Transport Committee on Oct. 23rd, 2023

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting number 83 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to the order of reference of Tuesday, September 26, 2023, the committee is meeting to discuss its study on Bill C-33, an act to amend the Customs Act, the Railway Safety Act, the Transportation of Dangerous Goods Act, 1992, the Marine Transportation Security Act, the Canada Transportation Act and the Canada Marine Act and to make a consequential amendment to another act.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Therefore, members are attending in person in the room and are able to join us remotely using the Zoom application. Before we begin, I wish to inform all members of the committee that the witnesses appearing virtually have been sound-tested for today's meeting for the benefit of our interpreters and have passed the test.

Colleagues, appearing before us today by video conference are the BMI Group, Justus Veldman, managing partner; the Chamber of Shipping, Bonnie Gee, president; and GCT Global Container Terminals Inc., Marko Dekovic, vice-president, public affairs. From South Coast Ship Watch Alliance, we have Mr. Bruce McConchie, who is joining us in person.

Welcome, everyone.

We'll begin our opening remarks with you, Mr. Veldman. I'll turn the floor over to you. You have five minutes, please.

[Justus Veldman, Managing Partner, BMI Group]

Thank you, dear Chair Schiefke and members of the committee.

My name is Justus Veldman. I am a managing partner with the BMI Group, a property development company specializing in the repurposing of industrial infrastructure. As the largest developer of end-of-use paper mills in Ontario, with significant rail and water infrastructure in place, it is an honour to be invited to address amendments to this bill.

In our Niagara ports properties alone, we have facilitated over $430 million of investment capital and have created well over 250 full-time permanent jobs. With our latest acquisition of 400 acres in Port Colborne, we own and operate in excess of 900 acres in total of port lands adjacent to the Welland Canal. With our existing partnership with the Hamilton-Oshawa Port Authority, the Niagara ports trade corridor is among the top five in Canada.

Our development in northern Ontario, in the town of Red Rock, which is another former paper mill town and the northernmost port on Lake Superior, is inclusive of a full first nations partnership and is in the process of signing an MOU with a significant lithium producer, which is contingent on its development.

The modernization of port operations, their security and their efficiency is very much in our interest. We are heavily investing in the success of our projects and advocating for the modernization of the St. Lawrence Seaway, particularly the Welland Canal section, to unlock its full potential as an economic driver.

The legacy structure we're working with makes it difficult to realize the full development potential of the regions we work in and the new traffic it will generate. Our continued challenging experience with the ongoing issues with the seaway reinforces the need and the urgency of updating and upgrading the structure of the Welland Canal corridor and its management. This corridor is important, and it needs to be modernized to fully optimize this Transport Canada asset. Make no mistake: Bringing attention to the corridor will, in fact, strengthen supply chain fluidity and resilience.

The effort to strengthen relationships and reconciliation with indigenous peoples is recognized as a very positive step forward.

We also recognize the efficiencies in inspection, including remote and automated systems, but they could present their own unique challenges, which we are open to working through to enable the secure, efficient and free flow of goods.

We acknowledge the bill's request to extend ministerial powers, and the subsequent potential for challenges to the Charter of Rights. However, given the justice minister's review, we trust that these powers will benefit all Canadians, will not be used in excess and will enhance the security of the supply chain sector.

While the sector is largely east-west focused, we see and would stimulate you to think about the significant opportunity for connecting the remote north to the south, and the necessity of connecting isolated, remote communities and of developing regional potential in these. Economic development and infrastructure mandates to this effect will significantly contribute to the prosperity and the security of the northern country.

On behalf of the BMI Group, thank you, Mr. Chair and members of the committee, for your time and attention, and for the opportunity to contribute.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Veldman.

Ms. Gee, the floor is yours. You have five minutes for your opening remarks.

[Bonnie Gee, President, Chamber of Shipping]

Thank you, Mr. Chair, for the opportunity to appear before the committee once again.

The Chamber of Shipping represents ocean carriers, shippers and service providers that move Canada's trade to and from international markets.

Since the introduction of Bill C-33 in November 2022, there have been some developments that should be taken into consideration with respect to the initial intent of the bill. These include the passage of Bill C-47, the budget implementation act, the introduction of Bill C-52, and the establishment of the supply chain office that will facilitate the development of a national supply chain strategy as recommended by the national supply chain task force.

