Transport Committee on Sept. 26th, 2018

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I am calling to order the meeting of the Standing Committee on Transport, Infrastructure and Communities. Pursuant to Standing Order 108(2), we are doing a study of the Canadian transportation and logistics strategy.

Welcome to our guests.

It's nice to see that our members are all up and ready for another long day today.

With us today we have Sonterra Ross, Chief Operating Officer for the Greater Victoria Harbour Authority. From the Nanaimo Port Authority, we have Ewan Moir, President and Chief Executive Officer. From the Vancouver Fraser Port Authority, we have Peter Xotta, Vice-President, Planning and Operations.

Ms. Ross, we'd like to start with you. Please keep it to five minutes so that committee members have plenty of time for questions.

[Sonterra Ross, Chief Operating Officer, Greater Victoria Harbour Authority]

Thank you very much.

Good morning, Madam Chair and members of the committee. Thank you very much for the opportunity to be with you today, and welcome to British Columbia.

My name is Sonterra Ross. I am the chief operating officer for the Greater Victoria Harbour Authority. On behalf of GVHA, I would like to commend you on this study you are undertaking. This is very critical for Canada as a whole, but especially here in B.C.

As a coastal province that serves as the country's gateway to Asia, we are in a particularly important position to offer and share valuable perspectives with you in the context of this study.

The Greater Victoria Harbour Authority is a non-profit corporation that owns and operates deep water, marina and upland land holdings in Victoria's harbour. These include Ogden Point, which is Canada's busiest cruise ship port of call.

During the 2017 season, we welcomed 239 ship calls. This year we'll have 245, and next year we're expecting close to 300 ship calls. This represents over $130 million for the local economy in Victoria.

This is only one illustration of just how important the travel and tourism sector, and specifically the cruise business, is to Victoria and also to the well-being of British Columbia.

Any future strategy aimed at maximizing the potential of the western Canadian transportation logistics network must address how to further develop the capacity needed to support the booming cruise business here in British Columbia. Part of this consideration must focus on determining the capital investments required to enable Canada's incredible position as a key international destination for cruise ships.

Furthermore, it must look at the new processes and allowances that will allow the cruise business in B.C. to continue growing. One of these is to offer more U.S. pre-clearance sites.

We at GVHA have developed and are currently realizing our Ogden Point master plan. This is an expansion that will transform Victoria and allow us to capture even more economic benefits from the surging cruise business in British Columbia.

It is important to highlight that this major expansion is currently being done in collaboration with our first nations partners. We have two in Victoria, the Esquimalt First Nation and the Songhees First Nation, each of which has a board seat. They are also founding members of the Greater Victoria Harbour Authority. Partnership with our local first nations has always been of critical importance for us at GVHA, and we look forward to continuing that partnership with them as we realize our master plan.

As you continue your deliberations on the central planks of the future Canadian transportation and logistics strategy, I strongly encourage you to ensure that this plan takes into account the importance of cruises not only to the B.C. economy, but also to the Canadian economy, and what measures and decisions can be taken by government to ensure that this continues to be a profitable business.

Thank you, again, for allowing me to join you today. I am happy to answer any questions you may have.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Ross.

Mr. Xotta, go ahead.

[Peter Xotta, Vice-President, Planning and Operations, Vancouver Fraser Port Authority]

Thank you very much for giving us the opportunity to appear.

You'll hear a common theme across the port authorities around the importance of ports to the Canadian economy. I'll be brief about the Vancouver Fraser Port Authority. We're responsible, obviously, for the port of Vancouver. Our mandate under the Canada Marine Act is to ensure that port infrastructure is in place to meet Canada's trade objectives, while protecting the environment and considering the impact of port activity on local communities. That, as you can imagine, is becoming increasingly complex as we, like Victoria and Nanaimo, are experiencing tremendous opportunities for our gateways, and thus the Canadian economy.

Vancouver, of course, is the largest port in Canada by a significant margin. For those familiar with the Lower Mainland, our jurisdiction includes Burrard Inlet, the surrounding lands in downtown Vancouver, and much of the Fraser River, totalling 16,000 hectares of water and 1,000 hectares of land.

