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37th PARLIAMENT, 2nd SESSION

Standing Committee on Transport

EVIDENCE

CONTENTS

Thursday, October 30, 2003

0910

The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.))

Mr. Dave Leach (Senior Vice President, Greyhound Canada Transportation Corp.)

The Chair

Mr. Stan Keyes (Hamilton West, Lib.)

The Chair

Mr. Stan Keyes

Mr. John Cannis (Scarborough Centre, Lib.)

The Clerk of the Committee (Mr. Georges Etoka)

The Chair

Mr. Stan Keyes

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Stan Keyes

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

0915

0920

0925

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

0930

The Chair

Mr. Brad Shephard (Vice President, Business Development & Analysis, Greyhound Canada Transportation Corp.)

The Chair

Mr. Dave Leach

Mr. Stan Keyes

The Chair

Mr. Brad Shephard

The Chair

Mr. Brad Shephard

Mrs. Bev Desjarlais (Churchill, NDP)

Mr. Dave Leach

The Chair

Mr. Brad Shephard

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

Mr. Stan Keyes

The Chair

0935

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance)

Mr. Dave Leach

Mr. Jim Gouk

0940

Mr. Dave Leach

The Chair

Mr. Jim Gouk

The Chair

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ)

Mr. Dave Leach

0945

Mr. Mario Laframboise

Mr. Dave Leach

Mr. Mario Laframboise

The Chair

Mr. Mario Laframboise

Mr. Dave Leach

The Chair

Mr. Stan Keyes

0950

The Chair

Mr. Stan Keyes

Mr. Brad Shephard

Mr. Stan Keyes

The Chair

Mr. Brad Shephard

Mr. Stan Keyes

Mr. Brad Shephard

Mr. Stan Keyes

The Chair

Mr. Stan Keyes

Mrs. Bev Desjarlais

Mr. Stan Keyes

Mr. Jim Gouk

Mr. Stan Keyes

0955

Mr. Dave Leach

Mr. Stan Keyes

Mr. Dave Leach

Mr. Stan Keyes

Mr. Dave Leach

Mr. Stan Keyes

Mr. Dave Leach

Mr. Brad Shephard

Mr. Stan Keyes

The Chair

Mr. Stan Keyes

Mr. Dave Leach

Mr. Stan Keyes

The Chair

Mr. Dave Leach

The Chair

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

The Chair

Mr. Jim Gouk

Mr. Dave Leach

Mr. Jim Gouk

1000

Mr. Dave Leach

Mr. Jim Gouk

Mr. Dave Leach

Mr. Jim Gouk

Mr. Dave Leach

Mr. Jim Gouk

Mrs. Lynne Yelich (Blackstrap, Canadian Alliance)

The Chair

Mrs. Lynne Yelich

Mr. Dave Leach

Mrs. Lynne Yelich

Mr. Dave Leach

Mrs. Lynne Yelich

The Chair

Mrs. Bev Desjarlais

Mr. Dave Leach

Mrs. Bev Desjarlais

Mr. Dave Leach

Mrs. Bev Desjarlais

Mr. Dave Leach

Mrs. Bev Desjarlais

1005

Mr. Dave Leach

Mrs. Bev Desjarlais

Mr. Brad Shephard

Mrs. Bev Desjarlais

Mr. Brad Shephard

Mrs. Bev Desjarlais

Mr. Brad Shephard

Mrs. Bev Desjarlais

Mr. Dave Leach

Mrs. Bev Desjarlais

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

Mr. Brad Shephard

Mrs. Bev Desjarlais

The Chair

Mrs. Bev Desjarlais

Mr. Brad Shephard

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Brad Shephard

The Chair

Mr. Dave Leach

1010

The Chair

Mr. Dave Leach

The Chair

Mr. Joe Fontana (London North Centre, Lib.)

Mr. Dave Leach

The Chair

Mr. Marcel Proulx (Hull—Aylmer, Lib.)

Mr. Marcel Proulx

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

Mr. Brad Shephard

The Chair

1015

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

Mr. Dave Leach

The Chair

1025

The Vice-Chair (Mr. John Cannis (Scarborough Centre, Lib.))

Mr. Sylvain Langis (President and CEO, Groupe Orléans Express Inc.)

1030

1035

1040

1045

The Chair

Mr. Jim Gouk

Mr. Sylvain Langis

Mr. Jim Gouk

Mr. Sylvain Langis

Mr. Jim Gouk

Mr. Sylvain Langis

Mr. Jim Gouk

Mr. Sylvain Langis

Mr. Jim Gouk

Mr. Sylvain Langis

The Chair

Mr. Mario Laframboise

1050

Mr. Sylvain Langis

Mr. Mario Laframboise

Mr. Sylvain Langis

1055

Mr. Mario Laframboise

Mr. Sylvain Langis

Mr. Mario Laframboise

Mr. Sylvain Langis

The Chair

Mr. Sylvain Langis

The Chair

Mrs. Lynne Yelich

The Chair

Mr. Rex Barnes (Gander—Grand Falls, PC)

Mr. Sylvain Langis

Mr. Rex Barnes

Mr. Sylvain Langis

1100

Mr. Rex Barnes

Mr. Sylvain Langis

Mr. Rex Barnes

Mr. Sylvain Langis

Mr. Rex Barnes

Mr. Sylvain Langis

Mr. Rex Barnes

The Chair

Mr. John Cannis

Mr. Sylvain Langis

1105

Mr. John Cannis

Mr. Sylvain Langis

The Chair

Mrs. Lynne Yelich

Mr. Sylvain Langis

Mrs. Lynne Yelich

Mr. Sylvain Langis

Mrs. Lynne Yelich

The Chair

Mr. Sylvain Langis

The Chair

Mr. Don W. Haire (President, Proteus Transportation Enterprises Inc.)

Mrs. Lynne Yelich

Mr. Sylvain Langis

Mrs. Lynne Yelich

Mr. Sylvain Langis

Mrs. Lynne Yelich

Mr. Sylvain Langis

The Chair

1110

Mr. Sylvain Langis

The Chair

CANADA

Standing Committee on Transport

NUMBER 041

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, October 30, 2003

[Recorded by Electronic Apparatus]

¿ (0910)

[English]

The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.)): Pursuant to the order of reference of Tuesday, March 25, 2003, we are examining Bill C-26, an act to amend the Canada Transportation Act and the Railway Safety Act, to enact the VIA Rail Canada Act, and to make consequential amendments to other acts.

Our witnesses this morning are from Greyhound Canada, and we have Mr. David Leach. Welcome, Mr. Leach.

Mr. Dave Leach (Senior Vice President, Greyhound Canada Transportation Corp.): Thank you.

The Chair: Then there's the Ontario.... I couldn't read that card, Georges, if my life depended on it. You read it.

Some hon. members: Oh, oh!

Mr. Stan Keyes (Hamilton West, Lib.): Do you want my glasses?

The Chair: Yes, give me your glasses.

Some hon. members: Oh, oh!

Mr. Stan Keyes: I need my glasses.

Mr. John Cannis (Scarborough Centre, Lib.): Do you want a hearing aid? That's how we try to handicap you, Mr. Chairman.

The Clerk of the Committee (Mr. Georges Etoka): It's Mr. Brad Shephard, vice-president, analyse commerciale et prospection.

The Chair: Did he pronounce everything right? You have to watch him like a hawk, you know.

You're both from Greyhound.

Mr. Stan Keyes: Where's the Ontario Motor Coach Association?

The Chair: They're coming in on the motor coach.

Mr. Dave Leach: Actually, let me clarify that for you, Mr. Chair, if you like. I sit on the board of Motor Coach Canada, of which the Ontario Motor Coach Association is a provincial division. I also sit on the board of the Canadian Bus Association, so you have representation from both associations here.

Brad is our vice-president of business development and analysis. He's here to supply any technical information you may need.

The Chair: But you're appearing on behalf of Greyhound this morning.

Mr. Dave Leach: We are; that's correct.

The Chair: I might advise the committee that, as you know...I've been spending more time with you folks than I have with my wife. Last night we were meeting--

Mr. Stan Keyes: Lucky for her.

The Chair: The flight attendants, the revenuers, and HRDC are presently meeting with the airlines. I've asked them to give a report or an update to the committee, hopefully during the break, but they will meet until there's a resolution to that problem.

Mr. Shephard and Mr. Leach, I don't know if you've appeared before the committee before and are familiar with the normal procedure.

Mr. Dave Leach: This is the first time.

The Chair: First off, be comfortable. The usual process is that you give some introductory comments, and then we'll go to questioning from Mr. Gouk, Mr. Laframboise, Ms. Desjarlais, and my buddy with the beard at the end there. Then we'll come back to questioning from this side, and if there's enough time, we'll go back for another series of questions.

The whole purpose of what we're trying to do today, as you well know, is to get evidence into the record with respect to the changes that are being proposed to the Canada Transportation Act. We want succinct answers to questions concerning the two-year consultative period that was held prior to the introduction of this bill. Was Greyhound involved, did you feel there was a consultative process, and were your concerns addressed? If you could address those issues during your introductory remarks, it would be very helpful.

I leave it with you folks, and if you feel comfortable with that format, let's proceed.

Mr. Dave Leach: Certainly. Thank you.

I have a prepared presentation. Unfortunately, it's only in English, so we can't give it out till we get it translated. I'll have to present it from here, unfortunately.

As far as the consultative process goes, we did participate in that consultative process, the CTA review, and we did appreciate that. Certainly, we had an opportunity to present our points at that time as they related to Greyhound Canada and intercity bus transportation.

However, I'd like to spend some time today talking about the white paper, the CTA review, government policy on transportation, and specifically Bill C-26. In that bill there is the VIA Rail Act, which is of some significant concern to us in the intercity bus industry, so I'd like to focus my presentation this morning on the VIA Rail Act portion of that bill.

The Chair: For some reason I thought you would.

Mr. Dave Leach: In particular, we're concerned about a small but critical part of the bill that confers formal crown corporation status on VIA Rail. Its inclusion in Bill C-26 is an invitation for stakeholders to comment on the impact of the proposed act on federal passenger rail policy and on federal oversight of transportation activities generally.

