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STANDING COMMITTEE ON TRANSPORT
LE COMITÉ PERMANENT DES TRANSPORTS
[Recorded by Electronic Apparatus]
Tuesday, April 11, 2000
The Chair (Mr. Stan Keyes (Hamilton West, Lib.)): Good morning, colleagues. Pursuant to Standing Order 108(2), this is an examination of the Canadian airport system.
Our witness this morning is here pursuant to a motion brought forward to this committee as a request that the Montreal Airport Authority come before us to provide us with a presentation and to then answer questions that will be put to them. Our first witness this morning is the chairman of the board and CEO of Montreal Airports, Nycol Pageau-Goyette.
Good morning. I wonder if you could introduce those you have brought with you this morning, and—
Ms. Nycol Pageau-Goyette (Chairman of the Board and Chief Executive Officer, Montreal Airports): Did you wish for me to do it in English?
The Chair: You can do it in English or French.
Ms. Nycol Pageau-Goyette: I'll make the presentation in French and answer any questions that you want in English, and I'll do my best.
I have with me three members of the board, Monsieur Raymond Deschamps, Monsieur Claude Lefebvre, who is a vice-chairman and also chairman of the SOPRAM, and Monsieur Normand Guérette. I also have two advisers, Daniel Picotte, from Fasken Martineau DuMoulin, and Jean-Marc Labelle, from ADM.
The Chair: Thank you very much for the introductions. If you could provide us with a presentation of fifteen minutes, we can then get into the round of questioning. Go ahead when you're comfortable, Ms. Pageau-Goyette. Thank you.
Ms. Nycol Pageau-Goyette: Since the proof of the pudding is in the eating, I thought I would start by talking to you about our 1999 performance.
Finalizing the development design for the Montreal-Dorval international airport was perhaps our most impressive achievement last year. What is also extremely fascinating is that we had an increase of approximately 5.25% in passenger traffic, the best performance among Canadian airports. Aircraft traffic also increased by 5%. A new carrier was added, Tarom Romanian. We also opened new routes: Dallas, Bucarest, Statu Mare and Cleveland, with three flights a week; Portland, with seven flights a week; London and Kingston, Ontario; two routes, Vienna and Madrid, were cancelled, although we hope to get them back this year. New flights were added: Brussels, two flights a week; San Francisco, an extremely important destination for us, five flights a week; Newark, Baie-Comeau, Bagotville and Sept-Îles. And you can read the list of new destinations.
From a financial standpoint, revenues increased by 6.1%, the surplus of revenues over expenditures rose 21% and the operating cash flow went up 14%. In 1999, we invested $60 million in capital projects, obtained ISO 9002 certification for our information systems, and, through one of our subsidiaries, inaugurated l'Europort-Vatry, with which we have special ties.
I have given you the highlights of our performance in 1999. Before returning to my seat, I would like to explain briefly the relationship between ADM and SOPRAM. Seven bodies appoint delegates to SOPRAM. These bodies are: the City of Laval; COPAM, which is an umbrella group of communities north of Montreal; the Greater Montreal Chamber of Commerce; the Montreal Board of Trade; the City of Montreal; the South Shore, including Longueuil; and the SMD. Each of these bodies appoints three people to SOPRAM: one elected person; one person who carries out administrative duties and is a permanent member of SOPRAM; and one finally a business person. The seven business people make up the board of directors of SOPRAM and are thereby members of ADM and its board of directors.
A clear understanding of the relationship between these two bodies shows that the appointing organizations are in the main body. ADM is responsible for operating the airports. It is managed by a board made up of seven business people. The two subsidiaries, ADM International and ADM Capital, were incorporated so that we could provide support, in our capacity as an airport operator, for local companies wishing to promote their products and services in other airports abroad.
ADM Capital is also the financial arm, responsible for managing ADM's investments. We used its services, for example, when we invested in the Budapest airport, of which we are now the operators. It was through ADM Capital that we made this very large investment that is yielding an excellent return.
Within this structure, we have an obligation to respect the accountability principles that are an integral part of our lease, of the contract that we have with Transport Canada. We are subject to the obligations of the Canada Business Corporations Act. We have, of course, a code of ethics that governs the application of article 22 of our general bylaws.
With respect to transparency, an issue that everyone is talking about these days, I can tell you that we hold an annual public meeting, that we make our quarterly results public, both the financial information and the increases in passenger traffic, and we report to SOPRAM at least three times a year. We provide that entity with our annual and five-year capital expenditure plans; reports concerning the budget, executive salaries and directors' honoraria, as well as any other report that needs to be provided or could be of interest. All this information is given in tabs 2, 3, 4, 5, 6 and 7 of the document you have been given. You will find a great deal of information there on this aspect.
Finally, I would like to mention other mechanisms that are contained in the lease with a view to ensuring that airport management conforms to the most highly recognized principles and practices of good management. We are required to have a performance evaluation report done every five years. This is the Coopers & Lybrand report, in our case, which was prepared after the fifth year. The author of the report is here, if you would like to ask him any questions. He is here with us.
This report, which you will find at tab 8, is very positive with respect to the Montreal airports. It recognizes the courage of the directors, who have made difficult decisions. It also recognizes that the facilities, the infrastructure has been modernized and renovated to a greater extent than anywhere else in the country. The Coopers & Lybrand report also underlines the difficulty of operating two international airports in one region, where the demographics—if I can put it that way—certainly do not support two international airports.
Transport Canada also has an obligation to have a performance evaluation carried out for each of the Canadian airports every five years, which was done in the form of 12 reports, called for by Transport Canada and dealing with all aspects of airport management. They all have been analyzed, and a summary of each of the 12 reports has been provided to you at tab 9 of the document. Each of the 12 reports is extremely favourable concerning ADM's management and the work that has been carried out at both airports.
As a board of directors, we launched an extensive continuous quality improvement program two years ago. Under this program, we have undertaken to have internal analyses done of each activity in our organization. The first activity to be examined was parking, since the risk analysis had shown that that was where there was the most money in circulation. The second activity was the FAA administration, which was a new project. We needed to ensure that the control mechanisms in place were adequate. The third activity consisted of the construction projects, since we had invested, over the past year, over $146 million and we needed to be sure that things were being done in accordance with good management practices. The first Samson Bélair report showed that there were weaknesses in some of the processes and made recommendations to correct them.
I will confirm to you what I have told many people: there has not been any fraud, misappropriation or misuse of funds. I acknowledge in that the good work of my predecessors. The report contains changes and corrective measures to be made to certain processes, including better project documentation, better analysis of projects before they are launched on the market, a review of the use of fast-track processes and construction methods, which often result in decisions being made before the documentation is complete.
The first Samson Bélair report was followed by a second report to implement all the suggested corrective measures. The changes are behind us and the corrective measures are now fully in place. Samson Bélair is still working with us. They are checking that the measures they propose are achieving the desired results.
At tab 11, I have provided you with the IATA report for last year, which shows where the Dorval airport stands when it comes to choices and preferences of carriers and passengers.
Dorval ranks very well among airports in its category around the world. It performs well in eight out of the ten areas covered. It ranks among the ten best airports in the world. I must tell you that, after one year of operating all flights at Dorval, we were very satisfied with these results.
I will close, Mr. Chairman, by mentioning the decision, which some people have called courageous, taken by the board of directors in 1996 in order to stop the erosion of air traffic in the Greater Montreal Region and recover some of the passengers that we were losing. That decision was the liberalization of regular flights. What we did was to allow carriers to set up at either airport, to decide which platform they wanted to use to operate their passenger services.
The result, obviously, is that almost all carriers chose Dorval for its ease of access and good connections. We see today the results of that decision, which I will show you. If I may, I will go up to the screen to show you the results. It will not take long.
You can see the increase in the number of destinations and the number of flights. Before 1997, there were 59 destinations; in 1998, there were 64 and in 1999, 68. You can also see, and this is in the document I gave you, all the new flights and destinations.
I wanted to show you this to indicate the importance of the difficult decision that was made in 1996 and the positive impact that resulted.
Here are the airlines that had left Mirabel before liberalization: Alitalia, TAP, Lufthansa and Canadian. Here are the new airlines since the change: Aeroflot, Alitalia, Continental Express, Lufthansa, which came back through Star Alliance, Régionair, Sabena and Tarom, which we mentioned earlier.
I also prepared a short document to show you how we were impacted by the merger of Air Canada and Canadian. Along with Toronto, we are probably one of the only airports right now to have benefited from this merger. You can see here the new destinations that are scheduled for this summer. This is extremely important for Montreal. As you can see, these are transborder flights. All these new flights are being added for the summer schedule, because the connections are there, because it is easier to operate at Laval and because the dominant carrier, as it must be regarded, is satisfied with this arrangement. So there are 138 extra flights a week and 35 flights a week to new destinations.
We also want to show you the effect of this decision on connecting passengers, since that is why we made the change. We went from 447,000 connecting passengers in 1996 to 1,327,500 in 1999. These numbers are documented and easily accessible.
What I am trying to show you is that the difficult decision taken in 1996 has yielded positive results.
I would like to conclude by showing you the Dorval airport expansion project. We can come back to this later. This plan was prepared a few weeks ago; so there have been a number of improvements.
To begin with, construction will take place to expand the airport by 40,000 metres. There will be an international wing and a transborder wing. At the request of the dominant carrier, we will also be speeding up the work to ensure better connections. So we will be closing the building and expanding it from inside, once again to improve connections between domestic, international and transborder flights. This is an extremely efficient plan, probably one of the best in the world. We will be able to provide you comparative data when we have finished all our comparative analyses.
In other phases, we will be increasing parking and transferring American immigration services, which will come here, with the train station that we will be building, I hope, around 2004. So this is expansion will enable us to operate until 2030, 2035 or 2040, until demand is high enough that we will once again need to expand this time in the area over here. This entire sector will be redeveloped around 2020. The aeroquai will disappear then, since there will be enough room at the Dorval airport.
In the future, we also plan to remove this row of hangers, which will be moved over to here when the work has finished so that the aircraft have more room to move around. I suppose that is of less interest to you. I will come back to it if there are any questions.
That is all I had to say, Mr. Chairman. There are no management problems at ADM. There have never been any, neither with my predecessors, nor with myself, and I am virtually certain that there will not be any. We have an organization that functions extremely well, an airport that is doing well, where things are improving daily and where customer service has become such an important concern that we are putting a lot of energy into it. We will also continue to develop airports to serve Montreal, Quebec and Canada.
Thank you, Mr. Chairman.
The Chair: Thank you very much for your presentation to the committee, Madam Chairman.
Colleagues, we have an extensive witness list, with some eight hours of hearings today, so you're going to have to give some latitude to the chair to keep us on time. If you think you have been cut off or if you think we should have an extension of any period of questioning of a particular witness, you're going to have to leave it to me to try to keep things on time.
Normally we would begin with ten-minute rounds, but because of the number of people who want to ask questions, we're going to go immediately to five-minute rounds. We'll do the traditional back-and-forth. We'll try to keep our questions—and that includes the answers, colleagues—within five minutes, so don't ring off six questions and hope that you're going to get answers to all six within five minutes, because I will just cut it off, to be fair to everyone.
We begin with Val Meredith.
Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Thank you, Mr. Chair.
Thank you for your presentation.
You mentioned, Madam Pageau, that Dorval was one of the few airports that really benefited from the merger between Air Canada and Canadian, that you have 130 more flights per week and 35 more destinations. We have had witnesses before this committee who've said—and I have heard this from other sources—that decisions are being made by the airport authority not to allow competitive airlines to land in Dorval, that they are sending them to Mirabel. Yet in your presentation you made it very clear that Dorval is the main airport; it is the one that has the connections.
Can you maybe explain to me why Canada 3000 and WestJet are not allowed to use Dorval's facilities? As a supplementary to that, are you really acting independently, or are you being used by Air Canada to get through the back door what they can't get through the front door?
Ms. Nycol Pageau-Goyette: First of all, the easy answer to your question would be to say that when we negotiated the lease with Transport Canada, we had the obligation to operate both airports. So when the decision was made in 1996, obviously we had to find a vocation for Mirabel and use the infrastructure, which is a beautiful infrastructure, as well as we could.
Because the clientele of the charter airlines and the clientele of the scheduled airlines are different, it was decided at the time that it would be best for the charter airlines to operate from Mirabel, and those with networks that provided feeders that provided them with passengers could operate from Dorval, to make it easier with the connections and everything.
Charter airlines are not part of a network. They have origins, destinations, and clientele, so they don't have any feeders. They don't have any network that provides passengers for them. So it seemed to us very convenient to allow them to stay in Mirabel. As such, I must say they're doing extremely well. The growth in 1999 was close to 12%, so they're doing very well in Mirabel, with the growth of passengers for the charter airlines.
The real question you're asking is perhaps not about Canada 3000, but about WestJet. WestJet could come to either Dorval or Mirabel, but again, WestJet does not have the same type of clientele. They operate under a low-cost structure, which is what we offer at Mirabel. They also don't serve the same types of passengers. They serve a clientele who go to see their moms or their sons, or who are studying elsewhere. They serve somebody who would ordinarily takes the car, bus or train. So it's not the same type of passenger. That's why they're going to Hamilton instead of Toronto, for example.
WestJet, to us, would be best in Mirabel, but if they want to operate from Dorval, they're immensely welcome. We will do anything to provide the right space for them. They would compete with the other charter low-cost carriers, but they probably wouldn't touch any of the Air Canada routes because that's not their main focus.
Ms. Val Meredith: I guess the concern I have is that the transportation minister has told Canadians that Canadian companies will become the competition to Air Canada. If Canadian companies are not being given the flexibility to compete, they will not be competitive and they will not be able to provide that competition.
Ms. Nycol Pageau-Goyette: I understand that fully.
Ms. Val Meredith: The concern I have is that if the airport authorities are going to determine to what degree these companies can compete with Air Canada, then Canadian companies will not be able to compete.
Although I favour foreign competition anyway, the foreign ownership component has been put in abeyance for a period of time to allow Air Canada to restructure. But if the airport authorities are going to take it upon themselves to prevent Canadian airlines from openly competing with Air Canada, I suggest to you we will be forcing the issue much quicker than giving Air Canada a chance to restructure.
Ms. Nycol Pageau-Goyette: Your question poses the problem that we have the obligation of operating both airports. We have the capacity in Dorval to bring all the airlines to Dorval. We could do that. But then again, our obligation is to operate both international airports. So until we are released from that obligation, we will have to find some ways to offer some competition to Air Canada, obviously, but also to maintain some activity in Mirabel.
Ms. Val Meredith: But is Dorval not the main headquarters for Air Canada? Do you not see how it can be looked upon that Air Canada, which is headquartered out of Dorval Airport, is preventing that competition? I would suggest to you that you may want to carefully look at the image that is being portrayed here, how Air Canada is actually calling the shots, not the airport authority.
Ms. Nycol Pageau-Goyette: I can assure you it hasn't happened yet, but if it does, it's going to be very prudent.
The Chair: Claude Drouin, please.
Mr. Claude Drouin (Beauce, Lib.): Ms. Pageau-Goyette, I am pleased to see you here with us this morning. In contrast to what we have been reading and hearing in the media for the last few months or weeks, it is good to hear you say this morning that many things are going well at ADM. However, there is room for improvement in some areas. I would like to discuss that with you. I would like to come back to the Transport Canada reports, the 12 reports on safety, the environment, etc. They are mainly positive, but are there things in there that need to be improved?
Ms. Nycol Pageau-Goyette: Very little. In the environment report, the consultant was very obstinate. I say that because we wrote to him and proved to him and demonstrated over and over that what he was saying was not true, but he preferred to stick to his opinion. He said, for example, that there was a pipeline leaking, which was totally wrong. It was not the case when Transport Canada was there and it is even less the case now. We showed that with our observation wells and everything. So we will have to take out the pipeline, which we are in the process of doing in the development project. That should solve the problem.
I am trying to remember what there was in the other documents. The 12 documents were quite thick. Basically, they say that the airport privatization policy has been very, very successful. It has been successful around the world as well. The approach adopted by Canada is extremely difficult to manage from a public policy standpoint, as I have realized over the last few weeks, but this approach is working well because it means adapting private sector discipline to infrastructure which is a public service and also, even primarily, a commercial service.
To come back to your question, the 12th report would seem to apply to all airports. I cannot put it in any other way. The report said, throughout its approximately 150 pages, that it was marvellous, that everything was fine, that it was an excellent airport, but that something might happen in the future. This was the report on governance. According to the report, the accountability principles should be tightened still further and made even more strict than they are at present.
I believe that that is what the Minister is looking at right now with his officials. He told us that in the fall or in the late summer he would get back to us with his thoughts on this 12th report.
Mr. Claude Drouin: You say that you have no management problems and that there have not been any. Going by what we have seen and heard in the media, it seems that you do not have very strict rules for the granting of contracts, in contrast to the other airports which, for any amount over $75,000, put out a call for tenders. There are apparently 12 or 13 contracts with cost overruns of between 172% and over 500%. When I hear that the passenger fee might be increased from $10 to $30 and costs are going over budget in this way, I find it hard to understand. Is that good management, Madam?
Ms. Nycol Pageau-Goyette: I can tell you that the report you are referring to is a memo produced by an ADM employee. There is no sender or recipient indicated on the memo. No one knows where it came from. It has never been documented. It has never been checked. The files you are referring to have all been examined and the expenditure, on average, range from 3% below budget to 4% over. In some cases, the expenditures are 10% below projected costs. Out of a total of $346 million spent over the last few years for all projects, cost overruns were below 10%, with overruns of 9% on construction and around 11% for engineering and professional services. So things are being extremely well managed. The report was given to a journalist by an employee who, obviously, had some problems. I had never seen this memo, which never circulated in the organization and was not an official memo; we do not really know what it refers to and we turned over all those files. We are checking everything from A to Z—and some of these files go back to 1992—to be absolutely sure that what is contained in the memo is completely false. Up to now, we have probably looked at more than half of the 800 contracts that have been awarded, and I can tell you that I have not yet found anything scandalous.
Mr. Claude Drouin: Thank you. Are you still comfortable being both chairman of the board and CEO? Should these responsibilities not be in the hands of two different people?
Ms. Nycol Pageau-Goyette: The board's decision to combine the two positions came gradually. When Jacques Auger, the chairman—I was going to say the founding chairman, since we are all founders—decided to return to the private sector, the board decided it was time to think about accountability. Accountability is something that must be understood. It is not the board of directors that is accountable. Each of us, personally, is accountable to our appointing bodies and to the public. I have to say that when you are at a cocktail party or a reception, doing errands or attending family get-togethers, you always get questioned. You always hear comments and opinions from your brother-in-law and everyone else, and these people are not necessarily well informed. It is because of that personal accountability that the board of directors decided to take a look at how things were being done.
We began to work more closely with the administrative side. We wanted to know about all the organization's activities, and the board of directors began by giving me additional duties. In July 1997, they added to my duties by saying that they wanted a stronger relationship with governments, more government relations, as we call it, and better communication with the public. So they gave me those responsibilities, in addition to being the chair of the board.
Mr. Claude Drouin: Are you going to continue to hold these two positions?
Ms. Nycol Pageau-Goyette: I am getting to that. We have taken that approach and there were philosophical differences with the chairman who followed. When he left, the board decided to temporarily combine the two positions and to work even harder, since this meant that the committees had to be even more productive. So people had to work even harder to make sure that the board of directors and the executives saw eye-to-eye.
This is a temporary situation. It will last until the board of directors decides that the time has come to once again separate the two positions, which I hope will happen soon, since it is very difficult to do both jobs. It will be done when the time is right for the organization.
The Chair: Thank you, Claude.
Mr. Michel Guimond (Beauport—Montmorency—Côte-de- Beaupré—Île-d'Orléans, BQ): Thank you, Mr. Chairman. By way of introduction, I would like to welcome the three Liberal members from the West Island and the member for Laval West and thank them for one of their rare visits to this committee.
The Chair: Michel...
Mr. Michel Guimond: Ms. Pageau-Goyette, I would like to tell you at the outset that neither I nor my party have anything against you personally or against ADM. The reason that I tabled, on behalf of my party, a motion that was unanimously adopted by the members of all parties represented on the Transport Committee was simply to follow up on an answer given by Mr. Collenette to a question he was asked in the House, where he said that there was some troubling information with respect to ADM's management.
Ms. Nycol Pageau-Goyette: No, it was in the papers. I am sorry, but I have the exact wording of the statement. In the newspapers...
Mr. Michel Guimond: Yes, but he answered...
The Chair: Order, please.
Mr. Michel Guimond: He answered...
The Chair: Order.
Mr. Michel Guimond: Do not contradict me, please.
The Chair: We'll let the question be asked first and then we'll have a response.
Mr. Michel Guimond: Please do not contradict me. He answered the question in the House. He was asked the question in the House. You may have read it in the newspapers, but the question was asked in the House.
Ms. Nycol Pageau-Goyette: I am talking about what was said.
Mr. Michel Guimond: So do you listen to Question Period every day? We are getting off on the wrong foot here.
I just want to tell you one thing, Ms. Pageau-Goyette. The Coopers & Lybrand audit report I have here is full of praise when it deals with generalities. There is a proverb—I do not know if it an English proverb translated into French—that says that he who pays the piper calls the tunes.
On page 11 of the report, the auditors point out that air traffic at Montreal increased by only 6.5% between 1992 and 1996. In the same period, Toronto increased by 18.8% and Vancouver by 37.6%. In Winnipeg, air traffic increased by 13.9%.
One of the reasons given for Montreal's low rate of increase is the slow population growth. One wonders whether Winnipeg's population increased much faster than Montreal's. I do not have these statistics, but one of the reasons that you always give and that the auditors mention is that Montreal has two airports. You use that as a wonderful excuse.
Now that international flights are concentrated at Dorval—and you are starting to have statistics on that—there still does not seem to be a substantial increase in air traffic. Could you give us your thoughts on that and also tell us how the other cities compare in terms of increases? You will certainly come up with a bit of an increase to justify your decision.
Ms. Nycol Pageau-Goyette: Much of what you say is quite correct. First, there has been little demographic growth in the Montreal region, as we all know, and that is clearly a factor that strongly influences growth in airport use.
Second, I may attach less importance than some other people to the fact that there are two airports. I believe that the important thing is to offer carriers the service they need, when they need it and how they want it. We felt that they could have moved to Mirabel, but they never did. Mirabel was there for them, but they did not go there. So we thought—and the 1996 decision was based on that—that by offering carriers what they wanted, we would increase our chances of success. What we did, Mr. Guimond, and this is very important, is stop the exodus. We stopped the decline.
Mr. Michel Guimond: Can you answer my question on the percentage?
Ms. Nycol Pageau-Goyette: Yes.
Mr. Michel Guimond: I only have five minutes, and you are digressing. I would like you to get back to my question.
Ms. Nycol Pageau-Goyette: Growth this year is 5.25%. It is the highest of all airports in Canada.
Mr. Michel Guimond: Perfect. Will you be able to give us some statistics?
Ms. Nycol Pageau-Goyette: Yes.
Mr. Michel Guimond: Transport Canada probably has them.
Ms. Nycol Pageau-Goyette: That is correct.
Mr. Michel Guimond: My second question...
Ms. Nycol Pageau-Goyette: The information is available at Transport Canada and it is in your package.
Mr. Michel Guimond: When we talk about management—and that is the main reason why we invited you to appear here—one of the main responsibilities revolves around billing. The last two paragraphs on page 31 of the document read as follows:
All suppliers have complained about the significant delays in the
paying of bills.
