TRAN Committee Meeting

STANDING COMMITTEE ON TRANSPORT

LE COMITÉ PERMANENT DES TRANSPORTS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 28, 1997

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[English]

[Editor's Note: Technical difficulty]

A voice: When we do the clause by clause, for example, there is one regarding pilotage. There's a request for a review or an obligation to do a review, to be completed by the end of this year. Obviously that date has become unrealistic. So when we do the clause-by-clause, we will propose a new date. This is what we call technical adjustments.

A voice: I see. Okay, thank you.

The Chairman (Mr. Raymond Bonin (Nickel Belt, Lib.)): If there are other issues like that, that need to be updated, we would appreciate having them before next Tuesday, when we start our exchanges.

Mr. Bailey.

Mr. Roy Bailey (Souris—Moose Mountain, Ref.): My question is along the line of my colleague's questioning.

The ports have to meet certain criteria, as you have said. What provisions or what steps would have to be taken?

All of this said, on the copy of the Port Alberni thing, they don't want to be included as a part of this. They've stated their reasons.

The question is this: Going down the road two or three years, if the port is not satisfied with Bill C-9 as it affects them directly, is there any way that particular port can negotiate or bargain its way out of Bill C-9 and revert back to a local port authority? Once they receive the status they must stay in. Is that correct? There's no opting out.

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Mr. Louis Ranger (Assistant Deputy Minister, Policy, Department of Transport): I don't think you can unscramble the eggs. Once you've become a CPA, you are a CPA.

Now, if your concern is if a port doesn't like that regime after three or four years, as we mentioned the last time, under clause 144 there is an obligation to review this bill after four years, during the fifth year, and a port then would have the opportunity to express their concerns about the working of the bill.

Mr. Roy Bailey: But at the present time, sir, on the suggested amendments—and there's a couple I've read in particular—then you would consider what Port Alberni has to...on their behalf, as a legitimate reason for not going with Bill C-9?

Mr. Louis Ranger: Let me make a very short preamble.

When we met the harbour commissions last week, it took us about an hour to get to the real nub of the problem. The harbour commissions are asking: why are you changing our status; is it because you feel we haven't done a good job?

That's not the issue at all. In fact, I would say that harbour commissions, among all ports, are perhaps those that have developed the closest relationship with their communities. They have served the communities very well. Our changing the regime is no reflection whatsoever on the good work that has been done, in some cases, for the last 50 years. It's driven by this concern for having a more uniform set of rules for all ports. It has become very difficult to manage different categories of ports in different ways with rules that are hard to follow, quite frankly, even for those who have been in the business for a long time.

So we certainly understand their concerns, but at the same time, I think we went a long way in explaining the background, the reasons why we're doing that. I felt, personally, that at the end of that meeting we had made some progress in at least conveying to them what's driving us, that it's certainly no reflection of any bad management. On the contrary, we recognize that. But I must say, this only came out at the end. There's an awful lot of people who spend many years achieving the developments of those forces we're seeing today.

Mr. Roy Bailey: My concluding question is this. Obviously you've done a cost-related study on those who are making use of the ports. Being from a wheat-growing area of Saskatchewan, I'm really concerned about Bill C-9—not the bill itself but the end result. Is this going to have any effect on the cost of handling goods through the major ports such as Vancouver?

Mr. Louis Ranger: Sir, this is the whole idea here, to put those ports on a more commercial basis.

Mr. Roy Bailey: Yeah.

Mr. Louis Ranger: Well, I think the regime will lead to productivity improvements. In fact, we wouldn't be doing this if we did not believe this would happen. They will not have to wait up to a year or a year and a half to get some permission from Ottawa to borrow money to get on and buy that crane they need. Under what we're proposing here, if the borrowing is below a certain threshold, they're on their own.

The Chairman: Relating to the question, can we assume that productivity improvements will mean lower rates? I think that's the question that is being asked? Do you sense that it's—

Mr. Louis Ranger: Well, because we're trying to put those ports on a level playing field—in other words, they'll be competing with each other, not to mention U.S. ports—the bill clearly gives them the full power to set those fees, but it'll be in a very competitive environment. That, we hope, combined with fewer barriers and delays in getting approvals, will translate into better tolls, better fees.

Mr. Roy Bailey: Is there no justification in the smaller ports' saying this thing is designed for Vancouver and Montreal?

Mr. Bruce Bowie (Director, Marine Policy, Department of Transport): I want to add to that in terms of the potential savings as a result of this legislation, that it identifies, in that letter from Port Alberni, for example, a number of areas where there are additional costs. A lot of those costs are associated with ensuring that this port is accountable to its users and to the general public: the requirement for financial statements, the ability to undertake reviews, and that sort of thing; to make sure proper mechanisms are in place. But things that haven't been stated are the fact that there are a number of processes harbour commissions are subject to right now: how they have to go about getting their harbour dues approved, how they have to go about getting leases approved, various contractual arrangements, what they have to do right now in order to borrow from the markets.

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All those processes have been streamlined. By streamlining those processes you're going to reduce the administrative burden on the harbour commissions. They will be able to operate on a commercial basis without an extensive review and approval process associated with a lot of the day-to-day activities they undertake. That's why there are savings.

Mr. Louis Ranger: We think there will be not only productivity improvements but real savings for government. I would like to ask Mr. Pageot just to say a few words on that.

Mr. André Pageot (Director General, Marine Policy and Programs, Department of Transport: I think we ignore the reductions in the overhead. That bill is eliminating a central secretariat in Ottawa that a few years back used to cost between $10 million and $12 million or $15 million per year.

Since the Canada Ports Corporation was established in 1983, special dividends have been paid to the Crown by ports such as Montreal, Quebec, and Vancouver, and they may have reached over $100 million over the years. The formula we have will be much cheaper than everything that has been paid since the current legislation was established.

The other thing we have to clarify is that when you have two or three categories of ports, that doesn't mean the smaller ports are not important for national trade. It's like cities; a small town in Saskatchewan is as important as Toronto or Halifax and so on. It is very critical to have all these activities.

The value in adding two categories is that with the big ones we have to think of huge investments. The Deltaport investment in Vancouver was typical. We have to plan the rail access, the highway access, and environmental studies. It has to be a co-ordinated approach, which is much easier under the Canadian Ports Authority regime than under a bunch of local decision-making.

With the smaller sites you have to realize.... I've been involved with ferry programs in Atlantic Canada. If you put up a sign about loading or unloading ferry passengers and you have to come to Ottawa and you need your sign to be designed by Public Works and you have to go to Supply and Services for a contract...I guarantee you it will be more efficient to do it at the local level. But that doesn't mean we attach less importance to it. We are just putting it closer to the people.

The Chairman: Mr. Casey.

Mr. Bill Casey (Cumberland—Colchester, PC): Every time somebody speaks I have a new set of questions.

You mentioned the impact on Atlantic Canada ferries. What are all the impacts on Atlantic Canadian ferries from Bill C-9—or all ferries?

Mr. André Pageot: Basically cheaper public costs, easier decision-making. I'll give you an example. Under Marine Atlantic we used to run the Labrador ferry services. On the entire coast of Labrador maybe 20 or 22 sites would be served with an annual contract negotiated in Ottawa. Ships would be selected, dispatched, with a plan approved by Ottawa.

Last spring we made a deal with Premier Tobin in the province of Newfoundland. We gave them the equivalent of the present value of the service. Now Mr. Tobin can decide inside Labrador, inside his own province, what the priorities are. He can decide whether he wants development supported at Goose Bay rather than Lewisporte and so on. With all due respect, he is better placed than I am in Ottawa to decide that.

So we believe the ferries will be protected.

Over the years the big concern with ferries has been constitutional obligations, and section 31 and section 33 of the 1949 act. This is fully protected in our Canada Marine Act. The Port aux Basques obligations will be fully met. Right now we are negotiating a new contract with Marine Atlantic for Port aux Basques. In the other sectors where we have used commercial firms, whether in the building of the P.E.I. bridge or in the tendering of services such as at Digby, Saint John, or the Bluenose, we are now showing significant gains with about the same service.

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At some point, though, if there is no traffic during the winter months you have to ask yourself how far you'll go in providing an empty ship. But this is attrition, you see, and most of the decisions on the ferries have been made and we will fully respect and meet the constitutional obligations.

Mr. Bill Casey: With respect to Marine Atlantic, what control does the federal government have?

Mr. André Pageot: It is a crown corporation that every year submits an annual operating plan to Ottawa, a plan that has to answer to the traffic offering, which is what we say in the constitutional language. If there is a demand in Newfoundland, we have to meet it. Every year we negotiate an annual plan.

Marine Atlantic has been performing very well when you consider that in the last few years there have been major transactions such as the opening of the P.E.I. bridge. They have been a very responsible company in terms of treating their employees and in terms of departure pay. We basically sit down with them, review the traffic forecasts, try to look at the vessel needs they have, and then calculate, based on fuel costs and labour costs, the annual subsidy required to meet the constitutional obligations.