Interestingly, and significantly, we also have 16 municipalities that we interact with in terms of trying to facilitate that trade, and of course we intersect with the asserted and established territories of several treaty lands of the Coast Salish first nations.

Ports are important, as I've said. One in three dollars in Canada's trade in goods outside North America goes through the port of Vancouver, as well as significant volumes of regional and North American trade.

Capacity is needed. The port of Vancouver, together with other ports, acts as the gateway to Asia, and trade with Asia is expected to continue to grow, in particular with China and India, but many other nations' trade patterns with Canada are also increasing. In 2017, the port of Vancouver handled 142 million tonnes of cargo, up 5% from the prior year. We anticipate that number to reach 200 million within the next decade.

With forecast growth of 4% a year through the port of Vancouver alone this year, and even with all the planned expansions at west coast terminals, additional capacity in our container sector is also required.

A lot has been done to improve the port and surrounding infrastructure to increase capacity, much of it through various federal funding initiatives. We are thankful to have been successful in securing funding from them. With our partners in terminals and other stakeholders, the port has redirected most of the profits of the port authority back into increasing capacity to enable Canada's trade.

There are a number of barriers we're facing with regard to growth that, if left unresolved, will result in economic loss for Canada.

First and foremost, trade-enabling land needs protecting. We're very concerned about the critical shortage of trade-enabling industrial land in the Lower Mainland. Vancouver has the second-lowest availability rate across North America. It's predicted that Vancouver could run out of industrial land supply in the not-too-distant future.

Road and rail capacity constraints require continued focus. Since 2014, the port has been working with the province, the regional transportation authority through TransLink, and the industry to identify bottlenecks in the roads and railways that serve the port. One of the impacts of this has been the ability to extend hours of operation and reduce impact on commuters.

Key focus areas have been the CP Rail Cascade subdivision, servicing the south shore of Burrard Inlet, and, more recently, the joint link section between New Westminster and Burrard Inlet, which serves the North Vancouver terminal complex and also hosts traffic from CN, VIA, Amtrak and Rocky Mountain Rail Tours.

Together, we've submitted funding applications to the federal government, through the national trade corridors fund, for a number of projects that will support Canada's growing trans-Pacific trade and protect the livability of local communities. In the summer, Minister Garneau announced more than $200 million for these projects. We are anxious to move forward with them, and we are busy doing so.

We're concerned about the impact that Bill C-69 will have on investment in Canada. As a trading nation that aspires to more trade, Canada needs its ports to be ready to manage the increased movement of goods. This, of course, requires increased investment—in our case, usually to develop brownfield sites, to make them more efficient and intensify their operations to handle this emerging trade.

It's critical that environmental reviews of port-related projects be done in a way that protects the environment, first and foremost, but they must also allow for timely development to meet growing trade objectives. One of our concerns is that environmental permitting processes are getting more difficult and certainly more complex and costly, which will make Canada less desirable as a place for investment. As a nation, we need to find a way to protect the environment and make those decisions in a timely way.

Growth continues to put pressure on passenger and freight corridors. We recommend continued investment by Canada to improve road and rail. As commuter passenger numbers increase within the region, we need to look at how we're managing our passenger and cargo rail system. As it stands, we have freight and passenger rail sharing rail lines, which impacts our goods-moving capability and constrains passenger rail opportunities. Because of the growth of the region, both of these things need to be advanced, without prioritizing one over the other.

Turning to efficiency of operations, we recommend that the federal government continue investments made to date through the transportation 2030 program. We have a particular initiative called the supply chain visibility project, which we're working on with Transport Canada. It aims to provide much greater visibility of goods movement from origin to port, to help inform operating decisions, to help collaboration between various stakeholders, and ultimately to identify when bottlenecks require infrastructure investment to be addressed.

We also encourage the federal government to invest in port infrastructure and enable more collaboration with all supply chain partners. The goal is a more efficient and reliable gateway, while reducing the impacts of growing trade on local residents. As I mentioned at the outset, that is becoming more and more complex.

