Madam Speaker, you will understand that, as transport critic for the Official Opposition, I am extremely interested in Bill C-22 which was presented at first reading on April 13, 1993. I also carefully reviewed the report Mr. Robert Nixon submitted to the hon. Prime Minister on November 29, 1993.
I did not waste any time in studying the contract signed on October 7, 1993 by the Government of Canada and T1 T2 Limited Partnership. I also asked certain employee associations for their opinion and consulted with some airport managers. I will not violate any official secrets by saying that, after these consultations and all that reading, I agree with the amendment proposed by the Leader of the Opposition and ask this House to authorize a Royal Commission to hold an inquiry on the circumstances surrounding the deal entered into by the government and T1 T2 Limited Partnership.
In its present form, Bill C-22 contains a dozen clauses. We agree with some of them but cannot support the wording of subsection 10(1), and I quote:
If the Minister considers it appropriate to do so, the Minister may, with the approval of the Governor in Council, enter into agreement on behalf of Her Majesty to provide for the payment of such amounts as the Minister considers appropriate in connection with the coming into force of this Act, subject to the terms and conditions the Minister considers appropriate.
During the election campaign, the leader of the Liberal Party of Canada, the present Prime Minister, made it very clear to the parties involved that he would have no qualms about cancelling the deal after he was elected. Following this statement, the chief negotiator for the former government requested written instructions on whether to complete the transaction. The then Conservative Prime Minister specifically requested that the agreement be signed that very day. However, concluding a transaction of this magnitude in the midst of an election campaign, effectively tying the newly elected government to the previous government's policies, flies in the face of normal democratic practices.
We must admit that the new Liberal Prime Minister, who was elected last October 27, wasted no time in dealing with the situation, announcing on December 3, 1993 the cancellation of the Pearson Airport privatization deal. Unfortunately, he probably soon realized that some of the people involved in that deal belonged to his party. It is probably why, on April 13, 1994, his government presented a bill to finalize the cancellation while reserving the right, under subsection 10(1), to enter into
agreements on behalf of Her Majesty to provide for the payment of such amounts he himself considers appropriate.
You will understand that to exclude Parliament from such an important decision and to give a blank cheque to Cabinet, especially the minister of Transport, is unacceptable.
During the last campaign, our party mentioned that the Liberals and the Tories were so similar that they were like two peas in a pod or "blanc bonnet, bonnet blanc", as we say in Beauport and on Île d'Orléans. This bill confirms it.
It is unacceptable for payment of compensation to be authorized without even being sure such compensation is warranted. When examining all the documents, and particularly the lengthy Nixon report, I wonder if there was any wrongdoing in that operation and I am very concerned about the answer.
After the royal commission of inquiry has made its review, after its decision and recommendations, maybe we will come to the conclusion that it is rather T1 T2 Limited Partnership that should pay compensation to the Canadian government. If however the royal commission concludes that there is compensation to be paid, Parliament will still be in a position to make a fair and enlightened decision.
I mentioned that we were not in agreement with section 10(1), but I would like to add that there should be another section in the bill saying who should manage Pearson International Airport. We all know that Transport Canada still operates the airport, but we would have liked to see this bill determine clearly that the Toronto airport should be under the management of a non-profit organisation just like the Montreal, Calgary, Vancouver and Edmonton airports.
In these cases, management is a group of people from the local community so they are quite capable of defending the interests of those they represent. Let me just give as an example Aéroports de Montréal, the corporation that operates the two Montreal airports; the members of its board come from the business community and are also board members of the SOPRAM, the corporation responsible for the promotion of Montreal airports.
The eighth member is the president and chief executive officer of Aéroports de Montréal, ADM if you will. It is also interesting to note that SOPRAM is a non-profit organization comprising 21 members appointed by the following organisations: the City of Montreal, the City of Laval, the Conférence des maires de banlieue, the Chambre de commerce du Montréal métropolitain, the Board of Trade of Metropolitan Montreal, the Corporation de promotion de l'aéroport de Mirabel (COPAM), the Société montérégienne de développement (SMD) and the city of Longueuil.
