing today and tomorrow.

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We don't want to put forth any threats here. I think what we are doing is putting down facts, the facts that we are here and that we're here to stay. I think that maybe it's time to take the stone-face attitude that I'm facing over here and give you a little bit of lightness, that despite the situation that is going on, the political upheaval in Quebec, I think the Mohawks can guarantee that the seaway will always be available to all of our white brothers, because it's going through our homelands, unless we get mad at you and you get mad at us. Then you guys are in trouble!

Thanks for the smile.

The Chairman: Perhaps I may say a couple of things before I turn it over to the other members of the committee. First, I noted, Chief Two Rivers and Chief Norton, that you both spoke in the Mohawk language when you started. I believe, Chief Two Rivers, you gave us your name. I trust you will be gentle with my last name if you ever try to translate it into Mohawk.

I've had a lot of time with the northern Cree in Manitoba negotiating and working with them on a variety of issues. They choose to call me the large guy with the mouse under his nose.

I appreciate the issues you're bringing forward. I don't understand them. I don't pretend to have any knowledge of them relative to the situation with the Mohawks. I've seen similar concerns brought forward by the actions of the federal government in other parts of the country.

We will be coming out to Kahnawake. I will be coming out to Kahnawake and other members of the committee will be invited to do so to see the situation firsthand, and I can assure you that we will raise your concerns in the report that we make on this particular bill.

I'd like to turn it over to members of the committee to talk. I would like to start with Mr. Comuzzi because Mr. Comuzzi has a great deal of interest in the seaway. He's from - Oh, excuse me.

Grand Chief Norton: May I suggest that the Grand Chief from the Mohawk Council of Akwesasne make his presentation?

The Chairman: I'm sorry, I didn't realize we had the - Go ahead, sure.

May I just make one comment? We've now used 40 minutes almost. If we're going to have any opportunity for questions - and I know that Mr. Comuzzi definitely wants to discuss some of this with you and I know Mr. Crête does and Mr. Gouk - we're running up against some of our time.

I'm sorry, Chief Roundpoint, I didn't realize that Chief Two Rivers this morning was not from Akwesasne.

Grand Chief Russell Roundpoint (Mohawk Council of Akwesasne): [Witness speaks in his native language].

It is my pleasure and my privilege to extend greetings and warmest wishes from the people of Akwesasne to this committee.

There is a prepared text. I will gloss over it, hit the high points and then I will deviate from it to make some points that I feel are appropriate, given the fact that this has to be approached on a person-to-person, humanistic level, as opposed to a government-to-government type of proceeding.

The Mohawk Nation's position, one that we share, has been forwarded to representatives of Canada, including the Governor General and a couple of cabinet ministers. We are trying to outline the fact that we are in opposition to Bill C-44. It's no secret that we continue to maintain and affirm our sovereignty over this land. We continue to assert that we have jurisdiction over our traditional land.

Bill C-44 will make resolution of difficulties that we've had, grievances that we have as Mohawks, particularly of Akwesasne but also of Kahnawake, that have been unresolved for almost 50 years. Bill C-44 will ignore our jurisdiction and our rights. Before we go any further with this, I would suggest on behalf of the Mohawks of Akwesasne that we take the time to resolve the longstanding grievances.

My colleague, Grand Chief Norton, made the comment that the seaway had really attained nothing for the Mohawks in Kahnawake. I would echo that statement. When the seaway came through Akwesasne, instead of coming to us and consulting with the people who were there at the time, we had one master builder talking to another person in Ottawa who purported to represent the Mohawks of Akwesasne and then bulldozed right through, without any regard for any consequences or effects for the people of the community of Akwesasne or Kahnawake.

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The resulting infrastructure, which was established for the benefit - it was a cause-and-effect kind of thing - of the European society, has had devastating effects on the Mohawk people. The change at Akwesasne was so profound that it changed absolutely everything. Everything went into turmoil and upheaval.

We had a society that really did not have a cash-based economy. Everything was done on trading amongst neighbours. That changed overnight. With the development of the hydroelectric projects the waters were raised. Much of our territory was submerged. No thought or any action was given to compensation. But I'm not here to talk about money. I'm here to talk about honour.

For almost fifty years we've been saying there are things we have to resolve. We see big ships coming through our territory, causing massive erosion problems on the islands we have left.

When I say the effect of the project was so devastating to Akwesasne and the Mohawk people, for me to compare it and turn the tables and put it on you, I would say for me to cause that much turmoil in your society I would have to take your modern transportation modes away from you. How much upheaval would there be if you had no vehicles, no cars, no trains, no planes to move about? There would be mass confusion, difficulties you could not even begin to imagine. That's what happened in Akwesasne; and it happened on our land, land that continues to be ours.

I have meagre resources, but I'm prepared to give you a dollar and say if you want to privatize it, then privatize it with us. We own it. You cannot give it to some multinational corporation that has only the bottom-line figure of looking at profit-and-loss statements. It's Akwesasne that owns that land.

There are installations along the system that belong to us. Millions of dollars are made annually as a result of these installations. Nothing comes back to Akwesasne, not one lousy penny. That's a shame.

When we talk about sitting together, working in partnership, following the spirit and intent of the Kahswentha, the two-row wampum, it seems the honour is flowing in one direction. I'm suggesting that now is the time for us to sit together and say ``Let's bring honour back to this. Let's take a look at the impacts the seaway has had on Akwesasne for the past fifty years. Let's take steps to remedy these difficulties.''

Oftentimes a remedy could be as easy as putting riprap along shore areas that are being damaged by the seaway traffic. Do you think we could get anywhere with that? Absolutely not. We are told time and again ``It is not our fault, it is not a consequence of us''.

When the hydroelectric project came about and generated cheap electricity, you had giant multinational corporations starting to establish themselves on the U.S. and on the Canadian side of the river. All of those had devastating effects.

I remember as a kid going fishing every day during the summer months. I fished every day and took fish home. Many times we would eat it or I would give it to my grandparents or other elders or to our neighbours. For me, to allow my children today to go fishing and then for me to eat that fish day in and day out - I'd be dead in five years.

The river we talk about, Cataraqui, used to mean ``the Area of Beautiful Water''. We can't ascribe that type of description to the St. Lawrence River today, because of what has happened. We can't sit here and wash that all away. I know the zebra mussels are trying hard to clean the water. I can sometimes see the bottom now. Some things are going to stand, but there are things we can resolve.

Because of that, Akwesasne proposes to establish a joint commission to seek to resolve the difficulties associated with Bill C-44. We are also seeking to resolve and remedy the situation of the past fifty years. That has to be done. The honour of Canada is at stake in this.

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There has been native upheaval across Canada for the past few years. Much has been made about the fact that natives are doing this, natives are doing that. There seems to be a campaign of negative press saying that we are spoiled and that we always want this or that. All we want is our fair share.

Let's not forget where the resources came from. Let us not forget who are the owners of this property. We have gotten to the stage where the tenants are suddenly telling the landlords what needs to be done. We have to take the step of working together, of resolving issues and moving ahead, because our ancestors, when they greeted the European man, extended the hand of friendship to assist them. Otherwise, the Europeans would not have survived. They did not say ``Welcome - how long are you staying?'' They said ``Welcome, brother.'' Over time brother became my children, children of the king, but that was only after you had everything that we had.

Now it is time to go back on an equal footing, an equal partnership, to resolve a lot of what is happening.

I had occasion to speak to a community elder the other day and I mentioned that I was coming here to talk about privatization of the seaway. I found the elder's remark to be right on the nose - that Canada appears to be for sale. There are certain things that are for sale right across the country. Air Canada was for sale, and now it is the seaway.

Ladies and gentlemen, and I'm speaking to everyone here, Mohawk lands are not for sale. We don't have enough left. We need to sit down together. I'll say it again: the honour of Canada is at stake. And we certainly hope the principles of Kahswentha will be honoured as we move ahead.

The Chairman: Chief Mitchell, I notice that you are also listed as a presenter. Do you have anything you wish to add?

Chief Mike Mitchell (Mohawk Council of Akwesasne): I'll take one minute.

I want to qualify everyone's understanding of the Kahswentha or two-row wampum. It also refers to co-existing of peoples, of nations, and that at any time there are differences, they will be linked by a chain that will pause. That means they will sit down and deliberate and fix what is wrong.

Generally, we're here today to point out the things we see that have been wrong. We see an opportunity to dialogue. We are well acquainted with the fact that we also have to defend our position. We have to defend our future generation. So with that in mind it means a lot to us what the elder spoke of, that we will co-exist. Today I think the need to co-exist and to dialogue should mean a lot to everyone.

With regard to the pictures that Chief Billy Two Rivers brought out, I would request that they be entered into the record.

The Chairman: Will you leave a set with us?

Let's begin with Mr. Comuzzi.

Mr. Comuzzi: Thank you, ladies and gentlemen, for the excellent presentation and for the insight that you bring.

Mr. Chairman, you and I were coming in from the airport last night and we were talking about always having to check your premise when you begin an argument.

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You folks making the presentation today are assuming that we on this committee know what's going on. We've been sent out to have interviews across this country on Bill C-44. Bill C-44 includes one clause on the Great Lakes and St. Lawrence Seaway system. We have not been told - I know that Mr. Jordan and Mr. Cullen have not been informed, I'm not sure about Mr. Keyes, Mr. Alcock and Mr. Crête, and I'm sure Mr. Gouk has not been told - that on item four the Minister of Transport has entered into a letter of intent with nine people to turn over exclusive use of the seaway to these nine people. We know this unofficially; we have not been told formally.

Mr. Gouk, am I correct in that? Mr. Jordan, am I correct in that? Mr. Cullen?

Other than this letter that has just been put in front of us dated October 22, which is yesterday, that's the first document we have that the Minister of Transport has entered into a letter of intent with what is called the users group for exclusive jurisdiction on the Great Lakes and St. Lawrence system.

So when you say you're different from us, in some instances that's not the truth, because we have not been informed, nor have we been consulted with respect to this issue on the Great Lakes and St. Lawrence system.

Mr. Chairman, have you been informed of this?

The Chairman: I hate to share my ignorance with you, Mr. Comuzzi, but I have not.

Mr. Comuzzi: So we're together to find out what's going on with this very important issue. You may know more about this than the Standing Committee on Transport.

Grand Chief Roundpoint: Mr. Chairman, in order to assist in the familiarization, I would extend an invitation to all committee members to visit Akwesasne. I'm sure my colleague Grand Chief Norton will also extend an invitation. We can take a firsthand look at some of the devastation and we can provide you with background information to enable you to understand the Mohawk position.

Mr. Comuzzi: I accept. I would like to do that, Mr. Chairman. As soon as we can do it, I think it would be beneficial.

I would like to ask a couple of general questions. This is for information. What is your relationship with the tribes in the United States - if I use the wrong words, please excuse me - with the Mohawks in the U.S., on the other side of the river?

Grand Chief Roundpoint: Akwesasne is a unique community, but Akwesasne is only one community within the Mohawk Nation. There are many. There is Kahnawake, Kanesatake, and several others. Our historical government, the one that was here upon the arrival of the Europeans, is the Mohawk Nation. They are still in existence. They are the national government for the Mohawks.

As I said, Akwesasne is a unique community in that our territory encompasses lands in what is claimed to be the jurisdictional areas of Ontario, Quebec, and New York State. We have five outside competing and conflicting jurisdictions in Akwesasne.

Our relationship with our Mohawk brothers on the U.S. side is essentially that we are a family. We do not look upon the borders that have been placed there as a means of separating us. We are one family and at every instance we will come together and arrive at a consensus on how we are to proceed.

Mr. Comuzzi: Yes, sir.

Chief Mitchell: There is an elected tribal council on the American side. On this issue, on the Mohawk, Hydro Ontario, the seaway, we have combined a single entity to look at all that, and along with the Mohawk Nation council we have committees that are one entity that look at everything and into both sides. Hopefully, that provides some clarification.

Mr. Comuzzi: Okay. So you have basically the same philosophy on both sides, the Americans and Canadians.

Let's talk about the fifteen locks - the two on the American side and thirteen on the Canadian side. How closely are you involved in those areas - and I'm talking about the Cornwall area, the St. Catharines area and Niagara Falls - where the majority of those locks are situated?

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Grand Chief Roundpoint: Are you asking about our involvement in the operations of the locks?

Mr. Comuzzi: For lack of a better word, your ``land claim'' where the locks are situated. Let's take St. Catharines as an example. Is that too far removed from the discussion, Chief Two Rivers?

Chief Two Rivers: If I may have a clarification on your question, are you speaking about the Côte Ste Catherine lock, the second lock in the seaway - St. Lambert, Côte Ste Catherine, Beauharnois? Are you talking about the Côte Ste Catherine lock?

Mr. Comuzzi: Yes.

Chief Two Rivers: It's on our territory in Quebec.

Mr. Comuzzi: How about in St. Catharines, right across from New York State?

Chief Two Rivers: You're speaking about Ontario. We're talking about -

Mr. Comuzzi: You're talking about Quebec.

Chief Two Rivers: We're talking about Kahnawake.

Mr. Comuzzi: Let's go into Ontario.

Chief Two Rivers: My brothers will take over then.

Mr. Comuzzi: Will you explain that to us when we come to visit you? Will you show us that?

Chief Two Rivers: Sure.

Grand Chief Roundpoint: To help you out, the areas of responsibility between Akwesasne and Kahnawake, the point at which Akwesasne begins to assume responsibility over territory, is at Beauharnois going west. So in that area, those installations fall within Mohawk territory at Akwesasne.

Mr. Comuzzi: I have a lot of questions, Mr. Chairman, but I don't have enough time. We're going to have to do this some other time.