As you know, Bill C-26 is an omnibus piece of proposed legislation that strives to implement the government's national transportation strategy. Where the government strategy is flawed, the proposed bill is flawed. Our comments are consequently directed not only at Bill C-26 but also at the government's transportation white paper, “Straight Ahead”. To a lesser extent we'll also be referencing the report of the government's blue ribbon panel, which completed the Canada Transportation Act review in June 2001, because their report, “Vision and Balance”, is largely responsible for triggering the issuance of the white paper in 2003.

Let me begin by assuring this committee that there's much in the white paper that is deserving of praise and much that Greyhound fully supports. Like the government, we subscribe to the belief that there is a need for a safe and secure transportation network that allocates resources on the basis of full costs. We also believe that transportation must minimize environmental damage and that transportation policy must be modal-neutral. Unfortunately, what the federal government says is not what it does.

We believe that the white paper, as well as Bill C-26, which flows from it, is flawed. On the one hand, the government expresses a transportation vision that is largely coherent, but then the government declares that virtually all of its existing transportation policies conform to that vision and are consequently justified. In truth, there's a basic disconnect between the vision of the government and the pre-existing policy framework that now supposedly conforms to this newly articulated vision. Our limited time does not afford us the opportunity to enter into a detailed, technical analysis on the shortcomings in the government's announced transportation strategy, but by focusing only on VIA Rail, we can provide this committee with some compelling examples of the basic disconnect between vision and policy.

As we all know, the pro-rail lobby has been hard at work during the past 18 months. First, the minister and his supporters have been pursuing a multi-billion dollar commitment to introduce high speed rail in the Montreal-Ottawa-Toronto portion of the corridor. Details of their precise plans are unknown because they remain secret to this day. Suffice it to say that we and others have consistently maintained that high speed rail is ill-conceived and is not good policy, particularly in light of Canada's relatively small travel markets as well as in light of the fact that its supporters are relying upon inflated assessments of how the project will be environmentally beneficial and how it will also serve to reduce highway congestion.

We now understand that the high speed rail proposal has been set aside, at least for the time being, in favour of a $700 million capital infusion to expand VIA Rail's conventional rail services. Once again, the details of this proposal are cloaked in secrecy for reasons that escape us. We do know from VIA Rail's public submissions to the CTA Review Panel that they intend to expand conventional train service frequency by 50% in the key Montreal-Ottawa-Toronto triangle and by 25% elsewhere in the corridor over the next three years. We also know that they intend to operate larger train sets with greater seating capacity. In total, we can infer from their limited disclosures to the CTA Review Panel that VIA Rail intends to expand its corridor train capacity from some 5 million seat-trips per annum to 7 million seat-trips per annum by 2006.

To accomplish this expansion they will need massive injections of taxpayer capital subsidies. Moreover, the steep expansion curves contemplated in VIA Rail's submission to the review panel will require not only capital subsidies but also increased operating subsidies. One cannot dump 2 million added seat-trips into the corridor travel market and fill them quickly. Either added operating subsidies will be needed to finance much lower rail fares in order to steal passengers from other modes, or they'll need to operate at a greater loss for many years to come. Either way, greater operating subsidies from the taxpayer will also be inevitable.

¿ (0915)

The CTA Review Panel expressed a number of concerns about VIA Rail's role in the transportation fabric. They noted that the contemplated corridor expansion may have disturbing effects on the private sector, and then they made two recommendations. The first recommendation was threefold, that VIA Rail separate its corridor operations and pursue a full cost recovery policy in the corridor, that management be directed to pursue commercialization in the corridor, and that management be required to report cost recovery for each corridor service on a fully allocated basis. The second recommendation was that after the corridor operations have been separated, VIA Rail should then be provided with enabling legislation to provide the necessary commercial freedom for it to become self-sufficient. The panel also noted that a smaller corridor rail carrier that was independently viable was still an outcome the government could view with pride.

The entire thrust of this set of recommendations was completely ignored when the government issued its white paper for a national transportation strategy. The white paper makes a unilateral declaration that there are public benefits from publicly funded passenger rail services, not even distinguishing between commuter rail and intercity rail products despite the massive difference in their relative service costs per seat-kilometre. It would be interesting to review the analysis that allowed the government to reach this overall conclusion.

The white paper then announces the government will seek legislation to confirm and continue VIA Rail's current mandate, thereby completely ignoring the CTA Review Panel's recommendations that VIA Rail be commercialized and that enabling legislation be put in place after the necessary organizational steps have first been taken to pursue this objective.

Even more galling to us is the cavalier fashion in which the white paper ignores its own prescriptive vision. The government states that in its vision it seeks, among other things, the efficient movement of people based on competitive markets, that it is committed to user pricing that reflects the full costs of transportation activity, and that it will pursue policy actions in support of intermodality and modal neutrality. That same document then seeks to confirm VIA Rail's current mandate, having somehow concluded that the status quo of passenger rail policy fully conforms to this vision--which is untrue.

I'd now like to share with you some of our recent experiences with VIA Rail's attempts to enter the Toronto commuter passenger markets. As many of you already know, VIA Rail started offering a very limited rail commuter service in Toronto in late 2001, ostensibly at the urging of the minister. When we queried Transport Canada at the time about the use of federal subsidies for such a local service, we were told that VIA Rail had assured the government that the six daily commuter trains in question would recover all direct costs and would not use federal subsidy moneys.

This is hogwash. For example, the Kitchener commuter train leaves Toronto at 9 o'clock at night, sleeps in Kitchener overnight, and then returns to Toronto at 11:40 the next morning. The trip timing can hardly be regarded as helpful to Toronto-destination commuters, and we'd be willing to wager a considerable amount that this train does not recover its out-of-pocket expenses. It has limited passenger revenues but has substantial direct expenses for track access costs, crew costs, overnight accommodations, and the like.

We strongly suspect that an independent audit would determine that the Kitchener commuter train, as well as the Windsor-Toronto train, which overnights in Oshawa, and the Montreal-Toronto train, which overnights in Aldershot, are draining federal taxpayer-supplied subsidies. Not only are there substantial added costs involved in the operation of these six daily trains, but VIA Rail is also offering commuter ticket books at a two-thirds discount off their base fares. Even if VIA Rail is operating at a 50% passenger load factor on these six trains, which is highly doubtful, this represents total commuter traffic of only 500 passengers daily. By comparison, GO Trains operating in and out of Union Station transport tens of thousands of passengers each hour during peak periods. We also believe that an independent audit would quickly determine that the total commuter traffic using these six daily trains is so small that it provides no material advantage in the reduction of overall commuter congestion in the Greater Toronto Area.

¿ (0920)

Meanwhile, Greyhound Canada is currently expanding its local commuter services in the Greater Toronto Area by introducing added capacity to carry commuters, this at no subsidy cost to federal taxpayers. Greyhound and the Government of Ontario recently announced a fifty-fifty cost-shared infrastructure project with a total one-time cost of $40 million that will allow Greyhound to more than triple our Toronto area commuter capacity from some 3,000 passenger trips daily to more than 10,000 passenger trips daily. That will be happening within the next year.

¿ (0925)

The Chair: Could you explain “passenger trip” for the committee? What does that mean?

Mr. Dave Leach: It's one passenger taking one trip one way.

The Chair: Thank you.

Mr. Dave Leach: On a commuter basis, it's important because you have commuters who will commute into a city but not necessarily take that same mode going back out. When you're counting passenger trips, it's important to count both inbound and outbound so you get a true reflection of the use of the service.

The total financial exposure to provincial taxpayers in this project is limited to a one-time investment of $20 million. The fleet investment and operating costs of our commuter service expansion will be entirely recovered at the fare box and will be done at no further cost to local taxpayers.

In this context, wasting federal taxpayer money on subsidizing VIA Rail commuter services in the Toronto area appears to be fiscal lunacy. After all, the VIA Rail service product was never designed to address local commuter needs in the first place. How can a 50-seat intercity rail car possibly be efficient in commuter operations when it has only 30% of the passenger-carrying capacity of a commuter rail car, not to mention either the added labour costs borne by VIA Rail for their on-board service personnel or the small size of their overall train consists?

We've devoted our presentation today to some of the implications of the proposed VIA Rail Act contained in Bill C-26. If time permitted, we'd address several other areas deserving of comment in respect of the government's national transportation strategy. For example, the white paper effectively dismisses the needs of small-town Canada, choosing to concentrate on the vote-rich areas represented by large, urban populations. Rather than consume more of your time here today, I'll just say that Greyhound and other scheduled bus carriers have serious reservations about other aspects of the government's transportation strategy beyond the VIA Rail issue.

Insofar as VIA Rail is concerned, our strong advice to this committee is to reject the rail-centric policy biases contained within the white paper as ill-conceived. This committee should shelve the VIA Rail Act until a public assessment of federal rail passenger policy has been completed in a calm and orderly fashion. The fact that both the white paper and Bill C-26 totally ignore the recommendations of the government's own blue ribbon commission on this issue should serve as a clear warning that the current legislative proposal misses the mark.

Before closing, I want to share some thoughts with you concerning the minister's VIA Rail funding announcement of last Friday. To the best of my knowledge, the government has not performed any impact studies on how much this added funding would harm private sector passenger carriers. Indeed, the minister has avoided even describing by how much passenger rail capacity will increase in the corridor. The only public statement on the issue remains VIA Rail's submission to the 2001 CTA Review Panel. Frankly, we're incredulous that this last-minute subsidy proposal gained approval, especially given that the existing VIA Rail subsidy program does not even expire until 2005.

Even more troubling to us are the comments of the minister concerning the benefits of this new subsidy program. Corridor passenger rail is more damaging to the environment than either bus or even car travel, and the minister has already admitted this in other public fora. He could not do otherwise, given that these findings come from public studies he commissioned. The minister also said at last Friday's press conference that this new VIA Rail subsidy program will relieve highway congestion. This is a red herring. Long-distance intercity car trips are a very small portion of total highway traffic. Most highway traffic is comprised of short-haul vehicle trips of less than 80 kilometres, a market VIA Rail's products are not even designed to serve.

