Proceedings of the Standing Senate Committee on
National Finance
Issue 16 - Evidence - September 23, 2014
OTTAWA, Tuesday, September 23, 2014
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to study 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: This morning, we are continuing our study of the Main Estimates for the fiscal year ending March 31, 2015.
[English]
From The Federal Bridge Corporation Limited, we are pleased to welcome Natalie Kinloch, who is the chief operating officer, and Mr. Richard Iglinski. Mr. Iglinski is the corporate controller.
Thank you both for being here. Ms. Kinloch, I believe you have some introductory remarks to help us understand what you're doing and why you need that $21 million.
Natalie Kinloch, Chief Operating Officer, The Federal Bridge Corporation Limited: Thank you, Mr. Chair, and good morning, ladies and gentlemen, honourable senators and members of the Standing Senate Committee on National Finance. It's an honour for The Federal Bridge Corporation Limited to be requested to attend this session. As the chair referred to, my name is Natalie Kinloch and I hold the dual position of chief operating officer and chief financial and administrative officer with FBCL, and have been a part of this corporation since 2009. Richard Iglinski, who is FBCL's corporate controller, joins me today.
Today is an important opportunity for us to share with you the important mandate and works of FBCL, accomplished for the benefit of Canada and all Canadians. I propose to make a brief statement outlining the mandate of FBCL, its current reorganization and major projects, and I will be pleased to respond to any of your inquiries.
Who is The Federal Bridge Corporation Limited? As defined by its name, we are a bridge company owned by the Government of Canada. We are a federal Crown corporation, governed by a board of directors consisting of a chair and three members. We report to Parliament through the Minister of Transport.
As one thinks of bridges, the mind is instantly drawn to images of imposing structures, often towering over cities and communities, of beautiful views from high vantage points or of links between two countries, provinces or municipalities. If you are not fond of heights you may associate bridges with some personal fear and anxiety over their height or length. Those who use these structures to across Canada's borders often associate these international bridges with time as we calculate how long we will wait in line to continue on our journey. Rarely in the images or thoughts that our minds evoke at the mention of bridges do we reflect on the business and activities behind these structures.
At FBCL, this latter part is our sole focus. It is our job to ensure the stewardship of the international bridge crossings entrusted to us by the Government of Canada. Simply, we make sure these bridges are well maintained, safe, secure and efficient for all bridge users.
[Translation]
FBCL is relatively young. The corporation was established in 1998 following the privatization of the seaway, to oversee and be accountable for the bridges under its control and to provide strategic direction to the asset operators under its authority. Initially, FBCL had a mandate to manage Canada's international bridges in Cornwall and the Thousand Islands, in Ontario, and domestic bridges in Montreal, Quebec.
Later, in 2000, FBCL acquired an ownership interest in the St. Mary's River Bridge Company, the owner of the Canadian portion of the Sault Ste. Marie International Bridge in Ontario.
The management of these facilities relies on a complex organizational structure made up of two subsidiaries and three bi-national partners. The Cornwall crossing is managed by international agreement as a joint venture between FBCL and the St. Lawrence Seaway Development Corporation, a federal U.S. entity.
The Thousand Islands crossing is managed by international agreement between FBCL and the Thousand Islands Bridge Authority, an entity of the State of New York that oversees the operation and maintenance of the entire bridge structure. Up north, in Sault Ste. Marie, the international crossing is managed by the International Bridge Administration, an entity of the State of Michigan, through another international agreement. In this case, the bridge operations are overseen by a joint international board of directors, the Sault Ste. Marie Bridge Authority.
In the interest of FBCL and its subsidiaries, every year, FBCL prepares a corporate plan subject to Governor-in-Council approval and releases a summary of that plan, which includes a five-year operating and financing plan, as well as a capital expenditure budget. As set out in the Financial Administration Act, FBCL also publishes quarterly financial reports and an annual report, all of which are available to the public on our website, www.federalbridge.ca.
A copy of our last annual report and a summary document were provided to the clerk of the committee for distribution to committee members.
[English]
This past fiscal year, 2013-14, featured a monumental shift to FBCL's governance. The corporation was targeted for a reorganization plan of federal Crown corporations as outlined in the Government of Canada's Economic Action Plan No. 2. This plan, currently being realized, not only will simplify the governance structure of FBCL; it focuses its mandate solely on international bridges.
The first phase of the reorganization included the creation of a new parent Crown corporation that owns and operates the federal domestic bridges in Montreal. This phase, which was completed in February 2014, saw the transfer to the Minister of Transport of FBCL's interests in the domestic bridges in Montreal and FBCL's share of The Jacques Cartier and Champlain Bridges Incorporated. The second phase of the reorganization plan will see the amalgamation of FBCL with its remaining two subsidiaries in Cornwall and Sault Ste. Marie. In doing so, maintenance and operation activities traditionally delivered through its subsidiaries will now be directly those of FBCL in keeping with the international agreements.
In the third phase, FBCL will also amalgamate with the Blue Water Bridge authority in Sarnia, Ontario.
This entire reorganization plan is scheduled for completion by the end of this calendar year, and the amalgamated corporation will bear the name of FBCL. At that time, the board will increase from the current four members to seven and will remain appointed positions.
[Translation]
Maintaining and operating bridges is costly. These are massive structures, and the work of operating and maintaining them is extremely important. Financial self-sufficiency is our objective. All of our international crossing operations rely on toll revenue. Tolls are established in accordance with long-term operating and maintenance costs, economic conditions in the local market, and the terms and conditions set out in the international agreements governing each site.
Annual net profits are divided among bridge owners, and the amounts collected are used to fund the capital program of each owner. Thanks to historic agreements signed with the Government of Canada in the late 1950s, the Mohawk community has the right to transit freely across the Cornwall bridge, an exception when it comes to toll collection. In the case of this crossing, then, tolls are charged to only 40 per cent of bridge users.
Although FBCL is generally able to cover its annual capital expenditures, the corporation requests federal support for major capital projects such as the building of a new bridge or the complete rebuilding of a customs plaza or toll booths.
[English]
Currently, FBCL is delivering major capital projects at three locations; these are the sums included in the Main Estimates.
Some of you may have heard of or be familiar with the new bridge project under way at the Seaway International Bridge in Cornwall. The brief distributed to you has some images of that project.
In January 2014, FBCL completed the construction and opened a new low-level bridge on the north channel of the span to replace the high-level bridge that was in an advanced state of deterioration. One may rightfully wonder why the high-level North Channel Bridge was built in the first place. Interestingly enough, the answer lies with the creation of the St. Lawrence Seaway. In a nutshell, taking a step backward in time in terms of chronology, in the early 1950s the Louis St. Laurent government attempted to secure an all-Canadian seaway between the city of Cornwall and Cornwall Island, located between upstate New York and the province of Ontario. The new channel bridge would have crossed over the prospective all-Canadian seaway route, and thus Canada built the bridge to a height sufficient to accommodate the large vessels. However, this did not prove necessary, as an agreement was struck, and the seaway was located on the U.S. side. Replacing the deck of the old high-level bridge would have been very costly, and the new low-level structure was almost half the cost.
The project is currently just past its midway point. At this time, we are fully functional with the new bridge, the toll plaza and the new Canada Border Services Agency facility. We have begun the imposing task of demolishing the high-level structure that sits overhead and immediately adjacent to the new bridge. We will also be realigning and improving the approaches and roadways.
The entire project is being funded through parliamentary appropriations totalling $74.8 million. We expect to complete that entire project by the fiscal year 2016-17.
[Translation]
In the case of the Thousand Islands crossing, as the owner of the Canadian portion of the bridge, FBCL is responsible for providing facilities to the Canada Border Services Agency, under the Customs Act. The facilities at the crossing were built in the 1950s and no longer meet Canadian border requirements when it comes to security or space. A significant crossing in Canada, the Thousand Islands bridge is used by more than 2.1 million vehicles, so good traffic flow is absolutely essential.
This year, a project to totally redevelop Canada's border facilities was launched. The project is funded by parliamentary appropriations from funding for ports of entry and border crossings, totalling $60 million. The estimated completion date for the project is 2017-18.
[English]
Similarly, in Sault Ste. Marie, FBCL's subsidiary, the St. Mary's River Bridge Company, was required in 2009 to develop the customs facilities and the entire Canadian bridge plaza. The project is funded by the Gateways and Border Crossings Fund, this time through a contribution agreement with Transport Canada, and totals the sum of $51 million. We expect to complete the entire project in 2017-18.
That project is in the construction phase, and bridge operations are uninterrupted during construction, requiring significant traffic planning.
In closing, I would invite you to continue to monitor the progress of FBCL in its reorganization and major projects by visiting our website regularly. We have created specific blogs for each of the major projects and are communicating and exchanging directly with Canadians on our plans and the advancement of works. Thank you.