The Chairman: Mr. Comuzzi, I appreciate your input in this. I've already indicated that I will go to the communities, and you and I could plan that trip together. Certainly that invitation is open to members of the opposition who would like to accompany us. For the purposes today - I know that Mr. Keyes has a supplementary question to one of the issues you're raising, Mr. Crête has indicated an interest, and Mr. Gouk is raising some questions too. I note that we are all running out of time.

Chief Two Rivers: We're not.

The Chairman: Historically, you've had more time than we have. Your sense of time goes much further into the past than mine.

Chief Two Rivers: As I say, the invitation is open. We'd like you to consider it as quickly as possible - the questions that are outstanding from you and other committee members. I already find it a bit adversarial when you extend the invitation to the opposition. I thought you guys were all working on the same team. Your party politics and all that -

The Chairman: Chief, I appreciate that observation, and gosh knows I've been inviting Mr. Crête and Mr. Mercier to come onside for a long time.

Chief Two Rivers: Hopefully, you can come as quickly as possible.

The Chairman: Absolutely.

Chief Two Rivers: Make arrangements and we can detail it and have a good discussion.

Mr. Comuzzi: Mr. Chairman, in advance of us getting there, you said you weren't interested in hampering the progress but that you want to participate in the future. If the future was some organization that involved both our friends in the United States and in Canada who have some involvement in the seaway, plus you obviously have a vested interested, some kind of tripartite arrangement that would administer the affairs of the seaway - just put that in your head and see if it makes any sense to you.

Grand Chief Roundpoint: That's what we had in mind when we suggested the joint commission. On the matter of how we can go further, I should advise members of this committee that previously in Akwesasne we have had, under the joint invitation of Kahnawake, the Mohawk Nation and the tribal council, a sitting of the parliamentary standing committee. We had the aboriginal committee in Akwesasne before, so an official sitting has been done before and I would invite you to have another.

Mr. Comuzzi: Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Comuzzi.

Mr. Keyes, you had a supplementary question.

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Mr. Keyes: Yes, Mr. Chairman, I certainly did. I just wanted to correct the record. Mr. Comuzzi, my learned colleague and friend, who has much more life experience than I -

Mr. Comuzzi: He means I'm older, Mr. Chairman.

The Chairman: I know exactly what he means.

Mr. Keyes: I just wanted to set the record straight for our witnesses and anyone else who was here during Mr. Comuzzi's remarks. In fact, the Minister of Transport issued a press release when the intention by the Government of Canada was to enter into negotiation with an operator users' group to run the St. Lawrence Seaway system. That was made public.

I know Mr. Comuzzi has a passion to get hold of the letter of intent particularly and find out exactly what it proposes, etc., but quite frankly, judicially it's still a matter of negotiation between the operating group and the minister's office. Much confidentiality still has to take place during that process. There was an open public declaration of this letter of intent and who the players were and where they came from, including one player from own town of Hamilton.

All that being said, Mr. Chairman, I just want to thank Chief Joe Norton, Chief Billy Two Rivers, Grand Chief Roundpoint, and Chief Mitchell for their passionate submission, probably the most passionate submission we've heard in this committee. I'm certainly more sensitive to their concerns and I have a better understanding of their heritage. Time, as you well know, is our best teacher and history has taught us not to ignore any members of any one of our communities, not to be exclusive but to be inclusive.

I want to assure the witnesses that everything remains the same. Bill C-44 provides for the opportunity for a change solely in the operation of the seaway. There are larger issues that I believe have to be resolved between first nations and Canada. Of course it's not the intention of this legislation to renegotiate or resolve the history of that relationship between them and the ports and the seaway, but I want to say again, the attempt to commercialize the St. Lawrence Seaway operation will not change, is in no way going to compromise, in no way going to jeopardize, the federal responsibilities concerning first nations.

Mr. Comuzzi: Mr. Chairman, I should defend myself on the point, please.

The Chairman: Why not?

Mr. Comuzzi: I don't care. I'm not going to sit here and take that nonsense.

You should understand that Mr. Keyes is parliamentary secretary to the Minister of Transport and therefore has to espouse his views or he doesn't sit in that position. He can defend the minister all he wants in this particular instance, but it's absolutely not correct. We don't care what the letter of intent says, and whether they want to make it exposed to us or whether they don't want to make it exposed to us is neither here nor there. If we are set on an agenda to review certain legislation in this country every document should be made available so we can come to a reasoned, rational, logical decision.

Mr. Keyes: That's what you're doing now, Mr. Comuzzi. That's exactly what you're doing now with this bill. You have every opportunity.

The Chairman: As you can see, gentlemen, the opposition is among us on this issue.

I note that this is a point of debate. I know you have a certain position and Mr. Keyes has a certain position, and it's a debate we'll try to get into in an orderly fashion.

I'd like to give Chief Roundpoint the opportunity to respond.

Grand Chief Roundpoint: Before I go too far, I would like to request that our written submission and the attachments become an official part of the record. Because of time constraints I did not read it into the record.

About BIll C-44, certain clauses of this bill, quite frankly, insult us, and to a certain extent frighten us. One of the more contentious parts of it is that the minister will have the authority to expropriate additional lands. Not to be adversarial, I will say that will never happen. It cannot happen. Therefore we must raise the fact that we object to that right at the outset.

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I hope we can proceed on the basis that we understand each other and that we come to some sort of an understanding and make efforts to resolve past grievances and move further ahead.

The Chairman: Thank you.

[Translation]

Mr. Crête.

Mr. Crête: The beginning of your presentation made me want to learn Mohawk. If any of you are interested in an exchange, we could teach you a bit of French and you could teach us some Mohawk. That would be great.

You have raised an important question, as evidenced by the current imbroglio. I personally do not find the Minister's letter in any way reassuring for you, particularly when he says that Mohawk activities should not be affected by the commercialization project. Obviously, "should not" does not mean the same thing as "will not". So, I understand your claims - indeed, I believe this is such an important issue that we really should look at it before we proceed with clause by clause consideration of the Bill.

We have scheduled November 5 for clause by clause, but given the importance of this issue, we really should meet with you before proceeding further in order to avoid embarking on something that could prove useless.

That brings me to my question. I think we have been given ample proof this morning of the fact that Canada is a country that can never seem to solve its problems. You have given us a clear demonstration of that. I would like to know whether the joint commission you are suggesting in your model would be a tripartite commission involving Canada, the U.S. and the Mohawks, or whether it be some other type of commission? What kind of role do you see for yourselves in this process, just so that we have a preliminary idea of your vision of how it would work?

I have one last comment to make. If the government were to pass Bill C-44 without making the changes you have suggested, would you seek other means of ensuring that justice is done, from your perspective?

[English]

Grand Chief Roundpoint: Thank you very much, sir. I do appreciate the thought that you would like to learn Mohawk. It is a very difficult language, much as I find French to be a difficult language.

The commission, committee, or whatever name you would like to give it - round table or whatever - would be in the forum that would provide for the best opportunity to arrive at equitable resolutions to difficulties. It would have to have the authority to act on behalf of Canada and to act on behalf of the Mohawks, including the Mohawks who currently reside on what you consider to be the United States, because we do not act on a faction-by-faction basis. When we act, it is for the Mohawks in our entirety.

We must operate under the principles of the good mind and maintain the fact that what we do must be taken into consideration for seven generations ahead. What we do cannot have negative ramifications for the children yet to come. So whatever form you want it to take, I am quite comfortable to receive your suggestions.

One thing I would like is that we establish this commission, committee, or whatever you want to call it in a timely fashion. I hope we can begin sitting before the Christmas season is upon us.

In response to your other question, there are other options that are available to us. We are all familiar with the court system and other systems, and I am optimistic to the point that I would not dare go further into these options, because I do believe that, as reasonable people, the opportunity is amply there for us to resolve any difficulties we may have. Thank you.

.1210

[Translation]

Mr. Crête: I understand from your comments that you're in favour of a nation-to-nation relationship within the commission, rather than a model based on private sector interests taking over management of the Seaway; that being the case, State involvement would be far less significant.

I just want to repeat my last question, which you may have forgotten. If Bill C-44 were to pass in its present form, would you seek other ways of ensuring that your rights are respected?

[English]

Grand Chief Roundpoint: In an effort to make sure that our rights are in fact recognized, we are looking at knocking on any door available to us or even on those not available to us. When I say rights I mean the rights of the future and the rights of the past.

I cannot emphasize this enough. As I sit here my feeling is one of hope. I maintain the utmost hope that by discussion we can arrive at mutually satisfactory resolutions to difficulties. You have asked if I would take other action if it becomes necessary. And in defence of the people of Akwesasne, I fear I would have to say yes, we would take any other action that would be appropriate to deal with this.

The Chairman: Thank you.

Grand Chief Roundpoint: Of course one of the options is the Canadian court system.

The Chairman: Absolutely. Chief Mitchell, do you wish to respond to that?

Chief Mitchell: Yes. We can assume many things in the future. Presently you have to be acquainted with the fact that there already are significant changes in the court the grand chief is referring to. In the last week or so the Adams Supreme Court decision on a fishing case in Akwesasne has been made known and has reaffirmed the aboriginal right to question more strongly than ever before. I'm currently in Ottawa at the federal court level about border crossings. Other things will come into focus.

One way or another, should anybody try to think of advancing this forward at a faster clip, they will have to realize that there will be significant steps taken by the Mohawk Nation, whether it's through the courts or at other levels. And on this issue, it can go all the way up to the UN level, to the international level.

But we're here to say let's start with dialogue in a commission format and see how far we can go in informing each other and in giving understanding of our respective concerns to each other.

The Chairman: I appreciate the fact that you're not raising the other issues and that in fact you're coming here in response to us.

Grand Chief Norton: I have just a brief comment in relation to Mr. Crête's comment and the general discussion that's going on over here.

Mr. Anderson's letter to Mr. Keyes doesn't give us the kind of reassurance we're looking for in terms of explaining to us or at least assuring us that what's in Bill C-44 will reflect what's in Mr. Anderson's letter.

As a matter of fact, there's some additional material that we received. There's a communiqué here and one paragraph states that the commercialization of the seaway will not affect federal responsibilities concerning first nations, including constitutional recognition of treaty rights, nor will it affect current federal agreements or the capacity to negotiate future agreements pertaining to first nations. This is in a communiqué from Mr. Anderson. It was released on June 10, if I'm not mistaken.

We've become aware of this just recently. As a matter of fact, we just saw this today. It wasn't with the original communiqué that was released on June 10. We were just made aware of this today. That's fine to have this said by Mr. Anderson's ministry, but on the other hand we don't see it reflected in the law. You can make it a policy, but at the same time, policies come and go, and in ten years from now when the users' group requires something different -

.1215

And this whole idea of a not-for-profit corporation is fine - the corporation may not make money, but the people who are the users are going to make the money. In terms of the law being passed, that doesn't give us any reassurances. Things that are being put in there right now in terms of policy - as well as a letter from the minister himself - give us no comfort.

The Chairman: I will deal with a question from Mr. Gouk and then I want to come back to one issue just before we close.

Mr. Gouk: Ladies and gentlemen, I'm very pleased that I was able to hear you today. I come from British Columbia, which is about as far away from this problem as you can get and still be in this country. It is really easy to sit on the outside and dismiss the kinds of things we hear and the kinds of claims you make. Even in preparation for hearing you today, I tended to think your appearance here was inconsequential.

You have done an excellent job. You have presented your position in a way I did not expect. It is going to mean some deep thought about this for me. Obviously, there's much more to it. I would like to think that I sit far away in an area not affected by this. Your approach today was very reasonable and, as I say, not what I expected. We are going to have to talk a great deal more about this. I'm not going to say I agree with all you say, but in light of hearing you today I'm certainly not going to say that I disagree with all of it either.

I have perhaps two questions. First of all, if there were an appropriately worded section in this legislation that deals with what is in the communiqué but not in the legislation, if that were encompassed into the body of the legislation - I realize you want something that is going to push this issue ahead, that you're growing impatient with the other methods and that you would like to use this as the catalyst that would get it going. But would the assurance that it at least will not minimalize or take away anything from your position go a long way towards resolving the issue regarding Bill C-44 at this point in time?

Grand Chief Roundpoint: For myself, unfortunately it would not, because we have fifty years of past grievances that must be dealt with. The passage of Bill C-44 would make the resolution of those past grievances much more difficult.

To perhaps assist the committee, I suggest that commission that we form work towards establishing a modern treaty. There is an example. It is the International Boundary Waters Treaty Act between yourself and the U.S.

Forgive me for suggesting that this time for our side we would have to insist that legislation be passed guaranteeing what was agreed upon from your side, given history, unfortunately.

Grand Chief Norton: If I may, I will give you somewhat of a principled, philosophical response rather than something of substance, but I think it leads to substance.

When we look at laws that are passed in this country generally, sometimes we're too quick to jump to the immediate effect. There's a cause and then there's an effect. So we looked at the immediate effect and we looked at the long-term effect from the past. What I'm getting at is that even in the constitution of the country, in a sense, which has a treaty and aboriginal rights clause, we look for something that in a sense restrains governments and big business from imposing on us. I think that's what we're looking at in terms of this law.

There is a process by which Chief Roundpoint and Chief Norton and whoever else can say okay, there is a process there by which we can deal with our situation in far different circumstances than you would with the non-native community ten miles downriver from us or ten miles upriver from us. The circumstances are different.

.1220

We are looking for a way that would eventually lead to more specific ways of resolving the problems and creating a better relationship. Does that make sense?

Mr. Gouk: Yes, it does. I actually read as fast as I could through much of the documentation. I have many questions that initially came to mind, but in light of your presentation I would rather reflect on that for a bit and then I think there will have to be more discussions on this.

The Chairman: I'd like to make one point and ask one final question. This goes beyond - I think Mr. Keyes rightly made the point that this committee is charged with some very narrow responsibilities relative to legislation.

