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37th PARLIAMENT, 3rd SESSION

Standing Committee on Transport


EVIDENCE

CONTENTS

Tuesday, March 23, 2004




Á 1105
V         The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.))
V         Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ)
V         The Chair
V         Mr. Mario Laframboise
V         The Chair
V         Mr. Jim Gouk (Kootenay—Boundary—Okanagan, CPC)
V         The Chair
V         Mr. Louis Ranger (Deputy Minister, Department of Transport)

Á 1110

Á 1115

Á 1120
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk

Á 1125
V         The Chair
V         Mr. Louis Ranger
V         The Chair
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk
V         Mr. Louis Ranger

Á 1130
V         Mr. Jim Gouk
V         The Chair
V         Mr. Mario Laframboise
V         Mr. Louis Ranger

Á 1135
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Marc Grégoire (Associate Assistant Deputy Minister, Safety and Security Group, Department of Transport)
V         Mr. Mario Laframboise
V         Mr. Louis Ranger

Á 1140
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         The Chair
V         Mr. Charles Hubbard (Miramichi, Lib.)

Á 1145
V         Mr. Louis Ranger
V         Mr. Charles Hubbard
V         The Chair
V         Mr. Louis Ranger

Á 1150
V         Ms. Kristine Burr (Assistant Deputy Minister, Policy Group, Department of Transport)
V         The Chair
V         Mr. Charles Hubbard
V         Mr. Louis Ranger
V         Mr. André Morency (Assistant Deputy Minister, Corporate Services, Department of Transport)
V         Mr. Charles Hubbard
V         Mr. Louis Ranger

Á 1155
V         The Chair
V         Mr. Charles Hubbard
V         The Chair
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Marc Grégoire
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk

 1200
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Marc Grégoire
V         Mr. Jim Gouk
V         Mr. Marc Grégoire
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         The Chair
V         Mr. Jim Gouk
V         Mr. Louis Ranger

 1205
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         The Chair
V         Mr. Louis Ranger
V         The Chair
V         Mr. Louis Ranger
V         The Chair
V         Mr. Ronald Sully (Assistant Deputy Minister, Programs and Divestiture Group, Department of Transport)
V         The Chair
V         Mr. Ronald Sully
V         The Chair
V         Mr. Ronald Sully

 1210
V         The Chair
V         Mr. Ovid Jackson (Bruce—Grey—Owen Sound, Lib.)
V         Mr. Louis Ranger
V         Mr. Ovid Jackson

 1215
V         Mr. Louis Ranger
V         Ms. Kristine Burr
V         Mr. Ovid Jackson
V         Ms. Kristine Burr
V         Mr. Ovid Jackson
V         The Chair
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger

 1220
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Jacques Pigeon (Senior General Counsel and Head, Department of Justice, Department of Transport)
V         Mr. Mario Laframboise

 1225
V         Mr. Jacques Pigeon
V         Mr. Mario Laframboise
V         Mr. Jacques Pigeon
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Ronald Sully
V         Mr. Mario Laframboise
V         Mr. Ronald Sully
V         Mr. Mario Laframboise
V         Mr. Louis Ranger

 1230
V         The Chair
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk

 1235
V         Mr. Louis Ranger
V         Mr. Ronald Sully
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk

 1240
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mrs. Lynne Yelich (Blackstrap, CPC)
V         The Chair
V         Mr. Louis Ranger

 1245
V         Mrs. Lynne Yelich
V         Mr. Louis Ranger
V         Mrs. Lynne Yelich
V         Mr. Louis Ranger
V         Mrs. Lynne Yelich
V         Mr. Louis Ranger
V         Mrs. Lynne Yelich
V         The Chair
V         Mr. Mario Laframboise
V         Mr. Louis Ranger

 1250
V         Mr. Mario Laframboise
V         Mr. Jacques Pigeon
V         Mr. Mario Laframboise
V         Mr. Jacques Pigeon
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise

 1255
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Ronald Sully
V         Mr. Mario Laframboise
V         The Chair
V         Mr. Jim Gouk

· 1300
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         Mr. Louis Ranger

· 1305
V         Mr. Jim Gouk
V         Mr. Louis Ranger
V         Mr. Jim Gouk
V         The Chair
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         The Chair
V         Mr. Luc Bourdon (Director General, Rail Safety, Department of Transport)
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon

· 1310
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Louis Ranger
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         Mr. Mario Laframboise
V         Mr. Luc Bourdon
V         The Chair
V         Mr. Luc Bourdon
V         The Chair
V         Mr. Luc Bourdon
V         The Chair
V         Mr. Luc Bourdon
V         The Chair
V         The Chair
V         Mrs. Lynne Yelich
V         Mr. Louis Ranger

· 1315
V         The Chair
V         Mr. Louis Ranger
V         The Chair
V         Mr. Jim Gouk
V         Mrs. Lynne Yelich
V         The Chair










CANADA

Standing Committee on Transport


NUMBER 006 
l
3rd SESSION 
l
37th PARLIAMENT 

EVIDENCE

Tuesday, March 23, 2004

[Recorded by Electronic Apparatus]

Á  +(1105)  

[Translation]

+

    The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.)): Good morning, everyone.

[English]

    Welcome, everybody.

    We have with us, from the Department of Transport, Deputy Minister Louis Ranger; Jacques Pigeon, senior general counsel and head of legal services; André Morency, assistant deputy minister, corporate services; Marc Grégoire, assistant deputy minister of the safety and security group; Kristine Burr, assistant deputy minister, policy group; and Ronald Sully, assistant deputy minister, programs and divestiture group.

    Welcome all.

    I have a notice of motion I will deal with.

[Translation]

    Do we all have a copy of your notice of motion?

+-

    Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ): It has been tabled; all of the members have a copy, Mr. Chairman.

+-

    The Chair: You have all received a copy of the notice of motion, and it has been accepted, Mr. Laframboise; we will deal with this notice of motion at a subsequent meeting.

+-

    Mr. Mario Laframboise: Thank you.

[English]

+-

    The Chair: Before we go on, I would like to thank the department for accepting our invitation. I know it must have been difficult for you, because we're not really telling you what we want today. I'll give you some history.

    As you can well understand, it's very difficult for us as a committee. Some people tell us there's going to be an election soon, and others tell us there isn't. There's no legislation coming down the pipe. I'd like to give the committee two months off, but they insist on doing some work.

+-

    Mr. Jim Gouk (Kootenay—Boundary—Okanagan, CPC): All in favour.

+-

    The Chair: I'm in favour.

    And the work that we do when we don't have legislation is to do studies, so I challenged the committee to produce some issues. They did such a good job that I have two pages of them.

    At our last meeting we tried to narrow it down to one issue, one thing to study, and we were all over the map. There are different priorities for each member. There were questions or statements made that we did not have the answers for, so I suggested that we invite you and that each member would be able to develop their priority through questions to you and through discussion among ourselves. That's the purpose of our meeting today.

    Next Thursday, colleagues, the minister will be with us. It will be on camera from 11 o'clock to 12:30. Then we have a group from CATSA who have asked to meet with me, and I always try to share with everybody. That portion will not be televised.

    Next Tuesday I will call the meeting to deal with appointments and the way the House leader wishes for us to decide on or recommend ways of questioning or having an input into the appointments that are under the jurisdiction of the Department of Transport. If that goes well I will ask you for permission to give you Thursday of next week off, but if you insist on working, give me an issue and I'll call the meeting.

[Translation]

    The department's representatives have asked for a few minutes to expand on a number of matters that were raised the last time they appeared before us. This involves questions that were asked and that could not be answered at that time. They have the answers today.

    Mr. Ranger, please go ahead.

+-

    Mr. Louis Ranger (Deputy Minister, Department of Transport): Thank you, Mr. Chairman.

[English]

    As you mentioned, there were a number of issues that were raised the last time. Reviewing the transcripts, we thought that we could bring complementary information today. I'm referring specifically to.... If you recall, there were a number of questions on the CN timber bridges that I would like to cover today. Also, there were several questions related to flight attendants, both on the employment insurance benefit and on the rather contentious issue of flight attendant ratio.

[Translation]

    There were also questions about the St. Lawrence Seaway. I would like to cover those points before answering your questions.

[English]

    Starting with the CN timber bridges, I can certainly understand the members' concerns about the safety of those bridges in Canada, especially given that, as you know, there was an accident near McBride, British Columbia, last May that actually took two lives.

    In Canada, CN and CP have about 890 such timber bridges. CN has 650; CP has 240. Together they represent about 20% of the bridge structures owned by CN and CP.

    In general, track safety and rail bridges specifically are regulated under the provisions of the Railway Safety Act and the associated track safety rules. Transport Canada also publishes engineering guidelines for railway bridges and other structures. To be clear, it's the railways that are responsible for inspecting their tracks to ensure they are operating in compliance with federal regulations, standards, and rules. Since last May, I can assure you, all the timber bridges on the line in question, the Fraser subdivision line, were inspected not once, but twice--once by Canadian National and a second time by Canadian National accompanied by the Transportation Safety Board.

    This spring CN will be completing an inspection of all its 650 timber bridges across the system. Actually, in February CN advised that their inspection was actually 90% to 95% complete. I understand that CN has also initiated the development of a computerized data-tracking system, also called the bridge and culvert condition system, to better track component deterioration and repair schedules. It is expected that this system will be completed this summer.

    Turning now to what Transport Canada has done, I'd like to go over a list of steps that we've taken.

    Certainly the first thing we do when there's an accident of that magnitude.... We appointed what we call a ministerial observer, who is following the TSB investigation closely so that if necessary the department can take immediate and appropriate action.

    Transport Canada is also reviewing the accident in terms of compliance with the rules and regulations under the Railway Safety Act, and this is being done concurrently with the TSB investigation.

    We're also conducting an audit of CN's records for the Fraser subdivision line, and this audit is ongoing. We're also revising our infrastructure program to include an examination of each railway company's standards and practices with respect to infrastructure safety management.

    Finally--and this is interesting--we've completed a review of all accident statistics for the past 20 years. We've determined that no other accident resulting in derailment actually involved a suspected bridge failure.

    Given the number of questions that were raised the last time, today I've asked our director general for railway safety, Monsieur Luc Bourdon, to be available to answer any questions of a more technical nature you may have, not just on bridges but on any other railway safety matter.

    Turning now to flight attendants, starting with the whole issue of employment insurance benefits and flight and duty time, I understand that following our meeting of March 9, airline industry groups appeared before this committee, and one of the issues that was discussed was this very question of employment insurance benefits.

    I understand that Mr. Richard Balnis, from the Canadian Union of Public Employees, CUPE, confirmed that flight attendants were working with CCRA--that's the Canada Customs and Revenue Agency--and HRSD, Human Resources and Skills Development, and that an agreement has been reached on the method to calculate the hours of work by flight attendants for the purpose of employment insurance benefits. Of course, we're pleased that these two departments are working with the union and that progress is being achieved on this issue.

Á  +-(1110)  

    Just to clarify our position on this matter, on the matter of regulations to limit hours of work for flight attendants, Transport Canada agrees that flight and duty regulations should be developed for flight attendants for the purpose of safety. This is being done through an open consultation process that we refer to as CARAC, which stands for the Canadian Aviation Regulation Advisory Council, which of course includes both air industry management and unions at the table.

    At first glance I know it may seem logical that flight attendants could simply be considered flight crew and have the existing flight and duty pilot regulations apply equally to flight attendants. Although the regulations for flight attendants will definitely follow a parallel process to that of pilot regulations, the regulations limiting hours of service for flight attendants will be developed based on their distinctive roles and responsibilities.

    The way in which flight attendants and crews are scheduled is the responsibility of airlines and depends on several factors. It depends on the base of the crew members. It depends on the aircraft type. It depends on the qualifications of crew members.

    There's no doubt that both pilots and flight attendants are integral to the safety on any given flight. However, they have different and distinctive responsibilities. They can also have different and distinctive schedules for any given day or any given week.

