Transport Committee on May 16th, 2006

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes. So basically through that process you saw some improvements, but there are two areas where very clearly you have concerns. What I hear you saying to the committee is essentially there's a sort of perverse impact when we look at clauses dealing with tolls, that essentially it will be of higher cost potentially for you to undertake capital expenditures if the statutory legislation is not changed.

[Thomas Garlock]

That would be correct. The law of unintended consequence is afoot here, no question about it.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Do I still have 30 seconds?

I'll save most of my questions for the next round, but just on the area around regulation, I missed the comment, but I think I understand the intent.

Around the regulation, are there significant differences between how New York and Michigan approach regulation? Your members are basically split between those two jurisdictions. Do you see significant differences between how those two states approach?

[Thomas Garlock]

In the areas of safety and security, I don't believe so. Both the province and the state have been in this business for a long time; they've had significant experience with infrastructure; they understand the standards that will preserve the safety of the infrastructure.

I can tell you the State of New York has done a great deal of work with regard to bridges. I was involved in state government in 1987 when the Schoharie Creek Bridge on the New York State Thruway collapsed, and I can tell you that it's a matter of high priority for them. I don't think it is any less a priority for Ontario over Michigan.

Again, I don't want to leave the members with the thought that we believe the minister is going to promulgate a whole new set of regulations. Indeed, we recognize that in some areas the minister may be compelled to do that. But in our second amendment language we're simply asking the minister to consider existing language standards oversight in the event it would meet the intent of the act. If the minister in his or her wisdom decides it does not, there's certainly nothing in that language to prohibit promulgating regulations believed to be in the best interests of Canada.

[The Chair, Conservative, Merv Tweed]

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

To follow up on Mr. Julian's questions, first of all, I appreciate the fact that you're generally supportive of Bill C-3. I believe there's general consensus that this legislation should be moving forward.

I'll address the two key issues that you've raised. First of all, on the issue of the regulation of tolls by the minister, you had provided some suggested wording and made the statement that you felt the minister's hands wouldn't be tied at all. From the wording used on the toll issue, as I recall, you basically brought in the whole act, as opposed to just section 15. In other words, what you're suggesting is that no action would be taken by the Governor in Council that will adversely affect the commercial or financial viability of these facilities. You don't refer specifically to section 15; you refer to the legislation as a whole. And that would tie the minister's hands, not only on the issue of tolls, but when it comes to perhaps increasing security requirements, which have attendant costs, obviously.

If in fact there are going to be any revisions to this particular section, you're probably going to have to go back to the drawing board again and consult with ministerial staff and make sure that in fact the minister's hands are not tied.

Could I have a brief comment on that before I go to the second issue?

[Thomas Garlock]

Mr. Fast, I'm a simple bridge manager. Having said that, we refer to “operation” in this language as well, and I think you may be referring a bit to that. The reason we bring that in is that if in the minister's wisdom he or she were to make a decision that all truck traffic on the Niagara River would cross at the Peace Bridge and only passenger traffic would cross at the Lewiston-Queenston Bridge, that would not have a direct impact on tolls per se, but it would have significant impact on revenue, as I'm sure the members understand, because of the differentiation between truck tolls and passenger car tolls: 40% of our traffic may be trucks, but that's more than 60% of our revenue. That would be a change in operations if the minister stepped in and made the recommendation that the class of traffic over a particular bridge be changed.

Even having said that, if the minister found that he or she had a need to address an existing, demonstrated negative impact on the efficient flow of traffic over the border, that would certainly give the minister the ability to step in and do just that.

[Ed Fast, Conservative, Abbotsford, BC]

At the same time, though, the way it's worded right now is quite broad, and I think it does have an element of tying the minister's hands.

The second suggested wording--that would be clause 4--has a similar problem. If you look at the words used, it almost appears to be a requirement that the minister accept existing standards, whether on the U.S. or the Canadian side, as being sufficient to fulfill the intent of the act. Again, that appears to be a tying of hands.

Following up on Mr. Julian's comments, during the process of your consultations with the minister, have you seen any evolution in the language that would bring it a little bit closer to addressing your concerns in both those clauses? Or is this something the minister has been very firm on and has said no, this is the wording we want to keep?

