Transport Committee on May 8th, 2008

[The Chair (Mr. Mervin Tweed (Brandon—Souris, CPC)), Conservative, Merv Tweed]

Good morning, everyone. Welcome to meeting 26 of the Standing Committee on Transport, Infrastructure and Communities.

The orders of the day, pursuant to Standing Order 81(4), are the main estimates for 2008-09. Today we'll be looking at votes 1, 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, and 75 under Transport, referred to the committee on Thursday, February 28, 2008.

Joining us today is the Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities. Joining him from the Department of Transport are Mr. Louis Ranger, deputy minister, and Mr. André Morency, assistant deputy minister, corporate management and crown corporation governance. From Infrastructure Canada we have David Cluff, assistant deputy minister, corporate services branch, and chief financial officer. Thank you.

I will advise members that we are being televised today. I know there are going to be lots of questions of the minister and the department, so I'll try to keep the timelines as tight as possible. You might want to watch for me to give you the one-minute warning so everyone can have a chance to address the minister.

Mr. Minister, welcome. We look forward to your comments and answers throughout the morning's meeting.

[Lawrence Cannon, Conservative, Minister of Transport]

Thank you very much, Mr. Chairman and members of the committee.

My officials and I are here today to discuss the 2008-09 main estimates for the transport, infrastructure, and communities portfolio. This is my third opportunity to appear before this committee and to deliver the main estimates. Since my first appearance, significant progress has been made within the portfolio. As you know, it is a wide-ranging portfolio that brings together Transport Canada, Infrastructure Canada, and 16 crown corporations.

In this portfolio we continue to tackle some of the most important issues facing Canada today, including the productivity of our economy, transportation safety and security, environmental sustainability, and the quality of life in our cities and communities, as supported by public infrastructure.

Members of the Standing Committee on Transport, Infrastructure and Communities have made important contributions in each of these areas, and I'd like to take this opportunity at the outset to thank you for your active involvement in the legislative agenda and the number of important policy decisions and questions that have an impact on the portfolio.

Specifically, I'd like to thank the members of the committee for its study of Bill C-23, which modifies the Canada Marine Act. The proposed amendments will strengthen the operating framework of Canada port authorities, helping to build a stronger and more competitive marine sector. Also key was the committee's participation in the study of rail safety and the subsequent amendments to the Railway Safety Act.

I also thank the committee for its consideration of the future role of the Navigable Waters Protection Act, the NWPA. We believe that the NWPA, one of the oldest pieces of legislation in Canada, needs to reflect current economic needs and respond to the increased volume and variety of uses of Canada's waterways. I look forward to working with you as we move forward on this and other issues central to transportation and infrastructure in Canada.

Over the past year, this government has made serious investments in transportation and infrastructure throughout Canada. In doing so, we are improving the quality of life of Canadians, and making Canada more competitive on the world stage.

As you know, we are moving forward on Canada's biggest infrastructure program ever. The Building Canada Infrastructure Plan is $33 billion worth of investments in matters that are important to Canadians, such as the environment, the economy and stronger and better communities.

Our plan provides an unprecedented, long-term, predictable investment that will allow provinces, territories and communities to plan for the future. In fact, more than half of the funding—$17.6 billion, to be exact—is going to municipalities through the 100 per cent GST rebate and the Gas Tax Fund, to modernize Canada's infrastructure.

It is expected that Building Canada, with other levels of government and funding partners, will generate at least $50 billion in new investments. Since the Prime Minister launched the Building Canada Plan last November, we have made significant progress in implementing this plan. We have signed framework agreements with eight provinces and territories, and we are well advanced and close to concluding agreements with the remaining provinces.

And, we are investing the gas tax in over 2,000 community projects.

Under Building Canada, we are making early progress through priority investments across Canada. These investments support a more productive economy, such as our $100 million commitment to improve highways in New Brunswick, and a cleaner environment. As you know, we have announced $1 billion in funding for public transit across the Greater Toronto area to reduce gridlock.

We are also making key investments to support the delivery of clean drinking water, such as the $50 million investment in the Huron Elgin London Clean Water Project in Southern Ontario.

We are supporting more liveable communities—such as the $40-million investment in the Centre of Sport Excellence in Calgary, and the $8-million contribution for the cultural precinct, Quartier des Spectacles, in Montreal.