The Chair: Ms. Kinloch, thank you very much. We appreciate the background. I have one point before I go to honourable senators — and I have quite a list of senators who would like to engage in a discussion with you. I assume the various amounts you have indicated as appropriations for the projects are the overall budget.
Ms. Kinloch: That's the overall budget. Most of them span four to five years.
The Chair: Are you able to provide us with a schedule as to where you are in each of those budgets in terms of how much you have drawn? I notice in the Main Estimates for this year that it's $21 million, and it doesn't give us a breakdown in relation to which bridges.
Ms. Kinloch: The $21 million has approximately $15 million for the Cornwall bridge and $6 million for the Thousand Islands bridge in this current year.
Within the brief, we have indicated where we are at. On page 5 of the brief, in Cornwall, we have expended currently $50 million of the $75 million in parliamentary appropriations. In Lansdowne, we are just initiating, so we are only at $300,000 of the $60 million; it's just in its very early stages. In Sault Ste. Marie, we have expended as of today somewhere around $10 million of the $51 million.
The Chair: Sault Ste. Marie is in here as well, is it?
Ms. Kinloch: We've referenced it briefly, yes. It is a contribution and therefore not reflected in the Main Estimates. It is included in Transport Canada's Main Estimates. It's a different funding formula.
The Chair: The other point you made was in relation to the maintenance of each of these bridges. It is sometimes a joint maintenance obligation with the U.S., either a state or federal organization. Is Public Works and Government Services Canada involved, or do you have outside contractors that look after that?
Ms. Kinloch: As a Crown corporation, we are outside of the Public Works mandate, so we use the private sector to do the maintenance work. We have our own crews for minor maintenance on the bridges.
Senator L. Smith: Thank you for attending today. I had looked at the 2012-13 annual report while doing some bedside reading, and then we received this document today. First, could you give us a little overview of why you restructured and what the restructuring has accomplished?
Second, I would like to understand the relationship with the U.S. partners and how that affects your board of governors in the operation of the board. Who has what power, and how is it going? Please give us an overview of that.
So there's one organizational question then a more practical question to get an understanding of how the board works.
Ms. Kinloch: Absolutely. I think one just needs to look at that chart of FBCL's organization to realize it's quite complex for an organization that has some 100 employees and three bridges.
If you don't mind, I will answer your second question first because I think it will help us to answer your first question regarding why we are restructuring.
If I can draw your attention to the chart, it might be easier for members to visualize. It is in the brief on page 6. I understand your reading material is lengthy.
The Chair: This chart — page 6.
Senator L. Smith: And that comes from this chart.
The Chair: Which is in the annual report.
Ms. Kinloch: Yes.
FBCL has three bridges. The three bridges all have their own distinct operating models. Each is a partnership with the U.S., but each has a distinct form of partnership with the U.S.
In the Thousand Islands, the simplest of forms, it is an immediate-contract relationship with the Thousand Islands Bridge Authority. That contract also permits FBCL to nominate three members to the Thousand Islands Bridge Authority board, and the Jefferson County in New York can choose to appoint those members who are nominated by FBCL. Together, we manage the bridge 50-50 — the entire length of its crossing — for the operations and regular maintenance. Anything considered major maintenance or capital is the responsibility of the owners. It may be identified by the Thousand Islands Bridge Authority or it may be identified by us through inspections, but we are directly responsible for those.
We share in the profits 50-50; we oversee the operations of the bridge together — all so that we have a combined workforce and the most efficient way of managing that bridge.
In Sault Ste. Marie, in 2000, FBCL acquired the shares of the St. Mary's River Bridge Company, which had a provincial mandate up to that time. The bridge became federal, and we have a joint international board from our subsidiary, the St. Mary's River Bridge Company, with the International Bridge Administration from the State of Michigan. The appointments there are done by the subsidiary organization that is local to Sault Ste. Marie. It's a four- and four-member board. The appointments in Michigan are made through the Governor of Michigan.
In Cornwall, the agreement is from FBCL to the Saint Lawrence Seaway Development Corporation, a U.S. federal entity. For that relationship, we formed a joint venture, which is a subsidiary of FBCL: the Seaway International Bridge Corporation. The FBCL appoints four members, and the SLSDC, the U.S. member, appoints four members, so it's a four and four board there as well.
As you can imagine, it gets pretty complex to determine who exactly is doing what. In each of the situations, we share in the operations, and the owners are each responsible for their capital. That is a pretty complex organization.
To add to that, before February, we also had the domestic bridges in Montreal. The Jacques Cartier and Champlain Bridges Incorporated was a subsidiary of FBCL as well, with domestic bridges, so they had a different mandate. Also, they were appropriated 100 per cent from the Government of Canada and therefore also had a different funding model and different needs than the international bridges.
The government, in looking at this and at the needs of each of the organizations, performed an analysis and a review of FBCL and its bridges and determined that the domestic bridges in Montreal should stand on their own as a separate Crown corporation. As you can imagine — it's been in the newspapers enough — there are a few issues with bridges in Montreal that The Jacques Cartier and Champlain Bridges Incorporated is managing directly. They are working with the Transport Canada groups and the infrastructure groups to address those.
The remainder of the chart, as you can see, is still quite complex, and the government decided to roll up the subsidiaries in order to avoid having these multiple layers because the more layers we have, the more decision making is complex. It doesn't allow for a quick flow of information. Also, the objective was to have best practices shared across all of the bridges. With each bridge being individually managed, it was hoped that we could take the best practices of each bridge, roll them across and therefore make a more efficient federal international bridge portfolio.
Senator L. Smith: May I ask another question?
The Chair: Yes.
Senator L. Smith: It kind of leads into your organizational structure and your boards. Do you have a chairman of the board for each of the three areas?
Ms. Kinloch: Yes, we do.
Senator L. Smith: Is the chairman a Canadian or a U.S. person? In the Canadian context, obviously, I would assume it would be a Canadian, but, in the case where you have a mix of Americans and Canadians, who is the chair? How does the power work, and how are decisions made? What type of bias exists within the board? I'm just trying to understand the political balance.
Ms. Kinloch: Certainly, each member comes with their own interests and baggage. The structure of the board is determined by the international agreements that have been signed by Canada and the U.S. That is pre-established.
At the Seaway International Bridge Corporation in Cornwall, because it is a Canadian subsidiary of FBCL, the chair is elected by the members, but the chair has always been a Canadian. The chair of FBCL proper is an appointed position of the Government of Canada, so those are Canadians.
For Sault Ste. Marie, the chair of the subsidiary of FBCL, the St. Mary's River Bridge Company, is a Canadian, Mr. Jim McIntyre of Sault Ste. Marie. There are four members on the board of the joint authority, and the chair is an American at this time, per the agreement.
The Thousand Islands Bridge Authority is a contractual agreement of FBCL. We have contracted TIBA to do the work for us. They are a U.S. entity, and the chair is appointed by Jefferson County. He is an American. We have three of seven members on that board.
Senator L. Smith: Can I ask you a last question? When you have three versus four, how does the relationship work?
Ms. Kinloch: Our relationships at these three crossings are absolutely exceptional. These three crossings each have had partnerships for 40 or 50 years. They are extremely collaborative crossings. Most of these communities are joined by geography, obviously, but also by economic interest. Having a bridge that functions well is in the best interests of both countries. The members have brought that to the table each and every time. The agreements allow us to share in appropriate projects, where the cost of doing it separately would be more expensive for both or where the timing lines up.
In Sault Ste. Marie and in Cornwall, we have bridges that meet in the middle, so, literally, you need the maintenance to be good on both sides of that. In the Thousand Islands, the geography is a bit different.
The relationships have been very cordial, very open. Because we are each responsible for our own capital, that takes a lot of the major projects outside of the boardroom and back into the hands of the owners. In our case, through our corporate plan, we seek our governmental authorities. These three bridges are absolutely models of international cooperation.
The Chair: There are no more bridges that your corporation is responsible for?
Ms. Kinloch: Today, no. By the end of the year, the government's plan has us amalgamating with the Blue Water Bridge in Sarnia, which is a major bridge of Canada. That bridge would become, essentially, a part of the FBCL family. It would not be a subsidiary; it would be part and parcel of FBCL, so direct operations.
The Chair: Where is it now?
Ms. Kinloch: Right now, it's an independent parent Crown corporation.
The Chair: Under Transport Canada?
Ms. Kinloch: Under Transport Canada.
Senator Runciman: Ms. Kinloch may have some suspicion of an issue I want to raise. It ties in with what Senator Smith was talking about — the structure. My designation as an Ontario senator Thousand Islands and Rideau Lakes, and I have contacted the corporation on a number of occasions with respect to an interest that people on the Canadian side have regarding seeing someone from the local area represented among the Canadian members of the Thousand Islands Bridge Authority. I know the corporation has been contacted by the 1000 Islands Gananoque Chamber of Commerce, the Township of Leeds and the Thousand Islands and the Counties Council of Leeds and Grenville, and, to date, we have met only with resistance from the bridge corporation.
