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37th PARLIAMENT, 1st SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Wednesday, February 27, 2002

1545

The Chair (Mrs. Sue Barnes (London West, Lib.))

1550

Mr. Wilfert

The Chair

Mr. Wilfert

The Chair

Ms. Girard-Bujold

The Chair

Ms. Girard-Bujold

The Chair

Mr. Brison

The Chair

The Clerk of the Committee

Mr. Brison

1555

The Chair

Mr. Brison

The Clerk

Mr. Brison

The Chair

Mr. Wilfert

The Chair

Ms. Girard-Bujold

The Chair

An hon. member

The Chair

Some hon. members

The Chair

Mr. Wilfert

1600

The Chair

Mr. Wilfert

The Chair

Mr. Ken Epp (Elk Island, Canadian Alliance)

The Chair

An hon. member

The Chair

Mrs. Karen Redman (Kitchener Centre, Lib.)

Mr. Ken Epp

The Chair

1605

Mr. Wilfert

Mr. Ken Epp

Mr. Wilfert

The Chair

Mr. Wilfert

The Chair

Mr. Wilfert

The Chair

Mr. Wilfert

The Chair

Mr. Wilfert

The Chair

The Clerk

The Chair

Mr. Bryon Wilfert

Mr. Ken Epp

The Chair

Mr. Georges Nydam (Industrial Commissioner, West Island Business Development Council)

1610

The Chair

Mr. Gérald Gauthier (Director, Industry Liaison, Railway Association of Canada)

1615

Mr. Chris Jones (Director, Government Relations, Railway Association of Canada)

The Chair

Ms. Emilia Shaw (Manager, Public Affairs, Canadian Urban Transit Association)

1620

1625

1630

The Chair

Mr. Epp

1635

Mr. Chris Jones

Mr. Ken Epp

Mr. Gérald Guathier

Mr. Ken Epp

Mr. Gérald Gauthier

Mr. Ken Epp

Mr. Gérald Gauthier

Mr. Ken Epp

The Chair

Mr. Chris Jones

Mr. Epp

1640

Mr. Yves Picard (Chief Executive Officer, Carrefour Jeunesse-Emploi Marquette et Ouest-de-l'île)

Mr. Ken Epp

Mr. Gérald Gauthier

Mr. Ken Epp

Mr. Gérald Gauthier

Mr. Ken Epp

Ms. Emilia Shaw

1645

The Chair

Ms. Girard-Bujold

Mr. Chris Jones

Ms. Emilia Shaw

Mr. Georges Nydam

1650

Ms. Girard-Bujold

The Chair

Mr. Murphy

The Chair

Mr. Chris Jones

Mr. Murphy

Mr. Chris Jones

Ms. Emilia Shaw

Mr. Murphy

Ms. Emilia Shaw

The Chair

Mr. Murphy

Mr. Gérald Gauthier

Mr. Murphy

Ms. Emilia Shaw

1655

1700

The Chair

Mr. Brison

The Chair

Mr. Georges Nydam

Ms. Emilia Shaw

1705

The Chair

Mr. Chris Jones

Mr. Brison

Mr. Chris Jones

Mr. Brison

Mr. Chris Jones

Mr. Brison

Mr. Chris Jones

Ms. Emilia Shaw

Mr. Brison

The Chair

Mr. Nystrom

1710

Mr. Chris Jones

Mr. Gérald Gauthier

Mr. Nystrom

Ms. Emilia Shaw

Mr. Nystrom

Ms. Emilia Shaw

Mr. Chris Jones

1715

The Chair

Mr. Lorne Nystrom

Mr. Chris Jones

The Chair

Mr. Julian Reed (Halton, Lib.)

1720

Ms. Emilia Shaw

Mr. Julian Reed

The Chair

Mr. Chris Jones

The Chair

Mr. Wilfert

1725

The Chair

Ms. Emilia Shaw

The Chair

Mr. Wilfert

The Chair

Mr. Wilfert

1730

The Chair

Mr. Ken Epp

The Chair

Mr. Chris Jones

Mr. Ken Epp

Mr. Chris Jones

Mr. Ken Epp

Mr. Chris Jones

Mr. Ken Epp

Mr. Chris Jones

Mr. Ken Epp

The Chair

Ms. Minna

1735

Ms. Emilia Shaw

Mr. Georges Nydam

1740

The Chair

Mr. Cullen

The Chair

Mr. Chris Jones

1745

The Chair

Ms. Emilia Shaw

The Chair

Ms. Girard-Bujold

Mr. Chris Jones

The Chair

Ms. Emilia Shaw

The Chair

Mr. Wilfert

The Chair

Mr. Wilfert

The Chair

CANADA

Standing Committee on Finance

NUMBER 082

1st SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, February 27, 2002

[Recorded by Electronic Apparatus]

¹ (1545)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): The order of the day is Bill C-209, an act to amend the Income Tax Act.

Our witnesses are, from the Canadian Urban Transit Association, Emilia Shaw, director of public affairs; from the Railway Association of Canada, Chris Jones, director of government relations, and Gérald Gauthier, director industry liaison; and from the West Island Business Development Council, Georges Nydam, and Yves Picard, chief executive officer.

Welcome.

[Translation]

Welcome.

[English]

We have witnesses scheduled for today on Bill C-209. Earlier today the clerk from our committee advised me that this bill has to be reported to the House on Tuesday after the break. Tuesday the reports into the House go in at 10 a.Mr., which means we would have to have clause-by-clause completed, at the very latest, on Monday.

All of the witnesses who have notified us so far--and please bear with me so that I can just take care of this business--have been notified by the clerk. I need to ask this committee if there are any more witnesses they would like to hear from, because we could potentially do that tomorrow, or again on Monday or Friday, but they have to be invited so we can give them some notice.

Mr. Wilfert.

¹ (1550)

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Madam Chair. I would ask for support to invite the mover of the bill, Madam Girard-Bujold, to be here tomorrow as a witness. Further to that, Madam Chair, I would also request that we have representatives from the finance department here as well for a short presentation and Q and A. And futher to that, Madam Chair--this would be the last of the witnesses from my understanding--because of the nature--

The Chair: Unless somebody else has witnesses they wish to invite.

Mr. Bryon Wilfert: If that is the case, given that the bill is not very complex in terms of this one clause, I would suggest that after the witnesses tomorrow we then deal with the bill itself.

The Chair: Yes.

[Translation]

Ms.. Bujold, do you wish to ...

Ms. Jocelyne Girard-Bujold (Jonquière, BQ): It would be my pleasure, Madame.

The Chair: Thank you

[English]

Madam Girard-Bujold, would you like any other witnesses?

[Translation]

Ms. Jocelyne Girard-Bujold: No.

[English]

The Chair: Mr. Brison.

Mr. Scott Brison (Kings--Hants, PC/DR): Should we invite the Canadian Federation of Municipalities?

The Chair: They have been invited actually, and the clerk has contacted theMr.

Go ahead, you can give the information on that.

The Clerk of the Committee: The Federation of Canadian Municipalities was invited last week because they were suggested, I believe, by the Bloc. I was in contact with Mr. Campbell, who indicated they were not in a position to appear this week and therefore declined the invitation.

Mr. Scott Brison: It would help if they could provide a written submission on their view on this. They're an important stakeholder. We represent ridings ranging from urban to small town and rural ridings, and since they're a national organization that represents a similarly diverse clientele, it would be interesting to have their view on this. Perhaps, if a member of the committee has...if you already have a written submission or something from--

¹ (1555)

The Chair: Just for clarification, we could have the clerk go over who has been contacted, because on our very first meeting we did have some discussion on this point.

Mr. Scott Brison: They may have a position paper in lieu of being here perhaps.

The Clerk: The witnesses who were contacted were those the committee approved last week.

I believe Madam Judy Sgro was invited by the committee, and she indicated to my office that she declined the invitation.

The Federation of Canadian Municipalities was invited, and it declined because they were not available this week.

The Canadian Bus Association was invited, and I've still to hear from theMr.

The Quebec urban transport association was invited and have declined.

And we have three groups before us who have accepted to come before the committee.

Mr. Scott Brison: To get back to the original point about a written submission--or just a position paper--that we could get, I'm certain there must be one.

The Chair: I think the clerk has offered, as I understand it, to anybody who has been invited as a witness--that's a constant--to submit a paper. We just don't wait for papers, that's all.

Now, I don't want to take up too much of our time. Do I have agreement, then, for a meeting of the witnesses as suggested?

An hon. member: Tomorrow morning.

The Chair: We'll start at nine, perhaps, because it is Thursday.

When do you wish to go clause by clause? I'm in your hands. Do you wish to do it tomorrow? Do you wish to do it Friday, or the following Monday?

Mr. Bryon Wilfert: Madam Chair, since there is only one clause, I would suggest that right after the witnesses tomorrow we might be able to deal with the bill.

The Chair: Madame.

[Translation]

Ms.. Jocelyne Girard-Bujold: I apologize, madame. If we ask the other groups such as the Federation of Canadian Municipalities to make submissions, we may not have the time to read them if we do it immediately after the clause-by-clause study of the bill. Could we not give ourselves a little time to read them? I have asked the people from Quebec to send us something and they are going to do so. The Federation of Canadian Municipalities was there when I held my press conference for my bill and they supported it. They were there when I tabled it.

[English]

The Chair: Yes, my information from the clerk is that when he invited them last week, he advised them they could send a brief. So far, we have not received one. Perhaps the clerk later today, after this meeting, could contact them again and tell them to get the brief in by tomorrow if they wish.

But, again, the proposal on the table is to go clause by clause tomorrow, after the witnesses, or tomorrow afternoon...I'm in your hands, committee. What would you like?

An hon. member: After the witnesses.

The Chair: Shall we do 9 a.Mr. until, say, 10:30 a.Mr. with the witnesses, break for five minutes, and then go from 10:35 a.Mr. to 11:30 a.Mr. for clause-by-clause?

That's agreed?

Some hon. members: Agreed.

The Chair: Good.

Bryon.

Mr. Bryon Wilfert: This is of a procedural nature, Madam Chair, but I would suggest, since we do not have this, this might be an appropriate time to suggest the following--and I have a written motion that I would like to read out:

-That 48 hours notice be given to the Members of the Committee before any new item of business is considered by the Committee and,

-That the notice be filed with the Clerk of the Committee and circulated to all Members in both official languages. Upon receipt of the notice, the Clerk will put the new item of business on the agenda of the next Committee meeting.

Notices of motion are, as you know, Madam Chair, very common in this institution. Because we don't have one, I think it would be appropriate for us to institute one.

º (1600)

The Chair: That's fine. Can I get that in writing? Then, Mr. Wilfert, is that--

Mr. Bryon Wilfert: That's correct, Madam Chair.

