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I call this meeting to order.

Welcome to meeting No. 59 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 3, 2022, the committee is meeting to discuss its study on large port infrastructure expansion projects in Canada and air passenger protection regulation.

Today's meeting is taking place in a hybrid format pursuant to the House order of Thursday, June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

I wish to inform the committee that all witnesses have been sound-tested for the benefit of our translators and interpreters for today's meeting, and have passed the test.

Appearing before us today, colleagues, from the Association of Canadian Port Authorities, we have Mr. Daniel-Robert Gooch, president and chief executive officer. From the Chamber of Shipping, we have Bonnie Gee, president, joining us by video conference. From the International Longshore and Warehouse Union Canada, we have Robert Ashton, president, joining us by video conference. From the Vancouver Airport Authority, we have Mr. Trevor Boudreau, director of government relations, by video conference. From the Vancouver Fraser Port Authority, we have Mr. Cliff Stewart, vice-president of infrastructure, joining by video conference.

We'll begin with our opening remarks, with Mr. Gooch.

Mr. Gooch, the floor is yours. You have five minutes.

Thank you.

Members of the committee, thank you for the opportunity to address you today as part of your study.

My name is Daniel‑Robert Gooch and I am the president and chief executive officer of the Association of Canadian Port Authorities, which represents the 17 Canada Port Authorities

I understand that you recently toured several of our ports to learn more about the great work they're doing to ensure sufficient capacity to support Canadian trade now and for the future.

I imagine you also learned about the challenges ports face within the confines of the CPA model as it is currently structured. To ensure enough capacity to support growing Canadian trade through innovation and expansion, while supporting the decarbonization of marine transport, $110 billion in infrastructure investment over 50 years is needed, according to the supply chain task force.

We'd like to work with the federal government to gain a better handle on that infrastructure deficit and understand what it looks like across our seaports, and we have a proposal out for study.

However, to make the needed investments, CPAs need greater financial flexibility to act more nimbly while maintaining the arm's-length, commercial nature of Canada's CPAs. For larger ports, the borrowing limits on each CPA hit their ability to nimbly act on investment opportunities. It takes years to get the limits raised; they are too low to fund the investments needed, and they are much lower than what prudent commercial borrowers can secure.

The national trade corridors fund has provided nearly $1 billion to Canada's port authorities. It's a great program that should be made permanent and tweaked to allow ports to move more quickly on projects that have been NTCF-approved but not yet announced. The longer it takes to move a project forward, the higher the impact on inflation.

The NTCF was the first infrastructure program even open to CPAs, yet new federal programs are not always so. Canada benefits when new federal budget programs are open to CPA participation.

Smaller ports face different challenges. With lower revenues, they must be more creative in how to maintain and build infrastructure. The ability to pursue business lines that may not be directly marine-related but provide the revenue needed to maintain and grow marine operations would be helpful.

Being more creative also includes exploring ways for ports of all sizes to collaborate more, such as on joint infrastructure projects or procurement. There are proposals in to Transport Canada on this.

Federal funding will also play a role, as it does in other sectors, such as the funding small airports receive for safety infrastructure through the airports capital assistance program. A similar program for small ports would be helpful for CPAs and non-CPA ports.

However, self-funding options are also important. ACPA has called for moving beyond borrowing limits, allowing port authorities to borrow based on creditworthiness and project merit in order to access more capital more nimbly.

With Bill C-33 expected before committee soon, your recent tour of ports was timely.

Canada's port authorities welcomed the supply chain task force report, which called for port authorities to be modernized through more authority, financial flexibility and autonomy. We were pleased to see that the federal government's goal with Bill C-33 is to provide ports with the tools to unlock greater performance, efficiency and productivity as effective instruments of public policy. These are goals we share.

When ACPA and our members reviewed Bill C-33 after it was tabled, we were pleased to see provisions recognizing port terminals as “works for the general advantage of Canada”, enabling expansion to inland areas and a greater role for ports in traffic management.

However, we also outlined questions and concerns in a letter to Minister Alghabra in December. In response, one month ago today, we had a productive initial meeting with Transport Canada to understand how the government envisions the bill contributing to our shared goals.

Many questions remain, most notably on details of what ports would have to report on financials and strategic plans, and how borrowing limits in this new environment will actually work. We have sought follow-up meetings to understand this in detail, but that hasn't happened yet, and it's necessary for us to determine if the financial amendments proposed in Bill C-33 will help the industry meet our shared goals for a modernized, more nimble system of ports, or if they may have a detrimental impact.