    Moving now to the issue of flight attendant ratio, I understand that the committee discussed the issue of ratio of flight attendants to either seats or passengers as being one to 40 passengers or one to 50 seats. I know the committee heard strong views on this subject at its March 11 meeting.

    First of all, I want to reassure members that Transport Canada has not made any final decisions on this matter. Actually, we are only at the beginning of our regulatory process. It goes without saying that when an issue is as contentious as this one, we have to be very strict on the process.

    We rely on a very inclusive process when we develop such regulations, and we feel that frankly this process, even though it sometimes appears quite lengthy, has helped us to make more informed decisions, to work towards what are called “smart regulations” that are supported by the industry we regulate.

    So in terms of the actual process, we will issue a notice of proposed amendments before the CARAC technical committee. That will be done in early April, and we will be giving committee members 30 days to comment. As I said, those members include unions and airline management. We will be reviewing and incorporating these comments into the draft regulations, and the draft regulations will become available this summer.

    The draft regulations will then go through the full gazetting process that you're familiar with, giving all parties another opportunity to make their views known. The gazetting process, along with the time to consider the submitted comments, can take anywhere from six months to a year and a half.

    Finally, I think it's important to understand that Transport Canada would not even be considering any change to the regulations unless there were some scientific evidence, some scientific data to suggest that this change could be done without affecting safety. In 2003, the department--this was discussed the last time--completed a risk assessment. That was done with airlines and unions. That assessment indicated that safety would not be compromised, provided that all safety requirements were met, of course, and that special mitigation measures were taken--for example, that there would be sufficient training.

    The report indicated, however, that a consensus was not achieved as to the acceptability of the risk associated with the one-to-50 ratio. The result of this risk assessment will form the basis of our discussion, needless to say, over the coming months. But at the request of the committee, I am tabling today a copy of the risk assessment in both languages for the information of all SCOT members.

Á  +-(1115)  

    Mrs. Desjarlais is not here today, but she had a question about the number of inspection positions we have at the Department of Transport in the civil aviation area. Currently we have 881 positions. That's 248 more positions than we had in 1995.

[Translation]

    With respect to the St. Lawrence Seaway, at our last meeting, Mr. Bigras raised concerns relating to the Great Lakes and St. Lawrence Seaway study. I will start by stating that Transport Canada, obviously, is involved with the American Department of Transport, the US DOT, along with the US Army Corps of Engineers, and on the Canadian side, the St. Lawrence Seaway Management Corporation, and other stakeholders and organizations, in a study on the future of the seaway. This is a joint venture, involving Canada and the United States, which will allow us to evaluate the current maintenance requirements—and I repeat, the current maintenance requirements— as well as the costs and benefits of maintaining the existing infrastructure.

    This study does not deal with any large-scale changes to the infrastructure, such as expanding the seaway. This confusion likely stems from the fact that another study was undertaken by the US Army Corps of Engineers in 2003. This was a preliminary study to identify options that, according to the US Army Corps of Engineers, might warrant a more extensive examination, including the broadening and deepening of the channel. Transport Canada did not take part in the US Army Corps of Engineers' study.

    With respect to the joint study in which we are involved, Canada has undertaken to examine the existing needs. This study will take place over 30 months, and no commitment has been made. The intention is that it proceed to other phases or subsequent activities or something that may require large-scale environmental assessments.

    Mr. Chairman, this completes my remarks on the four subjects that I had identified.

Á  +-(1120)  

+-

    The Chair: Thank you, Mr. Ranger.

[English]

    Colleagues, I did something I very seldom do. I scheduled a three-hour meeting today. Anyone who knows me knows that I like quick meetings. You don't have to use up the three hours.

+-

    Mr. Jim Gouk: These are one-hour rounds. Is that what you're saying?

+-

    The Chair: That's fine with me. The time is there. But I'll repeat myself: you don't have to use up the three hours, but we do have all the time that my colleagues need.

    I have another comment. Our guests have with them in the audience other specialists. I invite you to bring them to the table as you need them. The idea today is to get the information.

    Mr. Gouk, how about seven minutes, or do you want more?

+-

    Mr. Jim Gouk: Yes, why don't we do ten minutes? Ten is a nice round number.

+-

    The Chair: I'm not usually easy.

    Mr. Gouk, Monsieur Laframboise, Mr. Hubbard.

+-

    Mr. Jim Gouk: Thank you.

    I have a number of issues. Maybe the first is to touch on the ratio for flight attendants on board.

    I am not taking any particular position. First of all, obviously 40 is safer than 50, 30 is safer than 40, and so on down. One to one would be great, except they might get in the way then. The question really is, as you said, the risk assessment. Notwithstanding that 40 is safer, whether 50 is safe enough is what we're really looking at.

    In order to determine that, I've had discussions with people on both sides of this issue, and one of the things that has been identified is there are a number of documents out there that might help shed some light on this. Certainly one side has been asking for it. I would like to see whatever material is there to justify any final position that's taken.

    A couple of things have been asked for. One was a letter that was written by ATAC to Transport Canada. ATAC was here a couple of weeks ago. This committee specifically asked if they were prepared to share that letter with us and table it with the committee. They said yes, absolutely they were, but we have not got it, and we would like to see that, whether it comes from ATAC or it comes from Transport. We would like to see it because we think it's relevant to this.

    Second, there is background material for a Canadian Aviation Regulation Advisory Council meeting on March 20, 2001. I think this committee would be very well set to have a look at that as well. There is an e-mail between two Transport Canada officials, specifically Frances Wokes, dealing with safety standards, and Merlin Preuss, director of commercial and business aviation, dated March 27, 2001, regarding the CARAC decision on flight attendant requirements. The third one is a Transport Canada cabin safety standards review dated July 31, 2002. If those documents could be tabled, ideally very quickly--and when I say very quickly I mean later today--if they could be provided to the clerk so that we might have a chance to see those before our Thursday meeting....

Á  +-(1125)  

+-

    The Chair: Before we go on, is that acceptable? Are there any documents there that you want to...?

+-

    Mr. Louis Ranger: I'm aware of the request, because Mr. Moore actually wrote to me on March 12, requesting those four specific documents. They have been identified specifically, because there was a broad request to the department under access of information, and we released a number of documents under that request. But those four documents were specifically excluded, either because they were providing third-party information or they constituted advice to the minister. A good example is if the third party is prepared to release information, as was the case with ATAC, then certainly we have no problem with that.

    So I have a formal request. I take your point now about the urgency, and I'll have to take that on board. I was aware of the request.

    Speaking more broadly, this is a difficult one. You can all see the commercial interest behind this request, as our airlines have to compete with foreign airlines that have the advantage of the other ratio. On the other hand, the unions have a clear view, and the risk assessment actually reflected that.

    I also like the way you phrased it. There is no doubt that the current regime is safe. The question is, would the other regime also provide the required level of safety? When you see the report, it is not as black and white as one might think. I thought there was a good reflection of the issue. This is why, frankly, there are times when people complain about the CARAC process, but we'll need every step of that process to think this through, and to ensure there is a good debate of all options and their repercussions.

+-

    The Chair: So we won't be getting those documents today?

+-

    Mr. Louis Ranger: Not today.

+-

    Mr. Jim Gouk: We would like to get them, nonetheless, as quickly as possible—and any other documentation that you feel is relevant to allowing us to reach a decision based on arguments made for a specific outcome.

    You talked in terms of a timeline on this, and it sounds like it's a long time—there is going to be a CARAC meeting, there are going to be other follow-ups, and then there is going to be gazetting, so it could take anywhere from six months to a year and a half. But we are likely going into an election. Obviously, Parliament will be dissolved, and after the completion of that election, chances are that we're not going to be reconvening as a committee until next fall—if it's a spring election.

    Is it not likely that this would be put into effect—and possibly very quickly—under a ministerial exemption, and that it would not wait for the gazetting, and consequently that this committee would not have a chance to see the outcome and comment on that outcome if the election scenario follows?

+-

    Mr. Louis Ranger: We are following the process.

    Our minister is appearing on Thursday, I believe, and I think you may want to ask him that same question. Certainly our process calls for developing draft regulations in the summer, so I don't see how we would possibly....

    Sorry, on your question about exemptions, I am not aware that we would consider exemptions in the near term.

    We have engaged in the process, and that is the path we're following.

+-

    Mr. Jim Gouk: Would you actually be prepared to commit that we will not see a ministerial exemption on this, so that this committee would have an opportunity to revisit this?

+-

    The Chair: That is not a fair question.

+-

    Mr. Jim Gouk: Anything is a fair question. He doesn't have to answer it.

+-

    The Chair: No, you are asking it to the wrong person. You can ask it on Thursday, though.

+-

    Mr. Jim Gouk: Okay, fair enough.

    I would like to move to a couple of other things, and then I may come back to this in a later round.

    We've raised the question, and I've never really got any answers from CATSA on this, of the possibility of security passes in order to streamline their operation. From a Transport point of view, what reaction do you have to the concept where we would have something similar to a NEXUS card program, but for high-frequency travellers, for air crews, for people of low risk who have been security-cleared, and paid a fee if necessary, in order to get through this process? From Transport's point of view, is there any objection to this, or is there any potential support for this?

+-

    Mr. Louis Ranger: I'll give you a general answer, and I'll ask Marc Grégoire to perhaps give you the specifics.

    Certainly, in principle, we don't object to that. You may want to ask CATSA when they appear this week, but they are looking at it. I know that Mr. Duchesneau told me that he was looking at it specifically for high-frequency travellers. There is possibly this notion that it be done with a fee, but we would then have to have a discussion to decide whether CATSA can do some operations on a cost-recovery basis. When we set it up, cost recovery of that nature was not envisaged, but it is certainly something we are prepared to discuss.

Á  +-(1130)  

+-

    Mr. Jim Gouk: One other thing that's come up—in fact, many other things—with specific regard to CATSA is that in British Columbia, they're changing from Aeroguard to SecuriGuard, I think. Now, one of the things we were told when this was first being set up was that this was to provide uniformity throughout the industry, that it was going to be a set of highly trained professional people who were going to be doing this. Now, for whatever reason, CATSA has relet the contracts. These are contracted people who are providing this, who are wearing a CATSA uniform and are trained to a certain standard, but they're working for a private company that's contracted.

    They're switching from Aeroguard, I believe, to Securiguard. I discovered that when a company, whether it be Securiguard or someone else, bids on this, they don't have to have any qualified screeners on their staff. They don't have to have any of those people available at all. They win the contract, so that obviously means that the other people lost the contract. Now there's a bunch of trained people floating around out there.

    Securiguard in British Columbia is scheduled to take over on April 1. At this point in time, they do not have a contract in place with the former employees of the outgoing company, when I talked to them yesterday. They have made an offer, and it is being discussed by the union representing the employees, but they don't have an answer. We're just over a week before this thing kicks in.

    What kind of process is there in place to ensure that there's some kind of stability in this sector? There's no guarantee that these people are going to come over. Why are they even going back out to hire when there are no employees there?

+-

    The Chair: Thank you, Mr. Gouk. It's a good question, but we'll have to keep note of it.

    Mr. Gouk may allow you time to respond on the next round, or you may do it in closing remarks.

[Translation]

    Mr. Laframboise, you have 10 minutes.

+-

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

    I'd like to come back to the flight attendants. There is something that I find surprising in your process. When did you expect our committee to examine this issue? I don't mind your undertaking an analysis, and using CARAC and all the rest, but we, who are not experts but who must represent the population would become, through this committee, some type of buffer between the industry and...

    Because of matters relating to security that could arise, when did you intend to have us examine this?

+-

    Mr. Louis Ranger: I don't know whether I have any reason to brag about this, but Transport Canada is one of the largest generator of regulations in Ottawa; I think we can compete with the Department of Finance. We churn our a huge number of regulations and we currently manage about 600. Of course, some of them are more controversial than others. I don't think we had intended to approach the committee on that specific issue. But, of course, as things move along, we may realize that the issue might be controversial... This would involve high profile issues which would, of course, be of interest to the committee. That is why we are here today. We should examine the hot button issues from time to time over the course of the year.