The Mohawk people have a special relationship with the federal government. They have a great many relationships with the federal government and a great many guarantees of certain rights that in one sense it is also the responsibility of Minister Irwin to be cognizant of. I will be speaking to Minister Irwin and I've been talking to the clerk about contacting the chair of that committee, because there's more than one entity involved here on an issue like this and I think we want to make sure we've covered it off in a way that we don't keep bumping up against these kinds of things. We intend to deal with some very straightforward issues like the commercialization of port operations and that.

You talk about Bill C-44 because the seaway stuff is within that bill, but you're not raising any concerns about the port of Montreal, or Quebec, or Halifax. Your concerns are specific to the St. Lawrence Seaway where it goes through your lands, and some other historic arrangement. I think it's important to differentiate that, because the seaway is a section within that larger bill.

Grand Chief Norton: Well, Montreal is more our territory, so the -

Some hon. members: Hear, hear.

The Chairman: Mr. Cullen, did you have a comment?

Mr. Cullen: Thank you, Mr. Chairman. I also want to thank the chiefs for their presentation. I found it very powerful and very informative.

I want to comment on a comment made by my colleague opposite here, with the Bloc Québécois. I was quite interested in the sort of generosity of spirit that seemed to be emanating from across the table, and I'm hoping that - I'm sure I'll be following, as will the first nations people, to see that same generosity of spirit prevails in the discussions that follow, because to my knowledge it doesn't seem to have been prevalent in some of their other policy positions of their colleagues in Quebec City.

I also would like to note for the record that I don't think it totally appropriate to put a question to you in terms of what actions you would take if your concerns are not addressed, because I think that's why you're here and that's why we want to discuss it further. So I appreciated your moderation, and I look forward to the discussions that take place.

The Chairman: Mr. Keyes, did you have one comment?

Mr. Keyes: I want to let everyone know that we have a copy of the press release that was issued by the Minister of Transport in regard to the letter of intent between the operating group and the -

Mr. Comuzzi, did you want to put your hand up and ask questions or something?

Mr. Comuzzi: You go ahead.

Mr. Keyes: Mr. Comuzzi, far be it from me to be propagandizing. I'm just trying to clarify a point you raised that we were in the dark about as much as our witnesses. But the fact is that on July 17 the minister released this press release, and it has within it the body of the information that was distributed not only to the press, but of course to the members of Parliament. I will make that available to anyone who requests it.

The Chairman: Thank you, Mr. Keyes.

Thank you very much. It has been time well spent.

Grand Chief Roundpoint: Thank you.

The Chairman: For your information, members, we'll recess now and reconvene at 1 p.m. under the chairmanship of Mr. Comuzzi.

.1224

.1313

[Translation]

The Acting Chairman (Mr. Cullen): We will now begin. I want to welcome Mrs. Brisson and Mr. Paré of Air Canada.

[English]

The practice we've been following is if you could keep your comments to ten minutes or so, if that's possible, that leaves some time for questioning. But basically the floor is yours to use for half an hour or so as you wish. If we have time for discussion, that would be good. So please -

Ms Christiane Brisson (Director General, People Involvement, Air Canada): Thank you very much, Mr. Chairman. Good afternoon, ladies and gentlemen.

[Translation]

I guess I shouldn't say "ladies", because there are no ladies at the table.

[English]

Before I go any further, I would like to excuse myself in front of the French-speaking members of the committee.

[Translation]

Unfortunately, we had some serious computer problems. We lost much of our software and were therefore unable to have French copies for you this afternoon. Our apologies.

An Hon. Member: We can handle that.

Mrs. Brisson: Thank you very much.

[English]

First, on behalf of Air Canada employees, I want to thank you for this opportunity to speak to you today.

.1315

At Air Canada, it is my responsibility to work with the employees of Air Canada and involve them in activities of the company in such a way that they understand Air Canada's corporate mission and support its objectives. It is also my responsibility to represent the views and interests of employees and their families to decision-makers and all interested parties.

It is that part of my responsibility that brings me here today to report to you on how Canada's new international air policy and the decisions taken since its introduction in December 1994 have impacted on my 20,000 colleagues at Air Canada and their families.

I think it is necessary to first acknowledge the substantial efforts made in 1994 by Minister Young and his team at Transport Canada to address the problems that plagued Canada's air transportation sector under the previous division-of-the-world policy.

Now, after almost two years, the results of this new policy are very mixed. On the one hand, we see some notable initiatives to make Canada's airline industry more competitive and market responsive. The Canada-U.S. open skies agreement is a successful example that comes to mind. On the other hand, I can honestly say on behalf of the employees at Air Canada that the 1994 international air policy that intended to make Canada's air transport industry more competitive and market responsive has not succeeded in removing politics from government decisions impacting the Canadian airline industry.

In our view, Canada's airline industry remains polarized and as political as it was before under the division-of-the-world policy. I would even go as far as saying that the east-west antagonism has been magnified. Beyond a shadow of a doubt, the physical location of an airline's headquarters and its employees is more important than service to the Canadian travelling public, contribution to economic growth and competition.

The new international air policy has enriched lobbying and politics as the instruments of success for airlines, rather than their ability to implement new services, create jobs and benefit Canadians. Maybe you can have a look at the document you have that states the economic benefits to Canada of increased Air Canada frequencies to Hong Kong. With three more flights per week, you would see how many jobs this would create.

I don't want to dwell on negatives. Rather, I would like to use this opportunity you offer me today to summarize the steps we, the employees of Air Canada, urge this committee to consider in order to get Canada's international air policy up to its cruising altitude.

First, let's recognize that all airlines are fully privatized in this country. This is a 100% privatized investor industry. We in the airline business have done a great amount of work and gone through a lot of pain to make it that way. So we urge you to let this private industry be fully competitive and permit it to do its job without government interference.

Let's stop protecting airlines from competition or favouring foreign airlines over Canada's airlines. The most blatant example has to be Canadian government interference on the Hong Kong route, where Cathay Pacific, Hong Kong's flag carrier, remains the big winner with 26 flights a week. Canadian Airlines International has nine flights a week, while Air Canada is held back at an artificial cap of four flights a week. Secondly, Tokyo, Japan's largest market, is closed to Air Canada. Both are limitations imposed on Air Canada by the Minister of Transport.

.1320

Please pay attention to Air Canada and other carriers such as Air Transat and Air Club, to name just a few, who have voiced their concerns over the policy and hope that some positive changes will take place.

Let's recognize that the restrictive threshold for dual designation of carriers is short-changing Canada of jobs, services and fair competition in the airline industry. At the very least, let's make the 300,000 passenger threshold for a second designation carrier fair, consistent and not a tool for discriminating against some airline.

This restrictive threshold approach is not limited to a single route. It's become an ugly epidemic of government interference. As the threshold only includes passengers travelling on scheduled flights and excludes all charter traffic, Air Canada is shut out of Mexico, a full-fledged member of NAFTA. Italy, China, Taiwan, Thailand, all of Latin America, and Amsterdam are also closed to Air Canada, even though we can make a sound business case on all these routes based on existing international air policy criteria.

Let's also make this country's international air policy fair, open, transparent and easily understandable to the employees of Canada's airlines. That means all Canadian scheduled carriers should get an equal chance at making applications for designation. It also means that service applications should be open to public scrutiny. It means that the evaluation and recommendations on carriers' service applications should fall to a government agency like the Canadian Transportation Agency before ministerial assessment.

It means that decisions on carriers' service applications should be rendered with supporting evidence and rationale so that everyone in the air transport community would understand how the decisions were arrived at, and the benefits to Canada and Canada's carriers would be clearly identified. Most of all, it would mean less discretionary and subjective interpretation on the part of the minister and more accountability.

All these measures seek to achieve one objective - to once and for all disengage the federal government from interventions in international air transportation matters. This would bring to international air services the same integrity that is shown on domestic and transborder air services.

Let's recognize that only Canada's airlines, not foreign airlines, can create jobs and investment in this country. Only Canada's airlines can support the economy in that way. The best example is what Air Canada has done by buying Canadian-made regional jets from Canadair. Surely Canada's international air policy should recognize this. Surely our airlines should have at least an even chance of penetrating all of the world's markets.

I invite you to see how many jobs and how much economic benefit, trade and tourism has been created by Air Canada and its employees where there is a level playing field - the U.S., Europe, or Canada.

Over the past two years I have spoken to hundreds of Air Canada people across the country. To this day, I have not met one who understands why the federal government is still protecting some airlines from competition in this country and at the same time preventing others from generating significant economic benefits to Canada.

At a recent worldwide conference held in Montreal on June 10, 1996, entitled ``Globalized Economies - Competitiveness: Stakes, Myths and Reality'', key ministers of the Government of Canada reaffirmed Canada's commitment to pro-competitive policies.

.1325

Against this background, the Canadian government's position on the air transport service sector, particularly internationally, remains highly restrictive. Things have to change. The government must disengage itself from international air transportation as it has done for domestic and transborder air services.

That is the question I leave with you today. I thank you for your attention and your interest in the issue.

The Vice-Chairman (Mr. Comuzzi): Thank you, Ms Brisson.

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

Mr. Jacques Paré (Manager, International and Industry Tariff Affairs, Air Canada): Not really, Mr. Chairman. We will welcome your questions, if you have any.

The Vice-Chairman (Mr. Comuzzi): Mr. Keyes.

Mr. Keyes: Ms Brisson, do you know anything about bilateral air agreements?

Ms Brisson: Yes, sir. I am not part of the international department of Air Canada - Mr. Paré is - but yes, I do deal a lot with the people. They keep me informed.

Mr. Keyes: Are these bilateral things simple things, tricky things, complicated matters?

Ms Brisson: No, they are not.

Mr. Keyes: It's just a matter of picking up the telephone and calling Hong Kong and saying ``I want five flights to Hong Kong''?

Ms Brisson: No, Mr. Keyes.

If you want to give me a specific example, I can answer for you.

Mr. Keyes: Let's use your example of Hong Kong. What is the bilateral agreement and how did that take shape between the two countries?

Ms Brisson: There was a negotiation. The Hong Kong government was willing to have Air Canada fly daily to Hong Kong, but the restriction of four flights was specifically asked for by Minister Young at the time, and it was carried on by Minister Anderson.

Mr. Keyes: What frequency level did Air Canada originally request to fly to Hong Kong?

Ms Brisson: When Air Canada first requested rights to go to Hong Kong, it was many years ago. At that time Cathay Pacific was not operating 26 flights a week and Canadian Airlines was not operating nine flights a week. They operated up to 13 flights a week at one point.

The restriction on Hong Kong for Air Canada comes from the minister himself.

Mr. Keyes: But you neglected to answer my question. What frequency level did Air Canada originally ask for?

Ms Brisson: At the time, sir, Air Canada asked for four flights. But that's not a law. That's not set in cement.

Mr. Keyes: How many bilateral agreements does Canada have with other nations of the world? Are you aware?

Ms Brisson: No, sir, I wouldn't be able to tell you.

Mr. Keyes: Mr. Paré, do you know?

Mr. Paré: I would hesitate to quote a number, but let's put it this way. Canada has bilateral agreements with most of the countries in this world, the exception possibly being Africa.

Mr. Keyes: So are we talking about 65?

Mr. Paré: I was going to say about 60, yes.

Mr. Keyes: How many of those 60 does Air Canada have?

Ms Brisson: I wouldn't be able to tell you.

Mr. Keyes: Well, it's important to know how many. You wouldn't be able to know how many bilateral agreements Air Canada has? I find that rather odd.

Ms Brisson: Mr. Keyes, I don't know where you want to get at exactly with your question.

Mr. Keyes: I'm just asking a question. How many bilateral agreements does Air Canada with other countries?

Ms Brisson: What would it bring here if we were to give you the right number at this time?

Mr. Keyes: I'm trying to glean some information from the witnesses.

Ms Brisson: We're talking here of issues where there are serious problems, where the Minister of Transport specifically is unfair to Air Canada. I'm not talking of bilateral agreements, where it is fair for any carrier operating out of Canada on the international scene.

Mr. Keyes: Mr. Chairman, all I'm trying to do is to glean some information. As we understand it, Canada has about 65 bilateral agreements with other countries. Surely the executive of Air Canada would know how many -

The Vice-Chairman (Mr. Comuzzi): Would you undertake to provide this committee with that information?

Ms Brisson: Yes, sir, absolutely. We will provide the committee with that.

The Vice-Chairman (Mr. Comuzzi): Let's see if I'm correct, Mr. Keyes. The question is how many bilateral agreements Canada has entered into with other countries, and how many of those does Air Canada have, and to what destinations.

Mr. Keyes: On top of that, if the witness can provide the information, what percentage of that number does Air Canada operate? If they could provide us with that information, I think it would be most helpful to this committee.

The Vice-Chairman (Mr. Comuzzi): Can you do that, Ms Brisson?

Ms Brisson: Yes.

The Vice-Chairman (Mr. Comuzzi): It would be helpful.

Mr. Gouk.

.1330

Mr. Gouk: Thank you, Mr. Chairman.

There are 13 flights a week to Hong Kong with Canadian carriers right now.

Ms Brisson: That's right, sir.

Mr. Gouk: And there are nine for Canadian and four for you. If you were granted more, would it be in addition to the 13 or would it be part of the 13?

Ms Brisson: It would be in addition to the 13. It won't change anything for Canadian Airlines. Canadian Airlines has free access to Hong Kong. They could operate 25 flights tomorrow morning if they wanted to. There are selected -

Mr. Gouk: There are time slots available in -

Ms Brisson: If they have the right, sir, they could negotiate time slots - absolutely.

Mr. Gouk: That's like saying we can negotiate going into Kennedy - but we can negotiate all we want; if there are no slots we aren't going to get them.

Ms Brisson: Mr. Gouk, I can tell you that at every IATA schedule, Air Canada tries to get the slots in case the government, the Minister of Transport, gives Air Canada the right to fly three more flights. So if we can get those slots - and we don't even have the right to go now - we're just doing it in case - I think Canadian Airlines can negotiate more flights. Actually they were operating 13 flights before. They even planned to operate 17 flights at one point. If they elect not to do so, it's their business decision. It's not that they cannot, as far as slots or bilateral rights.

