Fisheries Committee on May 29th, 2007

[The Chair, Conservative, Gerald Keddy]

I call the meeting to order.

Pursuant to Standing Order 108(2), we are continuing the study on small craft harbours, which is a typical subject around this committee. I'm sure there'll be lots of questions.

We'll ask our witnesses to go ahead.

[Cal Hegge, Assistant Deputy Minister, Human Resources and Corporate Services, Department of Fisheries and Oceans]

Thank you, Mr. Chair.

It's a pleasure to be here again this morning to talk about the small craft harbours program. I know that this is of considerable interest to this committee and has been for several years.

I am joined today by Robert Bergeron, the DG of small craft harbours, and Micheline Leduc, the director of harbour operations and engineering.

If you wish, Mr. Chair, I have a very short deck to go through. I don't think it contains a lot of information the committee isn't familiar with, so I won't dwell on every line. But if the committee would indulge me for a few minutes, I suggest that we start with that.

Obviously we welcome the committee's interest, as I said. We're well aware that you have a couple of other sessions scheduled for Thursday of this week and next, I believe, when you'll be meeting with our regional directors of small craft harbours. So I commend you again for taking the initiative to engage our regional people in this very important discussion. Obviously we will continue to pledge our support throughout your investigation—not investigation, but your review.

[Some hon. members]

Oh, oh!

[Cal Hegge]

It was a Freudian slip. We'll pledge our support to you in any way we can, in order to provide any additional information you might want throughout the conduct of your study.

If I could go quickly to slide 2, there you see the budget represented, and we've tried to take out some of the mystery, in terms of what is the actual budget figure. So you'll see that the actual budget, which is the first figure there for 2007-08, is roughly $96.8 million. The higher figure results from adding in the enablers. We attribute the internal services, if you will, right across the program areas, but the more relevant figure is the $96.8 million.

On slide 3 we talk about some of the key program issues. This is not an exhaustive list, as you know, but in terms of our priorities, we tried to establish them on this slide. We all know that additional funding is required to maintain our core harbours. That's been a subject of considerable discussion at this committee in the past.

Our harbour authorities, whom we could not do without, have made representation to this committee recently, and you know that as good as they are, they are suffering from a bit of fatigue in some of the program challenges.

We also have a number of non-core or inactive fishing harbours, recreational harbours, that we are trying to divest. That continues to be a priority of the program.

And last but not least, this committee is familiar with a public report arguing for the creation of seven harbours in Nunavut.

On slide 4, we put forward a vision, if you will. Every organization should have a vision, so this is our attempt at a vision for the program, which I don't think will surprise you. We are looking to create a national network of harbours, obviously in good working condition. We think that the operation of these harbours through the harbour authorities is the most cost-effective way to do this.

Ultimately, we hope that the funding will be secured and the harbours improved, to the extent that the harbour authorities can generate more revenue and take more ownership, or responsibility, I should say, for the maintenance of the harbours.

Moving to slide 5, where we talk about the maintenance of the core harbours, again the information on this slide is quite familiar to you. We've actually done a considerable study on the state of the core harbours, and we've updated the study results, both in 2004 and 2006. The bottom line is that based on this analysis, there is still a shortfall this year of $32 million, and that will go up to $35 million next year, when the $3 million of the transformational plan funding drops off.

With respect to harbour authorities, we would like to strengthen the harbour authority model. We think this is the way to go. It has proven to be an effective and quite responsible way to operate the core harbours. We are concerned, as they are, about the long-term sustainability of the harbour authority model, the low turnover of some of the harbour authorities, and the fatigue factor.

On slide 6, we acknowledge that if we could improve the harbour conditions, which we are working to do, it would put the harbour authorities in a better state to generate additional revenue and contribute more to the maintenance of the harbours. But until that happens, obviously we're not going to walk away from our responsibilities.