Mr. Bill Casey: What's the range of the subsidy?

Mr. André Pageot: We used to have over $150 million. That was a few years ago. Right now I think it is in the order of about $70 million, after the opening of the bridge. We are very confident that with efficiency, operations savings and the right vessels we can continue to offer such efficient service. But over the next two or three years, based on the business plan, it will be anywhere between $50 million and $70 million or less.

Mr. Bill Casey: Are you the resident expert on Marine Atlantic?

Mr. André Pageot: I have colleagues who worked for a few years for them.

Mr. Bill Casey: Okay. Thanks very much.

The Chairman: Mr. Comuzzi.

Mr. Joe Comuzzi (Thunder Bay—Nipigon, Lib.): Thank you, Mr. Chairman. I'm here representing...and I apologize to Mr. Ranger. The last time we were at a meeting such as this I mispronounced your name and I didn't realize it until after the meeting. It has taken me a long time, Mr. Ranger, just to make an apology.

A voice: Was that in Washington, Joe?

Some hon. members: Oh, oh.

Mr. Joe Comuzzi: I hope it's accepted.

Mr. Louis Ranger: Thank you.

Mr. Joe Comuzzi: Mr. Chairman, I am more concerned at the outset about the technical process we will be reviewing in this legislation. As I am aware, and as some of the members on the committee are aware...as I look around the room there are only three of us at the table who have ever been involved in a thorough discussion of the marine act from its inception, like the heavy duty work that Mr. Keyes, I and someone else did.

I suspect, Mr. Ranger, that the document to which you referred at the outset is from 1995 and is referred to as the Keyes report. Isn't that correct?

Now, please correct me if I'm wrong, but I am advised that this legislation has already been proposed and is at the Senate for review under a bill called S-4.

A voice: No.

Mr. Joe Comuzzi: I'm asking that question.

The Chairman: I don't know about that. Is there anyone here who can confirm this?

Mr. Joe Comuzzi: What is Bill S-4, then?

Mr. Louis Ranger: Bill S-4 is a bill that amends liability limits in case of accidents by ships and in case of oil pollution. It is basically a technical bill for updating—

Mr. André Pageot: It's the former Bill C-58.

Mr. Joe Comuzzi: Thank you. You don't have to go any further on that. There is a transport bill in front of the Senate, but I heard this morning it was going to come to this committee and go back.

I think it would be appropriate, Mr. Chairman, given the constitution of this new transportation committee, that all the members have the benefit of some in-depth knowledge as to representations made by different parts of this country. I know, for one, that there were some questions asked by my colleagues...in the riding I represent there are people who are vitally interested who would like to make submissions with respect to this legislation.

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As it passed its way through the House in the last session, it passed the House, but there were several amendments that were voted against. It didn't find its way through the Senate. It didn't die on the Order Paper. It was refused passage at the Senate for obvious reasons, mainly, I'm told, because of the intransigence of the changes that were necessary for the port of Quebec and some of the down-river ports in Quebec and for the subsidies that would no longer be forthcoming to all of the eastern seaboard provinces—Newfoundland, Prince Edward Island, New Brunswick and Nova Scotia.

So I think this bill has some tremendous ramifications, and I would suggest very much that we have the benefit of hearing witnesses explain to the committee what their concerns are.

I leave that question with you, Mr. Chairman. What's your intention?

The Chairman: My response is that you've used up about five minutes, and it doesn't relate to the issue about which we are meeting today. If you wish to influence the committee to invite witnesses, it can be done at the end of the meeting or at the steering committee.

Mr. Joe Comuzzi: Thank you, Mr. Chairman.

Mr. Stan Keyes (Hamilton West, Lib.): On a point of order, Mr. Chairman, this committee dealt with it at the steering committee level. We dealt with it for 45 minutes. We discussed the pros, the cons and everything else. Out of respect for the members who serve on the steering committee and their decision, that decision has already been made.

The Chairman: Absolutely, but the committee may reconsider. That's why I suggest it could be debated at the end if the committee members so decide. But we have witnesses here—

Mr. Joe Comuzzi: As I said at the outset, I just wanted to get the process straight before I got into the substance of my questioning. That's the reason I asked to be a witness at this committee hearing, because the five-minute time limit doesn't offer me enough time.

The Chairman: We're on our way to spending a lot of time on an issue we haven't met today to discuss. I wish that questions would be asked of witnesses to provide information to assist members, in the decision they have made, to proceed the way we are proceeding. If the information leads the members to reconsider, then it'll be their decision.

I move on to Mr. Guimond.

[Translation]

Mr. Michel Guimond (Beauport—Montmorency—Orléans, BQ): Obviously, with the exercise we have undertaken here, we are in fact to a certain extent giving notice of our amendments. I am going to take part in this exercise. In any event, we will be tabling our amendments in advance.

I would like to look a little bit more at the technical and mechanical aspect of this whole thing. I am not a mechanic, but I would like to try to get the most out of this exercise.

Firstly, Mr. Ranger, how will this whole letters patent thing work? What type of timeframe are we looking at? Clause 8 of the bill reads as follows:

8.(1) The Minister may issue letters patent of incorporation that take effect on the date stated...

What time limit will there be if a community or a region expresses concerns regarding certain clauses, but not the principle underlying the bill? You see where I am coming from. Let me come back to the perimeter of the port of Quebec, since your answer does not satisfy me. If someone wanted to buy the Bay of Beauport, made an offer, and followed the commission process, how much time would one have once the letters patent have been issued to turn around and make a move?

Mr. Louis Ranger: There is a clause in the bill that stipulates that everything will come into force 150 days after passage of the bill; that is the limit we have set. We are already working on developing and drafting the letters patent, so that 150 days after the bill's passage by the House of Commons and the Senate and Royal Assent, all the bill's requirements will come into force. That is what we are aiming for.

Mr. Michel Guimond: What clause in the bill stipulates that port authorities must respect municipal zoning regulations?

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Mr. Louis Ranger: Several clauses deal with the Minister's power to make regulations. I would ask Mr. LePitre to give a more precise answer to your question.

[English]

Mr. Barrie LePitre (General Counsel, Legal Services, Department of Transport): There are provisions in the bill for port authorities to have land use plans and to develop them in a public way. We would expect that the land use plans would ordinarily in the port premises provide the necessary land use planning and development planning one would expect in the port community.

Since the port authorities are agents of the Crown in most of their activities, we would expect that in a general way they for the most part would not be subject to municipal zoning in regard to their activities and that the land use planning process and land use plan under the bill would provide the basis for land use development in the ports.

[Translation]

Mr. Michel Guimond: Perfect. I was expecting that kind of answer.

The Chairman: Excuse me, Mr. Guimond, but I believe Mr. Ranger wanted to add...

Mr. Louis Ranger: I could give you additional information. We are dealing here with Crown lands, in other words land that does not fall under municipal zoning plans. The bill stipulates that each port authority will make public a land-use plan as well as the process to be followed. It will invite comments and then announce its intentions based upon the comments received.

Mr. Michel Guimond: If the Communauté urbaine de Québec decided that part of the perimeter of the Port of Quebec should be set aside for tourism and outdoor recreational purposes and its great dream was to build a super wharf for container ships in the year 2097, how would all of this unravel? How does one go about ensuring that the child one is carrying will not be stillborn? How does one ensure that the child will live? How does one ensure that the pregnancy will go to term?

Mr. Louis Ranger: Mr. Pageot's hometown is Quebec City. He therefore is fully able to understand the example you have just given.

Mr. André Pageot: I was born not far from the wharves, that is to say in lowertown. Generally speaking, it would not be up to the municipality of Mirabel to decide to declare Mirabel Airport a tourist area or an agricultural zone or to turn the airport into a golf course. Where there is a transportation vocation, trade and transportation must prevail. The bill improves the situation in that two things are being put forward: the notion of primary activities, what are called core functions, and the notion of activities not tied to the port, the non-core functions.

This concept enables one to make a distinction between the real needs of the port that relate to its trade activities and the needs that are linked to the community. We will have instruments that will facilitate dialogue. The first instrument is such that the group that will take charge of the port will have to prepare a credible business plan that will be acceptable to the banks. Therefore, if one had grandiose dreams for the year 2050, they would not gain acceptance through the business plan by the representatives of the municipality, the province and the other interested parties.

There will also be dialogue at the second stage. Twelve months after the creation of the port authority, a land-use plan will be the subject of a public debate and the port authorities will be responsible for proving the existence of a real need. This is a tremendous improvement over the present system, and it allows for a much broader dialogue. As you might imagine, it is not every port from everywhere in the country that will come here to negotiate its land-use plan.

We have here a bill that sets out a very clear process enabling those who could not speak out before to be heard.

