FISH Committee Meeting

STANDING COMMITTEE ON FISHERIES AND OCEANS

COMITÉ PERMANENT DES PÊCHES ET DES OCÉANS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 20, 1998

• 0907

[English]

The Chairman (Mr. Charles Hubbard (Miramichi, Lib.)): Order. Good morning, everyone.

Pursuant to Standing Order 108(2), we will begin our meeting this morning.

I'd like first of all to apologize to our witnesses, but for about five minutes we have a little bit of administrative detail to conclude with today before we begin our proceedings.

I would draw to your attention, members of the committee, to the circulation of the minutes of our subcommittee on agenda and procedure, which met on Thursday, October 8. The committee agreed upon a certain number of operating rules and also an agenda for the next few weeks.

With that, I think it would be appropriate to have a motion to approve the procedure and agenda.

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

Mr. John Cummins (Delta—South Richmond, Ref.): I second it.

The Chairman: Is there any discussion? All those in favour?

An hon. member: Could we just have time to read that?

The Chairman: Certainly.

Okay. Is everyone ready for the motion?

There's one point I can maybe make on this before we do approve it. If you look at the paragraph on the west coast report, the agreement a week ago last Thursday was that the report would come to our committee and be voted upon without debate. In other words, it was agreed that we would not open up the report as it was written last year.

The minutes there don't really indicate that, but that was the agreement, I believe, we had on that—Mr. Matthews, Mr. Stoffer, and everyone.

• 0910

We'll have a vote, then, of all those in favour of adopting the procedures we have outlined.

[Translation]

Mr. Yvan Bernier (Bonaventure—Gaspé—Iles-de-la- Madeleine—Pabok, BQ): I see that the first paragraph of the sub- committee's report outlines the procedure for receiving evidence. I agree that we should proceed as we did in the past, that is as long as three members are present, including at least one opposition member. However, I don't understand the last part, unless it is poorly translated. It reads as follows:

—in the absence of either government or opposition members, the Chair be authorized to call the meeting to order no sooner than 15 minutes after the time indicated on the notice—

I don't understand this. In the absence of either government or opposition members, there should be no meeting at all, because when that evidence is discussed, it might be challenged. Therefore, I would prefer that we dispense with the last part of this paragraph and stick with our original idea, namely that at least three members, including both government and opposition, be present. Otherwise, we would be playing cat and mouse.

The report goes on to say that the West Coast Report will be tabled without further debate. I realize that I was absent from some meetings during the past month, and that perhaps I missed something, but I would like to look at the final report before my name is put to it. I'd like to look at it in both official languages.

[English]

The Chairman: Is there other debate or other discussion on this?

In relation to your latter concern, it is agreed that the report will be circulated in advance to give everyone sufficient time to read and to decide, but the general consensus was that the report was written by the previous committee. I think Mr. Cummins in particular felt that we shouldn't open this up to try to change it, because it has to reflect the previous committee's work and not necessarily the work of the present one.

Maybe others would like to comment. I think that was the consensus upon which we agreed.

As to the other point, maybe others would like to comment on the three-members-present suggestion.

Mr. Wayne Easter (Malpeque, Lib.): The idea of three members present, Yvan, was that it's unfair to witnesses, when it's not a minister and we're not making any motions but witnesses come here—perhaps from Vancouver, or god knows where—and then not even have the opportunity to state their case, which would go on the record, and raise questions. It's extremely unfair to them.

And when, maybe due to reasons beyond their control, some committee members can't be here, they don't have the benefit of that discussion as well. So it was felt that we should have some way of ensuring that their presentation went on the record and questions were put.

Mr. John Cummins: It could be the chair and three opposition members. It's not necessarily the chair and three government members; it could be the chair and three opposition members.

Mr. Wayne Easter: Yes.

[Translation]

Mr. Yvan Bernier: This stipulation was included to address the problem of witnesses who are called in advance. These are not surprise meetings. That's what I want to avoid.

• 0915

If meetings have been scheduled one or to weeks in advance and if some members have scheduling problems because of the weather and so forth and can't make it to the meeting, then I have no problem with that. We have always worked together in the past. I just wanted to be sure that this was not a new procedure that we were adopting in order to hear from witnesses when a particular point of view needs to be reinforced. I'm talking about witnesses called to testify the usual way, that is with sufficient advance notice so that everyone can arrange to be present.

Mr. Chairman, you talked about wrapping up the West Coast Report. However, what is the status of the report on the inland fishery and the trip to the Arctic, particularly to Ms. Lindell's riding? Will the committee be tabling a report on this matter?

[English]

The Chairman: It's not reflected in the minutes, but with the agenda for the next three weeks, as the clerk and the researcher can do, we're hoping to get at least a written draft of the freshwater and northern report.

Alan, I'm not sure how we're making out with that, but is there a plan, or a date maybe, to assure members that at least the draft could come to us for consideration?

Mr. Alan Nixon (Committee Researcher): I don't have a firm date. Both reports are in progress between myself and the offices of the members who are primarily concerned with those particular areas.

The Chairman: We might say, though, it is high on our list of priorities to get these things cleaned up from the previous work, Yvan.

In terms of your other comment, in fact, in paragraph one we talk about three members. This was the system we had with the committee last year, and it did work quite well. I don't think we had too many complaints. So it's not a change, it's the method of procedure we had.

As George did, I certainly will try to make sure we do have representation from— but in fairness to witnesses, we don't want to be caught with situations where they might come a distance and not have people here to hear their concerns.

I'll put the question. All those in favour—

Mr. Easter.

Mr. Wayne Easter: Just for Mr. Bernier's benefit, there is a graph, which has been handed out, that reflects what the steering committee suggested—that the west coast and east coast report would be dealt with this Thursday; the central Canadian report on October 27; and the P.E.I. and northern reports on October 29.

I think we were pretty firm that we wanted to complete those, so any members who have suggestions on those reports had better have them done by those dates, because we have to move on.

The Chairman: Are we ready, then, for the motion to accept the report from the committee?

Mr. John Cummins: I have just a comment, too, that on that west coast report, there's a vote in the House on that today.

The Chairman: All those in favour, then, of accepting the report from the subcommittee on agenda and procedure, please raise your right hand.

(Motion agreed to)

The Chairman: We'd like to welcome, therefore, the representatives from the coast guard. Last year, maybe you felt a bit left out, but this year we want to begin with the coast guard, looking at some of the ice breaking and navigational aids, probably even getting into dredging.

Maybe you could introduce your colleagues, Mr. Turner. I believe you've been here a number of times before, but we do want to keep your part of the report to us as brief as possible, and we then would like to probe with questions.

As you saw—or maybe you didn't see—we have an order by which different members of this committee proceed in terms of having times for questioning. It begins, of course, with 10 minutes for the Reform, then moving to the Bloc, and then to the Liberals. We'll have a cross-section of concerns and attempts to glean information.

We welcome you to our committee and we hope that in the year ahead we can work together so that both the coast guard and the parliamentary committee can look at procedures to try to see that they work in the best interests of all Canadians, especially in terms of our marine sector.

Thank you for coming.

• 0920

Acting Commissioner Michael A.H. Turner (Canadian Coast Guard, Department of Fisheries and Oceans): Thank you, Mr. Chairman. It is a pleasure to be here, and I do mean that sincerely. I certainly believe the work of the parliamentary committee is one of the most important—and frankly, rarely noticed—aspects of the work of this institution. I welcome the opportunity to spend a bit of time with you to talk about some of the things the coast guard does as part of Fisheries and Oceans.

First of all, I present my colleagues.

First, Suzanne Shirreff is director general for the area we refer to as Programming Planning and Coordination within the coast guard. Suzanne has been personally involved and responsible for the marine services fees file for roughly the last year and a half.

Mr. Tim Meisner is also involved in that file. He has recently stepped up to replace Suzanne, in fact, as the director of the particular project team within the coast guard that is dealing with the marine services fees, both aids to navigation and ice breaking, as we had understood that was the primary interest of this committee.

Captain Ian Marr is the director of our ice breaking program, in case there are specific technical questions in that area.

I of course am Michael Turner. I'm currently acting as the commissioner—I'm normally deputy commissioner, and was until recently—of the coast guard. The commissioner, Mr. Watters, has now moved on to another senior post in the Department of Finance.

With that, sir, I have circulated to your committee clerk opening remarks. In the interests of time, I will not read all of this. I know your members are interested in discussion and questions. So perhaps I could just quickly touch on a few high points from the statement we've already passed around.

Thank you, Mr. Chairman, for the opportunity to address the standing committee on the status of coast guard's marine services fees program.

