STANDING COMMITTEE ON FISHERIES AND OCEANS

COMITÉ PERMANENT DES PÊCHES ET DES OCÉANS

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 3, 1998

• 0907

[English]

The Chairman (Mr. Charles Hubbard (Miramichi, Lib.)): We will call our meeting to order. In accordance with its mandate under Standing Order 108(2), the committee undertook a study with respect to fees regarding icebreaking and other marine services.

Before we hear from our witnesses, I would like to ask the committee something. We have been reviewing the Nunavut report now for some time and we would like to get that report tabled in the House. The members who were concerned have made some suggestions with our clerk on the wording of several paragraphs in the report. With your concurrence on these minor changes, we would ask for a motion to allow our committee to present this report to the House.

Have you had an opportunity to review the proposed changes? I'll give you a minute to look at those.

It's the kind of motion that someone would have to move. It reads, it was agreed, that the draft report of Nunavut be adopted as the committee's seventh report to the House. It was agreed that the title of the report be called The Nunavut Report; that the seventh report be printed in accordance with the policy established by the Board of Internal Economy; and that pursuant to the Standing Order 109, the committee request that the government table a comprehensive response to the report.

If someone would move that the seventh report of the committee be tabled on Tuesday of next week...

Mr. Wayne Easter (Malpeque, Lib.): I would move it, Mr. Chairman. In moving it, I wonder if there was some concern by members that because this committee isn't the committee that did the tour, it should say so on the front of the report. The clerk and I have talked about this, that the report is put forward by this committee on behalf of the previous people, who really did the drafting.

• 0910

The Chairman: Would there be anyone who disagrees that we attempt to put a notation to our submission that the members of the previous committee were the ones who were involved with the drafting and the visit to Nunavut?

Mr. Wayne Easter: I so move, Mr. Chair.

The Chairman: All those in favour of adopting the report and presenting it to the House next week, raise their right hand.

Mr. Yvan Bernier (Bonaventure—Gaspé—Îles-de-la-Madeleine—Pabok, BQ): I have a point of order.

[Translation]

I would like to see the final copy of the Nunavut report of which you are proposing final concurrence. I proposed two small changes, but I haven't seen them in written form. I would like to be sure that we understood each other, because everything I tabled was about the care and precautions to be taken. For me, that was an important point. I don't want to be the one holding things up, but before giving my final approval to this report, I would like to see the final version.

[English]

The Chairman: Mr. Bernier, you came in a few minutes late. But it's my understanding that these were accommodated in...

Mr. Rocheleau has a copy of that, Mr. Bernier.

Mr. Yvan Bernier: May I read it?

[Translation]

OK. You took account of the recommendations I made. I'll be able to second the report. How about you?

A voice: Yes.

[English]

The Chairman: Thank you, Mr. Bernier.

(Motion agreed to)

The Chairman: Thank you.

I know we've received some concerns about the length of time this took, but I thought it was better to complete it than to leave it on the table forever.

I apologize to the witnesses for having kept you waiting, but we certainly want to welcome you here this morning. We had a very good meeting on Tuesday. We heard a great number of concerns from the various carriers and shippers.

David, I know you've been in contact with us and with the clerk. Are you the lead person on the presentation this morning?

Mr. David W. Church (Director, Transportation, Recycling and Purchasing, Canadian Pulp and Paper Association): I'll be making the opening presentation, which will take about five minutes or so. Then we're available to answer any questions members of the committee may have.

The Chairman: Very good. Perhaps you would introduce the other members of your group.

Mr. Gary Lunn (Saanich—Gulf Islands, Ref.): I want to confirm whether or not my dissenting opinion has been included in this report. If not, I would move that it be appended to the Nunavut report.

The Chairman: I'm not sure on that, Mr. Lunn, because we had a deadline for that to be submitted and the deadline wasn't met. Just to explain further, I'm not sure if all members saw your minority report. But I certainly would entertain, if you want, a very special concession to you because of the lateness of it, that we might agree to—

Mr. Gary Lunn: Mr. Chairman, I would submit that, first of all, we just made amendments to this report five seconds ago. It is standard procedure for the official opposition to have an opportunity to put in a dissenting opinion. The clerk has a copy of that. I discussed it with him. In fact, it was my understanding that it was going to be appended to the report. So there's no special consideration that needs to be given here. We just amended the report 30 seconds ago. So if we're still amending the report, I could have asked for more time to consider all these amendments.

• 0915

The Chairman: As chairman, I have no difficulty, Mr. Lunn, in presenting that to the meeting, but I would like to point out that you and your group did not meet their obligations about trying to get this done on time.

Mr. Gary Lunn: If you just amended the report, obviously we can't even write a dissenting opinion until we have the entire report that's completed.

I could ask for more time to amend the report even now.

The Chairman: I'll give you an opportunity now to ask for more time. Would you like to make a motion, Mr. Lunn?

Mr. Gary Lunn: I would like to make a motion that I will be requesting more time to put in a dissenting opinion, since this report was just edited a few moments ago.

The Chairman: We've heard a motion. I was prepared to have a motion that it would be included, but I would like to point out that your minority report is critical of this committee for not doing its work, and one of the reasons why we are late in doing this is the fact that some members don't do their work on time, and you did not do your work in time, in terms of the previous recorded minutes we have here.

But I would ask now if members would concur to have the minority report included.

All those in favour, please raise their right hand.

Mr. Yvan Bernier: Could you postpone it? We're having trouble with the earphones in French. There is some noise.

The Chairman: I'm asking the committee if they would permit Mr. Lunn to include his minority report with our presentation to the House next week. Does everyone agree that we would include it with our report?

(Motion agreed to)

Mr. Wayne Easter: Meet the deadline next time.

The Chairman: So we will include it. I had every intention of doing that, but I did want permission from the committee because of the fact that it did come in late.

We will proceed with the witnesses, so again, Mr. Church.

Mr. Gary Lunn: Mr. Chairman, if I can interrupt for one more time before we start, there is another motion on the floor, for which you had notice, and I would like us to deal with that now before we move on to this business.

The notice of motion, as you know, was made the last time.

I would move that the chair be authorized to write the Minister of Fisheries and Oceans recommending that the minister accept the proposal submitted to him by Guy Dufresne, chairman of the Great Lakes-St. Lawrence Maritime and Industrial Coalition, dated November 16.

If we could also get that item of the way, it would be appreciated.

The Chairman: Mr. Lunn, I will entertain that motion now, but I would like to point out to you that I wouldn't want to entertain the motion twice in one day.

In fairness to all the members who may come, and all groups that may come, to present themselves to this committee, do we want to send a number of reports, do we want to send one report, and do we want to more or less conclude our hearings without listening to the witnesses who came today?

With that, I will entertain your motion that we write this letter to the minister, indicating more or less our conclusions to our two days of hearings before we hear further witnesses.

All those in favour of that motion?

Mr. Wayne Easter: Mr. Chairman, could we talk about this first?

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): Can there be some discussion on the motion?

The Chairman: Yes. Mr. Provenzano.

Mr. Carmen Provenzano: Certainly, Mr. Lunn's motion is well motivated. I don't know how the other members of the committee feel, but I'd be inclined to vote for it, except it was made very clear by the presenters, in particular Mr. Doug Smith of the commercial Maritime group, that this was a backup position, it was a compromise they really did not want to enter into, and that what they were really looking for, as I understood it, was a moratorium. Quite frankly, based on the evidence I heard from these witnesses, I would be willing to support a moratorium until such time as that study, which would be forthcoming perhaps in three years, was available. It would be looking at all the implications of these icebreaking fees.

• 0920

So what I'm suggesting to the mover is that perhaps this motion is premature. Perhaps when it looks at the matter closer, this committee should entertain such a motion. I would be willing to make such a motion, Mr. Chairman.

The Chairman: Are there other points of view before we vote on this?

Mr. Easter.

Mr. Wayne Easter: Yes, Mr. Chairman. The motion was based on what the group of witnesses said the other day. I could personally accept it if it said “consider” rather than just closing off all...if it said “that the minister consider” rather than necessarily accept; he may or he may not do so.

At a reception last night I met with some shipowners. They are part of this group, and they didn't support the proposal that was put forward by this group to the minister last week. This morning Mr. Stoffer gave us a letter from the Port of Halifax with another different position.

I can't support the motion on that basis. If it were put forward on the basis of being one of the items the minister consider, I could, but I can't support it that way.

I'd say it should be withdrawn, and we should come back to it after we've heard—

The Chairman: Mr. Stoffer.

Mr. Peter Stoffer (Sackville—Eastern Shore, NDP):

[Editor's Note: Inaudible]...equate the fact that the coalition wanted to go halfway. It was something that, under careful consideration, I could appreciate.

The Chairman: We're having difficulty with the sound.

Okay, go ahead.

Mr. Peter Stoffer: I sincerely appreciate the views of the Reform Party in assisting our committee in some way, in assisting this coalition in achieving some sort of a compromise. But what I'm basically asking for is if Mr. Lunn would like to...

With what I've just received this morning and the three phone calls I've had from Mr. Elliot in Halifax and Mr. Smith this morning, and these competing views, I would like an opportunity to personally review the situation and talk to more people.