The Chair: So we have a motion on the floor right now.

Mr. Epp, go ahead.

Mr. Ken Epp (Elk Island, Canadian Alliance): Madam Chair, thank you for finally recognizing me, since I asked for the floor right at the beginning. I would like to just say a couple of things here.

First of all, it has been the practice of the finance committee, it being basically the pivotal committee in the House of Commons, that all of our proceedings have been televised. I would like that to be resumed. I think it's important. There's a great deal of public interest in what happens in this committee, and whereas we used to televise essentially all of our meetings, with very few exceptions, that should be resumed.

Second, and I will do this while I have the floor, with respect to this motion, if this motion is passed, that precludes going to clause-by-clause on the bill tomorrow because, after having heard the witnesses, I think the members of the committee may wish to propose some amendments. If the amendments need a 48-hour notice, there's no way we can propose motions to amend without having given that notice, and I think that would be a great error.

We, as members of the committee, should not so tie our hands that we cannot deal with business when it's in front of us. So I would speak very strongly against the motion of Mr. Wilfert. I know the motivation for it, but really what it does is preclude the committee from doing what it wants to do.

The Chair: Karen, I'm going to address the reason we're not televised. I had planned a steering committee yesterday, which we did not have. I'm trying to follow the existing rules of this committee, and the rules say we are televised for a minister and for the Governor of the Bank of Canada. I also found another rule that says for pre-budget witnesses it is the rule.

Until we have a standing committee meeting to revise all the rules, I'm going to stick with the rules we have as opposed to making these decisions ad hoc as a chair.

An hon. member: [Editor's Note: Inaudible]

The Chair: Well, we'll have a steering committee to deal with that, and I'm giving you the explanation that I know the clerk has already given to you on this point.

Karen Redman.

Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you, Madam Chair.

If I could just respond to Mr. Epp's point, I've sat on many, many standing committees of the House of Commons, and on this one as well, for many years and they have always had at least a 24-hour if not a 48-hour rule for amendments coming forward, with the understanding that if the committee gave unanimous consent they could waive that. I wonder if that option may not speak to some of Mr. Epp's issues around dealing with this piece of legislation expeditiously.

Mr. Ken Epp: Obviously it makes no difference. I'm going to be outvoted here today. We have three opposition members and nine government members and you guys will probably be carrying this motion.

This is what I think would happen tomorrow, just to take a for instance. We may hear something from these witnesses today, and if we pass a 48-hour rule, then under that rule we couldn't even produce some amendments for tomorrow. Also, in the event that we would have something from the Department of Finance that would ask for amendments, we wouldn't be able to deal with it tomorrow.

However, I cannot believe that tomorrow, if you want to have this bill pushed through, and if there are some reasonable amendments...and I'm not talking about dilatory motions here; I'm talking here about regular, ordinary, hard-working, analytical, thoughtful amendments that we want to put forward. If this committee is not going to accept them, or if any one person can say “I'm not going to accept it”, are we then going to go ahead and push through the clause-by-clause without even permitting amendments? That is a great error, folks. I know you can do what you want, but it's wrong.

The Chair: I think that's not the intention. The clerk is just clarifying for me new items of business. I want to make sure we don't have confusion here.

I'll go to Mr. Wilfert, and then if I need to clarify from the clerk I will.

º (1605)

Mr. Bryon Wilfert: I was dealing with new items of business, Madam Chair.

That is fairly common, as Ms. Redman pointed out, but obviously the wishes of the committee....

But to sooth Mr. Epp's concerns--and you know, Mr. Epp, I'm always willing to try to sooth your concerns--

Mr. Ken Epp: As I noticed yesterday.

Mr. Bryon Wilfert: Yes, because I noticed you were very supportive of what we did yesterday.

The Chair: Please, I don't want to delay our witnesses.

Mr. Bryon Wilfert: I would like to point out that we could move this to the Monday afternoon when we return and do it.

The Chair: Do you mean take your notice of motion off right now?

Mr. Bryon Wilfert: I would like to deal with this 48-hour rule now. Then, if the committee wishes to deal with the bill on March 11 in the afternoon, I wouldn't have difficulty with that.

The Chair: The committee has agreed to deal with it tomorrow. That decision has been taken. You either take this motion off the floor right now or we vote on it right now.

But it's my understanding from the clerk that your notice of motion is for new items of business. It's not going to affect clause-by-clause.

Mr. Bryon Wilfert: Okay. I misunderstood what you said. That's fine.

The Chair: Would the clerk please verify that?

Mr. Bryon Wilfert: If it doesn't affect what I originally said, then I have no difficulty.

The Chair: Okay.

The Clerk: My understanding of the motion--and I stand to be corrected by members--is that if a committee is meeting on a bill, as we will tomorrow on Bill C-209, motions that relate to this bill, which are on the agenda for tomorrow, will not be considered new items of business, since the agenda states the committee is meeting on Bill C-209.

Members had an opportunity to receive the notice that this meeting was taking place and this was the subject matter that was being considered by the committee, so there are no surprises for members of the committee. I assume this is the intention.

Again, this is my interpretation of what a new item of business would be. I don't rule on what these words mean. This is my interpretation.

The Chair: Does that concur with what you intended?

So Mr. Epp's concerns about not being able to amend are not within the purview of your motion.

Mr. Bryon Wilfert: That's right.

Mr. Ken Epp: Notwithstanding, as it indicates, we wouldn't have enough time to analyze the--

The Chair: I'm just trying to clarify your concern. That is not a concern now because that is not what the intention of this motion is, as I understand it.

I'm going to call the question because I don't want to delay the witnesses.

(Motion agreed to)

The Chair: Is there anything further before I get to the witnesses?

Thank you.

We will start with Mr. Nydam, please, from the West Island Business Development Council. Please be as succinct as you feel you can in giving us the testimony you need to put your points on the table.

Thank you.

[Translation]

Mr. Georges Nydam (Industrial Commissioner, West Island Business Development Council): Thank you, Madame Chair. Thank you also to the members of the Committee for inviting us to share our views on the bill before you.

FIrst of all, to put you in context a bit, allow me to pass on to you the interests of my colleague, Yves Picard, as well as my own. We represent two organizations mandated to develop the west end of Montreal Island, better known in English as West Island.

Our interests in this matter are very simple. On the one hand, I represent employers. For employers, one of the important criteria for development is accessibility for employees. So, public transit is an important consideration. On the other hand, Mr. Picard represents the Carrefour Jeunesse-Emploi Marquette et Ouest-de-l'Île. For him, it is an opportunity to offer young people the possibility of getting to work by means of public transit.

We congratulate you, madame, for presenting this measure which promotes the use of public transport. We support it because we believe it will increase the demand for public transit. If demand increases, the service will be improved and there will therefore be greater availability.

However, when we speak to people in our community, they point out that there exists--and the United States is the best example--a range of measures which we could use to change social habits. Let us make sure that the decision to take a car or public transit or to share a car is partly a social decision.

So, very succinctly, we believe that, if the House decides to support this measure, it will be a good first step but, for us, it is important that the Canadian government in concert with the provinces, adopt a global policy aimed at promoting the use of modes of collective transport from one end of the country to the other.

Madame, I think that is a succinct as it can be.

º (1610)

[English]

The Chair: Mr. Gauthier.

Mr. Gérald Gauthier (Director, Industry Liaison, Railway Association of Canada): I'll do the first part of our presentation in French, but you have the text. I will read excerpts from this presentation.

[Translation]

The Railway Association of Canada has been, since its creation in 1917, the spokesperson for the great majority of Canadian railways. Its travel members include notably the Agence métropolitaine de transport, Capital Railway, Go Transit and West Coast Express. Commuter trains used by these agencies carry out more than 47 million trips each year, reducing the congestion of road networks and parking lots in Montreal, Ottawa, Toronto and Vancouver. For example, if Toronto commuters drove cars instead of taking trains, buses or Go Transit, we would need three more Queen Elizabeth Ways and three new Don Valley Parkways, as well as a new parking lot the size of downtown Toronto.

In Canada, rail transport is often not taken very seriously. Yet, Canadian railways offer a significant environmental advantage over other means of ground transportation, notably in terms of greenhouse gas emissions.

In Canada, private cars are responsible for over half the fuel consumption and the carbon dioxide emissions arising from the transportation sector.

In Canada and the United States, gasoline, roads and parking systematically benefit from subsidies which artificially minimize the cost of automobile use. For example, almost 80 percent of commuters in the metropolitan area of Toronto benefit from a free parking spot at their workplace, to the detriment of public transit.

Rail offers a responsible environmental solution to the malignant and rapid growth of pollution, traffic congestion, land use and the considerable costs of road infrastructure. In addition, it reduces the stress of millions of commuters and increases their productivity by reducing the amount of time spent on congested urban road networks.

The Railway Association of Canada salutes the vision demonstrated by those who are promoting Bill C-209.

However, it is not always easy to estimate accurately the exact impact a tax credit for public transport would have on the rate of use of public transport.

Ottawa's commuter train saw its clientele drop from 6,000 to 5,000 a day when the service started charging last January, which confirms empirically that the cost of the means of transport has a direct impact on the rate of its use. In the case we are concerned with, it is reasonable to think that the use of public transit will increase by about 5 percent.

However, this incentive must not be accompanied by administrative red tape. Public transit agencies should not have to issue receipts other than the tickets or passes which they already issue.

We would also support any incentive measure which would allow an employer to provide a tax-free transit pass to his employees. This measure would not be unlike some fiscal arrangements in effect south of the border.

Under the terms of current American federal tax law, an employee may receive tax-free transit passes with a maximum monthly value of up to $65. The Transportation Equity Act for the 21^st Century maintains the aforementioned tax benefit but amends the law to eliminate the rule which prevented employees from being offered a choice between a tax-free pass and a taxable monetary benefit.

º (1615)

All these measures promote public transit. However, at the moment, public transit agencies are facing a chronic underfunding problem which prevents them from expanding and responding to the current increased demand and the demand which would arise from the proposed measure.

Currently, only municipalities and provincial governments are providing financial support. Yet, the federal government committed itself in the last Throne Speech to providing support for public transit. The amounts required are enormous. For example, GO Transit estimates its annual requirements for infrastructure to meet the growing demand, at $100 million dollars a year, of which a $34 million share should come from the federal government.

[English]

Mr. Chris Jones (Director, Government Relations, Railway Association of Canada): Thank you, Madam Chair.

An effective Canadian surface transportation policy should favour secure and seamless systems of passenger and freight transportation. It would treat all modes in a balanced way while striving to foster intermodal technology developments.

The government must recognize the strategic importance of transport infrastructure and the inherent benefits represented by rail transportation, especially passenger service. Henceforth, in our view, you must allocate infrastructure and operating dollars equitably to all modes on the basis of their contribution to the public interest.

