Proceedings of the Standing Senate Committee on
National Finance
Issue 18 - Evidence - October 7, 2014
OTTAWA, Tuesday, October 7, 2014
The Standing Senate Committee on National Finance met this day at 9:32 a.m. to examine the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2015.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, welcome to the Standing Committee on National Finance. This morning we will resume our study of the main estimates for the fiscal year ending March 31, 2015.
[English]
As honourable senators will recall, on September 23 we heard from officials from the Federal Bridge Corporation Limited, and we found out that the Federal Bridge Corporation Limited isn't the only federal entity involved with the federal bridges or bridges that have a federal interest. The Jacques Cartier and Champlain Bridges Incorporated is another entity that we heard from previously. We also heard from Infrastructure Canada in relation to certain activities for bridge construction regarding federal and international bridges.
We decided to try to expand our discussion by inviting the individuals with whom we will be discussing bridges this morning. From Buffalo and Fort Erie Public Bridge Authority, we are very pleased to welcome Mr. Anthony Annunziata, Vice-Chair. Good to have you here. He is accompanied by Mr. Ron Rienas, General Manager. By video conference from downtown Burlington, Ontario, we are pleased to welcome two representatives from the Niagara Falls Bridge Commission: Mr. Ernie Smith, Chair; and Mr. Lew Holloway, General Manager. From Transport Canada, we are pleased to welcome Ms. April Nakatsu, Director General, Crown Corporation Governance. We also have two officials from Transport Canada in the audience who will come forward and be introduced if questions are asked such that their expertise and background would be of help to honourable senators. From Fisheries and Oceans Canada, we welcome Mr. Jaime Caceres, Director General, Real Property, Safety and Security, Human Resources and Corporate Services. From Public Works and Government Services Canada, we welcome Ms. Marilea Pirie, Director General, Engineering Assets Strategy, Real Property Branch.
If I don't stop these introductions, we will use up all our time, so we will move on. Each of you from the different entities I've identified has some introductory opening remarks to help us understand your role in relation to bridges. Then we will go into a question-and-answer session with honourable senators who might be prompted by some of the information you will provide us and that the Library of Parliament has acquired for us.
Perhaps we could start with Transport Canada, then Fisheries and Oceans, Public Works and Government Services Canada, the Buffalo and Fort Erie Public Bridge Authority, and then the Niagara Falls Bridge Commission. If you agree with that order, I will ask Transport Canada to begin.
April Nakatsu, Director General, Crown Corporation Governance, Transport Canada: Thank you for the opportunity to explain some of the bridges in the Transport portfolio.
The Government of Canada owns hundreds of bridges that are owned by various departments and Crown corporations, as you have learned. The departments own bridges for their operational requirements.
I am here to speak to the international bridges. Constitutionally, legislative authority over international bridges and tunnels is federal jurisdiction, while intraprovincial structures are provincial jurisdiction. Over the years, the governance of international bridges has developed as a result of historical events. This means we have international bridges owned and operated by private entities, such as the Ambassador Bridge. We also have the Province of Ontario, through the Niagara Falls Bridge Commission, owning and operating bridges, such as the Rainbow Bridge.
Then we have some international bridges that fall within the Transport portfolio.
As you mentioned, you've already heard from the Federal Bridge Corporation Limited, which is a Crown corporation that is responsible for the Canadian interests in the Seaway International Bridge at Cornwall, St. Mary's River Bridge at Sault Ste. Marie and the Thousand Islands International Bridge at Lansdowne. There is another Crown corporation, the Blue Water Bridge Authority, which owns and operates the Canadian portion of the international bridge in Sarnia.
Through Economic Action Plan 2013 Act, No. 2, legislative provisions authorized the amalgamation of the Federal Bridge Corporation Limited with its subsidiaries and the Blue Water Bridge Authority, so it will become one Crown corporation.
Another international bridge in the Transport portfolio is the Peace Bridge in Niagara. It's owned and operated by the Buffalo and Fort Erie Public Bridge Authority, also known as the Peace Bridge Authority. This authority is not a Crown corporation but a binational entity established through an agreement between the U.S. and Canadian governments.
None of these corporations receive appropriations to cover their operating costs. They have the ability to charge tolls, but they also have leases, such as for duty-free shops, that generate revenues. However, they have received various levels of funding to support capital improvements through infrastructure programs in support of the Beyond the Border initiative.
There is another new international bridge that is a top priority for this government. Economic Action Plan 2014 provided the Detroit River International Crossing Project with $470 million over two years. This money is for the necessary procurement and project delivery activities on both sides of the border. The Windsor-Detroit Bridge Authority is a Crown corporation specifically created to deliver this project on behalf of Canada. It became operational in August of this year. We expect that the corporation will quickly begin spending the appropriated funds on property acquisition in Michigan, on utility relocation and on hiring engineers and other technical advisers.
Due to the various bridge service delivery mechanisms that have been introduced over the years, the international bridges are a complex system with numerous players. To address this complex system of delivery mechanisms, the International Bridges and Tunnels Act was enacted in 2007. This act reinforces the federal government's constitutional jurisdiction over international bridges and tunnels, and declares international bridges and tunnels to be works for the advantage of Canada.
The act provides bridge owners with a framework in which they can ensure the safe and efficient flow of people and goods across their bridges. Specifically, the act provides for the federal government to apply consistent policies and rules to international bridges. It stipulates that any construction, alteration, or change in ownership, operator or control of an international bridge requires government approval.
The act also allows for regulations with respect to maintenance and repair, and safety and security of the international bridges and tunnels. For example, under regulation, all international bridge owners are required to conduct regular safety inspections and to report on the results of these inspections to the Minister of Transport.
Therefore, irrespective of ownership, under the International Bridges and Tunnels Act, all international bridge owners and operates are subject to a consistent federal regulatory framework.
In closing, Transport Canada's objective with international bridges is the provision of safe and secure infrastructure by bridge owners for the efficient transportation of passengers and goods in support of trade.
Thank you.
The Chair: I will go on to Mr. Caceres. Before I do, when you say ''all international bridges,'' are you including the bridges in Montreal as part of that? Are they subject to the International Bridges and Tunnels Act?
Ms. Nakatsu: Those are not international bridges because they are within Montreal.
The Chair: They are federal bridges.
Ms. Nakatsu: They are federally owned bridges, but they are not international, yes.
Jaime Caceres, Director General, Real Property, Safety and Security, Human Resources and Corporate Services, Fisheries and Oceans Canada: Good morning, ladies and gentlemen and members of this standing Senate committee. I'm happy to be here on behalf of Fisheries and Oceans Canada. As noted earlier, I'm Director General of Real Property, Safety and Security.
The Department of Fisheries and Oceans Canada, along with Canadian Coast Guard, has lead federal rule in managing Canada's fishery and safeguarding its waters. Through sound science, forward-looking policy and operational service excellence, Fisheries and Oceans Canada employees work collaboratively towards three strategic outcomes: economically prosperous maritime sectors and fisheries, sustainable aquatic ecosystems, and safe and secure waters.
The department manages over 15,600 real property assets, including buildings, lighthouses, laboratories and Canadian Coast Guard bases. These assets have a value of about $5.7 billion and are directly linked to the program delivery of Fisheries and Oceans Canada's mandate.
As identified in the Directory of Federal Real Property, Fisheries and Oceans Canada is the custodian of 35 individual bridges at 27 unique locations, which represents one fifth of 1 per cent of the department's real property portfolio.
It should be noted that these are minor bridges, and a number of these assets are not vehicular bridges, but instead are footbridges used by department personnel while working at various operational sites in many cases.
I would also like to note that I think seven of the bridges, noted in some of the research that has been done, are actually departmental assets that are bridges themselves. In fact, they're the place name where the asset of a physical location of a non-departmental bridge might be.
What that means is, for instance, an aid to navigation used on a channel. They might be an asset or some form of a range indicator, which might be attached to a bridge, and that in turn is the actual asset that might be named in the inventory.
Like other assets owned by Fisheries and Oceans Canada, our bridge structures were built to support the mandate of the department. Investment decisions with respect to bridges are based on program requirements and site accessibility. They are constructed to provide safe, overlaying access to operational sites. Some of our bridges are pedestrian walkways, while others are larger works that support some vehicular traffic, providing access to operational sites to service them, such as lighthouses and hatcheries.
Fisheries and Oceans Canada's minor bridge structures are used by Canadians in one of three ways. First, under the Small Craft Harbours program, the department has constructed bridges at three core fishing harbours to allow vehicular access to the other side of the channel or pond.
Second, departmental bridges allow access to operational department facilities with greater public interest, such as salmonid enhancement facilities and hatcheries in the Pacific region.
Finally, departmental bridges are also used as a means to access non-Fisheries and Oceans Canada related sites. A good example is the Fisheries and Oceans Canada bridges leading to the operational light station located at Cape Race, Newfoundland, and near the Mistaken Point Ecological Reserve, which are often used by public access and the provincial park. However, they are primarily used for purposes that are operational in nature, as well to service the light.
This is the nature of the bridge structures that we have in Fisheries and Oceans. I would be happy to answer any questions you may have.
The Chair: Did I hear you say 35 bridges in 37 locations?
Mr. Caceres: Twenty-seven locations.