If this motion could be forwarded on Tuesday, then I could come up with a definitive response. Otherwise, I'll probably abstain from the vote at this moment. I normally don't like to do that, but because of the information I'm receiving, it would be unfair for me to go either way on this at this time.

Thank you.

The Chairman: Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Chairman, I would like to thank our Reform colleague for tabling this motion, which I find particulary interesting because of its underlying spirit. I find that a very important attitude in the present situation.

The people from the maritime and industrial sectors have come to tell us what they think about the Coast Guard's and the Ministry of Fisheries and Oceans' plans. They came to tell us in person. What is very important, is that it's a counterweight to the information the minister seems to have gotten. So, it's the spirit of the motion that we have to keep in mind.

It counterbalances the information that seems to have been given to the minister. The more we find out in this area, the more we are led to believe that the minister might be badly informed, that he's getting biased information from the Coast Guard which cares more about its own interests than those of the public.

As Parliamentarians, we have to be very aware of what we have been told and what we will be told again today, according to what I heard a while ago concerning the seriousness of the situation from Thunder Bay to Gaspé and which is not just a Quebec problem. For those who might be interested, those who think we're seeing life through a prism, I can tell them that's not the case. I think it concerns the economy of Eastern Canada, of the Great Lakes and of the St. Lawrence. It has a major effect on the public interest, and I think it very important that we maintain the spirit of this proposal, even if we have to reword it if its present content bothers you.

• 0925

We have to make the minister aware of the fact that we, Parliamentarians, have heard people with a mandate to speak, who speak with authority, who speak in their own interest which, by coincidence, is the same as that of the public, in my opinion. In fact, what's at stake here is the competitiveness of the entire Great Lakes and St. Lawrence system relative to that of their foreign competitors.

I think that should make us stop and think about the way Parliament works and the influence we want to have on government, on the executive power.

I repeat, as I already said Tuesday morning, that what is happening here this morning is very important. If the wording of the motion doesn't suit you, we'll have to be flexible, Mr. Chairman, and find some other wording that will suit everybody so that the committee's message can be brought to the attention of the minister. That's the important thing.

[English]

The Chairman: Are there other...?

Gary.

Mr. Gary Lunn: I just want to ask a couple of questions, and I appreciate Carmen's point of view. He's suggesting that it's possible we even need to go all the way, and I don't totally disagree with that.

At the outset, after reviewing all the evidence before us and listening to all the witnesses, I think there's a very serious problem here. What the Coast Guard has come up with is clearly not acceptable to industry. I appreciate that there are other points of view.

What they've asked for and they said—I quote from Mr. Smith; I spoke to him this morning—is that they have proposed to the Coast Guard and the minister that they go halfway. It's not what they want, but they are trying to compromise.

They said it will be difficult, but they will try to live with that for this season only, until this can be resolved, until they can revisit it. They are on the verge of losing hundreds of millions of dollars. This comes into effect on December 23.

I spoke with Mr. Smith this morning and with a number of other people, and they've also told me they have contracts that are waiting. They needed this information last month, two months, three months ago. They have to know the costs of the contracts they are bidding on, and it's only weeks away.

That's why I put forward this motion, that we accept their proposal. I appreciate Mr. Provenzano's point of view, but they did say...and he does represent these industries. Mr. Dufresne is the chairman of the Great Lakes-St. Lawrence Maritime and Industrial Coalition, with representation from across the entire country, and they said they could live with going halfway with the minister's proposal.

That's why I put this motion forward. I do believe it is a reasonable compromise, and I want to emphasize that it is a compromise. It has to be revisited, but it's for this season only, and they're prepared to go halfway.

In responding to Mr. Stoffer asking us to wait, I would again say that these guys can't afford to wait, and there could be thousands of jobs also at stake.

So I'm doing this in the spirit of compromise. This is not just accepting... They've already gone halfway, and if you would like, Mr. Chairman, I will read one sentence out of it. He said:

Implementation of the Coalition's interim proposal will enable the government to mitigate the cross-subsidization and the announced fees by establishing a transit fee

—which is 50% of the Coast Guard's proposal. Of course, they're not pleased with that, but they're trying to come up with some type of conciliatory approach they will be successful with. In speaking with Mr. Smith, he said it would obviously be better if they could eliminate them and revisit this entire area.

So I would ask that this motion now be called to question. That is the reason. They said they could live with it. I think we should, for this season only, encourage the minister to do that until this whole area can be revisited.

I appreciate Mr. Provenzano's point of view, that maybe we should be going all the way. But they said they could accept that, so that is why I put the motion in those terms.

The Chairman: Are we ready then for the motion? All those in favour? I guess what we are saying is that the committee would be recommending to the minister that the icebreaking fees to be accepted by industry this year would be in the vicinity of $6 million to $7 million. Is that what the motion...?

• 0930

Mr. Gary Lunn: Yes. I mean, some numbers are obviously questionable. Some people are saying it's a total of $6 million and some people are saying it's $13 million.

What they are saying is they go with 50% of the Coast Guard proposal. I don't know if that number is carved in stone, Mr. Chairman, but what they are saying is they're prepared to go with 50% of the proposal, for this season only, until it can be revisited in its entirety.

I think that's a very reasonable compromise so that these industries can move forward. Obviously the ripple effect is that thousands of jobs could be saved by this, as they will lose contracts. They have stated—

Mr. Wayne Easter: Mr. Chair, can we have the question? We do have witnesses.

The Chairman: Well, this is so important. It means we would be accepting a conclusion before we've heard all the evidence. I think it has placed the committee in a very difficult position, but...

Yes, Mr. Bonin.

Mr. Raymond Bonin (Nickel Belt, Lib.): I vote to defer the motion.

The Chairman: Defer the motion until after we hear all the witnesses?

Mr. Raymond Bonin: Yes.

The Chairman: Is there any debate on that motion?

Mr. Raymond Bonin: Deferral, not deletion.

[Translation]

Mr. Yves Rocheleau: We'll have time after we hear the witnesses.

[English]

The Chairman: All those in favour of deferring the motion until after we've completed the hearing of witnesses?

Some hon. members: Agreed.

The Chairman: Thank you. We will proceed.

Mr. Church, I'm sorry for the timing.

Mr. David Church: Thank you very much, Mr. Chairman and members of the committee, for inviting us here today to speak to the issue of icebreaking and Coast Guard cost recovery.

The Chairman: In order to hear witnesses this morning, and with the difficulties of distance, we are on an open telephone line with witnesses from the far north. Their member of Parliament, Nancy, is here this morning. She is sitting here on their behalf and making strong representation from the great territory of Nunavut. We certainly hope they can hear the presentations.

Mr. Church.

Mr. David Church: My name is Dave Church. I'm director of transportation, recycling and purchasing for the Canadian Pulp and Paper Association, and I'm based in Montreal.

I'm here with three representatives of our member companies, each of which has extensive knowledge and expertise on marine transportation matters, specifically with respect to the activities of the Canadian Coast Guard and its icebreaking services.

With me are Mr. Pierre Caron, manager, pulp and paper transportation for Donohue in Quebec City; Brian McGurk, director of transportation for Bowater Pulp and Paper in Montreal; and Captain David Brown, port superintendent for Abitibi-Consolidated in Botwood, Newfoundland. Pierre Caron, by the way, is a member of the Marine Advisory Board. The companies they represent have operations in Ontario, Quebec, New Brunswick, and Newfoundland.

We're here today to express our concerns about the Coast Guard's June 12 proposal to impose a $5,700 per-transit fee for icebreaking services and to support the position of the Great Lakes-St. Lawrence Maritime and Industrial Coalition.

On November 16 the coalition filed a submission with the Minister of Fisheries and Oceans containing an interim icebreaking fee and a long-term solution in response to the Coast Guard's June 12 proposal. The CPPA has carefully considered the coalition submission and supports its recommendations in their entirety.

The CPPA is a national association that represents 47 member companies located throughout Canada. These companies account for approximately 80% of the pulp, paper, and paperboard manufactured in the country.

Transportation is a significant cost element in the delivered price of our goods and a major determinant in our international competitiveness. Accordingly, the pulp and paper industry has a strong interest in the competitiveness of Canada's transportation industry systems.

• 0935

The industry is a major user of transportation services, not only for the 29 million tonnes of product that are shipped annually, but also for the related volume of inbound raw material consumed in the production process.

Shipping its products from mill to market represents approximately 15% of total costs for Canada's pulp and paper industry. As a major exporting industry in Canada, the initiative of the Coast Guard to recover the cost of some of its services will cost the Canadian pulp and paper industry millions of dollars annually.

In 1997 this industry shipped approximately 10.6 million tonnes of pulp, paper, and paperboard through ports in eastern Canada and western Canada to 70 offshore countries around the world. In each of these markets we are price-takers, that is, the price of our product is determined not by us, but by the marketplace. In every instance we are competing with suppliers much closer to the specific customers in these markets. Accordingly, our transportation costs are significantly greater, and we will have no choice but to absorb the additional cost for Coast Guard services.

In addition to accounting for a sizeable portion of the delivered cost of pulp and paper products, transportation costs have a significant influence on the location of new production facilities and the competitiveness of existing facilities in Canada.