The Chairman: Thank you. Mr. Guimond, you will have another opportunity in the second round.

[English]

Before we start the second round, the list is Mr. Mark and Ms. Desjarlais.

Ms. Bev Desjarlais (Churchill, NDP): If I could refer my time for questions to Mr. Guimond—

The Chairman: There's no need for that. Everyone will have an opportunity to ask all their questions.

Ms. Bev Desjarlais: Okay.

The Chairman: So at the end of the first round, Mr. Mark, and then we start the second round with Mr. Cullen, Mr. Casey, and Mr. Guimond, I imagine.

Mr. Mark.

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Mr. Inky Mark (Dauphin—Swan River, Ref.): Thank you, Mr. Chairman.

One of the concerns brought to us by the municipality is the issue of grants in lieu of taxes. Any time you bring that to municipal governments, they always believe that the federal government has basically evaded the taxes that are paid by the rest of the citizenry. That is a real concern.

The question is, do you have a process in place for how to develop this grant? Is there a formula you're going to follow?

Mr. Louis Ranger: Yes, this was a major issue. It has been resolved by declaring that all Canada port authorities will be agents of the Crown, and in that capacity they will all be paying grants in lieu of tax.

We had the Federation of Canadian Municipalities come to see us as late as last week. They confirmed that they were very pleased to see that, and want to make sure that we do not depart from that position.

Mr. Inky Mark: I understand that's what will happen, but is there a process in determining the amount of the grant?

Mr. Louis Ranger: Who can help me with that?

Mr. Bruce Bowie: The government, through the Minister of Public Works and Government Services, has the overall responsibility for the Municipal Grants Act. In co-ordination with the President of the Treasury Board, it set up a committee with the Canadian Federation of Municipalities to do an in-depth review of that act and the procedures established under it for the payment of grants in lieu of taxes.

There were a number of issues that the municipalities were concerned about. They thought they were not getting a fair share of federal dollars for certain lands that were within their municipality.

My understanding is that the results of that review were well received by all parties and that most of the difficulties they had in terms of the formula that was used to determine how much would go to the municipality for a specific federal property have been resolved. Also, I understand that the Federation of Canadian Municipalities, as the representative of municipalities across the country, is satisfied with the results of that review. So the process has been adjusted.

Mr. Inky Mark: Thank you.

Mr. Roy Cullen (Etobicoke North, Lib.): I have two questions. First, I would like to pick up on something my colleague Mr. Bailey brought up, but maybe from a different angle.

There are four key criteria for a CPA port. Is that at a point in time? For example, you could have a CPA designated. Then let's say that two or three years later it may not meet one of these criteria. As for financial self-sufficiency, strategic importance, or a diverse traffic base, it's perhaps not very likely that.... But consider a link to major rail lines. Say, for example, that a port is cut off from a rail line. Is a CPA, once designated, a CPA for life, other than the four-year review you talked about? If it fails to meet the criteria, are there ways of dealing with that?

Mr. Louis Ranger: Paragraph 8(1)(a) talks about a port having to be self-sufficient and remain self-sufficient. So that means the present and the future. When we asked our consultants to look at the financial position of those ports, they were asked to ascertain whether they were self-sufficient and likely to remain so.

Mr. Roy Cullen: But we all know that sometimes, although it's very rare indeed, consultants get things wrong.

Mr. Louis Ranger: In a case like that, the law does provide for a situation in which a port would lose its status. There's a dissolution clause whereby the minister would remove their name from the schedule to the bill so that they are no longer a Canada port authority.

Mr. André Pageot: That's clause 56, which is on dissolution. Ports are fairly long-term investments, so we don't expect this to happen frequently, but if you need to modify it, clause 56 talks about dissolution, the process you have to go through to modify it. We will not be in a static environment.

Mr. Roy Cullen: Okay, so this will be a fairly serious measure and not one that would be expected or looked forward to.

Just skipping a beat for a moment, consider some very remote ports in Canada. They could be on the coast of Newfoundland or on the northern coast of Vancouver Island. The briefing material you provided says that more than 80% of marine traffic goes through only about 40 of our ports. It talks about us having really some port overcapacity.

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Say you have a small port on the coast of Newfoundland that has basically two or three users. No matter how hard the community tries to get the users involved, it really isn't going to make the grade. It just can't be sustainable.

Say it's the case that we have overcapacity. Has your department looked at all at possible scenarios? For example, say we have a pulp mill and a mine in a remote part of Newfoundland that are using this port. If it's not going to make it economically, are there any scenarios to look at where that traffic, freight, or bulk cargo might be directed? Also, does it make any sense at all?

Mr. Louis Ranger: Mr. Randy Morriss looks after the smaller ports. Perhaps he could give you a definition of what we would call a remote port. There's a very specific definition. He also dealt with several cases similar to the ones you described.

Mr. Randy Morriss (Director General, Port Programs and Divestiture, Department of Transport): We really have two categories. As for the remote ports, the essential piece of the definition is that the community relies on the fixed-wharf structure for its year-round resupply.

You mentioned ports in Labrador. As it turns out, as someone mentioned earlier, we recently made an arrangement with the Province of Newfoundland whereby we transferred all the ports in Labrador to the Province of Newfoundland, which will be managing the future of those ports. Of course, there are other remotes, as you pointed out, such as in B.C. and so on. The essential criterion for remote status is this business of the wharf being essential to its year-round marine resupply.

You mentioned the business of a couple of major users using a facility. Typically, we approach all of the users. This is a policy of inclusion. So anywhere in the category of local and regional ports, our regional negotiators go to all of the users, all of the stakeholders in the community, including the municipality or anyone who might be remotely interested or involved in the operation of a port. We attempt to broker some sort of an arrangement in which the local community would take on the port in return for some sort of a financial consideration. We have the flexibility with the fund to be able to help them out in that regard.

Frankly, we have not run into any instances in which we have a lot of users, or a number of users, with whom we have had significant difficulties.

On the other hand, we've had situations in which there's a single user, or little or no great deal of local interest. Then we could put it to sealed public tender. In one case, at Country Harbour we recently conducted a public auction for the sale of the facility. But that's essentially the last step in a continuum of attempts to involve all of the local community, the users and stakeholders, in any particular port.

Mr. Roy Cullen: As for those remote ports in which the communities rely on the wharf to resupply them year-round, are they treated the same way as these other ports you just mentioned?

Mr. Randy Morriss: The Department of Transport undertakes to maintain those remote ports.

Mr. Roy Cullen: Look at the other ports, such as those that have one, two, or three users. As for the port divestiture fund, I can see you're saying that the result so far is that it's working out quite well.

For a community to look at that, it's a one-time payment. Say you have a structural problem in the port. Say 20 years from now there's suddenly a huge problem. I guess if the community accepts that, then it sort of says they think it's a good idea. Do you see any problems downstream if the port is just structurally not sustainable?

Mr. Randy Morriss: There are a couple of things mixed into the response to your question. First of all, we provide a number of steps in the port divestiture fund to allow us to provide money for various things.

First, when we are doing the transaction, we approach the community and provide them with a package of information.... This is the entity or group that's interested. I say the community, but it's the group. We provide it with all of the engineering data, all of the financial data around the port as we have operated it, all of the environmental data and the title documentation or real property documentation.

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We provide that package to the group because this is not an exercise in a classic sort of business negotiation. We are trying to be completely upfront with all of the material we have at the particular port. We provide that to the group members. They analyse that and typically do some due diligence on it. If they find holes in our material, they ask us and we provide other data or conduct studies. We also have money to provide them with the ability to conduct feasibility studies if they're concerned. We also ask that they provide us with a business plan of how they would operate the port so we can help them be positioned to be successful. It's not our objective to put them in a position to be unsuccessful.

Mr. Roy Cullen: Good, thank you.

Mr. Bill Casey: On the regional ports, when the process is complete does the federal government still own the property or does that go too?

Mr. Randy Morriss: No, in the public port divestiture program it is a title transfer from the federal Crown to the entity.

Mr. Bill Casey: So the federal government's completely done with it.

Mr. Randy Morriss: That's correct.

Mr. Bill Casey: What financial and legal obligations are transferred to the entity that takes over the regional port that weren't there before?

Mr. Randy Morriss: If we have any leases and licences under way at the time of transfer, we assign them to the new entity so once again we don't disadvantage any businesses that might already be operating there. Essentially the new leases and licences are administered by the new entity.

But typically as well, we involve all of the users of the port in the transaction if they wish to be involved so they become part of the user group that forms the entity.

Mr. Bill Casey: What costs will the entity incur that were previously carried by the federal government?

Mr. Randy Morriss: The entity is responsible for all costs associated with operating the port from the time of the transaction. But as I said earlier, one of the things we do is conduct this business planning process with the entity and then negotiate with it within a certain set of limits that are driven by a calculation we do, what financial consideration we can provide to the entity to make it viable over the long term. It's our objective to ensure that viability is not just a tail-light warranty sort of thing.

