TRGO Committee Meeting

STANDING COMMITTEE ON TRANSPORT AND GOVERNMENT OPERATIONS

LE COMITÉ PERMANENT DES TRANSPORTS ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 1, 2001

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[English]

The Chair (Mr. Ovid Jackson (Bruce—Grey—Owen Sound, Lib.)): Ladies and gentlemen, I think I see a quorum. We want to start on time, so we'll start the meeting.

I want to welcome the officials from Transport here this morning. Members have asked for a briefing. I think you're aware of what they need.

Who's going to start your presentation? You have ten minutes. As you have explained to us, and the committee would agree, it's quite informal.

Mr. Louis Ranger (Assistant Deputy Minister, Policy, Department of Transport): Let me start.

My name is Louis Ranger. With me are Bill Elliot, who is ADM in charge of safety and security, and Ron Sully, who is ADM of programs and divestiture. A fourth ADM in the department, who is in charge of corporate services, is not here this morning.

The way we're organized in Transport Canada, we also have five regions headed by regional directors. The four ADMs and the five regional directors report to Mrs. Margaret Bloodworth, who is our deputy minister.

I will go over eight or ten issues in the ten minutes, and I believe my colleagues will do the same. I assume there will be questions later.

[Translation]

I'll be making my presentation in English, but naturally, if members have any questions in French, I'll be happy to answer them.

[English]

The first item I should bring to your attention is airline restructuring. There's a long story here, which I certainly will not be able to tell in one minute.

It's been a challenge for the department to come up quickly with a special regime to handle the particular situation in front of us—of Air Canada acquiring Canadian Airlines. Initially the dominant carrier, as we called it, had 81% of the overall capacity in the system. Mr. Collenette has put a structure in place, with the help of this committee, that helps to deal with some of the emerging issues.

Obviously, one top-of-the-mind issue was how do we preserve service to small communities? As part of the agreement reached with Air Canada, it has a commitment to maintain services to small communities for three years. Obviously, there were concerns about having such a dominant carrier. Its behaviour could be predatory, and how could small carriers survive in that environment?

Special legislative powers have been given to the Commissioner of Competition, who can issue cease-and-desist orders to any carrier alleged to be behaving in a predatory manner.

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Commitments were also made regarding Air Canada employees—no involuntary layoffs or relocations for two years, and so on. We've also put in place a number of mechanisms to watch what's going on. The minister appointed an independent transition observer, Mrs. Deborah Ward, who reports periodically. We issued her first report a couple of days ago. There's also a complaint commissioner, Mr. Bruce Hood. He's there to try to mediate some arrangements when complaints are not resolved directly with the carrier.

So there's a whole battery of measures we've put in place, but obviously we're still very much in a transition period.

There is another issue in the area of air transportation we're going to look at in the next little while and for which we will need the help of this committee. As you know, we have a national airport system made up of the top 26 airports in this country. They handle some 95% of the total traffic, so we do capture the bulk of the market. We have entered into long-term agreements with most of those airports, in terms of managing the facilities. The facilities are still owned by the Government of Canada; they operate under 60-year agreements.

All those negotiations were carried out one by one. But as we step back now and look at the overall picture, there are some concerns that perhaps there's not enough transparency. Overall, it's a success in terms of having been able to create a framework to attract private sector investments to the airports. That's working extremely well.

But there are sometimes concerns that when an airport wants to introduce a new master plan, or make a major capital investment, or introduce airport improvement fees for passengers, then there should be some kind of process for consulting with the travelling public, with the airlines, with the community. So we're thinking of developing and proposing an economic policy framework to govern the way airports make those decisions. That would increase transparency and accountability. We will likely get back to you on this later this year.

One very sensitive topic in the last year has been our grain transportation system. There was a call for reform in the system, based more on market forces; it should be a contract-based system. Last May, Mr. Collenette, Mr. Goodale, and Mr. Vanclief introduced a major reform in the industry.

Again, it's hard to summarize all those measures in a short time, but essentially we put a ceiling on the total revenue that railway companies can collect from grain transportation, individually or collectively. In fact, that ceiling was set 18% below the level of their earnings in 1998. That represented, if you wish, a cut in revenue for the railways of $178 million.

The system is being implemented now, and it is encountering some difficulties. What we have put in place, via the legislation we introduced to support this reform, is a monitoring system. Every year, we will report back to this committee on the progress achieved toward having a more commercially oriented grain transportation system.

The Marine Liabilities Act—I'll be very brief on this. This will be coming your way very soon, if it hasn't arrived at this committee yet, because I understand it went through second reading yesterday, I believe, and was referred to this committee. In a nutshell we're trying to create one-stop shopping for marine liability where we will bring together in one bill various provisions dealing with passenger liability, cargo, and so on. There's a problem with that sector that we've known about for decades and that has not been resolved, and it's about time it was. Right now somebody operating a vessel carrying passengers can attempt to contract out its liability. On the back of the ticket it says, “This carrier will not carry any liability”. We believe we need legislation to ensure this is not allowed under Canadian law.

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It's a fairly technical bill. This will be the third time we've tried to pass it. It's not because it's controversial, but simply because we seem to be out of luck in terms of our timing, and the bill died on the order paper, or an election was called, and so on. I think there's very significant support for the bill.

Another item that will come your way is amendments to the Shipping Conferences Exemption Act. It's part of a larger bill on shipping, which I'm sure my colleague will talk about later. Again, it's very technical. A shipping conference has nothing to do with a conference call. A shipping conference is a group of shipping lines that reach agreement among themselves to offer fares at an agreed upon level and agree on conditions of carriage that are common to all. It has been with us for decades. An old terminology for that would be that it's a cartel. For that reason it has been exempted from the application of the Competition Act.

The benefit of that arrangement is that because of the huge investments that are required to operate shipping lines, if there are certain guarantees on fares and conditions of carriage, those lines can provide regular reliable service to our ports. We're trying to slowly liberalize that regime and to bring it in line with the American system. I'll say no more on that for today.

Another issue we would like to refer to this committee, if you have time, is the whole issue of intercity bus operations. When I was a student, I used buses extensively, and they were full. Certainly, that was the preferred mode of transportation for students. I'm not sure what happened. We could provide you with some figures later. The ridership on buses has been going down dramatically. There has been a quantum jump. It has been going down significantly since the early eighties, to a point now where it's about half of what it was 10 or 15 years ago. You have to wonder why that has happened.

How can we make the best use of that mode, which is extremely flexible? It removes cars off the highway and it provides a valuable service to small communities. Some people say what's wrong with our system is that it hasn't been deregulated. There are some who would argue that if we deregulated the bus industry—I'm talking about economic deregulation—some smaller operators in small communities may go to the bank and borrow $30,000 and buy a small van with eight or twelve seats and do a shuttle service with the next city, all that, of course, while having to be safe. It's a matter of trying to move away from a model where we have just a few large corporations in this country owning huge fleets of buses and operating extremely efficiently on the large routes, but maybe not with the level of efficiency we might find if we deregulated.

There's a huge debate on that. Some provinces think it's a good idea. Others do not share that opinion at all.

We've developed a background document on that, which describes the issues. The minister would like to bring this to this committee and have the benefit of your thoughts and recommendations on what we should do next. I know for a fact that the Canadian Bus Association is very keen to come and meet with you and to give you their perspective on that.

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Very briefly, my next item is the review of the Canada Transportation Act. There's a tradition in Transport that our umbrella legislation, which is called the Canada Transportation Act, is reviewed every five years. There's a provision in the act that requires the minister to launch an independent review every five years. We're right in the middle of a review, and the mandate of that review is extremely broad. It touches on all aspects of transportation policy and regulations. That report will be published at the end of June. Traditionally, this marks the beginning of a series of discussions as to what we should do with those recommendations, and I'm sure we would want to engage this committee on that as well.

I feel like skipping highways, but I'm sure you'll have questions on that. The story with highway infrastructure is that, traditionally, the federal government has invested jointly with the provinces about $350 million a year under bilateral agreements with them. In recent years those amounts have been going down, and the funds have pretty much dried up for the comings years for most of the provinces.