For the edification of members, on the American side, the four U.S. representatives are appointed locally by the local equivalent of the county council. They are all local people who live in the area of the bridge, but all of the Canadian appointees are bureaucrats with the bridge corporation. For whatever reasons, the local folks have requested one representative who would be nominated by the United Counties of Leeds and Grenville. The bridge corporation has delivered a flat no, and it's good to have a face-to-face opportunity to try to understand why that would be the case because, previously, they did have someone who was not a member of the corporation, a gentleman from Cornwall, who served on that board. All of the U.S. representatives are local people.
You talked about economic interests, and it would be interesting, in your response, to indicate when the last time was that the Canadian representatives on the bridge authority consulted with the local economic development people to try to understand any interests and concerns they might have.
I guess I'm looking for a response, one that can be understandable to local people in the area that I've represented for many years, as to why it's impossible to have someone — a very highly qualified individual — serve as one of the Canadian reps on that authority.
Ms. Kinloch: Thank you, Senator Runciman. Yes, I am aware of your concern. I am one of those federal bureaucrats on that board. Primarily, I will attempt to provide some history to the members as to why things are the way they are.
The responsibility for nominating rests with our board of directors. My nomination at the bridge is through the graces of my board of directors, and they nominate to Jefferson County. Jefferson County, New York, appoints. The history of the Thousand Islands Bridge is that it used to belong to the Canadian seaway. When the seaway was privatized, those bridge assets that were non-navigation assets were taken out of the Seaway and the FBCL was created. The presence of a long-term member that was not an FBCL employee stemmed from the seaway. When the seaway was privatized, those employees remained with the Thousand Islands Bridge Authority to ensure the continuity of the relationship there.
In making its decisions, FBCL's board has deliberated on the role of FBCL at the Thousand Islands Bridge. The Thousand Islands Bridge Authority has a mandate that is broader than just the bridge interest. They own Boldt Castle in the 1000 Islands, which some of you may have visited as a tourist attraction. They also have a tourism mandate from Jefferson County. Participation by our three members on the board of the Thousand Islands Bridge Authority is only as it relates to the FBCL mandate, which is restricted to the bridges and their safety and security.
What we have that has been communicated in the amalgamation of FBCL is an interest from each municipality, which is being amalgamated to have representation within FBCL so that these other organizations, such as Sault Ste. Marie, Cornwall, et cetera, have a chance to be represented on the seven-member board of FBCL. I realize that the Thousand Islands Bridge Authority also has an interest in a separate entity: the 1000 Islands International Tourism Council, which is an American entity. In the past there has been a Canadian on that board, but it is a separate organization from FBCL, and we don't hold a particular interest in it.
In summary, our mandate is limited to the bridge and its safety. The board of directors has concluded that they want the people involved in the daily bridge operations to be there. I can commit to bringing back your concern to that board of directors, as I am not the decision maker on that file.
Senator Runciman: Well, you mentioned economic interests and understanding economic interests. Clearly, what you're suggesting here today is that the Americans really appreciate the economic interest. They have a tourism mandate, as you've described it. I'm curious because the local people feel their economic interests are not being represented by the authority. Your response didn't really explain to me why you cannot have a local representative; and I look at the Sault Ste. Marie Bridge Authority. At least two of the four Canadian reps there are local people. I think Ms. Helen Gillespie, who is now in Vancouver, was a local individual as well and is still serving on that board. Certainly, at the Blue Water Bridge in Sarnia, local people include the chair of that organization. It's incomprehensible to me why there is this stubbornness to consider seriously having one representative of the three. It has been indicated that while these are actually appointed by Jefferson County, under the operating agreement Canada appoints on the advice of the bridge authority. The operating agreement doesn't say they have to be from the FBCL, so there is flexibility and latitude. But for whatever reason, the corporation continues to be rigid on this. Again, I'm not getting any explanation that satisfactorily answers that concern. It's not just my concern but a widespread local concern.
The Chair: As I understand it, the board has made the decision thus far, and you've undertaken to take back our concerns.
Ms. Kinloch: Absolutely.
The Chair: We would appreciate that. Have you told us who chooses the board members?
Ms. Kinloch: Our board of directors is appointed by Governor-in-Council. They're all appointed members. Currently we have three board members: Connie Graham is the chair from London, Ontario; Jim Durrell is from Ottawa; and Debbie Tropea is from Cornwall.
[Translation]
Senator Chaput: I would like some clarification regarding the agreements governing bridges where ownership is shared by the Canadians and Americans.
If I understand correctly, the agreements set out the responsibilities of each partner. I believe you said that the bridge's operations and revenue were shared and that each partner assumed its responsibility for capital. Is revenue shared on a 50-50 basis, as is the operation of the bridge?
Ms. Kinloch: Yes.
Senator Chaput: How does that work if each partner assumes its responsibility for capital? It is a single bridge, but it is shared.
Ms. Kinloch: When it makes sense to do so, the project is carried out jointly, and each partner funds its own portion of the bridge.
Take, for example, the South Channel bridge in Cornwall, which crosses the American seaway. Canada owns 32 per cent of the bridge, and the remaining portion belongs to the Americans. When it came time to repaint the bridge — which is quite an expensive project, costing nearly $14 million — FBCL paid 32 per cent of the cost.
Even though we carry out certain projects jointly, the financial responsibility is split accordingly between the owners of the bridge.
Senator Chaput: I believe you also mentioned that you call on the private sector in the case of routine operating expenditures.
Ms. Kinloch: We have employees. But when it comes to bridge inspections, for example, we use the services of engineering firms. When we built the Cornwall bridge, the separate contracts were competitive and were awarded to the private sector, as far as construction was concerned.
We do not have the internal resources to carry out large-scale projects.
Senator Chaput: When you have to seek out certain types of expertise in the private sector, is a specific percentage of the contract awarded to Canadian companies and a certain percentage to American companies? How does that work?
Ms. Kinloch: In the case of a Canadian project, we hold a public tendering process. We adhere to all the North American agreements when it comes to supply and so forth. The process is advertised and firms can approve it.
Generally speaking, we do not have the authority to exclude a company from bidding on a project, but we set the criteria in terms of the expertise required and so forth.
When we work on a project with the Americans, it is advertised in both countries and the best bid is chosen.
Senator Chaput: Since February 2014, you have been reporting directly to Infrastructure Canada. Is that correct?
Ms. Kinloch: No. Jacques Cartier and Champlain Bridges Incorporated reports to Infrastructure Canada. We are still under the authority of Transport Canada.
Senator Chaput: The Office of the Auditor General of Canada performed an audit. Is the corporation separate from the Federal Bridge Corporation?
Ms. Kinloch: Yes.
Senator Chaput: What were the Auditor General's recommendations, and how are you responding to those recommendations? Do they target just the Canadian portion or are they meant for the American portion as well?
Ms. Kinloch: We are subject to two types of audits by the Office of the Auditor General. Our financial statements are also audited yearly.
As far as our financial statements are concerned, no specific recommendations were made, but the opinions on our financial situation were positive. When it comes to special audits, the Auditor General examines how we operate and can make recommendations affecting operations.
The last time the entire corporation was audited was 2008. At the time, the Office of the Auditor General had identified two major shortcomings. The Auditor General indicated that, because of our complex organizational structure, the corporation was not in the position that it should be. The recommendation was shared with Transport Canada, and the outcome is what you see now, in other words, the reorganization stemming from that finding.
The second audit of the FBCL was conducted in 2008 and included the Montreal bridges. The three projects under way in Montreal that were examined at the time were the upgrading of the Mercier, Jacques Cartier and Champlain bridges. And even in 2008, the looming financial needs were tremendous and the corporation's ability to fund the work was non-existent. And that is why the Auditor General identified those challenges.
Senator Chaput: So you endeavoured to address those challenges raised by the Office of the Auditor General?
Ms. Kinloch: Yes. We spent a number of years working to advise Transport Canada of possible options. Transport Canada carried out its own examination of the organizational structure, trying to determine the best model for the Federal Bridge Corporation. The government responded to the observation by preparing a reorganization plan. From a financial perspective, it is expected that nearly all of the Federal Bridge Corporation's assets will be new within the next three years. And I believe the government has properly responded to the needs.
On the Montreal side of things, Jacques Cartier and Champlain Bridges Incorporated received an enormous amount of funding to address its financial needs.
Senator Chaput: You are asking the Government of Canada for votes, but does it work the same way for the United States? Will funding also be requested for the needs in the U.S.?
