Transport Committee on May 30th, 2016

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

I call meeting number 15 of the Standing Committee on Transport, Infrastructure and Communities to order. It is exactly 3:30 p.m.

I welcome all of you. We continue to deal with supplementary estimates. We have all of the departmental experts here to answer questions of the committee. I very much appreciate your being here.

Would you like to introduce yourselves? We'll start with Paul.

[Paul Griffin, President and Chief Executive Officer, Marine Atlantic Inc.]

My name is Paul Griffin. I'm president and CEO of Marine Atlantic Inc.

[André Lapointe, Chief Financial Officer, Department of Transport]

My name is André Lapointe. I am the assistant deputy minister and chief financial officer at Transport Canada.

[Helena Borges, Associate Deputy Minister, Transport, Infrastructure and Communities, Department of Transport]

I am Helena Borges, associate deputy minister of transport.

[Yazmine Laroche, Associate Deputy Minister, Infrastructure Canada]

I am Yazmine Laroche, associate deputy minister, Infrastructure Canada.

[Darlene Boileau, Assistant Deputy Minister, Corporate Services and Chief Financial Officer, Infrastructure Canada]

I am Darlene Boileau, assistant deputy minister, infrastructure, and CFO.

[Angus Watt, President and Chief Executive Officer, Canadian Air Transport Security Authority]

I am Angus Watt, the president and CEO of the Canadian Air Transport Security Authority.

[Omar Rashed, Acting Chief Financial Officer, Canadian Air Transport Security Authority]

I am Omar Rashed, acting vice-president and chief financial officer of CATSA.

[The Chair, Liberal, Judy Sgro]

As we start our meeting, I do have to mention to you that we're having a problem with our translators. The air conditioning is not working, so it's pretty hot. I'm not sure for how long our great translators will be able to cope with the heat in there; otherwise they can get it fixed. We will do our best to move along.

First I will call vote 1a under Canadian Air Transport Security Authority. Who would like to speak to that?

[Angus Watt]

Madam Chair, I'll start, with your permission.

CATSA was established on April 1, 2002, and is an agent crown corporation fully funded by parliamentary appropriations and accountable to Parliament through the Minister of Transport.

CATSA's mandate consists of four areas of aviation security: pre-board screening, which is the screening of passengers and their belongings prior to their entry into the secure area of an air terminal building; hold baggage screening, which is the screening of passengers' checked or hold baggage to prevent the boarding of prohibited items; non-passenger screening, which is the random screening of non-passengers accessing restricted areas at the highest-risk airports; the restricted access identity card, the program which uses iris and fingerprint biometric identifiers to allow non-passengers access to the restricted area of airports.

CATSA is expected to screen over 61 million passengers and their belongings in fiscal year 2016-17. Through the supplementary estimates (A), CATSA is seeking approval to access approximately $113 million in funds earmarked in budget 2014 for enhanced non-passenger screening for fiscal year 2016-17 in order to continue to support the strengthened International Civil Aviation Organization non-passenger screening standard.

This program, which was based on a Transport Canada risk assessment, increases CATSA non-passenger screening coverage to 100% presence at designated restricted area access points in the air terminal building at the highest-risk airports. It also introduced a screening program for non-passengers and vehicles that have access to the wider commercial apron of an airport.

In addition to these funds, CATSA is seeking approval of an additional $29 million in operating funding for 2016-17. These funds will be used to deliver a wait time service level similar to that of 2015-16. Last year, over 85% of passengers were screened in 15 minutes or less at Canada's largest airports. The funding will also accommodate new, upcoming operational changes primarily due to changes in passenger flows at major airports, and to support airport economic development plans.

I'm here today with Omar Rashed, CATSA's acting vice-president and chief financial officer, to answer the committee's questions on the supplementary estimates (A) for CATSA.

Subject to your questions, that completes my statement.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Who would like to go next?

[Helena Borges]

Madam Chair, we should probably introduce the two people on the video screen. They are with VIA Rail. The gentleman is Mr. Martin Landry. He's the chief commercial officer. The lady is the chief financial officer, Ms. Patricia Jasmin.

Do you want to continue with the crown corporations? Is that easier?

[The Chair, Liberal, Judy Sgro]

Yes, thanks.

[Helena Borges]

Why don't we go to Marine Atlantic.

[Paul Griffin]

Madam Chair, thank you to you and the committee for having us here today. I should mention that I also have Mr. Shawn Leamon with me. He's our VP of finance. Shawn and I will do our best to answer and address any areas that you would like to cover.

I prepared some slides for the committee. I hope the committee has them. It's a deck of seven slides. Did that get distributed?