In addition to the Building Canada plan, we continue to take action in each transportation mode. With respect to public transit, we brought investments to $1 billion per year, and in budget 2008 we've set aside $500 million to support capital investments, through the public transit capital trust.

In the rail sector, we passed Bill C-8, protecting rail shippers from potential abuse of market power by railways. We also began a review of rail freight service and signed two memorandums of understanding with the Railway Association of Canada. The first enhances the security of rail transportation in Canada, and the second addresses the issue of railway emissions. Both underscore the central role of railways to trade in Canada.

We are also making significant gains in the air sector. We are very encouraged by the progress that has been made in the year since we launched “Blue Sky”, and the momentum for more liberalized air travel continues to build.

Last June, when Prime Minister Harper met his European colleagues at the Canada-European Summit, the leaders agreed to launch negotiations for a comprehensive air services agreement between Canada and the European Union.

I am very happy to report to this committee that one year after the launch of “Blue Sky”, the third round of negotiations has begun in Brussels. This is good news for travellers and for the travel industry.

In the marine sector, as I mentioned previously, with your assistance we have moved ahead with amendments to the Canada Marine Act. I was also happy last month to announce that the Government of Canada is providing $101 million over five years to help Marine Atlantic Inc. acquire a charter vessel that will address increasing traffic to and from Newfoundland and Labrador.

We've made progress in building a more sustainable transportation system as well, and we must. Transportation accounts for about 25% of all Canada's greenhouse gas emissions. That's why we're moving forward with national fuel consumption regulations for new cars and light trucks. It's also why we're moving ahead in key areas of our ecoTransport strategy, which covers all modes of transportation.

We are also working with our provincial and territorial colleagues to improve our environment and reduce greenhouse gas emissions by delivering clean water, green energy, and cleaning up contaminated sites.

Honourable Members, this is the work we are currently doing and, as you can see, we have accomplished much together. But much more work yet remains. That is why I am asking you today to recommend that Parliament approve the spending in the Main Estimates that were tabled by the President of the Treasury Board on February 28.

The 2008-2009 Main Estimates for the portfolio, which total $4.544 billion, include $1.032 billion for Transport Canada and $2.456 billion for the Office of Infrastructure Canada. The remainder of the funding is allocated to the various Crown corporations.

Because we don’t have time to go into all the numbers, I would instead like to briefly discuss the two major components of this portfolio—Transport Canada and Infrastructure Canada.

For Transport Canada, the 2008-2009 Main Estimates—$1.032 billion—show a net increase of $173.3 million from the $859 million level in the 2007-2008 Main Estimates. The $173.3 million net increase is due to increases of $293.5 million for new initiatives, and changes to ongoing programs that are offset by $120.2 million in decreases in funding for the winding down of programs and government-wide reductions.

Of the $1.032 billion, 9.7 per cent—or $100.1 million—is for flow-through payments, including: $54.9 million for the Confederation Bridge; $41.9 million for the St. Lawrence Seaway; and, $3.3 million for the Victoria Bridge.

The remaining resources of $932.2 million, combined with respendable revenue of $345.6 million, represent a $1.28-billion budget that is available to the department to cover the following expenses: $471.7 million for grants and contributions programs; $382.5 million for personnel costs; $278.3 million for other operating costs; $78.2 million for capital; and, $67 million for employee benefit plans.

Let me now turn to the Infrastructure portion of this portfolio.

The total funding being sought is $2.456 billion, a net increase of $437.8 million from the $2.018 billion in the 2007-2008 main estimates. The $437.8 million net increase is due to the greater spending on infrastructure programs, and in particular I would like to mention $327.8 million for the provincial-territorial infrastructure base funding program, for the second year of this program, and a $197.5 million increase for the gas tax fund, which steps up in total from $800 million to close to $1 billion this year.

These increases were offset to some degree by decreases in funding for programs where most of the commitments were made in previous years.

Of course the estimates also provide for funding needed for the operations of the department and for the delivery of its programs in the amount of $37.5 million.

As Minister, I have a number of other portfolio responsibilities that do not require any appropriations from Parliament and are therefore not displayed in the Estimates. They include: the Ship Source Oil Pollution Fund; the Great Lakes Pilotage Authority; the Pacific Pilotage Authority; the Atlantic Pilotage Authority; the Laurentian Pilotage Authority; the Blue Water Bridge Authority; Ridley Terminals Inc.; the Royal Canadian Mint and Subsidiaries; and, Canada Lands Company Ltd.