May I add that while that was the primary topic we were advised would be of interest to your committee, we're certainly ready to talk about anything else you may wish to explore within the coast guard's areas of responsibility.

[Translation]

As you are probably aware, the Marine Services Fees program was initiated in response to the government's Program Review exercise and the policies of the Treasury Board. In this context, the Coast Guard developed strategic plans for both expenditure reduction and cost recovery.

[English]

As an organization, we've worked hard to achieve some efficiencies and at the same time reduce spending and adjust our levels of service in areas where this does not impede our core mandate—ensuring safety of life at sea, and protecting our marine environment—while allowing sustainable economic use of that resource.

The marine services fees are intended, however, to shift a portion of the costs of delivering commercial marine services—that is to say, marine services for the benefit of commercial users—from the general taxpayer to those who benefit directly from the service and to help ensure some financial discipline in the demand for government services as a result.

The commercial shipping industry has long agreed with the general principle that it bears a responsibility to pay a portion of the costs associated with marine services that assist them in carrying out their business. As you will appreciate, though, there has been considerable debate about the details of just exactly how that should work.

We have worked hard together to build some mutual understanding of each other's needs and situations, and we've tried to listen to industry's concerns. Within the limits of our ability to do, since we are obviously an organization under policy direction of the government, we have tried to make adjustments along the way. Therefore, our marine navigation services fees were introduced in June 1996, and they recover a portion of the cost of delivering aids to navigation and traffic services to commercial shipping. Ice breaking fees were deferred to give time for further discussion, and a major economic impact study was carried out using private sector consultants.

[Translation]

Our dialogue with industry did not end with the introduction of the navigation services fee. On the contrary, as our discussions continued, we recognized the need for a new approach to cost recovery. The then Minister of Fisheries and Oceans, the Honourable Fred Mifflin, announced in March 1997 our intention to develop this new approach.

• 0925

[English]

We implemented quite a number of changes in the navaids fees in 1997 to address some of the more immediate concerns. These include such things as the zonal fee structure for the Maritimes, which was being asked for by the people down there; a tonne-kilometre fee structure for domestic bulkers—asked for by the Canadian Shipowners Association—and for self-unloaders and containers in certain trades; and a quarterly fee to recognize seasonal operators, amongst others. The ice breaking fee was, again, confirmed.

We set up some subcommittees under the Marine Advisory Board to examine a number of core areas of concern. These produced some very valuable findings for us in areas such as accounting for costs; fee dispute resolution mechanisms; ice breaking fee structures; and cost reduction plans, including the introduction of new technologies.

These working groups have been formed of industry members, and the industry itself then has formed its own coalitions and groups representing regional and national interests and produced its own recommendations to the minister on coast guard governance; fee structures; fee predictability; economic impact safeguards; and requesting a further deferral of the ice breaking fee.

After reviewing all of the input, on May 14 of this year Minister Anderson announced that there would be a three-year cap placed on the marine services fees, and navaids fees would represent 30.8% of the costs directly attributable to delivering services to the commercial shipping sector—leaving the Canadian taxpayer with the rest of the bill, in other words.

He indicated that we would update and then freeze the navaids rates. By “update” we mean adjust for most recent data and make minor adjustments to accommodate industry concerns where possible, as we've done in the previous year.

He also reconfirmed the direction to us to implement the ice breaking fee to be introduced in December of this year. The rate being set for the new ice breaking fee would also be capped for the same period of time.

He also talked about the concerns on economic safeguards and a need for an independent fee review mechanism that would be put in place. Treasury Board has agreed to carry out an impact assessment, over a three-year period, of the stable fees.

We carried out further consultations—starting in June and ending in August—with respect to the marine services fees, and after incorporating these, they were reaffirmed and came into force, implemented October 1.

The minister then met with key industry representatives in September to listen to their concerns regarding the ice breaking fees and offered to extend the the dialogue until the end of October between the coast guard officials and industry to address any outstanding items or concerns regarding the fee structure and how it should be put in place for December.

We are committed to putting in, however, a transit-based ice breaking fee, beginning in December 1998, to generate $13.3 million. That's the amount that earlier studies had concluded could be absorbed by the industry with only modest impact. We've been soliciting input from the industry to ensure that the fee is levied in as fair and equitable manner as possible, and of course we will continue to do so. That process is still under way.

[Translation]

The ice breaking fee represents a recovery of 17.5 per cent of the costs of delivering the services to only the commercial shipping sector. This means the Canadian taxpayer will still be subsidizing more than 80 per cent of the cost of ice breaking services.

[English]

So the taxpayer will still be picking up the vast majority of the costs of ice breaking, even for commercial shipping, not to mention all the costs still of the Arctic ice breaking and the public good, flood-control ice breaking.

We are continuing our efforts across the country to meet and to dialogue with those who will be affected by the fee, and we remain open to further advice and suggestions as to how we might adjust in certain areas. We had a very productive meeting about a week and a half ago on this subject with the major user group. There is another one planned for this week in Montreal, I believe.

Thank you very much for the opportunity to present this overview.

I would be pleased now, Mr. Chairman, to respond to any questions the hon. members may have. As I mentioned earlier, that need not be restricted to the subject of the proposed or existing fees.

The Chairman: Thank you.

Before we begin our questioning with Mr. Cummins, in terms of ice breaking, looking at the estimates, it appears we're talking about some $60 million in terms of overall cost. You have about 450 people who work with that service, and with some of the revenue, I guess your planned expenditure is getting down to about the $40 million range.

• 0930

Now, for the committee, before we start this, it might be good to put a little bit of hard facts out for information so that we would know what the costs were. Your report here is a little bit different from the estimates that were presented.

Acting Commr Michael Turner: Mr. Chairman, that is a very key point, and I am pleased that you chose to raise it so early, actually, because it does give us a opportunity to clarify something that is often quite confusing for people who try to look at the estimates, which are essentially a cash expenditure document, and then compare that with the costs of us actually operating a service.

The estimates that Parliament approves are, as I said, a cash expenditure projected for that particular service. In fact, Treasury Board requires us, whenever we're dealing in matters of cost recovery or user fees, to state our full costs in a manner that they refer to in their documents as a “costing of outputs” so as to include not just the cash costs but in fact also the actual depreciation on the capital assets used—any of the overheads, of course, the cost of borrowing, and other factors—all of which add significantly, of course, to the total number.

So in fact, sir, the actual cost of running the ice breaker service in total, which includes all of our depreciation, capital assets and overheads and so on, is in fact roughly $160 million a year. Now, as you'll appreciate, ice breakers are quite costly assets in themselves, and the depreciation alone is quite significant in that sense.

Of that $160 million, roughly $60 million of that is spent in the Arctic each year in terms of the support that's provided to various programs and activities of the government throughout our north. The remaining $100 million or so is spent in the south, and approximately $25 million is spent on what one might call “public good” ice breaking, flood control particularly being the majority of that.

That leaves roughly $75 million or $76 million in full costs, representing the cost of providing ice breaking service in support of commercial shipping. It's that specific area, in support of commercial shipping, that's the only area in which we've been directed, at this time, to implement a cost-recovery fee for ice breaking.

The Chairman: Thank you. I guess you were right and ready for that question.

We'll turn now to Mr. Cummins.

Just to explain, we have 10 minutes for him, for his questions and the answers, so we hope they will be to the point.

Mr. John Cummins: Mr. Chairman, I'm going to defer to Mr. Bernier on this issue. He raised it, and it was his concern, so I'm going to defer to him this morning, and maybe I'll slip in at his time slot, if that would fine with you.

The Chairman: So you'll transfer your 10 minutes, which means you'll come back with 5, then.

Mr. John Cummins: Yes, I will. Sure.

The Chairman: Cooperation—that's what we need.

[Translation]

Mr. Yvan Bernier: I understand. The Bloc has 10 minutes, plus an additional 10 minutes. I'm not a new Reform party member, but rather an ally.

I don't have all of the details concerning Coast Guard expenditures, as you seem to have, but let me get right to the point. Commissioner Turner talked about defining direct costs. As I understand it, the new way for the Coast Guard or the government to get money from taxpayers is to apply the user-pay principle.

Industry representatives seem to agree that they should pay something. I note that the industry estimates that Coast Guard services received from you are valued at approximately $46 million, whereas based on your definition of “direct costs”, your services represent approximately $76 million. There is quite difference between these two figures.

You mentioned that the Coast Guard has held several study groups with industry representatives. Your impression is that is that everything is going smoothly. However, that is not the impression I get.

• 0935

What accounts for this difference? What is the Coast Guard really doing to provide the services that the industry requires? If we adopt a user-pay approach, we have to do more than simply bill the industry. We have to come to an agreement on the type of services needed. Has anything been done in this area?