Ms. Kinloch: Yes. In our case, it was a rare situation time-wise, in that all of our assets were coming due at virtually the same time. In the U.S., when major work such as the painting of the Cornwall bridge needs to be carried out, federal American votes are used to fund the project. We were lucky enough to have an adequate enough funding reserve to cover our portion of the costs, representing 32 per cent of the project. The Americans' needs were greater since they own 68 per cent of the bridge, and they did not have enough funding. So they asked the American government for votes.
Senator Rivard: Still on the topic of the Auditor General's examination, in February 2014, he suggested that an investigation be conducted into a former Federal Bridge Corporation president. At issue was $1.5 million in fraudulent activity. Were charges ever laid? Did the issue go before the courts?
Ms. Kinloch: The case you are referring to involves a former president and CEO of the Federal Bridge Corporation and Jacques Cartier and Champlain Bridges Incorporated in Montreal. The individual held two roles at the same time. The case in question involved a project in Montreal where the funding had been given directly to Jacques Cartier and Champlain Bridges Incorporated.
When we hear of these kinds of allegations, we have to face up to our responsibilities. The Deputy Minister of Transport asked us to investigate and we hired a firm to carry out the investigation. The objective was to determine whether FBCL had evidence of certain activities related to the project.
That investigation work was completed under the direction of our board of directors, and we submitted a report to the Deputy Minister. I can tell you with confidence that no evidence related to that case was found at the Federal Bridge Corporation. That was what we were anticipating since the project was really taking place in Montreal and we had very little information originating from the Federal Bridge Corporation. We learned by way of the newspapers that the RCMP was investigating the matter. And I do not have an update on the status of the investigation.
Senator Rivard: You are not responsible for the new Windsor-Detroit bridge, but are you familiar with the file? Whenever we hear from witnesses, whether from the Department of Finance or Transport Canada, the issue always ends up being referred to another committee. So I am daring to ask the question.
It is clear that the problem right now is that the American and Canadian governments agreed on the building of the bridge but an issue came up: the Americans did not want to pay for the customs station on their side of the border. It was said that President Obama was refusing to pay for it and that the cost was half a billion dollars.
Are you abreast of the matter? Is it resolved or still pending? I appreciate that, since you are not responsible, you may not know the answer, but I would like to know who we should ask in order to bring the witnesses familiar with the Windsor-Detroit issue before the committee.
Ms. Kinloch: Yes, I am familiar with the file. And no, we are not responsible for the bridge. Parts of the agreement with the U.S. are similar to the agreement governing the Sault Ste. Marie bridge since they involve long-term projects.
I can tell you that the customs facilities follow two models in Canada and the U.S. In Canada, the Customs Act confers the responsibility to the bridge owner. We are in the process of building the customs facilities and replacing all of that. On the Canadian side, which plays a significant role in the Windsor-Detroit bridge, there is no doubt that customs facilities were included in the bridge planning.
On the American side, the customs facilities are not the responsibility of the bridge operators, and the funding comes through another federal agency. Talks are ongoing, and the responsible organizations are Transport Canada and Infrastructure Canada. They are the ones who could tell you more about the project. Given that it involves an international bridge, the matter is being followed very closely.
Senator Rivard: I have another quick question. When you determine the toll, is dealing with the Americans easy? It is clear that, at the end of the day, an agreement is reached, but do you run into a lot of obstacles when you decide to change — well, raise, I would assume — toll rates when it involves an international bridge? I assume there is a barrier on the Canadian side and one on the American side. It is a bit like the San Francisco bridge, where it is known that those crossing the bridge one way will cross back on the way home.
Ms. Kinloch: It depends on the bridge and where the toll booth is. We agree on the tolls. Of course, users always want to pay less and people always want new bridges, but that is not always possible. Depending on the bridge, public consultations need to be carried out when it comes to raising tolls, especially in the U.S. We endeavour to be transparent in our communications and to point out the reasons why the tolls should be increased.
These days, the exchange rate is a topic of considerable discussion because it directly influences the toll on our bridges. We review the tolls on a cyclical basis, and if an opportunity arises or it is clear from the needs, we ask the board for a rate increase. Public consultations are also conducted in the case of the Sault Ste. Marie and Thousand Islands bridges.
[English]
Senator Eaton: Thank you, Ms. Kinloch. Do you foresee added expenses for security? Is bridge security your responsibility, or is it the CBSA's responsibility?
Ms. Kinloch: That's a very good question, and we are certainly in the midst of reviewing all those questions right now.
However, I can assure you that it's a joint effort. Certainly Canada has security-minded organizations that are mandated to look at the broader security of Canada. There is a process in place where Transport Canada performs threat and risk assessments on all our bridges, with information that is shared from those security establishments. That threat and risk assessment is then passed down to us, as the owner and bridge operator, so that we may address any flaws directly on the ground, things like access to bridge piers, how people flow through to gain access to the bridge, et cetera. We look at all the vulnerabilities.
Senator Eaton: Have you put anything in place lately, or is this something you're just now beginning to think of? Have you added cameras or people looking for bombs? Is it sort of up and going now, or is it something you're thinking about doing?
Ms. Kinloch: No, it is up and going now. The threat and risk assessments have been completed. The results are in. We have addressed all of the locations. If there were any vulnerabilities, they have been addressed. All of the locations are monitored by camera. There is restricted access to everything.
We do have a continuous briefing scenario where we are very aware of the threats. We work in conjunction with Canada Border Services Agency. We train our employees to be aware of and alert to the risks. If somebody were to see someone where they shouldn't be — a vehicle, et cetera — our employees are trained in those types of security matters so that they can immediately alert the responsible authorities.
We also have a memorandum of understanding with Transport Canada that establishes the responsibilities between what is Canada's security more broadly and what is our responsibility as the bridge asset owner and operator. That is all in place right now.
As for border security, that's with Canada Border Services Agency.
Senator Eaton: You work well with them?
Ms. Kinloch: We work well. If we identify anything, we are on a daily speaking basis.
Senator Eaton: You talked about the subsidy to the Mohawk Nation. When you profit-share with the U.S., your counterparts, do you account for the Mohawk subsidy? In other words, does Canada pay for the Mohawk subsidy out of its share of the profits, or is it shared jointly?
Ms. Kinloch: It is shared jointly, and it was agreed upon when the bridges were built in the 1950s and 1960s. Canada and the U.S. came to an agreement on this because the bridge in Cornwall is built over a reserve, and the Mohawk reserve stems in Canada, on Cornwall Island, but also has portions in New York state and in the province of Quebec. Three areas form the more global Mohawk reserve, and because of that unique geography, the countries came to an agreement. When we share a profit with the U.S., it's 50-50; there is no deduction.
Senator Eaton: There is no deduction?
Ms. Kinloch: No.
Senator Eaton: I think you mentioned — and I'm sorry; I didn't pick it up — what does that Mohawk subsidy cost you per year in revenues, approximately? Do you have a number?
Ms. Kinloch: Approximately $4 million.
Senator Eaton: Last little question.
The Chair: Do you notice how all the questions are little?
Senator Eaton: Yes, and how they go on for hours?
The Federal Bridge Corporation Limited is a very grand name for three bridges, and potentially a fourth. Do you see yourself taking over the Peace River Bridge and its successor, which is being negotiated now? Do you see yourself expanding to all international bridges?
Ms. Kinloch: Currently we have a restricted mandate. We are very excited to be amalgamating with the Blue Water Bridge and being able to bring all of those bridges together. Certainly our hope is that in demonstrating the best practices across all the bridges, if there is ever an opportunity to further simplify other models, our organization would have proven itself to be very valuable to Canada in that sense. But it is a policy decision, and that belongs with Transport Canada.
The Chair: I just wanted to let honourable senators know that, going to your last question, Senator Eaton, attached to our briefing note are various groupings of federal bridges with different federal departments involved. It could be quite helpful to us in looking at that question: Should this all be consolidated under your umbrella, or does it work well having various different departments, like Public Works, the Jacques Cartier Bridge and then the new one being built next to the Ambassador Bridge, which is a separate Crown corporation? Fisheries and Oceans are responsible for a few of these bridges, as are the National Capital Commission and Transport Canada. We will be talking to Infrastructure Canada in our next round. We should have that reflected in our report so that the public will have a chance to understand about all these bridges.
Senator Downe: Thank you. I want to follow up on Senator Rivard's question. I'm not sure if I understood. Are you involved or responsible for the new international bridge being built from Windsor to Detroit?
Ms. Kinloch: No, we are not.
Senator Downe: So you're the Federal Bridge Corporation involved in the international bridges, but you are excluded from that one.
Ms. Kinloch: Yes. That was a policy decision and it's with Transport Canada.
Senator Downe: I appreciate that. It may be a recommendation following up on Senator Eaton's and the chair's comments. In Prince Edward Island we have, for example, the Covehead Bridge and the Darnley Bridge under Fisheries and Oceans. They're the custodians. We have the Confederation Bridge, connecting Prince Edward Island to the rest of Canada, under Transport Canada.