Bill C-47 amends the Canada Transportation Act, which enables the collection of information from any users of the national transportation system to ensure the efficiency and proper functioning of the national transportation system. Bill C-52, introduced in June this year, seeks to further amend the Canada Transportation Act, as well as the Canada Marine Act, to enhance transparency and accountability in the setting of port fees. These bills, together with the national supply chain office, should take precedence and are foundational to strengthening ports in Canada by supporting a cohesive and transparent data strategy that will improve supply chain responsiveness and agility.

While we recognize the intent of Bill C-33 is to improve how the Government of Canada manages disruptions, we would caution that taking a piecemeal approach to legislative amendments, without a national supply chain strategy, may result in some unintended consequences and create even more of an administrative burden for our members.

My comments will focus on the proposed amendments to the Customs Act, Marine Transportation Security Act and the Canada Marine Act.

The Chamber of Shipping supports the proposed amendments to the Customs Act, as we understand the need to expedite the movement of containers identified for secondary exams to immediately address potential health, safety and security risks. We strongly urge the Canada Border Services Agency to move forward with the adoption of less intrusive technologies to expedite the examination process and reduce the costs of the exams. CBSA, as the lead agency for public safety, must be adequately resourced to support the expansion of container facilities across Canada in a timely manner.

A report recently released by the City of Delta last month associates increased container traffic to the proliferation of drugs and elements of crime in communities. The report highlights concerns with the Marine Transportation Security Act, MTSA, and the fragmented approach to port security responsibilities. Amendments to the MTSA in Bill C-33 fail to strengthen the security framework and rather focus on expanding the mandate of the act to include direct and indirect risks to the health of persons involved in the marine transportation system and provide additional authorities to direct vessels.

Expanding the MTSA to regulate health risks that are already regulated under the maritime occupational health and safety regulations appears unnecessary. Furthermore, if there is a need to issue an emergency direction to a vessel of concern for health safety reasons, authorities exist within the Public Health Agency of Canada under the Quarantine Act. The intention and desired outcome of the expanded mandate of the MTSA require further explanation and clarification on how a health risk would be assessed and determined under the act.

We continue to raise concerns about the overlapping and duplicative regulations and authorities, particularly in the marine transportation sector. Canada takes a multi-agency approach that involves a network of departments, which often, from an industry perspective, results in confusion and inefficiencies in decision-making and direction. A country surrounded by three oceans requires a clear maritime authority that can eliminate gaps and confusion in marine safety, security and environmental protection, and strengthen Canada's global position as a trading nation.

The expanded purpose of the Canada Marine Act in the proposed amendments is supported. It will enable port authorities to maintain security and enhance the resiliency of supply chains in a manner that safeguards national security and promotes healthy competition dynamics.

With reference to the added purpose that enables port authorities to “manage traffic, including mooring and anchorage, in order to promote the efficiency of supply chains”, this is only relevant to vessels with import cargoes. It should be clear that vessels typically seen at an anchorage are waiting for Canadian export cargoes to arrive and are a symptom of an inefficient supply chain. The direct management of export vessels has no direct influence on improving the efficiency of the supply chain, but they are often used to improve the fluidity of supply chains by taking partial loads.

Other amendments to the Canada Marine Act appear to address governance concerns that are only specific to Canada's largest port, and, therefore, proposed amendments in Bill C-33 may be rather onerous for smaller ports. The bill does not address the variability in the size, operations and resource capacity of port authorities, nor does it assess each authority's capability to meet their legislated mandate. These recommendations, together with the suggestion to consider the complementarities of regional ports, were also documented in the “what we heard” report during the ports modernization review and were not captured in Bill C-33.

In western Canada, the 2022 revenues for the four port authorities range from $4.8 million to $305 million. The status of the existing 17 port authorities and possible new port authorities should be reviewed.

Thank you. That concludes my remarks. I look forward to the questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Gee.

Next, we have Mr. Dekovic.

The floor is yours. You have five minutes for your opening remarks, sir.

[Marko Dekovic, Vice-President, Public Affairs, GCT Global Container Terminals Inc.]

Thank you, Mr. Chair.

Thank you to the committee for inviting me to appear before you.