The CPPA has major concerns with the June 12 proposal of the Coast Guard to impose a $5,700 fee per transit during the icebreaking season. We have analysed the economic impact the proposed fee would have on the mills, which require icebreaking services, and have determined that it will have a significant impact on the competitiveness of mills along the St. Lawrence River, northern New Brunswick, and in Newfoundland.

The pulp and paper industry ranks first in contribution to Canada's balance of trade. In 1997 the industry's net contribution to the balance of trade totalled $16.4 billion, and net exports of other forest products brought the total contribution to $30.9 billion.

Future growth of our industry is not in North America but offshore. Implementing the icebreaking fee, as proposed by the Coast Guard, will severely inhibit our ability to compete in these markets and jeopardize the growth of the industry.

If the fee had been implemented during the most recent icebreaking season, approximately 1.2 million tonnes shipped to offshore markets and to the U.S.A. by vessels during this period would have been subject to an icebreaking fee of $5,700 per transit. This icebreaking fee is in addition to the fee for aids to navigation, for which our members are now paying.

The ships used by the mills along the St. Lawrence River, in northern New Brunswick, and Newfoundland generally carry approximately 6,000 metric tonnes. In many cases these vessels can make calls at two or three different ports to complete the load. At each port the forest products cargo will be subject to an icebreaking fee of up to about $17,000 in total. Accordingly, our industry will be severely disadvantaged by the icebreaking fee as proposed by the Coast Guard.

Furthermore, the fee is applicable even if assistance by the Coast Guard is not required. We believe that paying for a service we do not use is a tax, not a user fee, and is unacceptable.

The submission filed with the Minister of Fisheries by the Great Lakes-St. Lawrence, Maritime and Industrial Coalition on November 16 recommends that the proposed fee be reduced by 50% for all users in all regions that require icebreaking services.

This would be for an interim one-year period, during which time industry and the Coast Guard would work toward developing a long-term structure acceptable to both industry and the Coast Guard. The CPPA supports this proposal and asks the standing committee to recommend to the Hon. Minister Anderson that it be adopted.

That concludes our comments this morning, Mr. Chairman, and we'd be pleased to answer any questions.

The Chairman: Thank you, Mr. Church.

Gary, this is your 10 minutes.

Mr. Gary Lunn: Thank you, Mr. Chair.

I understand, David, that you were presenting for all four people?

Mr. David Church: That's correct, yes. I will be making the opening statement.

The Chairman: Okay. The clerk mentions that we are going to entertain two other witnesses very briefly and then have questions. I guess it's a matter of how we're going to do this. The clerk had one idea and I had another.

An hon. member: Oh, oh!

Mr. Lou Sekora (Port Moody—Coquitlam—Port Coquitlam, Lib.): Why don't you pick a good one?

The Chairman: We have two other groups with us. We also have a group up in Iqaluit who are on the phone, and—

Mr. David Church: We're at your disposal.

• 0940

The Chairman: We have about an hour and 15 minutes left. What's the pleasure of the meeting? How should we proceed? Should we hear from all witnesses first and then have questions, or would you...?

An hon. member: Are we on-line?

The Chairman: Yes, we're on-line.

Mr. Yvan Bernier: Do they agree to wait for our questions?

The Chairman: Good morning, then. We'd like to welcome Captain Terry Cansell from the Northern Transportation Company Limited; from the Nunavut Ocean Transport we have Ken Harper, manager; and from the Nunavut Eastern Arctic Shipping group, Abraham Tagalik. Good morning, everyone.

An hon. member: We lost them.

The Chairman: The clerk has another suggestion. We also have with us Richard Leduc from the Chaleur Regional Development Commission Inc. Richard, could you join our table? And we have Joanne Lapointe from the Québec Stevedoring Company.

Richard, welcome to our meeting. As you can see, we are in great anticipation of this, with icebreaking of such great concern to us. We've heard witnesses on Tuesday and again beginning this morning, and I think the committee seems to be very anxious to come to some conclusions. As a committee, I think we all, both individually and collectively, recognize the cost of icebreaking as a major problem in a time when so many of our international commodities are suffering as a result of markets. We welcome you today from the great area of Chaleur Bay, just north of my own Miramichi, with the great ports of Belledune and Dalhousie.

Welcome. We have 5 or 10 minutes for your presentation, and then we'll go from there.

Mr. Richard Leduc (General Manager, Chaleur Regional Development Commission Inc.): Thank you, Mr. Chairman.

We're here to talk to you about the port of Belledune. I do have a couple of gentlemen with me who might be able to address some specific questions afterwards. We have the port manager, Mr. Guy Desgagnés, with us today, and Mr. Andy Flanagan, who's the mayor of what they call the super-village of Belledune and who has the port very much at heart.

While we do touch on icebreaking in our presentation, quite frankly we're more concerned with the aids to navigation that have just recently gone into effect.

I'll go through my presentation, which is, as you said, short.

Over 30 months ago, Mr. Chairman, in this very room we came before you to discuss the initiatives being undertaken by the Canadian Coast Guard to recover costs for services provided to commercial shipping. Hundreds of meetings by dozens of different national and regional advisory boards, task forces, hundreds of consultations and presentations by the Canadian Coast Guard, three years of hearings by this committee, and hundreds and thousands of dollars spent by lobbyists for various marine-shipping fraternity interest groups have not moved us any closer to resolving the issue of cost recovery in a fair and equitable manner. The operative words here are “fair” and “equitable”. That's the key issue we'd like to address today.

In our last presentation we discussed the process of setting cost-recovery targets. We spoke of ones that would be consultative, with input from all regions and sectors, and while we can appreciate the difficulty in arriving at a formula that's acceptable to everyone, we must still strive for what is fair and equitable and free of undue influence.

Ladies and gentlemen, over the last few years you've no doubt heard from hundreds of special interest groups vying to win you over to their point of view, each trying to influence the process to their advantage...and by inference, to the detriment of other stakeholders.

• 0945

We will not do that today, because we've come to believe the process itself and its underlying principles are flawed insofar as it has not been consultative. A lot has been said, but nobody seems to be listening, least of all the Canadian Coast Guard. Thus the more powerful special interest groups or regions with the most financial resources are having the most influence.

Here's a little aside, Mr. Chairman. We in the port of Belledune, and those in the greater region of New Brunswick around Chaleur Bay, feel very much out of the loop. We kind of found out after the fact, which is what prompted us two weeks ago to very quickly... We appreciate you giving us this opportunity to come to speak before this committee. We very much don't feel that we're a part of the decision-making process. We feel that things are being imposed on us, and we're not in a position to be able to accept them.

The process must be economically based and free of political or regional influences. We feel the only valid criterion for base cost recoveries is that you pay for what you use. But this has not been the case so far.

As a corollary principle, we users, as customers of the Canadian Coast Guard, should then pay only for what we need, not what the Canadian Coast Guard says we need. While the issue of redundancy in aids to navigation has been somewhat addressed, the savings have not been passed on to the users, nor are they about to be. The fees, as originally established, were based on existing aids to navigation. It would seem that by reducing their level, this should also reduce their cost.

Similarly, other basic principles are missing, such that every measure must be taken to deliver the service at the lowest possible cost, and any cost savings must be reflected in the fees. An economic impact study commissioned by the Canadian Coast Guard was also very flawed, superficial, and based on wrong assumptions. Therefore, it was of very little help. A fee review panel was originally planned to address specific issues of individual ports, but as far as we know, this committee has yet to be set up. Therefore, we and other similar groups have come before you as our only recourse.

Here's a case in point. On October 15, 1998, I received a routine bulletin, number 13, from the Department of Fisheries and Oceans. It announced that as of October 1, which was by then two weeks past, new navigational service fees had come into effect specifically in relation to our port of Belledune. It was 8.5¢ per tonne last year, but it suddenly moved to 16¢ per tonne, which is an 88% increase.

Now we're evidently on the mailing list, since I keep getting these bulletins. But nobody had come to consult with us. Even the port manager, Mr. Desgagnés, who's also on the mailing list, was caught a little flat-footed. And as for the port users who will have to pay this fee, the ones I talked to were neither notified nor consulted. It's all the more frustrating when we see in this same bulletin that the fees for the Laurentian and Central regions were reduced such that they're now less than the fees for Belledune.

Mr. Peter Stoffer: I'm sorry for interrupting. In the pamphlet you handed us, you said they were not notified. But here it says they were notified. I think it's on page 5.

Mr. Richard Leduc: I'm sorry, you're right. That's a misprint I didn't catch.

Mr. Peter Stoffer: Okay. It says “the ones in fact who will have to pay this fee, were notified or consulted”.

Mr. Richard Leduc: None of the port users were notified, which is what it should say.

Mr. Peter Stoffer: Okay, so it should be “were not notified”.

Mr. Richard Leduc: They were not notified.

I'll just repeat the last point, which is rather important. In this same bulletin, the fees for Laurentian and Central regions were in fact reduced. So they're now less than the fees for Belledune.

