Transport Committee on Sept. 22nd, 2016

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Point taken.

[David Emerson]

They're not investing in Canada, which means either we don't get the investment or government has to do it, and government doesn't have the money.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

How do we get dead money back into circulation?

[David Emerson]

You sit down with some very smart people from the Department of Finance and Transport Canada, and you find out from them how government can best play a role in creating an investment that long-term investors will invest in. It's various risk mitigation measures. It is creating a contractual or concession agreement that makes sense to a long-term investor. It's actually bringing the thinking of people who make a living from making long-term investments into your office and talking to them, and they'll tell you.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Do I have any time left? No? Well, rats.

[The Vice-Chair, Conservative, Luc Berthold]

I gave you two seconds more to understand the answer.

The floor now goes to Dianne Watts, for six minutes.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

I'll continue along the line that Ken was on in terms of leveraging the private sector in working together with government and incentivizing them to invest.

I know that in British Columbia we've had some of those kinds of investments, such as with the Port Mann Bridge and other bridges, that have not turned out really well, because government is subsidizing them to the tune of, I don't know, $60 million a year. In terms of leveraging money in that regard, we have to come up with better models. I think they're out there; I just don't think we've gotten there yet.

We talked about marine transportation on the east coast. Now I want to talk about it on the west coast. I want to talk about Kitimat and LNG and all of those things.

I know that there's been some movement in terms of having no tankers up the coast at all. How is that going to impact LNG? Is that dead now? How do we look at that? It's significant in terms of investment.

[David Emerson]

Our remit did not include pipelines, so let me just start there. However, my impression is—and this is not part of our report—the Government of Canada is considering a ban on tanker traffic. My understanding was that it was focused on oil, not gas, but I could be wrong.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

I think it was both.

[David Emerson]

Anyway, if there is a ban on both, then clearly, you've drastically narrowed your options for access to tidewater, probably to running it through a twinning of the Trans Mountain line through Vancouver.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

This is probably part of the problem that we have in British Columbia. The twinning of that line is under discussion right now, and I think that's probably not going to go ahead. Allowing any tankers that would carry gas is not going to go ahead. In looking at those economic corridors, looking at the viability of moving the economy forward, how do we deal with that? We have communities all the way up the coast, especially in the case of LNG, and there are opportunities there to get into the world market.

[David Emerson]

As I say, this was not a central part of the study. We backed into oil because the lack of pipeline capacity has led to some real escalation in shipping oil by rail. That has its own implications. It's less economic, less environmentally friendly, and it's less safe. While pipelines may not be very popular, the implications of the same volume going by rail, I think, are probably much darker.

I would also make the point that in Canada today, people are only just starting to realize how dependent Canada has become on the extended energy sector and all of the sectors that actually feed off the energy sector. The energy sector is almost exclusively dependent on using U.S. tidewater capacity, which means, ultimately, that Donald Trump can control your exports of oil, for example. As a Canadian, I think that's a very dangerous position to be in.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

In terms of setting up the governance structure, and we talked a little bit about that before in terms of making sure that those corridors are viable, making sure that there's a massing and clustering when you're looking at those corridors, is there any analysis that has been done? I know you've worked on the Asia-Pacific and all of the elements required for that. Is that a model that you could replicate in other areas? The elements would have to be there, of course, but could you use that model in other areas elsewhere?

[David Emerson]

Do you mean other parts of the country?

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

I'm thinking particularly of when it was asked about the east coast, when you're looking at massing and there are too many ports. How does that look? Can you take part of that model and move it over?

[David Emerson]

You could, but the elephant in the room is that nobody wants to agree that Halifax should be, let's say, the primary container port for the east coast. Let's say Saint John becomes the bulk and energy port. There seems to be an ongoing inability to agree on where the focus on investment and a strategy should be.

I think it was the previous government that tried to kick-start a gateway strategy for Atlantic Canada. Our understanding was it really didn't go very far because there was a lack of consensus within Atlantic Canada.

To do it right you actually have to consolidate and focus. That's what we've done on the west coast.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much.

[David Emerson]

We had a lot of resistance along the way, but it was done.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much, Ms. Watts.

Thank you very much, Mr. Emerson.

Mr. Iacono has the floor now, for six minutes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Chair.

Mr. Emerson, Asia is now one of our export markets, which is to the advantage of the western transportation corridor. In that context, how can the eastern transportation corridor, more specifically the St. Lawrence Seaway, remain attractive and competitive?

[David Emerson]

I'm not sure what your question is. Do you mean to make western products flow through the eastern corridor?

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Yes, exactly.

[David Emerson]

Well, a key thing, as Murad has alluded to, is icebreaking on the Great Lakes. Also, the St. Lawrence Seaway has limited capacity in terms of big, competitive ocean-going shipping these days. The ships are getting so much bigger.

My own view is that, over multiple decades, the rail links to ports like Montreal can sustain an increase in shipping, and eventually an increase in product flow through the St. Lawrence. My guess is that doing it through the Great Lakes for the long haul is probably not going to happen. There may be an increase in short sea shipping and some modest increase on the lakes, but having a supply chain that is not 24/7, 365 days of the year is really not going to be competitive in the global economy going forward. You have to have those ground rail links right from the west to tidewater in Quebec or Atlantic Canada.

[Murad Al-Katib]

Mr. Emerson, perhaps I could add a point.

Our trade lanes are also changing in Canada. When we look at the Asia-Pacific gateway, we had and continue to have a lot of focus on China. Also, with the growth in our agricultural exports to India, we have a number of our products going to India via the east coast, via Montreal. The steamship lines, in particular on the container side, are transshipping out of Europe via the Suez Canal to hit India on a transit time that's actually very efficient.

I think the priority we have both on growing our trade with countries like Turkey, North Africa, and India and, of course, with the CETA, the Canada-Europe trade agreement, is going to make that eastern gateway very important for us going forward. Containerized shipping out of Montreal, the Great Lakes, and the Quebec seaway port access are certainly priorities for our company and for others in the industry.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.