Transport Committee on March 28th, 2023

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting No. 60 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 3, 2022, the committee meets to discuss on its study of Large Port infrastructure Expansion Projects in Canada.

Today’s meeting is taking place in a hybrid format, pursuant to the House Order of Thursday, June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

I wish to inform committee members that all witnesses have been tested for today's meeting for the benefit of our interpreters and have passed the sound test.

With us today, colleagues, from the Canadian Chamber of Commerce, is Mr. Robin Guy, vice-president and deputy leader of government relations. Welcome.

From the City of Prince Rupert, we have Mayor Herbert Pond, who is here by video conference. Welcome.

Jacques Paquin, who is the Executive Vice-President of the Port of Trois-Rivières, is appearing by videoconference.

From the Shipping Federation of Canada, and joining us by video conference, is Mr. Christopher Hall, president.

I would like to welcome all of you to our committee today. Thank you in advance for your testimony.

We will begin with opening remarks.

I turn the floor over to Mr. Guy. You have five minutes. The floor is yours.

[Robin Guy, Vice-President and Deputy Leader, Government Relations, Canadian Chamber of Commerce]

Good morning and thank you, Mr. Chair and honourable members. It's a pleasure to be appearing again before the standing committee. This is my first time, actually, in person.

On behalf of the Canadian Chamber of Commerce, I would like to thank you for the opportunity to provide comment on the committee's study on large port infrastructure expansion projects in Canada.

The Canadian Chamber of Commerce is the country's largest business association, with an active network of over 400 chambers of commerce and boards of trade, representing nearly 200,000 businesses of all sizes in all sectors and regions of our country.

As a trading nation, it's safe to say that trade infrastructure matters more to Canada than it does to many other countries around the world. In fact, two out of every three dollars that Canada makes rely on moving goods. This is significantly higher than the OECD average of just over 50%. Simply put, Canada needs to continue to invest in trade infrastructure, including large port infrastructure expansion projects. Without focusing on these projects, we will not be able to get goods such as food, fuel, fertilizer, and critical minerals to market. Without focusing on these projects, we risk becoming less competitive. Without focusing on these projects, we risk not being able to grow our economy.

Canada's supply chains are only as strong as their weakest link. While we are seeing improvements, supply chain issues remain a key obstacle to growth for business. According to the most recent Statistics Canada's Canadian survey on business conditions, one-quarter of businesses are still identifying supply chain challenges as a key concern and one they expect to persist further into 2023.

As we eagerly await budget 2023 to be tabled by the Deputy Prime Minister and Minister of Finance later today, the message the business community is looking to hear is related to economic growth. Enhancing our trade infrastructure is a key ingredient that will support growing our economy. In the time remaining, please allow me to dig into this a little further.

If Canada is looking to grow its economy, we need to see long-term investment in Canada's trade infrastructure, including not just our marine ports, as they are only a part of the chain, but also the railways, airports and road systems supporting it all. Businesses need to be able to get their goods to market efficiently and reliably. We can't simply look to address the needs of today. There are challenges and opportunities we see 20 and 30 years from now.

There is a need for funding projects to support redundancy in critical infrastructure to reduce risk of critical failures in supply chains—for example, building new pipelines, bridges, railroads, marine ports and airports. Some of these investments should include investing in projects that will expand rail in high-congested areas, which includes bridge capacity, industrial lands around airports and ports, to sustain trade growth.

While the government is not solely responsible for infrastructure investments, its leadership is critical. A federal commitment to major, strategic long-term investments is key to building Canada's trade infrastructure. The government's national trade corridors fund is a positive step forward. While it is supporting worthwhile projects in the key areas above, the government must work to increase the speed at which projects receive funding. Too often projects are stalled due to inefficiencies. It must work with business on ensuring transparency for projects and by continuing to demonstrate how funding is helping address supply chain challenges both today and tomorrow.

