Public Accounts Committee on Oct. 7th, 2009

[Paul Côté]

It is an investment of VIA Rail into the CN infrastructure. It is based on the premise that with the third track—longer sidings, longer passing tracks—trains will circulate at higher speeds, and more trains will be available on the network.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

You said that was a VIA investment?

[Paul Côté]

This is part of the $690 million program. That's $300 million or so.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

I'm sorry, I did not understand that. So it's all a VIA investment.

[Paul Côté]

Yes, $300 million of the capital program is directed to it.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

By investing that money, you get a piece of the action on those rail lines, so you don't have to beg, borrow, and steal for the rest of your corporate history.

[Paul Côté]

We're better positioned to bring in more trains, at higher speeds. But it doesn't give us ownership or control over the track.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Lee.

Monsieur Nadeau, trois minutes.

[Richard Nadeau, Bloc, Gatineau, QC]

We read in the report how there had been some improvement in that VIA and CN had negotiated an agreement regarding rail use. Are we talking about a long-term agreement, or one that must periodically be renegotiated?

[Paul Côté]

The agreement is for a period of 10 years. It provides for a number of changes, as there had been some problems with the previous agreement, which also was for 10 years. The question came up earlier and we will write to the committee to provide more details. One important thing to note is that the whole issue of the management of VIA trains, evaluating whether or not the trains on running on time and the respective responsibilities of both parties has been greatly simplified. As we stressed to CN, we are looking at things from the customer's perspective. If a train is running 22 minutes behind schedule, the customer does not care that CN is to blame for 12 of those minutes, and VIA for the other 10 minutes. Those were considerations that complicated the agreement. Everything has been greatly simplified and the results that we are seeing are really very positive. In terms of performance, our trains are running on schedule over 85 % of the time, which is very acceptable.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you.

I have nothing further, Mr. Chair.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

When were the last public consultations held with communities along the Quebec City-Windsor corridor to ascertain service needs in the corridor?

[Paul Côté]

I don't believe that we have systematically held public consultations on the issue. Ms. Sirsly may be able to tell you more, but we have not organized a forum where we invited members of the public to share with us their ideas about service improvements. There was, however, one exception. We made some major investments in infrastructure in southwestern Ontario. This was mainly for safety reasons because homes and private property were located very close to the infrastructure and this was causing some problems. We organized some consultations and met with people to have them approve a rail safety management plan.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Les Coteaux station is located in my riding and the available service schedules do not meet the needs of the region. We've been talking about this for a number of years now. I'm a member of Parliament and I travel to Alexandria to catch the train to Ottawa because it's impossible to get a train in my riding. They are heading in the other direction.

[Paul Côté]

We do not hold formal public consultations as you know them, but we often receive telephone calls and meet with mayors. The mayor of Casselman comes to see us frequently. Our consultation process is more informal, but our customers who travel on our trains raise these same issues.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

We have signed petitions at the station in Alexandria.

[Paul Côté]

Indeed.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Ms. Faille.

Mr. Shipley, I have you on my list.

You're fine?

Mr. Weston.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair. Thank you as well to our witnesses for joining us today.

I just want to mention that like my colleague Mr. Kramp, my family and I travelled from Ottawa to Quebec City on board a VIA Rail train and had a wonderful trip.

In the big picture, getting away from my personal experience, Monsieur Côté, do you see this ever becoming a profitable enterprise, or is it something that will forever rely on government subsidy?

[Paul Côté]

That's a very wide question. I have to say to you that under the current system....

Let me rephrase that. I have been exposed to rail networks across the world. I have never come across any system that is profitable. Qingzang, and TGVs in France, in Italy, Spain, and so forth are not profitable. One needs to be very careful, because you know, how these things are reported is sometimes misleading. For instance, in France the SNCF is a corporation, and its product line, called TGV, is now strictly administered on the basis of cost and revenue of operation--no carrying of debt for the equipment, no carrying of debt or interest for building the infrastructure. In that regard, if you look at their books you'd probably find the product line TGV France to be profitable. But it's not. It would be a miracle, really, if that happened.

Now, can the ratio of cost to recovery be improved? Absolutely. I've been around for 38 years. Christena has been with us since 1985. We've seen the cost-to-revenue ratio of this corporation go from 0.30, break even being 1.0, to now about close to 60%, and it could be higher than that if some measures were taken, which we are, in fact, discussing with our board and will bring forward to the minister.

So we can significantly improve our cost-recovery ratio, but I don't think to make it profitable is a reality.

[Terence Young, Conservative, Oakville, ON]

Thank you.

Mr. Côté, when your revenues were $230 million lower than you thought they would be, from 2002 to 2005, what measures did you take to reduce overtime and performance bonuses for senior managers, perhaps reducing the number of senior managers and their expense accounts?

[Paul Côté]

There weren't any specific measures implemented in the way you describe them. We didn't, for instance, specifically give targets to reduce expense accounts and so forth. What we did depended on the responsibility of the managers and the effectiveness of our control processes. They were examined and audited on an ongoing basis, and they've proven to be efficient. So we can control and reduce expenses on an ongoing basis. Rather than imposing specific criteria on the company, my approach has always been to appeal to the responsibility of our managers to see to it that they manage the resources efficiently and that they do spend what is required, and if it's not required, don't spend it.

I know you are addressing a specific question with the number that Madam Fraser has mentioned, but let me say that in 2005, 2006, 2007, and 2008 our financial performance was better than the budget that was allocated to us by government; we did not require the funding that was allocated to us.

I take this as a sign of our being responsible managers and using resources in a responsible manner.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Young.

Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

The question I'd like to ask is when are you going to build the downtown Hamilton VIA station, but I can't link it to this report, so I'll leave that as a wish.

I do want to point out that there were three other issues that the Auditor General raised, and one of them was security. I wonder if the Auditor General would take a moment to outline what exactly you were referring to by security, and then Mr. Côté could respond as to how they've addressed those concerns.

[Sheila Fraser]

Thank you, Chair.

I think there were a number of issues such as security that were raised earlier. I think you're probably talking about security clearances or classification--