Transport Committee on Jan. 29th, 2008

[Captain Gordon Houston]

Thank you very much.

There are a lot of initiatives we've done. Again, this new port authority is 28 days old, so I can only use the history of the other ones, especially Vancouver, where I came from.

We were very active in communities such as Abbotsford and Langley. In fact, we started a task force in Langley to try to solve the problem they had with the trains coming to the port and dividing the town in two. Some of these trains are nearly two miles long. If the trains stop, the community is bisected. That becomes a problem for emergency vehicle access, and so on.

Although Langley is not technically one of the municipalities that was involved at that time with the Port of Vancouver—even the new port is not involved, as it's not one of the municipalities—we sat down as a task force and developed the scenario that said yes, they needed overpasses.

We convinced Transport Canada to do a study. The study reported that it needed $300 million for nine overpasses. We contributed $50 million to the port. That has nothing to do with the port per se, but it guarantees our traffic. Those are the types of things we've done in the past.

I'm sorry, what was the second part of your question?

[Ed Fast, Conservative, Abbotsford, BC]

Have you sensed any opposition to this legislation from the communities you're presently representing?

[Captain Gordon Houston]

No. We went to the municipalities and made sure they knew that the amendments were under way and that Bill C-23 was there, because there has been some discussion in the lower mainland on the new port authority. They wanted three appointees instead of one.

They're not representatives, they're appointees, so their fiduciary duty is to the port, not who put them there. So it doesn't matter whether it's one appointee or three appointees, they still have to vote in the best interests of the port.

That is the only thing we have gotten back from the municipalities that would indicate they have a problem. We told them we as a port could do nothing about it, and to wait until the changes to the act come through and then go forward with it. I don't know whether they have or not, but we advised them to do it that way.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Hanrahan, as this legislation has evolved through Bill C-61 in the previous Parliament to this one, there have been some changes. One of those is, of course, adding the borrowing empowerment. Why is that important to you? You touched on it briefly in your initial presentation.

Also, what kinds of projects would you have undertaken in the past but couldn't because of the limitations that are presently in the act?

[Sean Hanrahan]

I know others will want to speak on that as well.

First and foremost, going forward, if the bill passes as it is constructed currently, there will be two levels of ports, tier one and tier two, for the purposes of borrowing. A code, which is yet to be finalized, would require more work, we feel, between our officials and Transport Canada, and both sides are committed to coming up with an end product that will make it most efficient. That's a work in progress.

As to the philosophy, we were delighted to see in the bill that the government has shown an interest in proceeding with this kind of mechanism. We are all very pleased. The finer points have yet to be worked out by way of a code.

To the second part of your question, on what we would do, I mentioned in my presentation earlier the size of trade and the fact that it's going to double by 2020. What has to happen is that we make sure, as a port community and as a country, that we don't find ourselves in some kind of infrastructural deficit vis-à-vis ports in the U.S. and indeed elsewhere.

What we will do in our long-term planning—in consultation with others, of course, in our communities—is make sure that does not happen. That infrastructural deficit cannot happen.

There's rising volumes of trade; there's changing trade patterns; there's improving corridors of trade. All of these have to be addressed. The way you address all those concepts is by concrete—building things. That's what we would do, and that's what we haven't been able to do specifically in the past.

But even more, what we have to do is dovetail development with the increase in the trade patterns and volumes that are happening right now.

I'm sure I should share the floor on that one, if I may.

[Ed Fast, Conservative, Abbotsford, BC]

Let me address the question to both Captain Houston and also Mr. Pelletier.

Are there projects you would have undertaken in the past that you just couldn't because of these restrictions? Give us examples.

[Patrice Pelletier]

Yes, I'll try to be concrete in terms of our plan.

There are basically two elements. One is about our current infrastructure. I'm not talking about a new terminal; I'm talking about our current infrastructure.

Today, one of the elements for the Port of Montreal is to look at how we can optimize the water draft. Basically, if I can gain a few inches, if not a foot, that would permit the ship to come with more cargo. This is significant. You're talking, let's say on a 3,000- to 4,000-TEU ship—or even the 5,000-TEU ship that came to Montreal this year—about 15% to 20% additional cargo, with that additional foot. It's substantial.

That costs money. Naturally, there are all kinds of issues and impacts that we have to study and find mitigation measures for, but it's quite feasible. This is a concrete element.

The other concrete project we're looking at is all about the St. Lawrence cruise aspect. How can we, with better installations and better facilities, bring more ships and more passengers and therefore directly have more economic impact for the cities of the ports where the ship will call? This is another clear element.