Mr. Bill Casey: That's appropriate. What happens if a regional port gets into financial difficulty five or six years down the road and can't make it? My colleague over here was circling that question.

Mr. Randy Morriss: There are a number of options we have. We divest ports in two ways, either as operating ports or as non-operating ports. I assume you're talking about an operating port because it would continue to operate as a normal port.

In the divestiture documentation there is an operating agreement we enter into with the entity. In that operating agreement there is an option for the Crown to recover the port at nominal value if this catastrophic situation were to develop. We would then move to re-examine the possibility of some other group taking over the port or, failing that, putting it to the public tender process if it were no longer interested.

Intuitively, if the port were in a situation where it was not viable, chances are the users would have either decided not to operate there any more or it had become derelict for some reason. It would then go to the public tender process, public auction or whatever.

Mr. Bill Casey: You said Country Harbour was auctioned off. How much did you get for Country Harbour?

Mr. Randy Morriss: We received $200,000.

Mr. Bill Casey: Was that approximately what you thought it was worth?

Mr. Randy Morriss: That was a bit more than we thought we would get.

Mr. Bill Casey: I saw some of the ports on your list that I know personally are completely abandoned and haven't been used for maybe 100 years. In fact, the town where I live, Amherst, is the number one port and I don't think there has been anything in there since 1890. What do you do in a case like that? Do you just auction off the property?

Mr. Randy Morris: It really depends on what the situation is at the port. Shortly after the national marine policy was announced, we de-proclaimed the public harbour status at 199 public harbours across the country which were essentially unused. The minister had regulatory authority over bodies of water that we either had once regulated but didn't need to any more or just didn't need to regulate.

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There are slightly more than 100 public harbours remaining under the minister's regulatory authority. We will be looking at those as the divestiture of the facilities progresses, to undoing the public harbour status of those as well. That's the one side.

The other side is that where we have ownership of land, under this program we're obligated to divest that land in some way to eliminate the crown's legal liabilities around particular structures. If there is no interest, we have in some cases actually demolished the old Transport Canada wharf and rendered it to a green fill state.

Under environmental law we're obligated to bring it to.... We can't get rid of contaminated land. We can't dispose of contaminated land. We take out the structure so that there is no residual legal liability to the Crown.

The Chairman: Our questions are getting longer and our answers are getting longer. The list for speakers is as follows: Mr. Guimond, Mr. Bailey, Mr. Comuzzi, Mr. Grose, Mr. Morrison, Mr. Mark, Mr. Cullen. I make my point.

Another point I'd like to make is that this is an information session that we have today. If there are members who must be somewhere else, there's no requirement to have a quorum, because there will be no votes today. If anyone disagrees with that, speak up now. Therefore members who have to be somewhere else are able to do that.

Mr. Guimond.

[Translation]

Mr. Michel Guimond: Mr. Pageot, I would like to finish with the question I brought up earlier before moving on to the second set of points I wanted to make and to the amendments I will be tabling.

You alluded to clause 49 that stipulates that port authorities will be required to develop detailed land-use plans. It seems you strongly hope that meetings will be called and that explanations will be given on the future of the land. A port authority could very well say that it wishes to keep the land in view of one day being able to accommodate container ships. But if one were to give the same answer that I was given, as soon as a client is lined up, work could begin the very next day. But that is all just talk. What penalties are provided under clause 49 for cases where one might be stalling one type of use in view of some other use that might be in the offing?

Mr. André Pageot: That is not a legal matter. That is the reason why we set up community-based management boards. We will be relying on businessmen and the community of Quebec City which, like Vancouver, will prosper if there are commercial activities, trade and jobs.

The flip side of your question is that if, at the first request, we allowed the community to build condos and the port disappeared, we would have to go elsewhere and build railroad lines and a rail infrastructure, which would cost us much more. We are putting our trust in locally-based decision-making, by business people who will have been appointed, who will assume responsibilities towards the community and who will be able to judge what is important for the community. Obviously, we do not want to replace the Ottawa bureaucracy by another one that will take out a club every time we do not agree with its decisions.

Mr. Michel Guimond: My second series of comments deal precisely with the make-up of these boards, as you may have imagined.

Paragraph 8(2)(f) (ii) says:

(ii) one individual appointed by the municipalities mentioned in the letters patent.

What will we do if we are faced with several municipalities who are not able to agree amongst themselves or with a large municipality that tends to want to impose its own preferences? In the case of the Port of Quebec City, there would be the city of Quebec, whose facilities are situated mainly in the town of Beauport, Sillery and perhaps Sainte-Foy. I would have to check. If a city wanted to extend its hegemony, what would the appointments process be? That is my first question.

In Quebec City—and I imagine that the same situation exists elsewhere in Canada—there is a special entity: it is the municipal authority. Will we be asking the municipal authority to choose?

• 1640

Mr. Louis Ranger: First of all, the letters patent will clearly establish those municipalities that are involved.

Secondly, you asked what would happen if the municipalities failed to agree. To my knowledge, nothing would be imposed upon them. Whether it is one municipality or four municipalities, it will be up to them to make a decision.

Mr. Michel Guimond: But does the clause say that?

Mr. Louis Ranger: No, there is a representative for the municipalities.

Mr. Michel Guimond: Fine. According to what you have just said, these municipalities will decide whether there will be one or four representatives. Is that correct?

Mr. Louis Ranger: No, these municipalities will agree amongst themselves.

Mr. Michel Guimond: Precisely. If the city of Quebec says that 80 per cent of the land is contained within its territory, then how would one go about imposing the vote?

Mr. Louis Ranger: It is not a matter of imposing anything.

Mr. Michel Guimond: Your choice...

Mr. Louis Ranger: The same problem will arise in the case of the users. Several representatives will be representing the users and it is the users who will have to define the processes. User associations will decide who they want to appoint.

Mr. Michel Guimond: Let us talk about the users. Paragraph 8(2)(f) (iv) reads as follows:

(iv) the remaining individuals nominated by the Minister in consultation with the users selected by the Minister...

Am I to understand that it is the Minister who will be choosing the users, who will in turn be choosing the directors?

Mr. Louis Ranger: The Minister has an obligation to consult, but in the case of the users, appointments are made by the Governor in Council.

Mr. Michel Guimond: But the Minister might choose to not consult certain users. Is my understanding correct? Is that what the text says?

Mr. Louis Ranger: The letters patent will, in most cases, identify the classes of users who should be consulted and, in order to do this, the Minister could get in touch with the associations. That will vary from one case to another, but processes will be established so as to reach as many users as possible and to carry out the broadest possible consultations.

Mr. Michel Guimond: Clause 15 deals with the qualifications one must have to be a director:

15. Directors of a port authority shall have generally acknowledged and accepted stature within the transportation industry or the business community...

Mr. Pageot, this is why you corrected the term you used earlier, when you spoke only of businessmen. There are more and more women in the business community.

Mr. André Pageot: I corrected myself.

Mr. Michel Guimond: Yes, you talked about business people. I noticed that you stumbled before catching yourself, but I will not hold it against you. You are a good sort in any event.

Mr. André Pageot: I do not have to worry about getting reelected, but you are perfectly right.

Mr. Michel Guimond: And the clause goes on to say:

[...] and relevant knowledge and extensive experience related to the management of a business, to the operation of a port or to maritime trade.

I am asking myself a question relating to the categories of persons who work in certain fields and this is why the formulation I will probably be suggesting to my colleagues will emphasize solid experience in a field related to harbour activities. It is not just a matter of semantics. Take for example someone who is experienced in the area of environmental protection. You state in subsection 4(d) that one of your main objectives is to:

(d) provide for a high level of safety and environmental protection.

One might consider someone who is experienced in environmental protection or representatives of the tourism industry, for example, since there is more and more talk about the development of the cruise industry. One could consider someone who is specialized in land-use management. I would have difficulty establishing a link with the definition as it stands, if we do not stipulate that it must be in the marine sector. I do not see how such a person could be appointed under the clause.

Mr. Louis Ranger: The business person category is quite broad, as is the business management criterion.

Mr. Michel Guimond: Very well. In any event, that is what I wanted to hear you say.

Mr. André Pageot: I believe you are right: the Act is permissive.

Mr. Michel Guimond: Thank you, Mr. Chairman.

The Chairman: Mr. Bailey.

[English]

Mr. Roy Bailey: Thank you, Mr. Chairman.

I appreciate what you're doing here today; I find it tremendously interesting. In one of your previous answers there was one word you used that I have to come back to: “planning”. It seems to me that in much of the transportation across Canada there's often little or no planning. If you don't believe that, I invite you to come and visit me where I live at present. I can assure you there's no planning, so you would be a welcome guest there.

