Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 1 - Evidence, November 20, 2013
OTTAWA, Wednesday, November 20, 2013
The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. to study the subject- matter of those elements contained in Division 8 of Part 3 of Bill C-4, A second Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.
Senator Dennis Dawson (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this evening, we are beginning a study of Division 8 of Part 3 of Bill C-4, A second Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures. This division would authorize the amalgamation of four Crown corporations that own or operate international bridges.
[English]
I presume everyone has read the bill. If you want another copy, I have one at the table.
This evening, we have before us from Transport Canada, Aline MacDougall, Director, Portfolio Policy and Governance, Crown Corporation Governance; and April Nakatsu, Director General, Crown Corporation Governance.
I invite the witnesses to make their presentation. Following their presentation, we will proceed with questions.
April Nakatsu, Director General, Crown Corporation Governance, Transport Canada: Thank you for much for the invitation to appear before you today to talk about the provisions in Bill C-4, Division 8.
The legislative provisions contained in Division 8 of Bill C-4, if passed, would provide the authority for the amalgamation of four federal Crown corporations dealing with international crossings. Specifically, that would be the Federal Bridge Corporation Limited, two of its subsidiaries — the Seaway International Bridge Corporation Ltd. and the St. Mary's River Bridge Company — as well as another parent Crown corporation, the Blue Water Bridge Authority.
These provisions would also ensure that the resulting single amalgamated corporation would have the authorities required to continue to conduct their business. For example, provisions are included for the amalgamated corporation to have the authority to continue borrowing and to continue charging tolls.
Division 8 also includes provisions to repeal the legislation that was put in place decades ago to construct three of these crossings. Most of this legislation is not relevant today. Any relevant powers from those pieces of legislation and authorities are being brought forward as just mentioned, the borrowing authority and the ability to charge tolls.
The amalgamation of these Crown corporations is being pursued in order to establish a streamlined organizational structure with a focused approach to ongoing international bridge operations.
Individually, each of these corporations owns, manages and/or oversees an important economic link between Canada and the United States. Collectively, these corporations operate or oversee the Canadian portions of four international bridges crossing the waterways between the province of Ontario and the states of New York and Michigan.
Canada and the United States enjoy the largest bilateral trade relationship in the world. The secure and efficient flow of goods and people is vital to our economic competitiveness and mutual prosperity.
The establishment of a single parent Crown corporation through the amalgamation of these four distinct corporations would provide a coordinated portfolio approach to certain international bridge operations. A portfolio approach would allow the amalgamated corporation to apply consistent policies and procedures across all its operations, streamline reporting, the sharing of best practices, ensure consistency in service levels and security protocols, and conduct more rigorous financial planning.
The planned changes build on other Canada-United States initiatives under way, such as modernizing Canada Border Services Agency facilities located at the international bridges operated by these Crown corporations in Sault Ste. Marie, Cornwall, Thousand Islands and Sarnia.
The governance change should not negatively impact the travelling public. Bridge operations are expected to continue uninterrupted and with continued emphasis on public safety. Ultimately, the amalgamation of these corporations will improve the effectiveness of their operations and the coordination of the cross-border movement of people, products and services.
While the federal government has interests in other international bridges in Ontario, the proposed amalgamation will be limited to these four operating Crown corporations. More specifically, the new international bridge project at the Windsor-Detroit crossing has a different focus, which is on construction, and will take years to complete.
The Buffalo and Fort Erie Public Bridge Authority, also known as the Peace Bridge, is operated by a binational authority established through a compact between the United States and Canadian governments, and it is not a Crown corporation. The Government of Canada remains committed to the existing governance structure of the Peace Bridge Authority, so it will not be included in this amalgamation.
In summary, the provisions contained in Division 8 of Bill C-4 are aimed at simplifying the structure of Crown corporations that are responsible for the operation of four international bridges and to enhance their governance, accountability and streamline their operations. These changes are intended to lead to increased efficiency of international bridge operations.
The Chair: Ms. MacDougall, anything to add?
Aline MacDougall, Director, Portfolio Policy and Governance, Crown Corporation Governance, Transport Canada: No.
[Translation]
The Chair: On my list, I have Senator Demers, Senator Eggleton, Senator Merchant and Senator Verner.
[English]
Senator Demers: Thank you for coming. Your presentation was short, but it was to the point. I like that.
