Transport Committee on Oct. 28th, 2010

[The Chair, Conservative, Merv Tweed]

Thank you, and good morning, everyone.

Welcome to the Standing Committee on Transport, Infrastructure and Communities, meeting 30. Pursuant to the orders of the day, we will hear a briefing on the vision and priorities of the Minister for the Transport, Infrastructure and Communities, TIC, portfolio, Mr. Chuck Strahl.

Also joining us at the table from the Department of Transport is Yaprak Baltacioglu, deputy minister; and John Forster, associate deputy minister. Welcome.

Minister, I'm sure you know the routine. You'll make a brief presentation, and then we'll move to committee questions.

[Chuck Strahl, Conservative, Minister of Transport]

Thank you very much, Mr. Chairman, and thank you for the invitation to appear before your committee. I welcome this opportunity to discuss the priorities of the Transport, Infrastructure and Communities portfolio. As you have already mentioned, I'm joined by a couple of very able people: Yaprak Baltacioglu; and associate DM for infrastructure, John Forster.

The transportation sector plays a critical role in the Canadian economy and in the daily lives of Canadians, and our infrastructure investments are likewise touching every community. They're providing better-quality roads, cleaner water, and renewed community buildings, and at the same time helping to create jobs when the economy most needs it.

I'd like to speak to you today about both transportation and infrastructure.

The transportation system has always been identified with opportunity in Canada, connecting the country coast to coast to coast; connecting workers with jobs, travellers with destinations and products with markets.

It's a system that's recognized as one of the safest in the world. However, this is also a critical time for the transportation sector. The world is changing and technologies are changing, and these changes are coming at a time of ongoing global economic volatility, particularly as the recovery remains weak in the United States, our largest trading partner.

The government recognizes that a more connected world offers Canada enormous opportunities for trade. Efficient, safe, secure, and clean transportation systems that link Canada to the world are vital to realize these opportunities.

There are a number of global pressures that will have an impact on demands placed on our transportation system well into the future. They include continued global restructuring, driven in part by the rise of new economic powers such as China, India, and Brazil; ongoing security threats that I'm sure you'll want to talk about; rising demand for Canada's natural resources; and pressure to address the environmental impacts of both industry and consumer activities.

Canada's ability to compete globally will continue to depend to a large degree on the strength of an integrated, secure, and reliable transportation system to support trade. We cannot be complacent in the face of these challenges, and I want to share a few thoughts on how the portfolio is prepared to deal with these challenges.

Our approach will need to continue to depend on forming effective partnerships across public and private sectors and with key domestic and international players. We want to ensure that we maximize the benefits from the strategic infrastructure investments we have made in recent years, and we want to continue to build on the partnerships and collaboration we have built through our infrastructure funds.

Let me speak for a moment on our infrastructure investments, what we have achieved, and how we will look to the future. Since the government introduced our economic action plan in January 2009, we've invested approximately $10.7 billion in federal funds toward more than 6,100 projects. Working with our partners, we are jointly investing over $30 billion in Canadian infrastructure, and our partners have applauded our partnership in helping deliver infrastructure projects that are important to them.

In addition, our government built upon infrastructure programs that were already in place. We accelerated existing long-term funding under the $33 billion Building Canada fund. We created a $4 billion infrastructure stimulus fund, and a $1 billion green infrastructure fund. We provided a $500 million top-up to the Building Canada fund communities component, and we built a truly national partnership with the provinces, territories, and municipalities.

And I was very pleased that the Auditor General's report earlier this week also underscored that the Economic Action Plan is being delivered effectively. Her report says the Government of Canada reacted quickly and effectively to design and implement the plan and fund eligible projects.

Since last May, when Minister Baird met with you, we have made significant progress. As of the end of September, provinces, territories, and municipalities have reported that work is completed on about five times as many projects under the infrastructure stimulus fund as they reported last March.

