Transport Committee on Jan. 29th, 2008

[Patrice Pelletier]

For me, what's at stake here fundamentally is to bring more traffic to the St. Lawrence. The problem is upstream, not in maritime terms but in economic terms. For example, the Port of Montreal's most important client right now is Northern Europe. The North Atlantic route therefore brings in a very large part of our business.

However, new routes are being developed, such as the one in the Caribbean. In 2014, the Panama Canal will be widened, which will enable larger ships to pass through it and travel up the eastern coast of North America. I didn't say America but North America. One of our clients who currently comes to Montreal is from the Caribbean. This route didn't exist previously. There's also the Mediterranean, India via the Suez canal. Those are new routes that will give rise to an increase in traffic.

From that point, it will be necessary to determine how to ship goods arriving in Montreal and destined to western Canada most efficiently, that is from Montreal to Toronto and to the American Midwest. Are railroads going to be used? That's highly probable. In my opinion, it's the most economical and efficient way. This is what our dear competitors on the east coast of the United States have invested in. Indeed, east coast American states have invested over $2 billion in their infrastructure, and specifically rail infrastructure.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

What significant projects would the passing of this legislation allow you to implement? Do you have any projects in mind for the expansion or improvement of your facilities?

[Patrice Pelletier]

We would particularly like to consolidate and optimize our existing infrastructure. It is of course very important to me that as we undertake this second growth phase we have an even stronger foundation than we did for the first, which took place between 1970 and 1980.

Still on the St. Lawrence River, when we talk about the cost effectiveness of the channel, we are seeking ways to obtain even a few more inches or a foot in order to allow for greater capacity. I also talked about cruise ships. Building a cruise ship terminal in Montreal does represent a considerable investment. In order to answer several of your questions, I would say that in my opinion, this is a project that is directly related to the city, and would have significant social and community repercussions. The partners for such a project or cruise ship terminal have yet to be determined, but it is clear that the city will be involved in this development, which will be more than a cruise ship terminal.

As far as the expansion is concerned, we are talking about a size that will allow us to deal with the expansion plan for the next few years. This is a very significant investment.

[The Chair, Conservative, Merv Tweed]

Mr. Watson.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair. Thank you to our witnesses here today.

I have two questions. One will be for you, Mr. Hanrahan.

You obviously have some of the larger ports represented here and talking about economic development. What does Bill C-23 mean for smaller ports—say, for Windsor, Ontario, or for Hamilton, or ports like that?

Secondly, the question I want to ask the bigger ports here is this. It seems that in order to capitalize on the economic expansion you need to do, there are currently two hindrances. One is access to the significant federal funds that are available, whether it's the billion dollars of Asia-Pacific money or $2.1 billion for the borders and gateways initiatives; and the second obstacle is the ability to access more private capital.

The question for you is, could you have moved ahead on some of your projects more quickly had a bill like this been in place months ago, years ago, or whenever?

I'm getting to a timing issue here. If we delay this, is that going to mean a problem for you? Could you have moved ahead more quickly? Because those two obstacles are clearly going to be removed by a bill like this.

Those are my questions.

[Sean Hanrahan]

On the first question, Mr. Watson, as one of the smaller ports in size and revenue we are very pleased to see government's advance in two specific areas. One is the access, as you say, to federal funding. It's not on an unequal footing; it's just making the playing field more level, frankly. It's just an allowance of program parity, in that we would be able to make application for the same level footing as any other commercialized entity. That, from my perspective, is a great thing.

The second thing, and this is yet to come in finalized form, is the borrowing code, which ought to be as streamlined as possible. The philosophy behind increasing borrowing limits and making them more commercialized, if you will, is a tremendous advance.

As to how it plays itself out for the smaller ports, the tier two ports, in subsequent codes that will be put in place, that's something we're going to work together with Transport Canada on.

That's my end of things, sir.

[Captain Gordon Houston]

Thank you. In terms of whether we would have been able to go ahead faster, we're actually very fortunate that this act is being changed just as we're entering into this period of very heavy commitments financially. It wouldn't really have helped us earlier on. Obviously, you build as you grow, and that's the stage we're at.

[Jeff Watson, Conservative, Essex, ON]

With minority parliaments being precarious in terms of their duration—and we're typically reaching the outside limit of a minority parliament in terms of historical duration—on a scale of one to ten, how urgently do you need to get this through? Are we talking about the spring, this fall? How badly will delays hurt you? I just want to get a sense of that.

[Captain Gordon Houston]

Yesterday.

[Sean Hanrahan]

My colleague said yesterday.

[Jeff Watson, Conservative, Essex, ON]

It's a timing issue that I think would inform the work of the committee, first of all, and then the broader Parliament beyond that. That's what I'm getting at. It's not a partisan issue. I'm talking about historical realities and wanting to inform the work of the committee in terms of how quickly we get into and through this to get it passed—for your sake.

[Sean Hanrahan]

It's an excellent question, Mr. Watson. The short answer would be spring. If all of this could be done with final proclamation by spring, that would be the best.

I'll reflect back to what I said earlier. Trade is projected to double by 2020, and that is 11 years away. We simply have to dovetail everything that encourages commercialization and development at the same time as we hit this impending growth. So spring would be the answer, sir.

