EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 1, 1996

.1200

[English]

The Chairman: Let us come to order and get ready for today. For the information of committee members, I'll be rotating the questioning with each witness.

Our first witnesses are from the Chamber of Shipping of British Columbia. Mr. Cartwright, could you introduce the people who are with you and begin?

Mr. Ron Cartwright (President, Chamber of Shipping of British Columbia): Yes, certainly. Mr. Tony Roper is vice-chairman of the chamber and Captain Richard Stevens is the secretary-treasurer of the North West Cruiseship Association. We had planned to have Mr. Joe Nichol, the chairman of the chamber, here today. Unfortunately, he's sick and he sends his apologies.

The submission I will make is an aligned submission from three parties: the Chamber of Shipping, the Coal Association of Canada, and the North West Cruiseship Association.

Mr. Chairman and members of the Standing Committee on Transport, thank you for this opportunity to inform the committee of the fully aligned views of the combined membership of the Chamber of Shipping of British Columbia, the North West Cruiseship Association, and the Coal Association of Canada. I won't read the written introductions to the organizations; I'll go straight into the text.

First of all, in summary I would like to say that, as previously stated several times, we have on behalf of our respective memberships their essential support to the legislation as a considered and progressive upgrade to the existing regime. We are particularly reassured by the reflection in the proposed legislation of the suggestions made by industry organizations during the review process.

We are also pleased to note in the legislation part one of the redundancy of the Canada Ports Corporation, as well as confirmation that the ports will essentially remain federal entities. The proposed structure and degree of autonomy is entirely consistent with the crucial need for cost-effectiveness as a platform to maintaining competitiveness in the global marketplace.

In short, the proposal is to us the culmination of a commendable effort to bring change by consensus with the impacted interests. Our emphasis with respect to the structure is to see that the ports are not subject to the vagaries of multiple layers of jurisdiction, in particular with respect to taxation issues. The legislation must clearly underline the federal jurisdiction.

Now I propose to run through our comments on the proposed legislation in sequence.

The section defining ``port'' and ``users'' should be reviewed to ensure that there are no ambiguities, yet it should not be subject to narrow interpretation. The term ``users'' in particular would benefit from further amplification.

We have reservations on the proposed size of the boards, particularly for the smaller ports such as Fraser Port, and favour reduction in this case to say seven. The text should reflect this.

We favour restriction in the number of government directors and would prefer that provincial representation be limited to one, even for Vancouver. The sentiment of inland representation is appreciated and it may well be that this concern can be addressed through an understanding that industry users would take this into account in the consultation process.

The committee should be aware that the Western Marine Community, WMC, is an informal coalition of all port users from each sector. As such, we would recommend this body to play a key role in the consultation and selection process. I will be circulating a list of WMC members for your interest.

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In clause 4, the CEO function will be strengthened by allowing the board to have full discretion on the question of appointing the CEO as an additional director to those appointed to the consultation process.

In clause 5, we prefer a consultation process that does not contemplate political patronage and would call for a limited listing from the users with the understanding that the minister's discretion would apply only in exceptional circumstances.

In proposed paragraph 6(2)(h), the formula for calculating the federal charge must be mutually acceptable and consistent in order to avoid undue restriction of ports' ability to remain competitive or fund capital projects. As previously mentioned, we suggest WMC's involvement in the drafting of letters patent for the regional boards.

In clause 7, the sentiment of flexibility is appreciated. However, we would like to see this text include a statement to the effect that the minister will issue supplementary letters patent only in consultation with the board and the users.

With respect to clause 10, which deals with initial port authorities, our concerns are covered under our summary points.

In subclause 12(3), the fact that directors are part-time should be clearly stated, with consideration given to providing a maximum period.

In subclause 12(4), the wording should be amended to give the board the right. In other words, the board ``shall'' fix the director's remuneration.

Clause 14 states ``The following individuals may not be directors of a port authority''. We recognize the sentiment behind this clause. However, the effects may well be to limit the qualifiers to legal, retired, or academics and to exclude the type of current expertise that will best benefit the port. Concern of conflict of interest can be addressed in other words, such as through defined procedures. We suggest that the stipulation of qualifications within the letters be patent, following consultation within the wider community.

In clause 15, which deals with the election of the chairperson, we support the notion that the board ``shall'' elect a chairperson.

Clause 18 deals with the power to manage. In principle, the board should devote its effort to managing broad policy matters rather than the everyday operational matters. The latter is rightly the responsibility of the CEO. Nevertheless, we would wish to see a safeguard to counter the risk of an arbitrary fee or operational regulation. In this respect, the board of directors may well play a complementary role to the other mechanisms, such as the CTA, by functioning authoritatively as a court of appeal. In other words, there should be a local appeal process to avoid having to take everything up to Ottawa.

The effect of clause 22, which deals with no guarantee, should not alter existing and already approved financial arrangements. Again the concern is for continuity in the change.

In clause 24, which deals with capacity and powers, we support the sentiments contained in subclauses (1) and (2) and believe that the letters patent should reflect the specific activities that are to be considered applicable or appropriate for a particular port. In this context, the board again should retain discretion in order to preserve historical activities or the flexibility to decide on other activities, in accordance with the wishes of the board and in consultation with the users.

Clause 29 deals with the annual meeting. The group I represent supports the notion that the AGM should be held within a stipulated timeframe.

Our comments on clauses 30 to 35 on financial management and special examinations are restricted to an assurance that the proposed conditions are logical and avoid confusion. The stipulation of content and format should be such that there is a clear understanding by the general public of what is happening in the financial aspects.

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With respect to clauses 41 to 44, so far as the fees are concerned, again we would seek only the stipulation that's mentioned under 18, that the board should function as an appeal in case of a real perceived problem by the users.

Clauses 47 to 53, port traffic control: Again, there are similar comments. However, we do feel that the port authority should function as the regulatory authority in the area of its jurisdiction. This is the thing to do, and we envisage the function continuing to be applied through a consultative process with the federal agencies, pilots, and relevant representative bodies of users.

Those are our comments on part I. With respect to part II on public ports, we have one overall comment. The proposed measures contained in this part with regard to public ports carry our support. Our comments are restricted to advocating a practical mechanism, which will avoid ill-conceived over-regulation.

As far as the seaway is concerned, this part has the least impact in this region. However, we consider the proposals as progressive and worthy of support.

We have no comments on parts IV, V, and VI.

On part VII, amendments to the pilotage, the proposed amendments reflect the limited changes that have been discussed through the national and regional process, following the earlier recommendations by your committee. In this respect, the chamber, the North West Cruiseship Association and the Coal Association support the minister's proposals as they apply to the western region.

We would remind the committee that the west coast community has lived up to its obligations to maintain a self-sufficient pilotage service since the current regime's inception in 1972. At no time has the west coast called for any contribution from the Canadian taxpayer.

In particular, the chamber and the North West Cruiseship Association represent the users of the pilotage service; that is, the shipowners. The owner looks to the pilots on the basis of 24-hour, 365-days-a-year availability, for the professional guidance of his valuable asset through the hazards of coastal navigation. In this context, the owner's interest is coincident with that of the general public.

The west coast has an enviable safety record; indeed, it's among the best in the world. The current system, admittedly less than perfect, has evolved with a fine balance between the concerns of safety and the need to maintain efficiency. The single coast-wide dispatch results from the most cost-efficient use of resources.

Pilotage needs vary according to the different environments. One cannot compare either the cost or the task of piloting a vessel into Halifax with Vancouver any more than the task of piloting through ice with the Fraser River transit. We would point out that the critics of pilotage are often not appreciative of the subtleties of the task.

There was certainly some expression of dissatisfaction with the system during the review process, largely based on the premise that a competitive service would further lower costs. This call prompted an intense review activity implemented through a western region task force, which was chaired by the chairman, Mr. Joe Nichol.

The task force concluded that the current arrangement essentially meets the needs of the industry. At the same time it identified desirable areas of further improvements, in both the short and longer term, all of which we will continue to work on. Its conclusions were that the service is cost-effective in terms of costs for similar services in the trading area around the west coast.

Positive examples of the progressive, collaborative work now being jointly undertaken by the industry, the pilots, and the pilotage authority, which are a direct consequence of the task force activity, include proposed new access to Kitimat and helicopter boarding to optimize the use of pilot boats. Other tangible evidence of the positive benefits of the recent soul-searching is the acceptance by the pilots of final offer settlement for contract negotiations.

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This development is further enhanced in the western region by the newly negotiated five-year contract. We are confident that full use will be made of the resultant stability to focus on the longer term and more contentious areas of potential improvement. In this context we are looking forward to our participation in the proposed 1998 ministerial review.

Thank you, gentlemen. This concludes our commentary. We'll be happy to answer further questions.

The Chairman: Thank you.

Mr. Keyes.

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

Good morning, Mr. Cartwright, gentlemen. Thank you. It's good to see you again, and thank you for bringing forward a very intense and focused presentation, just the kind of thing the committee is looking for from our witnesses.

I just wanted to ease your concern, if I can, on the comments you addressed under part I, the Canada port authorities. I'd like to make it clear that your concern under number 5, that the consultative process by which the lists will be drawn up and then given to the minister for his consideration to formulate the governance on the port...while it is within the minister's discretion to do so, he is not going to be contemplating political patronage. In fact, that's the view of both the current and previous Minister of Transport, Mr. Anderson and Mr. Young: that their hand would apply in exceptional circumstances.

The reason you give in number 14, that you recognized the sentiment behind the clause but it may well be limited to the qualified retired legal person or academic.... I think the check and the balance in that particular area is when it's clear that the whole rationale for forming the governance in this particular fashion is based on the idea that the boards be provided with greater local decision-making and greater input by the users. So if the governance or the suggested list is going to put forward to the minister, it will be the users coming together to put the names on what we hope will be a limited list in order for that list to be considered.

Since the users would be singing the tune on that list, we would consider that the check and the balance against, as you suggested here, the retired legal persons or academics. Should a user think it's going to get value out of an academic, that name will go on the list, but I think for the most part your concern there can be addressed.

The Chairman: Mr. Fontana.

Mr. Fontana (London East): Thank you, Mr. Chairman.

Welcome, gentlemen, and thank you very much for your submission. As you know, this bill reflects in large part the consultation that the very members in the SCOT committee dealt with some time ago.

I want to talk about competitiveness. In essence, at the end of the day we have to put in place a regime that will ensure that Canadian ports are as competitive as they possibly can be. At the end of the day transportation is a cost to a commodity that we're trying to sell around the world.

I know that you support the bill, but you don't talk a lot about your challenges with regard to ensuring that your members, what they represent, and what they sell in a very globally competitive world stack up pretty well. I wonder whether or not you can enlighten the committee with regard to some of the.... You are the users of the ports. Do you in fact believe that this bill will move the cost structures down somewhat because of the autonomous nature of this bill with regard to ports and the fees? How does Canada stack up against other ports that some of your members obviously visit and work with?

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Mr. Anthony Roper (Vice-President, Chamber of Shipping of B.C.): We obviously relate mainly to Vancouver because that is where the largest area of activity is concerned, and there we have direct competition with some ports that are very close by, such as Tacoma and Seattle, and even some as far away as Portland.

We've had incidents recently where Portland, for example, has been able to divert Canadian cargoes to that area from provinces to the east of us because they can give them a better total deal. So there's a constant competitive element in the way this has to work. This is why we have felt that the closer control we have over the costs, the closer local control or local ability there is to reflect what is happening, the better we're going to be.

There are different elements in the structure of the U.S. ports because they have closer funding; they have different funding structures from what we have here. There will always be an element of cargo having to go through here because logistically it can't go anywhere else, but there still has to be an overall competitive position. We think that by having closer control over the costs, we can keep that.

At the moment, the fact that we are having 70 billion tonnes of cargo go through Vancouver means that we must be doing something right, and obviously we want to carry on doing that.

The Chairman: Mr. Gouk.

Mr. Gouk (Kootenay West - Revelstoke): Good morning, gentlemen.

Having heard the assurance of the parliamentary secretary of the minister, I would ask which of the two versions we've heard from the ministry you would like to see in the final draft. He came before the committee and said that he would appoint from the list nominated by the users. The legislation as it stands right now says that he will nominate them after consulting with users. Given the assurances from the parliamentary secretary, which of those two versions would you like to see in the final draft? Would you as a user like to nominate them or would you like him to nominate them after he's talked with you?

Mr. Roper: Obviously we would like as much say as we can have in the nomination, but we would also like to make sure the government agrees with what we're doing, so we would like that consultation.

Mr. Gouk: But do you want them to nominate them or would you like to be the ones who do the nominating?

Mr. Cartwright: I think the subtlety is whether we object to the government making the formal appointment. I guess the answer to that is no. We recognize the federal authority in the end. However, we would like to see that process done from a nomination list, a restricted list, which we as the users would collectively put up to the minister.

Mr. Gouk: That answers it. Thank you.

There are two things you were silent that I would like to get your comments on, given the broad spectrum of people you represent in terms of the users, the passenger operations, and everything. One is the port's right to run subsidiary business. You mentioned your concern about fees, but of course if the Port of Vancouver, for example, loses the ability to run certain other things that they run now, which produce revenue, and if they have other charges against the revenue, then any costs that are left unpaid obviously are going to go to the users.

So I'd like your comment on the section of the bill that disallows them from operating subsidiary business, and also why you were silent on the matter of policing. As major port users in a variety of spectra, I would like to have your comments on port policing.

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Mr. Cartwright: We did mention, under clause 24, capacity and powers. Intuitively we see the board having taken part in the consultation and the appointment of the board. We would like to see that board have authority and discretion. The question of discretion would apply to the activities that are appropriate for that particular port.

I think it would be difficult to put down a narrow interpretation that might inhibit one port from activities that either are historically happening today, which we probably would not want to see stopped, or may be seen in the best interest of that port in the future.

We don't want to see the port running totally wide of its mandate or its letters patent as to what it should engage in, but equally we wouldn't like to see the board inhibited in what might be of benefit to the ports in the future. Board discretion I think is the key.

The other aspect - the policing - we didn't address specifically. We have and did at our last presentation make reference to policing. We want to see policing on the port premises. We want to see true policing rather than essential terminal security.

We have not taken a hard position as to whether it should be the police force that is in place today or whether there should be some other way of delivering police service, but policing should happen. It should be provided by a dedicated unit that understands the maritime culture rather than simply by security guards. We're not advocating that.

[Translation]

The Chairman: Mr. Crête.

Mr. Crête (Kamouraska - Rivière-du-Loup): Thank you for your brief. I see that you represent some very important users. Thus, your suggestions concerning the control users should have over the appointment of members of our boards of directors are important. That is a comment that has been made to us repeatedly over the past two days and I think that we are going to have to take it into account in our amendments.

I'm going to read a sentence taken from the summary and ask you a question in this regard. You say:

[English]

Our emphasis with respect to structure is to see that the ports are not subject to the vagaries of multiple layers of jurisdiction. In particular, with respect to taxation issues, the legislation must clearly underline the federal jurisdiction.

[Translation]

It is at the end of the first page. I would like you to give us some clarifications. You say that you would not like to see the ports affected by changes that might be made to that jurisdiction. I understand that you fear having to deal with two or three levels of legislation with regard to taxation. This is in the context of delegation to local authorities.

What do you mean by your last sentence: "The legislation must clearly underline the federal jurisdiction"? Could you elaborate on that part of your brief?

[English]

Mr. Cartwright: I guess we are saying essentially that we recognize that the ports serve the national interest and not simply the immediate vicinity.

I think that's particularly true of the west coast, where we have such a large hinterland. We want to see.... If the ports are to be autonomous, there have to be very logically clear structures. We would not want to see that responsibility diffused by layers of involvement from other jurisdictions, provincial and municipal jurisdictions.

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We want to see a very clear line of responsibility. Obviously the interests of the other jurisdictions should have to be taken into account, but that should not inhibit the functioning of the port as a federal entity. I really think this is what we're trying to say.

[Translation]

Mr. Crête: You mean that in the bill as it stands, the jurisdictions are not sufficiently transparent? Do you think that that should be emphasized more than it is in bill C-44? In what way does this concern the discussions on taxation, particularly?

[English]

Mr. Cartwright: I think I lost the first part of your question, but it was the taxation issue you were focused on, was it not?

[Translation]

Mr. Crête: In the first part, as I was saying, your sentence seems to imply that the Act should define the federal area of jurisdiction more precisely. Do you mean that bill C-44 is not clear enough in this regard?

In another connection, for the future, what solution do you advocate with regard to the choices that will be made concerning taxation? Do you prefer the model in the legislation or would you prefer another model to allow ports to pay tax?

[English]

Mr. Cartwright: Yes.

Again, we're not criticizing the body of the text as it is put forward today. We are simply reinforcing our concern that when the details are put together there is this clear logical line of responsibility for the port. As far as the taxation issues are concerned, again there is a model in place today where, so far as the Port of Vancouver is concerned, grants are paid in lieu of taxes.

What we are saying in this area is that the port should be subject to due taxation. But it should not be subject to an undue taxation from municipalities and a provincial government that would simply treat the port or ports as a source of revenue.

The Chairman: On this matter, we have just a short supplementary question from Mr. Keyes.

Mr. Keyes: This is just a short one, Mr. Cartwright. It is not outlined in this bill. It is silent on the issue because the committee wanted input and the minister wants input from the users and the ports. Am I correct in saying you then favour federal agency status - this would answer Mr. Crête's question as to different levels of taxation - where federal agency status would exempt you from federal and provincial taxes on income and exemptions from provincial taxes on capital, etc.?

Mr. Cartwright: I think in principle, yes. But this is something we feel is probably more within the competence of the ports themselves to talk about, because they're much closer to the reality of today.

Mr. Keyes: But it is the users who write the cheque.

Mr. Cartwright: Yes.

Mr. Keyes: And you're here to pay those bills.

Mr. Cartwright: That's right.

Mr. Keyes: If they can save you that money on those bills with federal agency status, then that answers it.

Mr. Cartwright: Yes, I think so.

Mr. Keyes: Thank you.

The Chairman: Thank you, gentlemen.

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Our next presentation is from the Vancouver Port Corporation.

Good morning, Mr. Longstaffe. If I'm grading by weight, you win for the size of your brief.

Perhaps you could introduce the people who are with you. We have some flexibility. This is such a substantial port out here that I'd like to take the time to get into these issues as fully as we can.

Mr. Ron Longstaffe (Chair, Vancouver Port Corporation): Good morning, Mr. Chairman and members of the transport committee.

Vancouver Port Corporation welcomes this opportunity to present our comments on Bill C-44 and to file our brief with you. Appearing with me is our CEO, Captain Norman Stark. We are assisted this morning by Warren McCrimmon, our corporate secretary, Linda Morris, director of public affairs, and Walt Judas, our manager of public affairs.

As you know, the Port of Vancouver is Canada's largest port and the most diversified port in North America. Last year we handled a record tonnage and a record number of Alaska passengers. Our diversification ranges from coal, canola, chemicals and containers to cruise. Some 60% of our exports come from the landlocked provinces of Alberta and Saskatchewan, so we are as much the port of Saskatoon and the port of Grande Prairie as we are the port of Vancouver. We are also the western Canadian container port for the provinces of Ontario and Quebec.

The fundamental issue for us in assessing this legislation is what it does for the port's competitive position vis-à-vis the challenges we face from subsidized rivals in the U.S. Pacific Northwest, namely Seattle, Tacoma, Portland, Longview and Kalama. Meeting that challenge from American ports is a tough assignment, but it is a challenge that must be met competently, energetically and persuasively.

Port initiatives are certainly part of the answer. However, we also need an integrated policy regime that makes the competitive position of our national ports a federal priority, so that our capacity to be economic generators is enhanced and not eroded.

Bill C-44 has many merits, in our view, and is basically headed in the right direction. We particularly like the fuller vesting of authority in the board of directors, the streamlining of decision-making, the elimination of special drawdowns, and the abolition of the Canada Ports Corporation. However, Bill C-44 has features that erode rather than enhance our competitive position. In many respects the bill is more concerned with limiting than it is with liberating. It is crucial that the Canada Marine Act empowers national ports to compete effectively and innovatively.

Our brief addresses these concerns in detail, but allow me to highlight just three of the principal issues. One is that the reluctance to grant federal agent status to major ports such as Vancouver, Montreal and Halifax exposes us to taxation, zoning and subordination to other federal agencies, all of which impede our ability to facilitate Canada's international maritime trade.

National ports are part of Canada's infrastructure and are key to our international trade objectives. Moreover, national ports will continue to be owned and regulated by the federal government. They will continue to be trustees for the federal government in administering federal port lands. If port authorities can be federal institutions for the purposes of the Official Languages Act, then why not for issues like taxation and zoning, which go to the heart of our financial health and competitiveness?

Our U.S. competitors have many benefits that we do not, such as tax-exempt bonds for capital projects and the ability to raise taxes from local property owners, which give these U.S. ports a substantial advantage over us. For example, the Port of Seattle last year raised over $35 million U.S. from local residents for its marine activities.

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The few advantages we have in Canada, such as federal agent status, should be preserved, not stripped away. We do not expect the federal, provincial and municipal governments to provide us with the same advantages that favour our American counterparts, but it is crucial that Canadian port authorities do not lose the advantages they already possess, thereby boosting the already favourable odds for U.S. ports.

It is understandable that the federal government wants to restrict port authorities from creating obligations and liabilities, directly or indirectly, on the federal treasury. We are not opposing that restriction. However, in our view it is neither necessary nor competitive to deprive major ports of federal agent status to adequately protect the crown from financial exposure arising out of port activities.

Second, the powers and capacities outlined in Bill C-44 for major ports are confining and regressive. Vancouver and the other designated Canadian port authorities will have less scope in many areas under Bill C-44 than they have today. This is not a good policy prescription. If Parliament wants major Canadian ports to be competitive and to have extensive delegated authority, then Parliament should give national ports the flexibility to be innovative and entrepreneurial, and it should rely upon the directors to act responsibly within their mandate and to be accountable for their actions.

We are not asking for carte blanche. In grey areas Bill C-44 should from time to time allow the minister to amend each port's letters patent to grant additional powers where appropriate to meet shifting, unforeseen and exceptional circumstances. Canadian port authorities should not be penalized or frustrated just because of the wayward conduct in Toronto and elsewhere, where federal lands intended for port purposes were diverted to other purposes, such as condos and cultural centres.

Third, as drafted Bill C-44 has many rigid and inflexible features. We believe that good legislation, like a good, long-range plan, should be robust and responsive, not stiff and unyielding to changing or unexpected circumstances. For example, there is no scope for ports to trade real property with municipalities and other parties to improve their strategic land holdings for future development.

As you gentlemen and Mrs. Terrana well know, it is not easy or quick in the normal course to amend legislation. Accordingly, it is important that the Canada Marine Act has plenty of scope for ministerial or cabinet discretion, to allow ports to perform their mandate as economic generators in a responsible and progressive manner.

I now turn to Captain Norman Stark for our comments on municipal taxation, the stipend and port police.

Captain Norman Stark (President and Chief Executive Officer, Vancouver Port Corporation): Good morning, Mr. Chairman and members of the committee.

First of all, on grants in lieu of taxes, as a federal agent and in accordance with the act, the Vancouver Port Corporation pays grants in lieu of taxes to the surrounding municipalities to the tune of some $7.5 million. Combined with our tenants' contribution and taxation of another $32.5 million, this means the surrounding municipalities receive some $40 million in taxes and grants in lieu on federal land.

It should be noted that private lands that house port terminals, such as the B.C. Sugar terminal, the Burlington Northern dock and so on, contribute a further $7 million. I would like to point out that approximately 50% of this does go to the local school boards. As Ron said, this contrasts with U.S. ports such as Seattle, our main competitor in the container sector, which in 1995 received some $35 million U.S. as a taxing authority. Additionally, their tenants pay somewhere between 50% and 90% less in property taxes compared to those paid by a similar terminal operation in the port of Vancouver. U.S. taxes are paid based on the value of the lease and not on the value of the asset.