We're also pleased to see that more than 61% of projects are being constructed at least 30 days faster than originally forecast. That's good news, and in fact, 99% of the reported infrastructure stimulus fund and communities component top-up projects are now under way or completed. These projects put people to work when the economy needed it most and will provide infrastructure that will serve Canadians for generations to come.

It is important to note that as the economic action plan winds down, a plan that was always intended to be temporary, timely, and targeted, and as projects complete construction, the Government of Canada has made a long-term commitment to work with the provinces, territories, and municipalities to build world-class public infrastructure.

The $33 billion Building Canada plan complements the economic action plan, and whereas the economic action plan targeted the shovel-ready projects that could kick-start the economy, the Building Canada plan focuses on the longer-term projects that require more time to plan and build. That means that funding for these projects, under programs like the Building Canada fund, will continue to flow past next March.

As well, this government increased the gas tax fund to $2 billion a year and made that permanent. Municipalities can rely on this funding and use it when they need it, whether that is as they receive it or sometime in the future.

Mr. Chairman, we also need to continue building stronger links not only within Canada but also with our international partners. I mentioned earlier transformative changes taking place in the global economy and the transportation system that supports it.

Earlier this month, I had the opportunity to visit China to celebrate the 40th anniversary of Canada's diplomatic relations with China. Many community members have traveled to China and I am certain they were as impressed as I was by the rapid economic growth and the great strides in building a transportation infrastructure to sustain that growth.

China is already Canada's second largest merchandise trading partner and our third largest export market. Moreover, I encountered everywhere enthusiastic support for stronger trade ties and a transportation system that will bring us closer together. By building stronger partners in the transportation systems here in Canada, partnerships that bring industry and all levels of government together, we put ourselves in an excellent position to create stronger trade partnerships around the world.

That was clearly evident while meeting both with companies and with government officials in general in China. They are very pleased, I can say, with what Canada has been able to put together here. It was a very encouraging visit, from my perspective.

We have been making the changes necessary to keep pace. We will continue to focus clearly on the future needs of the transportation system in a fast changing-world.

There are lessons to be learned from today's global supply chain. That is why we cannot address the challenges I have outlined earlier in isolation. They are all interconnected and that is why the partnerships across industry and other jurisdictions are so critical to our competitiveness and success as a trading nation.

This approach underpins our Asia-Pacific gateway and corridor initiative, for example. We are applying the lessons learned from this initiative to our other gateways. One of the most important lessons from the Asia-Pacific gateway initiative is that it takes much more than infrastructure to prove the integrity and efficiency of a gateway and corridor. It takes the right governance structure and the appropriate regulatory environment. It takes policies that are integrated across all jurisdictions and every stakeholder must pull together with a common objective in sight.

It is a truly creative approach to bringing different modes together in a way that hasn't been done before. It means working more closely and more effectively with all public and private sector stakeholders to maximize the efficiency of the global supply chains.

Our partnership approach has become our strategic advantage, and our gateway approach has caught international attention both in China and the United States as a best practice.

Many are trying to adopt our model. That means we can't be complacent. We have to stay ahead to remain competitive, and I see this is one of my major priorities, and I'm sure the priority of this committee, as we move forward. It's an exciting time to be involved in the transportation sector and to invest in infrastructure, and I'm motivated by the challenges I face as the Minister of Transport, Infrastructure and Communities.

I'm inspired by great opportunities. We play an integral role in the economy of this country and in our trade opportunities worldwide. In many ways, the world has never been more interconnected by our transportation system, so that means there's a great opportunity. I don't think we've ever had such support from all stakeholders in these partnerships to strengthen the integrity of Canada's transportation systems, and of course delivering the needed infrastructure is a good part of helping to make that work as well.

Mr. Chairman, I'm looking forward to working with you and the committee in the months ahead. I welcome any questions you may have.

[The Chair, Conservative, Merv Tweed]

Thank you very much.

Mr. McCallum, seven minutes.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

Welcome, Minister.

In my new role here I'm really excited. It's a fascinating portfolio, with many challenges and issues.