Why would the Jacques-Cartier and Champlain Bridges — because I'm from Quebec and there's been a lot of talk lately, especially about the Champlain Bridge — incorporate a fully owned subsidiary of FBCL and the Windsor- Detroit Bridge Authority not consider amalgamation with the FBCL? For a French guy, ``amalgamation'' is pretty hard, but you understand.
Ms. Nakatsu: The Windsor-Detroit Bridge is not being included because its focus will be on construction for probably at least a decade. We don't want to affect the operation, safety and security of the other existing bridges. The amalgamation will take some time to happen, so we want the management to continue focusing on the operations of the corporations. Bringing in Windsor-Detroit, with all the work it has to do, we don't want it to cause any problems, so right now it's going to stay focused on building the bridge and being a separate entity while the other four come together.
Jacques-Cartier and Champlain Bridges, its focus is domestic bridges. It's in Montreal. It doesn't have the same international focus as the other bridges. So Jacques-Cartier is not disappearing. It is actually, in some senses, being elevated, because right now it is a subsidiary of the Federal Bridge Corporation. It will become its own parent Crown corporation. So instead of reporting to Federal Bridge Corporation, then to the minister, to Parliament, it will go directly to the minister, to Parliament, so there will be better accountability of the corporation to the public.
Senator Eggleton: I have much the same question as Senator Demers, but let me follow up on your answer. If they're going to be a separate Crown corporation, does that mean they'll have a separate board?
Ms. Nakatsu: They are already essentially a separate board. They are a subsidiary, so they are their own Crown corporation now, as a subsidiary. It will just be elevated to a parent status.
Senator Eggleton: Is there any increase in cost in doing this?
Ms. Nakatsu: No.
Senator Merchant: If there is no increase in cost, is there savings by doing this?
Ms. Nakatsu: There is no targeted savings for this. It is an efficiency gain. There are not a lot of employees now. There are maybe just over 100 right now between the four corporations. The issue with the four corporations is they're all different in the sense that in Sault Ste. Marie the bridge is operated by the American side, with an agreement with the Canadian side, so all the employees are on the American side. There are no Canadian employees, per se. Similarly at Thousand Islands, it's run by the American side, no Canadian employees. At Cornwall, it's all Canadian employees and we're running the whole bridge on behalf of the American side. At Blue Water Bridge Authority, there are Canadian employees running the Canadian side and American employees running the American side. For four different bridges, we've got three different models for how they operate. Since there are different models, there are inefficiencies.
With some of the bridges, the traffic is going down. To try to limit any pressure on increasing tolls, if they can build in efficiencies through this amalgamation, then there's less pressure to increase tolls.
Senator Merchant: This new corporation, it's going to be a Crown corporation still?
Ms. Nakatsu: Yes.
Senator Merchant: Are we going to have employees on both sides, some in the U.S. and some in Canada? How will this work?
Ms. Nakatsu: Yes. It will take time to transition, but there will still be employees on both sides and they will figure out what is the most efficient and effective way. We can picture there being some sharing of resources across the four bridges. So if they need engineering expertise, they can share that more. Right now, some of the corporations are so small, they have the same person doing a bit of finance, doing a bit of HR, doing a bit of something else, and they're not necessarily doing the best job they can because they're split. As they are amalgamated, they'll be able to get people to focus better and provide better support to the organization as a whole.
Senator Merchant: I'll stop for now. I may have a different question later.
[Translation]
Senator Verner: I have a number of questions. First of all, the bill would change the Federal Bridge Corporation's current governance structure by dissolving the corporation and creating a single entity. Keep in mind that, in her 2008 report, the Auditor General identified governance as a problem within the organization owing to the various boards of directors and various methods for overseeing activities. Is the amalgamation proposed in the bill meant, in any way, to address the Auditor General's recommendations?
[English]
Ms. Nakatsu: Yes, it does. It's pretty well in line with what the Auditor General was saying. With this amalgamation, the boards of those subsidiaries, other than the Jacques-Cartier and Champlain Bridges — that one would go off on its own — but the subsidiary corporations would disappear and they would become operating arms of a single parent Crown corporation.