However, in last year's budget the government announced up to $600 million for highways. That's $600 million over four years divided among ten provinces and three territories, which is $150 million a year. I'll let you draw your own conclusion as to whether this is enough. When you consider that just building an overpass in an urban area can cost you a minimum of $5 million, a lot of people in this country, along with the provinces, believe that amount is not sufficient. But that's what we have in the pipeline for the next four years.

Very soon Mr. Collenette will be announcing the details of that program, and my colleague Ron has the responsibility to negotiate agreements with the provinces.

Finally, in 30 seconds, although I have spent seven years of my life on the issue, there is VIA Rail. This committee was very helpful in providing a recommendation on what we should do with VIA Rail. I don't want to oversimplify, but basically this committee said that the situation as it saw it a year ago was not sustainable and that there had to be a long-term financial commitment to VIA Rail. Last year the government announced an additional subsidy of $400 million for capital investments in rolling stock and infrastructure over and above the base of $170 million that VIA Rail can count on annually.

Mr. Chairman, I'm sure I've exceeded my ten minutes, but those are my items.

The Chair: Is that pretty well it?

Mr. Louis Ranger: For me, yes.

The Chair: William.

Mr. William J. S. Elliott (Assistant Deputy Minister, Safety and Security Group, Department of Transport): Thank you, Mr. Chairman.

I'm Bill Elliott. I'm the Assistant Deputy Minister for safety and security. I'm relatively new to the department. I have two of my colleagues with me, which may be helpful with regard to responding to your questions. They are Malcolm McHattie, who is the acting director of the road safety program, and Joanne St-Onge, who is the project manager for our Canada Shipping Act reform project.

Perhaps I could start by speaking very briefly about Safety and Security's vision and mission and what we intend to achieve in partnership with our stakeholders with regard to transportation safety and security. I'll then discuss a number of key initiatives.

Our vision is to have the safest transportation system in the world, and our mission is to further advance the safety and security of an efficient, accessible, and sustainable system through legislation, regulation, standards and rules, effective safety policy, licensing and certification, monitoring and promotion, and education and awareness. Our intended outcomes are the protection of life, health, the environment, and property and a high level of public confidence in the safety and security of our transportation system.

The transportation system in Canada is considered to be one of the safest in the world. There's a continued general downward trend with regard to accidents, injuries, and fatalities. Nevertheless, there are still too many accidents, and we must continue our efforts to reduce these numbers.

I've been asked to touch on a number of specific topics. Perhaps I could begin with two important legislative initiatives. First is the Canada Shipping Act 2001, which I understand may be tabled later today in the House of Commons, and the Motor Vehicle Transport Act, which was tabled in the Senate on January 31.

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[Translation]

Revisions to the Motor Vehicle Transport Act, 1987, were tabled in the Senate on January 31 and have now been referred to the Standing Senate Committee on Transportation and Communications.

The focus of Bill S-3 is safety. The tabling of this proposed legislation reflects the federal government's firm commitment to truck and bus transport safety.

As you are aware, the bill centres on the National Safety Code for Motor Carriers, specifically on standard 14 of the Code.

[English]

The Canada Shipping Act 2001 is certainly an important piece of legislation. The current act is archaic, confusing, and overly prescriptive. It's one of the oldest pieces of legislation still in effect in Canada, originally based on the British Merchant Shipping Act of 1894.

This enactment overhauls and replaces the Canada Shipping Act, other than the portions that concern liability, with modernized legislation to promote the safety and economic performance of the commercial marine industry. It will also ensure the safety of those who use pleasure craft.

Key changes to the existing legislation include improvements to provisions to protect and support efficient crews, to ensure passenger and vessel safety, and to protect the environment. New administrative penalties will also provide Transport Canada with an alternative to the courts for dealing with certain contraventions.

The enactment clarifies the marine responsibilities of the Minister of Transport, and of the Minister of Fisheries and Oceans, who is responsible for the coast guard. The enactment organizes the content, updates the terminology, and streamlines substantive requirements to make the law much clearer and easier to understand.

Industry expressed strong support of a major reform and overhaul of the act. It agreed that amending the act section by section would make restructuring difficult and would fail to address the underlying problems with the organization of the act and its related regulations. Industry wanted the new act to state clear objectives, and the department wanted to be involved in the reform process. This, I'm happy to say, has been achieved.

[Translation]

I would now like to talk about the Transportation Appeals Tribunal of Canada. Transport Canada recently drafted a bill to establish the Transportation Appeals Tribunal of Canada and held consultations with stakeholders.

In recent years, Transport Canada has moved to modernize its legislative and compliance regimes, particularly in the marine and rail sectors. As part of this exercise, a series of administrative enforcement tools were introduced, such as the assessment of fines and the suspension of operating licenses in place of criminal prosecution.

[English]

An important component of an administrative enforcement scheme is an effective appeal mechanism, such as the role played by the Civil Aviation Tribunal in enforcing the Aeronautics Act. Administrative tribunals can provide the same open, fair, and impartial appeal functions as the courts, but faster and cheaper. Tribunals can also be better equipped to deal with technical issues.

We believe that the marine and rail sectors could benefit from having access to the same impartial and effective enforcement appeal process that the aviation sector currently enjoys through the Civil Aviation Tribunal.

In addition to its current responsibilities under the Aeronautics Act and the Canada Transportation Act, a transportation appeal tribunal could hear cases under the Canada Shipping Act, the Marine Transportation Security Act, and the Railway Safety Act. Other transport acts could provide for access to the tribunal as appropriate, depending on the nature of the enforcement and compliance tools included in those acts.

In punitive cases, such as the imposition of an administrative monetary penalty, the tribunal could be authorized to substitute its own decision for that of departmental officials. In cases where safety is at issue, including the competence of licensed personnel or certified operators, the proposed legislation limits the tribunal to confirming the decision of departmental enforcement officials or referring those decisions back for reconsideration.

It's anticipated that approximately 26 new tribunal members could be appointed on a part-time basis from the marine and rail sectors, in addition to the 26 part-time members currently appointed to the Civil Aviation Tribunal.

Consultation on the draft legislation has been conducted fairly recently. That period has closed, and we're in the process of reviewing the comments we've received.

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I'm chairing a steering committee that will review all the consultations over the next few weeks. We hope the tribunal legislation can be introduced in Parliament before the House rises for the summer.

The civil aviation framework is another subject of interest. We've issued a document called “Flight 2005”. It's Transport Canada's safety framework for civil aviation, developed by the National Civil Aviation staff in consultation with Industry and other stakeholders. It's an integral part of the department's strategic plan for transportation safety and security. It aims to improve the already high safety standard and to ensure the continued confidence of the public in civil aviation in Canada, despite ever-increasing air traffic levels.

The document identifies operating principles and values, describes directions for the next five years, provides specific safety targets, and outlines key results. Many individual initiatives are underway. Two of the more significant areas are implementing the safety management concept in aviation companies and mitigating the behavioural and organizational situations that contribute to human errors in the aviation industry.

A cornerstone of this activity was a November conference sponsored by the department and NAV CANADA. It was very successful; there was participation from a broad cross-section of the industry.

I've also been asked to speak about the Canadian Aviation Regulation Advisory Council and the process for developing civil aviation regulations. Before 1993, the rule-making process in the aviation community was characterized by extensive processing and approval delays and it was seen as lacking public accessibility and participation.

In June 1993, the Canadian Aviation Regulation Advisory Council, known as CARAC, was formally established to renew our approach to consultation and rule-making and to improve Canada's regulatory system. CARAC is a joint undertaking of government and the aviation community. Participation comes from a large number of organizations other than Transport Canada, including operators, manufacturers, management, and labour, as well as professional associations. These represent the overall viewpoint of the aviation community.

Following the department's concentrated three-year effort to rewrite its regulations—including the aviation community's participation in CARAC—in October 1996 the Canadian aviation regulations, referred to as CARs, were published. This marked the completion of a significant step in the new rule-making partnership approach.

[Translation]

CARAC's 600 or so members hail from all sectors of the aviation industry, and include individuals with a personal interest in aviation. The Council has achieved its stated objective and continues to receive the support of the aviation industry.

[English]

We're committed to the public consultations and to this process.

