Mr. Speaker, I am pleased to engage in the debate on the Canada airports bill. As members know, I am the chairman of the public accounts committee. I am looking at chapter 10 of the Auditor General's report of October 2000. I will be quoting fairly extensively from the report and also the 21st report of the Standing Committee on Public Accounts. The committee tabled its report based on the hearings and so on that we had on the Auditor General's chapter.
I listened to my colleague from Port Moody--Coquitlam--Port Coquitlam who spoke this morning. He said that under this minister's watch eight airlines had gone belly up and that the minister's track record was anything but good.
I thought I should do a bit of research so I took a look at some of the sidebars in the report tabled by the Auditor General in October 2000 on how the department managed or failed to manage the airports. On page 10/7-8, it states:
Airport authorities pay Transport Canada nothing up front for either the use of the airports or the rights to attendant business opportunities--which include the power to set their own user fees.
We have found that the airports have been granted authority under this lease with Transport Canada and they lease out space to businesses that then charge them rent as a sublessee. However nothing flows back to the government. It is a poor manager.
I will be splitting my time, Mr. Speaker, with the member for Kootenay--Columbia.
Going through this report I found a litany of problems, and I will give the House a few more quotes.
On page 10-26, it states that the lack of information on fair market value and the business cases supporting the transfers had serious implications because they did not do a fair market analysis when they transferred these airports to airport authorities.
The government gave them away and said that it did not care what they were worth and it signed the leases. Normally when someone signs a lease an amount of money is paid so the property, equipment or so on can be used. That is the normal way things work.
There are a number of airports that are paying negative rent. The landlord is paying the tenant for the right to use the property and the equipment. I have never heard of that before. That is a perfect recipe for Liberal governance or going bankrupt. It is one of the two. It is a perfect recipe for the way this Liberal government manages the resources of the taxpayer of Canada. The government is asking airports to run the operations on its behalf and it will pay them some money to do so. That is scandalous.
On page 10-27 the report states that Transport Canada had yet to determine and update how airport transfers has affected the government's fiscal framework. The government does not have a clue.
On page 10-32 it states, “A key weakness in the renegotiation process was the absence of any independent review and challenge of the final agreements before they were signed”. The deals were significantly different than what Treasury Board had authorized.
This is supposed to be the government. This is supposed to be the Minister of Transport's department and we have heard all day about how he has failed Canadians. He does not even follow Treasury Board guidelines far less anybody else's.
There is a litany of stuff in this report. It is incredible when we read it all.
Another quote reads:
It is disconcerting that Transport Canada has yet to establish a proper framework to evaluate and report on the overall financial impact of the airport transfers at any time after transfer over the life of the 60-year leases.
We are signing 60 year leases with these people and we do not have a clue what we are signing. Is that how we should be running the place? Unlike fair market value, book value is what was used, it does not reflect the real worth of the growing concern with its potential to generate substantial revenues. I am sorry but it is just awful.
What I am trying to say is that the management of the airports by that department is downright scandalous. At the public accounts committee we had a Mr. Louis Ranger, the assistant deputy minister of the department. He told us that the regime had borrowed $5 billion from the private sector without the government having to put a penny into it. What he figured was success was that the airports went out and got $5 billion worth of debt. By the way, this is why the government made these airports not for profit organizations. Let us remember back to the nineties. When we had a fiscal problem the government demonstrated that little sleight of hand thing. It created another organization and gave it borrowing power so there would be a $5 billion debt over there that would not show on the public accounts of Canada's books. The government tells us that it is doing a great job and yet the debt is showing up elsewhere.
The government practises sleight of hand accounting, which should not be tolerated, and then brags about fiscal responsibility when the debts are all over the place.
We dealt with the Department of National Defence in public accounts. It created another not for profit, no share capital organization. There were no profits and no share capital and yet, because it had guaranteed cashflow from the Government of Canada, it borrowed $742 million from the private sector and we are on the hook for that too. That does not show on the public accounts of Canada.
The department said that it had to renegotiate some of the 60 year leases. Because department officials were the good guys that week, they renegotiated four leases at a cost to the government of $474 million in foregone rent. We gave the rent back to them after we collected it. How are we supposed to run a business this way? I just do not know how we can run a business this way.
Continuing on with the report from the public accounts, the most important weakness identified by the audit was Transport Canada's failure to determine the fair market value of the assets and business opportunities that it was transferring. It just threw them away. The policy framework for the transfers, including a requirement that the airport value be determined on the basis of fair market value, should have been set up before the negotiations were started, but that was too complex. It would have required some brainpower, some management, some decisions and some professionalism. It did not have any of that so it gave up on that and gave the stuff away. It only looked at some cashflow, the net cashflow and the present cashflow.
In the meantime it gave the airport authority the opportunity to set up stores, businesses and all kinds of other spinoff type revenues and left it at that. By the way, airports are not taxable. They do not pay corporate tax, income tax or any kind of tax. They just collect tax, as we all know.
Just one comment here that we heard in the public accounts. Despite the complexity involved in the turnover in departmental staff responsible for the negotiations, the department did not document how the components of the policy framework were applied to the leases. They did not even write it down. Exceptions to transfer principles also were not documented.
Mr. Ranger accepted that mistake, admitting that he did not think the department would ever have the full picture of how the lease negotiations evolved. He does not know. He did not know and we will never know. That is a serious indictment of the Minister of Transport and his department. He has let things get totally and completely out of hand. This Parliament should not be standing for that.
I hope the committee roasts that guy and the department as it goes through the hearings on the bill.