We will also be proposing changes on the governance and advisory committee sections of Bill C-33, as ports have concerns there.

I'm happy to answer any questions you may have, and I'll do my best to respond. I may have to follow up if some of the questions are beyond my scope.

Thank you very much, Mr. Gooch.

Next, from the Chamber of Shipping, we have Ms. Bonnie Gee.

The floor is yours. You have five minutes.

Thank you, Mr. Chair, and good morning.

My name is Bonnie Gee. I am the president of the Chamber of Shipping. This is my first week in the role, so please be kind.

I wish to acknowledge first that I am speaking to you from the unceded territories of the Musqueam, Squamish and Tsleil-Waututh peoples.

On behalf of our members, who are shipowners, operators and agents who move a majority of Canada's international trade in the waters of the Asia-Pacific, the Chamber of Shipping appreciates the opportunity to provide our perspective on large port infrastructure expansion projects in Canada.

Port authorities are mandated to support the development of trade-enabling infrastructure to support the national interests of all Canadians.

Historically, port authorities have taken the lead on large infrastructure projects on what may appear to be speculative by some. What we know today as the Deltaport and Fairview Container terminals were really driven by a division of port authorities and community stakeholders, with little to no commitment from the shipping lines.

The context in which the shipping industry operates today has changed dramatically since then. There has been a tremendous increase in cargo volumes through the western trade corridors, and we have seen a piecemeal approach to improving infrastructure along the trade corridors to support the two major gateways in western Canada.

Port infrastructure expansion projects cannot be evaluated in isolation and must be part of a national growth strategy that encompasses all the pieces of the supply chain that would support fluidity through the intended project and the gateway as a whole.

A national supply chain strategy must involve provinces, municipalities, indigenous and local communities, and industry. Sufficient rail capacity and reliability are critical to the success of many marine terminals that have invested billions of dollars to increase their own capacity and efficiency.

Supply chains are comprised of a system of systems that has often felt like a house of cards, with climate change, civil disobedience and labour instability creating uncertainty.

Given the recent events that have affected our gateway over the last few years, the need for supply chain resiliency is top of mind. Disruptions will continue to occur, and it's imperative that we get better at preparing and reacting to them in a holistic and strategic manner, so that recovery does not take several months. Adequate surge capacity is needed throughout the supply chain.

We generally support the development of new trade-enabling infrastructure, and we are pleased to see that we are nearing the finish line for some major infrastructure projects in western Canada.

These projects are not for the tepid investor, and we recognize that sometimes government intervention may be needed to initiate or sustain projects. When it does, there must be transparency out front, and port users or tenants should not have to bear these costs after the fact if there's no direct or shared benefit.

Bill C-33 intends to address issues of port governance through amendments to the Canada Marine Act.

What is concerning specifically to our members is that the approval of major infrastructure projects often comes with conditions that can affect all port users. Conditions may be very specific to a project and yet have broader implications for other vessels operating in the same waterways.

While the Chamber of Shipping supports continuous improvements, the lack of apparent coordination between government departments on conservation initiatives, reconciliation and project approval puts the industry in a challenging space to operate. Pressure is building to manage or cap the cumulative effects of marine shipping and to support Canada's conservation objectives to protect 30% of our waters by 2030.

The concern is with the potential loss of operational flexibility for vessels, terminals and shippers, which implies a higher cost of doing business through Canadian ports.

Marine transportation is integral to Canada's supply chain and must be incorporated into the national supply chain strategy. Similar to the concerns regarding industrial land, our sector is facing a number of constraints on the water that will pose challenges to the rest of the supply chain if our marine corridors are not protected and managed appropriately.

In conclusion, we support large infrastructure expansion projects that support our economy by creating jobs and adding capacity and opportunities for trade while keeping Canadian exporters and importers competitive globally.

Thank you.

Thank you very much, Ms. Gee.

Next, from the International Longshore and Warehouse Union Canada, we have Mr. Ashton.

Mr. Ashton, the floor is yours. You have five minutes.

Good morning. Thanks. My name is Robert Ashton, national president for the International Longshore and Warehouse Union Canada. My pronouns are he and him.

The current year to date volumes comparing December 2022 and December 2021 show that fully loaded, imports are down 3.9% and exports are down 20% here in B.C., on the west coast. Empty containers for import are down 36.8%. The total number of exported cans that are empties according to the VFPA is 545,000 approximately, and fulls are 402,000 approximately. That means 58% of containers leaving through the port of Vancouver are empties.