Honourable Members, my limited time today does not allow me to go into detail regarding all the items on this list. However, I believe the numbers I have presented today demonstrate the importance this government places on the priorities we have identified under this portfolio.

Mr. Chairman, I welcome the Committee’s questions on our overall approach, or on any of the specific measures contained in these estimates.

Thank you.

[The Chair, Conservative, Merv Tweed]

Thank you, Mr. Minister.

Mr. Volpe.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you, Mr. Chairman.

Thank you, Mr. Minister, and your colleagues in the department.

I would like to begin by thanking the Minister for acknowledging the work done by members of this Committee. It is not out of the ordinary for a minister to acknowledge the work of committees in resolving government issues, and we are pleased to receive that acknowledgment.

Even though it gives us pleasure that you would recognize our work, I'd like to ask a few questions.

Realizing that we don't have a lot of time, Minister, I can't let go of the opportunity to ask you about the Auditor General's report on your department, and in particular about the SMS system as it relates to aviation. I do that because members around this table worked diligently and in a most non-partisan fashion to ensure that we would have an appropriate system in place. However, it would appear that the Auditor General confirmed some of the findings of the Canadian Business Aviation Association. Specifically, just to name a few, the system is not delivering in a fashion consistent with the expectations of this committee, at least.

I'd like you to address some of these, Minister, because we still haven't passed that piece of legislation in the House, and some of the support that members around the table have been giving might be conditional upon your answers.

First of all, it would appear that there is insufficient training of your officials in the department for the oversight capacity they were charged with: 15% of the officials haven't completed their training, and another 15% are insufficiently trained or qualified to do their work. And the number of inspectors, which we had been led to believe would remain constant, if not increase, has actually been dropping at a rate of about 8% per annum. So the combination of departmental oversight, plus direct inspection and regulation, plus the auditing of systems that first had to be approved appears to have fallen by the wayside.

I'm sure you have some answers for that, but from our perspective, the effort and energy we have put into trying to fashion a system that would receive public support does not appear to be reflected in the performance or ability of your department to deliver on the expectations of this committee and of the public.

[Lawrence Cannon, Conservative, Pontiac, QC]

Thank you very much, Mr. Volpe, for those comments, and also for the opportunity to set the record straight on what has occurred.

I just want to reiterate that air transportation in Canada is the safest in the world. The Auditor General, along with the International Civil Aviation Organization, ICAO, has recognized Transport Canada as a world leader in implementing safety management systems in aviation organizations.

Colleagues, the Auditor General does not question the safety of the travelling public. Rather, her report indicates and evaluates some administrative and planning aspects of how Transport Canada is managing the transition to safety management systems.

I'll let my deputy minister go into the details as to what has occurred since the report has been tabled, if you wish. It will take a couple of minutes.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I don't mind him, Mr. Minister, because this is an opportunity for us to hold the political branch accountable. I know that you speak for them, and I'm not trying to be antagonistic, but I do want to ask a couple of other questions. So if the deputy wants to answer, I'm hoping that he'll be brief, so the chairman will allow me to carry on.

[Lawrence Cannon, Conservative, Pontiac, QC]

Mr. Volpe, in terms of the number of inspectors, I think he can reassure you that, no, there isn't a decrease of 8% per year, and he can answer the other questions that you asked more specifically.

[Louis Ranger, Deputy Minister, Department of Transport]

Allow me two quick points, and if there are more specific questions, Mr. Merlin Preuss can address them.

First, when you talk about business aircraft, this is the safest area within a very safe sector. Why? Because if you're a businessman and can afford to own an aircraft, you make sure you have the best pilot in the country, the best mechanic. All the statistics show that this is the safest area within a very safe sector. That's point number one.

Second, the gaps, the deficiencies that you've identified, are based on an audit that we initiated ourselves. We didn't need the AG. We initiated that audit and are taking specific actions on training and whatever gaps were identified by that self-imposed audit. It's a new model, and we want to make sure the public is assured that this is preserving and improving our safety record.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you, Mr. Ranger.

I think it's important to put on the record that some of the biggest critics have not accepted that argument. Judge Moshansky, who appeared before this committee, appears not to have been convinced. The pilots association is also not convinced so far.

