Welcome the Standing Committee on Transport, Infrastructure and Communities. This is our third meeting.
Pursuant to Standing Order 81(5), we are studying the supplementary estimates (C), 2015-16: vote 1c under Canadian Air Transport Security Authority, votes 1c and 5c under Office of Infrastructure of Canada, votes 1c and 10c under Transport, and vote 1c under VIA Rail Inc., referred to the committee on Friday, February 19, 2016.
We have many witnesses here to speak to us.
The chair would call vote 1c under Canadian Air Transport Security Authority, which effectively opens the floor.
I believe that Ms. Duncan is trying to get my attention.
I'm going to ask the committee that we reserve 15 minutes at the end of the meeting so that we can take care of some housekeeping issues, including the comments and request by Ms. Duncan.
Can we open up the floor? We have Helena Borges, associate deputy minister for transport, infrastructure, and communities. I'll introduce everyone at the same time. We also have André Lapointe, assistant deputy minister and chief financial officer, corporate services, Transport Canada. We have Darlene Boileau, assistant deputy minister and chief financial officer, corporate services, Infrastructure Canada.
From the Canadian Air Transport Security Authority, we have Angus Watt, president and chief executive officer; and Andie Andreou, vice-president and chief financial officer.
By video conference, we have VIA Rail Canada Inc. We have Yves Desjardins-Siciliano, president and chief executive officer; and Patricia Jasmin, chief financial officer.
Welcome to all of you here in Ottawa. We very much appreciate your coming out on a snowy day to help us along with our work.
I will open the floor to whoever would like to go first.
Thank you, Madam Chair.
I will start and just give you a couple of highlights of what is in the supplementary estimates.
I am here representing the portfolio for transport, which includes Transport Canada and Infrastructure Canada, as well as a bundle of crown corporations that report under the to Parliament. Two of them are here because they are subjects in the supplementary estimates. They are VIA Rail and CATSA.
I will start by focusing on what is in there as an overview for the portfolio. The biggest amount is for Transport Canada, and it's an increase of $27.6 million in appropriations. This is basically to assist the department in carrying out our mandate for a safe and secure, efficient, and environmentally responsible transportation system.
The main element under the estimates is for the Asia-Pacific gateway and corridor. This is really a request that will allow us to efficiently manage our funding commitments to recipients for these grant and contribution programs. The funds are actually re-profiled from fiscal year 2015-16, from the previous year to the present year, and it is important to note that this program is pretty much tapped out now. A total of $910 million was announced for or committed to this program, and these are the residual projects that continue to be implemented by proponents.
The second biggest amount is for the Airports Capital Assistance Program. Since the program was launched in April 1995, 830 projects involving 174 airports have been funded, and 99 of those projects involved runway safety. These projects are essential to the safety of these airports.
Six program projects experienced various delays, and consequently, the $7.6-million funding was deferred to 2015 and 2016 so that these projects could be completed.
Because of the remoteness of some locations, the large number of eligible communities, and the shortness of the construction season in several areas of the country, it is difficult to complete all of these projects during the year for which the funding is granted.
The total statutory appropriations for Transport Canada include funding for the St. Lawrence Seaway Management Corporation, and included in supplementary estimates (C) is $1.9 million that will allow the corporation to do some infrastructure maintenance and funding for the Townline Tunnel, which is located in the Niagara region. By funding these repairs, the Government of Canada will maintain a safe and efficient means for travel in that region.
Regarding crown corporations, as I mentioned, we have one of the largest portfolios in government. If it would be helpful for you, I'd be happy, during questions and answers, to outline who makes up our portfolio and which crown corporations and other entities receive appropriations from government, versus those that are self-sustaining.
Through these estimates, the appropriations are being sought for the two crowns that are present at this session. For CATSA, we have an increase of $6.5 million to continue CATSA's capital investments in security screening equipment for baggage that is checked in at the airports. These are for airports across the country that have U.S. pre-clearance facilities and their new technology to basically X-ray the baggage that goes through.
Finally, for VIA Rail, there is an increase of $38.8 million in additional funding. These are to make required capital infrastructure investments to maintain a safe, efficient, and reliable passenger rail service in Canada. More specifically, this funding will allow VIA to advance the implementation of projects, including $18.6 million in new capital funding that was part of the federal infrastructure initiative that was announced over a year ago, as well as some other infrastructure projects that VIA has as part of its ongoing capital improvements, and that is a re-profiling.
For Infrastructure Canada, there is funding in the estimates for the new Champlain Bridge corridor project. It's a total of $61.8 million. As you may know, this is the bridge that's being built to replace the existing Champlain Bridge connecting Montreal to the south shore. The project agreement with the private partner that is constructing the project was signed on June 19, 2015. The project is on budget and on time. It is a very ambitious project.