In Prince Rupert, it's worse. There were 74,000 full and 196,642 empties, for a whopping 73% empty container export. This country does not have an issue with getting Canadian goods to other countries; we just need to do a better job at getting empty containers filled before they leave Canada. Our capacity is 6.3 million TEUs for 2022, and we've used 4,612,130 [Technical difficulty—Editor]

Mr. Ashton, you're cutting in and out, unfortunately.

I don't know if you're having a hard time hearing colleagues.

Perhaps, just for the sake of your opening remarks, if you could shut your camera off, it might help with the bandwidth and enable us to hear you more clearly.

We'll try that and see if it works out.

I'll will turn the floor back to you, sir.

Thank you.

Our capacity in B.C. was approximately 6.3 million TEUs for 2022. We used 4,612,130 of those twenty-foot-equivalent spots. As of the end of 2022, we have space for approximately another 1.5 million containers.

Do we need more container capacity in the west? No, we do not. What we need is to fix the parts of the system that are broken.

For example, we cannot get enough railcars west to load them up and send them east. Container dwell times in B.C. have gone up, while container volumes have dropped off significantly. Why is this? Also, why is no one addressing this issue of hundreds of thousands of containers sitting on the terminals for five days plus when they should be on a train headed east within three days?

According to the VFPA's own information, it is getting harder to send containers east via rail, because we are not getting our railcars. Why build a new container terminal that can take two million TEUs and will destroy thousands of west coast port jobs, when all you will be doing is dumping two million more problems onto an already broken rail and warehousing system east of the Rockies?

When construction of a new terminal is proposed and the current tenants are paying for it through increased rent, then that terminal should be built in line with the current terminals, not in a way that gives the new operator, whoever that may be, an upper hand straight out of the gate. If RBT2 is approved with the current level of automation that is proposed, which is still up in the air because, according to the VFPA, the third party will get to choose the level of automation, this will force the current conventional container terminals to automate as well, just to keep up with the new greenfield terminal.

The ILWU Canada commissioned a study in 2019 called the “Economic Impact Study of Digitization and Automation of Marine Port Terminal[s]”—the Prism report. This report talks about the negative impact of job loss in communities and the negative tax implications of both greenfield and brownfield sites.

The VFPA brags that it will create approximately 800 full-time jobs at 1,598 hours in a year, which equates to 39.5 weeks of work in a year, but if the RBT2 gets approved, it will force the current conventional or brownfield sites to automate, which can reduce the workforce by up to 50%, so the port's creation of approximately 800 jobs maybe will cause the loss of approximately 4,000 jobs, according to the Prism report. Does the Canadian government think this is a good idea for Canadians? Does the Canadian government think this is a good idea for the working class in this country?

In regard to environmental remediation, Environment and Climate Change Canada is not convinced that the mitigation offers from the Port of Vancouver are feasible. What does this mean? It means that the biofilm needed to feed shorebirds can and will be destroyed. We're in a situation in which shorebirds will not have the required food to be able to migrate when the time comes. This equates to putting an entire species at risk—such as the western sandpiper and others.

The national supply chain task force recognized the need to improve the labour relations paradigm in this country. In doing so, the government and its partners should recognize that in developing, building and operating large port infrastructure projects, that activity will impact the working conditions of thousands of workers under collective agreements such as ILWU Canada’s with BCMEA on the west coast.

In order to avoid labour disputes that may threaten the supply chain or infrastructure projects, government needs to consult with labour on planned projects and changes and to guarantee that such projects will not undermine the jobs, jurisdiction or collective agreements of unions. Where infrastructure projects have the potential to change where the work is done, how it is done and who is performing it, government must ensure that the project partners understand that infrastructure projects may not be used to undermine or remove collective agreement obligations.

In closing, I offer you this. Unions like ours, indigenous communities in our country and environmentalist groups need to have seats on port authority boards to bring an awareness to current and proposed infrastructure, so that before the development of new terminals in B.C.—like RBT2—we fix all other broken pieces first.

I urge our government to either not approve this project or postpone the decision until DP4 and the Prince Rupert expansion are in the same place in the impact assessment, so that all three projects can be put together and the best option for workers and the environment can be determined and acted upon.

Thank you for your time.

Thank you very much, Mr. Ashton.

Next, from the Vancouver Airport Authority, we have Mr. Boudreau.

Mr. Boudreau, it's good to have you back. The floor is yours. You have five minutes for your opening remarks, sir.

Thank you, Mr. Schiefke.

Good morning, everybody.

Thank you for the opportunity to address the committee today.