Mr. Gouk: What European countries do you fly into that Canadian Airlines does not?

Ms Brisson: None.

Mr. Gouk: None?

Ms Brisson: That we fly into?

Mr. Gouk: Yes.

Ms Brisson: Do you mean major markets?

Mr. Gouk: Yes, major, like Paris.

Ms Brisson: They have the right to go to Paris. They just elected to step out of the France market. They have equal rights to Germany. They go to the U.K. All other markets in Europe are under the 300,000 threshold.

Mr. Gouk: As I understood it, you made reference in your presentation today to the division-of-the-world program. At that time there was an agreement that certain countries would be Air Canada's and that you would have exclusive access to them.

Ms Brisson: At the time, sir.

Mr. Gouk: And Canadian Airlines had the same. They had exclusive access.

Ms Brisson: That's right.

Mr. Gouk: One of the areas they had exclusive access to and marketed was the Asian market. It was not particularly lucrative at the time, but that was their choice, for whatever reason.

Much of the European access or a considerable amount of the European access they got was through a questionable purchase of additional airlines at a time when their resources may not have suggested such a purchase. Nonetheless they did. It was buying an airline like Wardair that gave them access to some of the places they did not previously have. Is that not correct?

Ms Brisson: It was to three places - not some - where they wanted to go, which were France, the U.K. and Germany.

Mr. Gouk: Yes. So Air Canada developed their markets and Canadian developed theirs. Now, correct me if I'm wrong, but you're saying that you want to go into the market they developed and that you left alone while you were developing your markets. It's obviously a very lucrative market now. Maybe no one could foresee that at the time. That's the dilemma I find myself in. We want to be fair, open and equal, but at the same time, previous agreements created a situation where you had access to certain markets and they had access. They've developed theirs and you've developed yours and now they have one market that is particularly lucrative.

Ms Brisson: Yes.

Mr. Gouk: If there is so much business that it would allow you to go in there and have viable flights, does it not seem reasonable that your competitor would put additional flights on to take up that business? I'm sure they don't like to leave business sitting on the ground.

Ms Brisson: No, but that's a marketing decision. You have to go and ask them the questions, sir. If the policy changed from the division of the world to this new policy with a threshold of 300,000, it's because there was a demand. Now that all airlines are privatized and it's like that in the world, we have to be market-oriented. Otherwise no airline will be able to survive. It's not because we fly to Paris and London and Germany in today's world that we would succeed as an airline.

Mr. Gouk: I realize times are changing.

Ms Brisson: You're talking -

Mr. Gouk: You've brought forward some interesting points, but obviously we're going to have talk to the other side to hear their version.

The Vice-Chairman (Mr. Comuzzi): We're running a little late, and I know you have a lot more questions, Mr. Gouk, but we'll take them after the meeting.

Mr. Crête.

[Translation]

Mr. Crête: It is clear that the current government is determined to put Air Canada on trial.

.1335

I want to thank you for the clarity of your presentation and for expressing Air Canada's exasperation. It certainly takes courage to come here and tell it like it is.

Mr. Keyes' questions suggest to me that the Transport Committee may want to consider looking more carefully at this issue. Would you be opposed to the Transport Committee asking Air Canada and Canadian representatives to come and explain their positions so that we can try and determine, on behalf of all Canadians, what is really going on? The idea is not to put Air Canada on trial, but to analyze the overall situation and see whether there is unfair competition as a result of political interference - something we are all aware of, that we know the reasons for and that is directly linked to the Liberal Party's campaign fund.

Having said that, just to ensure that everyone has a clear understanding of the situation, Mrs. Brisson, could you tell us who owns Air Canada?

[English]

Mr. Keyes: That is out of line, Mr. Chairman. This is completely out of line.

Do you want to start getting political on this? Do you? We can start getting political -

The Vice-Chairman (Mr. Comuzzi): Just a minute, Mr. Keyes.

[Translation]

Mr. Crête: Mr. Keyes, I allowed you to speak when it was your turn earlier. Please be quiet! You have been talking absolute nonsense. You were very aggressive with Mrs. Brisson and now you're going to let me ask my question.

[English]

Mr. Keyes: I didn't get political. You got political.

The Vice-Chairman (Mr. Comuzzi): Mr. Keyes, Mr. Keyes.

Do you have a question?

[Translation]

Mr. Crête: You're the one that's been political so far! You're doing everything you can to keep Canadian in business by artificial means.

[English]

Mr. Keyes: It's obvious you're very frustrated.

The Vice-Chairman (Mr. Comuzzi): Mr. Crête.

[Translation]

Mr. Crête: Yes, I'm very frustrated by this whole situation.

[English]

Mr. Keyes: Yes, it shows.

[Translation]

Mr. Crête: Back to the question I was asking Mrs. Brisson.

Can you tell us who owns Air Canada so that it will be clear to everyone that we're not talking about separatist interests or anything like that? Who is Air Canada?

Secondly, would you have any objection to our taking a closer look at this in the Committee so that we can clarify the situation once and for all?

Mrs. Brisson: First of all, Mr. Crête, I want you to know that Air Canada employees made the decision to appear today.

I realize that our company is being very liberal by allowing its employees to voice their own views, but I think that is important in an environment where services are completely privatized.

I believe Air Canada has 65,000 or 68,000 shareholders. I cannot swear that figure is accurate, but I believe it's approximately that number. Also, some 67 per cent of Air Canada employees hold shares in the company.

So, it is important for us to ensure that our company is treated fairly by the Department of Transport. It's very important. We are all aware of the fact that there is protectionism going on, and that international policy is being used to protect a carrier from competition - healthy competition, I might add. At Air Canada, we work hard.

[English]

The Vice-Chairman (Mr. Comuzzi): Mr. Mercier.

[Translation]

Mr. Mercier: I would be very pleased to accede to Mr. Keyes' request that we not get "political" here, but when you're talking about relations between the government and Air Canada, it's practically impossible to avoid using that term to explain certain motivations.

Your request that the federal government disengage itself from intervention in international air transportation matters is one that we thoroughly approve. We would like to see rationality and economics take precedence over - I won't say "politics" - partisanship.

Now you mentioned Hong Kong; that is a blatant example. Perhaps you could comment on a more recent decision regarding Prague?

Mrs. Brisson: There is one thing I want to add. This is all we really want at Air Canada, and I am certain that management would tell you exactly the same thing: we want to have a chance to compete. Putting people on planes and bringing them to their destination safely, with the best possible service and with Canadian pride is what we do best at Air Canada. We don't always have an opportunity to say so, but what we really want is to do the best we possibly can with what we've got.

The issue of Czechoslovakia is rather delicate. It has to do with the international policy that says that when you're given a designation for a country where there are 300 000 passengers or less, you have one year to make your new route operational after being granted the designation.

.1340

It's important to remember that the aviation sector is constantly evolving. Not so long ago, we had an international agreement with Air France. But a change was made and now we have an agreement with Lufthansa. Before we had an agreement in place with Lufthansa, we could not put the Czechoslovakia operation in place. It was simply impossible.

Also, bilateral negotiations between Czechoslovakia and Canada had not been finalized. Last March, if I'm not mistaken, a meeting was held to finalize those bilateral negotiations. The fact is, though, only a full year after the negotiations were completed are we actually able to operate that route.

So, first of all, the negotiations had not been finalized. Secondly, Air Canada did not have an international partner with whom to operate the route. Once we had a partner, we were unable to announce within a 24-hour period that we would be providing service to Czechoslovakia through Frankfurt, Frankfurt being the transit hub. But first we had to get Germany to agree, Lufthansa to agree, and the same thing in Czechoslovakia. All of that takes time, because it's a very elaborate process.

[English]

The Vice-Chairman (Mr. Comuzzi): Thank you for that comprehensive answer, Ms Brisson.

[Translation]

Mr. Mercier: Were you able to explain all of that to the government in Ottawa?

Mrs. Brisson: Well I hope the Air Canada people who talked to Foreign Affairs were able to. Whether they heard us or not is another matter.

[English]

The Vice-Chairman (Mr. Comuzzi): Thank you.

I want to explain to Mr. Crête and Mr. Keyes that some of you folks weren't here this morning and I got into a bit of an argument. The thing both of you have to guard against is if you keep arguing, you have to take over the chair.

Mr. Keyes: I'm not allowed to.

Some hon. members: Oh, oh!

The Vice-Chairman (Mr. Comuzzi): That's very interesting.

Ms Brisson, you've undertaken some of the questions and you will supply us with the answers. I think there's some further follow-up on Mr. Crête's position. I don't think Mr. Cullen or Mr. Jordan have anything to add to the conversation. You've done a very good job of bringing this report to our attention and I thank you for taking the time.

Ms Brisson: I thank you, Mr. Chairman. May I just add a little something?

The Vice-Chairman (Mr. Comuzzi): You have 30 seconds.

Ms Brisson: We talk a lot about job creation, and it's the mandate of the Liberal Party on top of that. Three additional Air Canada flights to Hong Kong would create 95 very well-paid jobs in Vancouver. The Air Canada employees of Vancouver deserve to be respected. They live in western Canada; they are good people; they are professional people. They need their chance.

The Vice-Chairman (Mr. Comuzzi): Thank you.

I don't go to Hong Kong much, but if you could facilitate that trip to Rome or Milan, that would be good.

Ms Brisson: Oh, we'd love it, sir. If you settle the problem, we'll fly you to Rome.

Some hon. members: Oh, oh!

The Vice-Chairman (Mr. Comuzzi): The only way that would be proper, Ms Brisson, is if you flew the whole committee to Rome.

Some hon. members: Oh, oh!

Ms Brisson: We'd do that, Mr. Chairman.

The Vice-Chairman (Mr. Comuzzi): Well, there you go. Let's all applaud the chair.

Ms Brisson: Thank you very much.

The Vice-Chairman (Mr. Comuzzi): Thank you.

The next presenters are from the Omega Group. We have Mr. Savard and Mr. Verdi.

Welcome, gentlemen. Are you familiar with the format? The usual process is about a ten-minute presentation. That allows the members of the committee time to ask you some questions. Thank you.

.1345

[Translation]

Mr. Serge Savard (Vice-Chairman, Political Action, CAW-Quebec Local, Omega Group): Mr. Chairman, members of the Committee, good afternoon. My name is Serge Savard and I am a shop steward responsible for political action for our group, the Omega Group, which represents the Executive Committee of Local 4334 of the Canadian Automobile Workers. We represent men and women working for CN Intermodal, as well as employees from other branches of CN.

Our group would first like to thank the Committee for giving it this opportunity to express its views and concerns about the current status of transportation in Canada.

We will be making some comments regarding the legislation but do not have a written brief to submit with respect to the Canada Marine Act. Having more modest ambitions, we will be content to draw your attention to certain aspects of the geo-political context created by the Free Trade Agreement that are likely to affect the development of the port system and should thus be reflected in any transportation legislation, given their critical importance.

We represent men and women railway workers. Our group has developed a certain amount of expertise in the area of intermodal transportation. We have also attempted to prepare an overall analysis of the current status of Canada's transportation system with a view to finding ways of achieving an integrated transportation policy here in Canada.

Ladies and gentlemen members of the Committee, our group strongly believes that development of the port system, particularly in Eastern Canada, will only be guaranteed if its operations are fully integrated with those of the railroads in an intermodal environment.

We believe that these two transportation modes are indeed interdependent and we strongly advocate a policy that would create conditions favourable to the development and expansion of an integrated marine-rail system sensitive to regional needs and the requirements of import-export traffic.

However, as regards commercialization of the St. Lawrence Seaway, one of the issues addressed in Bill C-44, our group has some serious concerns given that since Canadian National was privatized, at least 55 per cent of company shares have passed into the hands of American groups. In addition, American groups, once again, have bought railway lines put up for sale in recent years by Canadian railways both in the Maritimes and Western Canada.

So, it is already clear that we are facing American control of the Canadian railway industry. It is also worth remembering that as a general rule, trade has evolved along a north-south axis since the Free Trade Agreement came into effect, and that the business strategies of Canadian railways are first and foremost determined on the basis of American market penetration. Significant investments made by CN, including the purchase and development of an intermodal terminal in Chicago and the excavation of the St. Clair Tunnel in the Sarnia region, are but two examples of this trend.

Last year, almost 135,000 CN cars transitted through Chicago, a 23 per cent increase over 1994.

.1350

It is clear to us that in this particular transportation sector, current policy is leading directly towards integration of the Canadian economy with the U.S. economic system.

One has only to take a look at a map of the Canadian railway system to realize that the major rail freight transportation routes in Canada, whether we're talking about the Montreal-Windsor corridor, near Detroit, or the one linking Western Canada to Duluth, Minnesota in the U.S., on Lake Superior, all converge near Chicago, to the south of us, which is a real continental North American railway hub.

So, we think it's important to make the point that because of the geo-political context, the American industry now seems to be in a strong position to influence the flow of import-export continental trade in the North East, something that would certainly favour the American transportation industry, as would a commercial strategy aimed at encouraging competition between American Atlantic ports and the ports of Halifax, Quebec or Montreal. In that regard, do we really need to remind you of the historical competition that has existed between Portland, on the coast of Maine, and ports on the St. Lawrence, particularly during construction of the railway in Canada?

The fact is, competition between American ports on the east coast and Canadian ports along the St. Lawrence still exists. We're all aware of that. That is nothing new. Because we work on the intermodal side, we are in a good position to note the changes in traffic flows that result from shipping companies' decision to choose one or another port of entry.

One has only to glance at a map of the railway system to see that Portland, on the coast of Maine - just to use that example - has, from a strictly geographical standpoint, certain advantages over Halifax or Montreal from the perspective of international carriers.