The Chair: Thank you. That makes it easier. I am glad you clarified that.
From Public Works and Government Services Canada, we have Marilea Pirie.
Marilea Pirie, Director General, Engineering Assets Strategy, Real Property Branch, Public Works and Government Services Canada: Thank you, Mr. Chair, and good morning honourable senators. I'm pleased to have this opportunity to discuss the history and funding of Public Works and Government Services Canada's bridge assets with you today.
In Canada's early history, PWGSC's predecessor departments constructed dams, roads, buildings and bridges in support of economic development. As a result, the department came to own a number of transportation and marine assets. Thirty years ago, the department's inventory included 35 major engineering works, such as bridges, dams, and other specialized assets.
In 1985, however, the Nielsen Task Force on Program Review directed government departments to divest themselves of land, marine and transportation assets no longer required for program purposes — a policy direction, I should note, that remains in place at PWGSC to this day.
Since 1990, the department has divested itself of 16 major engineering assets. Of the 19 that remain, 10 are either bridges or have bridge structures associated with them. Local examples are the Chaudière Crossing, the Alexandra Bridge and the Macdonald-Cartier Bridge, which connect Ottawa with Gatineau, or the J.C. Van Horne Bridge connecting Quebec and New Brunswick.
[Translation]
All of the department's bridge assets are vital pieces of public infrastructure in their respective communities, as they serve hundreds of thousands of Canadians daily.
[English]
In addition, PWGSC provides, on an optional fee-for-service basis, acquisition and technical services to federal departments and agencies that are involved in the construction and maintenance of projects. For instance, PWGSC is providing such services to Infrastructure Canada in the context of the new bridge for the St. Lawrence corridor project.
With respect to funding and maintenance, Budget 2008 recognized the necessity of mitigating the most urgent health and safety risks that were associated with PWGSC's 19 engineering assets. This was phase 1 of a stewardship and divestiture plan. This involved a major program to rehabilitate some of the assets to address high risks, as well as the completion of studies, inspections and reports to fully understand the conditions of these assets, their role within their communities and challenges related to divestiture.
In 2011, PWGSC began phase 2 of a program of work, investing hundreds of millions of dollars in major capital projects across Canada to ensure the assets are safe for users. We are now in year three of that five-year plan.
All told, since 2008, the department has spent approximately $228 million in capital on its bridges. By the end of phase 2, 2016-17, the total investment will be $366 million.
Ownership and responsibility for these types of public infrastructure in Canada usually rest with provinces and municipalities. PWGSC's divestiture strategy is to ensure long-term benefit to the Canadian taxpayer while exploring all avenues that could lead to divestiture to more appropriate jurisdictions, such as other federal departments, provinces, municipalities, even the private sector.
As an interim measure to divestiture, we are conducting the alternative use of management arrangements and looking for long-term stewardship of these certain assets.
[Translation]
In closing, Mr. Chair, the department's inventory of bridges is a collection of unique assets. While we seek divestiture solutions wherever they may lie, I assure committee members that we also take very seriously our obligation to maintain these assets and keep them safe for Canadians.
Thank you for your attention.
[English]
I would be happy to answer any questions.
The Chair: Thank you, Ms. Pirie. Could you explain the St. Lawrence corridor project? What does that include?
Ms. Pirie: That is not our project, but we are providing support services to Infrastructure Canada. We provide common services in real property and acquisitions, so we're helping out with environmental studies, real estate services work, acquiring land, looking at expropriation and other real property types of support services as a common service agency.
The Chair: Where is that activity taking place on the St. Lawrence? You are talking about a new bridge in the St. Lawrence corridor project in your submission. For honourable senators to understand where you are providing these services would be helpful.
Ms. Pirie: It is the new bridges that are going across.
The Chair: Where?
Ms. Pirie: In Montreal.
The Chair: Thank you. Next we go to the Buffalo and Fort Erie Public Bridge Authority.
Anthony Annunziata, Vice-Chair, Buffalo and Fort Erie Public Bridge Authority: Good morning. My name is Anthony Annunziata and I am Vice-Chair of the Buffalo and Fort Erie Public Bridge Authority, more commonly known as the Peace Bridge Authority. I appreciate the opportunity to address you this morning.
For a little background, the Peace Bridge crosses the Niagara River, connecting Buffalo, New York, and Fort Erie, Ontario. It is a 1.1-kilometre, three-lane bridge with a bidirectional centre lane that is controlled by the authority. The Peace Bridge is the second busiest international crossing with approximately 4.8 million cars and 1.2 million trucks carrying an estimated $40 billion in trade annually. The Peace Bridge is 87 years old, having been completed in June 1927. It is independently inspected every year. The latest engineering report rated the structural condition as satisfactory. The report concluded that it will continue to be capable of safely carrying loads for many years with continuing preventive maintenance, repairs and painting. This continuing positive forecast is in large part due to good maintenance practices used over the history of the bridge.
The authority itself came into being after the private company that built the Peace Bridge fell into financial difficulty following the Great Depression. It is a product of a compact between Canada and New York State. In 1934, the Parliament of Canada passed specific legislation to create the Peace Bridge Authority, along with New York State, with the consent of the Congress of the United States; they did likewise.
The authority is governed by a 10-member binational board. The five Canadian members are appointed by the Governor-General-in-Council upon recommendation of the Minister of Transportation. Of the five U.S. members, two are appointed by the Governor of New York; the third is the Attorney General of New York; the fourth is the Commissioner of Transportation of New York; and the fifth, the chairman of the Niagara Frontier Transportation Authority. In accordance with our enabling legislation, the chairmanship must alternate between Canadian and American board members annually. The chairman is elected by the whole of the board of directors.
In June 2013, New York State legislature introduced a bill to dissolve the Peace Bridge Authority. The bill was passed by the New York State Assembly and passed unanimously by the Senate by a vote of 62-0. Canada, represented by Ambassador Doer, and New York State, represented by Governor Andrew Cuomo, agreed to an understanding that would see both countries and the board agree on the continued development and governance of the Peace Bridge. As a result of the understanding, Governor Andrew Cuomo vetoed the legislation.
The authority not only operates the Peace Bridge but is also the owner of the customs plaza at both ends of the bridge. The authority is the landlord to the Canada Border Services Agency in Canada, and Customs and Border Protection in the U.S. In Canada, under section 6 of the Customs Act, the authority provides, at no cost to the government, all the facilities and buildings, their maintenance, all utilities, and services like snow removal. In the U.S., the federal government pays market rent to the authority for similar facilities and services.
The authority is self-funded and operates with no subsidies from either the U.S. or Canada. The authority makes no appropriation requests of Parliament. Its debt is not guaranteed by any government. Its primary sources of revenue are bridge tolls and rental income.
Tolls are collected only in one direction, entering Canada. Car tolls are $3 round trip, $2.70 if paid electronically using E-ZPass. This is the lowest toll of any international crossing between the U.S. and Canada. Eighty per cent of trucks use E-ZPass and pay a toll of $25 round trip. Total annual revenues amount to $33 million, operating expenses about $22 million. All operational surpluses are placed in capital reserves to fund the authority's capital plan. Currently that reserve is at approximately $105 million.
The Peace Bridge Authority board has approved a $168-million, six-year capital plan that includes approximately $72 million to re-deck the bridge beginning in the fall of 2015. Currently we are constructing a $10-million project that widens the approach on the U.S. side of the bridge and a $24-million expansion of the U.S. customs building. The State of New York is seeking to construct new connecting roads to the Peace Bridge Plaza.
On two occasions, the authority has received capital grants from the Government of Canada. In 2004, the authority received $21 million under the Border Infrastructure Fund program to reconfigure the plazas in response to the requirements emanating from the terrorist attacks of 9/11. In 2010 the authority received $900,000 under the Gateways and Border Crossings Fund for the construction of an additional CBSA commercial inspection lane in the truck booth. Last year the authority spent in excess of $1 million to construct a two-booth pre-inspection facility to support the pre- inspection pilot program under the Canada-U.S. Beyond the Border Action Plan.
The authority has a fully integrated binational workforce of 65 full-time employees, with Canadian employees able to work in the U.S. and Americans able to work in Canada. This results in optimal flexibility and efficiency to allocate resources wherever they may be required.
Thank you for the opportunity to describe the Peace Bridge Authority, and I would welcome any questions you may have.
The Chair: Thank you very much. We have one witness left, the Niagara Falls Bridge Commission, and they have been patiently waiting at a table in Burlington. You have the floor, sir.
Ernie Smith, Chair, Niagara Falls Bridge Commission: Good morning. My name is Ernie Smith. I'm the chair of the Niagara Falls Bridge Commission. I would like to thank you for giving us a chance to talk with the committee. With me today is Lew Holloway, our general manager.
The Niagara Falls Bridge Commission was created by a joint resolution of the United States Congress on June 16, 1938. The Extra-Provincial Corporations Act of Ontario licenses the NFBC to operate in Ontario, Canada.
The commission is a binational, not-for-profit transportation instrumentality charged with the authority to construct, acquire and operate bridges traversing the Niagara River at or near Niagara Falls, New York, and Niagara Falls, Canada. The commission is self-supportive, largely through user fees or tolls and private sector tenant leases, and is federally chartered to conduct international commercial financial transactions and issue federal, in the U.S., tax- exempt bonds.
