Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 17 - Evidence

OTTAWA, Thursday, May 7, 1998

The Standing Senate Committee on Transport and Communications, to which was referred Bill C-9, for making the system of Canadian ports competitive, efficient and commercially oriented, providing for the establishing of port authorities and the divesting of certain harbours and ports, for the commercialization of the St. Lawrence Seaway and ferry services and other matters related to maritime trade and transport and amending the Pilotage Act and amending and repealing other Acts as a consequence, met this day at 10:40 a.m. to give consideration to the bill.

Senator Lise Bacon (Chairman) in the Chair.


The Chairman: Good morning. We are continuing our study of Bill C-9.

Our first witnesses are from the City of Summerside, Mr. Bruce MacDougall and Mr. Mike Thususka.

Welcome to our committee. We are looking forward to hearing your presentation, after which senators will have questions for you.

Mr. Bruce MacDougall, Deputy Mayor and Councillor, City of Summerside: Thank you for allowing us the opportunity to speak with you today about not only the Port of Summerside, Prince Edward Island, but other ports of the province. I am Deputy Mayor and Councillor for the City of Summerside. Appearing with me is Mr. Mike Thususka, Economic Development Officer for the city.

We are here not only as representatives of the city, but as voices for over 44,000 people regionally and over 137,000 people provincially, to express to you our determination to see our port and others sustain their economic viability for the future.

We would like to express to you our interest in, and insights on, Bill C-9. We agree with many the objectives set forth in the bill. We of the City of Summerside also want an affordable, efficient and safe marine transportation system and we wish to ally ourselves with all levels of government to ensure that these objectives are met. We wish to maintain this partnership and ensure that the interests of our citizens are properly served.

It is not my intention to address every issue related to the port divestiture program and its implications for P.E.I. and, in particular, Summerside. Rather, I will try to localize our concerns to those regarding the focal point of our community, the Port of Summerside.

The Port of Summerside is the economic heart of our marine community, much like the downtown is the heart of any city. The port acts as our arms to the world, our gateway to economic prosperity and our link to world markets. This morning, I should like to discuss how we as a city feel about the long-term future of our port, from both a local and a regional perspective.

The economic and social impacts of the Port of Summerside on the community cannot be overestimated. We as a community see it as an invaluable asset which can never be replaced. The port injects a substantial amount of money into our local economy as well as into the economy of the province. With the multiplier effect compounding this initial investment, the significance of the port is immeasurable.

We believe that with a complete rethinking of how we do business, and a true partnership with the federal government, we can explore new and exciting revenue-generating alternatives that will make our port a crown jewel of the country and a model for other small Canadian ports, but we cannot do it alone. We are not the Port of Halifax, the Port of Montreal or the Port of Vancouver, but the Port of Summerside is just as important, if not more so, to our city and to P.E.I. as the Port of Halifax is to Halifax and Nova Scotia, the Port of Montreal is to Montreal and Quebec, or the Port of Vancouver is to British Columbia.

Should this divestiture program continue on the course that has been set, many questions and concerns will arise as to the implications that it will have on our local and provincial economy, questions such as who will now be the players controlling the direction of our port, who will assist the city with its strategic planning and the interrelationship the port has with the community.

We in Summerside believe the port is an essential service, much like the 401 in Toronto, acting as a feeder system for the movement of goods. Our port and waterways serve as our highway infrastructure, allowing a cost-effective means of connecting our markets to others both at home and abroad.

Many studies and reports have been written and reported on with regard to the viability of the port system on P.E.I. and how a reconfiguration of the existing system would make the port network more efficient. Many of these studies and reports were undertaken with some of the primary conclusions being drawn prior to the actual research being done. It is for this and other reasons that we are convinced that not only is a rethinking of the port operations in order but that the Summerside port should be a main catalyst and model for the future.

We have one of the most modern facilities in the maritimes, and with some infrastructure improvements, strategic marketing and an ability to handle higher capacity, the Port of Summerside can be well-positioned for the twenty-first century. We as a community believe this port must remain viable and must continue to be directed by parties who have a genuine interest in the direction and sustainability of this asset. Studies have a tendency to draw their own conclusions. We believe strongly that our port is strategically and economically viable if it has the proper balance of improvements, direction, partnerships, and control. Our port, as modern as it is, still requires significant infrastructure investment to bring it up to today's standards.

Our state-of-the-art port facilities offer the following: stevedoring, fuel, supplies, fresh water, sewage disposal, and wharfinger and harbour master services which are directly tied to incoming and outgoing traffic.

I would like to share with you some statistics we feel show the importance of maintaining a vibrant and attractive port. These are statistics with respect to the direct and indirect economic impacts that our port has on the region, and they come from an economic impact study conducted in 1996 by a provincial consulting firm whose mandate was to quantify the actual importance our port has for our local and regional economy.

The annual direct value of the harbour operations in real terms was $7,357,668, which I will break down for you.

The potato shipping operation component breaks down as follows: stevedoring, handling and storage, $2,023,217; trucking, $424,875; wharfside inspections, $20,000; officer and crew expenditures, $224,000; and ship supplies, $250,000. Total revenues directly related to potato shipping were $2,942,092.

When that is coupled with other forms of shipping, an example being the shipping of aggregate material, the total revenue generated directly through shipping operations in 1996 was $3,228,092.

With respect to harbour operations, the capital injection into the economy was as follows: Repairs, $224,800; capital expenditures, $87,900; surveying and dredging, $15,000 -- totalling $347,700 of direct monetary stimulus to the economy.

Other important sectors of the economy directly tied to the port include the oyster fishery, which injected a total of $2.6 million into the market-place, and the inshore fishery, which contributed a total of $732,089.

One final sector I would like to touch on is the recreational or pleasure sector. The Summerside Yacht Club, located directly beside the port, was estimated to contribute over $400,000 to the local economy, through a number of sources, including both our local boaters who purchase supplies and fuel and also visiting boaters who made purchases locally.

The port also provides both seasonal and full-time employment opportunities in a variety of capacities. In peak season, our port provides employment for 250 to 300 citizens, drawn from a labour force of over 6,000 people, or roughly 5 per cent of the labour pool, a significant percentage of our employment opportunities.

In the period between 1996 and 1998, the Port of Summerside handled 83 boats destined for various areas around the country and the world, carrying in excess of 500,000 tonnes of cargo. Some examples of the ports of call included Nova Scotia, Quebec, Newfoundland, Mexico, Brazil, Barbados, Trinidad, Uruguay, Norway and Venezuela, to name a few -- truly an international port.

These figures help to emphasize the importance our port has for the local, regional and national economy.

All that being said, we would not be responsible if we did not address the other side of the balance sheet. The community realizes the significant financial and fiscal responsibility faced by all levels of government. We thank the federal government for constructing the new storage shed in 1995, at a cost of over $7 million, as well as for the money going into the upgrading of the facility this year. We are all well aware of the expenses our state-of-the-art port has incurred over the years and, yes, one major expenditure has been the dredging of our approach and berthage channels which in essence limits our opportunities for growth in revenue potential.