Bill C-49, the Budget Implementation Act, 2001, proposes a strategic infrastructure fund program that would provide funding to eligible applicants for the construction of large-scale strategic infrastructure aimed at stimulating the economic growth or improving the quality of life in Canada.

Road and rail infrastructure would be eligible. It is hoped that part of these funds will be used to help public transport agencies cope with the growing levels of demand they are experiencing. This would be a wise investment and would be well received by taxpayers.

For instance, a poll conducted in the Vancouver region just last month recently placed transportation at the head of a list--at 83%--of public frustrations in that area, well ahead of its nearest rival.

This clear public concern, which is shared across the country--in Toronto and Montreal as well--is based on the fact that congestion is growing at an alarming rate in many city centres. As the OECD has noted, the construction of new roads merely induces new traffic. Moving people by transit and rail, by contrast, frees up existing roads for businesses that must use theMr.

In conclusion, the measure contemplated in Bill C-209 is a good one and would move partially in the direction of righting the financial imbalance that characterizes the provision of public goods in the transportation sector.

The public interest benefits that flow from the use of transit, commuter rail, and light rail must somehow be reflected in the tax systeMr. Having said this, defining the appropriate level of incentive in the tax system is a critically important part of devising a credible policy that will lure people from their cars and onto transit and rail.

To this extent, we support the measure being advanced here. However, it is only one piece of the puzzle and must be strengthened by a host of other rail and transit-friendly public policies that alter the mix of incentives and costs facing the commuter.

To reiterate, any tax incentive that encourages people to make a greater use of public transport is welcome. Such measures, however, must be matched by a greater level of federal public expenditure on commuter and transit infrastructure. Public transport agencies are already short of funds to cope with existing demand. The growth resulting from such incentive measures will only increase the need for sustainable funding. Thanks.

The Chair: Thank you very much. Thank you for your succinct presentations here.

We have this room a little longer, so if it's the will of the committee we could go 15 minutes longer, till 5:30 p.Mr., if you would like. Is that agreeable to everybody here: 15 minutes? So we'll go to 5:30 for those--

A voice: There's one more witness.

The Chair: Oh, Emilia Shaw.

Emilia Shaw asked to go last. You have the floor. Go ahead.

Ms. Emilia Shaw (Manager, Public Affairs, Canadian Urban Transit Association): Good afternoon. Thank you for the opportunity to speak. My name is Emilia Shaw and I'm manager of public affairs for the Canadian Urban Transit Association.

First of all, I would like to congratulate Madame Jocelyne Girard-Bujold of Jonquière for bringing this initiative forward. This is clearly an important incentive in support of increasing public transit use.

Bill C-209 will enable all Canadians, when filling out their income tax returns, to subtract a percentage of the money they pay for public transit from the amount they owe in taxes. My understanding is that this would be available for bus, rail, subway, and light rail. Individuals would provide documentation to support the amount they claimed; for example, a monthly and/or yearly pass. I would suggest that this is quite important because in just using tickets, there can be a sort of one-off, but by absolutely committing to a monthly or yearly pass, not only are current riders going to increase their transit use, but certainly it'll encourage new riders to use transit.

Public transit across Canada has been experiencing steady growth since 1999. However, much more needs to be done if public transit is to fulfill its mandate to significantly reduce congestion and improve quality of life in our urban communities. Bill C-209 is a step in the right direction.

The increasing number of cars on the road and the kilometres these vehicles are driven have overwhelmed technological advances such as cleaner fuel and more efficient engines. Reducing oil use should be a key strategy of the federal government to improve air quality and to counteract climate change by reducing greenhouse gas emissions.

Increased transit use results in decreased traffic congestion. Decreased traffic congestion reduces the amount of smog to which we are subjected. As a preventive health measure, lessening pollution will reduce the incidence of respiratory and cardiac illness, with fewer emergency room and physician visits. This an especially important benefit to our children and elderly family members, who are much more susceptible to pollution-related illnesses.

On a monetary level, reduced pollution-related health care leaves our provincial governments with many more resources to divert to other pressing health care issues, such as home care for our aging population.

Reducing auto use or the rate at which auto use is rising also reduces the need for expanding auto-related infrastructure. Municipalities across Canada are struggling to cope with increased transportation demand. Investing in public transit is a less expensive alternative to building new roads, bridges, and parking facilities. For example, here in Ottawa the transitway carries the equivalent of eight lanes of Queensway traffic each rush hour.

Congestion, a major concern of urban centres, is impacting the competitiveness of businesses. Toronto estimates their cost of congestion to be $2 billion annually. Yet decreasing auto use by a mere 5% would decrease congestion by 50%.

Increased transit use gives transit properties the flexibility to provide better transit service. It is extremely important to allow all members of our society equal access to jobs and educational opportunities. It also relieves some of the pressure on transit properties to reduce the subsidized fares of seniors and students.

All these benefits have a positive impact on our economy. As taxpayers, we simply can no longer afford to support unlimited increases in auto use.

The public clearly thinks that transit is important. A 1999 Environics poll suggested that 49% of individuals would like to see improved and expanded transit, whereas only 8% supported the building of new roads. A Decima Research Inc. survey conducted in Ottawa in December 2001 showed that more than half of those polled, 52%, voted for expanded public transit, compared with 29% who favoured improving and expanding roads.

As many of you may be aware, we have promoted tax incentives for public transit in the past; specifically, employer-provided tax exempt transit benefits, or what we call TEI. We have asked this committee in the past to recommend that the federal government amend the Income Tax Act to make employer-provided transit benefits income tax exempt.

We had asked for this amendment in order to address some of the current inequities that discourage public transit use. Parking and transit benefits are both designated as taxable income, although exemptions exist that allow many employers to give their employees free parking that is income tax free. While Revenue Canada states that it cannot identify the extent to which Canadians avoid paying tax on free parking, surveys show that free or subsidized parking is a common benefit provided to about 80% of auto commuters. I believe it's also provided to all of the MPs on the Hill.

Employer-provided transit benefits, however, are rare. Most commuters compare only the operational costs of using a vehicle, such as gas and parking, to the cost of using transit.

Employer-provided parking becomes a significant financial incentive to drive. Workers receiving free parking save an average of $1,280 a year.

º (1620)

This incentive increases to about $1,776 annually if income tax is not charged.

One way to compete with free parking is to change the way public transit benefits are taxed. A tax exemption gives employers the financial incentive to offer transit benefit to its employees. A transit benefit provides an equitable benefit for non-drivers as well as a motivation for drivers to switch to a mode of transportation with lower societal costs. In the United States, where employers are allowed to provide transit benefits to their employees income tax free, TEI has become the single most important transportation demand action, resulting in significant increases in new ridership.

Improvements to the 1998 Transportation Equity Act for the 21st century, commonly known as TEA-21, provides up to $100 per month in non-taxable transit benefits. Employees can also purchase these in pre-tax. A continual expansion of employers interested in participating in this program has occurred, with ridership growth setting a post-war record in 1999. In the past five years, total transit ridership in the United States has increased more than 20%.

Conversely, at a Johnson & Johnson factory in Yorkshire, Great Britain, a decision was made to begin taxing existing employer-provided transit benefits. This change in tax policy played a significant role in creating a negative transit-use spiral, which led to a massive collapse in bus use by staff.

I would like to spend a minute reflecting on who would benefit if TEI were implemented. TEI is a very important strategy for all levels of government--municipal, provincial, and federal--as well as for individual Canadians and businesses. As part of the national climate change process, a cost-benefit analysis of TEI was completed. This report by IBI Group and Management of Technology Services estimates transit increases of up to 58% among participating employees, with a resulting decrease in auto commuting of up to 7.5%. Of particular interest to the federal government should be the estimates of greenhouse gas reductions of up to 4.8%, depending on the type of legislation enacted.

As taxpayers, we are interested in the estimated societal savings of $3 for each dollar invested in TEI. We all represent only one taxpayer, so any initiative that costs money at one level of government, but results in overall savings at another level of government, is a sound investment.

Support for this initiative continues to grow, as it does for Bill C-209. This committee has heard submissions supporting the Tax Exempt Initiative from Pollution Probe, the Federation of Canadian Municipalities, Physicians for Global Survival, the David Suzuki Foundation, the Canadian Labour Congress, and the Ontario Coalition of Senior Citizens' Organizations. These are just a few of the many health, social, labour, transit, political, and environmental organizations across Canada that supported TEI.

Political support for TEI is also high. Many members of this committee participated in the three one-hour debates over motion 360, which was brought to the floor by Nelson Riis from the NDP. This was overwhelmingly endorsed by the House of Commons by a margin of 240 to 25.

Paul Martin, in earlier meetings with the National Round Table on the Environment and the Economy, has indicated his interest in ecological fiscal reforMr. I had the opportunity to attend one of those meetings. Actually, I had the opportunity to attend several of those meetings. I have to tell you that one person stood up and said, “Don't we already have an incentive like that? Isn't it called employer-provided tax exempt transit benefits?” I would like to suggest that TEI is a perfect example of using fiscal reforms to encourage more responsible and sustainable care of our environment.

I had the opportunity to go through the Hansard and subsequently read the two hours of debate, and I'd like to respond to that now.

The federal government has already committed to the environment. That's right, you have. The Liberals have moved forward with a number of very significant movements: the green municipal enabling and green municipal investment funds at approximately $250 million; the sustainable development technology fund at $100 million; your climate change action fund; your Canada infrastructure works program; and your strategic infrastructure initiative. These initiatives are to be commended. We sincerely hope this level of support continues and grows.

As many of you are aware, we have substantial needs for funding of public transit infrastructure. A recent survey of our members showed that $13.6 billion will be required between 2002 and 2006 to meet transit infrastructure investment needs across Canada. However, I would suggest that Bill C-209 and employer-provided tax exempt transit benefits are separate from these funding initiatives.

º (1625)

Bill C-209 and TEI are incentives. They respond to the demand side of public transit, whereas infrastructure responds to the supply.

We need to have reliable, accessible, and convenient public transit in place and we need to encourage people to use it. These are not exclusive of each other. Rather, they are complementary.

Rural equity always comes up in any discussion of this type of initiative. If you don't mind me quoting one of your colleagues, I think Paul Szabo addressed the issue of fairness best during his contribution to the debates of motion 360. He asked:

Does everybody have to be treated exactly the same? Or, is it that we are trying to promote equity or equality of benefits? If you had two children you might give one a book because they are a good reader. You might give the other a chemistry set because they want to get involved. You treated them equally because they both got something that maybe brought out the best of their talent but you did not treat them the same.

