Government Operations Committee on June 16th, 2009

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you very much.

[The Chair, Liberal, Derek Lee]

You have about 20 seconds left.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Then I have just a curiosity question on the Great Lakes pilotage issue. Can you just explain a little bit what you mean by the exemption for the compulsory pilotage? Is that a qualification of actual pilots and people on boats? My apologies for my ignorance.

[John Wiersema]

And my apologies, as I'm also not a total expert on piloting boats. When certain ships enter into Canadian waters, they are required to be piloted by experts. People who are trained pilots board the boats and assist them in their docking procedures.

Certain Canadian boats are exempted from that requirement. That exemption was put in place, as I indicated, in 1972. The intent was that it was supposed to be a temporary exemption. The corporation and the government were to work together to figure out alternative arrangements to ensure safe pilotage of exempted boats.

Our concern in the report is that after 35 years of a temporary measure, the government, 35 years later, still has not resolved how to ensure that those boats exempted from mandatory pilotage are safely piloted and docked. Our suggestion is that the corporation and the government need to work together to ensure, through whatever mechanism they decide, whether the exemption should continue or should be lifted.

I think the key point on this one, Mr. Chairman, is that the corporation's response indicated they expected revised regulations in 2008. I don't deal with regulations that have since been passed; it's another corporation, and if that's of concern to the committee, you may wish to call the corporation.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you very much.

Thank you, Mr. Chair.

[The Chair, Liberal, Derek Lee]

Madam Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Mr. Chair.

Good morning, gentlemen. Although the eight crown corporations that you have examined are major ones, I would like to talk mostly about the Federal Bridge Corporation and VIA Rail.

Like my colleague, I was struck by the fact that VIA Rail and the Federal Bridge Corporation have no reliable plan and have done no planning, yet these two crown corporations receive millions of dollars from the federal government. It seems to me that I have already read Auditor General's reports in which she mentioned that the two crown corporations had no strategic plans and no development plans. How is it that, five years later, we are talking about the same thing?

[John Wiersema]

The answer is that I do not know. You would have to ask the crown corporations.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

For the Federal Bridge Corporation, you say...Clearly, the board of directors of a crown corporation cannot correctly study results if it has nothing to base itself on to start with. So what are these people doing? Do they get just together for tea and cookies? We are putting money into these crown corporations; why is it that they are not required to do some planning?

[John Wiersema]

I do not know what I can say, Mr. Chair.

I'm not sure. That is why we are bringing these reports to the attention of Parliament. Ultimately these crown corporations are accountable to Parliament through the responsible ministers. The boards of the corporations, and VIA in particular, are engaged in the oversight of the management of these corporations. But as we indicate in our report, they have some significant strategic challenges yet to resolve. Why they have not yet resolved them is a question best put to the corporations. They haven't been able to meet their targets consistently, and that question again is best put to the corporations. I am trying to find the corporations' responses to our recommendations.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Before you answer, let me continue. Why do these crown corporations still use cash accounting when the Auditor General asked them several years ago to change to accrual accounting, like the departments?

[John Wiersema]

I think the situation is the inverse of what has been suggested here. Federal crown corporations have been following accrual accounting since 1984. So it is in place and functioning well in crown corporations. The Auditor General has indicated that accrual accounting has been adopted by the government ministries, departments, and agencies. But our concern is that the government has not yet adopted accrual-based principles in the budgeting and appropriations processes. That concern relates to

departments, not crown corporations.

We made a recommendation in our special examination report that VIA Rail in its next corporate plan should outline all the repercussions and issues premised on its investments plan. In collaboration with government officials, the board and management should develop alternative strategies to enable the corporation to fulfill its mandate within the funding envelope the government has provided.

The corporation responded by saying, “Management agrees that access to infrastructure is key to realizing half of the benefits set out in the medium term investment plan.... ... Management agrees with the recommendation” and “has prepared an assessment of the impact of not increasing frequency in the Quebec City-Windsor corridor.... An alternative plan was developed to mitigate the impact of not realizing the benefit of additional frequencies in the Quebec City-Windsor corridor” and this “alternative plan was incorporated into the 2009-2013 corporate plan, which is currently under discussion with the representatives” of the Department of Transport.