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It should also be noted that the grants-in-lieu legislation, like property tax law, is not structured on services rendered, but is based on the value of the assets. There is a provision in the existing grants-in-lieu legislation to reduce payments for services that are not required by the port. However, the port has never exercised this right. It should be noted that the corporation builds and maintains roads, overpasses, water mains, and sewers in many parts of the port and in certain municipalities.

The one significant cash saving for the port is that under grants-in-lieu legislation, certain unique structures, such as wharves, piers, and dock spaces, are excluded from grants in lieu of taxes. While we support the continuation of grants in lieu, we believe that these exclusions must be protected and maintained. However, we also believe that there should be a dispute resolution mechanism to sort out our differences with municipalities, as well as with the B.C. assessment authority and the municipal grants division of Public Works.

Should the exclusions from grants in lieu be removed, VPC would be faced with a further $9.5 million in payments. This would have one of two possible impacts. First, it would severely reduce VPC's net income to the extent that financial viability would be severely affected. Alternatively, it would cost the customers of the port more to move their cargo if the port corporation were to pass on these additional costs of the taxation by the municipalities. It should be noted that the container business alone contributes some $600 million to the economy.

With regard to stipends, the federal government is entitled to a return on its investment in major ports such as Vancouver. However, it should be borne in mind that the best overall return is as an economic generator. The Port of Vancouver is responsible for some 10,700 direct jobs, which translates into a contribution to the federal government of some $258 million in taxes. Since becoming an LTC in 1983, the port corporation has contributed approximately $150 million in dividends and special payments to the federal government, in contrast to the U.S. Pacific Northwest ports, our major competitors, who generate millions of dollars as a taxing authority. For instance, when every household owner in King's County pays taxes, some $300 million goes to the Port of Seattle.

Remember that every container lost to the Canadian transportation system is equivalent to the loss of $1,000 to the economy. In 1996 we expect to handle some 600,000 TEUs. Should a payment be required to the federal government, we strongly believe it should be on dividend - on net income - and not on a percentage of gross. A percentage of gross does not consider the financial viability of the corporation or the fact that all of our revenue comes from the customers, the importers, and the exporters.

Should the concept of dividends be unacceptable, the stipend should mirror the dividend that has been approved by Governor in Council in our current five-year business plan, which provided for a relatively low dividend due to the repayment of loans from the Export Development Corporation based on a very intense capital program that includes the new Deltaport Container Terminal, which will create some 700 jobs and millions of dollars in taxes to various levels of government. We believe port authorities must be set up to succeed and not to fail.

VPC has submitted to the Minister of Transport, through a Coopers & Lybrand study, a model for policing the port of Vancouver - a model that recognizes VPC's responsibility for security and emergency planning. The Coopers & Lybrand study shows and is confirmed by the director general of the Ports Canada police in Ottawa that 66% of the workload is security, 10% is emergency planning, and the balance is police work, and that splits into two areas of municipal type policing and enhanced or federal policing. We do not expect the municipal police forces to provide.... We expect them to provide the basic municipal policing, the cost of which should be recovered by the taxes paid by the terminal operators and grants in lieu paid by VPC.

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It should be noted that many of our terminals pay two to three times more in taxes than they do in land rent to VPC. For example, for some of our grain terminals the rent is in the area of $700,000 and the taxes to the municipality are $1.7 million. We have another terminal that is currently paying $400,000 in rent and $1.6 million in taxes.

The federal policing role, i.e., drug interdiction, should be continued to be supplied by RCMP and customs, who today I believe are doing an excellent job. I must emphasize that VPC has never stated that security guards can take over the policing role. Our goal is to have policing and security that are as good as, if not better than, what we have today.

Thank you.

The Chairman: Thank you, Captain Stark. Does that conclude your presentation?

Capt. Stark: I have some slides on competitiveness. I know a lot of questions have been asked, and we can give you some examples of Portland, Seattle, and Tacoma, if you so desire.

Mr. Longstaffe: We can file them afterwards, if that is your preference.

The Chairman: No, that issue has certainly been covered, but let's see where the questioning takes us. If it's appropriate to get into it, we'll do so by all means.

We're going to begin with the Reform Party. Mr. Gouk.

Mr. Gouk: Thank you. I have just one area of questioning, Mr. Chairman, and then I'd like to pass it to my colleague, who has a couple of questions. I address it to whoever wants to answer, although I have spoken to Captain Stark on this. I know it's very short notice because I spoke to him on this only at noon yesterday.

The issue is subsidiary income and the concern by virtually all the ports and users, for that matter, who have come forward about the disallowance of subsidiary income. I asked you if you could, on short notice, tell me approximately what percentage of your revenues comes from subsidiary income that you are at risk of losing under this bill and confirm that in the event it did occur, the cost would be passed on to the user.

Capt. Stark: Well, not including Canada Place Corporation, which is a subsidiary of Vancouver Port Corporation.... There are some examples such as the Canadian International College and the Cannery Restaurant. They generate between 5% and 7% of our gross income, which equates to around $5 million per year.

Mr. Gouk: If you lost that income, would it be substantial enough to you that there would have to be an adjustment of fees to users?

Capt. Stark: In the budget we have forecasted for this year...it has increased, but we were forecasting a net income of about $7.5 million, so it would reduce our net income by two-thirds.

Mr. Gouk: Would this $5 million include Canada Place?

Capt. Stark: No, it doesn't include Canada Place.

Mr. Longstaffe: We don't make any money from Canada Place. They have a positive cashflow, and that's put into reserve. In time those roofs are going to have to be replaced, so they're building up a reserve for that contingency.

Mr. Cummins (Delta): You suggested early in your presentation, Mr. Longstaffe, that the bill seemed more concerned with limiting rather than liberating. Do you see a decided advantage in this bill, or would you have preferred the status quo?

Mr. Longstaffe: No, I think it is necessary to reform and reshape port policy in Canada. I think the drafters of the legislation did not have a particularly good working knowledge of how ports operate and there wasn't very much consultation with ports in drafting the legislation, but the flaws that we see in it are all fixable. We think we're on the right course and with some key amendments we'll have a really good port regime.

Mr. Cummins: With regard to piloting, I notice that in the section you deal with it, you talk about the piloting act not needing extensive remodelling. You comment quite favourably on it, but you also note that waivers to certain cruise vessels piloting the coastal waters in the summer may be appropriate. Could you comment further on that? It seems to me that there may be some difficulties with that suggestion.

Capt. Stark: We believe that in the Pilotage Act.... These are very complicated waters here in this area. That's not to say to have qualified pilots on-board; however, there are certain areas in which we know that today there are two pilots carried on the cruise ships. It may be possible to carry one pilot to do certain parts of the journey and give waivers for those parts.

These are suggestions we made under SCOT. We still think there should be some flexibility, but basically I think all of it can be handled without changing the act. It can be done within the existing practice and procedures between the pilotage authority and the B.C. coast pilots.

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Mr. Cummins: Do you think you're compromising either passenger safety or environmental safety if you don't have a qualified pilot aboard?

Capt. Stark: In certain areas you are and in certain areas you're not. I think there are areas in which you can sail these waters without a pilot. An example could be leaving from the port of Vancouver until you get somewhere off Quadra Island. I think it's possible there, and there are other areas in which you could have some waiver for having a qualified pilot on the bridge.

Mr. Cummins: I have another question with regard to policing. I know that we're going to have some presentations on it later, but you made some suggestions that were interesting.

The one problem I see in this is the splitting of authority amongst the various municipalities. Do you not see that as posing some sort of problem to security on the waterfront?

Mr. Longstaffe: I think policing should be broken into two categories. One is regular, routine policing, such as that for motor vehicle accidents, floaters in the harbour, thefts from marinas. That type doesn't need coordinated law enforcement or intelligence.

Floaters are dead bodies, sorry. Our police, unfortunately, have to deal with a number of those.

The other is what we call enhanced policing in areas that do require coordinated law enforcement activity and intelligence. That would be organized crime, drugs, smuggling, illegal immigration, etc. There you do need some specialized, integrated teams working on those issues.

Mr. Cummins: I think the issues that surround the port in Burrard Inlet are somewhat different from the issues that prevail in the Port of Delta, in particular perhaps with the policing but also I think with the requirements for fire protection.

With specific regard to the port of Delta and the capabilities of the Delta police force, can you comment on the fire-fighting capabilities?

Capt. Stark: In terms of fire-fighting, to the best of my knowledge we have had one fire in the last 20 years. The Westshore Terminals pay full property taxes of $2.4 million to the municipality. We expect to be paying something like $1 million for the container terminal. Eventually that will go to a full lease, where the taxes will be realized. If the grain facility goes ahead, I think the number is somewhere around $2 million. So there's quite a sizeable contribution there. The demands on the fire department, as you say, in the last 20 years have been minimal.

We don't own the causeway. The causeway is owned by the province of B.C. We simply own the four pods at the outer end.

So what we have been discussing with the municipality is getting municipal policing for municipal-type incidents. There will be security for the facilities. There is security there today. We don't believe it will be onerous for the municipality whatsoever.

Mr. Cummins: That's fine for the policing, but the Delta fire department is essentially a department that is trained to deal with residential fires, light industrial fires, and that sort of thing. If there were a shipboard fire, it certainly would be beyond their capability. Although you've had only one incident in 20 years, it's certainly something that you have to prepare for, isn't it? You can't just say well, chances are.... We have to prepare for these things.

Are you dealing adequately with that at this point?

Mr. Longstaffe: We have regular meetings with the Delta municipal council, and at a recent dinner meeting this issue of liability came up by the fire chief. It is the first time it had come to our attention.

I think they have a legitimate concern that there may be a fire on a ship that comes to the Port of Delta - obviously the ship's not a taxpayer - and that they may not have the equipment or the capability to fight that ship's fire. They're concerned they may therefore be exposed to a liability that - they're self-insured - could conceivably wipe out all the grants in lieu we've paid them over a period of time.

We now have notice of the issue. We're consulting with other ports in the Pacific Northwest and elsewhere as to what their experience is about a liability. It's an issue they've raised. It's a fair one on their part, and we're trying to gather intelligence as to what's happening elsewhere. We have no wish to see Delta unduly exposed to a liability that is beyond their capability to meet. I believe it will be a solvable problem, but it needs more work. Thank you.

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The Chairman: Do you wish to comment, Mr. Crête?

[Translation]

Mr. Crête: I congratulate you on the quality of your brief. It seems that the Port of Vancouver could practically give the federal government lessons on harbour management. That is the message I take from your brief, to a certain extent.

On page 5, you say that in spite of its merits, the bill is characterized by unnecessary rigidity, conflictual and inconsistent priorities, that it fails to mention some very important topics and that it shows a limited understanding of programs and priorities that must be adopted in large ports such as the Port of Vancouver.

Further on, on page 9, you say that it is important that there be in-depth changes to the bill before it is passed into law because port authorities do not want to spend a lot of money in the course of the next few years on legal procedures or court action to determine whether they are really obeying the law.

Must we understand that you are ahead of the bill, so to speak, when you say that there should not be any particular category for very large ports such as the Port of Vancouver, in Canada? That seems to be what you are recommending when you say that the objectives should be included in letters patent, as is indicated on page 10.

I take from that that you would prefer the current situation to continue rather than having to live with the changes proposed in Bill C-44 if the amendments you suggest are not incorporated into the bill. Could you elaborate on that?

[English]

Mr. Longstaffe: We don't think we should be in a separate category as the Port of Vancouver. As I said earlier, we think the legislation is headed in the right direction. Port policy in Canada needs rationalization, needs streamlining. We find flaws in the document, but we believe they're fixable and we think that with the good recommendations of this committee, the areas we're concerned with can be put right.

When it comes to our letters patent, we would like to see appropriate recognition of the size of Vancouver, the scope of our activities, the expertise we have within our staff and the general competency and track record that we have shown over several years. There is a tendency at times by civil servants to treat the same all ports in Canada of a certain size. We think there should be some recognition for the added scope of our activities and our track record.

[Translation]

Ms Linda Morris (Director of Public Affairs, Vancouver Port Corporation): I would like to add that we are not against the bill, but we do suggest amendments. Mr. Stark did say that there were discussions a few years ago between the municipalities and the port concerning our contributions. I must tell you that there were several years of litigation before our situation was finally settled.

Mr. Crête: And won't the same happen again once Bill C-44 becomes law?

Ms Morris: Exactly. It can last for years and it can also be very costly.

Mr. Crête: I would have one other question. You suggest in your document net revenue rather than gross revenue be used in calculating the contribution you must remit to the federal government. Of course, from the government perspective, it is obvious that this would encourage the port to organize its affairs so that a lot of expenditures are reported somewhere under current operations. How would you reply to that objection?

[English]

Mr. Longstaffe: First, we'd be subject to an annual audit and to a public accountability meeting. And of course the government at any time can send in their own auditors or have a special examination with respect to how we're spending our money.

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Our concern at the moment is that we are taking on something like $140 million of debt to pay for our various projects, particularly Delta port, and the interest on that debt will reduce our net income over the next several years. So if you base it on revenues, we could well be paying a stipend to the federal government at a time when we're actually in a net loss position because of the debt burden.

When you look at appendix C at the back, you will notice that we can get wide swings in our annual tonnage. Last year we did 71.5 million tonnes. But if the world demand for coal and grain and the like were to slacken, we could be down to 60 million tonnes and that would have an enormous impact on our bottom line.

So we think net income is the fairest way, but we're happy to have the appropriate safeguards with respect to audits so that there's no tampering with a true presentation.

[Translation]

Ms Morris: We have a five-year planning cycle. If this should come to pass suddenly, it will certainly cause problems for us. If we could plan further ahead, that would certainly be helpful.

Mr. Crête: In the document, you put a great deal of emphasis on your status as a federal agency. That could no doubt allow you to be on an equal footing with the other federal organizations in your dealings with them.

Is that an essential element, according to you, if you are to be more competitive and innovative? This is what you say in the conclusion to your report. Is it absolutely essential for you to have federal agency status or is that just a suggestion you made because it would improve your situation?

[English]

Mr. Longstaffe: The answer is oui.

Mr. Crête: It's a good word.

Mr. Keyes: It depends on the question.

Mr. Crête: Every time.

The Chairman: Mr. Comuzzi.

Mr. Comuzzi (Thunder Bay - Nipigon): Sometimes you shouldn't ask the question. You should never ask the question, Paul.

I'm not convinced that the ports of Montreal and Halifax and Saint John should be treated the same as the port of Vancouver. This is a question, not a statement, but I'm sure they have different competition. Insofar as our eastern ports are concerned, they have more competition from the southern ports in the United States. They have Boston and New York, which have different problems from the competition Vancouver has with Tacoma and Seattle and Portland and the other ports.

This legislation has been a long time in coming. We're not going to have another kick at the cat for another 10 or 15 years. I'm concerned that we're going to do something that will hamper the port of Vancouver in meeting its needs with the Pacific Rim and with containers in the years to come.

For example, the methods of financing.... Your competition in the United States has a much greater advantage in the availability of bond structuring and the ability to sell bonds in their port. They don't have the federal jurisdiction that we do in Canada. They receive taxation rather than pay it. Fundamentally, if you level the competitive factors with respect to financing, then you can deal with all other aspects of the competitive industry.

I'm more interested in hearing how the Port of Vancouver, in order to meet my concerns and this legislation, can better its position financially with respect to the projections that you have.

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Mr. Longstaffe: We can answer that in a couple of ways, Mr. Comuzzi.

First of all, I think it's important that the legislation, in its final form, be robust and flexible, that it have enough latitude in it to meet the different circumstances of the ports. Probably the easiest way to accomplish that is to allow more scope for variances within the letters patent, which can be tailored to the particular needs, opportunities and priorities of the port in question.

We believe federal agent status is important in the protection it gives us, because that automatically confers benefits and advantages that would not be otherwise be covered off in Bill C-44.

We find that we have had fairly good success in meeting the challenge of U.S. ports, because we've had modern facilities, good rail connections, deep water, a skilled and productive workforce, competitive rates and a good customer service program.

We're not here to whine that we can't do the job, we don't want this legislation for the disadvantages. We think we're going to save some $1.5 million a year by not having to pay our share of the national office costs of Canada Ports Corporation, and that's certainly a plus. We don't know whether there will be a net saving on policing, because we're prepared to take over security and emergency planning at our cost and without any imposition on the local taxpayers. Whether we have to share in the enhanced policing, whatever arrangements are ultimately worked out, isn't known yet. In the end policing may be a break-even -

Mr. Comuzzi: The thrust of my question is that we don't want to make another mistake like the Canada Ports, whatever -

Mr. Longstaffe: We don't want you to make a mistake either, because if we lose tonnage or activities to the United States, they're unlikely to be recovered.

Mr. Comuzzi: Like we lost the potash business. We can't afford to lose many clients like that. We don't have a chance of recovering that industry for the next twenty-some years, given the contractual arrangements they got into with Portland.

Mr. Longstaffe: And we lost the tonnage of potash to Portland, which then went out and did tax-exempt bonds to build a $50 million facility. Now they're actively pursuing grain traffic from the prairie provinces, which I think to date we've effectively countered. But yes, that's real competition.

Mr. Comuzzi: Yes.

Finally, there's a thrust within this legislation talking about users playing a much greater part. I don't disagree with that philosophy, but it seems that when we're discussing the problems and where the Port of Vancouver should be looking to.... Do you agree that there may be more people who should be making a contribution, and there should be more consideration given to the direction of the Port of Vancouver that could come exclusively from the users? Users have a great part to play, but they shouldn't be exclusive in directing the affairs of the Port of Vancouver.

Mr. Longstaffe: Mr. Comuzzi, we have many stakeholders, from the three levels of government to shippers, to terminal operators, to railways, to truckers, to first nations bands, etc. We think the users should have input in terms of the governance of the organization and who is on the board, but we are very much in favour of a public interest board - in other words, directors who do not owe an allegiance to any particular constituency and who are there to serve the broad and overall interests of the port. They should serve in the best interests of all Canadians, not parochial interests and not one shipper's interests versus another's, but looking at the broad benefits and advantages of the port, the port as an economic generator, and as a good community citizen. That is the make-up of the board.

I believe we have that now. Our only concern with users is the possibility of people coming to view everything through their own particular prism and how it affects their constituency, rather than the broad interests of the port.

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Someone who made a presentation yesterday - and I don't recall who, but I think it was the board of trade - specifically thought they ought to have the directors reporting back to their constituency and being accountable to whoever appointed them. We do not share that view. They think there should be accountability to the broad spectrum of interests that are concerned with the activities and success of the port.

Mr. Comuzzi: I have one final question. To use users exclusively, is there a possibility, say, in the port of Vancouver that those users, if that were to carry on without change - users are what are called transnationals these days with the global economy. It could be that the same users we have here in the Port of Vancouver are participants in your direct competition in Seattle, Tacoma, Portland, and so on.

Mr. Longstaffe: There's no question that all of the shipping lines are for it, and many of them call Seattle, Tacoma, and Portland our competition.

Mr. Comuzzi: Thank you.

The Chairman: Mr. Fontana.

Mr. Fontana: I want to deal with the question of taxation again. I don't know if the municipal officials are here. I would like to talk about competitiveness and the effect of taxation on a port's competitiveness, especially when you tell me that in Seattle, for example, not only are they the taxing authority, which essentially means that they can tax and get revenue, but they're paying 50% less than what some of your users and lessees are paying. That troubles me an awful lot, especially since their take is about $46 million, according to your figures, and that all entities are taking about $46 million. One has to ask what they are giving you for $46 million.

Now, Mayor Owen said yesterday he gave you an intersection that allowed trucks to move more freely and much more. The fact is that you pump an awful lot of money into the greater Vancouver area in terms of taxes, directly and indirectly. Federal agency status obviously gives you some taxation benefits, and with that comes a grant in lieu of tax, which the federal government through you pays to the municipalities.

Let me ask the first question. Would you rather negotiate the terms of that taxation directly with the municipalities so that you in turn could pay directly for the services they give you? As you said, 50% of your costs relate to funding school boards, for example. But a fee for service directly as opposed to a grant in lieu of taxes....

I know that the FCM and municipalities are afraid that if in fact they're not federal agencies, they will lose the grants in lieu of taxes and hence may have to pick up some of the tab, so they want us to stay in the picture because we're going to be good for the money, too. How would you rather have it? Should we continue the grants in lieu of, based on the fact that you have federal agency status, or would you rather negotiate a fee for service with the municipalities?

Capt. Stark: In terms of fee for service, first of all I tend to agree with the mayor yesterday when he was asked for a list of services. It's very difficult to give you a list of services. For instance, the roads that are coming into the port...they're bringing cargo in from businesses that are in the city, they're taking cargo to businesses in the city. They are paying full taxes. It's not our cargo. It's cargo that belongs to those people who do business in the city of Vancouver.

In terms of services one city manager said to me that if we can't agree on what the fee for service is, does that mean he doesn't have to give any services? I think with the grants-in-lieu legislation today, it's a system that can work. Yes, 50% goes to the school board, but it's a system that can work. I think there are significant savings for us in terms of time and how the grants-in-lieu legislation is applied.

I'm not sure where you would start with a fee for service and how you could ever agree on it. The city might have one idea of what it should be, we may have another. Our services, I would suggest, are probably fire services. We don't have fire boats, but we do participate in the cost of the fire boats, or at least we did. So there's a fire service. There are municipal policing services that we get today. We get delivered to our property line the sewers, the water and so on, but from then on it's our cost.

I'm not sure where you would start, and I think the existing system can work provided we keep the exclusion and there's some form of appeal mechanism.

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Mr. Fontana: As you know, the bill is silent with regard to taxation, because, let's face it, the federal government has to negotiate those terms of grants with municipalities. Even though we have a standing agreement, from time to time we will get into the argument and discussion about that assessment base and how it is applied.

So when you pay $7.5 million to the federal government, who in turn turns it over to the various municipalities, the rest of it comes of course, as you said, in direct taxation that your lessees are paying. If you're paying 50% more and you're trying to be competitive, how do you get these tax addicts at the municipal level to understand that you can't continually tax your lessees and hence your users - the people who generate all this activity - when down the road to the south, not only do they get the tax, but they also pay 50% less in taxes?

How do we get competitive when certain tax regimes don't appreciate that?

Capt. Stark: You have to hand it to the terminal operators and the people here operating in the port. Our labour rates here are around $37. This is the charge-out rate. In the U.S. it's over $60. So we have been able to maintain that competitiveness through our productivity and through our labour rates.

I can show you numbers - and we have them in our Gateway Council paper that you'll get tomorrow - that show that the differential in all levels of taxation, federal, provincial and municipal, equate to about $45 a container or $2.50 a tonne for bulk cargo. We have to stay competitive through what we do in terms of operating the port.

Mr. Fontana: Finally, with regard to the taxation issue, I got the impression from the municipal leaders who were here yesterday that if the policing regime were going to change, they would look to you to have to pay for that extra. I have a problem with that, because essentially it means more taxation - more dollars, again, that have to come from the port and/or the federal government or what have you because they're saying they're not going to give you policing.

I recognize what you just said, Ron, that there are different policing requirements for ports. There are some basic coverages or basic services and then there are those federal powers or federal issues that need to be addressed by federal people, such as the RCMP or what have you - dedicated policing people. But I have a problem when he essentially says you're going to look to them to provide you those services based on the current tax quantity or amount and he has a problem with that. Well, I have a problem with paying more. Do you?

Mr. Longstaffe: We have a problem with that, too, in terms of regular, normal policing. We do not think our users should have to pay twice. They should be entitled to the same services that other taxpayers receive from municipal and local police forces.