[The Chair, Liberal, Judy Sgro]

Yes. If you send it to us, now everything is done through SharePoint. I believe we have it.

[Paul Griffin]

I'll reference those, if that's okay, Madam Chair, as I go through.

[The Chair, Liberal, Judy Sgro]

Yes.

[Paul Griffin]

We have a short presentation that will provide the committee with some background and context. If you have the slides, I'd ask you to look at slide two.

Just to provide a bit of background, Marine Atlantic is a critical transportation link of the Trans-Canada Highway between the island of Newfoundland and the mainland. We fulfill Canada's obligation to provide a freight and passenger ferry service between the island and Nova Scotia under the 1949 terms of union between Canada and Newfoundland. The essential nature of the service was recognized a number of years ago by the Canada Industrial Relations Board when we were designated an essential lifeline service.

We move residents of the island, non-resident tourists, and just about any type of product that you can imagine, from paper towels to medical oxygen. We carry about half the commercial goods on and off the island, and we play an important role in the business community of eastern Canada. We also play an important role in supporting Newfoundland's $1-billion tourism industry. In terms of statistics, last year we carried about 300,000 people, over 100,000 passenger vehicles, and close to 100,000 commercial vehicles.

Slide three has a picture of our fleet, which comprises four large RoPax super ferries. With the Government of Canada's support, we recently purchased two of these vessels: the MV Blue Puttees and the MV Highlanders. Two of the other vessels we own, the MV Leif Ericson, since 2000, and the MV Atlantic Vision, we lease from a European company.

All four vessels are required to carry the traffic during the peak summer season, and we regularly utilize three of the vessels during the winter months. We do have challenges during the summer months if one of these vessels suffers any mechanical breakdown, so an ongoing asset renewal and a rock-solid maintenance program are critical to our success. The fourth vessel acts as a backup during the winter months and allows us to complete vessel refits in the spring, all of which reduces the risk profile of the service.

Safety, of course, is absolutely paramount, given the harsh weather conditions we encounter in the Gulf of St. Lawrence, where high winds and significant wave heights can occur at any time during the year. Our ships are also designed to navigate through ice, which allows us to operate during the late winter and early spring, when we often encounter ice conditions in the gulf.

Slide four provides a familiar reference in terms of the size of our vessels. The MV Blue Puttees, which is pictured here, can carry about two and a half kilometres of road traffic, which is the equivalent of 525 passenger vehicles, plus more than 700 passengers and crew.

Slides five and six demonstrate some of the improvements we've made to the service over the last several years. With the excellent support of the Government of Canada and our friends at Transport Canada, we've made significant changes to our fleet, our infrastructure, our business practices, operations, internal processes, and so on. We deliver our service much more efficiently as a result.

In 2009, fewer than half of our customers were highly satisfied with our service, and I'm happy to report to the committee this improved to over 75% last year. In fact, some of our commercial customers indicate the level of service they receive today is the best they've ever seen.

As you can see on slide five, we are moving more traffic with fewer sailings, which greatly improves efficiency as well as reduces the risks to the maritime environment. Fuel consumption is dramatically down, which reduces environmental emissions as well as costs. We've also introduced new food service offerings, and we offer more cabins on our service.

Improved service has allowed us to generate more revenue which, when coupled with better cost control, has allowed us to increase our cost recoveries, and more importantly, deliver greater value to our customers and to the Canadian taxpayer.

Slide six highlights some of the metrics we track and how they've improved over the last several years. I'd like to draw your attention to our on-time performance. Excluding weather delays, it improved from under 70% in 2009 to over 90% last year. Including weather delays, it was still over 87%. By way of comparison, our numbers were better than any major airline in North America last year, according to FlightStats, which presented the top performer award to Alaskan Airlines in 2015 for an on-time performance of 85%. Needless to say, Marine Atlantic's reputation has improved dramatically over the last several years, something our board of directors has been heavily focused on, and something that our employees have been proud to deliver.

Slide seven indicates the amounts in supplementary estimates (A) which total $6.1 billion. That amount funds three important projects that are highlighted on the slide: mooring system upgrades, fender upgrades, and some replacement of the storm sewer in Port aux Basques.

With that, Madam Chair, I would like to thank you and the committee members for your attention. Mr. Leamon and I would be pleased to provide any further information that you require.

[The Chair, Liberal, Judy Sgro]

Thank you very much. We appreciate that.

[Helena Borges]

Perhaps I'll ask VIA Rail if they have any opening remarks.

[Martin R. Landry, Chief Commercial Officer, VIA Rail Canada Inc.]

Yes we do, thank you.

Madam Chair, ladies and gentlemen of the committee, hello to everyone from Montreal. I am Martin R. Landry, chief commercial officer at VIA Rail Canada. I am pleased to be here with you today with our chief financial officer, my colleague Patricia Jasmin.

