Transport Committee on Feb. 5th, 2008

[Adam Vaughan]

I've never apologized; I've never had to apologize.

[Paul Zed, Liberal, Saint John, NB]

—expressing your concerns about things you'd said.

I want to say, like Mr. Laframboise, that I was very surprised to read your submission on city council stationery, when in fact in any relationships I've ever had as the critic, the talk has always been about partnerships and strategic relationships.

I'll cede the rest of my time to Mr. Volpe.

[The Chair, Conservative, Merv Tweed]

You have 40 seconds.

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

There's not much time left, but I just want to clear up something.

I was glad to hear Mr. Vaughan talk about the intelligence of our approach to infrastructure. What I was concerned about initially was the confusion of this bill with a series of other issues that have absolutely nothing to do with this bill. But the connection has been made by Mr. Freeman and Mr. Iler, deliberately, with the island authorities and with the City Centre Airport, and then by Mr. Vaughan suggesting that the resources for the port come only out of lawsuits.

I want to put on the record that the lawsuit to which they have made reference is one where the federal government—and you had one of the lawyers here before this committee explain what happened—sat down with the province and the municipal government and tried to extricate the city out of a lawsuit it was going to lose. You heard that as testimony in this committee and that the Government of Canada handed over $35 million in indemnities in order to keep the city safe, harmless from what the city viewed, because it signed on to the agreement, as an irresponsible action against the port authority among other players.

I don't think we get a clear picture of things if we confuse one with the other. So Mr. Freeman, and Mr. Iler in particular, I'm afraid that if you want to make an impact on Bill C-23, you'll have to do it a little differently.

[The Chair, Conservative, Merv Tweed]

Mr. Volpe, I'm sorry, but as I stated earlier, I would call the meeting at this point in time and allow for the exchange of our witnesses and for the minister to come forward.

I want to thank the witnesses for attending today and for a lively, spirited debate. I appreciate your time. Thank you very much.

We'll recess for a few minutes to allow the minister and his officials to come in on Bill C-23.

[The Chair, Conservative, Merv Tweed]

Welcome back to meeting number 11, part two.

With us today is the Minister of Transport, Infrastructure and Communities, the Honourable Lawrence Cannon. Joining him from the Department of Transport are Emile Di Sanza, who is the director general of marine policy; Janet Kavanagh, the director of port policy; and Ekaterina Ohandjanian, legal counsel.

Welcome.

Minister, I would assume you might have an opening statement, and then we'll proceed with rounds of questions.

[Lawrence Cannon, Conservative, Minister of Transport]

I do, Mr. Chair.

Thank you very much, colleagues, for inviting me to be here this morning.

Incidentally, I was very pleased to shake Mr. Volpe's hand as I came in here.

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

There's a conspiracy to malign me. Drive-by smears, and then feigned friendship. That's great. I love it.

[Lawrence Cannon, Conservative, Pontiac, QC]

Colleagues, I'm pleased to continue the discussion on Bill C-23, which basically proposes amendments to the Canada Marine Act. As you may know, the CMA required the Minister of Transport to complete a review of the provisions and application of the act.

In 2002 the government appointed a panel to undertake coast-to-coast consultations on the Canada Marine Act and to report back to the Minister of Transport with recommendations. Very broad-based consultations were held and generated extensive and substantive input from stakeholders, including all levels of government, Canada port authorities, marine transport companies, marine industry associations, as well as associations representing other modes of transportation, shippers, logistics companies, and labour organizations. The result was the CMA review report tabled by the Minister of Transport in Parliament in June 2003, which subsequently provided the direction of Bill C-61.

The proposed amendments in Bill C-61 aimed to build upon the commercial operating environment envisioned by the National Marine Policy of 1995 and the subsequent Canada Marine Act of 1998. It reflected an approach that responded to industry concerns, recognizing the importance of promoting strategic investment and productivity improvements.