I might add that we have an excellent relationship with the harbour authorities. I think they made that point when they were in front of this committee. I have personally attended several regional harbour authority conferences over the last year, and through these mechanisms and means we try to provide additional training and respond to the harbour authority concerns. So the relationship continues to be very positive, not to understate the issues of fatigue, and so on.

Moving on to divestiture, which is on slide 8, I think the committee is aware that we have a little over 350 harbours that we still need to divest. That program is really dependent on additional funding. Right now, we're only able to divert about $1.5 million out of our annual budget to divest of those harbours, which means we're divesting roughly 15 to 25 harbours per year.

As you are aware, we have tabled to the committee the figure of $82 million in the past, which is our estimate of what we would need over five years to divest of the remaining harbours. The timeframe within which we could divest those harbours, if we had the money, would likely extend over a period greater than five years.

Moving on to the Nunavut harbours, as I think the committee is aware—in fact, you were provided with a copy of the report, which argues for the creation of seven small craft harbours in Nunavut—there are no harbours up there at the moment.

On the next slide you'll see that while that would be within the mandate of the small craft harbours program, given the budget shortfalls that we are faced with, we would need an additional $40 million, roughly, with some ongoing maintenance funding to do that. Those figures are based on the 2004 estimate.

Finally, with respect to internal management of the program, we are working towards making sure that our resources are distributed equitably across the country to each of the regions. We have been working very closely with the Department of Public Works with respect to reducing engineering costs and project management fees. We can elaborate on that, if the committee wishes, during the question period.

As I believe you heard me state, we are going to be looking at the allocation methodology that we use, over the next few months. I believe we've invited this committee, at your suggestion, to participate in that review.

On slide 13, we make reference to our function review, which I think you've heard us speak of before. This is a study that's under way that we hope to conclude this year, at least in terms of the recommendations, which will put the program on the most cost-effective and efficient delivery that we can within the department.

Finally, we have attached several annexes, which I won't speak to. It's essentially information with respect to the distribution of the harbours and a report on the rationalization of the non-core harbours. You can see the figure of 447 there, broken down—the 447 representing the non-core harbours that are reflected on the first annex. In annex D, we have the regional breakdown of this current fiscal year's base budget.

That's a fairly quick run-through of the deck, but as I said earlier, I think most of the information is generally familiar to the committee members. I and my colleagues would be quite pleased to do our best in answering your questions.

[The Chair, Conservative, Gerald Keddy]

Thank you very much, Mr. Hegge.

We'll go to our first questioner, Mr. Matthews.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Thank you, Mr. Chairman.

I'd like to thank our witnesses for appearing.

When can we expect the rollout of this year's approval? We're approaching June. My understanding is that until the program is announced things really won't begin to happen, because quite often, on an annual basis, projects don't get approved until late, and then we don't get the work done and there's carryover. So when can we expect the announcements to be made for this fiscal year?

[Cal Hegge]

We actually have, I believe, made some announcements this year, but more to your question, we are still working with the minister's office to secure approval of the proposed budget. So we haven't quite achieved that yet. We expect that will happen, quite frankly, within the next few days.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Okay, I appreciate that.

On the maintenance and repair budget, you say you have a gap of $32 million in this fiscal year, and then $35 million, I guess, for ongoing fiscal years.

[Cal Hegge]

Yes.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Over how many years? Is that going to be forever that you're going to need that amount to keep against the erosion, or whatever, of the infrastructure?

[Cal Hegge]

Based on life-cycle management principles, about which we could get into more detail, our estimation is that we would need this $32 million—

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Ongoing.

[Cal Hegge]

—ongoing, to arrest the deterioration and replace the harbours, etc.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

You talked about the request from Nunavut for seven harbours. Is that realistic? My question is, they don't have any now, so are they going to need seven harbours? If you had the money today, would you undertake to do seven harbours in Nunavut?

[Cal Hegge]

I can ask Mr. Bergeron to speak in more detail, but my quick response would be yes. The study was done over a period of time with considerable consultation, and the rationale provided for the seven harbours was fairly sound.