We cannot hide the fact that we must re-evaluate our ledger to bring it more in line with today's realities. I bring a strong and unified message to you today that the community of Summerside is committed to being fiscally responsible to our nation.

Dredging costs have averaged roughly $280,000 over the five-year period between 1990 and 1995, and they have had a significant impact on our balance sheet, as well as on our ability to attract new and diverse operations at our port.

I would like to touch upon one potential solution we are exploring with the provincial and federal governments: another major project for the city that may help to mitigate some of these dredging costs and thus put our port into a much improved position.

We restate that with a proper federal-provincial-municipal partnership in place, a more focused approach to revenue generation and port diversity activity can be achieved so that our port can become a model for the rest of Canada and the world. We do not wish to see our port go the way of the railways on P.E.I.

If I could, I would like to take you back in time, to 1989, when CFB Summerside was closed. At its peak, it employed close to 1,400 people. The community was devastated -- not so much by the actual closure but by the fact that many lacked the confidence in our community's ability to bounce back from this adversity. Today, Summerside, then seen as the city that "maybe could" is now thought of as a city that can. We have a thriving and growing aerospace centre which has positioned us on the global map and is destined for only great things.

The port is not too dissimilar to the base. Its regional focus, its significant strategic location, being in the lucrative potato-growing area of the province and also having all sorts of other shipments pass through it since it is the only port in the western half of the province, its colourful past in building our rich history, and its future potential cannot be overlooked. We want to participate actively in a tri-level government partnership to ensure its future long-term prosperity and to maintain its important role in the community.

I would like to touch on what we think are some proactive steps the community and the region are taking to ensure the long-term stability of the port. Much like in a puzzle, the port is perhaps the single most important piece to completing our picture or vision of the future.

First, in order to start the picture, you need a strategy, a map to get you from point A to B. The City of Summerside is proud to have adopted its official plan, its road-map to the future. Summerside is the only city on the island to have such a document in place which clearly lays out the organized, long-term plan for capital infrastructure and development opportunities in a planned and professional manner, and that will help start to develop that picture.

This document has enabled us to communicate to all, in a manner which most understand, where we see our city heading in the future and why the port facility, along with other strategic pieces of the puzzle, will help to bring our vision to fruition.

Second, our local, private-public partnership has just completed a working paper on what it considers to be a dynamic and aggressive approach to long-term waterfront redevelopment, and again the port and wharf area are expected to play a significant role in this project.

This project would consist of constructing a land mass with the inside becoming a man-made lake with gates to control the water level and quality. The area inside the land mass is large enough to accommodate a number of sporting and leisure activities while adding valuable infrastructure to the community for future generations. The land mass will be proximately 60 metres in width and approximately 1,700 metres in length. Coincidentally, the design of this first-class water park would allow it to hold some of the water sports events for the 2009 Canada Summer Games to be hosted by P.E.I.

One of the more interesting findings of this preliminary study was the project's ability to deal with the tidal nature of the area and the inherent problems that come with the shifting of sands and the silting of the harbour, the approach channel and the docking berths.

An innovative concept developed in Australia, which may be able to play a significant role in this project, is a sand-shifter which reclaims sand from one area and redirects it into areas deemed more appropriate and where it can be better utilized. One of the major drawbacks to our port, and one of the biggest financial drains to our operation, is the cost associated with dredging, not only of our channel but also our berthing docks. With this new technology, we could have the ability to perform year-round dredging at a fraction of the cost and disruption to our existing operations. This revolutionary system has many other direct benefits and other uses, besides the obvious which is to act as a permanent channel dredging tool to deal with our approach-depth problem. It can also play an important role in beach development and beach recharging programs, land mass creation, and in winter months can be used for the sanding of roads. With this technology, the potential exists to offset any unnatural changes to the environment, mitigating many existing and potential problems that may arise.

Work is also under way at the present time on some strategic research into the potential to attract cruise ships and alternative forms of water crafts, other than cargo ships, to our port. As our local and regional infrastructure has matured, and with the cooperative effort of the community, we have collaborated and pooled our resources to back Summerside as a destination. We believe the water access plays a pivotal role in our future. One only needs to look at the increase in cruise ship activity to see the potential this sector of the market holds, but you can be assured we are not intending to put all our eggs in one basket.

We as a community feel that we are positioned to share in new wealth in the long term and that we must work in a cooperative effort to ensure that this takes place. Slurry systems, the cruise ship industry, the west-end development project, the downtown revitalization program, and building on our historic roots including our strong link to the past boat-building era, are all helping us recapture our past and make it one with the future. All of these diversification programs rely on a vibrant and attractive port for their success.

We believe that the port infrastructure should be split in three ways: The Holman's & Queen's wharf should become the responsibility of the Department of Fisheries and Oceans; the yacht club breakwall should become the property of the Summerside Yacht Club; and finally, the Transport Canada wharf and Indian Head breakwall should become the joint responsibility of the federal-provincial-municipal partnership. It would be our suggestion that the federal government remain responsible for capital expenditures, and the province and the municipality should be responsible for the operational side of the port.

In summary, we believe that, with some proactive projects the City of Summerside has undertaken, and with new partnerships with all levels of government, our port can become a model for all small Canadian ports. The Port of Summerside should become a model for sand-shifter technology for all ports facing a dredging issue. Our port partnership should proactively pursue alternative and traditional forms of revenue generation and this partnership should be actively involved in the decision-making process related to the implementation of the Bill C-9. The Summerside port should be given every opportunity to remain viable in the long term.

On behalf of the citizens of Summerside and Prince Edward Island, I extend an open invitation to all of you to come and enjoy our fine island hospitality in the very near future.

Senator Forrestall: The root of this is you wish to remain a viable port.

Mr. MacDougall: Yes.

Senator Forrestall: You are talking about the port being up to standard. Is that a minimum standard or a commercial standard?

Mr. Mike Thususka, Economic Development Officer, City of Summerside: We know there are issues related to the capital infrastructure improvements needed in our port. We have not identified a particular standard. We simply realize repairs need to be done to bring our port up to speed with today's realities. There are issues related to some of the wharf piers, the channel and so on.

Senator Forrestall: If the bill goes through, you will be in jeopardy with respect to funding. How would you raise money to put in place, for example, the sand filtration system? It seems like an extraordinarily good idea. Is it mobile? Could you move it to other places?

Mr. Thususka: In order to address your question with respect to revenue generation, we must look at alternatives. Obviously, the depth of our channel and berthing docks has an impact on our ability to attract new revenue. That is why we are considering the sand-shifter technology. In a nutshell, the best way to describe it is to think of it as a number of straws placed around various areas in the channel. These straws are at a certain depth. The sand is agitated, the straws suck the sand out, and we are able to pump it to another area of the city, or to a holding tank perhaps, to be used for beach regeneration, the sanding of our streets or land mass creation. This is in the preliminary stages.