In any event, the minister cannot have it both ways. Either VIA Rail's proposed service expansion is helpful to the environment by diverting air traffic but not bus or car traffic, or it helps relieve highway congestion by diverting car traffic. It can't be both, and in fact it achieves neither.

This committee faces a significant challenge. Not only must it deal with the structural deficiencies in the white paper and the consequential flaws in Bill C-26, but it now must also advise Parliament on the appropriateness of the proposed new capital subsidy program as well as on the risk that expanding VIA Rail's capacity will also require increases in the annual operating subsidy beyond the current $170 million ceiling. I can only assure this committee that Greyhound and other bus carriers will do our best to contribute towards your forthcoming research on these issues.

I'd be happy to take your questions.

¿ (0930)

The Chair: Thank you, Mr. Leach.

Mr. Shephard, do you have any comments you want to add to that?

Mr. Brad Shephard (Vice President, Business Development & Analysis, Greyhound Canada Transportation Corp.): No, not at this time.

The Chair: Just by way of background, could you perhaps explain, Mr. Leach, how many passengers a year all of the bus companies, including Greyhound, move in Canada? You refer to it as passenger trips or something.

Mr. Dave Leach: I'll defer to Mr. Shephard on that.

Mr. Stan Keyes: Mr. Chairman, just as a point of order, can I ask you to be more specific and maybe pick a year, like 2002?

The Chair: Sure.

What is it for the last year you have figures for?

Mr. Brad Shephard: It would be our 2003 figures, actually, because our year-end is August 31. For Greyhound and the subsidiaries Greyhound owns, it's approximately 7 million passenger trips per year.

The Chair: Would you have the total figures for all of the bus companies?

Mr. Brad Shephard: For the industry as a whole, it's perhaps 100 million.

Mrs. Bev Desjarlais (Churchill, NDP): Mr. Chair, are those passenger trips in Canada?

Mr. Dave Leach: Yes.

The Chair: That was the next question.

Thanks, Ms. Desjarlais.

Mr. Brad Shephard: Sylvain Langis has just informed me that it's 100 million passenger trips for all companies, and that includes all charter as well as passenger line haul movement.

Mr. Dave Leach: Let me clarify that for you. Let's talk a little bit about what the bus industry is comprised of. There are small, sort of ma-and-pa charter operators, and if they're running a charter, say to a casino or somewhere, that's also a passenger trip. Intercity scheduled-service passenger trips are what Brad was referring to versus a catch-all for the entire industry.

There's also another component, one we consistently take issue on with Stats Canada, and that's the amount of bus ridership at transit level. As GO Transit expands into more of the outside areas of the 905 zone, is that intercity bus or is that transit? There's an overlapping of information or statistics between those two. Certainly, Greyhound Canada does a million commuter trips a year, but is that a transit statistic or is that an intercity bus statistic? You have to be careful with the stats as we go through them.

The Chair: I know you don't want to take a whole lot of time on this, but it would be very helpful if you folks could produce your intercity ridership figures, because we're trying to compare air, rail, and bus. I think that's what we're trying to do, so if you could, exclude the casinos.

Mr. Dave Leach: Yes, the charter sightseeing tour stuff is not really relevant.

There's one other piece of information I can give you that may be more specific to this discussion. About 90% of the ridership is in the Quebec City-Windsor corridor, where VIA Rail is somewhere around 3.5 million passenger trips a year, air is around 3.5 million--so they're very close--and scheduled intercity bus is around 2.75 million.

The Chair: You're going to present something, then.

Mr. Dave Leach: Yes, we'll put that information down.

The Chair: That will be exclusive to the corridor, but we have to look at Canada as a whole.

Mr. Dave Leach: Certainly.

The Chair: I liked your comments about rural Canada, to be very frank with you, and could you also include in that summary the cross-border traffic to the United States, excluding the casino in Buffalo? That would be very helpful.

Mr. Dave Leach: Certainly.

Mr. Stan Keyes: In both official languages.

The Chair: Yes, in both official languages. I caught hell for that yesterday.

Mr. Leach, how many buses does Greyhound run?

¿ (0935)

Mr. Dave Leach: On our intercity scheduled services we have 425, where you can buy an individual fare ticket at the local bus terminal. Then we have another 350 charter, tour, sightseeing, leisure pieces of equipment.

The Chair: How many seats are there on each bus?

Mr. Dave Leach: It varies according to the age of the coach, but it can range from 43 to 54. The most recent coaches have 54 seats on them.

The Chair: Mr. Gouk.

Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance): One of the things you said was that a way the government could help VIA was essentially to arrange for it to be able to steal passengers from other modes of transportation.

I first got involved in transport issues when I came here in 1993. VIA Rail had a strike early in the 1990s, and after they went back to work, in order to steal passengers from the other modes and build their ridership up, I believe, they cut 40% off their fares. I had a delegation from the bus industry here on the Hill. In fact, I have a poster here I showed you for nostalgia's sake earlier this morning. What impact would that have had on the bus industry when VIA Rail came back? I believe they were offering a VIA 1 round trip between Toronto and Kingston for $95, including meals, liquor, and everything. What impact would that have had on the bus industry?

Mr. Dave Leach: I think there's almost a threefold answer to that. There's certainly the competitive factor, with a subsidized service competing against a non-subsidized service. We have to cover every operating cost we have, while VIA Rail seems to only have to cover its avoidable costs, so we have that unfair part of the competition.

There's also the factor of the taxes paid by the private sector as opposed to their public sector competition. We pay our taxes. Every dollar that comes out of our coffers is a potential tax dollar that doesn't go to the government, and I think that's an important part of this as well.

The loss of incremental ridership can be devastating to our network. We have to run the bus; it's a scheduled service and it's a regulated service. We don't have an option to abandon corridors because we have a regulated environment we operate in. If that bus leaves with 25 people on it versus 50 people on it, it has a significant impact on our ability to recover our costs, so there's a profitability part to the answer.

Then there's just the competitive nature of it and how fundamentally wrong it is to have a public sector entity competing with the private sector and impacting the tax base. What is right from a transportation policy perspective? Should the government be providing this level of subsidy so the public sector carrier can discount its fares when there's already a service that's there?

Quite frankly, the additional capacity VIA Rail is going to put on conventional trains in the intercity bus industry is what scares us. It's going to impact the intercity bus industry more than it will air. Air competes more with VIA 1; their pricing is similar. But when you have excess capacity on a train...and we've talked about how much they're going to add capacity up to 2006. They may be able to, and part of Bill C-26 allows them to sell a seat for a buck if they want to. If they decide to sell that seat for a dollar, it can have a devastating impact on us, and they continue to get more subsidies to boot.

Mr. Jim Gouk: Now, suppose VIA Rail subsidies are not increased but the costs to the other modes of transportation continue to skyrocket, airport rents as an example. Let's say security costs go up and there is maybe charge-back on access to the airport, particularly for a place like Pearson. If all these fees got added onto the costs and drove up the costs to the airline, would it be possible that VIA might be able to benefit from their capacity without further increases in subsidy simply by virtue of this loading a lot of costs onto the other modes of transportation?

¿ (0940)

Mr. Dave Leach: If we were to fully allocate costs to VIA Rail and then to air and to intercity bus and trucking, the price you'd pay for a ticket on VIA Rail would be enormous. If you actually took those 3.5 million passenger trips, took the $400 million in capital subsidy, took another $700 million plus $170 million in operating subsidies, and actually tacked that onto the ticket price people were paying, they'd never be able to afford it.

On the air side they have to cover that cost; there is no subsidization per se.

I don't want to speak for the air industry, but certainly for the bus industry, I would suggest that we would fully embrace a fully allocated costing model for our highway use. Now, there was a review in 1992 that said about 4% of our services were subsidized because of highway development, but let me make sure the committee understands this. We pay fuel tax as well, so if we're going to fully allocate highways costs, then let's remove the fuel tax, because if you have the fuel tax there, it covers the cost of highways. We pay that and every road user pays that tax, so we still pay for our portion of the infrastructure supplied by different governments. But VIA Rail does not, and they continue to ask for more money.

We would embrace that type of costing structure, certainly.

The Chair: This is your last question, Mr. Gouk.

Mr. Jim Gouk: Then I can't pursue that particular line of questioning. I'll come back to it, gentlemen, when and if I get more time to develop the question.

The Chair: Mr. Laframboise.

[Translation]

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

I have two questions. First of all, I was under the impression that the idea of having separate legislation for VIA Rail was one of the recommendations made by the Auditor General, specifically to ensure that VIA Rail was truly viewed as a crown corporation and judged accordingly. I had the impression that the government wanted to distance itself from VIA Rail so that it would become more self-supporting. But now you are recommending that we not pass this act.

You are saying that we must not adopt legislation confirming VIA Rail as a crown corporation, as recommended by the Auditor General. I repeat that I was under the impression that the government wanted to increasingly distance itself from VIA Rail so that this body would become more self-supporting. And yet, you seem to be saying that we must not pass this legislation.

[English]

Mr. Dave Leach: There are parts of the act we don't agree with, and there are parts of the act we do agree with. Let me refer you to a specific portion of the proposed Via Rail Canada Act that is of very major concern to us, and it's proposed subsection 8(2):

The Corporation may use excess equipment, facilities and resources for any commercial purpose that is ancillary to its mandate with a view to reducing the need for payments to the Corporation out of the Consolidated Revenue Fund.

Let me clarify what that means to us. The way it's written, it allows VIA Rail to do predatory pricing on our mode of transportation. Let me read it to you one more time. “The Corporation may use excess equipment”--meaning excess seating capacity--“facilities and resources for any commercial purpose that is ancillary to its mandate with a view to reducing the need for payments”.

So if they sell one seat for $1, they've saved the fund $1, but what they've cost the intercity bus industry is a ticket worth $100, which we maybe make 50% profit on, which we then pay tax on. So the federal government may lose $10 for VIA Rail's reducing its subsidy by $1. This is a real issue for us, and it leaves the door wide open for VIA Rail to predatory price other modes of transportation. This is one part of the bill.

