Evidence of meeting #69 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-49.
A video is available from Parliament.
President, Seafarers' International Union of Canada
If I may, I wanted to touch on what you talked about with regard to a Canadian owner who owns a foreign-flag ship who decides to flag his ship outside of Canada. There are many. They do it for many reasons, not just crew costs. They do it for taxation. To flag a ship outside of Canada, Liberia or Panama or somewhere, your taxation costs are minimal. You usually pay, like with the Marshall Islands, $1,000 to fly their flag, and thank you very much and have a nice day. They'll tax you a bit on something, but it's not much, not compared to Canada.
You also have safety standards. The International Labour Organization, ILO, and the International Maritime Organization set minimum standards. They're not maximum, they're minimum. Not all flag states participate or are signatory to the ILO conventions. Their wages may actually be below the ILO minimum.
When it comes to the IMO enforcing ballast water, emission treatments, sulphur, you have Canadians who are investing millions and billions of dollars to renew their fleets, to bring those environmental standards up. Whereas the norm is that on the international stage on the older ships, you burn the lowest, cheapest gas you can buy. It's the throwaway that you can't burn anywhere else, and the emissions are high.
If you take Canadian ships as the perfect example, with the new tonnage, the new scrubbers, and the new emission controls, you're taking 500 to 600 trucks off of the road and putting that cargo into a vessel, or dredging with Canadian dredges. Your environmental footprint is less. Your social impact, of course, is doing business in Canada, which we all expect. There are many, many things other than just wage rates. Taxation is a huge one when it comes to flagging the ships offshore.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Thank you, Madam Chair.
Having negotiated with kids and dogs, I know that things can happen incrementally. You give a little, and all of a sudden you've lost your whole ice cream cone kind of thing. This is the concern that I have with respect to the cabotage issue.
As I understand it, what's being permitted now is for any ship to move empty containers from one port to another. You can correct me if I am wrong Mr. Given, but I understand there are no Canadian ships that are doing this business, or none that are interested in doing it at the price they're willing to pay. In fact today, if empties have to go from Montreal to Halifax, they go by train. Correct me if I'm wrong, but I don't think we're losing out on anything at this point.
My question is, if they get their foot in the door here, what do you see next?
President, Seafarers' International Union of Canada
I actually look at this outside of the Montreal-Halifax corridor. A lot of that traffic now goes by train. I know you get into issues sometimes of double-stacking and having to unload to go under underpasses, etc.—the infrastructure.
I look at the north, the Arctic sealift that happens every year with some of our partner companies. They do move some empty containers. The issue is that right now if those containers need to be moved, they can be moved by a foreign ship. They apply for a waiver with the CTA. That waiver application goes out to all the Canadian companies, and it asks whether they have a Canadian-flag vessel that can do this work. If they reply no, then the foreign-flag vessel gets its permit to move whatever they need to move. It's not stopped. Commerce is not stopped because of cabotage.
Another part of the issue that you have to look at is whether a Canadian would do it if there was revenue there. I don't know. I can't speak on behalf of the shipping companies. Knowing the shipping companies the way I do, I'm sure that if there was a buck to be made they would do it.
When you look at the non-revenue basis, they say it costs $2,000 to move an empty container on a Canadian ship and $400 on a foreign ship. Well, absolutely. If we want to give the okay to the exploitation of foreign crew and to the non-payment of taxes and to the non-payment of everything else, you can move a container for $400. Personally, I don't think that's what Canada is all about.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Okay. Basically, then, the money isn't in it at this point; therefore the Canadian shipping operators for the most part are taking a pass on moving empty containers.
President, Seafarers' International Union of Canada
I can't speak to whether they are or aren't. I know that in the Arctic they do; in certain areas they do.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
That would be pretty small potatoes compared with, say, Montreal to Halifax.
Let's move on.
Ms. Clark, on the issue of labour, you and I share a bit of history in some of the projects in Metro Vancouver, notably the Canada Line project, in which there was an Italian contractor digging one or both of the tunnels. I don't know whether they were Italian, but their crew was Itallian, and there was a huge dust-up over the wage rates, etc. We've seen this movie before.
With respect to the dredging, correct me again if I'm wrong, but I understand that there's actually a hurdle, a certain size of project—it has to be of a certain value or above—before a European competitor can bid on it. Is that correct?
Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
Yes, it's about $7.5 million, which is a very low hurdle.
Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
Yes. That's public. Private doesn't have a hurdle, and ports are considered private.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Ports are considered private.