I'll move now to some regulatory initiatives under CARAC, and the first is aircraft emergency intervention services at smaller airports. While preventing accidents will always be the prime focus of Transport Canada's safety efforts, we are committed to ensuring that appropriate levels of firefighting and emergency response services are available to the travelling public.

Our proposals are part of a comprehensive and thorough review of all issues related to aircraft firefighting. The proposed amendments have been subject to consultation with CARAC members as part of the regulatory process. The intensive consultations by the department during its comprehensive review of airport emergency intervention services, together with the considerable expertise available through the CARAC membership, have provided a solid basis for developing regulations and standardizations.

The department has undertaken the cost estimates for drafts at several stages of development. A variety of options have been identified for airports and communities, including the use of multi-tasking to minimize costs while providing effective services. The department is committed to funding initial capital costs of vehicles and ongoing vehicle replacement. This would help airport operators and their facilities to comply with the new proposed regulations and would allow for initial training of the required personnel.

Our aim is to strike a good balance between providing a credible emergency response capability and the reality of the cost constraints faced by small airports. The regulation proceeded to the Canada Gazette, part I, on July 8, 2000. The 45-day comment period ended on August 22, 2000, and a review of the public comments is currently underway. We are in the process of finalizing our report and recommendations to the minister.

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The hours-of-service rules for truck and bus drivers are also undergoing a detailed examination in conjunction with the provinces, territories, and other interested stakeholders. The review addresses the National Safety Code hours-of-service standard, and it is being conducted under the auspices of the Canadian Council of Motor Transport Administrators, CCMTA.

The objective of the review is to develop a set of rules nationally that respect the science on fatigue and that are easier to understand and to enforce than the current regime. The committee has developed proposals, which will be presented shortly for public comment and input. Once the NSC standard is finalized, it will be up to each jurisdiction to institute regulations that would mirror the standard, in order to achieve national consistency.

There are just two further topics, Mr. Chairman. The first is the Railway Safety Act regulatory development. In 1989 the Department of Transport assumed responsibility for the safety regulation of federally regulated railways from the Canadian Transport Commission. A new Railway Act provided legislative authority in this respect.

The Railway Safety Act contains a statutory requirement for the act to be reviewed five years after coming into effect. The five-year review report confirmed the validity of the underlying principles of the act but did identify some areas for improvement. The amendments to the act include authority to require railways to implement safety management systems, and we're doing just that by regulations, which come into force on March 31; authority to require railways to report safety critical information for the purpose of railway system safety performance monitoring; a new safety compliance order targeting safety management system deficiencies; and increased authority for rail safety inspectors. We have a number of regulatory projects in development. I mentioned the safety management system regulations that will come into force effective March 31. We're confident the measures undertaken will enhance the ability of the railway safety system to advance rail safety in Canada.

Finally, I've been asked to speak briefly about the grade crossing improvement program.

[Translation]

Transport Canada is committed to working with rail companies, highway authorities, cities and municipalities to ensure that all key safety problems are identified and resolved as quickly as possible.

The Grade Crossing Improvement Contribution Program has proven effective in reducing risk and minimizing loss of human life at grade crossings.

[English]

There's an annual parliamentary allocation of funds, which was set at $10 million annually between 1978 and 1991. Since then it has fluctuated between $7.2 million and $9 million. The allocation for the past few years has been $7.5 million. Funding for 90 crossing improvements was approved by the minister for fiscal year 2000-2001, and we're in the process of reviewing proposals for the coming fiscal year.

That concludes my remarks, Mr. Chairman.

The Chair: Thank you, William.

I think the interpreters were probably having a hard time because you were going so fast.

I appreciate that we're giving you a little more time this morning because we're trying to get an overview of the department and what you do. I hope all my colleagues will indulge me. In cases where you have specific questions, perhaps you could make a note of them. After all three have finished, we'll open it up for a round of questioning.

That leaves Ronald.

Mr. Ronald Sully (Assistant Deputy Minister, Programs and Divestiture Group, Department of Transport): Thank you, Mr. Chairman. Good morning, ladies and gentlemen.

I've been asked to brief you on five items: airport divestiture; the airport capital assistance program; climate change and the transport sector; public port divestiture; and the Blue Water Bridge Authority Act.

Let me begin by providing you with the status of the airport divestiture program. The airport divestiture, which is driven by the national airports policy announced in 1994, is now 85% complete. With the transfer of Gander International this very day, there remain only two national airport systems, or what we call NAS airports, to be transferred. These are Fredericton and Prince George. With Fredericton, as you know, we have an agreement in principle, and we expect to transfer Fredericton this spring. We expect to transfer Prince George by the end of this calendar year.

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There are 26 NAS airports in total, and 19 of these are now tenants of the federal government under long-term lease. As Louis said, these are 60-year leases. Three of the airports were transferred to governments in the north. These are Whitehorse, Yellowknife, and Iqaluit. Of course, the two Montreal airports are under a single lease. In addition to that we have Kelowna, which was operated by the municipality before the national airports program, and it continues under that arrangement. So that makes up the 26 NAS airports.

With regard to non-NAS airports, we have 71 regional or local airports, and 60 of those have been transferred. With regard to small airports, we have transferred 26 out of 31. This means that only 16 non-NAS airports remain to be transferred.

Approval has been received from Treasury Board to continue this divestiture program for two additional years to complete the process by March 31, 2002.

I won't spend any time talking about what we think has been a success under this program. Louis has already made mention of that. But just let me reinforce that we have undertaken our own review, something called the local airport authority review, and we have been reviewed by the Auditor General as well.

With regard to our own role in this, the reviews did call for more active lease monitoring on our part. So within Transport we are in the process of strengthening our landlord role. This will involve a more rigorous lease monitoring program, ensuring consistent national treatment while taking into account the specific terms and conditions of each lease. It will also involve establishing a national program to equip all staff responsible for lease management with the critical skills and knowledge required to do the job.

The national airports policy of 1994 also created the airports capital assistance program. This is a program to assist eligible applicants in financing capital projects related to safety, asset protection, and operating cost reduction. This is a program that applies to the smaller airports, non-NAS airports. To be eligible they have to have a certain level of scheduled air traffic and they must not be owned by the federal government. That's why the NAS airports are not eligible.

The current size of ACAP is $190 million over five years starting April 1, 2000, and ending March 31, 2005. That averages $38 million per year. Of this total envelope, $15 million has been identified for the aircraft emergency intervention services, which Bill Elliott has already spoken to. ACAP has assisted over 110 airports by financing approximately 200 important safety-related projects. Since the program started in 1995, total contributions have exceeded $120 million.

An evaluation of ACAP was completed in February 2000. Approximately 45 external stakeholder organizations as well as 179 eligible airports were consulted. The evaluation report concluded that the program has been successful and is meeting its objective of assisting smaller airports to finance safety-related capital expenditures. It also concluded that there is a need for the program to continue in order to assist eligible airports in meeting their safety-related financial needs.

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[Translation]

Regarding sustainable transportation and climate change, the cornerstone of our work in the field of sustainable development is our Sustainable Development Strategy. In December 1997, Transport Canada presented its first SDS to Parliament. The second SDS was presented on February 14 last. The most critical sustainable development issue is global climate change.

[English]

We believe the largest challenge facing us, in the area of sustainable transportation, is the issue of global climate change. Transport Canada has taken a leadership role on climate change, since transportation is the single largest source of greenhouse gases in Canada, accounting for about 25% of total Canadian emissions in 1997.

A multi-stakeholder table on transportation and climate change was co-sponsored and co-chaired by Transport Canada. This was part of a broader national process to develop an implementation strategy on climate change and a national business plan outlining actions to reduce greenhouse gas emissions across all jurisdictions and all sectors.

The transportation measures in the Government of Canada's Action Plan 2000 On Climate Change, which represents the federal contribution to the national business plan, focus on four key areas of transportation: improvements to new vehicle efficiency; increased use of fuels that emit fewer greenhouse gases, such as biomass ethanol, and of fuel-cell vehicle technology; improvements to urban transportation; and increased efficiency of the freight transportation system. Transport Canada is responsible for guiding the overall implementation of the transportation component of Action Plan 2000, in cooperation with Natural Resources Canada and other departments.