That is a matter of difference between us and our municipalities. We heard Ken Dobell of the city say yesterday on the enhanced policing that perhaps it isn't adequate today and there ought to be more. That may be an area where the Port of Vancouver has to make some contribution. That has to be discussed.

We should bear in mind, though, that the stolen cars that go through the port are stolen off municipal streets. They're not stolen at the port.

The Chairman: Thank you, Mr. Longstaffe.

Mr. Keyes.

Mr. Keyes: Thanks, Ron, and thanks, Norm, for your brief. It's probably the most comprehensive brief we've received from any of our witnesses and we thank you for all the input you've provided for us.

Most of the questions have been addressed, but I just wanted to touch on the net versus gross, which is a situation that's being discussed by all the ports that will be coming to us.

The federal government's position is that gross is the way to go because of the experience we've seen in some locations where the net line doesn't reflect exactly what the gross line was at the end of the day, with creative bookkeeping and the diligent work being done by ports and harbours across the country.

Given that, would there be a saw-off position opportunity here, where it is the position of the port, say of Vancouver, that gross would be acceptable if - and it's a qualifier - if it can be demonstrated that the port has a capacity to pay, and that specific would not be just put into the legislation but directly into the letters patent?

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Mr. Longstaffe: At the end of the day, Mr. Keyes, it's going to be the quantum, the amount that actually has to be paid. As long as the formula takes into account that burden of the port and our other expenses, I'm sure something sensible and reasonable can be worked out.

Mr. Keyes: Thank again, Ron.

Thanks, Norm.

The Chairman: Thank you, Mr. Keyes.

Mrs. Terrana, do you have anything to ask?

Mrs. Terrana (Vancouver East): I have nothing to ask, because I've already asked all my questions. I meet these people quite regularly.

I would just like to thank them for coming and say what a good job they're doing - nobody said it, so I have to say it - and how privileged I am to have them in my constituency.

The Chairman: Thank you, Mrs. Terrana.

Thank you, Mr. Longstaffe and everyone else.

Mr. Longstaffe: Thank you.

The Chairman: Our next presentation is from Mr. Ken Maddison of the North Fraser Harbour Commission.

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The Chairman: From the North Fraser Harbour Commission we have Mr. Maddison andMr. Colguhoun.

Gentlemen, take it away. You've been witnessing the routine. If you can, please keep your remarks to about 10 minutes, and away we go.

Mr. Ken Maddison (Chairman, North Fraser Harbour Commission): Thank you very much, Mr. Chairman and members of the committee.

My name is Ken Maddison. I'm currently the chairman of the North Fraser Harbour Commission. I have with me Mr. George Colguhoun, who is our general manager and chief executive officer. We are very pleased to have this opportunity to present this brief to the Standing Committee on Transport during its review of Bill C-44, the Canada Marine Act.

The North Fraser Harbour Commission is one of nine harbour commissions in Canada and one of the seven governed by the Harbour Commissions Act.

Harbour commissions are unique. They are public trusts directed by appointees of two levels of government: federal and municipal. They achieve a happy and successful marriage of free enterprise with public accountability. They operate autonomously in their own economic and political environment. They have extensive powers and a corresponding responsibility to the regions served. They are accountable to the Minister of Transport.

In the execution of our mission, the North Fraser Harbour Commission has provided not only for the users of the harbour but also for the communities that border the harbour and for the environment. Our model for port development is designed to make environmental considerations an integral part of harbour planning and uses an ecological perspective to promote environmentally sound port development.

We are partners with other government agencies in the Fraser River estuary management program. We developed our own environmental management plan in concert with the Department of Fisheries and Oceans and instituted the unique riverbank classroom, which brings educators and their students to the water's edge as part of their curriculum.

We believe the North Fraser Harbour Commission demonstrates to the users, the stakeholders and the civic and provincial political bodies an idea of what a harbour should be.

Our success stems from the many strengths contained in the Harbour Commissions Act. In our presentation to the Standing Committee on Transport in February 1995, we urged the committee to look closely at the Harbour Commissions Act as a model for new port legislation. We believed then and we still believe the Harbour Commissions Act provides a sound foundation for new port legislation. We were very pleased that the Standing Committee on Transport's recommendations reflected our views.

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Many positive steps have been taken since we last addressed the SCOT committee. The Canada Ports Corporation has been reorganized and apparently is functioning to the satisfaction of local port corporations. There has been a privatization of air controllers under NAV CAN. There has been a divesting of some of the public ports and harbours. And CN has been privatized.

We concur with some of the basic principles contained in Bill C-44. We all agree with the basic criteria of self-sufficiency and a reasonable stipend. After all, the minister has always had the ability to take a harbour commission surplus. He has, though, approved our retention of surplus revenue on the basis of solid planning.

We also concur that ports should submit capital budgets, corporate plans and audits to the minister annually; that ports should have a full delegation of authority to make contracts and leases and to acquire or dispose of land; that ports should have full pricing flexibility for the setting of tariffs and fees; that the federal government should not guarantee port borrowing; and that the ports should hold annual public meetings.

It is nevertheless very disappointing to us that many of the recommendations of SCOT, together with the spirit and intent with which they were made, have not been incorporated in Bill C-44. That being the case, we are of the opinion that the Harbour Commissions Act of 1964 should remain in effect. Bill C-44, as drafted, leaves harbour commissions far worse off than they are under the current legislation.

We propose several amendments to Bill C-44, clause 8, and the deletions of clauses 169, 170, 172 and 175 to accomplish this.

We consider Bill C-44 to be seriously flawed and detrimental to the long-term viability of ports. Bill C-44 fails us in five key areas: federal agency status, capacity and powers, taxation, the payment of stipends and dividends, and governance.

On the agency status, it fails to protect the ports from various local forces that focus solely on their own requirements. It grants control of the ports to the same users that ports must regulate and it subjects the ports to municipal taxation, provincial and municipal environmental laws, federal taxation and provincial taxation on capital formation and income.

The cumulative impact of these costs could seriously hinder a port's ability to be financially self-sufficient when coupled with other costs being passed on to ports, such as dredging and other fees now being considered by government agencies, such as Environment Canada, for ocean dumping.

We feel Bill C-44 fails to protect ports from municipal zoning and places ports in the position of being subject to rather than equal to federal, provincial and possible municipal ministries and departments. Ports must spend considerable time dealing with federal, provincial and municipal ministries and departments and must be on an equal footing with them, or they may well be fettered in their execution of their mandate.

Further, we believe Canada is better served by a national system of ports operating under a common national ports policy. SCOT recommended retention of the national ports policy, which we believe created a strong national ports system, which in turn made a strong contribution to national unity.

We propose amendments to Bill C-44, paragraphs 3(a) and 3(c) and subclause 23(1), that will overcome our concerns on the status of ports.

On the capacity and powers of Bill C-44, we feel it severely limits port authority activities when it should be empowering them. It fails to recognize that port authorities are generators of positive economic and social benefits within their communities. It limits the ports' potential revenue-producing capability, and certainly cashflow. It prevents the ports from pledging chattels, equipment and real property purchased with their own funds. It restricts ports to only pledge revenues. It positions ports as less desirable clients with financial institutions.

U.S. Pacific Northwest ports enjoy several advantages not available to Canadian ports. Bill C-44 widens this gap considerably.

On taxation, Bill C-44 fails to take a position on municipal taxation, fails to take into account that port lessees pay municipal taxes and fails to take into account the incremental costs ports are facing for dredging, government cost recovery programs and the costs that could be imposed by provincial legislation.

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We propose that Bill C-44 ensure that ports are no worse off after implementation than before. Grants in lieu of taxes or fees for services should be the maximum payment to municipalities.

On governance, Bill C-44, in our opinion, sets an inappropriate number of directors for most ports. It grants a majority rather than a plurality to the ports' users and it restricts the criteria for directors' qualifications, thus eliminating the services of other effective individuals. It also restricts the terms of directors. We propose amendments to correct this.

On stipends, it fails to set a formula for payments to the shareholder. We propose, for discussion purposes, an amendment of paragraph 6(2)(h), which sets out a formula.

In our review of Bill C-44, starting at page 14 of this brief, we have proposed other amendments not mentioned above. In our view, these amendments improve Bill C-44, and we urge you to consider them also.

In conclusion, we don't believe Bill C-44 should go forward in its present form. The bill as written is seriously flawed. We as a harbour commission are far better off under our current act than we would be under Bill C-44, because it limits the port authorities when it should be empowering them, it leaves them open to charges and it widens the gaps, as I mentioned before.

For us to appear after the Vancouver Port Corporation is a little bit inhibiting. To try to take a broad brush and say the North Fraser Harbour Commission is in exactly the same sphere as the Vancouver Port Corporation would certainly be erroneous.

Yesterday I attended presentations of other harbour commissions made to this committee, and I'm sure that in the presentations that will be made to this committee across the country, the committee will find there is that constant theme. It's very difficult to be able to put all the ports and harbours into one ball. They all have a uniqueness about them, especially in the service and the relationship to the communities they're working in.

To try to restrict the activities of the ports and harbour commissions to be solely port-related and not include a very significant relationship that must exist within the community to me is totally erroneous. I don't think it's in theme with the time in which we are living and I certainly don't think it is in theme with the future. All levels of government and all corporate entities have to have a responsibility to the community they work in and serve. Bill C-44 must take that into consideration.

In closing, we do feel that Bill C-44 certainly has an awful lot of good points in it and that with some changes made in the amendments, it could be a workable force.

Thank you, Mr. Chairman.

The Chairman: Thank you very much.

We'll begin the questioning with Mr. Crête.

[Translation]

Mr. Crête: You say that in your opinion Bill C-44 as it stands will put harbour commissions in a worse situation than the one they are in under the current legislation.

Further on in your document, you allude to the original recommendations of the SCOT report, a report of the Transport Committee wherein the 23rd recommendation stated that there should not be a cost recovery program before it has been demonstrated that the service would be provided in the best possible conditions.

Would it seem appropriate to you that we include in Bill C-44 or in any other bill on ports reform the whole issue of cost recovery in order to make sure that in a few years you are not saddled with a structure and mechanisms that do not include additional costs for aids to navigation, de-icing costs and other such things?

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[English]

Mr. George Colguhoun (General Manager and Chief Executive Officer, North Fraser Harbour Commission): I believe the original recommendation of SCOT spoke to recovery of programs by the Canadian Coast Guard. I believe some of those are now already under implementation, so it's probably a moot point now.

The other cost that has been talked about to the ports on the west coast, anyway, is of course picking up the cost of dredging. I believe we were asked that in the last go-around. We can certainly cover that cost. That is not a problem with our particular harbour. We could pick up those costs.

Throughout, the theme we're concerned about is incremental costs that, it would appear to us, could come through Bill C-44 because of such things as municipal taxation and capital taxes from the province.

[Translation]

Mr. Crête: Am I also correct in thinking that you would prefer that the Harbour Commissions Act continue to apply at least until you know whether the amendments to Bill C-44 will be to your satisfaction? Do you want the harbour commissions to continue to be governed by the current Act, while other ports, large ports, regional ports, would come under the Canada Marine Act?

[English]

Mr. Maddison: Yes, we certainly do believe the harbour commissions should continue. Everyone we talked to - our stakeholders, the cities we serve, the provincial government, everyone - is very pleased with the structure and the workability of the Harbour Commissions Act. We take the stand that if it's not broken, why are we trying to fix it?

[Translation]

Mr. Crête: Why in your opinion did the federal government not quite simply broaden the concept of harbour commissions to make them the model and starting point for Canada's new harbours policy?

[English]

Mr. Maddison: The SCOT committee, which came forward with the Keyes report, did incorporate many of the recommendations that were presented at that time with respect to maintenance of the Harbour Commissions Act and the harbour commissions structure. We were encouraged by that.

From our interpretation of the draft of Bill C-44, we feel the authors of the act have not taken in some of those what we consider to be very strong and positive recommendations made in the Keyes report.

The Chairman: Thank you.

Mr. Keyes.

Mr. Keyes: Oh, already. Okay. I was going to look at my old report.

The Chairman: Well, Mr. Keyes, I could come back to you.

Mr. Keyes: No, no, that's all right.

Thanks, Mr. Maddison, for your presentation to this committee and the work you've put into it.

I can't help but notice that one of your proposals is to delete certain clauses of the legislation, but I have to question whether you're acting on behalf of someone or in your own interest. Your particular port is asking us to delete clauses 169 and 170. Both of those have sole responsibility for the repeal of the Hamilton Harbour Commissioners Act. You're also asking us to delete clause 175, which repeals the Toronto Harbour Commissioners' Act.

I can understand clause 172, of course, because that's just the Harbour Commissions Act. But speaking for and coming from Hamilton, I'm a little concerned, because in consultation with my particular harbour commission and in consultations with the users of Hamilton Harbour, it's clear they are prepared to sign on Bill C-44 if, in recognition of the SCOT report of May 1995, federal agency status is provided to the harbour commissions when they make their applications to be CPAs.

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With federal agency status, many of your concerns would be addressed vis-à-vis municipal taxation, provincial taxation on capital and all the chief concerns of yours.

Would you be prepared to sign on if your concerns were addressed and if federal agency status were written into the bill?

Mr. Maddison: Thank you, Mr. Keyes.

Our recommendation to delete those clauses was really based on the philosophy of the Harbour Commissions Act staying. Many of the provisions under those acts, as you well know, also were incorporated in the Harbour Commissions Act. So it's just to get that common and consistent theme throughout the legislation.

Without question, the federal agency status is important to the harbour commissions as well as to the eight originally named as CPAs, and there is no question that the inclusion of federal agency status certainly does alleviate a great deal of the concerns we have brought forward in our recommendations.

Mr. Keyes: So then you would be prepared to be more accepting of a CPA status in the bill if federal agency status were written into the bill?

Mr. Maddison: We....

Mr. Keyes: You reserve judgment on that for now?

Mr. Maddison: No, no. Please, I don't want anyone to think we are totally against Bill C-44.

Mr. Keyes: No, I understand that.

Mr. Maddison: We are certainly very much in favour of the philosophy of it.

A common theme that always has come forward to us is that the harbours and ports would be no worse off than they are at the present time. We have some concerns in respect to that, as far as the jurisdiction under the Harbour Commissions Act goes. But federal agency status does alleviate a great deal of the concerns and dilemmas perceived by the ports and harbours across the country in their areas.

Mr. Keyes: Thank you.

The Chairman: Mr. Fontana, you had a short complementary to that question.

Mr. Fontana: Yes.

I know that so far - and I'm sure we'll hear this across the country - harbour commissions would essentially like to stay as they are. The problem is if we now create the fourth class in this hierarchy of ports that even the SCOT report anticipated or contemplated.

We have a Canadian Ports Authority, and hence those harbour commissions that qualify would be able to roll those into a Canadian port authority that would be a federal agency.

Then the second tier would be local and regional ports, which would be able to buy the assets or negotiate the assets with the federal government and completely own them, along with their partners: communities, municipalities and so on.

The third would be complete divestitures of those ports and harbours that really, in terms of rationalization, we must do as a country.

If you are now suggesting that we create this fourth class or keep it, the problem remains that we have to give everyone an opportunity to become a harbour commission, and that's problematic.

As Mr. Keyes has suggested, there are virtues in Bill C-44. If you were given federal agency status, all of the concerns you presently have would dissipate. Federal agency status as a CPA would give you everything plus what you already have as a harbour commission.

Secondly, in terms of rationalization, I didn't hear whether or not the Fraser Port and the North Fraser Port would look at rationalizing or, for lack of a better word, merging their operations together to create one large CPA called the Fraser Port or what have you.

Can you address those two issues?

Mr. Maddison: Sure.

In respect to the first issue, the last thing we would want to recommend is to establish another level of bureaucracy. I think one of the intents of the act was to try to start eliminating some of those levels, not adding to them.

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I guess we come back to our basic premise. We still would prefer, if we could have our druthers, that the Harbour Commissions Act stay in its present form. If, however, that just doesn't fit in with an awful lot of other things and a change has to be made, we've questioned whether or not it would be possible under Bill C-44 to have a schedule A and a schedule B, for instance. I know other pieces of legislation have those sorts of things.

Trying to throw all 19 of us - including the 8 and the other 11, I believe there are 19 - who meet criteria....

We certainly strongly believe you have to be financially viable, without question. We haven't received ten cents from the federal government in 83 years, and we're very proud of our financial independence and our financial record.

To best serve our community, our shareholders and our stakeholders, we would like to think it is workable either within Bill C-44 or in the independence of the act.

In respect to a potential merger with our colleagues at Fraser Port, both the North Fraser Harbour Commission and the Fraser River Harbour Commission were incorporated at the same time, which was some 83 years ago. They have functioned very well as independent organizations, and yet obviously some mutual concerns and some very positive working relationships historically have taken on between the two organizations.

We believe the organizations are somewhat unique. The Fraser River Harbour Commission certainly has now focused a lot more on their port operations, and we believe we serve our community very well as a harbour commission. Maybe some of the priorities we have as a harbour commission would not necessarily be top priorities to them within their organization, and we fully accept that.

From our discussions with our colleagues at the Fraser River Port, it is not a burning issue with them. It is not a burning issue with us. That's not to say that sometime down the road it might be a prudent marriage. I don't think any of us would ever want to say never.

But at the present time, with the relationships we enjoy within the community and with our stakeholders, there doesn't seem to be any financial benefit. We don't see any economies of scale to speak of. We run a pretty lean operation, so we don't see financial savings by doing so, and at the same time we think there may be a detriment to some of the services we presently are providing.

We will always continue, because of our proximity to each other, to communicate with each other and to make sure that together we're serving the needs of the Fraser River.

The Chairman: Thank you.

Mrs. Terrana.

Mrs. Terrana: Good morning. Thank you for coming.

Let me add that it's true these two harbour commissions have a very special relationship with their communities. One of my first questions when I came to know about them was ``Why don't you merge?'' It made sense to me. But when you start talking to the users and the people around them, there is a special.... It's different from the port. The port has bigger concerns.

I have a couple of questions. One has to do with the number of directors. On page 18, you propose five. I know five is a marvellous number, and we discussed it when I met with some of the people from the ports, but if you want to have representation from different groups - and actually, the union has also been asking to have their own representative on that board - don't you think five is too few? Have you thought of that? Have you thought there would be a different set-up?

Mr. Maddison: Thanks, Madam Terrana.

Yes, we certainly have thought about it. We operate with five now, and we find it a very workable number. Historically we've operated with five, so we're pleased with it.

We run a pretty lean operation. If we start getting a lot more than five.... I used to think we would have a draw among our staff, because they could have their own commissioner, and which one did they want this year?

What we're trying to do is make sure we remain workable, keep the costs down and also make the organization viable. We were thinking that in a structure of five there could be one from the federal government, one from the provincial government, one from the municipality and the other two would be recommendations of the stakeholders and users and would be appointed by the minister.

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Mrs. Terrana: Let me ask you, then, would you consider having a union representative on your commission?

Mr. Maddison: We presently have a union within our operation, as you know. That would almost be like having a user on the commission, which I think philosophically could be a detriment. There wouldn't be the independence we're looking for at the present time.

We happen to have a commissioner at the present time who is very active in the union movement and happens to be a shop steward in the organization he serves, but it certainly isn't a conflict of interest with what we're doing at the port. He has made a significant contribution to our commission.

Mrs. Terrana: My other question has to do with the appeal mechanism that the Port of Vancouver was asking to set up to discuss the taxation. Do you also have a feeling that there is a need for an appeal mechanism to discuss and of course to appeal the assessment?

Mr. Colguhoun: Currently the cities probably get taxation on 90% of the port's assets, so we'd be looking at 10%. That's if you're talking about the port's property. There are no taxes paid where our office is located right now. On the other hand, we didn't particularly get anything from the municipality when we built it. We paid for everything ourselves, including all the services.

My concern is that I have heard at least one of the cities say they we want taxes on every foot of foreshore on the river. That's totally impractical, because a lot of that foreshore could never be developed for anything, and it won't be. It's given over to the environment, or perhaps because of a hydraulic reason, there's no way the harbour commission is ever going to make a dollar on that property. That scares me, because now you're talking about miles of foreshore that could be taxed.

Mrs. Terrana: So you would want an appeal mechanism.

The Chairman: Thank you, Mrs. Terrana, very much.

Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

Mr. Maddison, I think a lot of people sometimes misunderstand the role of the different factions of the committee. I sit over here as an opposition critic, but for the last major bill this committee did, Mr. Fontana, who was the parliamentary secretary at the time, sat with me and we worked out those areas we actually agreed on. So we only wasted our energy, really, on things we agreed to disagree about.

I'm trying to do that. I am not trying to oppose this bill or support, necessarily, my particular amendments, other than to the extent the industry feels they're needed.

One new thing that's come up in talking with people before this hearing and at these hearings as well is some concern that there maybe should be a fourth level. But in reality right now we have two levels: you're a CPA or you're gone.

I think there is a potential need for a third level. I have not formulated this yet, and I'm looking for input from you and others who will come before us, but I am looking at a CPA with federal agency status, using much the same model as was used with airports. I'm looking at Vancouver, Montreal, Halifax and perhaps others, such as Bridgeport, being CPAs with federal agency status and the whole bit.

The next level, whatever you want to call it - regional ports - would be based on the harbour's role, but keep in mind that certain changes have to come. Much as has been done with the airports, there would be a phase-in period, but ultimately all costs and liabilities to the government would have to come to an end, because they pay for them by the taxpayer.

All the various ports say everything is paid by the user. Well, if it falls back to the government instead, it just means we go to a greater spectrum of users. So somehow it has to be paid out of the public pocket, one way or another.

Would you be in favour of something along that line as opposed to the direction we are going in with the bill this time?

Mr. Maddison: Yes, I think we could support that, but we would want to support that under the premise that schedule B or the harbour commissions would stay under the national system and enjoy the federal agency status. The reason I say that is we're there as stewards.

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You're absolutely right, I think everyone is trying to move forward in a positive fashion toward Bill C-44. We're there as stewards for our shareholder, and our shareholder at the present time, as everyone knows, is a single holder. It's the Minister of Transport. So the recommendations we're bringing forward and the time we've spent we believe are in the best interests of the Canadian citizen and the national transportation policy of our country. We certainly do not have any special interest in any of the recommendations. We're trying to do it in concert, to come through in a most positive fashion because we feel that's the role we're supposed to be performing. We're trying to do that. But yes, in answer to your question, we certainly could second that.

Mr. Cummins: Just a quick one, if I could. In your presentation here, in talking about the make-up of the board of directors, you say that it grants control of the ports to the same users ports must regulate. Then in your proposed amendments to the board on page 18 you were suggesting, I guess, a board of five people, a federal appointee, provincial, municipal and then two user groups. So essentially each one of the board of directors has its own self-interest to bring to the table.

Earlier today someone made the suggestion that things might be better with directors who had no allegiance to a particular stakeholder, and I would assume that to mean neither the province nor a user group. But you haven't made any allowance for people of that nature on that board. Is that something you didn't think of, or something you should have thought of, or something you thought of and rejected?

Mr. Maddison: I think our interpretation of the appointments by the federal, provincial or municipal authority would be that type of individual, that those people received names and brought the proper credentials and the proper type of independent thinking, and to be thinking not solely for that group but in the best interests of the harbour commission they're serving, something that I think historically has gone on.

Mr. Cummins: Thank you.

The Chairman: Thank you, gentlemen, for your presentation.

Mr. Maddison: Thank you, Mr. Chairman, members of the committee.

The Chairman: We will now move to the Prince Rupert Port Corporation, Donald Krusel. I will begin questioning on this with the Liberal side.

Mr. Krusel, perhaps you could introduce your companion and begin the presentation. Again, I'd ask you to confine your remarks to about 10 minutes so we can go to a round of questioning from the members.

Mr. Donald H. Krusel (President and Chief Executive Officer, Prince Rupert Port Corporation): Thank you, Mr. Chairman. We'll try.