So the committee may wish to look at that 2009-2013 corporate plan and talk to the corporation about its alternative strategies and whether or not its funding requirements are being met.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Especially since the track does not belong to them, which has to affect their profitability. Having taken the train a number of times, I can tell you that it is not very pleasant to have to get onto a siding to let a freight train past.

Have you observed any concern for the environment in VIA Rail. It shares the track with Canadian National. All across Canada, you can see piles of junk, ties soaked in creosote and mountains of tar. When you get to Jasper and see a pile of garbage, I have to say that it does nothing for the beautiful scenery. Should these crown corporations have to play a role in cleaning up the railway lines?

[John Wiersema]

Thank you, Mr. Chairman.

First, on the access to the track, I understand that the corporation is in continuing negotiations with CN to negotiate better access to the tracks to be able to facilitate its operations.

On the environmental issue in VIA Rail, we did indeed include that as part of our audit. It's in the report on the special examination of VIA Rail. We didn't look specifically at the question of cleaning up at the site of the rails, but we did end up.... There's about a four- or five-page section of our report dealing with environmental management.

Our recommendation to the corporation was that VIA Rail should complete the implementation of its environmental management system and establish an order of priority for identification and assessment of the environmental risks. So VIA Rail was in the early stages of implementing an environmental management system when we did this work in 2007 and 2008. We thought they had considerably more work to do in that regard, and then they had to set priorities in terms of managing those environmental risks. There is considerable material in our report on environmental management at VIA Rail.

[The Chair, Liberal, Derek Lee]

Merci beaucoup.

Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair. I thank you for your appearance here today. We appreciate the information that you're bringing forward.

I just want to go back to the issue of the pilotage for the Great Lakes folks. I know you did a review of the Pacific pilotage program as well. I guess the difference between these two different organizations is that there wasn't an exemption on the Pacific coast. Do you have any information as it pertains to why the original exemption was actually put into place? Was it because of the complications? It's quite a bit different in terms of the conditions. The pilotage program in the Pacific pertains to the coastline, comparatively, to a very extensive waterway and inland seaway. So I'm wondering, was the exemption put into place for that purpose?

[John Wiersema]

I'm not an expert, Mr. Chairman, but my understanding is consistent with the member's understanding, that it's quite a different waterway system in the Great Lakes versus the Pacific coast. Therefore, there was no need for that type of exemption in the Pacific.

[Chris Warkentin, Conservative, Peace River, AB]

Okay. And the pilotage exemption was the major concern. I guess there was another concern as it related to the revenues for the Great Lakes, the way they have planned for the revenues based on current traffic. I guess there was a decline, and if there was a larger decline, you were concerned about the profitability or the sustainability of the agency. Is that right?

[John Wiersema]

No, I don't think we had any issues with the financial viability of the Great Lakes Pilotage Authority. We identified one significant deficiency and that has to do with this temporary exemption.

[Chris Warkentin, Conservative, Peace River, AB]

Okay.

[John Wiersema]

We did not identify other significant deficiencies, but we did identify what we call two opportunities for improvement. They're not such major issues that they comprise a significant deficiency, but we identified two opportunities for improvement that relate to the efficiency of the pilotage service meeting the users' needs.

Actually, no, this is something that we credited them for good performance. The authority has been successful in reducing the number and length of delays in providing the pilotage service. Then with respect to the tariffs....

[Chris Warkentin, Conservative, Peace River, AB]

I was asking specifically as it pertained to the $6.5 million loss during the.... Pardon me, it falls under the area of opportunities for improvement. It's the last bullet point on page 16 of the report.

From your understanding, that's not a major concern and it's not something that you're looking for.... You have identified it as a way to improve, but you're not overly concerned.

[John Wiersema]

We did not identify it as a significant deficiency. We're flagging it as something to bring to the corporation's attention to stay close to, but we weren't signalling it as a significant deficiency or a concern with the financial self-sufficiency of the agency. It's just something they will have to stay close to.

[Chris Warkentin, Conservative, Peace River, AB]

So you weren't providing any recommendations as to what should be done.

[John Wiersema]

Auditors always have recommendations, Mr. Chairman. I suspect we will have had one on that. I'd have to look at the full report to find the recommendation on that.