• 1645

With the ports going into a type of independence—and they are totally dependent on the goods getting to the port by railway or highway—wherein now lies the responsibility of the other forms of government in meeting the demands the port has since it's now a commercial enterprise and not a government enterprise? Obviously its success is in rail and good highway transportation. How far back from the ports are you people prepared to go in your influence?

Mr. Louis Ranger: A port that is healthy, a port that works well, serves customers well, should attract a good rail line, should attract other investments which support that port. I guess that's the driving philosophy there.

But more and more—I believe Mr. Cullen touched on that the other day—reports happen very often to be from urban areas. When we talk about port congestion, it's not that we want to get into the jurisdictions of others, but it just happens that sometimes urban congestion does affect the performance of our national or international systems. So we're quite concerned...and it's not empty words when we say we want to work in partnership with the municipalities and the provinces. I know this requires a lot of effort, but in the field of transportation perhaps more than anywhere else there are relatively good partnerships with municipalities and provinces, certainly more than in other areas.

But I come back to my basic point. A port that is healthy and dynamic should attract other investments which support it.

Mr. Roy Bailey: Do you think after Bill C-9—and I think it's obvious where it's going: it's going to become law—the ports will have the same clout, in their state of semi-independence, in pursuing pressure on the railways and the highways within the municipalities, within the provinces, as they had previously, or will they have more clout?

Mr. Louis Ranger: More and more the government is getting out of those day-to-day decisions. CN is doing very well. It is entirely private now. It wants to do deals in many places and with many ports. There's a lot of energy there, and I think it's all going in the same direction. They are working very closely.

When the Delta port was opened, we didn't have to tell CP or CN, look, a port is opening; maybe you are interested. All this happened quite naturally. Together with the port, they are now mounting an exceptionally good service all the way from Vancouver to Chicago, competing very well, thank you very much, with other railways in the U.S.

To answer your earlier question, let's not forget there will also be municipal and provincial representation on those boards, which surely should facilitate the planning you mentioned.

Mr. André Pageot: We don't keep in memory that our ports are often landlords. They service customers. They provide a base where you have a long-term lease. So the real clout is with the users—the grain people, the iron ore people, the potash people—and their clout will be better with this proposed act, because they will be able to negotiate a lease. They will be able to have lower costs, because there will be less bureaucracy and so on. We should be careful, because very often 90% of the properties are leased to the private sector. It is the users that will have the clout.

Mr. Joe Comuzzi: To answer your question from Mr. Bailey earlier, I can only say I've been informed by the port I represent, the port of Thunder Bay, that if you're going to move any grain through that port it's going to be more expensive as a port than as a harbour.

Mr. Roy Bailey: We're going to have to say in that.

Mr. Joe Comuzzi: I know you're going to have to say in it. Mr. Bailey, I just wanted to put that word in here.

I realize now, Mr. Chairman, what I had missed about this transportation committee, and that's listening to the speeches by Mr. Guimond.

• 1650

Let's talk about ports, Mr. Ranger. All of the harbour commissions in Canada, with the exception of one, that meet the criteria will be bound to become a member of the Canada Ports Corporation. Is that correct?

Mr. Louis Ranger: Yes.

Mr. Joe Comuzzi: You said earlier that you wanted to get some consistency in the administration of all ports in Canada. Why would you exclude the Port of Hamilton and under subclause 10.(2) allow the Hamilton Harbour Commission to remain a harbour commission pursuant to the Harbour Commissions Act, and all other harbour commissions in Canada will be forced to become a port?

Mr. Louis Ranger: Hamilton does meet all the criteria.

Mr. Joe Comuzzi: That's not the question.

Mr. Louis Ranger: Yes, I know. We haven't excluded it. The only additional condition is that it is not the Minister of Transport who can declare that Hamilton is a CPA. It has to be following an application by the harbour commissioners.

Mr. Joe Comuzzi: Right. Let me read you the section. Have you read it? It says:

The Minister may not issue letters patent of continuance in respect of the Hamilton Harbour Commissioners constituted pursuant to the Hamilton Harbour Commissioners' Act....

Now, if we'd like to be fair across the country with all the harbour commissions now in existence, why wouldn't we make the same equitable arrangement and give each harbour commission operating today, provided it meets the criteria, the same rights as the harbour of Hamilton? Why not?

Mr. Louis Ranger: We've had representations to that effect.

Mr. Joe Comuzzi: That's not the question. The question is, why wouldn't we make it available to all of the harbour commissions in Canada?

Mr. Louis Ranger: Sir, the treatment of Hamilton was a political decision.

Mr. Joe Comuzzi: Oh?

The Chairman: You have the answer. Do you have another question?

Mr. Stan Keyes: Can I have supplementary, Mr. Chairman, since I'm from Hamilton?

The Chairman: I'll put you on the list.

Mr. Joe Comuzzi: You have to get on the list before you can speak.

It was a political decision and you don't agree with it.

Mr. Louis Ranger: I didn't say that.

Mr. Stan Keyes: He wasn't asked that question.

An hon. member: He has to watch his job.

Mr. Joe Comuzzi: Were you asked for your opinion, Mr. Ranger?

The Chairman: It's an unfair question, and I won't allow it.

Mr. Louis Ranger: This decision was made by the previous transport minister and it is still in the bill, as you know.

Mr. Joe Comuzzi: What is your opinion, then?

Mr. André Pageot: The objectives in the bill are clear.

The Chairman: Just a moment. Order. A question was asked.

Mr. Joe Comuzzi: Perhaps that's an unfair question.

The Chairman: Order, Mr. Comuzzi. I have the floor.

Mr. Joe Comuzzi: I'm sorry, Mr. Chairman.

The Chairman: A question was asked. The answer was that it's a political decision.

Mr. Louis Ranger: That's correct.

The Chairman: We'll move on to another question, please.

Mr. Joe Comuzzi: Okay.

The seaway: I understand it is the intention under the enabling legislation to turn the seaway over to a users' group.

Mr. Louis Ranger: That's correct.

Mr. Joe Comuzzi: A couple of years ago Transport Canada entered into a letter of intent outlining the terms and conditions of how the users' group would take over. There would be no sale of the seaway. They would take over the operation of the seaway with the exception of long-term maintenance. Is that correct?

Mr. Louis Ranger: I will answer your question, definitely, because I am the department's negotiator with the users. I met them as late as yesterday.

Mr. Joe Comuzzi: We'll get up-to-date information.

Mr. Louis Ranger: What we are negotiating, building on the letter of intent, is a management agreement with a not-for-profit corporation. All the assets remain with the federal government. They are going to manage it. The assumption here is that they can do it more effectively than under the current system.

A significant reserve was built up over the years. That money is available for capital investments that will be fully sizeable, actually, in the coming years. What I'm negotiating with users is an approach where there will be incentives and penalties so that they stay on their toes and realize the cost savings that they believe they can achieve.

Mr. Joe Comuzzi: The users, then, are nine corporations in Canada, some of whom are Canadian-owned corporations and some who are not Canadian corporations.

• 1655

Mr. Louis Ranger: That's correct. The majority are Canadian.

Mr. Joe Comuzzi: We will be turning over one of our assets in Canada to a non-.... Let me be very specific. Part of the management team will be non-Canadian corporations.

Mr. Louis Ranger: The users that I'm negotiating with include Fednav, which is a Canadian firm—

Mr. Joe Comuzzi: A world-wide corporation.

Mr. Louis Ranger: —but 50% of their business is with U.S. ports.

Louis Dreyfus is an American company represented in the group that I had met with, but there would be a board originally made up of Canadians—

Mr. André Pageot: There is a distinction. We are not turning over the available firms. We are creating—and our lawyer could confirm this—a corporation.

So the assets are not passed to Stelco, Dofasco—

Mr. Joe Comuzzi: I completely understand that.

Mr. André Pageot: They, rather than the users.

Mr. Joe Comuzzi: The negotiations, in its present form, are to turn the assets, which amount to $620 million—

Mr. Louis Ranger: We're not turning assets.

Mr. Joe Comuzzi: You're turning the assets over for usage. They will administer the assets.

Mr. André Pageot: The operations.

Mr. Joe Comuzzi: The operations.

Mr. André Pageot: And the maintenance.

Mr. Joe Comuzzi: They don't have ownership, but they will have complete control over the assets. Am I correct?

Mr. Louis Ranger: They will operate the seaway. They will commit to opening the seaway for x number of days during the year. At the beginning of each year they will agree to deliver a capital improvement package that—

Mr. Joe Comuzzi: You will be turning over the asset, port control, to this group of people.

Mr. Louis Ranger: They are managing it for us in the same way that—

Mr. Joe Comuzzi: You're turning it over to manage.

Mr. Bruce Bowie: They will have to operate in accordance with the terms and conditions of the management agreement which will be established—

Mr. Joe Comuzzi: In this letter of intent.

Mr. Bruce Bowie: The letter of intent essentially defines their terms and conditions that they want to satisfy in the agreement. The purpose of the negotiation is to define both what they're coming with and what the government will establish in their terms and conditions for the operation.