Bill C-23 addresses many of the same recommendations flowing from the CMA Review. I believe that Bill C-23 goes even further in terms of optimizing our port regime in order to compete in today's global economy and putting Canada's major ports on a more competitive footing with their international counterparts.

The ports have been waiting a long time for these changes. Canada Port Authorities have told us that these proposed amendments are fundamental to the success of Canada's . marine ports in today's global environment. A number of provinces have also echoed a similar message.

If we wait any longer, opportunities could be lost. Opportunities that have the potential to have a significant and long-term positive impact on regional economies and ultimately on the Canadian economy.

Marine transportation accounts for almost a fifth of the volume of Canada's exports to the United States and over 95% of the approximately 162 million tonnes of commodities and processed goods Canada exports to other countries. All parts of the country benefit from the production and employment generated by the marine sector.

While the largest absolute impacts are in British Columbia, followed by Ontario and Quebec, the positive economic effects of marine transport activities extend to all regions of the country. Clearly, the marine sector makes a significant contribution to the output of the economy, is a creator of high-paying jobs, and also a significant generator of federal, provincial, and municipal revenues. The proposed amendments in Bill C-23 would have a positive impact on the marine industry and would position Canada port authorities, which are so important to Canada's economy, to respond to the emerging trends in globalization and to support Canada's national trade objectives.

At this point, I think it's important to distinguish between the legislative proposals of Bill C-23 and any related and complementary policy initiatives that may be put in place. As part of our commitment to openness and transparency, and also to ensure that you have a comprehensive understanding of the modernized strategy envisaged for our port authorities, we have shared with you the various policy initiatives that are being pursued.

I understand that a number of questions and comments have been raised concerning land management policy initiatives, and I have provided additional information and I trust have responded to these questions. These policy initiatives are very important and of course necessary. They reflect the result of significant analysis and examination, including third-party studies in some cases. They are initiatives that will have an immediate impact on industry within the existing legislative framework. However, they do not make up the substance of Bill C-23 but are complementary to the bill's provisions.

While Bill C-23 is national in scope, I understand that it has generated significant discussion regarding the role of municipalities.

Our cities are economic generators by themselves, but they also serve as essential transportation hubs and gateways, providing access to ports, airports and border points. This means that what happens in cities is essential to the rest of the country. Through the $33 billion Building Canada Infrastructure Plan, we will fund investments in transit, local roads and highway projects to help mitigate our growing congestion problem.

We are convinced that these investments will have a major impact on Canada's competitiveness; on the environment, and on the quality of life of Canadians. The Building Canada Plan underpins a national emphasis on trade gateways.

We cannot talk about trade gateways without talking about ports. In addition to the Asia Pacific Gateway and Corridor initiative, l signed a Memorandum Of Understanding (MOU) with the provinces of Ontario and Quebec in July 2007 to develop the Ontario-Quebec Continental Gateway and Trade Corridor.

There are many marine-related opportunities along the St. Lawrence River and throughout the Great Lakes. Opportunities for increased short sea shipping that have the means to alleviate congestion, facilitate trade, reduce greenhouse gas emissions, and increase the efficiency of the transportation system through better utilization of waterway capacity.

In October 2007 the federal government also signed an MOU with all four Atlantic provinces to advance the important work of development and developing a forward-looking Atlantic gateway strategy. There are many opportunities to explore that, and that will include our ports.

I understand some concern has been raised with respect to community involvement in port activities, particularly related to land use. On this issue I would like to note Captain Houston's remarks of last Tuesday. He confirmed that there is a significant history of ensuring that the municipalities have a lot of say in how the port is developed, over and above what is required by the port authority.

For the Vancouver Fraser Port Authority, Captain Houston explained that a municipal liaison forum has been established that brings together the board of directors with municipal councillors on a regular basis to ensure that the views of the community are understood and considered. In addition, each and every project that is implemented in the Vancouver Fraser Port Authority is submitted to the development process of the municipalities of jurisdiction for their comments, and wherever possible their comments are accommodated.