[English]

Acting Commr Michael Turner: Thank you, sir.

You've actually raised about three quite significant points here that have been at the heart of our discussions with industry over the last couple of years.

The first is on the question of direct costs. In the definitions we are required to use when we cost the outputs that our service provides, in accordance with the Treasury Board policy, we state those full costs, the costs of providing the service. In our sense, direct costs are the costs of providing those services directly to only those commercial operators. That, as I mentioned in response to the chairman's question, is only a fraction of the total cost of operating the ice breaking service. We do have other clients and other users of the service.

The direct costs, in other words, are the costs, through our definition, of providing the costs directly to that group of users, but costed within the Treasury Board's guidelines we are required to use. The subcommittee of our Marine Advisory Board considered this question at some depth. We had experts from the industry, who were kind enough to make available their time and expertise in areas such as cost accounting, who looked at all of our costs in considerable detail. The ice breaking subcommittee as well had a look at the question of the costs of operating our ice breaking services.

The Marine Advisory Board subcommittee, or working group, felt that the coast guard should be moving closer to a definition of direct costs, which they provided. In fact, that definition is not very far off from what the Treasury Board requires us to use. We are conscious that there are some differences there still.

On the other hand, the working group that was dealing with the ice breaking directly itself examined the coast guard's operations and services. It developed its own definition, essentially, of what it felt should be the direct costs they should be responsible for.

Those direct costs were essentially what we would call “incremental costs”. They were based on the assumption that the government must maintain a fleet of ice breakers to provide, as a public service, certain goods and benefits to other parties, and that this additional portion that the private sector and commercial shipping industry required was essentially incremental to that. It represented something in the $40 million range, in their view. While we do take that into account, unfortunately, as I've said, sir, the Treasury Board does not permit us to cost our outputs in that manner.

The second matter you raised related to the question of the service or level of service or amount of service we actually provide. In that regard, we met two years ago with a group of the users of the service. This is a team of people who are the direct users of the service. They are the companies, the shipping industry, the ship operators, pilots and so on. We discussed with them whether or not the level of service being provided was what they required or whether it could be cut back.

Having in mind that cost-recovery in some form or some degree of user fee was coming, the committee took a very hard look at our ice breaking fleet and capability and came back and told us that they felt we needed less capacity than we had. As a result of that advice from the group, we have withdrawn from service, in the southern ice breaking program, one of our largest icebreakers, a type 1200, one of our large multi-task ships, a type 1100, and one of our smaller type 1000s. That's three units in total.

Those have been dispersed to other programs or other regions to replace vessels tied up, or have been funded through other science programs and so on, but they're no longer used as part of the ice breaking service in the gulf and river in eastern Canada. Therefore, they're no longer part of the cost base, either.

• 0940

So we have adjusted our levels of service down to what the industry has told us they require. We will, of course, continue to do that if the industry, after experience over the next couple of years, feels that we can make further adjustments downwards. We will, of course, listen very carefully to that.

[Translation]

Mr. Yvan Bernier: You are here this morning and there are people taking notes. Certainly we will verify with industry representatives your statement to the effect that the level of service was adjusted down to what the industry told you they required.

In percentage terms, by how much has the Coast Guard reduced its expenditures so far? You say that the level of some services has been adjusted downward and that certain costs have been eliminated. What was the Coast Guard's previous situation and what is its status today, or at least its status to December 1? By how much has the Coast Guard actually reduced its expenditures? What I see here is an astounding increase in fees.

The fee structure that you are proposing is based on tonnes per kilometre. I'm not an expert in this field, but I do know that you are charging a certain rate per number of outputs per quarter. I'd like to know how you tie that into the user-pay principle. This fee schedule would apply only to a given sector of the industry, but you have to consider the whole package.

You say that you are only prepared to pay for apples. Apples account for only 80 per cent of the shipping traffic in the St. Lawrence. Bearing in mind the next-to-last question that I asked, can you give me some indication of the cost of ice-breaking services on the St. Lawrence? Do ice breaking services represent 50 per cent of the overall bill, whereas they account for 80 per cent of your revenues?

Getting back to my first question, by how much has the Coast Guard reduced its expenditures, in percentage terms?

[English]

The Chairman: Yvan, I'm going to have to interrupt, as chairman. I'm going to ask John if he'll give you some more time, because if he doesn't, we're going to have this thing all apart.

John, will you sell him some more time—give him a good buy at reduced rates?

Mr. John Cummins: Yes, sure.

The Chairman: Thanks, John.

Sorry, Mr. Turner.

Acting Commr Michael Turner: Thank you, Mr. Chairman.

The first question related to the degree of cost reduction within the coast guard. I must say, sir, it has been a very difficult few years for many of our people. We have laid off, or otherwise retired early, over 1,400 people, and our overall costs in the organization have gone down about $173 million. If you take out the additional things that have been added in that are new since we came in to the Department of Fisheries and Oceans, in fact, our costs are down over $200 million. That would represent in excess of 35% of our overall budgets.

The coast guard, when it left the Department of Transport, left behind two major functions—the responsibility for ship inspection with Marine Safety of Transport Canada, and the responsibility for the harbours and ports function. However, coming into the Department of Fisheries and Oceans, we have picked up two or three other functions and responsibilities, including the costs and responsibilities for operating the entire fleet for the department, including research vessels, fisheries patrol vessels and so on.

In addition, because of other various bookkeeping changes and so on, it gets a bit complicated, but that's the short answer, sir—roughly 35% and about $200 million, after trying to take out— back out of the changes.

Your second question related to the notion of—

[Translation]

Mr. Yvan Bernier: Regarding the 35 per cent reduction, since you can appreciate how difficult it is to keep up with every single administrative change, could someone from your office explain, in terms that an ordinary MP can understand, the pre-reduction and post-reduction numbers? In looking at the blues that we receive in the House, we note that costs have not decreased, but, as a matter of fact, increased. Therefore, I would appreciate if someone could explain this to me.

Mr. Michael Turner: I'd be glad to. We can provide you with a document containing some specifics. That shouldn't be a problem.

• 0945

[English]

We have basically a simple layout. We'll provide it to the clerk of your committee, who can distribute it for everyone to see.

As I said, it is a little more complex than just 35%, $170 million or $200 million, because of the “puts and takes”, as they say—things we left behind, new things we've taken on, and so on—but there have been major reductions.

In comparison to the amount we've actually raised in revenue from the commercial shipping sector, they are much, much higher. The current level of fees are raising in the neighbourhood of $26 million or $27 million in aids to navigation, and what we are aiming for now, and have been directed to seek, is $13 million for ice breaking.

Now, given that the total all-up costs of the coast guard, including all of the depreciation on capital assets, departmental overheads, the cost of borrowing and so on, is close to $800 million—I think it's $780 million—that amounts to roughly 5% of our total costs that we're currently seeking in terms of cost recovery from the commercial shipping sector.

Your second question, sir, related to the issue of whether the fees are based on tonne miles or kilometres, and how that would relate to the fact that much of the traffic is going up the St. Lawrence in the winter. The fees you're referring to, Mr. Bernier, that are associated with a tonne or distance figure are those currently in place for the marine services fees for aids to navigation systems. They are not the ones that are being proposed for the ice breaking system.

For aids to navigation, the system we have in place essentially provides a mix of different ways of calculating the fees, based largely upon what the regional user groups wanted, and what we were able to provide. For example, as I mentioned earlier, largely in the Great Lakes system, the Canadian shipowners prefer to have a tonne-mile system—or -kilometre, if you prefer—and a seasonal system because of the nature of their business. We've tried to accommodate them, because we were able to obtain the data from them to assist in doing that.

The Chairman: Thank you, Mr. Turner.

You'll have to buy more time from somebody else, Mr. Bernier; but we'll get back you.

Mr. Yvan Bernier: How much time was I supposed to receive, five or ten minutes?

The Chairman: There was a ten that you got from John, plus your own five, which you had given to him and bought back, and now we go to the Liberals for ten.

Sarkis Assadourian.

Mr. Sarkis Assadourian (Brampton Centre, Lib.): Thank you very much.

I have two short questions. First, maybe you can provide us with a sample of your invoice, the one you send to shippers when they go through the St. Lawrence Seaway, so we know the format of your invoicing system. How much do you charge, and how does that compare with five years ago, before changes took place? Perhaps you can provide me with that sample.

Acting Commr Michael Turner: Certainly, sir, we'll provide an example invoice, but you will appreciate that the invoice will be only for the marine services fees for aids to navigation, because that's all that is in place. We don't have any invoice for ice breaking, because we have no charges in place yet.

Mr. Sarkis Assadourian: What I want to know is what kind of charges you put in that invoice.