Mr. Joe Comuzzi: Would it not be fair then that the letter of intention be disseminated amongst all members of the committee so they can assess the value of that transaction when we're turning over half of a billion dollars' worth of assets to—

Mr. Louis Ranger: If the letter of intent was the final say on this, I would not have met with them yesterday.

We're still in the middle of negotiations. It's a complicated deal, as you can imagine. For example, the users will be responsible for seaway operations, not for all the other non-navigational assets that are associated with the seaway. There are bridges and tunnels and a number of other things that we're separating out.

So we have to negotiate all this and then see how this translates into streams of costs and revenues over the next five years. It's quite an exercise. Once we've established this database, we can sort of finalize the deal, but we don't have it yet.

Mr. Joe Comuzzi: Mr. Ranger, all I'm saying.... I don't dispute that you're looking after our very best interests, but in a deal dealing with a national asset such as the seaway—

I don't hesitate even for a moment that you're looking after our very best interests, but since it's a national asset that's worth in excess of $500 million, don't you think that this type of transaction should come before a committee of Parliament to assess its value on behalf of the citizens of Canada?

Mr. Louis Ranger: The process we're following now—

The Chairman: That's a decision of government.

Mr. Louis Ranger: That's right.

The Chairman: Sorry, it's not your decision.

Mr. Louis Ranger: You're correct.

Mr. André Pageot: May I add, on the international obligations of the country?

All the international obligations—freedom of access, freedom of navigation, no discrimination on the basis of the flag, and so on—will be fully protected.

Mr. Joe Comuzzi: I don't think so.

Mr. André Pageot: We are dealing strictly with the actual operations by people who have knowledge of shipping and joint interest in keeping a competitive system, because those would be the people that would stop at the port of Thunder Bay and those would be the people that would stop in Montreal and Baie Comeau, and they will want to do it on a competitive basis and at low cost.

If there are low costs, then they will be more competitive and you will have more traffic in Thunder Bay than in Vancouver.

Mr. Joe Comuzzi: I don't think we can handle that.

The Chairman: Thank you, Mr. Comuzzi. Mr. Grose.

Mr. Ivan Grose (Oshawa, Lib.): Like my colleague opposite, the more I hear, the more questions I have.

• 1700

I represent the recently famous port of Oshawa.

I have been under the impression—not being on this committee through all the labour you've done here—that the size of the port had something to do with CPA status. If you had a small reasonably run port that made money, and had 30 or 40 ships a year, would that qualify for CPA status?

Mr. André Pageot: We never found an absolute criterion. A question like size—you are right—is an important factor. There is also the question of region, where you have Toronto and Hamilton in the same region as major ports with the same access and national network. You have a combination of factors. At the end of the day you have to make a judgment. There is no absolute number that can be defined. Otherwise, we would just have a computer and we wouldn't need to decide.

Mr. Ivan Grose: Thank you. You answered my question very well.

I'll walk you through a scenario. There was a point made here that you will not transfer polluted land or a polluted harbour. Supposing that the port doesn't qualify for CPA status and has a $30 million to $50 million pollution problem, what then?

Mr. Anrdé Pageot: I think we just encountered that in a transaction on a Newfoundland dockyard, which was an historical railway yard and which was used by Marine Atlantic over the years as a subsidiary. What we did was conduct an environmental study before the transfer. We got a full assessment of the obligations encountered by previous owners, depending on who operated and whose responsibility it is.

We have a full process that we apply in small ports and so on, where before a transfer is done we will do an assessment, we will make a judgment on the responsibility in terms of who has created pollution, who is responsible and who is liable. We will fully assume the obligations we have under the environmental act. However, if you have a site where you have had industrial activities, we may not say we will sell it for condos where it will cost you five times more for condos. We will have to exercise judgment on the obligations we have.

Mr. Ivan Grose: In other words, it would have to be an agreement on cleaning up the pollution problem, either by the federal government before it transfers the port—

Mr. André Pageot: We're meeting the full obligations under the environmental act. Sometimes you don't need to take remediation right away, depending on the responsibilities you have.

Mr. Ivan Grose: Thank you. You have answered my question very well.

The Chairman: Thank you, Mr. Grose. Mr. Morrison.

Mr. Lee Morrison (Cypress Hills—Grasslands, Ref.): Mr. Ranger, I'd like to follow up briefly on one of Mr. Comuzzi's questions.

What course of action would you recommend to a harbour commission, whether it's eligible for CPA status or not, to attain its status quo in the same fashion that Hamilton did? What formal action could they follow?

Now I'll ask a serious question.

Mr. Louis Ranger: I don't think you'll get any advice on that.

Mr. Lee Morrison: I think you could probably give it.

You are probably familiar with the port of Kitimat and their specific problems. They have three users. They've been a very sustainable, very viable port. They're doing very well, thank you very much. Here is another example of an organization that would rather not be in the mix with everybody else.

Willy-nilly they are going to become a public port. There are a number of concerns, not the least of which is that as a public port they will be excluded from the Navigable Waters Protection Act. I understand they are going to lose their part-time harbour master. They won't have a harbour master. They have three users. There are a lot of various problems.

Has anybody among you looked closely at Kitimat's problems, at the information they've presented? Is there anything that can be done within the act to help them out?

• 1705

Mr. Louis Ranger: Mr. Morriss will answer that.

Mr. Randy Morriss: Kitimat is a declared public harbour and therefore falls under the regional local port stream of things. But that said, the crown owns no shore-side facilities at Kitimat, so—

Mr. Lee Morrison: I know.

Mr. Randy Morriss: —the only responsibility the minister has is the regulatory authority currently exercised under the Public Harbours and Port Facilities Act for what is happening on the surface of the water in Kitimat.

We have not yet put together the regulatory initiative to de-proclaim Kitimat as a public harbour. That's still under review in the ministry. But when and if that happens, there is of course a consultation period required in the regulatory process through which all of the views of the folk in Kitimat can be heard and put into the mix.

I can tell you, though, that the idea of de-proclaiming a public harbour does not prevent the local users of that harbour—there is nothing in law—from hiring someone to do the job of a harbour master, whose essential duty is to act as the eyes and ears of the management of the port and to make the right calls at the right time if there are various statutes being violated. You require no statutory authority to have that done. The only thing that happens when a public harbour is de-proclaimed is that it ceases to fall under the federal statute that permits us to have harbour masters now.

Mr. Lee Morrison: But doesn't subclause 69(3) specifically state that a minister may appoint the harbour master to one of these ports?

Mr. Randy Morriss: Okay. I understand your point.

The public ports section in Bill C-9 is the bridging mechanism by which we will continue to operate the residual public ports until they are divested. We put the appropriate authorities into Bill C-9 because Bill C-9 repeals the Public Harbours and Port Facilities Act. We had to have a bridging mechanism by which the minister could continue to do the things he does now under the Public Harbours Act until such time as the public harbours are divested.

So yes, you are quite right when you say that it does give him that power, but it is the bridging mechanism—it's a continuance provision, if you will—to allow him to continue doing what he does now under the Public Harbours Act.

Mr. Lee Morrison: Let us hope he uses it for the sake of Kitimat.

The Chairman: Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chairman.

The transfer of port authorities and the creation of port authorities reminds me very much of the transfer of airports and the creation of airport authorities, which I'm very familiar with. I know that with airports there's a fund called the ACAP fund and I think with ports it's called the divestiture fund.

Mr. Louis Ranger: Yes.

Mr. Inky Mark: Will this fund be replenished and is there a timeframe in terms of accessibility of retrieving dollars from this fund?

Mr. Louis Ranger: It's a fund of $125 million. It's been in place for quite some time already. We've used only $25 million. There's still over $100 million left in that fund. It's a bit early to talk about replenishing it when we've hardly used 15% of it.

Mr. Inky Mark: If I may, I will ask a short question. Will there be any sunset clauses written into the transfer process of these ports?

Mr. Louis Ranger: I'm not sure I understand the question.

Mr. Inky Mark: This just follows up on the concern about what happens to a port if the port is not viable and sustainable down the road.

Mr. Randy Morriss: The public port divestiture program is over six years long. We're in the middle of the second year, so it has another four years to run. At the end of that time our objective, of course, is to have all of the public ports gone. If we don't we'll have to reassess it at that time and see what we might wish to recommend at that point. Our objective of course is to have all of the assets divested by 2002.

Mr. Louis Ranger: I would also like to add that the review of the act in five years will roughly coincide with the end of that program, so I think that will also be an opportunity to review the whole regime.

The Chairman: Thank you, Mr. Mark. Mr. Keyes.

Mr. Stan Keyes: Thank you, Mr. Chairman.

This is just a short intervention. As the parliamentary secretary, I don't like to say too much unless it's necessary, but I just wanted to say that I am the member of Parliament for Hamilton West, and the Hamilton Harbour Commission is in my riding. I want to assure my friends and colleagues on this committee that the Minister of Transport has every intention to put all harbour commissions on the same level playing field.