I'd like to add that I have seen this process in action recently. Working with the communities of Delta, Surrey, and Langley, as well as others, including Transport Canada, the Vancouver Fraser Port Authority has been part of a team effort that has created the Roberts Bank rail corridor, a series of nine overpasses that will facilitate traffic flow and reduce congestion in the lower mainland near Roberts Bank.

The needs of municipalities are clearly being considered in activities related to the ports, but equally important, regular dialogue is now occurring to ensure that all parties can learn from each other. The proposed amendments in Bill C-23 are absolute imperatives for the success of our gateways and corridors strategy.

While all of these separate and complementary initiatives are important, the reason I'm here today is to discuss Bill C-23, amendments to the Canada Marine Act.

This bill has five key components. The first amendment is designed to level the playing field for Canadian ports with other ports around the world. Bill C-23 removes the prohibition against federal funding in respect of contribution program funding for infrastructure, environmental sustainability, and security.

Currently, with very few exceptions, our Canadian ports are prohibited from accessing federal appropriations, while ports around the world are receiving increasing government funding for capital, environmental initiatives, and security enhancements. In addition, transportation sectors other than maritime are able to access these funds. It does not make any sense to discriminate against Canadian port authorities when we know that ports are an integral part of our long-term objectives, particularly regarding our national gateways and corridors strategy.

As you know, one of the objectives of our national policy framework for strategic gateways and trade corridors is to optimize the efficiency of the existing multi-modal transportation system. Greater use of the marine mode, especially with initiatives such as short sea shipping that are eligible for funding under the Building Canada Fund, will be a key solution to get goods off congested highways and railways and help protect our environment at the same time.

Short-sea shipping is also a priority for the United States, and we are working closely with our U.S. colleagues to further develop these opportunities. So let's put our CPAs on a more level playing field with the other transportation modes and the ports of other countries.

We are proposing amendments to the Act that would provide the option of a commercial borrowing regime for ports earning revenues of over $25 million a year for a period of three consecutive years. These amendments will allow the largest, most diverse CPAs to make financing decisions that are affordable, prudent and sustainable. For those eligible ports that choose to implement a commercial borrowing regime, they would be subject to a code governing borrowings in combination with commensurate accountabilities on the part of the Board.

Amendments are being proposed that are geared to providing long-term stability and continuity in the governance of CPAs. Bill C-23 provides for an additional term of re-appointment of board directors, thereby increasing the maximum tenure for a director from six to nine years, three terms of three years. Incumbent directors would remain in office until a renewed or new appointment is made. I would add that this is a term of a maximum of nine years.

On the subject of governance, I would like to clarify a very important point, one that is often forgotten or not well understood. You may recall that Captain Houston also noted this point in his remarks before this Committee. Specifically that Board members are appointees. Their fiduciary duty is to represent the best interests of the port authority board members. The act moreover stipulates that board members are not there as representatives of the people that nominate them – this is a matter of law, as such, and it does not matter whether it is one appointee or three appointees, board members must represent the best interests of the port.

Other amendments related to facilitating future amalgamations were warranted. You may be aware of the three ports in the lower mainland that amalgamated, effective January 1, 2008. The proposed amendments in Bill C-23 would put in place additional provisions for a consistent and streamlined approach to responding to potential future amalgamations, should the need arise.

The administrative monetary penalty amendments that are part of this package would provide ports with a modernized enforcement regime consistent with similar legislative impacting entities such as the St. Lawrence Seaway Management Corporation. Moving away from the lengthy court system for regulatory offences and introducing an independent review-and-appeal process has been demonstrated to result in a more efficient and cost-effective process, benefiting both the enforcement officers and the users of the marine system.