Ms. Nycol Pageau-Goyette: Absolutely.
Mr. Michel Guimond:
The billing process is particularly cumbersome [...]. Incidentally,
documents are continually misplaced and multiple copies must be
sent to ADM.
That almost reminds me of Ms. Stewart's department, Human Resources Development Canada, but the report was prepared in January 1999.
What specific steps have you taken, either you or ADM, to put some order in that situation?
Ms. Nycol Pageau-Goyette: I would like to point out that that was also part of the report given to Samson Bélair. It was also part of the corrective measures suggested by Samson Bélair, and the issue of unpaid suppliers was raised by members...
Mr. Michel Guimond: I cannot hear your answer. We will wait for Ms. Jennings.
Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): I simply said to be careful...
Mr. Michel Guimond: Could you repeat your answer, please?
Ms. Nycol Pageau-Goyette: Yes. The payment of suppliers has always been important, and all members of the board have been made aware of it by suppliers. So we questioned the senior managers of the day. We asked them to make some changes. We asked Samson Bélair to see if the methods used were the right ones, and I can assure you that bills are paid much more quickly today than at the time, which is not to say that the situation is perfect and up to my expectations. So there is still some work to do in that area.
Mr. Michel Guimond: I have one last quick question for this round. It will surely be easy to answer.
In the last point on page 38, the auditors say: “We are not in a position to comment on the Chairman of the Board's salary.”
Can you shed some light on that? Why were they not in a position to comment? How much are you paid? Can you tell us how much you earn? What other benefits come with your position? I am asking these questions in the spirit of transparency.
Ms. Nycol Pageau-Goyette: My salary, with the two positions I hold, is $185,000 per year. I have no other benefits apart from the 22, 23 or 25% that all other employees have. What I do receive is a bonus based on performance and the expectations I have met over the course of the year. Thirteen thousand five hundred dollars is also invested in my RRSP account; that's the maximum. So that is what I earn.
When I was chairman of the board, I was paid $72,000, and sometime later, when my responsibilities were increased, my salary went up to $125,000 per year, without any other compensation. So contrary to what journalists like to say, I do not have a director's fee nor do I receive other benefits. That is what my salary includes.
The Chair: No, Michel. Thank you.
Raymonde Folco, please.
Ms. Raymonde Folco (Laval West, Lib.): Welcome, Ms. Pageau- Goyette. I am happy to see you again, with you in your new position and myself in mine. ADM does of course manage two international airports. That is a heavy responsibility and it is the only Canadian airport authority that manages two airports. I would like to go directly to what I would call the heart of the matter: management transparency at ADM.
As you and everyone around this table knows, ADM has been in the headlines for some time now in all Montreal newspapers as well as in the national newspapers. ADM is being criticized for not being transparent enough. In particular, its relationship with SOPRAM is being criticized. I have two questions for you in addition to some sub-questions, but they are really two questions, Mr. Chairman.
To ensure there is enough transparency to satisfy everyone, what mechanism could be put in place, or do you feel that there are already enough mechanisms to ensure transparency at ADM? That is my first question. So, what is happening at present? If the situation is not entirely satisfactory, what mechanism could be used to improve it? If possible, I would like you to give us some concrete ideas.
My second question deals specifically with your relationship with SOPRAM. SOPRAM, if I have understood correctly, is ADM's advisory body. With an advisory body, the following relationship could exist: the advisory body provides some broad ideas and then ADM turns them into reality. Is that the type of relationship that exists between ADM and SOPRAM? If not, how do you work with SOPRAM? What type of relationship do you have with them? Those are my questions.
Ms. Nycol Pageau-Goyette: In response to your first question, the board of directors considers management and management practices at ADM highly transparent. Earlier on, I listed everything that is done to guarantee this transparency.
Now, it is clear that the Minister would like us to submit to the new accountability principle whereby there would be representatives from the federal government and the provincial government on the board of directors, and the board has already agreed to that. We plan to satisfy the Minister's wish as quickly as possible, as soon as he accepts to review the documents that bind us to him, as everything is contained in the contractual documents.
That is about the only principle that we do not submit to, the second being perhaps the issue raised by Mr. Drouin regarding tender calls for contracts worth $75,000. Of course there again, if required to do so, we will move in that direction. I want to point out right away that the requirement is to use tender calls for contracts worth $75,000, but also to disclose each occasion when this policy was not followed in the annual report. So in the annual report for the Toronto airport you will find 3, 4 or 5 pages of cases where they have departed from this principle.
Your second question dealt with our relationship with SOPRAM. SOPRAM is also unique in Canada. It is not an advisory body, but a group of organizations. As you know, squabbling in Montreal over Mirabel and Dorval went on for 12 years. The question was whether one airport or the other should be closed. For 12 years, the region tore itself apart. At the time, Jean Doré decided to bring all of the stakeholders to the table and create what became SOPRAM.
Since 1996, we have obviously had a very difficult relationship with SOPRAM because we do not see eye-to-eye with them. Moreover, this relationship is becoming more and more difficult. As we re-engineer these principles of accountability, we will no doubt have to look at how we can make better use of all SOPRAM. Once again, I would like to state that such an organization does not exist in the other provinces, nor is it part of the principles of accountability. This is surprising because, personally, I think that SOPRAM is the best guarantee of transparency. It is perhaps because of that that we are in hot water today, whereas the others don't have this type of mechanism and relationship. Although it is at times difficult to deal with SOPRAM, I remain personally convinced that, for the Greater Montreal Region, it is an extremely valid instrument.
The Chair: Thank you.
I'm sorry, Raymond. Your time is up.
Ms. Bev Desjarlais (Churchill, NDP): In the area of tendering contracts, and I apologize for missing the first part of the presentation, in the section of service contracts to engineers and architects, you go to public tendering at $500,000. In the section of service contracts for miscellaneous and other consulting services, you go to public tenders at $200,000. Why would there be a differentiation when you go to the public tendering?
Ms. Nycol Pageau-Goyette: Do you mind if I ask Jean-Marc to help with the question? He's responsible for that part.
Mr. Jean-Marc Labelle (President, IACM Services Canada Inc.): For the architects and the engineers, for the main consultants, ADM decided to adopt a policy, which is unique again, to try to call tenders every three or four years in order to accredit engineering firms and architectural firms and so on. Therefore the process is followed. Once these people are on board, if there's a mandate that goes beyond $500,000, then it's a public tender call over and beyond that.
Ms. Bev Desjarlais: My question, though, was why you would have a differentiation between the two areas if the intent is to public tender at a certain rate.
Mr. Jean-Marc Labelle: The policy was adopted in either 1992 or 1993, and we looked at the volume of possible contracts that could be awarded. The requirements were not there for bigger contracts than half a million dollars for engineers and architects, while for the other service contracts we had numerous contracts over $200,000. The board decided to adopt these numbers as policy.
Ms. Bev Desjarlais: So it wasn't based on the dollar figure; it was based on who might apply.
Mr. Jean-Marc Labelle: Not at all. It was based on requirements more than anything else.
Ms. Bev Desjarlais: Is that the normal practice? When you would be tendering, is that how you would base your decision on whether or not you're going to public tender? It would be based on the volume of tenders that you might get rather than the amount that you're dealing with.
Mr. Jean-Marc Labelle: No, but the formulation of the policy could be based on future requirements in the years to come.
Ms. Bev Desjarlais: Okay. That's fine.
The Chair: Thank you, Bev.
Nick Discepola, please.
Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.): Ms. Pageau- Goyette, I would like to go back to the question of transparency. When we look at your organization, we sometimes get the impression that it is hiding behind this transparency. I wonder where the accountability truly resides. I feel that you are managing the taxpayers property and that, accordingly, you are accountable to the general population. When I see that there is no representation from the public sector, either at the provincial or federal level, I really wonder where the accountability is. According to the newspaper reports, it appears that the transparency is sadly lacking.
I will give you an example of a lack of transparency which, in my mind, is blatant. Why have certain internal reports not been made public? Should we demand more frequent audits when the lease is negotiated? You told us yourself that the last report was commissioned at your request, but only after four or five years had elapsed. In order to guarantee greater transparency, should we amend the terms of the lease in order to require more frequent auditing and more frequent reporting to the public? We often forget that the government of Canada is the owner. Today your organization is being examined under the microscope. As a member of Parliament, transparency is a question of great concern to me.
I was not satisfied with the answer you gave to Ms. Folco. You said that the mechanisms were already in place. I would like to know which mechanisms you intend to establish in order to guarantee, to the Canadian public, that there will be better transparency.
Ms. Nycol Pageau-Goyette: I will explain the mechanisms that are already established. Every year we hold a public meeting where we report on our finances and our activities. Consequently, we do report to the public. Sixty days in advance, we publish an announcement in the newspapers in order to invite the population to attend the meeting. I should tell you that, generally speaking, many people do attend the meeting, but ask very few questions; there were, however, many questions the year that the transfer took place.
Every quarter, for the past year and a half now, we publish the results of our activities and report on growth and other factors of this type.
We report to SOPRAM three or four times per year and we try to remain in contact with this organization as much as possible. We also meet with the nomination organizations at least once a year, and often twice a year. Every year, we commission external audits that we forward to the Department of Transport. We also forward, to the department, the list of all the contracts that may involve people who are sitting on the ADM board or who work there. We communicate with the departmental officials as often as requested or when we feel the need to do so. And, of course, we are always surrounded by journalists.
I am trying to determine, with you, which mechanism we could add to those already listed in the principles of accountability. We report to SOPRAM, and that is perhaps where the problem lies. Perhaps we should be reporting more to the population on a direct basis. SOPRAM is informed about our annual and 5-year capital plans, but the population is not necessarily informed.
However, according to the accountability rules that the Minister wants us to abide by, this direct relationship with the population does exist. These things should be forwarded to the population directly rather than via SOPRAM.
Ms. Folco asked me what we were going to do. We will make these plans more available to the public directly during our annual public meetings. If you can think of any other mechanisms, please tell me because I don't see what more we could do.
You talked about internal reports. We are a private company that competes with other airports and other modes of transportation. We would feel a bit uncomfortable about disclosing our strategies publicly. An internal management report is just that: an internal management report. I am not going to stop auditing the company's activities because journalists may have access to these reports or because a disgruntled employee may leak them. We must be stringent and we must have healthy management practices. I intend to continue along this path.
Mr. Nick Discepola: Thank you, Mr. Chairman.
The Chair: Roy Bailey, please.
Mr. Roy Bailey (Souris—Moose Mountain, Canadian Alliance): Thank you, Mr. Chairman.
Let me first assume that you are the only airport authority that actually controls or administers to two airports. Is there any other airport in Canada like this?
Ms. Nycol Pageau-Goyette: Yes, in Moncton where the city airport...for a while there was...and they solved that problem with almost as much trouble as we have had.
Mr. Roy Bailey: All right. My question then is...I want a clearer picture. I'm not too familiar with that particular area, but the choice airport is Dorval, right?
Ms. Nycol Pageau-Goyette: Yes.
Mr. Roy Bailey: That's the choice of the flying public. So what is the difference in landing fees between Dorval and Mirabel? What is the difference in attempting to get slots at Mirabel on a regular basis? And there's the cost of moving the passenger from Mirabel to the city itself. These are all factors you have to deal with daily, I'm sure.
But I want to go back to a statement you made earlier in regard to the type of passenger WestJet was carrying. May I suggest to you that this clientele is changing, and changing very rapidly. Even in business, they want a cheaper fare with fewer connections. And WestJet, as you know, has recently got its hands on about 50 new aircraft. This is what we want in Canada—increased competition. You, and other airports, are in a position to say, yes, let's go for more competition. It's good for Air Canada; it's for Canada.
So I want to know what the difficulty is in the competition, like WestJet, getting a landing slot, and what the difference in landing rates is, and so on.
Ms. Nycol Pageau-Goyette: There is no problem for WestJet to be in Dorval. As I said, they can choose either airport. But at Mirabel, we put in some incentives, because we are under the obligation of maintaining activity in both airports. We have a contractual obligation to maintain the two airports in activity. If we want to accomplish our obligation, we have to have a strategy to help Mirabel survive, and so we have incentives and promotions. We try to lower the parking rates at times. We give them grants for publicity. We do all sorts of things to help Mirabel survive. Were we not to have this obligation of maintaining the two airports, then we would probably do something else.
But there is no problem of capacity in Dorval, and we could accept the WestJets of this world. We would gladly accept the WestJets of this world. It is not the same situation. We do have the obligation of maintaining those two airports, and to maintain Mirabel, we thought it would be proper to offer some incentives.
So for a company like WestJet that has a low-cost structure, it could be more interesting to go to Mirabel than to have to pay the full price in Dorval. One of the principles in airports is to have equity between the carriers, so they would have to pay the same price as Air Canada would pay, or Canadian or Air France—any of the carriers. So again, it is that contractual obligation that we have to maintain Mirabel that gives us this focus on providing some incentive to the carriers to prefer Mirabel if such is the case in their own development strategy.
Mr. Roy Bailey: What is the cost of moving passengers once they land in Mirabel? Is there a charge for bringing them from Mirabel to downtown Montreal?
Ms. Nycol Pageau-Goyette: Well, by taxi and bus obviously. It's more expensive because it's remote.
Mr. Roy Bailey: What's the timeframe you're looking at here?
Ms. Nycol Pageau-Goyette: It's about 50 minutes, I would say, maybe an hour when it's congested.
Mr. Roy Bailey: Thank you.
The Chair: Thank you, Roy.
We've gone through a round, colleagues. I just want to ask one question on the heels of Mr. Bailey, if I might.
Madame Pageau you said you have contractual obligations to serve both airports, and you also mentioned providing the passengers the services they need in the way they need them. Which is the greater priority for you?
Ms. Nycol Pageau-Goyette: Obviously, one point is that I can't do anything about this contractual obligation that we have to answer to. The other one is that obviously all our focus is to develop the airports and make Montreal one—
The Chair: Yes, but all I'm asking is, which is your greater priority? Your contractual obligations to serve both airports—
Ms. Nycol Pageau-Goyette: It's difficult to answer. The contractual obligation is there, so do we have one passenger and that's the obligation, or do we focus on developing Dorval, which is what we're doing?
The Chair: Well, that's what I'm asking you. Which is the greater priority for you and your board? Is it to service the contractual obligations of two airports that are under your control or to serve the client?
Ms. Nycol Pageau-Goyette: Serving the client.
The Chair: If that is the case, then, if WestJet came to you tomorrow and said that despite the incentives you will offer them for Mirabel they still want a slot at Dorval and they want it in a fair and equitable manner—not to provide disincentives for WestJet to fly into Dorval—would they be able to fly in tomorrow?
Ms. Nycol Pageau-Goyette: We'd be delighted.
The Chair: Thank you.
Ms. Nycol Pageau-Goyette: Absolutely delighted.
The Chair: Clifford Lincoln, please.
Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.): Ms. Pageau-Goyette, I will be asking three brief questions. The first question deals with the federal presence on the board of directors. You said that your board of directors came out in favour of that. I would like to know if this decision pertaining to government presence is really a decision made by the ADM board of directors and if this is a quid pro quo as regards renegotiation of the lease. I had understood that you had told the press that you would agree to that if you could appoint the members. Would you agree to the federal government appointing members to the board of directors without any quid pro quo regarding the lease?
Ms. Nycol Pageau-Goyette: It is true that I said this at one point. Over the past few years, we have wanted to use this federal government's desire to appoint its representatives as a bargaining chip for reviewing certain terms of the lease that were preventing us from performing as well as we would have liked. Now that it's all out in the open, this can no longer be used as a bargaining chip with the Department of Transport. This is all behind us and there is no quid pro quo as far as that is concerned.
Perhaps I did not explain myself properly as regards the appointment of members by the Department of Transport. We would like to borrow from the process used at the airports of Vancouver, Edmonton and Calgary which, if I understood correctly, received from the Minister a list of individuals from such and such a chamber of commerce or from some other organization which the Minister felt would make good candidates. I don't know how the process works exactly. Perhaps I have it backwards. Maybe it's the board of directors that prepares a short list that is submitted to the Minister, who in turn chooses the directors who, in his opinion have the best profile as an administrator. Regardless of which approach we adopt, it doesn't really make any difference. What really counts, in our minds, is that we be able to choose an individual whose expertise would be of benefit to us and who will bring added value to the board of directors. This is really what we are looking for. As for how the Minister decides to appoint these people...
Mr. Clifford Lincoln: I will ask two rather brief questions. According to the Coopers & Lybrand report, the eight members of the board of directors work very hard. It was, however, noted that five of these eight members have been sitting since 1989, for a period of 11 years, and that a maximum term has never been set. The report stated that no new blood was coming in. I would like to hear your comments on the matter. Would you agree to the establishment of a maximum term for the members of the board of directors?
For my last question, I would like to know what you can tell us about PBCs at Dorval? What is ADM doing to get rid of them? What is your responsibility pertaining to PBCs? Does the matter come under the jurisdiction of ADM or Transport Canada? Many people are worried.
Ms. Nycol Pageau-Goyette: To answer your question about the maximum length of terms, I would say that according to the accountability principles we intend to follow, terms will last no more than four years, with an option of reappointment for a second term, for a term totalling eight years. Naturally, in ratifying the other principles, we will also be ratifying that particular one as well, which is only proper since we have to allow for some continuity. I do not believe that the board will try to block this notion, quite the contrary.
As for the agreement we entered into with Transport Canada with respect to the PBCs and the so-called pollution created by our activities, I must say that Transport Canada belongs to Transport Canada. Daniel Picotte can correct me if I am wrong, but it is up to Transport Canada to deal with this pollution, something that it is doing very well. Although it took a little bit of time to get going, the work is progressing. We assume our responsibilities for the pollution that we create and we take prompt action. ADM has an extremely complicated, serious and rigorous environmental protection program. We invest a great deal of energy and resources into this program. We abide by the ISO standards and I believe that we have shown that we conduct ourselves in exemplary fashion.
Mr. Clifford Lincoln: Have Transport Canada and ADM set a deadline for resolving these problems?
Ms. Nycol Pageau-Goyette: No, there is no deadline, but Transport Canada provided us with a work plan last year. The work is progressing according to schedule. We have an excellent relationship with Transport Canada in this regard, as well as in other areas as well, and I have high hopes that... at any rate, there have not been any problems.
The Chair: Thank you, Clifford.
Mr. Asselin, please.
Mr. Gérard Asselin (Charlevoix, BQ): Ms. Pageau-Goyette, at the outset, this morning, you said that you didn't have any administrative or management problems. I do feel, however, that you have a human relations problem.
Page 34 of the report states that relations between ADM and its employees appear to be particularly tense, both between the board and its managers and between the managers and the employees. Could you clarify the relations between management and the employees? Why would the work atmosphere at ADM have deteriorated to this level over the past few weeks? You made certain comments on CKAC radio, during a morning program hosted by Paul Arcand last March 31. What do you mean exactly by confidential information about ADM in your March 28 memo to all ADM employees?
Ms. Nycol Pageau-Goyette: I acknowledge that there were some significant human relations problems after the takeover. I say that they are significant given that we all want the relations to be perfect at all times, which was not the case.
We arrived in a very highly structured organisation that had always been managed properly. This was an organization of Transport Canada, with a mentality and a culture characteristic of government. Rightly or wrongly, management at that time imposed a new type of management on the people, one found in the world of business. You know how things go: everything that had been done by Transport Canada was bad and everything that came from the private sector was good.
Rather than striving for harmony within the organization and profiting from the vast experience that had been acquired, things that we didn't want to happen unfortunately did, and that's the way it goes. Naturally, these problems spilled over to affect the relationship between the board of directors and management for more or less the same reasons. We could really feel this dichotomy between the base and this management that had been put into place. We could really feel the friction and the animosity. This is why we have embarked upon this process, including the dual positions, because the board really wants all of the problems to stop and to have a very well-run organization.
You referred to my memorandum, which was also leaked or was recovered by someone who went into our computer system. The purpose of the memo was to calm employees. All the employees knew that one of them had taken an internal document to a journalist and that at first glance, this document could be quite harmful to the company. All our professionals felt extremely angry, because they also knew that there were many incorrect statements in the information, particularly in the note about cost overruns. So you can imagine the kind of upheaval this caused in the company. Everyone was trying to determine who was the mole, who were the bad guys who went and told the journalists all sorts of stories. This created a terrible work environment. Some journalists are still in touch with certain employees, and I imagine that will continue to be the case.
What I tried to say in my memo was that we had carried out an investigation. We found the people responsible for this disgraceful leak that was designed to harm the company. We dealt with them in accordance with their code of conduct. Some of them were professionals, so we reminded them of their professional obligations. And I intend, sir, to insure that this company complies with an extremely serious code of conduct. Some things are done and others are simply not done.
Mr. Gérard Asselin: Mr. Chairman, what concrete steps will be taken in the weeks ahead, in addition to the code of conduct, of course, to restore employees' confidence and harmony between employees and the employer?
Ms. Nycol Pageau-Goyette: For several months now we have had what we call partnering activities. I don't know how to say that in French. These are two-day meetings during which employees from all sectors who worked together talk to each other about their concerns and their respective irritants. It is a very difficult process to go through, but the results are frankly very good. These activities will continue for a while, but I think things are improving a great deal.
We have also established some multi-sector teams. When the guy in finance has a better understanding of the concerns of the guy in construction, because they work closely together, their relationship is better. Employees have a better understanding of each other's needs and obligations.
The guy in construction doesn't like it when the person in internal control comes and imposes certain requirements on him and asks him to document his files. However, when he understands the reason for it, the relationship between the two is better.
So we have established some multi-disciplinary teams made up of the employees in supplies, internal control, auditing, construction and the legal sector. All those individuals are now on work teams.
Nothing will happen magically overnight, but progress will be made. I am very hopeful. There is a great deal of good will, and particularly exceptional enthusiasm on the part of these employees. People who work in airports like airplanes. They like airports and they are passionate about the work they do. I am banking on that.
The Chair: Ms. Jennings, please.
Ms. Marlene Jennings: Thank you, Mr. Chairman, and thank you, Ms. Pageau-Goyette.
You will understand that I am particularly interested in ethical issues, since I was formerly the assistant commissioner for police ethics in the province of Quebec.
I have reviewed quite quickly but quite thoroughly the rules of conduct and the ethical guidelines for both directors and employees. I was struck by one fact: article 5.2 of the rules of conduct for employees refers to interest in external businesses. That appears on page 3.
Ms. Nycol Pageau-Goyette: That is in the other report.
Ms. Marlene Jennings: It is on page 3 of the English version.
Ms. Nycol Pageau-Goyette: Article 5.2.
Ms. Marlene Jennings: Yes. It reads as follows:
No employee or related person shall hold, directly or indirectly,
an interest in the business of any of ADM's competitors, nor in the
business of a supplier, contractor, customer or partner of a
business offering, rendering or providing a major financial
participation in such a business.
This is very clear. However, the same requirement does not appear in the guidelines for directors, and I am wondering why.
Ms. Nycol Pageau-Goyette: Directors declare these interests annually, whatever they may be, and any interests affecting their immediate family. These interests are disclosed once a year to the vice-president of legal affairs, who forwards the list to the individuals concerned, to all those that might be awarding contracts or hiring professionals, so as to not involve a director with the awarding of the contract if there is a conflict.