    As I told you, this is a relatively important aspect of the department's workload. We have dozens of lawyers assigned exclusively to reviewing regulations. We also have a very elaborate process, but I will agree that it does not explicitly include the committee.

    As to the CARAC process, when they convene an annual meeting of all of the members and all of the stakeholders, they have to rent the entire Conference Centre in Ottawa in order to accommodate everyone. There are hundreds of people involved in reviewing the regulations, including a host of technical committees and subcommittees. In fact, regulation drafting is a team effort. It is a complex operation, but I will admit that there is no specific provision to include the committee. The level of controversy would dictate whether or not it would be discussed here.

Á  +-(1135)  

+-

    Mr. Mario Laframboise: The controversy arises out of the security aspect. We can't claim that we want more security if we don't ensure that the committee, which brings together the members whose job it is to defend the interests of the population, gets a chance to examine this issue. But you did give us an answer; you said that you had not intended to submit the regulation to us since it was not your standard operating procedure. If we want to review it, we will have to push the issue, because, even if you do answer our questions today, we will never have the final word on this, particularly since some of the documents are missing.

    You said earlier that you had read out the list of the four outstanding issues. Could we have the studies from 2001, the reports and all of the rest? You seem somewhat reluctant to give them to us.

+-

    Mr. Louis Ranger: We must also respect the Access to Information Act. If the information comes from a third party and if that third party is not prepared to release the documents, then we must respect the act. The same applies to advice given to the minister which is considered privileged information that is also protected by the act.

+-

    Mr. Mario Laframboise: So, even the Transport Canada internal report dated March 2001 which served as a basis for your proposal which was, at the time, to not reject the reduction is, according to what you are telling us, a confidential document prepared for the minister. And we are not allowed to see it.

+-

    Mr. Louis Ranger: However, today I am tabling the risk assessment report. I would invite you to read it. You will see that it is neither black nor white. The report is an objective evaluation of the levels of risk, speaks to the lack of a consensus, and compares various risk levels according to various options.

+-

    Mr. Mario Laframboise: But, if I am not mistaken, this report was commissioned after the ATAC asked you to review your positions. I believe that you recommended a report. Is that correct? As to the time frame, that probably arose afterwards.

+-

    Mr. Marc Grégoire (Associate Assistant Deputy Minister, Safety and Security Group, Department of Transport): The first time that it was analyzed, it was at the request of an airline, and it had been rejected. The ATAC came back to us a little later and asked us to reconsider our decision, which does happen from time to time within the CARAC process. Any citizen of Canada can request that a regulation be reviewed. That is how this very democratic process operates. So we agreed to revisit the issue, but we had to undertake a risk analysis, which was done, and which is being tabled here today.

+-

    Mr. Mario Laframboise: That's fine, but it was done after you turned down the request, in light of your initial analysis.

    Despite the fact that you are specialists in this field, Mr. Grégoire, we are here to try and protect the citizens and to simply ensure that what is happening is in their interest. I am not saying that we cannot try to balance the needs of the industry, cost effectiveness, and the public will, but we do have issues with the way in which you seem to be going about it: there was an initial report that was rejected by Transport Canada, a request made by the ATAC, because, in the end, there are financial considerations. You said that earlier, Mr. Ranger, there is no denying it, there were financial interests involved in the request.

    We are here to ensure that passenger safety is properly maintained. You will tell me that CARAC should have that responsibility, but they are not accountable to the public, whereas we are. The minute this file lands on the committee desk, I become responsible. I have an airport in my riding. If anything were to happen, I would feel very uncomfortable if I had not asked all the right questions to ensure that these regulations will provide the highest possible security. As I have said, what bothers me is that the committee will not be discussing this and it will probably be adopted without our input. As a representative of the population, I have a hard time accepting that.

+-

    Mr. Louis Ranger: I take comfort in the fact that the system does work. If we are discussing it today, it means that we are putting the subject on the table and are open to hearing what various stakeholders have to say... If it were controversial... There are various ways to access this committee, and the stakeholders did appear before you.

    We, however, are often criticized because our process takes too long. For example, a draft regulation requires so many stages that when it is finally published in the Canada Gazette, there is very little feedback since all the comments have already been made because of the opportunity for open debate.

    In this case as in many others, particularly when it comes to civil aviation, there is a very elaborate process.

Á  +-(1140)  

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    Mr. Mario Laframboise: Except that when you say that there is an open debate, according to my understanding, for many of these regulations, this takes place outside the Transport Committee. Your specialist groups discuss them, but we are here to try to establish some type of balance between the industry and security, and we are not in the loop.

    So I will do my outmost to ensure that this committee becomes involved, so that we might also hear witnesses and make a recommendation that the government will probably decide to reject if ever it is deemed inadequate. That is what I intend to do so that members can at least examine the issue, but I have taken note of your comments.

    Basically, today you are tabling your latest study and we will not be getting the other documents because the Access to Information Act will not let you give them to us. Is that correct?

+-

    Mr. Louis Ranger: I was asked if I could table them today. I can't give you that commitment today. I received a formal request to produce those documents. I am now aware of the pressing nature of the request and I would like to do it as quickly as I can.

+-

    Mr. Mario Laframboise: How is that done, again? You will set things in motion as of April, with 30 days... I would just like you to remind me of the procedure.

+-

    Mr. Louis Ranger: Let me take a look at my notes. A notice of amendment will be issued early in April. The stakeholders will have 30 days to comment and, based on those comments, we will prepare a draft regulation. That will be done over the summer, based on the comments that have been received. Then comes the process as it relates to Part 1 of the Gazette, which gives the stakeholders 60 days to comment on the text of the draft. After that, in light of what has been submitted, it can take from 6 to 18 months to fine tune and finalize the regulation.

+-

    The Chair: Thank you, Mr. Laframboise.

    I would like to point out that the reason why the committee is examining this issue is because the stakeholders, the interveners, asked to meet with me in my office, in my capacity as chairman. Instead of agreeing to that, I suggested that they meet with the entire committee.

    Mr. Laframboise, I understand your interest in this matter and your wish to take this further, but the committee will deal with the bill and the regulations once they have been recommended or before they are decided upon. We will undertake some studies, but we will not become involved in micro-managing the Department of Transport. At some point we will have to let them do their research and proceed with their consultations, but that will not prevent the committee from doing its own work as it sees fit. Is that okay?

    Mr. Hubbard.

[English]

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    Mr. Charles Hubbard (Miramichi, Lib.): Thanks, Mr. Chair.

    Listening to this, I wonder if the transport committee is involved with transportation any more. It's quite a question, isn't it, because most of the topics that are going around here, safety and so forth.... Historically, transportation by several modes was always a major activity of the transport department, but we've spun off so many of those activities that now we're simply dealing with regulations and safety regulations on how the system works rather than being involved with the system. Do you see the day when the Department of Transport will disappear?

    Louis, maybe that's a good, hard question, but it appears to me that when you look at the involvement you've had—we'll say in the early 1990s—and what it's become today in 2004, you've spun off how many thousand employees? It's just an estimate or rough guess.

Á  +-(1145)  

+-

    Mr. Louis Ranger: We had over 21,000 employees, and we're now at about 4,600. In that process, no one got a pink slip, so they were just people being transferred either to NavCanada or airports—or there's actually a good number who went to Department of Fisheries and Oceans as part of the coast guard transfer. But these are the numbers now.

    Having said that, what has always been our priority is to ensure safety. I think that's always been the core function, and it definitely remains a core function. But since September 11, security has now taken proportions that nobody could have imagined before.

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    Mr. Charles Hubbard: What I'm concerned about is that in the history of our country, transport has always been a very vital issue for the economic development of Canada and the political integrity of Canada in terms of keeping our nation together. As a department, we've spun off nearly all of those kinds of activities. In terms of our airports, we've divested them. In terms of our ports, we've divested them, giving them out to somebody, hopefully that Transport Canada may never see them again, except to regulate what they're doing.

    It's a concern to many of our smaller areas that we've lost our ports, we've lost our air service, and we've lost a lot of the economic generators that we had. For example, my own port of Miramichi, which is one of the oldest ports in this country, was divested to a group last Saturday, who got a building, which somebody hopes they're going to continue to do something with. In terms of the marine strategy for the river, which had been dredged for some years, there's no money any more anywhere to dredge the river. When it was divested, no money was given to the port of Newcastle or Miramichi to dredge it, to the point where ships of nearly nine metres of draft could come into the river. So you've really said “Goodbye. Here's your port, here's your building. Now see what you can do with it.”

    But when you do that, in terms getting rid of air service or marine service, all of those goods suddenly have to travel by road. If I'm a passenger wanting to go from, we'll say, Chatham Airport—which existed as a commercial activity 10 years ago, or in fact even less than that—I have to drive 120 miles to my nearest airport. The roads are not that good. If Ultramar wants to bring its gas and oil to the Miramichi, they have to bring it by road or rail. The roads are going to get millions of tons of extra use as a result of Canada pulling out of the system.

    So the question I think I have to ask is what role are we going to play in the future? We've lost out; we're trying to divest everything. VIA Rail is still part of your operation, as we do give them money each year. There are some people wanting to divest it.

    What is the future of Transport Canada? Is it just a regulatory agency?

+-

    The Chair: Mr. Ranger, before you respond, because I think it's a very important question, as the role of the department is diminished, the role of the member of Parliament is also diminished. We're getting to a point where our constituents call us about problems that we would have handled or lobbied for them, yet we're being squeezed out of almost all of the operations of government.

    As you say, will Transport Canada be around? I say, will the member of Parliament be around? There's a lot of stuff in the last ten years that when people call us about, we say, “Well, it's been contracted out, really”.

+-

    Mr. Louis Ranger: There is no doubt that in your roles as members of Parliament, I'm sure you are approached to intervene in day-to-day operations, which is not new.

    There's no doubt that we're less and less involved in day-to-day operations, let's face it. I remember many years ago spending a whole hour around a management table deciding how many bicycle racks we should have outside Pearson Airport, and so on.

    The new model is one where we still have a very important landlord function. We still own all those airports and ports.

    Where we still feel that we play a very fundamental role is in policy development. Periodically, the Canada Transportation Act has been reviewed. Maybe Mrs. Burr could say a few words.

    In the air sector, some would say it's still too regulated, and ask if we should move to more liberalization of the air sector. This is all controlled by the legislator. Our job is to advise the Minister of Transport on whether new opportunities can be unleashed by perhaps removing outdated regulations, or maybe by revisiting some of the policy parameters that have existed.

    There's still, I believe, a lot that we can do. Is there more that we can do to foster competition between and within the modes? Those policies have served us very, very well in the past. I grant you that these are not day-to-day issues, and probably not issues that your constituents would raise with you. That's the new model.

    Do you want to add something, Kris?

Á  +-(1150)  

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    Ms. Kristine Burr (Assistant Deputy Minister, Policy Group, Department of Transport): I guess I'd just add that in the process of constantly trying to review and examine where we should be going with respect to transportation policy, the government did launch the Canada Transportation Act review panel process a couple of years ago. Their report I think largely confirmed the direction that has been under way for the last few years in terms of trying to create a transportation system that allows Canada to be as competitive as possible vis-à-vis other countries, recognizing that we're in a globalized world with lots of international competitors.

    There's no doubt that more could be done in certain areas, and that maybe there are certain areas of imbalance. One of the issues we're thinking about right now within the department is how to ensure greater integration between the modes. Quite often that's something that isn't happening as well as it could.

    That might in some instances address some of the concerns you've raised, Mr. Hubbard.

+-

    The Chair: You have more time.

+-

    Mr. Charles Hubbard: In terms of your budget--and I know this will probably be off the cuff for you--you have certain mandatory spending. You have bridge systems, and you have contracts you have to honour year after year. If you take the mandatory aspect out, how much optional funding is actually involved in terms of the budget?