¿ (0945)

[Translation]

Mr. Mario Laframboise: I must say that I by far prefer this interpretation, namely that you are telling us that you would simply like us to repeal clause 8(2) rather than do way with the legislation completely. I prefer your explanation because, at least, I can keep my initial impression that the government wants to distance itself from VIA Rail and try to ensure that it becomes more and more self-supporting. This was a recommendation made by the Auditor General.

I prefer this explanation, and if you have any others concerning specific clauses that you would like to see repealed, eliminated or amended, I would suggest that you send them to the committee. Personally, I would prefer if you would provide this type of clarification. Does that suit you?

[English]

Mr. Dave Leach: Certainly.

It's not necessarily what's in the act but what's not in the act as well. In my presentation I talked about the recommendations by the CTA Review Panel, the two recommendations in there that VIA Rail separate its corridor operations and report the profitability or lack of profitability by corridor. It doesn't go to that extent in this act.

We fully support VIA Rail being accountable and the government moving away from VIA Rail. We believe that hasn't happened enough in this act. Amtrak in the U.S. has to report corridor profitability every year. VIA Rail does not report corridor profitability. VIA Rail talks about its accountability to the government, but we believe the government needs to spend significantly more time reviewing VIA Rail's policies and procedures and its own national transportation policy, which means reviewing the role of VIA Rail on a national basis.

This act doesn't allow for that. It's a piece of legislation that is built around a white paper that we believe doesn't fit the strategy for VIA Rail. It allows it to seek funding for situations like that in proposed subsection 8(2), which can be very dangerous. It can go out into the marketplace, seek funds, and then predatory price while still using its subsidies. So that's an area that's not in the legislation, but we believe it should be.

To answer your question more pointedly, which I'm trying to do, I'd say that it's not necessarily what's in the legislation, it's what's not in the legislation, and making VIA Rail accountable and having a level playing field for all the other modes are what we would like to see.

[Translation]

Mr. Mario Laframboise: I follow what you're saying, but my second question pertains to infrastructure work. I may not agree with you, first of all because you do not pay for highway repairs, improvements or constructions. You pay your portion of the gas taxes, but you do not pay for highway renovations. If you didn't have the highways on which to travel, you would not be competitive with many other carriers, whether it'll be rail or air carriers. You have the highways.

Currently, VIA Rail does not have dedicated track in several sectors and must rely on the transportation of goods, which means delays, with the result that it is not necessarily competitive.

[English]

The Chair: Mr. Laframboise, I'm sorry to intervene, but I was called away and you're well over your time. I don't want to cut you off, but could you just ask the question?

[Translation]

Mr. Mario Laframboise: Do you think that VIA Rail should pay for all of its development work, including dedicated tracks? Do you find that normal?

[English]

Mr. Dave Leach: If VIA Rail is the only service using it, yes. It has to stand on its own, and if that's the cost to operate VIA Rail service, then this government should know that.

The Chair: Thank you, Mr. Laframboise.

Mr. Keyes.

Mr. Stan Keyes: Thank you, Mr. Chair. Thank you, gentlemen, for your presentation to the committee.

I, like the chair, am looking forward to receiving some of the details, the statistics on the status of the industry ridership. I may wander a bit here, Mr. Chairman, so you may have to cut me off.

¿ (0950)

The Chair: Why should you be any different today than any other day?

Mr. Stan Keyes: Touché.

Brad, you're vice-president of business development. If I understood correctly, you said that after all the shopping mall and casino trips etc. were taken out, there were some 7 million passenger trips in 2003.

Mr. Brad Shephard: Yes, approximately.

Mr. Stan Keyes: That compares to about 4 million passenger trips on the VIA Rail passenger service.

The Chair: That's just exclusive to Greyhound.

Mr. Brad Shephard: Exclusive to Greyhound and the Greyhound subsidiaries.

Mr. Stan Keyes: So industry-wide...?

Mr. Brad Shephard: There are about 20 million passenger trips.

Mr. Stan Keyes: So that compares to about 4 million for VIA Rail; I think that was the latest number, in 2002.

I have to build up...pardon? What is the cost per trip? All right, Mr. Chairman. Are there any other questions you want me to ask?

Some hon. members: Oh, oh!

The Chair: That's pertinent information.

Mr. Stan Keyes: Well, I think this is what we're going to get from them. I don't know if they have the statistics available.

Then you have to average it out according to what trip you're talking about and what the cost for that trip would be, and to be fair you have to compare it to what that cost would be with VIA Rail. Let's say you're going from Windsor to Toronto or Windsor to Montreal; what would that cost be and what would the breakdown be for what you'd pay, for example, in taxes vis-à-vis what VIA Rail would pay? We'll do the VIA Rail end of it if you give us your end of it unless you have that at your fingertips now. That's pretty specific, Windsor to Montreal. Let's pick a route and actually do a fair analysis.

As you're already aware, Mr. Chairman, I'm on record as calling for a public hearing. A full consultation would help this committee evaluate, for example, the likelihood of a modal shift having environmental benefits and the extent to which an enhanced subsidy to VIA would impact on competitive modes of transportation. This is a big nut, and it needs that full evaluation by this all-party committee to justify any decision.

To commit a future government to the expenditure of $692.5 million on a proposal when this committee has no idea what VIA Fast is, and to set a priority for the future when we don't know how that ranks.... Maybe we will have the money; maybe we won't have the money. If we do have the money, maybe it should go to health care, education, etc. Those are all huge decisions, and hence the response that has been heard.

But let's play devil's advocate for a minute.

Mrs. Bev Desjarlais: Time violation.

Some hon. members: Oh, oh!

Mr. Stan Keyes: Well, you gave up your time, Bev, and Rex gave up his time, so I just figured I'd...you know.

Mr. Jim Gouk: I haven't had my second round.

Mr. Stan Keyes: Anyway, I have time. My clock's running.

But let's play devil's advocate. You're concerned about predatory pricing in light of proposed subsection 8(2), but there is a recourse, just as there is in the airline industry--or one can be developed, just like in the airline industry. If you as an industry feel there is predatory pricing coming at you from a competitive mode of transportation, it could be set up like we do in the airline industry, between the airlines. If one is trying to underprice another, then maybe there should be an opportunity, through either statutory or regulatory means, for you to make an appeal.

Some might think you fear competition. What would be your response to that--I mean, if it's set up properly?

¿ (0955)

Mr. Dave Leach: Well, we fear unfair competition, and that's truly the case here.

Speaking of recourse, I'll have to get the information for you, but we as an intercity bus industry have had to choose recourse to the courts with VIA Rail in the past, to the point of suing VIA Rail for predatory pricing. I will find out some more information about that specific issue if you'd like, but for us this is not a new issue with VIA Rail.

Mr. Stan Keyes: Mr. Chairman, I'd very much like all cards to be on the table so the committee will be able to compare apples to apples. The rail industry would--we've heard them say this--say that the bus industry, for example, is in fact a subsidized service because it moves on an infrastructure that's paid for, maintained, kept clean, cleared of snow, policed, etc. by the taxpayers of Canada. What is the true value of all that for the bus industry as compared to the subsidy that's provided to VIA Rail for passenger rail? I'm not talking about high speed rail; I'm talking about conventional passenger rail service that's supported by this government. Has an evaluation ever been done by the bus industry to that degree, to that depth, on how much it truly receives, given all the subsidy factors for its service?

Mr. Dave Leach: Yes, there has been.

I'm just referring to my notes because I did in preparation--

Mr. Stan Keyes: But there is a study or something that's been done.

Mr. Dave Leach: Yes, there is. I believe this committee in 1992 or--

Mr. Stan Keyes: Well, no. I want to bring us up to date. Let's get up into the year 2000s.

Mr. Dave Leach: There was the royal commission; that's right.

Mr. Brad Shephard: And it determined that about 4% was the level of subsidy the bus industry was given, based on the regulation and....

Mr. Stan Keyes: If we could have the breakdown, I'd like to see it, to see exactly how this 4% was established.

The Chair: They'd have to come back and talk to us.

Mr. Stan Keyes: Or they could provide us with the information, not necessarily talk to us--

Mr. Dave Leach: Certainly.

Mr. Stan Keyes: --but give it in black and white so we can do that fair analysis.

Thanks, Mr. Chair.

The Chair: Thank you, Mr. Keyes.

For that line of questioning, I will go to Mr. Gouk.

But Mr. Leach, you stated in your original presentation--I hope I took it down right--that you paid your share of road costs over and above what you paid in fuel taxes and licensing costs. I think those were your words. You make a contribution to the costs of the roads in addition to what you already pay in...I think that is what you said, or maybe you want to rephrase it.

Mr. Dave Leach: The comment was that we pay for road infrastructure through fuel taxes and the other taxes we pay. There is nothing over and above that, there is no other contribution we make, but certainly, every other user on that highway pays as well. There's automobile traffic paying through fuel taxes and there are trucks, all that sort of stuff.

The competition comment is very appropriate. We're not afraid of being allocated costs--true costs, direct costs--for highway usage. We would embrace that because our belief is that it would not impact the bus industry, just as we would embrace comparing the social cost associated with our industry to that of other modes. We do not fear environmental impact assessments for VIA Rail intercity rail service--with commuters it's a little bit different--versus intercity bus service. Fully allocating costs is something we embrace because the intercity bus industry will come out far ahead of any of the other modes of transportation.

The Chair: Thank you.

Mr. Gouk.

Mr. Jim Gouk: Thank you, Mr. Chair.

How long do I have?

The Chair: I can tell you, Mr. Gouk, you can have as long as you want because you're mad at me this morning and I want to be friends with you.

Mr. Jim Gouk: As long as I want? Well--

The Chair: Up to five minutes.

Mr. Jim Gouk: Suppose the government privatized VIA Rail, and whoever purchased VIA Rail had to pay the normal capitalization costs and the full operational costs. If, once through all that, it managed to put together a high speed rail system with modern coaches and everything else to compete against you, would you be prepared to go head-to-head against somebody that had those full capitalization costs?

Mr. Dave Leach: Absolutely.

Mr. Jim Gouk: How much approximately is a new motor coach now, just ballpark?

À (1000)

Mr. Dave Leach: It's between $500,000 and $600,000 Canadian.