He said it is important for us “not to dismiss” TEI or Bill C-209 “simply because it is not universally accessible and relevant to all Canadians”. He says:

I think we as parliamentarians always want to be as open as possible with regard to broader implications...with issues that Canadians feel are important. ... Do not tell me why we cannot, tell me how we can.

Another issue that was brought up in Hansard was that what was required was for transit to use more effective alternative fuel sources. Let me tell you, public transit is prepared to play its part. Currently, public transit emits less than 1% of the 32% of greenhouse gas emissions produced by transportation. Despite this low figure, we continue to look for ways to reduce our emissions. The ideal would be to replace our old fleets with new hybrid electric or fuel-cell buses and to invest in light rail that uses clean electricity or wind; however, some of these technologies are not currently available or they are extremely expensive. And, as already mentioned by many people here, funding is scarce. So instead, we do what we can through retrofits, catalytic mufflers, and anti-idling campaigns.

This government needs to support incentive programs like Bill C-209. The fact remains that our government has choices to make, and these choices will have consequences. Should tax incentives be refused because of a perceived inequity? All Canadians will bear the consequences of this decision. Or does the government want to implement this initiative on the basis that this is a very good first step toward keeping our Kyoto promise?

The consequences will be positive, as we will lessen our congestion costs and save on taxes. Further savings in transportation costs will be reinvested into our economy. Our communities will be healthier and more livable, and all members of society will enjoy improved mobility options. Implementing a public transit tax incentive is a win-win proposal, but the time to act is now. This is a rare opportunity for the federal government to affect public policy at a local level.

You have indicated your desire to ensure that Canada remains a major player in the new economy. Bill C-209 will help reverse the crippling cost of congestion in our urban areas and improve both our productivity and our standard of living.

You have stated in the past that you want to recommend initiatives that provide Canadians with equal opportunities to succeed. Ensuring the viability of public transit systems is paramount to ensuring equal access to education, job, social, and recreational opportunities.

You wish to create a socio-economic environment where Canadians can enjoy the best quality of life and standard of living. The impact of our transportation choices extends further than the health impacts of smog and greenhouse gas emissions. It includes the loss of green space, parkland, and agricultural lands; the cost of time wasted on congested roads; safety factors such as accidents; and the limiting of access to services to those with a car.

We believe it is time for the federal government to take action and encourage the use of public transit. In supporting Bill C-209, you would be doing just that.

Thank you.

º (1630)

The Chair: Thank you very much, Ms. Shaw.

Mr. Epp, for 10 minutes.

Mr. Ken Epp Thank you all for being here. I just want to get a summary one-word statement from you on this question. Do you support this bill?

Ms. Emilia Shaw: Yes.

Mr. Ken Epp: Okay, so you're all in favour of it.

Now I will ask the second question. I'm sure you have a copy of the bill before you. What's your understanding of the bill where it says A is the appropriate percentage for the year? What does appropriate percentage mean?

Do you have a copy of the bill?

º (1635)

Mr. Chris Jones: We've read it.

Mr. Ken Epp: It's so short, I'll just read it. It says:

For the purpose of computing an individual's tax payable under this Part for a taxation year, there may be deducted the amount determined by the formula A x B where A is the appropriate percentage for the year; and B is the total of all reasonable amounts paid by the individual in the year for the use of a public transportation service....

So what is your understanding of the appropriate percentage?

Mr. Gérald Guathier: If I may, the French version varies a bit from the English version. I believe the French version says it's “le taux de base pour l'année”, which seems to indicate the tax rate you're subject to as a taxpayer.

Let's say, for the sake of the conversation, your tax rate is 24%. My understanding is that A in this section refers to the 24% that would be applicable to your income tax statement.

That's the reading according to the French version. Unfortunately, the English version differs.

Mr. Ken Epp: So this is in the section on computing your tax, rather than computing your taxable income. Is that what it is?

Mr. Gérald Gauthier: According to our reading of the text, it seems that the total portion of your deductible transportation costs would be exactly the same percentage as your income tax bracket.

Mr. Ken Epp: Different people have different rates of income tax on their marginal tax, based on where they are on the income scale. Would you base this on the lower rate or the higher rate?

Mr. Gérald Gauthier: We agree with the bill as presented, although we believe it would be much more logical for anyone to be able to deduct the full cost of transportation. We don't see any reason why we should use the tax rates. That's what the bill says, and it makes sense, but it would be preferable if the full cost were deductible.

Mr. Ken Epp: Okay. The purpose of this committee is to report this bill back to the House, with or without amendments. If in our view we would like to see the House pass it as presented, we would present it without amendment. If we think it could be improved, I'm positive that as a committee we would pass some amendments.

So if I can be so bold as to ask each of your groups, if you had the opportunity to propose any amendment to this, what would it be?

The Chair: Who would like to start ?

Mr. Chris Jones: It's a complex question to determine what rate the incentive should be set at. It has to be a rate--I know I'm not answering your question directly--that will be sufficient to trigger people to move away from their vehicles to public transit or rail.

That's, in essence, going to be quite a high number when you think about it, because on the other side of the ledger there are significant subsidies to commuting by car. There's the public infrastructure that is not priced at its true cost, so people run over roads generating significant externalities they themselves don't pay. Parking, as we've heard earlier, is subsidized.

Canadian and U.S. prices for gasoline are significantly lower than European ones, and are arguably not at their real rate, although politically you wouldn't want to say that to the Canadian public. So in a sense, you have to counterbalance that particular set of incentives that encourage people to buy vehicles

We have to be reasonable here, though, and the tax expenditure cost to the department would be significant at 100%, but perhaps it has to be more than 30%. The number is hard to set exactly, but transportation research economists probably have an idea what that number should be. We generally think it must be at least 30%, and probably higher.

Mr. Ken Epp: Are there any other responses?

º (1640)

[Translation]

Mr. Yves Picard (Chief Executive Officer, Carrefour Jeunesse-Emploi Marquette et Ouest-de-l'île): I work with young adults, that is, people between 16 and 35 years of age. We often think that the young people from the West Island of Montreal are affluent, but 50 percent of the people who frequent our two organizations have not completed Grade 12. They are often workers who only earn a basic wage. We expect them to work, start a family, clothe and feed themselves with only a limited income.

For the people I represent, the amount of $50 which they spend on a public transit pass in order to get to their workplace, in order to have access to the labour market should be deductible from taxable income. This is 100% clear to me.

Also, the more people who use public transit, the better the service will be and businesses will be that much more profitable. In the West Island, there are companies that cannot have a second shift. They are open during the day but they cannot open at night. As a result, jobs are being lost. Production is not 100%. There are also companies that cannot open on weekends because there is no public transit.

Obviously, at $8, it will be mostly workers who, in principle will use the public transit service. The more people there are, the better the service will be. Everybody will be a winner. If a young adult who earns $280 a week can deduct the cost of his transit pass from his taxes, this is money that he will probably use to buy essential consumer goods such as food and housing. He will pay his bills.

The values that are inherent in this type of bill, notably where the environment is concerned, are the values held by young people themselves. Companies should, in principle, be in agreement. Mr. Nydam presented the business community's point of view. We hear about ethical funds and the social responsibility of companies. I think that mindsets are changing. We also have to change and we have to show that the Canadian government is ready to support these changes.

[English]

Mr. Ken Epp: I need to interrupt you because I'm going to run out of time. I'm sorry about that.

You are simply once again stating your support for the bill, and I had asked whether there were any amendments.

I'm surprised none of you are suggesting it should be amended to provide that, in the event an employer provides a bus pass or transit pass as part of an employment package, that should be deemed “not taxable” income. That's not in this bill, and I would think it would have been a good amendment.

The other thing I would question is an element of fairness. I am one--you probably can't tell looking at me sideways--who for many years rode his bicycle to work. I guess it could be arguable, but I think I produced even less pollution than if I had used the rapid transit systeMr. I never did ask anybody who was cycling close behind me, but we won't get into that.

This seems to me to contain an element of unfairness, because if there are two people at exactly the same income level going the same distance to work, and one uses the rapid transit while the other uses the bicycle or walks, the person using the bicycle or walking is actually going to pay more taxes than the person who takes the rapid transit. To me that's a negative incentive, and I'm surprised you didn't mention it.

So with those last two things I think those will be all my questions for now.

Mr. Gérald Gauthier: If I may just comment on your first statement, maybe I spoke too fast when I read the presentation, but we said we would be supportive of any initiative that allowed employers to provide their employees with tax-free monthly passes for public transit. We would support such initiatives.

Mr. Ken Epp: In other words, having pumped it out of you, you now would support an amendment to that extent.

Mr. Gérald Gauthier: Certainly.

Mr. Ken Epp: Good. Thank you.

Ms. Emilia Shaw: Certainly you're going to see me supporting the employer-provided tax-exempt transit benefit. I've appeared before this committee several times in favour of it, so certainly, if that amendment were available, it is something we would support.

As far as unfairness is concerned, we have done a number of studies recently on health and transit. One of the opportunities we had in doing that study was to look at active transportation, which is the walking and biking you've just alluded to.

Our studies show that in fact they increase together. If you do in fact increase public transit, subsequently biking and walking will also increase. Indirectly they do benefit from anything that will lead to increases in public transit.

Let me explain. You walk to the transit stop. So the likelihood is that you have to have good sidewalks. That means that the snow is going to be cleared from them, which means that ultimately they're going to be better for walking. As to biking, rack and rolls, or the bike racks that are now on buses, are becoming a real part of the way transit does business.

I think to a certain extent you could be quite right in saying that it's unfair, but honestly if you were to ask any of my colleagues who work in active transportation, they'd say you have to move forward. And if this is a good first step, this is a good first step.

º (1645)

The Chair: Thank you.

Madame, commencez, s'il vous plaît.

[Translation]

Ms. Jocelyne Girard-Bujold: Thank you, Madame Chair.

I would like to thank all of you for coming this afternoon to respond to the bill that I tabled. Mrs. Emilia, I thank you very much. Your memorandum was extremely precise and brought together all the factors which led me to table this bill. Thank you.

Mr. Nydam, I think it is admirable that employers have taken the step to state that this is an extremely important measure for theMr. As for our young people, I think that these are the values they hold, environmental values, accessible means at prices which are still affordable.

Mr. Gauthier and Mr. Jones of the Railway Association of Canada, I used to be a great user of the railways. In my region, in my home area, we used to have good railways. Today, they are struggling, but I know that the railways in our region have developed new ways of attracting customers, even if it is only to provide bicycle racers with a means of transporting their equipment inside railcars.

I have observed that all of you have already focussed on the future. I think that this bill shows one way of considering new ways of fighting everything we are talking about today, everything that young people and ourselves, as well, at our age, are fighting against.