This kind of representation means that the corporation is sensitive to local interests and has a perspective rooted into the business community. This is a prerequisite that we would have liked to see in Bill C-22. I would like to come back to the royal commission we are requesting. Why should we have a commission of inquiry? There are several reasons.
The first would be to determine why, on March 11, 1992, the government asked formally for proposals regarding the privatization of Terminals 1 and 2 of Pearson Airport. There would be only one phase and no prequalification, contrary to the process for Terminal 3, which was to be in two phases.
The second reason is that, looking at the Nixon report, we note that the call for tenders left only a very short time, 90 days, which meant that only groups closely connected with the operation of the airport, like Claridge and Paxport, could possibly submit a valid tender. This explains why only two tenders were received. Paxport had already submitted a privatization plan in 1989, but had had to withdraw, and Claridge was operating Terminal 3.
The third reason is to determine why the contract was signed on October 7, 1993, during the election campaign, and despite the fact that the very hesitant chief negotiator had asked for written instructions before signing the deal.
The fourth reason is to determine what role did the lobbyists played and whom they lobbied. The fifth one, to determine the cost to the public of this hasty decision, and who really benefitted from it. The sixth one, to establish why the Conservative government sought to privatize Pearson Airport, the most profitable in Canada. The seventh reason, to find out why the government allowed T1 T2 Limited Partnership a rate of return of 24 per cent before taxes and 14 per cent after taxes.
The eighth reason is to see why the Nixon Report recommends that no compensation be paid for lost business opportunities and lobbying costs. Have the commissioners uncovered even more irregularities than we know of?
The ninth reason is to determine the role of certain stakeholders closely linked either to the Conservative Party or to the Liberal Party of Canada.
The tenth reason is the answer to the following question: Why did the government not include in Bill C-22 a clause allowing it to transfer the Pearson Airport administration to a non-profit organization?
These are some of the reasons why a royal commission of inquiry is needed to arrive at a well advised decision. It is also important that the commission clearly indicate the impact of lobbyists in this case. It must examine the costs to the taxpayers,
the impact on jobs in the Metro Toronto area, and especially, the impact on transportation in Canada.
I will be focusing in particular on the repercussions of this transaction on Canadian transportation. My colleagues will discuss not only the impact on public finances and on jobs in the Metro Toronto area, but also the role of lobbyists in this affair.
Airports, along with aircraft and human resources, are the mainstay of the air transport industry. Airport facilities allow you to increase the number of destinations, accommodate various types of aircraft and provide different kinds of services.
Air transportation has a great influence on the overall economy of a region. An airport is the point of arrival for foreign investors and the point of departure for local human and non-human resources. For the region where it is located as well as for the destinations it is linked with, an airport is considered a significant economic lever.
According to a study conducted by the École des hautes études commerciales of Montreal in the late 1980s, the contribution of Montreal airports to the Gross Domestic Product in terms of value added in 1992 was expected to be $1.3 billion in direct effects only and $2.2 billion in both direct and indirect effects.
To show just how airport facilities can influence regional development, let me quote from an IATA report issued in December 1991. In Toronto, the addition of a runway would mean $3.5 billion more in revenues for the region over the next 15 years and $9 billion more for the province. The impact on the employment situation would be significant: locally, the addition of the runway would create 3,300 new jobs every year and 3,700 jobs throughout Ontario, which comes to over 7,000 new jobs for Ontario.
Also, in its October 1992 issue, the magazine L'Actualité reported that the number and frequency of air transport communications between major cities is the fifth criterion used by potential investors.
The air transport industry depends directly on airport facilities. Carriers are the primary clients of airports and it is thanks to the serviceability of airport facilities that airlines can develop and generate by their activities considerable revenues for the community.
The main cause of these decreases is quite clear. In the mid 1960s, projections for future passenger and cargo traffic led authorities to plan the building of a second airport in Montreal, that is Mirabel. According to the projections made in 1967 for the 1980s, we were to expect 14 million passengers and 2,020,000 tons of cargo by 1985.
Also in the mid 1960s, we anticipated a 15 per cent growth rate for passenger traffic in the Montreal area, that is approximately 10,600,000 passengers for 1975, the year Mirabel was going to be inaugurated.