So a boat travelling all the way down the St. Lawrence, where there are thousands of aids to navigation—let's say it's going to Montreal, for example—will end up paying a lower fee for aids to navigation than if it came into Belledune. We have two lights at the entrance to the harbour. Evidently, there are aids to navigation in the Gulf of St. Lawrence, but they're common to both ships we're talking about here. Therefore, we feel that 16¢ per tonne is a little much.

The port of Belledune, our port, is at the heart of our economic diversification efforts for our region. In an area where unemployment runs in the range of 17% to 20% and whose economy has historically been based on non-replenishable natural resources such as mining, this diversification is not a growth strategy; it's a survival strategy.

• 0950

Our population is very much behind this strategy. In fact, every single resident of our region contributed to the recent port expansion in terms of its capital costs.

We're working actively in trying to get natural gas to our port. We feel we're almost there. Natural gas from Sable Island comes on line next year. Within the next year or so, we'll end up getting natural gas to Belledune, which should round out our economic diversification on that aspect of it.

We're also working with Ports Canada right now and the Ministry of Transport to transfer Belledune to a local administration under a Canadian port authority. We're doing a study to look at the ideal and most competitive rate structure that will allow us to carry our substantial debt of $38 million.

I'll quickly skip over some other aspects here.

Now that gas has been confirmed to be coming, and with our deep water port, we have been entertaining the possibility of several megaprojects being established in this area. These projects are now being looked into.

So after all I've told you right now, and with the port showing a 45% increase, which is significant, over the last two years—we're projecting another 17% increase next year—the last thing we need right now is an 88% increase in aids to navigation.

This is all the more crucial when we consider icebreaking. While this has not yet been finalized—I gather it will be done very soon—there have not been any consultations of late with any of our stakeholders in our region. We will no doubt be called upon to pay substantial fees. We can see it coming.

While the Bay of Chaleur itself does not represent a major icebreaking challenge as it's fairly ice-free all the way to Belledune, the exception occurs when the northeast wind blows in the ice from the Gulf of St. Lawrence. The Gulf of St. Lawrence itself is a major ice problem zone.

We understand that a fee for necessary icebreaking services in the Gulf of St. Lawrence is warranted. We're willing to accept a reasonable fee. But we do not agree with some of the proposals, such as a uniform fee.

There's a $5,700 fee being talked about for every vessel crossing an ice zone. We have to cross about 60 miles of the Gulf of St. Lawrence to go to Belledune. If you wanted to go to Montreal, however, you would have 600 miles of ice to cross.

There should be some consideration in establishing the fee. This $5,700 would dramatically impact shipping into the port of Belledune. We generally have commodities of very low value going in there, such as coal, zinc ore, and gypsum, any of which would be definitely impacted dramatically.

Transportation is a commercial venture best left to the private sector and influenced solely by competitive economic forces. This has been an underlying principle directing the privatization of rail, air, and marine transportation. Cost recovery for marine services is an integral part of this process, and we readily support the user-pay principle. Those ports with natural geographic advantages, such as being ice-free, having few navigational aids, and requiring little dredging, should have a competitive advantage. Evidently, ports on or close to the open sea, such as those in the Maritimes, would seem to be well positioned in this regard.

Mr. Chairman, as you know, we Maritimers have so few natural advantages that we cannot afford to pass on any of them. It would therefore go against the principle of privatization to have taxpayers subsidizing high-cost ports in order to maintain their competitiveness against low-cost ports. It's even worse if low-cost ports are asked to indirectly subsidize high-cost ports.

With regard to aids to navigation, Belledune is a very, very low-cost port. With the proposed 16¢ per tonne for the 2.5 million tonnes projected next year, the Canadian Coast Guard is looking to collect $384,000, thereby significantly raising the cost for shippers using the port of Belledune. We feel this is unwarranted, inequitable, and unfair.

We're asking for the rate increase to be at least rolled back to 8.5¢ a tonne, which was already in place. This still represents more than $200,000 annually. It's more than double what the study shows to be the true cost of maintaining aids to navigation in Belledune.

We thank you very much for the opportunity, Mr. Chairman. We would be willing to answer any questions.

The Chairman: Thank you, Mr. Leduc.

Mr. Sekora.

Mr. Lou Sekora: As I listen to this, I'm really totally confused by some of the problems that exist. I can't believe it.

• 0955

The Chairman: Lou, I'm sorry, I can't entertain that yet, unless it's a point of order. We will finish hearing from our witnesses.

Mr. Lou Sekora: Okay, go ahead.

The Chairman: We also have Ms. Lapointe from the Québec Stevedoring Company. Just to fill you in, we're trying to complete the presentations by witnesses and then we'll have our questioning afterwards.

Are you ready to make your presentation?

Ms. Joanne Lapointe (Vice-President, Corporate Affairs, Québec Stevedoring Company Ltd.): Yes, Mr. Chairman.

Thank you for having us here today. I represent the Québec Stevedoring Company. My company and its subsidiaries operate 18 ports located on the Great Lakes, on the St. Lawrence River, and in Belledune, New Brunswick. We employ 1,000 people yearly.

I would like to talk about what de-icing cost recovery may do to our labour and our capacity to compete with other ports.

We operate in regional ports along the St. Lawrence. They are much smaller operations than Canadian port authorities. Most of these ports usually have a strong social mission as well as an economic mission. For instance, if you take the port of Gros Cacouna, it serves a purpose for the paper mills located around the port. It's the same with Matane and Baie-Comeau. All these ports are crucial for the regions they serve.

The impact of de-icing costs will be tremendous for these cargoes. Ships will come into the St. Lawrence and stop at these ports. For very little tonnage, a ship that comes into Matane or Gros Cacouna for 500 tonnes cannot afford to pay $5,700 in de-icing fees.

The Chairman: Mr. Rocheleau is so pleased with your presentation. I would like to remind you we work in both official languages. I hope he's getting the proper translation, because I see the big smile on his face. But feel free to speak in French also. We have our translators.

Ms. Joanne Lapointe: Okay. Thank you.

[Translation]

I was saying that many ships that use the St. Lawrence and stop at regional ports, like those at Matane, Cacouna, Gaspé and Pointe-au-Pic, are not able to pay such high icebreaking charges.

Mr. Yvan Bernier: I appreciate the fact that Ms. Lapointe is speaking to us in French. I must tell her, though, that I am well aware of the problems. If there's anybody to be convinced here this morning, it's the members of the party in power. So, you can also speak English, since the microphones are working very badly. They might have trouble hearing you, and it's them that have to understand.

Voices: Ah, ah!

[English]

Ms. Joanne Lapointe: Does anyone speak Spanish around the table?

Ships that come into these regional ports very often come for small amounts of cargo. When you talk about 500, 1,000 or 2,000 tonnes of newsprint, lumber or granite, you can't afford $5,700 of de-icing fees. These ships also serve many ports on the same trip. It's $5,700 every time they stop. That will lower the number of ships on the St. Lawrence. We will have to build bigger and bigger inventories. In the winter, traffic will go down dramatically.

It means we will have a hard time maintaining our skilled labour force all year long. We can't maintain people on unemployment for seven or eight months a year. They will obviously look for something else that can sustain them the whole year round. This creates a major problem for us.

• 1000

Some granite, newsprint, and lumber shippers have already indicated to us they intend to use containers or ship through the United States, if they ship at all. The paper industry is looking at domestic issues right now. If they can sell through the United States, it's certainly an option they will consider. Our rates are already much higher than in the United States, and we have to be very inventive now to keep our cargo, so that extra burden will be very damaging for us.

De-icing is not the only issue the industry has had to face in the past year. We're also going through the port divestiture process, which has brought its share of problems to the industry. All of the ports I've mentioned to you along the St. Lawrence are going through the process of divestiture. We're also facing very heavy new financial burdens with this that we have to deal with. Our future is already very uncertain with this process, and de-icing is just the icing on the cake, really.

The industry cannot sustain any more of these burdens. For instance, the regional ports were supplied with operating figures from Transport Canada, and the extra things we're looking at are very significant. We're looking at municipal taxes, insurance, and debt service. We're looking at engineering service and a major maintenance program. So for most of these ports we've already demonstrated, or we're on our way to demonstrating, that this venture is not financially viable as it is, and that's excluding de-icing costs we will have to support.

When we do our plan for operating a port, we do it with the cargo we think we can maintain. If we lose some cargo—and the Coast Guard has already admitted there will be a decrease in cargo with de-icing—the de-icing charges will not be lower, so the remaining cargo will have to support the extra burden of what's already gone. The last shipper to leave will have to foot the whole bill, in the end. This is very dangerous.

When I speak for our company, we support 1,000 direct jobs along the St. Lawrence, and I think that's very important. They are being jeopardized here. You can also imagine how many indirect jobs are represented. That's why I think a step like de-icing deserves far more consideration before it is implemented, especially with the way it is being done right now. Thank you.

The Chairman: Thank you.

Is Captain Terry Cansell on the phone?

Captain Terry Cansell (Director, Eastern Arctic Operations, Northern Transportation Company Limited): Yes, I am.

The Chairman: Welcome, Terry. I don't know if you've heard some of our presentations, but hopefully we'll have a good dialogue with you. Could you keep your remarks fairly short, at five to ten minutes?

Captain Terry Cansell: I certainly can.

The Chairman: Thank you, Captain.