Ms. Marlene Jennings: I find your explanation confusing, because the code of conduct for employees also requires them to make a statement to the corporate secretary within 30 days of being hired or appointed. Each year thereafter, the concerned employee shall submit a statement within 60 days of the end of every fiscal year and without delay whenever there is a change in the information contained in the most recent statement.
In other words, employees have the same obligation as directors to declare any interests that could cause conflict of interest or the appearance thereof. However, the guidelines for employees are much clearer in that they exclude... I'm wondering why ADM, the board of directors and the ethics committee that suggested and recommended these guidelines to the board did not deem it advisable to include the same type of clause in the code of conduct for directors.
Ms. Nycol Pageau-Goyette: The reason is that directors are no way involved in the awarding of contracts. They are in no way involved.
Second, if you want competent business people on the board of directors, requiring them to have no ties of any sort with any corporations whatsoever, it would make it very difficult to find people with network connections. We would not have such high quality, highly competent individuals.
I should also mention that employees have full-time jobs. So we are right to be more demanding for employees than for directors, who come to meetings, 12, 14 or 16 times a year. Their commitment is not the same at all. I think we are being very strict in requiring an annual disclosure and in ensuring that there is no connection between the awarding of contracts and directors. In any case, that is much more than is required by most private corporations. Much more.
Ms. Marlene Jennings: What about other airport management corporations?
Ms. Nycol Pageau-Goyette: The same applies to them, because we all follow the same code of ethics.
Ms. Marlene Jennings: The code is exactly the same.
Ms. Nycol Pageau-Goyette: It is more or less the same. Daniel...
Mr. Daniel Picotte (Legal Counsel, Fasken Martineau DuMoulin): To my knowledge, the code is the same.
Ms. Nycol Pageau-Goyette: To our knowledge it is the same, because we all have section 22 of the regulations, I imagine.
Ms. Marlene Jennings: Thank you.
The Chair: Bev Desjarlais, please.
Ms. Bev Desjarlais: I must admit, I was a bit surprised that when my colleague, Mr. Bailey—I believe it was him—mentioned to you that the clientele of, let's say, WestJet was changing as a result of what's taken place within the airline industry, your comment was “Is that right?” I was surprised, because anyone who had listened to our numerous hours of consultations through the airline discussions would have become quite aware that it was expected that some of these other airlines would be there as the competition for Air Canada.
So I must say, when you said “Is that right?”, I had to wonder how involved you were in the airline industry, because it was kind of hard to miss that.
Ms. Nycol Pageau-Goyette: May I comment on that?
Ms. Bev Desjarlais: Certainly.
Ms. Nycol Pageau-Goyette: I'm not too sure about the change of clientele for WestJet. I don't think it's happening. I think their basic focus is what we've said, and until I'm proven wrong on that particular point.... I think this is the way WestJet is conducting its business.
As well, we do want competition for Air Canada. Everybody wants competition for Air Canada. But we have suffered a number of experiences that brought bankruptcy to those airlines who tried to compete when they didn't have the proper structure, the proper cost structure, or the proper fares. We've been through it, so we know what we're talking about, I can tell you. We have gone through Québecair and all these—
Ms. Bev Desjarlais: So is it your concern that you don't want to give the same opportunity to WestJet because you have a guarantee with Air Canada but you're concerned that WestJet may not survive?
Ms. Nycol Pageau-Goyette: Absolutely not. Again, if WestJet wants to be in Dorval, we will offer the best conditions we can. We do want our clients. What we've been offering WestJet is a structure that considers their own clientele and their own will in what they want to do. We've offered both airports with the incentive in Mirabel.
Ms. Bev Desjarlais: Okay. The incentive in Mirabel is there for all airports that are involved, and it's the same with Dorval.
Ms. Nycol Pageau-Goyette: Yes, again because of the equity issue.
Ms. Bev Desjarlais: I have just one more quick question. Would you prefer not to have Mirabel as part of the deal? As someone who hasn't been totally involved in what would happen between the two, I definitely have the impression this morning that you're not exactly thrilled to have Mirabel.
Ms. Nycol Pageau-Goyette: Montreal, as you know, has a population that is not growing as much as in other places around the country. Having two airports is a difficult situation. Making them both viable and profitable is not an easy task. If you asked me, I would do anything—and I am doing everything I can—to maintain both airports. The board is committed to Mirabel and to Dorval, but we are mostly committed to making sure that the population and the carriers have the service they want. We will provide whatever we have to provide to them.
The Chair: Thank you, Bev.
Joe Fontana, please.
Mr. Joe Fontana (London North Centre, Lib.): Thank you, Mr. Chairman.
First of all, it's an interesting little precedent here of listening to one particular airport, because I can tell you that there are 26 national airports in this country.
The Chair: Joe—
Mr. Joe Fontana: This is just a comment, and I'm just saying—
The Chair: But your comment is incorrect in that the order of the day is to examine the Canadian airport system. It's only part of a greater number of airports.
Mr. Joe Fontana: Okay, and that's why I say that there are 26 airports across this country, including my own in London, Ontario. I can hardly wait to get representatives of Pearson airport before this committee, because I'm fed up with their service or lack of service. So we'll be busy for the greater part of a year or a year and a half, I'm sure, as we look at every airport in this country.
This is not unusual, because, Mr. Chairman, as you know, we've heard from many airports already and some of the similar concerns from municipalities and the stakeholder groups with regard to accountability, transparency, the board, and so on. To us this is not new information.
Obviously, what we did as a government in 1994 and 1995 to transfer more and more airports to the local communities and local airport authorities was for the purpose of engaging the local community and making sure that local airports with a national mandate had the opportunity to promote themselves, expand services, and so on.
I look forward to talking about the improvements we can make in a number of areas. But there are some common themes.
I also want to congratulate Montreal Airports for doing a number of very good things, including their role internationally. When other countries of the world start to look at our expertise, be it in Vancouver, Montreal, or for that matter Toronto, that means we must be doing certain things very well. Sure, there are improvements, and that's to be understood. So I want to applaud so far the men and women who work at the airports of Montreal to improve the infrastructure as we move into the future.
I want to talk a little bit about the future, because I'm a little concerned. I can hardly wait for Mr. Milton from Air Canada to get back here. We in this country are going through a massive restructuring that affects not only airports but also communities and the travelling public. Val Meredith, Roy Bailey, Bev, and others have asked a little bit about the future and how we're going to deal with the public.
I think it's important that every airport in this country do everything possible to ensure that competition will prevail in this country. Any company that has 80% of the domestic market and 70% of the international market, like it or not, has an awful lot of clout at airports. They can demand a number of things. Therefore, I want to ask the airports of Montreal, as I intend to ask airports across this country, if they will do everything possible to ensure that the WestJets, the Transats, or the Canada 3000s of this world, whose mandate is now changing.... They are forced to change from charters perhaps to scheduled aircraft, and therefore they're going to need the support and the slots at airports where the people want to gather and where the connections are. I think airports, including yourself, will have to get around this new mindset that we want competition and we're going to get this competition no matter where.
So can we have a commitment from the airports of Montreal that you will do everything possible to make sure that you will make slots available, everything available, so that we can create competition in this country? That's a far greater issue to me than anything else.
Ms. Nycol Pageau-Goyette: You have that commitment, sir.
Mr. Joe Fontana: But what do you intend to do about that? I hear complaints. You say that Air Transat should stay at Mirabel.
Let me tell you something. Every major city in this world, every international city in this world, has two airports. And to tell you the truth, I've been at both Mirabel and Dorval. You have two wonderful jewels, and if you can exploit both to their maximum potential, I think you have the best of all worlds. To have both those airports is creating infrastructure to serve the travelling public. But obviously if Air Transat, and the Canada 3000s, and the WestJets, and everybody else who we want to form a new company, want access to where the people are and where the infrastructure is and the connections.... What do you intend to do to make sure they get the slots, the capacity, and the services at Dorval and/or Mirabel.
Ms. Nycol Pageau-Goyette: I'll answer in French, if that's all right with you—
Mr. Joe Fontana: Yes.
Ms. Nycol Pageau-Goyette: —because I'm not sure I know the word for banalisation—
The Chair: Yes, that's fine. We'll have interpretation.
A voice: Common use.
Ms. Nycol Pageau-Goyette: Okay, common use. The answer to that is obviously to buy the gates and own as much as we can of the counters that Air Canada or the others would.... And this is the difficult part because we have to negotiate with Air Canada—
Mr. Joe Fontana: Aha.
Ms. Nycol Pageau-Goyette: —especially when we have an extension program that decides. Thank God for that law where we have to reserve some slots for other users, which is great for us because we can buy back those slots and keep them for ourselves and then decide who we're going to give them to.
We are also trying to make sure the services that are rendered by Air Canada are, as much as possible, rendered by other people, so they don't discriminate against other carriers that would do baggage handling, for example. Air Canada is responsible for most of the baggage handling, but if somebody else, either ADM or an outside company, does the work, then there's no discrimination between carriers.
So we're trying with all those little strategies to make sure Air Canada will never be the one to say, jump, and this is how high I want you to jump. It makes our negotiations with Air Canada very difficult.
Mr. Joe Fontana: That's my point, because part of the deal to allow Air Canada to merge with Canadian in our report as a committee—which was fine—was to ensure that Air Canada wouldn't give you undue pressure.
Mr. Milton will be here next week?
The Chair: May 4.
Mr. Joe Fontana: I want to ask you bluntly then... I think you've alluded to the fact that negotiations with Air Canada are very difficult.
Ms. Nycol Pageau-Goyette: Let's say they're not easy.
Mr. Joe Fontana: I'll be damned if Mr. Milton is going to dictate the public policy of this country. I want him to hear that specifically, that if he's being very difficult.... He's a monopoly, and a monopoly holds a heck of a lot of clout.
The Chair: Thank you, Joe.
Ms. Val Meredith: I'm following this and I have a number of questions.
The Chair: You have five minutes, so use the time judiciously.
Ms. Val Meredith: I'm going to touch upon a few points that Bev Desjarlais, whom I notice has left, and others brought up. She was talking to you about contracts and letting contracts go and dollar values and whatnot. Perhaps it was Marlene Jennings who brought up this business. Your response was that the directors do not take any part in awarding contracts. Therefore, the directors didn't have to have the same level of experience and didn't have to have the same degree of ethical conduct requirements. I have problems with that, because I interpreted from it that the directors of the Montreal Airport Authority are not making the decisions, but the employees are making the decisions.
Ms. Nycol Pageau-Goyette: To a point.
Ms. Val Meredith: Can you assure me that your board of directors is in fact running the show and making the directives and are therefore accountable for any decisions that are made regarding the airports of Dorval and Mirabel?
Ms. Nycol Pageau-Goyette: If you look into the binder, you will find the policy we're following and the délégation d'autorité. I'm not sure how you say that in English. You'll see that only the contracts that are above $2 million will come to the board. Or if it's under $2 million, if there's a derogation or a problem with awarding the contract to the lowest bidder, then it will come to the board with the reasons why.
Ms. Val Meredith: So you're telling me that only if there is a massive contract for over $2 million would the board make that decision?
Ms. Nycol Pageau-Goyette: Exactly.
Ms. Val Meredith: How do you hold your employees accountable?
Ms. Nycol Pageau-Goyette: They have to go to the lowest bidder. They form a committee of outside people and inside people and they look at the bids in the same way it's done all over the place. Individuals on that committee come to some sort of agreement, a consensus. They're fair to every company and so they usually go to the lowest bidder. If they don't, they have to come back to the board and say why they're not suggesting going to the lowest bidder, and give their reasons and explain themselves and carry on with their duties.
Ms. Val Meredith: But you're still saying that an employee or a group of employees can spend up to $2 million—
Ms. Nycol Pageau-Goyette: Up to $1 million.
Ms. Val Meredith: —up to $1 million without getting the okay from the board of directors that the project is acceptable, that the project is needed.
Ms. Nycol Pageau-Goyette: I don't know. Obviously not, because when they do the budgeting, all the projects they want to do during the year must come before the board. Each one of those projects is accepted, refused, tabled, delayed—whatever. They still have to come back a second time with each of the projects and say, we expect it to cost between this and this.
Ms. Val Meredith: So the decision really isn't made by the employees. The decision is made by the board of directors when they review the budgets—
Ms. Nycol Pageau-Goyette: Exactly.
Ms. Val Meredith: —and say, this project is on board; we're giving $2 million for it. So it's—
Ms. Nycol Pageau-Goyette: But they're not part of the committee that would award the contract. They would go to the lowest bidders.
Ms. Val Meredith: Okay. But it's the decision and the authority of the board of directors to okay a project.
Ms. Nycol Pageau-Goyette: Yes, absolutely.
Ms. Val Meredith: They're just delegating the responsibility of the administration of that project to somebody.
Ms. Nycol Pageau-Goyette: And it's so thorough that we have a computer system by which you can't even start a project if the board hasn't accepted it. You can't push the button without the acceptance of the board.
Ms. Val Meredith: So the board is in control. That's all I wanted to hear.
Ms. Nycol Pageau-Goyette: Yes, absolutely.
Ms. Val Meredith: You also mentioned in response to another conversation that you had to buy back the slots, that you had to buy back counters and whatnot—
Ms. Nycol Pageau-Goyette: Yes.
Ms. Val Meredith: —in order to give it to somebody else. Am I under the impression that you sell slots, meaning the time and the space for an aircraft to land? Or are you talking about the physical baggage-handling time and reservation counters?
Ms. Nycol Pageau-Goyette: All of the above.
Ms. Val Meredith: So you also fly—
Ms. Nycol Pageau-Goyette: When we took over, Air Canada already had some gates, they already had some slots, they already had some baggage-handling room—they already had a number of items and activities that were under their control. After we started in 1992 we started buying back some of the slots and some of the gates because we felt their common use was in our own interest, in our best interest. In the same way, this policy you're putting forward will allow us to buy back some of the Canadian gates they were using, which to us is a plus, and in the same way, we have forced our carriers to use common-use counters and computers.
Ms. Val Meredith: I want to distinguish between the physical counters and those sorts of things and space in an airport with slots, which is an abstract time and place of a plane landing. Are you selling slots?
Ms. Nycol Pageau-Goyette: No.
Ms. Val Meredith: Okay.
The Chair: Claude Drouin, please.
Mr. Claude Drouin: I would like to come back to some questions about Mirabel. My colleague, Joe Fontana, spoke about this as well. Have your initial forecast for cargo, for freight been met? Will the impact of Air France on cargo be major? First of all, why was this decision made?
Ms. Nycol Pageau-Goyette: We are reviewing the whole issue of cargo again. This is a competitive area throughout the world. Things are not unfolding exactly as we had anticipated. At this point, we really have to wonder whether we adopted the right strategy.
It was not really the departure of Air France that brought this about. Toward the end, Air France was practically doing touch- and-go's. The problem is rather the whole strategy of using Mirabel as a logistics centre, which is what we are trying to do. In that context, does the all-freight system as we knew it two, three or four years ago still exist in all parts of the world as we had expected?
This is an evolving market and one we must definitely review. That is what we are in the process of doing. We should have a master plan within a few months.
Mr. Claude Drouin: I would like to come back to the question of transparency. You have explained some very important things to us, but we have seen or heard other things in the media, in particular that SOPRAM shared the premises with your corporation. We know that some members of SOPRAM are not pleased about a decision that was made and that runs counter to their interests or their objectives.
On the other hand, if they are being loaned premises free of charge, I am not sure that that can guarantee transparent management. If you are housing them free of charge, are they as critical as they would be if they had no interests at stake? I don't know your position on this, or whether the facts as I have stated them are correct.
Ms. Nycol Pageau-Goyette: The facts not exactly correct. When we started in 1987, we had no money and no place to meet. All seven of us were volunteers. Since my job is to run not-for-profit associations, all 21 members accepted this offer to be housed on our premises.
When Mr. Earle needed a secretary, rather than having to pay the costs of hiring someone, we used our own system, which was easy to do. SOPRAM paid for this service and normal operating costs such as stamps, and so on.
This was known to the 21 members. It appeared in the annual report every year. It was discussed by the board members. We never tried to hide this fact or do it behind people's backs. People were always kept informed and they thanked me every year for offering them this service free of charge.
You have to be selective about what you believe today when some journalists are making a great deal of fuss and are trying to destroy me just for the fun of it. You should not believe everything you read.
Mr. Claude Drouin: I appreciate the fact that you helped out an organization whose objective is to improve Montreal and its airports and all related matters. However, would it not be a good idea to change this approach, because people are inclined to wonder about transparency?
Ms. Nycol Pageau-Goyette: First of all, SOPRAM has no head office, as you know. It has no fixed address. It is somewhat of a roving organization. Since 1996, since the decision regarding Dorval and Mirabel, I have no longer agreed to having people on my premises. So I no longer lend them the conference room. We are no longer providing secretarial services. The only things still being offered are a telephone number and postage stamps, when required. If I need to update that, I will do so, because that does not bother me at all. I did that to help them out, and I really don't find it amusing to be attacked in such a way at the moment.
Mr. Claude Drouin: Thank you.
Thank you, Mr. Chairman.
The Chair: Thank you, Claude.
Michel Guimond, please.
Mr. Michel Guimond: My question will once more be about ADM management transparency, Ms. Pageau-Goyette. You will see that I am logical. I would like very quick answers, because I also have some questions for Mr. Lefebvre.
I concluded by asking you about your salary. You said that it was $185,000 plus performance bonuses. Let's look at the presidents of the six big banks in Canada, whose salaries are a few hundred thousand dollars, but whose real income is several million dollars. My question will be direct, Ms. Pageau-Goyette, and it can be easily answered with a single number: in 1999, how much did you receive in bonuses?
Ms. Nycol Pageau-Goyette: I do not know yet, because I have not yet been given the figure. I feel that I have accomplished all of my objectives.
Mr. Michel Guimond: Will it be $10, $100, $10,000?
Ms. Nycol Pageau-Goyette: No, no, not at all.
Mr. Michel Guimond: How much?
Ms. Nycol Pageau-Goyette: I imagine my bonus will be 30% of my salary, which is standard practice these days.
Mr. Michel Guimond: So 30% of $185,000.
Ms. Nycol Pageau-Goyette: I did not quite earn $185,000 in 1999.
Mr. Michel Guimond: How much were your bonuses in 1998?
Ms. Nycol Pageau-Goyette: Twenty thousand dollars.
Mr. Michel Guimond: Twenty thousand dollars in bonuses. Okay.
Mr. Lefebvre, I'm going to ask you some short questions that you will be able to answer quite easily, almost with a simple yes or no. Do you still have shares in Surentec?
Mr. Claude Lefebvre (Vice-Chairman of the Board, Aéroports de Montréal): Yes.
Mr. Michel Guimond: You own 25% of the shares. Is that correct?
Mr. Claude Lefebvre: That is correct. It is public knowledge. It was published in the papers.
Mr. Michel Guimond: Yes, exactly. You are involved in contracts. This company, in which you are a shareholder, received contracts over a period of 18 months, during the last six months of 1997 and throughout 1998. There were seven contracts worth $1.3 million. That is accurate. Moreover, you did not deny it.
Mr. Claude Lefebvre: That is accurate, out of the $346 million of work carried out in Laval and Mirabel.
Mr. Michel Guimond: Okay. At any rate, in Laval... Mr. Lefebvre, you are familiar with ADM's letters patent that indicate, in chapter 10, that ADM carries out its activities without financial gain for board members. Do you see a problem with that?
Mr. Claude Lefebvre: “Without financial gain” means not receiving bonuses or dividends at the end of the year. Those are the gains being referred to, if I am not mistaken. Mr. Picotte, is that correct? We do not receive dividends. Because we have not invested in the company, we do not receive dividends. That is what that means.
Mr. Michel Guimond: Yes, but Surentec, the company in which you hold 25% of the shares, obtained contracts from ADM worth approximately $1.3 million. I hope that these contracts were profitable, unless you are a philanthropic or religious organization...
Mr. Claude Lefebvre: But I did not receive this remuneration as an ADM board member. It is from Surentec. Furthermore, at Surentec, I am neither a member of the board nor a manager; I am a shareholder. I have three meetings a year with Surentec: the annual general assembly, the Christmas party and a golf tournament. That is the only contact I have with the company.
Mr. Michel Guimond: But, Mr. Lefebvre, you consult your legal counsel and... A distinction must be made. Citizens, and the nasty journalists as Ms. Pageau-Goyette calls them, she who seems to be their victim... Perhaps journalists should be put in prison or muzzled like they are in some totalitarian regimes in Africa. Journalists do their job. They do their job.
Ms. Nycol Pageau-Goyette: Absolutely.
The Chair: Order, please.
Mr. Michel Guimond: Exactly. And these nasty journalists, Mr. Lefebvre, make a distinction between the legality and morality of action taken. Do you think it is morally acceptable for the company in which you hold 25% of the shares to be granted contracts worth $1.3 million?
Mr. Claude Lefebvre: I do not see a problem with that.
Mr. Michel Guimond: You do not see a problem with that. So that means it is not immoral.
Mr. Claude Lefebvre: I did not say the journalists were bad.
Mr. Michel Guimond: No, not you. I mentioned Ms. Pageau- Goyette.
Mr. Claude Lefebvre: I apologize, but...
Mr. Michel Guimond: All communication will have to be in writing, that is why I wanted to obtain journalists' questions in writing.
Ms. Nycol Pageau-Goyette: I did not call them “nasty journalists.”
Mr. Michel Guimond: At any rate, it is normal for you. You do not have a problem with that.
Mr. Claude Lefebvre: I do not see a problem with that. I followed the code of ethics. Wherever I have worked, I have declared my assets and my investments in all companies. If some day the board of directors has to make a decision on a contract, I simply withdraw from the meeting, as ministers do. Look, we live in a world where some people have investments and others do not.
Mr. Michel Guimond: Ms. Pageau-Goyette, since 1992, as regards reimbursements to your company, to go back to Mr. Drouin's line of thought...
In 1996, for example, the 1,737-dollar amount applied solely to coffee, secretarial fees, and so on. But ADM has been operational since 1992. I can understand that perhaps at some time... At any rate, I see that in 1989, your company, Nycol Pageau-Goyette and Associates... Do not correct me if I did not get the corporate name right. You're going to correct me. So Pageau- Goyette and Associates obtained, in 1989, contracts for $56,996. I imagine that was for more than coffee and stamps. In 1996, the 1,737-dollar amount was just for that.
Ms. Nycol Pageau-Goyette: We have always made a distinction between SOPRAM and ADM. They are organized completely differently, and we have always wanted to keep them separate. We do not want ADM to pay for SOPRAM, which, in our opinion, would eliminate their legitimate voice we referred to earlier. It goes without saying that if ADM were to pay all of SOPRAM's expenses, that would not necessarily enhance the right to speak and assertiveness. The 21 members have always made a conscious distinction between the two, in the awareness and acceptance of that. Is it now necessary to re-examine the relationship between ADM and SOPRAM? That might be necessary.
You mention contracts worth $8,000 and $7,000 over the last few years. These contracts covered the delivery of very limited services, such as the salary paid to Mr. Earle's secretary at one point. I did not benefit from these services.
Mr. Michel Guimond: That explains the $56,000 in 1989.
Ms. Nycol Pageau-Goyette: Yes, that's it.
Mr. Michel Guimond: Thank you.
The Chair: Thank you, Michel.
Clifford Lincoln, please.
