Transport Committee on March 19th, 2013

[Marie Lemay]

Yes.

[Denis Coderre, Liberal, Bourassa, QC]

Those things happen, especially two days before the budget is announced.

Regarding the VIA Rail situation, you can say that there is no problem, but when a 60% cut is made, something is obviously going on. You can't convince me that certain services will not be affected. Rail traffic between Windsor and Quebec City is increasing, but is there a way to ensure that people from the regions don't feel like second-class citizens? We are talking about 60% after all. Reports have been produced and programs have been reviewed, but we are under the impression that the government is increasingly neglecting VIA Rail.

What would you like to say to the regions to reassure thousands of television viewers watching our meeting?

[André Morency]

As you pointed out, it looks like VIA Rail's budget has been cut significantly this year. However, as I mentioned earlier, that's because its capital program is coming to a term. Based on past experience, we can probably expect VIA Rail to always want to continue investing in certain projects. We are in ongoing discussions with them regarding those projects. It's highly likely that we will discuss—under supplementary estimates—the possibility of them having access to additional government funding to carry out other projects.

[Denis Coderre, Liberal, Bourassa, QC]

Merci.

Mr. McDonald, I'd like to talk about security. I know the department makes the evaluation of a security link, for example, if you have some airline companies that want to come.

If you want an airline to set up in a specific location.

In a practical way, with the fact that we're cutting some of the budget, of course we need to evaluate some of the future links we would like to have, and it's an important economic venue if we have more airplanes coming from direct lines.

What is the situation right now overall? What's the status in the way the department is working right now in the evaluation of those

future air routes.

Will budget cuts have a direct impact on the quality of assessments? Does that further delay things and could it have an economic impact because some communities are calling for certain routes?

[Gerard McDonald]

There are two aspects to it. If you're looking for increased air services to Canada, there's the aspect of the types of bilateral relations you have with other countries and whether or not those affect what services are offered. I'll let my colleague Mr. Streiner get into more detail on that.

The other aspect is whether or not the companies that are coming here are operating a safe operation, and that's where my part of the organization gets involved. We assess whether or not a company should be awarded a foreign air operator certificate. That largely is done within our organization, but we also assess the country they're coming from, whether or not we have faith in their system and accept their rules, whether they live by the International Civil Aviation Organization rules, and that gives us a degree of confidence in the operations they will undertake in Canada.

For the most part, any of the reductions we've taken in the civil aviation organization...and this was one organization, given all the focus on it, that we tried to have very minimal impacts on in the budget reductions. The ability to assess foreign air operators has not been affected by any of the cuts we've undertaken through the deficit reduction action plan.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Streiner.

[Scott Streiner, Assistant Deputy Minister, Policy Group, Department of Transport]

With respect to international air agreements and service to various centres, as I think most members of the committee know, Mr. Chair, we have been operating for the last six or seven years under the blue sky policy, which promotes liberalization of air services internationally and promotes the establishment of air agreements with other countries where there's clear demand, but always with the caveat that we want Canadian carriers to face a level playing field globally and to compete, but to compete under conditions that are fair.

[Denis Coderre, Liberal, Bourassa, QC]

Let me give you some examples.

The Maghreb issue is still relevant. Does that have a direct impact? For instance, I am talking about having a direct link to Montreal. We could be talking about Algiers or another location. The Lebanese reality should also be considered. What should we tell people? I understand the situation, and I have always protected our country by bringing up security issues. We shouldn't play with security, but some realities are akin to protectionism. In the United States—where the situation is sometimes even worse—they have direct links to those countries. So do changes need to be made? Does this have to do with a lack of resources? Is it due to political actions or position defended by the Department of Foreign Affairs? Why does this process sometimes take too long?

[Scott Streiner]

Thank you for the question.

Security issues come under Mr. McDonald's area of expertise.

When it comes to the question of the Maghreb or of international air agreements with other areas, really what it comes down to is a couple of issues.

One is whether or not there is actually a demonstrated need. Are there Canadians and passengers or potential travellers in the other country who are demonstrating a desire and an interest in the service? We will consider that in establishing our negotiation priorities.

There's also the question of existing unused capacity. In some instances we actually have air agreements and they aren't being fully utilized by carriers in either country. The fact that we have an air agreement with another country that provides for a certain number of flights every week doesn't mean that carriers have necessarily chosen to take advantage of it.

Each year we look at setting priorities, and we do it on the basis of a number of objective criteria. But reaching those agreements is ultimately dependent on both parties being interested in advancing. These are international agreements, and we have to be sure that in making progress with our counterparts abroad, we're not only protecting Canadian interests but also considering the competitive position of the Canadian industry.

[Denis Coderre, Liberal, Bourassa, QC]

Thank you.

[The Chair, Conservative, Larry Miller]

Mr. Holder and Mr. Adler are splitting the next 14 minutes.

Mr. Toet, you have the first five.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair, and thank you to our witnesses.

I want to get down to the crux of the whole process we're working through here. I've heard the estimates being referred to by some of my colleagues as a budget. I'm also seeing a lot of comparisons that are being directly drawn between estimates from 2012 to the estimates we're looking at today. We really run into a problem when we do that. As I understand it, and maybe one of the department officials could correct me if I have this wrong, at a provincial level you have a budget that comes out at the same time as the main estimates of the expenditures and the main estimates in revenues. Those three elements definitely closely correlate to each other, and they have a great correlation for the next year, when you can look at main estimates of revenue, compare it to main estimates of revenue again, and expenditures, in the same fashion.