The fourth item on our agenda today is public port divestiture. This program is approximately 70% complete. We are behind when compared to airports, but then we started the public port divestiture program later than the airport program. To this point, we have divested, demolished, or terminated the status of 384 of 549 ports and public harbours. Of the 165 remaining ports, 34 are designated as remote and will be retained by the department. However, these remote ports are available for transfer should an interested party come forward. We have 13 months remaining to complete this program.

Our other major ports program involves monitoring the newly created Canada Port Authority. The Canada Marine Act imposes certain conditions with respect to the management of real property by the Canadian port authorities, or CPAs. For example, the approval of the Governor in Council and the Treasury Board are required for certain land transactions.

As well, dispositions of federal real property are subject to the determination of aboriginal interests. Our task at Transport Canada is to ensure that these transactions are handled as expeditiously as possible, so the ports are able to function as truly commercial entities.

The final item for our update today is the Blue Water Bridge Authority Act. Bill S-5, respecting amendments to the Blue Water Bridge Authority Act, was recently introduced in the Senate. Second reading was held on February 7, and the legislation was referred to the Standing Committee on Transport and Communications for debate today, March 1.

The proposed legislation amends the Blue Water Bridge Authority Act of 1964 by updating the ability of the Blue Water Bridge Authority to borrow funds. The current act limits its borrowing ability to when the bond interest rate is less than or equal to 6.5%. This restriction is not in keeping with current practice. Other international bridges have an established maximum borrowing limit.

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The Blue Water Bridge is the second-largest Canada-U.S. gateway in terms of exports and the second-busiest crossing for trucks. An average of 14,000 vehicles per day cross the international Blue Water Bridge—and on a busy day as many as 20,000 vehicles, including well over 6,000 trucks, may cross. The Blue Water Bridge is Canada's fastest-growing crossing, with traffic increases of about 8% per year. The bridge is primarily a long-distance crossing.

The amendment proposes a maximum borrowing limit of $125 million. This would be adequate to handle the bridge's long-term debt, which currently totals approximately $60 million, and its multi-year capital plan, which totals an additional $55 million.

The Blue Water Bridge is a public body, independent of the crown, operating at arm's length. It is not an agent or employee of the crown and receives no federal funding. The crown is therefore not liable for its debts.

The Blue Water Bridge Authority needs this legislation in order to continue to operate and to make capital improvements in the most cost-effective manner.

Thank you, Mr. Chairman.

The Chair: Okay. We'll start off with a round of questioning, with ten minutes each in the first round.

Jay Hill, you're on.

Mr. Jay Hill (Prince George—Peace River, Canadian Alliance): Thank you very much, Mr. Chairman.

Thank you, gentlemen, for appearing today and trying to enlighten us about what the department is doing and what it's going to be up to for the next little while.

Time is of the essence, and we've already used up close to 50 minutes with your presentation. So if you could answer my questions as quickly as possible, I can get as many as possible in. All of us are aware that the transport portfolio is huge, and there are lots of issues we'd like to delve into.

I direct my first couple of questions to Mr. Elliott, ADM for the safety and securities division. I understand that in international law, if someone misses an international flight, then that person's luggage has to be unloaded off the plane. Is that correct? Do you know that?

Mr. William Elliott: I can't speak terribly authoritatively—as I say, I'm relatively new to the department—but my understanding is that, yes, pursuant to international agreement, passengers have to be matched with their luggage. The idea is that the luggage should not go without the passenger.

Mr. Jay Hill: That's my understanding as well. But is that correct? Does one of the other ADMs know definitively that we have signed an international agreement to the effect that all our international carriers must unload luggage if a passenger doesn't get on the plane?

Mr. Louis Ranger: It's not a definitive answer, but my understanding is as described by my colleague.

Mr. Jay Hill: All right. Again to Mr. Elliott, if someone complained that this didn't happen, that one of our airlines didn't do that, who would it be referred to? You, as the ADM for security?

Mr. William Elliott: That would be one logical place. My colleague Mr. Ranger described the structure of the department. Each of our regional directors general is responsible. There's a regional director for security, who reports to a regional director general. I have responsibility. There's a director general in headquarters for security matters.

Mr. Jay Hill: Okay. Could the complaint also go to Bruce Hood, if it was specific to Air Canada?

Mr. Louis Ranger: I took your question to be essentially a safety issue—

Mr. Jay Hill: Definitely, yes.

Mr. Louis Ranger: Mr. Hood was put in place to mediate situations in which passengers did not get satisfaction from the carrier in question—Air Canada, for example. In that case, Mr. Hood tries to bring the parties to a rapprochement. If the matter concerns an infraction of our regulations, he can also refer the matter more formally to the Canadian Transportation Agency. It follows the process.

So if an individual had to change his plans at the last minute and the suitcase left without him—I'm not invoking safety reasons here—and if there were some implications, financial or otherwise, then sure, I assume he could bring it up with the carrier. And if he didn't get satisfaction, he could take it to Mr. Hood.

Mr. Jay Hill: Obviously, this is primarily a safety reason. We're all well aware of the history of the Air India disaster and the importance of ensuring that passengers are matched with their luggage and vice-versa.

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What would the penalty be to a carrier if it was found it didn't comply with that, in other words, that luggage was on an international flight and the passenger was not?

Mr. William Elliott: I'm afraid I don't know, but I certainly could provide an answer.

Mr. Jay Hill: Okay. I'd appreciate having a little more information about that.

Mr. Ranger, I'd like to get into the whole issue of Air Canada. Some Alliance MPs had the good fortune—or misfortune, as it were—to meet with Mr. Steve Markey and one of his colleagues yesterday. Air Canada has announced that effective this month, March, it's going to substantially cut service to some cities in Canada and reroute some other flights through Toronto. This will cause further inconvenience, especially to business travellers.

In your opening remarks, you outlined the commitment Air Canada has made to the minister, in writing, to maintain service to smaller communities. I guess it really comes down to this: what is the definition of service? What's the department's view? If you had, let's say, ten flights a week from Calgary to Ottawa and all of a sudden that's cut to one flight, or half of them are rerouted through Toronto, arguably you can still say Air Canada is providing service, but it's certainly not anything close to the service that was provided.

Mr. Louis Ranger: Let me be very clear on the nature of the commitment. You take Air Canada and its connectors, the Air Canada family, Air Nova and so on, and you take Canadian Airlines and all its connectors. The commitment from Air Canada is that service would be maintained to all the points served by those carriers—the families of Air Canada and Canadian Airlines—at the time of the transaction.

Obviously, the reason that transaction became necessary was that all the experts agreed there was excess capacity because of the intense competition in the market. We all heard the stories about both Air Canada and Canadian Airlines planes leaving Toronto at the same time—same type of aircraft, same number of seats, and so on.

So we knew there had to be some adjustments. To make a long story short, the government did not want to prescribe a level of service. All we wanted to maintain was just service. Whether planes fly six times a day, three times a day, or just once, we left that to the carrier to determine, based on business levels.

Mr. Jay Hill: Well, how can we, the travelling public, the department, or the government, hold Air Canada accountable for its service if we don't have any definition of service? If you're flying an A-320 once a day and all of a sudden you go to a Dash 8 once a week, there's going to be a huge inconvenience to the travelling public.

I think we all agree that you can't have planes flying around half empty. But some flights from western Canada that are cancelled as of today, for this month, are flights that are always full. We know it well, because as MPs we travel a lot.

We didn't get what I felt was an adequate explanation from Air Canada yesterday, and I was hoping you would at least enlighten me as to what the department can do to hold them accountable. This merger has been allowed by the government because there would have been catastrophic consequences if something wasn't done—Canadian was going to go under, and we all recognized that. But we can't just throw up our hands and say, well, Air Canada can do whatever it wants.

Mr. Louis Ranger: As I said, when the transaction took place the result was that Air Canada had 81% of the seats offered on the market. Since then, it's down to 71%. What does that tell you? It tells you that as Air Canada reduced services on certain routes, other carriers came in. I don't need to name them. Well, obviously WestJet has done extremely well. CanJet is there; Canada 3000 is acquiring Royal and coming back with a very aggressive business plan; and you heard about RootsAir that will start service on March 26.