This is Rhoda Witherly, vice-chair of the corporation.

Ms Rhoda Witherly (Vice-Chair, Prince Rupert Port Corporation): I think we've agreed that I'll make some opening remarks. Then Mr. Krusel will make the formal presentation on some of the comments we've made in the brief and in the accompanying schedule that you have.

First of all, I'd like to thank the committee for the opportunity to speak to you today about the bill. It's something that's going to be very important for the operation of ports across the country.

I wanted to say a little bit about the port of Prince Rupert because we are always in the shadow of Vancouver. As a port, we ship some 13 million tonnes every year. Our main commodities are grain, coal and lumber. We ship some fish products, and we also have an aquatrain that runs from Prince Rupert and then on a barge up into Alaska.

We feel that we are certainly the second outlet to the Orient, and a majority of our traffic does go to the Asia-Pacific. We are an underutilized port. We have the capacity to double our tonnage with really no capital improvements other than minor kinds of upgrades. We feel that we are an economic generator for northern British Columbia across to Edmonton and to the northern regions of Alberta and Saskatchewan. In fact, we have had a lot of comments and discussion with prairie farmers from that region.

We welcome the changes to the act being proposed. However, we do have some concerns about some of those, and I think I would turn over now to Mr. Krusel to go through them and mention some of the positives and negatives that we see in the bill.

Mr. Krusel.

Mr. Krusel: Thank you, Rhoda.

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As we stated in our presentation before this committee on February 20, 1995, when it was first reviewing marine policy, the overriding objective of any legislation should be to provide the necessary legal foundation to support a responsive, competitive and commercially oriented port system in this country. Our remarks today and suggested amendments to the draft legislation will be focused on this objective.

It should be made clear to the committee that we believe specific areas of the draft legislation are sufficiently flawed that, without the recommended changes being made, the Prince Rupert Port Corporation is of the opinion that the port system would be better served without the Canada Marine Act.

In order to establish the legal foundation to support a responsive and competitive and commercially oriented port system, amendments are required under four major areas: the need for CPAs to have federal agency status; an enhancement of the powers and capacities of CPAs; changes to CPA governance; and strengthening of CPAs' ability to remain financially viable and competitive.

During the original standing committee hearings into marine policy it was stated before this committee again and again by the port and marine community that federal agency status was a necessity. Recommendation number three of the committee's report describes the need for a new marine act that would provide ports with a number of essential elements.

One of the elements identified was that ports should be designated as federal agencies, similar to harbour commissions. Currently, Bill C-44 is silent on CPAs having federal agency status. This shortfall in Bill C-44 must be corrected by this committee.

Federal agency status is critical to the success of CPAs. It will ensure that ports are able to remain competitive and financially viable, because it will ensure that they are not burdened by unreasonable provincial and municipal taxation. It will ensure that ports can continue to develop lands for port-related purposes in a timely and expedient fashion, by giving them control over zoning, regulations on those properties they administer and control, and it will ensure that ports have equal status to other federal departments and agencies, thereby providing for more cooperative associations relating to port infrastructure development.

We therefore recommend that clause 23 clearly state that CPAs are federal agents, and that a new subclause 40.(11) be added clearly stating that port authorities have control over zoning regulations on the real property under their authority.

Hours and capacities: Bill C-44 as it is currently drafted provides contradictory direction to the new CPAs. The legislation calls for ports to be commercially oriented and financially self-sufficient while at the same time places such rigid restrictions on the CPAs' power and capacities to almost ensure financial and commercial failure.

The current legislation also fails to recognize the important role ports play in economic generation. This is an important role for all ports, but we have to emphasize that this role is even more important in a location such as Prince Rupert, where the activities and actions have a more profound impact on the local and regional economies.

Let me give the committee a realistic example of how the current legislation restricts ports. A CPA may be required to build a cruise ship facility to accommodate a growing industry. But two problems face the port authority: first, the cruise business, at least in Canada, is very seasonal and therefore such a facility would be in use only part of the year; secondly, cruise ship facilities are very expensive to develop.

If the port authority is forced to be restricted to the activities currently stated in Bill C-44, it will have only two choices to ensure its long-term financial viability. It will either not build the facility at all, or it will be forced to raise fees on the cruise traffic to such an extent that it may no longer be competitive.

What is required in this scenario is the ability of the port authority to engage in broader-based commercial activity that would support a cruise ship facility. It may be necessary to lease portions of the new facility to restaurants and other commercial interests in order to provide year-round revenues that will make the project economically viable. In fact, taken to its literal extreme, even if the project were financially viable, the language of Bill C-44 would prohibit a CPA from developing a cruise facility, or any other facility, because under subclause 24.(1) it only allows CPAs to operate ports, not to develop ports.

We therefore recommend subclauses 24.(1) and 24.(2) be amended to give Canadian port authorities expanded capacities and powers.

Financial viability and competitiveness: the overriding objective of Bill C-44 appears to be to protect the federal government from any financial risk relating to Canadian port authorities. This may be viewed as worth while from the perspective of the government's fiscal initiatives. However, from the perspective of supporting a healthy and competitive port system and thus Canada's international trade objectives, Bill C-44 must be focused on reinforcing the competitiveness of Canadian ports. Port authorities must be able to pledge more than simply their revenues for borrowing purposes. Otherwise, the future of CPAs will be burdened with higher borrowing costs, therefore making their facilities and operations uncompetitive.

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We recommend that subclause 27.(1) be amended to allow port authorities to pledge, without restriction, any assets other than real property and furthermore to allow port authorities to pledge real property with the approval of the minister.

Bill C-44 prohibits the federal government from providing any funding or guarantees to future CPAs. While one can support the initiative to place the financial burden squarely on the shoulders of the port authority, it seems excessive to bind the current and future governments from participating financially in port-related initiatives that may be in the national interest. It further prevents the federal government from assisting ports during reconstructive efforts following potential disasters, such as earthquakes. Financial support from the government should be maintained as an option of last resort in cases of national interest or emergency. We therefore recommend that clauses 21 and 22 be deleted.

Bill C-44 suggests that the stipend to be paid to the federal government be paid on gross revenues. This type of franchise fee makes the payment almost akin to a capital tax and is inconsistent with general law, both statutory and common, which prohibits a company from paying a dividend except from its profits. The gross revenue option places a port authority at greater financial risk and could in fact further increase the borrowing costs of a port. Therefore, we recommend that paragraph 6.(2)(h) be amended to state that the stipend charged will be on net income as determined according to generally accepted accounting principles.

Governance: we believe the board of directors of a CPA should be of a smaller and more manageable size than suggested in Bill C-44.

Since the Prince Rupert Port Corporation views itself as a port serving all of western Canada, in the same way as the Vancouver Port Corporation, it should, as any other future CPA, have the flexibility of having directors from provinces outside the province in which it resides. Paragraph 6.(2)(f) of Bill C-44 gives this flexibility only to the Port of Vancouver. We therefore recommend that subparagraph 6.(2)(f)(iii) be amended to allow letters patent to describe the type of provincial representation on the board of directors of a port authority.

Finally, in most private sector organizations it is the majority shareholder who has control over the appointment of the chair of the board of directors and it is our belief that this premise should be carried through to the new port authorities. It is also important to state that the chair should be appointed for a period of time equal to his or her tenure on the board, rather than for a one-year period.

Our final comments deal with the Ridley Terminals, which, as you are aware, is a major coal-handling facility in Prince Rupert and is a wholly owned subsidiary of the Canada Ports Corporation. Since Bill C-44 calls for the dissolution of the Canada Ports Corporation, it is assumed that Ridley Terminals will be transferred to the control of Transport Canada in Ottawa until some of the issues relating to coal markets, contracts and financing arrangements can be dealt with. It is the premise of the Prince Rupert Port Corporation and others in Prince Rupert that the affairs and decision-making of this important asset, which has been managed for several years from 3,000 miles away, be brought back to local control.

We are not suggesting that a decision on the long-term ownership of Ridley Terminals be made by this committee, but we are asking that this committee endorse the concept of Ridley Terminals being given local control during this temporary holding period rather than it being transferred to Transport Canada in Ottawa.

We believe strongly that the interests of Ridley Terminals can best be served through the efforts of local initiatives focused on building long-term value for Ridley Terminals. We also believe that local control of Ridley Terminals supports the main objective of the new Canada Marine Act, which states in paragraph 3.(e) that one of the objectives is to ``provide a high degree of autonomy for local or regional management of components of the system of services''. Regional management of the Ridley Terminals component cannot be achieved from 3,000 miles away.

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We therefore recommend that two new clauses be added: subclause 126(4), which would state:

The subsidiary of the Canada Ports Corporation, Ridley Terminals Inc., be transferred as a wholly-owned subsidiary to the port authority in Prince Rupert under the same terms, conditions and financing arrangements as currently exist.

And we recommend another subclause be added that states:

The Minister shall, in consultation with the port authority in Prince Rupert and other interested parties, before December 31, 1998, review the ownership of Ridley Terminals Inc. and prepare a report recommending the long-term ownership terms, conditions and financing arrangements.

Thank you for your attention, and we hope you will give our recommendation serious consideration during your deliberations. We are prepared to answer any questions on our submission at this time.

The Chairman: Thank you very much.

Mr. Comuzzi, one very short question, please.

Mr. Comuzzi: Thank you, Mr. Chairman.

We heard from Mr. Roth yesterday.

Ms Witherly: We hear from Mr. Roth a lot.

Mr. Comuzzi: The primary produce that Prince Rupert port ships is coal and grain. Am I correct in that?

Ms Witherly: And lumber.

Mr. Comuzzi: Lumber is third to those other two commodities.

We were told yesterday, and perhaps you'd like to confirm, that you're on a lease, that part of that grain establishment is on a long-term lease on land that's very, very expensive, and that the municipal tax rate is the highest of any grain facility in Canada.

Ms Witherly: Mr. Roth has mentioned many times that the municipal tax rate is high, and I believe it is. However, the value of the terminal is also very high.

Mr. Comuzzi: Yes. What I'm talking about is the entry level of people who want to become a port, and further to that, the facility that was built some years ago is financed 80% by the Province of Alberta and 20% by a consortium of elevator companies, and there are some years that you have difficulty in paying even the interest on that investment. Is that correct?

Mr. Krusel: I think they are up to date on their interest payments. It is the debt reduction that Prince Rupert Grain is having a difficult time -

Mr. Comuzzi: Yes, exactly. I'm not being -

Mr. Krusel: I'm just clarifying.

Mr. Comuzzi: These are the realities of the port, and I wonder, given all of what I've said in the preamble, how do you propose to get through that threshold of financial viability?

Mr. Krusel: Yes, the grain is one pillar of our port's financial viability. I think the financial viability of that particular terminal is a difficult one, but for that terminal there are three separate issues that relate to it: it's the extra charge, the railway charges, for getting grain to the terminal; it's the onerous debt financing charges; and then as a third element, it is the Wheat Board allocation of grain to western Canadian ports.

It's a very complex problem. I can assure you and the committee that we have been spending a great deal of time with Prince Rupert Grain on this particular issue to try to get around some of these issues, to try to make that particular terminal viable.

Mr. Comuzzi: Thank you.

The Chairman: Mr. Gouk.

Mr. Gouk: Your brief is pretty extensive, and of course we're getting deluged with this stuff. But I assure you, we will review all these things that come in.

I have one area I want to clear up - I know time is short. You talked about wanting to be able to pledge assets other than real property, the real property with approval of the minister. What about property that you either may own now - I'm not sure what your status is on that - or may acquire at some time in the future that you did not get from the federal government, that you purchased? Would you not feel that you should be able to pledge that at any time without approval? I don't want to put words in your mouth, but -

Mr. Krusel: At the moment the Prince Rupert Port Corporation does not own any land in its own right. It's all crown land or held in the name of Her Majesty. However, taking your question further, if we were to acquire land in our own right and with our own cashflows with the future CPA, then I would suggest that this property could be encumbered for borrowing purposes.

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Mr. Gouk: The reason is that when we put all this together - you've gone through this, and I took a quick look at it - there are a number of areas in which you have said it does not apply to you. If that were the case, then I don't want to leave the impression that you think no property should be pledged, whether you bought it yourself or not. So that does clear that up.

Ms Witherly: On the matter of pledging property, I think the reason we put in ``with the approval of the Minister'' is that the property, wherever it is, is still held in trust no matter what the disposition of the legislation is. It's still owned by the people of Canada, and when you come to pledging it, you have to have some assurance that it's in the best interest of all to do that. I think that's really what that's about. We're not opposed to being able to mortgage property, but it has to be done under some guidelines.

The Chairman: Thank you, Mr. Gouk.

[Translation]

Mr. Crête.

Mr. Crête: You recommend that sub-clauses 24(1) and 24(2) be amended so as to give Canadian port authorities additional capacities and powers. That recommendation has been made by several others, but as legislators, we are concerned with preventing undue competition.

What would you say if we agreed to your suggestion of giving ports greater powers to intervene, a broader scope and greater latitude, in terms of the example you give concerning cruise ships, restaurants, etc?

How could we make sure that port authorities not extend their activities to fields where other businesses are already active?

Is my question clear?

[English]

Mr. Krusel: Yes, I think your greatest assurance is in how you are proposing to set up the governance, the board of directors, under the legislation. You are establishing that users be able to nominate people to that board, and you are asking for provincial and local representatives who have an interest in the long-term health of commerce through that port. Therefore, if you have confidence in the people and the process of setting up that board of directors, they will ensure that the properties under the control of the port authority are maintained for the long-term health of commercial trade and transportation through that facility.

[Translation]

Mr. Crête: Thus, you suggest that we not specify that in the bill. We could say, for instance, that we are granting additional powers, but if we added "without creating undue competition", would that seem too general to you? In my opinion, simply counting on the good will of administrators is not necessarily a guarantee. In the medium term, you would not always have the same persons involved and small projects may develop on the periphery, outside the scope of port authorities, and finally, you will be competing in any case.

[English]

Ms Witherly: I think the expansion of capacities and powers does have to deal with the definition of ``develop and operate''. We make this recommendation from our perspective as a port that really has a great deal of land that can be developed, where there are a number of things that can happen. We want to be able to do those kinds of projects in conjunction with private people, or be able to do that kind of thing. So that's the perspective we're coming at it from. Again, the control and the balance comes from the board of directors and from some of the ministerial oversight that we recommend be included as part of the bill.

The Chairman: Thank you.

Ms Terrana, you have time for one very short question.

Mrs. Terrana: Mr. Chairman, thank you.

Welcome, and let me say that I was very impressed with Prince Rupert. Everybody should visit that port.

Ms Witherly: Thank you, Anna. We invite you all.

Mrs. Terrana: I would also like to support Prince Rupert with the Ridley Terminals. They are very important to them, so we should actually look at this situation. What I want to know is whether or not you have any concern about policing in the ports. You don't seem to express it anywhere.

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Ms Witherly: We have never had our own port police. We have always done it in conjunction with the RCMP and the community. I guess we pay for it through our grants in lieu, so there is no specific allocation to the municipality for policing. It's done by the RCMP, sometimes reluctantly, but it is nonetheless done.

Mrs. Terrana: Thank you.

The Chairman: Thank you very much, Ms Witherly and Mr. Krusel.

From the Corporation of the Municipality of Delta, we now have David Kalinovich and Krista Engelland.

Mr. David Kalinovich (Director, Parks and Recreation, Corporation of the Municipality of Delta): Thank you, Mr. Chairman. Unfortunately, Councillor Engelland couldn't be here this morning.

The Chairman: You have been witnessing the process here. If you could attempt to confine your remarks to about ten minutes, we could then get in a round of questions.

Mr. Kalinovich: Thank you, Mr. Chairman and members of the committee, for the opportunity to speak to you on behalf of Delta. I'm David Kalinovich. I'm with the corporation, and I'd like to just give you a brief history of the municipality of Delta.

The municipality was incorporated in 1879, and it started out primarily as a farming and fishing community. Delta has over 36,000 hectares, or 142 square miles, within its boundaries. Our municipality stretches from the international border at Point Roberts along the Strait of Georgia to the Fraser River, along the river to the city of Surrey boundary and then along Boundary Bay. In the brief we've submitted to you, there is a map showing where Delta is located.

To give you some key facts about Delta, our 1996 population is about 95,000 people. We are comprised of three residential communities, Tsawwassen, Ladner, and North Delta, and these communities are separated by very prime agricultural lands. Agriculture is therefore the major economic activity in our municipality.

Industrial growth is increasing rapidly, and it's primarily focused along the Fraser River and at Roberts Bank. The Fraser River Harbour Commission operates within our municipality, primarily along River Road and on Annacis Island, in the northeast sector of our municipality.

The Vancouver Port Corporation is a major presence at Roberts Bank, along with their partners West Shore Terminals, at the coal-handling facility; Terminal Systems Incorporated, at the container terminal currently under construction and scheduled to open in March, 1997; and a possible future agricultural products handling terminal on the remaining pod at Roberts Bank.

The impacts of Roberts Bank developments on the community over the years have been many and varied, ranging from increased rail and truck traffic to coal dust pollution to increased noise levels to impacts on the marine environment. The direct impacts of the Fraser River Harbour Commission have been lesser in scale than those of the Vancouver Port Corporation, but are nonetheless of concern to Delta, particularly with regard to the fees for service paid to the municipality.

The Canada Marine Act and the regulations that will flow from it have a significant importance to our municipality, particularly if passed in current form. We understand the need for many of the new directions inherent in the legislation in order to create the climate necessary for port authorities to fulfil the objectives stated in the purpose of the act, especially with making the system of Canadian ports competitive, efficient and commercially oriented. However, Delta's council shares the views of several other lower mainland municipalities that suggest that changes to the act be considered by this committee.

It is understood that the committee received a presentation yesterday by the City of Vancouver that was supported by other lower mainland municipalities. Delta municipal council, at its meeting on September 26, considered providing recommendations to this committee that were similar to those presented by the city of Vancouver. Because Delta has two port authorities operating within our municipality and the potential for significant future expansion of these port authorities, however, council endorsed 13 recommendations that are similar to those of the City of Vancouver, with two exceptions.

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The first exception is recommendation (c) in the appendix, which requests that the minister include a Delta representative on any group advising on the development of letters patent and the implementation of the legislation in the Port of Vancouver and the Fraser River Port Authority.

The second is recommendation (e), which urges the government to provide for two directors appointed by the municipalities to each of the Port of Vancouver and the Fraser River Port Authority boards of directors.

The full council report and recommendations are appended to our submission.

Of the other 11 recommendations, Delta council is particularly concerned with the following points. The legislation is silent on payment of property taxes, grants or payments in lieu of taxes or fees for service. Council urges that legislation include a requirement that the new port authorities be subject to the same payment in lieu of tax rules that apply to other federal properties.

The issue of policing services requires resolution on how those responsibilities can be addressed, particularly with the dissolution of Ports Canada police. This issue is particularly important to Delta as the developments at Roberts Bank are anticipated to require infrastructure and service that the municipality currently doesn't have and can ill afford.

Council urges that the legislation require compliance with municipal zoning or joint port-municipal land use agreements that would allow broader land uses within the port lands.

We would urge this committee to consider these recommendations and wish to thank you for the opportunity to present the recommendations of the Delta municipal council.

The Chairman: Thank you very much.

I'll begin this round of questioning with the Reform Party. Mr. Cummins.

Mr. Cummins: Thank you, Mr. Chairman, and welcome, David.

I would like to underline the key point that Delta does have two port authorities operating within the municipality, so this bill is extremely important to our community.

There are a number of issues you raised this morning, David, and I would like you to expand upon your concerns on, to start with, the policing and the fire protection and how that would affect the municipality.

Mr. Kalinovich: In the discussions and negotiations we've had with the Vancouver Port Corporation on fire services and police services, Delta has stated that it will provide normal municipal-level fire and police services.

Our concern with police services particularly is with regard to those policing services that are currently provided by Ports Canada police and other agencies.

In terms of fire services, Delta's infrastructure is minimal. We're a small municipality. Our fire services are primarily geared to residential fire prevention and fighting services. We have no capacity for shipboard fires particularly, and that is a major concern. As you can see on the map, we're at the southern end of the lower mainland. We're far away from Burrard Inlet. We do not have the capacity to provide service for shipboard fires particularly.

In regard to police and fire services, from the municipal perspective we're prepared to provide the normal level of municipal fire protection, but we don't have the capacity to provide more at this time.

Mr. Cummins: On the issue of land use agreements, you suggest that you'd like them to allow broader land uses within the ports lands. Would you care to expand on that?

Mr. Kalinovich: As we interpret the legislation, it would apply only to those lands within the port authority. We're suggesting that lands around a port authority or adjacent to it would fall outside the jurisdiction of the legislation as it's currently written. This would preclude the entering into agreements for buffer uses, for exchanges of land, for port authorities to enter into agreements with a municipality like Delta to provide amenities within a municipality, those kinds of situations.

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We have some experience with that in terms of the Vancouver Port Corporation, which has through discussion and agreement agreed to provide some of these kinds of opportunities and amenities to us, and we would recommend that those kinds of opportunities be enshrined in legislation.

Mr. Cummins: With the issue of grants in lieu of taxes, what did the municipality have in mind to improve that situation?

Mr. Kalinovich: Mr. Chairman, the municipality would support, of course, the UBCM position that full property taxes be provided by all landowners within the municipality. Vancouver Port currently pays grants in lieu of taxes. The Fraser River Port Authority pays a fee for services. We would like a level playing field in that regard, particularly with regard to grants in lieu or payments in lieu of taxes.

Mr. Cummins: The last item that I think is worth a comment and an emphasis is the issue of letters patent and the fact that Delta would like some say in that. Would you care to expand on that notion, please?

Mr. Kalinovich: A number of recommendations were made in terms of the structure of the port authorities. We understand from the letters patent, or at least in some of the recommendations that have been made by lower mainland municipalities, that if you don't enshrine opportunities within the legislation, then at least provide in the letters patent of each port authority the capacity to do a number of things. If the legislation is written more permissively - if I can put it that way - Delta would be very pleased and would want to be involved in the development of those letters patent.

Mr. Cummins: I comment very briefly in closing, Mr. Chairman, that this bill does have a big impact on our municipality. There are 95,000 people in the municipality. The transportation corridors alone, which are necessarily being developed to service the new port, have had a real impact, and a negative one in some respects, on the municipality. So I'm sure the committee will take this brief under very careful consideration.

Thank you.

The Chairman: Thanks, Mr. Cummins.

[Translation]

Mr. Crête.

Mr. Crête: I have a very short question. On clause 13, you recommend that directors be chosen among people who don't necessarily have expertise in the area of ports. You say that they could be chosen among people who have expertise in land use planning, for instance, which could be interesting for municipal councils. Would you like to see that exception apply only to municipalities, or do you think it could be generalized to other types of groups who could be represented on a board?

[English]

Mr. Kalinovich: Mr. Chairman, certainly the committee could make whatever recommendations it would wish. That recommendation stems from the fact that the legislation seems to be focused primarily on members of the board of directors who are involved in some way in port activities.

There are a number of residents in every community, I would venture to say, and particularly in Delta, who have community interests, who are involved in aboriginal issues, who are involved in a number of other issues non-directly related to shipping or commercial activities involved in a port that could bring a perspective, we suggest, to the boards of directors that would be different and perhaps useful. Our experience in committees we have in Delta is that approach has been very useful and very rewarding and rich for all members of the board.

[Translation]

Mr. Crête: You are already familiar with that fact?

[English]

Mr. Kalinovich: I meant to refer to committees and boards within the municipality, not within the current board of directors of the port authorities.

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The Chairman: Mr. Fontana.

Mr. Fontana: I want to talk about my favourite topic for the morning, municipal taxation and its effects.