I'm the vice-president of public affairs at GCT Global Container Terminals, headquartered in Vancouver. We are the largest majority-Canadian owned container terminal in the country, and we are a tenant of the Vancouver Fraser Port Authority.

Bill C-33 was born from a chorus of voices from the private sector, labour unions and indigenous communities, all calling on the government to address the functioning of our supply chain and, specifically, the network of Canada port authorities. Since then, Bill C-52 has also been introduced. In some ways, it better addresses some of the shortcomings of Bill C-33.

Today, my comments will focus exclusively on the proposed changes to the Canada Marine Act within Bill C-33.

It is of utmost importance for all members of the committee to understand the current workings of our port system. Private sector companies operate port terminals handling various goods, including bulk, breakbulk, containers and autos, to name some. They assume all of the risks associated with investing in terminal infrastructure, acquiring and retaining customers, and navigating economic fluctuations. These private companies are tenants of port authorities, and port authorities impose rents—and collect rents—escalating fees and regulations upon those private sector operators, all while assuming little to no risk themselves.

As you review and potentially shape Bill C-33, I implore the committee to consider a fundamental question. Do you wish for port authorities to function as governance and regulatory bodies overseeing the supply chain with transparency, or would you prefer for them to remain as they are now, operating opaquely as monopolistic quasi-market players generating revenue for themselves without any real accountability?

This decision is crucial, as it will shape how you approach every aspect of Bill C-33.

For instance, consider the recommendation to modify the borrowing limits for port authorities. Increasing the borrowing limits for port authorities does not necessarily stimulate private investment; rather, it can deter it. This happens because port authorities must repay what they borrow with interest, and this cost ultimately falls on the shoulders of terminal operators, which in turn pass it to their customers, leading to potential inflation.

Port authorities should rarely need to borrow if they're fulfilling their mandate correctly, which is to facilitate trade and grow their private sector tenants. When the private sector is assured of its growth potential, it will invest. Port authorities can also use their lease agreements with tenants to encourage them to take on greater investment risk, thereby reducing the need for port authorities to borrow.

Consider the Vancouver Fraser Port Authority as an example. Over the past 20 years, its borrowing limit has increased three times faster than the volume growth, growing by 385% while volumes grew by 98%. Given this incredible borrowing, one would assume that the port functions incredibly well, but as many of us will have seen, recent global rankings have shown that's not the case. Therefore, it is evident that increasing borrowing by port authorities is unlikely to improve supply chain outcomes. Instead, we should focus on facilitating the private sector's desire to grow and expand. Port authorities should be asking, “How can we assist growth?”, rather than dictating what must be done and, at times, directly competing with private money.

Along the entire west coast of Canada, private sector terminal investment projects are waiting to proceed. The primary obstacle is most often government regulation and often port authorities' individual interests.

I commend the recent announcement by the port of Prince Rupert, which seems to have found a balanced approach. It's unlocked over $750 million in investment by collaborating with private terminals and rail operators and listening to customers.

Not to use a cliché, but the customer's always right. This is because, ultimately, the customer ends up paying. If we take that approach with our supply chain at a national level, we will succeed and potentially save a lot of taxpayer dollars.

In summary, it is crucial to get Bill C-33 right. To achieve this, you must decide whether you want port authorities to determine what is best for Canada or you want the government to have more input and provide guardrails. You must choose whether to unleash private investment or send a message that it will become more expensive to be a customer or a tenant of a Canada port authority due to increased regulatory burdens.

You must decide whether you want to potentially risk more taxpayer dollars by giving port authorities more borrowing powers, or you want to push increased collaboration and the identification of the right investment opportunities with the private sector.

Thank you again for the opportunity to address you today.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Dekovic.

Finally, with opening remarks, we have Mr. McConchie.

Mr. McConchie, the floor is yours. You have five minutes, sir.

[Bruce McConchie, Spokesperson, South Coast Ship Watch Alliance]

Mr. Chair and members of the committee, good day. Thank you for the opportunity to speak with you about the Canada Marine Act.

I am representing the South Coast Ship Watch Alliance, which is the collective voice of eight coastal communities within the southern Gulf Islands and adjacent Vancouver Island coastlines.