+-

    Mr. Louis Ranger: I'll ask André Morency to respond. It's a very good question. I mean, $1.6 billion sounds like a large amount, but when you look at the breakdown, you realize that some components are pretty rigid. So you're asking how much flexibility we have to reallocate within.

    André.

+-

    Mr. André Morency (Assistant Deputy Minister, Corporate Services, Department of Transport): In the context of our budget, as you know, we are appropriated, but we're also on voted net revenues. So in terms of the revenues we receive for airport rents, as an example, our appropriations are reduced by a corresponding amount.

    In terms of flexibility, when you look at our main estimates you'll know that a lot of the money in our votes simply flow through to crown corporations and through grants and contributions. The remainder of that, about $600 million, is to operate the department, half of which is traditionally salaries and wages.

    So the operating part of the budget for the department is not as substantial as one would normally consider when one looks at a budget that says $1.6 billion.

+-

    Mr. Charles Hubbard: Finally, in terms of this airport strategy and the income you're getting from airports, which is becoming a bigger balloon every year, you say that this goes directly to Treasury Board to offset...or it's not money that you can use at your own discretion, optionally, for other activities. It's my understanding that it reduces your overall budget by the amount you receive. Is that right?

    How big is this getting? We hear airports complaining that the contracts they've made with you are a major factor in the services they're providing and the fees they're charging to their clients, their customers.

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    Mr. Louis Ranger: I'll ask Mr. Sully to respond specifically, but the proceeds of the rent payments indeed come directly to Transport Canada. Obviously, that's so much less that we have to get from Treasury Board.

    I wish you were right in saying this is ever-increasing. We were working on that assumption until September 11, when we realized that as traffic goes down significantly, below certain thresholds, then the rent formula is such that there's a significant decrease in rent. Frankly, we had not experienced that before. We had to learn this the hard way, especially as no one was able to actually predict by how much the fall would occur. We had to adjust internally for that.

    I'm pleased to say that we were able to cash manage the situation. We were able to postpone certain expenditures to future years so that we didn't have to seek additional resources. But the plunge was quite significant, and we're now watching those revenues on a monthly basis to try to fine-tune our predictions.

    Maybe Ron could speak more specifically about the magnitude of the revenues.

Á  +-(1155)  

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    The Chair: Thank you, Mr. Ranger.

    Mr. Sully, you might want to keep note of this. We'll find some time, and if we don't, there will be an opportunity for closing remarks.

    Mr. Hubbard, I gave back to you the minute I took from you earlier.

+-

    Mr. Charles Hubbard: He's a tough chairman.

+-

    The Chair: Mr. Gouk.

+-

    Mr. Jim Gouk: Thanks.

    We left you with a question in the last round. Perhaps now you could respond to it, with regard to this process of CATSA going for new contracts and writing contracts with groups that don't have the employees to provide the services.

+-

    Mr. Louis Ranger: I will ask Marc Grégoire to answer that.

+-

    Mr. Marc Grégoire: That's a very good question, sir. Actually, we had the same question in Transport, and we discussed it over the last months with CATSA. It was a rhetorical question indeed for us, because in CATSA's contract there was a transition from the old contract to the new contract. As a result of that, in Vancouver, for instance, as of last week the new provider had hired, I believe, 93% of the screeners. There is no question for us that screeners must be trained to standard. CATSA has significantly improved the training provided to screeners over the last year, and they're not taking people off the street.

    They're starting now as we speak--and you may get updated numbers from Jacques Duchesneau when you meet him on Thursday--with 93% of the same employees who were there. They're just changing employers. Why have they done that? It's sound money management. They have reduced the number of contracts they had in the country from I think 14 or 15 contracts down to five contracts for all of the airports.

+-

    Mr. Jim Gouk: The only thing that concerns me is, first of all, the process. If it worked well, that would be great, but they start out by contracting with a group that does not have these employees on the assumption that it will acquire them. That, to me, just leaves a lot of things up in the air.

    Second, I talked with one of the heads of Securiguard yesterday from Vancouver. He advises me that they have presented to the union a proposed agreement but have not heard back.

    I too have heard that 93% or whatever it is, a figure in that range, have accepted the employment, but I'm wondering if it's accepted or if it's tentative subject to this agreement being ratified. Just where exactly is this, and what security do we have for keeping our airports running effective April 1 if there's a glitch in this thing?

+-

    Mr. Louis Ranger: When you raise the question about lack of expertise, you're referring to the new management, right?

+-

    Mr. Jim Gouk: No, I was referring to the fact that they did not, at the time they won the contract, have people on their staff working for them who were qualified to provide security clearance screening for Canadian airports.

+-

    Mr. Louis Ranger: I'm not trying to not answer your question. We're in the field of contractual relationships. Obviously, CATSA is in a much better position than we are to answer those questions. I'm quite sure this was an open, competitive bid. I'm sure they had a selection process with specific criteria, and Mr. Duchesneau might be able to share that with you.

+-

    Mr. Jim Gouk: We'll certainly be asking him that.

    If I could, I'll go back for a minute to the flight attendant ratios. I asked you something specific with regard to ministerial exemption. It seems to me that if we do not have a ministerial exemption, then this committee or some future committee struck after the election, assuming it occurs, will have an opportunity to review this before anything is put into effect. My question is, has Transport Canada drafted for or proposed for either the current minister or the previous minister an outline of an exemption dealing with this specific issue?

  +-(1200)  

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    Mr. Louis Ranger: Just to be very clear for the record, I'll say that already some exemptions have been provided for very small aircraft, say aircraft with 51 seats--I could provide the committee with the specific types of aircraft where the exemption has already been allowed--but certainly not for the large-body aircraft that are the source of concern. There is no doubt, as Mr. Grégoire said, that we have been approached by one company in particular to seek an exemption. We have debated that internally, and it was decided that we would proceed with the process.

+-

    Mr. Jim Gouk: Aside from some specific issues that already exist, which we should presumably be able to find out about if we investigate them, your answer is that there is no presentation of an exemption for current or past ministers.

+-

    Mr. Louis Ranger: There is no proposal on the table at the department to have an exemption as we speak today, sir.

+-

    Mr. Jim Gouk: I'd be remiss if I didn't raise my favourite subject, that being VIA Rail.

+-

    Mr. Marc Grégoire: I can give you the exact name of the aircraft. The Challenger 600-2B19, the ATR42-300, and the Dash 8-300 are the aircraft exempted today. There's nothing in the works for--

+-

    Mr. Jim Gouk: And that's been ongoing for some time?

+-

    Mr. Marc Grégoire: Yes.

+-

    Mr. Jim Gouk: VIA Rail. The previous minister had indicated--in fact, I have a letter from him--that he was supporting and moving towards expansion of VIA Rail services in western Canada, namely the southern route from Calgary to Vancouver. Is there anything dealing with VIA Rail on the agenda of Transport Canada at this time?

+-

    Mr. Louis Ranger: I'm pleased to answer that question again. I'm well aware of the issue, and it goes back well before the last minister. We're well aware of the commercial successes of the other operator on that line. We're very well aware of the issue he's raised about a private sector company having to compete with a subsidized company. As we speak, sir, this is not being examined by the department. You asked me the last time if we had plans. The department has no plans in that respect as we speak.

+-

    Mr. Jim Gouk: Has the department ever done any studies on or investigation into the potential of, as one minister put it, either commercialization or privatization of VIA Rail's operation?

+-

    Mr. Louis Ranger: At one time the British government moved to a brand-new model where the tracks, as you know, were sold to a particular corporation and the railways, either freight or passenger, were turned into franchises and were allowed under conditions to use the track. There's no doubt that at that time we in Canada took a good look at a model whereby we would franchise certain services of VIA Rail. We definitely looked at that and actually retained the services of consultants to look at that. This was examined by the last government, and at that time the decision was made to go ahead with a $401 million capital investment. That was about four or five years ago.

+-

    Mr. Jim Gouk: Could the department table with this committee that study and any recommendations that flowed out of that study?

+-

    Mr. Louis Ranger: I certainly will take that request on board, sir. I can assure you that studies were done. I will follow up on that request, sir.

+-

    Mr. Jim Gouk: If you would, either table the report and the other material I have asked for, or at least provide us with a letter responding to the request.

+-

    Mr. Louis Ranger: Yes, I will do that.

+-

    The Chair: If I may, I'll add something, Mr. Gouk. This committee did a study on passenger rail. I'll ask the clerk to make sure every member has a copy, because there's a response from cabinet and they agreed with nine out of eleven recommendations at that time.

+-

    Mr. Jim Gouk: Maybe we'll move for a moment to the subject of airport rents, which was raised in the last round by Mr. Hubbard.

    We've heard testimony from the airports that the rents are exorbitant, that they've already paid in rent the asset value of the airport at the time they took it over, that they're adding hundreds of millions of dollars of new assets that, as soon as they're complete, belong to the government, and that they just have to pass these fees on. Is there any study being done by the Department of Transport on the potential for lowering rents that would, if possible, identify or quantify how much, what kind of new formula might be used, and what impact this would have on the Department of Transport?

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    Mr. Louis Ranger: Sir, we've done considerable work, and it would be irresponsible for us not to have done a lot of work, because we were the object of criticism by the Auditor General several years ago. We appeared before the Standing Committee on Public Accounts to explain what the basis was for the current rent. It was actually because of those conclusions that cabinet instructed the department to undertake a review of rent, the basis of rent, the methodology used, and long-term projections.

    We are definitely very advanced in conducting that review. It's under the responsibility of Mrs. Burr here, but certainly with the support of Mr. Sully. It's a cabinet-mandated review, so this is all part of input to cabinet, but I can definitely confirm that considerable work has been carried out already.

  +-(1205)  

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    Mr. Jim Gouk: Because that's being done for cabinet, I gather that would not be available to the committee.

+-

    Mr. Louis Ranger: I'm afraid that's the signal I have to give you.

    On your previous question, about the studies we did for VIA Rail, I will definitely follow up on your request. We will have to assess it again. It's always the same dilemma. Those studies were done as input for cabinet decisions, so we'll have to see how much of that information we can make available to the committee.

+-

    The Chair: Thank you.

    Before I go to Mr. Jackson, would you be able to very quickly or briefly give us a little insight into the formula for rents for airports--or is the formula in these 19 pages?

+-

    Mr. Louis Ranger: It's longer than that.

+-

    The Chair: Okay. You may be able to do something in a minute.

+-

    Mr. Louis Ranger: I will ask Mr. Sully to do that. It's quite a challenge.

+-

    The Chair: It's one of those questions that if you can't do it in a minute, you can't do it in ten.

    Mr. Sully.

+-

    Mr. Ronald Sully (Assistant Deputy Minister, Programs and Divestiture Group, Department of Transport): I can try.

    There have been a couple of iterations. The first five airports that were transferred in the early nineties had one particular formula, which was modified with the advent of the national airports policy in 1995.

    Basically, they looked at the projected revenue streams of the airport--had Transport Canada continued to operate them--the projected expenditure streams, and the requirement for additions of capital from time to time to recapitalize the airport. What followed from that was a projected stream of payments in rent to the government.

    Obviously, because different airports had different financial strength at the time of transfer and different expected financial strength over the 60 years--bear in mind, we're talking about 60-year leases--it's not surprising when you end up in a situation where different airports that seem to be roughly the same size are paying different amounts of rent.

    That's very roughly how it works.

+-

    The Chair: But the formulas pre-date 9/11.

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    Mr. Ronald Sully: Definitely.

+-

    The Chair: Do the payments today take into consideration the reduction in passenger airport usage?

+-

    Mr. Ronald Sully: After 9/11, the whole SARS thing, the war in Iraq, and so on, we saw the severe downturn in the industry. The formulas are such that they did provide for some reduction for the airports. As their passenger volumes went down, the payments due to the crown also went down. So there is a built-in mechanism where they are provided with some partial relief, and I think the committee is fully aware of the additional relief the government provided through the two-year rent deferral for those airports.