Acting Commr Michael Turner: We will send you a sample. Perhaps what we could provide, in fact, is a specific fee schedule, along with a sample invoice, maybe with the ship name or owner blacked out.

Mr. Sarkis Assadourian: And travelling from point A to point B.

My second question is, if you put your budget for the fisheries and ocean department, and subtract from it total revenues you have, cost recoveries, revenues fees, everything, would you be in a surplus or deficit position in your own department?

Acting Commr Michael Turner: Sir, the amount that's recovered in all revenues for all activities for which there is any kind of licence fee, permit charge, user fee and everything else—

Mr. Sarkis Assadourian: All charges, everything.

Acting Commr Michael Turner: —is a fraction, a small fraction, of the total cost to the department. It's probably in the neighbourhood of about 10% or so, probably less than that. I could get the exact number for you, of course.

Mr. Sarkis Assadourian: So you operate basically a 90% deficit—

Acting Commr Michael Turner: Well, I'm not sure “deficit” is the correct word, sir. These are operations that you as parliamentarians have agreed we should undertake and have agreed to fund.

In our own case, in the coast guard, as I said, we are currently raising $27 million through this specific user fee for aids to navigation. In total, all revenues, including what we do in the north and our radio stations and so on, accounts for $52 million in the current year of 1998-99.

• 0950

That $52 million compares with overall expenditures of $500 million, which is roughly $400 million in O and M and about $100 million in capital.

As you can see, then, that is in the neighbourhood of 10%, or less than 10%.

Mr. Sarkis Assadourian: So your budget is about $500 million. Is that what you are saying?

Acting Commr Michael Turner: Close to it. Actually, it's $400 million in operating money and there is an additional contribution towards capital that is nominally $100 million, but we've not, in fact, been able to access all of that $100 million this year. It is considerably less than that.

Mr. Sarkis Assadourian: Thank you.

The Chairman: Sarkis, you're sharing your time with Carmen, then?

Mr. Sarkis Assadourian: Yes, sure, he is my friend.

The Chairman: There is some time left, Carmen.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): I'll just shoot my questions out, and they can answer as many as they can within the timeframe.

Basically, in terms of the commercial sector you are mentioning, who actually is it that pays? Are foreign ships included? At what point is the payment exacted? Have you assessed the impact in terms of interference with shipping patterns? Have we consulted with not only the shipping industry but also industries that use the shipping industry? I'm thinking of the grain industry and the steel industry.

With respect to operations, some of your ice breaking operations, I think, probably overlap with U.S. operations. Does the U.S. charge a similar fee? Is there potential here to interfere with shipping patterns? Are we going to see a transfer to another mode of transportation as a result of these fees if they can't be absorbed?

Have you looked at all these?

Acting Commr Michael Turner: Perhaps I can answer in the order in which you asked these, sir.

You had asked, first of all, about who actually pays the fees. The fees in the sense of the existing marine navigation fees are billed to the ship on the basis of cargo tonnage loaded and offloaded for foreign-flag ships and on the basis of the actual gross tonnage to the shipowner for Canadian-flag vessels, with some exceptions, as I have already mentioned.

On the question of fees and at what point they are collected, they are normally collected by direct billing for Canadian-flag operators and owners. They are collected by an invoice that is issued through the shipping agent on the eastern side of the country for all foreign-flag ships.

In the case of western Canada, we have quite a unique partnership with an organization out west, the Western Marine Community, which has come together to look at this issue and has agreed to act as partners with us to facilitate the entire fee collection system. In that case, they actually advise us on what the fee structure should be, and they actually administer the entire billing and collection system, currently through a contract we have with them.

Mr. Carmen Provenzano: Are there ships that could use our waterways that wouldn't pay this fee?

Acting Commr Michael Turner: By this fee, do you mean the aids to navigation fee currently in place?

Mr. Carmen Provenzano: Exactly. Who are they?

Acting Commr Michael Turner: Those would be ships that are bound to and from American ports in the Great Lakes without stopping at Canadian ports. If they are simply passing through, they have essentially—and I don't want to call it “right of innocent passage”, because that's a specific legal term—a right of passage through the system into the Great Lakes and back out again. They are not stopping, they are not doing business in Canada.

Mr. Carmen Provenzano: No other foreign ships.

Acting Commr Michael Turner: No, no. Obviously there are other cases as well, such as government vessels in other government departments, of course. Fishing vessels don't pay, recreational boats don't pay.

Other than that, commercial ships operating in Canadian waters would be paying, yes.

Mr. Carmen Provenzano: Sorry to interrupt.

Acting Commr Michael Turner: I'll get back to your list of questions.

On the question of whether or not there was any look at the cargo diversion issue, there was indeed a significant study carried out about two years ago that looked in considerable detail at some 1,200 different cargo movements in and out of Canadian ports and through our waterways. It narrowed that down to about 92 that were considered to significantly have the potential to be impacted in some way, which in turn resulted in about 17 special in-depth studies.

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The actual studies that were carried out focused on the impact on specific trades in, for example, the Great Lakes, looking at grain, for example, and issues of whether there may be cargo diversion of that grain down the Mississippi. Those kinds of issues were specifically looked at.

Low-value cargoes, such as aggregates, were specifically looked at as well. In fact, the results of those studies were that we introduced a number of caps and adjustments to try to make it as fair as possible to situations like that where there would be some impact that was more significant for those kinds of cargoes.

With respect to the question about the consultations, we have had extensive consultations throughout the process. We established about four years ago, three and half years ago now, a Marine Advisory Board to the commissioner, which consists of various industry representatives from across the country. That initially started off as a group that was going to look at all of the functions of the coast guard and its programs, but in fact very quickly focused instead on the issue about fees for aids to navigation.

Those members around the table initially were from the shipping industry, but as we got deeper into this subject it became clear that there were others impacted. We have had extensive dialogue as well with shipper groups. So, yes, sir, they were involved as well, and have been throughout.

At the current time, for example, in our discussions we're having with the ice breaking group, we are dealing with ports, shipowners and operators, shippers, and various associations representing them as well.

As an example of the kinds of people we speak with on a frequent basis, in addition to the associations representing a large group, such as the Chamber of Maritime Commerce and the Canadian Shipowners Association, the Shipping Federation of Canada, the Chamber of Shipping of British Columbia, and so on, there have been specific industry representatives as well in areas such as steel and grain and other areas where they might feel they were going to be particularly impacted. Industry and shippers along the St. Lawrence and the north shore have been particularly involved. In fact when we get into the area of looking at ice breaking and the possible impacts from ice breaking, we've had a great deal of advice on a number of points.

I must say, I know some industry parties express some disappointment that not everything has come out the way in which they believe it should, and indicate that consultations are not effective. I'm afraid that they may be mistaking consultations for agreement.

We have incorporated as much as we possibly can of the various suggestions and proposals put to us by various parties. As you will appreciate, with so many parties at the table and affected, there is, from time to time, situations where there are direct contradictions in the advice we get. But we've certainly done our best to try to extensively discuss and consult with the people who will be impacted by any of these fees.

The Chairman: Thanks, Mr. Turner.

Now we'll go Peter Stoffer, NDP, with the great port of Halifax right nearby.

Mr. Peter Stoffer (Sackville—Eastern Shore, NDP): The wonderful port of Halifax, absolutely. Thank you, Mr. Chair.

Thanks to our witnesses today for appearing.

First of all, I want to publicly thank each and every one of you at the coast guard for the work done after the Swissair disaster by the crews, especially of the Matthew, and all the people who spent 48 hours, 72 hours, staying awake, in labour and in management.

For most of the people here who don't realize it, many of those people went through a private hell when they saw what was underneath and on top of the water. These crews deserve our deepest gratitude, not only from us but from the country as well.

I state that with a bone of contention, because the other day the crew of the Matthew, or many of them, received a letter of thanks from Minister Anderson acknowledging the hard work, and the work they had done, but in that same envelope was a letter stating that the Matthew was going to be tied up this winter for a period of time, and as would some other ships, which means that those people will be laid off.

You just don't go through a private hell like that and then turn around and get a thank you from the minister in the same envelope as a letter saying, “You're going to be laid off very soon”. It's a very poor Christmas present for those people.

This is why I state publicly that the merger between DFO and coast guard has been a complete disaster, from my point of view. I know the Reform Party states that the coast guard should have merged, if anything, with the military.

If Mr. Cummins wishes to comment on that later, fine.

There was a former commissioner of the coast guard—and the name of him forgets me now—who had helped introduce a program called “alternate service delivery”, and then he left the coast guard. He was a commissioner for the coast guard on the Atlantic coast. Then he went to join the Irving group. It was surprising, to me, to see that Irving picked up some of these former jobs that were slowly being contracted out.