So it's a matter of the funding at this point. If we have less funding—for example, if we receive only $20 million or $25 million—we have discussed this with the Nunavut government, and we would have an approach in terms of the priority of the harbours that we would build.

Robert, did you want to add on that?

[Robert Bergeron, Director General, Small Craft Harbours, Department of Fisheries and Oceans]

Yes. What I would add is that in fact their needs are for many more than seven harbours. They have 26 communities that would require some harbour infrastructure, but the Government of Nunavut has decided that its priority is for seven specific harbours.

This is what we discussed with them in the past. In the report, we focused on the seven harbours that were determined by the GN as their top priorities.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Thank you. That pretty much takes care of my questioning.

I look forward to the directors arriving on Thursday.

Having served on this committee since I came here some ten years ago, I want to say that I can only applaud the work of your officials in Newfoundland and Labrador. They are a superb group of people to work with. They can't make dollars out of nothing, but I've found them to be very good to work for. I want to go on the record in front of my colleagues to say this about them, and I certainly look forward to Mr. Goulding in particular, who will appear on Thursday, because they've done a marvellous job.

We've made progress, I must say. You don't hear that very often. In the riding I represent, we've made significant progress in ten years. There's still a nice bit of work to be done, but we're getting there.

[The Chair, Conservative, Gerald Keddy]

Thank you very much.

Mr. Dhaliwal, there are a few minutes, if you want a quick question.

Monsieur Blais, I'm certain you will have a question.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Thank you very much, Mr. Chairman.

Good morning, ladies and gentlemen.

First of all, I'd like to address the theme of budget allocation. You have a first allocation for work under $1 million and another for work over $1 million. When I look at the budget allocation for work worth $1 million or less, I note that one-quarter of the allocation is based on the number of harbour administrations, the number of essential harbours, the number of wharfs in general, etc.

I find that frustrating in a way. I've previously mentioned that on a number of occasions, but I'm coming back to it today. I find it frustrating because a divestiture effort has been made in Quebec, as far as I know. In other words, the number of wharfs has declined. Knowing what I know today, a few years ago, I would probably have advised the people working on divestiture not to work on it, to abandon it entirely and keep a large number of harbours. That's why I'm saying that the effort is not being rewarded.

What do you think of that?

[Cal Hegge]

As I mentioned at our last meeting, we intend to evaluate our budget allocation process. That will take a few months, perhaps more. We've been using this method for six or seven years. So I think it's time to evaluate it. We were waiting for the amount stated in the 2007 budget. As you know, we will be receiving $20 million more. The budget isn't big enough to cover the program's needs. So some regions will be winners in this and others will be losers. That's the challenge, and we're ready to face it, but I'm beginning at the beginning.

I'm going to ask Robert to explain a little more in detail how the formula we've used was created.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

First I'd like you to be able to speak. Do you share my frustration or not?

[Cal Hegge]

Do I agree with the formula? As I said, it's time to evaluate it. It's true that, when I visit the regions, people everywhere tell me that it's time to evaluate the process. That means that not all the regions agree on the formula. That means something. If we change the method or formula—and that's possible, as I said—some regions will be winners and others losers. It is absolutely necessary that we evaluate this issue with a great deal of attention if we want to find a better formula than the present one.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Unfortunately, I must tell you that I am apprehensive. In view of what has happened and what's being done, I am firmly convinced that those who have done their homework have been penalized. What could assure me today that the new formula that you find will be fairer than the old one?

[Cal Hegge]

It's very hard to answer that today, since we haven't had the time to do the evaluation. I can say that, if the facts suggest that it's time to change our methodology, I imagine we'll change it in order to have a fairer system.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

In the evaluation you're currently conducting, do you intend to take into consideration the fact that some regions, including Quebec in particular and possibly others, have made a divestiture effort. I think, without necessarily rewarding them, that should be taken into account in the new evaluation that you'll be conducting. Are you going to take that factor into account?