Mr. Jim Gouk: Suppose someone came out with a new $5 million bus that was able to go 200 kilometres an hour but you had to build your own separate lane to put it in because it had to be segregated completely from the other traffic. It could go 200 kilometres an hour, and it was very comfortable, very safe, and very environmentally friendly. Would you likely go and buy a bunch of those and put that independent lane in?

Mr. Dave Leach: It depends on whether you could recover the cost from your passengers. My initial answer is, not a chance. The fare you'd have to charge would put you out of business.

Mr. Jim Gouk: But if the government came along and said, well, we think it's something really important to have, so we're going to put it in and run that as a government operation. What effect would that have on your industry?

Mr. Dave Leach: It would impact the industry significantly, which it does.

Mr. Jim Gouk: That's in essence what we've done--or are in the process of doing.

That's all I have, Mr. Chair. Thank you.

Mrs. Lynne Yelich (Blackstrap, Canadian Alliance): I have one.

The Chair: Yes, Ms. Yelich.

Mrs. Lynne Yelich: You were comparing your industry with VIA Rail when you said there was unfairness, but I wondered if you had any comparisons to make with the airline industry. Do you think you're treated more fairly or less fairly?

Mr. Dave Leach: I certainly do think we compete fairly with the airline industry. WestJet is a significant competitor of ours in western Canada. They have $39 fares from Vancouver to Kelowna, and we price it at $29 a fare. If we can't cover our costs, then we go out of business, and if WestJet can't cover theirs, they go out of business. Market forces drive competition there, and that's the way it should be.

Mrs. Lynne Yelich: I just want to clarify something. You said the provinces subsidize you somewhat. Did I get that right?

Mr. Dave Leach: No. It's the federal government that regulates the intercity bus industry. We have minimum levels of service we have to provide, and that's not only for certain corridors, like origin-destination pairs, but also for service to remote points. We service over 3,000 communities in this country, and Greyhound Canada runs 780 facilities in this country. To put it in perspective, I might point out that there are only 70 airports.

So the network we support is supported by a regulated environment in part. A lack of competition from another intercity bus carrier on a major corridor allows us to provide service to small rural parts of the country that aren't profitable. Greyhound Canada has done a lot of work in trying to offset our operating costs in smaller towns by running freight on our services. We try to find innovative ways to build more revenue into the schedule, so we put trailers behind buses now and we supply bits and parts and chunks to small-town Canada.

Just before we leave that part of remote Canada--we could go on for a while on this issue--I'd like to bring something up. VIA Rail says they should provide service where there is a lack of an alternative or there's a public need and necessity; that's their definition of “remote service”. We would agree that, say, the Churchill run fits that criterion, but Edmonton to Prince Rupert doesn't fit that criterion. Greyhound Canada runs three times a day on that corridor. Why does VIA Rail run under the guise of remote service down there? I would suggest that they're trying to compete with Rocky Mountaineer Rail Tours on rail leisure services in that area and that it has nothing to do with public need and necessity. This whole area needs review, in our opinion.

Mrs. Lynne Yelich: I would just like to reiterate what Mr. Keyes' request was. I do hope that you will provide details as he has asked, and I think that would be really helpful.

The Chair: Is there any other questioning?

Ms. Desjarlais.

Mrs. Bev Desjarlais: I just have a couple of quick questions. I just want to verify something. Your cost for the motor coach was how much?

Mr. Dave Leach: It's between $500,000 and $600,000.

Mrs. Bev Desjarlais: Is there any kind of subsidization out there for the bus industry when a bus company is building buses and there's a risk they might go out of business? Has there ever been any government subsidy for bus companies so the buses can be built?

Mr. Dave Leach: Not for the bus company; not for our company; not for the operator.

Mrs. Bev Desjarlais: No, but is there something for the manufacturer so the buses can be built?

Mr. Dave Leach: There is for the manufacturer, certainly.

Mrs. Bev Desjarlais: You don't think that would be seen as a subsidy to a particular industry, where down the road that industry would benefit from that, the same as if the government was to give a train company some subsidy?

À (1005)

Mr. Dave Leach: Certainly, and let me comment on subsidies. We are not against subsidies; we are against unfair competition as a result of those subsidies.

Mrs. Bev Desjarlais: You mentioned a route where you were competing against WestJet. Would you have to take a bit of a decrease in revenue or possibly see that route not being profitable because you had to drop the fare to $29?

Mr. Brad Shephard: In some cases we actually don't drop it down to their level as we wouldn't be able to recover our costs. We don't really try to--

Mrs. Bev Desjarlais: But there was a suggestion that you do do that.

Mr. Brad Shephard: We do if we know there's still money to be made for us, but we don't really go below our costs.

Mrs. Bev Desjarlais: You would never sort of cross-subsidize, knowing that your bus passengers from here to there are going to continue on another route that is profitable? You wouldn't use that kind of cross-subsidy?

Mr. Brad Shephard: We deal on an overall basis. We try to implement overall pricing strategies that cover that rather than--

Mrs. Bev Desjarlais: Would that be the same kind of overall pricing strategy VIA might use, running from this quarter to this quarter, maybe, to offset costs in another quarter?

Mr. Dave Leach: I think we should be careful on that. We can't afford to price ourselves under our long-term operating costs. We can do short-term incentives, but we can't afford to price ourselves under or we'll go out of business. VIA Rail can, and that's a very basic distinction between the two businesses.

Mrs. Bev Desjarlais: Thank you.

The Chair: Thank you, Ms. Desjarlais.

I have a couple of questions here. According to what you said, Mr. Leach, you feel that WestJet, Jetsgo, or CanJet is fair competition. Nobody likes extreme competition, but that's good competition.

Mr. Dave Leach: Yes, and we encourage that.

The Chair: So there's no problem in that area.

In your recent history, have you found it necessary to add any of the following? I'll give them to you one at a time. Have you found it necessary to add a fuel tax or surcharge to any tickets you sell?

Mr. Dave Leach: On the passenger services side we haven't, and there's a very good reason for that; I'll let Brad speak to that in a moment. But we have added it onto our courier express side because of the pickup and delivery component of the parcel business, where we have owner-operated vehicles out on the road picking up and delivering packages.

The Chair: That's a separate business, isn't it?

Mr. Dave Leach: Yes, it is. Although the parcels travel on the bus, it's separate.

Brad, maybe you want to talk a little bit about this.

Mr. Brad Shephard: To be competitive we haven't gone to a fuel surcharge as of yet. We also try to price our specials so we take into account the fuel costs, and we're not undercutting on that.

Mrs. Bev Desjarlais: Mr. Chairman, would you allow me just to ask another question along that line?

The Chair: Certainly. This is such a friendly committee that you can just jump in any time you want, Ms. Desjarlais.

Mrs. Bev Desjarlais: You've already indicated that you ship cargo along with operating a passenger bus line and that the cargo that's being shipped on the same bus the passenger takes does have the fuel tax added, so there is a fuel tax being added to that part of the system.

Mr. Brad Shephard: Yes.

The Chair: So the answer to my question is no, for passenger service you've never added a fuel charge.

I know insurance rates are increasing. Do you add or have you ever added an extra insurance charge to the cost of your passenger ticket?

Mr. Dave Leach: No, we only do it if the passenger requests insurance on their luggage.

The Chair: That's over and above the coverage that's normally given.

Mr. Dave Leach: Yes, that's direct coverage for loss or damage.

The Chair: Do you ever find it necessary to add a terminal? You have 370 terminals in Canada or something.

Mr. Dave Leach: We have over 700.

The Chair: Do you ever find it necessary to add one and have your passengers pay a terminal charge as they do in airports with their terminal fees?

Mr. Dave Leach: No, but they pay indirectly--or directly--through the passenger fare.

The Chair: Yes, but you don't have a passenger fare of $30 and a terminal charge of $5.

Mr. Brad Shephard: No, we don't segregate the charges out. We try to put it all in one price.

The Chair: Your ticket price is all-inclusive, and you're satisfied that's the proper way to run it.

Mr. Dave Leach: Absolutely, except that there are areas where a national transportation policy could impact intermodalism. We talk about intermodalism, we talk about a national policy, and we talk about subsidization. Let's talk about Toronto and Union Station for a minute. Was intercity bus ever considered as part of the Union Station revitalization? I met with the federal minister on this very issue and was told, I'm sorry, but this is not part of the playbook today. Yet we're a component--

À (1010)

The Chair: Just a minute. These guys should pay attention to this. Say that again, please.

Mr. Dave Leach: I met with the minister about intermodalism and the inclusion of intercity bus in the revitalization of Union Station. As everybody knows, $600 million went to platform improvements for high speed rail out to the airport and all that stuff. Now, if anybody's been down to the Bay Street intercity bus terminal, which is run by the Toronto Transit Commission, they'll know it's a disgrace. Quite frankly, we're embarrassed with that facility.

As a private sector organization trying to improve its infrastructure, we approached the federal minister about being included in that transportation funding from an intermodal perspective. Take a look at the bus station in New York City or at Pacific Central Station in Vancouver, where Greyhound Canada has the head lease on that station from VIA Rail and we operate it. Quebec City is another facility as well, yet we couldn't get support from the federal minister for intermodal inclusion in that project, and it goes on from there.

From a transit perspective, we're going to improve our services from 3,000 commuter trips a day to 10,000. It's going to cost Greyhound Canada $20 million in capital infrastructure up front for park-and-ride facilities, and we need a facility in downtown Toronto to incorporate this. We're getting cars off the highway and the environmental impact is enormous, yet we get no support--zero--because we're not rail and it doesn't impact rail. Yet--

The Chair: Joe, did you have a question?

Mr. Joe Fontana (London North Centre, Lib.): How can we explain stupidity?

Some hon. members: Oh, oh!

Mr. Dave Leach: I appreciate that.

The Chair: Mr. Proulx.

Mr. Marcel Proulx (Hull—Aylmer, Lib.): On a point of order, I think maybe we should put it on the record that the train station mentioned doesn't belong to the federal government any more. I wasn't there, but the federal minister probably said, don't talk to me; go and talk to the City of Toronto.

A Voice: That's not the issue.

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

The Chair: Mr. Leach would like to respond to the point of order.