Canada and the U.S. are equally represented on the eight-member board of commissioners. The board consists of four appointees by the Premier of Ontario and four by the Governor of the State of New York. The chair is chosen from amongst the eight commissioners and alternates annually between Canada and the United States.
The mission of the Niagara Falls Bridge Commission is to build, maintain and operate Niagara River border crossings to facilitate commerce and the movement of goods and people in a safe and efficient manner. The vision of the commission is as follows: The Niagara Falls Bridge Commission is a unique, binational, self-financing public benefit corporation which delivers exceptional border crossing facilities and services. The commission operates and maintains the Rainbow Bridge, the Whirlpool Bridge, and the Lewiston-Queenston Bridge.
The Rainbow Bridge was opened in 1941. It connects the cities of Niagara Falls, Ontario, and Niagara Falls, New York. The Rainbow Bridge is open 24 hours a day, seven days a week and is restricted to passenger vehicles, buses, bicycles and pedestrians. Commercial trucks are not permitted to cross the Rainbow Bridge.
The Whirlpool Bridge was opened in 1897. It connects the cities of Niagara Falls, Ontario, and Niagara Falls, New York. The Whirlpool Bridge is restricted to NEXUS traffic only and is open between 7 a.m. and 11 p.m. daily. The upper deck of the bridge has a rail crossing used once a day in each direction by a passenger train operated by Amtrak and VIA Rail, servicing New York City and Toronto.
The Lewiston-Queenston Bridge was opened in 1962 and connects Queenston, Ontario, and Lewiston, New York, by Highway 405 in Ontario and Interstate 190 in New York. The Lewiston-Queenston Bridge is open 24 hours a day, seven days a week and is the only bridge owned and operated by the commission that accommodates commercial truck traffic.
Thank you very much. Mr. Holloway and I are willing to answer any questions you would like.
The Chair: Thank you very much. I will proceed directly to honourable senators who have expressed an interest.
[Translation]
Senator Rivard: Thank you very much, Mr. Chair. It is our pleasure to welcome Ms. Marie-Hélène Lévesque, who is the Senior Director of the Detroit River International Crossing. I want to make a comparison between the Detroit River project and the future Champlain Bridge. And so, I would like to invite Ms. Lévesque to the witness table so that I may ask her a few questions. I found it curious that Ms. Lévesque was on the witness list but was not seated at the table. Since you are the senior director of the project, I have a few questions for you.
As compared to the Champlain Bridge project, how far along is the Detroit River project? Has construction begun? How much will the project cost? Is there a P3, or traditional calls for tenders? You have undoubtedly considered a toll. Can you tell us more, to allow us to compare the Detroit River project and the future Champlain Bridge project?
Marie-Hélène Lévesque, Senior Director, Detroit River International Crossing, Transport Canada: Honourable senators, it is my pleasure to appear before the committee to reply to your questions. The Detroit River project was launched by Transport Canada in 2001. In fact, it was in 2005-06 that the project received appropriations from Parliament, and this is now considered the biggest infrastructure project in Canada at this time.
In 2013, for instance, in the Windsor-Detroit corridor, 2 million trucks crossed the bridge, carrying more than $100 billion in trade. Thus, if you compare that to the Peace Bridge we talked about earlier, the scale is different. This represents 30 per cent of the trade between Canada and the United States, and so that corridor is of capital importance in the trade between our two countries.
Moreover, 99 per cent of the trucks involved in that trade use the Ambassador Bridge, which opened in 1929. That bridge is showing its age at this time. It has two lanes on either side, no NEXUS or FAST traffic lanes, and no redundancy. So there are not many options for heavy truck traffic in the Windsor-Detroit area.
Transport Canada was the lead entity for the project until very recently. Ms. Nakatsu mentioned that a crown corporation was created in 2012, but only started work in August 2014. That crown corporation is responsible for the provision of services for the construction, operation and maintenance of that infrastructure.
To reply to your question, senator, in compliance with the authorizations received from Parliament, the project will be a public-private partnership and we will be using the design-construction-funding-maintenance-operation model. So the public-private partnership will deal with all of that, the provision of all those services, and will be managed by the crown corporation.
Senator Rivard: So, to make a comparison, we are also talking about a P3 for the future Champlain Bridge. For the Detroit River Bridge, are we talking about a 25, 30 or 40-year contract? Do you know the duration of that P3 partnership for the new bridge?
Ms. Lévesque: The provision of services will be managed by the crown corporation, and there will only be one contract, in which the duration of construction, operation, and total cost will be established. Since this contract has not yet been awarded, I am sorry, senator, that I cannot give you that information at this time.
Senator Rivard: I wanted to make a comparison with the work that is going to be done in Montreal. We have had witnesses from several departments: the Department of Finance, Treasury Board, Public Works, and Infrastructure Canada. All of these departments said that only the Department of Transport could give us an answer. So, you are here to answer my question.
I read that there was a serious dispute with the American government concerning that bridge, in connection with the customs building. I understand that the customs building is covered by a separate budget, but the American side did not want to pay its share. The litigation, it was said, could cost $0.5 billion.
Is it true that there is a dispute? If so, has it been settled, or is it being settled?
Ms. Lévesque: I will reassure you, senators, since there is neither litigation nor tension between the Government of Canada and the American government on this matter. At this time, we are holding discussions with the American government so as to find a funding solution for the American gateway and the customs post on the American side, in Michigan.
What I can tell you is that our minister, the Honourable Lisa Raitt, mentioned in a press conference last July 30 that the funding for the American gateway will not be an obstacle that will interfere with project deadlines.
Senator Rivard: And when do you think the new bridge will be ready to use?
Ms. Lévesque: I cannot give any opinion on that today; I will echo our minister who asked us to do everything in our power to have the bridge ready for operation in 2020.
Senator Rivard: So you will not be surprised that even if the Champlain Bridge project is launched after yours, it may be open at the end of 2018? You are not here to provide your opinion, but just as a point of comparison, the Detroit River Bridge and the Champlain Bridge are about the same length. Can the two projects be compared?
Ms. Lévesque: Yes, to the extent that these are two big bridges that will see considerable traffic. As you probably know, the Champlain Bridge in Montreal is the busiest bridge in Canada. However, there is more heavy truck traffic in the Windsor-Detroit corridor.
Personally I find it difficult to make comparisons, because the Champlain Bridge in Montreal, for instance, will have its piers in the water, whereas this will be forbidden for the Windsor-Detroit Bridge; its piers will be on the banks. That bridge will be approximately 850 metres long, aside from the approaches.
Two types of bridges are being considered, and the decision will be made by the P3 consortium that will be awarded the contract. However, it will certainly be either a suspended bridge like the Golden Gate Bridge in San Francisco, or a cable-stayed bridge like the Millau Viaduct Bridge, if you can picture that. Those are the two types of bridges that could be built in that corridor.
The Chair: Thank you, Ms. Lévesque.
[English]
I will now go to the deputy chair of the committee, Senator Smith from Montreal.
Senator L. Smith: For the Transport group, reading the second paragraph of your presentation, ''the Government of Canada owns thousands of bridges which are owned by various departments and Crown corporations,'' I have a general question, which may be silly. I understand jurisdiction in different political issues. Is there a movement over time? It looks like people are divesting and trying to get rid of some of the bridges or put them in other hands. Has there been a movement to consolidate the management of bridges, whether they are domestic or international, with relationships into one department so that you could have a war chest or a map of Canada-U.S. and have all the points on that map and understand? Millions of dollars of capital obviously go into the various bridges.
The second question I'd like to ask is about the self-funding element, whether information is exchanged. What is the best self-funding model that exists? Is there a movement toward trying to consolidate the bridges under one group so that we would know within that one group how much money it costs the country to manage the bridges and the relationships across this country?
Ms. Nakatsu: No, there is not. As mentioned by some of my colleagues, some bridges exist for operational reasons, and they range from small footpaths to the large international bridges.
As mentioned, we are amalgamating the Federal Bridge Corporation with the Blue Water Bridge corporation, so that will amalgamate most of the international bridges under federal jurisdiction. The Peace Bridge is not part of that because we have a binational authority in place with the United States government, and we will continue to respect that arrangement, but for the other bridges, we are looking to amalgamate them.
The international bridges are different. A bridge is a bridge in the sense that, yes, they all help you cross over something. Some of them are over roadways; some of them are over water; some of them just pass to certain places. But the international bridges are for trade. You have customs issues to deal with. You have immigration issues to deal with. You have agricultural issues to deal with.
From an engineering perspective there is probably engineering expertise you can share, and I believe some of the places do take advantage of Public Works and the engineering expertise they have there. The other issues and the other operations are significantly different, and the customs plaza they require in those sorts of facilities are different, so we are keeping the international bridges separate from any other bridges.
Senator L. Smith: Is there a self-funding model that is shared or experiences that are shared from one location to another so you can maximize the efficiency? We understand capital is provided by the governments, whether it's the Canadian government or the U.S. government, but is there an exchange of funding models between the various players? Is there a best funding model?
Ms. Nakatsu: For the international bridges, they all charge tolls. They base their tolls on their local conditions and other bridges in the area and what tolls are supportable by the local community. They also are able to charge revenues for rental of properties and leases and things like that.