Federal governments and federal agencies can't pay taxes, so they pay grants in lieu of taxes. That's in recognition of services to be received from the municipality. I take it that in return for those grants in lieu of taxes to the municipality of Delta, as an example, the federal agency or the port or whatever federal government building pays these grants expects certain services.

I'm still having a problem reconciling this. Policing is one of the services the municipalities provide to all citizens and to taxpayers - business, governments and otherwise. Why should they have to pay double? If, as an example, the Canadian port police are eliminated and therefore the two ports in your jurisdiction seek policing, why should they have to pay twice for the services they are already paying for?

I realize that municipal governments always want more taxes; so does every government, I suppose. But at the end of the day there's a collective interest in making sure the ports in our communities are the most competitive and can generate business. If the business isn't there, they're not going to be there; hence you don't get any grants or the tax base erodes and that business will go someplace else. Doesn't the municipality appreciate the fact that these airports, ports and other generators of economic activity provide fantastic revenues and services in return to the municipalities? I want you to answer why they should have to pay twice for policing.

Mr. Kalinovich: Mr. Chairman, when I spoke about policing in my brief, I mentioned that Delta in its discussions with the Vancouver Port Corporation has said that it will provide the normal level of municipal policing. We do not provide policing that relates to provincial or federal legislation, particularly with things like drug enforcement, organized crime, immigration, arms trade, etc.

Mr. Fontana: Could I stop you there for a second? Do you mean to tell me that if an illegal immigrant carrying drugs was in the port and then hit the streets of Delta, you would stop that criminal and ask where he came from; and if he came from the port, which is not your jurisdiction, you would not apprehend the person?

Mr. Kalinovich: I don't mean to speak for the Delta Police Board, which I understand will be speaking to you this afternoon. But in my understanding of what normal municipal policing would be, yes, if 911 is called because there is an illegal person or someone with drugs at Delta port, our police will certainly respond. I suggest that it would be considered normal policing to respond to those kinds of situations on an emergency basis. But in terms of regularization of criminal or illegal activities going on within a port, we believe that -

Mr. Fontana: Is that any different from a subdivision that expands the municipality so that you have to put in more policing to make sure the streets and homes in that subdivision, just like a port, are safe from criminal activity?

I'm having a problem understanding why all of a sudden.... I understand that you don't want to pay more, and I agree. Every government is looking at ways...but I have a real problem when you want us to stay in the picture as a federal agency and pay you grants in lieu of taxes, but at the same time when the ports come to you saying they want you to give them some service, you intend to tell the government or the port that they have to pay more for it. I have a problem with that.

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Mr. Kalinovich: Mr. Chairman, those types of policing services, we would suggest, are extraordinary and are above and beyond the kinds of services a municipal police department would normally provide at a port such as Delta port.

The Chairman: Mr. Gouk, do you have a brief question?

Mr. Gouk: This is actually just a comment. I spoke to a couple of councillors from the Municipality of Delta. Just to go beyond what you said, Joe, and I've run into this in my riding, the analogy is that if a new industrial user comes on, he pays taxes and gets the same benefits as anybody else. But if he has a special need, say if special fire equipment is needed for that industrial business, then it is an upfront cost that a city would normally be expected to charge to that complex.

I believe that what the Municipality of Delta said - they did through the councillors I've spoken to - was that if something is wanted beyond what they would normally provide to a normal taxpayer of Delta, then, as with with an industrial user, they would expect payment for those extraordinary costs. This is not for the basics, as you were saying, but for any extraordinary cost that may or may not exist.

Mr. Keyes: They would have to be determined.

Mr. Gouk: Yes.

The Chairman: Thank you very much.

I ask members to be back in this room after lunch, when we will begin again.

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The Chairman: From the Fraser River Pilots Association, we have Captain Bill Burnett.

Captain Burnett, I'm not sure whether you had been watching earlier, but maybe you could confine your remarks to about ten minutes to give members of the committee a chance to question. Thank you.

We'll start the questioning with the Bloc.

Captain Bill Burnett (Fraser River Pilots Association): The Fraser River Pilots Association welcomes this opportunity to appear before you today to discuss Bill C-44 as it pertains to pilotage, particularly on how it impinges our district.

Pilots in the Pacific Northwest operate in one of the most hostile marine environments on earth, with the primary aim of delivering ships, their cargoes and crews safely in and out of ports from the boundaries of our districts. Almost equally important is the protection of our shores for the benefit of all our citizens.

This all occurs with a tremendous success rate by way of the Pilotage Act and its single service provider, Pacific Pilotage Authority Canada. Cost-wise, this service is delivered competitively when compared with neighbouring west coast jurisdictions, except in the case of the Fraser River, which is a problem that was identified in the original document ``A Discussion Paper on Marine Pilotage in Canada'', dated January 27, 1995. But more on that later.

Bill C-44's continued support of regional pilotage authorities is to be admired, as Canada's waters, and thus pilotage, are as varied as any in the world, and can best be delivered with such given flexibility. This can thus only enhance our world stature as one of the safest jurisdictions for shipping.

We applaud clauses 133 and 136, which amend subsection 34(1) and section 36 of the Pilotage Act. One speeds up the tariff approval system to prevent authorities falling into a negative cashflow situation with protracted tariff hearings. The other allows authorities to borrow to help cover operational shortfalls of a temporary nature, thus cutting out the former practice of taxpayers' subsidies.

We wholly endorse the requirement contained in clause 137 that the minister lay before Parliament, by December 31, 1998, a report from each authority that summarizes progress made on such issues as cost reduction and financial self-sufficiency. However, we do not feel that this clause is strong enough to essentially change the imbalance felt by users of Fraser Port. We feel that more emphasis should be put on finding the solution to the river problem. This could be accomplished if there's a genuine will among the participants within the framework and terms of reference of the recently established Pacific Pilotage Advisory Group.

The total cost of pilotage to and from Fraser Port was one of the original items singled out by Transport Canada. A task force was set up specifically to deal with this problem, but failed to reach a satisfactory conclusion. However, the spotlight was put on the port, which has had a negative result from shippers. It has now also suffered a further setback with the PPA's recent application for tariff increases.

Regarding the tariff increase application, the single most contentious issue to us is a system of singling out individual pilot stations as stand-alone entities, resulting in a rate increase to Sand Heads pilot station of 65% this time around.

In most comparable pilotage jurisdictions, the cost of conveying pilots to and from their assignments is included in the tariff, even though some assignments require more than one pilot.

We hear from certain sections of industry about the need for no new cross-subsidies, not a call for no cross-subsidies; yet we know they do exist. For instance, up to 1995, river revenues exceeded costs by over $250,000 per year. This obviously subsidized some other part of the authority's operation, as the PPA does not have that money now. The PPA's billing system, with its increases over the years, has ended up with a cost to the users of Fraser Port being a punitive 200% of the cost to a similar vessel trading to Vancouver, which is a port of a similar distance from Victoria.

Perhaps what we need at this time is a review of the entire tariff structure to even out the tonne-mile cost of piloting in the Pacific region, as it certainly benefits some users over others at present.

Another pilot problem for Fraser Port is the application of the coast guard recovery fee regarding Fraser users. The fee is based on gross registered tonnes. If a 50,000 GRT vessel visits B.C. and takes a full cargo of wheat, ore or lumber, this fee of $2,040 seems reasonable. However, if a 50,000 GRT car carrier visits the river with 100 autos, this fee is far from reasonable on a per-car basis. The result is that the ship can discharge the cars in the U.S., thus avoiding the recovery fee and all Canadian port and pilotage charges.

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Why could this recovery fee not have been the lesser of either GRT or ad valorem so as not to divert small Canadian cargo shipments south of the border?

A shipper at the task force stated that as little as 50¢ a tonne could cause a loss of business. So you can see how these two items, increased pilotage costs and the recovery fee, are going to impact Fraser Port in a negative way.

Fraser Port is the only freshwater port on the west coast of Canada. It has the benefits of smaller tide ranges for roll on, roll offs and car carriers. It's beneficial to ships' underwater hull areas and lessens considerably the congestion on downtown Vancouver's road and rail systems. Surely the federal government, with its initiatives to lessen costs to government, did not intend to destroy such a beneficial system.

The Chairman: Thank you. We'll begin our questioning with Monsieur Crête from the Bloc.

[Translation]

Mr. Crête: I have no specific questions.

[English]

The Chairman: Mr. Gouk.

Mr. Gouk: Actually, I only have a couple of areas, because there are all kinds of things we could get into.

Here's one of the things I'm interested in. You talk about this great cost for the Fraser. Is there some system whereby the river and coastal pilots in general could do some blending of lines? Are there circumstances in which you may be on a ship along with a coastal pilot because you're going through his jurisdiction and your jurisdiction? You mentioned in here that sometimes it takes more than one pilot on board. Is there some way that some of these costs can be reduced whereby one pilot, who's maybe on a rotational basis or whatever, could do some portion of the area of the other so as to avoid having to have two pilots when we're talking about a relatively small area?

Capt. Burnett: The way we're set up is that we are employee pilots and they are entrepreneur pilots. At this time, no, it can't be done.

Mr. Gouk: It can't be done under your existing set-up maybe, but is it a feasible thing? Could we work toward trying to do something like this, to eliminate the need for two pilots when potentially maybe one would do?

Is it a problem created by jurisdictional sort of problems within each pilotage group? I know you work under one general authority, but you each have your own regions - I don't know if that's the right word or whatever - and if you're going into your region, they have to have a river pilot. If you're going into an outside area there, they have to have a different pilot. Yet maybe one could do both jobs when there's a relatively small transition to be encountered.

Capt. Burnett: Every study, even including the one we did under the task force this time around, has always maintained that the Fraser River pilots, because of the added hazards in the Fraser River, should be a separate pilotage district. We are caught in that.

Mr. Gouk: I would like a clarification of one thing you mentioned in here near the end of your presentation, which is about a recovery fee of the lesser of GRT or ad valorem. How would that work? I know what an ad valorem is. I have some problems with it generally. But you're saying to charge them on the basis of their gross registered tonnage or just a blended cost that would be charged all over.

Capt. Burnett: The ad valorem would be on the value of the tonnage that he was discharging.

Mr. Gouk: On a specific ship.

Capt. Burnett: Yes.

Mr. Gouk: Okay.

Capt. Burnett: The Fraser River, due to its draft restrictions, can't take bulkers, obviously, plus the fact that there are no bulk-loading terminals there.

As for a ship coming in and loading a full cargo, the recovery fee on a per-tonne basis can be relatively low compared with a ship that maybe comes with 2,000 tonnes of cargo. And it could be a 50,000-tonne ship.

Mr. Gouk: We looked at the same problem, I think, on the east coast in terms of coast guard cost recovery generally, and that was one of the problems. They were going to charge, for example in Halifax, whether they unloaded their entire cargo there or just stopped and dropped off a small portion.

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So you're saying to base it on the fee that would be for gross registered tonnage, but if they dropped off only 25% of that they would be charged 25% of the fee of the gross registered tonnage. Is that what you meant by that?

Capt. Burnett: No, the fee would be on the value of the cargo they discharged, if it was less than the total.

Mr. Gouk: Based on the value. Okay.

Capt. Burnett: Recently we've had an example of a steel importer diverting a ship to Bellingham because the parcel was 2,000 tonnes. The ship was maybe a 25,000 gross registered tonne ship. Rather than pay the recovery fee on the 25,000 gross registered tonnes, he actually went to Bellingham, discharged the cargo into barges, and towed them into the river, thus avoiding everything to do with Canada.

Mr. Gouk: That's certainly understandable. And this is just based on pilotage fees?

Capt. Burnett: I'm saying the recovery fee plus the additional cost it takes to come to the river is making the river not viable.

Mr. Cummins: You talk about the problem with tariff increase applications and then on the second page you talk about the pilot stations as stand-alone entities. I don't understand that.

Capt. Burnett: In many jurisdictions pilots are put on ships, they may be changed if there's a longer pilotage, and the tariff structure takes care of the cost of the total system. In the system we have here in B.C., and more so now, for each boat and pilot station, the cost of running that boat is being assessed to the user of that service. In other words, the Sand Heads boat is being totally assessed against Fraser River users.

In recent years the numbers have gone...in fact, from the start in 1995, when we got into all this, it looks as if the spotting has really reduced our numbers. The pilot boat station at Sand Heads is running a deficit. So to eliminate the deficit, it's not being moved from pilot boat A to pilot boat B, or from pilot boat C to pilot boat D, it's knocking the price up for pilot boat B till it stands alone. A 65% increase at this time will make the river even more uneconomic.

Mr. Cummins: What you would prefer, then, is for the system basically to be costed out over the whole of the system. In that way the fees on a route such as the Fraser River would be less, because the overall cost burden would be coast-wide rather than on a specific pilotage area.

Capt. Burnett: San Francisco has a similar system. They have a bar boat and pilots join at the bar. If the vessel is going to Stockton or up to Sacramento a pilot change is involved. There is no mention in the tariff about pilot boat cost. Pilot boat costs are within the tariff structure that applies to that vessel. In other words, the total costing of pilot boat services is put into the pot and is part of the tariff process.

The Chairman: Thank you, Captain Burnett.

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Now, from the Delta Police Board, Deputy Chief Higgins. And Barbara Murphy, you're from....

Ms Barbara Murphy (Policy Researcher, Ministry of the Attorney General, British Columbia): I'm from the Ministry of Attorney General. Listing the name of the Delta Police Board is actually an error. Deputy Chief Constable Higgins is from the Vancouver Police Department. I'm from the Ministry of the Attorney General. We represent the provincial municipal subcommittee on ports policing. The committee is actually comprised of police representatives from all of the lower mainland municipalities affected by ports.

The Chairman: Thank you very much for clarifying that. I was wondering about the cosy relationship between Delta and the Attorney General's department. It now makes more sense to me. Let's see if the presentation does.

Ms Murphy: I'm here today with Deputy Chief Higgins, and in the audience behind us is a number of police representatives from the various municipalities who have come to support us in the presentation.

Mr. Higgins.

Deputy Chief Ken Higgins (Vancouver Police Department): Mr. Chairman, perhaps I could take a moment to list the people who have been party to making this report: from Burnaby RCMP, the officer in charge, Superintendent Fenske; Chief Constable Cessford in Delta; Chief Constable Rankin from Delta; Ms Barbara Murphy from the Attorney General's department; Chief Young, from New Westminster; from Port Moody, Chief Constable Ray Singbeil; from the Richmond RCMP, the officer in charge, Superintendent MacAulay; from E Division, Assistant Commissioner Murray Johnston; from Surrey, Chief Superintendent Terry Smith; from the Vancouver Police Department, myself, Deputy Chief Constable McGuinness, and Inspector Chalmers; from West Vancouver, Inspector Kiloh; from North Vancouver, Superintendent Gil Yard.

In addressing this issue, we have tried to get a broad consensus from the executive of the police community. Perhaps I should start by saying that our first concern is that we're heading into some form of model for policing, which has not allowed us to address the very real issue of accountability.

In these days, the police groups are very responsible for accounting to business groups, community groups and so forth for the type of policing we deliver to a particular community. And that is far more than emergency responses to crises or disorder problems, it's the day-to-day problem-solving. Policing today is at an unprecedented high level of using resources within the community, wherever they're from, to address problems of mutual interest.

In addressing this issue, I think this is the first thing we really have to bring to the forefront. Policing today is very accountable, but being accountable is far more than just responding to calls of service. We will explain that in a little more detail later.

Also, to some extent I feel somewhat uncomfortable here, because there are several questions surrounding the ports that I cannot give the answers to. I'm not criticizing the Ports Canada police, but, for example, to what extent is the port area corrupted by prostitution? We don't know. To what extent is there violence within the work site? We don't know. To what extent does the stolen property go out? To what extent do drugs come in? We don't know.

And as we will focus on in a minute or two, the problem with accountability is that we can no longer be on the outside looking in. We have to be part of what is going on down there, and the ports are very much a community that we have to serve in whatever form is agreed to.

We would be looking for a process where there is some negotiation toward a model that everybody agrees to and that will probably involve some compromise by all involved. But if we don't get it right this time, we're going to be coming back time and time again to deal with issues.

The number one thing I would like to emphasize, Mr. Chairman, is that this problem is made more problematic because it's multi-jurisdictional. You only have to read the recent report out of Ontario regarding the Bernardo case and the issues that were compounded by multi-jurisdiction. We don't want to come anywhere close to that if we have the chance to eliminate the potential problems here.

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Historically, the port of Vancouver has been a federal policing jurisdiction, and the proposed Canada Marine Act will effectively eliminate the federal police agency.

The police executive group to which I have just alluded has taken a close look at the port of Vancouver in an attempt to assess the public safety and security requirements and policing challenges that are unique and specific to this port. I can tell you now that we have found quite a few, which I will address in a moment. To summarize, we have barely begun getting a handle on what will be needed to plan for the next five to ten years, in whatever format.

Our primary position is that the policing at the major seaports should remain a federal responsibility.

Seaports in British Columbia must receive adequate and professional services as they are structured today, not as they were years ago but how policing is evolving into the next decade of service. If anything else different from that is in place, the general community who work and live there would be at risk. We think the model we've evolved into in Canadian policing is very much to the better, and it is essential that any new police initiatives will reflect the philosophy of policing today, not just from the police group but what the people in the community want.

Our mandate was to determine the appropriate model for port police services required in lower mainland ports. We received presentations from various groups, and in the course of exploring alternatives for policing at the major seaports, the subcommittee surveyed North American and international ports identified as being comparable in size and function to the port of Vancouver. All six of the United States respondents have dedicated port police, as does the port of Rotterdam. In addition, information was provided that of the fifteen largest seaports in the United States, ranked by cargo value, all but two use sworn police officers to police the ports.

A real concern for us is the fragmentation of policing that could come about with any significant changes that will occur, unless we can, hopefully, negotiate a model whereby everybody thinks we're getting closer to what would be the optimum condition for the ports.

Specifically, proposals to provide non-police regulatory personnel, such as Canada Customs and the harbour master, with general or specific police authority and appointing corporate security agents as federal enforcement officers are seen as being likely to cause havoc in the police community.

The police subcommittee has not been able to obtain accurate data about a number of factors that must be considered when determining the resource requirements for the provision of port service. Accordingly, we have declined to make guesses as to what is needed. Nonetheless, we have outlined specific issues that will have to be addressed, and these are contained within the report.

Our initial conclusions about the current situation of policing at British Columbia's lower mainland ports are: the resources of the current Ports Canada police detachment at the port of Vancouver are inadequate for providing the primary police services for the port of Vancouver; the connection between the local Ports Canada detachment and the Vancouver Port Corporation is indirect, but the corporation exerts control over the local detachments through the budgetary process, and this has been most evident in recent years, when their numbers have dwindled.

As a result, it is our conclusion that the port of Vancouver detachment does not fully operate as a professional police agency. It is now seen to be largely an armed corporate police security agency. As a result of this, professionalism has been undermined and the Vancouver detachment has been directed more by corporate goals than by the modern needs of community-based policing.

In our view it is critical that port police should be an independent police agency free from corporate influence other than what is now part and parcel of the way we do business with our various communities, where we seek input, help, and direction in problem-solving. That critical line of independence has to be maintained to keep policing as it is.

A fairly significant portion of the Ports Canada police time is spent in performing security functions, which include compliance with Canada's national security standards and providing assessments for port tenants.

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Our committee is in agreement that there is a very legitimate role to be played by private security in the ports. However, we would like to emphasize the point that we think whatever the model that is eventually in place, it has to be built on a sound infrastructure of policing services, so we are not on the outside, looking in on what is largely a private security outfit, where the issues of conflict of interest come very much to the fore. That is the essential ingredient for police independence: that we do operate somewhat independently and thereby the potential for conflict of interest in what may be negatively affecting the port can be largely avoided.

At this point I'll hand over to our co-chair, Barbara Murphy. As I said, initially we did not have adequate information to address all our concerns, but we have outlined specific instances and concerns, which I'll ask Barbara to address.

Ms Murphy: When we started looking at the Ports Canada police question, one of the things we looked back on was their reason for being. All the information we could find was that the Ports Canada police exist for one reason. Crime and corruption in the ports of Canada had reached a critical stage and our international reputation was affected. Now it's 20 or 35 years later, quite substantially later. Bill C-44 will have the effect of eliminating the one dedicated ports police agency in this country. That is going to happen, if it proceeds as it seems to be proceeding, without anything being put into place to take care of the problems or to make sure those problems don't arise and do damage to our reputation again.

The concern the Attorney General has put forward to the Minister of Transport went right back to the very first question, about the need for consultation. Before you pass a bill that takes away the one police agency dedicated to the ports, something else has to be put into place to take care of it. The Ports Canada police represent federal involvement, federal responsibility for law enforcement at the ports. Bill C-44 removes the federal involvement from port policing. They're not going to have a dedicated police agency any more.

We have received information on the Coopers & Lybrand model designed for the port of Vancouver. It's a very simplified model. It talks about policing in terms of ``basic'' and ``enhanced''.

When you're looking at a port situation as this subcommittee has looked at it - and we've been working at it for about three and a half months now - certain conclusions are drawn. You can look at basic policing as being a level like this, which everybody in the community gets, and the minute you look at a port situation you're looking at this much. It's substantially higher to provide basic policing to a port than it is to other communities. It has special needs, special requirements. Unique problems are occurring down there.

The model that has been proposed by Coopers & Lybrand seems to divide the responsibility among the RCMP, Canada Customs, and the municipal police. This subcommittee is here to tell you the municipal police have not agreed with that model and are not prepared to take it on simply as a hand-off.

We haven't been able to ascertain what position the RCMP might be taking about this. As far as Customs goes, while we're aware of the work they're doing down there, we're also aware of the fact that they don't have police authority and they are very limited in the amount of enforcement they can do. You may be aware that Canada Customs is currently seeking to have its powers extended so it can take some form of police action, but that's an extension that hasn't been granted yet and is not fully supported.

The position we're taking today is we're asking that Bill C-44 should be amended or delayed, or whatever is necessary should be done to address the policing problem in a manner that is satisfactory to the municipalities and to all the others who are involved in delivering police services. I think it's critical the federal government, the provincial government, and the local governments, who will ultimately have responsibility for policing and will bear the liabilities associated with failing to police properly, should sit down and take a look at this problem as a joint effort.

A lot of information is available and a lot of information is yet to come. Our work has just begun. What we want is the opportunity to finish it, and we'd like to finish it in cooperation with the federal government.

Thank you.

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The Chairman: Good. Do you have your -

Ms Murphy: I believe we have tabled our report today. We were able to obtain a translation as a courtesy to our French-speaking members and I believe it's been circulated to you.

The Chairman: Yes, thank you very much.

I must confess that I'm a little confused about one point, if I may take the prerogative of the chair. If I understood the early part of your presentation, you were concerned about the amount of fragmentation in the delivery of policing services, yet you argue to keep one more entity in the mix. Doesn't removing one entity simplify the policing relationships?

D/Chief Higgins: Not in those terms, Mr. Chairman. What the end model would be nobody has determined yet. The last thing we would be proposing is another agency in there doing whatever it is. Whatever the end result is, there should be an improved lateral matrix whereby we have a common or communal focus, with a mandate for what we want to be doing there and who we are doing it for that focuses on the port as a whole. That, as you said, covers a large geographical area, so the model that is eventually in place should have....

I think the term ``basic policing'' has been somewhat misleading; at least it isn't a term we accept. Basic policing these days does include a presence whereby we relate to the community on a day-to-day basis so that when problems start to occur we're on top of them. This is usually a separate role from responding to crisis calls. From there, you get intelligence building and gathering, which is still part and parcel of basic policing today. The project level of policing very often is the direct result of basic policing information and so forth.

