Transport Committee on May 16th, 2019

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

When we talk about that new link, as I guess you want to call it, to Canada through the northern peninsula—and I have heard this before—that would complete what we call the circular route, from Quebec City through to Labrador and across the northern peninsula back to Quebec City via Marine Atlantic.

We hear differing views in terms of cost savings and the impact on the Marine Atlantic service in terms of efficiency. I'm thinking about access to the island from mainland Canada in times of difficult weather conditions, when Marine Atlantic is not operating.

In the overall picture for the circular route, how do you see this as being a really good benefit for the province?

Mr. Dumaresque.

[Danny Dumaresque]

One of the most dramatic ways to illustrate this is...when the Confederation Bridge was opened in 1997, there were some 700,000 people who had been going to wonderful Prince Edward Island. Last year, there were 1.5 million.

Ten years ago, Marine Atlantic was bringing somewhere around 140,000 non-residents to the island of Newfoundland. Last year, it was fewer than 100,000. What's happening? People are going, of course, and they want to visit Newfoundland, but instead of costing $44 to go to Prince Edward Island, it's going to cost over $500 on a seven-hour ferry crossing, and people don't know if that ferry is going to be on time. As somebody in the fish business who has had a container on a dock for 11 days.... That causes all kinds of risk and unpredictability, so 90% of the people will turn around rather than go through the extra cost and extra time.

However, if you add this fixed link—seven days a week, 24 hours a day, 365 days a year—for the price of the ferry, that gives the guaranteed reliability of being able to get in and out.

I believe that if the people were to be able to come in for this rate, a lot of them—if not the vast majority—would decide to come through Quebec, go down through Labrador, under the Strait of Belle Isle, and, after they visit all the wonderful places on the island of Newfoundland, they will then go out through Port aux Basques. This would bring stable revenue and increasing new revenue to the Marine Atlantic equation, whereas there would be a decrease in commercial traffic at Port aux Basques and that route because they would come by the reliability of the transport truck.

That's how I think it would have a significant benefit.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

When you look at the overall scope of this project—the costs associated with building it, the cost recovery that you talked about and so on, and the value for the entire eastern region of Canada including Quebec, the Atlantic provinces, Newfoundland and Labrador—is it a very positive thing, from your perspective?

[Danny Dumaresque]

There's no question. When I was in government—and anybody who has looked back over the years—when you looked at the unemployment rate.... Coming across Canada, you start in British Columbia and come across and hit Nova Scotia, but as soon as you hit Prince Edward Island, it went up by 6% or 7%.

Since the Confederation Bridge has been there and most recently, P.E.I. is around 10%, which is similar to the rest of Canada. When you go across to Port aux Basques, all of a sudden we're upwards another 7%.

There is no question that not having the reliability to get in and out with our goods and services is a terrible drag on our economy.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

If I'm reading this right in terms of the overall project, the key thing here is that there have to be some solid partnerships between federal and provincial governments—the Province of Quebec and the Province of Newfoundland and Labrador—and maybe the private sector to make this project become a reality.

You talked about cost. I've heard some numbers that are exorbitant, like $4 billion. Where do these kinds of numbers come from, compared to the numbers that you're presenting here today?

[Danny Dumaresque]

If you ask an academic, he's going to study it and he's going to have all kinds of methodologies. The answer you get depends on the assumptions. There's nothing like giving the parameters or the blueprint to the guy who builds it.

That's exactly what should happen in this case. Define the parameters of the project. You know the length of it. You can go online and see the way it has been tendered in Norway, where you have unit cost pricing. Then you sit down with the people and say that you are prepared to enter into the financing.

Quebec, Ottawa and Newfoundland and Labrador have public dollars in existing ferries and roads. Why not take those monies, go to the private sector, make an agreement similar to what we did in Prince Edward Island—

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Nobody does feasibility studies. Do they just do RFPs?

[Danny Dumaresque]

The Prince Edward Island bridge was done through an RFP. Take what we're doing now with the seniors' complexes in Newfoundland. I don't know so much about everywhere else, but we recently signed an agreement for a seniors' complex on a similar private-public partnership. We go out with a request for proposals, design the building and then tell them to give us their price. On the basis of their price, we work out a financing arrangement.

With Prince Edward Island, it hasn't cost a cent. It saved millions of dollars to Canadian taxpayers, created hundreds of thousands of new jobs and opportunities, and everybody is happy.

[The Chair, Liberal, Judy Sgro]

Thank you.

We'll go on to Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

First of all, thank you, folks, for being here this morning and afternoon. I wanted to preface my comments by saying that there's a reason we're doing this study from coast to coast to coast. That reason is to look at you folks being an integral part of establishing objectives to the study, to an overall study, and from those objectives establishing action plans. It is also, of course, to look at you being among the contributors to ensuring we're able to execute those action plans as we move forward in our future transportation logistics distribution corridors.

I do want to ask the first question of Mr. Morency. You're in the business on a daily basis, and within your business plan you talk about providing customers with seamless access to a wider range of logistics and service offerings. That's at the crux of our discussions today. How can we better establish those objectives and action plans? How can we then execute them on your behalf to give you a wider ability, a broader ability and range to then create more fluidity and seamless access to logistics and service offerings?

[Francois-Xavier Morency]

I think it's fair to say that our business model right now is to have the biggest ship possible and to land it in a port that's as easy to get in and get out as possible. That is the business model. Then the cargo is being redistributed within the current market. I think that is the business model in Vancouver. You guys worked on the de-bottlenecking of the Vancouver area. I think there's no real infrastructure in the east. We can't get the ships that are big enough into the St. Lawrence Seaway, so they have to land on the eastern seaboard and then redistribute.