[The Chair, Conservative, Merv Tweed]

Mr. Maloney has offered his time to Mr. Volpe.

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

I suspect he's doing that because he wanted somebody to make an intervention on behalf of a Great Lakes gateway from an economic perspective in terms of developing the entire economy of Canada.

I thank you, gentlemen, for pointing out that there is a Pacific gateway strategy. The government members are keen to take full credit for it. We're not going to engage in partisanship, but it is one of the gateways. On the other, I see Mr. Hanrahan and Mr. Leroux, along with Monsieur Pelletier, have done well, speaking about the gateway that comes from Atlantic Canada and through the Port of Montreal.

I want to thank you before I make my comment on focusing strictly on the changing economic and trade patterns that impact on the way the port authorities see the world, and the way they must prepare for the world.

We have a variety of ports in Ontario. Mr. Watson has pointed to one, Windsor. There are several others. I'm thinking in terms of my own home city—Toronto—although other people might view themselves as expert on what happens in that city. I know that what you'll want to do is give us an indication about why it's important to think about the macro-economic changes for which we must prepare. That's why I asked you—and I'm wondering, Mr. Hanrahan, whether you'll do it perhaps from a different perspective—to talk in terms of governance issues in a CPA that will take into consideration any potential or foreseeable differences with local authorities about developing the infrastructure for changing trade patterns--why it would be important from your perspective that the jurisdictional authorities vested in CPAs, and confirmed by the courts, stay within the structure of material that must be dealt with from an investment perspective locally, but within a larger perspective.

And I'm taking the lead from Monsieur Pelletier, who said that the Port of Montreal really has a great dependency on the northern European market, secondarily on the southern Mediterranean, and thirdly from the Indian market accessing the Atlantic through the Suez Canal. This strikes me as a more studious approach to what should be happening with a port like Montreal if it's going to be a gateway into the Great Lakes basin, the northeastern United States, the midwest United States, and the biggest market in Canada, the Golden Horseshoe.

Those Canadian ports that are resident in the interior of that gateway, the Great Lakes ports, must have a similar strategy based on significantly similar economic assessment of where the future is going. So I'm wondering whether from your perspective the governance issues addressed by Bill C-23 are focused appropriately on that expansive mode, or whether they should concentrate, notwithstanding the jurisdictional decisions that have already been confirmed by the courts, on local issues only.

[Patrice Pelletier]

I can perhaps address part of it, but I'll let you judge if it has something to do with Bill C-23.

There are three gateways in the country: Atlantic, continental, and the Pacific. In terms of the continental gateway, there is a subdivision that addresses the St. Lawrence and the Great Lakes and one that addresses southern Ontario. The idea is to come up with a plan together. That plan is driven in terms of the St. Lawrence and Great Lakes. Right now there is a market study that will give the common strategy about what the market is and how this market can be conveyed to the end destination.

People within that gateway are getting organized the same way as the Pacific gateway. They have organized themselves very well. I think Gordon can talk about this.

I see a little bit of the same thing in many respects. We didn't talk about environment, but there is action with Green Marine--Alliance verte--in our part of the world. That is before laws and really avant-garde of auto regulations toward improving the environment. I see a convergence toward this. I don't see that because it's a smaller authority or an authority in a different basin or adjacent basin that it will be disfavoured.

I think the element underlying all of this is how we increase trade from a national perspective. We know there are gateways. We have to interlink with the southern Ontario gateway, which is very different from ours, but we're connected because we know where we're going. Sixty percent of the trade coming into Montreal stays in Canada, 40% goes to the United States. And 75% of that 40% goes to the Midwest, because that is the hub for merchandising and so on. Our neighbours in Ontario have to deal with the same issue. Personally, I see convergence in terms of our overall objective.

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

This is, in essence, from your perspective of protection and enhancement of an asset that may be used down the road.

[The Chair, Conservative, Merv Tweed]

I'm sorry, you're well over the five minutes.

Mr. Jean.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

As you can see, there is a demand for time--there never seems to be enough.

I have two questions. First, the competitive disadvantage the St. Lawrence has in relation to the level of the water, is that felt in other ports or other areas? In essence, if the water level were higher, it would be better?

[Patrice Pelletier]

Here's the paradox: 2007 was considered a low-water year, and that's no big secret, but we had the largest traffic ever in container arrivals. Post-Panamax ships from Maersk call at Montreal. Post-Panamax is the largest ship that ever came to Montreal. At the same time, we're talking about Toronto.

The issue I was trying to raise in terms of water is how to optimize. We have to remember that we don't control trade, we facilitate trade. We are the door and we know how big or tall the door is.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I only have so much time, I'm sorry, but do other ports feel this as well? That's really my question. It's very important.

[Captain Gordon Houston]

Yes, we do. There is a draft limitation in the Fraser River site of the Vancouver Fraser port as well because of the river.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Does a lot of dredging need to be done?

[Captain Gordon Houston]

About $12 million a year.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Is that the same for the St. Lawrence dredging? Would that suffice, or is it rock bottom?

[Patrice Pelletier]

What will suffice?