There is a bridge operators' association where the bridge operators themselves gather and share some of their own best practices, but it's not something that the federal government is leading the charge on. We are leaving the operators to operate their bridges. It's their business; they know how to run it. Amalgamating the Federal Bridge Corporation with its subsidiaries and the Blue Water Bridge will help those bridges further share their practices amongst themselves and make it a more formal relation.
Senator L. Smith: Do you think it should be done to a higher level? If it's left up just to the bridge authorities, is there a potential to improve the best practices models that would lead to more efficient operations and cost- effectiveness?
Ms. Nakatsu: The Crown corporations do have to submit corporate plans to the Government of Canada for approval so we are able to review their financial situation. If we can see on the horizon that there are issues, we will talk to them about what they can do to make sure that they do not require appropriations into the future.
The Chair: Senator Smith raises a point. We would like to have a report that has a grid showing all the federal bridges by the various federal government departments or separate entities and the bridges under their authority, including Niagara and the others.
You said there are thousands, so you must have had a list you could count somewhere along the way?
Ms. Nakatsu: No, I must admit that was kind of from stories I had heard. I understood the Treasury Board Secretariat had forwarded a list to the senators.
The Chair: It must be on its way. We haven't received it. It's probably going over some international bridge.
Ms. Nakatsu: They were working on a list of major bridges, but it was only going to include those under federal ownership. It wasn't going to include all the bridges owned by others. I don't believe such a list exists.
The Chair: This committee is going to try to create that list. That will be helpful.
While we are on that subject, Fisheries and Oceans, can you provide us with a list of all the international bridges under your authority?
Mr. Caceres: We currently don't have any international bridges. The bridges that we have, as described, are all minor structures that are essentially to support some aspects of our program delivery, whether it be a lighthouse or a small craft harbour or something of that sort. The span of some of these bridges technically could be considered bridges but really we are talking about 30 or 40 feet, so they are very small and have a limited type of traffic because they are meant to service obviously the light and what not.
The Chair: I envisage a grid that would have international bridges, federal bridges, and you have, I think you told us, 35 bridges?
Mr. Caceres: We would be happy to supply those.
The Chair: That was my question. Thank you. Public Works and Government Services Canada, 19 bridges. Can you provide us with your list and the locations?
Ms. Pirie: Yes. In total, we actually have 76 bridges. One of the assets we have is the Alaska Highway, and there are 56 bridges on the Alaska Highway, although, like our colleague here, many of them are over three metres and over large culverts.
Our department does have those 10 assets, and some of them have more than one bridge structure on them. So there are 76 bridges in total, but we probably have about 16 major bridges.
The Chair: Could you provide us with a list of all of them?
Ms. Pirie: We have submitted that list to Treasury Board and we would be happy to resubmit it.
The Chair: Major or otherwise would be helpful. If Treasury Board has that, as long as we get the list, that will be helpful.
Ms. Pirie: I believe it was the short list, and our department was showing nine major bridges.
The Chair: Yes, but I think we want to go beyond major. ''Major'' is a pretty subjective term. Do you have any in Manitoba, so our senator from Manitoba can get involved?
Ms. Pirie: We do. We have a facility called the St. Andrews Lock and Dam, which is north of Winnipeg. While that is a lock and it is a dam, there is also a bridge, a roadway that goes over top of it.
[Translation]
Senator Hervieux-Payette: My question is for Ms. Pirie. On page 2 of your presentation, you say this:
As an interim measure to divestiture, we are also considering the use of alternative management arrangements for long-term stewardship of certain assets.
Can you explain to us what an alternative management arrangement is? Perhaps you know what it is, but I do not understand.
[English]
Ms. Pirie: Thank you for the question. If we are unable to divest these to another level of government or even to sell them privately, then we need to look at them, if we are going to have them long-term, to be as efficient as possible.
Right now we have almost 70 dedicated staff within Public Works and Government Services Canada that operate and maintain these bridges and do the project work. We would be looking at outsourcing that in Public Works for all of our office accommodation, for example. We have, as we call them, alternative forms of delivery where we have SNC-Lavalin, for example, who would operate and maintain our office buildings. We are looking at trying to create large procurement tools where we would look to the private sector to operate our facilities. If we could bundle any of them, whether it's bridges along with dams or whatever, we would look at that. We are even in discussions with our colleague departments to see if there would be opportunity to bundle or combine with other assets owned by other federal departments.
[Translation]
Senator Hervieux-Payette: I will quote another sentence from your presentation:
While we seek divestiture solutions wherever they may lie [. . .]
I suppose that ''solutions wherever they may lie'' correspond to what you have just explained to us. I would like to add that SNC-Lavalin also built the Champlain Bridge. So I am not all that reassured for the future, given that we are talking about maintaining infrastructure that would remain our property, while those who built the bridges would not have responsibility for them.
Montreal is going to pay for a bridge for a second time, and the consortium that built the bridge will not be responsible in any way for the quality of that structure. I find it totally incredible that we want to divest ourselves of these bridges. Moreover, I do not feel that you are very optimistic, and I would like to know whether the decision is attributable to policies as such, or whether it is a political decision.
[English]
Ms. Pirie: It's not my place to discuss the politics or political decisions. What I can say is that the mandate of Public Works is such that, when we engage the private sector, we have terms and conditions, and inspections to satisfy ourselves that the structures built were not only on time, on budget and on scope but also met the various technical standards and so forth. This is so that, when we outsource, we have quality management programs, et cetera, in place to do that.
I can't speak on behalf of other departments and how they have gone directly to do their procurement with the private sector.
Senator Hervieux-Payette: How many projects were there where you had problems where you sued the company that built or operated the facility — whichever facility is under your governance? Did you sue one company that didn't do their mandate?
Ms. Pirie: We go out for every project and publicly tender the project. Typically, it is the company that bids the best price with the highest technical standard.
Senator Hervieux-Payette: That's not an answer to my question, but anyway.
Is the new Windsor-Detroit bridge going over the seaway?
Ms. Pirie: I will let my colleague answer that.
[Translation]
Senator Hervieux-Payette: Will the new bridge span the seaway? Will it have the necessary elevation so that the ships can sail underneath it?
Ms. Lévesque: The bridge will span a waterway, but not the seaway as such. According to the permit the American Coast Guard gave us, minimal elevation has to be respected in order to allow the lakers that use the St. Clair and Detroit rivers there to continue to do so.
Senator Hervieux-Payette: That is not part of the seaway?
Ms. Lévesque: According to my understanding, the seaway is a part of the Great Lakes system. The seaway — I am sorry, I withdraw that.
Senator Hervieux-Payette: I would like you to come back to us with a clarification, because it is important to know whether the seaway is at issue, since we have exactly the same problem in Montreal. There has to be a special structure because of the seaway.
Earlier, you talked about construction-related constraints. Are these constraints the American government imposed on us? The American government is demanding this?
Ms. Lévesque: That is in the permit the American Coast Guard awarded us. It is also a part of the preliminary design we have developed.
Senator Hervieux-Payette: How are the United States involved in the construction and execution of the project? Do they attend the project management meetings?
Ms. Lévesque: As you know, this is a unique and complex project that has four components: the Canada customs gateway, the bridge, the United States customs gateway, and an interchange for Highway 75 in Michigan.
The American authorities that do the inspections take part in the daily management of the customs gateway, and Michigan takes part in the management of issues for the right-of-way area needed for Michigan, and matters concerning the interchange for the highway.
Senator Hervieux-Payette: However, to my knowledge, bridge piers are a part of a bridge. Do I understand that the United States set out their requirements, but are not participating in the development of the bridge project?
Ms. Lévesque: The final design of the bridge will be developed by the consortium that will be chosen by the P3 and will be awarded the contract.
Senator Hervieux-Payette: Who will approve it? Canada alone, or the United States and Canada?
Ms. Lévesque: A governance structure was established in the framework of the Canada-Michigan crossing agreement which states that project management will be led by the crown corporation created by Canada. There is an international committee known as the ''international authority'' that was created to supervise that crown corporation. That international authority consists of three Canadian members and three members from Michigan.
Senator Hervieux-Payette: Who will authorize it? Will it be the Canadian crown corporation or the international authority?
Ms. Lévesque: Both entities must agree before the contract can be awarded.
Senator Hervieux-Payette: Will the international authority participate in the examination and preparation of the call for tenders?
Ms. Lévesque: The international authority will take part in the authorization and will have to give its agreement for the service provision process to go forward according to the documents that will have been prepared.
Senator Hervieux-Payette: So, in principle, they will not have anything to do with the technical requirements the government or the Canadian corporation will set? When you award a P3 contract, certain parameters have to be respected. Those parameters are uniquely Canadian and so do not derive from international authorities.
Ms. Lévesque: The technical specifications will be binational, depending on whether or not the structure is in Canada or the United States. As for the bridge, the specifications will be approved by both governments, on both sides.
Senator Hervieux-Payette: For all of the structures, or strictly for the bridge? I am only referring to the bridge.
Ms. Lévesque: In the case of the bridge specifically, the international authority is going to have to approve the specifications. If I understand your question correctly, that is to say, are they involved from the technical standpoint, the answer is that the people who sit on the international authority will be able to consult all of the technical experts tasked with preparing the procurement documents, and they can also consult independent experts if they wish to do so.