Captain Terry Cansell: Thank you very much, Mr. Chairman. I have a very short presentation, and I'm quite willing to accommodate questions afterwards at the appropriate time.

Good morning, committee members. Thank you very much for this opportunity to address the committee on this very important issue in marine transportation in the Arctic: the Canadian Coast Guard icebreaking service. I have been involved in the marine business in the north for 25 years and have spent many years on ships in the Arctic. Speaking of my predecessor there in the Port of Belledune as being out of the loop, he should try moving to the Arctic.

• 1005

I spent the last 10 years of my service aboard Arctic vessels as captain of an icebreaker for an offshore oil exploration firm. I am presently director of eastern Arctic operations for Northern Transportation Company Limited, which has marine transportation services throughout the entire Arctic.

During the last few years there has been tremendous pressure to reduce icebreaking service in the Arctic in order to reduce costs. I am addressing you today to point out what a big mistake that would be.

The Canadian Arctic is totally dependent on the marine supply system in order to ensure that communities will receive their yearly supplies. The icebreaker service is a very important part of this marine supply system, and any more reductions in the level of service will seriously jeopardize the reliability of this system.

Just several years ago there was a plan to completely eliminate the only western Arctic-based icebreaker. This vessel has been servicing an area of about 1,500 nautical miles from the Alaska border to the Boothia Peninsula and includes 10 communities as well as many defence and exploration sites, all of which rely totally on marine transportation for supplies and fuel. The region also has considerable marine traffic consisting of local intercommunity boats, tugs and barges, passenger vessels, scientific and hydrographic vessels, as well as exploration adventurers.

The icebreaker that is stationed in this region also provides a number of services in addition to the icebreaker support, including aids to navigation, marine search and rescue, environmental response capability, and support to other government departments and agencies. It also conveys a very important message to other nations of the presence of the Canadian government in the north. This service has continued for approximately the last 40 years.

The plan was that after this icebreaker was eliminated, this service would be provided from a reduced eastern Arctic fleet on an as-needed basis. This proposal to service the western Arctic on an as required basis places community resupply at great risk.

The plan to deploy icebreakers from the eastern Arctic fleet means that there would be a very lengthy response time for icebreaker support and for emergency or environmental response. It also fails to address the very real possibility of adverse ice conditions affecting both regions and the resultant dilemma of which region gets the necessary support.

So why am I bringing up this issue of the western Arctic-based icebreaker, as it did not get eliminated as planned several years ago? The reason is that we learned recently at the Canadian Marine Advisory Council meeting in Iqaluit that the reinstatement of this icebreaker was only temporary, and the service is being threatened again by the year 2000.

This is not only a western Arctic icebreaker issue. The plan to service the western Arctic from an eastern-based icebreaker also puts a strain on the eastern-based icebreaker fleet and therefore has a dramatic effect on the total icebreaker service across the entire Arctic. Any reduction of this service could have a catastrophic effect on the people and communities of the north. The cost to either the territorial or federal governments to airlift fuel and vital supplies in the event of a non-delivery would be very onerous.

The Canadian Coast Guard is responsible for all of Canada's waterways, and that includes northern Canada's waterways, and it cannot be allowed to disadvantage the Arctic, which has neither highways nor a railway system and which relies solely on marine transportation for its continued subsistence.

I sincerely hope that the issue of icebreaker service across the entire Arctic will be carefully re-evaluated and that there will be no further reductions in the level of service. Thank you very much for your time.

The Chairman: Thank you, Captain.

We'll now proceed with questions. I'm not sure if Mr. Lunn has whittled his pencil and is any closer to getting his costs down, but he has 10 minutes now to speak with the witnesses.

• 1010

Mr. Gary Lunn: Thank you. We don't have too many questions, so we'll give our second five minutes to Mr. Bernier and Mr. Rocheleau, if they require it. They're the ones on the forefront of this issue in Question Period.

We had witnesses before the committee two days ago, and the concerns we're hearing about are much the same. That's why I think time is so critical on this issue.

I know a number of you have stated that you support this proposal put forth by Guy Dufresne, the chairman of the Great Lakes-St. Lawrence Maritime and Industrial Coalition. Just answer with a quick yes or no. Are you all members of this coalition? Is there anyone here who's not a member of the coalition? Let's put it that way.

Mr. David Church: Of the member companies of CPPA, most of those that have mills in the Great Lakes and St. Lawrence region would be members of the coalition. The difficulty is that they also have mills in Newfoundland as well. But, yes, I believe most of the member companies that are here today are members of the Great Lakes-St. Lawrence Maritime and Industrial Coalition.

Mr. Gary Lunn: And they are supporting this proposal dated November 16 that has been put forth by the coalition.

Mr. David Church: Yes, that's correct.

Mr. Gary Lunn: I'm sorry, sir. Is it Mr. Caron?

Mr. Richard Leduc: No, it's Mr. Leduc.

Mr. Gary Lunn: Were you going to add a comment?

Mr. Richard Leduc: Yes. You asked who were members. As far as I know, and it gets a little hazy, Bowater has a plant in Dalhousie, which is on the Bay of Chaleur, and therefore very indirectly they are members of the coalition. But how representative that is of the interests of our region, I question. Directly, we have no membership, nor are we made aware at the Port of Belledune of the decision or the recommendations. Today is the first I've heard that there was an alternative proposal put forth.

Mr. Gary Lunn: Okay, thank you.

The other issue that has been brought before the committee and discussed very extensively is that we're led to believe by the minister that this proposal that was brought forward of these new icebreaking fees by the Coast Guard was based on the industry and that in fact they're the ones who support it. We have now learned otherwise. What has been suggested to us?

I think most people here are going to agree that the proposal put forward by the Coast Guard for this new icebreaking fee structure is a complete disaster. We heard it's going to cost thousands of jobs, and the list goes on and on. There are all kinds of issues, such as the fact that ships coming in and using Canadian Coast Guard icebreaking services will pay nothing if they're going to a U.S. port. There are all kinds of problems with the whole system, and the issue needs to be revisited.

So for your benefit, sir, over on the end, what this proposal basically is suggesting is that they just go halfway this year, that we try to come up with some type of a compromise and conciliatory approach with the minister to revisit it all. This is on an interim basis only, I understand, and it's only for the 1998-99 season. In my opinion, the whole thing has to go back to square one. Do you also support that initiative? I would like your comments. I understand the other members are supporting this compromise that has been brought forth by the coalition, and I'll ask you to comment on it as well. Thank you.

Mr. Richard Leduc: As perhaps an analogy, you're asking me if I'd rather be shot in the chest or in the left shoulder. I think if you give me a choice between you paying $5,700 or half of it, you leave me not much choice but to say half.

I think a few others have suggested there be a moratorium, because evidently this is a much bigger issue than anybody ever imagined. With all due respect, gentlemen, and I'm sure you've been debating this for months, perhaps a little bit of time might be worth while, and I respectfully suggest that.

Mr. Gary Lunn: I'll just add one quick comment to that. I do hear what you're saying, and the moratorium came to my mind.

I understand the reason this proposal was put forward is because they'd rather be shot in the shoulder than in the chest, exactly as you put it. They would much rather have the moratorium, but they're trying to get something they can live with, without losing contracts and experiencing the ripple effect, etc. They have stated before this committee that although it's not what they want and it's less than ideal, they'll try to live with that, if they could even get that. But anything less than that is going to put the whole industry in peril.

I'll just ask for the other members to comment on this proposal, because that's what we're really trying to come to terms with.

• 1015

Captain David Brown (Port Superintendent, Abitibi-Consolidated Inc.; Canadian Pulp and Paper Association): If I may make a comment, you mentioned earlier that the original fee proposal came from industry.

Mr. Gary Lunn: That's what we were told.

Captain David Brown: I think if you check across industry and go back three years to when all these fees were initially talked about, all the companies would confirm that they put forward the position that icebreaking was an essential service and they did not want any fee.

They felt that any fee would be an onerous fee. It kept developing and developing. It was coming. We were given a choice. You can have a transit-based fee or you can have an hourly fee. What do you choose?

If you went with an hourly fee and you had a vessel trying to get into a Québec Stevedoring port to pick up 500 tonnes of cargo, currently under the proposed system, for the vessel just to go into the dock it's $5,700; for the vessel to leave the dock it's $5,700. That's $22 per tonne right there.

The other option is that you could pay an hourly fee. So if the wind is the wrong way and you pay an icebreaker $2,000 per hour and it takes you 24 hours to get in, what choice do you have? You can have the small shipper absorbing the cost and going bankrupt on one voyage. So it was the lesser of two evils.

It is not an industry-driven fee. We put forward the position that it's an essential service. We maintain that. When you look at the proposal that's put forward now, yes, we are supporting a 50% reduction in the fee, because it is an onerous fee.

It is going to have far-reaching effects that nobody can determine right now, an example being the information from Québec Stevedoring that shippers are already looking at alternatives. If shippers look at alternatives and move away from these ports, you have 1,000 people unemployed. If shippers don't have an alternative and can't be competitive and reach their markets, you're going to have industries taking down time. More economic ripples will go through the economy.