At a time in our country's development when we, as citizens, believe we must reclaim the railways as our own, the question is not whether commercialization of the Seaway is advisable or not. In our view, the real question is whether commercialization will foster the development of our port operations, as opposed to the American economy.

We went through the process of commercialization and then privatization at CN. But while the company was creating 44 jobs in Chicago, its CEO, Mr. Paul Tellier, was eliminating another 10,000 in Canada. The privatization of CN has been a good deal for the Americans, who have reaped the benefits, but not for Canadians, who have ended up losing their jobs, and particularly not for regions like Montreal, where the impact of dismantling railway infrastructures and staff transfers has been devastating.

We find all this quite perplexing and can't help but be amused - although there is really nothing funny about it - at the idea that the people spreading the most propaganda about Canadian federalism have gone ahead and sold the railway, which we surely don't have to remind you is the very source of the Canadian federation and our history as a country, and the linchpin of our economic infrastructure.

We thus want to express our deep concern to the Committee about the medium- and long-term repercussions of this legislation in the context of foreign control of our transportation infrastructure. We believe the development of port activity in Eastern Canada depends first and foremost on a coherent, integrated Canadian transportation policy, where the railway plays a central role.

.1355

Ladies and gentlemen members of the Committee, we must reclaim our tools and especially safeguard those we still have - safeguard the home and the tools that are our fathers' legacy.

I want to thank the Committee again for allowing us to express our views on a fundamental issue for the Canadian transportation industry. Ours is of course only a modest contribution to a debate that has yet to take place on the political scene in Canada. We don't claim to represent the views of all union organizations, but rather those of a group of railway workers with a deep interest and involvement in developing the transportation industry in Canada.

In the final analysis, it is trade and communication that shaped our country and made it what it is today. Allowing them to be controlled by foreigners could have disastrous consequences for Canada, both economically and politically.

Thank you.

[English]

The Vice-Chairman (Mr. Comuzzi): Thank you, Mr. Savard. You have a nice day, also.

Mr. Crête.

[Translation]

Mr. Crête: I want to thank you for your presentation because a geo-political or integrated approach, as you put it, really provides food for thought.

Would you have any figures or data on CN's sales? What happened when shares were sold? We put a provision in the Act stating that no one owner could hold more than 15 per cent of total shares, but that did not prevent three or four different American groups from each acquiring 15 per cent of the shares. Do you have any data on that?

Secondly, could you elaborate on the matter of competition from American ports, perhaps with reference to intermodality?

Mr. Grey Verdi (Information Officer, Omega Group, Canadian Auto Workers (Quebec)): I can try to answer that question. When CN was privatized, naturally the legislation provided that no one group or individual could buy more than 15 per cent of total shares.

However, if you look at the overall situation, and Paul Tellier, Chief Executive Officer of CN, admitted this himself in a recent statement, at least 55 per cent of shares are currently held by American carriers.

Mr. Crête: Americans own 55 per cent of CN.

Mr. Verdi: Of CN's overall shares. Although no individual American group holds more than 15 per cent, the fact remains that the American industry now holds the majority of shares in Canadian railway companies.

To answer your question about American ports, the point we are trying to make is that if the commercialization of the Seaway or port facilities is conducted in a way similar to what happened with CN, it is clear that the United States will end up with control of our Canadian transportation infrastructure. They will be in a position to direct the flow of trade, particularly if you consider that CN, CP and all class 1 national railways are investing a lot of money to develop those corridors.

CN has made substantial investments in intermodal facilities in Chicago. Most of that investment is aimed at developing a north-south corridor, something that runs completely counter to our history, as we all know, where the railway played a central role in unifying the country.

.1400

What concerns us is foreign control of our infrastructure, something that will eventually have an impact on government social policy.

Mr. Crête: Thank you. With respect to the Seaway, if you had to choose between the status quo as far as the type of organization is concerned, a bi-national structure where Canada and the United States would be 50-50 partners, and a model such as the one the Minister is currently promoting - which involves transferring responsibility for the infrastructure to users - which one would you consider to be the most beneficial or rather the least dangerous?

Mr. Verdi: In principle, we are not against the idea of commercialization if it can help to develop our core industry, which is shipping.

However, this legislation should be developed within the broad framework of a truly integrated transportation policy. We often have the impression nowadays that there is very little linkage between marine transportation and rail transportation activities. Yet that is precisely what we are advocating.

We work in the intermodal sector, meaning that our operations involve several transportation modes. Obviously, we are looking after our own interests in defending the railway, because it is clear to us that the railway system is in the process of being dismantled. If we want to preserve our national identity as Canadian citizens and Canadian investors, it is important to ensure that every policy in every area take those facts into account. We can develop a system with public and private sector partners and with unions and working groups. You find many of them in municipalities and regions seeking direct involvement in that kind of policy.

[English]

The Vice-Chairman (Mr. Comuzzi): Thank you, Mr. Crête.

I thank you, Mr. Savard and Mr. Verdi, for coming and making this presentation today. It will be given consideration, along with all the other presentations that are made here in Montreal.

[Translation]

Mr. Savard: Thank you, Mr. Chairman. Our local did not have the staff to have this document translated. I asked someone when I came in if it would be possible to have it translated and send it on to our local so that we can distribute copies to our anglophone members.

We also brought a video with us; we gave it to the lady at the entrance.

Mr. Crête: Yes, I've seen that video. It is about twelve minutes long and deals with intermodality. It's really very interesting and not the slightest bit partisan.

Mr. Savard: Mr. Chairman, this is a CN video. We were a little put off by the fact that there was no television available for us to show you the video. We were told it costs too much money. Personally, I found that a little sad. That's why I wanted to mention it. Thank you.

[English]

The Vice-Chairman (Mr. Comuzzi): We have the facilities in Ottawa, so we will have a chance to look at this video there. Thank you for that. That's a different approach. We'll make sure Mr. Crête follows through and that we watch it, and we will be the judge of whether it's partisan.

Some hon. members: Oh, oh!

[Translation]

Mr. Crête: It's a CN video. If it's partisan, it certainly doesn't support my side.

[English]

The Vice-Chairman (Mr. Comuzzi): Mr. Michaud is here from the United Transportation Union. Welcome, Mr. Michaud. Who are you with?

Mr. Robert Michaud (Chair, Quebec Legislation Committee, United Transportation Union): I'm with Mr. Don Tennant.

.1405

[Translation]

Mr. Tennant holds the same position I do in his home province. He is Chairman of the Legislative Committee of the province of Manitoba for the United Transportation Union.

[English]

The Vice-Chairman (Mr. Comuzzi): Go ahead.

Mr. Michaud: I was wondering - there aren't many people around.

Mr. Keyes: There's an ongoing -

[Translation]

Mr. Michaud: Yes, I know. As I was saying, my name is Robert Michaud. I represent the United Transportation Union. I will be reading part of our brief.

[English]

I'll probably come away from this a few times.

[Translation]

I noticed that Mr. Savard and Mr. Verdi touched on a number of points of interest to us. What is surprising is that Mrs. Brisson of Air Canada also touched on a number of points that are of interest to us. What was even more surprising, is that the people making these points are always Canadian companies. Mr. Verdi emphasized the fact that there were a great many other foreign investors. We get the feeling people are always giving things away.

Anyway, I will focus now on our written presentation and I will be available to answer your questions afterwards. I am fulfilling the duties of Alternate Legislative Director for Canada. I am the Provincial Chair. Don does the same thing in Manitoba.

First of all, I want to thank you for allowing us to appear and to present our views. Although we represent no one at the Port of Montreal, we speak on behalf of a number of members who work in port facilities in Quebec. Previously we did represent people working for the Port of Montreal, but they are now members of the International Longshoremen's Association.

In Montreal, the railway infrastructure depends entirely or to a great extent on the Port of Montreal. Much of our traffic originates in the Port of Montreal and other ports. Thus the railway depends on the ports to ensure its economic viability and maintain jobs.

Initially, we were primarily motivated by our concern to avoid seeing a repeat of what happened in the railway sector. Mr. Verdi referred to this earlier. We have not gotten over being privatized, deregulated and sold at bargain basement prices. I now work for an American company by the name of CN. I certainly don't think this will in any way benefit the future of the railways in Canada. Today, our presentation will mainly focus on the linkage between the railways and -

Last year, in documents provided to us early on in the process, it was our impression that reforms being made to pilotage and ice-breaking services and the St. Lawrence Seaway would have a major impact on trans-shipment costs in Montreal, thus leading to a major cost increase for shipping associations and shippers and the elimination of container traffic and intermodality in Montreal.

That doesn't really seem to be the case anymore. We believe that under your reform package, these issues and the potential repercussions on the ports, as well as ways of limiting these costs, will all be reviewed. We hope the cost of these reforms will not be passed on to one party alone within the St. Lawrence Seaway system, namely Montreal.

As you probably know, Montreal is still a very important railway centre in Canada, and even in North America. Less than four years ago, after a variety of reforms, Montreal lost that status. Shipping services at competitive prices will benefit the Port of Montreal and the railway sector. I don't want to get into a discussion about unions and contracts. I don't even want to talk about it later on.

Canadian ports depend on that. I don't know whether you're aware of this - I remember seeing Mr. Keyes looking at the CAW map earlier - but the Port of Vancouver, the Port of Halifax and the Port of Montreal depend on the railway and on railway companies choosing those ports. Right now, our transshipping costs are cost-effective compared to the U.S., but that is temporary. It will last only as long as you allow it to last and as long as the dollar is low.

.1410

So, I do hope the reforms being proposed will not adversely affect that competitiveness.

Clause 25 of the Bill sets out the powers of port authorities in relation to railways. I only prepared this paper this morning and I seem to have forgotten a paragraph. Our concern is that these powers will be extended to existing companies that might expand their operations.

As I already mentioned, recent railway reforms have practically wiped out CN and CP's dominance in this area. In our view, it is important that the Port of Montreal, just like other Canadians ports, be required to give priority to Canadian partners.

Why? A number of railway companies have access to Montreal: CN, CP, the St. Lawrence and Hudson Railway, the Delaware and Hudson Railway, Railtex, Conrail as well as a number of other companies that are already in place, will eventually be in place or are now being started up.

I have provided copies of two articles. I don't know whether you have seen them or not, one mentions that Conrail said two years ago that in future, its biggest market would be Montreal, because of the port. They decided to withdraw from the port in 1994-95 and they are currently restoring their line. Following the merger with BN, we are now talking about a railway conglomerate that will have direct access to Montreal, and will want to make Montreal an important part of its structure.

I have nothing against an American company setting up shop there, but I want to see our Canadian ports establishing partnerships with Canadian entities instead. If they have the freedom to form partnerships with a company that is entirely American - in other words, that is identified as such - there should be some mechanism for ensuring that there will be jobs there for Canadians.

We have no guarantee that Canadian railway jobs will be maintained, because our Immigration Act is somewhat lacking as far as transportation is concerned.

At the present time, all railway transportation within 125 or 200 miles from the American border can be handled by American companies without any problem. As long as there is no domestic trans-shipment in Canada, the American company can basically do whatever it wants there. So, we need to either put appropriate mechanisms in place, or ensure there are partnerships between Canadian companies and the ports.

The Transport Committee and the committee that reviewed the sale of CN repeated over and over that CN has to be competitive and productive. That approach would at least allow CN and CP to maintain lines that would secure their economic viability in future.

Also, in our capacity as union representatives, we have a duty to point out that nowhere does Bill C-44 mention maintenance of jobs or representation of workers in these new entities to be called Canada Port Authorities. We see this as a major shortcoming.

As your hearings also deal with areas such as tourism, transportation and trade, we think it's important to point out that passenger rail transportation is an important industry for both Quebec and Canada. We believe that VIA Passenger service should be maintained.

We are concerned about that aspect of the hearings, which has never really been defined publicly. It is our view that no decision or recommendation should flow from this stage of the hearing process without all stakeholders being aware of the issues that are on the table. The fact is, we don't feel very confident. We were here earlier during the discussion about air transportation agreements and Air Canada's position.

I want to thank you for hearing our views. If you have any questions, we are now available to answer them.

[English]

The Vice-Chairman (Mr. Comuzzi): Mr. Mercier.

[Translation]

Mr. Mercier: You say that the Port of Hamilton believes that its prosperity depends to a large extent on the railway.

Mr. Michaud: Which port? The Port of -

Mr. Mercier: I'm sorry, the Port of Halifax.

.1415

Mr. Michaud: Yes, there is an important link with the -

Mr. Mercier: We went to Halifax and received briefs from a variety of witnesses, including officials from the Port of Halifax, who told us they were concerned about the Halifax-Montreal railway link. They want that link to be maintained.

Mr. Michaud: At the present time, Halifax depends on CN for its traffic. If CN were to disappear as an entity or Halifax decided not to deal mainly with CN, those two entities could not survive in Eastern Canada. In Montreal, I guess you could say that the Port of Montreal's biggest partner now is CP. In future, it could be Conrail and CN, but only for part of the traffic, not all of it.

If there were no partnership, CN or CP - CP is only operating in Montreal. It will disappear and the Port of Montreal will end up without a partner or will be forced to take a temporary American partner, for as long as that American partner decides to stick with us. Americans never let us play around with their profits for long. We saw that with Railtex and what happened in Vermont.

Vancouver depends on CN. There are important links with Vancouver, for access to markets in Western Canada. The port's operations revolve around that.

Mr. Mercier: As far as Bill C-44 is concerned, you say that nowhere is there any mention of worker representation in the new entities that will replace the current port corporations. But you don't make any specific recommendations. Are we to understand that you would like boards of directors to include at least one worker representative?

Mr. Michaud: Certain choices have been made. I am not part of that structure. At the same time, I think that under the new structure - that even the Minister was trying to sell us on by telling us we should be proactive and so forth - workers or unions should be represented. Not to reflect that in the Bill is an important shortcoming, as far as I'm concerned.