The main span will be constructed by December 2018. The rest of the corridor, which includes road improvements, will be completed by October 2019. These are extremely tight time frames, but given the state of the existing Champlain Bridge, it was a priority to get this project built as soon as possible.
The amount that is required includes $49.3 million. It's for operating funding, which basically allows Infrastructure Canada to deal with any unforeseen events in those components of the project for which it is responsible, not for the elements that the private sector is handling at this time. The money will be used, as needed, to deal with those unanticipated elements.
As well, there is $12.5 million for the project. These are capital expenditures, primarily focused on land acquisition that has been required to construct the project, as well as some work that has been undertaken by Hydro-Québec to move some pylons to make way for the bridge.
In a nutshell, these are the highlights. There is, of course, more detail in there. We would be happy to answer any questions.
As has already been noted, the will be appearing before this committee on March 7. He will be speaking to his priorities, so we will not get into those today. Likewise, the will be attending this committee on March 9 for the same purpose.
If it is helpful to the committee, we are prepared to give you an outline of the estimates process, if there are members who are not totally clear on how the process unfolds. If that is helpful, we'd be happy to do that.
With that, I'll pass it back to you, Chair, for questions.
Good afternoon. I'm Angus Watt. I'm the president and CEO of CATSA, the Canadian Air Transport Security Authority. CATSA was established on April 1, 2002, and is an agent crown corporation fully funded by parliamentary appropriations and accountable to Parliament through the Minister of Transport.
Our mandate consists of four areas of aviation security: pre-board screening, which is the screening of passengers and their belongings prior to their entry into the secure area of an air terminal building; hold baggage screening, or HBS, which is the screening of all passenger checked or hold baggage to prevent the boarding of prohibited items; non-passenger screening, which is the random screening of non-passengers accessing restricted areas at the highest risk airports; and a restricted area identity card program, which uses iris and fingerprint biometric identifiers to allow non-passengers access to restricted areas of the airport.
Supported by its screening contractors and their screening officer workforce, CATSA is expected to screen 58 million passengers and their belongings this fiscal year, 2015-16. More pertinently to this committee's deliberations on the supplementary estimates, CATSA is currently undertaking the life-cycle management of its HBS, hold-baggage system, through the recapitalization of equipment at airports all across Canada.
This deployment of advanced technology will ensure that CATSA remains compatible with its international partners, and that it employs best industry practices and standards to deliver a secure experience for air travellers. The initiative also supports the Canada–U.S. declaration of beyond the border, as it will eliminate the need for the United States transportation security administration to rescreen connecting baggage originating from Canadian airports with U.S. pre-clearance facilities.
This multi-year initiative started in fiscal year 2011-12, and it involves 32 airports, with an overall capital envelope of $580 million. The HBS recapitalization initiative is highly dependent on airport collaboration and timelines associated with airport project plans.
Through the supplementary estimates (C), CATSA is seeking access to $6.5 million in capital funds associated with that HBS program. This funding will allow the organization to continue to deploy the upgraded HBS system as part of the life-cycle management program and in support of the beyond the border initiative.
Thank you and I'm subject to your questions.
Thank you, Madam Chair.
Members of the committee, good afternoon.
We're sorry we could not be in attendance with you in snowy Ottawa. Although it is snowing in Montreal, we have full confidence that if we had taken a train, we would have been there on time to meet with you. Unfortunately, it will be a pleasure that we will have to put off to another day and I look forward to the honour of meeting with all of you in person.
Today we are here to talk about our request for supplementary estimates (C).
By way of introduction, I'll just talk a bit about VIA Rail and its status within the apparatus of the Government of Canada. VIA Rail was formed in 1977 by an order in council. It is a non-agent crown corporation. It reports to Parliament through the , and it is subject to annual appropriation. Its mandate is to provide a safe, efficient, reliable, and environmentally friendly transportation service that meets the needs of Canadians.
Up to 90% of our passengers travel within the Quebec-Windsor corridor. The rest of our travellers are either on The Canadian—the iconic train that you see on the back of your $10 bill—from Toronto to Vancouver, or The Ocean, which goes from Montreal to Halifax. A small number of our travellers travel to remote areas like Senneterre and Jonquière, Quebec; from Winnipeg to Churchill, Manitoba; and Prince Rupert, B.C.
I have been the serving president and CEO since May 2014. Since that time, we have been busy refocusing our business to what counts most, which is our passengers. With that new vision of making and providing Canadians with a smarter way to move around Canada, we have been putting passengers first. Very early on, in the last 18 months, that experience has started to bear fruit. For the first time since the recession of 2008, ridership has picked up, and so has revenue, for VIA Rail. But much is left to be done.