Senator Hervieux-Payette: Will there be an administrative structure in place for your six people? Is there going to be a working group of 10, 20, 30 people, engineers, specialists of all kinds who will work for the authority, or will there be three people appointed by the two governments?
Ms. Lévesque: There will be three members appointed by Canada, and at this time there are three members appointed by Michigan, who met to have a first board meeting. As is the practice where other bridge authorities are concerned, the Windsor-Detroit Bridge authority will offer technical services, as need be, to the international authority.
[English]
Senator Wells: Ms. Nakatsu, do you have a budget that is dispersed to look after repairs, maintenance and upgrades, or is that strictly through the $300 million or the $228 million that Ms. Pirie mentioned under Public Works?
Ms. Nakatsu: The international bridges all have their own budgets; they don't get any funding from Transport Canada or the Government of Canada. They generate their own revenues through tolls and leasing, so we don't give them money. They have their own budgets, so each bridge would have its own budget that it manages through the funds it raises.
They do get some capital funding. The Federal Bridge Corporation, I believe, for 2014-15 is getting $21 million to help it with the new North Channel Bridge that they just opened, but they still have to do the deconstruction, and there is still some construction left. They are still getting funding to renew the plaza at the Thousand Islands Bridge as part of the Beyond the Border program.
Senator Wells: I will go on to Ms. Pirie, then. You hold the biggest bag of money. How are the disbursement decisions done? Are they based on the structural and engineering assessments that are done on a scheduled basis? How does that work, please?
Ms. Pirie: We have annual inspections — comprehensive and not-so-comprehensive. We also do engineering asset management plans on each of our assets, and we put that together. That really determines two things: the operating and maintenance costs, which are about $30 million a year in our department for our bridges; and that will also determine what the capital costs are.
The figures I gave earlier in my opening statement, which will total the $366 million, are for capital projects only. That would not include the approximate $30 per year on O and M for our structures.
Senator Wells: Right. I'm struck, and maybe some of my colleagues are as well, by the number of bridges that are controlled under this federal and international bridge discussion we're having.
You mentioned culverts. I am trying to get an idea of the lowest form of bridge. Is it pavement over a culvert? Is that a bridge?
Ms. Pirie: What we define in our department is that anything over three metres is considered to be a bridge. There are culverts that are over three metres, so we would consider that a bridge.
Senator Wells: All right.
Ms. Pirie: And then there's a differentiation between a minor and a major bridge. A major bridge is one where it forms part of a provincial or major highway, or a major thoroughfare.
Senator Wells: Right, okay. Mr. Annunziata, it seems to be a well-run operation. You have over $100 million in reserve for repairs, maintenance upgrades. You have a 10-member board, five Americans, five Canadians. What happened that made 62 people try to vote to have it dissolved, and zero on that side wanting to continue it?
Mr. Annunziata: I have my own opinions about New York state politics, but beyond the obvious reason, there's a significant piece of infrastructure in that corridor, in western New York and southern Ontario. The belief is that the state of New York wanted sole control of that asset. They made an attempt in the past, in 1955, to seek control of that asset and dissolve the governance structure that existed.
That issue was resolved by Prime Minister Lester Pearson. This time it didn't have to go to the Prime Minister, but the ambassador stepped in to negotiate an understanding. The fact that we have $100 million in reserves was a natural attraction for New York given the fact they're having some troubles funding a lot of their internal infrastructure.
Senator Wells: You may not know, but was part of the deal to have that bill vetoed an increase in expenditures from your reserve on the American side? I think you mentioned $28 million for customs and additional roads or feeder roads?
Mr. Annunziata: Actually, the board had already unanimously approved $168 million in capital funding prior to this legislation being introduced. There was a lot of political motivation around it. In the end, there was no difference in the commitments from a capital perspective. The only thing that was agreed upon was that there would be a dedicated commitment to continue to move forward, and the governor then chose to use that as an out and vetoed the bill.
The Chair: As a follow-up on the power play that went on, the 62-0 vote to try and do away with the authority and you had to bring in the governor, it was only a year ago.
Mr. Annunziata: That was a year ago.
The Chair: In June.
Mr. Annunziata: The governor denies having organized that, but, as you know, 62-0 is a pretty emphatic statement.
The Chair: It is.
Mr. Annunziata: In the end there were a lot of politics around it, and we enlisted the efforts of Foreign Affairs, who got the ambassador involved, and we were able to negotiate. What occurred is an understanding to continue with the current governance structure.
The Chair: My colleague was wondering whether Lester Pearson got his Nobel Peace Prize for the Peace Bridge and negotiating a peaceful treaty to that.
Now, our colleagues sitting on video conference are learning a lot as well, and I must say that the Canadian flag flying over your head, Mr. Smith, is very patriotic.
Mr. Smith: Thank you.
The Chair: You are another bridge authority not far away from the one we have just been discussing. Have you seen any similar type of expression of unhappiness by the New York state legislators?
Mr. Smith: No we have not. We have been getting along fine. Our positions are made in the best interests of the Niagara Falls Bridge Commission by all eight of our commissioners.
The Chair: Is there something the Buffalo and Fort Erie Public Bridge Authority could learn from your commission that would help things go a little more smoothly? Do you talk to one another on a regular basis?
Mr. Smith: Yes, we do. Our general managers get along very well and they're at a number of conferences together. The general managers for the day-to-day operations — Mr. Rienas, who is there with you, and Mr. Holloway, who is here — both operate each bridge situation, and they talk daily.
The Chair: Is there anything you can help this committee with? We may be able to help in solving this situation. To have an understanding from the U.S. governor — and that's the legal basis for your continued existence — seems a little bit tenuous. Maybe we could help out if we understood this a little more thoroughly.
Mr. Annunziata: The existence is provided for in legislation as an international compact. We will exist anyway, through to 2020, by legislative authority. We also have bonding that takes us beyond 2020 into 2025, I believe, which will allow for our existence into that period of time. But the threat that comes from New York State, from this specific governor, is real. They continue to express it.
Now, as to whether they legally can do that, we're a product of a three-party agreement that involves New York State but also the U.S. Congress, the State Department, and the Government of Canada, so all three would have to agree to the dissolution of the authority for it to occur. No one party can terminate it. As I suggested before, it is a significant political scenario in New York. I think our friends in Niagara Falls are fortunate that they're not at the centre of it, and we deflect a lot of those issues as we're fairly prominent in the trade discussion and border discussion when it comes to New York and southern Ontario.
The Chair: Other senators may have a follow-up, but that's an interesting point, and we have both of you here.
Senator Gerstein: Thank you, witnesses, for appearing here today. Ms. Nakatsu, I need your help to understand a particular power grab in a request from Transport that is found in the Main Estimates, particularly the second-last paragraph. I will quote because it's three relatively brief lines.
Planned spending in the grants and contributions vote is expected to increase as a result of changes in cash flows . . .
I think I understand that.
The changes in planned spending were due to the reprofile of funds . . .
The final statement was:
This allowed Transport Canada to better match planned spending to project requirements.
Could you give the committee some idea as to the quantum of reprofiling that took place over the last few years, and to what extent is it a change from year to year and from capital funds to operating or vice versa?
I should indicate that reprofiling has been an ongoing education program for me since I have been on this committee and anything you can do to help would be greatly appreciated.
Ms. Nakatsu: I'm sorry to disappoint. I don't think I can respond to that question. I don't know what was happening with the granting contributions program.
Senator Gerstein: That was certainly a direct response to the question.
The Chair: You may wish for an undertaking on this instance.
Senator Gerstein: Could you provide us with something, some numbers of how the reprofiling has taken place since Budget 2012 that you refer to?
Ms. Nakatsu: Okay.
Senator Gerstein: This is specifically referenced on page 317 of the Main Estimates.
Ms. Nakatsu: Yes, I can do that.
Senator Gerstein: It would be helpful to me — I don't know about the rest of the committee — if we could have a better understanding of how these funds are moved around and the implications of it.
Ms. Nakatsu: Certainly, yes.
The Chair: It is at page 317 of the Main Estimates for Transport Canada. It is the next-to-the-last paragraph on that page. If you could tell us what that all means and give us some explanation from Transport Canada, that would be appreciated.
Ms. Nakatsu: We will do that.
[Translation]
Senator Bellemare: My question is addressed to all of you, and concerns the relationship between the governance authorities of major bridges, the local residents and the provincial governments.
Big bridges serve the local populations of large cities, and for the most part they are toll bridges. I imagine there are choices to make regarding construction, and the tolls to be imposed on local populations, which cause reactions.
Do you have to manage the reactions of the local residents? Do you take into account the provincial and municipal governments where the bridges are located? We know that the federal bridges located in Quebec generate all kinds of reactions from the local residents. Do you have any ideas to share about how to manage those reactions?
[English]
Ms. Nakatsu: I will start with the international bridges owned by the Federal Bridge Corporation. They determine the tolls on their own, so Transport Canada does not have a role in that one. They are expected to take into consideration local concerns. There's recognition that if you raise tolls too much, people aren't going to use your bridges. That sort of defeats the purpose of having the bridge, so they have to do the balancing act.
