Public Accounts Committee on Nov. 29th, 2016

[The Chair, Conservative, Kevin Sorenson]

Just before we go to Mr. Godin, I want to get a little clearer idea.

You're a crown corporation. Why would you not be privatized? Why would this entity not be privatized? I think I know the answer. There are certain routes you take that are money-losing routes. Is that a fact or not?

Is there any area that you know is a money loser, or you know you aren't going to be making any money on, but you want to provide a service? The Government of Canada, Canada as a whole, wants to provide a service. Is that part of, perhaps, why you are a crown corporation?

[Peter MacArthur]

We're a crown corporation. We're one that doesn't get any funding from the federal government. We're not funded. We have to make our own revenues.

What we attempt to do is to have each of our compulsory areas at least break even. Does it always work? No. Obviously, when we're losing $500,000 a year, we can't have that.

We treat each one as a cost centre. For example, Halifax is a cost centre. Placentia Bay is a cost centre. We do separate statements for each of them. We try to avoid cross-subsidization from one to the other. It's difficult, but we have succeeded in previous years, but not in the last couple of years. We're not using the funds from one port to subsidize another port. We're trying not to, anyway.

[The Chair, Conservative, Kevin Sorenson]

If you were a privately owned company, do you think that.... Is there an incentive out there? Who are you competing with? Is there competition—

[Peter MacArthur]

We don't have competition. There are some areas where private pilots are providing a service, but we don't have competition in compulsory ports like Halifax, Saint John, and so on.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Mr. Godin.

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

Thank you, Mr. Chair.

I'd like to thank the witnesses for their participation.

Mr. Griffiths, I'm rather disappointed to see that a corporation like yours is apparently surprised by the Auditor General's findings. This is what I took away from your presentation.

You said that your corporation contributes to public confidence, but to my mind, that's not enough. A more meaningful and solid foundation is necessary.

The Auditor General's visit probably caught you off guard. You said you agreed with the report but that it wasn't representative of the reality because your organization was short-staffed during the period on which the audit focused. That's a bit of a simplistic explanation.

You've provided an opinion survey. I could give you one too. Nowhere do you provide information on sampling, methodology, or the date. What is there to support the credibility of the survey and your claim that everything is fine?

We are all wasting our time here today if you're going to sit there and tell us that your organization is doing fine and that you don't have any problems. I'm going to put it this way. The Auditor General got to you.

Put yourself in his shoes. If you were auditing your organization, would you come to the same findings? That is my question to you.

[Capt Sean Griffiths]

Yes, I probably would, because we agreed with the findings of the report.

I at no time said that the authority is in perfect shape, in tip-top order and things are running great. We do need improvement.

This exercise of the special exam showed us where we need improvement, and we appreciated their help in identifying those concerns. We take them seriously and we've been working very, very hard over the last six to eight months to rectify these. You can see by our action plan that over 50% have already been completed, and we will complete the rest before the due dates.

As far as the survey goes, sir, it was a very, very intense survey, with the right questions in the right field. If you want copies, I'd be happy to send the whole thing to you, with our target audience, and why we asked what we did.

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

I don't want a copy of everything. I just want to know how the sampling worked and when the survey was conducted. Was it done by an independent firm, or was it an internal undertaking to consult your clients?

[Capt Sean Griffiths]

We consulted our clients through an online forum. It's anonymous, if they want it to be; they can say who are they are, otherwise. We had ship owners, shipmasters, agents, and consultants. Anyone whom the APA does business with on a daily basis was asked his opinion.

Again, it's not to reflect that we have a great operation in Halifax—we do need improvement—but to show that our commitment to safety is of the utmost importance. That is defined in that survey, which people agree with. Our openness and transparency have always been positive attributes of the authority. You can ask the Shipping Federation about that; they will agree. We do a great job of showing our business plans to our users so that they buy into our tariffs, and we have not had an objection because of them. We need some work, however.

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

You aren't the only ones, but why wait for the Auditor General to go through your books before fixing the situation and adopting a more effective approach? Why not do a yearly self-assessment so that your organization is seen as efficient? Why wait up to 10, 15, or 20 years to take action? Why wait for a slap on the wrist from the Auditor General before taking action? It strikes me as a corporation that operates willy-nilly, without any vision.

[Capt Sean Griffiths]

It's a fair question. Why did we wait? We did not wait. We acted, two years ago in some cases, to rectify some of the deficiencies that we're well aware of. Some things, however, take a bit of time.

Many things were in progress. They were identified by us, and we share the views and the recommendations of the OAG because of that. We didn't wait for them to identify them; we knew they were deficient anyway.

We take them very seriously. We didn't wait. We executed.

[The Chair, Conservative, Kevin Sorenson]

Thanks very much, Mr. Godin.

We'll now move to Mr. Arya, please, for five minutes.

[Chandra Arya, Liberal, Nepean, ON]

This is a question for Mr. MacArthur. You have been there for 28 years. The Auditor General knows that the entrepreneurial pilots were without documented contracts. How can you continue to hire them and pay them without documented contracts?

[Peter MacArthur]

I don't think we were hiding them.

[Chandra Arya, Liberal, Nepean, ON]

I said hire them, not hide them.

[Peter MacArthur]

I'm sorry.

We've known that this is an issue. The Pilotage Act has been set up so that you can have two types of pilots: members of a body corporate or employees. Most of our pilots are employees. In some smaller areas, such as Restigouche, which includes the port of Dalhousie, where we get five or six ships a year, it wouldn't make sense to have an employee pilot. Miramichi is another area in which we get—

[Chandra Arya, Liberal, Nepean, ON]

I understand that.

[Peter MacArthur]

It's the small areas. We have made attempts in the past to get bodies corporate established. In fact, in Miramichi we had a body corporate. One of the pilots is now retired—

[Chandra Arya, Liberal, Nepean, ON]

Usually when you hire an individual, you need some sort of contract. Isn't that right?

[Peter MacArthur]

There is a contract with Miramichi River Services. We attempted to get contracts in some of the other areas. Essentially the pilots said they would stop working if they had to form a body corporate and engage with us.

We were left in a position of deciding whether we should continue going the way this has gone for 40 years and leave them as what we call entrepreneurial pilots, or take the risk—

[Chandra Arya, Liberal, Nepean, ON]

I understand. That's why you need time to post more —

[Peter MacArthur]

—and we've been getting legal advice. The legal advice we have received is—

[Chandra Arya, Liberal, Nepean, ON]

That's fine.

My second question is one that possibly the chairperson could answer.

In response to recommendation 22, you have stated, “Board members and management have provided written disclosure” of all the possible, actual, potential, or perceived conflicts “as required by the Corporation’s conflict of interest code”, and that the “Chairperson will put in place appropriate mitigations”. I'd guess that is the response.

Can you give us some examples of what these actual or perceived conflicts might be?

[L. Anne Galbraith]

Sure.

As you saw, the composition of our board is two members of industry, two public members, and two pilots. The pilots are both retired pilots. They're still in contact with a lot of their compatriots, whom they work with, so there's a conflict there.

[Chandra Arya, Liberal, Nepean, ON]

Is this information publicly available, the conflict of the board members or the management, what conflicts they have?