We look forward to your questions this morning, including any questions you have about the port of Vancouver or more generally.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Moir, go ahead.

[Ewan Moir, President and Chief Executive Officer, Nanaimo Port Authority]

Good morning, Madam Chair. Thank you very much for the invitation to speak here.

The port of Nanaimo is a medium-sized port, of the 18 port authorities that are classed as federal port authorities. Traditionally it was a coal port. It moved on to become a forestry and lumber port, and more recently it has become multi-purpose, simply because people are looking at the island differently than they did many years ago. Everyone considers the island as a place where people go to retire. By way of examples of recent stats in Nanaimo, the population is 90,000 and the average age today is 44.6 years. The average age in British Columbia is 44.1 years. In 2014-15, there was a 27% increase in housing starts in Nanaimo. That is an example of what is going on in the Regional District of Nanaimo and in Vancouver.

One of the big drivers is the cost of living in the Lower Mainland and, as Peter said, the availability of industrial land in the Lower Mainland. There is a lot of industrial land available on the island, as it is 32,000 square kilometres. The cost of land to lease, and the cost of land to buy, is about one tenth of the cost here in the Lower Mainland.

One of the examples of the diversification that we've recently introduced is a vehicle processing centre, which is under construction in Nanaimo. This is to bring cars in from Europe, which are going to be converted or made into Canadian cars: all the software is updated, and all the stickers they want in English and French, etc. That happens in a vehicle processing centre. Those European cars will be shipped back from the island to the Lower Mainland, and eventually into the western provinces. The driver for that was the availability of industrial land right on the water, at an acceptable dollar-per-square-foot rate. That's what drove that project.

We're looking at Duke Point, which is our container terminal and heavy industrial area, where we are feeding products from Vancouver Island to the Lower Mainland for international shipping. A lot of manufacturing is starting to take place on Vancouver Island. There is very limited direct shipping from Vancouver Island to the rest of the world. You have to come into Vancouver, and then you have to move to another ship in Vancouver. Then you go to the rest of the world. Some of the manufacturers have told me that the cost to go from the island to Vancouver is the same as the cost to go from Vancouver to China. That's simply because of the number of times you touch the product. Obviously it adds to the cost of the transportation across the Salish Sea.

We've got to look at this in the future. We're 27 nautical miles away from Vancouver. This morning it took me 20 minutes to fly by helicopter from Nanaimo to downtown Vancouver, and I could probably beat someone to this office today, in comparison to someone coming from Surrey. It's a lot faster for me to come from the island.

I've mentioned to Robin, Peter's boss, that we are complementary to the port of Vancouver, because of our closeness to the Lower Mainland, the availability of skilled workers and the availability of industrial land.

My final point is this. There are 800,000 people living on Vancouver Island today, projected to grow to 1.5 million people. I don't think it's a question of whether we ever have an earthquake; it's a question of when we'll have an earthquake. We have no warehousing on the island. There are two companies that warehouse: Sobeys and Quality Foods, one in Victoria and one in Qualicum Beach. We live in a just-in-time economy. They estimate that fuel, food—even beer and wine—will run out on the island within a week if we're cut off from the Lower Mainland.

We have a growing population. We have a tremendous opportunity to provide more to trade for Canada, yet we are sitting on the edge if there's a major national disaster. If you look at the map of Vancouver Island, you see that one road goes north to south—it's nearly east to west—from Victoria up to Port Hardy. It goes over the Malahat. You've probably heard about the Malahat being cut off by road accidents, etc. You cut that off for a long period of time, and the north of the island doesn't have connections.

As the port of Nanaimo, part of our vision is to actually grow that connection to the Lower Mainland, not simply for trade but also for the future, for emergency purposes.

Thank you very much. I'm looking forward to answering any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go to Mr. Liepert for five minutes.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Good morning, all of you, and thanks for being here. It's good to be in Vancouver.

I have a number of questions, so I'd appreciate really short answers. I think you can give really short answers to a few of them.

My colleague and I are both from Alberta, so I think you can probably guess that we might have some questions about the pipeline and that sort of thing.

I want to ask this of each one of you individually. Does shipping oil by tanker cause you any concern at all?