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My fear—and this will be my first question—is this: Is this not a slippery slope down to total privatization of coast guard services within this country? You keep talking about the Treasury Board's mandate, but I can see the time—I hope I'm wrong, and I hope you correct me on this—when eventually coast guard services will be done by the private sector in this country. I think that would be a disaster, as well.

I have two other concerns. The other day it was mentioned in the Halifax papers that the coast guard will be looking for $55 million in further reductions in their budget across the country. I would like you to be able, if it is possible, to verify that, and if not to get back to us later on.

This week, of course, BIO, the Bedford Institute of Oceanography, DFO and coast guard will be having an open house from Thursday through Sunday. I don't know if you folks have been down there lately, but in the 1970s and 1980s that institute was one of the finest institutes in the world. It is now just a shell of itself, and morale is at an all-time low.

I would like you to answer the question about the current morale in the coast guard. Because these men and women on those ships do yeomen's work time and time again, and they risk their lives for not only Canada but also for people entering our waters. I fear that with the cuts going on and with the privatization going on as well that those people— Their morale is of course very low, and job security, if it can be ascertained in that way any more, is flying out the window very quickly.

The last question I have—and perhaps this is something we can get back from you later—is on the marine inspectors. Bill C-9, I believe, introduced part of that, and we had some concerns about who would be actually inspecting these ships. To be a qualified marine inspector, you have to take various courses. It's a long degree of work in order to become a marine inspector. Speculation has it the shipowners can designate whoever they deem necessary to inspect the ships. That's what's being said, although I would like to have further clarification on that.

I thank you for your time.

The Chairman: A word of caution—you have about a minute to answer.

Mr. Peter Stoffer: On some of it, he can get back to me.

The Chairman: You will have a turn again, but in terms of five minutes.

Acting Commr Michael Turner: I'll try to keep it short, sir.

First of all, I really appreciate your mentioning the tremendous job our people have done out there on the Swissair case. They are still there. The main recovery operation currently under way is being managed by the coast guard, and we are having considerable success out there in recovering the wreckage. Yes, people have gone through some terrible experiences.

With respect to the question you raised about the Matthew, the Matthew was scheduled to be laid up part of the winter in any event, but you should not assume, sir, that the notice that the ship is to be laid up equates to the crew being laid off. That is not necessarily correct. While some temporary or term employees will have to leave us, that will not be the case across the board.

Mr. Peter Stoffer: For a point of clarification, sir, other ships will be laid up as well.

Acting Commr Michael Turner: That is correct, sir. We are undergoing a period right now where we're having to re-examine some of our present operations. We are under considerable pressure funding-wise; the whole department is.

It is true that, yes, we have transferred a fair amount of money over the last few years from coast guard to the rest of DFO to support other aspects of the department, but of course the deputy minister responsible for all of our operations must make those kinds of priority decisions. There will be some additional changes in the Maritimes, but I can confirm that the $55-million figure mentioned in yesterday's paper is not correct, not at all, nowhere near correct. We're simply looking at a few percent that has to be adjusted.

The Chairman: Mr. Turner, I'm going to cut it off now, and switch to the Liberal side for a five-minute round.

Wayne, you had some questions.

Mr. Wayne Easter: Yes, thank you, Mr. Chairman.

Certainly we too want to congratulate the coast guard on their good work in the Swissair disaster. Coast guard—up until recently, at least—is very well respected in the fishing communities and in the ports. There's high credibility and respect for coast guard.

From both sides, Mr. Turner, the opposition parties and ourselves, you'll note that there's a lot of concern over cost recovery. Yes, I heard you mention it in your response that the government has certainly passed these initiatives. That's true. That's not to say we're not concerned, though; we're very concerned.

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I know you mentioned that it's really 5% of your total costs, and that's correct. The problem is, although it may look like a minimal cost to you and to the department and to the government, and a fairly major cost to taxpayers, in these communities that are affected it's do or die in terms of a lot of cost recovery.

One of the difficulties I have and I think a lot of members have is that in all the analysis we do, there are too many decisions made today on the basis of economics and nothing else. I don't know how you'd do it, but we've been pushing at it ever since we got into cost recovery many years ago. How do you do an analysis of the impact on a community, social and economic? Because we could kill the very economy we're depending on for growth. I just want to note that as a concern.

This brings me to my key question. One question I do want answered—and I know I'm going to run out of time—is on flood control. Where does that mainly take place?

The key area of concern I have, though, is related to the marine aids, the aids to navigation. There are 49 harbours, I understand, in Atlantic Canada in which the move is being made to turn these over to the ports. I'd like you to explain the process, because the people who are in those ports are telling me that decisions have already been made, that although coast guard and DFO say there are consultations, it's not consultation. That's what I've been told.

I need to know how much saving there is. Although the coast guard has said they would offer technical support during the transition, what happens after the transition, and can these communities really afford to maintain them? What is the impact on safety?

I mean, it's easy to make a decision here in Ottawa, but if you're sitting out there in the water in a 30 swell, in heavy, pouring rain and wind, and the marine aid that you thought was there is no longer there, then I'll tell you, you're going to look at the situation a hell of a lot differently.

Acting Commr Michael Turner: Thank you, sir.

I would be the first to agree that it has been very difficult for people to evaluate the overall impacts, including the social impacts, of the many changes that have been implemented over the last few years across government, including, of course, the coast guard. This is one of the reasons that we have, in our case, had extensive consultations with the various players who are involved in these files with respect to the user charges. It is why we have carried out the economic impact studies. It is why we've also introduced a cap on certain low-value cargoes. The minister announced a three-year cap on the fees to give a period of stability from here on in so that we can all better understand what's going on and whether there are any impacts. I think that's an important point.

Secondly, with respect to the economic safeguards overall, we also have of course the agreement from the Treasury Board that they're going to carry out the overall study of impacts over the next three years. I understand it will be considerably wider than the last time. Of course, we have also agreed there should be a separate and independent fee review panel.

Coming to the aids to navigation, sir, yes, we are in the process of adjusting the aids to navigation overall. There have been, I think it would be fair to say, significant pressures from our commercial clients to reduce the aids to navigation system and reduce our costs thereby.

I have been examining ways in which we can meet our budget reduction targets, which go well beyond program review into the other areas of supporting other parts of the department, as I mentioned, in ways that will minimize any impact on safety. One of the things our people had done was to look at the aids to navigation that had been provided in areas where there are uncharted waters, or very poorly charted, where we really don't know accurately what's there under the water.

Our concern was that we are, as a government agency, not well positioned—and I don't mean any pun here—to position the aids correctly in such locations because of the doubt about what's really there. It really needs to be something that's done by local users.

The adjustments to our levels in service this time around included a decision that it would be best to attempt to transfer to more local control and management, minor aids in smaller harbours and inland waters where this was the case, where they were not well charted or not charted at all.

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The process we've used, therefore, has been a process of going out on a consultation about how this might be accomplished. I think that may be where the confusion has come in. The question of consultation isn't a question of “Is this a good thing to do?” but rather, “If we are required by our current policy to reduce a number of these minor aids, what is the best way to do that, and what are the best ways local community could become more involved?”

The Chairman: Thanks again, Mr. Turner. I'm sorry to cut you off, but we'll probably get back to that.

I think various committee members, in dealing with constituents, have some difficulty with the definition of the word “consultations”. It's quite evident that your definition— of the perception of it and what local users have with it.

We'll turn now to our great province of Newfoundland; back to the rock, Bill.

Mr. Bill Matthews (Burin—St. George's, PC): Thank you, Mr. Chairman.

Mr. Provenzano and Mr. Easter have covered a couple of issues that I wanted to pursue, so I thank them for that.

I would like to thank you, Mr. Turner, and your officials for being here.

I have just a couple of things. First, on the classification as commercial, the concern of Newfoundland and Labrador particularly is that usually most of our ice breaking needs, I guess, are during our seal hunts. Small boats get caught in ice. What, if any, are the implications for those under your new policy? Because I have heard some fishermen speak publicly about the fact that they're going to be hit with fees. Whether that's correct or not, I would like to have it clarified for my own information. I can consequently inform them.

You mentioned, I believe, that you inherited responsibility for fisheries patrol vessels. I would like to know how many fisheries patrol vessels there are and where they are utilized. I would like to know what effects or impacts the reductions you've talked about this morning have had on the operations of our fisheries patrol vessels, which are so very important to our fish resources, doing things we should have done in terms of keeping an eye on what's happening, particularly outside of 200.