So the government's approach to dealing with the dominant carriers was to create a basic safety net and then create an environment where new carriers could emerge and existing carriers could grow. We're monitoring the extent to which the smaller carriers are taking advantage of those opportunities. We are still operating in a deregulated environment with the kinds of adjustments you see. As I said, the government did not want to prescribe a level of service.

• 1155

Mr. Jay Hill: I'll just make one final point. I'm probably out of time. I won't pose it even as a question. I would just make the final point that to my way of thinking, and I think to that of the vast majority, if not all, of the Canadian travelling public, the so-called commitment by Air Canada to maintain service—and that was the assurance they gave this government and Canadians in general when they were given the go-ahead for the merger—is meaningless in light of what they're doing and in light of the reality the travelling public is facing.

I'll let that go for now. Maybe we can have another round if we have time.

The Chair: We'll go to Larry and then Mario.

Mr. Larry Bagnell (Yukon, Lib.): In the interest of time, I'm just going to make some comments.

The Chair: You have ten minutes, and you can use it all.

Mr. Larry Bagnell: I won't use it all. I'm just going to make some comments for you to take under advisement. If you want to get back on any of them, you can. It's more just to let you know my position.

Starting with Air Canada, I just want to make sure you are aware that last week I spoke in the House and condemned Air Canada for a 45% increase they put in a couple of weeks ago for trans-border fares, and today as we're sitting here they're putting it in for all domestic fares in Canada. The Government of Canada has an inflation goal of less than 3%, so for a company to just arbitrarily and surreptitiously bring in a 45% increase, which just shows up on your bill.... There seemed to have been general approval across the whole House when I said that. There didn't seem to be any party disagreeing that this was somewhat unconscionable.

On a micro-point similar to Jay's, Air Canada told us—I'm not sure if it was the same three-year commitment; I think it was a two-year commitment—that service would not decrease in the Yukon for two years. They have indeed cut one of our flights one month out of the summer schedule, which has a dramatic effect on our tourism. So they didn't keep our definition of that commitment; their definition might be different.

My third point is related to CARS308. I'm glad it's under discussion and that you raised it, Mr. Elliott. I and a number of people think that regulation makes absolutely no sense at all, and we've been lobbying against it for years.

Finally—and I'm sure you're aware of this, too—a few years ago the internal trade agreement was a higher priority than it is now. The Province of B.C. has some very obstructionist trucking regulations that are making it very difficult for Yukon truckers. We're hoping that progress is still being made on internal trade related to trucking so that we can trade within the country as well.

As I said, I don't need replies at this time.

The Chair: All right. That was quick and dirty. We'll go to Mario.

Mr. Jay Hill: I have a point of order, Mr. Chairman. In fairness to our guests, they may wish to reply to some of those concerns Larry raised, and they should be given the opportunity to do so.

Mr. Louis Ranger: Perhaps I could make just one clarification. It's important to make a distinction between the commitments Air Canada made to the Government of Canada and other commitments. The commitments made to the Minister of Transport and the Commissioner of Competition are formal commitments that are actually enshrined in legislation. They have made other commitments to certain regions. This may be a case where they have committed to you that they would maintain service to the Yukon. You expressed the view that they haven't met that commitment. But that's quite separate from the formal commitment they've made to government.

Another example is they committed not to increase domestic fares last year, and they did not. Far be it for me to defend Air Canada here, but they are arguing that because of the increase in the price of fuel, and having respected the commitment of not increasing domestic fares last year, there is now a necessity to increase fares.

• 1200

The Chair: Are the officials finished answering the questions?

Mr. Louis Ranger: Yes.

The Chair: Okay. We'll go to Mario Laframboise.

[Translation]

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ): Thank you, Mr. Chairman.

Before I get to my questions, I would like to focus briefly on our aviation industry which has been privatized. A case in point is Air Canada. When a single carrier dominates the industry and competition is eliminated, one would think that the end result would be improved, more cost-efficient service for the traveling public. That has not been the case.

Even though an agreement was reached not to increase fares in the regions, Air Canada, while maintaining service in accordance with the service maintenance clause, has drawn up flight schedules that are not in tune with the needs of customers. Consequently, throughout all regions of Canada, the traveling public is turning away from Air Canada. Entire regions are being poorly served by the aviation industry. All of this has transpired in the space of two years. Airline service is atrocious and is getting worse. What alternative do passengers have? Are they supposed to take the bus?

We've been told that a move is afoot to deregulate the bus industry. The results will likely be the same. Service will improve in more populous centres, while it will suffer in the regions. We've seen the same thing happen in the rail sector. New companies have come on the scene and are doing well as we speak, but the state of the country's railways continues to deteriorate because the government has once again abdicated its responsibilities and reduced its level of investment in this sector. You're telling us today that the government is investing less money in our country's highways than it once did. Annual investment in this sector is down from $300 million to $150 million. That can only spell disaster for regions in Quebec and Canada. All of this has happened in the last two years. In the case of the rail industry, the decline has been occurring over the past decade.

We're seeing the higher levels of government - or at least the federal government - pulling out of certain areas and transferring responsibility to the private sector. Yet, what is the private sector doing? It's concerned about making money. Companies deal with boards of directors and are accountable to shareholders. They are not accountable to the government, as is abundantly clear in the case of Air Canada. The company is upholding the terms of the contract it signed, but it is trying to reap maximum profit from the agreements concluded with the government.

It has maintained service in the regions, but the schedules do not suit the needs of the traveling public. The carrier has turned its back on the regions and is focussing increasingly on service between heavily populated urban centres. Less populated areas will experience, just as more remote regions have, cuts to airline services, leaving the traveling public to opt increasingly for bus and automobile travel. The industry's focus has shifted to providing service between urban centres, all at the expense of the regions which will experience a population exodus of sorts. People won't want to live in the regions if they have no reliable transportation services.

The federal government is gradually - although it has quickened the pace in recent years - reducing its level of investment in this sector, turning to privatization initiatives and in the process depriving the regions of air transportation services. For the most part, the regions no longer have any rail transportation services. If deregulation becomes a reality, bus service in the regions will becoming increasingly scarce. Obviously, the focus will shift to motor vehicle transport. People are going to use their motor vehicles, yet the federal government has reduced its investments in highways. As more and more people take to the roadways to travel, the greater the need will be for highways in good repair.

• 1205

Of course, the federal government plans to leave that responsibility to the provinces which are already overburdened with the task of administering other services. The provinces have always held to the belief that the federal government would help them to establish a Canada-wide transportation network, one that is affordable and accessible to all Canadians.

That's not what we're seeing today. As we speak, the regions do not enjoy the same transportation services as major urban centres. That's a myth. All of the examples that you have given us today show that over the past decade, we have witnessed a dangerous concentration of transportation services in populous centres where services can be offered on a large scale, where companies are located and where the money is. Ultimately, no one cares that people are leaving the regions in droves.

Judging from what you've told us today, I don't expect the situation to change any, even in the long term. You've announced lower levels of investment and in your responses concerning the airline industry, you're not admitting that a mistake was made. I think there is a mistake in the agreement concluded with Air Canada. Everyone believed that Air Canada would maintain service, but that hasn't been the case.

Therefore, who is going to call Air Canada to task on this? If other companies will be called upon to take up the slack, they will need some assistance. If Air Canada cannot provide services, then it's time to put in place a program to help other companies provide adequate air transportation services in the regions. Judging from what you and the minister have said, I don't sense that any such plans have been drawn up.

Once again, we are seeing an ever-widening gap between the services provided to large urban centres and those provided to the regions. I have to say that I'm concerned about this situation. It's not just small communities that are affected by the lack of services, it's also small towns which, in the scheme of things, are nonetheless important centres of commerce...

[English]

Mr. Jay Hill: I have a point of order, Mr. Chair. I think it's just showing good faith to our guests that they should be allowed part of the ten minutes to respond to the concerns being expressed here. If you use up the entire ten minutes, obviously they won't be allowed any time to respond.

The Chair: Monsieur Laframboise, you have been speaking for approximately seven minutes. You have ten minutes in the first round. If you use your time for comments, then you won't have any questions.

[Translation]

Mr. Mario Laframboise: I'll let the witness respond.

[English]

The Chair: It's your time, and you can decide how you want to use it. Continue.