In addition to what the Auditor General talked about within the Federal Bridge Corporation Limited, we're bringing in the Blue Water Bridge. It was originally intended to be a binational authority, but the Americans never exercised their right to appoint members to the board, so it became a de facto Crown corporation. We're bringing it into the Federal Bridge Corporation. All those subsidiary boards of directors disappear and it will be an operating corporation.
[Translation]
Senator Verner: Still, it did take five years for it to happen. Why did it take so long, and during those five years, were any efforts made at all to rectify the problem identified by the Auditor General?
[English]
Ms. Nakatsu: On the governance side, the corporation tried to do some things on its own. It appointed some of their own employees to the boards of directors to try to improve some of the communications. That was tried for a while and it improved, but it still was problematic, so the government has been reviewing it and finally took the decision.
[Translation]
Senator Verner: We see that the Jacques Cartier and Champlain bridges will not be part of the new organization. You explained that construction of the bridge was under way and could take a decade, so the preference was to focus on construction. The Windsor-Detroit bridge is not built either, and I believe a decision on that has yet to be made.
[English]
Ms. Nakatsu: Yes. So Windsor-Detroit is not included in this.
[Translation]
Senator Verner: Very well, it is not included either. I see. It is clear from reading the bill that, under these conditions, the new entity will have the legislative authority to charge tolls. If Jacques Cartier and Champlain Bridges Incorporated is not part of the new entity, will it have the legal authority to charge tolls?
[English]
Ms. Nakatsu: They have their own regulations right now that give them the authority to do it; and that's not being touched by any of this. I'm not sure if the tolls are in that authority already, but when they're looking at the Champlain Bridge, they will address that through another means.
[Translation]
Senator Verner: Just to make sure I understand correctly, they have all the legislative or regulatory tools they need to charge tolls on the Champlain Bridge. Is that correct?
[English]
Ms. Nakatsu: Yes, this doesn't affect the Jacques Cartier and Champlain Bridges at all. Any authority through this proposed legislation is strictly for the four international bridges and won't affect any powers or authorities that the Jacques Cartier or Champlain Bridges have. If the government is going to change that, they will do it through a different means.
[Translation]
Senator Verner: My understanding, then, is that, right now, Jacques Cartier and Champlain Bridges Incorporated can charge tolls.
[English]
Ms. Nakatsu: I don't know offhand if they have the authority currently.
[Translation]
Senator Verner: That is basically what I am trying to find out, because, as you know, the whole issue of tolls in the Montreal area is quite contentious. I am wondering how they would be able to do it if they are not part of the new organization that is empowered to charge tolls. I assume you can get back to us with that information in a timely manner.
[English]
Ms. Nakatsu: Yes, we can probably get that for you.
The Chair: Since it's not clear, and I think it's important that we have clarification, can you assure us that an answer will be given to the question: Do they or do they not have now the power to implement a toll on the bridge? You can communicate with the clerk and the clerk will communicate with the members of the committee.
Senator McInnis: I see that they can use debt to operate to the tune of $130 million. Is that a line of credit?
Ms. Nakatsu: Right now, the Blue Water Bridge has issued a series of bonds. They did a twinning of the bridge in the late 1990s so they paid for that through the issuance of bonds. The level of borrowing is reflective of the borrowing that existing corporations already have and exercise. Blue Water Bridge has some bonds and they do other borrowing, some being a line of credit. In Sault Ste. Marie, they borrowed money to be able to purchase property to do an expansion of the Canadian Plaza. I believe that's it.
Senator McInnis: Could I ask a question on the Champlain Bridge? Is the environmental assessment complete for that structure?
Ms. Nakatsu: I can't speak to that.
Senator McInnis: Is there a timeline at all for the construction that you're aware of?
Ms. Nakatsu: I'm sure there is, but I don't know.
Senator McInnis: As a consequence, you would not know whether they are thinking about P3 in terms of construction?
Ms. Nakatsu: No, I don't, sorry.
Senator McInnis: It's no use asking, then, about the causeway bridge combination from Nuns Island, which is an expenditure of $124 million. That's fine.
Senator Plett: I have two questions. You spoke in your presentation about one of the reasons for doing this: Much of the initial legislation — many of the reasons we didn't have this — is no longer relevant. Could you expand on that?