The other thing relates to what Mr. Easter said and some of the initiatives you're now involved in with navigational aids and so on. My own observation is that I think you're getting dangerously close, as a result of government pressures on the need to cut back and to lay off and yet on the other hand to find money, to flying in the face of your own mandate. I would like to hear your response to that. That's my sense of it, that you're under such pressure to do the things you're now about doing, you're almost going to be contradictory to what coast guard is supposed to be.

My final question is this. In light of the helicopter fiasco and the safety/unsafety situation of helicopters, what effect has there been on your services? Have there been greater demands on your services as a result of helicopters being grounded and not being able to fly and so on?

I would like to hear your responses to those, please.

Acting Commr Michael Turner: Thank you, sir. I'll try to keep it short.

Your question was with respect to the fishing vessels particularly engaged in the seal hunt. I can tell you there will be no impact on them. The editorial in the St. John's paper yesterday was completely off base, I'm afraid, because if he'd read his own news coverage elsewhere in the paper, he would have seen it clearly identified that the fees will not apply to fishing vessels.

Secondly, in regard to the overall question about marine safety and the impacts this is having, I would only say, sir, that I have to agree that we are certainly under considerable pressure to try to reduce our costs and try to reduce our operations in ways that will allow us to live within the budgets we have and still do our primary job, marine safety and environmental protection. Yes, it's difficult, but I think our people are up to it. We do the best we can with the resources the government is able to make available to us, and of course our department is able to make available.

On the question of the fisheries patrol vessels, I can't give you specific numbers at this time, partially because, sir, the way in which the coast guard fleet now operates is that any vessel may become a fisheries patrol vessel the moment you put a fisheries officer on it for a period of time. It's what we call multi-tasking, making more efficient use of the fleet.

There was an article in the paper recently, though, in St. John's indicating that the two large offshore patrol vessels that are used at the nose and tail of the Banks, the Cowley and the Cape Roger, were due to be laid up prematurely and would not be available.

That, I can assure you, will not happen. We expect to get the full budgeted time from those vessels for the NAFO patrols and the patrols on the nose and tail of the Banks, in other words.

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We are working very hard with our colleagues in the fisheries management side of the department in that regard to make sure that continues. In this case, they provide the funding, we operate the vessels, and they've assured us they will find the funding in that case.

You had one other point, I think, on the helicopters in search and rescue. Yes, the helicopter situation at DND is putting some additional pressure on us. We have in fact sent a warning—if I can put it that way—to all of our people across the country to be ready to try to respond if needed with respect to the ship side of our operations.

With respect to our own helicopters, however, it has essentially minimal impact, because we're simply not equipped for those kinds of machines to carry out the long-range search and rescue kind of operation.

It is having some impact, and we are watching it very closely. We work hand in glove, very closely, with our colleagues in DND in this area, and we'll do our best to support them.

The Chairman: Thanks again.

We move now back to the Liberal side. We also have on our Liberal committee, from the great north, where we talked about—

Was it $60 million that we spend on ice breaking up there?

Acting Commr Michael Turner: That's our full cost. We spend considerably less than that. I used that advisedly, because what's in your estimates—in other words, the cash expenditure—would probably run somewhere in the $25 million to $30 million range.

The Chairman: So we might have some questions from Nancy in terms of whether or not your service is adequate.

On your immediate left is Mr. Sekora from the great province of British Columbia, where they don't have to worry too much about ice breaking, so there may be some other types of questions.

I'll come now to the Liberal side. Are there further questions there?

Go ahead, Nancy.

Mrs. Nancy Karetak-Lindell (Nunavut, Lib.): This is more to do with services. Over the summer, when we were up in Grise Fiord, we had a concern brought to us that even though there was a coast guard in the vicinity, because of an early break-up something like seven to nine snowmobiles and people were stuck on a piece of ice. They felt that the response was not fast enough to help the community. They lost all their snowmobiles.

They had put in a request through my office as to in what conditions the coast guard is responsible to compensate for the recovery of those snowmobiles. We haven't gotten an answer yet. We did get some reports that they did try but did not find them.

They want to know if there is any way, because of, let's say, the coast guard not responding soon enough, they could be compensated for those snowmobiles they lost. For a community of 160 people, losing seven snowmobiles is a considerable economic loss for that community.

Acting Commr Michael Turner: I can very much sympathize with the problem. Particularly in the Arctic, where the distances are so vast, it is difficult for us to respond in a timely manner in some cases. We have made reductions, of course, in that area as well.

That particular case I'm not aware of, although I would say in a general sense that unless the coast guard had, through the operation of its icebreaker, actually struck the floe that caused the snowmobiles to sink, it would be unlikely that we would be able to compensate anybody for that loss.

There are many situations in which we are called to assist, and we come as quickly as we can, but that's essentially the end of it. It's a best-efforts basis. Particularly given the enormous distances, that's pretty difficult in the Arctic, I understand.

I'm not sure, Ian, if you have any further information on that incident.

Captain Ian Marr (Director, Ice Breaking Program, Canadian Coast Guard, Department of Fisheries and Oceans): I have a little bit of knowledge about that incident, because it was investigated in response to your office calling. In that particular case, it was a helicopter rescue of the people, which was of course our first concern. It is very difficult for our small helicopters, obviously, to handle anything as heavy and cumbersome as a snowmobile.

The weather at that time was also not the best. By the time we got the people off the ice, the weather had then closed in to the point where flying our helicopter to rescue property as opposed to people was deemed by our commanding officer, quite rightly, to be not a wise decision.

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As I explained to some of your colleagues in the north, another restriction we do have is that the waters up there are not fully charted. Therefore, it is sometimes very difficult for us to move the icebreaker itself, which has the capability to pick up these snowmobiles, to the location of the snowmobiles, which tend to be closer to the shore, in areas where there is no charting for the icebreaker.

Our policy certainly is that where it's at all possible, we will pick up the property as well as the people, but we are very conscious of the safety aspects as we operate in the north because of the charting and because of the somewhat limited capabilities of our helicopters to lift heavy and awkward pieces of equipment.

The Chairman: The time is up again.

Thank you. It certainly brings another perspective on the multi uses and functions that your group has to perform.

John, we'll get back to B.C. again.

Mr. John Cummins: Thank you, Mr. Chairman.

Welcome to the witnesses. I must comment that we on the west coast are also grateful for the coast guard, more often the American coast guard, though, because our experience has been that the coast guard on the west coast is underequipped and underfunded. When I used to fish the west coast, we looked down more to Neah Bay in Washington state for support than any facilities that were offered by the Canadian Coast Guard.

That being said, to get to the issue at hand today, on your definition of a user, if I'm shipping into an ice-free port from the east coast, am I a user of ice breaking services?

Acting Commr Michael Turner: If you are shipping in the sense that you are a company putting a product into the transportation stream, you are not a direct user of our service, the ship is, and the shipping company itself.

Mr. John Cummins: Precisely. I guess that's what I meant. Would I be then considered a user if I'm shipping into an ice-free port as opposed to a port, say, on the St. Lawrence?

Acting Commr Michael Turner: Really, it has no relevance to whether it's ice-free or not; we don't work on the basis of ports and whether or not they are in ice zones. The charges we are proposing, which essentially are based upon what industry proposed to us, are essentially charges for ice breaking that would be levied to the ships, many of which, of course, are foreign-flag ships. So they're not to a shipper, no.

Mr. John Cummins: Are those fees, then—and this issue was raised across the way—enough to divert shipping elsewhere, and if so, where would that ship go? Has there ever been a determination? If a ship was bound for Montreal and found the fees were too high, is it likely to go to Halifax, or is it going to go to New York?

Acting Commr Michael Turner: To answer the specific example, if a ship such as a container ship coming into Montreal was likely to go somewhere else, that would most likely be New York. Since half of the cargo on those ships is in fact going to American ports, they are, of course, as a result, the people who end up paying their share of the fee, not Canadians. But the figures show that in fact last year there was roughly a 7.8% increase in traffic in the port of Montreal. So our fees can't be having too much impact in terms of diversion.

Mr. John Cummins: How do you determine the public good versus commercial use? You mentioned public good such as flood control and whatnot. Again, is it possible to determine when—

Acting Commr Michael Turner: It's very much a judgment call, sir. To revert very quickly to the other question you asked, you see not so much diversion as you do different ways in which the industry manages its costs. But in this particular one of public good, in every case we have to look at a service and determine what portion of that is used directly by commercial ships, what portion is used by other clientele.

In the aids to navigation side, for example, and the ice breaking side, both of which are the subject of these fees, we've done extensive work with the various client groups to determine exactly who uses every aid to navigation, for example, and what ships use our ice breaking services and so on, so that we have a pretty good idea.