This is important work you are doing. Your dedication to the goal of preserving our environment, despite being from different political parties, is very much appreciated. I am here to encourage you on behalf of my fellow islanders, our children and grandchildren, and the indigenous peoples of the west coast to further your work and preserve a very special part of Canada with over 300 species at risk.

The narrow waterways surrounding our islands are being used as an unnecessary overflow parking lot for the port of Vancouver. Currently, there are 33 anchorages for large cargo ships designated for vessels waiting for a berth in the port of Vancouver. Almost all ships using these anchorages are bulk carriers arriving empty to load coal and grain. They often arrive too early for their berthing times in the port, staying for weeks and occasionally months at a time. The increase in use has been staggering—from only 19 ships in 2009 to 476 ships last year, staying for 5,900 anchoring days.

The negative environmental impacts of this anchoring are significant and increasing.

Our air is being polluted by the constant spewing of diesel exhaust from large on-board generators—up to 10 tonnes of greenhouse gas per ship per day. This is in a region declared by our provincial government as a high smoke sensitivity zone.

Excessive noise both above and under the water is created by these cargo ships at anchor and during transit to these anchorages. Underwater noise disrupts the feeding, breeding, navigation and communication of marine species, especially the threatened southern resident killer whales. Above water, the very health of coastal residents is being affected.

The seabed ecosystems of our Salish Sea are constantly being scoured by large anchor chains. We are living with the constant fear of a major incident as a result of ships dragging their anchors during winter storms. The resulting oil spill would be catastrophic.

We are concerned that the consequence of the word “anchorage” in proposed paragraph (f.2) of Bill C-33 would be to allow the Vancouver Fraser Port Authority, an industrial entity, to implement its plan to expand its jurisdictional boundaries to include cargo ship anchorages within the southern Gulf Islands and the adjacent Vancouver Island waters. This should not happen.

These anchorages are unnecessary. If the port of Vancouver implemented a modern vessel arrival system and restricted early arrivals, as is done in ports elsewhere; if the Minister of Transport would demand the port require all-weather grain loading—currently, grain cannot be loaded in the rain in Vancouver; if the federal government would suspend shipping of thermal coal, a major contributor to climate change; and if the supply chain to the port was optimized and the many inefficiencies addressed, we would see an end to this attack on the fragile ecosystems of our Salish Sea.

For years now, the indigenous peoples and coastal residents of the Salish Sea have been sounding the alarm about the ever-increasing attack on our marine environment, air and health. Bill C-33 has raised our hopes that our government will finally strengthen that important clause of the act under “Purpose”, paragraph 4(d): “provide for a high level of safety and environmental protection”. We support the marine transportation industry and its contribution to the Canadian economy as stated in the purpose of the act, but no economic gains can buy back our environment.

It was five years ago this month when my fellow coastal resident Chris Straw passionately addressed this committee on this same topic. Unfortunately, he passed away without realizing the dream of eliminating these anchorages. On his behalf and that of all islanders in the southern Gulf Islands and the adjacent Vancouver Island, we need your help now to protect the Salish Sea.

Thank you for your time.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. McConchie.

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

Mr. Strahl, I'll turn the floor over to you. You have six minutes, sir.

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

Thank you very much, Chair.

Thank you to the witnesses for your testimony and your passion for the industry and for the environment. It's been interesting to hear all these perspectives on this bill.

I want to start with the Chamber of Shipping. Initially, this bill was marketed as being a response to the national supply chain task force. One of the specific, more controversial issues about that was what we do to ensure that we are able to maintain the supply chain when there are labour disruptions, and it was identified as a major concern.

I'm wondering if you can speak to whether you believe the bill should have addressed that issue and maybe specifically address the issue of the impact that the closure of the St. Lawrence Seaway will have on your member companies and your membership in the immediate and medium-term future.

[Bonnie Gee]

Unfortunately, I think my camera is frozen. I'll try to reset it while somebody else is speaking.

With regard to managing disruptions, I don't expect that Bill C-33 would address labour disruptions. It was really meant, I think, to address some of the recent discussions we had with respect to blockades, wildfires and atmospheric rivers. I don't think we would expect Bill C-33 to prevent labour disruptions from happening, because we don't want to affect our labour force and their ability to properly negotiate and strike if needed.

I'm sorry. I forgot your other question. It was with regard to the St. Lawrence Seaway....

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

It was about the impact of that closure on your membership.