Created by an order in council in 1977, VIA Rail operates a national passenger rail service on behalf of the Government of Canada providing intercity, regional, and essential remote rail transportation services. Our vision is to provide a safe, efficient, reliable, and environmentally sustainable transportation service that meets the needs of Canadian travellers.

We're proud to serve over 400 communities from sea to sea to sea across a rail network of some 12,500 kilometres. Today you've called on us to answer your questions regarding $6.9 million in funding that has been presented in the supplementary estimates (A). The submission can be broken down into three different initiatives.

First, there's an allotment of funds to address the decontamination of VIA Rail property, which forms part of the broader federal remediation plan to address contaminated sites.

In addition, this submission also requests authority to spend a portion of the $34 million in VIA Rail's maintenance centres and stations as outlined in budget 2016. Specifically, we're requesting authorization for $3 million for upgrades to VIA Rail's maintenance centres in Toronto and Montreal. This includes updates to various mechanical and electrical systems, heating and ventilation systems, roof repairs, water treatment, yard trackage, and other work to ensure continued compliance to regulations and to provide for efficient operations.

We're also requesting $3.8 million for various upgrades to our stations in the Quebec City-Windsor corridor, including similar infrastructure work to what was mentioned for the maintenance centres, as well as platform improvements.

As you know, passenger rail transportation is a capital intense business. As such, there are significant investments required to maintain our aging assets to ensure the safety and comfort of our customers. For instance, as you may know, we operate the oldest fleet in North America. Although the life expectancy of passenger trains is typically in the 25 to 30 years range, the average age of our rolling stock is over 40 years old. The advanced age of our trains combined with the stress of running over freight tracks takes a significant toll on our trains. This, when added with the declining on-time performance resulting from sharing tracks with freight railways has played a major role in the decline of ridership over the last several years.

That is why VIA Rail was pleased to see budget 2016 announce investments in pre-procurement activities for new rolling stock for VIA Rail, as well as a commitment to further study a proposal for a high-frequency rail service within the corridor that could see VIA Rail operate on dedicated tracks and therefore offer better frequencies, improved on-time performance, and reduced trip times for our customers.

We recognize that investing in sustainable transportation infrastructure, while also addressing the harmful effects that highway congestion has on the environment and climate change, is among the Government of Canada's priorities. This initiative offers clear economic and environmental benefits through job creation and the anticipated increase in labour productivity. Moreover, our plan will lead to significantly reduced greenhouse gas emissions. We anticipate that this more modern service will substantially increase ridership, thereby also reducing the number of car trips per year. Designed and planned by our management team, this initiative is specifically aimed at finding permanent solutions to our recurring operating deficit and the very slow growth in ridership.

We believe that this plan could not only improve the mobility and productivity of Canadians by providing them greater sustainable travel options, but would also do so in a fiscally responsible way by reducing VIA Rail's reliance on the federal budget.

In conclusion, I would like to reiterate the commitment of the entire VIA Rail team to continue to deliver a safe, comfortable, and environmentally sustainable passenger rail service on behalf of the Government of Canada. We're excited about Canada's future and how sustainable transportation alternatives like passenger rail will play an even more important role in connecting Canadians from coast to coast to coast.

My colleague and I are pleased to take your questions.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Ms. Borges, go ahead.

[Helena Borges]

Now that you have heard from three of our partners in the Transport portfolio, I will give you a few remarks on what is in the request for supplementary estimates (A) for Transport Canada.

You will note that we are requesting a total increase in our estimates of $125.9 million. This is to assist the department in continuing to provide a safe, secure, efficient, and environmentally responsible transportation system. The most significant amount listed is for the ferry services contribution program. This is above and beyond the amount that Marine Atlantic has spoken about. Budget 2016 provided approximately $51.4 million to support three ferry services in Atlantic Canada and eastern Quebec up to March 31, 2017, so it is one year of funding. The services that receive this funding operate between Îles-de-la-Madeleine, Quebec and Souris, P.E.I.; between Wood Islands, P.E.I. and Caribou, Nova Scotia; and between Saint John, New Brunswick and Digby, Nova Scotia.

As well, the funding is provided to take out of service the Princess of Acadia, which was a vessel that was replaced by a new vessel called the Fundy Rose last July. We now need to dismantle this vessel because it has contaminants on board and it is no longer safe to operate. The requested funding will be provided to the ferry operators to cover their operating deficits and expenditures and to maintain and repair the Transport Canada assets, which include the vessels as well as the terminals that these services operate between.