We are awaiting soil samples which we can send to this company to find out the actual cost associated with installing this technology.

Senator Forrestall: How do you propose to finance it?

Mr. Thususka: The sand-sifter technology came out of our project to rejuvenate our west end. There are many issues with our west end and our waterfront. One of the issues was how do we deal with the shifting of sands? A gentleman was visiting from Australia and we got into a conversation about the problem, and that is how we got into the sand-shifter technology.

Senator Forrestall: What about going to the bank?

Mr. Thususka: We were looking at partnering with the federal and provincial governments. We have set up a technical committee to study these issues. We are in the very early stages of that process. At the present time the committee is working on terms of reference for the request for proposal so that we have an idea of costs. Once we have a better understanding of the actual cost, we can decide where to go to get the funding for the project.

Senator Forrestall: You have acknowledged the $7 million federal contribution to the shed. It is a beautiful one. What I am attempting to get from you is how you plan to finance yourselves once you are a candidate for divestiture.

Mr. Thususka: We believe it will be through a government partnership of some sort. Once we address the fundamental issues of the state of the port and the dredging problem, then we believe we will be able to find new forms of revenue generation. We believe that, with such a program, we will be able to market ourselves much more aggressively to attract alternative forms of transportation to our community. Putting the port in the hands of the people of the community will allow us to go out and have an aggressive marketing campaign.

Mr. MacDougall: We will be a little more proactive.

Senator Forrestall: I look forward to hearing Senator Callbeck's questions because she has had firsthand experience as premier of the province.

If the port were offered to the province and the province declined and the port were then offered to the city of Summerside -- this is not a hypothetical question -- how would you cope with it? Have you discussed financing, for example, with the banks?

Mr. MacDougall: No.

Mr. Thususka: We have not reached that stage of the game yet. Through this bill and some of the work I am undertaking, we have just started to consider the options. Obviously we are a bit behind on what we should have been doing. That is why we are trying to be proactive in what we are doing.

Senator Forrestall: Is there anything that disturbs you in Bill C-9?

Mr. MacDougall: The part of Bill C-9 that disturbs me says there should be one port authority for the four ports on P.E.I. It disturbs me because there is also an ACOA report which says there should be one port authority for P.E.I., but that two ports should close, Summerside being one. That is like having a noose around your neck and waiting for someone to kick the stool out from underneath you.

Senator De Bané: Thank you for your presentation. I should like to explain to you why I support the provisions in this bill concerning small ports.

Essentially, there are two philosophies at play here. One states that the fate of the ports of your province should be in the hands of unknown bureaucrats in Ottawa and they will make decisions about the fate of those ports.

The other philosophy states that, no, the private sector and the local people in each area should be in charge. We make the assumption that they are a lot more productive and efficient that anonymous bureaucrats in Ottawa who do not live in P.E.I.. That is the approach. Who should be in charge of those ports: people you do not know in Ottawa or people who live in, and have at heart the destiny of, your province?

The minister announced sometime ago his policy regarding the 549 harbours and port facilities in Canada. Already 114 sites have been transferred, two have been demolished, and 199 have been de-proclaimed as public harbours, so 60 per cent of all sites have been resolved. Now the department has put in place that fund of over $100 million to help the remaining ports whereby, as a first step, they will sit down with you, finance a feasibility study, a marketing study, a capital-needs study, to assess what should be done to keep those ports viable.

Minister Collenette has told this committee that his department has gone the extra mile for P.E.I. because it looked as though it would be the only coastal province which would not have a CPA port. He mentioned the announcement made in Summerside before Christmas regarding financial assistance and said that the Canada Port Authority in P.E.I. would be organized to run four ports there. In the meantime, assistance was to be given to keep the ports in good repair until the Canada Port Authority was organized.

As you know, the minister brought forward a major amendment to the bill in clause 72 to keep with the minister operating responsibility for public ports and public facilities that are not divested pending the resolution of individual situations. The final adjudication over certain ports would remain in the political domain with Parliament having a say on that. Hopefully the politicians would be sensitive to regional and local interests.

I personally have represented a riding in the Gaspé Peninsula which has exactly the same configuration as the other maritime provinces. I think it is a lot better to put those ports in the hands of local people who will be freed from those regulations in Ottawa and the tariffs and the rates set by bureaucrats in Ottawa. They will develop their own business plan. You have shown this morning how imaginative you are with all the initiatives that you see to increase the profitability of your ports in P.E.I. I am sure that 99 per cent of the suggestions you have made have never crossed the minds of the bureaucrats in Ottawa. This is why I think that what the minister is suggesting in this bill is the right policy to help you achieve your ambitions.

Senator Callbeck: I want to thank you both for coming to Ottawa to talk about the importance of the Port of Summerside.

First, I want to commend you on the improvements that have been made to the waterfront over the last two years and on your official plan. Certainly, you are a very progressive area, as all Canadians know what Summerside has accomplished since the closure of the base. You are a model city.

Having been brought up seven miles from Summerside, I realize the importance of the port, which you have outlined so well this morning in your brief when you talk about direct dollar value being over $7 million. At peak times, it provides employment for 5 per cent of the labour pool. Those are very significant figures. Certainly the port creates a lot of economic development in the area.

In your brief, you mentioned that the port requires significant infrastructure investment to bring it up to standard. Do you have an idea of the figure? How much money are you talking about?

Mr. Thususka: I am not 100 per cent sure. A few studies have been circulated with respect to the actual amounts. I would hazard a guess that hundreds of thousands of dollars have been spent on pier system there, the Queen's wharf and the like. That would be a ballpark figure. We apologize that we do not have the actual number in front of us. We should have been prepared for that.

The Chairman: Could you furnish us with those figures?

Mr. Thususka: Certainly.

Senator Callbeck: You mentioned a new dredging system. Do you have any idea of costs that would be involved there, or is it too early to tell?

Mr. Thususka: We have only looked at dredging from the operational side and only with respect to the Australian experience. The costs there, on average, are $260,000 to $280,000 in the five-year period we studied. Someone suggested to us that we could reduce that level roughly in half. However, much of it is dependent upon the materials being pumped out of the area. Until we get the actual samples, we will not have an exact figure. It was also suggested that it would be able to operate year-round.

Senator Callbeck: When do you expect to have those figures?

Mr. Thususka: They will start to dredge in the next couple of weeks. As soon as we get those figures, we will fax them to Australia. I am hoping that will be in the next month or so.

Senator Callbeck: Would the City of Summerside consider taking over the port? Is it possible the city could take it over, continue to operate it and pay for the ongoing maintenance, infrastructure and dredging?

Mr. Thususka: I would like to think we could. We believe we are a community that can. I would like to sit down in a partnership-type forum so that we could address all the issues and ensure that we are all reading from the same song sheet to understand the cost and the revenues. One of the difficulties we have had in the past is understanding the costs associated with the ports. Three or four different reports or studies have reported three or four different figures with respect to costs. We believe in our hearts that we can. However, we would like to see the numbers and form this partnership so that the port can actually become viable.

