Transport Committee on Feb. 24th, 2016

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

Welcome the Standing Committee on Transport, Infrastructure and Communities. This is our third meeting.

Pursuant to Standing Order 81(5), we are studying the supplementary estimates (C), 2015-16: vote 1c under Canadian Air Transport Security Authority, votes 1c and 5c under Office of Infrastructure of Canada, votes 1c and 10c under Transport, and vote 1c under VIA Rail Inc., referred to the committee on Friday, February 19, 2016.

We have many witnesses here to speak to us.

The chair would call vote 1c under Canadian Air Transport Security Authority, which effectively opens the floor.

I believe that Ms. Duncan is trying to get my attention.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Yes, as I mentioned, there are two matters. One is that the main estimates have been tabled, and I wonder if we're going to be setting a date to review the mains, as well. Second, in two weeks from now, we will have the two ministers in. I think the request was put in, but I just want to confirm that we will have a meeting that will be televised.

[The Chair, Liberal, Judy Sgro]

I'm going to ask the committee that we reserve 15 minutes at the end of the meeting so that we can take care of some housekeeping issues, including the comments and request by Ms. Duncan.

Can we open up the floor? We have Helena Borges, associate deputy minister for transport, infrastructure, and communities. I'll introduce everyone at the same time. We also have André Lapointe, assistant deputy minister and chief financial officer, corporate services, Transport Canada. We have Darlene Boileau, assistant deputy minister and chief financial officer, corporate services, Infrastructure Canada.

From the Canadian Air Transport Security Authority, we have Angus Watt, president and chief executive officer; and Andie Andreou, vice-president and chief financial officer.

By video conference, we have VIA Rail Canada Inc. We have Yves Desjardins-Siciliano, president and chief executive officer; and Patricia Jasmin, chief financial officer.

Welcome to all of you here in Ottawa. We very much appreciate your coming out on a snowy day to help us along with our work.

I will open the floor to whoever would like to go first.

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

Thank you, Madam Chair.

I will start and just give you a couple of highlights of what is in the supplementary estimates.

I am here representing the portfolio for transport, which includes Transport Canada and Infrastructure Canada, as well as a bundle of crown corporations that report under the Minister of Transport to Parliament. Two of them are here because they are subjects in the supplementary estimates. They are VIA Rail and CATSA.

I will start by focusing on what is in there as an overview for the portfolio. The biggest amount is for Transport Canada, and it's an increase of $27.6 million in appropriations. This is basically to assist the department in carrying out our mandate for a safe and secure, efficient, and environmentally responsible transportation system.

The main element under the estimates is for the Asia-Pacific gateway and corridor. This is really a request that will allow us to efficiently manage our funding commitments to recipients for these grant and contribution programs. The funds are actually re-profiled from fiscal year 2015-16, from the previous year to the present year, and it is important to note that this program is pretty much tapped out now. A total of $910 million was announced for or committed to this program, and these are the residual projects that continue to be implemented by proponents.

The second biggest amount is for the Airports Capital Assistance Program. Since the program was launched in April 1995, 830 projects involving 174 airports have been funded, and 99 of those projects involved runway safety. These projects are essential to the safety of these airports.

Six program projects experienced various delays, and consequently, the $7.6-million funding was deferred to 2015 and 2016 so that these projects could be completed.

Because of the remoteness of some locations, the large number of eligible communities, and the shortness of the construction season in several areas of the country, it is difficult to complete all of these projects during the year for which the funding is granted.

The total statutory appropriations for Transport Canada include funding for the St. Lawrence Seaway Management Corporation, and included in supplementary estimates (C) is $1.9 million that will allow the corporation to do some infrastructure maintenance and funding for the Townline Tunnel, which is located in the Niagara region. By funding these repairs, the Government of Canada will maintain a safe and efficient means for travel in that region.

Regarding crown corporations, as I mentioned, we have one of the largest portfolios in government. If it would be helpful for you, I'd be happy, during questions and answers, to outline who makes up our portfolio and which crown corporations and other entities receive appropriations from government, versus those that are self-sustaining.

Through these estimates, the appropriations are being sought for the two crowns that are present at this session. For CATSA, we have an increase of $6.5 million to continue CATSA's capital investments in security screening equipment for baggage that is checked in at the airports. These are for airports across the country that have U.S. pre-clearance facilities and their new technology to basically X-ray the baggage that goes through.