The second amount of funding for Transport Canada is related to climate change and air pollution. This two-year bridge funding, which was announced in budget 2016, will allow Transport Canada to continue efforts to reduce air emissions from transportation and to improve the resilience of the transportation system in the north to address the impacts of climate change and extreme weather conditions.

The third item is for $22.6 million. It is operating funding related to the assessment, management, and remediation of federal contaminated sites, otherwise known as the federal contaminated sites action plan, of which we are one of several partners in the federal government. Transport Canada is responsible for the management of 379 contaminated sites across the country. These stem from a history of commercial and industrial activity at Transport Canada facilities such as airports and ports. The department also has assessment and remediation obligations linked with the divestiture of departmental lands and facilities.

Now I will speak about the funding that was provided as part of the infrastructure initiative. We are asking for $17.88 million of new funding to cover three separate elements: $4.8 million would allow Transport Canada to address urgent health- and safety-related capital projects at Transport Canada-owned airports and ports; $1.2 million would allow Transport Canada to build an exterior barrier for crash testing of alternative fuel vehicles at our state-of-the-art motor vehicle test centre in Blainville, Quebec; and $11.8 million for the remediation of sites, but not part of the federal contaminated sites program. These would be other sites that Transport Canada owns.

As well, in supplementary estimates (A) we are asking for authority for $2.67 million to allow our inspectors to continue to inspect foreign tankers for another year, as well as $974,000 that is being requested to allow us to meet our legislative requirements under the northern territorial environmental assessment regimes to meet the service standards for northern projects. This is a technical obligation we have to the boards that review projects in the north. As well, $932,000 is being requested to allow Transport Canada to continue its current ballast water program, which works to prevent invasive species from entering Canadian waters, and $2.59 million in statutory appropriations which are required for employee benefit plans for the salary dollars included in these estimates.

While I appreciate this might be a lot of information to digest, I and my colleague, the CFO, would be happy to take questions in terms of the details.

I will turn it over now to Yazmine Laroche.

[Yazmine Laroche]

Thank you, Helena.

Thank you all for inviting us to be here with you again. It is a pleasure to see you.

I am accompanied by our assistant deputy minister for corporate services and chief financial officer, Darlene Boileau, who will be more than happy to answer the tough questions.

We have been invited here today to speak to you about Infrastructure Canada's supplementary estimates (A), which were tabled in the House of Commons on May 10.

Before I get into the details of the funds that we are requesting, I would like to talk a bit about the work that the department has done to date, the work that will be supported by the funds we are requesting.

During his last appearance, Minister Sohi spoke about the Government of Canada's commitment to doubling federal investment in public infrastructure in the next decade. Over the next 10 years, that represents $60 billion in new investments focused on public transit, green infrastructure and social infrastructure.

In budget 2016, the federal government announced that phase one of its infrastructure plan would provide immediate investments of $11.9 billion, including: $3.4 billion to upgrade and improve public transit systems; $5 billion for investments in water, waste-water, and green infrastructure projects; and $3.4 billion for social infrastructure, including affordable housing, early learning and child care, cultural and recreational infrastructure, and community health care facilities in first nation communities.

As a department, we moved quickly to get as much information as we could to our provincial, territorial, municipal, and stakeholder partners.

In keeping with the department's commitment to transparency, the letters that Minister Sohi sent to his provincial and territorial counterparts, which provided details of the funding that will be allocated to the public transit infrastructure fund and to the clean water and waste water fund, were published on the Infrastructure Canada website.

More recently, on May 4, Minister Sohi reached out to members of Parliament and asked them to be involved in the development of phase two, which is the long-term infrastructure strategy. The minister has asked parliamentarians to indicate to him what areas of investment are important to their communities and to their constituents. This will help identify what areas require federal involvement, and what kind of funding or programming needs to be developed. This feedback will be invaluable in designing the longer-term infrastructure plan.

Returning to phase 1, you can see that the department has requested additional funding of close to $1.4 billion in the supplementary estimates (A). This funding will be allocated to our programs as follows: $844 million for the public transit infrastructure fund; close to $500 million for the clean and waste water fund; close to $24 million for the existing New Building Canada Fund; and close to $19 million for transfer programs to support municipalities in asset management planning and capacity building to help them face the challenges related to climate change.

In addition, Infrastructure Canada is requesting approximately $14.7 million for operating funding, which includes: $10.2 million for operating expenditures including personnel; $0.5 million for a data initiative with Statistics Canada; and $4 million to develop codes, guides, and specifications for climate resilient infrastructure with the National Research Council.

Finally, I would like to point out that, in keeping with the department's transparency mandate, we will present the results of our investments at the same time as this funding is disbursed.

Thank you for inviting us to appear before you today. We would be happy to answer any questions you have.