Mr. Dave Leach: I just wanted to clarify the issue. That's a valid comment because it refers to Union Station itself, but the facility we were looking at was next to the station and was to be incorporated, and we were prepared to fully fund the capital requirement. We needed funding for intermodal connections between our facility and Union Station, and unfortunately, at the negotiating table between the provincial government and the federal government, Infrastructure Canada told the provincial government that the bus depot part of this project wasn't going to be included.

The Chair: Thank you.

Montreal to Toronto: how long does it take?

Mr. Dave Leach: Do you mean directly along the lakeshore?

The Chair: What's your best route?

Mr. Dave Leach: We go via Ottawa, where there's another bus company, Trentway-Wager, that runs directly from there. It's about what, Brad?

Mr. Brad Shephard: It's about six and half, seven hours.

The Chair: I have one other question. You stated you would be willing to embrace an additional cost with respect to the cost of highways. This is hypothetical, but suppose the Government of Canada was to develop a program for a four-lane national highway right across the country, with particular emphasis on the 11 major border crossing points. It would be built up to standards that would exceed what we see now in the interstate highway system in the United States. What do you mean, then, when you say you will embrace an additional cost? This is going to be expensive. It's going to be for users.

À (1015)

Mr. Dave Leach: I think the point to be made here is that with respect to cost, our usage portion of highway infrastructure is insignificant when compared to the total usage of the highway. The impact we have in moving passengers is so small that we would embrace that. If we had to pay for the highway just for ourselves, as one of the committee members suggested, we couldn't do it. But certainly, we are prepared to contribute because we know how little usage we have of that highway compared to trucking and the individual automobile.

So yes, if everybody shares in that cost, we certainly are prepared to share the cost for any infrastructure we use. We'll pay for it, and we do at this point in time through the fuel taxes we pay.

The Chair: I'm talking about something over and above the regular fuel tax.

Mr. Dave Leach: Well, if it's a toll or something to that effect--

The Chair: There'll be no tolls.

Mr. Dave Leach: --what we would encourage the committee to look at is combining the current funds being received through that fuel tax and--

The Chair: You can't get it mixed up in the taxation.

Mr. Dave Leach: Yes, but the taxes cover that part of the highway, in our opinion.

The Chair: I want to be clear about what you said. You said you would embrace an additional cost for improved highways. That's what you said.

Mr. Dave Leach: I said we would embrace full cost allocation for our usage of the highway, whether that's through a tax on fuel or some other way. That's what we would embrace.

The Chair: Let me give you an example. Say you were already paying your regular cost. If the total cost of the highway project was $20 billion and the trucking industry made a contribution of, say, 3¢ to 4¢ a litre over and above the regular taxes and the bus industry was asked to make a negotiated contribution of 2¢ or 3¢ a litre extra over the time the highway was in use, would that be something your industry would entertain?

Mr. Dave Leach: Probably not, and I might say--

The Chair: Well, then I don't know what you mean by your statement.

Mr. Dave Leach: I'll be upfront and open with you. We feel the taxes we now pay cover that infrastructure development.

The Chair: No, they don't.

Mr. Dave Leach: That's what we feel. That's through fuel.

The Chair: Thank you very much for coming today.

We're going to take a five-minute break.

À (1025)

The Vice-Chair (Mr. John Cannis (Scarborough Centre, Lib.)): I'd like to call the meeting to order if I could.

Our second witness is from Groupe Orléans Express Inc., and we'd like to welcome to the committee Mr. Sylvain Langis, president and CEO. Welcome to our committee. The floor is yours, sir.

Mr. Sylvain Langis (President and CEO, Groupe Orléans Express Inc.): Well, Mr. Chairman, thank you very much, and good morning. Good morning to the members of the committee, and thank you for affording me the opportunity to appear before you today.

As you said, my name is Sylvain Langis. I'm the president and CEO of Groupe Orléans Express Inc. Orléans Express is the largest intercity bus carrier in Quebec and the second largest in Canada in the intercity scheduled bus system in Canada, after Greyhound.

I'm also president of the Canadian Bus Association, although I'm appearing here before you this morning as Orléans' representative.

[Translation]

Given that this committee also has francophone members, I will be making my presentation in both languages. Unfortunately, I did not have enough time to translate the entire text. It is available in English. I believe it will be translated and everyone will have access to it.

[English]

Maybe first off I'll answer one of the questions that was asked at the beginning of Mr. Leach's presentation. Yes, we were also consulted through the transportation blueprint process, and all our comments were written down and left with Transport Canada at that time, including comments on some issues that will be raised in my presentation here this morning.

I'm here today to offer my insights on Bill C-26, on what is both addressed and not addressed in the bill. As you know, Bill C-26 is intended to implement substantial portions of the government's national transportation strategy as set out in the white paper “Straight Ahead”.

A little earlier my colleagues from Greyhound offered pertinent insights on the flawed process that has led to the draft VIA Rail Act contained within Bill C-26, as well as on VIA Rail's pointless attempt to become a commuter service supplier in the Greater Toronto Area. I will not waste the committee's time by repeating the arguments but will concentrate on two important issues: one, how the government's white paper fails by not properly taking the needs of small-town Canada into account; and two, how continuing unfair competition from VIA Rail threatens my own company and the public service we provide.

Let me begin by assuring this committee that we support substantial portions of the government's white paper. There are, however, three areas where we believe the white paper is deficient. First, the federal government recognizes a commitment to help urban centres and remote communities in respect of their transportation needs but ignores the needs of towns and rural areas.

Second, the white paper defers dealing with the intercity bus industry, noting that they have not had time to absorb the findings of the Senate committee's report on our industry tabled in December 2002. By the way, that committee was set up at the request of the minister. Our strong suggestion to this committee is that one cannot develop a national transportation strategy by ignoring Canada's largest intercity passenger mode. The total passenger traffic of the intercity bus mode is more than double the combined passenger traffic of the air and rail modes. Presumably, as policy-makers devise new approaches to transportation policy, the bus industry and the passengers it serves will not be left standing at the side of the road.

Third, the continuing attempts by the federal government to increase subsidies to VIA Rail in order to finance more assaults on the market shares of the air and bus modes serve to repudiate the government's own stated transportation vision. The government says one thing in the white paper and then does the opposite in practice.

À (1030)

[Translation]

Generally speaking, we agree with the transportation vision outline by the government in the White Paper, except for one notable exception. By an act of semantics, the government chooses to define an urban area as any population centre of more than 10,000. They assert thereby that 80 per cent of Canadians live in an urban setting.

The White Paper then commits to make transportation investments that will help reduce urban congestion. Their only other commitment is to remote communities, typically defined as a community without access to a year-round all-weather road that is connected to the highway network. In so far as remote communities are concerned, the government has made a commitment to respect self-regulation to the extent possible and to guarantee the ongoing provision of essential services.

The statement that 80 per cent of Canadians live in urban areas misleads Canadians about what constitutes an urban area. By this definition, the towns of Dawson Creek, Amos or Petawawa are urban areas—which may come as somewhat of a surprise to their respective citizens.

Let us now look at a more representative cross-section of Canada's population. There are six municipal areas, namely cities with a population of over 1 million, representing 45 per cent of the total population, there are 19 municipal areas with a population of between 100,000 and a million and these areas represent 17 per cent of the Canadian population. Towns with populations of between 10,000 and 100,000 represent 18 per cent of this population. Villages and rural regions represent 19 per cent and remote communities represent 1 per cent.

We appreciate that there is both a political and legitimate economic justification for meeting the transportation needs of our largest urban centres. But, we doubt that much federal support money will ever be made available beyond the largest six urban centres if the sole justification is to address urban congestion. We can virtually guarantee that no federal support money will ever be made beyond the 25 largest urban centres of Canada. The opportunities for Amos or Dawson Creek to receive federal transportation support in order to alleviate urban congestion are non-existent.

Therefore, the government's claim that its strategy addresses the needs of 80 per cent of Canadians is clearly exaggerated.

À (1035)

[English]

In this context, it is noteworthy that both the white paper and Bill C-26 do not address the role of the intercity bus industry. It is our industry that acts as the glue connecting small-town Canada to the national transportation network. We appreciate the fact that the Senate committee study on the intercity bus industry was not tabled until December of 2002. We appreciate that the stated intent of the government is to consult with their provincial and territorial colleagues in due course, whenever that is. But in the meantime, we have a national transportation strategy that does not take into account an industry that serves some 3,000 towns and that overall provides some 100 million passenger trips annually. By comparison, the domestic scheduled intercity air and rail industries have a combined traffic of some 30 million passenger trips annually.

We are the only passenger transportation mode that is profitable, albeit with slim profit margins. We are the least subsidized transportation mode. We are the safest surface travel mode. We are the least environmentally damaging transportation mode by a huge margin over the others. Yet we are ignored in the government's national transportation policy. Government cannot have an effective national transportation strategy until it includes the needs of small-town Canada and also determines the future role of the intercity bus industry within the overall strategy.

[Translation]

You have already heard from my colleagues at Greyhound about the huge gap that exists between the government's stated transportation vision and the manner in which it proposes to pursue this vision. In effect, their message is: “Do as I say, not as I do.” The government insistence on protecting certain interests is, for us, disappointing in the extreme. A national transportation strategy must be even-handed, not incomplete and inconsistent. It must look forward to our country's future needs, not backwards to sustaining outmoded interests. Having a vision implies a sense of leadership and not an arrogant perpetuation of the status quo.

All of which brings me to the current government's misguided VIA Rail policy. I am aware, and appreciative, that many committee members share my misgivings about the Minister of Transportation well-known affection for passenger rail. But the current government needs to get a grip on reality. The bus industry is not opposed to modal subsidies, although we strongly believe that they should be minimized whenever possible.

But during the past year, we have seen the minister pursue two separate funding initiatives for VIA Rail—first, a multi-million dollar commitment for high-speed rail in the Montreal-Ottawa-Toronto triangle and when that lost momentum, a substantial expansion of conventional rail capacity—largely devoted to the Corridor.

[English]

Neither of these funding proposals has ever been made public and therefore must be regarded with suspicion.