But in terms of the infrastructure deadline of March 31, I cannot for the life of me understand why you don't simply grant a blanket extension of something like six months. It's not as if any economists anticipate a dramatic drop in the unemployment rate over the next 12 months. Right now we have a frenzy of overtime and bidding for materials, which raises the costs, which are then downloaded to the municipal taxpayer. It doesn't seem to make sense. Many towns are going to be late, through no fault of their own, sometimes because your government was late, as the Auditor General said, in granting approval; sometimes because of weather; and sometimes because of any number of reasons.

So what we have now is a situation in which towns cannot do their planning, where they risk higher taxes. Why don't you just do the simple, straightforward thing and grant a six-month extension for all municipalities?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I know that is one side of the argument, but the other side of the argument is that the whole effort, of course, originally, and the contribution agreements we signed with municipalities and provinces were specifically to try to jump-start the economy in that crisis period, if you will, and to try to finish it all by March 31. Every proponent of a project not only agreed to that, but they had engineers signing off who said they could actually do that.

By kind of keeping the pressure on to complete it by March 31, a couple of things have happened. We have a lot of projects out the door, and also, because in many parts of the country projects were done, and done ahead of time, because of that emphasis on doing shovel-ready projects, we were able to reinvest money that was realized in the savings. We've done over $100 million, for example, of plowing back into new projects because the original projects were done and ahead of schedule.

I hear your concern about overtime and so on, but in fact we found in many areas, many jurisdictions, that the projects actually came in under the anticipated budgets, and we were able to take those savings and plow them back into increased numbers of projects.

So it kind of cuts both ways. By being aggressive and saying “Let's do it”, we've been able to do even more than we originally anticipated.

[John McCallum, Liberal, Markham—Unionville, ON]

I'm not saying it was wrong to have this March 31 deadline at the beginning. I'm not saying that was wrong at all. But here we are with winter approaching and not much construction season left before the deadline. I'm saying that now is a different time from a year ago, and I don't understand what would be the downside. Why not simply grant a six-month extension at this point? It would be simple, it would be fair, it would allow municipalities to plan, and it would alleviate the risk of downloading the costs to municipal taxpayers. I can't see any downside for it at this time.

I don't understand why you seem to be hiding behind the provinces. If Brantford, for example, has a problem through no fault of its own, simply grant an extension to Brantford—although I'm saying grant it to everybody. But why do you hide behind the provinces on this matter?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I don't want to hide behind anything, but as you know, the agreements are done in concert with the provinces and the provinces are the ones that ride herd on it, so to speak. What I've said to the provinces is to give me the data. I know there are projects that are concerned, so I share that concern. That's why we said we want to be fair and reasonable. We've said to the provinces, “Give us the data. What's the state of affairs?”

Some of them have come back to us and said, “We've looked at these projects, a project....” For a bunch of reasons, who knows...and without pointing fingers of blame—there's lots of blame to go around sometimes—the projects just can't be done. It wasn't ready; it's not ready. So they've re-scoped the project, they've done a different project, and so on.

[John McCallum, Liberal, Markham—Unionville, ON]

Again, with respect, you haven't answered my question.

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Well, I'm getting to it, though.

[John McCallum, Liberal, Markham—Unionville, ON]

What's the downside of a blanket six-month extension at this time? Granted, I agree with you that when the program was first initiated, that March 31 deadline made sense. Now it's today. What's the downside of doing it? It won't cost you any more money than you've committed and it will give certainty to municipalities.

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

The downside is it's still five months away from the deadline. In part, the agreement that everybody signed, including these proponents and municipalities, said they could get it done by March 31. So we said, “Well, okay, that's what you signed, that's what you're going to do. We understand you're going to make every effort to do that. That's the contract.” It's still a good way away from any deadline, but I've said to the provinces, give me the data, give me the detail and we'll look at it. We'll be fair and reasonable. When I go to Nova Scotia, for example, they say they're 98% done, or they're going to be done. I go to B.C. and they say they're going to get them done. Alberta says they are likely going to get them all done. Saskatchewan, even after the flood, says they're in very good shape. Manitoba says it looks good. They're going to get them all done. It's not like it's a crisis.