[English]

The Vice-Chairman (Mr. Comuzzi): Mr. Keyes.

Mr. Keyes: I want to thank the witness for his presentation. Of course, it seemed somewhat more philosophical than directly related to any particular -

Mr. Michaud: That's all that's left. All the infrastructure is going away slowly. So philosophy - You just heard it before.

Mr. Keyes: I just want to be permitted to wax eloquent then. For example, in the words of Transport Minister Anderson, ``A strong, more efficient marine transportation system will improve Canada's international trade performance''. And that means jobs.

So to follow along the theme you presented to us today, any business entity is only successful if it responds to the needs of its customers, correct? The ports of this country of course are no exception. So with Bill C-44, and through it by streamlining the regulatory regime, by allowing the ports to independently manage themselves, by cutting bureaucracy and all the red tape, which also means cutting back on their overhead costs, the ports become more competitive. This means of course that they get busier. If they get busier it means that so do the links to the community at large, including the railways and the networks that service those communities, which are the lifelines to those ports. The ports are fully cognizant of that.

Mr. Michaud: What can I answer to this? It's basically -

The Vice-Chairman (Mr. Comuzzi): You can't answer a philosophical question.

Mr. Michaud: I can comment very easily. We went in a philosophical direction when we started with deregulation in the railways with the sale of CN. Mr. Young and Mr. Mulroney and everybody at the start - it was quite philosophical. At this point, I don't have much in Montreal. Jobs and infrastructure are going away slowly.

Mr. Keyes: Why is that?

Mr. Michaud: A choice was made to put it somewhere else. It's as simple as that.

.1420

Mr. Keyes: We won't get into the philosophical reasons for why it's leaving Montreal.

Mr. Michaud: For eastern Canada one of the biggest work equipment gang centres was in Quebec City, and now it's gone. It's going to be gone completely. These are choices being made.

At present I have a dossier and it's an American company involved in doing all the work in Quebec. We're not after the American company; it's only a safety aspect. But it used to be Canadian employees doing the job, not Americans. But this is life. This is deregulation.

Basically we're saying that competitiveness is important. Maybe we should look into the fact that it's important that we give an edge to the Canadian companies that give jobs over here. If this is not good enough in the railways, try to look at the immigration law so that we at least have a Canadian worker on these American trains.

Mr. Keyes: I think the witness and I agree on one thing, which is that if you're going to be competitive and service your customers to the best of your ability, there will come a time when you have to rationalize. There has to be a look at the big picture. There has to be a rationalization of that big picture. You can no longer, in this globally competitive environment we have entered into, keep on subsidizing and watching little-used lines eat up the revenues of a company that can't survive if it doesn't rationalize.

Mr. Michaud: As Mr. Comuzzi said, I think we're better not going to that thing. In 1994 I was following the vice-president of CN stating to everybody that all of northern Quebec was a total loss of money, continuously. They're making millions. It's an entity of CN. They cut a few jobs. People make more money than they made before. They have the same traffic and they make money. You didn't change much there. They want to do the same thing with the south shore. They're going to make money.

It's a philosophical way of looking at things. If you look at the loss of CN in 1992, $1 billion for this, in 1994 CN still has this money in the bank. There is no need to argue on all those things. Political choices were made and that's where we are now. We're now asking that you please enter into a pattern where you're going to protect the ports and keep their costs at the normal level. Don't impose too much on them. At the same time, please protect what exists and give us an edge in the Canadian railway industry.

The Vice-Chairman (Mr. Comuzzi): Mr. Michaud, thank you. This conversation can go on forever.

Mr. Michaud: Do you think so?

The Vice-Chairman (Mr. Comuzzi): Oh, yes. I thank you and your colleague for making these presentations to us today. Unfortunately we are always bound by the clock, especially at this time of the day when we have to get back to our other jobs.

[Translation]

Mr. Michaud: Thank you very much.

[English]

The Vice-Chairman (Mr. Comuzzi): We now welcome Mr. Roger L. Spack. You have half an hour. You can read your presentation, or you can summarize it and give the members an opportunity to question you.

Mr. Roger L. Spack (Transportation Consultant): Thank you, Mr. Chairman. I hope that the members have at least had a glance at it. I would like to comment on it and by doing that, enhance what I've written but not repeat it.

Mr. Chairman, I'm very happy that the committee is doing these hearings and I hope and pray that something will come out of them. It seems to me that as I listen to what happens in government, parliamentary committees sometimes have some influence, but not as much as I'd like to see. I think it's one of the great benefits of the American system that the congressional committees seem to have considerably more effect than our House committees.

.1425

I just hope this committee will be very effective, Mr. Chairman.

The Vice-Chairman (Mr. Comuzzi): That's a very astute observation you just made.

Mr. Spack: Probably, if I may say, it's one of the frustrations of the committee.

Mr. Keyes: We're going to do quite well with this committee.

The Vice-Chairman (Mr. Comuzzi): If there's anybody alive at the end of it.

Mr. Spack: When I was writing this presentation I was trying to think of the correct words to talk about it. Perhaps what I'm saying here is something the Premier of Ontario talked about and won an election on, and I'd call it a common sense revolution.

In terms of what you gentlemen are working on here, when I see that the business of renewing the national highway system is a prime interest of this committee, I'd like to make some strong comments on that, recognizing that the federal government's effective financial interest in this is pretty low at the moment, although the federal government does collect about $2 billion in fuel taxes.

The Vice-Chairman (Mr. Comuzzi): It's $4 billion.

Mr. Spack: It's $4 billion? Thank you. Mr. Chairman, I must say that unless you're prepared to spend weeks at it, getting numbers is hard to do. That includes the GST, I presume.

The Vice-Chairman (Mr. Comuzzi): I haven't checked that.

Mr. Spack: Okay.

On this whole business of the national highway system and perhaps some federal government involvement in it, it seems to me that as I drive on the highway - I try not to do too much highway driving, and prefer to take the train whenever I can - we have some real problems with this highway system.

The highway system is good for tourism, trade, transportation and so forth. But what's really going on in our highway system, as I look at the numbers, is that we have a system that the general taxpayer is subsidizing pretty heavily. I don't have the Quebec figures worked out yet, but I have some rough figures on Ontario, and if you begin to look through the figures, the Ontario figures would indicate, on a provincial basis, that if you got right down and talked about highway services, etc., and the cost of debt, we're probably about $2 billion in the hole in Ontario. I suspect from figures I've seen elsewhere that the Quebec total is not much below that.

I can also quote one other figure from 25 years ago in the province of Alberta, which was an official government figure of $900 million. So you can figure that's probably getting close to the $2-billion level.

In other words, the highway system is a drain on general taxation. We talk so much about it, and the present government has been pretty successful in the area of trying to reduce deficits, but isn't this an area the government should be applying some common sense to? Common sense really says let's balance the budget on highways. If you take my numbers, particularly in the province of Quebec, that's somewhere between one-third to one-half of the provincial deficit.

Who are the benefactors of this? Yes, I like to use the car from time to time - not as extensively as many - it's nice. It's good for tourism, but it's also good for trucking. If you look at the situation vis-à-vis trucking, we now have weight limits of, for practical purposes, 70 tonnes on a truck and it's at least 70 feet long. Have you passed any of them lately, or tried to on the highway? Have you had any of those lovely trucks come up behind you at 110 kilometres to 120 kilometres per hour and try to push you out of the way, gently, only a car length or so behind you? I had two or three of those driving to Ottawa the other day.

The Vice-Chairman (Mr. Comuzzi): We haven't had that experience, Mr. Spack. But we have had an experience in the last week or so of meeting an oncoming truck tire that came in contact with our bus. So we know what you're talking about.

Mr. Spack: You know what I'm talking about. There's also the failure rate. When safety checks are done very occasionally by the provinces, somewhere between 30% to 40% of large trucks have failures on them.

I'm making a plea here for common sense in terms of transportation because the trucking industry is being subsidized - I would suspect, by the numbers I have quoted - by up to $1 billion per year in the two major provinces, just on the basis of not paying their expenses on the highway.

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It seems to me you have to look at the basic numbers that have been researched all over the world on this, particularly in the United States. By pulling various reports together, my friends who are really conversant on this tell me that the large, 70-odd tonne truck does 29,000 times as much damage as you and I driving our automobiles. Or, if you want to put this in nice tough terms, it means 1,000 average large trucks going over a heavily used lane of highway do as much damage to that highway as a full run of passenger cars for one year. One year of heavy automobile traffic is equal to something in the order of 1,000 truck trips, which could happen in a day.

Here we have a deficit from the highways and we have heavily subsidized truck transportation - from what I got out of the previous presentation, and I think that gentleman would agree with me. This is what we're doing. It doesn't make any sense.

The other thing with this situation is the government here is working with the railways to reduce the railway network. I understand the railways' problems with balancing their budgets, and I'm very sympathetic - I have a railroad background. But it seems to me we have a circle here that's going something like this. We have lots of highways and we're happy to let anybody use them. We're happy to let general tax dollars pick up the costs of them. We are happy to have the trucks on the highway. If I understand correctly, the NAFTA situation is pushing the whole thing so we will have heavier trucks that are harder to pass and will push us a little harder, lose more wheels, and kill more people. I believe the trucking accident rate in Canada is 640 people per year on the highways, on average.

At the same time that our railways are gradually disappearing in many places, we have basically free railway highways out there that are not being heavily utilized. We have subsidized highways that are carrying truck traffic, killing people, unsafe, unpoliced and unregulated in many respects. Does this make any sense? Those railways are basically still paying their way, even if they are being downsized. Does this make any sense?

I sense from the papers for this committee that it is really looking at how we can expand the highway system. Let us, in common sense, at least make sure, before the federal government puts another cent in the highway situation, that the provinces are balancing their budgets, particularly in the area of highways.

It seems to me it is ridiculous to add more asphalt that's going to require more repairs on highways that will be more heavily trucked, etc., with higher deficits there, and the federal government would help this out. This doesn't make sense. Common sense says let's see what the real score is. Let's stop subsidizing highways. My driver's licence and my car registration fee will go up - I have to take that - and so will yours if this approach is taken.

Trucking will at least start paying its way. The trucks hopefully will diminish somewhat. I realize the trucking service is better than rail service most of the time. But at least in this whole situation we will try to move some traffic onto what is essentially a free highway - the railways, or what's left of the railways by the time this happens - a taxed highway right now, to compare with our untaxed highways, which are probably the biggest real estate tax drain in the country.

I strongly suggest that before we do anything in this area, let's get this highway transportation thing under control and make some sense out of it.

I would go ahead - because I have a certain bias to go further than that - and say if we were able to do this, then what could we do? From the standpoint of economics, I think we need to give the railways a break - yes, the railways, some of the biggest corporations in the country, need a break.

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Basically, over the last 30 or 40 years the Government of Canada has been very unkind to the railways most of the time. I think that's as nice a term as you can use. I realize the bureaucracy in Transport Canada - from the ones I've dealt with, most of them - would just as soon skewer the railways as otherwise. We won't argue the pros and cons of that, but I think it's a fact if you were really to check the personnel involved.

I'm saying let's give the freight railways a break. Let's give them a chance for a level playing field in this whole transportation thing, and in doing so - and I know there's a lot of provincial jurisdiction here - let's remove the provincial and federal-specific fuel taxes and the real estate taxes from the railways and give them a break. I think they deserve it. By my estimate, that's something in the order of 5% to 6% of railway expenses, which may be a tilt point to move some of this traffic that's gaining and gaining on the highways - and killing people - off the highways.

I would go further than that - and some people say this gets pretty complicated - and I would say this: When we're concerned about highways and transportation, one of the things that's getting very heavily hit in this whole process is rail passenger transportation. I'm an unabashed rail passenger transportation advocate. I've worked in the business. I've seen a lot of the situation that goes on there.

Yes, a lot of it could be done better, but it has potential. And the interesting part is that in the last few years I think VIA has pulled up its socks and is doing a fairly good job. But it's also doing a job of being badly underfinanced, and I don't know how long - this may not even last until the next election. We may have a real financial problem with VIA before the next election, which I don't think the government would like, because VIA is being asked to raise its revenue drastically, and if you're a marketing person in VIA's situation today I don't know how you do it. I worked in marketing in that area 25 years ago, and I don't think the problem has changed much.

I'm advocating that we move from the highway situation to the rail situation. Let's take the savings that could be given in eliminating federal and provincial fuel taxes and real estate taxes on rail and use that money through the railway industry - let's not create more bureaucracies - to fund VIA Rail Canada improved service across the country, not too heavy in places where it's not needed. But we're a national country and I think we need service from Halifax to Vancouver, without trying to do a full rationale on it, and also, in the centre of that, a much-improved corridor service with a particular high-speed corridor route between Montreal, Ottawa and Toronto.

If you look at the studies that have been done on that, that will make considerable money. I realize the capital is high, but the capital reports, if any of you followed them, are not that high, I believe. I'm talking about the money that could be saved by giving the railways a break, and in doing so, cutting their operating costs, therefore allowing for cheaper freight rates, including on all that grain, some of which, I gather, is going through the United States now. Some people in the railway industry are telling me there are five trains a day going through the United States from western Canada to the Pacific coast because of our problems with properly handling railroad costs.

I'm suggesting that we use that money as the backbone money to finance improved VIA service, and this is both infrastructure and rail passenger equipment, and track improvements across the country and particularly in the central Quebec-Windsor corridor with a high-speed route. That money will pay a high percentage of the cost of this work.

Past that, we're going to need things like grade separations and some new rights of way. Let the provinces do that.

If you look at my presentation in detail - or if you'd like further details on it, I'd be happy to do it - you have to look at principles before going any further and you will see you can take this whole subject and move it into what the provinces should pay for and what the federal government should pay for.