Another critical step forward is developing a vision for Canada's trade corridors. Trade corridors are key to this transportation of goods. The government must look to work with business to develop new gateway strategies, including those for western, St. Lawrence and Arctic gateways. Each corridor strategy would lay out how government would work with the provinces, the private sector, communities and indigenous peoples to identify capacity challenges facing our corridor transportation system and develop a pipeline of actionable solutions.

Lastly, we need government to commit to accelerating its regulatory modernization agenda. Regulatory effectiveness is integral to a competitive environment and requires regulating smarter to attract new economic opportunities to Canada. Regulatory uncertainty and changing expectations in the regulatory process are a poisoned pill to those looking to invest billions of dollars developing new pipelines, new mines and other large-scale, nation-building infrastructure projects. We need predictable timelines to encourage capital investment. It can't take a decade to approve infrastructure projects. In this sense, streamlining the regulatory process and adopting strict timelines for approving major infrastructure projects are essential and long overdue.

Thank you again for the opportunity to address the committee. I look forward to your questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Guy.

Next we have Mayor Pond.

Mayor Pond, the floor is yours. You have five minutes for your opening remarks.

[Herbert Pond, Mayor, City of Prince Rupert]

Thank you, Mr. Chair and honourable members.

I'm Herb Pond, the mayor of Prince Rupert, Canada's northernmost west coast city and home to Canada's third-largest port.

The community and the port of Prince Rupert are inextricably linked. Each must be successful for the other to survive. The port has been wildly successful, generating thousands of jobs and billions in trade. The municipality, however, is struggling to catch up, battling aging infrastructure, near-zero vacancy rates and inadequate revenues.

Canada's number one and two ports, Vancouver and Montreal, are attached to populations of 2.7 million and 4.4 million people, respectively. Prince Rupert has 12,300 souls, one-third of whom, I'm proud to point out, are indigenous. We're remote. We're separated from the nearest larger community by 750 kilometres.

The trade corridor through Prince Rupert supports billions of dollars of economic activity across Canada and generates millions of dollars of revenue for the provincial and federal governments, yet it was all put at risk this past winter. The City of Prince Rupert declared a state of emergency when it battled 14 water main breaks in the space of two weeks. Much larger urban municipalities won't deal with that many in a year. Our little municipality needs help if we're to play our part in hosting this strategically necessary corridor. B.C.'s premier David Eby recognized the need and recently directed $65 million towards Prince Rupert's aging water system. More than anything else, we need the federal government to join him.

In addition, I offer the following observations.

The antiquated property tax system that funds municipalities is broken in so many ways, including in its complete decoupling from the financial performance of the underlying enterprises. Empty or full, it's property that pays taxes to municipalities, not economic activity. As elsewhere, our retail sector has been hollowed out by the shift to online shopping and easy access to affordable air travel. Property taxes that were once paid in small centres like Prince Rupert are now benefiting large urban centres that host giant fulfillment centres.

Valuations of major industry—in British Columbia, anyway—are based on depreciated values. From the day a terminal opens, it pays less and less tax each year to the municipality. The B.C. government, in an incentivizing investment, actually made the problem worse for municipalities by capping municipal taxes on port terminals at about half of what they would otherwise be. When municipal costs rise, they can no longer be shared among all property classes, leaving homeowners and small businesses with an increasing burden. Port authorities aren't bound by municipal bylaws of any sort, including tax bylaws. Instead, they make payments in lieu of taxes, or PILT. The Prince Rupert Port Authority has appealed its assessments, and its payments in lieu of taxes have been drastically reduced.

On labour and housing shortages, attracting labourers and developers to small, remote communities is difficult. As port growth occurs, the costs for labour and housing escalate, squeezing out people on the margins, important people like our seniors and local small businesses.

Finally, while completed projects contribute taxes to the municipality, they're often preceded by years of disruptive construction, during which the municipality incurs significant costs with no accompanying revenue.

There are a few things that I suggest could be done, in addition to joining the premier with the $65 million.