The other one, to which I was referring earlier, is about the future, the 2015 horizon—not to talk about the 2020 horizon, which will be even more challenging. This, in our case, means an expansion. It means a new terminal, and that means investment, and it is only seven years away.

One could ask, “Why didn't you do this five or seven years ago?” Maybe the time was not right in terms of our need for additional capacity, or in terms of the transformation of the shipping industry to being very focused on the port of call, through the design of the ship. People put a lot of effort into designing the ship today, in ways not necessarily the same as before. This is very good timing in terms of our future development.

[Captain Gordon Houston]

Thank you, Patrice.

In Vancouver Fraser, our borrowing limit is $510 million. Currently, we have two-thirds of that committed, but we have up until now managed to pay for it with our own investments, etc. This year, for the first year, we've made an arrangement for $175 million worth of borrowing. We have $350 million worth of commitments, on $500 million.

But we also have a $1.3 billion terminal coming down. In fact, tomorrow we'll get the proposals back from the four short-listed proponents. So we're going to be up somewhere around $1.7 billion requirement potentially. I obviously don't know what the deal with the new proponent is going to be, because tomorrow is the day, but potentially, we could be looking at about $1.7 billion worth of investment required to move the Asia Pacific Gateway forward.

Clearly, a new regime would be very much in our interest.

[The Chair, Conservative, Merv Tweed]

Mr. Zed.

[Paul Zed, Liberal, Saint John, NB]

Gentlemen, thank you very much for being here today.

My home town of Saint John, New Brunswick, is obviously very much a port community. One of the things I thought we would do is take advantage of your being here today to have you give us a couple of examples and also some help, and maybe we'll leave you with some homework.

I think my colleague Ed had talked about the municipality services and the kinds of things that a community needs to have as a result of working with a port. In Saint John, for example, there are new challenges for policing and security. The post-9/11 environment has created new challenges for your industry.

We all acknowledge that they are centres of activity, and in certain circumstances, whether it's in Montreal or the west, there are opportunities when certain lands may be surplus and these are community opportunities when, in concert, working with a community or a municipality or an organization, there may be a joint development that would occur.

I wonder if you would share with us your philosophy. Also, when we're talking about infrastructure costs, I'd like to hear from you if there is a study, and if there isn't a study, whether you would consider a study as to what the global bill of our ports would be for infrastructure, not blue-skying, but to say how much money would be re-invested in the communities from Quebec, the Maritimes, the west, where we need, as a global competitive country, to be able to attack the global competition that's occurring in China and India. As a country, what are some of the general principles we might move forward with?

[Gary Leroux]

Mr. Zed, Saint John is indeed a great port, and Captain Soppitt is doing a fantastic job as the CEO.

[Paul Zed, Liberal, Saint John, NB]

It's okay, he doesn't work for me.

[Gary Leroux]

In terms of joint development, I think the Port of Saint John is doing a lot of joint development, as you know, with the Irvings and with the local uptown group. They've done a lot of good with the boardwalk they've built there, and with tourism and that kind of thing. They've enhanced that community greatly. They continue to work. They're on all kinds of committees and local partnerships. I think joint development is certainly a focus of the Port of Saint John, from what I know, and I don't know in great detail.

I agree with you that a study on the cost of the global bill, as you put it, for infrastructure would be a good one to have, and we don't have it, quite frankly. I know that the TD Bank Financial Group did a study a couple of a years ago and said there was a $120 billion deficit in infrastructure in Canada globally. The ports have significant infrastructure requirements, as well.

What the bill would be, I don't know. A few years ago we did a study, and the capital plans of the eight top ports in Canada was a $1 billion requirement. That's now probably doubled. In the U.S. the Port of Seattle has $8 billion for one port, and most of that comes from federal and state governments. They're funded to the hilt.

We have to go out and find ways and means of financing that infrastructure investment. With this new borrowing regime, we hope that the cost of borrowing will be reduced, because you have more dollars brought to the table when you're financing with the banks or private partners, and you're dealing with partners as equals because you're bringing money to the table as opposed to trying to get their money to do the investment in the port authority. There are lots of benefits from this.

[Captain Gordon Houston]

If I may, I don't want to break the unanimity of this group in front of you, but I might just be going to do that.

When we put a piece of infrastructure in place, like a terminal, it's there for about a hundred years. It's a long-term vision that you need before you do that. Up until now, of course, we've only been able to build infrastructure for port purposes. So what you're suggesting, actually, is quite new to us.