I also think that it isn't perfect. We can amend it to improve it. I think it is already a good step because we don't have the means at present that allow us to have a horizon so that we can get there using statistics. There are American statistics which prove that when such tax abatements are offered, the use of public transit increases by 30 percent. Even in England, they also achieved that rate, and those are recent statistics.

So, yes, it's good, but I would also like to ask you if it is absolutely essential that the Canadian government take this step. I think that we have the ideal situation to do so now because we have budget surpluses and we now have looming climate changes. In addition, investments in roads are becoming more and more expensive. Moreover, the federal government provides no help whatsoever for public transit.

So, I would like to hear from one of you on this. Sir, madame: what options would this allow for each of the employers, the young people, so that we could get started and continue to advance so that we can find alternative solutions? Thank you.

[English]

Mr. Chris Jones: As you probably all know, the transportation sector accounts for the single largest portion of greenhouse gas emissions of all the industrial sectors. Hence we're very conscious that if Canada's Kyoto targets are going to be met, the transportation sector has to play a pretty key role in that--25%.

We would endorse your sentiments and suggest that the government ought to be looking very seriously at providing any incentives it can to move people out of their cars into public transit and commuter light rail.

Ms. Emilia Shaw: I also concur. It is time for the federal government to take action. You've indicated in many different ways that you want to make a difference as far as climate change and air quality are concerned. This is a way to do that. Yes, infrastructure is required, and you've heard that from all of us. There's a very real need for spending on infrastructure. But you also need to encourage demand.

There are many different ways to do this--certainly with Bill C-209 with employer-provided tax-exempt transit benefits. The transit system is already trying to encourage seniors with reduced passes, and many of us are now working to try review passes, which are currently under way to try to encourage students and provide them with a discounted pass.

It's time for you guys to act. We throw the challenge back to you. We've done our homework, we've listened to you, and now we're coming back and asking you for action.

[Translation]

Mr. Georges Nydam: We have been following this support for Mrs. Shaw. I remind you that the new administration of the City of Montreal adopted a measure this year to promote public transit among the young. It decreed and granted to any university or CEGEP student the right to use ...[Editor's note: Inaudible]. So, I think that the local community is doing its share to promote public transit and perhaps a signal from you would be appreciated.

º (1650)

Ms. Jocelyne Girard-Bujold: Thank you.

[English]

The Chair: Mr. Murphy.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much for your presentations.

I agree with much of what has been said by each of the witnesses who came before us today, but the difficulty I'm having, gentlemen and lady, is the whole area of effectiveness. You're quite correct that the federal government has indicated they're going to do something about public transportation. You're quite correct that they haven't done it yet. You're quite correct that this is a very important issue in meeting our greenhouse gas emissions. And you're quite correct that one of the ways we have to do it is to get more people out of cars and onto the buses and trains. I agree with that 100%.

That leads to the issue of effectiveness. This, no matter how you want to refer to it, is a monetary bill; it's going to cost the government. I'm not sure exactly the amount, but I believe it's in the vicinity of $300 million. In the real world we deal with--$300 million maybe; I'm not sure, but I don't think it makes any difference. We can get that figure from the Finance officials tomorrow; maybe it's $100 million or $50 million.

My point is this, and anyone who wishes can address it: we want to get people out of their cars and onto the buses and trains. Mr. Jones made a very compelling argument that there is funding required for the systems. That is an immediate requirement.

Assuming that the financial resources are limited, I don't think the amount makes a lot of difference, but let's use $100 million; let's assume the envelope is $100 million. What is the most effective way--and it's going to be an either/or situation--to get the people out of the cars and onto the buses and the trains? Is it, to follow Mr. Jones's submission, to put the $100 million into the system so that the infrastructure can be enhanced--that more buses can be offered to the Canadian people--or is it to offer the tax relief that's contemplated in this bill?

In your opinion--you're all involved in industry--what would be the most effective way to get the most people out of the cars and onto the trains? It's one or the other.

The Chair: Mr. Jones.

Mr. Chris Jones: I'll be very brief.

The most effective way is probably a way you didn't cite, which is to introduce user pay on our road system; essentially, to introduce a system of road user charges that would allocate the true cost of running over the roads, factoring in a number of externalities that are presently not factored in and apportioning those to the individual driver. Very quickly he would reach the conclusion that taking his car in and out of the city every day is not viable and he'd start looking very seriously at public transit. That's happening in some other countries in the world. These are being gradually introduced--green taxes, road user fees, these kinds of things. That would be the very quick way.

Mr. Shawn Murphy: Mr. Jones, if I could interrupt you, I don't believe that's an option that's available to the federal government. We're federal parliamentarians.

I'm not disagreeing with you for one minute but, I mean, we're....

Mr. Chris Jones: Well, you asked for the ideal method of doing it. Between those other two, perhaps I have to ask my colleague. My sense of it is that in GO's case in Toronto they would have a problem if there were a sudden influx of new people wanting to use it, at one level, because they are running at capacity at the moment.

Arguably the case there is for more infrastructure. It may be that in other cities there's sufficient capacity, and what you need is an incentive to get people onto those trains. So it varies, I suppose, across the country.

Ms. Emilia Shaw: I'll certainly respond to it as well. You've asked for an either/or, and I'm not going to come back with an either/or. I'm going to say both.

Mr. Shawn Murphy: I was afraid you would say that.

Ms. Emilia Shaw: I haven't disappointed then.

What I would really say is that you have a lot of options. Within the written report that I've provided to you, we actually did go back and look at legislation that was enacted in the United States. They came in originally at $15 per month. Then they went up to $21 per month. They're now up to $100 per month.

If you are concerned about the cost of this particular initiative, particularly from the employer-provided...but then if you were to subsequently bring it out to Bill C-209, there are ways to capture it, to control it--all of those kinds of things. I have to tell you that infrastructure is crucially important. GO Transit is absolutely at capacity. TCC is at capacity. OC Transpo is at capacity. Vancouver is at capacity. Montreal is at capacity, London is at capacity. St. Catharines is at capacity. This is an issue that certainly they're at capacity.

We need infrastructure costs. I'm not denying it. But you also need to have a way of continuing to have people come on-board. Other areas such as Winnipeg and others need to have this kind of incentive in place. My comment back to you is that this is going to take time. First of all, it will likely take a little while to get the infrastructure dollars from the federal government, although we are looking forward to theMr. But it will also take time to bring this incentive into place. I would suggest, don't keep waiting. You have to move on this.

I tried very hard within this to look at what your costs are in the first year and then to take your costs up to ten years. You have a lot of control over it. Let's get it started. Please continue to try to find a way to fund infrastructure. But let's get started on providing an incentive as well.

The Chair: Are there any other responses?

Mr. Murphy, are those all your questions? You have about three more minutes, unless you would like to share it with one of your colleagues.

Mr. Shawn Murphy: Perhaps I'll just follow up on this discussion and try to flush out a few more comments.

I'm not an expert in this area and I don't come from an area that has extensive public transportation, but it seems to me that there are a lot of people using the system now and you're at capacity. By adopting this, we're giving each and every one of those people a tax incentive. There would be some retention there. But since you're at capacity, and you're probably correct that immediate action is required, it seems to me that to get more people--to come back to my original premise--out of the cars and on to the buses and trains, the immediate and most effective way would be infrastructure cash rather than this proposal, if you only had a limited envelope to spend.

Mr. Gérald Gauthier: On that question I would tend to agree with you, sir, that a commuter agency, at least on the freight side, if they had to make a decision between the two offers, would prefer to receive funds for infrastructure, because they are extremely in need of infrastructure funds.

Also--just the opposite to your comment maybe--you wanted to know if this measure would cause people to switch from cars to trains. Poor service is also a deterrent to public transit use. If you have a capacity problem, you want to make sure you have enough funds to provide better service to your customers. By having proper funding, you are in a position to offer better service and you will keep your customers and maybe attract some others.

Strictly from the point of view of the commuters, I would say that the answer to your question is probably that they need funding first.

Mr. Shawn Murphy: And the most unfavourable response is to do nothing.

Ms. Emilia Shaw: I'm going to respond again.

You would have enjoyed being with us. We had our executive committee in Ottawa yesterday and we were having all of these discussions. We have both very large systems, such as TTC in Vancouver, and we have small ones, such as Saint John. Their comment was, from what we've heard from the federal government, the big boys are likely to get the bucks for infrastructure. However, something like a tax exempt initiative allows all the rest of us to participate in pursuing and encouraging public transit within our own communities.

º (1655)

So it was very tough. We sat there in the same dilemma saying, what would I come back and say to you? Would I come back and say I want $13.6 billion? Yes, I do. But do we also want the incentives? Yes.

I know I'm not really responding to you, Mr. Murphy, but I think this is the dilemma we face, and I would suggest if it is a cost issue, there are ways to control the incentives, and please move ahead with the infrastructure.

» (1700)

The Chair: Thank you.

Mr. Brison, please, ten minutes, and then we'll go to Mr. NystroMr.

Mr. Scott Brison: Thank you, Madam Chairman, and thank you to all of you for your interventions today.

I think we all agree with the intention of this bill. I have a problem in that we're addressing a demand issue when in fact demand is not the probleMr. Mr. Jones spoke of the fact that currently transit systems across Canada can't meet existing demand; Ms. Shaw spoke of all of the transit systems being at capacity.

Before we pursue policies to increase ridership, shouldn't we be focused on a national strategy to increase infrastructure? I realize it's like chewing gum and walking at the same time--we could be doing both in lockstep--but I would argue that we ought to be addressing the infrastructure issue before we address a lack of demand when in fact there really isn't a lack of demand.

The Chair: Mr. NydaMr.

Mr. Georges Nydam: I beg to differ in one respect, in terms of the supply question for public transit. Supply for public transit is not a fixed volume. Most transit companies can easily take additional amounts of 3% to 5% within existing services.

There is a question of supply in terms of completely new services, and effectively, when you do put in completely new services--and this is where I believe infrastructure is important--we have an immediate result. The best example we have, and I just know my local parish, is the train to Blainville, where basically within one month of having a new service between Blainville and Montreal, the train was not quite 80% full.

People in trains tend to always take one seat at a time. Two seats for one person, that seems to be the modus vivendi there; we haven't got car pooling in trains yet. But I would suggest very strongly that there is sufficient reserve capacity for incremental improvement, and the importance of this measure is the fact that it's a clear signal to the Canadian that we would like you to get off the road and look at getting into a public transit system, and to encourage you and reward you we'll give you the tax credit.

So I would not say it's just that we absolutely need infrastructure and there's nothing else to be done. I think you can start off with this measure, and the transport companies do have certain capacities to readjust. The Montreal system, for example, is just acquiring 250 new buses, I understand. So we have the capacity to move additional people.