But federally, by law, we do have some unique situations. We have main estimates that have to be tabled before March 1—by law. What we end up having is main estimates of expenditures that are actually brought forward before the new budget comes out, and these expenditures can only reflect ongoing statutory expenditures or those done through a vote at appropriations. They cannot reflect any spending that's coming in a new budget. Not only may they not, but they cannot, by law, reflect anything that may be anticipated in an upcoming budget—if I have that correct.

They also reflect sunsetting programs that will have run their course and run their term. Any savings identified in Budget 2012 will not have been reflected in the estimates that were tabled last year, on March 1, so any of those savings are also again correlated back into the estimates that we have going forward. We cannot look at what was in estimates for 2012 compared to estimates 2013 because there's a differentiation there, because the budget came out in between, which made changes to that, especially through the draft program.

I guess what I'm getting at is this. I feel any attempt to use these estimates to say that this will be the government's spending over the course of the next year really is fundamentally flawed. We don't know what's going to happen as of Thursday. A lot of what we're looking at today may change in a fairly drastic fashion. It's not like anybody's playing games, or being underhanded, or trying to change things. Simply, by law, these estimates cannot reflect anything that may be in Budget 2013, which will be tabled on Thursday in the House.

I feel it's like trying to compare an apple and an orange, even almost to go from estimates to estimates, never mind trying to compare the estimates that we're looking at today and saying, well, this is what's going to be in the budget for the upcoming year.

Would any of you like to comment on that or say that I'm wrong, or is that correct?

[André Morency]

I would say, Mr. Chair, that the honourable member certainly has it correct in the context of how these main estimates are being presented. They're certainly being presented before the budget, which will be coming out on Thursday. They represent planned spending for the organization. Yes, the budget that comes out on Thursday may have an impact on this, but generally, the main estimates also reflect all decisions that were taken during the course of last year. They would have received Treasury Board approval, would have received approval to proceed, including the 2012 budget announcements for savings. They're reflected in these main estimates, and last year, again, because of timing, the Budget 2012 savings were not reflected at the beginning of the main estimates, that's correct. So I think your characterization of where we are today in the context of the budgeting process is actually correct.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

That's essentially where our supplementary estimates come in during the course of the year, why these things occur, because we have to make adjustments. There's a recognition that there are definitely adjustments.

[André Morency]

That's correct.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I'm sure this year we'll also have supplementary estimates as we go forward, because there will be adjustments and changes after the budget comes out and the budget implementations occur.

[André Morency]

That's correct.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

In light of that, that's the danger we get into, and you're right, I guess, in trying to come up with exact dollar values: here's an exact dollar value that changed between last year and this year. Even percentages are a dangerous thing for us to get into because we may note there seems to be a decrease. One of the things that I've noted is that there seems to be a decrease in internal services, if I look year to year, based on the documentation I have in front of me. I'm not going to give you a number or a percentage because of the preamble I gave you, but could you explain to me whether internal services include any front-line services or front-line personnel?

[André Morency]

No. Generally, internal services are those services that support the department in the context of its proper functioning. Generally, they represent functions like human resource management, finance administration, our investments in IM and IT, communications, legal services. So no, the reductions do not have an impact on internal services with respect to front-line services. I think the minister and the deputy had previously mentioned that. All of the resource savings you're seeing as part of these changes in the main estimates have no impact on front-line inspection services for the department.

[The Chair, Conservative, Larry Miller]

Mr. Holder, you have five minutes, please.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank our guests for being here today. I don't think I've ever seen so many assistant deputy ministers in one collection at the same time.

[Voices]

Oh, oh!

[A voice]

Nobody is running the department.

[Ed Holder, Conservative, London West, ON]

It's rather interesting. As I heard testimony from both ministers with respect to what obviously was a very busy agenda, and then the question about how you help support infrastructure requirements in municipalities, I thought about that at length. You may not know, but I come from London, Ontario, the 10th largest city in the country. I share that with you because when the government made the decision to implement the gas tax, and then doubled it and made it permanent, my city was the beneficiary of some $21 million—modest compared to some of those great cities such as Toronto and Montreal, but very significant to us.

One of the things I do is a weekly survey of my constituents and others. It goes out to about 25,000 people, and it's a rather interesting thing. One of the questions I asked about the gas tax was on the priorities of the municipalities, because they have a fair amount of flexibility to do things with the gas tax. I asked whether the dollars should be spent on major projects or on small sewer/gutter kinds of things, and overwhelmingly they came back with the strong belief that it should be major projects.

I look at the $21 million my municipality receives. If they had a $100 million project, which is not insignificant...I would think that if you've got five years of permanent funding, that gives you the avenue or the opportunity to be able to take care of what you need for a project, if you focused on large projects.

Is there any intention to be more restrictive with municipalities about the gas tax? Is that pretty much set, would you imagine, or will they have the flexibility that they seem to have shown in the past? Can anyone here enlighten me? I'm not sure who to ask in this august group.

[Marie Lemay]

We should have actually introduced ourselves. I'm surprised at how many people it takes to replace the two ministers and the deputy. They'll be very happy to know that.