Senator Callbeck: When you talk about a partnership, you do so on the assumption that the federal government would be putting money in, do you not?

Mr. MacDougall: Yes.

Senator Bryden: I know Summerside reasonably well. As a matter of fact, I live 50 yards from the high water mark of the Northumberland Strait. When I get up in the morning, I see the lights at Summerside.

My concern is to ensure that in your planning you understand that one of the principal purposes of this bill and the marine policy that it will enact is to remove the federal government from the ports' business within six years. Are you aware of that?

Mr. Thususka: Yes.

Mr. MacDougall: Yes.

Senator Bryden: From you dealings with various levels of government, do you believe that within the six-year period, you can get sufficient funding to bring your port facility up to commercial standards and obtain the infrastructure you need to go forward after that?

Mr. MacDougall: We would hope so.

Mr. Thususka: I would like to think so. When we look at the big picture, one of the biggest fears shared by the City of Summerside and the region surrounding the program is what happens next. We are here to tell you that some of the reports or studies that have been undertaken exclude Summerside from future operations. That is one of our biggest issues.

We would like to think that we have a vested interest in our port and that we as a community and region can be strong.

With respect to the capital dollars, I believe we can be self-sustainable if the proper infrastructure improvements are in place. There also needs to be a strategic focus with respect to revenue generation apart from the traditional ways we have undertaken business. We wish to understand all the ramifications and the financial issues with respect to the ports. That is why we are here to express our concerns with respect to the bill.

Senator Bryden: Is it correct to say that the ability to finance capital maintenance in the future, not during this transition period, will come from cash flow?

There are currently two contrasting situations in the country with respect to major ports. Representatives from the Port of Vancouver assured us that they have no problem in financing their capital maintenance out of cash flow because their cash flow is about $25 million per year. Mind you, the capital maintenance demands are huge. However, we also heard from representatives of the Port of Halifax, which is a major port, who feel they will have a major problem financing their capital gains out of cash flow.

If you start the way you want and have the projects going you believe you can have, will your cash flow come up to a level that can either be banked or used as security for funding?

Mr. Thususka: Our revenue generation has been hindered by many issues. Obviously the dredging costs have an impact on our balance sheet. We also have in place a great deal of top-quality infrastructure that needs to be maintained. In order to manage those two issues, we are considering taking some practice steps such as the slurry system, west end rejuvenation and waterfront redevelopment. All those things will help us to market our port to the rest of the world.

We feel we have addressed the cost side of life and now want to consider what marketing avenues we may be able to take.

Senator Spivak: Apparently what you will be required to pay to the federal government will be based on gross rather than net revenues. How do you feel about that?

Mr. Thususka: I can give you my gut feeling. Unfortunately, we have not delved into many of these issues.

Senator Spivak: That deals with cash flow.

Mr. Thususka: I am taking a general approach. If our port remains in its present situation, it will not be sustainable six years from now. We know that. As a community, we are examining alternative ways of doing business and of keeping our balance sheet.

If we have sufficient revenue to sustain our port, we will all be happy and we would be willing to do whatever the partnership and the government agreed to do. However, I am not sure I am qualified to answer that question specifically.

Senator Forrestall: Have you considered or would you consider seeking the authority and the usual understandings to try to float tax-free provincial and federal port development bonds as a means of raising revenue?

Mr. Thususka: That is a progressive idea and we would be open to any suggestions like that.

Senator Johnstone: You will be asked some pretty blunt questions here this morning. Do not think that we are the enemy. We would like you to give us some ammunition so that we can be of some help.

I should like to congratulate you on your submission and the quality of your material. We were quite impressed with the quality of the material submitted by Corner Brook as well.

We know what happened in Summerside after the closing of CFB Summerside and we are quite aware of the miracle that has transpired at Slemon Park. I am not on the directorate there but I am very close to some of the directors and I am reasonably well-informed. If anything, Slemon Park is ahead of schedule. I hope that good work continues.

At least twice you mentioned cruise ships and their potential. I am not aware that you have had many of them through the port so far.

Earlier you said that you are here not only to represent Summerside, but that you would like to speak for the other ports in P.E.I. as well. How far are you from Georgetown?

Mr. MacDougall: It would be at least 60 miles.

Senator Johnstone: If there were to be only one port in Prince Edward Island which could receive federal help, it is conceivable that it may be Georgetown. In P.E.I., 60 miles is a great distance, whereas people from central Canada would probably go to a town 60 miles away just to see a movie. I know people who live in Calgary and work in Edmonton, which is about 200 miles away. It is a matter of perception.

How would you feel if Georgetown were the designated port?

Mr. MacDougall: If Georgetown were the selected port, our road infrastructure would not withstand the wear and tear of the truck traffic. Many of the biggest shipments from Prince Edward Island are of potatoes. The Summerside area is the major potato-growing area. O'Leary and Alberton to the west are major potato-growing areas as well, and it is a long haul from there to Georgetown. It would be very hard on the infrastructure.

Senator Johnstone: You are suggesting that it would have a devastating effect on potato shipping.

Mr. Thususka: There are two main issues. First, with the cost of shipping increasing dramatically, would our potatoes be sustainable in the market-place? Second, from Charlottetown to Georgetown there is only a one-lane highway. Can our highway infrastructure support the traffic going to other ports?

Also, will the shippers agree to utilize another port? Who will pay the additional costs?

Senator Perrault: You have a fantastic province. My wife and I vacationed there last year. We wanted to be among the first to cross the Confederation Bridge. It was a very rewarding experience. I hope that millions of Canadians make that visit.

What effect has the new Confederation Bridge had on shipments from the Port of Summerside? Have you been able to assess the advantages or disadvantages?

Mr. Thususka: It is too early to tell. The bridge was not involved in some of the shipping issues this year simply because the transportation system was predetermined. Shippers have told us that the cost of ground transportation is too enormous to absorb in the cost of their products, which is why they would rather use a port.

Senator Perrault: When the Confederation Bridge was being discussed, it was said that it would usher in opportunities for greater commercial activity on the island. The concept that goods could be transported by truck or trailer to the mainland attracted a great deal of support. You say that the final results have not yet been determined as to the net effect of shipments by either marine or road?

Mr. Thususka: We must look at the final destination of shipments. Would it be cost-effective to transport goods from Summerside to Halifax via road and then transfer them to a ship to complete the journey to, say, Brazil, when it is possible to go directly from Summerside to Brazil? That is what is attractive to shippers about our port. They can load the product on ships 20 miles from where it is grown and take it directly to their market.

Senator Perrault: The Australian system of sand technology is very intriguing. You are conducting tests now, are you?

Mr. Thususka: Yes. We are waiting for the dredging samples to come out of the harbour. We will then send them to Australia.

Senator Perrault: Certain conditions must be prevail before the system can be installed, but you are very hopeful about it?