Ms. Emilia Shaw: My comment, Mr. Brison, is that we have now been at this since 1985. I think we've been trying to get something like this forward. Certainly it came to the transportation table in 1999, and it was subsequently voted on in 1999 from the employer-provided perspective at 240 to 25.

We're now into 2002. I really hesitate to say please don't move forward on this now, because I don't know how much longer it would take to get this back to the table. Yes, we have an infrastructure need; we do have some capacity.

As I pointed out before, it's going to take a while to build this up with demand. What you're asking of many people is to get out, start marketing, and start doing it. I would imagine by the time you got legislation completely organized, it will then take a while to get through.

I would think if you vote on this tomorrow and agree that it's going to happen--I don't know how quickly the process works, and I apologize for this, but I would imagine it's probably going to be about a year before we even start to see the capability of being able to take effect of it.

I'm saying it's time to move. I'm not disagreeing with you. Infrastructure is important, but I really hesitate to see this drop off the table and then have to wait another 15, 20 or 30 years to see it come back on and get implemented. We need to have a synergistic approach. We need to look at transportation demand management, which is what something like Bill C-209--or the employer-provided--will absolutely assist with in getting employers on board. Then we need to ensure that the buses, the rails, and the subways are there to carry theMr.

» (1705)

The Chair: Mr. Jones.

Mr. Chris Jones: In a very brief point of clarification, I just wanted to state that I think I indicated that of our four commuter members, GO Transit was the one that was significantly at capacity and hence the need of dollars for infrastructure in a significant way. I believe I'm right in saying that there probably is some capacity in West Coast Express, for instance, and certainly the new commuter service in Ottawa is at an early stage.

In one sense I suppose it would be desirable if it weren't just one finite pot of money, either/or, as you mentioned, but perhaps it needs to be a combination of the two as a reasonable approach to dealing with the probleMr.

Mr. Scott Brison: You were speaking earlier of internalizing the externalities of other behaviours, in that case the car and people driving. Would it not make more sense to use the tax system to internalize the externalities in that sense and then let people make their own decisions on how they proceed from there?

Mr. Chris Jones: You're right on the money. That is the way to proceed. That's the way a lot of the more progressive governments around the world are proceeding at the moment. Just this week, I believe, the city of London in the U.K. has introduced a tolling system for vehicles entering the city.

Mr. Scott Brison: There are also ways, through gas taxes, to address the issue of the choices of people's cars. You see these mammoth vehicles with one person in theMr. I'm not going to mention any vehicle manufacturer specifically, but there are some choices being made by Canadian motorists that from an environmental perspective are pretty dubious.

Mr. Chris Jones: Yes, and at the moment we don't deter that behaviour in any obvious way. For instance, I just called around today out of interest and noticed that one litre of milk will cost you $2.19 and a litre of gas will cost you 65¢, so there are these tremendous incentives at one level to be--

Mr. Scott Brison: And milk tastes better.

Mr. Chris Jones: Yes, but the cost differentials encourage people to use their vehicles significantly.

Ms. Emilia Shaw: When we sat at the transportation table it was a very interesting initiative, because we sat with the car manufacturers, CPPI, the trucking association, and a multitude of different players. I have to tell you that when you have to try to come to an agreement with that round of stakeholders, it's very difficult. I think most of us would suggest you need strong parking policies in place. You need to tax your parking. You have it in place, but you don't currently do it.

You need to do all of those things, but I think many of us are sitting here at the table because we beat our head against that brick wall. We know that's probably the ideal way to go, but unfortunately it's a stick. It's not an incentive.

What we're suggesting at this point in time is that you certainly need the disincentives. You need those sticks such as Chris was talking about earlier, but we'd like to suggest that you also need the incentives, and this is one of theMr.

Mr. Scott Brison: Thank you very much.

The Chair: Mr. Nystrom, go ahead, please.

[Translation]

Mr. Lorne Nystrom (Regina--Qu'Appelle, NDP): First, Madame Chair, I support Madame Girard-Bujold's proposal and I support her proposal in the House.

[English]

I'd like to ask a couple of questions of Dr. Chris Jones, if I may.

About a month or two ago I was driving and went to Pearson. I had to speak at Peterborough and I thought, “Well, it's 150 kilometres between the two so I have two hours to do that.” In Saskatchewan you would do 150 kilometres in an hour and a half and maybe in one hour if you speed a bit, but it took me three hours to go 150 kilometres.

It just struck me that we need something in terms of getting people off the roads and into public transit of one sort or another. Also, there are all these big warehouses, these big trucks, that are going down the highways, and then all the pollution and the global warming and so on. So I think we have something here that is very worthwhile supporting.

I want to ask you one or two questions. Should the bill go through as you see the bill written, obviously there'd be a huge surge in the use of public transit in this country. We have in Mr. Martin's budget, I think, $2 billion for infrastructure over the next five years. I assume that would not be adequate.

Do you have any guesstimate, let alone estimate, as to how much we'd need in terms of infrastructure for transportation in this country, not just urban transit but transit in the rural areas as well?

» (1710)

Mr. Chris Jones: We applauded the government's move to include rail as an eligible item for infrastructure in that fund. I don't think we've done any kind of summary of all of our rail infrastructure--it would be a wish list--but we do have a series of needs that would help to alleviate the traffic problem, one of which is to help upgrade what are called short-line railway operators who feed freight into the main trunk lines and, in doing so, remove traffic off the roads. Their main issue, very briefly, is to allow them to run heavy axle loads on their track that, at the present time, they are unable to do.

The class one carriers, CN and CP, can move heavy axle loads, 286,000 pounds. Our short-line carriers can't, and if they could, this would be a tremendous advantage and would allow them to take more volume off the trucks, etc., off the roads.

I don't think we've identified precisely what the total commuter needs are in terms of infrastructure. It has always been our assumption that there wasn't going to be a lot of money there.

Mr. Gérald Gauthier: No, but we mentioned earlier that GO Transit estimates they will need $100 million per year. You can expect that Montreal has similar needs, a bit smaller, and that West Coast Express also has similar needs, also smaller, due to the size of the services they provide.

Mr. Lorne Nystrom: I think there's a real need. There's also a federal-provincial issue here, too, because you have highways under provincial jurisdiction. Many countries in the world have federal governments that are involved in helping cities buy public transit vehicles, buses and the like.

It's also a rural issue. It's not quite related to Madame Girard-Bujold's bill, but you mentioned short-line railways. We have a big problem now in the prairies. The federal government got rid of the Crow rate for the farmers and they also allowed the rail lines to abandon rails. For many years on the prairies, Saskatchewan in particular but right across the prairies, they would build what's called thin-membrane highways, where the concrete is not very thick. Of course, when you get rid of the railways, here come the big trucks on those highways, so that now, when you drive down those highways, you're almost putting your life at risk. There are humongous holes and bumps and so on. So now we must spend a lot of money building thick-membrane highways to facilitate these large trucks that are carrying tons and tons of grain.

Again, it gets back to the infrastructure prograMr. There's such a need for federal funding for proper rural transit and for a national highways program, yet you only have $2 billion budgeted. How much more do we need?

Does anybody else have a guess at what we need over the next five or ten years in terms of urban transit, as effected by this particular bill? We have a lot of call on that from rural Canada as well, for things like I've mentioned, let alone all the other areas.

Ms. Emilia Shaw: We did take a survey of our transit members, who do include train, and GO Transit, AMT, and all the others. What came back was a need for $13.6 billion over the next four or five years.

Mr. Lorne Nystrom: That was $13.6 billion.

Ms. Emilia Shaw: Yes, so what's actually required is substantial.

If you wouldn't mind for just a second, over $4.8 billion is needed simply to renew outdated facilities and rolling stock, but only $4 billion of that amount is available in current budgets. Almost $8.8 billion is needed to expand infrastructure and meet growing demand by adding new vehicles, control systems, stations, tracks or rights-of-way, but only $2.8 billion of that amount is currently budgeted for.

You're quite right, $2 billion is probably not enough. We were just pleased to see it as a first step.

Mr. Chris Jones: I'd like to make a point. These questions around infrastructure dollars are very intractable, and I want to give you an illustration of one that's going on at the moment on the west coast of Canada. It's the E & N Railway on Vancouver Island, where its freight service cross-subsidized its passenger service. It had one main client on its line, Norske, a mill in Port Alberni.

That mill, for various reasons, decided it would ship its product henceforth by truck. In doing so, the freight rail line, which subsidized and kept the passenger line going, lost 75% of its revenue or even more, maybe 80%.

These are the kinds of issues we need to grapple with and find a way to resolve. If we simply say that company may make that decision with impunity, then there are clearly social or economic costs, inasmuch as Vancouver Island will now have a great deal many more trucks on the road. There will be more congestion. There will be more pollution. The road runs through a national park.

These kinds of issues are very difficult to get at, and it seems to me we have to get at some of the sources of the problems, not just throw more money at the problem, if you see what I mean.

» (1715)

The Chair: You have one minute.

Mr. Lorne Nystrom: It's a unique Canadian question. How do you see the cost sharing of all of this amongst the federal government, the provinces, and the municipalities? It's unique to our federation, of course, and I think the federal government takes a lead role in terms of this. How big is that lead role?

Mr. Chris Jones: Canada is the only G-7 nation at the moment that is not providing a significant amount of cash for public transit. I think we're, in total, providing about 5% on both the capital and the operating sides. Many other countries are providing significantly more than that. So I think the federal government has to step into the breach on that side.

You're right, there's a split jurisdiction, and that will need to be negotiated. Ontario has a proposal on the table at the moment for 30-30-30, or 33-33-33, of each level of government. So far, I guess, that ball's in play. I'm not sure what the federal government's...the initial response was lukewarMr.

Clearly there needs to be cooperation between the different levels of government. We can't have a silo approach to dealing with these problems any more.

The Chair: Thank you.

Mr. Wilfert for ten minutes. I have Mr. Reed and Ms. Minna on the list also. You may wish to share your time with one of them, and then if we have a few more minutes, we might get another question or two in.

Mr. Julian Reed (Halton, Lib.): I won't take a world of time.

The Chair: Okay. Go ahead, Mr. Reed.

Mr. Julian Reed: Mr. Jones, first of all, I want you to know I'm supporting the proposal for an intermodal station in the riding in the south of Halton. I'm suffering the brickbats from the NIMBYs, who might be quite determined to unseat me in the next election, and I'm going to ask for your help.

In terms of attracting ridership, in the area I live in, the urban planning is so bad there is no provision made for increasing infrastructure. The only things there are roads and GO Transit, which is running at capacity. This really works against public transit.

Public transit was tried in the town beside me over a period of 15 years. I think there were three attempts made and they all failed. It's not as easy as providing some tax incentives to those people who do pay taxes. There is something more inherent in the human psyche that we have to contend with.