Mr. Clifford Lincoln: Along the same lines, I think the problem we face is that the general public perceives this as a conflict of interest. Whether we like it or not, that is real. People are asking questions. For example, there was the question regarding the islands where la Ronde is located. I do not know to what extent the journalists had accurate information. When I read the articles, I'm under the impression that there is a possible conflict of interest. I do not know to what extent that goes, but at any rate, the public perceived these situations as a conflict of interest. Mr. Lefebvre talked about ministers who often face similar situations. That is precisely why ministers are required to place all of their assets in a blind trust, so that there is no public perception of a possible or real conflict of interest. I know that throughout the discussions that were held—I read this in the papers—ADM has said that it is a private organization. I agree; legally, you are a private organization, but in fact, you are a public trust. You are administering public money. You are a public non-profit corporation.
Don't you think that there should be much more process in the ADM's code of conduct? Should people not set out all potential conflicts of interest, should there not be a requirement to declare all such situations and place them in a blind trust if necessary, so that people have no doubts in any of this?
Ms. Nycol Pageau-Goyette: In the first month of each year, all directors have to complete a form on which they declare all their interests, all the positions they hold and all the positions held by the members of their family, and so on. I went so far as to include my children, my brother and my sisters. I declared everything; this information is known to everyone. I have trouble seeing how we could do better than that.
As you know, I hold two positions. Of course, as you say, I've put my company somewhat on the back burner, and others are looking after it. If I cannot remain chairman of the board and CEO of ADM, I will have to go back to earning my living at my other job. I cannot go to my cottage and simply stay there. The same goes for my colleagues. Raymond Deschamps has a construction company. Normand Guérette has other interests and Michel Langlois has a great deal of experience in marketing, and does wonderful work for us at ADM. Should all these people stop working? We meet at the ADM board of directors 12, 14 or 15 times a year. These people cannot stop working. What is the solution? We have to declare our interests and positions we hold, and we do that religiously every year. This information is known. With all due respect, Mr. Lincoln, I fail to see what more we could do. I am trying to see how we could improve things. If you have any suggestions, I would be pleased to accept them.
Mr. Clifford Lincoln: I am not raising this issue in any sort of personal way, Ms. Pageau-Goyette. I am speaking solely about the principle of the thing. For example, I was referring to what happens in government and Parliament, where ministers and members of Parliament are in a conflict of interest situation as soon as they're involved with a financial issue involving the government for which they could have information that others do not have. So people immediately try to avoid such potential or visible conflicts of interest. That is why ministers have to establish blind trusts.
Do you not think that if the private company of a director can respond to calls for tender, this puts the director in a potential conflict of interest situation? Should there not be some sort of mechanisms established for such cases, either to allow the activity or to disallow it, solely with respect to ADM activities, not other outside activities? I have no opposition to that, because obviously these directors have to earn their living.
Ms. Nycol Pageau-Goyette: In light of the many contracts awarded by ADM in a year, we would definitely be depriving ourselves of some competent directors. Moreover, this is the practice followed in all other airports. We all have the same code of conduct. I would issue this warning if the government thinks that we should not be operating in this way.
I remember sitting on a board of directors where we simply stopped paying the honorariums, the fees. I can tell you that the quality of the directors suffered as a result. This was not helpful to the organization; in fact, the opposite was true. We have to determine whether transparency in terms of declaration of conflict of interest is adequate or whether it is preferable to lose people with important skills for running a corporation of this type. That is the choice we have to make.
Mr. Clifford Lincoln: Thank you.
The Chair: Colleagues, our time has expired, and we're going to say thank you very much to the chairman, Nycol Pageau-Goyette, and her associates for appearing before our committee.
Ms. Nycol Pageau-Goyette: Thank you.
The Chair: If there are questions that follow our day's proceedings, I understand we can always give you a call and try to get some clarification to anything that might arise between now and 7 o'clock this evening.
Again, I thank you very much for your presentation.
Colleagues, we'd like to invite now the City of Blainville to the table, please.
We don't have a title for you, Mr. Mercier. What is it you do at the city?
Mr. François Mercier (General Manager, Conseil régional de développement des Laurentides, City of Blainville): I'm the general manager of the Conseil régional de développement des Laurentides.
The Chair: Thank you very much.
Gentlemen, welcome. We look forward to your presentation of not more than five minutes so that we can ask questions.
Colleagues, this witness is here until 11:30 a.m.
Gentlemen, when you're comfortable, please begin.
Mr. Pierre Gingras (Mayor of Blainville and Chairman, Corporation de promotion de l'aéroport de Mirabel): Thank you, Mr. Chairman. First, I would like to thank the Standing Committee on Transport for giving the Corporation de promotion de l'aéroport de Mirabel, COPAM, this opportunity to present its views on the management of the Aéroports de Montréal Corporation, the ADM.
As you mentioned, Mr. Chairman, I am the Mayor of Blainville, the Chairman of the Laurentides Regional Development Council and, it should be pointed out, a member of SOPRAM.
I will skip over the first part of the report, which deals with our participation in the management takeover of ADM's operations.
Specific facts concerning various aspects quickly undermine our confidence: access to information on strategic decisions, access to strategic management information, the quality of research in support of files and, of course, the quality of the decisions being made. We gradually moved from being an on-side partner to being a sceptical partner where the management of Montreal's airports was concerned.
We quickly realized that in SOPRAM,
we were there to do the rubber-stamping.
In view of the evasive answers or complete lack of answers we received every time we asked questions, we concluded that the management problems caused by laxness were primarily responsible for this. Although it was difficult to get information on project management and the airport developments studies, we heard rumours about unwarranted cost overruns and badly managed projects. However, as the Corporation de promotion de l'aéroport de Mirabel, we had little credibility in the eyes of some of those involved.
In 1998, as you know, an audit report prepared by Samson Bélair Deloitte & Touche confirmed our intuitions. The report points out significant shortcomings in project management, including cost increases, budget overruns approved without adequate justification and the lack of a project evaluation process.
Before the recent announcement that $1.3 billion would be invested to make Dorval airport fully functional, we would have agreed fully with some of the comments in the report by Coopers & Lybrand, which is now Price-Waterhouse-Coopers.
First of all, they point out in their report that ADM's management was “more bureaucratic and slower to react than Transport Canada”. The report also says that “ADM's expertise on the operational front is seen as weak and customer service is particularly inadequate”.
Recent events and information reenforced existing doubts and questions about ADM's management. The many questions raised after the reports were published came to the fore again in the last few weeks when major investments for the Dorval airport were announced.
One of the most troubling things from our point of view was the inability of ADM's management to answer questions about the studies that indicated that these investments were necessary.
With respect to the two internal audit reports prepared by Samson
Bélair Deloitte & Touche, they are part of a continuous improvement
process launched by ADM. These reports are internal and ADM does
not intend to make them public. I would remind you that the audits
found no misappropriation, no fraud, no misuse of funds, no
inappropriate expenditures. What is at issue is the processes and
As members of SOPRAM, we do not have access to those reports.
The total lack of consultation with SOPRAM members, contrary to article 2 of the memorandum of understanding signed on November 30, 1989, concerned us.
Ms. Pageau-Goyette talked earlier about the information she provided to SOPRAM members. Ms. Pageau-Goyette or the ADM members need to reread the memorandum of understanding, in which ADM agreed to consult SOPRAM regarding development plans or projects that could have an impact on the development of airport facilities. I hope that you will have a number of questions.
I will now move to the report's conclusion. Although ADM is responsible for managing airport operations, accountability lies with the Minister of Transport of the Government of Canada.
The principle according to which power can be delegated but accountability cannot be is generally recognized and accepted in our democratic society.
Because of the seriousness of the questions raised about ADM's management, COPAM respectfully proposes the following recommendations to you: given ADM's lack of transparency; given the legitimate doubts that have arisen regarding the independence of the directors in the context of the contractual relationships involving some of them; given the fact that ADM has not consulted the members of SOPRAM; given the so-called confidential nature of the studies indicating the need to invest $1.3 billion in Dorval, COPAM makes the following recommendations:
- That the Government of Canada appoint a commission of inquiry to look into ADM's management and the process that lead to flights being transferred from Mirabel to Dorval;
- That the Minister of Transport Canada impose a moratorium on any investment not related to public security at Dorval and Mirabel, including the plans to invest $1.3 billion.
Thank you for your attention. I would have liked to have much more time, but I will be pleased to answer your questions. Thank you for your attention. Thank you, Mr. Chairman.
The Chair: Yes, thank you very much, Your Worship.
We have a problem in that there are many witnesses before us today, and we're trying to get everyone in that we can. Thank you for your summation.
Val Meredith, please.
Ms. Val Meredith: Thank you, Mr. Chair, and thank you very much, Your Worship, for appearing before us.
I get the impression from what you have told us that you feel the municipalities around the airport, the people who sit on SOPRAM, are not really part of the decision-making process.
Mr. Pierre Gingras: Exactly.
Ms. Val Meredith: The comment from the other side of the table is that you're not supposed to be part of the decision-making process. So I guess the question I ask is, what is the purpose of that group, and why do you feel you're left out of a process that apparently you weren't supposed to be in?
Mr. Pierre Gingras: It should be pointed out that the government's intention at that time—it will be recalled that it was the Conservative government that began this move toward local control over airport management and operations—was to give the local community, and not this person, responsibility for managing and administering the airports. That is why this 21-person body was created. I have been a member of this body since early 1999 and I have not found any justification for being there.
We have no information and no one pays any attention to what we might say or ask. Although we ask for the documents, we do not receive them. So I agree with you when you ask what we are doing there.
Ms. Val Meredith: How do the members of the ADM get their authority? Who appoints them or who elects them? If they're a local airport authority, how do they get their positions? Is it through SOPRAM?
Mr. François Mercier: They are nominated through SOPRAM. They are the business members of SOPRAM. They are named for four years and their mandate cannot be extended.
Ms. Val Meredith: So the members come from your organization through a nomination process, but there isn't any reporting back or accountability to the group that appoints them. So in essence, when you make your appointments, you're giving them free reign, without any kind of input?
Mr. Pierre Gingras: Those people are supposed to represent the organization that appointed them, but I can tell you that there is a selection process in ADM that makes it so not just anyone can get in. The selection process is controlled by ADM's board of directors. So it is a fairly closed circle.
Ms. Val Meredith: Would you consider this independence...I gather you have a problem with the independence of this, that once you appoint the people, they become independent of the organization.
Mr. Pierre Gingras: That is not a major problem for us, as long as they manage the airports independently and they manage them not for the benefit of the aircraft, as was mentioned, but for the benefit of passengers.
Ms. Val Meredith: If the municipalities around the airport had a concern, would they go to the ADM or to SOPRAM?
Mr. Pierre Gingras: They go to ADM, and we have two major concerns. First of all, have the other directors or their companies obtained contracts with ADM or its subsidiaries? When you talk about independent decision-making, are they really independent when they make decisions? That is the first concern. The second involves the subsidiaries. What about these subsidiaries? What is their status? Do they operate on a not-for-profit basis or a for-profit basis and who gets the profits?
So we ask ADM members many questions. A mayor of a municipality or a member of a municipal council would never award contracts. Should the fact that you admit stealing something mean that you should immediately be found not guilty?
Ms. Val Meredith: Does that process of establishing a subsidiary business go through SOPRAM?
Mr. Pierre Gingras: I'm sorry. Can you repeat the question?
Ms. Val Meredith: Does the establishment of these subsidiary companies—that do the business you're concerned about—go through SOPRAM, or does the ADM establish them?
Mr. Pierre Gingras: The ADM.
The Chair: Thank you, Val.
Claude Drouin, please.
Mr. Claude Drouin: Mr. Gingras and Mr. Mercier, thank you for your presentation. You are asking the committee two very important things today: to create a commission of inquiry and to impose a moratorium on all investments.
In light of your presentation this morning, I would like to understand certain things. We were told about a 5.25% increase in passengers, which was the highest increase anywhere in the country. We were told that Dorval was highly ranked for 8 out of 10 aspects in its category of airports around the world, according to Global Airport Connectivity Monitor in 1999. We were told that the 12 Transport Canada reports were very positive.
We realize that things are not perfect, and we have seen that this morning. There have been questions and there is room for improvement in certain areas. However, there seems to have been substantial improvement and we are in a very good position.
I would like to know if you know of other facts that would make us want to go as far as you are asking this morning, given what we heard before your presentation, Mr. Gingras.
Mr. Pierre Gingras: What you heard before me, Mr. Drouin, were the allegations and opinions of ADM. I cannot confirm anything about SOPRAM, because we have not received the necessary documents. However, there have definitely been more significant increases in other airports in Canada, owing to economic growth.
I want to come back to the heart of the debate. People talked and I will talk about ADM's management. There has been talk since the beginning about manipulation, scheming, doctoring of documents, cover-ups, faulty assessments.
Mr. Claude Drouin: Do you have any examples?
Mr. Pierre Gingras: I gave you examples earlier. We never have access to the documents. Do we need a commission of inquiry or a transport committee to get the directors' salaries? That's what it took to get them.
What we are hearing in Quebec is that journalists are harassing people. Consultants who do not agree with ADM are obstinate. Employees who do not say the same thing as their bosses, like these seven people, are people with problems. Some people at SOPRAM who ask too many questions are difficult to manage and acting in bad faith.
Mr. Claude Drouin: That is what you say, Mr. Gingras. We did not hear that here this morning.
Mr. Pierre Gingras: Well, we heard it this morning from Ms. Pageau-Goyette, who said that journalists were harassing her. The consultants were obstinate: “I could not get them to change their report and the public do not understand the issues”. We heard that this morning. I would invite you to go over the transcript of what we heard this morning.
Mr. Drouin, what I am asking you today is if I still have the right, as a citizen of Quebec and of Canada, to ask questions about ADM's management. Everyone has questions. Over 80% of the Quebec public has doubts about how things are being managed.
Mr. Claude Drouin: We have had questions as well. And we asked questions this morning and got some answers.
In your opinion, has there been an improvement over the last three years? Have things remained static or even gotten worse?
Mr. Pierre Gingras: There has been no improvement and things have gotten worse. Perhaps Mr. Mercier could add something.
Mr. François Mercier: The problem for the members of SOPRAM and COPAM is that we just do not have access to the information. We could confirm whether things have gotten better if we could get the documents. I would remind you that there is an agreement between SOPRAM and ADM, a contractual agreement that ADM is not living up to.
Mr. Claude Drouin: Mr. Mercier, I find it a little hard to follow you. You do not have access to the information, but you are able to say that things have gotten worse. Mr. Gingras says that things are worse, but he has no access to the information.
Mr. Pierre Gingras: Yes.
Mr. François Mercier: We do not have access to ADM's information.
Mr. Claude Drouin: You have access to the information.
Mr. Pierre Gingras: No, not from ADM.
Mr. François Mercier: In the newspapers...
Mr. Claude Drouin: That is what I understand.
Mr. François Mercier: Probably the newspapers...
Mr. Claude Drouin: If the lease were reopened and the same requirement that exists at the other airports were put in place so that the government would have representatives on the board of directors and contracts of $75,000 or more would go out to tender, would that, in your opinion, be a positive step and make airport management more transparent?
Mr. Pierre Gingras: Absolutely. I would just point out that the Auditor General of Canada pointed out, as early as 1993, that changes should be made. ADM has always refused. I was there. They refused to allow the government of Canada to appoint board members. Why is she saying yes today? In the present situation, I think that there is no alternative. She will say yes, but you will recall that just a few months ago she wanted to choose the people like she currently chooses the members of the board.
Mr. Claude Drouin: The CEO explained that. In the negotiations...
The Chair: Mr. Asselin, five minutes.
Mr. Gérard Asselin: To begin with, Mr. Gingras, you are perfectly right. You listened well and when people listen, they hear everything. They do not hear just one version, but both.
Ms. Pageau-Goyette clearly admitted this morning that she had a problem, a problem of interpretation but also a publicity problem with journalists. She said that she was the victim of harassment and that there were people who had an interest, rightly or wrongly, in feeding these journalists.
Where there is smoke there is fire. There is a problem with the journalists. There is a problem among the directors. There is a problem of conflict of interest, a problem with transparency, a problem with consultants, a problem between senior management and the board of directors, a problem between senior management and the employees. That gets to be a lot of problems, and I think that you are quite right to ask questions and try to get to the bottom of this, as Mr. Lincoln, Mr. Drouin and Mr. Discepola said earlier.
We need to shed light on this situation. If they have nothing to hide, if things are straightforward, if they are transparent and are paid to do a job, it should be possible to make public the figures and the way in which things are done.
The question that I have, and I would like to hear what you have to say on this, relates to what seems to me to be a sort of closed circle. Not just anyone is allowed in. There is surely a problem with that. The fact that Jacques Auger stepped down as chairman of the board, and Ms. Chantal S. Laurin resigned as CEO of Dorval Airport, and Richard Cacchione left as Chairman and CEO indicates that there is a problem.
Did these people leave because their salary was such that they could take early retirement? That is no doubt what Ms. Pageau- Goyette will do as well once things get too hot for her. She will surely have enough in the way of bonuses and salary and will have invested enough in her RRSPs to be able to do that.
We are talking about public services. We are talking about public management. These people are managing on behalf of the government, since airports come under Transport Canada. They manage security and customer service. They manage an environment that needs to be adequate. Would you be in favour of having the members of the board of directors appointed by both the government of Canada and the government of Quebec and having people representing both levels of government through the departments of Transport and genuinely representing the public in this organization? Would you favour having the directors appointed by both levels of government?
Mr. Pierre Gingras: You are asking me whether I agree with a particular approach. I understand that we all have the same objective: to make these people accountable. At the moment, these seven individuals are accountable to God only. They may say “In God we trust”, but otherwise, they are accountable to no one.
Yes, there are various approaches, such as those you mentioned, which could make this airport management organization accountable. Yes, there is a lack of transparency and accountability, and maintaining the status quo will do nothing to make these people more accountable.
Mr. Gérard Asselin: I understood that SOPRAM had a role to play in the memorandum of understanding and that today, it is no longer able to play that role. Is that correct?
Mr. Pierre Gingras: That is correct.
Mr. Gérard Asselin: They completely deny your existence. Your demands are no longer considered, your questions are not answered, and as far as they are concerned, SOPRAM is something from the past.
Mr. Pierre Gingras: There is more talk about information than consultation. Let us discuss just the $1.3 billion. We were called to a meeting at 8 a.m. to be told that. The public announcement, the press conference, was held at 10 a.m. Does that sound like a good management practice? As committee members, would you agree to finding out at 8 a.m. about an investment of that size that was to be announced publicly at 10 a.m.? Personally, I did not agree with that. My job is not to be a rubber stamp.
The Vice-Chair (Ms. Val Meredith): Thank you.
Mr. Nick Discepola: It is unfortunate that we have only five minutes left.
Mr. Gingras, you are in a poor position to speak on behalf of ADM. You yourself told the committee that the media told you everything you know about this matter. That is why I am having trouble accepting your recommendations. I fail to see how your two recommendations could improve the situation. I don't think it would be helpful to repeat the whole Mirabel versus Dorval debate and go over past history. That would not be useful for our region or our province.
You are here as the mayor of the City of Blainville, and I understand that in that capacity you have to defend your turf. That is something I did when I was mayor. But we are here to make a decision that will affect the whole Montreal region, if not Quebec and the economy of our province.
You are here as a member of the Corporation de promotion de l'Aéroport de Mirabel. What more can the government do to help Mirabel find its proper role and to give it the tools it requires, without reopening the whole debate and trying to determine whether we should be transferring flights to one place or another? I don't think that will do the people any good. Are there tools we could give Mirabel or things we should be doing to facilitate its use? I am thinking, for example, about completing Highway 13, extending the railway line to Mirabel, or even Highway 50. Should we find a role for Mirabel? What can we do that would be really helpful to you? It would be wrong to try to blame one side or the other, because that will not help us make any progress with this debate.
Mr. Pierre Gingras: I'm pleased to answer this question, Mr. Discepola, because you are doing exactly what everyone wants to do, namely, divert the debate to the decision regarding the transfer of flights from Mirabel to Dorval. Our recommendations are not about that.
Mr. Nick Discepola: Yes, sir.
Mr. Pierre Gingras: In the first place, our recommendations are about...
The Vice-Chair (Ms. Val Meredith): Let him answer the question.
Mr. Nick Discepola: No, but I want to get back to the issue.
Mr. Pierre Gingras: The recommendations are about setting up a commission of inquiry.
The Vice-Chair (Ms. Val Meredith): You asked the question, he's answering it.
Mr. Nick Discepola: But he's wrong.
Mr. Pierre Gingras: They are about setting up a commission of inquiry.
The Vice-Chair (Ms. Val Meredith): I'll come back to you.
Mr. Nick Discepola: In five minutes?
The Vice-Chair (Ms. Val Meredith): No.
Mr. Pierre Gingras: We recommend the establishment of a commission of inquiry to look into the management of ADM. Were the decisions that were made...
Mr. Nick Discepola: Go on, please.
Mr. Pierre Gingras: Were the decisions...
An Honourable Member: Let him speak.
The Vice-Chair (Ms. Val Meredith): Are you finished?
Mr. Pierre Gingras: Were the decisions that were made at the time when we had doubts about the motives of the directors the best possible decisions for airports in Canada and Quebec? We say there should be a commission of inquiry to investigate the management of these airports. What you are saying is that the government of Canada would not question the quality of the management if entrusted to these directors. The government of Canada is still accountable, although under the terms of the lease, it did give management and operational responsibility to the directors.
It is true, Mr. Discepola, that some members of the media helped us understand the situation and to obtain documents. I would invite you to listen carefully to the researchers you will be hearing from this afternoon and try to understand what they are telling you. Some people have told us certain things. It is up to us to decide whether we want to be part of the 10% of the population that refuses to understand what is happening that has specific interests to protect, Mr. Discepola.
Mr. Nick Discepola: If you are asking me...
The Chair: Colleagues, we have exactly one minute left and we have three interveners for questions—actually two, as Michel left.
Marlene Jennings and Clifford Lincoln, I'm going to ask you for one question each, so we can move on to our next witness, please.
You have one question, Marlene.
Ms. Marlene Jennings: Good morning, Mr. Gingras. I will ask my questions very quickly. You may have had a chance to look at the documents the ADM gave us today. They include an organization chart which shows SOPRAM above ADM, and above SOPRAM, is COPAM, the City of Montreal, and so on.
Another document states that SOPRAM is the nominating committee and also a round table representing the political and economic interests of the greater Montreal community. So that includes also the whole north shore area, where Mirabel is located.
As the president of COPAM, do you not think you are in a rather sensitive position given that your priority is first your own region, and only secondarily the entire larger region? Your situation is somewhat similar to that of the mayors of Dorval or other cities on the Island of Montreal, who are more in favour of the Dorval airport, because it represents an advantage for the economic development of their own region, rather than Mirabel, Blainville or other regions.
Don't you think you are necessarily in this type of conflict situation? You are the mayor of Blainville and at the same time you are the president of COPAM, whose members' priority is their own region. This could be seen as a conflict of interest by the people living on the Island of Montreal, for example.
The Chair: Thank you, Ms. Jennings.
Mr. Pierre Gingras: Does defending the interests of your taxpayers automatically place you in a conflict of interest situation?
Ms. Marlene Jennings: The fact is that this exists...
Mr. Pierre Gingras: SOPRAM is a round table made up of all the people interested in the issue. We saw the organization chart this morning.
Putting COPAM or its seven-member organizations at the top amounts to turning the pyramid upside down. Neither the companies that make up SOPRAM, which appoint people to SOPRAM, nor SOPRAM itself are in any way involved in the decisions made by ADM. SOPRAM is not involved in the decision-making.