Just a few minutes ago, I was informed that VIA for the first time has made the Forbes list of top employers in Canada, coming in 47th in the top 250 Canadian employers, and fourth in Quebec. It is the highest-ranking federal institution as employer. Management at VIA take full credit for that ranking.
The estimates (C) request is for $38 million, encompassing three areas of activity: information technology, equipment refurbishment, and infrastructure projects.
With regard to equipment refurbishment, we're looking at completing the fleet renewal undertaken back in 2010 of the LRC fleet, which is coming to the end of its term over the next seven to 10 years.
On the infrastructure side, we are looking for funds to complete work under way on subdivisions owned by VIA Rail: part of the Guelph subdivisions, the Alexandria subdivisions, and the Chatham subdivisions in southwest Ontario.
In order to provide context to members of the committee, I would like to make a few points with regard to the operating realities of VIA Rail. One that is VIA operates the oldest rolling stock in passenger service in North America, with an average age of over 40 years. Therefore, this refurbishment project is of immediate importance, so is the renewal of that fleet in very short order.
The second point is that the mission of VIA is really to take passengers out of their cars, specifically in the high-density Toronto-Ottawa-Montreal corridor, and put them into trains. To do so, VIA management has developed a plan to build and operate its own railway network between those major cities. The objective is to move five million passengers from their cars to the train, reducing the carbon footprint of Canadian cars in Canada by 22.5 million tonnes per year by that mere decision.
It is within the context of our renewed commitment to safe, comfortable, and environmentally sustainable passenger rail service, on behalf of the Government of Canada, that I submit to you our request for these estimates.
Thank you, Madam Chair.
A portion of that money, $12.5 million, is for capital expenditures that the department is responsible for. When we entered into the contract with the P3 concessionaire, we had already negotiated all the properties that were required for the bridge project. That's a normal process, because governments are in a better position to acquire the lands and clean them up. Part of that land acquisition involved having Hydro-Québec relocate some of the pylons that were in the right of way for the bridge, so it's going through that, plus the costs of the people who are managing the project.
The additional amount, the $49 million for operating, is related to, again, obligations for Infrastructure Canada. We had conducted the environmental assessment early on in the project. For the project to go to procurement, we had the environmental assessment completed. As part of that, we took on a large number of recommendations in making sure we are mitigating the impacts on people and on the neighbouring communities, so we continue to do work like monitoring for air contaminants, noise, vibrations, and things like that, and working with the first nations to make sure that we're being sensitive to the archaeological elements there.
That's the kind of thing the money is for. It's just that when you're doing environmental monitoring and elements, things always come up that we don't know about at the time or how we're going to be able to deal with them. It's to deal with those aspects under the department's control.
Transport Canada has a capital budget. We own a lot of assets across the country. We own ports, airports, other facilities where we test vehicles, and things like that. Every year we go through a priority-setting process where we look at the needs of our facilities and make sure we are able to maintain those facilities in a safe, environmentally sound way.
Every year we end up not being able to use up the capital money we have. Some of that money is either re-profiled to the next year or if it's beyond the amount we're allowed to carry over to the next year, lapses into the fiscal framework.
This year we've had an unusual situation. In our operating funding, we have, over the past couple of years, made an intensive effort to bring on more inspectors for our safety and security activities—rail safety, marine safety, aviation, and dangerous goods. In the past we've had a difficult time recruiting people for these occupations. We took a different approach to recruitment in terms of being much more proactive, being out there, different ways of recruiting, including recruitment of some veterans.
We now have our inspectorate, a full complement of inspectors and oversight personnel, on board in those areas. What that does, though, is increase our operating expenses. When we bring those new people in, we have to pay their salaries. We also have to pay for their training. It will take us about two years to fully train an oversight inspector to perform their duties properly. As part of their training, they have to travel, because not all the training is where they are located. Most of our inspectors are based across Canada. There is, then, also the travel required for them to actually do their work, when they have to go and do inspections of the various entities.
With this big recruitment effort, and now that we're happy we have all these inspectors on board, we've had to spend a bit more money than anticipated, so we're moving some of that excess capital money one year to cover the operating.
Thank you, Madam Chair.
I thank all of you for coming here. I'm sure we'll see lots of you over the coming years. We look forward to seeing the ministers as well.
My first question goes to Mr. Watt, but I'm not sure if the department would be involved in this as well.
The new funds for baggage screening, I understand you to say, are for hold baggage. Information has come to light through the French-language media that there was an incident at the Pearson airport as far back as 2011. It was the explosion of a lithium battery in luggage that was about to be boarded.