So that will be the challenge. We don't have the answer yet. It will be a chance to get whatever sort of lateral focus we get, where we're addressing the policing needs in today's context around the geographic area by whatever model is agreed to. Within that process there is an exchange of information whereby the projects eventually materialize. Projects are extremely expensive and there's usually an oversubscription of resources to them. You go with the best one that will give you the best chance of a positive result. If you're not getting good, solid information about what is going on or why you should put a targeting group on a particular issue, the chances are that another equally pressing project will come along.

The basic policing model includes far more than just responding to crisis calls and disorder. Today's demands on us require that we be there interacting and getting to know the community, whatever form it takes. From there we have liaison with the security, with the businesses, with the immediate community outside, and with the other agencies within whatever model is agreed to.

We don't have the final one, but we are very concerned that we could end up with something that is totally fragmented, and as a result, project-based stuff could suffer as well.

Ms Murphy: There's another aspect of fragmentation that we might address today. It relates to the dividing up and parcelling out of police powers.

Police powers are extraordinary powers, and we have our professional agencies that have public oversight and are accountable to public authorities that deal with them. There are a number of issues today surrounding law enforcement by non-police officers. I alluded earlier to the Canada Customs situation. Canada Customs has the authority to enforce the Customs Act. It doesn't have the authority to enforce the Criminal Code or the federal statutes or the provincial statutes beyond that. When they talk about moving the police out of there, there's going to be a gap because Ports Canada police provide that authority. That's the link between Customs and Ports Canada police. Customs does a certain amount of investigation and has a certain amount of authority, but then it goes in with the police. They're in partnership.

Taking away the police, who is going to enforce the Criminal Code? Who is going to enforce the federal statutes and the other provincial statutes? We have a proposal before us to extend that authority to customs officers. That's a fragmentation of policing. You're taking police powers and giving them to non-police officers.

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Bill C-44, in the section on enforcement officers, I believe grants extraordinary powers to the enforcement officers. They'll have the right to enter onto ships; they'll have the right to get warrants; they'll have the right to seize goods. The question we've been asking is, who's going to do that? Who's going to have that extraordinary police authority? - because that's what it is. We haven't got an answer to that question yet, and we're concerned. If you're not going to have Ports Canada police down there, who's going to be doing this? Do you expect that the municipalities are going to take it on - which would be a lot of extra work - or is it going to be fragmented and given to somebody else?

That's the fragmentation issue.

The Chairman: As tempted as I am to continue this, perhaps I should go to Mr. Comuzzi.

Mr. Comuzzi: When you talk about policing, are you including the policing of both cargo and passengers on the cruise ships? Are you talking about policing in both of those areas?

D/Chief Higgins: It would be our position that we should be able to have a presence there whereby we can make sure that the standards are being maintained, such as who will be setting the standards for the operation of these various activities? We should have a presence there - not necessarily responsible for basic security of a cruise ship terminal, for example, but a police presence should definitely be there to make sure that there is no dropping of standards, or else clearly there's a policy in place that would appear to be in conflict with the best interests of the port.

As we say in the report, we see that there's a very real role for security there, but we should build on what are the basic police needs because of the authority of the police and then look meaningfully at where we can have a very real working relationship with security. But to have great sections of this area where the police are on the outside looking in....

Considering the importance the access to this country has, we are making a very strong appeal that this should be looked at and that we will address this issue from the ground up, so to speak.

Mr. Comuzzi: Was I incorrect in hearing that up to this point in time, given the policing that we have through the ports police, there was no exchange of critical information between the ports police and the police agencies in the surrounding area with respect to assaults, theft, prostitution, immigration, and those types of things?

D/Chief Higgins: There is some exchange. Without changing their mandate, they've still kept quite a large water presence with their marine patrol. Their numbers have been reducing. Their ability to be a viable entity has been largely reduced. It's not a criticism of them; I think they've been trying their best. With the resources, we could not have done much better to maintain an around-the-clock presence. It takes six people to keep officers positioned around the clock, and you've got only 42, and it's now down to 29.

Mr. Comuzzi: Obviously, for whatever reason, there wasn't the proper exchange between police forces with respect to crime. Is that what you're saying?

D/Chief Higgins: It was more limited.

Mr. Comuzzi: It was limited?

D/Chief Higgins: Yes.

Mr. Comuzzi: Would you expect more cooperation between two of your police forces in this area, rather than the cooperation that exists? Maybe ``cooperation'' is not the best word, but, for whatever reason, there was a lack of cooperation between the ports police and the other police forces in areas of vital importance for the protection of the community.

Ms Murphy: I don't think that's accurate.

D/Chief Higgins: More communication.

Mr. Comuzzi: Tell me what's accurate.

Ms Murphy: What has happened is that the Ports Canada police have been downsized. They have 29 members left in their detachment. Because the waterfront has been seen to be their area, they've looked after it as best they could, without much help from the City of Vancouver, which goes down when it's necessary and goes in whenever there is something that is beyond the capability of the Ports Canada police. There's an interaction there, but they've functioned as an independent, on-their-own kind of agency.

What has happened is that they've provided the statistics, such as they have them, but how many statistics are 29 members going to generate on the waterfront? Deputy Higgins was saying it takes five to six positions to keep one man on the waterfront. So with 29, you're looking at four officers on duty at any given time.

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Mr. Comuzzi: I don't know. What's being said, in essence, is that there is that cooperative venture between all the police forces, including the ports police, but they can't do it because of their manpower restrictions. The system is there, but the manpower isn't. Is that what you're saying, Ms Murphy?

Ms Murphy: The system there could well work, perhaps -

Mr. Comuzzi: So if we had 40 people there, you would have the information that your other police forces need. Is that correct?

Ms Murphy: We would have more information, more of it.

Mr. Comuzzi: And that would be information that you would cooperate in and act on. Is that correct?

Ms Murphy: Yes, to the extent that we received the information.

Mr. Comuzzi: I think that answers that question, but I have one final one, Mr. Chairman.

You said the ultimate responsibility for the policing of the port-related facilities should rest with the federal government.

Ms Murphy: Yes.

Mr. Comuzzi: That's the RCMP.

Ms Murphy: Right now, but it could be whoever.

Mr. Comuzzi: Who else do we have? It's our only police force.

Ms Murphy: It's the only police force. Currently, the Department of Transport has taken responsibility for providing some policing of ports through the Ports Canada police, and whether it comes to -

Mr. Comuzzi: But that's changing.

Ms Murphy: The suggestion is that it is going to change, and instead of it staying with a federal entity, it's going to filter down to the local -

Mr. Comuzzi: I'm just trying to get to a resolution of this. So if the RCMP should assume the responsibility for the overall policing, what you're saying is that the Attorney General department and the other police forces would cooperate with the RCMP. The RCMP would be responsible for the overall coverage of policing, but would delegate that responsibility to other police forces. You would be satisfied with that?

Ms Murphy: I'm sorry, I don't understand the delegation part.

Mr. Comuzzi: I think you said in your submission that you need somebody to be ultimately responsible.

Ms Murphy: Yes.

Mr. Comuzzi: So if the RCMP is ultimately responsible, they would delegate responsibility for all smuggling, immigration, and other federal jurisdiction items, Criminal Code items.

Ms Murphy: Yes. The federal RCMP has a presence here in British Columbia -

Mr. Comuzzi: Yes, I know they do.

Ms Murphy: - and works very well with the other police agencies that are here. What we're concerned about is having an adequate level of professional policing on the ports. If the federal government chooses to deliver that through the federal RCMP, I doubt there would be any problem getting cooperation from the surrounding police forces.

Mr. Comuzzi: That answers my question.

The Chairman: Thank you, Mr. Comuzzi.

Mr. Keyes, do you have a question?

Mr. Keyes: I sure do, Mr. Chairman.

Personally speaking, I can't see how a federal government that used to have some 85 Canada Ports Corporation police officers looking after all these different ports across Canada is going to now structure some kind of an organization. We're trying to reduce the amount of bureaucracy. We're trying to reduce the amount of responsibility held by the federal government in the port areas. So I don't see a Ports Canada bureaucracy being set up and paid for by the federal government in order to look after policing harbours across the country.

So far, to my knowledge, the Port of Vancouver is the only port or harbour that has a problem with the Ports Canada police and the repeal through the Canada Ports Corporation. I'm not hearing anything from Halifax, I'm not hearing anything from Quebec, I'm not hearing anything from Montreal. We already have regional and municipal police forces looking after policing at harbour commissions and smaller ports right across this country. That being said, I see it break down into two areas: jurisdiction and who pays.

I can't see a problem with jurisdiction, because, quite frankly, every one of the officers who wears the uniform and a badge is magnificent in the way he or she does his or her job. If those officers see a crime in progress, they don't question jurisdiction first. They do their job, and jurisdiction is then determined after the fact. So if you're going to have a crime committed at the port of Vancouver, whether it's drugs or smuggling or an immigration problem or what have you, the police officer - an RCMP officer or a customs officer or a Vancouver police officer - on the scene will take the necessary action. The jurisdiction is resolved after the initial arrest or situation is taken care of.

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When it comes to who pays, many will argue here in the port of Vancouver that the users of this port have been paying full municipal taxes for many years while never receiving police service from the greater municipality of Vancouver. One might say the reverse, that truly, having charged complete municipal taxes for so many years, the municipality has been getting a free ride on policing after having been looked after by Ports Canada police.

The Chairman: Mr. Keyes, in the words of the Speaker, ``The question is...?''

Mr. Keyes: I want to clear up some of what I understand from the witnesses. I'm glad to hear from the witnesses on their position, but quite frankly you can build a mountain out of a mole hill. It's easy to do, so let's get down to the brass tacks.

Taxes are being paid to their full extent. Policing has not been provided at the port of Vancouver, but has been done by the Ports Canada police. Now, however, the users, who are going to request a policy body on their port, are going to get the service that they've been paying for all along anyway. And if it boils down to some kind of a check-the-locks-and-check-the-gate situation, I'm sure Ron Longstaffe and the guys at Vancouver are going to say that they'll hire a smaller security force to walk around and to check locks and gates and all that kind of stuff, and will pay them $11 an hour as opposed to $35 an hour.

So I think there are all kinds of opportunities here. Jurisdiction can be worked out. It's not as complicated a situation as I'm hearing at this present moment, and the bill is being paid.

The Chairman: Would you care to respond?

D/Chief Higgins: Yes, Mr. Chairman.

I certainly agree with Mr. Keyes on his scenario of the response from any police officer passing through the jurisdiction. That is absolutely without question. But the question that is yet to be posed - I haven't heard it - is centred around what the Port of Vancouver wants the police to do. In this somewhat simplistic model of percentages, they've said what they think it will do, but nobody has come close to saying what we want of the police in our area. If all they want is for them to come in when they have a crisis, as an executive in this area I would say that you should be very concerned. That is a totally unrealistic expectation or indeed awareness of what is truly needed.

We're not disputing how crises will be dealt with, but nobody has said to us what they want of the police. You can't do it on pie charts and graphs and think you're going to provide the right service to the people who use the port to import and export and bring people here by the thousands on a monthly basis. Once they start outlining to us what they're expecting of the police community, that's fair enough. But it's not even close to being addressed.

Mr. Keyes: I'm not sure whose fault that is.

Ms Murphy: I would like to respond to some of the comments you made, Mr. Keyes.

In terms of jurisdiction, I agree with Deputy Higgins. When you're talking about reactionary policing, you're going to get a reaction from a professional police officer - and there are a lot of other professionals who would respond too. But that's not what policing is about today. Policing isn't about reacting any more. Policing is proactive.

On the port, when we've gone down - to the extent that we've been able to do that - to take a look at what's happening there, the kinds of crimes that have the greatest impact on this province and this country have not been the kinds of crimes that people phone in to report. We don't get people calling 911 to say there's a container down there with cocaine in it. That type of information is gathered by police who are there on a daily basis to cultivate a knowledge of the waterfront, of how container ports work. I, myself, don't know. They go down there, they specialize, they get into the community down there and they learn how to find these things out without waiting for a phone call. That's the kind of policing that's required at the port. That's beyond reactionary and that's where we have a problem.

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How do you define putting the police in there? Deputy Higgins asks what they want from us. They want us to police them, but on what model? In order to police them properly you need to have a dedicated presence down there who are experts.

You made a very interesting comment yourself yesterday. You said every port is so different from the rest. This is true. And it's as true about policing as it is about everything else.

We heard Mr. Longstaffe talk about this being the biggest, most diverse port in Canada. It has an international reputation. In our explorations about policing we've heard lots of good things about Vancouver as a port in general. We tried to find similar ports to find out what are the similar needs and the similar problems. We didn't only look at whether they had a regional police force or whether they were Canadian, or whatever.

Mr. Keyes: But you can also fine-tune -

Ms Murphy: I'm getting a Winnipeg wave from the end of the table.

The Chairman: It is time to move along a bit.

Mr. Keyes: On that point, Ms Murphy, I agree with you 100%, on the community. But remember, take it right back to community policing. Community policing doesn't mean that you have a cop on every corner. It means that there's an involvement within the community to identify the cocaine in that particular.... So it's the port community that has to work with the officers, who aren't going to be on every pier and wharf in Vancouver, but a recognition by the community. This is something we can come together on, but it doesn't mean that all the problems are solved -

The Chairman: Okay. Whoa, whoa, come on! It's a little like herding cats.

I think I will let the members of the Reform and the Bloc have at this question. I think it's an important one and I've let the debate run on a bit because this is one of the central issues we've been asked to think a bit about.

Let me get around to this side of the table and then we'll see if there's a need for further clarification. Mr. Gouk.

Mr. Gouk: You mentioned that one of your concerns is to get rid of fragmentation, and I think that's a good idea. However, under your joint initiatives that you've laid out on your page eight, I think in some respects you're creating fragmentation because you have so many different jurisdictions, so many municipalities on the port of Vancouver alone, for example, that I don't think it's practical to have dedicated forces from Vancouver, North Vancouver, West Vancouver, Port Moodie, Coquitlam, New Westminister, Burnaby and whatever else is involved there.

I think it would make more sense for the regular routine police work to be done in each jurisdiction. But the things that are on the second part of your list - the investigative unit and so on, plus the marine patrol out of your top list - you would put together some kind of proposal, whether it be done by one member from this jurisdiction and six from that, or one jurisdiction saying we will look after it with a dedicated force to which each will contribute, and of course some aspects of it back-charge. Would that not make more sense than having a marine patrol in each of the jurisdictions and having a special investigative force, investigative unit, one from Vancouver, one from the north and west, and Port Moodie and all the rest? Would that not be a more sensible model?

D/Chief Higgins: There are economies of scale very much in what you have said, sir, yes.

Mr. Gouk: Is that feasible for you to put together some kind of outline based on that type of model?

Ms Murphy: I don't think the problem is coming up with revisions to this model - and I think you're pretty close to how we saw this model operation-wise. Our difficulty is, how much is required? Is it good enough to hava one patrol car that can drive from Burnaby to...? This is where we run into a problem, getting information on what's going on down there and what's really needed.

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This model deals with a level of service, but to quantify it is something we haven't been able to do. That's why we feel we can't proceed at this point. Quantifying it is going to take a great deal more work and we're not going to be able to do it in ten days or thirty days. It's taken us a long time to get this far. We require the time and the input.

Mr. Cummins: You're mentioning again this issue of what the level of service is. When you look at Delta, it's doubly a problem, because you're bringing a new facility on stream there and you have nothing to fall back on to say what's going to be required to police this. This is what you say very eloquently in your brief. I understand that issue, and I think most people should.

We've gone around the board on the issue of fragmentation, yet to me the issue is that you're dealing with...how many municipalities around the port of Vancouver? You have one entity, the port of Vancouver, yet the policing jurisdiction would be split up among fifteen or sixteen municipalities. I think that's the issue here, that in part policing that fragmented area is going to create difficulties. Could you elaborate on that problem as you see it?

D/Chief Higgins: I think it's the crux of the issue and probably the protestations emanating from the west coast are all the more strident because of that very issue. If we were metro, if this were a metropolitan policing region, we wouldn't have half the logistic problems we're faced with now. There are going to be changes, we know, and everything is negotiable. We just have to agree to try to work towards a model, as opposed to having something which, in my view and in the view of our committee, is all too simplistic, is only going to bring the stakeholders back to a meeting, when we probably have some problem which, if we sit down and talk about it and thrash it out now, we can probably avoid for the future. Yesterday was yesterday, but we'd like to see something that will deal with this multi-jurisdictional problem that is inherent to this and agree to work towards something everybody is going to have to agree to. There will probably have to be compromises by everybody involved.

We're confident we can probably work something out and make recommendations, but we definitely need more time. This is very complex.

Mr. Cummins: I guess also, whether it be a vessel coming in or a smaller boat just coming into the harbour, the issue is also that they do transit several municipal jurisdictions, if you divide it up, and who is really going to be in charge? Who is going to check that out? The first guy in the line or the second guy, and so on? The difficulty there in just tracking vessel traffic or people movements throughout the port is it really belongs to one service. How that's organized is another question.

The other critical issue is this business of knowing your community. If you put that onto the level of policing, knowing what goes on in a port is different from knowing what is necessarily going on in the city of Vancouver. I'm not sure we've given enough attention to that aspect of it. I'm sure when the port police take a drive down the harbour they can tell what's normal and what's abnormal on any one day, but for most of us that's not always the case. Is that not a critical issue too, that if you do divide the jurisdiction up in fourteen different ways and then each of those forces is going to assign certain people to pass through the port, you're going to be losing that expertise, that knowledge of the community? Is that a concern as well?

Ms Murphy: That's a major concern. When you talk about it being a different kind of community and the need for the expertise, when you consider that the port is a place where there are a lot of transient people...and I don't mean ``transient'' in the sense of being homeless, I mean there's definitely an international component to what you meet down there. On any given day there are a large number of people from foreign countries. There are language issues, cultural issues. All kinds of things play into the waterfront. The constituency is just different from another community.

Mr. Cummins: Just knowing the characters.... People do pass through that port on a regular basis, and over time, as you're stationed there, you're going to learn the community that's travelling in and out too, which is bound to be helpful. You know who to watch for and who not to.

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D/Chief Higgins: Local knowledge, Mr. Chairman, is probably one of the essential elements of successful policing. With the widespread area and all the jurisdictions, the coordination capability, without making it hierarchial, is definitely very necessary to make sure there is the right focus throughout the area, with very local efforts and initiatives where you have a particular community within and around the port.

The Chairman: Mr. Crête.

[Translation]

Mr. Crête: I thank you for having made us aware of that problem and for having helped us to understand its complexity. It is true that a port is necessarily a potential focus for extensive criminal activity. Bill C-44 probably provides you with the opportunity of shedding light on something you are already aware of.

Would you go so far as to recommend that the federal government explicitly provide for adequate resources that would allow for those transfers, either in the bill or through a government commitment? The problem does indeed seem quite complex to me in terms of coordinating police personnel.

You also raised a problem that may exist elsewhere, i.e. the independence of harbour police, because its funding comes from harbour commission budgets in the cases involved. In any case, that is what is said: the money would come from that source, all of it.

How long do you think the evaluation of the transition period you refer to in your brief would take? What should we do in order to be able to say, three to five years from now, that we have the necessary information to assess the efficiency of the system that will be put in place?

One last question: have you evaluated the impact of criminality in the port on crime activity in the surrounding area, in the Vancouver area, for instance?

[English]

Ms Murphy: I don't know what order we're going to address the issues in. As I understand it, the first question you asked relates to whether or not we would recommend that something be put into the bill to deal with policing. Am I correct with my interpretation of that?

The Attorney General has asked the Minister of Transport to address this in the bill and has taken a position that the policing issue cannot be left to chance and should be addressed prior to this bill proceeding.

D/Chief Higgins: The second question, as I understood it, was how much time would we need to assess the transition period.

If I can then go to your last question, do we have an assessment of the effect of criminality, and so on, in the port, the closest we have at the moment, which we have used as a reference document, was a paper by professors Brantingham, The Criminality of Place, which is not specifically addressed to the port of Vancouver.

If we were to undertake a parallel study along those lines, you're looking at several months to have it other than a sort of assessment. If it's to be done by proper study, I think we'd be looking at five or six months because it would have to be an academic matter.

So to come back, if that is to be included in the time needed to assess the transition period, I think we're looking at a minimum of six months.

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I think the independence of police is being reinforced, and that can be addressed in developing protocols with the private security who would work there and the reporting relationship with the people who have a hand in it, because I think the money is going to come from the port and the port has to stay competitive. We recognize that the port has real needs to stay competitive as a port, and it has to be a good port.

So how policing should now relate, whatever the model, I think the port's stakeholders, if they get into the current model of policing, will see significant change in the lines of communication. That has been a recurring theme, that they feel that they pay and have absolutely zero control. To some extent that is true. It can go so far, but not total control.

So with the development of standards, how we can agree that we will interact, if we can get the right people to now come and sit down with us and, instead of exchanging position papers, start actually running through some options, I still think we probably need six months. But Barbara would....

Ms Murphy: I am not in a position to give you an assessment on that. But I do agree with Deputy Higgins that what we need to do is get together all the parties who have a responsibility in this and start working on some joint solutions instead of just the exchange of what I think you should do, which is always easy.

[Translation]

Mr. Crête: If I understand correctly, basically, you don't want responsibilities to be transferred before this matter has been settled. You would prefer that the federal government keep its current responsibilities until we have some clear definitions of the roles and mechanisms involved in the new structures and operations.

[English]

Ms Murphy: If it's ultimately the decision that responsibility for policing is going to be transferred, this would have to be clarified in advance.

I'm sorry?

Mr. Keyes: It is; it's dissolved.

The Chairman: Does that complete your questions?

Mr. Crête: Okay.

The Chairman: Thank you.

D/Chief Higgins: Mr. Chairman, I apologize. I did not answer the third question: for a five- to ten-year period, how we're going to figure out what we would build in. We didn't address that, and again, that would have to be discussed and negotiated. What are the measures of success whereby we think we're going pretty well there and the people who are receiving the service think, yes, this is the service we want? Again, I would not be presumptuous to say that, but it would have to be negotiated and revisited very regularly to make sure we appear to have it largely right. That has to be done.

The Chairman: Thank you.

I have had a request from the member of Parliament for Thunder Bay to ask one final, very small question, and we're all interested to see if he can.

Mr. Gouk: The questions are small; it's the five-minute preamble to it.

Mr. Comuzzi: Don't accuse me of that.

It's not a question. I want to apologize to the presenters. Up until a couple of minutes ago I was unaware that Vancouver is governed by four or five police forces. I thought it was just one police force, and that's why I was having trouble understanding your concern about jurisdiction. So it seems that answers the question. I apologize for any questions I asked thinking you had one police force in Vancouver. Thank you.

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

Mr. Comuzzi: Is that short enough?

The Chairman: I am impressed.

I'd like to thank you. I think it's an important area you raise. As I understand it, though, there are two components to it. From the police point of view - I hope I understand this correctly - you raise some very legitimate concerns about how you provide police services to that particular area. And I believe I did hear the mayor of Vancouver talk yesterday about how they had bought a police boat and they felt they were quite capable of providing services.

But there is the question I have seen raised - and I've only seen this in a copy of a letter and in some press articles raised by the Attorney General of British Columbia - that strikes me as more political question about who pays for this, what's the relationship between the feds and the province, and everything else.

I hope those two issues are separate. I hope the issue of how we provide adequate and proper police services to a very significant commercial entity in this province is something the police will, as I'm sure they will, focus on answering in a professional and responsible way. The interjurisdictional arguments are something quite different and perhaps should be left to a different forum.

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Thank you very much. I appreciate the time you've put in down here. I think it's been very helpful.

We now have an individual presentation from Mr. Ted Ciunyk. Mr. Ciunyk, I see you have a written presentation. You have presented before this committee in the past. If you could confine your remarks to ten minutes, then we will give everybody a chance to question you.

Mr. Ted Ciunyk (Individual Presentation): Thank you, Mr. Chairman. I want to apologize for the quality of my brief, but being retired I don't have the staff I would like.