I hope you will ask the same question to my colleague, the mayor of Dorval, this afternoon when he comes to testify before the committee. I hope he too will defend his community.
Ms. Marlene Jennings: In my first question, Mr. Gingras, I compare the two...
The Chair: Order, please.
Ms. Marlene Jennings: No, no, that has been corrected.
The Chair: I know, but I have my limitations.
Mr. Lincoln, please.
Mr. Clifford Lincoln: You said that SOPRAM should administer the airport, in your view. That is what you said. SOPRAM should have the task of administering the airports. Is this your personal opinion, or is that the view of SOPRAM?
Second, with reference to the whole issue of conflict of interest, do you think SOPRAM is necessary? You say that 10 percent of people are opposed to the consultants' report that you praised. Are you referring to 10 percent of the population? Are you including in that figure the population of the city of Montreal, the corporations that represent all the people and that are of a different view? Where do you get the figure that 90 percent of the people that are in favour of your approach and 10 percent are against it? Are these official statistics or just estimates you made yourself? Do you represent the objectives of SOPRAM as a whole? Second, where do you get your figures of 10 percent and 90 percent?
Mr. Pierre Gingras: I will start with your second question. This was a survey which is definitely similar to those we see on television, where people are asked a question. According to this survey, over 80 percent of people have serious questions about the management of the Dorval and Mirabel airports. That is the first point.
Mr. Clifford Lincoln: That is completely different from what you said before.
Mr. Pierre Gingras: Here is the second point. You asked me whether it was my personal opinion that SOPRAM should manage the airports. I can tell you that this issue was not discussed within the group.
From what I know about SOPRAM, my colleagues who were appointed with me have their view and I have mine. I was appointed to this body and I have been on it for two years. I can tell you that I feel of no use in the management of the airports. I am neither informed nor consulted. If other members of SOPRAM are, I would like you to tell me how they are informed and consulted.
Mr. Clifford Lincoln: Thank you.
The Chair: Thank you very much, Mr. Lincoln.
Your Worship Monsieur Gingras, Monsieur Mercier, merci beaucoup. Thank you very much for your presentation and for answering our questions. We appreciate your contributions.
Mr. Pierre Gingras: Mr. Chairman, I would like to thank all committee members for their time and their questions.
The Chair: Thank you.
Colleagues, joining us from the West Island Business Development Council is Mr. Steve Macdonell, chair.
Mr. Steve Macdonell (Chair, West Island Development Council): Thank you, Mr. President.
I would like to thank the members of the Standing Committee on Transport. My name is Steve Macdonell.
I'm president of the West Island Development Council. I'm not involved with SOPRAM, and I'm not involved with ADM.
The Chair: You have about five minutes for your presentation, sir. Thank you.
Mr. Steve Macdonell: Thank you.
The West Island Business Development Council covers a very important part of Montreal, with a population of close to 250,000. The Development Council, which I chair, exists to stimulate economic development and to support industries and companies in our community.
The West Island is unique as a community, and it's very representative of the Canadian environment. Our residents reflect Canada's bicultural reality. We are well educated, with one in two adults having a post-secondary diploma.
Specifically, the West Island is renowned for its technological sectors. We dominate the industrial environment, and we group 70% of industrial employment within the aerospace, electronics, and pharmaceuticals as key employers.
Some 13,000 jobs have been created in the last two years in the region I represent. Development of the West Island is directly linked to Dorval Airport. The airport was there before the community developed. The region was a bedroom community that developed when our industries located close to the airport.
More and more, the role of the airport and the role of the community today are to support each other. West Islanders live with their airport. They recognize that the airport has several dimensions in its operation, each of which contributes to the success and the visibility of the whole. First, the airport provides travelling convenience to the public, both personally and for the business community. I'm here today speaking on behalf of that business community.
Along with providing air flights and transportation, there's another important factor, which is the maintenance of aircraft. That plays a vital role within our community.
The West Island employs 110,000 people today, in addition to the 8,000 people whose jobs are directly linked to the activities of the Dorval airport. Fifteen thousand jobs were created by the
freight forwarders and transportation industries
that serve the airport. Forty percent of the industries that located in the community came because of the airport.
More and more, with globalization and world travel, there's a need and a policy within companies to build within the travelling range of a major international airport. We remain convinced that Montreal's greater good, and that of Quebec, is to consolidate all the commercial flights within Dorval. After all, site selection is a customer choice. Specialists have declared that the key criterion is to have non-stop access.
As we said earlier, the growth of the population of the city of Montreal is limited. When an airport such as this wants to increase its business, it is important that it be able to attract people from the outside.
The idea is to have the airport within the centre of the city core, thus allowing it to act as a hub and allowing foreign travellers to use the Dorval International Airport as a transfer point or a spoke to other areas.
Basically, in conclusion, it's important that freedom of choice be left in the marketplace. The marketplace wants a single airport, the marketplace wants a hub, and Dorval is able to provide these things.
Prior to the international flights being repatriated back to Dorval, we had basically lost almost all of the international flights of Ottawans and most of the international flights of our colleagues living in Quebec City. It didn't make sense to fly to Montreal and to then have to take a cab or take a bus. We were saying it would take 40 minutes to transfer, but it could be an hour and a half in the event of a snowstorm. What we were getting was a lot of people taking international flights both from Ottawa and Quebec City, going straight to Pearson. Pearson recognizes the value the airport has in Montreal, with a single structure and a single terminal, and to that effect they're spending about $4 billion in converting Pearson into a single terminal.
And that concludes my presentation. I would be happy to answer your questions.
The Chair: Thank you very much, Mr. Macdonell. We appreciate your summation.
Mr. Nick Discepola, Michel Guimond, and Claude Drouin.
Mr. Nick Discepola: Welcome, Steve. Long time no see.
Mr. Steve Macdonell: Thank you.
Mr. Nick Discepola: I'm no longer considered a West Island MP, notwithstanding what some of the Bloc members think.
One of the concerns I have is that there are some communities in my riding that still experience an awful lot of noise pollution, as I like to call it, from the airport. I'm just wondering if your group has any statistics on whether the quality of life for citizens has deteriorated since the flights were transferred to Dorval from Mirabel, in terms of noise pollution, air pollution, the whole bit. How has that impacted the West Island in particular? My frustration comes when I get citizens calling me from Notre-Dame-de-l'Île-Perrot, for example. I don't have very much recourse. They complain an awful lot, and we try to go through ADM. So I'm wondering if you are aware of anything that has been done to improve the situation in terms of changing flight schedules or even orienting certain runways, les pistes.
Mr. Steve Macdonell: No, I don't have intimate knowledge about the changing of runways or flight hours. But as president of the development council and as someone who was previously president of the West Island Chamber of Commerce, what I can tell you is that we have contacted the municipalities surrounding the airport in order to monitor the level of complaints and whether their numbers have increased or not. Yes, they have increased nominally. They went from a few complaints a month to a dozen complaints a month. So it wasn't a dramatic increase; nevertheless, it was an increase.
By and large, to my knowledge, the community has not complained. The local papers that I read do not have any adverse reactions toward the airport. From an economic standpoint, the region has benefited enormously. As mentioned in my presentation, we've had 13,000 jobs created. I'm not saying they're directly caused by the airport, but these 13,000 jobs also brought with them close to $1 billion in capital investment within the community. So I think there's a good offset between the two.
Furthermore—and again, I'm not an aviation engineer—the planes are becoming smaller, contrary to what was originally thought. They're becoming smaller and they're becoming quieter.
Mr. Nick Discepola: Are you not fearful that with the increased traffic and the projected expansion plans, the situation in the West Island will deteriorate?
Mr. Steve Macdonell: I don't think so, no.
Mr. Nick Discepola: Okay.
The Chair: Thank you, Nick.
Mr. Michel Guimond: I give the floor to Mr. Asselin.
The Chair: Mr. Asselin.
Mr. Gérard Asselin: Good day, sir. Firstly, I would like to tell you that I am a permanent member of the Transport Committee and I live in Baie-Comeau. When there is a problem between Dorval and Mirabel, it is public money, money that governments have invested to build Mirabel, which is at stake. Mirabel was to be the airport of the future. It was thought that it would be easy to expand the facilities and that it would offer quality services for years and years. However, at a certain point in time, a certain number of square meters of Mirabel airport were closed down because the space was not used and therefore it was no longer profitable, and flights were rerouted to Dorval, where it was decided that some 40,000 square meters' worth of facilities hd to be built.
That reminds me somewhat of a Liberal minister from the Quebec National Assembly who had decided to close two floors of the Hauterive hospital and to build two floors in the hospital in Baie-Comeau. It was illogical. Luckily Lazure arrived in time to put some order in the house. It is public money that is being spent, those are our tax dollars.
Why should we invest again today, when it has already cost so much? The creation of Mirabel Airport was not easily accepted by the people in the area. And yet it was built and it was sold as an airport of the future with many opportunities for expansion. We invested a great deal of money and today we are closing part of the facilities in order to rebuild facilities at Dorval.
As an administrator do you find that to be normal?
Mr. Pierre Gingras: No, we don't think that that's normal either. We had also built an Olympic stadium that we are still trying to keep afloat today even though we should probably tear it down. And yet we continue to fund it.
I think that we had made a good decision at the time, when we decided to build Mirabel. At that time we foresaw a major increase in the number of flights. Aircrafts were becoming longer and longer and larger and larger. The need was real. That being said, some 20 or 30 years later, that did not turn out to be the case. Montreal unfortunately didn't continue its economic growth or didn't see an increase in its population as we had hoped. Aircraft technology has changed. Canadair and Bombardier are building smaller and quieter aircrafts.
You are saying that it was a bad decision and you're asking me whether we should continue to support this airport. I would tell you that that is a decision to be made by politicians.
Mr. Gérard Asselin: Ms. Pageau-Goyette told us this morning that over the 10 or 20 years to come, we are going to have to create space and develop potential. The government must take great care when it makes a decision because we may end up being blamed for the consequences by our children at some later point. We have to have a more long term view. Why would we expropriate people who live in a neighbourhood west of Montreal in order to bring the airport closer to downtown, while Mirabel appears to be a perfect spot? We discussed transportation between Mirabel and Dorval for people who must take an international flight. I think that some form of intermodal terminal such as the one we built could accommodate travellers who like myself leave Baie-Comeau and must then go to Dorval and then to Mirabel. We could probably come to some agreements. The problem arises when we see how we invested major sums of money, the facilities are no longer being used, and now people want to reinvest just as much to give Montreal the vocation that we had foreseen for Mirabel and to build basically the same things.
Mr. Steve Macdonell: The general public, people from Greater Montreal and the business people of Montreal obviously prefer that the airport be closer. The mayor of Dorval will not be very happy about what I have to say regarding expropriation, but there is a 45-hole golf course around the airport. There are therefore large spaces which are always available and which the airport owns. The City of Dorval, which built a golf course there, is the tenant. I don't think that it will be necessary to expropriate people.
What type of needs are we trying to satisfy? Those of the travelling public or those of the two infrastructures? That's the question we have to ask ourselves. I think it's important to satisfy the needs of the client, and the space is available to enlarge the airport if required.
The Chair: Mr. Drouin, please.
Mr. Claude Drouin: I will continue along the same lines. If Montreal's economic development was not as strong as we had hoped, it is perhaps because of Mr. Lazure et al, but we won't get into that.
In your opinion, has the ADM taken measures to foster development in your region? You spoke of its impact in terms of job creation in West Island Montreal. Have the measures that the airport has taken so far met the expectations of the organization you represent?
Mr. Steve Macdonell: I think that the debate I've heard here today deals with the transparency of internal methods at the Montreal airport and I really could not comment on that point.
As to the commercial and industrial market, there are a certain number of benefits, including the increased number of flights and destinations based at Dorval. I think that we added some dozen cities and had recuperated a number of flights that we had lost, including those of Alitalia. So, yes, these activities seem to meet a need for industries, and there is an increasing number of flights.
Mr. Claude Drouin: Have the companies in the West Island and even some in Montreal asked you to develop a niche at the Dorval airport and to focus your efforts towards fostering expansion?
Mr. Steve Macdonell: More and more, businesses are working in a globalized market. Business people travel today more than ever. Large multinational companies established in the West Island have global mandates rather than national mandates. They deal with the research, development, production, sales, and marketing of their products on a global scale, which means that their employees must travel a great deal. So, yes, in part, there is satisfaction, but people want to see more.
Mr. Claude Drouin: Thank you, Mr. Macdonell and Mr. Chairman.
The Chair: Thank you, Claude.
Ms. Marlene Jennings: Mr. Macdonell, thank you so much for your presentation. I believe that you have been here for the entire session today?
Mr. Steve Macdonell: Yes.
Ms. Marlene Jennings: You have therefore heard several questions, a certain number of which seemed to cast doubt on the integrity of the managers and administrators of the Montreal airport, and perhaps even that of some administrators of the SOPRAM. I would like to hear your point on this as a representative of the West Island Development Council, which covers a city that is part of my riding, and that is why I'm so interested in this issue. Do you think that the administration of the Montreal airport acted with integrity? We know that things can always be improved, but I would like to know whether you feel that they demonstrated integrity. We have heard some rather serious allegations.
Mr. Steve Macdonell: I must tell you that I'm not familiar with all the points that were raised. Some people mentioned contracts which had been signed with the administrators. I'm a member of the board of a hospital and I chair the board of a CEGEP. We are governed by legislation and, in the case of the education world, we respect the provisions of section 13 which sets the rules of the game. This section states that administrators may enter into contracts with the institution, but that they must declare them so that the public can be informed. Therefore, nothing would prevent administrators from accepting contracts, but it is important that they be...
Ms. Marlene Jennings: That is provincial legislation, I believe.
Mr. Steve Macdonell: It is provincial legislation, but it deals with the issue of transparency. From what I understood, in listening to your exchanges this morning, you were discussing transparency in terms of the activities of the administrators. I agree with those who state that if we prevent administrators from answering calls for tenders, we would run the risk of not being able to recruit certain very qualified people to sit on a board.
I also believe that you were discussing transparency in terms of the information held by the ADM, including its reports. It is quite clear that we are pro-transparency. It is a matter of public money as well as a matter of the money spent by passengers. So what I take from this morning's discussions is that there is room for greater transparency in the administration of the Montreal airports.
Ms. Marlene Jennings: You were happy to hear, then, Ms. Pageau-Goyette confirm that there have been improvements and that the Montreal airport is now willing to accept that the federal government appoint members of the board, which they were not willing to accept two years ago or even before today.
Mr. Steve Macdonell: I thought that we were admitting our transgressions. We recognized that mistakes were made. I must admit that I'm not very familiar with the debates surrounding the issue of appointing the members of the board.
Ms. Marlene Jennings: Thank you.
The Chair: Thank you very much.
A question, please, Mr. Asselin,
and then we'll move on.
Mr. Gérard Asselin: You are a member of the board of a CEGEP, you certainly have to answer to someone. You have a certain number of rules to follow and you know what to do and what not to do. I imagine that you have to report to the Ministry of Education. Do you actually submit reports?
Therefore could the members of your board end up in a situation similar to that of the administrators of the airports of Montreal, who represent the two contractual parties or who have certain interests and are also subcontractors? Does that happen?
Mr. Steve Macdonell: We could have such a situation, but it has not happened in our case. Yes, we must submit reports to the Ministry of Education, and yes, an administrator could have business dealings with the CEGEP. It could happen, but it has never happened.
Mr. Gérard Asselin: Do you have a code of ethics which forbids such transactions and which protects your administrators from any accusation of conflict of interest?
Mr. Steve Macdonell: No, we are governed by section 13 of the provincial legislation, if I remember correctly. Although an administrator may have business dealings with the institution, there's a very detailed process to be followed, which stipulates among other things that when the board studies the submission made by a member of the board, the member must leave the room. At our CEGEP, it is not the board who administers contracts. It is important that the people who administer contracts know that I, for example, or another member of the board could have certain interests. Therefore we avoid any recriminations or any blame later on.
The Chair: Mr. Macdonell, thank you very much for your presentation to the committee and for answering our questions. We appreciate the time you've taken.
Mr. Steve Macdonell: We invite you all to come and visit us on the West Island.
The Chair: Thank you. I often do.
An hon. member: I will.
The Chair: Colleagues, our next witness is from the City of Mirabel. Is His Worship here?
A voice: Isn't that at 12:30?
The Chair: Oh, I'm sorry.
Is the Mayor of the City of Mirabel here yet?
Some voices: Yes.
The Chair: Would you mind taking the table?
That is good, colleagues, because it keeps us right on track, and we may be able to....
Colleagues, this is what we'll do. I've had some representation from my colleagues on the committee. We will break until 12:15, and then we'll listen to the mayor from Mirabel beginning at 12:15. We're back at 12:15, colleagues.
The Chair: Colleagues, we welcome the Mayor of Mirabel to the table.
Your Worship, thank you for coming before our committee. We look forward to your remarks of about five minutes, and then we'd like to ask questions. So whenever you're comfortable, sir, please begin.
Mr. Hubert Meilleur (Mayor of the City of Mirabel): Mr. Chairman, it is possible that my presentation will last a few minutes more, but I will try to respect the eight-minute limit that you have set.
Although I was a member of the SOPRAM from 1987 to 1998, I would like to speak to you here today as a public administrator.
In the first pages of my brief, I gave you an overview of the events which occurred between 1986 and 1995. In the area of airport management, all parties had formally undertaken to maintain the two airports, Mirabel as an international airport where international flights would go, and it would also deal with air cargo, and Dorval would be an international airport with domestic flights and transborder flights. The airports of Montreal had undertaken to consult with the members of SOPRAM and to provide them with all documents and reports relating to contracts granted by Transport Canada in order that they might make informed decisions. We had foreseen that the two airports would be run on a viable commercial basis, but without any financial gains for members of the board. We knew at the time what the expression “without any financial gain” meant.
Prior to 1995, there was never any question of transferring flights from Mirabel to Dorval. ADM consulted the members of SOPRAM, who were regularly invited to give their views. They were asked for commitments and presented with preliminary and final studies. Confidential drafts of the file report on the future of the integrated airport system were submitted to them. We had a relationship of trust, and the lease conditions regarding consultation and transparency were met.
However, in late 1995 came a stunning move that people in the Lower Laurentian region called “the theft of the century”. For ADM, it was Project 30-30.
At that point, SOPRAM members became mere figureheads for ADM. Around September 1995, ADM asked the firm of Sypher:Mueller to revise the recommendations of the 1992-1993 report. As Sypher:Mueller did not comply with the request in a satisfactory manner, the decision was made to sanitize the text that was considered unsuitable in the new report and to change the wording so as to make it possible to accept Project 30-30. The only persons who were actually aware of the project at the time were Messrs. Auger, Earle and Benoît, and Ms. Nathalie Hamel. Curiously, these four individuals left ADM as soon as the decision was made, and others were also forced to resign. Why? It is deplorable that such important decisions for the public should have become separated from the decision-makers, who never had to bear the consequences, a situation which promotes short-sighted decisions.
Forces began to mobilize when the papers reported that ADM was preparing to transfer certain international flights to Dorval. Nothing stopped ADM. The members of SOPRAM could not gain access to the studies because there were none, apart from preliminary studies which, as one may imagine, were not consistent with what ADM wanted to do.
We were forced to turn to the courts in order to shed light on this matter. The citizens of Mirabel spent $1.6 million to try to correct what we consider to be a terrible mistake that ADM was preparing to make. But the mistake was not the construction of the Mirabel airport. The Trudeau government's plan was in itself a good one. The mistake was what some politicians, and in particular the officers of ADM, made of it.
Project 30-30 was supposed to cost $200 million, but the cost of the completed work now stands at $350 million. Authorities are now announcing another phase, to involve $500 million of expenditures over the next four years. It will be followed by other phases, and the total cost will reach $1.3 billion, virtually all of which will be incurred for an airport that has the structure of a regional airport, namely Dorval. We were also told in 1996 that the transfer of flights to Dorval was only temporary. Today, we are being told in no uncertain terms that the flights will not be coming back to Mirabel. The whole thing was just a media game. How can we leave the administration of our public property to ADM?
ADM essentially bases its management on a communications plan, and a very successful one at that; falsifies documents (for example, the Sypher:Mueller study); adjourns annual general meetings because it is too embarrassed by the public's legitimate questions; does not consult SOPRAM members, even though SOPRAM is the true regional authority responsible for the guiding principles of the airport system; presents a project which was supposed to involve $200 million in expenditures, but which will end up costing $1.3 billion; displays dubious and unsound management (calls for tender of $2.5 million without public bids and $2 million without the Board of Directors' consent); is not at all transparent; is not accountable to anyone; creates corporations (ADMC and ADMI) which spend more time investing in other countries than managing the Montreal airports; scraps the Montreal airport system (Air France is one example, all-freight service has now gone to Atlanta and Chicago); and goes into debt, together with its subsidiaries, to the point where ADM will no longer be able to make its lease payments if airport fees are not increased, whereas, prior to 1996, ADM made annual profits on the order of $25 million.
For much less, dear politicians, we would all be sent out the door.
What is happening now isn't a surprise anymore to anyone in our area. ADM, including members of the board of administration as well as the vast majority of the members of the SOPRAM, no longer have any credibility. ADM did not respect the undertakings to consult as set forth in the lease. ADM did not respect the management plan, which did not foresee the transfer of international flights to Dorval. ADM, through its immoral actions, broke the ties of confidence. Was anything illegal done? That will be up to the inquiry to decide. We say in labour law that where trust between an employer and an employee is broken by certain actions, the employer may fire the employee. In my opinion, ADM must be fired on the spot without compensation, which is what the government of Canada must do if they want to maintain any credibility in this issue.
Ladies and gentlemen, all this must come to a stop. In 1997, we were told that things were going from bad to worse and that a stop had to be put to it. We were quite right; the circus is still running around at ADM. What the federal government is doing today is very laudable, but in a mere few hours we will not be able to shed light on what is probably the greatest theft of the century according to people from the Lower Laurentian region and according to all the Quebeckers who give us their comments. ADM must be put under trusteeship today. And we must go further: we must hold a public inquiry on ADM and its subsidiaries; review the composition of the SOPRAM and ADM; and more generally reintroduce a democratic point of view regarding political representation. It is wrong to believe that only the logic of business people can ensure transparency and responsibility when it comes to managing public funds of such a size. ADM doesn't have much regard for politicians. It is as if we all had AIDS. If we do not take these measures, public goods, the property of our citizens, need I remind you, will be in jeopardy.
I will give you as evidence all the documents that support my statements and I have them all. I even have the management plan for 1995 which was tabled on December 18, 1995, where it was indicated that the status quo would be maintained. At the same time, ADM was working on transferring flights. I am not saying that it could not transfer flights, but there should have been prior consultations, as the airport of Montreal did from 1987 to 1992. They should have submitted a completely different management plan to Transport Canada before going ahead. Everything was done on the sly, and that is what we do not accept.
Thank you, Mr. Chairman.
The Chair: Thank you, Mr. Mayor, for your presentation.
Val Meredith, please.
Ms. Val Meredith: Thank you, Mr. Chair.
Thank you, Your Worship, for being here.
I gather from your comments that your concern is the process by which Mirabel's use was changed over to Dorval. You feel the representation wasn't there, that the decision was made by a very select few people without consultation with the area?