I'll start with you, Sonterra, for a short answer.

[Sonterra Ross]

The answer would be yes, more with regard to the impact on the environment on the water side. However, we do feel that this is an essential service. It takes it off the roads and moves it onto the water, which is seen as a highway. We do have our concerns, but we are supportive of the project.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you.

Peter, go ahead.

[Peter Xotta]

The nature of every product is assessed by the port authority to ensure that we're fulfilling our mandate to operate safely. In the case of the proposed pipeline and the volume, we've done that assessment and are confident that it can be handled properly.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you.

Ewan, go ahead.

[Ewan Moir]

No, I don't have a concern, provided it's handled correctly. To repeat what was said earlier, I think the movement of goods such as chemicals and oils is a lot safer on water than by rail.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Ewan, I would encourage you to have sit-down with your MP, who thinks quite a bit differently than you do. Thank you.

I guess along that line, I am now an MP, but I recall that when I was a resident of the Prairies, farmers would express concern about having limited or no ability to get their product to market, and yet there were dozens of ships sitting at sea waiting to be loaded, and it seemed as though there was always some kind of a labour dispute or something going on at the Vancouver port. I haven't heard those concerns in the last 10 years. What is the situation at the Vancouver port? Is that something you've managed to fix?

[Peter Xotta]

Certainly, the various stakeholders are concerned about the collective brand that Canada puts forward. With regard to this movement, there have been a number of initiatives. I think 2014 was the last time there was a really significant challenge with regard to moving grain.

The visibility project that I mentioned in my prepared remarks is an initiative that I'll call a joint venture among Transport Canada, CN and CP, and the port authority under a memorandum of agreement. The objective there is not only to have better insight into past supply chain challenges, but also hopefully to get into a position where we can better predict when we're going to have capacity or other constraints.

Labour agreements between various critical parties occur from time to time, but I'm pleased to say and concur with you that they are not a central theme or a concern expressed by the international customers I talk to regularly.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

It seems to me that we are hearing more concerns from the railways—and they will be presenting later—about getting the cars to Vancouver than about having the loaded cars sitting in Vancouver waiting for ships.

Maybe I'll just switch back to oil for a moment. What would you have to do to accommodate large tankers in the port of Vancouver? A while back, I had the opportunity to tour the port of Vancouver. I was energy minister in Alberta for a couple of years, and at that time they were talking about additional dredging that would have to take place.

Would that kind of construction activity have to happen, or is it pretty much ready to accept the kind of tankers that would be required?

[Peter Xotta]

It is ready to accept the kind of tankers that would be required. The particular transit that is contemplated between the terminal facility and open waters is the most stringently controlled transit within the port's jurisdiction. Those procedures have been established working very closely with the B.C. Coast Pilots, the Pacific Pilotage Authority, the Coast Guard and other agencies. So a procedure is in place to handle what's anticipated, and I'm confident it can be done safely.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I'll let my colleague ask a question.

[Matt Jeneroux, Edmonton Riverbend, CPC]

I have one minute. I'll just quickly get some clarification.

Which of your ports would have been responsible for the energy east project, which is no longer going ahead?

[Peter Xotta]

It's not energy east. It's northern gateway.

[Matt Jeneroux]

Sorry, it's northern gateway, yes.

[Peter Xotta]

None of the ports here would have been responsible.

[Matt Jeneroux]

Okay.

Mr. Xotta, you spoke on Bill C-69, and some concerns you had with that. I will revisit this in my second round of questioning, but if you have a moment to perhaps comment on what some of your concerns are, that would be helpful, I think, for this committee.

[Peter Xotta]

The review that we're involved in today, particularly, is a project regarding the extension of container capacity. The extended timeline that appears to be unfolding is obviously costly. It impacts the securing of commercial partners because of the uncertainly around when that facility might be constructed and thus operational.

We're expressing our concern at the local level, but it's one that we think should be considered nationally. What is the message, essentially, that's being sent to international investors of major infrastructure projects? Our example is a container terminal, but I'm sure there are others.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will now move on to Mr. Hardie.