  +-(1210)  

+-

    The Chair: Thank you.

    Mr. Jackson is next, for ten minutes.

+-

    Mr. Ovid Jackson (Bruce—Grey—Owen Sound, Lib.): Thank you very much, Mr. Chair.

    My question has to do with security of marine installations. We have a very large country, and risk assessment will probably have to be the way in which it's approached. The country is so large, I am reminded that if a person learned to swim and they didn't die by drowning, then swimming was useless. If they actually did learn to swim and then died by drowning, swimming was useless too.

    In a lot of ways, governments go to places and have guards running around with guns and boats patrolling and nothing happens for a hundred years, and we're spending $50 million or $60 million for it. So it becomes problematic in terms of our security.

    Have we had an assessment done based on the risks we have? How has it been improved? A lot of money has been allocated to security of marine ports. I'd like to know how we're doing on that. That's the first question.

+-

    Mr. Louis Ranger: Thank you. We've done so much work on this in recent months that we could spend hours talking about this.

    I appreciate your question, because inasmuch as we've spent a lot of time on aviation security, there's a consensus now that we need to focus on marine security, especially at our ports.

    We are complying with international standards established by the International Maritime Organization. By July 1 of this year, we have to comply with the international standards. We have to issue about 800 certificates to either port facilities or shipowners, which is a huge challenge for our department. But to be able to issue that certificate, each port facility or each vessel owner first has to submit to us a risk assessment. Most of those risk assessments are in now, and we're assessing those.

    Based on those risk assessments, they have to submit to us a plan on how they will introduce the proper security measures to mitigate the risk, and it's on that basis that we will issue those certificates. So it's a very methodical, systematic approach to dealing with those issues.

    My colleague could elaborate at length, but it is a top priority. In all the documents that were issued by the new government on December 12--Mr. Hubbard was asking what is the role of Transport Canada--this one was singled out, making the Minister of Transport the lead minister for the coordination of marine security measures. That was actually essential, because in that field there are so many players involved, not just the Department of Transport, obviously the coast guard, the navy, the new Department of Public Safety and Emergency Preparedness, but several players, those involved in the intelligence gathering, and we've made a lot of progress on that front.

+-

    Mr. Ovid Jackson: My other question has to do with cabotage and the use of the biggest modes of transportation system for Canadians. Canadians are the ones we're here to protect and the ones for whom we want to get the best price, and we want them to be able to travel properly. If you're going to use the modal kind of transportation system, as Mr. Hubbard said, you're going to take some of the traffic off the roads and put it on the water systems, and so on. I know it becomes complex, but somebody doesn't really take the lead here.

    I know in Europe, for instance, if you're going to go a certain distance, you'll take a car, and then farther than that you'll get a bus, and then you'll use the rail and trains. I guess because of the population densities and the fact that maybe they're smaller areas, they could have some kind of system.

    In our case, rail systems, of course, are extremely expensive unless you have major corridors where there are large populations, and you can probably elevate the train, and in some cases stop conflicts in the road system.

    Does Transport Canada take an approach, or do we have an approach we take where we look into the whole country and into the various kinds of things that we have to in terms of improving the infrastructure of our system?

    We have the Windsor border, for instance, where there is a lot of traffic, and we're still having problems with whether or not the municipality will allow them to drive through the city. Are we going to use a tunnel, and that kind of stuff?

    How are we doing on that front? I know I'm covering a lot here, but we tend to go north-south to the U.S., and there are so many aircraft flying around that, to me, it's kind of crazy that we have this control system in this country.

    When I go to California, for instance--I went to Las Vegas in 1995--I wonder why that kind of stuff can't be transferred on to Canadians in order to make it more accessible so they can move around a lot better.

    If we had cabotage and open skies, wouldn't that be better for Canadians?

  +-(1215)  

+-

    Mr. Louis Ranger: You've certainly covered a lot of ground, but I will ask Kris Burr, our ADM for policy, whose job it is to integrate all those questions.

+-

    Ms. Kristine Burr: First of all, coming back to the point you raised about Europe, it's true that in Europe there has been a strong emphasis on rail transportation for many years. They have a highly sophisticated, very successful passenger rail network through most of Europe. It's highly subsidized. Interestingly, they're struggling with the issue of how to get more freight transportation onto rail. That's one of their challenges.

    My first point would be that I don't think that anywhere in the world has anyone got it perfectly right, including Canada. One of our preoccupations, certainly, with the growing concern around congestion and the environmental impacts of transportation is to find ways to encourage more integrated transportation systems.

    With respect to your point about cabotage, I think we would all agree with the concept that over the long term there need to be ways to encourage ease of travel for all passengers. When you look at the barriers that are in place right now, it's very clear that you need willing partners in order to introduce measures that profit Canada.

    Looking across the border at our major partner, the United States, they have very entrenched cabotage laws of their own right now in marine and in air.

    For anything we would want to do in the future, I think we would probably want to look for reciprocity. It's not always easy to negotiate, but it's certainly something we're looking at and assessing, in the context of looking at ways to improve transportation for Canadians.

+-

    Mr. Ovid Jackson: This is more of a comment. I would predict that places like Toronto will have to put some kind of a toll road going in there. I don't know if we have anything to do with it, but they don't seem to look at the fact that the people going to games, the Blue Jays games, the basketball games, what have you, drive, and sooner or later they're all going to emerge at the same spot.

    I remember being in Europe with Mr. Caccia at one time, because I lived in London. At the time I lived there in the 1960s, the English people only used their cars on weekends. Then they got car sickness like North Americans, and everybody had one, two, or three cars. They ended up having to accept the fact that you have to stop cars from going downtown.

    In places like California, you have the diamond lanes. Unless you put a blown-up dummy next to you, you can only go on those diamond lanes if you have more than two people in the car.

    There are lots of things we could do that would make our systems better. We don't seem to integrate them. I don't know why. You have the provinces, you have the municipalities, and you have us, yet somehow we don't seem to get together.

+-

    Ms. Kristine Burr: It's very true that the multiplicity of jurisdictions makes this a challenging area.

    Interestingly, however, there is a lot of debate going on right now about the importance of creating more liveable cities. We take great interest in the fact that many municipal governments, and many people who are interested in creating more liveable urban areas, are talking a lot about improving transportation, finding ways to encourage people to move to mass transit and to demand management, so that people will leave those cars at home and take public transit.

+-

    Mr. Ovid Jackson: Thank you, Mr. Chair.

[Translation]

+-

    The Chair: Thank you.

    Mr. Laframboise, you have 10 minutes.

+-

    Mr. Mario Laframboise: I would like to discuss air transportation in Quebec. You are preparing to transfer the Saint-Hubert Airport to the local authorities. Would you start by giving me an update on that?

+-

    Mr. Louis Ranger: I don't have the latest information, but we are very close to an agreement. To my knowledge, there is an agreement in principle between the airports in Montreal and Saint-Hubert for the day-to-day management of the airport. We are close to an agreement, but I don't have the specific details.

+-

    Mr. Mario Laframboise: You mentioned management. You currently own the property, and therefore you manage the Saint-Hubert Airport, but you would entrust the management to the Montreal Airport authorities.

+-

    Mr. Louis Ranger: If we sell the airport, it will no longer be ours. I spoke to some people at Aéroports de Montréal, and, as far as I know, there is an agreement in principle with the new owners of the Saint-Hubert Airport according to which managers from the ADM would be responsible for the day-to-day operations at Saint-Hubert.

  +-(1220)  

+-

    Mr. Mario Laframboise: That leads me to ask you about ADM. Among others, Mirabel and Dorval airports belong to you, they are managed by the people at ADM.

    How involved can you get in the management of these airports? Do you let them do whatever they want, or do you intervene? Do you have officials who monitor them? Does someone have a seat on their board of directors? I know you appoint the board members, but what is your power over ADM?

+-

    Mr. Louis Ranger: To connect your question specifically to the Saint-Hubert issue—and Mr. Pigeon may be able to confirm what I'm about to say—to my knowledge, the agreement or lease we have with ADM for 60 years gives ADM exclusive authority over international services, so that if Saint-Hubert or other suburban Montreal airports had any ambition to compete with ADM, it would not be possible. There are provisions about that in the terms of ADM's lease. So in doing that, we indirectly defined the vocation of the other airports. If your concern is that Saint-Hubert could become larger than anticipated, there are already limits that will mean that ADM will keep its exclusive rights for international flights.

+-

    Mr. Mario Laframboise: That doesn't worry me. Everything that involves ADM...

+-

    Mr. Louis Ranger: All right.

+-

    Mr. Mario Laframboise: I would say that the result is inconclusive. So that is what worries me the most. You know that at Mirabel, among other things, they have to manage equipment and buildings that are appropriate for an international airport. However, we have an empty hotel and deserted office space.

    Who makes ADM toe the line, is it the minister or you, the officials?

+-

    Mr. Louis Ranger: With your permission, I'd like to ask Mr. Pigeon to answer the question. Mr. Pigeon was directly involved in the negotiations in the early days. Montreal, Calgary, Edmonton and Vancouver were the first four: they were the pioneers. So on many occasions, Mr. Pigeon had to address such issues such as to what extent the federal government has the power to intervene once the contract has been signed. Perhaps he could clarify that.

+-

    Mr. Jacques Pigeon (Senior General Counsel and Head, Department of Justice, Department of Transport): Yes. Let's just say that given the nature of the contract that binds the federal government and ADM, ADM was given a lease so that it could operate the airports on its own account and not for the federal government. This is not a management contract in the sense that even if we own the land, the fact remains that we granted ADM a lease with a right to peaceful enjoyment. That means that ADM operates this airport, this airport enterprise if you will, for its own benefit.

    I think that that's the basis of the contractual relations that exist between us and ADM. In that sense, from a legal standpoint, I would make a distinction between that lease and a management contract, for example under which ADM would operate the airport for us in accordance with the directives we give them. In this case, we rented the land to them so that they could operate their business in accordance with the obligations set out in the lease.

+-

    Mr. Mario Laframboise: Except that you know full well, Mr. Pigeon, that they must use all the equipment in the operation of an international airport. Let me give you the example of the hotel because as we know, it has been closed for two years. There have been tenants who went to... I know that there have even been requests made directly to the government. I know that you could intervene. With regard to the decision not to intervene, I fail to understand that an independent body is allowed to manage and close certain properties when no one can see the day when anything will be done with them. I hope that you will be honest enough to tell me that there is no political will here. That's okay, that's not a problem for me, except that you as a department could intervene.

    Why didn't you intervene? Is it because you never intervened for any airport in the country? Is it because you let each of these administrations do whatever they wish? Or do you monitor the management?

  +-(1225)  

+-

    Mr. Jacques Pigeon: We can only intervene under conditions where this has been provided for, in cases where the right to intervene has been set out in the lease. What I'm saying is that the leases do not allow the federal government to intervene in the day-to-day management of the airport, because this enterprise is operated by the airport authority for its own benefit. These enterprises are not operated for the benefit of the government, they are operated for the benefit of the corporation which is a private sector corporation.

+-

    Mr. Mario Laframboise: Except that you know that you could intervene. The decision not to do so is a choice. If you felt that the administration was unsound, you could do something.

+-

    Mr. Jacques Pigeon: The lease includes rights and obligations for each party. The right to intervene was not set out in this lease.

+-

    Mr. Mario Laframboise: This brings me to a second topic on airports. The reason I was talking about Saint-Hubert is that I know that the community is asking for intervention from the Airport Capital Assistance Program, or ACAP.

    Has anything been provided for? Are you familiar with ACAP envelopes? Are there very specific requests?

+-

    Mr. Louis Ranger: Your question is about the parameters of the program?

+-

    Mr. Mario Laframboise: There are requests from Saint-Hubert, among others, and I know that other Quebec airports are asking for assistance. This is probably true all across Canada.