Mr. Thususka: Yes, we are excited about it.

Senator Bryden: It is my understanding that the local and regional ports will not pay a stipend off the top, that only the Canada Port Authorities will.

Senator Spivak: Is that in the bill?

Senator Bryden: It is not in the bill that they shall pay; it is in the bill that the CPAs will pay. The basis on which the local authorities will acquire the right to manage the ports will be subject to the agreement that is negotiated between the municipality, the province -- if it is involved -- and the department. That is my understanding. They may pay out of the net profit. As I understand it, they may also get access to capital assets, depending on the terms of the agreement, which they would be able to use as security.

I wanted to ensure that we are clear on that.

Senator Forrestall: I did not understand that the three ports would continue to function but there would be one authority. That is a separate question from all the other options available. While there is an extended window of opportunity for Prince Edward Island, the final paragraph is pretty definitive. A solution exists somewhere. I do not know what it is. The committee has been struggling, in reality, for four or five years with this change in maritime policy and we have not come up with a definitive solution.

Bill C-9 follows one direction, but it is not the only direction. Our concern in this committee is how to protect Georgetown, Souris, Summerside, Charlottetown and Corner Brook, and we have not even got up to the Gaspé -- yet. The list goes on and on.

How do we protect you during this interim period while we find what is other than an ad hoc solution? I used to decry ad hoc solutions. I now know they are a necessary tool or process of governance because we do not always have the answers.

We wish you luck in staying alive and afloat. Anything we as a committee can do to help you do that, we will.

Mr. Thususka: Thank you.

Senator Forrestall: Frankly, we are short of a re-entry capability for the minister, a notwithstanding clause, an amendment to the patent section which would allow appeal directly to the minister, a ministerial intervention where there is a proven case. With all due respect, these two options appear to be gaining some currency, but we are far from having exhausted options for solutions.

For the first time, Madam Chairman, we have seen an economic impact study. Similar studies should be done for every port facing the dilemma the Port of Summerside is facing. The port is to be commended for preparing it and bringing it forward.

Senator Spivak: Coming from the west, I certainly understand what it means to maintain small communities. In the West, there have been tremendous changes in terms of economic activity, and they are threatening the maintenance of small communities.

I wish to reinforce your comment about the roads. If you take the subsidy away from the ports, you will have, as we have in the West, people clamouring for subsidies for the roads. Those roads were never intended for the huge truck traffic. It does not seem to make any sense.

I hope that whatever solution comes here maintains the viability of a port which is close to where the resource is. Getting the resource to the tidewater is a big problem out west.

It is important to have the economic impact studies to which Senator Forrestall referred before decisions are made as to who does what to whom. I echo what Senator Forrestall says. We are most interested in maintaining small communities across Canada. That has always been the way we have thought about things.

Senator De Bané: I would use this opportunity, Madam Chairman, to tell our distinguished guests of the commitment that the Minister of Transport made to Senator Callbeck and Senator Johnstone when they prodded him and put questions to him. I will read his commitment about P.E.I. On April 2, 1998, he said, at page 11:37:

The government is committed to ensuring the viability of the Prince Edward Island port system. We believe that Prince Edward Island, as a coastal province, must have a port system. I think that can include keeping the four ports open. As you know, Georgetown actually makes money. Summerside has good revenue and has potential to make money. The study you referred to just dealt with Summerside and did not look at them as a package.... Souris, of course, is assured because of constitutional ferry obligations. We believe, for a number of reasons, that Charlottetown is viable in the long run. Put together, we think the pluses will outweigh the minuses.... The money we are putting in will take us well into the early part of the next century in terms of viability for repairs and dredging. In the meantime, the CPA structure will be put together and I think it will work.

He went on to say:

However, if all else fails, clause 72(8), which was included at the behest of Mr. Byrne, an MP from Newfoundland, provides for continuation of the ports that are not transferred by the end of the program. That is an absolute guarantee that if there are absolute political needs the government will have to continue with those ports. As I said, the government is committed to the viability of the Prince Edward Island port system. That applies not only to P.E.I. ports but to others as well. There is a safety net.

Senator Johnson: Was that in his opening statement?

Senator De Bané: No, that was in response to Senator Johnstone and Senator Callbeck.

Senator Forrestall: It was a question of debate. That is fine and very welcome, but it does come to an end. The minister also said that, at the end of the six years, all of these problems shall be resolved.

The Chairman: The minister will be here soon. We can ask him questions at that time.

Thank you, Mr. MacDougall and Mr. Thususka, for an excellent brief.

We are pleased, Mr. Minister, that you have agreed to return today to answer more questions on Bill C-9.

We have worked hard on this bill. We have heard many witnesses who represent a variety of interests. We heard from those who wanted us to pass the bill quickly, with no amendments, but we also heard from those who are quite concerned about the future of their ports and who want some changes to the bill.

My colleagues on the committee will have many questions for you today, but perhaps I could summarize the concerns we have heard under the following broad categories:

There were financial concerns. Many of the ports and cities were concerned about not having access to government funding, not being able to pledge their assets as security for loans, and having to pay dividends based on growth revenues. Some have a new requirement to pay grants in lieu of taxes. They told us that, in the future, their ability to raise capital for expansion and major repairs would be seriously eroded.

There were concerns about the make-up of the boards of directors. The biggest complaint was that users could not be directors, but we also heard about the composition of the boards being unsuitable for the smaller ports which are now harbour commissions.

We also heard that the degree of environmental protection would be diminished under this bill due to the non-applicability of the Navigable Waters Protection Act and its associated triggers.

Some smaller ports are concerned about the bill. Some, such as Corner Brook, for example, told us it would be catastrophic for them since, under diversification, they would never attract the new investment they need. Others were concerned that the divestiture fund was not large enough. Several witnesses representing quite different parts of the country argued for some sort of middle regime for the smaller ports, something less than a full Canada ports authority but more than a facility handed over to the private sector whose future would be entirely at the mercy of commercial forces.

As I said, my colleagues will have many questions this morning. Before I invite them to question you, I would ask if you wish to make an opening statement, Mr. Minister.

The Honourable David Collenette, Minister of Transport: I am pleased to be back here today with the officials who appeared here last time, my deputy minister and the others who will be identified as and when they speak. Certainly I am very pleased that you have outlined some issues that we have detected as being of great concern to senators. In my remarks, I will address most of the points which you have just raised. I am glad you have seen a variance of witnesses, people who want the bill changed and people who want the bill to remain as is.


Any compromise solution, as I already have said, leaves the parties with a choice. They can choose to see the glass as half empty, they can have the desire to achieve greater change, or they can say that the glass is half full, with the positive gains achieved so far and a solid framework for moving forward.

I also remind you, as I did on April 2nd, that this bill has provision for a review after four years, and this, to me, is quite important. Experience can then show us if there are things that can be done better, or things that we simply did not anticipate.