When I leave this hill tonight, I'll use one of these little suckers to go home to Gatineau--for $1.60--instead of a taxi, which would cost me $13. When I go to get either a train or a plane, I use two of these on OC Transpo, and they cost me $1.70, compared to a taxi ride of $23. It's just as fast and I get to meet a lot of nice people on the road.

When I get home to Toronto--I'll probably take the train tomorrow--here's my ten-tripper on GO Transit. I can use that on the bus, or I can use it on the GO train, whatever schedule suits. But I don't see very many of my colleagues--I'm not trying to be critical of them--doing this.

I hope they will because they would get an idea, and maybe endorse the concept, that a simple tax write-off is really not going to attract a lot of people. There has to be some little change up there--maybe confusion or something--that will encourage people to begin to use public transit.

The public transit service in Ottawa and Gatineau is quite excellent. It's just as fast to go from here to the airport on an OC Transpo bus.

With due deference to Madame Girard-Bujold, her intent is superb, but people who pay no income tax would get no benefit whatsoever from this kind of thing, so there has to be another way.

I wish I were bright enough to be able to think through how to attract people to transit systems.

The transit systems I ride on are pretty good. I live on a farm 50 kilometres west of Toronto. I can walk 10 minutes and get a GO bus into Toronto. I don't drive into Toronto any more. The cost of doing this is half what it would cost me to park downtown.

So you're giving us the transit virtually for free. If you increased it 50%, I don't think it would deter anybody.

» (1720)

Ms. Emilia Shaw: Certainly when we brought forward the employer-provided tax transit benefit, one of our goals was to make it very targeted, because you actually need to get in and work with employers. You need to talk to them about encouraging their own employees to start changing their modes of transportation from single-occupancy vehicles to potentially transit.

You need to walk through the door. You need to start showing them what the schedules are, how easy it is to use transit, and all of the rest of it. There are a lot of transportation demand management initiatives under way now right across the country, and they're doing just those kinds of things.

One of the reasons we've always asked for employer-provided is that it provides payroll savings to the employer as well. It provides that little tweak, that little incentive, so you are able to walk through the door of the employer. Once you get in there, then you can start talking about all sorts of other things.

I apologize that JDS isn't a particularly good example right now, considering what's happened to the economy, but we were able to get in the door with theMr. We were able to work with theMr. We were able to decide that they needed to get a bus going back and forth during their shift changes.

So you're quite right that behavioural change is going to take a long while. We need to work at it, but I would suggest this particular incentive.

You need to do many things, and I think what we heard from all of the colleagues is there needs to be a combined approach, but this is part of that combined approach.

Mr. Julian Reed: Okay. Thank you, Madam Chair.

The Chair: Thank you.

Mr. Chris Jones: Just very briefly, to pick up on a point I made earlier, we meter and charge for water and electricity, but we give everybody free rides on the highways. Hence there's no surprise that people run over that infrastructure.

So to answer your question and pick up the point, Mr. Brison, it's a combination of carrot and stick, and I'm afraid that at one level, given the consequences for the environment, you have to start looking at the stick to a degree.

The Chair: There are about two minutes left.

Mr. Wilfert, go ahead.

Mr. Bryon Wilfert: Mr. Wilfert would like to come back, too, but let me just put something in some context. The bill was written on February 2, 2001. I want to thank everyone for coming, and Emilia in particular, who I have worked with for many years.

I would be the first to say that in 1983, the Federation of Canadian Municipalities proposed a national infrastructure prograMr. It lay dormant until 1993, when this government adopted it.

Since then we've had an extension of that program and we've had a new prograMr. As you know, under the national infrastructure program, with the $2 billion to be matched by provincial and municipal governments, municipal governments can put forth transit projects as one of their major needs.

The Canadian strategic infrastructure fund, which the minister announced in the budget in December, of $2 billion-plus, is again for larger transportation projects.

Also, the Prime Minister's task force on urban issues, which will be making its interim report in April, I can assure you, since I'm on it, will be making a number of specific recommendations dealing with transit, I am sure.

Just last week the Minister of Finance met with the big-city mayors. Out of that came a working group of Department of Finance officials and finance officials from the five major cities of the country to talk about strategies to deal with public transit, a file that I of course have been dealing with for many years and one that is very near and dear to my heart. Ten years ago this wouldn't have been in the cards. I happen to have been around in those days, and I can tell you that it never happened.

As you pointed out, all of the major cities are at capacity. I say this in the context that this bill was written before a number of these major initiatives had taken place.

Given that there's only so much money on the table, what is the most effective way of dealing with the issue of transit? It would seem that municipal governments have clearly indicated what they want, such as capital or rail, which might be done through regulatory changes and without much cost at all. Hopefully, we can assist in putting people on commuter trains, etc.

Although this is a vehicle that has some merit, going back to my colleague Mr. Murphy, the problem is that only a certain amount of money is available. If you had to make a choice, and unfortunately public policy comes down to choices.... The comment we get from the FCM and the big-city mayors is that they want to look at other measures. Of course, they'd like these measures. I'm not saying they wouldn't. I was on council for 12 years, and as a former FCM president I can tell you that the reality is that you can't have everything.

So the question, through you, Madam Chair, is, what is the most effective way? Is it to deal with this issue of maximum capacity and provide assistance in that regard? Given the signals we got from the big-city mayors, is it that we want to work out some kind of fiscal arrangement on the issue of transit, etc.?

As you know, and I'll conclude with this, the Province of Ontario used to fund 75% of the capital cost and 50% of the operating cost. They withdrew from the field for three years. They then came back and had the audacity to suggest that they would put in 33-cent dollars. By the way, you guys put in 33¢ right away.

» (1725)

The Chair: Thank you. If anybody wishes to respond to that, they may.

Ms. Emilia Shaw: You just want to put me on the spot here.

You've heard from all of us that infrastructure is crucial. None of us is going to deny that infrastructure is crucial, but we still haven't seen all the dollars. We're certainly hearing about them, but we have yet to actually see them in place. We have yet to see them come down to public transit.

The green municipal enabling funds have been great, but they're teeny. They're $20,000 as a general rule. Twenty grand is great for study, but it doesn't get you much as far as action is concerned.

We commend you for coming to the table and looking at public transit. We certainly believe in it from the commuter rail perspective and everything else.

If you're concerned about funding and how much this costs, there are ways to control this kind of incentive. I still believe it's time to get something like this in place to manage the costs and to grow it when there's additional money. Hopefully, you're going to invest so much money in public transit that we're going to have all these new commuter rails for GO Train, Sky Train, and AMT. We're going to have new buses on the road. It's going to be great. It's going to be wonderful. We're going to see a renaissance in public transit in Canada.

But you have to get those people on board. If you implement something like this now, as that capacity becomes available you can grow it and change it. You can say $50 a month or $100 a month. You can say whatever you want. But at least it's in place and we can act on it.

So yes, infrastructure is crucially important, but please don't lose this opportunity to make a difference from the demand side.

The Chair: I have Ms. Minna, Mr. Cullen, and Mr. Epp who still want to ask questions. I propose to go to Mr. Epp for a question and then to Ms. Minna and--

Mr. Bryon Wilfert: May I make a 30-second comment?

The Chair: Go ahead.

Mr. Bryon Wilfert: The other issue with my municipal friends is that in the GTA, densities have continually declined since 1967. Part of the problem, I'm afraid, in terms of why we're not getting effective use of public transit is that municipal councils in the GTA, as one example, are saying one thing but they're certainly doing something else.

» (1730)

The Chair: Mr. Epp, go ahead, please, one question, and then Ms. Minna, and then Mr. Cullen, for a question each.

Mr. Ken Epp: Thank you, Madam Chair. I would like to indicate to Dr. Jones that I think the credibility of his case could be maintained if he was a little more accurate in the use of one number. I reject outright....

I live on the prairie and I actually live away from a city. I have to drive 25 kilometres till I get to where the buses are. There are many people out there who live very far away. When he says we give them the roads and we give them the bridges, that is patently not correct, because I am a bit of a list-keeper and a record-keeper and over the years I've kept track of my vehicles. I haven't done it now in the last little while, but I have found that typically, of the cost of operating my vehicles--operating, not owning them--about half is fuel and the other half of the cost is everything else, insurance, licensing, and maintenance. Half is fuel, and of that half, fully a half of the fuel cost is tax. That means that one quarter of the cost of operating my vehicle actually goes to governments in taxes. Those are the facts.

As I said, it would increase the credibility of the argument if we didn't make statements like that, which really can be shot to pieces.

The Chair: Mr. Jones, please, a short answer.

Mr. Chris Jones: I'm not quite sure where to respond to your point. I didn't hear the very first part, I'm sorry, the very beginning of your assertion about my earlier comment.

Mr. Ken Epp: You said that we give the roads to people who drive their cars and their trucks and so on.

Mr. Chris Jones: This is a delicate issue. But it seems to me that in many parts of this country we've overbuilt our road infrastructure. We've also overbuilt our airport infrastructure. We have a very thin population, and it seems to me that we have to be very prudent about saying we will widen every existing road, repave every road, build a new road wherever anybody wants one, even when the population numbers don't dictate it. I think we have to be very hard-headed. I think we have to say where there is capacity constraint and demand we have to put the infrastructure resources that are required, and it may be that in some parts of the country we can't afford to ad infinitum continue providing and upgrading the infrastructure where the numbers don't justify.

Mr. Ken Epp: No, sir, I can't believe that you really believe this. For example, I grew up on a farm in the country. We were about three quarters of a mile away from the next neighbour. Now that was my mum and dad and three kids. You're not suggesting that because there were only five people there that we shouldn't have a road.

Should we drive over our fields? Is this what you're suggesting? It's not realistic for a Canadian society.

Mr. Chris Jones: No. I'm saying that when I went to Sault Ste. Marie about two weeks ago in connection with a Ministry of Transportation of Ontario stakeholder session, I took the highway from the airport into downtown. The airport in Sault Ste. Marie is quite a long way out, as you may know. In about the 25-minute taxi ride at ten in the morning on a weekday, we encountered about four other cars.

I guess this is my question. Can we in Canada continue to afford to pour billions of dollars into the road system, when superficially, on the face of it, it's not sustainable, when there are other means? I guess it comes down to people being entitled to live where they want to live, but the issue is, should we, the rest of us, have to subsidize those lifestyle choices? It's a difficult question.

Mr. Ken Epp: For a farmer to raise grain and cattle on this acreage, which is needed, is not a lifestyle choice. It's important for you, so that you have food on your table.

Mr. Chris Jones: I agree. But do all of the roads in northern Ontario, for instance, need to be repaved and widened? That's an issue that the MTO is facing right now. We would argue that they don't, that you have to make hard choices about where money needs to be spent.

Mr. Ken Epp: Yes, and I would agree with that.