The other international bridges, I will let the others speak to. But Crown corporations set their own tolls, and Transport Canada does not have a role in that one.
Mr. Caceres: For DFO's minor bridges, there are certain circumstances; even though most of them are in remote communities or remote locations, there are some that are near communities. In those cases where it may facilitate access to another location or another site, obviously the folks who are either operating the particular facility, whether it is a light station or any hatchery, would be talking with the community to allow for a certain access. There are certain instances where maybe the particular access road that we have to the facility may facilitate access somewhere else, so those discussions happen if needed. But again, most of the locations are remote, and it is usually only aimed to service the particular program.
Ms. Pirie: In Public Works and Government Services Canada, before we would undertake any significant project work we would develop a communications plan. So we would clearly have a stakeholder engagement plan, and depending on where the asset was in the community and the interest and what level of impact that would have, we have websites for the public to go to. We also have public information sessions where we describe the project and allow the public to ask questions. There's signage if it's a bridge and there's reduced traffic. We do proactively reach out to transit or to significant users of a particular piece of infrastructure. We always focus very heavily on our communications and stakeholder engagement.
Mr. Annunziata: I'd like to thank the senator for that question. It's a very good question. I don't come from government, so I think it's important that you do get a perspective from the community, because the community can be very active specific to environmental review and design review. You have to engage the community on both those fronts.
The other thing that is important is the context between the design and the build cost against the toll or the fee to use it. I can tell you from experience that when we were going through the design and build of the matching or twin-span bridge, we were looking at the Peace Bridge, and that the scope crept to the point where it became a $600-million build. To add context to that, even though they wanted a signature span, the cost to fund such a bridge would require raising tolls to about $10 to $12 a crossing — a very significant discussion, generating that discussion for alignment on the structure and the cost to use it.
Lew Holloway, General Manager, Niagara Falls Bridge Commission: The Niagara Falls Bridge Commission is very conscious of the impact of tolls and we work hard to keep our tolls to the lowest level possible. We have the second- lowest tolls on the international crossing between New York and Ontario, and Ontario and Michigan, second only to the Peace Bridge, and that refers to cars. As far as trucks are concerned, we have the lowest tolls.
We work also in collaboration with our municipalities — both Niagara Falls, Canada, and Niagara Falls, New York, and Lewiston and Queenston — to keep them informed. We have excellent relationships with all, and we receive very few complaints.
Senator Bellemare: Mr. Holloway, what is the toll, actually? You said it is the lowest. What is it?
Mr. Holloway: The second lowest. Our toll for cars is $3.50 return. That's both ways, so it is $3.50 in total to cross. That's U.S., and $3.75 in Canadian funds. Our truck tolls are about $21 —
Senator Bellemare: So what I understand is that there's actually no official structure to build links with the communities, but it is a communications program and you do it when it is needed. Am I correct?
Mr. Holloway: Yes, that is correct. I have been at this for quite a while, and what I have learned is that good governance trumps everything, which means that if you have good governance, then everything flows smoother.
Ms. Lévesque: I can offer some information on the Detroit River International Crossing and its relations with the communities.
The relationship with the communities is in three phases, from our perspective, one during the environmental assessment phase, which was really extensive. It took many years for partnership of the Province of Ontario, the Government of Canada, the State of Michigan and the municipalities to consult with the community. I believe there were more than a hundred meetings during the environmental assessment phase on both sides, if you count the meetings on both sides of the project. So that was the first phase, which was concluded in 2009.
The second phase is about to begin. The Windsor-Detroit Bridge Authority, which is a Canadian Crown corporation that is currently standing up and taking over this project to build it, is going to enter into some level of community involvement in order to make sure that the locals are aware of the project, where it is going to be and what it will entail.
The third phase will be entered into when we have a proponent, a successful bidder. The bidder will take on a lot of the community relations as part of its responsibilities, within the contract that will be signed. That is what is expected currently.
Senator L. Smith: Looking at the notes I scribbled down, in terms of the Peace River Bridge Authority, in 1934 the authority was set up. The bridge is how old? Because in both cases, when I look at the Niagara Falls Bridge Commission, 1938, these are older bridges: Rainbow Bridge, 1941; Whirlpool Bridge, 1897; Lewiston-Queenston, 1962.
For both groups: In terms of your experience managing older infrastructure and the infrastructure costs, could you give us an idea of how much capital you have required to keep those bridges functioning at a high level?
What is your experience, from both the groups, in terms of the maintenance and how you balance that with your revenue generation? You have $105 million in capital, but how do you manage all of that with older structures? I am thinking of the newer structure in the area where I live in Montreal, which was built in the early 1960s and suddenly was falling apart in the 1990s and 2000s, and so how do you look at managing older structures? When you look at newer structures, are there any best practices, advice, any information that you could give to this committee?
Mr. Annunziata: I will start out and then turn it over to the general manager who deals with the operational purpose. I can tell you, as a board, how we approach and how we look at the structure. Our bridge was built in 1927, so it is 87 years old, and it has the original deck. For you to understand what that means, it is probably the oldest deck of its kind in North America that still exists. Really, we have a deck replacement capital plan for that, but the essence of that really lies in the fact that we have a very firm commitment on inspection and maintenance.
We continue to make that a priority at the bridge to make sure that the bridge doesn't fall into disrepair because, as we are a single asset authority, our prime purpose is to have that bridge function and stay open. So we want to avoid blowouts or lane closures to do repairs because that disrupts traffic and slows down commerce.
We spent pretty significant effort to do that, and I will turn it over to the general manager to relate what the actual costs of that are.
Ron Rienas, General Manager, Buffalo and Fort Erie Public Bridge Authority: Our actual annual maintenance costs are relatively high for a structure that's 1.1 kilometres long. But by spending money on maintenance, we are able to spend less on capital. As the vice-chair indicated, it is still the original deck, and we have a $72-million capital plan component to replace that deck, but we're on that bridge deck every day. We have a dedicated maintenance staff, and we crack-seal with special epoxy any time there's a crack that appears on the concrete deck. We have a very aggressive joint replacement program. We blow out the joints every day. We wash the underside of the bridge from pigeon droppings so it doesn't corrode into the steel. By spending money on maintenance every year, very aggressively, we still have an 87-year-old structure that every year gets a satisfactory rating because it is in such good condition, given the maintenance that we put into it. Spending the maintenance dollars is not as sexy as building a new bridge, but it is very cost-effective to spend money on maintenance as opposed to on capital.
Senator L. Smith: Your total revenue, if I understand correctly, was $33 million. Are the repairs $27 million, or is that the cost to run the building?
Mr. Rienas: No, that's the total cost of everything.
Senator L. Smith: How much do you spend annually on maintenance?
Mr. Rienas: Depending how you factor it, if we have a specific maintenance item, but on average probably about $2.5 million or $3 million a year just on maintenance on a 1.1-kilometre long bridge.
Senator L. Smith: You mentioned that a new deck is $72 million?
Mr. Rienas: Yes, $72 million; correct.
Senator L. Smith: How about the fellows from the Niagara Falls Bridge Commission? Do you have words of wisdom?
Mr. Holloway: The Niagara Falls Bridge Commission takes a very similar approach to the Peace Bridge. We have our three bridges inspected annually by Hardesty & Hanover, an international bridge inspection company. When we get those reports, we address their recommendations quickly.
As Mr. Rienas said, maintenance is the key to maintaining the infrastructure. As you look at our Whirlpool Bridge built in 1897, that bridge is in excellent condition. We spent $25 million in maintenance on it about three years ago, revitalizing, repainting. On average, it varies depending on the year. For example, in 2009 we spent $32 million on bridge infrastructure maintenance and $40 million in 2010, and we average, other than that, about $5 million or $10 million a year in capital projects related to our bridges.
As Mr. Rienas said, it is far cheaper to keep your bridges maintained to very high standards than to have to rebuild or replace the bridge at some time in the future.
Senator L. Smith: Between the two groups, if you had to outline the keys to the success of your operations, what would you say the three keys of success would be? Why are your two operations appearing to function so well?
Mr. Rienas: Are you talking from an operational perspective or capital maintenance programming?
Senator L. Smith: I'm talking about the perspective of Mr. and Mrs. Taxpayer on the other side of the border who want to know the three reasons why you guys are successful. If there's a mixture of the two, then what are your top three reasons, prioritizing them, that you have a successful operation?
Mr. Rienas: I would say the commitment to providing a high level of service to the customers at the most reasonable cost possible, and what that means is not only keeping the bridge maintained well so we don't have to disrupt it by major capital works, but also looking at other revenue sources to keep the tolls low. The board has made a conscious decision to not have tolls be a disincentive to crossing the border. I can't think of three off the top of my head, but I think it is really a commitment to service at the best possible cost to the customer.
Mr. Annunziata: Just to quantify that a little bit better, maintenance is a significant contributor to that. I think conscious efforts to look at external revenues, as the general manager said, there are a lot of revenue opportunities that can be garnered through the international bridge crossing that will offset the cost significantly, like leasing revenues and things like that, that exist at the bridge that allow you to maintain a certain standard.
You want to avoid what we call avoidance. You do not want to get into large lane closures or capital repairs that people look at huge backups and see non-predictability of the bridge. Creating a bridge that is predictable in its crossing is fairly significant to maintaining confidence in that crossing.
