Mr. Speaker, I am very pleased to present the House with Bill C-64, An Act to amend the Pilotage Act.
The Pilotage Act creates four pilotage authorities, the Atlantic, Laurentian, Great Lakes and Pacific, all of which are crown corporations. Pilotage in this particular case refers to the marine pilots who assist vessels in navigating coastal and inland waters, a very important issue in Canada with trade.
The amendments proposed in this bill would bring about the necessary administrative changes to the legislation that governs marine pilotage in Canada and would also provide these four pilotage authorities with the required administrative tools to assist them to become and remain financially solvent, a requirement under the Pilotage Act.
This bill is a critical step toward ensuring that legislative objectives and obligations in the act do not establish processes that contradict an authority's responsibility to remain financially self-sufficient and that the relationship between the pilotage authorities and pilot corporations is established as a commercial one, a very important piece of legislation.
Before I move on though, I would like to have an opportunity to provide the House with some background on the Pilotage Act and the impetus for the amendments to this particular bill and why it is so important at this stage.
The act allows for the creation of pilot corporations to provide pilot services via a commercial contract with an authority. Once a pilot corporation is formed in a specific area, an authority has no choice but to contract with the corporation for services. We now know, in essence, this creates a monopoly, which is not conducive to good business practices and an ongoing competitive environment that helps consumers and Canadians.
The act actually outlines how contract disputes between a pilotage authority and a pilot corporation are resolved via mediation and, if necessary, arbitration, which is based on a final offer selection process. During this process, the arbitrator selects one of the two final offers presented in its entirety. This means that the arbitrator cannot adjust the offers or select parts of an offer presented. He or she must make a choice.
Therefore, during service contract arbitration between an authority and a pilot corporation, an arbitrator could make a decision based on one of the two final offers presented, which could cause that authority to publish an amended tariff regulation. It is very important. The increased tariff sought by the amendment would allow that authority to cover the increased cost of the service contract.
As permitted under the Pilotage Act, stakeholders can file an objection with the Canadian Transportation Agency on the basis that the tariff increase is actually harmful to the public interest. The agency, in turn, can disallow the tariff increase on the grounds of public interest, a decision that can cause an authority to assume an unsustainable debt load.
Unfortunately, this is not entirely a hypothetical situation. This string of events recently occurred with regard to the Laurentian Pilotage Authority, which prompted Transport Canada and this government to seek approval via an order in council to rescind a Canadian Transportation Agency decision, a very rare event indeed to say the least and one we would prefer not to have to repeat, but if this section of the act is not amended it is very likely it will take some intervention on the part of the government each and every year.
This action, however, was a temporary measure and this government looks for long term solutions to the issues which came about as a result of the governance related elements of the act that contradict the legislative requirement of an authority to be financially self-sufficient. Although the impetus for the amendments itself is the Laurentian Pilotage Authority's experience, as I just described, and the amendments provide a long term solution which we are looking for with regard to their specific issues, these amendments would not affect the way in which the other authorities conduct their business.
The amendments would provide options for all authorities to implement and they would give them flexibility to conduct business in a financially sustainable manner. This is a good thing.
The amendments in the proposed bill would provide specific additional tools to assist authorities to remain financially self-sufficient. These crucial amendments impact the governance tools for these crown corporations. As such, Bill C-64 is considered a “machinery of government bill” that is absolutely essential to carry out government business as it relates to the safe and efficient marine pilotage services and are strictly administrative in nature.
Our Prime Minister approved stakeholder consultations and as all members of the House are aware, the government consults with stakeholders because it is the right thing to do.
On four particular amendments to the act, late in January 2007 was when most of the consultations took place. Stakeholder reaction to the proposed amendments was swift and varied.
Two of the four amendments did not receive stakeholder support and as such the proposed amendments have been adjusted to reflect concerns raised by stakeholders during the consultations. Yes, the government listens and acts.
Two of the proposals received varying degrees of support with some stakeholders actually agreeing with our proposals and others adamantly opposing them. The proposed legislation therefore forges a middle road between the two, a compromise situation in the best interests of all parties involved.
As previously mentioned, the bill contains proposed amendments to the Pilotage Act relating to governance issues for crown corporations that do not impact the level of safety or the environment. Those are two very important issues for the government.
In order to add greater certainty to the functioning of the act concerning governance, the amendments proposed have the following five objectives and I would like to go through them.
The first objective is to introduce a level of flexibility in the process of engagement of pilots and to redefine the relationship between an authority and a pilot corporation as a commercial relationship.
The second objective is to amend the service contract negotiation process to reflect the commercial relationship to make sure it remains viable, competitive and adds proper service.
The third objective is to explicitly state that pilot authorities must remain financially self-sufficient. This is very important.
The fourth objective is to provide flexibility to the role that the department provides when amendments are made to specific regulations.
Finally, the fifth objective is to provide greater latitude to the Canadian Transportation Agency when reviewing objections to new tariff regulations published by an authority.
These are all great amendments and we are hoping that all members of the House will be able to support them and we believe they will.
The proposed amendments in the bill add flexibility to the Pilotage Act that will allow an authority to actually hire employee pilots while simultaneously contracting with the pilot corporation. If it makes good business sense to do so, and it does, with this change authorities would be free to hire their own employee pilots to match their workload and have the option of actually entering into a service contract with a pilot corporation if needed. In this way they can control their overall cost of providing the service and subsequently have greater control over their finances.
If an authority chooses to contract with the pilot corporation for services, then the proposed amendments in the bill will provide an even playing field, especially during service contract negotiations. If an authority and a corporation cannot agree on the terms of a contract, then mediation and arbitration is still a legislated requirement.
However, with these amendments the arbitrator will have the ability to actually assess the offers presented in light of a summary corporate plan of the authority and the legislated requirement for an authority to be financially self-sufficient. These are options not previously afforded to the arbitrator which are very important. The goal is to ensure that the arbitrator has taken into consideration the financial needs of the authority when rendering a decision.
With the proposed amendments in the bill the financial needs of the authority will also be considered by the Canadian Transportation Agency when it renders a decision on objections to tariff regulations.
It is important that the two entities mandated to make decisions impacting the financial self-sufficiency of a crown corporation use the same criteria on which to base their decisions. Given that the 2000 Auditor General's report stated: “The corporate plan is the cornerstone of the control and accountability framework for crown corporations”, this amendment itself is relevant and will increase the significance of the corporate plan during arbitration and during CTA deliberations. This is very important.
Bill C-64 has been drafted in response to a significant negative financial situation experienced by one pilotage authority. While providing a solution for the Laurentian Pilotage Authority, it would also give the remaining authorities options that would safeguard them from experiencing the same situation in the future.
The government listens to stakeholders and then makes the best decision possible.
The department's legislative initiatives remain consistent with the overall federal transportation framework. It emphasizes a national vision of safety, efficiency and environmental responsibility. These are three very important aspects to this government, especially the national vision. For so many years without a national vision, its takes this Prime Minister, this minister and this government to move forward with that agenda.
The changes introduced in Bill C-64 have been requested by some marine stakeholders and are welcomed by the Department of Finance, the Auditor General's Office and the Canadian Transportation Agency.
I ask for the support of all members of this House as I introduce Bill C-64. It is my pleasure to do so now.