• 1710

The Chairman: That's been cleared up.

Mr. Stan Keyes: Stay tuned.

The Chairman: Thank you.

We have 20 minutes left. I have one request for a third round. I will take names for a third round now. We get on the list, but we don't get on the list after we start.

So Mr. Comuzzi and Mr. Guimond. Mr. Cullen is already on. Anyone else? Those are the only three names for the third round. We'll begin with Mr. Cullen.

Mr. Roy Cullen: Thank you, Mr. Chairman.

Two issues, briefly. One, I wanted to follow up the member from Thunder Bay and pose a question with respect to the management of the seaway. Will there be a clause in the contract that will call for the seaway managers to protect, repair, renew, and reinvest in the seaway assets?

Mr. Louis Ranger: Absolutely. There's a whole process that defines how we go about deciding on the priorities for capital investment. There will be a capital committee set up, made up of government officials or government representatives and the users. Each year we will decide exactly what we intend to do, and then the non-political corporation will manage it for us. There will be penalties if they don't deliver at the price we agreed to initially, and so on.

Mr. Roy Cullen: Okay. Thank you.

I'd like to move back very briefly to what I call these regional ports, these—let's call them marginal ports. Not the remote ports, but these other ports. What you have told me has made me feel a lot more comfortable, but I have some empathy with some of these areas where these ports may be problem ports or marginal ports. The briefing material you have given us says that the divestiture fund will ease the transition over a six-year period to a financially and commercially responsive system.

Many of these, as you say, will be solved through auction or through communities pulling together and coming up with a reasonable business plan. But with the odd 5% or 10%, or whatever it is, where there's a permanent gap in terms of the competitiveness of such a port, will the divestiture fund provide ongoing subsidy, or will someone come along at some point in time and say “Sorry, this port just doesn't seem to be able to work; it will have to go”?

Mr. Randy Morriss: I can answer that. It should be self-regulating in the sense that when the initial negotiations are done, we come to a mutually agreed amount of money that is required for the crown to provide to the entity for the foreseeable future. All of the elements of the operations of the port are factored into that equation when we do the financial negotiations, when we produce the financial material for the port.

For example, some maintenance is in there, ongoing maintenance, future maintenance. If there's some serious work that's going to have to be done in the future at some point in time, we've done a net-present-value calculation of that.

When the amount of money is finally decided, that can be provided, depending upon the terms of the deal, as an upfront payment to the entity. The entity is then expected to manage that, because after all it is title-transferred. That's the financial consideration for the deal. They are then expected to manage that money in such way that they would have sufficient funds to be able to make them viable over the long term.

As I said before, it is an attempt to sort of gaze into the future and come up with a reasonable amount of money.

Mr. Roy Cullen: I understand all that, I think. What I'm saying is that if it becomes clear, after you go through all of these machinations and you look at a business plan and the community and you put it to tender at a public auction, that in the long term the port is really not sustainable without some federal government support through to eternity—and I think the wording of this says this is a transition to an economically and financially viable port system—in those rare circumstances where this just won't be there, then I think what you're telling me, if I understand it, is that that port would have to close and the traffic going through it would have to move through another port. Is that not so?

• 1715

Mr. Randy Morriss: Your original question was whether or not this would be an ongoing subsidy fund. The way the fund is currently contemplated it is not. It is a negotiated transaction.

Mr. Roy Cullen: Yes. So if they were to allow the present values and they bring in all the stakeholders, in the long run it just is not workable. That's what I'm getting at.

The Chairman: If common sense predicts it's not viable, it shouldn't operate, how do we close her down? Let's be direct.

Mr. Randy Morriss: Our position essentially is that the traffic will determine whether or not the port continues. If the users are still using the port and they are paying appropriate tariffs to the entity or whatever it is, it should remain viable. If all the business goes away, then the entity essentially implodes.

Mr. Roy Cullen: I don't want to belabour this point. I think I understand all that. But if you're talking about tariffs, you get to a point where it is economically not feasible for the users, the major shippers, and they may then say, well, really, it makes more sense to move it over to this other port. If this is a transition fund, it seems to me at some point there will be some marginal ports which will be determined to be non-viable. Correct me if I'm wrong, but it seems to me that's saying that port will be closed.

Mr. André Pageot: First keep in mind that the wharves sometimes have a life of anywhere from 20 years to 50 years, so there is enough time for users to check. Then you have to maintain a level playing field. If you have 50 sites where you have commercial discipline, you will have to keep a balance.

That's why the clause in the bill, as amended by the committee, does not put in a sunset. We will have to get a review mechanism, but the current philosophy of this bill is that we will have a level playing field and commercial discipline; and commercial discipline means making choices once in a while. This is what we do in any business. We cannot guarantee for the next 50 years there will never be any choice made.

Mr. Roy Cullen: I understand that. It seems to me if you're saying we have over-capacity at some point it makes sense. Presumably one could look at some reasonable scenarios and say if that port does shut down, the shippers have some reasonable options. Presumably someone in the department is looking at that. In the department you would know roughly what ports are at risk, I would suspect.

Mr. André Pageot: That's why the review is there. If you watch what other countries have done, in New Zealand, where they went much further than we did, there have not been very significant closures.

The Chairman: Mr. Comuzzi.

Mr. Joe Comuzzi: Let's get back to the seaway. On Mr. Cullen's question, isn't the dilemma, Mr. Ranger, that when we turn over the management of the seaway, this user group will retain profits for future development? It's proven that the seaway is a profitable enterprise, but in the event of some serious maintenance problems, the Government of Canada and the taxpayers of Canada will still be responsible.

Mr. Louis Ranger: Absolutely. First of all, this is a not-for-profit corporation, which generally means we stay there. Definitely that's understood.

I don't think I need to tell you that, sir. You also have the audited reports here. There is a Comuzzi report on the seaway, and I know what—

Mr. Joe Comuzzi: We will have Mr. Keyes' report directly.

Mr. Louis Ranger: I don't think I need to tell this committee how....

The seaway has to be the most precious transport infrastructure we have. At a time when we debate climate change and all those things, ships remain the most energy-efficient mode of transportation.

We're going to ask users, those who care most about the future of the seaway, to manage it for us. We're not exactly putting it in the hands of people who don't care.

Mr. Joe Comuzzi: Absolutely.

Mr. Louis Ranger: To answer your question, yes, should we have bad year after bad year—tonnages are down and not enough revenue is generated to cover all the costs—we will absorb the cost.

Mr. Joe Comuzzi: What concerns me as an aside, Mr. Ranger, is that in the estimates I saw they were figuring a maximum of 33 million tonnes through the seaway. If that were the case we should pave it over now, because it has potential for huge gains. So I'm not concerned about that.

Have you considered that the best customer of the seaway is the United States? Some 53% of all the business that goes through the seaway has its genesis in the United States.

Mr. Louis Ranger: Most definitely.

Mr. Joe Comuzzi: And they are not in favour of this user group.

• 1720

Mr. Louis Ranger: I would not say that. In fact, they too are trying to develop a new model for the way they manage. They have what they call a PBO, performance-based organization, that will be given targets and will be judged on its performance. That's exactly what we are trying to do on the Canadian side.

It does not exclude some longer term option of a binational agency, not at all.

Mr. Joe Comuzzi: But as it's presently structured, they're not in favour of turning over the Canadian portion. Not that they have any say over the matter, but, although they're the largest single customer, they're not in favour of turning over the management. And we have some international and binational obligations to the United States on tolls and so on.

The reason for that question is, are you further aware, in your negotiating on the seaway, that we are so vulnerable on Lake Superior with respect to shipping out of any product on Lake Superior that we are at the pleasure of the United States, inasmuch as all shipping through, going into or coming out of Lake Superior, is at the pleasure of the United States, the corps of engineers, insofar as the Poe Canal, which is the only access to the lakes, is concerned?

Any agreement that is entered into should have some dialogue with our friends in the United States because of the potential for harm that may be generated.

Mr. Louis Ranger: I want to answer that because we have—

The Chairman: After your response to that, we'll move on to Mr. Guimond.

Mr. Louis Ranger: You talk about our vulnerability, but think about their exposure as well. We control 13 locks out of 15. The vast majority of the seaway is on Canadian lands.

We deal with them almost weekly, sir. In the last three weeks there have been three meetings with the U.S. on the seaway. It was a good part of the discussion that Mr. Collenette had with Mr. Slater in the last two weeks. We do talk to each other. There's a working group that tries to find ways of eliminating duplication and improving the way we operate the seaway.

Mr. Joe Comuzzi: Are you also aware there is legislation being presented in the House of Representatives—and we have a copy of that legislation—and it talks about the seaway in a binational way?

Mr. Louis Ranger: Definitely. We're aware of it.