The Chairman: Thank you, Captain Brown. His time is up. We have 10 minutes, 5 minutes, and we'll have a chance to go further then.

Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: One again, I would like to thank my colleague from the Reform Party for his kindness and courtesy.

Mr. Church, you write in your brief, at the bottom of page 1:

The future growth of our industry will take place on overseas markets and not on the North American market. The imposition of icebreaking fees such as those proposed by the Coast Guard will prevent us from being competitive on those markets and will endanger the growth of our industry.

You're presenting an argument there that seems to me to be very important and that well describes the threat to the sector.

Could you elaborate on the subject which seems to be at the centre of the whole debate? Some witnesses have used terms like “devastating impact”, which describe the situation well, but I would like for you to be more specific about what the situation is.

[English]

Mr. David Church: Perhaps Brian McGurk could answer that question.

Mr. Brian McGurk (Corporate Manager, Transportation, Canadian Pulp and Paper Association): Thank you, Mr. Rocheleau.

Before you, you have three of the world's largest producers of newsprint in the world. Abitibi-Consolidated is the largest, Bowater is the second largest, and I believe Donohue is the third largest.

Growth in North American markets in the next 12 years is expected to be 0.5%—in other words, it's a stagnant market. Growth in the world outside, export markets, is expected to increase by 5% to 8% in North America and in the Far East. It's the equivalent, in our estimation, of 70 new paper machines offshore. If we can't compete effectively in these markets, if we can't get to those markets in a competitive way, we will not have access to that growth. Both Abitibi and Bowater have invested in offshore facilities in the Far East to address in part these issues. Investment will continue to go offshore to get closer to the markets and to become more competitive, not in North America and certainly not in Quebec.

• 1020

All three of our companies have gone through consolidation. Abitibi has done so in terms of Abitibi-Consolidated, Bowater has consumed Avenor, and Donohue has consumed Champion. The synergies of those mergers and acquisitions are largely achieved through transportation. Those mills that have a transportation advantage in certain marketplaces will now become much more desirable to ship from.

Donohue has a challenge to look at their Baie Comeau mill, versus the mills in Texas going to South America. Obviously, those mills in Texas are closer to the market. They're not ice-borne, and they don't have the costs that some of the Canadian operations have. In Dalhousie, New Brunswick, where Bowater's operation is located, we're looking at our mill operations in Mersey Point, Nova Scotia, and in Liverpool, Nova Scotia, which do not have ice. Which markets should we serve, and should Dalhousie be an export marketplace in the long term? Those are the rationalization issues we face.

In addition, perhaps Monsieur Caron can say a few words.

Mr. Pierre Caron (Manager, Pulp and Paper Transportation, Canadian Pulp and Paper Association): Thank you, Brian.

Brian was saying a little bit about Donohue. These facts are really true. Also, let's look at the mills on the north shore of the St. Lawrence River. Right now, we're looking at shipping to smaller markets like Spain, Greece, and Chile. These markets have very small tonnage, as Joanne was saying—500, 1,000, 2,000 tonnes. The impact of the de-icing costs can be very enormous on those shipments. On a 1,000-tonne shipment to Spain, you may hit an additional cost of $5.70 per tonne. We will look seriously at taking this tonnage down to our other mills in the south in order to ship to ice-free ports where the costs are much lower. This will have a considerable impact on the St. Lawrence River.

We can also see that this impact will be reflected on the port activities along the St. Lawrence River. By lowering the shipments, the revenues won't be there. This will tend to put a hold on the port transfer process that's being put in place right now. In many ports that we're in right now, we're at the stage of making the business plans. These are unknowns that tend to slow down the whole process, so it's very critical right now.

The Chairman: You have time for one more.

[Translation]

Mr. Yves Rocheleau: I have a question for Ms. Lapointe.

Ms. Lapointe, a while ago, you talked about the fate of regional ports such as those at Cacouna, Matane, etc., and of the CPAs, the Canadian Port Authorities, of which there are six or eight in Quebec, if my memory is correct.

Could you describe to us in more detail what impact there would be on regional ports if the Coast Guard gets its way, if that should ever happen? What would happen to users and, finally, what would the minister be faced with if this impact happened in our regions, particularly in the case of regional ports which, given the ambiguity of the situation, Transport Canada wants to hand over to the local communities? Where's the logic in all that, considering federal plans?

Ms. Joanne Lapointe: Thank you, Mr. Rocheleau.

[English]

I would like first to describe the ports that we are talking about. On the St. Lawrence River, I would say around 95% of the cargo that goes through regional ports goes through six particular ports: Sorel, Gros Cacouna, Pointe-au-Pic, Baie Comeau, Gaspé, and Matane.

As I said before, these ports also carry a social mission. They carry a lot of weight. They're important economic drivers in their regions. You have paper mills, you have lumber mills, you have all kinds of industries that are established. These industries sustain a large number of workers, and they're established around a port to and from which they can easily ship their production.

• 1025

We're already going through the process of port divestiture, and Monsieur Caron can vouch for that. It's been a very painful process for the port users for the past two years. We face very substantial increases in port dues, and all kinds of financial obligations that we're going to have to support from now on because the federal government has decided to withdraw from these operations. We sat down with them to look at ways to take over in a sensible manner.

On top of that, for the operations that we do in these ports, de-icing is going to have a dramatic effect. Ships that come in to the St. Lawrence to service these ports will very often make many stops to pick up smaller amounts of cargo in the regions. If we go at $5,700 a piece, the cargo shippers will not be able to support that. It has very direct effects on us. We will not be able to maintain our labour force, and paper mills and lumber mills will have difficulty shipping through these facilities because of the expenses.

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

Lou, do you have—

Mr. Lou Sekora: Thank you, Mr. Chairman. I'm going to give some of my time to my colleague.

I'm fairly new to this committee, but this looks like—

The Chairman: One moment.

Yes, Mr. Rocheleau, you had a point of order.

[Translation]

Mr. Yves Rocheleau: I think that Mr. Caron would like to say a few words.

[English]

The Chairman: I'm sorry, but the minutes were up. Mr. Caron, we will give you an opportunity later, hopefully.

Mr. Lou Sekora: I think we have a problem, and it's a huge problem. I don't know who worked on this fee increase or whatever it is, but it looks like more than one person, because one guy couldn't make such a mess of it.

Some hon. members: Oh, oh!

Mr. Lou Sekora: No, really. Frankly, I'll tell you, I'm a business man, and I can't believe what I'm hearing today. Mr. Chairman, I think we should either somehow stop this increase that's coming up on December 21, or whenever it is, or put it on hold and maybe straighten this mess up. We should take a look at what it is, because to me it's a bloody boil.

A voice: I'm right with you.

Mr. Lou Sekora: I don't know who set these fee structures, or what is really happening. It looks like a bureaucracy has taken over and has said this is the way it's going to be, and to hell with whatever the hell else is going to happen! Pardon my expression, but I'm one of those guys who says what's on my mind. I don't like what I'm hearing, not for one minute, Mr. Chair.

With that, I'll ask Mr. Easter to carry on. I hope he's in the same mood I'm in today.

Mr. Wayne Easter: I'm not in the same mood, Mr. Chairman.

One of the conditions outlined in terms of icebreaking fees and other fees is that proper consultations are to be held with industry. Somebody mentioned earlier on—I believe it was Mr. Church—that you didn't think you were really consulted to any great extent. Could each of the witnesses tell me the extent of the consultations with the Coast Guard—whether they took place, how extensive they were, whether they were consultations or just information sessions? There were supposed to be consultations.

Mr. David Church: Perhaps Monsieur Caron could speak about that. He was a member of the Marine Advisory Board, and I know a number of other members here were also participating closely in the consultation phase. Perhaps it would be better for them to speak about it.

Mr. Pierre Caron: The Marine Advisory Board held its sessions, and I was there until November 1997. We went through the consultation process with the Hickling group and Booz-Allen. There were some consultations all across Quebec at least, and we helped the people organizing those consultations. What was said at those consultations—and I've assisted with many of them—was not what was really reported in the report.

• 1030

The report is a very broad overview of what was actually said by all the communities and the people who are living with the Coast Guard issues. Even the ice subcommittee of the MAB issued a document on November 27, 1997, that traced the path that was followed probably by the minister, or at least by the civil servants. This report actually was not agreed to unanimously by the people who were on the subcommittee. The report said that before any ice recuperation fees were implemented, they should look completely at the whole issue of the Coast Guard. That meant a comprehensive look at the direct cost first, before putting anything on paper, but that's not what happened. The fees were put on first, with the intent of then doing a study. So actually the whole process was a big mess.

Mr. Wayne Easter: Anybody else?

Mr. David Church: The one point I would like to make is that when the initial discussions about developing aids-to-navigation and icebreaking fees were held about three years ago, our understanding of the process was that we would be involved with the Coast Guard in developing fees for both aids to navigation and for icebreaking. What we discovered was that as you get farther along in the process, when you get to the details of cost reduction in terms of Coast Guard services, what our industry and other industries that are here say they need, that's when the process bogs down. You get to a situation that pits what our industry's and other industries' shippers say they need versus what the Coast Guard says they think we need. That's where you have the difficulty.