On the other hand, I understand it could be a problem, especially in Quebec where they got off to a late start. I've said to several ministers, give us some detail. Right now we don't have any detail, especially on the PRECO projects, so we're just using anecdotal stories that there could be some degree of problem. I want to work with them to address that, but I can't really without the data.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

I have one quick last question on a different subject. I understand that over 5,000 Air Canada maintenance jobs might be at risk of moving to Costa Rica or El Salvador. The law states that those jobs should be in three Canadian cities, but I understand it is an issue because Air Canada is no longer the majority owner of those maintenance facilities. My question to you is this. Are you going to take action to protect those 5,000-plus, well-paying permanent jobs?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I don't know if you've spoken to Air Canada lately or not. When I spoke with Air Canada...they're very proud of their maintenance facilities here in Canada. In fact, as recently as this week, when I met with them, they use it as part of the argument of their economic multiplier effect that they have in the regions. They say these are the jobs. They're not just talking about pilots; they're talking about all of the jobs in the industry that spin off from that. They seem very proud of that, and they use it, if you will, as part of their advertising as good corporate citizens.

The law is in place, as I've said to you in the House of Commons, and we expect Air Canada to adhere to that. There is no indication that it will be otherwise, and I expect the law will be adhered to exactly.

[The Chair, Conservative, Merv Tweed]

Thank you.

Monsieur Guimond.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Thank you, Mr. Chairman.

Minister, I thank you for appearing before our committee. You and I were both elected in 1993, so we have known each other for a few years. You know full well how committees operate. Given that I want to take full advantage of your presence, my questions will be brief.

I would like to ask you some questions regarding the infrastructure program because it can be said that, in terms of numbers, the problem is all the more glaring in Quebec. I think you can appreciate that. You presented the situation in the provinces, from west to east. On a number of occasions, in the House, I have asked you questions and you have responded that the shortage of pipes, contractors and labour are anecdotal.

What am I to garner from your most recent response to Mr. McCallum? If the Government of Quebec submits specific cases to you... In the House, in response to my questions, you talk of flexibility. I, unlike the Liberals, do not agree with a six-month extension of the program across the board, as I am not convinced that is what we need.

However, would your officials be prepared, if need be, to assess on a case-by-case basis the situation in municipalities that are having some difficulties completing the work? Perhaps it is a matter of one, two, three or even seven months. That is what I, personally, would consider flexibility.

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

The reason I'm reluctant to go past what I've been saying concerning “fair and reasonable”, especially in Quebec, is that we're very careful to respect Quebec's wishes that we deal with the Province of Quebec and not directly with municipalities.

It's different from everywhere else in the country. In most of the country, when somebody has a problem, they phone up someone in our department and we see what we can do—see whether there are things we can do to help, or what can be done.

In Quebec's case, the reason I deal with the Quebec ministers and say to them.... I hear individual stories, mostly in the media, about people who have trouble in their project in a municipality, and I don't doubt that it's true, but I say to the province, being respectful of the province, “You are in charge; you have told us you don't want us to deal directly with the municipalities.” So we deal with the province—because that's the law. So I say to the province that they have to come back to us and give us the data—that they themselves have to, because they've made it quite clear that they don't want me dealing with Trois-Rivières directly. So I say to the province, “Come back with the details and just tell me.”

I don't know exactly why that's been a problem. I've been asking now since I became the minister for them to give us the detail, and so far we haven't received it. I get along well with all the ministers there and everything seems fine, yet the detail just isn't forthcoming.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Very well.

Minister, I do not want to blame the interpreters, but the Bloc Québécois fully agrees that Quebec should manage this program and that the municipalities should deal directly with the Government of Quebec through the Department of Municipal Affairs which would, in turn, deal with its federal counterpart.

In any case, we will do what is needed so that the Government of Quebec may take action, in light of your response.