[Translation]

Mr. Louis Ranger: I've been working in the transportation sector for the past 27 years. I also have a Master's degree in transportation economics and I've had an opportunity to assess the two major models.

When I started working in government in the field of transportation, endless debates raged. Air Canada wanted to add a second flight to its Toronto-Winnipeg route, while Canadian Airlines, or CP Air as it was known at the time, wanted to fly the Toronto-Vancouver route, but was denied permission to do so.

The industry was constantly being micromanaged. At times, each region had its own carrier and the government, in its wisdom, allocated one route here or eliminated one route there. When things didn't work out, it would provide a grant here, exert a little pressure there to get more money for a particular airport, just so that it could build or extend a runway to allow Boeing 747s to land in Chibougamau.

That was one approach. Very few countries in the world have stuck by this model. In the industrialized world, deregulation has become the order of the day, with the results you've described to us. Very few countries have not moved in this direction. I'm only describing to you a system based on broad policy directions advocated by the current government.

I'd like to clarify my comments about the bus industry. I didn't come here to sell people on deregulation. If you happen to consider this matter, I would urge you to look at what happened in the United States. There have been some good results, and some bad ones as well. Some small communities have lost bus services, whereas others have seen their situation change for the better. It's not a black and white issue. Deregulation has been going on for at least 10 or 15 years and of course, the process is more advanced in the United States. All I can do is outline the major options for you.

• 1210

[English]

The Chair: We're now into the five-minute rounds, and Marcel Proulx for the Liberals has the floor for five minutes.

[Translation]

Mr. Marcel Proulx (Hull—Aylmer, Lib.): Good morning, gentlemen and thank you for coming here this morning. I'll get right to the point.

Earlier, you talked about urban or public transportation. You mentioned several programs, including ones focussed on sustainable transportation and climate change. Is there anything to be done at the federal level in the area of urban transportation, or is this strictly the domain of the Department of the Environment? Does the federal government have a role to play in the field of urban transportation?

Mr. Louis Ranger: I'll let my colleague Ron touch on that subject because up until now, these issues have been considered at length within the framework of climate change. Clearly, and not coincidentally, major pollution sources, notably the automobile, can be linked to urban environments.

There are things that we can do. Some large cities in this country would like to put existing rail lines to greater use. For instance, there is no clear protocol in place for giving municipalities access to these lands in a manner that is fair to owners, the railways and the municipalities.

Nor is there a clear regulatory regime in place governing relations between a rail company and a municipality. If a municipality wants to operate a commuter train, can it use existing rail lines for a reasonable fee? Mr. Collenette specifically highlighted this issue and has asked a panel in charge of reviewing the legislation to look into this matter. These rail lines are known as urban corridors. That's one example, but I'll let Ron continue.

[English]

Mr. Ronald Sully: As you know, in the Speech from the Throne there was a commitment by the government to work with municipalities to see where it could assist in the area of urban transit. That work is just beginning within government.

I can't give you an indication as to where that might go. But for the moment, through the work of the transportation table on climate change, we have succeeded in getting cabinet approval to take a first step, which is a program called the urban showcase program. I don't want to go into great detail about it. I think the minister will make an announcement this spring.

The program was announced last October as part of the first national business plan on climate change. You will recall that the government's contribution at that time was $500 million. That's spread across all of the sectors, not just transportation, so transportation has a part of that.

Within transportation there's something called the urban showcase program. We will support proposals by municipalities to demonstrate best practices in urban transportation, with, I think, the focus being more on the demand management side, because with the kind of money that's available, it would be difficult for us to go into heavy infrastructure requirements, for example.

I think we've seen recently that in the meetings of the big city mayors and so on the numbers that are being talked about for public transit, let's say, are huge. They're the kinds of numbers we hear when we talk to the provinces about highway funding. With the kind of money we have available now, we wouldn't be able to get into that kind of business, but we would be able to support municipalities who put forward common-sense solutions to basically reorient their systems to get people away from single-occupant vehicle use and onto public transit.

The Chair: We're out of time. I'll come back to you, Marcel.

• 1215

We'll go back to Jay Hill of the Alliance Party. You have five minutes.

Mr. Jay Hill: Thank you, Mr. Chairman.

Thank you, gentlemen. I'm going to thank you right now for appearing today, in case I don't have the opportunity later—I have to leave after this five-minute round.

I have a series of questions, and again, if you keep your answers short, I'll try to keep my questions short.

I forget which one of you was talking, at the beginning about the divestiture of airports. The airport authorities are viewed as tenants with 60-year leases. How much money does the government receive annually from the 26 NAS airports?

Mr. Ronald Sully: As I indicated, we haven't transferred all the airports at this point. But I'll give you a rough number; it's not exact, but fairly close. This fiscal year we'll collect something in the order of $225 million. Of all the airports transferred, only eight of them actually pay rent.

Mr. Jay Hill: Okay, $225 million roughly. I appreciate that.

Compare that to the $38 million this government has committed to the airport capital assistance program. I think that was the number—$199 million over four years, roughly $38 million a year.

On divestiture of airports, I can only speak with some knowledge about the Vancouver Airport Authority. From the contractors who work there, from the public that goes through there, from the Vancouver Board of Trade that has lodged complaints—I hear increasingly that the government has washed its hands of these airports. It seems to me that these airport authorities are powers unto themselves.

Could you explain to me, as quickly as possible, what checks and balances are in place? Who monitors this, and are they answerable to anyone?

I can tell you that when I raised some concerns with the Vancouver Airport Authority on behalf of some contractors there...to say I was snubbed would be putting it lightly. I was absolutely astounded at their attitude.

Mr. Ronald Sully: Before we get to that, if I could just comment on airport revenues, the government's costs for the aviation industry extend well beyond the $38 million a year for airports capital assistance. But the magnitude of the rent is not geared to what we spend; it's geared to the notion of a reasonable return to the taxpayers who put billions of dollars into these facilities over the years. The taxpayers are entitled to some return.

With respect to the airport authorities, I don't want to single out Vancouver, but there have been disagreements at some airports. These have to do with the extent to which airport authorities consult with their stakeholders and with the level of transparency in their operations.

It has been pointed out through our own LAA review and through the Auditor General's review that we need to be clearer on the rules. That way, everyone will understand their responsibilities and their accountabilities, so we won't have these kinds of issues in the future.

Across the country, you do find airports—and again, I don't want to single any out—where the relationship between the airport authority and the local municipalities and the chambers of commerce is wonderful. Everybody pulls together. Then you find other situations where it's not working so well.

Mr. Jay Hill: Is there any monitoring or checking? That was my question.

Mr. Ronald Sully: We do that through these reviews I've alluded to. But I think one thing the government could do that would be helpful would be too spell out a clearer framework. That's what Louis Ranger was referring to earlier and that's what the minister is considering at this point.

Mr. Jay Hill: It's under consideration?

Mr. Ronald Sully: Yes.

Mr. Jay Hill: Is my time up?

The Chair: You have about 50 seconds.

Mr. Jay Hill: Okay. I'm just going to touch on what Larry raised, because it's a huge concern to me. I've raised it ever since I became the transport critic last summer. That's the CARS308. There's no argument that the vast majority of the small communities around the 100 or so largely rural airports that fall under this are vehemently opposed to its implementation. My understanding from Canada Gazette, part 1, is that feedback has come back to the department—maybe that's already been done—and now they're compiling it.

• 1220

Where are we with this thing? Is it the intent of the minister and the transportation ministry to forge ahead with this, regardless of the level of opposition from the small communities?

Mr. William Elliott: As I indicated, we have received comments. Civil aviation officials from both Ottawa and the region recently met with municipalities in British Columbia. We're in the process of preparing a report on all the comments we've received and making recommendations to the minister. I expect the minister will soon be in a position to decide how to go forward, or whether to go forward.

I would note that some of the comments we've received indicate that the regulations aren't stringent enough. We should in fact require more emergency response services than the proposed regulation requires.

Mr. Jay Hill: I would just caution you that the makers of those comments might have a vested interest in the reimposition of those regulations.

The Chair: We're out of time on that round. I will now go back to the Liberals.

Dominic LeBlanc, you had some questions.

Mr. Dominic LeBlanc (Beauséjour—Petitcodiac, Lib.): Thank you, Mr. Chairman.