Questions are being raised because other countries, apparently, are taking measures to stop people from having active equipment with lithium batteries because of the risk. I'm wondering if this additional money for hold baggage also addresses that potential risk.
Thank you very much for your question.
The funds allocated here are really meant to maintain services as they are today. Enhancements have been made over the last year and a half, which account for our increase in revenue and ridership. But they are marginal improvements at best because the fleet is getting older every day and there is congestion on the railways. Because we use shared railways that are mainly used, owned, and operated by freight companies, time to destination and on-time performance is deteriorating every day as well. Therefore, the usefulness and relevancy of the service is decreasing. That is why, more and more, it is a challenge to get more people to leave their cars behind and get on the train.
To go back to these funds, half of these funds are a re-profiling of an amount already approved. The other half is part of the infrastructure program improvements for the Montreal-Ottawa corridor. To answer your question, these funds maintain the service as is. We do not have any plans to reduce service.
We would like to improve service as we improve our financial picture by self-generating funds. We'd like to reinvest these funds in better service, in service enhancements, which might mean more stops or new frequencies. If the freight lines give us access to their infrastructure, we'd like to introduce new frequencies.
These funds keep us going as we are, and there are no current plans to reduce service.
Beyond the border was an agreement concluded by Prime Minister and President Obama several years ago. Essentially, it was done to remove barriers to the free flow of goods and trade and people across the border.
One of the key elements with respect to airports was the free flow of passengers. Because we had a differing technical installation in Canada, the hold baggage—in other words, the checked bags of our passengers—even though it was pre-cleared for U.S. customs, had to be rescreened in the U.S. using their X-ray system.
What we determined was that if we were to replace that system with the U.S.-certified latest technology, you could remove that requirement so that our bags wouldn't have to be rescreened. You might ask what difference that makes. What it means is less cost for the airlines and a better scheduling flexibility. It's largely invisible to passengers, but you would see it in the cost of a ticket and in the ability to schedule those airlines.
It had a deadline, and that deadline was to complete the installation of those systems by December 2015. With one small exception in Calgary for a couple of months, we met that deadline all across the country.
It's on infrastructure work, and there are two types. One is steel. Rail steel is in high demand in North America because of the growth of regional passenger rail services.
In the last five years, for example, GO Transit out of Toronto, has grown by over 21%, and they have acquired 83% of their network. Therefore, they are investing heavily in upgrading that capability and they need steel. Freight railways across North America are also demanding a high level of steel for their track infrastructure.
There are shortages on component parts, mainly steel for the tracks, and the manpower. Contractors who specialize in these fields are typically independent contractors, because over the last 20 years, the major players, the big railways, have divested those capabilities. They used to own their workforce, but they have divested over time and created this industry of contractors in railway works. That group of contractors is seeing a huge growth in demand for their services, and they have a shortage of skill sets.
When I go to engineering schools today and ask a class of 200 how many are planning to be in the railway business, as you could expect, nobody puts their hand up, because for the last 30 years, rail has not been perceived as a cool future or a cool career.
There is a shortage across the board with regard to the railway build and maintenance capability, and that's a North American phenomenon.
I am now going to call the vote on the various motions in front of me.
CANADIAN AIR TRANSPORT SECURITY AUTHORITY
Vote 1c—Payments to the Canadian Air Transport Security Authority for operating and capital expenditures..........$6,513,787
(Vote 1c agreed to on division)
OFFICE OF INFRASTRUCTURE OF CANADA
Vote 1c—Operating expenditures..........$49,310,925
Vote 5c—Capital expenditures..........$12,537,085
(Votes 1c and 5c agreed to on division)
Vote 1c—Operating expenditures..........$5,312,160
Vote 10c—Grants and contributions..........$21,844,683
(Votes 1c and 10c agreed to on division)
Vote 1c—Payments to VIA Rail Canada Inc...........$38,790,134
(Vote 1c agreed to on division)
The Chair: Shall the chair report vote 1c under Canadian Air Transport Security Authority; votes 1c and 5c under Office of Infrastructure of Canada; votes 1c and 10c under Transport; and vote 1c under VIA Rail Canada Inc. to the House?
Some hon. members: Agreed.
The Chair: Thank you very much. We have completed this part.
I'd like to specifically thank the witnesses for coming on very short notice. I believe it was 30 hours' notice for VIA Rail and 46 hours' notice for the departments. Thank you so much for being available and sharing so much information with us today. We no doubt will see lots of each other as the time progresses.
I'm going to suspend the meeting for two minutes in order to give the witnesses a chance to exit before we continue.