I would have a bit of caution around doing something like that on port property. The fortunes of ports ebb and flow, and what isn't used today may very well be crucial in 15 years' time, 20 years' time, outside most people's planning horizon. So there's always that caution, certainly from our perspective, when you look at something like this.

From my own perspective, I would rather, if it needs to have some sort of joint venture with a municipality, do it outside the port. You just never know when a piece of land is going to become really valuable to moving cargo.

[Paul Zed, Liberal, Saint John, NB]

The Federation of Canadian Municipalities has just completed a report that talks about a deficit in Canada of $123 billion. Our party has spent a lot of time lately with the urban caucus, travelling around Canada, trying to get a list and a canvass of the kinds of things that need to be reinvested. That's why I think it would be very helpful if your association would canvass your agencies throughout the country and prepare for this committee a response to this specific question. What are your short-term, medium-term, and long-term infrastructure requirements, even over a five- or ten-year period?

The other thing is, we have to be very careful when you go to borrow money that we don't end up in the situation we ended up in when you were indeed given some new autonomy with the previous Liberal government, when Doug Young was the minister, where the changes occurred that allowed you the ability to be somewhat independent of the national government.

I think those are important principles to be guided by.

The last point, Mr. Chair, is a short question. I think I know the answer to this. Where is labour in all this? I think they are an important partner. I know they have been an important partner. I think they're on the witness list, but I think it would be helpful, again, for us as legislators to know where labour is and how they view this, and whether they're prepared to participate in the future. They're a critical component of all this.

[Captain Gordon Houston]

I have spoken to the president of the Canadian area of the ILWU. We told them this was going to happen and asked whether he would be supportive of these changes. As he said before, many times, they are very, very supportive of anything that will help the ports grow. Obviously, it creates labour and jobs for their members.

As far as the west coast goes, and actually the Canadian area, with this one president, they're very supportive of the changes.

[Patrice Pelletier]

Perhaps I can add a similar comment, not only from inside the administration but also from everybody involved in the ports. I've talked to the president of the union about this, about the plan. Basically, from their side, it's this: What can we do to help you?

As an anecdote, I go to their office and I look on their board and I see an article on the port of Montreal. The section about growth and expansion is highlighted. They welcome this. Everything that will facilitate that growth and these expansions and improvements are very much welcomed.

[The Chair, Conservative, Merv Tweed]

Monsieur Carrier.

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

Thank you, Mr. Chairman.

Good afternoon, gentlemen. I am pleased to meet you. I would like to address my question to Mr. Pelletier since he represents all of Quebec when it comes to maritime transport. I'll take this opportunity to congratulate him on his recent appointment.

The Bloc Québécois certainly supports the principle of the bill since it would favour the St. Lawrence—Great Lakes trade corridor. However, we'd like some clarification. For example, you say that the Port of Montreal has experienced growth for the past several years. I'd like to know exactly how many millions of tons you handle annually.

[Patrice Pelletier]

During fiscal 2007, we handled almost 26 million tonnes, the vast majority of which was containerized, which fact has had a certain impact, especially on our financial health. As I said earlier, this overall growth in cargo has increased on average 3% to 4% per year, and especially in 2007. Perhaps you know that there's been no growth in the United States in 2007. Here, there's been 9% growth in containerized merchandise.

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

You're also part of the Sodes, the St. Lawrence Economic Development Council, a corporation that has been in existence for about a year. I'd like to know whether the Sodes supports the bill.

[Patrice Pelletier]

Absolutely. I spoke to the former president of that organization as well as the new one, whom I met, and to Mr. Gagnon, the director general. Moreover, there has been a meeting of all the CEOs of St. Lawrence ports, namely Quebec City, Sept-Îles and the Saguenay. We met to discuss Bill C-23 and the amendment. We unanimously supported the bill and we continue to do so.

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

The bill will allow port administrations to come together. Is that one of the reasons why the Sodes sees this favourably? Is this kind of merger which seeks to improve the operations of port administrations part of the Sodes projects?

[Patrice Pelletier]

I haven't heard about any merger project. I think that the main objective of the Sodes, which looks after grouping activities and infrastructures that affect the St. Lawrence, is to increase trade at the gateway, as you've already mentioned. That objective does not necessarily have to be achieved through a merger. We think that with the means we have at our disposal right now, together with those that you will enable us to obtain through these amendments to the legislation, we will be able to achieve that objective.

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

Among various possibilities available for increasing transport on the St. Lawrence Seaway in terms of tonnage, is intermodal transport one solution that you favour?