Mr. Hubert Meilleur: That is exactly what happened. Since 1995, things have changed completely. Everything was done in such secrecy that the only people who were aware of the flight transfers were Mr. Auger, Mr. Earle, Mr. Benoît and Ms. Nathalie Hamel, his political attachée. On December 18, before the decision was made on February 20, even the members of ADM were not aware of the transfer that was being planned.
Ms. Val Meredith: If the decision was based on the fact that both airports cannot operate efficiently sharing the responsibility of international and domestic travel, and that Mirabel didn't seem to be serving the purpose.... Do you feel there was any good reason they made that decision, or do you feel that had they made the process more public, the decision they did come to would have been any different?
Mr. Hubert Meilleur: According to the studies that ADM had requested from Sypher:Mueller and which were tabled in 1993, if we wanted to develop a long term airport network, given that at Dorval we couldn't go beyond the year 2017, everything had to be concentrated at Mirabel.
I have no concerns as such. If we want to redo the study and properly focus the future of the Montreal and Mirabel airports, let's do it, but it should be done openly, therefore publicly. What I know is that according to studies, the citizens of the West Island can tolerate 600 flights a day, and there are already close to 640 per day.
Since Air Canada took over Canadian, it is true that there has been an increase in traffic. I am told that the increase is in the area of 17%. If there are more takeoffs it is because there are more small crafts. Dorval is losing its true vocation as an international airport and is becoming a hub for other airports. There are people who leave from Montreal, go to New York, and then fly by Montreal to go to Europe. Others go to Toronto and fly over Montreal to go to Europe.
Ms. Val Meredith: In a lot of these situations there's a winner and a loser. I guess what I'm hearing from you is that Ouest-Île is the winner and Mirabel is the loser. Is that a fair statement? And that's a lot of the reason you're here before us?
Mr. Hubert Meilleur: Listen, I am here to tell you that the Montreal airport system is being neglected for other international airports, because Dorval has all the characteristics of a regional airport and an international infrastructure cannot be developed there which allows for a 24-hour operation.
Mirabel was built under the Trudeau regime. At the time, forecast were made to 2010, 2020, 2030 and 2050. We had looked towards the future. Why was Dorval not increasing its market share? Because it cannot be operated 24 hours a day, which prevents it from taking its share of the market of other international airports, whether they be North American or in eastern Canada. It is not possible. We cannot work any other way because Dorval is already saturated. As Ms. Pageau-Goyette has told you, we have to grow from the inside out. We have 17,000 acres of land at Mirabel; there are 3,000 acres at Dorval.
Ms. Val Meredith: So a political decision was made by the ADM to develop Dorval rather than Mirabel, and that's where you feel the mistake was made. You feel that although the studies showed Mirabel had the future expansion potential and although Mirabel is in an area that could be expanded commercially, the politicians of the day, through the ADM, chose Dorval over Mirabel, and that's the decision you find fault with, the political nature through the ADM?
Mr. Hubert Meilleur: You know, the ADM's decision...
Ms. Val Meredith: Municipal politicians, as opposed to—
Mr. Hubert Meilleur: ... is a businessman's decision. These are short-term decisions, because we know that the logic of business people is to make money in the short term. They don't necessarily take a long term view. As public administrators, we must take a long term view.
Therefore if we have a long term view, if we respect the conclusions in the Sypher:Mueller report and that of all the other studies, we know that in 2017, Dorval will be saturated.
We had proposed in the beginning, when it was still possible that Mirabel would be chosen, to transform Dorval airport into an industrial super-park. The square footage is much more valuable at Dorval than at Mirabel; at Mirabel we're in the middle of the fields. Do you understand?
It would be possible to transform Dorval airport into an industrial super-park, which would be very useful to Bombardier. Bombardier has just signed some amazing contracts. Why would we not give Bombardier the opportunity to take the expansion at Dorval and why would we not develop a true international airport which could run all day?
It is certain that, as mayor, I would rather Mirabel be an industrial airport because frankly it would be much more profitable for me. But, as a public servant, I cannot believe that we can develop an airport in an area where a million people live. I have difficulty in understanding that, if only from a safety point of view, there has never been any impact study as to what this would entail for Dorval airport. Very soon, there will be 800 to 900 flights daily. I don't think that the citizens will be able to support this nuisance. There will be major problems for the people living in this community.
Ms. Val Meredith: Thank you.
The Chair: Thank you very much.
Clifford Lincoln, please.
Mr. Clifford Lincoln: Mr. Meilleur, you said some things, which in my view, require discussion. You said that since the transfer to Dorval, this airport has become increasingly regionalized, while other international airports, such as New York, are in development. Is this supported by facts?
I would remind you that when Mirabel was in operation, we had lost Aer Lingus, SAS, Lufthansa, Alitalia and FinnAir, just to name a few. Today, Swissair has returned to Dorval and has chosen Dorval as its hub instead of Toronto. Alitalia has returned. Lufthansa has returned. Romanian Air has signed on.
I thus find what you are saying quite surprising, because I travel quite a bit, and I have seen that there are more flights than ever which depart from Montreal, whether it be towards the U.S., or... Therefore, how can you say that today, Dorval is more regional than before?
Mr. Hubert Meilleur: I did not say, Mr. Lincoln, that Dorval had become a regional airport. I am saying that Dorval has certain characteristics of a regional airport, while we are trying to turn it into an international airport. Departures such as Lufthansa or Alitalia are cyclical, when the market is inadequate. We were told, and studies demonstrated, that Lufthansa was going to leave Montreal because they did not sell enough business class tickets. They were selling too many moderately priced seats. Do you understand? Alliances were made, and another company has returned. It is not Alitalia per se.
Therefore, it is cyclical. In the years where the economy is less favourable, there are airline companies which disappear from Quebec skies. In the years where the economy is favourable, there are airline companies that come back. That's quite normal. It has been demonstrated in the studies, which all said just about the same thing. It is entirely normal.
Now, we are going through very favourable economic times. Let's not kid ourselves, we are in very favourable economic times. How is it then that between 1996 and 1998, since the Mirabel flights were transferred to Dorval—which we accept without difficulty or rancour—the number of passengers has only increased by some 40,000 or so, where as ADM had set the number at 650,000 and Sypher:Mueller said that the maximum that we could get would be some 150,000?
And that is why we are asking these questions. They concern the transparency of management. When an informed decision is made, then we can accept it. When it is not an informed decision and when we have to go before a judge to obtain our rights, as members of the SOPRAM and public administrators, in order to have access to certain documents, it's very annoying. That is why I withdrew from the SOPRAM in 1998. I didn't want to be told that I was just a player filling a chair when important decisions were being made which affected the population people. I would rather sit at home.
Mr. Clifford Lincoln: When you say that an airport, because it is located within the city, cannot become an international airport, are you suggesting that National, for example, which is some 15 minutes from the White House and Capitol Hill, in Washington, and which has recently been restored as an international airport over Dulles... that Boston, that La Guardia should have a different vocation simply because they are the result of a mistake?
Mr. Hubert Meilleur: That's not what I am saying, Mr. Lincoln. Mr. Lincoln, what I am telling you is that Dorval airport has the characteristics of a regional airport, as the specialists have said. I am not saying that you cannot develop an international airport in an urban setting, but what I am saying is that everything seems to point to the fact that no new international airports are created in urban settings, where there is a high density of population, for reasons of safety and because of the nuisance of the noise.
Mr. Clifford Lincoln: I have read the report of those who make these allegations, but I am not an idiot and I do travel a great deal. I go to Washington; Dulles airport is next door and, right downtown, Ronald Reagan's airport has just been refitted to be used as an international airport. If I go to Boston, I land downtown, at Logan. If I go to La Guardia, I am in downtown New York City. If I go to Heathrow, I am in downtown London. You are telling us that it can't be done. It is done, and well done.
Mr. Hubert Meilleur: Mr. Lincoln, I find it somewhat shocking to see that you, a former Minister of the Environment, are not concerned about the fact that 600 airplanes a day are flying over Pointe-Claire and Ville-Saint-Laurent. I am an ordinary citizen and I am very concerned, especially about the safety aspects. But if it does not bother you, I will go along with your decision.
Mirabel does not necessarily depend on this airport for its development. We can develop very well without the airport, in any case. Let us be clear about that. But ADM was making profits. The studies showed that we had a very good airport system. Quebec is now getting back to having small regional airports, while development is taking place everywhere else in the world.
What is also sad is that 9,000 people in Mirabel were expropriated to build the airport of the future, which is now being mothballed to please a handful of businessmen. They are not going to look for more business, since there has been an increase of only 40,000 people since $350 million was invested in Dorval. Why? Because they cannot operate 24 hours a day and cater to large markets. It is becoming a hub for Air Canada. That is all.
The Chair: Thank you very much, Clifford.
Mr. Guimond, please.
Mr. Michel Guimond: Mr. Meilleur, still on the subject of transparency and ADM's management, which is the reason you are appearing here today, I would like to hear a little bit more from you on that. You resigned from SOPRAM. I would like to know a bit more about how you see the role that SOPRAM should play in connection with ADM.
In one of the last points on page 4 in your submission, you criticize ADM for not consulting the members of SOPRAM, which, you say, is the real regional authority responsible for the policy directions in the airport system.
However, in ADM's presentation this morning and on page 3 of the information binder we were given, there was a description of SOPRAM's objectives as they have existed since 1989. Five are listed: to bring stakeholders together; to foster the initiation of air transport development projects; to promote the development and stature of the facilities; to bring forward the interests and needs of the public; to appoint the members of Aéroports de Montréal.
On the following page, ADM states that SOPRAM is basically the appointing committee and a round table for economic and political interests representing the greater Montreal region.
So, the question... Yes, yes, there is no...
Some honourable members: Oh, oh!
Ms. Marlene Jennings: Thank you for having brought to our attention the other part of...
Some honourable members: Oh, oh!
The Chair: Okay. Order, please.
Mr. Michel Guimond: Mr. Chairman, if the members from the West Island continue to sit on the Transport Committee, I will make life difficult during all the rest of the proceedings. I promise you that I will do this right up to June.
A voice: Blackmail. That is blackmail.
Mr. Michel Guimond: No, no, I am not using blackmail, since I am really going to do it. Ask Mr. Drouin if that is blackmail. I am going to do it.
The Chair: Order, please.
Mr. Michel Guimond: So, basically, SOPRAM...
No, since we always maintain a fairly good working atmosphere here. We respect each other.
A voice: Oh, yes.
Mr. Michel Guimond: You are forgetting that you are not usually here. You cannot judge.
The Chair: Let's cool it, or else the chair will have a tough time recognizing you as a questioner. So let's cool it.
Mr. Michel Guimond: Basically, then, SOPRAM serves as an appointing committee and a round table. However, you seem to be very critical of ADM regarding the period when you were a member of SOPRAM. In other words, you complain that you were not consulted, but how often? What are relations like between SOPRAM and ADM? How much contact is there between the two? Would it happen at a simple informal meeting in Ms. Pageau-Goyette's offices? And if that is not enough, how much contact should there be?
Mr. Hubert Meilleur: Let us be clear about this. Until 1995, there were no problems with respect to article 2 of the agreement signed between SOPRAM and ADM. The agreement is clear. Article 2 states:
ADM agrees to consult SOPRAM on the preparation of development
plans and projects that could affect the development or stature of
airport facilities... [by providing SOPRAM with a copy of reports
and proposals prepared to that effect].
Until 1995, there were no problems. There was consultation, the lease was followed to the letter and the agreements that were signed by both parties were complied with. It was in 1995 that things changed completely because the coup was being planned. Beginning in 1995, the members of SOPRAM received next to no information. I would suggest you invite them all to testify under oath so that they can tell you how many of them knew and had documents about the 1996 decision. None of them were aware, not even the members of the board of directors.
At present, SOPRAM meets three times a year. I quit being a member. Is it reasonable that the Société de promotion des aéroports de Montréal, which is the highest authority and which works with ADM to prepare a corporate plan, should meet three times a year from 8 to 10 am and be shown a few slides? Is that how to manage a 100-million-dollar-a-year company? If that is the case, there is no point talking about it and we will just let them go ahead.
At Mirabel, they spend at least 10 minutes on a small project with $2,000. The members of SOPRAM have absolutely no voice. They are just puppets as far as ADM is concerned. They get all the respect of puppets. ADM uses them because it is useful for a small group of people. We are talking about a subsidiary of the Chambre de commerce de Montréal. For one thing, and you can check this, the Chambre de commerce de Montréal and the Board of Trade of Metropolitan Montreal never put any money in when we had the airports council. COPAM allocated $83,000 to have some studies done regarding management at both airports, but the Chambre de commerce de Montréal gave absolutely nothing.
The Chair: Claude Drouin.
Mr. Claude Drouin: Mr. Meilleur and Mr. Lacroix, thank you for your presentation. You point out that SOPRAM, until 1995, was consulted frequently by ADM and that, before the coup, things changed. You seem to be speaking on behalf of SOPRAM. Do the majority of SOPRAM's members agree with what you are saying?
Mr. Hubert Meilleur: I say in my text that the rules of the game need to be changed. When a company has no real interest...
Mr. Claude Drouin: Are you representing the majority of SOPRAM members, Mr. Meilleur?
Mr. Hubert Meilleur: For the moment, I no longer represent them. I did not represent the majority of SOPRAM members because I was one out of 21 members.
Mr. Claude Drouin: There are SOPRAM members that seem to be satisfied with the way things are working. We have not heard the majority of SOPRAM members say that they were not satisfied with the decision. Could it be that former members of SOPRAM, given that the decision made by ADM was not to their satisfaction, are somewhat unhappy about the decisions and the procedures used?
Mr. Hubert Meilleur: I can tell you that in all boards of directors, there are members that participate for the sake of participating, whereas others are interested in what is going on and read all the documentation. I can tell you that there are SOPRAM members who hardly ever took part in the SOPRAM meetings and who nevertheless supported Aéroports de Montréal in its initiatives. To check that, you just have to look at the minutes of SOPRAM board meetings.
Mr. Claude Drouin: It would be difficult for us to do that today.
Mr. Hubert Meilleur: That is why I am calling for a public inquiry, Mr. Drouin.
Mr. Claude Drouin: I would be happier if you talked about what happened on your own behalf and not on behalf of SOPRAM. You often talk about public management, given that you are a mayor and a councillor. When a council makes decisions, that does not mean that there is unanimous agreement around the table. If there is an opposition group in the council, I am not sure that it will get all the information much in advance, because people want to be sure that the opposition is not going to use it to its advantage. Do you agree that the opposition has a role to play, Mr. Meilleur?
Mr. Hubert Meilleur: I am sorry. ADM has to work within the lease requirements. They have to do things according to the provisions. They also have to follow the agreement that was signed between the government of Canada, ADM and Transport Canada. They have to follow those rules. They have not been followed. As a member of SOPRAM, I am telling you that they were not followed.
Mr. Claude Drouin: As a former member of SOPRAM?
Mr. Hubert Meilleur: Yes, a former member of SOPRAM.
Mr. Claude Drouin: Can the changes that they want to make be significant ones that will help increase transparency? This morning, ADM seemed to be indicating some openness about putting everything on the table. Is that not a tangible sign of improvement? Mr. Macdonell mentioned to us that the studies that have been carried out regarding airport development had not given the desired results, not only in Quebec but in most places around the world. Airplanes are quieter and airports smaller than what had been predicted. You have talked a lot about the 1993 study. We have many studies here done at the federal, provincial and municipal levels, which evolve as time goes on. Could that not also be the case with the study you are talking about?
Mr. Hubert Meilleur: Mr. Drouin, I am talking to you about the 1995 corporate plan submitted to the Minister on July 18, 1995, and to the members of SOPRAM on December 18, 1995. Perhaps it was not July the 18th. In any case, it was December 18, 1995. On December 18, 1995, they announced the status quo for the 1995-2015 period.
They said that Aéroports de Montréal was working, that everything was going very well and that both airports were making profits. At the same time, it was announced that flights were being transferred. This corporate plan was submitted to the Minister and was never followed. Someone was closing their eyes somewhere.
With respect to SOPRAM's membership, I think that it needs to be completely changed because there are too many people in SOPRAM who are not interested in airport development, at either Dorval or Mirabel.
For example, there are almost never people from Saint-Hubert at the meetings. You just have to read the minutes from the SOPRAM meetings. So we need to take another look at who makes up the Société de promotion des aéroports de Montréal.
The Chair: Colleagues, sorry to play tough guy again.
Marlene, one question, please, then Val Meredith, one question, please.
Ms. Marlene Jennings: Mr. Meilleur, thank you for your presentation. Since the decision was made to cancel international flights at Mirabel airport and transfer them to Dorval airport have the city of Mirabel's revenues gone up or down? In either case, did you make financial forecasts in your five-year or three-year plan? Is the present revenue and economic development situation of your town what had been predicted?
Mr. Hubert Meilleur: Let us say that Mirabel is a town that is growing very well, from a residential, industrial and commercial standpoint. So we compensated by other industrial and residential developments. The first year, the net loss was around $500,000 because of all the airport concessions.
Concerning payments in lieu of taxes,...
Ms. Marlene Jennings: And today?
Mr. Hubert Meilleur: ... we signed an agreement with Aéroports de Montreal guaranteeing us the same payment for the next five years to minimize the decision's impact. It was much more detrimental, since our region lost 1700 jobs to Dorval or other areas of the city of Montreal. But it is still in the same region, which is easier to take.
Ms. Marlene Jennings: You said that the town is growing well anyway from an economic and industrial standpoint, etc. Has there been job creation in your area? Is the bottomline positive or negative since 1995?
Mr. Hubert Meilleur: There have been many jobs lost in the 17,000 acres that belong to Transport Canada. Outside that area, in the town as such, we have become much more dynamic in terms of industrial and residential development. The town of Mirabel approves building permits every year worth 30 to 40 million dollars. So we have managed to compensate.
The Chair: Thanks very much, Marlene.
Val Meredith, please.
Ms. Val Meredith: Thank you.
When Madam Pageau-Goyette appeared before us, she said that Mirabel was given incentives to encourage airlines to use the facilities. Can you tell us what those incentives were? She didn't expand upon—to any degree—what incentives were given to Mirabel.
Mr. Hubert Meilleur: When the flights were transferred from Mirabel to Dorval, ADM announced a substantial incentive program. If I remember correctly, and Mr. Lacroix can correct me if I am wrong, it was in the millions of dollars. For example, Air Transat was allowed to stay at Mirabel with much lower airport costs. Landing costs are not necessarily lower, since it is much more expensive to land at Mirabel than Dorval. That was the rule in 1996. Incentives were also given for passenger parking, and the $10 airport tax was not charged at Mirabel. Now there are plans to do that. Airport fees for Mirabel will soon be announced, because Mirabel has had a deficit of around 5 million dollars a year since the transfer, where as in 1996, Mirabel airport was more profitable than Dorval, given its recent construction and its ability to manage its own operations.
Ms. Val Meredith: Thank you.
The Chair: Thank you, Val.
Thank you, Your Worship, for your presentation and for answering our questions. We appreciate you being here with us today.
Mr. Hubert Meilleur: Thank you very much, Mr. Chairman. If there is ever anything else, please contact us, we will be pleased to answer your questions.
The Chair: Thank you very much. We will.
Mr. Gérard Asselin: Mr. Chairman, before he leaves, the witness has offered the committee documents that could be relevant for the committee's work on ADM. Could some of those documents be tabled with the clerk so that they can be translated for the benefit of committee members?
Mr. Hubert Meilleur: I wanted to table them, Mr. Chairman, and I forgot. You will find evidence for what I said in these documents.
The Chair: Thank you very much.
May we have the City of Dorval at the table, please?
We welcome to the table the Mayor of Dorval, Peter Yeomans, who is here to present us with a five-minute submission. After that, we will ask questions of you, sir. Please begin when you're comfortable.
Mr. Peter Yeomans (Mayor of the City of Dorval): Good afternoon, Mr. Chairman, and members of the Standing Committee. I am very pleased to be here. I do not have a prepared text, except for the history of events from the beginning.
It is true that I am here as mayor, but not really in my role as mayor. I hold other positions, including as a director of SOPRAM. I was appointed by my fellow mayors of towns on the Island of Montreal, other than the City of Montreal.
I represent the interests of 800,000 people on that part of the island, but that is not to say that I do not have a vital interest in the overall scheme of things, given the charge that we have at SOPRAM and given the interests we have in the evolution of two airports. We have done this with diligence. I am very proud of the achievements of the people who have been named,
the people named to ADM by SOPRAM. These are competent people with many years of practical experience and a great deal of wisdom. A variety of groups seek out their services.
I was appointed to SOPRAM for an indefinite time. My term is renewed periodically, but I have a duty to report to my fellow mayors who, in turn, are accountable to the people. God knows that the airport is a real treasure for my community even though, from time to time, it is also controversial,
for whatever good reasons.
Certainly many of the people who live in the communities around the airport derive their incomes and their quality of life as a result of the exceptional employment opportunities, which regroup the firms, manufacturers, and producers of like products and of dissimilar products. I have seen the situation grow; I've been mayor since 1982. I want you to know that the council of our city has been together for a number of years, so there is that continuity.
Let me just jump to SOPRAM for a minute, and then I'll let you get on with the questions. SOPRAM, by its very nature, is made up of people who are de passage for various reasons. They're either there because they're in an elective office or because they're named by their organization, which could be the Chamber of Commerce or another promotional organization, economic and otherwise.
So there is some rotation. From that standpoint, I am one of the fortunate ones who has not been rotated. I've been renewed and I'm very proud and pleased to be able to do that. I hope that literally the whole population of Quebec is listening to the activities here today, because this airport and Mirabel together are
the gates to Quebec. These airports are absolutely essential to Quebec's economy and they are seen as stimuli by all those who work at the airport or in related activities.
I'm wide open to questions. As I say, I can go back from the very first instance. I'm proud of being one of the architects of this recovery process, because we were sinking as a total region. When I say “region”, I'm talking about something that approximates the census region. We certainly had to do something—as far back as 1987-88.
That wraps up my presentation, Mr. Chairman.
The Chair: Thank you very much, Your Worship.
Mr. Claude Drouin, please.
Mr. Claude Drouin: We are glad to have you here, Mr. Yeomans. You mentioned that you have been a member of SOPRAM since the beginning. We are glad that you are in a position to talk to us a little about the SOPRAM board of directors because, since this morning, we have heard various things from current and former members of SOPRAM, who say that this organization is not consulted, does not have any clout, and has trouble obtaining documents.
I would like to know your version of what is happening at ADM and SOPRAM. Could you please tell me to whom ADM is accountable?
Mr. Peter Yeomans: Perhaps you have to refer back to the mandate. The mandate is very clear: it calls for working together. This means participating; you will not score goals by sitting on the sidelines. So, it is essential to be proactive, to attend meetings, to participate. As I said earlier, a positive attitude toward the mandate and the objectives is important.
If you decide that you are always inferior, unable to compete, not in the game, you will hold a grudge for a long time. I believe that it is important to build for everyone that we serve, both our clients and the general public. We will not get anywhere by blaming and criticizing. I personally have never had any trouble obtaining information or finding out how things are done or what plans there are for redeveloping the airport. This is not an airport expansion project, strictly speaking, but rather a redevelopment and modernization project, following on years and years of neglect by Transport Canada, in a manner of speaking. We are finally taking our place.