We are confident when all factors are considered that we have a good bill. The bill is worthy of your support. The bill does the right things for ports, for the seaway, and for the users and employees of all our marine institutions.


When we move to questions, I will be happy to address some of the specifics you have outlined, Madam Chairman, but I will comment on some of the areas you outlined in your earlier marks.

On port divestiture, you have heard from a number of people who are not satisfied with the divestiture process. Some of these groups are presently active in negotiations with the department. I believe Corner Brook is one of them, so I am not at liberty to discuss the particulars of the negotiations. I do not believe the committee process should be used to circumvent the negotiations between Transport Canada and those various ports.

I must say up front that I feel it would be a mistake to delay any part of this bill. There is a misconception that a delay in the bill, or any of its parts, would somehow halt the divestiture process. That is not true. The divestiture process will be ongoing.

The bill has good features to deal with unexpected future events. We need to discuss some of these features more closely to lay to rest apprehensions that smaller communities are somehow being hung out to dry under this bill. I have heard all manner of wild assertions from people, assertions that are not borne out by the facts. Some people tend to equate the transfer of a port with the decision to close it. That is not the case, and I think that is absolutely farfetched. I would ask any senator present whether you believe new owners would really think they are taking over a port just for the privilege of shutting it down.

Admittedly, we were not in active discussion for the takeover of every single port, but we believe the signs so far are encouraging. Later, Mr. Morriss, who is handling this for us and who appeared before the committee last time, will perhaps go into more detail with respect to your specific questions.

To date, we have transfers and other changes of status in some 316 of the 549 ports and harbours. That, I think, is good progress.

As you know, we have a $125-million port divestiture fund to ensure that the condition of port facilities at the time of transfer to new owners will support continued safe operations. We are also prepared to negotiate lump sum transfers to be used by the new owners for future maintenance and port operations. These funds will come from departmental savings resulting from the new policy and will include any revenues obtained from port sales.

With $110 million still available, there is no immediate shortage of funding to cover future transfers, but this is something we would keep under close review if the fund were to become seriously depleted as the divestitures proceed. Nothing prevents the cabinet from authorizing more funds, should this be necessary. I am not saying they will do that, as I would have to make that case. However, certainly the $125 million cannot be seen as an absolute fund with no further possibility of funding, should it be required.

Various comments have been made in the hearings to date about the authority for carrying out port divestitures. We believe we are on solid legal ground. These transfers are proceeding very smoothly under the authority of two statutes, the Federal Real Property Act and the Surplus Crown Assets Act. Whatever the fate of Bill C-9 -- of course, that is now in your hands -- we can and will move forward on this priority of the port transfers.

I feel it is important to make this point because a letter was circulated widely in Atlantic Canada by one of your colleagues. The letter states:

Passage of this legislation will lead either to privatization of many of our ports or the federal government turning over their operation to provincial or municipal authorities. Only very small, remote ports will continue to be operated by the federal government.

This statement indicates that divestiture is tied to the passage of the bill. That is simply not true, and I want to dispel that here and now. I did so the last time I appeared before this committee, and I do it again. I do not think it is fair to the port community to put that kind of argument out there when it is not true. People are being misinformed, and it is not fair.

The "public ports" part of the bill, Part 2, continues the authority of the minister for day-to-day management of any public port operation once the Public Harbours and Port Facilities Act is repealed. It is not concerned with closing public ports. Rather, it continues to allow for divestiture and says how the minister can proceed to keep them operating in the meantime.

Some people have asked what will happen with a transfer deal that goes bad. We had that question from Senator Bryden the last time we were here. When a divestiture is negotiated, one condition requires a new owner to operate the port for a specific period. The operating agreement includes an option for the Crown to recover the real property of the port at a nominal amount should the new owner fail to live up to the terms of the transfer arrangement.

I am now circulating a paper which contains the model text we used for such recovery options. I would bring to your attention that these are two separate components drawn from our model contracts for port transfers. One extract is from Schedule B, and the other is taken from Appendix C. The two documents are set up in the agreement on an interlocking basis to ensure the recovery of port property where the new owner fails to meet mandatory obligations.

With your agreement, I would prefer to hold back on any questions or discussions regarding these two documents until we get into questions later on, but hopefully this will be helpful.

Other parties have come to the committee and asked, "What will happen to any small ports in 2002 that are still with the minister when the divestiture program has finished?" We agreed last time to give a clear answer to this question. An amendment was made last year in subclause 72(8) to ensure that the minister continues to be responsible to operate public ports and public port facilities that have not been transferred once the six-year time period set for the divestiture program has expired.

Senator Bacon raised the issue of environmental assessment. Some of the testimony you received has asserted that Bill C-9 will somehow have an impact on the environmental assessments. We would argue that those comments stray quite a distance from the facts as we know them.

For example, it has been suggested that the bill will cripple the application of the Canadian Environmental Assessment Act to port and seaway projects. I assure the committee that Bill C-9 makes it clear that our port authorities will fall directly under the scope of the regulatory authority provided under the Canadian Environmental Assessment Act. There are no waivers and no exceptions to this legislation.

The Canadian Environmental Assessment Agency, with the involvement of the Regulatory Advisory Committee and Transport Canada, is now examining the requirements for guidelines or regulations for port authorities. This study will include a full examination of the facts, extensive consultations with all parties, and a full regulatory impact analysis. Officials from my department will work every step of the way with the Canadian Environmental Assessment Agency to assist in completing this important work at the earliest practical date.

I also wish to respond to the suggestion by one of your witnesses that the Minister of Transport was kept in the dark about the environmental issues of the bill until after second reading in the House of Commons. This is another wild rumour that has been circulating, and it bears no relation to the facts. We put out issue papers on the bill, first when it was Bill C-44 -- my colleague David Anderson was the minister -- and last fall when we introduced the bill into the House. The issue papers for both versions of the bill, given both to this committee and to the House of Commons standing committee, stated that Canada Port Authorities will be subject to the Canadian Environmental Assessment Act and that navigation in their harbours will be protected through regulation. To be blunt, parliamentarians have been given clear and consistent information on this subject from the outset of this bill some 18 months ago.


You have raised the matter of the pension of employees at the seaway. This is quite important for us, since seaway workers have raised concerns about continuation of their pension plans. I should explain that, when Federal organizations were commercialized, it has been the position of the government that continued participation by affected employees in the public service superannuation plan has not been an option.

The Public Service Superannuation Act was designed for the needs of a workforce for whom the Treasury Board is the employer.

In the private sector, pensions and other fringe benefits are negotiable components of a total compensation package, in contrast to the public sector where these matters are excluded from collective bargaining.

One of the reasons for this approach, in a commercial environment, is that it is not appropriate for the new employer or the employees to be subject to a pension plan where neither party has any say or control.

We have provided considerable protection to employees in this legislation by requiring the new employer to establish a comparable pension plan for its employees. Should there be any delays in getting this new plan in place, the bill allows for the possibility of a transitional period of coverage under the existing plan.