Chair, I'm not sure why if we have a federal Crown bridge corporation, they would not be responsible for all bridges. It would seem to me that Fisheries and Oceans would have to have some expertise in the department on bridges, and so would the other departments you named. A bridge is a bridge is a bridge. It may be something the committee would want to consider.
The Chair: Thank you, Senator Downe, for that comment. I think that Senator Eaton's question was leading us in that direction. It seems like a consensus is starting to build. Ms. Kinloch would be pleased to have all those other bridges to look after, as long as you looked after a proper board of directors so that we could feel that the communities would have some input.
[Translation]
Senator Bellemare: I would like to come back to the cost structure and fee structure for the tolls on your bridges. You mentioned that you assess maintenance costs on a long-term basis for the bridges under your responsibility; what is the current toll for a residential vehicle transiting those bridges?
Ms. Kinloch: Right now, for the Cornwall bridge, it is $3.25. For the Thousand Islands bridge, it is $2.75, and in the case of the Sault Ste. Marie bridge, the toll, having just been raised, is off the top of my head $3.10 or perhaps $3.25.
Senator Bellemare: I would think a major distinction is drawn between personal vehicles and transport trucks. Is the toll doubled for trucks? Is it tripled? Can you give me an idea of how much more it is?
Ms. Kinloch: It depends on the size of the truck, because commercial trucks come in a number of classes.
In Cornwall, for instance, the toll for a commercial truck, as we know it, would be $11, more than triple the regular rate. Tolls vary depending on the size of the vehicle. In the Thousand Islands, a tremendous amount of large-sized and heavier-duty commercial vehicles transit the bridge. Vehicles often need to be escorted, and additional fees are charged for that purpose.
Senator Bellemare: Since we are talking about revenue dependency, what percentage of your revenue comes from heavy-duty freight trucks versus personal vehicles?
Ms. Kinloch: It is a pretty significant percentage. It all depends, once again, on the bridge. In Cornwall, the proportion is much lower. If I am not mistaken, some 6,000 trucks cross the bridge a year, out of a total of 3 million vehicles. The difference is huge. In the Thousand Islands, traffic is much more commercial and the percentage is different. Trucks account for approximately 20 per cent of vehicles crossing the bridge. But they represent a much higher percentage of revenue. So the proportion depends on the economic situation.
Senator Bellemare: I presume these three bridges have a monopoly. Is there an alternative for personal vehicles? Do they have to use the bridge to go in that direction?
Ms. Kinloch: In Sault Ste. Marie you have to drive 600 kilometres to find an alternative. Along Highway 401 in the Cornwall-Thousand Islands corridor, there is a bridge in the centre, in Prescott. And so there are three alternative bridges.
Senator Bellemare: Are the other bridges also toll bridges?
Ms. Kinloch: Yes.
Senator Bellemare: In these cases, was this a provincial or federal decision?
Ms. Kinloch: I believe it was a federal decision. We are responsible for two of the three bridges. The third one belongs to an American corporation. So there is an element of competition in this market.
Senator Bellemare: I do not want to judge, but the fees seem relatively low as compared to some of the figures we heard in Quebec, for instance for the Champlain Bridge. I am a bit surprised by that fact. And yet these amounts are sufficient for maintenance and so on.
I would like to know why the Jacques-Cartier and Champlain bridges were taken away from your responsibility. Was there a particular reason?
Ms. Kinloch: This is due in part to our complex structure. Even though a bridge is a bridge, the international partnership plans require another business model. The expertise and engineering are similar, however the Montreal bridges operate in a large metropolis. The issues are provincial, federal and municipal. The issues are different. In the context of building the Champlain Bridge, an initiative undertaken by Infrastructure Canada, the government decided to separate its interests in domestic bridges and international bridges.
Senator Bellemare: To your knowledge, is there in Canada, and in other provinces, a bridge that has an economic mission as important as that of the Champlain Bridge? Are there bridges one could say are comparable?
Ms. Kinloch: When the FBCL was directly responsible for the Champlain Bridge, we carried out several studies. The bridges in southwest Ontario have an enormous economic importance for Canada. The Confederation Bridge is also of particular interest for Prince Edward Island.
In terms of volume, for the bridges in southwest Ontario, I would mention the Blue Water Bridge; we have an interest in it, and I would also mention the Peace Bridge, the Niagara bridges and the new Windsor-Detroit bridge.
Senator Bellemare: Are all of these bridges toll bridges?
Ms. Kinloch: Yes.
Senator Bellemare: And the toll is in the order of $3?
Ms. Kinloch: The toll is rather in the order of $6.
The Chair: We will discuss the Champlain and Jacques-Cartier bridges during the second turn.
[English]
We are into the second round. These are the short, snappy questions and hopefully short, snappy answers because we're over time now and we have the other panel waiting. I think it's important for senators to get their points on the record. If you can't answer it quickly, maybe you could provide us with a written undertaking.
Senator L. Smith: Could you tell me the volume of traffic over the Thousand Islands bridge in terms of cars and then commercial vehicles?
Ms. Kinloch: Off the top of my head, approximately 3 million. I would have to look up the percentage difference, and I can undertake to provide it to the clerk. These are public numbers. Just off the top of my head, I have a lot of numbers.
Senator L. Smith: The reason I'm asking you the question is that over the Champlain Bridge we're talking about 20 million to 30 million vehicle crossings a year, and I'm trying to get an understanding of this.
Do you own the land around your bridge in the Thousand Islands?
Ms. Kinloch: Yes, we do, and Parks Canada owns the rest.
Senator L. Smith: From a business perspective, if you're trying to develop revenue sources — I've been there four, five times because my daughter lives in the United States — it looks like a lot of places have closed down and it doesn't look as buoyant on the Canadian side.
Going back to Senator Runciman's question, what interaction do you folks have? I know you said it's just a bridge and that's why the board is focused and constituted the way it is. But if you're trying to get revenues from these various bridges, what about the commercial implication and type of relationship? If there is no relationship, why wouldn't there be a relationship with the local folks so you could maximize the opportunity and minimize the cost to taxpayers?
Ms. Kinloch: Currently we are investing significantly in the CBSA plaza, the border plaza, because to attract a lot of traffic, that bridge has to be very efficient, and the structures are old and the traffic is slow.
The commercial traffic is certainly picking up. We are seeing the economic recovery from the ground. I understand your point, particularly in the approach to the bridge as far as the economic reality on that small island.
Senator L. Smith: My point is a question, but also a suggestion. One of the suggestions our committee hopefully makes is that you truly look at the relationship opportunity with the local chamber of commerce or business community group, as Senator Runciman has pointed out. I'm not saying you need to select a local person, but it would be neat if you could do that. The relationship opportunity could only lead to potential economic opportunity not only for you but for Canadians.
Ms. Kinloch: Thank you, I will take that back for sure.
Senator Runciman: The thing that got me involved in this was the reluctance on the U.S. side to get engaged in some investments that would benefit both sides of the border in a significant way, and our Canadian counterparts at the border not being familiar with that and not obviously prepared to raise those kinds of issues.
With respect to the rehabilitation of the facility on the Thousand Islands, what are the completion date and the traffic impact during construction? What are you doing to minimize or eliminate them? I'm assuming there will be a designated NEXUS lane in the new facility. I know some people thought this project would have started a lot earlier; I would like to know the completion date and the traffic impacts during construction, which you suggest might happen.
Ms. Kinloch: The completion date is 2017-18 with final landscaping. The construction will start this fall. The design is just being completed, so we'll start with rock removal this fall.
With regard to the traffic, the border will be completely operational throughout. Because of the rock removal, we are able to take down the secondary facility, build there and then transfer traffic over and continue to flow while we do the other part, so no interruption in traffic. The Thousand Islands Bridge Authority has been wonderful at providing staff in order to align the traffic so that we don't get those unexpected traffic blocks just because people may not know what lineups to take. We're working very closely with CBSA and the Thousand Islands Bridge Authority to ensure absolute minimal impact on traffic.
The Chair: That concludes the list of senators. I have had to discourage some senators from posing questions, although it is a very interesting area and more complex than we thought. A bridge is not always a bridge, and we are finding that out. Thank you.
If any undertakings are promised, we would appreciate receiving those further bits of information you feel would be helpful to us, having heard the flavour of the questions. You could send such to our clerk and it will get circulated to everybody.
Ms. Kinloch, thank you very much for being here. Mr. Iglinski, we appreciate your being along as well. You didn't get to answer too many questions, but your presence was important.
[Translation]
In our second session this morning we will continue our study of the Main Estimates for the fiscal year ending March 31, 2015.
[English]
We are pleased to welcome from Jacques Cartier and Champlain Bridges Incorporated, Claude Lachance, Senior Director of Administration; and Jean-Vincent Lacroix, Director of Communications. We are equally pleased to welcome Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges, Infrastructure Canada. I believe we have had the opportunity of having her here with us before.