I am joining you today from Vancouver International Airport, which is located on the traditional, unceded and continuously occupied territory of the Musqueam Indian Band. Before I begin, I'd like to pay my respects to elders past and present.

As the committee studies large port infrastructure expansion projects, it's YVR's position that the Government of Canada must take a whole-of-government approach. Our large port ecosystems are only as strong as the weakest link. The Government of Canada must ensure that the existing port ecosystem is as efficient as possible to remain globally competitive.

Aviation cargo and logistics have always been a vital component of Canada's large port ecosystem. Today airports are playing an increasingly outsized and strategic role in supporting the expansion of Canada's trade, investment and supply chain resilience. The high-value goods, products and essential supplies that are key to international trade must move by air. Historically, 70% of the cargo that moved through our port did so in the belly of passenger aircraft. That is changing rapidly. There's a seismic shift under way to dedicated air freighters in response to changing consumer habits and the need for greater supply chain resilience.

Take, for example, one of YVR's largest exports. In just about a month's time, we're entering Dungeness crab season here in British Columbia. B.C. Dungeness crab is a highly sought-after commodity in the Indo-Pacific markets, but it's also a commodity that relies on aviation to retain its freshness, and thereby its value.

Moreover, we are beginning to see a shifting of supply chains in terms of the repatriation of manufacturing to North America—for example, semiconductors. Moving forward, other growth commodities that require air access include chips to support the booming 5G and Internet of things space; value-added biomanufacturing and pharmaceuticals; as well as components to support Canadian clean-tech and clean energy companies. Companies such as General Fusion have recently relocated their global head offices to YVR. Why? They needed access to our strategic location and global connectivity.

Canada needs airport capacity and air service access to support these developing trade lanes. That's why Canada's airports and air carriers are investing in cargo. Our major Canadian airlines, WestJet and Air Canada, have made significant investments in freighter fleets that are arriving this year.

YVR is opening up highly sought-after greenfield industrial land for development. We're also investing to expand our own capacity. This includes building our $150-million airport cargo expansion project, which will facilitate more than $250 billion in trade and investment over the next 20 years.

We're also implementing digital solutions, including our new air cargo community system. It's a system we developed in collaboration with our end-users and customers, allowing us to improve data sharing, streamline our operations and enhance YVR's overall cargo handling efficiency.

Before we move to the question period, though, I'd like to leave the committee with three recommendations to consider.

First, focus support and prioritize digital infrastructure and data sharing to create greater visibility, efficiency and multimodal collaboration. This will ensure that Canada is making the most of existing and future port infrastructure, providing clarity for end-users and delivering improved climate outcomes. Impact investment programs like the national trade corridors fund, which other colleagues have mentioned, are critical, but what is more critical is the long-term stable funding for these programs.

Second, ensure that government agencies are adequately resourced to increase their own capacity and modernize. This will ensure that all agency partners can support future trade growth and adapt to the evolving trade environment without sacrificing their core safety and security functions.

Finally, invest in trade-enabling transportation infrastructure now, while exploring new multimodal connections in the future. There is an immediate opportunity and need for Canada to invest in bridges, tunnels and roads. We must also think out of the box to explore better ways to connect businesses with consumers. For example, YVR is exploring the possibility right now of “air to marine to rail” connections, using e-barges to move goods up the Fraser River, a traditional trade channel here in the region.

Thank you very much for the opportunity to speak today. I look forward to discussing these recommendations in more detail with committee members.

Thank you very much, Mr. Boudreau.

We would like to have heard from Mr. Stewart next. Unfortunately, I was just informed by our interpreters that they will not be able to interpret his testimony today due to a lack of the appropriate headset.

Mr. Miller, we very much appreciate your presence here today. I know that you will do your best to deliver the opening remarks on behalf of Mr. Stewart and to also respond to questions.

To both of you, I'd like to offer that if you don't feel that your testimony was adequate, we do have a subsequent meeting coming up next Tuesday. We could have you come back at that point to possibly answer questions to the fullest extent possible.

With that, Mr. Miller, I'll turn the floor over to you. You have five minutes for your opening remarks.

Thanks very much.

I regret this, because obviously Mr. Stewart is the appropriate person, as the vice-president of infrastructure, to deal with a lot of these issues. I will do my best to deal with questions, recognizing that some of them may be beyond my areas of expertise.

Thanks very much for your invitation to us to appear here today. We regret that the committee was not able to visit our port during its recent tour. We would certainly appreciate the opportunity to host you all in the near future.

