Transport Committee on March 9th, 2016

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Mr. Boulerice, as you know, the situation has changed since 2012. We are now in a situation where Air Canada plans on purchasing 45 C Series aircraft, and possibly even 75. The manufacturing of those planes will create jobs. Air Canada will help establish a centre of excellence, because that aircraft has brand new technology that doesn't exist anywhere else. Furthermore, the company committed to maintaining the C Series planes that it plans to buy for at least the next 20 years. This is going to create jobs in Quebec. These were not the circumstances in 2012, when Aveos shut down.

Air Canada is also currently in talks with the Government of Manitoba, but I am not involved in those discussions. As for Ontario, Bombardier already has a very strong presence there.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

If I understand correctly, Minister Garneau, you are saying that your government is going to make those job losses legal, although yesterday they were still illegal.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

The Government of Quebec decided to drop its lawsuit against Air Canada in light of the new circumstances. I have been saying since February 17 that this opens the door to amending the Air Canada Public Participation Act in order to clarify the section on maintenance.

[The Chair, Liberal, Judy Sgro]

Thank you, Minister Garneau.

Ms. Block, for six minutes.

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

Thank you very much, Madam Chair.

Minister, nearly every response that you have given concerning the Toronto Island expansion and Bombardier's C Series has been to praise Air Canada's letter of intent to purchase the plane. Air Canada announced that it had signed a letter of intent to purchase the C Series aircraft on February 17, 2016. We're nearly three months after your tweet that unilaterally ended Toronto City Council's process to determine the future of the Billy Bishop airport. Therefore, Air Canada's signing a letter of intent to purchase the C Series is not justification for your decision. It was already made.

Furthermore, Air Canada signed a letter of intent with a two-year negotiation window. No money has changed hands, and none will for several years. Neither Bombardier nor Air Canada has announced the price they have agreed on for the C Series aircraft, but it is believed to be under $30 million per unit, which is far below the break-even point for Bombardier. Assuming Air Canada's letter of intent leads to orders at the end of the two-year negotiating window, planes are scheduled to be delivered beginning in early 2020, after deliveries of Boeing 737 MAX aircraft are completed and assuming no delays take place during production.

I should also note that the Quebec government has already acquired a 49% share of the C Series program for $1 billion.

If it is the intention, as you signalled today, of this Liberal government to purchase the remaining portion of this program, are you concerned with the implications of having effectively nationalized Bombardier and the C Series? Do you actually believe that you should be promoting a private business decision made by Air Canada as the justification for why you unilaterally shut down the City of Toronto's process to determine whether or not to allow the expansion of the city airport?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Well, I think there's a little misunderstanding or confusion in what I understood from your question.

The reason we decided not to reopen the tripartite agreement, as I think I've said many times in the past month, is that we feel the current tripartite agreement achieves the proper balance between the commercial interests of the area and the community interests. Those community interests are important, and primarily they have to do with the waterfront and the people who live there, because there are many people who live there.

Billy Bishop is a thriving airport. It's doing very well. We think the right balance has been achieved. That's the reason we said and why I announced that we would not reopen the tripartite agreement.

With respect to your question about a state-owned Bombardier, let's not get ahead of the gun. Let's just see what is happening at the moment. I've said to people, and Minister Bains has made it very clear, that he is looking at the requests that came from Bombardier. I would ask you to refer your questions to him with respect to that. A decision has not been made. We're looking at it very diligently, and when we have something to say, we will say it.

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

I want to switch topics.

I would like to talk about energy east. A pipeline like energy east would transport the equivalent of nearly 1,600 railcars of crude oil per day, travelling from Saskatchewan and Alberta to eastern Canada. As the Minister of Transport, do you have a role in cabinet of arguing that removing 1,600 railcars of oil per day is good for Canada's transportation network as a whole?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

I have a role in cabinet like that of every other cabinet minister sitting around the table when we discuss what we're going to go ahead with in terms of decisions that the government makes. I have a chance to give my input, as does everybody else. I'm not here to share confidential cabinet discussions.

I think my colleagues, however, are well aware of the energy east issue. I can assure you of that. They're also very much aware of the fact that dangerous goods, including crude oil, are transported on our rail system across the country. I try to keep them well informed on that. It is something that the private sector that wants to move oil sometimes makes the decision to do. It's more expensive than a pipeline, but in some cases they decide that that's the way they're going to do it.

A lot of this crosses the border as well. The clientele is not just in Canada, it's in the United States.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Iacono.

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

Thank you, Madam Chair.

Thank you for being here with your team this afternoon, Minister Garneau.

The 2016-17 main estimates propose an allocation to VIA Rail to meet the corporation's estimated budget expenditures, which include $239.5 million to cover an operating deficit. The CTA review recommends that the federal government consider the elimination of federal subsidies for the Toronto to Vancouver service and support the ongoing feasibility study of a project to build dedicated track between Montreal and Toronto.

What is VIA Rail’s current level of cost-recovery from its operations across Canada?

Is VIA Rail’s revenue from passenger fares expected to cover a greater proportion of its costs in the future?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

I have been asked that question several times and I am certainly aware of what appears in the report and of Mr. Emerson's recommendations. As I'm sure you know, every year the federal government gives Via Rail about $370 million to maintain its profitability. Some lines are more profitable than others. Passengers are more concentrated in the Montreal-Ottawa-Toronto corridor, which is why Via Rail just made us a proposal.