Mr. Chairman and honourable colleagues, I believe that these proposed amendments are the right thing to do for the marine transportation system. They are long overdue, and they are a critical part of this government's overall policy and frameworks supporting transportation and trade in Canada. They are also integral to the long-term objectives of the three national gateway and corridor strategies: the Asia-Pacific one, the continental one, and the Atlantic gateway.

Bill C-23 is required to ensure that Canadian ports have the tools they need to compete in a global trade environment and in support of their role with the national policy framework for strategic gateways and trade corridors. And it's the right time to make these changes for the Canadian economy.

Thank you very much, Chair and colleagues, for your attention.

[The Chair, Conservative, Merv Tweed]

Thank you, Mr. Minister.

Mr. Zed.

[Paul Zed, Liberal, Saint John, NB]

Thank you, colleagues.

Mr. Minister, thank you for coming today.

I obviously can't speak for everyone at this table, but I think in general terms you're going to find people are very much in favour of the modernization occurring with this legislation.

One of the concerns I have relates specifically to underfunding. I was wondering whether or not you could speak to that as a policy matter.

We heard from the port of Montreal. You know that I come from the port of Saint John. Rather than having three strategies, would there be any benefit to having a strategy called the continental Atlantic strategy, under which, as a national policy, you as a government would encourage Montreal east, where all of those groups would work together?

I'm asking that question because of the St. Lawrence issues, because of the marine transportation issues. Historically, in the maritime provinces, we're more north-south traders, but we have some challenges, certainly, in post-9/11. I was wondering whether we could ask you for your philosophy behind that.

Also, I was wondering whether you would comment on Churchill. As you may know, I, as the critic for cities and communities, have been travelling the country, and I have found that in Manitoba there's a great interest in Churchill. With global warming and climate change happening, Churchill is becoming a bigger issue.

Also as part of my list of questions, Mr. Chair, perhaps I could ask the minister to comment on the challenges that the communities—the smaller ports especially—are facing with security and policing. In bigger cities and city centres, it's not as much of an issue, but certainly in cities like Halifax, St. John's, Newfoundland, and Saint John, New Brunswick, policing, which was taken away from that jurisdiction in the 1990s and downloaded to the municipalities.... I'm wondering whether you might have some comments to offer, in terms of whether special funds might be available.

I've asked you a lot of questions. I'm sorry.

[Lawrence Cannon, Conservative, Pontiac, QC]

That's all right.

[Paul Zed, Liberal, Saint John, NB]

You're used to them now.

[Lawrence Cannon, Conservative, Pontiac, QC]

I do certainly want to thank you for your encouragement, in terms of the direction this piece of legislation is bringing to our colleagues around the table.

In terms of the strategy that's developed for our gateway strategy, the framework agreement basically follows the geographical patterns of the country and of course the trade flows that have been recognized there. I'll let Emile and his team go into probably a little more detail.

Just to give you an overarching view, that is the way we set up the continental Ontario-Quebec gateway, which goes into the heartland of the United States, as well as the Asia-Pacific one, which was initiated previously but which we funded considerably over the last number of years, and which offers, I believe quite honestly, a best-practice environment. It showcases a lot of things, I think, we can do, in terms of developing our competitiveness abroad.

In the case of the Atlantic gateway, we have come to realize that we need to be able to develop a comprehensive approach, and that's why the four provinces came together and agreed with us on the MOU. We are in the midst of putting together, over the course of the next several months, the data required to be able to help us promote.

Rightly so, you pointed out that the changing climate offers, I think, new opportunities for Canada up in the Fort Churchill area. The Prime Minister, as a matter of fact, was up there not long ago, and he announced investments into the rail system.

It is not at all excluded from the Building Canada plan. As a matter of fact, we have set aside money to be able to analyze and do the research on the new trends that are coming up. We do want to look at an Arctic gateway, and it will be an overarching strategy that should eventually come up.