For small municipalities that host large ports, there should be consideration for expanding the ports' mandates to include housing in small communities. Large urban ports invest heavily in decongesting travel corridors in their host communities, to the great benefit of those host communities. Rupert doesn't need decongesting, but we desperately need housing to accommodate the next workers for the next project.

Another thing that might be considered for communities under a certain size is a return of the federal stipend that comes from port revenues, each year, which is returned to the federal government as a small profit. Those are probably fairly meaningless in the grand scheme of things to Ottawa, but they would be indispensable in a small community.

Finally, then, we encourage federal investment in the small communities that host these key pieces of Canada's infrastructure.

With that, I'll wait to take questions. Thank you, Mr. Chair.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mayor Pond.

I would also like to take this opportunity to thank you on behalf of all committee members for the warm welcome you showed us during our visit two weeks ago.

I will now turn the floor over to Jacques Paquin.

Mr. Paquin, you have five minutes for your opening remarks.

[Jacques Paquin, Executive Vice-President, Port of Trois-Rivières]

Good morning, everyone.

Thank you for giving me the opportunity to speak to you today.

My name is Jacques Paquin and I am the Executive Vice-President of the Port of Trois-Rivières.

The Port of Trois-Rivières is strategically located halfway between Montreal and Quebec City on the St. Lawrence River, and specializes in solid and liquid bulk commodities and general cargo. It handles over four million tonnes of goods and moves 55,000 trucks, 11,000 rail cars and 250 ships per year. It serves businesses located all over in Quebec, Ontario and western Canada and elsewhere in North America. The Port of Trois-Rivières meets the needs of numerous key sectors of the Canadian economy: the manufacturing, agri-food, mining and energy industries.

In 2008, the Port adopted an ambitious modernization plan called “On Course for 2020” that has resulted in $132 million in investments of which 40 per cent is financed by Port users, 37 per cent by the Port itself, and 23 per cent by grants from the Canadian and Quebec governments. The plan was completed in 2017, three years ahead of schedule, and in addition to providing for better integration of the Port into the surrounding urban environment and increasing the productivity of port activities, it has increased the Port's capacity by 40 per cent. This additional capacity is in full use today, and the Port is having to turn away traffic from Canadian shippers that would like to use its services to reach global markets.

That is why, in 2018, the Port launched the On Course for 2030 plan, following on the previous plan. The vision of this plan is to make Trois-Rivières an innovative, sustainable urban port, generating growth, at the heart of a competitive supply chain. Each word in this vision has been carefully chosen and takes shape in precise policies and action plans.

One of the things the Port and its partners are working on is a portfolio of projects totalling over $350 million. State of the art multimodal facilities and storage areas that are adapted to the goods handled comprise the main facilities needed by the Port to achieve its vision and fulfil its role in supply chains.

On this point, the St. Lawrence ports have to deal with circumstances that are unique to them. It is important to recall that the St. Lawrence and Great Lakes region represents the third largest economic space in the world and the highest traffic and most important multimodal corridor in Canada. Increasing the competitive capacity of the St. Lawrence calls for greater cooperation among the ports in order to optimize the use of port facilities, not just in a single port, but also across the system as a whole. That is the context in which collaboration among the St. Lawrence port authorities must be facilitated and expand. The Government of Canada has to create conditions that are favourable for this cooperation.

There are other challenges that ports are facing that will also call for the attention of the Government of Canada. These include reducing greenhouse gas, or GHG, emissions and addressing the labour shortage. The Port of Trois-Rivières subscribes to the government's objectives regarding GHG. One of the best ways for the Port to contribute to this would be to offer electrical hook-ups for ships in port, which would reduce the GHG emitted in the port lands by 50 per cent. However, that requires significant investments. For a port like Trois-Rivières, this is estimated at over $100 million, in addition to the investments already planned. That presents a challenge not just in terms of funding, but also in terms of viability.