At some point down the road, my understanding is that the Coast Guard then says this consultation process isn't necessarily meant to reach an agreement, it's meant to consult, but they're going to have the final say. That's the dilemma we're faced with. We work with the Coast Guard for two to three years on these issues, but the Coast Guard ultimately decides to impose a fee.

The Chairman: Mr. Leduc, would you like to comment in terms of...?

Mr. Richard Leduc: I thought I was the only guy out of the loop, but I guess I'm not. I won't belabour the point. I'll leave you all the time to ask more questions.

Yes, we were consulted, but nobody listened. Nobody implemented anything on it, so what's the use of consulting? All the committees and all the task forces that started with all the good intentions in the world are now no longer operative because nobody is listening.

From our region, we had a representative on the national icebreaking task force. He came back one day, threw his arms up, and said that was it, he wasn't going any more. He said he'd be damned if he was going to sit there for four hours listening to the Coast Guard tell him what they were going to do. He didn't want to waste his time.

The Chairman: I think your time is up.

Mr. Wayne Easter: Can I get something quickly, Mr. Chair?

The Chairman: No, I'm afraid—

Mr. Wayne Easter: On a point of information or a point of order on time, Mr. Chairman, I know there's a vote. I also know we have to take a motion off the table here, and that's what I want to deal with.

The Chairman: I won't take that as a point of order. We can come back after the vote.

I'll go back to the Reform Party. The Reform Party has five minutes, followed by the Liberals again, and then we'll go back to Mr. Stoffer from the NDP, unless the Liberals will give up their time.

One thing I haven't heard about this morning is dredging. I assume the groups are satisfied, but we went through this with dredging. They said there would be no more dredging, and everyone has been satisfied with that aspect of it. I wonder what the response would be if they said there'd be no more icebreaking.

Anyway, I will go now to the Reform Party and Mr. Cummins.

Mr. John Cummins (Delta—South Richmond, Ref.): I'll go very quickly, Mr. Chairman, and then I'm going to pass to the Bloc.

Captain Cansell, from the Northern Transportation Company, is on the air there. I just wonder if he has a comment on what's been going on so far. It almost seems like we've forgotten about him.

The Chairman: I think you're probably right.

Captain, do you have any points on consultations?

• 1035

Captain Terry Cansell: I certainly do. I would like to agree with my predecessor on consultation. I think the consultation process should actually be a part of this. I feel that what we've gone through is very similar to what they've gone through. The consultation process takes place and then the cuts or whatever go ahead. So I would really stress that it's very important.

There is a vehicle for the consultation process in the Arctic as well, the Arctic Marine Advisory Board, and I certainly think this vehicle should be used to the absolute extent in order to ensure that all northerners' interests are taken into consideration when these cuts are brought forward.

Thank you.

The Chairman: John, do you have any further questions?

Mr. John Cummins: No.

The Chairman: We'll go to Mr. Stoffer next.

Mr. Peter Stoffer: Thank you very much. The dilemma continues.

First of all, thank you all very much for coming today.

My one concern is, obviously in the industries, especially Abitibi and Bowater, you represent a lot of labour, and yet, as I had mentioned at the last committee, there are no labour representatives here. I think it would go a long way, especially in my particular concern, if you had labour here, speaking out of the same voice. I heard there was solidarity among the owners, the shippers, and labour, yet I haven't heard from labour at all, except one letter I received before.

Secondly, you mention the three big newsprint industries that are here representing the majority of Canadian newsprint industries, yet I haven't heard a single thing out of the Irvings as to whether they agree. In terms of, as you saw, the letter I got from the Port of Halifax, which contradicts what you're saying, I haven't heard anything from the Port of Saint John as to what their views are, or from the Irving corporation themselves. I'm not a fan of the Irvings, of course, but the fact is, I would really like to hear their views as well, as to what they propose on this.

My concern, sir, is that you mentioned, if these fees are implemented, the possibility of mill closures—and obviously, town closures after that, because a lot of the small towns are one-mill towns—and eventually you could look at other markets or other avenues. These people would lose their jobs, and thus the trickle-down effect would be that small business would lose their jobs. The towns would suffer greatly.

What guarantees can you offer this committee that even if there were no icebreaking fees, with realignment, readjustments, and mergers that are all happening, these communities won't close up anyway?

Abitibi just went through a protracted strike with its labour force and the feelings weren't very good, and now they've come up with some sort of compromise and solution. I was speaking with the union representatives up there as well, and their fear in the future is that a lot of these mills are going to close down anyway, no matter what happens, that the long-term goal of the companies is to consolidate, to merge, and eventually shut down the mills anyway, that regardless of icebreaking fees or whatever you're imposed with, the long-term goal is to get out of it eventually.

I need some assurance from you that that is not the long-term goal, that if these fees are reduced 50% or the moratorium is in place, it will go a long way in maintaining the stability in these small communities up and down the Great Lakes and the coast and in Newfoundland.

Captain David Brown: Obviously, that is a tremendous concern.

Again, as David mentioned, we are not price setters. We can't go in and say, okay, we have a very inefficient mill. It has a 70-year-old paper machine. It costs $700 a tonne to make the paper and $200 a tonne to take it to market. We want a 30% profit margin. Give us $1,100 a tonne.

We don't do that. We have to take the price that's set in the market, and we have to become efficient to work within the price that is available to us.

Nobody can give you a guarantee that inefficient machines will not be closed, but I think if the companies overall are made uncompetitive, nobody will survive, or it would be very difficult.

As Brian pointed out, it's a stagnant market in North America. The future is to ship to offshore markets. To add on an extra levy or tax or fee to make everybody that much more uncompetitive...nobody can give you an assurance that inefficient machines will not be closed, but if companies can remain competitive enough, the investment will go back into those mills. I think recently Abitibi invested in Jonquière; they put in a new machine. That is what our company wants. We want to be efficient and competitive.

• 1040

Ms. Joanne Lapointe: If I may add to this, most of the cargo we're talking about is very volatile. Newsprint could be shipped from anywhere. The danger we're looking at is not that Matane will close down. The danger we're facing is that Matane keeps operating but ships through the United States. This is very dangerous. Granite could be shipped from Maine. It's already being pooled with granite from Vermont to be shipped out of the St. Lawrence. If prices are out of range, they'll just go out through the United States.

We're already at a clear disadvantage with eastern U.S. ports, so de-icing just adds on to whatever else we've had to face in the past three years. This is what is dangerous. Lumber could be shipped from anywhere. Lumber could be purchased from anywhere. A client in the Far East doesn't have to purchase the lumber in eastern Canada if the price doesn't fit. There are many other sources where they can get their lumber, or newsprint or whatever.

Mr. David Church: I think it's a question of future investment as well. As we pointed out, the cargo will shift. It is either going to go from the Canadian mills in Newfoundland or the north shore of the St. Lawrence, or perhaps because of the acquisitions that tonnage is going to move out of the southern United States or some other mills. The question then of what happens in terms of the future of that mill is related to the investment the company is willing to make into it. If it looks at the cost structure at Baie Comeau, or one of those mills, and determines that in order to increase the efficiency and the productivity of the mill, we're going to have to invest x millions of dollars here or we can do the same thing somewhere else... They have to look at all the factors, including transportation, including many other issues, as to where that investment dollar is going to go.

I'm sure none of the companies have a goal that says, we're going to close this mill. That's not the objective. The objective is whether there's going to be future investment in the mill to make it more productive, where those investment dollars are going to go.

The Chairman: Again, I have to go back now. On the Liberal side, are there any questions?

Mr. Wayne Easter: I have one more question, Mr. Chairman. I know Treasury Board is doing an analysis of the impact studies, and that's going to take three years, which is a little after the fact.

Do any of you, relative to your industries, or ports or both, have any economic impact analysis studies in terms of how these fees, in combination with the other fees, affect your industry? Do you have anything fairly specific?

Mr. Pierre Caron: Being involved in three ports through the port divestiture program...the business plans are not complete yet, because there are so many things, as I think Joanne mentioned earlier, like municipal taxation in Quebec, that have a direct effect on the port's balance sheet. In some cases it's horrible to see the amount of money the municipal taxation will bear on the ports. I can say that for the Port of Baie Comeau itself it's going to be $1,000,100 a year just in municipal tax.

We have not had the chance to pursue the studies further, but we know there's going to be some impact if other costs are applied to the ports. There will be some diversion of traffic, of that we are sure. We will have to evaluate that, but we're in the process right now of starting to put some figures together.

Mr. David Church: The other difficulty we have with this is that there are many other issues related to marine transportation out there, and it's been pointed out: you have icebreaking, you have aids to navigation, you have dredging, you have transfer of ports to the local communities or the establishment of Canadian port authorities, you have the change in the harbourmaster and who's going to be providing that service, whether it will be Transport... One of the difficulties is that nobody knows what the total cost is going to be. As I understand it, this issue of Coast Guard cost recovery was a Transport Canada initiative initially before it was transferred to Fisheries and Oceans.