    Have you planned to recommend larger investments in this program to help these communities?

+-

    Mr. Louis Ranger: We have an annual budget of approximately $38 million for that program. There's a huge number of requests coming in. There are two major parameters. Demand is greater than what our budget allows us to do so we target projects that will improve airport security. There's also one basic parameter: there must be a certain number of flights per week.

    Mr. Sully could give you the exact parameters.

+-

    Mr. Mario Laframboise: Do you have any projects that you plan to fund? First of all, do you have any money left? Do you have any envelopes left?

+-

    Mr. Ronald Sully: First of all, the program only applies to airport security systems and it's not just for airports that have problems.

    Secondly, there is almost always a certain amount available for an airport at the time of a transfer, for example, for Saint-Hubert Airport.

+-

    Mr. Mario Laframboise: There is an amount that would be available.

+-

    Mr. Ronald Sully: Yes.

+-

    Mr. Mario Laframboise: I would like to come back to the issue of the St. Lawrence Seaway. Earlier, in your presentation, you said something which differs slightly from what you said last time, but perhaps you will be able to clarify it for me. You said that you have only been involved in one study on current maintenance requirements. The last time, however, you told us that this study comprised several stages. Are we talking about the same thing?

+-

    Mr. Louis Ranger: I am glad that you have asked the question; I myself needed clarification on the issue, which is why I saw fit to raise it in my opening remarks. The US Army Corps of Engineers undertook their own study on the issue. I know that some people in the United States think that we should indeed widen and deepen the St. Lawrence Seaway so that it could be used by larger ships. The US Army Corps of Engineers undertook a study in several phases. That is why, the last time, I spoke of a study carried out in several stages.

    We were not involved in the study. The results of Part 1 were made public. What I'm trying to clarify is that we were not involved in this multi-part study. We launched a different joint study with several stakeholders to better understand the long-term budgetary needs of the St. Lawrence Seaway. The St. Lawrence Seaway is getting a bit long in the tooth and the annual maintenance costs are continually rising. We have a ten-year renewable agreement with the St. Lawrence Seaway Management Corporation which we review every five years, and the main subject of discussion is how we are going to find the money for the upkeep of the Seaway, which is getting on a bit. Furthermore, the work in question always involves major undertakings which require several million dollars. So, when we renewed the agreement last year, the main issue at stake was how much money we were going to continue to invest. At the moment, the St. Lawrence Seaway pays for itself, but we fear that, with time—and that time will come quickly—we will find ourselves in a situation where we will have to consider investing new funds in the Seaway simply for upkeep. I'm not talking about widening it or deepening it, simply about maintaining it. I feel that it is incumbent upon us to draw this to the attention of our minister and the government. What is the long-range forecast? Is it going to become very costly for the government to maintain the St. Lawrence Seaway?

  +-(1230)  

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    The Chair: Thank you, Mr. Laframboise.

[English]

    We will continue, the reason being that I suspect we're going to finish before two.

    For my colleagues, I will not be doing rounds. Indicate to me that you want to ask questions, and as you indicate I will be going to you.

    Mr. Gouk, then Ms. Yelich.

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    Mr. Jim Gouk: I want to go back to the explanation we got on airport rentals.

    Mr. Sully, you had given us a bit of an explanation as to what that involved. Who actually designed the formula? Was that done by officials in the Department of Transport? Who actually designed that formula?

+-

    Mr. Louis Ranger: I'd like to make two broad comments on conclusions that I've reached over the years.

    The basic philosophy to set the rent initially was that the government should not be worse off. That was the driving principle. So as we negotiated airport by airport, we didn't want to be worse off.

    Let's face it, since the first airports were transferred several years ago, and as we move in time, it becomes less and less clear what we would have done with those airports had we continued to manage them. As I said the last time, where would we have found the money to expand the runways and build new terminals and so on? So it becomes less and less clear what the benchmark is as you move in time. That's the first great conclusion that I've reached.

    The second one is that you will have airport managers who may come to this table and ask, “Why is it that at Ottawa, the government is charging $2 per passenger”—I'm using fictitious numbers—“and if you go to Toronto, it's $5 per passenger, and then if you go somewhere else, it's a different price?” The reason is quite simple. As Mr. Sully alluded to, all of those airports didn't have the same situation. There are some airports that asked the government to inject considerable amounts of money as a condition for the transfer, and others did not. So it would have been unfair for us to have charged the same rents. In other words, at the time of the transfer, some airports had a much higher book value than others, and that's factored into the formula. So looking back ten years later on, you can ask why we're charging different prices, but there's a financial explanation for that.

    Where it is felt that the formula is unfair is that as the boards of those airports have made their own risk assessment and have engaged in huge financial obligations, the government continues to collect what is called a participation rent. In other words, it is said that the government benefits from investments and risks taken by the airport authorities. The government did not put a penny more in the airports, and yet it is gaining from those local investments.

    That, in a nutshell, is what is on the table now.

+-

    Mr. Jim Gouk: I just wanted to clarify—which again goes with what you've just said—that in the general concept, the way this was structured was to take into consideration the projected revenues Transport Canada would have had if they continued to operate, balanced against projected capital expenditures, where necessary. Is that essentially correct?

  +-(1235)  

+-

    Mr. Louis Ranger: That's correct.

+-

    Mr. Ronald Sully: The only comment I would add, sir, is that the capital was in recognition of what we call replacement capital, and not for expansion.

+-

    Mr. Jim Gouk: Okay.

    Where I have a lot of problems is with two things. First of all—and I think I've said this to you before—I spent a day with acknowledgeably one of the foremost airport operations experts in Canada, and perhaps internationally, because he's certainly contracted out enough. He worked for Price Waterhouse at the time. I spent a day with him, while he took me through charts and graphs. In his mind, this was the most bizarre formula he had ever seen in his life. He couldn't have imagined how it could possibly work.

    As for the projected revenues for Transport Canada, did Transport not lose $200 million a year? Was that not their projected cashflow at the time these airports came into creation? They were losing a ton of money on this, with no revenues at all, but a loss.

+-

    Mr. Louis Ranger: Some of the key airports were actually generating profits for the government and others were not. In fact, some of those profits were used to offset losses elsewhere in the system.

    I remember at the time when the proposal was made to transfer airports, some people were actually shaking their heads and asking why the government was transferring profit-making assets. The simple answer to that was as you look down the road, yes, an airport may be making money, but if you look at projections of capital expenditures required to keep those airports going, of which Toronto was a very good example, the decision-makers of the day could not see where that kind of money could be found down the road.

    So yes, you're transferring assets that generate profits, but it still would seem to be a good idea, given that we cannot afford to generate that kind of capital money.

+-

    Mr. Jim Gouk: As an example, Ottawa came before this committee and pointed out, in their view, of course, that they have already paid more rent to Transport Canada than the asset value they took over. They're paying escalating rents, even post-9/11. They, at their own expense, without a dime coming from Transport, built a new $335 million terminal, which becomes the property of Transport the day it opens, or the property of the government the day it opens. They continue to pay ever-escalating rents.

    Now, where is the justification in that, given that those rents have to be passed back to the industry, an industry that is in serious trouble in this country? We talk about the flight attendant ratio, about how we have to compete, and that other countries do things differently so we have to, yet we're downloading this incredible burden onto the airline industry. How do we justify that?

+-

    Mr. Louis Ranger: I think you've nailed the issue on the head. You will find a number of airports in this country that will tell you that if you add up all the rent payments they've made since the transfer, it's more than the book value of the airport. It raises the fundamental question of what basis the government should use to set the rent.

    You'll find a lot of people in this country who will say that the book value is not relevant. The basis should be the value of that airport as a going concern. It was sold as a business, with the operations set up to operate as an airport and as a revenue-generating undertaking. What is the going-concern value of an airport?

    You end up, one way or another, making long-term projections of costs and revenues and what the net present value is of those streams of costs and revenues. That's the value today of an airport.

    This is where we've hired the best consultants that money can buy in this country to help us determine what the fair value of an airport is that should serve as a base to set the rent. That's where we are now.

+-

    Mr. Jim Gouk: Therein, to me, lies the problem. We're not a Canadian investment corporation trying to make money; we're the Canadian government. The business of the Canadian government is to provide a necessary service to Canadians, to do those things for Canadians that must be done, which they cannot or will not do for themselves, regulatory things that are very high in priority.

    Now, we have airports across this country--necessary, certainly, in a country like this, where we have an airline industry. There have to be airports, and there has to be some structure with it. We are now operating these things, frankly, like a cash cow for the government. We're getting huge revenue streams that we never had before this was done. If we were a company with shareholders, we'd say “hot damn, have we ever got onto a good thing”.

    That's not what the government is supposed to be doing. I don't think we should be throwing our assets away, but we should be ensuring that they continue to operate as benefits for all Canadians. By owning the airports, certainly, we do that. We ensure that's going to happen, but we're getting all these capital expenditures, all these expansions and developments that are necessary to make these airports better. It isn't costing us a dime. There's no risk factor for the government.

    Frankly, I think a lot of the money that is being generated now should be going, first of all, to paying for some of these improvements so there's not a debt load. We should be giving reductions in operational costs. If we're going to be competitive with other countries, with companies in other countries, there's one way we can ensure that happens.

    At the same time, you talk in terms of some airports make a profit and some don't, but they're all a necessary part of the air transportation net. The little ones that maybe aren't profitable have to feed the big ones in other to make them profitable.

    There should be a lot more assistance given to those airports than the ACAP. There should be an expansion of ACAP, and perhaps some additional funding in those areas to help these little struggling airports, which is what you're saying the government used to do. But they can't do that while we're sucking all the revenues out of these airports and asking for more.

  +-(1240)  

+-

    The Chair: Thank you, Mr. Gouk.

    Keeping in mind that reducing rents doesn't necessarily help the passenger--

+-

    Mr. Jim Gouk: It can if we structure it that way.

+-

    The Chair: --maybe there's another way to help the passenger, because the taxes are high.

    Ms. Yelich.

+-

    Mrs. Lynne Yelich (Blackstrap, CPC): I want to comment on that as well.

    I come from the province of Saskatchewan, the city of Saskatoon. There's an increased need for efficient and effective links to the world. Because we are into industries such as biotechnology and synchrotron, we need a good, effective, and efficient transportation link.

    Taxes particularly harm mid-sized airports like Saskatoon. You're talking about how you can determine fair value, or basis for rent, those revenue generators, things like that. I'm thinking as I'm listening to you, if an airport such as Saskatoon.... The taxes are way too high in the industry, whether we're talking about the passenger or what I understand causes most of the problems, the deferred rents, which are going to cause a lot of problems for airports like Saskatoon.

    Are you open to suggestion on dealing with airport by airport on this sort of thing? If I had my people, the Saskatoon authority, talk to you to discuss about how incumbent this is upon them--the taxes are prohibitive--and then I know they have lots of concerns about some of the regulations.... They are an example.

    I think, as you know, the Saskatoon Airport Authority came in under budget when they made their improvements. They run it very efficiently, and yet we have secondary service in the country. We're a very important airport. We have the highest population in Saskatchewan. We are an important link.

    I would like your comments on that.

+-

    The Chair: Before you do, Monsieur Ranger, for anyone in the room wishing to get some food, it's open now.

+-

    Mr. Louis Ranger: I welcome the question, because it allows me to clarify that we have 26 airport authorities, but obviously they are all very different. When we talk about all this money coming to Transport Canada from rent payment, there are only nine airports out of 26 that actually pay rent as we speak. Out of that, Toronto pays half of all the money we get. There are several airports that will not pay rent for several years. For Saskatoon I believe it starts in 2006.

    If we adopt an approach where rents are based on what I call the “going-concern value”, then it means that we look at each airport individually, and what is Saskatoon airport's projection of costs and projection of revenues over the remainder of the lease and adjust the quantum of the rents accordingly.