Finally, for VIA Rail, there is an increase of $38.8 million in additional funding. These are to make required capital infrastructure investments to maintain a safe, efficient, and reliable passenger rail service in Canada. More specifically, this funding will allow VIA to advance the implementation of projects, including $18.6 million in new capital funding that was part of the federal infrastructure initiative that was announced over a year ago, as well as some other infrastructure projects that VIA has as part of its ongoing capital improvements, and that is a re-profiling.

For Infrastructure Canada, there is funding in the estimates for the new Champlain Bridge corridor project. It's a total of $61.8 million. As you may know, this is the bridge that's being built to replace the existing Champlain Bridge connecting Montreal to the south shore. The project agreement with the private partner that is constructing the project was signed on June 19, 2015. The project is on budget and on time. It is a very ambitious project.

The main span will be constructed by December 2018. The rest of the corridor, which includes road improvements, will be completed by October 2019. These are extremely tight time frames, but given the state of the existing Champlain Bridge, it was a priority to get this project built as soon as possible.

The amount that is required includes $49.3 million. It's for operating funding, which basically allows Infrastructure Canada to deal with any unforeseen events in those components of the project for which it is responsible, not for the elements that the private sector is handling at this time. The money will be used, as needed, to deal with those unanticipated elements.

As well, there is $12.5 million for the project. These are capital expenditures, primarily focused on land acquisition that has been required to construct the project, as well as some work that has been undertaken by Hydro-Québec to move some pylons to make way for the bridge.

In a nutshell, these are the highlights. There is, of course, more detail in there. We would be happy to answer any questions.

As has already been noted, the Minister of Infrastructure will be appearing before this committee on March 7. He will be speaking to his priorities, so we will not get into those today. Likewise, the Minister of Transport will be attending this committee on March 9 for the same purpose.

If it is helpful to the committee, we are prepared to give you an outline of the estimates process, if there are members who are not totally clear on how the process unfolds. If that is helpful, we'd be happy to do that.

With that, I'll pass it back to you, Chair, for questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Borges.

I'm going to take you up on that offer on the estimates. The more information we have, the better for all of us, regardless of how long we've been here. You can just send that to the clerk and he'll circulate to all of the committee members. Thank you.

Next, we have Mr. Angus Watt from the Canadian Air Transport Security Authority.

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

Good afternoon. I'm Angus Watt. I'm the president and CEO of CATSA, the Canadian Air Transport Security Authority. 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.

Our 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, or HBS, which is the screening of all passenger 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; and a restricted area identity card program, which uses iris and fingerprint biometric identifiers to allow non-passengers access to restricted areas of the airport.

Supported by its screening contractors and their screening officer workforce, CATSA is expected to screen 58 million passengers and their belongings this fiscal year, 2015-16. More pertinently to this committee's deliberations on the supplementary estimates, CATSA is currently undertaking the life-cycle management of its HBS, hold-baggage system, through the recapitalization of equipment at airports all across Canada.

This deployment of advanced technology will ensure that CATSA remains compatible with its international partners, and that it employs best industry practices and standards to deliver a secure experience for air travellers. The initiative also supports the Canada–U.S. declaration of beyond the border, as it will eliminate the need for the United States transportation security administration to rescreen connecting baggage originating from Canadian airports with U.S. pre-clearance facilities.

This multi-year initiative started in fiscal year 2011-12, and it involves 32 airports, with an overall capital envelope of $580 million. The HBS recapitalization initiative is highly dependent on airport collaboration and timelines associated with airport project plans.

Through the supplementary estimates (C), CATSA is seeking access to $6.5 million in capital funds associated with that HBS program. This funding will allow the organization to continue to deploy the upgraded HBS system as part of the life-cycle management program and in support of the beyond the border initiative.

Thank you and I'm subject to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

From VIA Rail, we have Mr. Desjardins-Siciliano.

[Yves Desjardins-Siciliano, President and Chief Executive Officer, VIA Rail Canada Inc.]

Thank you, Madam Chair.

Members of the committee, good afternoon.