On the subject of labour, the ports of Quebec are facing a recruitment and retention challenge that is forcing them to look for innovative solutions. Automation and artificial intelligence are part of those solutions and will call for major investments, along with R&D efforts. To achieve this, the Port of Trois-Rivières, in collaboration with other St. Lawrence ports, has undertaken the creation of a port logistics centre of expertise. We are counting on the Government of Canada to support this initiative by encouraging collaboration among port authorities, but also by providing financial support for the centre's activities.

I can't conclude without mentioning the importance of the relationship between the City and the Port. Because ports are located in urban areas, they have a responsibility to integrate their activities into the surrounding environment. To that end, the Port and the City of Trois-Rivières are working on a redevelopment project for a portion of the port facilities located near the downtown and the historic quarter. The project enjoys a high degree of social acceptance and will be possible provided that the government allows the Port of Trois-Rivières greater agility and flexibility. That means allowing it to carry on activities that are a better fit with this location and will provide the revenue that is necessary for maintaining and optimizing the facilities in question.

Thank you for your attention.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Paquin.

Next, and finally, we have Mr. Hall from the Shipping Federation of Canada.

Mr. Hall, the floor is yours. You have five minutes for your opening remarks.

[Christopher Hall, President, Shipping Federation of Canada]

Thank you, Mr. Chair and honourable members. Good morning.

It's a pleasure to be here this morning on behalf of the Shipping Federation of Canada, which is the national association that represents the owners, operators and agents of ocean ships that carry Canada's imports and exports to and from global markets.

Our members' ships load and unload cargo at ports across Canada. They carry everything, including containerized consumer and manufacturer goods; dry bulk commodities such as grain and iron ore; liquid bulks like crude oil and refined oil products; and project cargoes such as heavy machinery and industrial parts.

These ships, which are all ocean-going and foreign-flagged, carry virtually all of Canada's international seaborne trade. They therefore play an essential role in connecting Canada's importers and exporters to customers throughout the world.

If there is a single priority action that our members, and indeed most of Canada's supply chain stakeholders, would likely agree on, it is the need for a national supply chain strategy to guide Canada's future decisions regarding investment in trade-enabling infrastructure, which is also one of the key recommendations in the final report of the supply chain task force. Current investment decisions, including those that are part of the national trade corridors fund, are too often made in a highly piecemeal manner, with no mechanism for demonstrating how a project will contribute to the efficiency of the supply chain overall or the fluidity, and no systematic process for evaluating projects once they are operationalized.

A related issue, and one that needs to be addressed in a national strategy, is the lack of predictability, consistency and timeliness in the current process for assessing the environmental impact of specific port infrastructure projects. I would place these projects in two broad categories. The first is the replacement of aging infrastructure that may no longer be fit for purpose, and the second is the creation of new assets to meet current or future demand. Although the latter category may be more fashionable, both categories are equally important. It's essential that both types of projects receive timely review and approval when merited.

As crucial as investment in physical infrastructure is, equally important is the need to invest in digital tools and platforms that enhance the ability of stakeholders to better manage and extract value from the huge volumes of data that flow through the supply chain on a daily basis. We strongly support the supply chain task force's recommendation on the need to develop a national supply chain data and digitization strategy, which we view as the best option for making the system more efficient and competitive in a context where our ability to build physical infrastructure is increasingly constrained by a variety of factors, including lack of space, community push-back and environmental concerns.

In order to be fully effective, the primary focus of such a strategy must be on connecting existing digital platforms rather than building new ones, and ensuring that Canada's major ports play a leadership role from both a regional and a national perspective. Government departments and agencies must also be prepared to join the digitization effort, ideally by migrating to a “maritime single window” reporting model for collecting data from supply chain stakeholders.

Although this committee is focused on large port infrastructure projects, it's worth noting that the most advanced ports and terminals in the world won't generate full value for their operators or investors if supporting infrastructure like the navigational channels linked to the ports aren't appropriately dredged, if ships can't access the ports during the winter due to a lack of icebreaking resources or if there's insufficient anchorage capacity to accommodate ships awaiting their cargo. Nor will these terminals operate at full capacity if shippers hesitate to move cargo through the port due to inadequate rail or road connections, or concerns over the labour market.