As far as information is concerned, the minutes indicate what took place during the discussions. As for being aware of what was happening with the airports and Transport Canada, I feel that I was very well informed. I always have been. When I was not satisfied, I made telephone calls. In previous years, there was Mr. Gordon Fehr, who represented our group on ADM, and there was also Mr. Arthur Earle, who was the president and was very open. I have similar relations with Ms. Pageau-Goyette.
There is controversy, of course. Whenever you build something, there will be differences of opinion. But it is up to all of us to find a common goal, to go forward and build together. That is what matters. So, to answer your question, I am well informed, my fellow mayors who belong to the group are well informed, thanks to measures that I take from time to time, and the general public is well informed, because I write, and I am often quoted, in the newspapers.
it's bringing tremendous job opportunities. I should just mention in passing that almost 38% of the Bombardier employees live in Laval or les Basses Laurentides, so we are serving the opportunities and employment needs of a vast region.
The impact is not limited to the boundaries of one city, if I can put it that way. The fact that we are located only 13 to 15 minutes from downtown is a considerable competitive asset and I think that it is wonderful. There is some talk now of a rail shuttle linking the terminal and downtown. In the end, we will make Montreal and the surrounding area an example to be followed by others.
Mr. Claude Drouin: I would like to probe more deeply. I do not want you to speak on behalf of SOPRAM, but in your opinion, as a member of SOPRAM, are the people in this organization satisfied with the manner in which ADM is being managed, at this point in time?
Mr. Peter Yeomans: I would say that the members of our group who are represented on SOPRAM are for the most part satisfied.
The Chair: Thank you very much.
Michel Guimond, please.
Mr. Michel Guimond: Thank you for your presentation, Mr. Yeomans. I am sure that your member, Mr. Lincoln, is going to think that I will be rude to you and that I will grill you, but you will see that I was properly brought up by my mother.
I must tell you that I greatly appreciate your call for co-operation. If I get bored tonight, you can lend me your shoulder. You will not be pleased to have the head of a separatist on your shoulder, but that is not the point of my remarks.
Mr. Peter Yeomans: No, that's fine.
Mr. Michel Guimond: I would like to say that I greatly appreciate your call for co-operation, and I also like the tone of your presentation. I would like you, as a member of SOPRAM, to comment on the powers that are assigned to Ms. Pageau-Goyette. Questions have been raised about the transparency of ADM management, but Ms. Pageau-Goyette wears two hats. She told us that this was temporary, but it has been temporary for a number of months, if not years. I would like to know your opinion. Is this current situation desirable and acceptable, in your eyes?
Mr. Peter Yeomans: In a corporate organization such as ADM, there is a constant search for checks and balances. In other words, there is a need for a counterbalance. It would be like my not having a general manager for my city. A general manager is important because you need a reference point, someone to run ideas by so that they can be tested, someone who carries out projects. We must not forget that, in the case of ADM, there was a transition period. The last general manager, or president, resigned for reasons unknown to me. At the time, there were transitions that had to be made and there was a legal proceeding launched by a group that felt threatened or not necessarily represented. This led to delays in the airport development and construction plans. I realize that, in order to deal with what was basically a backlog of files, it was necessary to take on other roles. I have said publicly, and I will say it again, that it would be advisable to fill the position as soon as possible and for the organization to continue to develop into a typical corporate body, with everything that implies regarding marketing or even the completion of work. I therefore agree with you.
Mr. Michel Guimond: Mr. Yeomans, were you given a copy of the internal audit report by Coopers & Lybrand commissioned by ADM? It seems to be the subject of some disagreement.
Mr. Peter Yeomans: I have it here, Mr. Guimond.
Mr. Michel Guimond: Yes, but did you obtain it right away, or did you receive it later on? I am asking the question because it would appear that, within SOPRAM, there are two classes of members: the Dorval supporters on one side and, on the other, the Mirabel supporters. Look, I am suggesting this, although I am from the Quebec City area. Despite the fact that I am my party's transportation critic, I come from the Quebec City area and I am not well attuned to specific municipal and regional differences. In Quebec City, in any event, we are busy enough with our own quarrels. I have been following this affair from the outside since the very beginning, and there seem to be two categories of SOPRAM members. Before you, we heard from Mr. Meilleur, who left because he felt he could no longer function on the board, that it was becoming untenable, that there was not enough information. For your part, you say that all is well and you have enough information. It is as though you were living in two different worlds. Did you have trouble obtaining the audit report? Did you receive it right away?
Mr. Peter Yeomans: It was tabled at a SOPRAM meeting.
Mr. Michel Guimond: What was the date of that meeting?
Mr. Peter Yeomans: It was in the middle of 1999, a few months after the tabling. I was even consulted by the auditors. My opinions are expressed in the report, although not identified as such, like the opinions of several other people. The report also represents the opinions of users and participants, and I am prepared to say that I criticized certain things.
As for the information, I obtained it in a timely fashion. As for quarrelling, as you refer to it, I work closely with the two mayors who preceded me. With regard to the needs of the Mirabel airport, I am just as aware of these. I say this in all honesty, even though I am not testifying under oath here. Frankly, Mirabel needs to survive, and even expand and grow. It cannot be otherwise. We are looking for space. There is even a development fund for this purpose, so that part of the profits from the Dorval airport are used to support and promote the Mirabel airport. However, this takes time. It is a huge job. We sometimes feel that it never goes fast enough.
I myself have been mayor since 1982 and I was on the municipal council for four years before that. We wanted Transport Canada to realize that the Dorval airport could be made into something. Dorval was an international airport until the time of the Olympic Games. After that, flights were transferred. Traffic levels are now close to what they were in those years.
As for Mirabel, some of my thoughts are in the report. Large- scale efforts are needed to promote and, above all, increase our airport growth. We have worked hard to become the eastern gate to the country and it is important that we remain this gate. There are other ways to increase traffic. We have an aggressive campaign that targets Ottawa. We will go as far as Kingston and even the northern United States. As you will see, this is starting to bring more and more grist to the mill. Our mill is Mirabel and Dorval—both of them.
The Chair: Thank you very much, Michel.
Nick Discepola, please.
Mr. Nick Discepola: Mr. Yeomans, what is most confusing in all this, is that people have been unable, or unwilling, to understand the role of the various organizations. There is an attempt to mix up the roles of the government, ADM and SOPRAM. I personally think that this is the problem.
This morning, we heard that there are people who are denouncing ADM for all kinds of reasons, for a lack of transparency or other reasons. The people from SOPRAM are uncomfortable because they do not think that the ADM decision expresses or reflects their mandate. We must get back to basics, to the role of each of these organizations.
If I understand correctly from your testimony, SOPRAM, after all, acts in an advisory capacity. As a result, it can't be called upon to interfere or be seen as being the decision-making body that ADM has been mandated to be. Then you take a look at ADM and its relationship with the government.
When we look back at the decision that was made several years ago it's been a phenomenal success story of privatizing these airports. Everywhere I travel, from a smaller airport to the larger ones, they're all expanding. They're all investing. It's economically a godsend.
Some of the suggestions that I'm hearing around the table are that the federal government has a role to play. And I'm thinking out loud here. The federal government really has a very little role. We relinquished that role at the request of the regional bodies, because they were the ones that lived and worked in their communities and they were the ones that could best see the future of their airport. So that 60-year lease that we've entered into is really a transfer of responsibilities and all the things that go with that lease to the local bodies. And that's what the ADM has been there for to administer.
So I guess some of this witch hunt I see here today, to try to lay blame on one body or the other, might be justified. I think ADM is probably the first one to recognize that they've done a lousy job of communicating and being more open with some of their decision-making processes. I hate to come back to the proverbial debate we've had for the past 30 years on the West Island, for example, on the future of one or the other. It's a breath of fresh air when I hear you come here and say you have the interests of the overall region at heart, because that's where the direction should be focused, and I don't see it that way.
I've asked Mr. Macdonell before about the impact of the increased traffic in Dorval, the impact on the quality of life issues before your constituents, my constituents, most of them.
I've also put together some of the other testimony, and I'm wondering whether Dorval can fulfil its mandate beyond 2017-2020. There was some severe criticism by the mayor of Mirabel that said you don't have the expansion possibility, that you're handling almost 600 flights per day and the capacity is at its peak.
Therefore, should the government actually reopen that whole debate again on what we should do with each airport, or do you have the confidence that ADM can actually manage a situation unique in Canada, which is a two-airport situation?
Mr. Peter Yeomans: To the question about being able to manage, one has to be inspired by the mission statements and the commitment of the operator in terms of the lease. The lease is very specific, and it took months to iron out. It certainly is innovative in many respects from the standpoint of who's to do what and the conditions under which they're to be done.
As far as the federal government is concerned, I would look at it as a Canadian taxpayer. They are the recipients in 60 years of what is going to be built there and how the whole situation is to be configured. One of the main ways is to ensure that there are annual or periodic audits. The other thing is for interaction between transport and ADM at the highest level, on occasion, to discuss the progress. It should not be seen as an organization that nobody can question. The word “para-private” means something.
The very fact that I have a role to play through to the top as far as information is concerned is a protection for transport for the Government of Canada. The Government of Canada can intervene whenever it wishes, certainly in the questioning mode, and it can do that either through SOPRAM or directly through ADM. So there are provisions in there for what I mentioned before are the checks and balances.
On the question of intervening, if you remember, the reason for the devolution of the airports was to get away from the political elements of it, which were very tiring, costly, and essentially not serving the Canadian interests. This is why we did what had to be done. The federal government at the time saw the opportunities that this represented and bought into it with some modifications.
As far as presence of the board is concerned, if you're on the board and you're a voting member, you're part of the decision. I think the federal government has to decide whether they want to be part and parcel, juge et partie, and if not, then perhaps they should be there as observer status. That has to be reviewed.
As far as SOPRAM is concerned, we have a provincial government observer who's there at all our meetings, and he's interested because of the ground approaches and the activities there, and especially the air modules. So the federal government kept the air safety and kept the full ownership of the facilities. I think as landlord, they have every right to know exactly what is going on at all times in a very transparent fashion.
My understanding is that this interaction is taking place. Perhaps it has to be intensified. Perhaps it has to be formalized a little better. That's part of the growing pains of this evolution and devolution at the same time.
The Chair: Thank you, Nick.
Marlene Jennings, please.
Ms. Marlene Jennings: I wasn't able to ask these questions to Mr. Meilleur, the mayor of Mirabel and former member of COPAM, or to Mr. Gingras, who's the president of COPAM. Perhaps you have the answers.
In terms of the economic development for the Mirabel region, if I can call it that, which comprises many different municipalities, clearly the expansion of the extension of the construction of highway 13 right up to the airport would be a boost in terms of the airport being able to draw in new customers. And then there would be the economic fallout, which would be positive for the region. Do you know whether or not discussions are ongoing with the Quebec government to in fact extend highway 13 right to Mirabel? Do you have any idea of what the cost would be?
Mr. Peter Yeomans: The costs are in excess of $100 million. Expropriations would have to take place to get the corridor. The discussions with the provincial government, I believe, are ongoing. It's never a question of tomorrow. It seems to always be put off. There's a bit of frustration obviously in that area.
Now, with scarce public dollars, the question of payback from the standpoint of cost benefit is always looked at. So there has to be something tangible to substantiate the outlay. And if it isn't there, it's a chicken and egg thing. So really I think what will happen—
Ms. Marlene Jennings: Are you saying it's not there right now?
Mr. Peter Yeomans: —Ms. Jennings, is that, over time, you'll see the aircraft-related and other types of industries evolve with Mirabel, especially in the industrial park in that area. As the mayor mentioned, things are happening. This will, over time, create that synergy and a magnet effect. Eventually you're going to see the industries that are so allied overlap with the region around both airports, because there is a community of interest between the two. And the last thing we would ever want to do is to try to draw a line. We have something fascinating here. We have a tremendous investment that we can certainly work with in tandem.
Ms. Marlene Jennings: So at this point in time there isn't that economic justification in terms of cost benefit that would justify the expansion of highway 13 right to Mirabel airport.
Mr. Peter Yeomans: It would have to require a significant substantiation—I think that's where the difficulty is—and that in light of the evolution of Mirabel and then also the capacity of Dorval for the next 17 to 20 years to handle the demands at that particular area as far as the movements per day, etc.... So we have two things happening here, and fortunately we have some options. I think that's what's important.
Ms. Marlene Jennings: Thank you.
The Chair: Thank you, Marlene.
I have three left. We'll have one question each.
Bev, Raymonde, and Mr. Asselin.
Ms. Bev Desjarlais: In your meetings with the SOPRAM advisory group, did you ever at any time in the last, say, six or seven months have discussions over the possible changes that each airport might have to address with the change to the airline restructuring, i.e., the need that some other carriers might want to come into Dorval, things along that line?
Mr. Peter Yeomans: In the last two meetings of SOPRAM, the chair, Mr. Lefebvre, along with Madam Pageau-Goyette and their staff reviewed the effects of the Onex situation with Air Canada—what happened as a result of the coming together of both airlines—and the opportunities for other carriers to get directly and indirectly involved, knowing this was certainly going to evolve and evolve very quickly.
So to answer your question, yes, from the very beginning of discussions on the Onex issue, the impacts it could have, and the reduction or increase, depending on the type of flight and the type of aircraft....
The Chair: Ms. Folco, just one question, please.
Ms. Raymonde Folco: Your Worship, at the start of your remarks, you introduced yourself in your capacity as a mayor and also as a SOPRAM director. I would like to come back to this aspect of your role.
We know that SOPRAM is the only organization of its kind in Canada, the only one that has relations of the sort that it maintains with ADM. No other airport authority has such relations with an organization like yours. I would like to know your opinion on the role that SOPRAM currently plays. You expressed your satisfaction with the information that you received, with the personal contacts you have with ADM members, but I would like to know how...
Because we have indeed heard a great deal of criticism. Even Ms. Pageau-Goyette referred this morning to certain shortcomings in relations with SOPRAM members. My question will therefore be very short, in the hope that your answer will be longer and more detailed. What role could SOPRAM play to ensure more transparency in ADM's management?
Mr. Peter Yeomans: That is a very good question, Ms. Folco.
The devolution and construction period gave rise to a great amount of synergy, interaction and interest. As for the SOPRAM, which acts as a kind of conscience for ADM, it could begin reviewing its role tomorrow and, if it can be improved, through our representatives...
I explained earlier that each group that belongs to SOPRAM supports the candidacy of an individual who participates at ADM as an observer. I mentioned that earlier.
We SOPRAM members perhaps have a duty, it is perhaps one of our roles and responsibilities, which are constantly evolving, to ensure that SOPRAM's management practices are perceived by the public as being beyond reproach, and that they are in fact irreproachable.
If SOPRAM needs to be improved, I am sure that the people who sit on this body, who are very professional and well-intentioned, will ensure that it is improved.
Ms. Raymonde Folco: That sounds to me like a statement of good intentions.
Mr. Peter Yeomans: Yes.
Ms. Raymonde Folco: I would have preferred an answer that is a little more concrete.
Mr. Peter Yeomans: In that case, we would have to go back to the letters patent that define the relations between SOPRAM and ADM. We must verify that they are followed to the letter. If the issue of transparency needs to be examined, it will probably have to be examined. I cannot give you a solution right now, but we must always keep sight of the goals, of the mandate of both organizations, and ensure that accountability is always a priority.
It would not be useful to require reporting on various items on a weekly basis, but there are certain phases in the construction and reconstruction. We must ensure that there is a good dialogue and frequent discussions. I learned from my predecessors that there were shortcomings in this regard, for one reason or another. Consequently, we must ensure frequent, open communication. We must aim for that.
The Chair: Thank you very much.
Finally, one question, Mr. Asselin, s'il vous plaît.
Mr. Gérard Asselin: The representation on SOPRAM must be equitable. It must be a democratic committee. Its decisions are adopted on a 50-percent-plus-one majority. Do you think that SOPRAM members are representatives of their communities?
The Chair: Order, please. We all had our chance at questions, so let's reserve our comments, please.
Mr. Gérard Asselin: Do you think that the composition of SOPRAM accurately reflects the stakeholders in the airport sector? Do you not think that this representation shows a strong bias in favour of Dorval? There is the Montreal Chamber of Commerce, the Board of Trade, the City of Montreal, the mayors from the suburban communities, the South Shore, Laval, with a question mark, and the North Shore with Mirabel.
When we are concerned with democracy, we are concerned with the representativeness of the bodies where decisions are made, decisions that must be adopted with a majority of 50 percent plus one in a democratic system. Is some bias not introduced into decision-making by the composition of the SOPRAM management office?
Mr. Peter Yeomans: First, consider the Chamber of Commerce of Greater Montreal. What is it exactly? It is not just the Island of Montreal. The organization is made up of chambers from not only the Island, but also from outside the Island, either on the South Shore, or in the north crown and even in one part of Laval. Those are some of its members.
The committee is also made up of representatives of the geographic areas surrounding the greater urban area. Of course, the population and investments are mainly concentrated in the core and not in the surrounding municipalities.
However, it would be desirable if everyone were represented. As I said at the outset, I represent the interests of almost 800,000 people, investments amounting to billions of dollars and thousands of jobs. My municipality is next to that of my colleague from Mirabel, now Blainville, where investments are well below those figures. We could also compare the City of Montreal to the South Shore. They all have a vote equal to mine. The vote is not weighted. We try to reconcile our different viewpoints and diverging opinions, by focussing on our common goals. We do not achieve that by weighting individual member's votes, but by applying common sense and choosing the best ways of doing things.
We simply could not function if everyone around the table did not have the same goals, did not have the same mission, and did not share the same spirit.
The Chair: Thank you very much.
Your Worship, Mayor Yeomans, thank you very much for answering our questions.
Mr. Peter Yeomans: You're very welcome, Mr. Chair. It was a pleasure.
The Chair: I agree with Mr. Guimond that the tone of your presentation was most welcome. Thank you very much.
Colleagues, our last presenters—if we could bring them to the table, please—are Mr. Jacques Roy and Mr. Robert Gagné.
While the gentlemen get seated, I'll just remind you that we're back in this room at 3:30 p.m. We're combining our last two witnesses so that we can be done before the vote and won't have to return after the vote.
So we'll have the first witness from 3:30 p.m. to 4:30 p.m., and then we'll combine the last two witnesses because they're both labour representatives. We'll have them both before us to present and ask questions for the last hour before the vote is called. Is that all right with you?
Ms. Val Meredith: What time are you expecting the vote?
The Chair: About 5:30 p.m., I think. If that's all right with you, we'll proceed in that way.
Ms. Val Meredith: Is Air Canada not showing up?
The Chair: No, Air Canada is not showing up. They declined. But that's all right. We have them on May 4, so you can expand the questioning a little bit.
Colleagues, we welcome to the table, from the Université du Québec à Montréal, Jacques Roy, professor, and from École des Hautes Études Commerciales, Robert Gagné, the economist.
Gentlemen, welcome to the Standing Committee on Transport. We look forward to your presentation of five minutes, please, so we can ask the questions that our committee has for you. Thank you. When you're comfortable....
Mr. Jacques Roy (Professor, Université du Québec à Montréal): Thank you, Mr. Chairman.
Ladies and gentlemen, committee members. I am very pleased to be here today, accompanied by Robert Gagné. Unfortunately, our colleague Yvon Bigras was held up at the university and was therefore unable to attend. Some of us still have to teach.
We are here to share our thoughts on decisions made by Aéroports de Montréal over the past five years. We have prepared a brief, and I assume you will receive a copy as soon as it is translated. I will refer to it occasionally, however, since we do not have much time.
We are here today because we have been examining this issue for several years now. We represent no interest groups. Two of the authors took part in a study on international air transport in Quebec in 1993, commissioned by the Department of Transport. Therefore, this is obviously an area that has interested us for some years.
Recent events have prompted us to respond, including everything we have read in the media and the decision to invest $1.3 billion in the two airports. We have been prompted to reflect upon the repercussions of ADM's 1996 decision, and on the continuation of this project in coming years. We examined the soundness of the 1996 decision and decision-making process. As you will see in our brief, we have highlighted deficiencies in the areas of transparency and accountability.
Allow me to quickly go over the 1996 decision. In his testimony, Mr. Meilleur alluded to some aspects of the process; he pointed out that, at the time, Lufthansa's withdrawal from the airport hurt everyone in Montreal. Some people had not seen it coming. However, we understood fairly quickly why they had withdrawn because we had discussed the economic situation and other factors that prompted their withdrawal with people from Lufthansa in the past.
That said, ADM decided at the time essentially to replace Lufthansa with a carrier known as Air Canada, which would continue the flights to Frankfurt, provided that it operated out of Dorval and guaranteed the flights.
Again, I will quickly go over the documents mentioned by Mr. Meilleur, and the somewhat apocalyptic scenarios that seemed to worry everyone at the time. People were saying that there would be a haemorrhage—that was the word used—if nothing was done. So we used the worst-case scenario to conduct an in-house study. There was some urgency to this, of course; we had to move quickly because the sky would be opened to everyone. We were already embarked upon that process, and U.S. carriers would be landing at our gates in 1997. So we had to move quickly.
We also heard some optimistic—even unrealistic—projections about how the number of passengers would grow because of this decision. I will come back to this later.
So what has happened since then? If we look at the documents and studies that have been tabled or that we have heard of, we can see that relatively few jobs have been created. Passengers are still being inconvenienced in many ways, and still have to deal with a temporary international finger. We were told that completing a permanent finger was urgent, yet today that project is still being postponed.
There have also been many hidden costs that were not included in the $185 million, including costs engendered by agricultural recovery, traffic congestion and the incentives mentioned earlier that were offered to chartered carriers to persuade them to operate out of Mirabel. To that, we can add the damage being done to the environment, as well as noise pollution, which is certainly not going to decrease. The purpose of all this was to increase the number of passengers taking connecting flights out of Montreal.
Where are we at, then? We are responding now, but we have just received Statistics Canada data for 1998. We would dearly love to see the 1999 data. Unfortunately, that takes rather a long time. But we do get the data eventually.
In comparing 1996 with 1998, we have to understand that basically, Aéroports de Montréal's problem was that it compared itself to the Toronto airport. We talk about Montreal airports' experiencing a decline in relation to Toronto's airport. We dream that one day, Montreal will be the gateway for international flights into Canada—quite a dream, even then—and we say that it could be achieved if only we didn't have those two airports. This is obviously an erroneous diagnosis, as we have demonstrated several times. ADM, its consultants and others have demonstrated that Montreal's decline in relation to Toronto can be explained by many factors.
That said, in examining the repercussions of ADM's decision, which consists in allowing the city to act as a hub for connecting flights—something with which we agree in principle, because nobody wants to split up traffic—we arrive at the following result. If we add up all domestic legs of international flights in Montreal and Toronto, we arrive at a certain number. In 1996, the Montreal share of those legs represented 23.7%. Therefore, Montreal's market share was 23.7%. In the first full year following the consolidation of flights in Dorval, that share rose to 24.6%, an increase of 26,480 passengers. On the grounds that the ice storm affected flights in January 1998, the first quarter was removed from the equation and the other three quarters were averaged. This improved the figure somewhat, giving Montreal 24.9% of the market share instead of 24.6%, an increase of 36,000 passengers when we round out the figures. In other words, 36,000 more passengers flew domestic flights out of Montreal, in comparison with Toronto.
The same principle applies to transborder connections. The figures for transborder legs of international flights have remained the same, with almost no increase. Thus, we are very far from achieving the 650,000 additional passengers projected for the year 2000, or even the additional 500,000 passengers projected one year after the consolidation of flights in Dorval.