[Bonnie Gee]

Unfortunately, we primarily represent carriers on the west coast, so we may see diversion of trade through the west coast as a result of that seaway closure. Fortunately, we have the capacity here to manage additional movements of grain products, for instance.

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

On the west coast, we've obviously heard some testimony about the anchorages that were just mentioned. Is there an alternative location for those? Obviously, we're seeing an increased use of all of the anchorages that are available to the Vancouver Fraser Port Authority. I guess the question is where else they could go, and what happens to ships that arrive when the anchorages are full? Do they simply idle offshore in a holding pattern? In your opinion, is it better or worse for the environment to have ships continuing to move around in the ocean while they wait for their turn at the port?

[Bonnie Gee]

We have worked with the pilotage authority and the B.C. Coast Pilots in identifying some alternative anchorage locations. When we worked with the community stakeholders in looking at the existing anchorages, we realized that some of the anchorages that are currently in place won't meet the demands for the future growth of the industry. We had identified a number of anchorages in other locations, but we were told that there really is no process in place for establishing new anchorages at this time.

Unfortunately, when vessels cannot obtain an anchorage, yes, they spend time drifting offshore waiting to be called in. We estimate that the GHG impact of those vessels offshore is three times more than what it would be if a vessel was sitting in an anchorage.

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

Mr. Dekovic, I appreciated your perspective on the role of the private sector and your explanation on how ports operate. Obviously, Bill C-52 does allow for a little more transparency on how rates are set.

We've heard in previous testimony that the additional cost and administrative burden of some of the changes that are proposed in Bill C-33 could range up to $200,000 a year, for instance, for additional reporting and additional staff to oversee that. When the Vancouver Fraser Port Authority takes on a $200,000 additional bill, who pays for that in the end? Does that get passed down to you as a terminal operator? What is your understanding of how additional costs incurred by the port authority are paid for?

[Marko Dekovic]

Thank you for that question.

Port authorities are supposed to be financially self-sufficient, meaning they generate revenue from assessing fees and rents onto the users, the tenants. Any additional cost that's assigned to port authorities ultimately is collected from tenants and the vessels and the people using the port. It can be tenants, and it can be vessels through wharfage and berthage, but ultimately it's the customer, the end customer, that pays, which of course can eventually provide increased inflationary pressures.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Dekovic.

Thank you, Mr. Strahl.

Mr. Rogers, I'll turn the floor over to you for six minutes, sir.

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

Thanks, Chair.

Welcome to all of our witnesses today. It's great that you're here to give us the benefit of your experience and expertise as we're trying to tackle this study and get it right for Bill C-33.

First off, Mr. Dekovic, we've heard that measures like those in Bill C-33 will improve supply chain efficiency. At least, that's our hope. Do you agree that is the case? What measures in particular do you think would be most effective in optimizing supply chain outcomes?

[Marko Dekovic]

Thank you for the question.

To me, it is not clear which parts of Bill C-33 will ultimately improve efficiency. If we want to create a more efficient and resilient system, we ultimately need to invest in some spare infrastructure leading to and from our ports. I don't see how Bill C-33 does that.

I'm sorry. The second part of your question was...?

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

I'm just asking what measures you think would be most effective in optimizing supply chain outcomes.

[Marko Dekovic]

I think, as I mentioned, that it's creating that additional infrastructure, that pipeline, if you will—be it road or rail infrastructure—leading to and from ports. Ultimately, it's important to remember that 70% of everything we trade here is moved by rail from the west coast. Making sure that our rail system is resilient and can support the growth of the supply chain is of the utmost importance.

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

Thank you.

Turning to Mr. McConchie, should Bill C-33 pass? The federal government would have the authority to make regulations with respect to how anchorages are managed at the ports. What kinds of things would you like to see in these potential regulations that might be enacted to manage that?

[Bruce McConchie]

Our ultimate goal is the elimination of the anchorages because they are unnecessary and language to that effect to give the Minister of Transport the authority to declare the southern Gulf Islands waters and adjacent Vancouver Island waters a special sanctuary zone.

The Minister of Transport under the Canada Shipping Act has that power already, and we would like to see it in the legislation that's coming forward to back that up.

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

Given the amount of traffic that flows through Vancouver as a port, is that realistic, in your mind?