We're sorry we could not be in attendance with you in snowy Ottawa. Although it is snowing in Montreal, we have full confidence that if we had taken a train, we would have been there on time to meet with you. Unfortunately, it will be a pleasure that we will have to put off to another day and I look forward to the honour of meeting with all of you in person.

Today we are here to talk about our request for supplementary estimates (C).

By way of introduction, I'll just talk a bit about VIA Rail and its status within the apparatus of the Government of Canada. VIA Rail was formed in 1977 by an order in council. It is a non-agent crown corporation. It reports to Parliament through the Minister of Transport, and it is subject to annual appropriation. Its mandate is to provide a safe, efficient, reliable, and environmentally friendly transportation service that meets the needs of Canadians.

Up to 90% of our passengers travel within the Quebec-Windsor corridor. The rest of our travellers are either on The Canadian—the iconic train that you see on the back of your $10 bill—from Toronto to Vancouver, or The Ocean, which goes from Montreal to Halifax. A small number of our travellers travel to remote areas like Senneterre and Jonquière, Quebec; from Winnipeg to Churchill, Manitoba; and Prince Rupert, B.C.

I have been the serving president and CEO since May 2014. Since that time, we have been busy refocusing our business to what counts most, which is our passengers. With that new vision of making and providing Canadians with a smarter way to move around Canada, we have been putting passengers first. Very early on, in the last 18 months, that experience has started to bear fruit. For the first time since the recession of 2008, ridership has picked up, and so has revenue, for VIA Rail. But much is left to be done.

Just a few minutes ago, I was informed that VIA for the first time has made the Forbes list of top employers in Canada, coming in 47th in the top 250 Canadian employers, and fourth in Quebec. It is the highest-ranking federal institution as employer. Management at VIA take full credit for that ranking.

The estimates (C) request is for $38 million, encompassing three areas of activity: information technology, equipment refurbishment, and infrastructure projects.

With regard to equipment refurbishment, we're looking at completing the fleet renewal undertaken back in 2010 of the LRC fleet, which is coming to the end of its term over the next seven to 10 years.

On the infrastructure side, we are looking for funds to complete work under way on subdivisions owned by VIA Rail: part of the Guelph subdivisions, the Alexandria subdivisions, and the Chatham subdivisions in southwest Ontario.

In order to provide context to members of the committee, I would like to make a few points with regard to the operating realities of VIA Rail. One that is VIA operates the oldest rolling stock in passenger service in North America, with an average age of over 40 years. Therefore, this refurbishment project is of immediate importance, so is the renewal of that fleet in very short order.

The second point is that the mission of VIA is really to take passengers out of their cars, specifically in the high-density Toronto-Ottawa-Montreal corridor, and put them into trains. To do so, VIA management has developed a plan to build and operate its own railway network between those major cities. The objective is to move five million passengers from their cars to the train, reducing the carbon footprint of Canadian cars in Canada by 22.5 million tonnes per year by that mere decision.

It is within the context of our renewed commitment to safe, comfortable, and environmentally sustainable passenger rail service, on behalf of the Government of Canada, that I submit to you our request for these estimates.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Do any of the witnesses want to offer the committee any further information before we open up the floor to the members? Okay.

Thank you very much for being so succinct. We appreciate that very much.

We will open the floor to members for six minutes each, starting with Ms. Block.

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

Thank you very much, Madam Chair.

I would like to thank our witnesses for joining us today and also thank the departmental officials. I know that there is an army of people who provide support to the minister and his ministry. I'm looking forward to hearing some of your answers to our questions.

I'm going to start by asking some questions of CATSA. The first is the vote 1c in these supplementary (C)s. Why is the additional funding of $6.5 million on overall authorities of $705 million necessary?

[Angus Watt]

I can give you a very detailed answer with my CFO sitting here or I can give you the big strategic picture.

The big strategic picture is that this is a 10-year program, as I outlined. It's in partnership with the airports. The airports own the infrastructure and they build the whole baggage system that moves the bag. What we do is provide the X-ray machines. The airports, though.... We established this plan way back in 2010 based on an expectation of what the airports schedule for those investments would be. As time passes, the schedule changes, so while we remain within the overall budget, we have to move money from one fiscal year to the other in order to remain aligned with the airports' plan. This $6 million isn't new money; it's essentially a realignment of existing money.

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

For my own curiosity, where does the whole baggage screening take place?