    I personally believe that's a much better approach than having one simple rule of thumb saying everybody should pay $2 each time you use an airport. I don't think that would be fair in the sense of representing the particular situation of each airport. Certainly the work we've done would go more in the direction that you're suggesting, that we should reflect the situation of each airport.

  +-(1245)  

+-

    Mrs. Lynne Yelich: I wouldn't mind commenting about VIA Rail. We probably have the worst service in the world in Saskatoon for VIA Rail: 2 a.m. is when you can catch a train one way or the other. I just wanted to get that on the record.

+-

    Mr. Louis Ranger: It's a nightmare for transportation planners. The problem is that the country is either too large or too small to have schedules that can accommodate everybody.

    I'm saying this obviously with a note of humour, but it's been my experience, in watching VIA Rail struggle to come up with a schedule for their western transcontinental service that provides arrival times and departure times at decent times in the day or night, that this has always been the problem. Saskatoon, perhaps more than most, has suffered from that geographic situation. The moment you decide to have much reduced service in terms of frequency per week, it makes the challenge of coming up with decent schedules even more difficult.

+-

    Mrs. Lynne Yelich: So you might consider that when there's any question about going into competition with the Rocky Mountaineer. Perhaps let them do their business, because they already have it, and give us in the prairies a little better service, or at least make it affordable. That's the real reason the train isn't used more--it's not affordable.

    There were other changes that made it almost inconvenient. It almost went out of its way to make it inconvenient. I'm sure there are schedules down east, in particular, that aren't as productive....

+-

    Mr. Louis Ranger: In the case of the Calgary to Vancouver route, the existing operator operates this in two legs with an overnight stay in Kamloops. VIA was proposing to stick more to its mandate of providing basic transportation as a continuing trip--which I believe is 22 hours--non-stop from Calgary to Vancouver. They have argued, rightly or wrongly, that this was a different service, providing more opportunities for people who wanted--

+-

    Mrs. Lynne Yelich: That's what I'm saying. Rail is different in the prairies too. You would be offering us something we really don't have.

+-

    Mr. Louis Ranger: Yes. In terms of generating new ideas, I know that VIA tried to move away from operating the Western Transcontinental as one continuous trip. At one time they played with the idea of having several overnight stops to make it look like a very different package, with people overnighting in places, because most travellers were using the Western Transcontinental, especially during the summer, for the experience of taking the train.

+-

    Mrs. Lynne Yelich: Thank you.

+-

    The Chair: Monsieur Laframboise.

[Translation]

+-

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

    I would like to come back to the issue of airport rentals. The last time, you said that Aéroport de Montréal paid the least. Is that based on the number of passengers or the formula?

+-

    Mr. Louis Ranger: Regardless of how you look at the question, be it in terms of what I call the quantum, in other words the total amount paid in relation to the volume of passengers, or be it per capita, if it is not the least expensive, it is certainly amongst the least expensive. We are fully aware of that. The problem with the rental structure of the Aéroport de Montréal is that they have the power to introduce atypical practices. By that I mean that they don't offer incentives. For example, there is no incentive to enter into commercial agreements which could be profitable for the airport, because a high percentage of the profits would go straight into government coffers. There is clearly a structural flaw in the lease agreement with the Aéroport de Montréal, and I am certainly not trying to deny it.

    The reason why we have not dealt with this particular problem is that, at this stage, we do not want to start entering into separate agreements with each airport. We are looking for a more global solution. Cabinet asked us to seek a more global solution, and we are working on it. We have avoided signing individual agreements which could serve to slow down the whole process.

  +-(1250)  

+-

    Mr. Mario Laframboise: The other aspect of why they may want to have a new structure or to try once again to benefit from a rent reduction is that... I find it very difficult to understand. They have a loan arrangement for their investments. They surely must get government authorization, right? Do they issue bonds?

+-

    Mr. Jacques Pigeon: They borrow funds on their behalf. There are restrictions in the lease, so that if they use their lease as security in order to get a loan... There are certain restrictions in the lease, but they involve how their rights can be protected when they seek a loan. But the loan itself is issued by a private sector corporation, and the government does not get involved when the loan is given. Moreover, the government has no responsibility for the loan.

+-

    Mr. Mario Laframboise: When municipalities in Quebec arrange a loan, they have to submit the information to the Department of Municipal Affairs to ensure compliance with... But you have absolutely nothing. They can do as they see fit, borrow as they see fit, get into financial trouble as they see fit, and there is no problem with that.

+-

    Mr. Jacques Pigeon: Since the Montreal Airport authority and all the other airport authorities in Canada are private sector corporations and not crown corporations, they do not have to seek approval... The government has no oversight regarding their financial and commercial decisions. Things are done on a commercial basis with lending institutions that are also private sector businesses.

+-

    Mr. Mario Laframboise: Finally, you are aware, since you have discussed things at length with them, that they have the power to levy taxes, that is, they can charge renovation fees for airports, and they use this taxation power to guarantee loans with their bankers. What you are telling me is that the structure of these authorities enable them to satisfy their bankers, since they can simply increase the fees or tariffs, and you can do nothing to stop them.

+-

    Mr. Louis Ranger: We have no oversight regarding the tariff structure or tariff increases. Some people think that there should perhaps be a legislative framework, at least in order to create a process that tells us where the money is going when there is a tariff increase. Is it going for some particular project? When the costs of the project are paid, in 10 or 20 years, will the tax be reduced as a result?

    Some people think that there is a lack of transparency and that there is not enough rigour, at least in the consultation process, beginning with the airlines themselves, which are the first to pay, when it comes down to it. Bill C-27 was drafted to try to deal with that issue.

+-

    Mr. Mario Laframboise: The bill is not under consideration. Finally, you play no role in the development plans that they present to their annual general meetings; they are going to do that for Mirabel, they have done one for Dorval, etc. You have no say in that process.

+-

    Mr. Louis Ranger: They are required to hold an annual meeting. There are some parameters that apply, but that is all.

+-

    Mr. Mario Laframboise: So if they want to have a development plan and decide to invest millions of dollars, they can do so, and all they have to do is to get a tariff increase passed. Is that what it comes down to?

+-

    Mr. Louis Ranger: But that does not mean that the board of directors does not do its work rigorously and that it does not seek expert advice. The decision is made by the board of directors.

+-

    Mr. Mario Laframboise: Except that, like in the case of Montreal, when things start off on the wrong foot, that is, when there are two airports and the decision is made to close one of them, when they try to renovate the other one and when the initial estimate is that it will cost $400 million and the final cost is over $1 billion, it is ultimately the board of directors... It does little good to change directors—it happened in the Montreal case, where some directors were replaced—once things start off badly, there is no way of stopping them. At least that is what you are telling me.

  +-(1255)  

+-

    Mr. Louis Ranger: A number of airport managers will tell you that it is a myth to think that airports have an absolute monopoly, that if an airport starts to charge fees that are out of proportion for transit flights, for example, and if it abuses its taxation power, its role as a major hub can be affected.

+-

    Mr. Mario Laframboise: As you said earlier, however, when an organization controls all the airports around it, like the Montreal Airport authorities will do with Saint-Hubert, like they are doing at Mirabel... The ideal thing for Mirabel would be to have an independent airport administration that could breathe some life into that airport. But the Montreal Airport authority certainly does not want to create any competition. Since their fees are so high or since they are planning to increase them, they do not want anyone around them that would charge less. That seems to be the problem in a way.

    Right now, their competitors are further away. Plattsburgh will be competing with them soon. There is also the Ottawa Airport, but it is outside Quebec, and we are losing out. That is why I am telling you that some day the government will have to try to stop these people, so that we can ensure that some development take place. But right now that is not on the table, it is not on the drawing board, and what there was has been withdrawn.

+-

    Mr. Louis Ranger: That is correct.

+-

    Mr. Mario Laframboise: I want to come back to another topic dealing with ports. You remember the famous policy to sell off the ports. What is the situation with that? Is there still the same envelope with no increase? Are there plans for that to go ahead in Quebec? Quebec was behind in this regard. Do you have files that can be resolved in the coming days or weeks?

+-

    Mr. Louis Ranger: You are right, the budget envelopes have not changed. Talks are underway with the Government of Quebec right now. I believe that I detect a willingness to move ahead, at least in the discussion to agree on the priority that Quebec might give to the divestiture of certain ports.

    However, it is clear that there are other ports that people want to see stay under federal jurisdiction. I do not feel that I can comment further on that. All that I can tell you is that we are holding discussions with Transports Québec officials right now.

+-

    Mr. Mario Laframboise: Has an analysis been done for each port? I am talking about an analysis of the costs involved in repairing or maintaining the infrastructure in each port.

+-

    Mr. Ronald Sully: We certainly have the instruments we need regarding repairs and security for the ports. We also have instruments for calculating funding to encourage port transfers. We are now negotiating with the appropriate authorities. There are some 10 municipalities that have an interest in such a transfer. So there is an interest.

+-

    Mr. Mario Laframboise: Thank you.

[English]

+-

    The Chair: Merci, Monsieur Laframboise.

    Mr. Gouk, for five minutes.

+-

    Mr. Jim Gouk: I have two things.

    Just to clarify some comments you made with regard to VIA Rail's operation on the Calgary-Vancouver route, that it's a totally different operation, that they're providing transportation, just so there's no misunderstanding, they're not providing transportation; they're competing against a tourism operation. In the existing run now from Edmonton to Vancouver, despite the incredible subsidization of VIA Rail, hundreds of millions of dollars in capital funding, half a million dollars a day in operational funding, for all that subsidization they are the most expensive way to get from Edmonton to Vancouver--far more than the airline. They take thirteen times as long, and ironically, they're the least environmentally friendly. You know, everyone thinks rail is great, and it is for heavy freight, but not for passengers.

    So just so there's no misunderstanding, they're going in that southern route, if they go, for one reason and one reason only, and that's to try to bite into the tourism market.

    One of the things I did want to ask was with regard to airports. When we talk in terms of helping the industry, rents are one way to look at that, but there is another way. It's an idea that's been brought to us by the operators of various airlines, most specifically Clive Beddoe of WestJet. He says there is absolutely no control on the airport authorities in terms of what they spend. They can come up with any design they pretty much want for a terminal, an expansion, or for remodelling. The airlines have no input. Transport Canada doesn't appear to have any constraints they place on them. They spend what they spend and they pass the cost down to the operators.

    Has Transport Canada looked at the idea of trying to put any controls in place that would ensure that any kind of major expenditure made by the airport authority has some approval process, for the operators that are going to have to foot the bill?

·  +-(1300)  

+-

    Mr. Louis Ranger: Your suggestion would call for a major change in policy and a major change in the contractual relationship that exists now. The government of the day signed 60-year leases that do not constrain the airports in terms of how much they can charge. On the basis of that contract, the boards of those airports have made plans for expansions and have borrowed money on the understanding that those would be the rules. Because the land is still the property of the Government of Canada, a banker would obviously want to guarantee the loan or seek comfort. I have to assume that the fact that the board had full control over pricing was a major factor in the airports being able to attract all those investments. So if the government today were to change the rules and start regulating, for example, the rates, there's no doubt in my mind that the financial institutions would want to renegotiate the terms of those agreements, because they would no longer be able rely on the full flexibility that the boards enjoyed.

    So is this an option? Yes, but we would definitely have to think through the consequences.

+-

    Mr. Jim Gouk: I'm not suggesting you put arbitrary restraints on what they can charge. If you put in $200 million worth of expenditure, you should be able to adjust your fees to the users in order to recover that. But where we need constraint is when you're doing a $300 million project when the users themselves say there's a perfectly adequate design and model available that would cost $200 million, and they would pay for that, but they don't want to have to pay the extra $100 million to make this thing into some architectural oddity to win on some design in some magazine.

    We want something that is functional, that works for the passengers and doesn't cost us an arm and a leg, because we're the ones who ultimately foot the bill.