I would also like to get back to the issue of job transfers at Air Canada. You said that you had met with people from Air Canada, but, Minister, you must know that the Air Canada Public Participation Act, passed in 1988 under Prime Minister Mulroney, provided some guarantees as to jobs being maintained in Quebec and elsewhere in Canada. That is mainly why Air Canada has the obligation to maintain headquarters within the Montreal urban community.

Section 6(1)(d) of the act provides that with respect to maintenance “provisions requiring the cooperation to maintain operational and overhaul centres”... In French, it says “centres d'entretien et de révision”.

Legislators do not come up with this off the top of their head. The words “Entretien et révision” means small maintenance jobs. According to my understanding of the word “overhaul”, and I am not as bilingual as you are—I say that with a touch of irony—the work carried out in Winnipeg, Mississauga and the Montreal urban community is far more significant than that. There are over 6,500 employees in these three operational centres, mainly in Montreal.

We know that Aveos has signed agreements on acquisitions in El Salvador, and according to the most recent rumours, perhaps even in Costa Rica.

Can Air Canada employees, and in particular highly competent Air Canada machinists, count on you keeping your word and thus forcing Air Canada to keep these jobs in Mississauga, Montreal and Winnipeg?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I don't know what I can add to what I said earlier. We're watching the situation, the same as you are. I don't have any indication of any problem or any issue. I understand the questions I've had in the House and I understand some of the speculation in the media. I've not seen any evidence of those concerns on the ground.

When I talk to Air Canada, I haven't heard anything otherwise. They have to respect the letter of the law and they know that. As I say, they are quite proud when they talk about the impact of the airline industry in Canada. They don't just talk about the travelling public or the number of pilots or the planes; they talk about the industry as a whole and—it's even part of their advertising, if you will—of the impacts, especially in these service centres they have. So it's part and parcel of what they do.

We are monitoring it, as I'm sure you are, but I have nothing more to add, other than that the law is in place and I don't have any evidence that it's not being adhered to. Other than to keep a close watch on it, I don't know what more I should do.

[The Chair, Conservative, Merv Tweed]

Merci, monsieur Guimond.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Thanks, Mr. Chair.

Welcome, Mr. Minister. I'm very pleased to see you here.

In your previous role we had many opportunities to visit my constituency, the Northwest Territories. I look forward to you coming in your present role and taking a look at some of the infrastructure programs there that you are familiar with and that can be good for Canada as a whole. That's something that I'm sure you share with me.

Transport, of course, is a very complex department. It's the meat and potatoes of Canada, moving people and goods around, and we are under constant need to survey the many issues of its different areas. One of them, of course, is the railway revenue formulas that have been set up and the need for a review of them. Many of the people moving grain across this country are very concerned with what's happening with the rates they're paying. They're feeling very much that the companies are perhaps not treating them as fairly as they should.

Now, we're in a somewhat monopolistic situation in Canada. Are you moving ahead with this review? Is this review going to be expedited in a fashion that can help these farmers out over the next while?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Thank you for those questions.

You're right, I have enjoyed my time travelling; the northern part of my travels was a unique pleasure in my past portfolio. It's something I encourage for all Canadians. If we're talking about transportation, I urge them all to take a trip up north and enjoy that part of Canada as well. It's a great part of the world.

We put quite a bit of emphasis, as you know, on the rail service review. It's coming to a close now. We have an interim report that was published during this last week or so. In that, the independent panel made a series of recommendations on rail service issues that tried to address some of this quasi-monopolistic reality we have in Canada, whereby you have two railways but often, depending on where you live in the geography, only one option.

During the rail service review, an independent panel met with all these folks, as did we all, but the independent panel came forward with a series of recommendations that they hoped would address some of this exclusive provider problem—I guess you'd call it a monopolistic provider—and some of those issues that were raised in submissions by shippers and by ports and others.

I met with the forestry crowd this week, and agricultural groups, and so on, and I've urged them during the time that the draft report has come forward—the final report will be written up in the next few weeks—to make sure they put their oars in the water and address the concerns raised in that service review. Many of the issues are going to be contained in the service review, because it's not just about costing, but about placement of cars, a capacity for reciprocity with the railways, enforceable commercial contracts, and all those things that go with it. I've urged them to comment on that so that when the final report comes in, the government can react to it.