The commercial air and bus industries are not alone in this assessment. The CTA Review Panel, appointed by the current minister, clearly reached a similar conclusion even before these additional funding requests had been submitted. The panel made a series of VIA Rail policy recommendations that emphasized transparency on how subsidy moneys are spent, full cost recovery in the corridor, the commercialization of VIA Rail routes whenever possible, etc. The panel members have regarded the minister's subsequent billion dollar subsidy proposals with horror.

But rather than dwelling on future threats from VIA Rail, I'll describe the unfair competition from VIA Rail that already exists. I have attached to my oral presentation two brief summaries, “Relative Modal Costs” for the Montreal-Quebec City pair as well as “Public Mode Fare Levels” in the same market. Rather than reading out this information to you, I invite you to briefly review it. Unfortunately, I don't think the documents have been presented, but this, I believe, would answer one of Mr. Keyes' questions to the Greyhound representatives a little earlier.

In summary, I will point out that VIA Rail sells its passenger seats at rail fares from 50% to 75% below true operating costs. Moreover, VIA sells many of these seats at the same level as bus fares, even though bus operating costs are roughly four times less than rail operating costs on this lane. It's our contention that VIA is already using federal subsidies to finance predatory activity against the unsubsidized commercial travel modes. If the federal government grants further subsidies to expand VIA Rail's capacity on the Montreal-Quebec City lane, the predatory impact will increase exponentially. In order to attract car ridership and/or fill the added rail passenger seats, VIA Rail must discount their passenger fares even further below the heavily subsidized level that exists today.

À (1040)

[Translation]

This is not just an issue affecting public travel options between Montreal and Quebec City. As many of you already know, the scheduled bus industry is required to cross-subsidize unprofitable rural route services out of profits from their profitable routes.

In our own case, Orléans Express has an exclusive permit to operate between Montreal and Quebec City but is also required by the Quebec government to provide scheduled bus services in such outlying areas as the Mauricie and the Gaspé, both of which service regions are very unprofitable. If federal government subsidies to VIA Rail are used to erode our profitability on the Montreal/Quebec City route, we will be unable to continue to provide scheduled service in the unprofitable portions of our route network. Even though this may seem somewhat contradictory given the present context, it could well happen that one of the first regions to be deprived of scheduled bus service would be the Mauricie, the current Prime Minister's region, where we cross-subsidize the service provided on a daily basis.

The federal government needs to be more sensitive to the fact that its VIA Rail funding decisions have ramifications throughout the transportation network. A decision to increase rail market share between Montreal and Quebec City can result in the loss of public mode service to Shawinigan or to Matane.

[English]

Before closing, I'd like to add a brief comment about the minister's proposal last Friday to grant a further capital subsidy of $697 million to VIA Rail. Please bear in mind that these new moneys are in addition to VIA Rail's annual $170 million grant in operating subsidies. This latest proposal is also in addition to the $402 million granted to VIA Rail in 2000, a subsidy program that does not expire until 2005 and the moneys of which are still not exhausted.

Assuming the annual cap on VIA Rail's operating subsidy remains firm and does not also need to be increased and assuming the minister's new capital subsidy program is implemented, this means VIA Rail will have received approximately $2.8 billion in federal funding between 2000 and 2009, and the minister also wants another roughly $3 billion to pursue high speed rail in the corridor. The size of these commitments is staggering, especially in view of the more pressing social needs that must compete for access to the same federal funding.

Let me close this presentation by making two specific recommendations to the committee. First, the national transportation strategy as set out in the government's white paper is flawed. It shortchanges small-town Canada and fails to set out any role for Canada's largest intercity travel mode. The government strategy must offer a complete vision, not one to be further amended in due course at some unspecified future date.

Second, VIA Rail's role in the transportation network needs to be rationalized, not continued and not expanded. A public review of its current and future role as well as a complete disclosure of how VIA Rail now spends taxpayers' money is essential.

Two separate federal commissions, both the 1992 royal commission and the minister's own 2001 CTA Review Panel, made forceful recommendations to place VIA Rail on a more commercial and more publicly transparent footing. As presently subsidized and without adequate public accountability, VIA Rail acts as an impediment to an efficient transportation network in Canada and even fails to comply with the transportation vision set out in the government's own white paper.

Thank you for letting me make this presentation, and I'll be very happy to answer your questions in both official languages.

À (1045)

The Chair: Thank you, Mr. Langis.

Mr. Gouk.

Mr. Jim Gouk: Thank you, Mr. Chair.

This is just to put things in perspective, because you were mentioning a variety of different subsidization figures for VIA Rail. In actual fact, since 1993, when the present government took office, they have had $3 billion. By the end of the latest funding period included in the minister's new funding announcement, the amount will exceed $4.5 billion, and their annual operating subsidy is half a million dollars a day. That's just so it's in perspective; that's what VIA Rail gets.

You've sort of answered this, but I'd like to put it succinctly in the form of three questions. If the subsidization of VIA Rail continues and is increased and if VIA ultimately moves into high speed rail service through to Quebec City, would that harm your company in Quebec?

Mr. Sylvain Langis: Oh, definitely. If the conditions for the sale of those seats are set the way they have been in the past, it will definitely have an impact on us. In all the strategies in past years, they've never pronounced the word “bus”. They've always said they were trying to attract more car passengers, but all the pricing strategy has been set parallel to the bus pricing in order to attract bus passengers.

Just in Quebec City, for example, we're sitting in the same station. At least there's an intermodal link there, but we're sitting in the same station, and it's obvious that if you offer passengers a much better deal for their money, they will take the better offer. But there's one reality. The more passengers you attract with subsidies within the big Quebec City-Windsor corridor, the less possibility our industry has to cross-subsidize services where there is no train or plane, only bus service. This is why I speak so loudly about small-town Canada.

Mr. Jim Gouk: The next question ties into that. If you were to be driven out of business--God forbid--what impact would that have on the travelling public in your service area?

Mr. Sylvain Langis: If we went out of business, you'd have impacts not only on us but on all the other companies that interconnect with our own network in the province of Quebec. You would have impacts not only on the actual Orléans Express network where it competes directly with VIA Rail, but you would have impacts on regions such as the Saguenay and Lac Saint-Jean area, the north shore of the St. Lawrence, and the Abitibi, which have services that do interconnect with our network but not necessarily with the rail system.

Mr. Jim Gouk: What impact would that have on the travelling public?

Mr. Sylvain Langis: There would be no more services in those regions. If you take the region of the Gaspé Peninsula, for example, we definitely cross-subsidize that area for approximately $1 million a year in non-profitability. It's the same thing with the Mauricie region, which is essentially the riding of the actual prime minister.

Mr. Jim Gouk: Conversely, if for some reason VIA Rail were to go out of business, what impact would that have on the travelling public and what service would be fully lost that wouldn't be picked up by someone else, whether it be you or someone else?

Mr. Sylvain Langis: If the rail system were to go out of business?

Mr. Jim Gouk: If VIA Rail ceased to operate--with notice.

Mr. Sylvain Langis: We already serve all those areas and even more.

The Chair: Thank you.

Mr. Laframboise.

[Translation]

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

First of all, I would like to thank you on your presentation. In Quebec's communities, the bus has been the most reliable mode of transportation for a long time. Despite all of the turbulence that has occurred in the transportation sector, bus service has always been available. This must not change: cross-subsidization must continue.

However, based on what you are saying today, the government's plans to invest in VIA Rail could jeopardize cross-subsidization. Is that accurate?

À (1050)

Mr. Sylvain Langis: I think that there are two aspects to that issue. First of all, the blind manner—and here I'm expressing our opinion, if I may—in which the government intends to make these investments and the size of the subsidies to be given to VIA Rail, given the number of passengers involved, is jeopardizing our industry. How can I show that this is the case?

Let's say that every dollar invested in subsidies increases VIA Rail's capacity to attract new passengers, either by offering new departure times or better infrastructure leading to faster trains. The subsidies always strike at the heart of the private sector's resources, whether you're talking about the bus industry or, to a certain extent, air transport.

In addition to the subsidies themselves, the way that this money is being spent concerns us tremendously. Over the years, we have seen many examples of subsidies with extremely inefficient results. For example, there was the acquisition of the new Renaissance cars. These traincars had less space than Bombardier's LRC trains. As a result, to transport the same number of passengers, more traincars were required.

I am no engineer, but I would assume that an increased number of traincars results in more energy, which means more fuel costs and greater pollution in the areas travelled. In addition, from what I can gather, when you add on more traincars, it costs more money to rent the space required to transport passengers by rail.

So, in addition to requiring more traincars to transport the same number of passengers, you have to pay more money to transport them. There's something about the way this Crown Corporation is managed that I just do not understand.

Mr. Mario Laframboise: I'm going to make an assumption and then, I would like you to tell me what it is that I fail to understand. I would like all transportation modes to be able to serve communities. If we want satisfactory economic growth and tourism development, we need a healthy railway system and highway system, and other transportation systems need to be operating satisfactorily as well.

As for the railway system, I don't think the company is generally responsible for infrastructure costs—here, I am talking about railway tracks. VIA Rail says it has a problem: it cannot serve communities properly because it is obliged to share the tracks with freight trains and its schedules are overridden. It would like to have dedicated tracks.

I tend to support that notion. And VIA Rail should not necessarily be responsible for the cost of those tracks. You use the highways; that is how you get around. But VIA has a significant limitation. I don't mean the cost of equipment, which in my view it should be responsible for. I think it is up to VIA Rail to buy locomotives and work towards the company's development. However, as a society, we should ensure that transportation modes, transportation companies, have the means they need to operate properly. I am talking about the railway tracks that VIA uses. What is wrong with my theory?

Mr. Sylvain Langis: I will answer your question with a question, if I may. Can you explain why VIA Rail, rather than fulfilling the social role we play in all parts of the country, has withdrawn from non-profitable regions because it was not making money serving them? To ensure its survival, VIA Rail withdrew from all regional segments to focus on the only profitable corridor in Canada—the Quebec City-Windsor corridor.

But today, VIA Rail is asking for additional funding to serve only one area of Canada, the most highly populated region, the Quebec City-Windsor corridor. It wants to provide service, but only on condition that it receives huge subsidies. Who would subsidize VIA Rail? The business people who use the train and who need the least encouragement to travel. That's my answer.