• 1045

One of the things we said when the government proposed its Canada marine transportation policy was to make sure both groups knew what the other was doing. In other words, if they were going to go toward port divestiture, Transport Canada people were in contact with what now has to be Fisheries and Oceans to make sure people understood the total impact these would have on industry. The government understands the total impact of these proposals, and some of them have already been implemented

To my knowledge, there was never any joint committee established—and I understood there was going to be one—from both Fisheries and Oceans and Transport Canada to ensure that both departments understood the impact the first was having on the second. To my knowledge, that hasn't been done, and that's the difficulty we have in terms of that.

The Chairman: Regardless of what happens, we only have about 10 minutes left this morning. If the committee is ready to entertain it, we do have a motion that was presented here on Tuesday.

Mr. John Cummins: On a point of order, Mr. Chairman, I wonder if I could make an amendment to that motion.

The Chairman: I think we'll have to first determine if we want to entertain it.

The motion from Mr. Lunn was that, on behalf of the committee, the chair write the Minister of Fisheries and Oceans recommending that the minister accept the proposal submitted to him by Guy Dufresne, chairman of the Great Lakes-St. Lawrence Maritime and Industrial Coalition. That was the motion as tabled here.

Mr. Gary Lunn: On a point of order, Mr. Chairman, I don't think there's any discretion on whether we entertain it. There was 48 hours' notice, and there was a motion passed that we hear the witnesses first, but I think we have to entertain that motion.

The Chairman: That is my point, Mr. Lunn, that we would entertain it with consent. In other words, we would stop debate and we would entertain it as of this minute.

Now, if you would like to object, I certainly—

Mr. Gary Lunn: I think you have a point of order for an amendment to that motion, which you must hear first.

The Chairman: We would entertain that after we decide if we're ready to place the motion before we adjourn this morning.

Are we ready to entertain the motion, or do we want to hear more from the witnesses?

Some hon. members: Yes, we're ready.

Mr. Wayne Easter: Well, I think... I don't know, do you have an amendment?

Mr. John Cummins: I'd like to make an amendment to the motion, Mr. Chairman. We agreed to delay the motion because we wanted to hear from further witnesses.

In light of that, I'd like to delete the words after “accept” in the motion, and replace it with these words:

put in place a moratorium on fees for 1998-99 season, unless agreement can be reached with the Great Lakes-St. Lawrence Maritime and Industrial Coalition.

The Chairman: You have heard the amendment. Are we clear on that now? We've not only had representation here on icebreaking fees, but our mission here was also to look at other fees. Certainly Mr. Leduc said there are great concerns with the marine service fees as well as with the icebreaking.

Would this include that, Mr. Cummins?

A voice: It's under the current proposal by the Coast Guard.

The Chairman: So it would include both icebreaking fees—-

An hon. member: Yes.

Mr. Gary Lunn: That one proposal put forward, which we're discussing, where they're trying to recover the $13 million.

I have no idea if you're talking about a separate agreement. Whatever is covered under that one specific agreement we've been talking about is in question. It's my understanding. I don't believe those other fees you're talking about are in this agreement.

Am I correct on that, Wayne?

Mr. Wayne Easter: You're correct.

A voice: Call the question on the amendment.

The Chairman: Would you go over the amendment again then, just so we're all clear on what we are—

Mr. John Cummins: Delete the words after “accept”.

The Chairman: The amendment says we've put in place a moratorium on fees. That's what the amendment says on fees. I asked you to clarify. Does it include both icebreaking and—-

Mr. John Cummins: No, it would be this icebreaking component we're talking about now.

The Chairman: On icebreaking fees.

Mr. John Cummins: Yes, you can add that word if you like.

The Chairman: We're all very careful now to see that the agreement only has to be reached with one group, the Great Lakes-St. Lawrence Maritime and Industrial Coalition group?

Mr. Gary Lunn: That's correct.

• 1050

The Chairman: You don't want anyone else to be consulted or...?

Are you ready for the motion then?

I think it places some difficulty in terms of trying to be so specific. We've had the people from Chaleur come here. They're going to be left out of our loop. But I think we have to understand that in terms of your amendment.

Is there any debate on the amendment then?

Mr. Gary Lunn: Call the question.

The Chairman: All those in favour of the amendment as presented by Mr. Cummins?

(Motion negatived)

The Chairman: In view of the fact that the amendment has changed the original motion, I would like to—

Mr. Gary Lunn: Has the motion has been defeated, Mr. Chairman?

The Chairman: It has been defeated, so we're back to the original motion.

An hon. member: Call the question on the motion.

The Chairman: Okay. I thought it sort of defeated the intent of the motion, but anyway...

So the original motion then would be that the chair be authorized to write the Minister of Fisheries and Oceans recommending that the minister accept the proposals submitted to him by Mr. Guy Dufresne, chairman of the Great Lakes-St. Lawrence Maritime and Industrial Coalition.

Mr. Gary Lunn: Can you complete that, please?

The Chairman: Mr. Lunn, you wrote it.

Mr. Gary Lunn: No, I didn't.

An hon. member: Oh, oh!

Mr. Gary Lunn: Well, could you just read it back one more time?

The Chairman: I guess the clerk forgot a word.

The motion is that the chair be authorized to write the Minister of Fisheries and Oceans immediately, recommending that the minister accept the proposals submitted to him by Guy Dufresne, chairman of the Great Lakes-St. Lawrence Maritime and Industrial Coalition.

Are we ready for that motion?

Mr. Provenzano.

Mr. Carmen Provenzano: I beg the indulgence of other members.

Mr. Lunn, would you consider just adding the words “as an interim measure” after “recommending” so that...?

Mr. Gary Lunn: Read from this proposal; this might satisfy your concerns. If I can just take one second...“towards that end, the Great Lakes-St. Lawrence Maritime and Industrial Coalition has developed an interim approach to ice breaking.” It's already there.

They're talking about this season, so I think that would satisfy. It's already in their proposal, so I don't see a need for that. It's already there, and it talks about it being for this season only as an interim basis.

Mr. Wayne Easter: Mr. Chair, as we've seen on the motion, as we've seen from these witnesses and witnesses the other day—and we heard the Coast Guard—substantial work needs to be done here.

I can accept this motion on an interim basis, but I do want to request that the steering committee of this committee meet on this issue. This would be to make a determination on how we further expand our investigation on this issue and maybe all fees. We need to look at this more in depth and make a concrete recommendation somewhere down the line.

The Chairman: Mr. Stoffer.

Mr. Peter Stoffer: Concerning information I have received in the last 24 hours, I ask one more time of the Reform Party to defer this motion until Tuesday.

The Chairman: You're asking Mr. Lunn to...?

Mr. Peter Stoffer: Or if we can have a vote on that to defer it until Tuesday.

The Chairman: Mr. Lunn, for your own reassurance, I met yesterday with the minister. On the basis of that motion, I indicated to him that there were great concerns here, and I did appeal for him to reconsider.

There is the possibility that more than half of the fees could be waived. As chairman, I'd like to caution you...in trying to say that we should look for $6 million or $7 million when there's a possibility it could be less.

Mr. Gary Lunn: We did have that amendment, Mr. Chairman, and it was defeated by honourable members, not by this side.

The Chairman: But then you want to pursue the $7 million...?

Mr. Gary Lunn: Well, Mr. Chairman, it's on the record that we had—

The Chairman: Yes. I'm just asking you, and I will now put your motion.

All those in favour of the—

Mr. Raymond Bonin: On a point of order, Mr. Chairman, you have a motion to defer.

The Chairman: He didn't make it. You suggested he make it—

Mr. Raymond Bonin: Yes, but then I heard him make it.

Mr. John Cummins: There's already a motion on the floor. You can't put another one there.

Mr. Gary Lunn: No, no, we have to deal with your motion first.

The Chairman: I think we have to deal with that. We deferred it once this morning—

• 1055

Mr. Raymond Bonin: You can defer; you can have a motion for deferral.

Mr. Lou Sekora: Just until Tuesday.

The Chairman: The point is I guess we're left with two choices. We can defeat this motion or we can reconsider another motion next week, but Mr. Lunn insists it not be tabled until Tuesday. He wants it placed.

Mr. Gary Lunn: Call the question, Mr. Chairman.

The Chairman: All those in favour of—

Mr. Ovid L. Jackson (Bruce—Grey, Lib.): I have a point of order, Mr. Chairman.

A motion to defer is to be accepted. It is in order. It should be accepted right away and voted on without debate. If it fails, then...

Mr. Gary Lunn: We had a motion before this committee to defer once already. We can't just keep deferring.

Mr. Ovid Jackson: It could be changed only as to time. We had one as to time, which was now. He's asking...

The Chairman: I'm consulting an expert here now.

Mr. Ovid Jackson: A motion to adjourn is always acceptable.

The Chairman: I'm not perfect at this, but I'm trying to be. Gary, I know you never think I am. But anyway, with unanimous consent, I would entertain your motion to defer until Tuesday.

It's not permitted.

So in terms of the motion, then, we'll now vote on it. The motion from Mr. Lunn is that we recommend to the minister an allocation of about $7 million in cost-recovery fees for icebreaking. That's the general intent.

Mr. Lunn.

Mr. Gary Lunn: Could we have a recorded vote, please?

The Chairman: Yes, we certainly can.

(Motion agreed to: yeas 13; nays 0)

The Chairman: I'd like to thank the witnesses for coming.

The meeting is adjourned.