As I'm sure you're aware, the port of Vancouver is Canada's largest port, moving volumes nearly equal to those for the next-largest five ports combined. In the next five years, we're forecasted to grow by an amount equal to all of the trade through the port of Montreal, Canada's second-largest port, as new capacity ramps up and comes on stream.

We operate in a complex environment with challenging geography and bordering 16 local municipalities and a number of first nations. Given the growth that has taken place, our ability to finance and build infrastructure is extremely important. We certainly welcome the opportunity to discuss some of our recent projects and a vitally important project that we're hoping to have approved in the near future.

When it comes to major infrastructure projects, a significant impediment facing Canada's ports is the challenge of getting an increase to our federally mandated borrowing limits. Current borrowing limits are set substantially below the levels that commercial lenders would view as reasonable and appropriate. Raising borrowing limits is a slow process, usually taking several years. This can make responding quickly to commercial opportunities impossible. Bill C-33 creates a revolving three-year process for reviewing borrowing limits, but it does nothing to ensure that the process will move more quickly than it has in the past.

There are two significant infrastructure projects that were completed in recent years that I would like to note. The first is the G3 grain terminal. This was the first new grain terminal to be built at the port in many decades and it is the first grain terminal on the Canadian west coast with a loop track. This enables trains to unload without having to be broken apart or to remove the locomotive—a huge improvement in the speed and efficiency of the process. The project facilitated investment of well over $1 billion in the prairie grain elevator system and created a highly efficient new supply chain to move grain to the coast and on to customers.

Under the provisions of CEAA 2012, as the terminal did not require construction of a new berth, the port was able to review the project through its own process. The terminal was approved and permitted in seven months and completed well ahead of schedule.

Similarly, the expansion to the existing Centerm container terminal did not need to go through the federal process, allowing it to complete permitting and move forward in 16 months. The expansion increased the capacity of the terminal by 60% while increasing the footprint by only 15%.

Unlike our recent success stories in advancing projects quickly to completion, our Roberts Bank Terminal 2 container project has been in the federal environmental review process for nine and a half years. We're very concerned that even using low-case projections for growth in container traffic, we're now in a position in which the port will run out of container capacity well before the new terminal can be completed.

The recent slowdown in the sector may buy us a bit of time, but not enough. On a recent trip to Asia to meet with the container shipping lines, my colleagues heard a common refrain wherever they went: We need more capacity.

This terminal is strongly supported by the western provinces, and we're proud that we currently have mutual-benefit agreements for this project with 26 first nations. As with our existing Roberts Bank terminal, the port authority plans to build the land and marine structure for the T2 terminal and then lease it to an operator, which would build and operate the terminal. The cost of building the land will be recovered through the long-term lease.

Another reason we're so anxious to move forward with T2 is to increase competition. Currently there are only two operators with container terminals at the B.C. ports. We believe that adding a third operator will ensure competitive pricing for Canadian importers, exporters and consumers. This is particularly important in the strategic Roberts Bank area, where there is currently only one operator. This is the only area in which there are no height or depth constraints, and the terminal can handle the largest ships, which are now in use around the construction.

If we do not build the capacity in Vancouver and Prince Rupert, our exporters and importers will be forced to rely on U.S. ports. This will represent a significant increase in cost, a loss of domestic control and an increase in emissions, as containers will need to be moved longer distances. More will move by truck rather than rail, due to limited rail capacity across the border.

This will negatively impact small and medium-sized Canadian exporters. These exporters, particularly those moving agricultural products such as pulse crops, compete on the world market, where the increased costs involved in using Seattle or Portland would likely make them uncompetitive.

Needless to say, we view this project as being essential for the future of Canada's trade competitiveness.

Thank you, and I'll do my best to handle your questions.

Thank you very much, once again, Mr. Miller.

We'll begin our line of questioning today with Mr. Lewis.

Mr. Lewis, the floor is yours. You have six minutes.

Thank you, Mr. Chair, and thank you to all the witnesses this morning. Certainly, there has been good conversation around the table.

Mr. Chair, I believe the majority of my questions will be directed to Mr. Ashton.

The first question is this: What do you think the fix is to move the containers from the east to the west? I believe I heard it properly when you were talking about the bottlenecks not necessarily being at the ports but with the rail system.

Do you propose a solution? Is my line of thinking correct there?

I just shut my camera off, so that I don't have the same issue I had earlier.

The problem with moving boxes isn't at the container terminals. We move them on and off as best and as fast as we can. The problems that we see are in getting the railcars from the east coast.