My main concern, of course, is safety and security in Canada's major ports. I appeared before the Standing Committee on Transport on February 20, 1996, in support of the Ports Canada police and the need to maintain a strong police presence in Canada's major ports. In its report the committee recommended that individual ports have the responsibility for police and security, and this is what prompted me to come back.

My comments and observations on this subject are based on my 40 years of police experience within both the Royal Canadian Mounted Police and the Ports Canada police, and seven years as executive director of the International Association of Airport and Seaport Police.

I left the RCMP in 1969 to take command of the detachment being established at the port of Vancouver. I was tasked with the responsibility of recruiting and training the police personnel who eventually replaced the security guards employed by the port. With the exception of the British Columbia Maritime Employers' Association, the stevedoring companies and some importer-exporters, the arrival of the port police was not well received. Indeed, port management was most indignant and refused to cooperate until a directive was issued by the National Harbours Board.

Policing in an industrial environment is quite different from municipal duties. Very few calls for service were received, and it was soon realized that the only way to control the criminal activity was to take a proactive approach. It took several years for the police to become totally familiar with the procedures, language and documentation used in the industry and to gain the confidence of the port users and the labour force.

During my 16 years at the port of Vancouver, a number of very positive changes occurred. Pilfering and thefts were no longer commonplace. There was a spirit of cooperation among the port management, port users and the police. Although criminal activity became more sophisticated, the port police were able to closely monitor such activities, thereby preventing organized criminals from gaining a foothold on the waterfront.

On taking the position of director general of the Ports Canada police in 1984, I was able to get the broader view of all of Canada's major ports.

Although the Minister of Transport has written me assurances that the safety and security of Canada's major ports will not be jeopardized by the new marine policy, the Canada Ports Corporation and local port corporations have been subtly undermining the effectiveness of the port police through the budgetary process by suggesting that personnel seek other employment, by entering into or attempting to enter into other policing arrangements, and by reducing the headquarters staff to a level where they can no longer support the field commanders.

What appears to have gone unnoticed is that virtually every police association in this country, a number of major police forces, the Insurance Corporation of British Columbia, the Insurance Crime Prevention Bureau, the Attorney General of British Columbia, and many in the maritime industry have opposed any changes to the present policing system.

It also appears from some articles in the daily press that the ports feel they will get the same level of security through the use of security guards with a municipal police back-up. It is suggested that this will result in substantial saving.

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There are criminal connections in the ports across Canada, and more has to be done to coordinate investigations. This would best be done by unified, dedicated police units such as the Ports Canada police.

Nothing I have heard or read has given me reason to change my position that there is a need to continue the policing of Canada's major ports by a dedicated, professional port police force. The argument of replacing the present port police by some other form of security as a cost-saving measure to put the ports in a more competitive position was not weighed against the loss of business due to the increase in theft and other criminal activities affecting the normal delivery of cargo.

Without consistent and constant police presence, organized crime will eventually gain control at Canada's major ports.

Municipal police forces have indicated that they expect to be compensated for any extra personnel that will be required to patrol port property.

In addition to being totally familiar with port facilities and operations, port police must also be sensitive to the conditions between the labour force and the employers in the execution of their duty. This would be nearly impossible for municipal police.

Any security guard force on the Vancouver waterfront will fall within the jurisdiction of the International Longshoremen's and Warehousemen's Union, which was the situation prior to 1969, when the port police were established.

Removal of the Ports Canada police adds to the erosion of federal identity across this country. It is essential that the safety and security of Canada's assets, national security, and the reputation of Canada's major ports should remain under the jurisdiction of the Government of Canada, that the policing of Canada's major ports be consistent throughout the country.

I recommend that a professional national transportation police force, to include ports, airports, ports of entry, rail, and interprovincial and international highway transport, should be created.

Thank you, Mr. Chairman.

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

I thought we would begin this round with the Reform Party, but I understand that Mr. Crête has a question.

[Translation]

Mr. Crête: You say in your brief that you were named director general of the Ports Canada Police in 1984, here in Vancouver. Can you tell us how long you occupied that position and give us a quick picture of the type of criminal activity one encounters in a port such as the Port of Vancouver?

[English]

Mr. Ciunyk: Yes. I was in the position of director general for four years. I retired in 1988.

The types of crime I saw in the Port of Vancouver involved almost anything that you would find in a municipality. The only thing we didn't have during my term here was a murder, but there were break-ins, assaults, rapes.... As a matter of fact, we even had to seize a passenger vessel for the public health officer because there was typhoid on board - something that had not happened in this country for years.

[Translation]

Mr. Crête: Are the people involved very often foreigners, people who are not Canadian citizens, or are they mostly members of the port personnel? That would help me to understand the complexity of the situations you have to deal with.

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[English]

Mr. Ciunyk: We have much to do with foreigners. Every vessel that comes in is a foreign ship; therefore you're dealing with different nationalities on a regular basis. It takes some time to get to know how to handle people like that.

For example, in recent years, what used to be mutiny on a ship is just a labour dispute. We've had the experience of ships coming in with the officers locked in the bridge and the crew taking over the ships. That's one example for you.

As far as crime within the port is concerned, it just doesn't happen to be either the labour force or transients. There is also a considerable amount of crime being committed within the corporation. That is another area the police had to be very careful with.

The Chairman: Thanks, Mr. Ciunyk. Actually, I never thought of Captain Bligh being caught in a labour dispute -

Some hon. members: Oh, oh!

The Chairman: - but I suppose it is quite possible.

Mr. Gouk.

Mr. Gouk: You talked about policing being consistent throughout the country. Because of their uniqueness, I realize there are some things ports have in common with each other, as opposed to having things in common with other types of business or industry or whatever. But I think there are also some differences within the ports, depending on the nature of the cargo and all of those other things.

Do you not think that it could work if we did something along the lines of what the police group that was just here suggested? Basic patrols, police presence, response to 911 and just general law enforcement could be done within the jurisdictions of the ports by the municipal or civic authority, but there could be a specialized, dedicated force for the more specific things, for what they referred to as investigative work. I can't remember the actual terms they used. They were fairly clear: intelligence gathering related to special criminal activities, surveillance, undercover work, that type of thing. It could be done by a dedicated force of local police forces, an individual local police force, a special dedicated force, or whatever. Would that kind of model work?

Mr. Ciunyk: It exists now. It existed during my sixteen years in Vancouver. It was called the court and law enforcement unit. They exchanged information on a daily basis with us. Our people attended their meetings and we worked on joint force operations. I can't say whether that happens today, but it certainly did up until 1988.

That's certainly a good model, and that's the way you have to work. As I think was said here, there just are not enough resources out there for everybody to go their own ways. But you have to have the local knowledge. You have to know what's going on. You can only do this by having dedicated people there.

Mr. Gouk: You make a good point, and I don't think there's disagreement with the general tone of your presentation. We're getting different bits of somewhat similar information. We're going to have to disseminate all of that and come up with something that works from a policing point of view, but we can't get around the fact that financial constraint is something we have to marry with that concern.

Mr. Ciunyk: I appreciate that. But are you going to let the criminals take over your country because of financial constraints?

Mr. Gouk: No. Financial constraint has to be married with it to the extent that the whole thing shouldn't be driven strictly by bottom-line costs. But we can't ignore the fact that we can't afford a Cadillac police service that will guarantee the virtual elimination of crime, which I don't think is actually possible.

Mr. Ciunyk: I agree with that statement. Ports Canada police have been operating for the last twenty-odd years on a minimal budget. I think you got a bigger dollar value out of them than you'll find in almost any other group of people in this country.

The Chairman: Thank you, Mr. Mr. Ciunyk.

Do I have a representative from the Greater Vancouver Regional District? I think the phrase is ``approach and be identified''.

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You're Mayor...?

Mr. Greg Halsey-Brandt (Mayor of Richmond; Chairperson, Greater Vancouver Regional District Board of Directors; and Chairperson, Council of Mayors of the Fraser River Harbour Commission): Halsey-Brandt, Mayor of Richmond. This is John Northey, Mayor of Port Moody and chairman of our strategic planning committee.

The Vice-Chairman (Mr. Comuzzi): Welcome, Mayor Northey.

Please try to confine your remarks to about ten minutes to allow for a round of discussion on the points you raise.

Mr. Halsey-Brandt: It's my pleasure.

I assume you've had our brief distributed. We actually have two. I'm here in two capacities today. One is as chairman of the Greater Vancouver Regional District. The other is chair of the Council of Mayors of the Fraser River Harbour Commission. We'll be dealing with both efforts.

I'll be fairly brief on the GVRD one, because we have submitted this paper in the past to the minister, the Honourable David Anderson. We've been trying to get a meeting with him on it since about May, but that hasn't been possible, so we're submitting it to you this afternoon for your consideration.

In essence, the Greater Vancouver Regional District comprises about 1.8 million people in our region and there are 20 municipalities in the greater Vancouver area. Of course we're very concerned, as gateway not only to the Pacific rim but for shipping from all over different parts of the world. Obviously your deliberations are critical to us.

There are three main policy concerns we're concerned with in the proposed legislation. The first of course is representation. I think that was addressed for the port of Vancouver yesterday, and I'll be making some representation on it a little later on for the Fraser River Harbour Commission. The second is payment in lieu of taxes in terms of that revenue. The third is policing, again primarily for the port of Vancouver, but it does have some bearing on the Fraser port as well.

While I'm on here as a representative from the GVRD.... In our brief we have what we call ``municipal positions''. Because we are twenty municipalities, we'll get some that differ from municipality to municipality. But we also have some overarching GVRD positions. As I said before, that's primarily based on representation and taxes, those two areas.

Secondly, on the one from municipalities, those are set out in page 3 of the brief from the GVRD. You'll see there are a number of specific ones. The only one I wish to draw your attention to at this time is the North Fraser Harbour Commission. That affects only three municipalities: mine of Richmond, the city of Vancouver, and the city of Burnaby.

What we would like, without knowing the details ourselves, is if the committee...and I understand they're somewhere between a port and a commission and they may apply to be a port or something. Whether or not they're big enough - I'm not sure they meet the criteria - we would appreciate it if a review could be done, proving to the public, in terms of rationalization, that there are necessarily sufficient resources there to have two ports or whatever you may call them. I realize they have slightly different markets, because the depth of the river is different on the north arm as opposed to the main arm of the Fraser River, but generally speaking, most of the commodities are somewhat similar and their types of administration are similar. Most of our constituencies would ask us why we have what appears to be a duplication of service. There should be some rationalization of those two commissions. But I will leave it up to yourselves and the Minister of Transport to sort that out.

The Vice-Chairman (Mr. Comuzzi): We may leave it to you.

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The Chairman: I understand that there's a sort of an order that different ports and commissions go through in terms of their reallocation, and we have had a very brief look at that. That's a possibility, but a rationalization might be more appropriate.

This is Mayor Bob Bose of the City of Surrey, the second-largest city in British Columbia.

Mr. Bob Bose (Mayor of Surrey, British Columbia): The paper I want to turn to now is the position paper on Bill C-44 by the Council of Mayors, Fraser River Harbour Commission.

I'll just hit the highlights of it for you, and then we will look forward to any of your questions.

The first one is governance on the board representation. At the present time two of the five members on the board are municipal representatives. We go through a program of advertising in the local newspapers. We get 50 or 60 applicants for each position. We interview them all and put on two of the best people we can find to be our representatives on the board. We find this to be an excellent way to go, and we'd like to see that continue.

Obviously, two out of five is 40%. We're concerned about the suggestions that it should go to a majority of users. This would change the whole balance on the board, for reasons that are set out in our proposal.

Secondly, there is the size of the board. I realize that the Port of Vancouver is different from the harbour commission. We suggest that the legislation be all-encompassing. They can go from seven to eleven, or whatever they wish, but perhaps the letters patent of each different port could have a number of representatives that more accurately reflects the workload, rather than have a ``one size fits all''.

The second point on governance is on page 2, land-use jurisdiction. The legislation provides for the ports to develop their own land use plans without reference to our official community plan. Certainly in our working relationship with Fraser Port, the harbour commission, and also, in my instance, the Vancouver International Airport, which is in my constituency, we've worked very well together. The documents may call them different titles, but at least the land uses are related and agreed to in protocols between both parties. We certainly think that's the way to go, and our constituencies reflect that.

When I mention protocol agreements that may be more specific with ports, these are in terms of our regulatory process in terms of design, control, building permits, and all that type of material. So far we are working very well with the harbour commission in going through processes that we've agreed to with each other. We wouldn't want to see that discontinue.

For example, the Vancouver International Airport does its own building permits and we have no control over those. So when I send my fire department out there to deal with their problems, we are really wondering what sorts of standards the buildings have been built to, what's in the buildings. For us, in supplying municipal services, it's really a headache unless those two jurisdictions are intertwined.

On finance the legislation seems to be silent. It did talk about fee for service, perhaps payments in lieu of municipal taxes.

We're somewhat bewildered about exactly what the ultimate proposal is going to be. We understand, of course, that the lessees pay municipal taxes, and that's fine, but particularly on the Fraser River on land that the harbour commission owns but that is not being utilized they pay absolutely no fee for service, taxes, or anything else.

They own about 650 acres in the middle of my city and they pay absolutely nothing for it. That can sit there vacant for 100 or 200 years. It makes it very difficult for me to run a city, or plan, when we have this property sitting there that pays absolutely nothing.

It's very valuable land, I'm told, and will become a major port in the network of ports around Canada. However, if they have no use for it, I'd appreciate getting it back - and I'm sure that the federal government...that as MPs you would be appreciative of selling it at a surplus.

Right now, if no one pays taxes on anything, of course there is no incentive to do anything with it. That certainly has to be addressed. We would appreciate a level playing field, where people pay taxes like anyone else.

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It's also silent on municipal development servicing costs. We here in Greater Vancouver have development cost charges. They may be called something different in other parts of Canada, but I'm sure you're familiar with paying for local municipal services to the site, if they're required. We of course would request that any development on the port lands pay those as well.

The next point, 2.3, talks about policing. I realize you've had some extensive presentations on that from the Port of Vancouver, so we'll restrict our comments to the Fraser River Harbour Commission and Fraser Port.

At the present time it's simply an extension of our RCMP services or our private municipal police services. We can appreciate that and understand it. However, depending on what happens, particularly with the Port of Vancouver, for - how should I put it? - accelerated levels of service for smuggling, immigration and things like that, which our normal police forces are not equipped to deal with, we would expect that to be dealt with by specialized funding, a specialized team or some other mechanism. We're simply not equipped at our local levels to provide that service.

As to ice-breaking and dredging costs, I guess those of us in western Canada, although our climate may be somewhat different from that in the east, see ice-breaking and dredging as somewhat similar. We may have a dredging problem out here and back east they may have an ice-breaking problem, so if it's someone else's responsibility to ice-break, then surely we shouldn't be downloading dredging onto the local operators. We believe there should be a level playing field for those two operations.

I have two final comments. One is on the payments to the federal government. We understand the legislation is not specific on that. Currently port revenues exceeding a certain threshold revert to the federal government unless we can prove to them that those funds are needed for our own capital improvements. We understand the proposed legislation is looking at a percentage of the gross going back to Ottawa regardless of our local needs. We would expect some changes in the legislation that look at revenue needs of the local port corporations for expansion or improvements.

Finally, on implementation, I understand there is going to be some kind of transition team or authority or something put in place. Although that's very peculiar to us, if that's the intent of the minister and if it's going to be the intent of the legislation, we would consider it necessary that some of the existing board at least is put on that transition team in order that there be some sort of carryover from one to the other.

That transition doesn't normally happen in our political life around this table, and I guess we wonder why it would have to be here. You don't want local volunteers who serve on these commissions to have people looking over their shoulders all the time, wondering or second-guessing them or changing things down the line or whatever. It's a rather odd mechanism that we have seen proposed through the legislation.

That's it in a nutshell. I have been very brief, because there are many points we have to make.

Just before I conclude, I would like to introduce Mayor Betty Toporowski of the loyal city of New Westminster, who's joined us here as well. It fronts lands on the North Fraser Harbour Commission.

The Chairman: Welcome.

Mr. Bose: We're quite prepared to answer any questions you might have.

The Chairman: I appreciate all of you taking the time out of what must be very busy schedules to come down here and talk about this. It's an extremely important topic for Canada as well as your municipalities.

In reference to the coast guard costs, I think we are prepared to pick up your ice-breaking costs and Halifax's dredging costs.

Some hon. members: Oh, oh!

The Chairman: Perhaps I'll turn to the Reform Party and let them begin the questions.

Mr. Gouk: Thank you. I'm going to stay away from the ice-breaking.

I have an interesting challenge ahead of me. There are some things that I think need to be changed in this bill. They're things we've heard from a great number of people who have come before us - the operators, the users, etc. There's much agreement. You've touched on a lot of these areas.

What I look for is some support from the various people so we all understand there's a general need in the community. As I read your submission - and correct me if I'm wrong - essentially what you're asking for is that the government remain responsible for leasing, that you remain responsible for recreational community facilities, but the ports pay full taxes as opposed to selective taxes and that all revenues be retained within the communities.

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Where I have a problem in trying to deal with my colleagues in Ottawa is to say how can I possibly justify wanting to give everything we have away in terms of a benefit to us or a recovery from us - us being the federal government or the representatives of the general taxpayer, and as was said by one of your colleagues here yesterday, there's only one taxpayer when it comes right down to it - and at the same time retain all the responsibility for cost things, like recreational and community facilities, for policing and for paying of taxes and that sort of thing? How can we justify making a change in this bill so that we'd give away all the benefits and retain all the responsibilities? How do I argue that on your behalf in Ottawa?

Mr. Halsey-Brandt: I'll just make a comment and then defer to Mayor Toporowski.

What we're trying to get at is that certainly we understand the responsibilities of the federal government and other infrastructure across Canada, but surely in order to make those things work and to make the funds available for them, the port corporations must have enough funds generated locally, that they could keep locally, to make them economically effective - for example, even borrowing against their property - to make something of themselves. If there's no incentive financially for them to do that, then we'll get less than we might expect from them.

If I can just use the example of the local airport authority again, that was a long, tough two or three years of negotiations between how much money goes to Ottawa and how much stays here at Vancouver International Airport. Of course, both sides aren't happy, so I suppose it's probably the best deal for the taxpayers. But there was enough left on the table that the volunteers who are trying to run that airport can build a new terminal and runway, with a fee, and trying to make something of it. Sure, out of that there's a lot that goes back to Ottawa to help all the small airports across Canada that don't have enough revenue generation to make it on their own. So we certainly understand that. But if you don't leave anything on the table for them as a port, there's no incentive to do that.

On the taxation part, for us it's a level playing field, I guess. We don't see that we have the ability on behalf of any of our constituents to say to somebody, yes, you're a special case and therefore you shouldn't pay taxes, or 50% of taxes. That is just not where local government comes from. So in terms of our representation, we wouldn't be able to deal with that. It would have to come on high from someplace else, and you'd have to have a hell of a good reason as to why they shouldn't pay their fair share of taxes.

Mr. Gouk: I'm dealing with something like this in my own riding with an airport, where the city is taking over an airport that isn't in the city and they want to annex it so they have control of the zoning. The regional district is very upset because they don't want to give up control, but they never had it; as a federal property, they didn't have it in the first place. Are you concerned that you want increased tax revenues or that you simply don't want to lose what you have under the current arrangements? Right now, from the Vancouver Port Authority you're getting grants in lieu, which is a very specified and structured thing within the federal spectrum. But some of the other ports have no obligation to pay. In the case of Fraser Port, for example, it pays a negotiated fee. I understand, talking with Surrey, for one, that they are relatively satisfied with that arrangement and the responsibility taken on by Fraser Port. So are you looking for an expansion of that, or are you looking that we set up this bill in such a way that you do not end up worse off?

Mr. Halsey-Brandt: It depends on who you talk to. As I say, in my city on 650 acres we get nothing, not a nickel. So anything is better than what we have right now.

The Chairman: You have a 650-acre garbage dump.

Mr. Halsey-Brandt: No, it's about a 50-acre garbage dump. The rest of it is development. At any rate, for us, anything is better than what we have now. This is the point I'm trying to make. We're all over the map in terms of the treatment we get, so if Surrey is happy with their fee for service, which is perhaps to a grant in lieu, then I'd like to be at a grant in lieu too, thank you very much. The Vancouver Port Corporation in terms of theirs may have a different standard. But certainly one that treats us all the same I think would be the premise it should be coming from anyway.

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Ms Betty Toporowski (Mayor of New Westminster; Chairperson, Intergovernment and Communications Committee, Greater Vancouver Regional District Board of Directors; Chairperson, Marine Policy Task Force, Federation of Canadian Municipalities): I'd like an opportunity to comment on that, because I think it's a very important point.

The best way to resolve legislation.... If we have this opportunity now to redesign the way we're doing business, then this should be a time to look at providing some equity and some level playing fields, and establishing some principles on how we do business.

We have, as municipalities through the Federation of Canadian Municipalities, achieved with the federal government a policy such that federal properties will pay grants or payments in lieu. It will be a fair taxpayer within municipalities. That applies for other federal infrastructure, buildings, office towers or whatever they have in other places in the country, and the federation has adhered to that. We want to see this legislation consistent with that principle.

The reason this principle is important is that the ports are, through this legislation, becoming more and more autonomous. They're becoming self-reliant. So to some degree, if that's the intent of the legislation as well, some things have to become congruent with that. You have to pay your own bills. You have to be a fair corporate player within the scheme of other corporate players within the community.

Infrastructure, which is the road, service, water, sewer, fire department, police response, is paid for by all the property taxpayers within a municipality. So as a good corporate citizen, the port should pay its even share of that. That's because where it doesn't pay you're actually causing the burden of providing that to shift to another sector of our taxpayers, which primarily would be the residential taxpayer in a lot of communities.

We have, as a federation, said that we are willing to discuss, in each province, the issue of assessment class so we would see that the ports would not unfairly or uneconomically be driven by this issue. But the principle should remain consistent.

I think it's important, when you look at a philosophy of legislation that I think this is intended to achieve, to have local responsibility and autonomy. With the right to act in a more locally determined way, they also have to have local responsibilities they have to meet. I think that should be consistent as well.

Mr. Bose: Possibly I could add to this. First of all, the provisions in place today for payment in lieu by the Fraser River Harbour Commission are payments that are relatively new. We have thrashed out agreements one on one with the commission port largely in recognition of the exposure that the cities have in providing these services have already been mentioned.

I would not want to suggest that we are happy with what we've got. It's better than what we had before, but I don't think there's been a principled discussion around what is fair and equitable as it applies to all of the communities. And each of our communities is impacted by the port differently.

I would like to put my brief comment in the context that the port doesn't operate in isolation within our communities. The port depends upon the context it's in. The cities undertake many initiatives that are port-supportive. So we end up by investing in infrastructure in the anticipation of the expansion of the port and of the continuation of payments, grants in lieu, or however one wants to express it.

We have developed particularly good relationships with our port over the years, which I think can best be described as an incredibly effective partnership. The mayors of the nine jurisdictions affected by the port have reached a really fairly high standard of protocol among ourselves in working with that port.

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I suppose my concern is to make sure it's understood that the port is important to the economy of my community, but in order for that port to flourish, we have to be able to service it. I wouldn't want to get into a position in which it's a bit of a dog-in-the-manger environment, one in which we get no recognition of our contribution and are then forced to dig our heels in and ask why we should do anything for you.

We have a really harmonious and productive relationship, and our fear is that change in this legislation would deny us the kind of access to the decision-making that we currently enjoy, which I think is most productive and fruitful. And I'm sure Mike Jones went into some depth on this point.

We do need revenues in order to provide the services, and some of those services are really demanding. There isn't always a constant demand, but if we have a major fire on the port, where do they go? They have no place to turn to but the local jurisdiction. We even have to mobilize volunteer firefighters, even in a big force as large as Surrey's, in order to meet the needs of that port.