Thank you, gentlemen, for spending these two hours on fairly short notice. I'm a new member of Parliament and a new member of this committee. I read the briefing book prepared by the committee staff, and it was interesting to have a chance to hear your overview. I appreciate the time you've taken.

[Translation]

I have a rather specific question for Mr. Ranger, as I know he was involved to a considerable extent in the VIA Rail issue. Mr. Collenette spoke about it often enough to me. I applaud the minister's announcement of a $400 million injection of funds in VIA Rail. I often take the train and my father was a serious enthusiast of rail travel. He would travel by train quite frequently between Montreal and Ottawa. He absolutely loved taking the train. I know that $400 million will be quite a boon.

I am concerned about one thing - and on this score I agree with my colleague from Moncton, Ms. Bradshaw. I'm also mindful of your relationship with VIA Rail. Has the minister at any time indicated to VIA Rail that the corporation has a responsibility to spend this money in a way that benefits all regions of the country? Most likely you're familiar with a company in Moncton that the minister toured with Ms. Bradshaw. It's not located in my riding, though. I know that VIA Rail expressed a great deal of interest in this company which has purchased surplus bud cars from VIA. However, it seems that negotiations between the two parties are dragging a little. I can understand your not getting involved in business dealings of Crown corporations, but will you try to encourage VIA not to spend all of this money or to consider the overall impact on the regions, including mine?

Mr. Louis Ranger: Earlier, I mentioned that I had been working in this sector for quite some time. I remember the days when we had two transcontinental trains heading west, and two heading east. Some people who are caught up in nostalgia would like us to turn back the clock and restore all of these services. Mr. Collenette has made his position very clear. An injection of $400 million in the rail sector is not a great deal of money. A single rail car can be extremely costly. Therefore, it's clear that we must consolidate the existing network before giving any thought to expanding it or to turning back the clock to another era.

Having said this, I won't deny that the corridor is a priority, given that it has the greatest potential. However, at the same time, Mr. Collenette has stated quite clearly that he wants the full network to benefit. There not much more I can tell you. He wasn't specific as to the funds allocated to each region, but the spinoffs are expected to be felt across the full network.

Mr. Dominic Leblanc: I would imagine that you've reminded VIA of its national obligations.

Mr. Louis Ranger: Most certainly. The minister is the sole shareholder in VIA Rail. When he meets with the board of directors, he can certainly convey messages of this nature.

• 1225

Mr. Dominic Leblanc: That would serve a very useful purpose. The city of Moncton proper and the whole southeastern region of New Brunswick were once known for their rail industry. Along with the Atlantic Canada Opportunities Agency, we're conducting a rather interesting analysis of the type of manpower remaining in the city of Moncton.

[English]

If you look at the workforce that used to be in big companies like CN and so on, a lot of fairly skilled labour was working on very modest jobs at low wages, and if there were smaller private sector actors that could become contractors with a company like VIA, the potential to spin off little businesses in places like Atlantic Canada is enormous. I know the minister is sensitive to that. If in your discussions with VIA you could encourage them to be sensitive to that, it would make a big difference in our part of the country.

The Chair: You're out of time.

Mr. Dominic LeBlanc: Thank you, Mr. Chairman.

The Chair: We'll go to Monsieur Laframboise from the Bloc Québécois.

[Translation]

Mr. Mario Laframboise: My question is for Mr. Ranger.

I'd like to take a somewhat philosophical view of matters, since, as everyone knows, there are exceptions to every rule, however sound it may be.

How many countries in the world cover as vast an expanse of land as Canada and have such a small population, with communities spread out over wide areas? We must never lose sight of the fact that Canada's development was tied largely to its natural resources. Therefore, population centres are scattered across the landscape.

How many countries in the world find themselves in a comparable situation? It's all well and good that the global trend is toward deregulation and for Canada to move in this direction, but in my opinion, Canada is proving itself to be an exception to this rule. Transportation networks between communities are being dismantled because someone, somewhere, thinks we need to adopt the international model. I believe some caution is in order, Mr. Ranger, because the Canadian economy has been sustained to a considerable extent by the regions. While this may be the era of globalization, the Internet and high technology, Canada still has its natural resources which have contributed to development in the past and will continue to provide us with some measure of security in the future.

Far from riding on the coattails of the large cities, the regions have sustained these municipalities over the past 130 years. We need to be careful about this. Let me say it again: this transportation policy is driving people away from Canada's regions. Why can't you see that? Increasingly, the private transportation industry is abandoning remote regions and the larger towns in these regions.

If you can't see that, then we have a big problem on our hands, Mr. Ranger.

Mr. Louis Ranger: As I said, I can help identify the options available to you. There are also a number of societal choices to be made. When the deregulation process was first initiated, everyone seated here at this table shared your concerns. When the proposal was made to deregulate the airline industry to take these concerns into account, initially, the possibility was not discounted that special measures would be taken to ensure service to remote regions. We lived with this regime for a number of years and saw carriers agree that for purely economic considerations, it was in their best interest to maintain service to these remote regions. I won't say that rates were low, but we didn't have to intervene during the transition period. Consequently, when the legislation came up for review, it was agreed that this provision was somewhat unnecessary and it was eliminated.

Are there other countries that feel the need to intervene to manage the way in which services are supplied? Yes, but it comes down to societal choices. It's not for me to say at this time that exceptions should be made for remote regions. No doubt, that's a political decision.

[English]

The Chair: That's it, Mario.

We'll go back to Marcel Proulx of the Liberals for five minutes.

Mr. Marcel Proulx: Thank you, Mr. Chairman.

[Translation]

Mr. Ranger, earlier we heard about a new initiative called the Local Airport Authority Review.

• 1230

You stated that eight local airport authorities paid some kind of rent. This isn't a trick question. I'm merely trying to get some answers. In the past, these local airport authorities have been unhappy with the rent they were being charged. The local airport authority here in Ottawa was one of the first to feel the effects of this shift when privatization was launched under the Liberal government. Where do relations now stand with these authorities? I realize that they're not easily satisfied, but has any kind of consensus been reached? Has a truce been called? Are the airports now satisfied with the conditions or are negotiations still ongoing?

Mr. Louis Ranger: Since you're my MP, I know you wouldn't ask me a trick question.

Mr. Marcel Proulx: I congratulate you on your excellent choice and good judgment.

An hon. member: He didn't say he voted for you.

Mr. Marcel Proulx: Not to worry. Everyone voted for me. I won, didn't I?

Mr. Louis Ranger: Clearly, the airport authorities do have a number of concerns. A total of eight currently pay rent, but a number of others do not, and will not until 2010 or 2015.

Mr. Marcel Proulx: You say that some won't be paying any rent until 2010 or 2015? Are they included in the group of eight authorities that Mr. Sully say already pay?

Mr. Louis Ranger: No. At present, only eight airport authorities pay rent totaling approximately $225 million. All of the agreements in question were negotiated with each individual airport. Authorities are beginning to compare the agreements they have signed and to ask some questions. Why is there not a ceiling on the rent charged to the Vancouver authority? Why were rents reasonable in Ottawa at first, and then all of a sudden... If the trend continues, the authorities maintain that they won't be able to proceed with their development plans in a few years' time.

All I can say at this time is that we're well aware of their concerns. In our policy perspective, the first question we ask is whether the network of airports is efficient. The second question is whether the rents charged hinders the efficiency of these airport. The third question is this: is the rent charged reasonable? We don't want to see the level of rent charged impede the efficiency of these airports' operations.

Should we charge so much per passenger or 25 per cent more? The whole matter was debated at length. All I'm saying is that we are reviewing the situation.

Mr. Marcel Proulx: Therefore, nothing is cast in stone.

Mr. Louis Ranger: No, nothing is cast in stone. However, there is a significant amount of taxpayer dollars at stake. We have a duty to defend the interests of taxpayers who have invested extensively in these airports. They deserve a fair return on their investment.

Mr. Marcel Proulx: Thank you.

[English]

Am I out of time?

The Chair: You have maybe 50 seconds left.

Mr. Marcel Proulx: Okay. I'll take 50 seconds to ask my question, and then they'll have 15 minutes to answer.

The Chair: No, that's total time.