Senator L. Smith: Thank you. Fellows, what about yourselves from Niagara Falls?
Mr. Holloway: I believe first of all it's a focus on mission and having a clear mission. For us, as we said, it's to facilitate moving traffic safely across our bridges cost-effectively. And then it's a focus on making sure that the bridges are extremely well maintained. So as was stated, you avoid as much as possible lane closures or major disruptions, and to do that keep your bridge well maintained and have a focus on maintenance. Third is having employees and a government structure that are dedicated to achieving the mission.
Senator L. Smith: This is the second time you mentioned it, so I will bring it up for both groups, but the board involvement and having a good board, could you give us just a little feedback on that success? You have given us the composition, but what makes the boards work in your two instances?
Mr. Annunziata: We spend a lot of time between the two boards. We do functions annually together as boards. I can say that the board's responsibility in knowing how to be board members is significant. Governance, as Mr. Holloway has suggested, is critical. The observation of that governance and the following of that governance and the enforcement of that governance are actually critical. Good governance will lead to a good fiduciary role with respect to board members and board members that don't see that their role as operational, leaving the operation specifically to the staff to do the function that they're supposed to do and then holding them accountable to that standard. That is absolutely critical.
Mr. Holloway: I keep repeating governance. If you have a board that is functioning, as the chair said, and their decisions are made in the best interests of the commission, then you get good governance. Of course, governance is directly — how shall I say it? It is dependent on the quality and the qualifications of the people who are appointed, and especially qualifications, and support the chair gets in that situation.
They set the policy, they set the overall direction, and they get good policy advice from management; but at the end of the day, the board members make the decision on the direction of the commission and the policies that will be implemented. If you have a good board and you have a good chair and the chair has the support of the board, then that's the first essential step to an efficient operating corporation.
Senator L. Smith: Just one point, if I may bring it up, to end. Mr. Annunziata brought up the importance of external revenues. If you remember, we had a witness in a couple of weeks ago from the Thousand Islands Bridge and we asked that question. Basically the feedback we received was, ''Our job is to take care of the bridge.''
It may be an important factor that we would send back a note to these folks saying that the external revenues that were brought up in terms of managing that, revenue building, marketing, community involvement, would be something they could spend a little more time on because they certainly told us in no uncertain terms that they just looked after the bridge. I thought that was an interesting comment.
The Chair: We have made note of that. We will follow up on that point, and the point that it's important to set a toll that doesn't discourage traffic but gives you enough revenue to do what has to be done, the need for a good board to help you come up with that, and good general managers.
[Translation]
Senator Chaput: My question will be brief and concerns the toll. A toll is set for all of the bridges. I assume that that toll is related to costs or expenses for the bridge. Are tolls reviewed periodically? If so, how is the increase determined when there is a review?
[English]
Mr. Annunziata: We are required to review them annually as a board because we have covenants and bond indenture that require us to satisfy our bondholders. Our bonding requirements require us to look at revenues and sustainable revenues and debt servicing and debt coverage. It is reviewed on a regular basis. We want to maintain a significant cushion relative to a debt coverage standard. That's why we've held the line on tolls. We are also sensitive to the economics of the local markets that are the predominant users of the bridge.
Taking those two things into consideration should always be important to do on a regular basis with the bridge tolls.
Senator Chaput: What is the definition of ''on a regular basis''? Is it annually or every five years?
Mr. Annunziata: Annually. Every year.
[Translation]
Senator Chaput: Are there any others?
[English]
Ms. Nakatsu: The Crown corporations like the Federal Bridge Corporation have to submit corporate plans annually. Parts of that is tolls, because that is their source of revenue to offset their costs. We need to make sure that the tolls cover their costs. They do that on an annual basis, but they also have agreements with their American partners. So they have to establish the tolls in line with where their American partners want to go or do not want to go, based on their local communities as well, so they have a bit of a balancing act. But they do it annually as well.
[Translation]
Senator Chaput: Are the amounts you are saving allowing you to set funds aside for future repair or for the replacement of a bridge?
[English]
Mr. Annunziata: Yes, we have a significant reserve now built up as a result of our toll strategy. As well as the fact that we have the lowest tolls of any international bridge crossing, we have over $100 million in reserves. That also gives us significant bonding capacity, having a reserve like that. So we have bonding capacity in the $300 million to $400 million range. To construct a bridge with significant bonding capacity and significant reserves, we then are well positioned. If we have to build additional infrastructure or replace a bridge, we have the ability to do that.
[Translation]
Senator Chaput: Mr. Chair, would it be possible to obtain detailed information about the toll bridge rates? I would also like to know if some have managed to save sufficient funds for the retrofitting of a bridge.
The Chair: Do you have that information? Yes? Can you send it to us?
[English]
Mr. Annunziata: Absolutely. I probably have it in my car.
Senator Chaput: Thank you.
Mr. Smith: Mr. Chair, from Niagara Falls we put out a yearly Niagara Falls Bridge Commission annual review, which explains how the bridge operates and our tolls. Our tolls, again, are reviewed periodically throughout the year. We would be happy to send you last year's; this year's is not printed as yet.
Mr. Holloway will also add something.
Mr. Holloway: In answer to your first question, every year we prepare for our board's consideration a comprehensive business plan. In that business plan are 5- to 10-year projections. Those projections give the board guidance on whether or not we have to raise our tolls.
Obviously, it's difficult to predict revenues in some cases because you are actually predicting traffic, and traffic varies sometimes considerably. That's why we are consulting in every year. We set our tolls so that they generate an annual surplus. That surplus goes into reserves to maintain our bond coverage ratios so that we can maintain our A- plus rating from Standard & Poor's.
Basically, we set our tolls as low as we possibly can to cover our expenses and also to create a surplus so that that surplus goes into capital reserve for maintenance and possibly eventual replacement of the bridges. Currently, the Niagara Falls Bridge Commission has $70 million in reserves.
The Chair: I am sorry, I didn't hear you; $70 million in capital reserves?
Mr. Holloway: Correct.
The Chair: Just as a follow-up to that, to clarify this for honourable senators, do each of the authorities have statutory authority to borrow against your assets, or do you have to come to Parliament for that?
Mr. Annunziata: No, we have statutory authority. We have effectively the authority; we typically go to the U.S. bond market because they have a preferred tax-exempt status in those because we qualify for tax-exempt status bonds. We typically go to that market. We are rated. We have an A rating in the bond market. We just went for bonding this past year and had some significant interest in underwriting our debt.
The Chair: That is Fort Erie-Buffalo?
Mr. Annunziata: Yes.
The Chair: What is the total amount of your accumulated debt?
Mr. Annunziata: Right now we have $28 million in outstanding bonds, and we're looking, with our long-term planning, to go back in 2018 for $30 million more to fund our capital extension fund.
The Chair: And Niagara Falls?
Mr. Holloway: For the Niagara Falls Bridge Commission, our enabling legislation was created by a joint resolution of the U.S. Congress. We were created by the U.S. Congress. We are licensed to operate in Ontario. About half our staff are Canadian; about half are American. Our offices are in Lewiston, New York. I am Canadian. On the question concerning the raising of funds, through our enabling legislation we are authorized to issue tax-exempt U.S. bonds. That's how we raise our capital. In fact, we just recently raised $35 million.
The Chair: Are you tax-exempt under the U.S. tax system or the Canadian tax system or both?
Mr. Holloway: Under the U.S. tax system.
The Chair: So all your investors in bonds are Americans, then?
Mr. Holloway: To a large degree, yes. In fact, the answer is yes.
The Chair: Your accumulated total outstanding debt?
Mr. Holloway: It's probably around $80 million or $90 million.
[Translation]
Senator Hervieux-Payette: I want to come back to my question on non-conventional management. Your reply gave me the impression that you are going to award bridge management contracts to companies that are connected to your 70 employees.
First of all, I would like to know what you intend to do with the 70 employees. Are you going to offer them to those who will obtain the contract? Why? Would that be more effective than keeping them with the government?
There have been cases where companies maintained buildings for the government, and that was less than highly successful.
Secondly, when you say this, and I quote:
All told, since 2008, the department has spent approximately $228 million in capital on its bridges. By the end of . . . in 2016-2017, the total investment . . .
In other words, you do not provide any information and this does not tell us how much you spend every year. I did the calculation from 2008 to 2016, and over eight years that takes us to $45 million in maintenance costs per year for an unknown number of bridges.
This gives us no indication of the amounts spent each year for bridge maintenance. It says that these are expenses ''on capital spending for the bridges it owns.''
I think we need an explanation on that paragraph. We would need the real figures. I do not know when you started. You say ''since 2008,'' but one thing is certain, we cannot see the amount.
[English]
Just a word for my colleagues, I would like to remind some of you that some bridges built under the Romans are still in operation.
Ms. Pirie: Thank you for the question. I'll try to go through those in order and answer them.
Yes, it's true; we could look at alternate forms of delivery. That would be our goal of last resort. We are in the process of looking at divesting of these assets. We are in discussion with other levels of government or the provinces or municipalities. Only then, if we truly believe that they are not able to be divested, would we look at alternative forms of delivery.