With the downstream situation that I believe can happen, in something like 12 years, or maybe 10 if we're good at it, we will have a revitalized VIA Rail system. We will have a high-speed corridor central route. We will have VIA Rail paying for all or almost all of its costs. And in this process, I suggest that the provinces be brought in as co-managers, as the real managers collectively - the eight provinces that have rail passenger service - of VIA, and that the federal government gradually leave this field or have a token presence in it.

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I realize that downloading financial obligations is a great thing with governments at all levels these days. I recommend that the provinces get in there and that we get better ground transportation in Canada. The federal government has done its best for the airlines and I'm not sure that that's even good enough by the look of their balance sheets, but here's an opportunity to take money and change this transportation situation from a heavily road-oriented one, to give the railways a break and to give rail passengers a break. If you look at the studies, there are people out there who will ride those trains. And when the emphasis of the committee is on tourism, remember that it's in places like western Canada and eastern Canada where you need those trains to get the tourists into the country.

If we look at the local transportation level across this country, the bus industry is going downhill at a remarkable rate, I'm sorry to say. Cooperation through the provinces between the bus industry and VIA will do a tremendous amount towards providing a level of mobility - even the level of mobility of ten or fifteen years - for people who do not want to or cannot use automobiles, or who cannot afford to use automobiles. It's 10% to 15% of the population. It will give local transportation and cross-Canada transportation a real lift at very little cost to the government. If my numbers add up correctly, there will be very little cost to the federal government or even to the provinces for VIA unless one of those levels of government particularly wants to subsidize the service.

That is the gist of my presentation, Mr. Chairman. I believe it's a common sense revolution. I don't hear many people talking about it and I think somebody needs to.

The Acting Chairman (Mr. Jordan): Thank you very much, Mr. Spack. As you know, I wasn't here when you started to make your presentation. It looks very concise and I think there's a lot of room for discussion.

Mr. Spack, my written presentation is numbered page 7 of 9. Did I miss something?

Mr. Spack: No. The guts of the presentation are in pages 2 to 7. The first page is the letter to the committee.

The Acting Chairman (Mr. Jordan): All right. I wouldn't want to miss anything. There's lots of fodder there for discussion among our members.

Mr. Cullen, is there any aspect -

Mr. Cullen: Thank you, Mr. Chair.

I apologize. I missed the first part as well, but I skimmed through your brief. With respect to the section on proposed financing, do you think the private sector could play a role in financing some of the ideas you've put before us today?

Mr. Spack: In the sense that if the costs that are being applied by government - costs that I'd say are applied punitively to rail freight operations - were applied through the railways - And I'm not talking about another bureaucracy, but if a deal is made with the railways in order for them to do most of this work, that would be my private sector involvement.

You could argue about whether you put the operation of VIA into their hands or not, but I would argue very strongly for a core of real marketing-type people who would look after this, or it will not work. The railways lost their interest in rail passenger service about thirty years ago, justifiably, I think. That would be where my private industry area would come in. I'm sure, too, that people like Bombardier would greatly benefit by this. I would question whether they'd be prepared to put any money into it.

Mr. Cullen: Thank you.

The Acting Chairman (Mr. Jordan): We can gather from some of the things you've said that maybe you've had some railway experiences and that you see a real purpose in a nation like ours maintaining a strong component there.

Mr. Spack: Yes. And I really believe, Mr. Chairman, that there are a lot of people - not millions of people, but there are people in various places across the country who are being deprived of any sort of public transportation because governments, both federal and provincial, have done a very bad job - the nicest term - of helping the whole transportation situation.

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If you go into the VIA Rail thing, for instance, if you look at my numbers - I've looked at this. I was part of that organization at one time. In my recollection, something like $2 billion of something like $7 billion to $8 billion spent on VIA Rail should not have been spent. Those were dollars that government primarily allowed or happened or whatever word you'd like - Government and the Department of Transport have a real hand in wasting those dollars.

The Acting Chairman (Mr. Jordan): Mr. Keyes.

Mr. Keyes: Yes, Mr. Chairman, that was the same cry that this particular witness has for the highways that we're not doing a good job with. It was the same cry from rail, especially the passenger rail, when they came to us saying we had to help them do more. We did, and of course that's being gradually cut back because VIA is getting onto a solid financial footing.

Mr. Spack: But I caution you that you can only do so much about cutting jobs. I really do think they've done a good job. I was in VIA when it was a heavy bureaucracy. I think that's gone.

Mr. Keyes: Right. We helped it get over the hump and we -

Mr. Spack: But on the other side, in order to balance those numbers, an awful lot has to be done on the marketing side. I look at the marketing side as an outsider now, and, boy, I would not try that job. I wouldn't know what to do. I've talked informally with people at lower levels in VIA and they're saying the same thing: ``I don't know what to do. I have to increase my marketing budget. How the deuce do I do it?'' They say they don't know how. They say they have no tools except lower prices. With lower prices there are longer trains. You move more people, but your bottom line may not go anywhere.

If you look at it as an outsider, from a marketing standpoint I suggest that if you're looking at your best bottom line, you try to almost optimize your revenue at a certain place where your expenses will come into the best balance with it.

I suggest that the VIA people have done an excellent job there. They're very close to the apex of that curve.

The Acting Chairman (Mr. Jordan): Are you satisfied, Mr. Keyes?

Mr. Keyes: Thank you, Mr. Chairman.

The Acting Chairman (Mr. Jordan): Thank you very much, Mr. Spack, and thank you for keeping us on schedule. We appreciate that too.

Mr. Spack: Thank you, Mr. Chairman.

The Acting Chairman (Mr. Jordan): The next group - and I think there's one more - is the Coalition to Renew Canada's Infrastructure. Are Mr. Redfern and Mr. Facette here?

A voice: Apparently they're from Ottawa, Mr. Chairman, and they're supposed to be here at 3 p.m. They're not here yet. You might want to take a break.

The Acting Chairman (Mr. Jordan): Let's take a break until 3 p.m. If they're not here at 3 p.m., we'll expect to see them in Ottawa.

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The Acting Chairman (Mr. Jordan): I think we are ready to go. We announced we were closing down for a few minutes until everybody assembled and it appears those who are going to be here are here.

The last presenters of the afternoon are from the Coalition to Renew Canada's Infrastructure, Mr. John Redfern and Mr. Jim Facette.

We have a half an hour, gentlemen, to hear from you, and then perhaps you'll hear from us. Go right to it. It is your time.

Mr. John Redfern (Chairman, Coalition to Renew Canada's Infrastructure): So the floor is mine? Thank you very much, Mr. Chairman. Hopefully we won't take up the whole half hour. We'll be short with the presentation and leave a longer time for any questions you might have.

We'd like to thank you for the opportunity to discuss what is often an ignored asset of the Canadian economy, our national highway system. My understanding is you're concluding hearings today here on two issues and your hard work has not gone unnoticed. CRCI congratulates you on your commitment to an efficient transportation system for Canada.

I want to explain our approach, given the time allotted to us, but let me first introduce Jim Facette. He is the president and secretary for the Coalition to Renew Canada's Infrastructure. As I said before, it is our intention to be brief. I believe it is more important to allow as much time as possible for questions or constructive dialogue. Therefore I will outline, first of all, what CRCI is and present some of the highlights of our written submission, which I think has been given to the panel beforehand.

Since 1991, CRCI has served as the collective voice of a broad-based coalition advocating strategic investment in Canada's core infrastructure. For the past three years we have focused much of our intention on the need for a national highway plan for Canada. As a broad-based coalition made up of businesses from all spectrums of the economy, we are greatly concerned about the deterioration of our highway network and its negative impact on Canada's economic competitiveness.

Canadians are wasting fuel, time and money. They are endangering their health and the environment, and in the process becoming less competitive in the global economy. Highway decay adds unnecessary costs to Canadians corporate operations and it impacts negatively on our competitive capability, reducing demand for Canadian products.

When CRCI received your request to appear before your committee, we were pleased to observe you had chosen to focus your initial review on renewal of Canada's national highway system as it relates to trade and tourism. Given the recent work on air, rail and marine policies, highways are the last remaining piece of Canada's transportation puzzle yet to be properly addressed.

In the area of trade, in 1995 domestic trade in Canada totalled some $31.5 billion, accounting for 20% of GDP and nearly two million jobs. The importance of international trade in the Canadian economy grows each year. Recent Statistics Canada figures indicate 1995 was a record-breaking year, with Canada's trade surplus growing to $28.3 billion from $15.4 billion in 1994, or 32.4% of overall GDP. Statistically, highway carriers account for approximately 42% of all carrier operating revenues, and roads dominate passenger travel in Canada with some 90% of all trips being taken by automobile.

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In the area of tourism, the impact of tourism on the Canadian economy continues to grow. Total tourism spending in Canada amounted to $41.8 billion in 1995. This represents a 69% increase over 1986 figures.

In 1994 Canadians made 76.6 million overnight trips, of which 68.5 million, or 89%, were by automobile. International tourists numbered 16 million, with American visitors accounting for 76%, the remainder being from overseas. About 60% of American visitors used automobiles for travel.

When the current Liberal administration was in opposition, the Liberal task force on infrastructure recognized the importance of highways to our economy. It recommended a federal commitment to rehabilitate and expand the Trans-Canada Highway system. To quote the task force:

- the economic consequence of poor roads is staggering. Studies reveal that the productivity of a region is very much dependent upon the transportation system. Traffic congestion increases the cost of transporting materials, reducing the industry's competitiveness - Bad roads - also have a negative impact on tourism, an important sector of the Canadian economy.

A recent Transport Canada study came to the same conclusions. The links among trade, tourism, and Canada's national highway system are obvious. All the studies are done, and we cite them in the report we have submitted to you. We know what type of work is required on the national highway system and where.

In CRCI's view there remain two challenges: who is responsible for the national highways and how we pay for the necessary work. We submit the responsibility for our national highway system is a responsibility shared between the federal and provincial governments, for the following reasons.

First, international trade agreements are signed by the federal government and interprovincial trade agreements are signed between the federal and provincial governments. Second, the federal government promotes tourism and investment in Canada and around the world. Provinces promote tourism in their respective provinces. In our written submission we stated that the federal involvement in highways is not new, hence the third reason is the federal government's participation at present in Canada's national highway system, which has two parts, through the investment in highways conducted through seven separate bilateral agreements and through the active participation of the federal government with the various provincial governments in the promotion and development of the national highway plan.

How do we best pay for a national highway program? After reviewing expert opinions, including one provided by government, we submit that governments continue to contribute to the maintenance of Canada's national highway system. Governments are the primary owner of public infrastructure, including highways. It has become increasingly popular for governments to discuss the funding of necessary infrastructure work by trying to answer the following question: how can we, the government owner, maintain traditional infrastructure but have someone else pay for all or part of the work?

Did I hear a responsive chord?

When governments examine how infrastructure investments are, made more and more governments are at least turning to the idea of the private sector for assistance in the form of public-private partnerships. The generally accepted definition of a public-private partnership is the transfer of responsibility from public agencies to private owners. Private owners assume responsibility for public facilities with the notion of making a profit from the sale of the service provided by the facility. Simply put, users are now charged a fee for the use of the facility or service.

However, the building and maintenance of Canada's national highway system by provincial and federal governments were paid and are paid for from tax revenues. Unfortunately there is no direct link between what the federal government collects in gasoline taxes and what it invests in our national highway system, as opposed to the current system in the United States. That is to say, we do not dedicate funds for highway investment.

The federal government collects 13.7¢ per litre in gasoline taxes. In 1995 Ottawa collected $5 billion in taxes from the sale of gasoline. In fiscal year 1996-97 Transport Canada will spend only 5% of this revenue.

Mr. Chairman and committee members, the financing of a national highway program for Canada comes down to two basic options: continue to commit tax revenues or enter into public-private partnerships, which will place direct user fees on Canada's national highway system. It may be possible to blend these two options, but the governments must be prepared to place direct user fees on highways that do not currently have them. Recent Transport Canada work and that done by the national highway review policy study demonstrates that the opportunities for applying user fees to the national highway system are limited.

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The Coalition to Renew Canada's Infrastructure therefore offers the following five recommendations to this committee:

The first is that through an act of Parliament, the federal government designate Canada's national highway system as prescribed by the national highway review policy report. This would lock in the current agreed-upon system and take advantage of the considerable work that's been done by both levels of government.

The second recommendation is that the federal government adopt a national highway policy that would be long-term in nature and oversee future improvement, maintenance and expansion of Canada's national highway system. This would facilitate the efficient use of taxpayers' money in infrastructure investment.

The third recommendation is that to meet the immediate needs of Canada's national highway system the federal government adopt a national highway program for rehabilitation.

Fourth, we recommend that the federal government increase its percentage of gasoline tax revenue spent on highway investment to address the immediate needs of Canada's national highway system. CRCI suggests allocating two cents per litre of revenues collected.

The fifth recommendation is that the federal government set up a special highway trust fund for the allocated resources, and this would be similar to our NAFTA partners.

The need, the what, the where, and the why questions have all been answered concerning the state of Canada's national highway system. We're only left with the when.

The dependency of trade and tourism on an efficient and acceptable highway system is obvious. Without having heard all the submissions before you on this important topic, CRCI probably would not be far off the mark in stating that many organizations and people agree that Canada's national highway system needs immediate attention.

The hurdle is, how do we finance a national highway program? The Liberal task force on infrastructure of 1990 had one suggestion, that applying fuel tax revenues to road construction and maintenance be examined.

I would propose that we stop here and use whatever remains of the time you've allotted us to answer any questions.

The Acting Chairman (Mr. Jordan): I thank you for summarizing your report.

I notice in the second paragraph on page 12 you did pick up something that is very significant, where Highway 416 will be completed from the nation's capital to Highway 401. I feel quite strongly about that and I'm glad you picked that out of the mêlée.