VIA Rail runs service to Gaspé three times a week. So people who need to travel everyday, for example between Gaspé and the Rimouski Hospital, are not having their needs met by VIA Rail. They are using the Orléans Express. It's not VIA Rail but bus lines that are meeting people's transportation needs in areas like northern Manitoba and Saskatchewan. With the subsidies, should VIA Rail not be playing a social role and providing services in the regions, rather than competing with private-sector carriers who are well able to provide service in the regions where they have a market? That is my question to you.

À (1055)

Mr. Mario Laframboise: I would say you are right. My only problem is this: I fear that the government will deregulate everything, prevent cross-subsidization and tell you that henceforth you can do anything you like. The minute the government does that, I will lose all the services you provide in the remote areas.

Mr. Sylvain Langis: If the government deregulates our industry, we will ask that it put the train on the same wavelength, as it were—that it to put us both on an even playing field. If our industry is deregulated, then for a while all players will focus on the major markets, and small-town Canada will pay the price. But people in the regions pay exactly as much in taxes to the government as you and I do.

Mr. Mario Laframboise: So when people say that you may not be paying your fair share of highway subsidization, you have an answer ready.

Mr. Sylvain Langis: That makes me laugh, because I have been hearing it for 20 years. You should take a fresh look at some documents produced by Ottawa, including the 1992 report by the Royal Commission on National Passenger Transportation, which studied this issue in particular. According to the Commission, the bus industry was paying its fair share if not more for using the road and highway system in Canada. Let me give you an example: in Canada, there are 3,000 to 4,000 buses. Take—

[English]

The Chair: Thank you, Mr. Laframboise.

Mr. Barnes.

Mr. Sylvain Langis: I had not finished.

The Chair: Well, we have to move on.

Mrs. Lynne Yelich: Perhaps you would like to revisit this in writing and give us a submission with what you feel you've contributed. We've asked Greyhound to forward us a breakdown.

The Chair: Mr. Barnes.

Mr. Rex Barnes (Gander—Grand Falls, PC): Thank you, Mr. Chairman.

There's no doubt in the mind of anyone around this table, I suppose, with regard to your business that if VIA Rail wasn't being heavily subsidized, they couldn't afford to run. There's no doubt in anyone's mind.

Mr. Sylvain Langis: You're absolutely right. They would probably have to charge so much for each ticket that there wouldn't be any passenger who would want to use the system.

That being said, do we need to invest in a rail system if it costs so much to Canada? Maybe it suits other countries, ones that have so many people who can use the system, but here, can we afford to have such a rail system?

I'll just give you an example. VIA Rail carries, let's say, 4 million passengers today system-wide. Even with high speed rail they may only double that number, and there are still just 8 million passengers they carry. Is it worthwhile? I'm just asking the question.

Mr. Rex Barnes: Those are some of the questions that are going to be hard to answer. From a political perspective, they'll probably say it's a good thing, but from a company and private business perspective, it's probably not a very good thing.

Mr. Sylvain Langis: What we gather from the minister's argument is that it was mainly based on environmental questions, where it would reduce so much traffic around, for example, the Greater Toronto Area or the greater Montreal area. I think the minister has been badly briefed by someone somewhere, because when you look at all the numbers and all the studies, you will very easily see that most of the traffic you find in the Greater Toronto Area or the greater Montreal area comes from a perimeter that is about 80 kilometres away. It's not the traffic that comes from Montreal and goes to Toronto that constitutes the congestion in the morning; it's the traffic that comes from the suburbs. It's the same in the Montreal area. So even though you reduced by so many passengers the traffic between Toronto and Montreal, it would have absolutely no impact on the congestion in the Greater Toronto Area. This is where I absolutely don't agree with the minister's arguments.

Á (1100)

Mr. Rex Barnes: With respect to duplication of the road service versus the rail service, is there a lot of duplication with regard to the bus line industry?

Mr. Sylvain Langis: What do you mean by “duplication” here?

Mr. Rex Barnes: I mean the same runs. If passengers can take the bus versus the train, is there a lot of duplication? If there's a lot of duplication, there should always be consideration about what is more affordable without subsidies.

Mr. Sylvain Langis: There is a lot of duplication, but essentially along what used to be the Grand Trunk from, I'd say, Vancouver to Halifax; all along that rail route, definitely you have duplications. But from the trunk to all other areas, it's essentially done by the bus industry.

Mr. Rex Barnes: If things continue on the same route as they normally have continued over the last while, this bill is going to pass, probably with changes--hopefully with changes if the feeling is that it should change. But if it doesn't change, what impact is it going to have for your long term?

Mr. Sylvain Langis: I think my colleagues from Greyhound clearly pointed out the effects of proposed subsection 8(2). The way we read it, it would have just a dramatic impact on the services we provide throughout the country right now, because then VIA could do anything it wanted. That way, based on the example of a $1 ticket that was given by Mr. Leach, they could just kill us within one year. If they did that, again, who'd subsidize a bus industry to go and serve small Canada? The same taxpayer? Aren't we here to somehow manage how those moneys are spent? There are so many things we cannot understand.

Mr. Rex Barnes: What I always firmly believe is that we have to allow transportation to move people from one end of the country to the other end of the country at the lowest cost possible to make it affordable. But at the same time, I don't think government should be into heavy subsidies, regardless of what anyone may feel about it. They may say that the bus line industry is subsidized because of the roads, but then of course, the roads are there for the better good of the general populace.

With regard to VIA Rail, the railway system is there for a single use, we'll say, and it's not used by the general populace. Therefore, it's heavily subsidized to make sure it's feasible to operate. We as Canadians all pay to make sure the roads are maintained, so I don't think the bus line industry is subsidized with regard to that. The roads are there for the better good of all.

The Chair: Thank you, Mr. Barnes.

Mr. Cannis, and then Ms. Yelich has the final one.

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

I have a sort of quick question, but before I ask the question, I know your comment with respect to us needing rail in Canada was meant constructively. When we look at it from a historical perspective relating to the building of our country, etc., it plays a vital role. I think the question lies more in the degree to which degree subsidies and support continue.

But I do want to ask you to elaborate on something for me. In your statement you said there was a Senate report and there were some positive things in that report and so on with respect to what is in Bill C-26 right now. Can you just, for the benefit of us all, maybe outline some of these issues or points presented in the report from the Senate that were not included, implemented, or touched upon in the current bill?

Mr. Sylvain Langis: What we hear is that when the Senate report came out, the blueprint was already written, so they didn't take into account any of the recommendations the Senate committee made. We found that very unfortunate because the whole question of the bus industry was brought out at the Senate committee at the minister's own request.

Á (1105)

Mr. John Cannis: Can you recall some of the recommendations that were made?

Mr. Sylvain Langis: Unfortunately, I don't have them with me, but I could send you all the information. I'd be very happy to do so.

The Chair: Thank you, Mr. Cannis.

Ms. Yelich.

Mrs. Lynne Yelich: I wonder if there's anywhere in the big picture you see having passenger rail as an advantage.

Mr. Sylvain Langis: Listen, I speak very loud and very often against subsidies to the rail system, but I'm not against a train system. Don't read me wrong.

Mrs. Lynne Yelich: I do believe we need it to ship goods, so we do need rail. I'm talking about passenger rail. Do you see a need anywhere? You mentioned you don't believe a corridor is necessary between Windsor and Quebec City. Did I get that right?

Mr. Sylvain Langis: Not the way it is set up right now, with very high subsidies for rail to compete against other, private transportation modes that can do the job. If we had a passenger rail system in the corridor that recovered a better portion of its costs, I don't think any of us would have a problem with that. But right now, because of the way the subsidies are given away and the way they're used by Via Rail, we in fact suffer predatory pricing, and this is where we start screaming. None of us can be against the development of technology, but it's just a matter of the way the subsidies are given away and the way they're used by the crown corporation.

Mrs. Lynne Yelich: Thank you very much.

I can't imagine how you felt when you read the headlines last Friday. It must have pushed you off the deep end.

The Chair: Mr. Langis, thank you.

There's just one question somebody forgot to ask, and I have it here. What's the size of your seats compared to airline seats? Is it 24 inches, 26 inches? Do you know offhand?

Mr. Sylvain Langis: That's an excellent question, but I'm sure they're about the same size as seats you find in the--

The Chair: Would you get your colleagues behind to...?

Yes, sir.

Mr. Don W. Haire (President, Proteus Transportation Enterprises Inc.): In terms of the pitch, they're slightly larger than those in economy class but smaller than those in business class.

Mrs. Lynne Yelich: We heard an interesting statistic about how commuter traffic only goes 80 kilometres out in Montreal or Toronto. Could you make those statistics or percentages available to us as well?

Mr. Sylvain Langis: Do you mean for the commuting system around the Montreal area? Yes.

Mrs. Lynne Yelich: It was that it is really going to serve only a small number of people, and perhaps there's not even a necessity for commuter--

Mr. Sylvain Langis: I can give you an idea. Just in the Montreal area, the commuting system run by private companies serves over 13 million passengers.

Mrs. Lynne Yelich: There you go.

Mr. Sylvain Langis: We can provide you with all the information.

The Chair: Thank you.

If I could, I'll express some thoughts to you and through you to your other colleagues in the bus industry. I think you understand that with the evidence we've received this morning on the number of riders you have, your submission and the submissions from previous presenters are finally falling on some very favourable ears at the committee level. However, I must emphasize that the information the committee members need should be delivered fairly quickly.

I would also suggest that one of the largest impediments when it comes to making comparisons is the fact that you have the same problem as the trucking industry, namely that you don't pay adequately for your use of the highway system, taking into account the social and environmental costs and so on. That's just a statement--no, it's not. You'd better address that issue in your submission.

Á (1110)

Mr. Sylvain Langis: We will.

The Chair: I tried to get the previous witness to acknowledge something in that respect. I would very strongly suggest that you address that particular aspect of transportation needs in your further submission.

Thank you very much.

I apologize to the committee that's coming in. The equipment wasn't operating this morning.

The meeting stands adjourned.