The Chair: Okay, I'm going to go to Ms. Minna for a question. I think I'm going to give you the last word, and I'll let Mr. Cullen go, and then you, our mover of the bill, can go finally.

Go ahead, Ms. Minna.

Ms. Maria Minna (Beaches--East York, Lib.) Thank you, Madam Chair. Actually, mine is partly comment and partly question.

First of all, I want to say that I don't have a driver's licence. I've used public transit all my life, and still do, with the exception of when I come from the airport here in Ottawa. So obviously that's my bent, and I want to see public transit expanded.

The difficulty I'm having with this bill is the fact that a great many of the people I ride with on transit in Toronto don't have a lot of money. They have to pay the amount up front, before they get the rebate through their taxes or whatever it is, however it's going to work. This money isn't necessarily going to help the infrastructure or the expansion.

The transit situation in Toronto is not great. There's a very bad need, for instance, for new equipment and expansion, because it is at capacity to some degree. Some of the decisions of how it was done were not great.

It seems to me that, yes, we need to increase the transit and rail as well, in terms of inter-urban transit. I would like to see trucks off the roads altogether and see them get on rail on the corridor from Quebec City to Windsor, and anywhere else in the country where it's doable. That means building infrastructure, and I think we should bite the bullet and start doing stuff like that. That's what's going to bring down a lot of the emissions we're talking about. It seems to me that we need to improve the systems, keep the prices low, and discourage cars. Those are the three main things we need in order to accomplish what we want to do.

When I travel in other parts of the world.... For instance, last year I was in Italy. It's a place I visit frequently because I have relatives there. I'll tell you, public transit is very cheap. To travel by bus in Rome or anywhere else is very inexpensive. To travel by train in the whole of the country is very inexpensive. It's hugely subsidized by all levels of government, and of course it's heavily used.

I'm not sure the tax cut does what we really have to do. I'm not sure it helps the people who don't have a lot of money and can't afford it. They don't get it until the end of the year anyway. Many of them don't make enough money for the tax credit to be a big deal for theMr. What we need is a national transportation plan that really addresses the fundamental issues of climate change, smog, and all the things we're talking about.

I'm not sold that the tax credit is going to make a big difference or even a minor difference to the major issues we have to face. Quite frankly, what's going to encourage people to take public transit is the price of the transit, efficiency, how quick it is, how effective it is, how clean it is, and all of that. That's what's going to attract the ridership. It's not the tax. It doesn't benefit everybody equally, because the guys who can afford cars are still going to use their cars, and the guys who don't have a lot of money to start with, who I see in public transit now, aren't going to benefit all that much from the tax credit.

I'm trying to see the silver lining here, and I don't see it. The real benefit to the whole issue of taking cars off the road, taking trucks off the highways, and really expanding public transit and rail lines in this country.... I'm having difficulty with that.

» (1735)

Ms. Emilia Shaw: The employer-provided transit benefit has been in place since 1984 down in the United States. During that time period, for the employers that offer it, they have seen increases of ridership of up to 30%. That is substantial. You certainly are getting people out of the cars. So we do have proof to show that it does work. Certainly, when it's very targeted and there's a whole program in place, it works. It gets people out of the cars; it accomplishes the goals you've just spoken about.

All of us have said to you today that this is a very large puzzle, and that's just one part of it. We've talked about infrastructure, we've talked about regulatory changes, we've talked about all sorts of other things. It's part of it, but it is a necessary part to try to encourage people to leave their vehicles behind.

From the United States' perspective, it does work. I guess that's where I'll leave it.

Mr. Georges Nydam: We don't support the measure because it is supposed to be an award for the public transit users; we support the measure as an incentive for those who do not currently use it.

It is true that those who will use it will benefit from it, but the idea is basically to provide an incentive, and, as Mr. Shaw said, studies done both in Europe and the United States effectively show that if you just talk about it you get a marginal increase in ridership. If you put fiscal and financial incentives in place to encourage it, you get significant increases in use. They can vary from 8% to 15%. If you then take the bigger measures, you go up to a 30% increase in terms of public transit.

You are not going to be able to supply public transit to everybody. Mr. Wilfert was quite right: most of our urbanites are not thinking in terms of public transit, in terms of development purposes, but there are core areas where you can, and where we should, in which case, of course, it is obvious to us.

In Montreal we have the same situation. Are we going to build a new bridge across the St. Lawrence River, other than the one the Liberals promised us in the last election? Or are we going to put in a public transit system to more effectively move people? This is where the objective is: encouraging people to use the transit. That's where the incentive comes in.

» (1740)

The Chair: Mr. Cullen, a short question, please.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Madam Chair.

Thank you to the presenters. I'm sorry I missed the bulk of the earlier discussion, but I'm reasonably familiar with the issue.

I really wanted to ask the question that Mr. Wilfert asked, and I probably would have done it in a shorter way. Nonetheless, he asked the question and I don't think he got an answer. I'd like to come back to that in a moment.

On the question of incentives, it seems to me the data is pretty clear that the most you're going to get is a lift of maybe a 10% to 15% increase in ridership. That would be a good thing, but it seems to me the government has to look at cost effectiveness and cost efficiency. It ends up basically rewarding people who are currently using public transit in a big way.

I'm a big fan of rail, myself, in terms of some of the environmental benefits. I think rail is making some great progress with respect to offering alternatives to truckers, but we have just-in-time inventory, when you can load a truck and take it right to your customer in a few hours. I think as far as the ability of the rails to compete goes, to take additional market share, they'll take additional market share, but as long as we have the policies we have--and maybe we need to change those policies--I think we're going to be left with trucks on the road, big time, getting goods to market. I think rail has been doing a lot of good work to try to take more share.

I would like to come back to this question that Mr. Wilfert put to you. If you want to comment on what I've just said, that's fine too. If this bill goes through this committee, if it passes in the House of Commons, I think the fiscal cost is somewhere around $300 million. It's somewhere in that vicinity. If that happens, the reality is that there will be a need for highways and highway investment. I can't speak on behalf of whether there will be, through the strategic infrastructure initiative, but there will be big pressure to renew our highways, especially the north-south corridors.

Resources are limited, so if this bill goes, there may not be any money for infrastructure investment in public transit. So I guess my question is still there. If you have to choose between this bill and direct investment in infrastructure for public transit, what side would you come down on?

The Chair: Mr. Jones.

Mr. Chris Jones: It's difficult because you're posing it as a zero-sum game, as either/or. To pick up on one of the points you made in your preface, I think the way the rail industry perceives this is that we need to alter the vision of how transportation is looked at in Canada, away from a kind of unimodal vision, which looks at it through the eyes of providing road and highway infrastructure, to a multimodal vision that takes advantage of the intrinsic benefits of each mode and gets them to work seamlessly.

If you start out with a vision that says Canada wants to have a first-class, multimodal transportation system, then you cascade out of that a series of questions. How do you get there? What do you need to do? In certain regions you need to do this and in other regions you need to do that. It seems to me that we start from a philosophy that is biased towards a certain outcome.

Until we change some of the fundamental precepts on how we organize and deliver transportation policy in Canada, it's going to be very hard to get away from these kinds of artificial constraints or choices that say, “There's really only a very finite sum of money, and it can only be put towards commuter and transit in this way.” We contest that from the outset. I think that's our probleMr. We want a new vision of how transportation is delivered in Canada.

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The Chair: Madame Bujold. Oh, I'm sorry, Ms. Shaw.

Ms. Emilia Shaw: I would like to support what Chris has just said. We need a new vision for transportation--and it involves all sorts of different initiatives--in order to move forward. We always come back to the money question. We always come back to existing riders versus new riders.

We provided you with some new information in what we presented today. If you were to undertake $21 per month, given the experience down in the United States you'd probably be looking at $670,000 for the first year. That's not substantial. I mean, it is substantial from my perspective, but we're talking about billions and millions of dollars here too, so I imagine it's not.

I guess what I'm saying is you should be starting. When I come back to it, if you're going to ask me point blank, Mr. Cullen, I'm going to say invest in infrastructure, because that's where it's needed. But I would suggest it's not as simple as an either/or, as Mr. Jones has just suggested. We need to have a vision, and this is part of that vision.

If I may quickly respond, Madam Chair, to Madam Minna, we don't have a lot of experience in providing incentives here in Canada for public transit, but we do as far as new passes are concerned. That's what I would judge on, where we could see it happening. New passes in Victoria led to increases of 30% to 50% in new riders.

So we know these do work. You've heard us speak about it. The GAO report, which Mr. Cullen and Finance will certainly speak to, shows that it leads to increases of 25% in new riders. This is substantial. It is a move we should undertake.

The Chair: A final question.

[Translation]

Ms. Jocelyne Girard-Bujold: Thank you, Madame Chair.

I would just like to clarify the immediate infrastructure requirements for public transit. How much would be needed, tomorrow morning, according to your forecasts?

This measure would also make it possible to reduce greenhouse gases. How much would they be reduced, in your opinion? We know that Canada must reduce its greenhouse gas emissions. If we achieved that, we would achieve our Kyoto objectives and this would allow us to make enormous savings. By making savings, Canada could respect.... This would also allow the environment to improve. Those are the two questions I wanted to ask you and I thank you. It was very nice of you to come.

[English]

Mr. Chris Jones: If we are to meet our Kyoto targets, we need to move more people and freight by rail. Rail at the moment hauls by weight 60% of the volume of goods in this country yet emits only 4% of the GHG emissions in total. We need to find a way to encourage more green-friendly modes of transportation. That's a very complex issue, which we touched on earlier, but it involves a range of instruments and approaches that presently are not being looked at seriously.

The Chair: Thank you.

Ms. Shaw? Nothing? Okay.

Ms. Emilia Shaw: I support what Mr. Jones says. We need a range of activities.

The Chair: And Mr. Nydam, did you wish to add anything?

Mr. Georges Nydam: No.

The Chair: Thank you to our witnesses for coming today, and thank you for staying a little longer to accommodate the questions.

Mr. Wilfert.

Mr. Bryon Wilfert: There's one housekeeping matter, Madam Chair. With the consent of the committee I'm sure there won't be any problem, because we have all-party agreement.

Roy Romanow will be here tomorrow to speak before the health committee. We can have this room tomorrow--we have all-party agreement to do this--between 9 a.Mr. and 11 a.Mr. Should we need an extra hour or two, we would then move to 269 West Block, where we've been in the past. Just to alert, all parties have agreed to it, but I wanted let all the members know it.

The Chair: All right. Our notice has gone out for this room, so the clerk will deal with whether he has to put out an amendment.

Mr. Bryon Wilfert: It just came to my attention. They want to have it televised; that's why. Thank you.

The Chair: I understand. Thank you very much.

The meeting is adjourned.