The experiences you've had with the business community... And you're quite right, they ought to have a personal interest, as opposed to merely a business interest, in the safety of their equipment. I'm looking forward to an answer on that. But I want to shift gears for a moment, if I might.

Minister, one of your colleagues in cabinet has pointed to one of the issues that you've raised here, and that is the efficiency of our transportation system as it relates to bridges, especially the ones in the Detroit-Windsor corridor. Security was pointed out as being the biggest problem to free-flowing trade between us.

I know that you made an announcement just a couple of weeks ago regarding building additional capacity. That bridge that crosses the river right now is operating at only 50% capacity. Are you working with your colleague in cabinet, particularly the CBSA minister, to ensure that there is actual free flow of commerce between Windsor and Detroit? If so, what is it that you're doing that they're not catching at the border?

It's nice to hear the words, but we want to know specifically what it is that's happening to make this happen. That bridge is not going to be built next week.

[The Chair, Conservative, Merv Tweed]

Mr. Cannon.

[Lawrence Cannon, Conservative, Pontiac, QC]

I just want to reassure you, Mr. Volpe. You know full well that there is the DRIC process, the Detroit River international crossing process, that's in place. This government, as well as the previous government, looked at it.

In terms of the conclusion as to the capacity of the bridge, yes, today there might be an instant photo of the situation, but the underlying fact remains that as we move forward, to 2012 for instance, that is when that capacity is going to be at its fullest. Therefore there is an important issue around being able to construct a new bridge by 2013 to handle the new capacity that's going to be coming forward.

I would say, colleague, that the whole idea of being able to--yes--accommodate the Americans in terms of their preoccupations with security challenges is one of the challenges we face, but at the same time we need to find ways and develop processes that will enable our country to continue to benefit from the relationship with that trading partner.

I believe the first time I came to this committee, colleague, that was one of the major things we addressed in terms of, yes, we're accommodating the Americans' concerns with protection and making sure that we can indeed meet some of the challenges they put forward, but at the same time we're making sure our borders are open for business and that Canada can remain extremely competitive in a world market that is becoming more and more tough.

[The Chair, Conservative, Merv Tweed]

Monsieur Laframboise.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Thank you, Mr. Chairman. First of all, I have a comment to make with respect to what Mr. Volpe was saying about the civil aviation inspection service.

Minister, we have had lengthy discussions in this Committee with respect to the number of inspections. We even received a letter signed by Mr. Grégoire, of your Department, on March 14, 2007, stating that the number had increased. And yet, the Auditor General tells us, on page 16 of her report, that the inspection and safety service has declined by 8 per cent.

The problem is, who are we to believe? Minister, it is your responsibility to ensure that your officials, when they appear before a committee, provide us with accurate information. That's the comment I wanted to make; it isn't a question, Minister.

[Lawrence Cannon, Conservative, Pontiac, QC]

Perhaps, but I would like to respond.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

As you wish.

In your opening statement, you vaunted Marine Atlantic and the monies that have been invested in the Newfoundland and Labrador Ferry. On page 24-2 of the Ministry summary, it says that you have indeed paid out an extra $25 million to Marine Atlantic.

However, I saw nothing in there about the problems experienced by people in the Magdalen Islands or the permanent ferry they have been requesting. Once again, there is no money. You said this would be a pilot project. Winter is now over and you haven't invested a penny—but winter will come again next year. I can tell you for certain that there will be a winter next year.

So, what is going to be done? Will there be money to pay for ferry service year round in the Magdalen Islands?

[Lawrence Cannon, Conservative, Pontiac, QC]

Thank you, colleague. If time permits, I will ask the Deputy Minister to answer with respect to Mr. Grégoire's note regarding comments made by the Auditor General.

Having said that, I want to reassure you and the people of the Magdalen Islands. I have had discussions and meetings with the Mayor of Cap-aux-Meules. There has been correspondence between us on this very topic. You know as well as I do that the snow melt will make it possible to reorganize ferry services.

