Public Accounts Committee on June 16th, 2016

[Yves Desjardins-Siciliano]

We are preparing the corporate plan now for the following period. In our conversation with Transport Canada, we will be seeking at least another three years, like the last one, or ideally a five-year plan, but not only on capital this time, but also on operating funding.

[Chandra Arya, Liberal, Nepean, ON]

Have you not submitted any plans to Transport Canada yet?

[Yves Desjardins-Siciliano]

No, not yet.

[Chandra Arya, Liberal, Nepean, ON]

Okay, that's good.

I'll talk about the new networks. In the first phase, you said there is some interest from the private sector investors for the new track that you're going to have eventually between Quebec and Windsor. Is my understanding correct that the private sector may be interested in participating with you?

[Yves Desjardins-Siciliano]

Yes. Once the decision is made from a policy point of view that we should build a dedicated infrastructure for passenger rail, what we're suggesting is that funds are available outside of government. Public pension funds...and you saw it with the Caisse de dépôt in Quebec, with a $5.5-billion project. We believe that financing is available outside of the government, if the government wishes to seek outside funding.

[Chandra Arya, Liberal, Nepean, ON]

You want your own tracks, I think, possibly in the area between Ottawa and Toronto. Once that is done, will grade separation be part of it, or is there some way it can come in there?

[Yves Desjardins-Siciliano]

Again, depending on if it's VIA establishing trackage over a road, then it's our responsibility, but if the road is already there, the grade separation is the road authority's responsibility.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much. Your time is up.

We'll now move back to the opposition and to Mr. Godin, pour cinq minutes.

Go ahead.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chair.

The Government of Canada invests approximately $400 million a year in VIA to help it fulfill its mandate. The mandate, I believe, is as follows:

Therefore, the Corporation provides inter-city and long-distance travel services, as well as services for regional and remote communities.

That's what I want to look at. Some Canadians don't have the privilege of living in a corridor such as the Quebec City-Windsor corridor. You serve these regions, but you are incurring financial losses. That's why the Government of Canada offsets these losses.

What about the Gaspé region? You don't own the tracks, but under your mandate, you're required to provide rail service. Everyone's turning in circles. You want to fulfill your mandate, but you can't use tracks that don't meet safety standards.

How can this be resolved?

[Yves Desjardins-Siciliano]

The owner of the railway track must make the necessary infrastructure investments so the tracks can be used safely. In the case of the Gaspé, the Quebec government acquired the railway track from the local authorities. The Quebec government is thus responsible for upgrading the infrastructure using its own funds or funds from other sources. It's not VIA's role to invest in railway tracks it doesn't own.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Okay.

It's not VIA's role, but as members of Parliament, how can we ensure services are provided to that population?

You are an integral part of the problem and solution. I am thinking out loud. I don't know whether you or the officials from the Office of the Auditor General can answer me. I'm not sure whether I'll be able to get a full answer. Do you have possible solutions for this type of situation?

I mentioned the Gaspé, but the problem also exists in western and northern Canada. The government is responsible for ensuring that one of its service providers, in this case VIA Rail, fulfills its mandate. How can this be resolved?

[Yves Desjardins-Siciliano]

For over 12 years, Canadian infrastructure has often been funded at the municipal, provincial, and federal levels. Each of the three levels of government must establish its list of priorities and include the project. My understanding is that, if there's no funding for infrastructure upgrades in the Gaspé, the reason is that the local authorities in Gaspésie, the provincial authorities in Quebec City, and the federal authorities have not included it in their list of priorities. Funding decisions are made by those three stakeholders together. Once the infrastructure has been funded and restored, we must conduct a safety check, and once it is safe, we then use it as needed. That's my understanding of how the infrastructure is funded.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Since this situation means that VIA Rail fails to fulfill its mandate, do you lobby provincial and municipal authorities to start developing railway networks or to ensure the safety of the ones they own?

[Yves Desjardins-Siciliano]

Absolutely.

Since the VIA Rail service ended, we have been consistently lobbying provincial and local authorities about the infrastructure. The public have been asking us, like they have been asking you, when we plan to restore the service. We give them the same answer. We also tell the authorities involved that it may be time to invest in the railway track given that the demand is there.

The fact remains that it's not our job to repair infrastructure we don't own. We are still in a somewhat difficult situation because we want to work together and cover the territory. The Gaspésie section, in particular, is magnificent. However, we don't have the money to make that type of investment. We also don't have the authority to determine which infrastructure the government should invest in.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

You have only the authority to propose it.

[Yves Desjardins-Siciliano]

Exactly.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We'll now move to Ms. Shanahan, please, for five minutes.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much for being here this morning. Thanks first to all in the Auditor General's office for a very complete report, and second, to all of you from VIA Rail.

Mr. Desjardins-Siciliano, you gave

a very dynamic presentation. I, too, had very serious concerns in reading the report, but what you're telling us is that VIA Rail is at a turning point, and I would like nothing better than to be here again in a few years to hear the good news story.

That being said, my very serious concerns and what the Auditor General's office brought out very clearly were the lack of performance measures, be they in the ridership cost or in the capital infrastructure program, just the analysis there concerning the replacement of cars. This was not going in the right direction, and if you have ambitions for the future, we don't want to see that go in the wrong direction either. Perhaps you could share with us how you are tightening up these performance measures and how will they be reported.

[Yves Desjardins-Siciliano]

Thank you very much for that question.

You're right. The Auditor General's comments were absolutely accurate, and they were my own findings when I became the CEO of the corporation. That is why initiatives such as profitability by train are now a way that we have to look at the cost of operating a given train and its profitability or its financial viability versus looking at it as an average rail service. That's an example of changing the way we do things.

On the project management office, there was also a recognition of the fact that projects used to be over budget and over time and that we needed to professionalize the management of capital projects.

One has to understand that historically, between 1992 and 2006, VIA Rail was quite starved for capital cash. If you look at the annual reports of VIA Rail over that period, there are years when the capital contribution of the Government of Canada to VIA Rail is zero. Zero. You have over $4 billion in assets and you have no money to maintain those assets. A rule of thumb in capital maintenance is 3%. If you have a million-dollar house, you should have 3% unreserved to fix the roof or fix the windows. VIA had zero in successive years. The consequence of that is there was no expertise in house to manage capital projects because VIA wasn't getting any capital money.

[The Chair, Conservative, Kevin Sorenson]

What years were those?

[Yves Desjardins-Siciliano]

Between 1992 and 2006, there are different years where it was zero.

The point I was leading to was that VIA had no expertise. Then, all of a sudden, money started to flow, but there was no expertise. That's why projects ran late and ran over budget. We professionalized it by having a project management office and having professionals who know how to manage projects. Early results after only 18 months of this PMO show current projects are running on time and on budget. We're very encouraged by that. Again, I think you have to take a historical perspective to understand why it got to that situation. We didn't have the expertise to manage capital projects because we weren't getting capital.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you for clarifying that.

Now on to the performance measures; what are the key ones you mentioned, profitability by train?

[Yves Desjardins-Siciliano]

Yes.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

What are other key measures that you're working on?

[Yves Desjardins-Siciliano]

Profitability by train is an important one.

The other issues have to do with, for example, absenteeism and health and safety in the workplace, which has come down as well. In terms of our rate of absenteeism, it's down. Our sick leave time is down. Productivity is up and employee engagement is up.

We measure our full capacity, which is available seat miles on the network, and then the cost for every available seat mile: what the revenue is for every available seat mile. These are measures that have existed in the transportation industry for decades. They did not exist at VIA Rail.