This could mean grouping them under a contract or that a provincial government might operate and maintain these, along with their other hundreds or thousands of bridges in the province to achieve efficiencies.
We were talking about tolling earlier. We've done some preliminary studies on tolling to look at that. We have found that that would be more of a small subsidy and wouldn't cover the O and M, and certainly not the capital. We do not have international bridges of the size or magnitude that warrant tolling as achieving self-sufficiency.
When I spoke earlier of the $228 million or $336 million, that is capital information. Those are for major capital projects.
In 2008, our department had some 35 engineering assets that were managed individually by the regions, and because of certain accidents that had happened on Montreal bridges and in the United States, our department took it upon itself to create one organization in Public Works and Government Services Canada to oversee these engineering assets.
Our mandate is really office accommodation, so we were able to bring these 35 assets under one organization. At that time, because they were not the mandate of our department, there had not been funding, either O and M or capital, to keep them to a certain standard. We have sought funding, both with Budget 2008 and Budget 2011, to bring all of those structures up to health and safety standards, either through enhanced maintenance or rehabilitation. In some cases we are in the process of actually replacing bridges, for example the Des Allumettes Bridge between Ontario and Quebec is a total replacement project. The projects that are here locally in Ottawa, the three bridges that I spoke of earlier, are just rehabilitation projects.
I also said earlier that in terms of maintenance costs this unit spends about $27 million to $30 million a year in O and M costs. We believe that that total could go down because by the end of 2016-17 all of our assets, our bridges as well as all of our other engineering assets, will be what we call green risk rating and we will have mitigated and resolved the health and safety issues.
While it seems like a large infusion of capital that was as a result of perhaps some underfunding over previous decades, we will now be in a position where we are able to divest of our assets because they will meet health and safety standards and green risk rating.
Senator Hervieux-Payette: Specifically, on how many units will this amount of money be spent? How many structures?
Ms. Pirie: We have 10 bridge structures where this money will be distributed.
Senator Hervieux-Payette: How many bridges have you sold so far?
Ms. Pirie: There are about nine; five of them went to New Brunswick, international bridges, and there have been four or five others. I have a list if you're interested in those details.
Senator Hervieux-Payette: How much cash came to the federal government in selling these bridges?
Ms. Pirie: These bridges are unlike an office building at the corner of a downtown community. These bridges come with heavy operating and maintenance costs. Often it's just a transfer to another level of government, and often there is some formula that would have been worked out in order to transfer these that would pay for some minimal years of capital and O and M to transfer them to another jurisdiction.
Senator Hervieux-Payette: Do I understand that you in fact paid to sell these bridges, paid some money to help them cope with the new property?
Ms. Pirie: That's correct. As a result of that, we've been able to take these off the federal government's books and will have significant savings down the road because they and their associated risks are no longer on our books.
The Chair: Senator Mockler and I are quite interested in New Brunswick and the fact that these bridges may be going on the books of New Brunswick.
Senator L. Smith: There go your taxes, chair.
The Chair: The Saint Croix and St. John River crossings, I assume, because they're border rivers. New Brunswick is not in as good a position, let me put it that way, as might be the federal government to maintain bridges at border crossings.
Can you help me a bit on what bridges you're talking about in New Brunswick? Do they go to the provincial government or to a private consortium?
Ms. Pirie: I will provide you with a list. Five international bridges between New Brunswick and the U.S. were transferred in 1990 to New Brunswick.
The Chair: 1990?
Ms. Pirie: Yes.
The Chair: No wonder we're broke.
Ms. Pirie: There was also the Plaza Bridge in 1998 that went to the Regional Municipality of Ottawa-Carleton. There was the Perley Bridge in 1999 that went to the provinces of Quebec and Ontario. The Mackenzie King and Laurier Bridges were in 1996. They also went to the Regional Municipality of Ottawa-Carleton.
Then we transferred a portion of the Alaska Highway, the part that's in the Yukon, not in northern B.C., and some 26 bridges went with that.
The Chair: That's now part of Yukon's responsibility to maintain?
Ms. Pirie: That is correct.
Senator Hervieux-Payette: That's our money.
The Chair: Senator Mockler, I'm glad you are here.
Senator Mockler: Can you provide us with a list for the New Brunswick bridges and exactly where they are?
Ms. Pirie: Those five international bridges that were transferred?
Senator Mockler: Do you have the names of them or which communities?
Ms. Pirie: We had a consultant report, and I have a colleague in the room with me. I looked last night to see if we had a list of those five international bridges. If we can't provide you with that momentarily, we will certainly submit a list.
The Chair: Your colleague is approaching.
Ms. Pirie: Those international bridges are in Fosterville, Forest City, Milltown and Campobello Island.
The Chair: The one to Campobello Island is to the Roosevelt Campobello International Park. Surely the federal government would recognize that goes from Campobello to the United States.
Ms. Pirie: Those are the international bridges that went to New Brunswick. Public Works no longer has any international bridges. We have interprovincial but not international bridges.
The Chair: Thank you for that. Senator Mockler, do you have a follow up on that?
Senator Mockler: The witness has named three.
Ms. Pirie: Those were four: Fosterville, Forest City, Milltown and Campobello.
Senator Mockler: Where is the fifth one?
Ms. Pirie: I don't see that on this list.
The Chair: Baker Lake up in the north on the St. John River — I think we heard from someone else on that previously. Could you confirm that for us?
Ms. Pirie: Yes.
The Chair: Thank you. Our last intervenor this morning is Senator Rivard.
[Translation]
Senator Rivard: I would like to go back to the Champlain Bridge. Minister Lebel announced that the new bridge that will be built to replace the Champlain Bridge will have an operational life of 125 years. The current bridge was built at the same time as the St. Lawrence Seaway and is now approximately 70 years old. If I understand correctly, we have to replace the bridge because of its premature deterioration; the concrete is crumbling and the steel structure is rotting. We think that the premature deterioration is due to the massive use of sodium chloride, commonly called calcium.
In the 1950s, when the bridge was designed and built, the Lavalin company did the building; can it be said that the de-icing product was poorly assessed by the company at that time? In the fifties, there were winters just like today, and no one had foreseen that the use of sodium chloride in Montreal could lead to much more rapid deterioration. I am trying to figure out whether Lavalin was at fault when the bridge was designed in the beginning of the 1950s. Was this unpredictable, or was another type of de-icing product being used at that time rather than sodium chloride?
[English]
Mr. Rienas: From the Peace Bridge perspective, we have not used salt for years on the bridge. The reason for that is exactly as you have indicated. It relates to corrosion. Years ago, we used sand mixed with some salt but only so that the sand didn't clot together. For the last 10 years, we have used a liquid non-corrosive de-icer for precisely the reason you have indicated, to avoid corrosion on the bridge.
[Translation]
Senator Rivard: This leads me to my other question. I will not hide the fact that in the beginning of the meeting I was a little bit surprised by a comment made by one of my colleagues — and I have respect for all my colleagues — who said that she was not reassured to see that the SNC-Lavalin company was involved in bridge projects. I think that the SNC-Lavalin company is a crown jewel of Canadian engineering, and throughout the world for that matter, and everyone understands that the courts are dealing with certain accusations in the case of certain company executives. We will let the court do its work, but I think that the Lavalin company, with its tens of thousands of employees throughout the world, deserves more respect. So I wanted to dissociate myself from that statement made in the beginning of the meeting.
The Chair: Ms. Pirie, would you have a comment to add?
[English]
Ms. Pirie: I can make a comment on that. Before Public Works and Government Services Canada would award any contract now, we have an integrity framework process that we must go through. Any company that could be under investigation or where there could have been criminal charges, we have to review that and receive clearance before any contracts are awarded. That was recently instituted in the last couple of years.
The Chair: That concludes our questioning.
I think it would be helpful for honourable senators to know if the annual reports or the independently audited financial statements of either of the independent bridge commissions — Buffalo and Fort Erie or Niagara — are reported to the Parliament of Canada through any particular avenue.
Mr. Rienas: We provide a copy of our audited financial statements to Transport Canada.
The Chair: Was that a delicate change in my wording? You provide a copy as opposed to reporting?
Mr. Annunziata: We do provide a copy. We are a public bridge authority, so all our statements are available to the public for public review. It is not an internal, privileged piece of information. Certainly, if any members here today would like a copy or through the clerk, we would be more than happy to provide copies to you.
The Chair: But would they be tabled in Parliament through a minister?
Mr. Annunziata: No.
The Chair: No, they are not. Is it similar for Niagara?
Mr. Holloway: Yes, our financial statements are available on our website, the Niagara Falls Bridge Commission, and we provide copies of the annual report to the Governor of New York, the Premier of Ontario and other people who may request it.
The Chair: Thank you very much.
On behalf of the Standing Senate Committee on National Finance, we would like to thank the Buffalo and Fort Erie Public Bridge Authority, the Niagara Falls Bridge Commission, Transport Canada, Public Works and Government Services Canada and Fisheries and Oceans Canada. It is a complicated world that we live in with all these bridges, but we are learning. You have helped us a lot today. We thank you very much for that.
Colleagues, tomorrow evening at our next meeting, we will have Veterans Affairs, Correctional Service Canada and the Public Health Agency of Canada under the Main Estimates, so bring your Main Estimates along.
(The committee adjourned.)