[Angus Watt]

This is an interesting thing because I can tell you that until I became president of CATSA, I was unaware that it actually took place. It's in the basement of most airports. When you check your bag and it disappears behind the counter, it goes down through a series of conveyers usually into the basement of an airport, and there's this huge conveyer system there that channels your bag to the appropriate high-speed X-ray machine, which CATSA owns. That high-speed X-ray machine analyzes the bag to make sure nothing untoward is in the bag, and if it is clear, then it goes to the airplane. If it is not cleared, then it is searched by one of our personnel to make sure it is safe.

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

This is another general question, I guess.

CATSA was subject to an Auditor General evaluation last year. The AG noted that there were some deficiencies in relation to the communication of changes in screening procedures to screening officers. Can you comment on what specific changes CATSA has enacted to address that concern?

[Angus Watt]

That's a little outside the scope of this.

In general we have 6,000 screening officers across the country. We screen 150,000 people every day. It's a very complex operation. In order to better prepare them for their duties each day, the Auditor General noted that perhaps we could communicate changes in a more coherent fashion, which we have done through enhanced shift briefings—that's what we call them. When a screening officer starts this shift, they get them together as a group and they provide this update briefing as a means of enhancing that communication.

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

I will follow up with another question on that, if I may, and if you can't answer that, it's okay.

I know that the AG report also noted that CATSA uses key performance indicators to assess the performance of screening contractors and graded them on these metrics. It also remarked that contractors did not always implement the action plans designed to address this specific issue that caused them not to achieve the mandated performance target. Can you tell me what action CATSA is taking to ensure that all performance targets are being met by screening contractors?

[Angus Watt]

We have a complex network of KPIs that we use in conjunction with our airport security screening agreement with the screening contractors. Those are measured on a daily basis through CATSA personnel called performance officers who watch the screening officers perform their duties at airports all across the country every day. They never achieve perfection, so we're always trying to make it better. The answer is that it's not a one or a zero. It's not that they're not achieving their targets. It's just that we're always trying to encourage them to do better.

One of the ways we do that is built into the contracts, because we use third-party service providers. We build in financial incentives that incentivize these third-party service providers to improve their performance. What we do is adjust those KPIs and the associated financial incentives every year to encourage exactly what you've talked about, which is better performance.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

You have half a minute left, Ms. Block.

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

I think I'm fine.

[The Chair, Liberal, Judy Sgro]

All right. Thank you.

Mr. Hardie, you have six minutes.

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

Thank you, Madam Chair, and thanks to everyone for being here. It's a fascinating portfolio in total.

I wanted to talk a little about the St. Lawrence bridge and the corridor project. When do you anticipate a P3 agreement to be reached?

[Helena Borges]

The P3 agreement was reached in June 2015, and the winning consortium is already in the process of constructing the bridge project, as we speak. They've torn down one of the old portions of the bridge, and they're building what we call the jetties, the platforms they will use to replace the bridge they've torn down, as well as the replacement bridge for the St. Lawrence.

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

The question then comes back to the $49.3 million that you're asking to be allocated for contingencies. My understanding of P3s is that risks are transferred to the private partner, so what's the necessity for this rather large amount of money?

[Helena Borges]

A portion of that money, $12.5 million, is for capital expenditures that the department is responsible for. When we entered into the contract with the P3 concessionaire, we had already negotiated all the properties that were required for the bridge project. That's a normal process, because governments are in a better position to acquire the lands and clean them up. Part of that land acquisition involved having Hydro-Québec relocate some of the pylons that were in the right of way for the bridge, so it's going through that, plus the costs of the people who are managing the project.

The additional amount, the $49 million for operating, is related to, again, obligations for Infrastructure Canada. We had conducted the environmental assessment early on in the project. For the project to go to procurement, we had the environmental assessment completed. As part of that, we took on a large number of recommendations in making sure we are mitigating the impacts on people and on the neighbouring communities, so we continue to do work like monitoring for air contaminants, noise, vibrations, and things like that, and working with the first nations to make sure that we're being sensitive to the archaeological elements there.

That's the kind of thing the money is for. It's just that when you're doing environmental monitoring and elements, things always come up that we don't know about at the time or how we're going to be able to deal with them. It's to deal with those aspects under the department's control.