There already have been preliminary discussions with the Treasury Board with respect to this transition feature.

With respect to pensions, ports and the seaway are to have comparable benefits, with the benefits provided at the same cost to employees as they faced before the transfer. This is comparable to what was done for NAVCanada, for the airline system and for airport authority employees.


Turning to the issue of users of the seaboard, we support the principle of user involvement in port management -- however, not as port authority board members. Officers, directors, and employers of port companies are seen to have a high risk of conflict of interest which could prevent them from serving effectively on these boards. The government is confident that, even with this restriction, port users will be able to find suitable candidates with excellent qualifications, perhaps past employers or someone associated with the port in various industries who can assist in bringing commercial orientation to port operations.

Some witnesses see a contradiction in having users on the board of the not-for-profit corporation which will manage the St. Lawrence Seaway. Let me tell you why this comparison misses the mark. Users of the seaway are generally subject to a published, set tariff, and there are few confidential contracts or leasing arrangements. As a result, the risk of conflict of interest is much reduced in the case of the seaway.

The question of seaway funding has been raised a number of times, why the seaway would have continued access to the Consolidated Revenue Fund and large ports would not. When I appeared before this committee previously, I explained that the seaway is unique. It functions as a water highway, and this makes it more complex than any port. That is not to say that our major ports are not important, because they are. However, this acknowledges the uniqueness of the seaway as a connection between more than 40 provincial and state highways and nearly 30 railway lines that lie in the Great Lakes basin. It also ties in 61 Great Lakes ports to key cities throughout the U.S. and Canada.

The seaway also has a greater vulnerability to the ups and downs of the global economy compared to other maritime facilities. When the economy is down, the impact on other individual ports and communities can be variable; however, negative impacts among the facilities and communities linked by the seaway tend to be compounded for the seaway itself. In other words, the cumulative impact of these individual changes is what hits the seaway.

Future appropriations for the seaway, should they ever be required, would not affect the competitive position of particular ports, neither would such funds be used to expand overall seaway capacity. They would be applied to the rebuilding of existing lock walls, gates, hydraulic equipment, and other essential assets that do not change market potentials or the competitive balance.

You have heard quite a bit about the seaway being in competition with ports such as Halifax. Representatives from the Halifax and Dartmouth Port Development Commissions offered opinions. Unfortunately, the chairman of the Port of Halifax was unable to appear before you. My understanding is that he would directly challenge some of the assertions made by the Authority. I am not discounting those individuals or their opinions; however, I take very seriously the chairman of the current Halifax Harbour Authority. He knows his business inside and out. He would challenge the view that you heard from the other development agency.

In dealing with this particular point, I would ask you to reflect for a moment on the vastly different traffic being handled by Halifax. Containers predominate. Senator Forrestall knows that Halifax is a massive container port. Compare this to the iron ore, grain and mainly bulk commodities that move on the seaway. These two marine routes are very important to Canada's economy but serve completely different markets. In other words, their roles are complementary, not competitive.

We must also remember that the seaway is a bi-national undertaking with the United States. The Canadian government cannot ignore its obligations to the U.S. The seaway serves other critical roles, not just movement of goods. It serves roles relating to keeping water levels stable, flood control, and to riparian interests in general. I believe I have covered the points raised on that particular issue.


Honorable senators, this is a bill that moves us forward with safe, efficient, competitive, and environmentally sustainable transportation in our marine sector.

I am ready to discuss any areas of the bill where you have further questions.


I am convinced that we can demonstrate to you that, over the course of developing this bill, we have moved on a large number of fronts. We have accepted a number of interventions from various witnesses, and we have tried to accommodate these legitimate points of view. When all is said and done, it is time to deal with the bill and move on, to pass it and have the economy reap the considerable benefits that the marine sector expects to attain.

One last point, and this is in no way to be taken as undue flattery: The last hearing was televised across the country on the Easter weekend. I had a number of calls from various people who were intrigued. It is the first time they had seen a Senate hearing. I believe it was a credit to the Senate and hopefully a credit to the government in explaining its case. I notice we are on camera again today. I do welcome the level of questioning we had last time. It certainly helped us in our deliberations, and it helped all of us in both houses of Parliament to show the valuable work that we are doing.

The Chairman: I should like to welcome also Ms Margaret Bloodworth, the deputy minister; Mr. Louis Ranger, assistant deputy minister for policy; Mr. André Pageot, director general, marine policy and program; Mr. Bruce Bowie, who is executive director, marine reform; and Mr. Randy Morriss, director general, ports programs and divestiture.

Senator Forrestall: Mr. Minister, I am sorry I missed you when you were here the first time; however, some things cannot be avoided. I am pleased to have the privilege to be here to hear you this morning and to hear you dealing with some of the concerns that have been brought to our attention.

We have heard a great deal of evidence from the ports community. We have heard praise and "get on with it" from one section and "damned if you do" from the other section. We are concerned about doing what is in the best interests. We would be the pragmatic, optimistic side of the equation.

However, having said that, let me be pessimistic. I wish to deal with the question of the seaway's unfettered access to federal help and the concerns about a level playing field. I will use the example of Halifax. This has been with us since day one, four or five years ago. There is nothing new about this.

Mr. Minister, the new president of the St. Lawrence Seaway told us the other day that he would like to see the seaway compete with CN. That is fine. That is a good, positive thrust. He is one gentleman who is quite capable of making that happen. The difficulty is that you have given them tools which you will now take away through Bill C-9.

The Port of Halifax needs to start almost immediately on Post-Panamax container facilities. Depending upon where in the harbour it is decided to locate that new facility, it could cost from $150 million to upwards of $300 million. If we bite the bullet in the year 2000 and build a facility that will last through the first half of the next century, it may cost upwards of $300 million. A land bridge concept would cost that much as well. We do not have that amount of money, and we cannot borrow it from a bank on our cash flow.

Please comment on whether there is not an element of unfairness there. Are we not assisting the seaway corporation, to whose advantage it would be to bring these Post-Panamax ships to Sept-Îles and transferring for movement up the river? I may doubt very sincerely the presence in the St. Lawrence River of a Post-Panamax-size vessel, as there are other factors such as navigation and safety which would make that very difficult to achieve. However, that is the dilemma. They have the wherewithal and the support of Ottawa to put this type of planning in place.

Have you considered offering the ports, in lieu of federal grants, outright contributions or assistance, a program of bonds which might be federal or provincial, tax free, as a means of organizing the commercial level they want to achieve?

Mr. Collenette: You raise a number of very good points.

You talk about a level playing field. We agree that there must be a level playing field. However, as I said in my opening remarks, we do not believe the seaway and the ports are the same kind of entities. They are apples and oranges. The president of the seaway spoke to you about taking traffic from CN. That is fine, but that traffic is not coming from the Port of Halifax.