Other lines elsewhere in the country cost the federal government more per passenger, and we need to hand over some money to Via Rail. If you look at the number of passengers between Toronto and Vancouver, for example, and the cost of that service, the ticket price definitely does not cover the cost of the transportation itself. This is the current policy and the one that has been in place for many years. Mr. Emerson made some recommendations in that regard. We are going to have a closer look at all of his recommendations, and all the others. I cannot say right now what our decision will be. We recognize the importance of passenger rail service. We also recognize that there are some places where it is used a lot more, and other places where it is used less, and this costs the Canadian government and taxpayers a lot of money.

We have to make a decision with all that information and all those considerations in mind, and we will examine the Emerson report on this matter.

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

Does the federal government plan to eliminate the subsidies for the Toronto to Vancouver service?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

I don't have an answer for you right now, except to say that there are other people in this room who take the train between Ottawa and Montreal, and it costs the federal government $44 every time a passenger gets on that train. It costs the government money. It is a question of philosophy. Is this something we provide because it's an important service, or should it be profitable? Like any government, that is the kind of thing we have to consider.

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

What plans, if any, does the federal government have to support VIA Rail's proposal to build a dedicated track for higher frequency and higher speed between Montreal and Toronto? Is that a possibility?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

We're looking at it. VIA Rail has come forward with a proposal. High frequency means more trains per day. That's where the frequency part of it comes in. They would also go faster, because they would have their own dedicated rail line and they wouldn't have to stop to let a freight train go by because they were on somebody else's line. They say their projections show that eventually it could go from 2.5 million to seven million passengers. That sounds pretty good. That means taking people who at the moment drive or in some cases fly. We have to look at that very seriously. Is that something based on a solid assessment that is credible?

The second thing is they believe they can line up two-thirds of the money—it's a $3-billion proposal—from the private sector. Is the private sector on board? We need to look at that as well, because they're looking for one-third from the federal government. We want to look at whether the private sector is solidly on board. It's important for us when we're talking about the taxpayers' money to do our due diligence. It's an attractive proposal on the face of it, but we need to do our due diligence to make sure there's a solid business case as well.

Certainly, in terms of cutting down on pollution, I love the train myself, and I'll make no secret of that fact. I love going by train, but that's a personal thing. We're talking about the Canadian taxpayers' money.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Ms. Duncan, you have six minutes.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

There are so many issues to raise. Emerson dealt with a lot of issues, but one of the topics, Mr. Minister, the report dealt with was northern infrastructure. I had the pleasure of working in Yukon—

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

You mean the northern type of infrastructure? Okay, I get it.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

That's right. A very important part of the report covers everything from northern isolated airports to marine transport in the Arctic, and so on.

In reviewing the Emerson report overall, I see two conflicting recommendations, and I'm curious to know in what direction you plan to go with your government.

On one hand is a recommendation for an emphasis on two or three long-term nation-building projects, but on the other hand, the Emerson report is saying what we need to do is to maintain and improve northern transport for the benefit of local communities and the well-being of the north, including federal procurement of northern carriers and so forth.

I'm curious to know in which direction you are going. Are we going to repeat this idea that southerners propose big projects for the north and, gosh, it'll be really good if things trickle down, or this time around, are we actually going to have the northerners decide on the transportation needs of their communities and also have opportunities to participate in the economy?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Well, in typical Canadian fashion, we'll probably do both.

It did strike me when I read this report how much focus there was on the north. Considering the mandate that was given by the previous government, I thought the committee really did put a lot of focus on the north. There's no question it is an important area that has probably suffered from not being addressed very much in the past. Of course, there are special challenges associated with it, but given the fact that the planet is changing, including Canada, I think it behooves us to look at the north very seriously. Of course, the consultation process with the people who live up there is critical. I think Mr. Emerson and his team, in fairness, did consult with them, but we now have to decide which particular thrusts we want to focus on to help northerners, again, in the interests of making our transportation infrastructure as efficient as possible, both for people and for goods.

I think it's going to change a great deal. If you have the ship option many more months of the year, that changes a lot of things. If you have not just gravel runways but other kinds of runways, that can also change the face of things if there's a growing pressure for more people to want to go up there either for work or to live there. These are things we have to look at, because we are talking about a 20-year to 30-year horizon. Frankly, I think it's important for us, and I thank Mr. Emerson for putting quite a bit of emphasis on the north.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I have a few more seconds, and I want to talk to you about bitumen loading terminals. A number of 24-hour bitumen loading terminals are being proposed for Alberta. One is already in operation. For some remarkable reason, the rail industry is the only one that's been almost totally exempted from federal environmental assessment.

There was an environmental assessment called for the latest one, in Hardisty, and the company, as I understand it, yanked their proposal because there was going to be an assessment. What engagement do you have in this? I presume you would be the lead agency if an environmental assessment were to be called.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

We would not be the lead.

Are these the transloading places? Yes, some of them are not very active at the moment because of the price of oil.

It would be the Minister of Environment who would be responsible for the environmental assessment.

[Jean-François Tremblay]

We would support them with expertise.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

We would be supportive. I mean, we have a support role. That's what I'm saying.