Mr. John Northey (Mayor of Port Moody; Chairperson, Greater Vancouver Regional District Strategic Planning Committee): If I could, Mr. Chairman, I would just like to elaborate.

I was here yesterday to present the material on the Port of Vancouver, but one of the reasons I am accompanying my colleagues here today is that although we are a single region, one of the problems in which we have had a great interest - in fact, as chair of the regional planning committee, I'll be speaking more about this tomorrow on transportation - is trade and tourism. We have an incredible interest that the ports remain viable and be the kinds of economic engines they have been to the region. I'm sure you obviously are aware of that; it's presumably one of the reasons the committee is having these hearings.

In saying that, however, there is a very major difference between the Fraser River Harbour Commission and the Port of Vancouver as an entity. Quite apart from the way it's organized, it's just a very different animal. I think that partly came forward in the policing concerns that were expressed to you by the witnesses who appeared just before us. The considerations that the Vancouver police and the RCMP have to deal with at the port of Vancouver are very different from those elsewhere within the region.

We've tried to deal with this ourselves, and I think you can see a great amount of commonality coming forward from the various chief executives of twenty different municipalities. We have minor suggestions that may differ on the margin, but we all have the same objectives in mind. Now that you are proceeding to make similar the administrations, perhaps, of these two quite different entities around the country, this is the time to recognize that the playing field does need to be levelled. It can't be levelled, however, in a way that effectively penalizes the municipalities and effectively downloads a particular service or need onto those communities - even though you may not consider this to be what you are actually doing.

I can only reiterate Betty's comments - and we also stated this yesterday. One of the members of the committee asked if we would be happier if the port corporations were taxed in the same way as anybody else. Obviously we would be very happy with that, because it would completely level the playing field.

Mr. Keyes: Big business could give them support.

Mr. Northey: There are a lot of big corporations out there that do very well and pay normal taxes. We recognize that there is only so much money that we can access from any part of the larger metropolitan community - any particular land use, if you will - and the system works on that basis. I think Mayor Toporowski has said that.

The Chairman: Mr. Comuzzi.

Mr. Comuzzi: I want to compliment the mayor who made the presentation. It's amazing that you could get all the mayors here at the same time. That's very commendable.

I sympathize with what you've said. When you visit the harbour commissions, often when they're showing you their facilities they go to great lengths to show the tracts of land they've acquired over a period of time. Sotto voce, I often wonder if those parcels of land would have been acquired had there been municipal taxes involved. That's something we're going to have to consider. Regardless of the outcome, how much of that land does each of these harbours really need in order to carry on? Some of them have excessive land holdings.

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Mr. Halsey-Brandt: That's an excellent point. We certainly respect the harbour commission's vision in terms of the national interest. I don't know what Canada's going to be like in 50 years or in 100 years, and we appreciate that national interest at stake and that there may be very valid reasons why some of this land has to be held for the longer term.

It just makes it very difficult to deal with those kinds of issues at the local level without a clear indication of what that national interest is. Or should somebody actually be paying for that throughout a period of time? Once a property's acquired, it disappears from the tax rolls forever, I guess, until they get around to leasing it out. That makes it very difficult for us to plan the futures of our communities. If there is a greater national interest, somebody out there should either be telling us what it is or paying for the privilege of removing it from the marketplace.

Mr. Comuzzi: I was interested in your comments and by the very structure of your submission, by what you thought the new governing structure should be. You brought the user groups.... Although user groups are very important to all of the boards of directors, they have not been the predominant force on the boards. They're very important to the process, but not so all-important that they should have the majority of memberships on the directors' boards of these corporations. I'd be interested in your thoughts on why you directed it toward that area.

Mr. Halsey-Brandt: We've outlined several points in the submission, starting with conflict of interest, I guess, and sort of favouring some users over others.

Secondly, I haven't received any submissions from any users requesting that they be on the board or on the commission and I've been on council for fifteen years now. I don't know if the other mayors have received any submissions. So from our experience, if there's nothing wrong with the system - at least there isn't in this neck of the woods - we wonder why there is a push to change the representation on the board. Or if they want to be advisory committees or whatever...if these people aren't available to answer questions or available to the public, then by all means we can look at mechanisms to deal with that.

Mr. Comuzzi: You see public policy involved in the administration of your port.

Mr. Halsey-Brandt: Absolutely. And in my experience, I think we've worked with the harbour commission very well, with the federal representatives and the municipal representatives.

As Mayor Bose was saying, we have meetings several times a year with the harbour commission. We discuss policy and where the commission and Fraser Port are going. We have a wonderful relationship. We sort of build on things through protocols. We'll find a way to accomplish the same goals, because I understand the legislation is very old and very difficult to change. We've worked very well. It doesn't seem to be broken, so we wonder why it's on the table.

Betty is going to answer now.

Ms Toporowski: I am interested in making a very specific point. I've done it on a number of occasions directly to the minister as well as to the staff. From a community point of view, the shippers and the carriers are footloose. They will move wherever they want to move for economic advantages, and a lot of that is outside of our control. It could be a railway freight rate. It could be a change in their customer's location, whether they ship out of the port of Prince Rupert or the port of Vancouver or the port of Seattle. That's beyond our control. They will move. They're very transient. It's in their own self-interest to move, and they're capable of moving. It's to their advantage to be flexible.

The people who have the long-term permanent interest are the people who are captive to the location. The people who are captive to the location are the physical people attached to the land, to the port itself, to Burrard Inlet or to the mouth of the Fraser River. Those of us who are employed in the port, or who have employment or family revenue coming from a business that's dependent on the port, or who own houses or who have mortgages - it's the largest capital asset of most of the individual members of communities - those people have an inherent and real commitment to the success of that port. They will do what needs to be done to succeed, because they can't pack up and leave. If the port doesn't function, the value of their homes goes down; they become unemployed. There's a direct relationship. They can't just pack up and move to Tacoma or Prince Rupert.

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That function of the economic reality is very important to capture in the governance of the port to ensure that long-term, real commitment is attached and driving the strategy and future of the port.

I likened it to Antwerp and to Rotterdam, where the local communities, through their city council, control the port. We're not saying that's necessarily the perfect answer, but it builds in the commitment of everybody who lives in the community to the success of the port. The people in Antwerp understand why they have to have the rail lines and highways and why things ship through their community, and it's in their interest to make it succeed.

I think building and strengthening that alliance, and also recognizing the critical success of communities and how hard they will strive, will produce the global success we need in the port of Vancouver to compete with the west coast of the United States.

Mr. Bose: May I add, to my knowledge the municipalities never appointed a member until the cities got together and developed a protocol that would overcome the legislative constraints that do exist in the current legislation. As you know, there had to be unanimity among the nine jurisdictions, and getting unanimity was impossible.

That was something those of us who are involved recognized and decided to find a way around. We developed a protocol that really gives the authority to the mayors to make the appointments, previously sanctioned by their councils, and we end up with a unanimous decision of the mayors and with appointments to the commission who have a background and understanding of local conditions and issues.

In the case of the Fraser Port, the current chairman is a former city manager from my city. He brings to the commission incredible knowledge of the needs of the city. It is because of that understanding that we've been able to develop real meaningful working relationships with the port.

I'd have to say that those of us at the city level have developed a strong sense of ownership to the port and are responsive to its needs simply because we have a voice there. I think what's at risk here is a loss of that local sense of ownership to the port. If you want a thriving port, it has to be something that is supported by the community. We have been incredibly successful, but as I said earlier, it's a very short history where this relationship has been developed.

Finally, I would say that in my experience, and I'm sure the others would support this observation, those who are appointed by the cities to the port have played their role exceptionally well in meeting the needs first and foremost of the port and being sensitive to the needs of the cities. So it's not a case of those members simply being messenger people for the cities, but they have really taken on the responsibility of running those ports with great vigour and a tremendous sense of responsibility. At the same time, they have been able to bring to the table as a secondary responsibility the needs of the cities and create some kind of harmony there.

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The Chairman: Thank you very much. Once again, I do appreciate your taking time out of your day to share this with us.

At the end of the day, what I think we want is harmony. We want functioning, efficient, effective port service in your communities and in the nation. As a prairie person, I should say that the port of Vancouver is of great interest to us in the prairies, and we see ourselves as having a proprietary interest in that port.

There is one niggling little concern about local municipalities. Notwithstanding what you said, Mayor Toporowski, how do we end up taxing bridges $1.5 million?

Ms Toporowski: Can I answer this?

The Chairman: Please.

Ms Toporowski: For us, being the one community in New Westminster that has a rail bridge, and having never received any taxation because its ownership is with Public Works Canada, taxing bridge structures as part of the utility in the province of B.C. is an issue. It's an issue where we need to have equity, but we also need individuals to understand that part of the regulatory regime for the whole system of transportation in this country brings difficult situations with regard to the costs associated with having a rail bridge in your community and all the traffic.

Our bridge is not taxable; 40% of the traffic to the port of Vancouver runs across that bridge, yet it brings no taxation. There is a tremendous amount of rail traffic coming into our community and passing over streets, which are getting very close to producing the cross product required for an overpass. The railway's contribution to a potential overpass is capped at $60,000. The cost of the overpass is going to be close to $7 million, and that's probably a 1988 or 1989 estimate. We don't look at this very often because it hurts so much when our community has to face that reality.

On behalf of the prairie provinces that are shipping the grain, the communities in the Rockies that are shipping the coal, the port of Vancouver that has the jobs.... The city of New Westminster happens to be located in a narrow spot along the Fraser where the train doesn't even stop; it rumbles through. So you look at the regulatory regime and say that they shouldn't have to pay taxes because it doesn't help their economic competitiveness. Our community says that this economic commitment is costing us $7 million, driving congestion, noise, all the things associated with railways, and is not servicing our people by its origin or destination.

The regime has to be looked at in total. Do you pick any one part of this system? If you say that the railway causing that cross product is going to pay the $7 million for the overpass, we'd get a little less testy about the taxation.

The Chairman: The same concern can be raised by any community anywhere in the country that has a railway running through it.

Ms Toporowski: I'm just saying it's a regulatory regime, and we need to talk about the whole bundle if we're going to talk about the parts.

Mr. Northey: Mr. Chair, that will also be part of the presentation tomorrow on transportation and tourism. I believe that's another part of your mandate for the study you are proposing to do, that very type of thing. That's a very good illustration.

The Chairman: It is indeed part of what we are attempting to do starting tomorrow. Mayor Northey, I look forward to seeing you again.

Mr. Halsey-Brandt: Could you give us any information on the process from here in terms of timing, where this bill is at, where it goes, and when you might see it again?

The Chairman: We are hoping to finish our round of discussions and deliberations by the end of the week after Thanksgiving, whereupon we will go into a series of clause-by-clause recommendations and amendments to the bill. Then we will report the bill to the House in late October or early November, depending on how much unanimity we have arrived at here. We aren't nine; we are merely three separate groups. But I'm sure after the Bloc and the Reform have seen the wisdom of the government's thinking on this, they may yield. At that point it goes back to the House for final debate and vote, and then to the department for implementation.

I assure you that we will consider most carefully what you have presented to us, along with what everybody else has, in moving to our clause-by-clause deliberations.

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Mr. Halsey-Brandt: Are you thinking maybe back to the House for debate before the Christmas recess?

The Chairman: Absolutely.

Mr. Halsey-Brandt: So it might be final.

Mr. Keyes: For second. The third reading will probably be after Christmas. Then you have the whole process to go all over again through the Senate.

Mr. Halsey-Brandt: Do you give three readings to a bill?

Mr. Keyes: Yes.

Mr. Halsey-Brandt: Thank you very much for your time.

The Chairman: Thank you very much.

The Vice-Chairman (Mr. Comuzzi): From Neptune Bulk Terminals we welcomeMr. Willcox and Mr. Nardi. The usual process, as I'm sure you've heard, is that we have about a 10-minute presentation then all the wise men will ask you some questions, and then we'll go from there.

An hon. member: Then the MPs will ask some.

Mr. John T. Willcox (President and Chief Exective Officer, Neptune Bulk Terminals (Canada) Ltd.): Thank you very much indeed, Mr. Chairman. I'd like to thank the standing committee for accepting my presentation at very little notice.

The reason I asked to speak was that I was recently at a Western Transportation Advisory Council meeting, and it was attended by senior personnel of Transport Canada. They were suggesting that very few terminal operators were actually making presentations to this committee. On that basis, I believed it would be a good idea to at least attempt to get a hearing. So I thank you very much indeed for that notice.

Just a little bit of background on the company, which may help you understand the viewpoint. We're a tenant of the Port of Vancouver. We're one of about 25. If you look at Lynnterm, Centerm, and Vanterm, they are really the only businesses that are owned by the port and lease the structures. From my point of view, I'm one of the other 22 who make up the vast majority of the port that actually pays rent in return for a long-term lease.

We're members of the BCMEA, which you heard from yesterday, and we use ILWU labour. We are involved in the port in the area of lease negotiations, development, environmental matters, as well as the port's ongoing responsibility for lease maintenance.

From the point of view of Neptune, we're certainly the largest multi-commodity bulk terminal located in the inner harbour. We ship 11 million tonnes a year, or approximately 15% of the 72 million tonnes that are shipped through the port of Vancouver annually.

It's interesting to listen to some of the previous presentations, because although the cruise aspects and certainly the containers are a very important part of the port, from a bulk point of view 80 some percent of the commodities are bulk, and that is not so easy to pick up and move, as I heard some inference from previous speakers.

We're a non-profit organization. We're owned by a consortium of prairie shippers. We ship coal from Alberta, about six million tonnes; potash from Saskatchewan; agricultural commodities, a million tonnes a year from Alberta, Saskatchewan and Manitoba; fertilizers from Alberta. We also receive phosphate rock in the fertilizer process.

Having made that introduction, I'd like to make some comments in terms of Bill C-44.

For the majority of the terminals operating within the B.C. port system, we would judge the final legislation a success if it could achieve the following items: first of all, to safeguard the lease tenure from municipal encroachment; second, to allow reasonable development; third, to offer a user-friendly format that can respond in a reasonably rapid way; and above all, to keep the essential elements of the port competitive in the long term.

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Bill C-44 has the stated aim of making the system of Canadian ports competitive, efficient, and commercially oriented. Without full knowledge of the final form, and certainly having read the draft, and without full knowledge of the working details, I think the initial reaction is very supportive and positive, for the following reasons.

First of all, the land used by the port tenants remains the property of the crown, which if the legalese is correctly crafted achieves the first requirement of protecting port lands. To emphasize this point, some of the local population overlooking Neptune and Seaboard in fact - and we're located in the city of North Vancouver - freely admit they would like to see the area as the next British Properties, and the waterfront industry doesn't fit with that type of revision. The port has national significance and requires some form of national protection from provincial and municipal taxes and ambitions.

To enlarge on this, I'd like to bring two examples into play. In 1988 the Saskatchewan potash industry wanted to expand the shipping capacity at Neptune. We made what we thought was a routine application to the City of North Vancouver. To cut a long story short, on September 22, 1989, 21 months later, the city rejected our application. To the port's credit, it fully supported the application, developed a new process, and the project was finally approved in May 1990 and completed in 1992. It's probably the most up-to-date potash facility in the world.

Consider what kind of a message we're sending to our customers and shippers about being open for business, as a result of this type of a struggle for approval and the four- to five-year lead time. Consider also, in fact, that the potash shippers mentioned later on decided they were going to develop another facility at Portland and move out of Vancouver. I'm certainly not claiming this experience was the only reason, but I do know it was a nail in the coffin.

On the subject of taxation, as a terminal we pay $5 million per year or more, which is 10% or more of our gross revenue, to all levels of government. I've included those details in the appendix. That's not bad for a non-profit organization. Municipal taxes are $2.07 million in 1997 and port lease costs will be $1.64 million. Water alone is $230,000 a year.

If you think about the situation where taxes would be paid instead of grants in lieu of taxes, the majority of the port's income comes from lease tenants such as ours. We already pay taxes. The port would only have to boost the lease costs to accrue the additional dollars. To my mind that would be a form of double taxation.

We're paying 4% of the total taxes collected in the city of North Vancouver, even though our tax assessment is only 2%. The industrial tax rate is very much higher. We're 23% of the total industrial tax rate in the city.

Water is an interesting point. We alone pay 10% of the city of North Vancouver's bill for the service of water.

The point I'm trying to make is that I'm not in any way arguing that taxes should be avoided. I'm just trying to say I've heard a lot of input which says the port is undertaxed. In my belief, from the user perspective, we're overtaxed.

The system is no longer supporting Ports Canada, which has long been considered a redundant body, and this should result in a cost saving to the Vancouver port authority of $2.4 million a year. More importantly, it will speed up a cumbersome decision-making process which has had effect in the past. The port will no longer have to pay 30% of its net per annum, or the $80 million or so in special payments that have been made over the last eight to ten years to the federal government. A predictable annual dividend will replace this; and we applaud the bill on that basis.

While the future of the port's policing system is still a subject of considerable debate, there is a potential saving of some $3 million per annum in cost. Again, we employ our own security company. In fact, most companies in the port do, other than originally the three terminals I happened to mention.

All in all, therefore, VPC has the potential of saving major components of $20 million a year or so of average annual outgoings in the areas I've mentioned, which in turn should be available to fuel future development and reduce the ongoing cost of doing business for the marine community. This is, of course, assuming the charge on gross revenues paid to the federal government, as defined presumably by the yet-to-be-negotiated letters patent, is consistent, fair, and reasonable. It also assumes that the provision within the act to issue supplementary letters patent from time to time will not be used as an unfettered right to increase or to modify the charge or to reverse some of the positive changes.

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The governance of the port is of great concern to the users, and in general the formula adopted should assist in achieving the objective to expedite and foster international trade. A large proportion of the board will be nominated by the minister in consultation with the users, and that is good, although subtly different from the user input position from the list supplied by the users. It's still infinitely preferable to pure federal or provincial political appointments with no user input.

The board should be truly part-time and limited in salary and time bookable. This again may have the effect of saving half a million dollars a year and allow the current port staff to focus on the port, rather than on the wishes of what for many years has been virtually a full-time port board.

We also believe the board should freely elect its own chairman, as provided for in the initial draft of the act.

My personal belief is that the president and CEO of the port requires the status of director. I say that from the experience of being director of my own company. That gives the individual status and equality with the other directors. Although you've heard positions to the contrary, I personally think that would be a great advantage.

Other good features are the accountability of the port through the medium of a special examiner, annual public meeting, the ability to grant leases up to 60 years, and the self-sufficiency provisions in terms of fiscal performance. We believe that these features will give greater stability to the port community and encourage a greater commercial discipline going into the port structure.

In the past there has been evidence of excessive weight being given to federal, provincial, and municipal politics in the day-to-day affairs of the port.

The bill is essentially silent on the subject of west coast pilots, with acceptance of the fact that the pilotage authority will self-regulate some of the costs and practices that have given users concerns in British Columbia. I hope this is the case, since the cost of pilots alone in my business is 14¢ a tonne on coal and 25¢ a tonne on specialty grain.

To give you an example of extremes, the last time we moved a ship 500 feet along a dock from one berth to another - and we have three berths on our dock - the pilots' fees were $1,200, which again adds to the shipping price of the commodity. The shipper pays for that.

In conclusion, I think the implications to the western Canadian transportation system will add stability and cost-effectiveness, but many questions remain to be answered to be sure. The key question is, will the legislation be sufficiently well written to allow the port authority, which is essentially a private sector corporation under the Canada Business Corporations Act, to protect its historical federally owned land and avoid being taxed to death in terms of municipal school and property taxes and B.C. capital tax, over and above the agreed-upon annual dividend? If not, the net effect will add another $8.5 million a year to the cost of the users, which already is high.

Thank you very much.

The Vice-Chairman (Mr. Comuzzi): Thank you very much, Mr. Willcox.

Does Mr. Nardi wish to make some comments?

Mr. Tony Nardi (Neptune Bulk Terminals (Canada) Ltd.): No, I don't.

The Vice-Chairman (Mr. Comuzzi): I'm sorry that we were smiling up here, but when you talked about that pilotage fee, Mr. Keyes suggested that it would be cheaper to move the dock.

Mr. Willcox: It might very well be. Occasionally ships do move the dock, actually.

The Vice-Chairman (Mr. Comuzzi): Mr. Alcock, would you like to ask a question today?

Mr. Alcock (Winnipeg South): I come from the prairies. After a prairie farmer says ``Goddamn the CPR'', he tells the story of the moving down of the potash. I spent some time talking to Ron about that the other day.

You made the comment about pilotage. It's a comment we've heard in a number of forums, yet I was surprised by the number of presentations we had today that basically discounted that as a significant issue or a significant additional cost. Do you have any sense of why we're encountering this seeming inconsistency?

Mr. Willcox: I think that basically the pilotage fees are often borne and are billed to either the shipping line or the buyer of the commodity, so from a terminal perspective it's seen as being an add-on to the commodity price and it's not necessarily seen in isolation.

In our particular case, we don't consider that the limits of the business extend to the 72-acre lease, so it goes broader than that.

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On that basis, we're well aware of the selling price and the cost of a tonne of coal, the margins involved and those kinds of aspects. To us it seems to be fairly extensive. The pilots do a good job. Occasionally there are some real problems in terms of availability and in terms of the total numbers and the costs in the system, but that's all I can really add.

Tony, can you think of anything?

Mr. Nardi: No, I don't have much more to add, other than that the cost should be as transparent as possible. If it's user-pay, then users must have a way of auditing those costs.

Mr. Alcock: I was also interested in your comments about the role of the CEO and being a member of the board, as opposed to off the board, as someone suggested. Do you also extend that to representatives of the labour organizations?

Mr. Willcox: No. I've given that some thought, actually, because I heard that question come up.

The labour organization, just like the BCMEA, has a vested interest in the workings of the community. The board of the port should be made up of individuals who are knowledgeable in business, international trade and the many facets of the community. But I don't believe they should have a particular axe to grind or a particular aspect that would probably see its way through into the matters.

The port probably requires something broader than what may be loosely termed ``specific interest''. It's not only the labour aspect; there are many other aspects I class in that way.

Mr. Alcock: Thank you very much.

The Vice-Chairman (Mr. Comuzzi): Thank you, Mr. Alcock. The preamble was a bit long, but the questions were good.

Some hon. members: Oh, oh!

The Vice-Chairman (Mr. Comuzzi): Mr. Gouk, do you want to contribute?

Mr. Gouk: Actually, Mr. Chairman, no. The brief was very succinct.

The Vice-Chairman (Mr. Comuzzi): Mr. Cummins?

Mr. Cummins: No.

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

Mr. Keyes.

Mr. Gouk: Push, push, push, Joe. You just want to get to that other matter.

Some hon. members: Oh, oh!

Mr. Keyes: This is just a quick one, Mr. Willcox. I was fascinated with your remark about security and policing of the port. You mentioned that you and most users of the port look after their own security. Are you talking about just fences and cameras, or are you talking about people power as well?

Mr. Willcox: I'm talking about fences, cameras, gates and some people power. We've employed a private security company to patrol the perimeter and mend the gate, just as an initial security barrier. We certainly don't look after our own security in the more extensive problems that may occur - very rarely, actually, but they do occur.

Mr. Keyes: You said most of the other users. Is that just a guess?

Mr. Willcox: No, it's more than a guess. Again, I differentiate between port-owned terminals like Lynnterm, Centerm, and Vanterm, but they're only three out of the 25 terminals. Most terminals employ a private security company to cover their gates.

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

Thank you very much, Mr. Willcox and Mr. Nardi, for taking the time this afternoon to make this presentation. As the chairman has stated, it will be considered in the final deliberations.

Mr. Willcox: Thank you very much indeed, Mr. Chairman.

The Vice-Chairman (Mr. Comuzzi): The meeting is adjourned.

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