Lastly, Mirabel was to be the sole gateway in Canada for all transatlantic flights and, eventually, for all international flights other than transborder flights.
Things did not turn out that way. In 1985, the combined passenger traffic for Dorval and Mirabel was 7 million passengers, that is half of what was initially projected. In 1985, the combined cargo traffic for Dorval and Mirabel was approximately 105,000 tons, which is less than what Dorval handled alone in 1975. This cargo is 5 per cent of what was projected in 1967.
In the years following the inauguration of Mirabel Airport, Montreal lost the preferential status that it had been promised. Mirabel is no longer the only gateway in Canada and more and more airlines are authorized to offer direct flights from other Canadian airports to foreign destinations.
Between 1966 and 1975, passenger traffic in Montreal grew by about 9.9 per cent, which is 5 per cent less than expected. However, the growth rate did not remain steady after 1975. Between 1975 and 1984, passenger traffic grew by only 2.24 per cent, which represents an annual growth rate of less than one quarter of one per cent. So, the growth rate at both Montreal airports was about 10 per cent of the Canadian growth rate during the same period.
Between 1975 and 1984, increases in passenger traffic occurred mainly in Toronto, Vancouver, Calgary, Edmonton, Ottawa and Halifax. Montreal accounted for only 1.86 per cent of the overall growth in traffic in Canada during this nine-year period. Also, during the last ten years, that is from 1981 to 1991, the growth rate of passenger traffic in Montreal was minimal compared to the 44.55 per cent rate recorded in Toronto.
In 1981, Dorval and Mirabel handled 7.5 million passengers a year, whereas Toronto handled 14.7 million. The slow growth of airport activity in Montreal since the early 70s is especially notable compared to what happened in Toronto over the same period. Statistical data are a proven measure of airport activity.
Therefore, one can imagine that the negative impact of this shift in economic activity from Montreal to Toronto has played a major role in the erosion of Air Canada's pilot base in Montreal in favour of Ontario's capital. For example, in 1979, Air Canada had 461 pilots based in Montreal and 451 in Toronto, a difference of 10 in favour of Montreal. Some 13 years later, in 1992, Air Canada had 301 pilots based in Montreal and 781 in Toronto, a difference of 480 in favour of Toronto. Over a 13-year period, Montreal lost 160 pilots whereas Toronto gained 480 pilots. This
about-turn is due mainly to the fact that Montreal has lost its privileged status with regard to direct flights to Europe, which allowed a shift in economic activity from Montreal to Toronto.
In closing, I would like to quote the words of Mr. Tory Hine, financial analyst for Scotia McLeod, as reported by the magazine Wings , vol. 5, in the fall of 1992.
"We have an airline industry concentrated on a single hub, Pearson International in Toronto, with secondary hubs in Vancouver, the Pacific gateway and Montreal. The position and dominance of the Toronto hub is the single asset of Canada's industry. The potential for Toronto to be the North American scale hub is important for the jobs and revenue which would be created in the Toronto area, but it also provides an important link which enables Canada to participate fully in both the Canada-U.S. and North American free trade agreements. The split of Montreal's two airports between international services at Mirabel and domestic and transborder services at Dorval means that the two airports are relegated to serving primarily the local market. Montreal as a result has not emerged as a full hub".
Again, if Montreal could have maintained the status it enjoyed in the seventies, it would not have to limit itself to serving local routes.
In conclusion, the Montreal airports authority manages Montreal's two airports very well. Business people and airport people are talking to each other and the best solution will soon be found. Hopefully, the Montreal airports authority will try to convince airlines to have their inspection and maintenance work done in a place where air traffic is already heavy. This would have a major impact on employment at the Air Canada technical maintenance centre in Montreal, where close to 3,500 people work and which is known around the world for its excellence and expertise.
My party does not intend to take the place of local people when it comes to deciding whether there should be one or two airports in Montreal. We are convinced that they are able to make the right decisions.
The government will soon have important decisions to make concerning Pearson Airport, and I am not talking about compensation, but about its future and administration. Before making decisions that could result in one area of the country being more prosperous than another, would it not be a good idea to review the whole Canadian airport system, to discuss with business people and specialized agencies, and to involve the provincial governments so that all regions, and not only one, can prosper?