[Thomas Garlock]

To answer the first question, Mr. Fast, with all due respect, I think there's a significant difference in the sense that the minister would accept other regulation as opposed to the language we're using--“shall examine” other regulation “for the purpose of”--if it fits. We understand, and it's our intent that if the minister, in his or her wisdom, finds that it doesn't fit, we would expect that new regulations would be promulgated.

On your second question, as I said earlier to Mr. Julian, while the Department of Transport listened with great empathy and I think understands our concern, no, we did not see any appreciable difference in the language as it progressed to Bill C-3.

[Ed Fast, Conservative, Abbotsford, BC]

I'm not going to suggest any language to you. Even though I am a lawyer, I'm not a specialist in this area. If anything is going to happen, it's going to be through further consultation with the minister.

The ministerial representative we had in front of us at the last meeting is aware of these concerns. I don't believe he indicated any clear willingness to change it, but I think that further discussions are warranted.

[Thomas Garlock]

Mr. Fast, as always, we would be pleased to continue those discussions, but we do have a sense that you and your colleagues have this bill on a rather fast track. I can't emphasize enough that we are looking for statutory change rather than waiting to address it in the regulatory process.

[Ed Fast, Conservative, Abbotsford, BC]

Yes, and we understand why.

[The Chair, Conservative, Merv Tweed]

Mr. Hubbard.

[Charles Hubbard, Liberal, Miramichi, NB]

Thank you, Mr. Chair.

For the record, do you publish an annual report of your financial statements?

[Thomas Garlock]

Yes.

[Charles Hubbard, Liberal, Miramichi, NB]

And with that, in terms of government financing, they've operated for many, many years without major governmental contributions. Is that correct?

[Thomas Garlock]

That is correct, Mr. Hubbard.

[Charles Hubbard, Liberal, Miramichi, NB]

So really, we have all these bridges that are not costing anybody except the users a great deal of money.

[Thomas Garlock]

That is true. In fact, I could add for you, Mr. Hubbard, that all of the operators have been very aggressive and diligent in developing non-toll sources of income to further maintain toll rates.

I'll only speak about the Niagara Falls Bridge Commission, but we have not had a toll increase since 1998. In fact, our bond covenants called for an increase in 2001, but we were able to demonstrate to our bond holders that we did not have to do it. We've delayed the increase every year since 2001, at a total savings to our toll payers of approximately $12 million. I will tell you, it is likely that we will entertain a change in our toll structure within the next year or so.

[Charles Hubbard, Liberal, Miramichi, NB]

It seems that most of your argument and concerns today are with borrowing capacity and the attitudes that borrowers have had.

Some of those bridges have been there a long time. Are you seeing a light at the end of the tunnel in terms of paying off your debts and having maintenance reserves so that you do not need to go for further large borrowing activity?

[Thomas Garlock]

In all candour, Mr. Hubbard, that could be the case if we were not liable for the provisions of section 6. The Niagara Falls Bridge Commission is about to rebuild the Queenston Plaza. Right now, we estimate the cost to be $124 million. Three years ago, when we applied for border infrastructure funds for the fifth lane on the bridge--a wonderful project--we estimated the cost of the plaza to be $80 million. But there have been delays--for good reason, at the request of the government because of increased security interests, which are clearly understandable--and the cost has ballooned significantly. So rather than a satisfaction of debt, we could be looking at adding more debt.

By their nature, these structures are very, very costly to maintain. If a bridge over a two-lane road in a remote part of the country has difficulty, it's not a serious issue. If the third or fourth-highest volume commercial crossings between Canada and the United States are incapacitated for any reason, that would be an economic catastrophe for Canada. That's why in 2002-03 we spent $18 million metallizing the Rainbow Bridge, and that's why over the next two years we're spending approximately $12 million to $13 million painting and replacing steel on the almost 110-year-old Whirlpool Bridge, and why we've made extensive investment in the Queenston-Lewiston.

[Charles Hubbard, Liberal, Miramichi, NB]

Transport Canada cites four reasons for this act: to confirm the federal government's exclusive jurisdiction; to require governmental approval for the construction or alteration of new and existing bridges and tunnels; to require government approval for all changes in ownership; and to authorize the government to make regulations regarding bridge maintenance--which you do very well, apparently--safety and security, and the operation.

Are you aware of those four objectives?

[Thomas Garlock]

I am.

[Charles Hubbard, Liberal, Miramichi, NB]

And the major points you've made today are the two main concerns that your association has with the bill.

[Thomas Garlock]

They are.