When we say “public good”, we're really talking about something the coast guard does that is not related to the traditional marine client in the sense of a commercial operation, or support to a commercial operation, but is done solely for the greater good of the Canadian public, or a mariner. Search and rescue is probably the prime example—safety of life at sea in its ultimate. Other areas are environmental protection, for example. Flood control is normally considered a public good simply because it protects the riparian owners and towns from flooding, even though there are some obvious spin-off benefits to others.

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So we have to look at each case. We look, for example, at our traffic management systems. We have essentially made a decision that we would call 50% of the costs attributable to commercial shipping support and 50% to the public good, because they are effective in both the areas in terms of supporting commercial traffic and in terms of supporting environmental protection and search and rescue and other activities like that.

Mr. John Cummins: So it's very much a judgment call.

Acting Commr Michael Turner: It is, sir, yes.

Mr. John Cummins: Very quickly, what is the status of the base at Selkirk?

Acting Commr Michael Turner: We have a small operational site at Selkirk. Selkirk, being a minor inland waterway, is essentially one of the areas in which we've been seeking ways to reduce our costs.

It is currently operational. We have reduced our presence on Lake Winnipeg and out of the Selkirk base, and have, as a result of that, reduced the staff levels there. We have taken out of operation, for the time being, at least, the one ship on the lake and replaced it with a smaller unit. We have leased out half of the building space in Selkirk to a commercial operator to help defray our costs in that site.

The Chairman: Thank you, John.

Yvan, we're back for five.

[Translation]

Mr. Yvan Bernier: Earlier, in response to Mr. Cummin's question, you stated that you would be setting a fee schedule for ice breaking services based on the requests submitted by the industry. I was somewhat surprised to hear you say that, so I'd like to ask you the following question. The national shipping industry coalition which you have undoubtedly heard of seems to believe that one way of determining direct user costs in the St. Lawrence-Great Lakes corridor would be to base the fee charged on the number of hours of ice breaking services delivered. That is one possible option. Do you agree with it? Is this feasible?

[English]

Acting Commr Michael Turner: My understanding, sir, is that they did not comment directly on that other than with respect to the eastern regions issue. The costs of our ice breaking operations have been explained in great detail, if you like—“exposed” might be a better word—to this group.

While we have no fee in place at the present time, of course, the structure for a fee that we are currently consulting on was proposed, in fact, by the working committee, which includes many of the people who in turn joined together to form the coalition. So we really don't have a fee in place at the present time.

[Translation]

Mr. Yvan Bernier: I realize that there is no ice breaking fee in place at the present time, but it was my understanding that you were working toward introducing a fee structure by December. You mentioned the user-pay principle. Those in the industry who use the services would be the ones to pay the fees and they are entitled to know what the Coast Guard is planning to charge them.

I'd like to know if it is in fact true that in order to set the rate for proper, normal and satisfactory ice breaking services in the St. Lawrence-Great Lakes corridor in response to requests from the industry, the Coast Guard is planning to keep track of the number of hours of ice breaking operations in this sector. Is it not equally important to keep track of ice breaking operations in, say, Corner Brook? Must all ice breaking operations be linked or do operations in Corner Brook have any impact at all on shipping in the St. Lawrence-Great Lakes corridor? We know for a fact that a number of users navigate only inside this corridor.

[English]

Acting Commr Michael Turner: You are absolutely correct, sir, that the users who are going into Corner Brook are not going up the St. Lawrence. However, the manner in which the ice breaking service operates is that it is one collective system providing support to ships going through the gulf and the river in eastern Canada to all of the ports, whether it's the ports of north shore Quebec, or the Gaspé, or P.E.I., or Newfoundland, or up the St. Lawrence.

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In considering the complexities of how the coast guard might or might not apply the fee, the industry committees felt, after much internal debate, that applying a single, consistent fee to every ship that came through the area, no matter what port it was going to, provided it was moving in ice-covered waters during the ice period of the year, was, to the committee, and to the working group, the best approach, because it reduces the complexities of trying to calculate specific costs for specific ships, and fairly attributes to every ship a portion of the overall costs. That was the view of the working group.

[Translation]

Mr. Yvan Bernier: I will concede that it is important for users to pay their fair share, but you are talking about the user- pay principle. You maintain that there is no connection between ice breaking operations in Corner Brook and those in the St. Lawrence- Great Lakes corridor and that these operations have no impact on safety. I'd be curious to know the costs of maintaining the St. Lawrence-Great Lakes corridor, still working within the parameters that you have set. For instance, you say that the ice breaking fee you charge represents a recovery of 17 per cent of the costs of delivering those services. What exactly are these costs? According to the figures I have, it takes half the amount of time to keep other eastern sectors free of ice as it does to maintain the Great Lakes-St. Lawrence corridor. Getting back to the amount you wish to charge for ice breaking operations in this corridor, you can argue that it costs less to maintain the St. Lawrence-Great Lakes corridor and later decide to spread the cost among all sectors. Who will have to make up the shortfall? I haven't figured that one out yet, but I'd like someone to tell me if it makes any sense to view ice breaking operations in this corridor as separate from operations in other sectors. Your telling me that it does and that there is no connection.

[English]

Acting Commr Michael Turner: We are able to tell you what the costs would be for the Great Lakes, primarily because it's a semi-closed system. Once the locks are closed in the wintertime, one knows what traffic is actually moving. Along with the preliminary ice breaking done in the fall, before the lock closes and in the breakup in the spring, when ships come in from the other regions, we can probably calculate that.

For all of eastern Canada, however, other than that example of the Great Lakes where the locks close, it is very difficult and complex. We do not have a single figure that one could give you as to what ice breaking costs, for example, on a stretch of the St. Lawrence, or for a particular area of the gulf, because all of the units operate together from all of the regions. They move back and forth across the so-called regional boundaries. Eastern Canada operates as one region.

The advice we received from the coalition itself, as well as from the user groups that met to determine how we should structure our fee, was that it should be a regional approach, and certainly in terms of eastern Canada, the only approach that is practical and possible in terms of all the icebreakers operating together in the gulf in the wintertime, is one region for that entire area. Because an icebreaker from the Maritimes may be doing work one hour for a particular ship that is going through what you refer to as “the corridor”, going up the St. Lawrence, and the next hour for a ship to Corner Brook, and the next hour for a ship that's going to Gaspé, and so on. And that ship isn't even based in Quebec; it's based in another region of the coast guard.

So they all operate as one Gulf and St. Lawrence region in the wintertime. That is the region we are able to track the costs on, and that is the region the committee itself felt was the best billing region, if I can put it that way. As I said, the advice we've received from the coalition was also that our fees should be regionally based.

The Chairman: Thank you, Yvan. We have to come back—

[Translation]

Mr. Yvan Bernier: One final comment, Mr. Chairman. If I understood Commissioner Turner correctly, during the winter months, the Coast Guard has trouble keeping track of its vessels. Even though it doesn't quite know where its vessels are located, you would have us believe that this very same Coast Guard is capable of telling us what foreign vessels are doing on the Grand Banks and of telling us, with the help of a computer, which vessel fishes where at what time and on which day.

I can't understand why the Coast Guard is capable of monitoring foreign vessels, but unable to keep track of what its own vessels are doing. I'm sorry, but I just don't get it. Perhaps we should test our own equipment on our own boats, then George Baker and I might believe that the Coast Guard system is impervious to foreign vessels overfishing in our waters. We don't even have the capability of testing our own equipment using our own boats! I don't understand it. And now, the Coast Guard wants to bill the industry for the services it delivers. I can see why the industry is fed up.

[English]

The Chairman: Yvan, we'll come back again.

We switch now to the Liberal side, and Mr. Easter.

Mr. Wayne Easter: On this ice breaking, could you give me a specific example of, for a boat coming by Newfoundland and then going up to the port of Montreal, how those fees would be calculated?

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I know the point Yvan's getting at, but it's extremely unfair to Halifax, or the open-water eastern ports, if in fact Halifax and Saint John and others are subsidizing the ice breaking for a boat to go to the port of Montreal. The boat that goes to the port of Montreal should certainly pay higher costs, because they have to pay ice breaking coming by Newfoundland and going up the St. Lawrence. Otherwise, we're putting Halifax at a disadvantage.

Back on navigation aids, in answer to my previous question you mentioned unchartered waters. Has there been a problem to date with navigation aids in unchartered waters? Has there been a problem that makes you now decide that these navaids should be pulled out?

Because if I look at the figures, I mean, what is the cost? You're dealing with 49 harbours, 1,600 aids. Can you give me the saving that coast guard is going to have as a result of this decision?