Mr. Joe Comuzzi: And joint operating cost sharing in that legislation.

Mr. Louis Ranger: We're aware of that proposal.

Mr. Andre Pageot: If I may just add, the U.S. being the number one trading partner of Canada and Canada being the number one trading partner of the U.S., it's perfectly normal that we have very open border co-operation.

We have the same situation with the highways. A lot of our trucks driving containers to Chicago, with CN crossing the border, are a very big customer of the highways of New York or the State of Maine. If we are a very big customer of the highways in the State of Maine, it does not necessarily make us the highway administrator in the State of Maine. In New York you may have a toll on the highway or in Canada you may have a fuel tax, but that doesn't prevent us from being very good partners in co-operating together. We have open borders for trucking every day.

So we have to define Canadian interests and work co-operatively with the United States. That doesn't mean we have to share 50-50 on any decision, and we don't decide on the highways in New York.

The Chairman: Monsieur Guimond.

[Translation]

Mr. Michel Guimond: In your opening remarks, Mr. Ranger, you said—and I understood correctly, because you were speaking a language other than French and I never use these earphones to improve my understanding of English—, that there would only be changes that could be qualified as cosmetic as far as pilotage is concerned.

Mr. Louis Ranger: That is correct.

Mr. Michel Guimond: For which clauses do you plan on tabling amendments, and how many have you in all?

Mr. Louis Ranger: There will certainly be an amendment to the clause dealing with the timeframe for review.

Mr. Michel Guimond: Will there be others?

Mr. Louis Ranger: I do not believe so.

Mr. Michel Guimond: You do not believe so.

Mr. Louis Ranger: That is correct.

Mr. Michel Guimond: I would like to make a small suggestion, given that it is the lawyer in me who is speaking and not the politician. From now on, why do you not tell your law editors that instead of setting a precise date for things like that, they should provide for a coming into force 12 or 18 months following Royal Assent. That is one of the basic principles of legislation drafting that you are taught in your first year of law school.

• 1725

Mr. Louis Ranger: That will inspire us for the amendment that we plan on tabling.

Mr. Michel Guimond: There will not be any other amendments apart from that one, then, will there? To what clause will this amendment apply?

[English]

Mr. Gerard McDonald (Director, Marine Pilotage, Department of Transport) To respond to that, you're talking about section 137 of the Canada Marine Act.

With respect to other proposed amendments with respect to pilotage, there is one that is being considered, although a final decision has not been made on whether or not it would be introduced. It concerns the age of chairmen of the pilotage authorities.

Presently there is a stipulation in the act that anyone over the age of 65 could not be named chairman of a pilotage authority. There is a concern that this may be contrary to the Charter of Rights. Our lawyers are looking into this right now to determine whether or not that is so. If it is deemed to be thus, we would propose an amendment in that regard.

[Translation]

Mr. Michel Guimond: Perfect. Thank you.

Now comes my second question, and I will end on this. To my great surprise, the Minister admitted to me that the improvement fund would amount to $125 million. I had asked the question. If you read the minutes, you will see that he clearly stated that the compensation or improvement fund—I do not remember what it is called officially—that we will be providing for the ports to carry out... He gave the amount. Where does that appear in the bill? Will it be provided for in a separate regulation? How is this going to work?

Mr. Louis Ranger: The matter of the transfer of the ports is dealt with in Part II, but there is an entire program behind that, and he has already announced it under the marine policy reform. That does not come under the bill per se. The Act governing the administration of public ports will be repealed. We had to retain in the bill the necessary powers to carry out the transfers. As I said, this is dealt with in Part II.

At the present time, the mechanics of the thing and the budgets are managed by the department. This is why it is not specifically mentioned.

Mr. Michel Guimond: Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Guimond.

[English]

I cut Mr. Comuzzi off, assuring myself that Mr. Guimond would have equal time. Can you pursue it in one minute?

Mr. Joe Comuzzi: Yes, absolutely. This won't be a question, Mr. Chairman, because I'm very interested in what our witnesses have to say with respect to commercial discipline, and we'll come back to this another day.

When you start talking about what keeps this country together and what we're planning to do with some ports and harbours in the eastern part of this country, which is also suffering some distress presently, and what we're anticipating to do with respect to this one-time pay-off, I don't think you can approach those areas in transportation as a commercial venture. But I'm sure, Mr. Ranger, you and your committee and I hopefully will have the opportunity to discuss the transportation needs in the eastern part of our country and how we are responsible, as a country, with respect to keeping those water highways open.

The Chairman: Thank you.

[Translation]

Mr. Louis Ranger: I would like to add something. Mr. Guimond alluded to a fund of some $125 million. This is not a new fund. This is a fund that was announced several years ago. Mr. Collenette had talked about a $125 million fund. It is an existing fund. This is not a new $125 million chunk of money. I want to make that very clear.

Mr. Michel Guimond: Fine.

[English]

The Chairman: Thank you very much. We were able to get twenty interventions in less than two hours. So I congratulate the members and our witnesses, and I'm sure we will meet again.

Forgive me for being brief. We want to move on to another issue. We have a request from the Reform Party, and I understand there's a concern over it not being presented in both official languages.

[Translation]

Is the fact that it is not in both official languages a problem or is the request acceptable?

[English]

I'm really asking Monsieur Guimond if we can proceed with it.

• 1730

[Translation]

Mr. Michel Guimond: I would like to take advantage of this opportunity to tell Mr. Morrison that I am bad-tempered, but I do not have the reputation of being a bad guy. It is simply a matter of the minimum amount of respect that we should all have for each other. I will not turn it into a question of principle, but I would like to ensure that Mr. Morrison and his colleagues will make amends and in future give us documents in both official languages in this beautiful country called Canada.

[English]

The Chairman: As chair, I request that each and every member try to accommodate the committee and present written documents in both official languages. We have translation services, and it would prevent situations such as this when we get here. I request this be done. If it's not, we'll have a problem in the future and the committee will resolve it.

Mr. Guimond.

Mr. Michel Guimond: Mr. Chairman, I would appreciate hearing comments from Mr. Morrison on my comments.

The Chairman: If he chooses to make comments he will ask for the floor.

Can we proceed with this request?

Mr. Michel Guimond: I would like to ask Mr. Morrison to give his comments before I give my consent, please.

The Chairman: Okay. Mr. Morrison.

Mr. Lee Morrison: I have not run into a problem of this nature before in committee on a motion. This is not a major presentation. It's a small simple motion. As I said to you personally, if you were to present a motion in French and not in English it certainly wouldn't bother me at all. It's a matter of expediency. I see no problem with this, but if you find it objectionable, I guess in the future we'll have to abide by the letter of the law.

The Chairman: Thank you very much. We may proceed.

Mr. John Cannis (Scarborough Centre, Lib.): Earlier you said there was no other business we'd be conducting and no votes taken.

The Chairman: That's right. We're not going to debate the motion. We're going to decide how to deal with it, where we're going to meet and when we're going to do it.

Mr. Keyes.

Mr. Stan Keyes: I think every committee has an obligation to deal with estimates, and if there is a request to deal with estimates I can't see why everybody wouldn't agree with it. The only question I would have for Mr. Morrison is that given the timetable we're trying to work with on this bill and since the deadline is not till December 5, we could probably get a consensus to proceed if he would agree that we would have the estimates and these departmental officials before us the day after, two days after, or the week after we wrap up clause-by-clause on Tuesday, November 18. So on November 19, 20, or the following week we could deal with estimates.

The Chairman: Is that acceptable, Mr. Morrison?

Mr. Lee Morrison: No, it's not, because that locks us in, and the main problem is the clause-by-clause on Bill C-9. Then we will have an absolute fixed date for completing our work on Bill C-9 no matter what we run into as we go on, because this has to be finished before December 5.

I think we should get on the estimates, as a committee, at our earliest convenience. We only received the supplementary estimates last week and have since found things in there we would like to question the minister about. While we have already made our plans, they are not cast in stone. We should revisit that particular question, get on to the estimates at our earliest convenience, and not wait until everything else is done.

The Chairman: If we don't agree on a mechanism the voting bell will ring and we won't have even dealt with it. Can we agree to either meet at 1.30 p.m. tomorrow in the lobby for a steering committee meeting, or at the end of next Tuesday's meeting go into a steering committee to resolve when and how we're going to deal with this issue?

Mr. Stan Keyes: I like the second proposal.

The Chairman: I hear we're building a consensus around November 4. At the end of the meeting we'll have a steering committee meeting and deal with your request.

Mr. Lee Morrison: What if we happen to run into the same problem as they had today with the vote?

• 1735

The Chairman: If there's a vote we have a problem. I can't predict that.

Mr. Lee Morrison: We should try to be a little bit pre-emptory and try to get this out of the way before we have to vote.

The Chairman: I understand the vote today is an opposition vote, so.... Thank you.

The meeting is adjourned.