We thank each of you for coming. I understand that each organization has some brief introductory remarks to help us set the stage for questions and answers. We will begin with Mr. Lachance from Jacques Cartier and Champlain Bridges Incorporated. That's a fairly recently incorporated entity. I think you will be telling us more about that. Then we will move to Ms. Pham from Infrastructure Canada.
[Translation]
Claude Lachance, Senior Director, Administration, Jacques-Cartier and Champlain Bridges Incorporated: Good morning, Mr. Chair and members of the committee. I am very thankful for the opportunity to appear before you today. I am here today with Mr. Jean-Vincent Lacroix, Director of Communications. In February 2014, the corporation's status changed. It became a parent Crown Corporation, whereas since its incorporation in 1978, it was for 20 years a subsidiary of the St. Lawrence Seaway Authority, and became, in 1998, a subsidiary of the Federal Bridge Corporation Limited.
JCCBI is in charge managing federal infrastructures such as bridges, highways, and tunnels in the Greater Montreal area. In this regard, the corporation's primary goal is to ensure the safe passage of infrastructure users through the management, maintenance, and rehabilitation of these infrastructures by optimizing traffic flow and respecting the environment.
JCCBI is responsible for three bridges and their approaches: the Jacques-Cartier Bridge, Champlain Bridge, and the federal section of Honoré-Mercier Bridge. It also oversees three minor bridges, which are Clément Bridge, Nuns' Island Bridge and its bypass bridge, and three connecting infrastructures: a section of Bonaventure expressway and Highway 15, the Champlain Bridge's Ice Bridge, and the Melocheville tunnel.
JCCBI's main activities are distributed between two sectors: Engineering and Construction and Operations and Maintenance. Administrative services, such as legal counsel, procurement, finances, planning, information technology, human resources, and communications support these sectors of activity. Engineering and construction services manage the activities connected with major projects for the construction, rehabilitation, and repair of components of civil and road engineering structures such as piers, girders, decks, steel structures, foundations, paving and painting. Operations and Maintenance services oversee and manage contracts for snow removal and spreading of abrasives, road cleaning and maintenance, landscaping, replacement of guard rails, sealing cracks and lubricating bearings, repairing potholes in the pavement and bridge decks, as well as the maintenance and operation of lane signal control systems and surveillance cameras, electrical distribution, and road lighting.
The corporation currently manages several major projects including the construction of the Nuns' Island bypass bridge, a major rehabilitation of the Champlain Bridge, the replacement of the deck on Honoré-Mercier Bridge, the replacement of viaducts in the Highway 15 corridor, and the treatment of groundwater in the Bonaventure Expressway sector.
These operations account for $120.8 million out the $146.2 million in the 2014-15 main expenditures budget. During the 2014 budget, and within the framework of the additional expenditures budget, JCCBI received $253.7 million in additional funds for the 2014-15 budgetary year to complete its major works program, for a total of $399.9 million.
JCCBI is forced to carry out its activities in a difficult environment where several external factors can have an impact on its planning. In terms of financing, JCCBI remains careful to monitor the public funds it spends. JCCBI's goal is to make sure its infrastructures are always safe. To this effect, the corporation has implemented monitoring programs and orders detailed reports and additional inspections to obtain the most relevant and updated information needed to make appropriate decisions regarding both short and long-term maintenance and rehabilitation programs. I would like to thank you again for inviting us here today. I would be happy to answer any questions you may have.
The Chair: Thank you very much, Mr. Lachance.
Ms. Pham, you have the floor.
Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges, Infrastructure Canada: Good morning, Mr. Chair and members of the committee.
[English]
Thank you for giving me the opportunity to come back to appear in front of you this morning to provide you with an update on the new bridge for the St. Lawrence corridor project in Montreal. My last appearance at this committee, as you indicated, Mr. Chair, was in May of this year.
As you probably know, following the recommendations of a pre-feasibility study, the Government of Canada announced in 2011 that it will replace the existing Champlain Bridge. In December 2013, Minister Lebel announced an acceleration of the project so that the new bridge for the St. Lawrence can be in service in 2018.
[Translation]
All the necessary funding for the preparation and supply of the new bridge for the St. Lawrence project was obtained through federal budget 2014, that is, nearly $165 million. Over the past few months, there has been a significant amount of progress on this project. Managed by Infrastructure Canada, this project includes a new bridge over the St. Lawrence to replace the Champlain Bridge, a new Nun's Island Bridge, and a reconstructed and widened federal portion of Highway 15.
[English]
The new bridge for the St. Lawrence will have six lanes for vehicles, a central corridor for public transit, and a multi-use path for pedestrians and cyclists.
On June 27, the Government of Canada unveiled the proposed architectural design of the new bridge, and I hope that you have had the opportunity to take a look at that. Otherwise, it can be found on Infrastructure's website. To ensure value for money for taxpayers, the project is being carried out as a public-private partnership.
The procurement process is under way, and it was officially launched on March 17, 2014. Following the launch of the procurement process, six multinational consortia have responded to the request for qualifications. Following a very thorough evaluation process, the three highest-ranked qualified respondents were selected to move on to the second stage of the process. That is the request for proposals.
As of July 21, the request for proposals was released to the top three respondents to enter into the next phase of the project. The request for proposals contains technical specifications with which the three consortia will have to comply to ensure that the new bridge is safe and reliable and will have a 125-year design life.
Meetings with the three consortia have begun already, and we are in discussions with the proponents.
[Translation]
In order to go forward, we have continued to work closely with our partners, including the Ministère des Transports du Québec, the Agence métropolitaine de transport du Québec, the cities of Montreal, Brossard, and Longueuil, and of course, the Jacques-Cartier and Champlain Bridges Incorporated.
For example, we work closely with the Government of Quebec to plan the central corridor dedicated to public transit.
[English]
Another example of collaboration is what we have with JCCBI. We work closely with JCCBI's experts to plan and coordinate future work on the new bridge but also repairs on the existing Champlain Bridge. In terms of the next steps for the procurement process, we expect to receive formal proposals from the three consortia, both technical and financial proposals. The proposals will include a fixed price and a fixed schedule. The contract will be awarded to the consortium that will comply with the technical requirements, but the one selected will be the consortium that has the lowest cost proposal. The winning proponent will be announced in the spring of 2015, and construction should begin shortly thereafter, therefore, in the spring of 2015. So, by this time next year, you will see that there will be work already on the ground.
[Translation]
The new bridge for the St. Lawrence will be in service by December 2018. The other components of the corridor project will be completed by 2020.
[English]
The Chair: Ms. Pham, thank you very much. I will go right to honourable senators and will start with Senator Downe from Prince Edward Island.
Senator Downe: According to the briefing note I have in front of me, tolls stopped being charged on the Champlain Bridge in May of 1990. Is that correct? How did you pay for the ongoing maintenance if you weren't collecting tolls?
[Translation]
Mr. Lachance: With the parliamentary credits that are allocated to us by the government.
[English]
Senator Downe: Now, with the new proposed bridge, the tolls have become a point of controversy in Montreal. Obviously, if you had been charging tolls for the last 24 years, you would have some money to help pay for the bridge. What is the estimated cost of the new bridge?
Ms. Pham: The construction cost of the new bridge is estimated to be between $3 billion and $5 billion. This is based on the preliminary report that the department received.
I should indicate, however, that the final cost of the project will only be known once we receive the bids. Based on the studies that we have now, it is estimated to be between $3 billion and $5 billion.
Senator Downe: Is Transport Canada involved in the construction of the new bridge, or is it Infrastructure Canada? Is that the same?
Ms. Pham: It is the same in the sense that initially it was with Transport Canada, so the decision to build a new bridge was given to Transport Canada. Then, that responsibility was transferred to Infrastructure Canada, but it's the same team in terms of the expertise in major bridges. We're also working with other federal departments as well.
Senator Downe: As you know, the Confederation Bridge, connecting Prince Edward Island to the rest of Canada, was built at a cost of roughly over $1 billion. You're talking up to $5 billion. We currently pay a toll. Every time I leave Prince Edward Island on that bridge, my toll is $45. What is the estimated toll for the new bridge in Montreal?
Ms. Pham: No decisions have been made with respect to the toll rates yet, as you probably know.
I'd like to come back, though, to the comparison. The $3 billion to $5 billion that I indicated earlier today is not only for the bridge but also for the entire corridor. As I mentioned before, there is a new bridge, of course, for the St. Lawrence. There's the Nuns' Island Bridge, but there is also going to be the widening of three kilometres of elevated highway from Autoroute 15.
Going back to the second part of your question, the toll rate has not been decided on. We are still looking at other analysis of the traffic and of the rate that is being implemented in the Greater Montreal Area. Also, we have to consider, of course, the volume of cars as well.