I've told the agricultural guys to deal with the review, that I want to see it dealt with first, before we deal with a cost review. We can't really do them both hand in hand, so I've asked them to do them sequentially. We'll do that one first and see whether it addresses their issues.

[Dennis Bevington, NDP, Western Arctic, NT]

Now let's go on to infrastructure.

I would echo the comments that have been made here about making a decision on the extension of infrastructure programs. If you don't make a uniform decision, at least start to get this thing done.

I met with the consulting engineers association. They're saying that many increased costs are coming on stream because the decision has not been made to extend the deadline for these programs; municipalities are picking up these costs.

That's not a good way to do business. These municipalities went into programs in good faith to help stimulate the economy of Canada, and they should not be penalized unduly for trying to work with our federal government. I put that out as a comment.

I'm also concerned about the direction the government is taking in terms of a long-term infrastructure investment strategy. We have a few years left in the Building Canada fund, but we have a huge infrastructure deficit and we also have a very large deficit in federal financing.

Are you moving ahead with plans now for increased funding in the future for infrastructure in this country?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I'm not the finance minister, so I don't write the budget on this, but we've been able to point to the fact—and I mentioned it in my remarks—that infrastructure needs to be a lot more than stimulus spending. We know that; it needs to be long term.

That's why our last major infrastructure plan was seven years long. That's also why we've doubled the gas tax for municipalities and made it permanent. There's $2 billion a year there that they can lever and count on in the long term. Those are some things that are not just in the window; they're reality. So folks can already plan on that.

That being said, there's obviously a desire, both from the Federation of Canadian Municipalities and from the engineers and from the Canadian Public Works Association, and from others, for long-term planning for infrastructure needs. This stimulus funding was necessary, and they all welcomed it and have all lauded it and said it was a great thing. But they also understand, as do we, that it's not the way to fix long-term infrastructure needs.

It was also brought up at the federal-provincial transport and infrastructure ministers' meeting in Halifax a month ago. So there's a common thread running through this: people want to get together and plan long term. I think that's a good idea.

Just to assure them, things don't end on March 31; things continue. It's business as usual, and they should count on that. But certainly in the longer term, we need to sit down with all of the stakeholders, as we've done in the case of the Pacific gateway, as a good example, to see what parts of it are infrastructure-related, regulatory, jurisdictional, and so on, to see what part we can all play in that.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Watson.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you, of course, to the minister and our witnesses for appearing today.

I'm going to start locally and then move beyond the Windsor-Essex region in short order.

Minister, shortly after your appointment you were in the Windsor-Essex region, in fact making a very important ISF announcement in the Windsor port facilities—an important economic development project and a good set-up to the Detroit River international crossing project, with the amount of aggregate and other products that are going to have to proceed through the port into that region.

I want to talk about DRIC in just a moment, but I think that announcement builds on a number of important things. It wasn't long ago that we were in the depths of a very tough global recession. It hit the Windsor-Essex region harder, arguably, than anywhere else in the country, with 16% unemployment at the time.

As a government, we not only helped stabilize the auto industry, which was an important part for the base of the economy, but we stimulated the economy to create some very important jobs, with the highest infrastructure stimulus funding per capita across Canada being invested in the Windsor-Essex region. Since then, we've been moving to projects that are about diversifying the economy and improving the economic development, including that port announcement.

But there is the other important issue for the economic future of our region, and that is the Detroit River international crossing project, one that not only promises thousands of jobs in the immediate Windsor-Essex region, with construction and other things, but thousands of jobs through Ontario and into Quebec as well. It's very critical.

Can you give the committee, and of course Canadians who are watching these televised hearings, an update on what measures you're taking to maintain the momentum behind the Detroit River international crossing project, and as well, what steps or measures you're taking to engage our American partners in that important project?