[Vance Badawey, Liberal, Niagara Centre, ON]

Right, and let's dive into that. When you look at your business, your core business is obviously on the water. Of course, with that and especially with the trade agreements we've recently established—the CPP and TPP being front of mind when it comes to our discussion—right now with the St. Lawrence and with the Great Lakes, you're relying upon a lot of inland services. You're integrating your shipping with a lot of inland services. In your presentation you mentioned rail, and I'm sure with that are trucking and air.

With that, in all parts of Canada, including all strategic trade corridors—some of which you're participating in now and some of which I'm sure you intend to participate in—how can we better help and streamline that fluidity to help you integrate with the inland services, which is just as important as what we're trying to do with your ocean services?

[Francois-Xavier Morency]

I think it's about the speed at which you can move cargo. If we think about the ISO boxes, then we want to accelerate the movements of these cargo boxes. That is the key to it all. That goes through how you make them flow on the network, whether it's by roads, by ship—short-sea shipping—or by rail, how you move them across the borders, and how you make sure that all the necessary security measures in modern transportation are done? It's really the acceleration of the movement of goods that's important. That's the concept that surrounds landing a Triple E vessel in a big port, unloading it as fast as possible, distributing that cargo across the network and integrating that network with all the different areas. Those are key.

I will also add that you have chances to make it a bit automated and certainly to have low carbon emissions, if you plan properly.

[Vance Badawey, Liberal, Niagara Centre, ON]

Again, going back to your business plan, you're enabling and facilitating global supply chains and providing opportunities for customers to trade globally. Right now you're in the west. You're somewhat in the east. You're in Montreal, in Sorel. A lot of that is coming to a point where you sometimes have to travel with product in a non-feasible fashion. How do we make it more feasible for you? How do we integrate more, especially when you get to the Sorel-Montreal area and you're offloading the containers? Most of it's going in trucks. Some of it's going on rail. Through this strategy, how do we further integrate that for you to make it more feasible and more friendly to business?

[Francois-Xavier Morency]

The most efficient way to transport goods is through sea shipping. But once you get it off the ship, then it's really about being integrated with the ports and infrastructure. How do you interconnect all the networks? How are the goods transiting?

[Vance Badawey, Liberal, Niagara Centre, ON]

So in terms of moving forward, the modernization of ports is key to really aligning with what you're doing. As you know, we're doing the ports modernization review. A lot of that's going to come together with this strategy.

[Francois-Xavier Morency]

That's right, the modernization of ports and the interconnecting networks.

[Vance Badawey, Liberal, Niagara Centre, ON]

My last question is to all of you, including—

[The Chair, Liberal, Judy Sgro]

Make it very short.

[Vance Badawey, Liberal, Niagara Centre, ON]

I'm making an assumption here, but I'll frame it as a question.

Once the interim reports come together and we come out with the final report, are you willing to be a part of that process to help us come forward with that final report?

[Francois-Xavier Morency]

Of course. It's both a government and industry effort.

[Vance Badawey, Liberal, Niagara Centre, ON]

Great. Thank you.

[The Chair, Liberal, Judy Sgro]

Next is Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

I echo my colleagues in welcoming you here this morning. I'm really enjoying this study. I'm certainly learning more about our Atlantic region and understanding that our Atlantic trade corridors are important to the economic well-being of the Atlantic provinces and to Canada as a whole.

I think it's important to understand that, as the committee is coming together to discuss a strategy and the development of transportation and infrastructure designed to keep Canada competitive in a globalized market, the current government is introducing legislation and implementing regulations and even federal taxes that I believe have an impact on our competitiveness. We can't separate those things out from a strategy in terms of addressing our transportation needs.

Ms. O'Pray, you've highlighted the impact that the delays in completing the 41 kilometres of Route 138 are having on the economy and the businesses that need that roadway to be completed in order to provide more efficient transportation to the region.

I'm wondering if you could comment as well on the federal carbon tax and whether your organization has any formal position on the carbon tax and the impact that is having on the competitiveness of your region.

[Adrienne O'Pray]

Certainly, back in 2017 the business council hosted a forum with many stakeholders: government, academics, the business community and environmental organizations. Our key focus there was in particular addressing the competitiveness issue.

From a business council perspective, we are certainly in support of the need for regulation to address climate change across Canada. However, the federal backstop has been applied in New Brunswick because in the change of government, what was brought forward by the previous government in New Brunswick was not accepted. As a result, New Brunswick defaulted to the federal backstop.

In this case, the position of the business council is that we would strongly urge the Government of Canada to allow New Brunswick to once again have an opportunity much like the other provinces in Atlantic Canada had. Newfoundland, Nova Scotia and P.E.I. were able to negotiate their own pricing mechanisms around carbon and climate change and the transition.

In New Brunswick, because the plan that was brought forward by the previous government was not accepted, it's put us into a federal backstop. We would certainly advocate for New Brunswick to have another opportunity, sooner rather than later, to bring forward an alternative plan for New Brunswick.

At this point, a carbon tax for fuel would be about a 5.5-cent increase for every litre, whereas in the other provinces it would be roughly 1 to 1.3 cents. Even within Atlantic Canada, that puts New Brunswick in the position of being uncompetitive with its neighbouring provinces.