Regarding the security and policing issue, over the course of the last several months we have put forward programs to ensure our restricted areas are secured, or at least the restricted areas in the ports. There are programs there. We have signed agreements with the Montreal Port Authority, the Halifax Port Authority. Emile can respond to that.

In Vancouver, because there was a request on behalf of the union and the labour group to be able to put that aside until such time as they complete their elections, that also should be moving forward.

Maybe, Emile, you have a point to add to those issues.

[Emile Di Sanza, Director General, Marine Policy, Department of Transport]

With respect to the gateways, as the minister indicated, I guess the MOUs that were signed for Quebec, Ontario, and the federal government, and similarly in the Atlantic region, call for a series of studies and examinations. These will look at trade flows, traffic patterns, infrastructure requirements, and at a series of priorities to be established in that respect.

Of course, nothing there prevents the various business arrangements still to take place that cross over those geographical limitations. In fact, a number of those are taking place between Atlantic Canada, the Montreal region, and then further into the seaway and the Great Lakes. So nothing there would presumably stop that.

With regard to security, one element, of course, is the proposed amendment to the legislation here that would provide access to funding for capital projects under infrastructure, environmental sustainability, but also security enforcement. While there was a program, that program terminated in November 2007. The provision here would provide continued access should a funding program be established to that effect.

[The Chair, Conservative, Merv Tweed]

Thank you.

I'll go to Monsieur Laframboise, and perhaps the minister, in his answer, can speak very briefly about the Churchill question—because I certainly have an interest in that too.

Monsieur Laframboise.

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

Thank you very much.

Minister, you know that the Bloc Québécois will support this bill. This has forced me to do a little research. As regards governance, you state in clause 11 of the bill who may not be a member of the board of directors, and you include the officers and employees of a port authority. You know how I love the municipal world. However, paragraph 16(a) of the act states the following about individuals who may not be directors of a port authority:

(a) an individual who is a mayor, councillor, officer or employee of a municipality mentioned in the letters patent;

Having regard to that provision, I would like you to explain to me how it is that Ghislain Harvey is sitting as chairman of the board of directors of the Saguenay Port Authority, whereas he is the mayor's chief of staff, and thus on the city's organization chart, in addition to being President and CEO of Promotion Saguenay, a creation of the city. Try to explain that to me.

[Lawrence Cannon, Conservative, Pontiac, QC]

From what I understand, the City of Saguenay is entirely sovereign with regard to the people it appoints to the board of directors of the port authority. In that sense, we do not necessarily foresee a conflict. It was the City of Saguenay that appointed the incumbent to that position.

[Emile Di Sanza]

We should do some more research on the subject, Minister.

[Lawrence Cannon, Conservative, Pontiac, QC]

I checked, Mr. Laframboise, and that's what I was told.

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

Perhaps a legal opinion should be requested, having regard to the individuals whom section 16 of the act excludes as directors. That would reassure me.

[Lawrence Cannon, Conservative, Pontiac, QC]

All right.

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

As regards governance, clause 13 of the bill states the following:

13. The Act is amended by adding the following under section 21: 21.1 Subject to the letters patent, the board of directors may delegate the powers to manage the activities of the port authority to a committee of directors or to the officers of the port authority.

It's as though subcontracts could be awarded. However, my research led me to believe that, in order to avoid conflicts of interest, the port authority could not grant contracts to directors. I would like you to reassure me that the Saguenay Port Authority has awarded no contracts to members of the board of directors and that this bill will not permit that practice.

Is that the purpose?

[Lawrence Cannon, Conservative, Pontiac, QC]

I entirely agree with you that this should not allow people to exchange contracts freely.

[Emile Di Sanza]

The purpose here is strictly to facilitate the performance of the responsibilities of the boards of directors. In the case of smaller ports, for example, it may be difficult for the board of directors to have to bear the entire workload. To a certain extent, these people may delegate certain powers to directors. Ultimately, however, those responsible are still the board of directors and its members.