Senator Downe: We could get the volume of cars for the Confederation Bridge much higher if we reduced the toll as well. If it was not $45, the traffic, obviously, would be much higher.
The point I want to confirm is that there has been no change on the part of the Government of Canada. There has been a long-standing policy of user pay on major infrastructure projects in Canada. That's why there's been little or no criticism in Prince Edward Island that we pay $45 to really drive on the TransCanada but, in effect, to leave the province. We only have a seasonal ferry service. In Atlantic Canada, there is a major toll that Marine Atlantic charges for the ferry from Cape Breton to Newfoundland. There is the Îsles de la Madeleine ferry to Prince Edward Island and so on. This discussion of no toll in Montreal is interesting and would be very interesting for the people in Atlantic Canada affected by a decision not to charge a toll if the policy was changed because we would have our hand up for similar treatment.
The Chair: Thank you for that warning.
Senator Eaton: Thank you for coming. Very interesting. Melocheville, Jacques Cartier, Honoré Mercier — nowhere is there a mention of Victoria. The Victoria Bridge is run and looked after by the province, and you've just taken the bridges that need help. Is that it?
[Translation]
Jean-Vincent Lacroix, Director, Communications, Jacques-Cartier and Champlain Bridges Incorporated: Canadian National is responsible for the Victoria Bridge.
Senator Eaton: It carries the costs?
Mr. Lacroix: Yes.
Senator Eaton: It belongs to CN?
Mr. Lacroix: It is responsible for it, yes. It concluded agreements with the Quebec Ministry of Transport, since the Victoria Bridge is made up of two automobile traffic lanes, in addition to the railway lane. There is an agreement with the Quebec Ministry of Transport governing the operation of the Victoria Bridge, which has two lanes toward Montreal in the morning and two lanes toward the South Shore in the afternoon; but Canadian National is the owner.
[English]
Senator Eaton: It's interesting that, in your presentation, Ms. Pham, you said that you want assurance that the new Champlain Bridge is safe and reliable and has a 125-year lifespan. It's stunning, when you look at Victoria Bridge, for instance, that the Champlain Bridge has not had a long life. Was it badly constructed in the first place?
[Translation]
Mr. Lacroix: Historically, the original design of the Champlain Bridge was based on a model that was unique at the time. It was a new design that came from France, the purpose of which was to lighten the bridge's structure. The major problem with the Champlain Bridge structure, if one compares it to the Victoria and Jacques-Cartier bridges, is that it is not flexible. The Jacques-Cartier and Victoria bridges do not at all have the same structure, and they are made of steel. Over time there have been several major rehabilitation projects on these structures. The original components of the bridges go back to the 1930s and are no longer available. The Jacques-Cartier Bridge deck was replaced completely. The decks that cars have been travelling on go back 10 years, and not 75 years. The Champlain Bridge unfortunately is made of concrete. Rather than moving over a concrete deck that rests on girders, traffic moves directly on top of the girder. There is no deck, which makes the structure lighter.
Small slabs were poured underneath each of the seven girders, and all of this is held together by 54 steel rods, like a large concrete block. The problem is that today we cannot replace any of the components of the bridge without shutting down traffic completely for several months. We do not have the flexibility to replace major components of the bridge with girders without an enormous impact on traffic.
Our corporation commissioned a study by the Ontario firm Delcan; we asked it to examine all of the possibilities with a view to keeping the Champlain Bridge structure. This led to the 2011 report that was tabled, a report that informed the Canadian government's reflection. As opposed to the situation involving the Jacques-Cartier and Victoria Bridges, we did not have the necessary flexibility to replace all of these structural components without shutting down traffic completely, and there were also enormous engineering challenges, since the design at the outset was not sufficiently flexible. That is an important element.
The other point is the impact of road salt. When the Champlain Bridge was designed, Quebec was starting to use salt but its use was not as widespread as it became during the 1960s; Quebec uses salt a great deal. It is used less in other provinces because its effectiveness is greatest between -15o C and 0o C. In the western provinces where it is very cold, where you see temperatures like -20o C or -25o C, salt is not used because it is not effective. In Quebec, and in Montreal particularly, a great deal of salt was used, probably too much of it, because in the beginning people were not aware of its corrosive effects. Over time, the salt penetrated into the structure of the Champlain Bridge, and today we are reaching a point where we would have to replace the components that have been affected by the salt. However, we do not have that flexibility because of the original design.
Senator Eaton: Once the bridges are built, are they managed by the Province of Quebec, or are they part of the infrastructure managed by Transport Canada?
Ms. Pham: For the moment, the priority is of course to build the bridge, and the Canadian government will then maintain ownership of it. However, the federal government would have some interest in transferring these bridges to the Government of Quebec at the proper time. For the moment, however, our priority is to build the new bridge.
Senator Bellemare: When one listens to you and thinks about the major rehabilitation works that will be taking place in Montreal, one wonders how it is that our infrastructures deteriorated to such a point.
If I understand correctly, the federal government has the responsibility for maintaining these three bridges since it is the owner. Were maintenance budgets reduced in the 1990s following the removal of the toll station?
This could also explain the disaster that is unfolding in Montreal. I would like to hear your comments on this.
Mr. Lacroix: Today we are undoubtedly still managing the problems related to the operation of the Champlain Bridge during its first 20 years, when a lot of salt was used because people were not aware of the impacts of corrosion at the time.
Today still, the problem is related to the fact that we cannot replace the bridge components without doing what was done in the case of the Jacques-Cartier Bridge; during the 2000 decade, the deck of the Jacques-Cartier Bridge also deteriorated considerably. In the case of the Jacques-Cartier Bridge, we cut out pieces of the bridge slab and replaced them with new prefabricated concrete slabs. Every night for a period of two years, the Jacques-Cartier Bridge shut down completely so that its components could be replaced, like a giant jigsaw puzzle. We would need to do the same thing for the Champlain Bridge, but since the two bridges have different designs we do not have the flexibility.
The Jacques-Cartier and Champlain Bridges do not have a monopoly on problems; this is the case for all of the structures in Quebec which were subjected to the use of a great deal of salt, together with the fact that people did not have as much knowledge as we do today about the impacts of corrosion.
So there are several examples; the Champlain Bridge is an excellent example, because it is due to the impact of salt together with a lack of flexibility at the level of the original design that we cannot today replace parts of the bridge, that is to say the girders. The more important problem is that if we evaluate the seven girders of the Champlain Bridge, the two girders that are the most deteriorated and the ones we are focusing all of our efforts on, are the girders at the ends. Salt-saturated water used to run along those girders toward the river; the five central ones were protected since the water did not run along them, and so they are in relatively good shape despite their age. They were not affected by salt like the other two. We can really see a difference between the components that were corroded by salt, and the ones that were not.
The same strategy was used for the Mercier Bridge as for the Jacques-Cartier Bridge; we are in the process of replacing all of the slabs in the federal section of the Mercier Bridge; there are two owners. Here again this is a steel bridge, which means we have more flexibility to work on it.
Senator Bellemare: I cannot stop myself from asking a question on the report that was discussed recently in Montreal newspapers, pointing out that there would be congestion everywhere else if there were a toll on the Champlain Bridge.
In light of the fact that these three bridges belong to the federal government — the Mercier, Jacques-Cartier and Champlain bridges — do you think that one solution might be to impose tolls everywhere?
Ms. Pham: For the moment the government has announced that there will be a toll on the new bridge, but it has not yet made any decision concerning the existing bridges. I cannot say any more than that regarding what is discussed in the media or by the population.
Senator Bellemare: In Montreal, tens of millions of vehicles go over the Champlain and Jacques-Cartier bridges; Montreal is an economic engine. Will there be an important distinction made between the tolls for commercial vehicles and tolls for personal vehicles?
Have you considered separating the demand in this way, in order to have a good part of the revenue generated from commercial traffic?
Ms. Pham: The decision on making tolls different according to the type of vehicle has not yet been made. As you indicated, we still have to examine new data on traffic, and before a decision is made, we will have to do more studies and analyses.
Of course, in the context of the work we are doing, we evaluate all possible scenarios, including, for instance, the possibility of imposing a different toll for heavy vehicles like trucks, as well as taking the time of day into consideration. We are really examining all possible scenarios.
Senator Bellemare: Do you intend to take all of the costs into account, so that the toll would provide funding for all of the projects, or will the tolls finance only part of the projects and part of the repair costs?
Ms. Pham: I would like to go back to the question on the new bridge for the St. Lawrence, because we are talking about the toll for that bridge. As I said, this project will be a public-private-partnership. A toll would allow for the recovery of part of the costs of constructing and the operating the bridge. However the Government of Canada has also indicated that it will be making an important contribution to the project.
Senator Chaput: A study was undertaken by Jacques Cartier and Champlain Bridges Incorporated on the possibility of transporting people between the South Shore and the Island of Montreal over the ice bridge of the Champlain Bridge. This study was done at the same time as others that examined the issue of public transit, that is to say a light rail system.