The commitment I made to the Mayor and the people of the Magdalen Islands is for a pilot project to begin in the coming year, in order to acquire some concrete experience with this. I hope to table a business plan with the government, so that we can eventually consider providing service 12 months of the year to the people of the Magdalen Islands. This is a formal commitment that I have made; I addressed it in writing to the Mayor of the Magdalen Islands and reiterated it in public. As a general rule, Mr. Laframboise, when a Conservative makes a commitment, in Quebec and in Canada, promises are kept. That is what Quebeckers remember about our administration.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Except that in your budget, no money is set aside between now and the end of fiscal year 2007-08, Minister. Will you dip into your own pockets for this? Will you pay for it with your own money?

[Lawrence Cannon, Conservative, Pontiac, QC]

Mr. Laframboise, you know full well that when the Deputy Minister tells me there is enough money to proceed with pilot projects, he is generally in a position to support his assertions.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

My second question deals with Canada Post. On page 24-2, I note that transfer payments to the Canada Post Corporation declined by $25 million. You paid out $25 million for the ferry and reduced support for Canada Post Corporation by $25 million. That's probably where you got the money back.

What will not be paid for at the Canada Post Corporation because of the fact that you are giving it $25 million less?

[Lawrence Cannon, Conservative, Pontiac, QC]

I would like to ask Mr. Morency to answer that question.

[André Morency, Assistant Deputy Minister, Corporate Management and Crown Corporation Governance, Department of Transport]

Mr. Laframboise, the government undertook to help Canada Post set up its pension fund, and we decided that we were going to reduce our contribution by $25 million per year. As a result, the Corporation will receive $75 million this year, and $50 million next year. The idea was to provide the Corporation with support for the purposes of setting up its pension fund. It was always planned that by the year 2010-11, Canada Post would be in a position to maintain its own pension fund for its employees.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

However, you know that more and more rural postal services are being eliminated these days. This is part of a wide-scale operation. So, you are saying there is no connection between service cuts currently occurring at Canada Post and the cuts you are making in this budget.

[Lawrence Cannon, Conservative, Pontiac, QC]

There is no causal link there. First of all, the House of Commons supported a motion that we brought forward with a view to maintaining and, in some cases, restoring rural postal service. Officials at Canada Post are currently reviewing all places of posting. They are proceeding with the verifications demanded by the House of Commons. That process is working very well. Thus far, I am told that they have assessed almost 100,000 sites or mailboxes and that the necessary corrections have been made, in some cases because of urban spread. Corrective measures have also been taken with respect to community mailboxes. In other cases, we suggested to the owners that they ensure there is safe access for the people delivering the mail and, in some circumstances, that mailboxes be moved.

So, that whole operation is proceeding smoothly. There are some problems. Of course, people are used to their way of doing things but, on the other hand, there is a need to be cognizant of the safety requirements of the people delivering the mail. There is also the whole question of the health of these individuals. So, I believe we are taking appropriate, enlightened action in this regard.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

The fact remains, however, that you have announced a large-scale operation aimed at reviewing the future of the Canada Post Corporation, even though you say it will be a Crown corporation. When you say you are reviewing its operations, that may mean that a lot of services will no longer be offered. You know that. In any case, that is not the subject of my next question.

You have announced funding for the Windsor-Detroit Bridge. I noted that you have increased by $21 million transfers for the Champlain Bridge, and for the Jacques Cartier and Champlain Bridges Incorporated.

Given the current state of the Champlain Bridge, which is quite old now, is this part of an operation aimed at determining whether it needs to be rebuilt? Is that what we're talking about? If not, are you simply waiting for there to be accidents?

[Lawrence Cannon, Conservative, Pontiac, QC]

If you don't mind, I would like to come back to your assertion that Canada Post is being cut left and right. Mr. Morency answered you with respect to the monies allocated this year to Canada Post. We have in fact struck a committee with the aim of reviewing certain fundamental aspects of Canada Post's operations. There has been a revolution in the communications industry. If you are not aware of it, your children or grandchildren certainly are. That revolution is called the Internet. New means of communications are now available.

As part of that process, it is important to review a number of issues of interest to Canadians, as well as to parliamentarians and directors. At the present time, a committee has been struck with the mandate of making recommendations. You will be made aware of those recommendations.

Mr. Chairman, my colleague is assuming that we are going to be making cuts, but I think it would be outrageous to do that at this stage. We will have to look at the recommendations together before taking any action whatsoever. Personally, as both a parliamentarian and the Minister responsible, I believe it is important to make decisions on the basis of existing information, rather than seeking out information from a variety of sources that have not yet been validated or are unclear.