Ms. Nakatsu: Some of the original legislation was written in 1901 and 1934 and was geared more towards the construction of the bridges. It spoke to the borrowing for the funding of the bridges but not so much the ongoing operation of the bridges. It was relatively minimal. Any authorities they need for the ongoing operations of the bridge we're bringing forward through this division; any of the other provisions relating to construction of the bridge and whatever will be eliminated. All that old legislation will disappear. There are two pieces dealing with the construction of the bridge at Sault Ste. Marie. It was kind of redundant and we don't know why two pieces of legislation were required to build the same bridge, but they were 30 years apart. We're just looking to clean up the books in some senses for those ones.
Senator Plett: What impact, if any, does this have on the surveillance and security of the international crossings?
Ms. Nakatsu: It will continue under the existing regime, the International Bridges and Tunnels Act. They all have requirements from a safety and security perspective. With the amalgamation, hopefully they will be able to do more consistent policies across the bridges to make sure they're sharing best practices to improve their security screening methods.
Senator Plett: Hopefully, but is there a plan in place that in fact will do that, or are we just hoping this will happen?
Ms. Nakatsu: It's still early stages. Until the bill passes there's only so much the corporations can do. They are talking to see how they can bring the corporations and the employees together to start developing some of those policies to make it better.
Senator Plett: There is no specific plan.
Ms. Nakatsu: No.
Senator Mercer: I apologize for being late to the meeting — too many meetings tonight.
These bridges we're talking about are all for autos and trucks. Are rail bridges associated with them?
Ms. Nakatsu: No.
Senator Mercer: That being said, there is an issue today in transport in this country. There was an announcement by the Minister of Transport this afternoon about rail transportation and the transportation of dangerous goods. Dangerous goods are not just transported by rail or by ship but also by truck. If you have a dangerous good being transported across a bridge, and we had an incident on the bridge, it could cause a huge problem. I'm anxious to know whether we have a plan to protect Canadians and the commerce that moves across these bridges against an event that might happen on those bridges. If we do have a plan, this is good news, but if we don't have a plan, it is bad news. If we have a plan, how do we plan to involve the municipalities who are the people who need to respond? They will be the first responders to any emergency that might happen on these bridges.
Ms. Nakatsu: I'm not that familiar with the operations of the bridges to know what specific measures they take for dangerous goods, but we can get you information on that.
Senator Mercer: I appreciate that. Perhaps, as the chair has indicated, you could respond through the clerk.
One of my questions with respect to earlier announcements today is that we need to understand what municipalities are expected to do if there were an incident on a bridge. We need to understand if the municipalities know what goods are being transported across the bridges on an ongoing basis. Indeed, we should be able to know what's being transported across the bridge in a reasonable fashion at any given time. I don't expect that we will be able to identify each truck going across bridge X or bridge Y, but we should be able to know that in two-days' time a certain product will go across a particular bridge.
My point is that the municipality is stuck with the responsibility of responding if there is an incident. The local fire department and other local emergency measures people will be there. I would hope that you could come back and tell us what that responsibility is and if it's an undue burden — perhaps not undue but an extra burden — on the municipal units.
Are we looking at providing the municipalities and those fire and emergency measures groups who are the first responders with the proper training to deal with whatever it is that is going to cross the bridge? And, if we are, is Transport Canada going to help either pay the costs or share the costs with municipalities, because we are then putting undue burdens on the local municipalities?
Ms. Nakatsu: We'll have to get you that information. We don't have it.
Senator Mercer: Thank you. I appreciate it if you would.
The Chair: I have a short question on job losses. Are there any job losses consequential to this merger of organizations?
Ms. Nakatsu: When you're bringing four corporations together, one can guess there may be, but the organizations themselves are small. There are no targeted job losses or savings, but you figure for one corporation, there will be one CEO. Fortunately, the CEO position at Blue Water Bridge is vacant, so it's not a job loss; it's through attrition. Similarly, the chief financial officer position at Blue Water Bridge is vacant. It's full at Federal Bridge Corporation.
There will be a lot of those situations where it will be done through attrition if there is a need, but from discussions so far, like I mentioned earlier, a lot of people are doing two or three jobs part time. They will just be able to realign the work that needs to be done and minimize impact on job losses.
The Chair: I wanted to get it on the record. Ms. Nakatsu and Ms. MacDougall, thank you very much.
We will now go in camera to decide about future meetings and the report stage on this legislation.
(The committee continued in camera.)