As the supply chain challenges over the last few years have made all too clear, ports don't exist in isolation but are part of a larger trade and transportation ecosystem that's made up of many subsystems, all of which exist to serve the golden rule of shipping, which is that cargo is king. As king, cargo will always find the most efficient and affordable path to its destination. Once a better route becomes available, it is virtually impossible to bring that cargo back to its previous routing. This basic fact is always top of mind from an ocean shipping perspective, and something we hope will also serve as a guiding principle of this committee's deliberations.

Thank you for your time. I look forward to your questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Hall.

We'll begin our line of questioning today with Mr. Strahl.

Mr. Strahl, the floor is yours for six minutes.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you very much.

I will stick with Mr. Hall to start with. You talked about the need for a national strategy. I think I've heard that from other stakeholders I've met with, such as freight forwarders, who believe in the national trade corridors initiative and the funds that come out of that program but feel that those funds should be driven by an overarching strategy. As you said, it's not only about evaluating what the impact is. After the funds are delivered, there should be a report on how it went. Can you expand a bit on that?

I was very interested in your testimony that this is done in a highly piecemeal manner and that there's no systemic evaluation. Can you talk about what you see as a way for the government to overcome that piecemeal manner and to have that systemic evaluation?

[Christopher Hall]

Thank you for the question. It's not an easy one, indeed.

Like many things in organizations, it all starts with a strategy. Without a strategy, you can't have any plans. Things end up being a little more piecemeal and ad hoc without them. I certainly don't have a recommendation here today on what the components of that strategy should be. It's probably beyond the scope of this discussion, but a strategy needs to be developed.

There are experts in this field, both in government and in industry, who need to come together to start building a strategy. Once the strategy is in place, projects can be evaluated in concurrence with that strategy. If it aligns, that's great. If it doesn't align, additional work might need to be done to evaluate the legitimacy of a project.

A strategy is definitely needed. That was borne out during the supply chain challenges of the last couple of years.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you.

The next question is for Mr. Guy.

We heard in our first meeting on this study about red tape and project delays. We heard about when a project does not require government approval as it's on a brownfield site or is a redevelopment, perhaps. At the Port of Vancouver, they were able to build new terminals in nine months or 18 months, but the project that the port was advocating for was in its 10th year of evaluation and not a single shovel was in the ground.

Can you talk about the impact not only on infrastructure but on the Canadian economy when we have these inefficiencies in our project approval processes? What do you see as solutions and recommendations for this committee? As we're talking about large port infrastructure, what can be done to ensure that ports are able to operate at the speed of business, not at the speed of “in a decade from now, we might talk about your project”?

[Robin Guy]

Thank you very much for that question. It's an important conversation to have.

As I mentioned in my opening statement today, Canada's economic growth depends on trade. When we are talking about the need for investment and the need for strategies, at the end of the day, these are what help pay for a lot of the items we'll be talking about later on today. It's the ability to get Canadian goods to market.

What we're looking for is not a matter of economics or the environment, one or the other. I think those definitely go hand in hand. You gave the example of one project that everybody has heard of. At the end of the day, we need to figure out how to build it more quickly. Simply put, if we're not able to get goods to market, business will go elsewhere. It becomes important for us to have the capacity within the country to get goods to market, like food, fuel and fertilizer, etc.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thanks.

My next question is for Mr. Paquin. You said that to proceed with a project you were working on with the city, you needed the government to grant the port more agility and flexibility. I think that's what you said.

Can you expand on what that would look like? What could the government do to give you the tools you need to go ahead on that project you were talking about?

[Jacques Paquin]

I am going to kind of reiterate what Mr. Pond said. I think he is having to manage a similar situation to what we have in Trois-Rivières.