+-

    Mr. Louis Ranger: But when we were asked to reflect on what we could do about this without starting all over again, without unscrambling the eggs, what did we do? Short of regulating the rates, we thought there should be due process, at the minimum. There should be principles to guide pricing, not remote from the principles that are used now for NavCanada, where if the airport comes with a new master plan and they want to build a new wing, or whatever, they need to engage in a process prescribed by legislation of 90 days for this and 60 days for that. They need to call a special meeting with the community, have a debate, have a special meeting with the immediate users, the airlines, and allow that process.

    If the airport authority failed in any way to follow that process, that would be monitored by the Canadian Transportation Agency. You could actually appeal to the agency to make sure their process had been followed, and if it was not followed, start over again.

+-

    Mr. Jim Gouk: When they go through that process, it's a consultative process for them to reach an end decision, but is it not basically democratic input and autocratic decision-making? They listen very democratically to what everybody has to say, and then they make their own decision and carry it out, which may or may not reflect what they've heard from the users.

+-

    Mr. Louis Ranger: That is correct. When the previous government developed the legislation, it did not think it was appropriate to go all the way and actually regulate or impose federal views on the board.

·  +-(1305)  

+-

    Mr. Jim Gouk: Theoretically, they could make the full decision before they started the consultation process. They could simply go through it and say “Yes, yes, hurry up, finish talking so we can start building.” Is that the constraint we need to look at?

+-

    Mr. Louis Ranger: That's right. That is the model in place now. Personally, I think there's a lot that can be done without undoing the model.

+-

    Mr. Jim Gouk: Thank you.

+-

    The Chair: Thank you, Mr. Gouk.

    Monsieur Laframboise.

[Translation]

+-

    Mr. Mario Laframboise: To come back to your initial presentation about inspecting railway bridges, you said that there were 800 and some bridges.

+-

    Mr. Louis Ranger: Eight hundred and ninety.

+-

    Mr. Mario Laframboise: There are 890 bridges. You said that this was the responsibility of the railways.

    I am referring as well to your comments last time. You do some sort of spot checks on the bridges, but you say that there are no systematic inspections of the bridges by Transport Canada. Let me take the example of bridges on highways in Quebec. Even though they are municipal property, there is an inspection system carried out by the Ministry of Transport for all bridges. You have no inspection system for all bridges. Is that in fact what you are saying?

+-

    Mr. Louis Ranger: I'm going to ask our director general to answer your question.

+-

    The Chair: Mr. Bourdon.

+-

    Mr. Luc Bourdon (Director General, Rail Safety, Department of Transport): Yes, wherever possible, Transport Canada does a visual inspection of bridges at least once a year.

+-

    Mr. Mario Laframboise: Of all bridges?

+-

    Mr. Luc Bourdon: Of most bridges. It often depends on traffic density. Bridges located on rail lines where there is a great deal of rail traffic are checked more often. We also carry out inspections if there have been accidents, and if there are safety risks. We will do an inspection if trains encountered an emergency on the bridges, but as far as possible, the inspections are based on the risk factors of each bridge.

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    Mr. Mario Laframboise: If work is required, does the company pay for it?

+-

    Mr. Luc Bourdon: The company has the work done. Generally, the railways do an annual visual inspection of all bridges and they do what they call a specific inspection based on the same factors. That is a more detailed inspection during which they occasionally go under the bridge to look at all its components. If it is a wooden bridge, they take samples to determine the quality of the bridge.

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    Mr. Mario Laframboise: But you do not do this structural analysis. All you do is a visual analysis.

+-

    Mr. Luc Bourdon: We do a visual analysis of what is known as the deck. We look at such things as the alignment of the tracks, for example. We check to see if the bridge appears to be in very good condition, the tracks are very straight, and there are no cracks anywhere. However, we check all the railways' records and ask to see the specific inspection reports. If any repairs have been done, we request evidence that they have been done, and we check on their entire system in this way.

+-

    Mr. Mario Laframboise: Do you have a file on each bridge, or does the company have such a file?

+-

    Mr. Luc Bourdon: We keep the notes from our inspections. Each region has bridges in its area. The regions have their inspection reports and we corroborate their data by comparing them to the railways' inspection reports.

+-

    Mr. Mario Laframboise: I am comparing that with what is done in Quebec, where the Ministry of Transport has the file on each bridge. What you're saying is that it is a private company that...

+-

    Mr. Luc Bourdon: That has the files on each bridge. We have our inspection reports. Clearly, if we are paying special attention to a bridge, we will collect all the details we can about that bridge. For example, if we had to issue what we call a notice A, under section 31 of the act, because there is something that does not meet the required standards, there would be a file set up on that bridge. In such a case, we would have all the information about the bridge in question. If everything is fine, we will have our inspection report.

+-

    Mr. Mario Laframboise: How many inspectors do you have working in your department?

+-

    Mr. Luc Bourdon: On bridges?

+-

    Mr. Mario Laframboise: Yes.

+-

    Mr. Luc Bourdon: In terms of infrastructure, the people who look after the bridges are the same ones who look after the tracks. There are one or two for each region.

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    Mr. Mario Laframboise: How many regions are there?

+-

    Mr. Luc Bourdon: There are five regions.

+-

    Mr. Mario Laframboise: So you have 10 inspectors for all of Canada. You are serious, that is how many there are?

+-

    Mr. Luc Bourdon: Yes.

·  +-(1310)  

+-

    Mr. Mario Laframboise: I understand why you cannot maintain all that. You would need more employees to do that. Because all of these infrastructures are getting old, do you plan to be more stringent some day?

+-

    Mr. Luc Bourdon: The capacity of the bridges is assessed using a system called the Cooper E, which is a system used to classify bridges from E50 to E80. Cooper E50 means that for each axle of a locomotive, the bridge must be able to bear 50,000 pounds, and the 5 means that for each linear foot of train car, the bridge must be able to bear 5,000 pounds. That was the standard for bridges built at the time of the First World War. Today, most bridges have a classification between E75 and E80. Consequently, E-80 means that the bridge must be able to bear 80,000 pounds for each axle of each locomotive, and 8,000 pounds per linear foot of train car. These are the standards maintained at the moment. Consequently, provided the bridge meets these standards, there is no problem. Over the years, the necessary repairs are done to maintain the bridges.

+-

    Mr. Mario Laframboise: You were saying that there were 890 wooden bridges, but there must be other types of bridges as well.

+-

    Mr. Luc Bourdon: There are concrete bridges and steel bridges.

+-

    Mr. Mario Laframboise: How many are there altogether?

+-

    Mr. Luc Bourdon: There are about 4,000. I think CN has 3,000, Canadian Pacific 1,440 and we have 160, for a total of 4,600 bridges.

+-

    Mr. Mario Laframboise: And you have 10 people to look after all of that.

+-

    Mr. Louis Ranger: I was saying in English at the beginning that we looked at our statistics on accidents over the last 20 years and that we had found no incident or accident involving a derailment that was caused by a bridge.

+-

    Mr. Mario Laframboise: But your equipment is getting old and that is why you are starting to have more problems. I say that, because I am from a municipal background, and that is why the government insisted on doing more inspections, because all the infrastructures, even the concrete ones, are getting old. Hence, the infrastructure must be inspected more often, and someone has to be responsible for this. What I find surprising is that you were saying that the private sector maintains all that. With all the cutbacks and efforts to save money, at some point, the government is going to have to assume this responsibility.

+-

    Mr. Luc Bourdon: We did over 1,000 bridge inspections this year. So we do manage to carry out a great many inspections. I think the last accident, before the McBride accident, dated back to 1941. That happened on the Wisconsin Central in the United States.

+-

    Mr. Mario Laframboise: Then I can only hope that there will be just one in the next 20 or 25 years, but as I was saying, with the aging infrastructure, there's a risk that more will occur. We certainly do not wish it but the likelihood is there because of the aging infrastructure. What I'm worried about is your method of ensuring that the equipment has been properly checked. If you are not responsible for keeping the records, with the private sector keeping all the statistics on bridge inspections up to date, then your role is limited to visual inspection.

+-

    Mr. Luc Bourdon: We do a visual inspection and then we take a look at the company records relating to their inspections to determine whether they corroborate our own. We also make a point of looking for any defects they may have identified and determine whether the work has been done. Furthermore, there are geometric railway cars that go over the bridges and record rail data. These data are downloaded and are verified at the same time.

+-

    Mr. Mario Laframboise: Except you don't have statistics on each of the bridges. You are not the ones who look after this. I imagine you must have some files relating to cases—

+-

    Mr. Luc Bourdon: We do have our inspection records; everything we inspect is documented because we provide a report on our visual inspection of the bridge to the railway company.

+-

    The Chair: Thank you, Mr. Laframboise.

    Mr. Bourdon, you say that you carried out 1,000 inspections this year.

+-

    Mr. Luc Bourdon: We did 1,048 visual inspections last year. There are also other verifications...

+-

    The Chair: Previously you said that you carried out 1,000 this year.

+-

    Mr. Luc Bourdon: That was for the year 2003. This year, we started only two and a half months ago, so...

+-

    The Chair: I was wondering whether you were observing the school year.

    Some Hon. Members : Oh, oh!

+-

    Mr. Luc Bourdon: No, no. It hasn't been such a long time since I left school, but that is not the case.

+-

    The Chair: As a matter of fact, that's the calendar I prefer.

[English]

+-

    The Chair Mrs. Yelich.

+-

    Mrs. Lynne Yelich: I want to ask a simple question.

    I realize the taxes were deferred with the Saskatoon Airport Authority, but also I think it will be very difficult times for them, given the extra costs and taxes that have been imposed upon them with security and many other.... The transportation industry indeed is suffering across the board. I don't see anywhere where anybody is very happy.

    That's my question to you. Do you see anywhere in your department that is a model or a vision in any of the areas, whether we talk about air or rail? Do you have something to tell us?

+-

    Mr. Louis Ranger: To give you a conventional answer, the officials are there to advise on options. I enjoyed the exchange on rents, for example, because there's no doubt that as we have been challenged by the Auditor General, by this committee, and by the public accounts committee, we have a lot of options on the table at the moment. Our job is to assess them the best we can. When we don't have the resources, we do have money to hire the best minds in this country to help us develop options. At the end of the day, those become policy decisions. That's where our responsibility ends.

    There's no doubt that we cannot remain indifferent to the different impacts on the air industry. We've been very severely impacted not just by September 11, but by SARS, and all this has contributed to difficulties encountered by airlines. That in turn has had an impact on airports--large, medium-sized, and small airports. Not all of them are under the regime we just talked about.

    We still own 99 airports. Our airports have been affected by the reduction in traffic. You know, there's this old myth that people will pay any price to travel by air. It's not true. So when the government introduces new taxes, air security charges, it does have an impact on the level of traffic. There's no doubt about that, and there are several examples we could give you.

    Our job is to assess all those impacts and advise the minister of the day, and I'd like to think we are doing a reasonably good job. All of us at this table have been with the department for a long time, so we have the benefit of looking at trends over time and giving the best policy advice we can give. At the end of the day, it's not our decision.

·  -(1315)  

+-

    The Chair: Thank you very much, and I thank you all.

    Would you like a few minutes for closing remarks?

+-

    Mr. Louis Ranger: I believe, sir, we had an opportunity to answer all the questions that were outstanding, so I don't think we have anything to add.

+-

    The Chair: Thank you very much.

    Colleagues, you kept them working, kept them busy.

    Mr. Gouk, you had 40 minutes. That's very good.

+-

    Mr. Jim Gouk: I noticed a precedent now that we've established as to how much time I get. I appreciate that.

+-

    Mrs. Lynne Yelich: Or at least congratulations for what you did get.

[Translation]

-

    The Chair: Mr. Laframboise, you had 36 minutes. Congratulations!

[English]

    Mrs. Yelich had 15 minutes, and Mr. Hubbard and Mr. Jackson had 10 minutes each.

    Although you bought lunch, you made them work for it.

    Thank you very much, and I'll see you all on Thursday. Have a good budget day today.

    The meeting is adjourned.