Looking, then, at your book of business over, say, an average year, what percentage of your projects would be over $7 million, would you say?
Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
I would say 80%. Our main dredging contract is with the port of Vancouver. We have an 11-year contract to maintain the shipping channel, which is worth over $7.5 million a year.
Liberal
Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
It's counted as one job. Then we do a series of smaller dredging projects on an annual basis. But the larger projects, such as the LNG projects or the expansion of Deltaport terminal 2, are well over that level.
As I said, private doesn't have that hurdle, and we do a lot of private dredging on the river, on the island, and up the coast.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Do you think that those contracts would be even big enough to attract their attention?
Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
It all depends on how they feel they need to set up in Canada to be able to compete on the larger projects and what kind of vessels they have available. It's not just dredging vessels; they can use barges with heavy-duty cranes on them to do dredging as well.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Okay.
Going back to the example of the Canada Line and some of the others, two of you have mentioned that we need oversight, that we need people monitoring. Do a bit of a deeper dive into that. What sort of things do we need to be taking care of?
Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
I'm glad you asked that question, Member Hardie. We had a good meeting this morning with Transport Canada as they are trying to work this out.
They right now have advance notification, whereby the firm would put in their application and show that they are eligible to opt out of the coasting trade licence because they are eligible under CETA. It only covers that eligibility.
Then, the other requirements, such as the safety standards, visa requirements, and the taxation, are all managed by other departments. We've been strongly asking for the past two years that there be a mechanism whereby one department takes the lead and coordinates across the other departments informationally to ensure that all those requirements are met, because we can see even under the coasting trade licence that they have struggled interdepartmentally.
When we met with them today, they even emphasized that we the industry are part of the policing mechanism to catch anyone who is in non-compliance. We said that we need to know, then, that these vessels are here. That was one discussion that we had: please notify us.
That is our first recommendation today: that there be a protocol led by Transport Canada to ensure that this coordination goes on.
Liberal
Sean Fraser Liberal Central Nova, NS
Thank you very much.
Mr. Hardie launched down the line of questioning I had sketched out, so forgive me if we're a little bit repetitive, but I'll give you a chance to add a bit more colour. I'll start with Mr. Given.
We had some testimony earlier today that I'm trying to square mentally with what you've just given. It was from someone who was a big advocate for adopting the proposed mechanism in the Coasting Trade Act. We essentially heard that the movement of empty containers by Canadian-flag ships isn't happening and is never going to happen.
I think you've suggested that there may be some examples up north to contradict this, but is this something, under anything like the rules that we have in place today, that you could conceivably see happening?
President, Seafarers' International Union of Canada
I've heard the testimony. My point is that Canadian companies right now, under the current coasting trade system, have an opportunity to move them if they want to. If they don't want to, the foreign ship or foreign company that applied for the waiver is free to move them. There are certain ones that do, and I know they go by rail and by truck. I wish they would go by ship. It would be more environmentally friendly.
However, in the north and in some of the other areas where they do, to take that away, I don't understand it, and I simply don't understand why we would expand on something where provisions are already there without opening the coasting trade.
Liberal
Sean Fraser Liberal Central Nova, NS
On that issue, if I recall accurately the testimony from earlier today, she explained the waiver process and said that on at least one occasion what happened was that we put it out and asked if anyone was interested. When somebody says, “Yes, we can do it at this cost,” all of a sudden the economic option for the owner of the containers is to import new containers rather than move them within Canada, which strikes me as a strange inefficiency.
Do you have a comment on whether that's the reality we're facing? Are we going to leave containers sitting empty and bring new ones into Canada?
President, Seafarers' International Union of Canada
It's my understanding right now, and I stand to be corrected, that the only company that has provisions to have containers in Canada for more than six months is Maersk Line, through a special provision. Other containers do get moved around. We see the field of them sitting in Montreal. We see the empty containers everywhere along rail yards.
Again, knowing shipping companies, present company excluded, they won't leave anything sitting around too long if they can make a buck.
Liberal
Sean Fraser Liberal Central Nova, NS
Let's explore why there's such a cost differential for Canadian-flag ships. You mentioned safety regulations, labour standards, and environmental rules, which are mostly quite good. We've adopted them in Canada because we think they're the right policy. Is it the fear that the foreign-flag ships is not going to comply with Canadian laws in Canadian waters, or is it that they're not going to follow the same standards that drive up the cost for Canadian-flag ships globally?