Some of our facilities should be adapted or given a new role, to enable the community to benefit more from them, given their proximity to the downtown and an historic quarter. I would also remind you that Trois-Rivières is one of the oldest cities in Canada. In fact, I believe it is the second oldest, after Quebec City. We even have an historic quarter that goes back to the colonial era, which is actually quite exceptional. Some of our facilities are located near that sector.

In collaboration with the City, we have developed a project for redeploying that sector. However, in order to participate in it as the Port, it assumes that we would be able to associate ourselves with activities or projects that go beyond the basic responsibilities of a port authority. One of the things this involves is working on facilities that are intended to be used for recreational and tourist activities or commercial activities.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Paquin. Unfortunately, time is short.

Next we have Mr. Rogers.

Mr. Rogers, the floor is yours. You have six minutes.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you, Mr. Chair.

Welcome to all of our guests today.

Mr. Guy, I will start with you for a question. You made reference to the fact that your supply chain issues are still a concern for many of your members, one-quarter of which are still facing challenges.

You made reference to the national trade corridors fund, if you want to comment on that, but I'm interested in what you propose government should be doing. Just elaborate on providing more leadership for your group.

[Robin Guy]

Again, from where we sit, I think the national trade corridors fund is very successful. I think it's supporting a lot of good programs. It's helping to alleviate concerns.

I think where we would like to see government leadership is on a corridor strategy. That becomes the one overarching piece if you're asking what the leadership piece means. That corridor strategy will bring everybody together. It will bring together provincial governments, municipal governments and communities and will push those things forward so that everybody knows what everybody does. It would outline certain projects that we believe—or that a strategy believes—are critical to, again, getting those goods to market.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you very much.

Mr. Hall, over the last few months or so at this committee, we've heard from many witnesses, of course, about labour shortages in many different sectors. In terms of the grain sector, what are your thoughts on labour shortages? How concerned are you about these and what are your members doing to address them?

[Christopher Hall]

We're very concerned about labour in general, not just shortages but the overall efficiency of how labour is organized in Canada's major ports. There are perhaps other models, other ways, that could make the system more efficient in how labour is deployed, but that is an issue the terminal operators and those who employ the labour have had a hard time overcoming over the years. It's an issue that a lot of folks don't want to talk about.

There was a general recommendation in the supply chain task force report about visiting labour as general theme. There was quite a bit of negative commentary the day after that report was released from certain government departments about bringing up labour at all.

It's a very sensitive topic and understandably so, but it is a very important one for all of our members. This is in a global context, not just a Canadian context. Maritime labour is crucial. It's absolutely necessary, but it is one of the gatekeepers, if you will, to efficiency. If you're operating through antiquated labour models and labour rules and the way that labour is organized and set up doesn't match with the way the industry operates today, then you have inherent inefficiencies in that alone.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

From your perspective, then, we need to find a balance between labour, automation and digitalization, some kind of balance that works for everybody.

[Christopher Hall]

Absolutely, yes, and my comments didn't even factor in the automation piece. It's a fact that automation is coming to many parts of our lives. There is a role automation can play in terminal operations. It's been proven, and it doesn't necessarily mean a loss of jobs. It doesn't have to mean, if you bring an automated system in, that it equates to a direct loss of employment. There are ways this can work, but technology does have to be part of the solution. We're only utilizing our terminals in Canada for a fraction of the day, and that's because of the way we currently operate and the types of technologies that are used.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

I'm happy to hear you make that comment, because we do have some obviously conflicting views from different witnesses about whether or not we need more automation and digitalization to achieve efficiency. Then, of course, there's the labour side and the concerns we've heard. I'm happy to hear that.

Mr. Chair, how are we doing here?

[The Chair, Liberal, Peter Schiefke]

You have one minute and 20 seconds left, Mr. Rogers.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

During the COVID period, it appeared that the Canadian supply chain worked relatively well compared to that of the U.S., for example, as the economy restarted after the lockdowns. Would you agree with this assessment? If so, what role did our marine ports and marine shipping play in this?

This is for Mr. Hall and Mr. Guy.