If I look at Nine Mile Creek in P.E.I., I believe there are ten aids there that weigh 200 pounds apiece. For the coast guard to go in there with a coast guard vessel, with the hoists, in a few minutes they're done. But if you turn that over to the community, and they gear up a barge or some other thing, or charter a company to do it, their costs are going to be excessive, whereas the coast guard can just slip in and the job is done and the aids are there.

I'd ask you for the figure, for what's the saving here. To service 49 communities, to me, it looks like minimal cost at the moment.

The other thing I need to know is, if the coast guard is not doing these 1,600 aids, what are they doing with that saving in time and manpower? Are they idling away the time or what? I mean, is it a real saving to the system?

Acting Commr Michael Turner: On your first question, sir, regarding the ice breaking, I'm not quite sure why there would be a concern about Halifax unfairly paying something, because the way in which the industry has proposed the fee should be structured, which we in turn have put out on the table, is that only ships moving through ice zones would be paying, and ports such as Halifax are not located in an ice zone.

If a ship is coming from sea internationally, say, going into the gulf and up to Montreal, to use your example, it would receive several services from us. First of all, it would receive ice routing service, which is based upon the information we in turn get and interpret and add to from the environment service, complemented by our own tactical reconnaissance and the knowledge of our icebreaker captains. Secondly, it gets essentially a stand-by system, so to speak, where the icebreaker located in a certain area is ready to respond, if necessary. Third, if it becomes beset, it would receive icebreaker support.

Now, a good number of the ships that are going up to Montreal are large container ships that in the wintertime, once they get through the outer part of the gulf, really do not require very much assistance going up the river. The same thing is true for large bulk carriers going into ports like Sept-Îles and so on.

When one looks at the workload involved with the ports in various areas around the gulf and the complexity of that system, I believe that is why the user committee felt that a fee structure based upon simply a one-time entry into the ice zone was the best approach, what we call a “transit fee”.

The committee had recommended to us that if you enter into the ice zone in the wintertime, you would pay the one-time transit fee. If you leave a port and go back through the ice zone going out to sea, for example, you would pay a second transit fee. It would be the same fee if you were going from, let us say, Halifax into Corner Brook as if you were going from at sea into Quebec City.

The Chairman: Thank you, Michael.

We'll go now to Mr. Stoffer.

We only have about ten minutes left. I'll give you five, but if you could use less, I think Bill and others might appreciate it.

Mr. Peter Stoffer: God love you, Mr. Chair.

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You have constantly stated that you'd discussed with industry, with industry, with industry, but not once did I hear you say you'd talked with chambers of commerce, with various community groups or, for that matter, labour groups.

I guess the only question I have—and I can give extra time to my colleague from Newfoundland and Labrador—is this: Are you consulting with those groups, and if so, why wouldn't it be in this brochure you've handed to us? I think a very important point, as Mr. Easter has pointed out, is that when you download or transfer responsibilities, it's the communities that have to pick this up, and in many cases the communities are unable to finance it.

Acting Commr Michael Turner: Thank you, sir.

Just briefly, the consultations we're referring to with industry are specifically on the fees we're asking that segment of industry to pay, and on the mechanism and structure for how that should be set up with respect to the ice breaking fees.

We have many other consultations in fora and meetings with broader community groups, right down to local user groups—local fishermen's communities, yacht clubs and so on—right across the country, frequently, literally hundreds in the course of a year, including on this question of navigation aids. I cannot provide the exact number with respect to how much we're going to save on the 1,600 navigation aids, but I can assure members that this is a real saving, and I'll try to provide some more information on that.

In consulting with the community groups on the services provided, it goes far beyond the question of user fees, of course. We're focusing on all of our services when we talk to user groups, chambers of commerce, labour groups and so on.

Mr. Peter Stoffer: Finally, I asked you before about the marine inspectors and who will qualify. Perhaps you could answer that, if you have time. If not, if you could get back to me, I'd appreciate it.

Acting Commr Michael Turner: Very briefly, unfortunately—or otherwise, depending on your perspective—when the coast guard was removed from Transport Canada, the ship safety inspectors remained with Transport Canada. Therefore, in Bill C-9, Transport's marine surveyors, as they're called, are a responsibility of the Department of Transport, and we have to get the answer for you from them.

Mr. Peter Stoffer: Thank you.

The Chairman: Thank you, Peter.

I'm going to switch away from the Liberals for a minute. Bill has to get a second round.

Mr. Bill Matthews: I just want to follow up on Mr. Turner's answer to Mr. Easter.

I guess you're saying basically you don't know the amount of savings on navigational aids.

Acting Commr Michael Turner: I'm saying I don't have that at my fingertips on that specific case in the Maritimes.

Mr. Bill Matthews: Okay.

The only other thing I'd like you to respond to is Mr. Easter's concern about what it will do to manpower and utilization of time.

That will be it for me, Mr. Chairman.

Acting Commr Michael Turner: Certainly we are in the midst of a multi-year general restructuring of the organization, including a re-examination of not only our ships but also our bases. We have significantly reduced personnel already in the yards and shops who are servicing aids to navigation, in anticipation, essentially, of reducing the number of aids in some cases. There are real and substantial savings associated with each of these initiatives we're taking, or frankly, we would obviously provide more service if we were able to.

On the question of the coast guard vessel being able to slip in quickly and do the job and get out, we used to think very much that way ourselves, but certainly with a much greater focus on the costs of our operations being scrutinized very carefully by the sector that's now starting to pay a bit of the bill, we are much more conscious of the fact that it's not just a few minutes' time with a ship and crew; it's all of the infrastructure costs that support that operation as well, which must be proportioned against each of the aids and each of the things we do.

But we'll certainly try to get better information for you with respect to the specific case in the Maritimes that was referred to.

Mr. Bill Matthews: I have one final question, Mr. Chairman.

I think you mentioned that you have had 1,400 employees laid off or retired.

Acting Commr Michael Turner: Something in excess of that now, yes.

Mr. Bill Matthews: Over what timeframe did that occur?

Acting Commr Michael Turner: That's over the past four years, roughly 1994-95 to 1998-99.

The Chairman: I would permit another one-minute question from anyone.

We had a very interesting discussion this morning, and we probably could go on for the next three weeks and still be learning something about this process.

Peter, do you have a little question?

Mr. Peter Stoffer: A little one, yes.

Mr. Turner, the final question I have for you, sir, is in your professional opinion, and that of your colleagues' here, do you feel that you have the resources in order to do the job that the coast guard is mandated to do?

Acting Commr Michael Turner: That's a difficult question to answer, sir, as you'll appreciate.

An hon. member: And it's not fair.

Mr. Peter Stoffer: No, it's not a political question.

Acting Commr Michael Turner: We do the best with the resources we're given. We are in a very tight situation, and certainly there are areas in which we are concerned that we're very close to the edge, as Mr. Matthews has said, in terms of the level and quality of service.

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All I can do is assure the committee we'll do the best we can with the resources the government's prepared to give us and the department can make available, but we do need to continue to change and to adjust how we do things to become more efficient to continue to reduce costs as a part of that trying to provide the best possible service with the money that's available.

The Chairman: Again, thank you for coming this morning.

I hope, Ms. Shirreff and Mr. Meisner, you didn't feel completely left out. We may have to have another encounter so we will have a chance to see exactly how— but maybe Mr. Turner felt more comfortable having some supporters with him when he appeared before our committee.

It has been a good experience. We know that with costs everywhere, in every department—in fact, even at home with our own personal living—there are budgets to be met. We probably never have everything we want, but hopefully we have enough to do with, as best we can.

Peter, I know— and we didn't talk policies. For example, we have all these icebreakers, and I might have asked what those crews do in the summertime. We had originally thought there might be a greater offset, that those who worked in the boats in the winter with ice breaking might go into fisheries, where we later on will hear we don't have enough fish guardians.

Are we doing some of the policy decisions that might better use our FTEs?

Acting Commr Michael Turner: If I may, sir, they will appear largely in the Arctic in the summertime, where your colleague is concerned about the level of service we are providing.

The Chairman: Largely but not entirely, is that it?

Acting Commr Michael Turner: The other ships that are the lighter icebreakers, what we call “multi-mission”, such as type 1100s or 1000s, are generally doing aids to navigation, some SAR, and, yes, now some fisheries patrol as well.

The Chairman: Thanks for coming. We may call on you again. I would suspect that some members of this committee will have letters that they will communicate to your office. I know in the past you have given us good service with your answers. I'm sure you'll continue to respond to parliamentarians as we look for more information.

Thank you, Mr. Turner, Mr. Meisner, Ms. Shirreff, and Captain Marr.

We are going to go in camera for about five or ten minutes to look at some of our future agenda items.

We are adjourned.