Mr. Marcel Proulx: Let's talk about greenhouse gases. You mentioned, Mr. Sully, that there are four different categories. I want to talk about three of them. One is new vehicles, one is alternative fuels, and one is urban transport.

With regard to new vehicles, are we active on this or are we waiting for manufacturers to make suggestions to us?

Environment is interested in alternative fuels. How interested is Transport and how active is Transport vis-à-vis the public and the government? You don't need to answer me today, but I'd like to know how many vehicles the Canadian government owns and how many of those use alternative fuels.

The Chair: We're out of time for the officials and for the rest of the committee. In cases like this, if you could furnish us with that information in written form, it would be nice. It usually comes to the committee, and then it's dispersed to all members.

We'll go back to Monsieur Laframboise from the Bloc Québécois if he has some questions. If not, we could turn the floor over to another colleague.

Mr. Marcel Proulx: Are there any answers at all?

The Chair: I'm saying that you're out of time and you can come back to that in a minute.

Mr. Marcel Proulx: Okay, I'll come back.

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The Chair: Do your colleagues want to give you some more time?

Some hon. members: Yes.

The Chair: Okay, you have another five minutes. We'll give you another round.

Mr. Marcel Proulx: What are we doing on greenhouse gases to help the local public transport authorities?

Mr. Ronald Sully: I was explaining that these four initiatives are part of the government's action plan that was announced last fall. Since that time we've been working with external stakeholders, the provinces, and other departments to get these programs ready to go and hopefully to launch this spring. I didn't want to go into a great deal of detail because it's really up to the minister to announce these things.

You asked about the interest of departments. It's the minister who has the responsibility to pull together all of these programs. Some of them will be administered by our department and some will perhaps be administered by Natural Resources Canada, if I can put it that way.

Mr. Marcel Proulx: So you're the lead department.

Mr. Ronald Sully: We're the lead department.

On new vehicle fuels—and I don't mind saying this because it was announced last fall—the initiative is that we intend to work with the U.S. administration and the major auto manufacturers to negotiate a significant improvement in fuel economy for new vehicles by the year 2010. We have to work with both the vehicle manufacturers and the U.S. government because the only way this would make sense would be to have a harmonized approach with the U.S. As you know, the auto manufacturing industry is totally integrated, so if we ended up with radically different targets in Canada as opposed to the U.S., it would make the cost of automobiles and trucks in Canada much higher than it should be. That's one initiative.

On fuels, yes, we do have a large interest there. There are two specific initiatives. One is to triple the amount of ethanol production in Canada by the year 2010. The leadership on that will come from Agriculture Canada and Natural Resources Canada. The other one on fuels is to assist the industry to develop the fuelling infrastructure that will be required for fuel-cell vehicles as they come on to the market.

So far, as you know, almost all of the research money has been spent on the upstream, which is developing the fuel cells themselves, and we have some tremendous Canadian success stories, such as Ballard Fuel. But nobody has really addressed the issue of what kind of fuel will be used to power those fuel cells and what kind of infrastructure you need to develop that. So there will be a fairly significant push on that front.

The urban one is the one I described, which is the urban showcase program, where we will be looking for cities to put forward their ideas on how improvements can be made in transportation to reduce greenhouse gases. This will be a competitive process because we will not be able to provide funding to every city in the country. So what we will be looking for is for cities to put their best ideas forward, and the ones that are the best will be funded.

Mr. Marcel Proulx: Thank you.

The Chair: We'll now go to Mr. St. Denis from the Liberals.

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chair.

I want to ask Mr. Elliott about the National Safety Code. I believe we'll have more discussions about that when we talk about the committee dealing with the Motor Vehicle Transport Act. But just generally speaking, as I understand it—and please elaborate, if you would—the national code is something that's always in a state of improvement. There are always things we can do better. But when it comes to the implementation of that code, I assume it's up to the provinces to voluntarily implement it in their jurisdictions. Is that a reasonable characterization of the process?

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Mr. William Elliott: Yes.

Mr. Brent St. Denis: I wonder if you could just elaborate on the relationship between the national code and the provincial jurisdictions that must implement it and on how the code itself is changed, improved, and updated as time moves along.

Mr. William Elliott: I referred to the CCMTA, which is a federal-provincial stakeholder organization dealing with National Safety Code issues and related issues.

I think you've characterized it correctly. With regard to these matters, jurisdiction is really shared between the federal government and the provinces. The federal government has really given over much of its jurisdiction to the provinces. The notion of the code is that there will be agreement on what the rules will be. Then each jurisdiction—federal, provincial, and territorial—will enact legislation or regulations to implement that.

I think you're right, there certainly is always room for improvement, and many would say there is room for improvement with regard to the process. There certainly has been some frustration with regard to how long it takes to reach consensus, because this really is a consensus approach, and how long it takes for individual jurisdictions to bring the provisions of the code into force in their jurisdiction. There are also some problems with consistency because there are some differences between jurisdictions in how they implement the regulations they bring in in support of the code.

Mr. Brent St. Denis: Just as a supplementary, for example, in Ontario some years ago we saw rims blowing up. Truck rims were exploding, and there was a great push by the province to put more inspectors on the roads to check those rims. It turned out there was some alloy problem and so on and so forth. At some time in the process, is that an item that's discussed by the CCMTA? Here's an emerging issue. Here's something we never thought of ten years ago, but now it has become an issue and it's hot in the press. How does that emerging issue work its way to eventually becoming maybe a regulation or a National Safety Code element and then ultimately becoming a regulation within a province to say the rims must be of a certain kind of steel and they must be manufactured in a certain way? Is this an example of something that would be dealt with in due course through a process of amending the code and subsequently...?

I know you're new to it, and I don't mean to put you on the spot. It just seems kind of muddy to me.

Mr. William Elliott: In a previous life I practised law, and my favourite lawyerly answer is, it depends.

Some hon. members: Oh, oh!

Mr. William Elliott: And I think that's very appropriate here.

For much of the federal government jurisdiction with regard to operations and operators, for example, those enforcement activities are carried out by the provinces. If it's an issue related to enforcement—I mentioned hours of service, for example—that's something that very naturally would be discussed in the context of the National Safety Code.

The federal government, though, does maintain its jurisdiction and program with regard to the certification of new vehicles. So if there was a problem, for example, with a defect in the manufacturing process or with a specific product, that would come under our program and our jurisdiction. We certainly can pass regulations dealing with manufacturing standards. That is something the federal government would do on its own.

But because the cars, trucks, and buses are out there on the roads and the provinces are doing the enforcing, certainly our provincial contacts are very helpful in keeping us informed on what's happening.

Mr. Brent St. Denis: Thank you, Mr. Chair.

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The Chair: Are there any further questions?

Mr. Laframboise, from the Bloc Québécois.

[Translation]

Mr. Mario Laframboise: Thank you, Mr. Chairman.

Can you tell me if the department's budget has remained unchanged in recent years?

Mr. Louis Ranger: The department has cut its workforce considerably. Not that long ago, it had 21,000 employees. Today, only 4,500 remain.

Mr. Mario Laframboise: Were transfers awarded, for example, to help the rail sector to deal with cuts to its workforce? Is the overall budget substantially the same, or has it been slashed?

Mr. Louis Ranger: In terms of the human resources budget, overall, virtually no one lost his or her job. Airports were transferred to the authorities along with the employees. NAV Canada employees also received transfers. Some people left the Coast Guard to work for Fisheries and Oceans.

As far as subsidies are concerned, sizeable ones used to be awarded for western grain transportation and to cover the cost of transporting goods from the Maritimes to Central Canada. VIA Rail continues to be heavily subsidized, but that is pretty much it in so far as subsidies are concerned. The ferry service to Newfoundland is still subsidized, but not to the same extent as it once was. These changes were part of the package of reforms announced by the government.

Mr. William Elliott: I just want to say that we have more inspectors today than in the past. Again, it depends.

[English]

The Chair: Thank you, Mr. Sully, Mr. Ranger, Mr. Elliott, for that orientation. We appreciate you coming here today. Thank you, gentlemen.

We will meet again at 11 a.m. on Tuesday, March 13, at which time we will have officials from Public Works and Government Services here.

This meeting is adjourned.