Mr. Redfern: I would like to add to that point. In my remarks we discussed the possibilities of where certain private partnerships might or might not be used and the limited ability that most experts see for the national highway system. There are certain systems where you're building new highways where there is a non-user fee alternate, such as Highway 407 around Toronto and these other places where people can opt for the cost of the efficient transportation from A to B by taking the option of paying or can go the longer, more time-consuming route.

I think there are areas right across the national highway system where that type of thing could be done on a limited basis, but in the vast majority you don't have a parallel, a non-existing system that you can -

The Acting Chairman (Mr. Jordan): I agree.

Mr. Cullen.

Mr. Cullen: Mr. Redfern and Mr. Facette, in your brief you mention a report, study, or piece of work published by the Transportation Association of Canada, Highway Finance, Theory and Practice, and you mention the different alternative ways of financing highways. One is the public-private partnerships you touched on. I certainly want to get hold of this publication and have a look myself, but could you expand on the public-private partnerships?

When one looks at it, are you restricted, for example, to new highways and tolls? Could you put some public-private partnerships on existing roads? Could you - and I'll be the devil's advocate here, sort of thinking out loud - privatize the national highway system or a part of it? I'm not suggesting that's a good national policy to pursue. I'm just trying to get at the full range of alternatives. If you could expand on that, I'd appreciate it.

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Mr. Redfern: Anything is possible. As we pointed out in the summary and in the report, severe political pressure would be exerted if you were taking an existing road, maybe rehabilitating it and bringing it back up to standard, and then turning around and saying now we're going to charge you for this. I guess they're going to charge for that Wentworth Valley road in Nova Scotia.

Private-public partnerships essentially mean that you're going to collect fees, and the big problem with collecting fees has been that up until now it's been very costly and inefficient to turn around, to stop people and collect. In the future, if we have some kind of an efficient, electronic method to collect fees, I think you could do that.

Right now, in fact, we have a very painless way of collecting user fees. If you take some of the gas tax - it's a system already in place - already being collected, I guess with every cent you put on a litre of gas you collect something like $400 million a year. That would be a way of putting user fees on the roads in general without instigating a cumbersome collection method and running into this problem where someone says ``I used to go down this road for nothing and now I'm going to have to pay for it''.

Anything is possible. It's the politics of it, the efficiency of the collecting, and the appropriateness of the volume -

Highway 407 in Toronto probably has some of the most dense traffic potential in North America. But when you look at some of the stretches in northern Ontario, or at the back roads, or across the west or the east, you're going to have a very difficult proposition to collect sufficient money to pay in full for those stretches of road. It's not a popular sell when you don't have much traffic.

Mr. Cullen: Thank you.

I'm becoming acutely aware that sometimes politics and public policy go off on different tangents. But if you look at this notion of ``the road has already been paid for, so why am I being charged for it again?'', there's an irrationality to it, in a sense. Every road has a capital cost and the cost of maintenance. So if the issue in the first instance is that to build the road we need to have a user-pay concept, you could apply that logic to say we need the user-pay concept to maintain it. But I totally agree with you that the politics are quite a different story.

If you look at the whole system and the parts of the highway system that are more congested or busy, is it possible - When I was out in B.C., looking at B.C. Ferry, they were looking at privatizing that. And they basically said it's all or nothing, because otherwise people would cherry-pick the good routes.

Mr. Redfern: That's right.

Mr. Cullen: Could you apply that same logic? Our national highway system is enormous. We're looking at something huge. Even financing something like that would be a monster deal. But could you look at it globally like that and say take it all or nothing?

Mr. Redfern: I think you could. I think the Coquihalla Highway or Highway 407 have been cherry-picked. It's a new idea. As for the idea that there's a capital cost and then a maintenance cost, particularly when the loading amounts and the number of vehicles go up and you're trying to bring these things up to the standard of the day, there's certainly justification for saying there's an ongoing cost.

One of the advantages in coming to a program that you set out for a long term, with fixed engineering requirements and standard design features, is that you can make your dollar work efficiently because you know you have a steady amount of work. You know you're working for the long haul.

But the other part of the equation is that maintaining your highway system is not a discretionary expenditure. It's not one of those things where you can say you're under financial stress so you'll defer the idea of having a highway system. I think it's one of those things that's a given if you're going to run an efficient, competitive economy.

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The problem with the costing question is that if you say you're going to defer the necessary maintenance and expenditure on these highways for a given amount of years, you end up not only having the problem of a non-efficient highway system, you end up paying more. It's sort of the same thing as me saying to you that you need a new roof on your house, but you say no, you're going to defer it. But if you defer it until the water leaks through the roof and you rot the structure, you don't just have a hole in your roof, you have to rebuild the whole structure. Well, it's the same with the highways.

The cheapest way to look after your highways is to first of all design them and build them properly to begin with, and to then perform timely maintenance. As you go to deferred maintenance, it doubles or triples the cost. And as you go to rebuilding, you're looking at five to ten times the cost or more. So I think we have to come to grips with the idea that we really aren't advocating that we're not going to have a highway system to start with.

What is the most efficient and best way to do it? This is what the proposal for a national highway system was. This is why the federal government experts and all the provinces worked together for three or four years to come up with this thing. It was so that we would have a standard set of main highways that weren't a hodge-podge collection, but were ones that were designed properly.

To me, the best idea about private partnerships is just the concept. If you go to a private partnership idea, you say you want to spend x dollars and want to get y dollars out as a result. You work a cost-benefit ratio on it and you stretch it out over a number of years. If we had done that with our highways, if we had said that we wanted a highway that was going to last for x years with minimum maintenance and that we were going to do it this way to start with, this would have been the most efficient and best way to go. Too often, however, our highways program has been a sort of hand-them-out and what-can-we-do-this-year program, or one in which we've said that maybe we wouldn't do anything for two or three years, and then we end up doing something else. So you end up with very inefficient expenditures of your infrastructure dollars.

The Acting Chairman (Mr. Jordan): Mr. Mercier.

[Translation]

Mr. Mercier: I have the French version of your brief in front of me. It's really very interesting. It contains a lot of figures and a lot of information. However, I am surprised to see that even though we're in Montreal, you did not even present part of your brief in French.

I have two questions. The first is only a point of information. I see here that Highway 10 from Montreal to Sherbrooke is mentioned in this list of national highways. I still remember that there was a provincial toll on that highway. I made sure that toll was abolished. But up until now, I'd always thought it was a provincial highway.

Mr. Redfern: Yes.

Mr. Mercier: In your five recommendations, you make no reference to tolls, either for maintenance of current roads or for the construction of new ones. I would be interested in hearing what you think of tolls as a potential source of funding.

Mr. Redfern: First of all, all roads in Canada belong to the provinces. The first major project in Canada was a national highway in Canada. The federal government gave half in that case - in other words 90 per cent of construction costs, after which the province became the owner. So it is up to the province to pay for maintenance.

The same would apply to the national highway plan. That way we would have a national standard throughout the country and we would not need to stop trucks at every border because provincial regulations vary from province to province.

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I don't think the federal government wants to own highways in Quebec or Ontario. This is simply for the benefit of the national road network, national standards and the national economy. That is one of the reasons why it levies taxes on gasoline each year. Last year, it levied some $5 billion in taxes.

[English]

The Acting Chairman (Mr. Jordan): Mr. Comuzzi.

Mr. Comuzzi: Mr. Redfern, your group is represented by a substantial number of highway good suppliers and builders. Whenever we've been involved in discussing highways, people have said if we're going into a cooperative venture or privatization, let us be involved at the outset in the design and the construction of the highway so that we can bring our expertise to the table.

That has bothered me, and you alluded to this a moment ago. Why haven't we, up to this point in time, brought the designers and the contractors who are involved in the building of these highways to the table to get their expertise?

Mr. Redfern: I don't know. Essentially up until the present time, certainly in Canada, all of the highway work has been the property of the municipal and provincial governments, and, through their participation, the federal government.

Most of the highway designers work for government agencies. You can now go out and get civil and structural engineers who work for private people. But even in the case of Highway 407, you'll find that the Ontario Ministry of Transport has participated in the design phase of that as ``optionee'' of last resort who would exercise their expertise and take over the highway after a certain period of time.

I don't think there's a lack of design capacity in the Department of Transport, federally or provincially. The main thing to ask is what the most efficient highway structure is to build on a total yearly cost-per-mile basis, and use that as the criteria.

In fact, one of the main goals of this federal-provincial group, which took three or four years to set out this plan, was to maximize what the design criteria would be, where the roads would go, and how we would make sure we had one standard across the country.

Mr. Comuzzi: Perhaps I can ask one more short question, because I may never have a chance to ask Mr. Redfern again.

You're with Lafarge. I've often wondered when the decision is made to do a highway, when the decision is made to use concrete and when is it made to use asphalt. What's their life span? Obviously, it's a question of maintenance. What's the difference in cost per mile between concrete and asphalt? In your judgment, what should we be looking at?

The Acting Chairman (Mr. Jordan): I know it's a short question. Could you be short with the answer? We have one more group today. They don't always start on time, but we always finish on time.

Mr. Redfern: That's my criterion to start with.

The answer is that it changes over time. Until quite recently, most highway departments had their capital budgets in one group and their maintenance budgets in another group, and they never did want to put the two together. What's happened is that with the heavy loading and the cost of aggregate and compaction, you're finding now that the cost per mile is probably in the long term about equal or a little bit better for concrete.

The cost up front for the short term is probably less if you use asphalt, but you have more maintenance work as you go along. You get into technical problems, such as the heavy loading in asphalt and rutting.

The other problem you used to have with concrete highways is we lacked for some time some expertise in how to build a good concrete highway. They used to build them in the 1930s and then they had a lay-off and they didn't do them. Now with the equipment and other things, it's back.

But my position is not whether it's asphalt or whether it's concrete. My position is whatever works out. I think you can make good highways out of both of them. Just design it in at the start.

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The Acting Chairman (Mr. Jordan): Thank you, Mr. Comuzzi. Mr. Keyes.

Mr. Keyes: I have two brief questions. Have you gauged any public acceptance of two additional cents to a dedicated highway truck instead of two cents from existing revenues?

Mr. Redfern: As we said in our preamble, we have been working on this for nearly four years. In fact, we went to the Department of Transport some years ago and said why don't we go ahead with an additional -

Mr. Keyes: Which department was that?

Mr. Redfern: The federal Department of Transport.

Mr. Keyes: Federal?

Mr. Redfern: Yes.

We said ``Why don't we look at the idea of an additional gas tax and you can dedicate it or just put it in out of the revenues?'' The answer was: ``It might be workable, but help us sell it.'' A little bit later the answer was that it wasn't a viable option, that the government policy was not to increase taxes. And then, that very year, they increased the gas tax by two cents and put it into general revenue.

If you ask everybody, cold turkey, how they would like to pay another cent or another two cents a litre, everybody would say they don't like it. When we put it to the people and say they'll end up getting better roads for it, they say it might be worth while if that's the only way to get it.

Mr. Keyes: If it's a dedicated trust fund for highways -

Mr. Redfern: Yes. I realize that dedicated money is something the finance department and the finance people don't want. They do it in the States on this ISTEA program. It's worked in other countries. Whether it's dedicated in concrete or dedicated in theory, it's the idea that we will at least put x amount of dollars towards it and not just flush it off into the general fund.

Mr. Keyes: I want your feeling on this. What do you say to a person who comes up to you - in particular, on Highway 407 versus the existing highway situation - and says he has a bad feeling in his stomach about it because he'll be watching people who have the extra dough get on a fancy high-speed highway to make it over the top of Toronto in 45 minutes from Hamilton, let's say? If he doesn't have the extra funds in his budget, he'll just clunk along for one and a half hours from Hamilton to Toronto on a 401 that needs maintenance. What do you say to a person like that?

Mr. Redfern: I say that everybody's a winner. You've got two choices: build 407 or don't build 407. If you don't build 407, everybody clunks along and goes that same old route. If you do build it, at least if you have to go on the old route you have that much less traffic. Traffic won't be the same. I think both people are winners. One's going to pay for it and the other one isn't going to pay for it.

As to whether there should be maintenance or not, I think that's part of the highway program. It has to be maintained, because you lose the total asset if you don't.

Mr. Keyes: If properly coordinated, instead of having a 407 that will let people who have the money dash over the top of Toronto - Properly coordinated, it would be an option. Take the existing 401, which is cramped and crowded because of the narrowness in some spots in Mississauga, etc., expand that by a lane in each direction if necessary - or find other opportune means to move traffic more efficiently - use private sector partnership money and toll for an existing time period.

All of our bridges, like the Skyway in Hamilton, were tolled for a while until the moneys were recouped by the private sector - and then some. Then they were removed. A more coordinated fashion -

Mr. Redfern: I used to build highways in Ontario in 1958 and 1959. The Department of Transport had its headquarters at Downsview. They were at Downsview because it was going to be outside the city of Toronto and the four lanes of 401 were going to look after all of the traffic needs they could perceive - forever.

They're getting up to sixteen lanes right now. When you start to add more lanes, I don't think you're going to save much money by building a couple of extra ones, expanding the right of way, expanding the bridges, and expanding the overpasses.

I think you're going to get just as efficient a use of the cash, but you are actually diverting on a high-speed access way. You could not efficiently make an expanded 401 a high-speed access way. You would still be stuck with all the same entrances and exits.

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I really think the way they're doing it is more efficient, and I think the people who don't pay are going to get the benefit of reduced traffic on 401.

Mr. Keyes: Thank you, sir.

The Acting Chairman (Mr. Jordan): Thank you. There's room for a lot more discussion, but we're quitting now because it's 3:30 p.m. Thank you very much for your presentation.

Committee members, I'm told you reassemble tomorrow morning in Ottawa at 8:30 a.m.

Mr. Redfern: Thank you very much, committee members. We appreciate your coming here to see us. Bonne chance pour demain et pour les jours suivants.

The Acting Chairman (Mr. Jordan): The meeting is adjourned.

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