While taking these parallel studies into account, did you draw any conclusions from the feasibility study on the transportation of persons? Also, did you derive any conclusions from the other parallel study that examined public transit?
Mr. Lacroix: In fact, with regard to the history of the studies done in partnership with the AMT — I think that is the study you are referring to — the AMT shared with us its interest in conducting a study to validate the possibility of creating a light rail system along the ice control structure of the Champlain Bridge, and a study was published.
In the meantime the AMT, the Montreal transit authority, had heard about the project that was being considered to completely rebuild the structure of the Champlain Bridge, but it came to the conclusion that it preferred to take advantage of the construction of a new Champlain Bridge to integrate a light rail transit system into the new structure. When the government made the decision to build the new bridge, the idea of using the ice bridge was less interesting than that of integrating a light rail system.
The problem with the ice bridge is that it reaches Nun's Island at the seaway dyke. It does not continue along the Brossard-Montreal axis. In addition to putting a light rail system on the structure, they also had to consider connecting that light rail system to Montreal by going through Nun's Island, and also over the seaway. The biggest issue for any bridge to the South Shore is to provide sufficient clearance over the seaway, that is to say enough width and height to allow ships to get through. However, the ice bridge does not allow for that clearance.
So there were challenges, but also possibilities. It became much more interesting to pursue the new bridge project with a structure that would cross Montreal-Brossard, rather than pursuing the idea of the ice bridge. So this idea of using the ice bridge was set aside.
Senator Chaput: Since this idea was set aside, we are no longer considering a light rail transit system?
Mr. Lacroix: The idea of that system was not set aside, but the use of the ice bridge was. The idea is maintained, but using the new bridge that is being built.
Ms. Pham: I can provide additional information on that point. The new bridge will have two lanes, i.e. two decks for automobile traffic. There will also be a central deck with two lanes that will be dedicated to public transit alone. We are working with the Government of Quebec because we are going to reserve that central corridor for public transit. However, it is up to the Government of Quebec to decide whether there will be a light rail transit system. One thing is certain, and that is that there will be a dedicated corridor.
Senator Rivard: I would like to go back to Senator Bellemare's question. Since we are going to proceed with PPPs, I find it difficult to imagine that a bidder would propose a single price. If when we call for tenders we do not know whether there will be tolls on the other two bridges, it would be impossible to arrive at a realistic price. And if it is true that this study which was leaked to the media recently indicates that we will see a major impact on the other bridges, the impact will be minor if the other three bridges have tolls, even if they are different tolls. Unless the call for tenders produces new scenarios, such as having a single toll on the Champlain Bridge and not on the other bridges. In that case, it is certain that the toll will be higher, or the cost of working through PPPs, because we will have to consider the revenues, the operation and the maintenance. The amount cannot stay the same. The bidders will take into account current traffic and suppose that with a larger population and more transportation, this will be profitable. However, if tolls are imposed on the other bridges, the situation will be different.
I suppose that when you prepare the final specifications, you will take these tolls into account, whether there is only one on the Champlain Bridge or whether they are imposed on all three bridges?
Ms. Pham: The meetings, discussions and negotiations with the three consortia are ongoing as we speak. These are considerations we discuss with them as well. You will understand that these discussions are confidential.
Senator Rivard: However, let us agree that if there is a toll on the Champlain Bridge alone, the price may be different than if there were tolls on the other bridges as well. Will the decision be made when we get to the bids? Unless there are price breakdowns provided, and then the government will make its choice subsequently.
If we consider that the bids are settled once the envelopes are opened, the lowest compliant bidder will obtain the contract, and afterwards he or she may realize that traffic is much less than anticipated because the decision was made to not place tolls on the other bridges. How frequently the bridges are used is important information to determine the price when preparing the bids.
[English]
If this question can be answered, it can probably be answered by Ms. Pham. Both our committee and I are interested in knowing what federal money is going into bridge authorities, if any. I think we've touched on most of the various Crown corporations and the Federal Bridge Corporation Limited that we just heard from.
Regarding the Lewiston-Queenston Bridge from Ontario and the Niagara Falls Bridge Commission, is there any federal ownership or any federal money that goes into that that you're aware of?
Ms. Pham: I will have to get back to you with an answer to your question because I don't have that information right now.
The Chair: But if you can easily find it for us, I will give you two names, then: The Ogdensburg Bridge and Port Authority, which is between Prescott and Ogdensburg, New York — and, I think there was one other one that I wondered about as well, if you will just bear with me here — the Buffalo and Port Erie Public Bridge Authority. If you could find those for me and let me know if there is any federal money involved in those corporations.
Ms. Pham: Certainly. I will get back to you.
Senator Chaput: To add to that, Mr. Chair, we had the appendix prepared by our staff. Could we have the federal money given to all the bridges on this that have a federal component? There are quite a few of them.
The Chair: I'm not sure if you have a copy of this, but, Ms. Pham, we will ensure you get a copy at the end of this session. If you could look at the various federal government departments that are responsible for different bridges, it would be very helpful for us to know what the amount is, which department it is and where it comes from. Is it Transport or Infrastructure? We're trying to draw all this together and put our arms around it.
Ms. Pham: I understand. I would be more than pleased to follow up on that.
Senator Downe: I'd just like to follow that up. I wasn't aware that the Government of Canada was also contributing to the new bridge in Montreal. I thought it was a public-private partnership but that the tolls would pay the cost. As you know, the Confederation Bridge was built because it was part of the constitutional obligation of Prince Edward Island joining Canada. They took the annual ferry subsidy, $42 million indexed in 1992, paid over the next 35 years to the private company that built the bridge, plus the tolls. That's how the Confederation Bridge is being paid for.
Tell me how the new bridge in Montreal is going to be paid for. What is the level of contribution over and above the tolls from the Government of Canada?
Ms. Pham: We will only know the final cost of the project once we have the bids. Based on our estimates at this point, we feel that tolls will help recoup part of the cost to build and operate the bridge, but there will still be a need for a federal contribution. At this point, I'm not able to communicate that amount because we're still waiting for the bids to come in.
Senator Downe: But the bridge is built for a lifespan of 125 years, and the Confederation Bridge was built for a lifespan of 100 years. The deal was the $42 million, indexed from 1992 for 35 years, plus the tolls. After that, it reverts to the Government of Canada. So you get 65 years of ownership. Surely this bridge can be amortized over a number of years to pay the total cost of any taxpayer money going in up front.
Ms. Pham: Depending on the toll rates and also the total cost of the project, those numbers are still being looked at, so we don't have the final numbers as to what the federal contribution will be, nor have we set the toll rates yet.
Senator Downe: Obviously, this is a point of some interest because Prince Edward Islanders haven't objected, or other Canadians, to the $45 fee, chair, but if there is additional money going into another bridge, our rate could be much lower if we had a top-up as well. Thank you for that information.
The Chair: Thank you. We will continue to be interested in these subjects.
I have one other senator on round two, Senator Chaput.
Senator Chaput: Very briefly. It's with regard to information we've asked for. According to the appendix we have, there are 26 existing federal bridges across Canada and they're under six different custodians. This is the information that we'd like to receive with regard to the monies the federal government is giving to all of those.
The Chair: We'll give you two schedules. One we have prepared — the Library of Parliament has brought this together for us — that lists the names of bridges under different government departments. I mentioned those: Fisheries, et cetera. Then we have another one: existing federal bridges and what authority is responsible. That's where I got those various names that I wasn't sure who this particular authority was. If you're able to help us with that schedule and maybe bring it all together into one for us, that would be very helpful.
Ms. Pham: I will try to do so.
The Chair: This is our Finance Committee inquiry, so we're interested in knowing the amount of federal money going into these various projects and what oversight there is. That's our area of interest.
[Translation]
Senator Rivard: When we began discussing the problems surrounding the replacement of the Champlain Bridge, we all wondered whether it was relevant to ask why this was not an international bridge, and why the federal government had decided to build it at its own expense a few years ago. I found the reply I was given satisfactory. Correct me if I am wrong, but that decision was taken because of the opening of the St. Lawrence Seaway, which allowed ships to travel right up to the Great lakes. That was the justification for making it a federal bridge. That is still the reason why the federal government has kept the responsibility for the Champlain Bridge, because contrary to other bridges in Canada, that must be interprovincial or international, in the case of the Champlain Bridge, the idea was that it goes over the seaway which serves three-quarters of Canada. Is that correct?
Ms. Pham: Yes.
Senator Rivard: Thank you.
The Chair: If there are no further comments, and if no other senator wishes to have the floor, I will thank you, Ms. Pham, Mr. Lachance and Mr. Lacroix. We continue to be interested in the bridges.
If you have any further comments, we are always here, and please do not hesitate to contact us.
(The committee adjourned.)