I will run quickly through the other events since the 1996 decision, which demonstrate problems with ADM's transparency and accountability. I will cite only recommendations by the Tardif commission, subsidiary management, internal conflicts, and other factors.
I would also like to highlight the well-known 1997 get- together, which flowed from “Open Skies”. The meeting did take place, but unfortunately in Toronto—or fortunately in Toronto, depending on where you stand. There has been a significant increase in transborder flights to Toronto and Vancouver, as you will see in our brief. While there have been fairly few new transborder flights into Montreal.
Now we come to the ADM project, the $1.3 billion that are to be invested over the next 20 years. ADM wants to spend almost $500 million in the short term to build a new international transborder finger and renovate the terminal. Bear in mind that, in 1996, this was supposed to cost $150 million. Now, the figure we hear is over $500 million. ADM is also talking about increasing the airport improvement tax to $30.00, and is also talking about more federal money.
What this project will achieve is to bring Dorval to Air Canada on a silver platter—to paraphrase my colleague—and allow Air Canada complete domination. We will therefore have to deal with all the inconveniences of an airport dominated by a single carrier. U.S. studies have shown that travellers living in a city dominated by a single carrier pay rates up to 18% higher than the rates of airports in cities that are not a hub. Montreal will always be a secondary hub, not the real hub, which is Toronto. That means we will have all the inconveniences of being a hub without having its advantages.
If I may, I would like to formulate a number of recommendations.
Given that the institutions managed by ADM are in fact public institutions, given the management problems, lack of transparency and lack of accountability demonstrated by ADM, and given the issues involved in ADM's decision...
The Chair: Mr. Roy, we have a bit of a time problem here. How many recommendations are you making?
Prof. Jacques Roy: Four.
The Chair: If you can do it in less than a minute, we'd appreciate it.
Prof. Jacques Roy: Yes.
The Chair: Raymonde.
Ms. Raymonde Folco: If all of this is in the document Mr. Roy has submitted, then I would suggest that in order to save time—
The Chair: We don't have that document because it wasn't translated.
Ms. Raymonde Folco: Oh. I'm sorry. Then I withdraw that.
An hon. member: Is this the document?
The Chair: Wait a minute, colleagues. Relax.
How did you receive the document?
Ms. Raymonde Folco: I have a document, called Une analyse du “beau” projet d'ADM de 1995 à aujourd'hui.
The Chair: Well, colleagues, it wasn't the committee that received the documents. It may have been obtained by—
Mr. Nick Discepola: It's http:\\www.unites.uqam.ca/sirp/ADM/index.html.
The Chair: There you go.
Colleagues, the more you waste time, the less we have for questions.
They have obtained a document through, I guess, a website. It was given to our committee but not distributed because it wasn't bilingual.
Would you like the document now, without it being translated?
Some hon. members: Yes.
Some hon. members: No.
The Chair: You don't want it distributed.
Ms. Bev Desjarlais: Not if it's not translated.
The Chair: Fine. We have a disagreement.
Mr. Jacques Roy: If you can give me 30 seconds, I will finish reading the recommendations.
The Chair: That's fine.
In the past, Bev, just so you know, when the French was not available, Mr. Guimond did on many occasions allow the English to be distributed. So we were hoping for cooperation there.
Ms. Bev Desjarlais: Go ahead.
The Chair: Is it all right?
Ms. Bev Desjarlais: I have to leave right now anyway, so go ahead.
The Chair: Okay. Thank you.
So we will distribute.
One minute, Mr. Roy, please.
Mr. Jacques Roy: Since the federal government is the real owner of Montreal's airports, we respectfully recommend that a moratorium be imposed on the ADM renovation project, that ADM be required to demonstrate more transparency and accountability by obliging ADM to comply with regulations governing other airport authorities, that the possibility of consolidating all flights at Mirabel and making Dorval an industrial airport be seriously and objectively examined as an option, and, lastly, that the Competition Office examine ADM's monopoly, particularly with respect to administration and airport fees, and Air Canada's domination in Dorval. Thank you.
The Chair: Mr. Roy, you did that in way less than a minute. Thank you very much.
Colleagues, we have questions, starting with Val Meredith.
Ms. Val Meredith: Thank you, Mr. Chair.
You commented that the media, I guess, have indicated that there's $1.3 billion of improvements, and that's for both airports, not just the one. You made the comment that it used to be $185 million. I'm a little interested in that.
Could you please explain to me the discrepancy between that $185 million and $1.3 billion?
Prof. Jacques Roy: Originally, in 1996, the project at the time was for a temporary international terminal that would cost $36 million and an additional $150 million for a permanent terminal. That was supposed to do it all.
Ms. Val Meredith: In Dorval or Mirabel?
Prof. Jacques Roy: In Dorval. To consolidate all regular international flights in Dorval, it would cost, bottom line, $185 million. It would be financed by an airport improvement fee at the time, which was supposed to be free for intra-Quebec and so on. Anyway, it turned out to be $10 for everyone.
The Chair: What year was that?
Ms. Val Meredith: It was 1996.
Prof. Jacques Roy: ADM is now telling us it's going to cost an additional $500 million in the next five years to rearrange, as Madame Pageau-Goyette said, to
build from the inside, expand from the inside,
or build from the inside.
We think it's a lot of money as compared with the original project. It doesn't even count everything; $200 million was spent in Dorval in 1997-98, and we know many other investments are required and were required to consolidate all flights.
Ms. Val Meredith: One thing we've heard from some of the airline witnesses is the concern that airport authorities have these grandiose expansion plans. With the merger, what's happening is that there's a cutback in the number of flights that land and take off, and therefore a reduction in revenue to the airport authorities.
I know Dorval is showing an increase. Dorval is Air Canada's hub—its major home office, if you want to call it that. Is there not a concern by the ADM and by others that this $1.3 billion project may be one of these grandiose plans they really can't afford?
Prof. Jacques Roy: I don't think Air Canada is much concerned. I think they're happy to be in Dorval and that they will be, as I said, the major player in Dorval.
It's kind of ironic that the international terminal will be the last one built. They're building the transborder part first. So I don't think Air Canada is in a big hurry to see competitors arrive and to have competitors play on a level playing field, if you want.
So I'm not sure; maybe you're going to have to ask Air Canada.
Ms. Val Meredith: I'm interested in those comments as well, because one of my questions to the ADM was on this concern that Air Canada will get through the back door—through the airport authorities—what they can't get through the front door. They will restrict competition by restricting access to the airports. A couple of airlines have advised us that they have not been allowed to use Dorval.
I'm concerned about what you have just told me, that Air Canada can prevent competition from Canadian carriers by controlling airport access. Dorval is one, because it's their home airport, but can they do that in other major airports, such as Pearson and Vancouver?
Prof. Jacques Roy: The situation is different in Montreal because of the two airport systems. So if you have competitors like charter airlines that offer lower fares, you just send them to Mirabel so they don't fight with you in Dorval.
The WestJet case is another example. Royal Airlines is a regular carrier for the United States, for Florida, and they had to move to Mirabel. So I share your concern about this issue.
Ms. Val Meredith: It's not just the big ones. In places like Whitehorse, decisions are being made that the facilities will not be offered to smaller carriers and charter carriers that might offer Canadians competition. How do we get around that? What would you suggest to this committee to avoid getting...?
Mr. Robert Gagné (Economist, École des Hautes Études Commerciales): That's my baby. In an airport there is a real advantage in being first. In Montreal, for instance, at Dorval, the master is certainly Air Canada. So the regulator, the government, should make sure airports are available and can serve airlines that want to serve those airports. If you can stop them from coming in, you limit competition and can get higher fares.
In the case of Montreal, you keep the charters in Mirabel, which is in a different market in a remote place without any accessibility. From a customer's point of view, it's preferable to go to Dorval. So that, in a sense, is a means of keeping competition away. But that's a good thing for Air Canada. We want them to do that because they're running after profits, so that's what they have to do.
Ms. Val Meredith: I guess my concern is that the government has divested to the airport authorities the responsibility of running airports. The government is now faced with a monopoly. How can the government, without re-regulating airports and airport authorities, put some controls on the dominant air carrier that has a monopoly to keep it from using its spending power to put controls on airport usage?
Mr. Robert Gagné: The government has to make sure airports are managed in a way that will allow competition to come in. That's it.
Ms. Val Meredith: Thank you.
The Chair: Thank you, Val.
Just a reminder, Val, we also have the additional regulations within the bill—the CTA, cease and desist, as well as predatory behaviour.
Ms. Val Meredith: I know, but I was asking the witness what recommendations they could make. I know what we're dealing with, but the witness answered what they felt could be done.
The Chair: My apology. I thought you didn't think there was anything there.
Ms. Val Meredith: Oh no.
The Chair: But you're aware of it all. That's great.
Ms. Raymonde Folco: Good afternoon, Mr. Roy and Mr. Gagné. The four recommendations you have just read, which appear on the last page of your analysis of this “excellent”—“excellent” is in inverted commas—of course—project, which I have just downloaded from the Internet, are all addressed to the federal government. I am a Liberal, and have generally no problem either in accepting or promoting the government's role and responsibilities in ensuring proper management.
My question for you is on this issue in particular. Are there managers in Dorval and Mirabel? We have a board of directors at ADM, and then we have SOPRAM. By submitting these recommendations to the government of Canada, are you not implicitly recognizing SOPRAM's weakness and lack of leadership in their dealings with ADM? In my opinion, your recommendations should first be submitted to the ADM advisory committee, which is SOPRAM. In going above SOPRAM's head, are you not implicitly recognizing not only its weakness, but also the fact that it is not playing the role it is supposed to play?
Mr. Jacques Roy: You are absolutely right, Madam. I don't believe that the SOPRAM is in any position to tell the ADM what to do, since, in my opinion, it is an advisory organization. You were told this morning that its members were only informed at 8:00 a.m. of a decision regarding an investment of $1.3 billion. Therefore, I don't think there is much point in turning to that type of organization.
I see the Montreal airports as being more or less an important real estate asset which belongs to the federal government and therefore to all of us. You have handed over the management of these assets to a specific group, and we are wondering how it is accountable, whom it turns to for information and who gives it the green light to make this type of investment, when the stakes are so high and this type of decision would have a long term impact.
Ms. Raymonde Folco: Thank you.
The Chair: Thank you, Raymonde.
Michel Guimond, please.
Mr. Michel Guimond: Mr. Roy, I will ask you a very short question and I would like to receive a very short answer so that I can ask you other questions as well.
I don't know if you were here this morning to hear Ms. Pageau- Goyette's testimony. She confirmed, as we read in the papers, that in 1999, her salary was $185,000, in addition to bonuses which she believed represented about 30% of $185,000. That's what she told us. Since you are an expert in transportation management, do you know how much the managers of other airport authorities in Canada make? If so, are they on the same scale? What do you think?
Mr. Jacques Roy: I read the figures in the papers, but I haven't researched the issue. We did not want to go on a witch hunt, as we said earlier, or get into a debate about personalities. We studied the decision-making process of the ADM group and the consequences of those decisions. I did not research the issue. I don't know if Robert...
Mr. Michel Guimond: Have you read the Coopers & Lybrand report?
Mr. Jacques Roy: No, not in its entirety. I haven't got my hands on a copy.
Mr. Michel Guimond: The basic point I retained from Ms. Pageau-Goyette's testimony this morning, and which I spoke of to the media, is that I don't see where the problem is, and that includes her answers to questions regarding contracts given to Mr. Lefebvre.
In your mind, it might simply be a question of legal management practice, but if you act that way, don't you feel the public's confidence is tested? You are a taxpayer and you say you're not associated in any way with a protest movement against the ADM group. Are management practices like the ones involving Mr. Lefebvre acceptable?
Mr. Jacques Roy: My answer lies in the second recommendation we made. We don't see why the Montreal airports should not fall under the same rules as other airports throughout the country, nor why there shouldn't be elected representatives on the board of directors, nor why the rules governing the tender of contracts should differ from those of other airport authorities. That's the way I see things. Perhaps Robert would like to add something.
Mr. Michel Guimond: Fine. Page 30 of the report deals with the relationship with partners and I will quote several passages. A little earlier, reporters asked me if there was something I specifically disagreed with in the testimony.
It seems that the relationship between the ADM group and its
partners are characterized by a lack of mutual confidence.
Most of the stakeholders questioned held the view that the ADM
group did not trust its partners enough.
The ADM group does not pay enough attention to its partners and
does not consult enough before making a decision.
The ADM group's operational expertise is perceived as being weak.
Customer service is particularly lacking. Despite the laudable
efforts of its operational personnel [...] its ignorance of the
industry represents an obstacle...
This morning, I talked about several things, including the payment of bills and the cumbersome billing system. In view of this, do the statements confirmed by Coopers & Lybrand reinforce your conclusions?
Mr. Jacques Roy: Yes, indeed, the report we tabled addresses the internal conflicts within the ADM group, as well as the fact that three chairman came and went since 1996, and we also mention all the problems and setbacks this may have caused the organization, including the departure of many middle managers, people I knew well and who left the ADM group for all sorts of reasons. As we indicated in the conclusion of the report, we noted that the organization's ability to manage operations decreased, which is not surprising given the fact that many competent people left in the last three years for various reasons.
Mr. Michel Guimond: Why did these people quit their jobs? There is a lot of innuendo and people seem to want to have it both ways. Why did Jacques Auger quit?
Mr. Jacques Roy: You would have to ask him. I don't know.
Mr. Michel Guimond: Yes. Thank you, I have no further questions.
The Chair: Thank you very much, Michel.
Marlene Jennings, Clifford Lincoln, Claude Drouin, and then we're done.
Ms. Marlene Jennings: Thank you, Mr. Roy and Mr. Gagné. I will try to be fairly brief and to stick to the recommendations you made regarding the federal government. You recommend that it:
Impose a moratorium on the redesign project;
Demand greater transparency and accountability...
Seriously and objectively study the option of consolidating all
flights at Mirabel...
I must admit that I have certain reservations regarding your recommendations, since the federal government and the ADM group have both signed a leasing agreement. Suppose you were the owner of an income-generating building and that you signed a 60 year lease with a property management company. The leasing agreement would contain various provisions, including how much the company has to pay in rent. Both parties must abide by the agreement until it expires, unless both parties agree to reopen the lease, otherwise the terms remain the same.
The federal government cannot therefore impose a moratorium and demand more accountability and transparency from the ADM group. Of course, I am in favour of transparency and accountability, but the fact remains that both parties must abide by the leasing agreement until they mutually agree to reopen it. Ms. Pageau- Goyette told us that she would agree to that and to make any changes necessary allowing the federal government to appoint representatives to the board of directors. However, she could set certain conditions and demand that such and such a provision be renegotiated.
People have forever been accusing the federal government of stomping on everyone. These accusations don't only come from Quebec, but from elsewhere as well. You're now telling us that the federal government should start stomping around—but only in this particular case—in order to destroy the ADM group, something which you believe would make everyone happy. But you have to be consistent. First, the ADM group would have to agree to reopen the leasing agreement, which only expires in a few years, in fact in several decades. Why are you taking your complaints to us?
Mr. Jacques Roy: Because you own the facilities.
Ms. Marlene Jennings: Yes, but the lease is still a factor.
Mr. Jacques Roy: Listen...
Ms. Marlene Jennings: Perhaps.
Mr. Robert Gagné: Perhaps the government was had.
Ms. Marlene Jennings: Perhaps you were right in saying that the government was had and that it learned its lesson when it negotiated the leases with the other companies.
Mr. Robert Gagné: We don't play at politics.
Ms. Marlene Jennings: No, I am not asking you...
Mr. Robert Gagné: We are academics and we studied the situation at Dorval and Mirabel. From our point of view as academics specializing in transportation...
Ms. Marlene Jennings: In transportation?
Mr. Robert Gagné: Of course, in transportation; we are dealing with airports. So, we studied the situation and we concluded that something was not working. One of the things we noted is that initial projects were set aside to make way for new ones. This was noted. Furthermore, we noted that measures taken by the ADM group seemed to create conditions allowing Air Canada to better exercise its monopoly. I say this as an economist. Its not a political point of view. So, based on that observation, we came here to tell you what the problem is. You replied that there is a lease. But we looked at the situation from an economic perspective. It doesn't matter whether there is a lease or not; that in itself doesn't affect the facts. In fact, Air Canada is consolidating its hold at Dorval.
Ms. Marlene Jennings: Yes, but given the fact that the ADM group could freely do everything you say, apart from the issue regarding the competition bureau, why not direct your recommendations to the ADM first and then recommend that the federal government try to cancel the lease in order to get to the bottom of the matter?
Mr. Jacques Roy: Let's take your example. You have two income generating units: one is called Dorval and the other Mirabel. You make more money with Mirabel than with Dorval. But the Mirabel property manager, with whom you have signed a lease, decides to turn Mirabel into a money-losing proposition. If you are the owner, are you just going to sit back and do nothing? It is similar to the situation we are dealing with here.
Ms. Marlene Jennings: No, but if you have a lease, I have no reason to...
The Chair: Thank you, Marlene.
Ms. Marlene Jennings: ... cancel it.
The Chair: Ms. Jennings—
Ms. Marlene Jennings: Yes.
The Chair: Thank you.
Clifford Lincoln, please.
Mr. Clifford Lincoln: I must say, Mr. Roy and Mr. Gagné, that when I heard Mr. Guimond talk about the Coopers & Lybrand study this morning, and when he said that he who pays the piper calls the tune, it made me laugh a bit.
If I recall correctly, you were paid to do a study whose conclusions are a repetition of the previous ones. Now, you have told us that you were perfectly objective, that you are volunteers and that nobody paid you to do the job. However, by an amazing coincidence, the new study, which says the same thing which was said before, was made public a few days before this meeting.
I have to say I am a little bit suspicious, because when I compare this study to the one undertaken by Coopers & Lybrand, I find it rather stunning that the latter of study, which was made public and which is well documented, is not entirely negative. There are negative and positive aspects. A little earlier, Mr. Guimond chose only to mention the negative things. There were many of them, but on page 26 there was also a list of all the good things achieved by the ADM group. Your report, however, is entirely negative. There is not a single positive comment. For instance, the report talks about Air Canada's monopoly at Dorval without mentioning its maintenance operations and the 5,000 jobs related to them, it doesn't mention the convergence between Air Canada and Bombardier nor the fact that the regional jets left because of Air Canada, and many other such facts. None of that is mentioned. It's all negative.
It also does not mention the fact that the Canadian government clearly stated that in its new bill, it would set aside the best base to foster airport competition. But that is not mentioned at all.
The report says that there are few new flights. In fact, there is a whole list of new flights. I could give you many examples. Also, there is no mention of the two strikes which took place in 1998. The report doesn't refer to 1999, which was Dorval's best year in terms of growth. Ms. Pageau-Goyette mentioned it this morning; perhaps she has her facts wrong.
So in a fairly short report running to about 20 pages, you conclude that the whole Mirabel-Dorval debate should be reopened and we should start anew. Don't you think there has been enough talk and that we should instead try to find new runways? If all of Air Canada's flights were transferred to Mirabel tomorrow morning, would Air Canada be in a less dominant position?
Would Air Transat and Canada 3000 cut into Air Canada's dominant position? Isn't Air Canada bigger than all the other airlines put together in Toronto, Vancouver, Edmonton and Calgary? Isn't Air France the biggest carrier in Paris and British Airways the biggest one in London? That's what I don't understand.
I must add that I read your study very carefully and that I found it extremely biased, since it only gives one version of the facts and that its recommendations are drastic.
The Chair: Thank you, Clifford.
Mr. Roy, do you want to respond to that?
Mr. Jacques Roy: I understand your concern. Regarding where we come from, I said a little earlier that we have been studying this case since 1993 and that, at the time, we did not even know the people who were running Mirabel. Indeed, we did a study in 1996 for the Mirabel authorities, but I had already made my opinion public previously to that. Our weakness may be that our point of view has been consistent.
You are right in saying that this document greatly underscores the weakness in the way the ADM group runs its business. That was the point. The point was not to be objective. This is not a 100- page document. We wanted to focus on the new statistics which became available barely 10 days ago. We couldn't do so before because the figures were not available then.
It's important to clearly measure the impact of this decision. That's what we tried to do here with real figures. Ms. Pageau- Goyette is very proud of her 1999 figures, but she does not mention those from 1998. The 5.3% mainly represents international flights. However, she herself said this morning that charter carriers had increased their international flights by 12%. It's hard to say that the growth rate of 5.3% was due to the 1996 decision. I would rather not give an opinion on figures when I don't know where they come from and when I have not been able to study them. We will look at the 1999 figures once they are out.
I don't know if Robert wants to add anything. You asked a lot of questions.
Mr. Robert Gagné: If Air Canada operated out of Mirabel and if it was in competition with Canada 3000, WestJet Airlines, Air Transat and Royal Air, that would represent true competition, despite the fact that Air Canada has a huge network to draw upon. It's been proven time and time again that charter carriers foster competition.
Mr. Jacques Roy: What has reopened the debate, Mr. Lincoln, is that the government is on the verge on spending $1.3 billion. When the amount was $150 million, I think there was a consensus: that was fine, given the fact that it would be possible to do transfers. But now we are dealing with the project which would have cost $700 million with no end in sight. We should perhaps stop for some breathing room and take stock of the situation once and for all. And we should follow the final recommendations of a study which, for once, would ensure that if a billion dollars needs to be spent, it will be spent on the right things, irrespective of what these things may be.
The Chair: Thank you very much, Mr. Lincoln.
Mr. Drouin, you have time for one short question.
It's 2:10 p.m. already, colleagues. Question Period begins in five minutes.
Mr. Claude Drouin: Thank you, Mr. Chairman.
Mr. Roy and Mr. Gagné, you have raised several issues. You said that you could not comment on the 1999 figures. However, you chose to ignore the two strikes which took place in 1998 and which had a major impact on the figures; they should have been mentioned here.
You said that at 8:00 a.m., the SOPRAM received the documents which were made public at 10:00 a.m. Let me just say at this point that the opposition is part of Parliament and that sometimes the government makes an announcement before informing the opposition, because it knows full well that some members do not necessarily view the government's projects with an objective eye. Is it in the interest of some of SOPRAM's members to put a positive spin on things? That is doubtful, but they may be planning something.
Clifford mentioned the monopoly. Doesn't Air Canada have a monopoly at Mirabel? I want to insist on that.
To conclude, you've compared $180 million with $700 million. Would these amounts be spent on the same project? Have the same specific requests been made? Are you sure, Mr. Roy, that everything which was planned at the time will indeed be achieved by spending this money? Pearson Airport in Toronto will spend $4.3 billion on improving its facilities. Do you find it indefensible that we spend $800 million?
Mr. Jacques Roy: There are two issues. First, when Air Canada went on strike, I believe it also affected Toronto. Since we are comparing the relative flight situations between Dorval and Toronto, I don't think that's a problem.
Regarding the project, we studied the decision-making process. We were told at one point that it would cost a certain amount to consolidate the flights and to build a permanent international finger. Four years later, we are told that it's going to cost four times as much. But the objective hasn't changed.
Mr. Claude Drouin: Its the same project.
Mr. Jacques Roy: Its not the same project. This time, they want to redesign the airport, but the objective is the same.
Mr. Claude Drouin: Its important to mention that, Mr. Roy.
Mr. Jacques Roy: Well, listen...
The Chair: Thank you very much, Claude.
Colleagues, we're adjourned until 3:30 p.m., when we'll reconvene in this room. You can leave your books if you like, as it will be locked up.