I can cite statistics back to 1987 of all the traffic that goes through Halifax. We can also give you the figures for commodities that are shipped on the seaway. There is no way that the seaway will compete with CN in hauling containers, which are the lifeblood of Halifax. The seaway will go after bulk commodities that are hauled by rail, such as grain. In our view, they will not threaten Halifax. That is why we say they are complementary.

Your point about the financing of the Post-Panamax expenditures is a good one. However, the five-year plan put forward by the Port of Halifax was analyzed by Nesbitt Burns, the financial advisors to this department. They believe that that five-year plan is fully financeable under Bill C-9. That plan, I understand it, includes the ramping-up to deal with the Post-Panamax ships.

On the question of bonds, nothing in this bill precludes the Minister of Finance federally or, I suppose, any provincial ministers in the case of ports going to municipalities, from dealing with that issue. That could certainly proceed, and it would help ports like Halifax which would have a big capital requirement in the future.

Senator Forrestall: I will not dispute the Nesbitt Burns report with you, but there are many "ifs," "ands," and "maybes." The bank wants to see the cash flow. We cannot use the asset as collateral. The bill denies that, and that is unfair.

Mr. Collenette: You cannot use the land, but you can use the fixed assets such as cranes, et cetera.

Senator Forrestall: We will give you all the fixed assets back if you give us the land and some way to finance it. The assets, in the case of most of our ports, are 100 years old, Minister. They have been patched and fixed up. The only new piers in Halifax are military.

Mr. Collenette: Are you telling me that all the cranes in Halifax are 100 years old?

Senator Forrestall: They are pretty old. As a matter of fact, most of them have been pulled out. The waterfront does not perform the way it did 100 years ago.

In any event, we are really talking about bringing ports up to viable commercial standards so that the private sector or the province can continue to use them in anticipation of profit, good business practices, and so on. Some years ago, we started the privatization of airports. Everyone was interested, and everyone jumped on the band wagon. Now that has stopped.

Mr. Collenette: It has not stopped; it is ongoing.

Senator Forrestall: Let us look at Halifax. Halifax sought status six or seven years ago. They are not going ahead today because they do not have the capital. They refuse to go out and get the capital. They want the federal government to put the capital improvements in place before they take it over. It is the same with the ports.

Mr. Collenette: With great respect, we are in the middle of negotiations with the Halifax Airport Authority. I think we can make a deal, although I do resent the Halifax airport authority trying to negotiate in public, which is in effect what you are doing by extension here and what they have done in Halifax. That is no way to make a deal, and I will not get drawn into that.

The fact is that airport divestiture across the country is going reasonably well. We have just made some accommodations with St. John's, Newfoundland, and I think we can get a deal there. A number of deals have been concluded in the last year since I have been minister. It is time-consuming, and everyone wants to squeeze as much as they can out of the federal government, and I do not blame them.

Senator Forrestall: Incidentally, I have had no conversations with the new authority.

Mr. Collenette: You would not have to; you would read it in the newspapers every day in Halifax. They are whining that the federal government is trying to put the blocks to them. We will not negotiate in public.

Senator Forrestall: The Halifax paper may be right or wrong in carrying these stories; I do not know. It just seems to me that, after the first blush, the finalization of privatization of airports has slowed down. It may still be ongoing, and you may be doing good work, but it has slowed down.

The same will be true with regard to privatizing the ports. I think it will work, but very soon the proviso will be that the port must be commercially viable before it is taken over. What is your response to that observation?

Mr. André Pageot, Director General, Marine Policy and Program, Transport Canada: Senator, you raise a very interesting point.

I will make a general point on the viability of the shipping sector. We could be led to believe, because we have a few adjustments to make, that this sector is in bad shape. That is not the case. The marine sector in Canada is viable.

In the last report from Statistics Canada, 358 million tonnes moved in our ports in Canada, of which approximately 100 million tonnes is domestic shipping. I must point out that this is done without subsidies in the great majority of cases.

The revenue in the marine sector is over $3 billion, including hundreds of millions in port revenues, but you must remember that much of it is revenues to private firms. If you have 260 million tonnes in deep sea shipping, we collect a few million dollars in ocean freight bills.

We must be careful in discussing port reform. We could be led to believe it is an unproductive, non-viable sector. It is well managed. The Port of Halifax, among others, has done well in terms of financial performance. The in-bound container traffic is up. The number of shipping lines is increasing. The cruise sector is developing. This is a positive story.

We are doing the reform because it takes time to make the decisions in a global world. In the case of Vancouver, a few years ago we were quoted 18 months for a decision for a crane. The reform will bring the decision-making closer to the users.

There are hundred of ports, and we will obviously need to adjust some of them. That is why we have a fund. However, the sector in general is viable, the Port of Halifax is viable, and I think that message should also be clear in our discussions.

Senator Forrestall: The total dollars involved in maritime shipping is quite adequate to take to any bank or any consortium of banks and borrow whatever you want to borrow, but the fact of the matter is, and I think you have alluded to it, the second largest port in Canada employs 11 people. One of the smallest of the major ports in Canada, in terms of turnover, employs hundreds and hundreds. They are the fourth, fifth, sixth largest ports in Canada. These differences exist, and we must be careful when we speak generally. The ports are all different.

I took note of your mentioning that CPAC was kind enough to carry this over the weekend. People were relaxing and had the opportunity to watch it. The last two times we were televised, it came on at 1:30 or 2:00 o'clock in the morning. I hope CPAC has more concern with the minister present and can put it on at a time of day when Canadians interested in ports and maritime movement can watch it and hear the minister's observations.

Senator Spivak: Mr. Minister, I wish to address clauses 47, 73, and 101 of the bill. They say essentially the same thing:

The Navigable Waters Protection Act does not apply to a work, within the meaning of that Act, to which regulations made under section 62 of this Act apply.

On page 22 of your brief, you say very unequivocally:

I want to assure this committee that Bill C-9 makes it very clear that our port authorities will fall directly under the scope of the regulatory authority provided under the Canadian Environmental Assessment Act.

I am sure you must have read the testimony of Mr. Frank Gertler from the Centre québécois du droit de l'environnement and Marie Bowden, the Associate Dean of Law at the University of Saskatchewan. They say that, in effect, as you read it, this removes the ports from the Navigable Waters Protection Act and, therefore, given the CEAA legislation, three of the four triggers are removed.

They have put forward a rather contradictory position that what you are asserting. I am puzzled. I would like you to explain how the removal of those triggers does not impede the application of the Canadian Environmental Assessment Act.

Mr. Collenette: I think Mr. Bowie will answer that. He is more expert than I.

Mr. Bruce Bowie, Executive Director, Marine Reform, Transport Canada: I must say that I am certainly not an expert in environmental law.

Senator Spivak: Have you read this testimony?

Mr. Bowie: Yes, and I was here for the testimony, so I am familiar with the issue.

Senator Spivak: These people are both lawyers.

Mr. Bowie: Yes. In fact, they are members of the regulatory advisory committee dealing with this issue on a day-to-day basis.

Senator Spivak: That is why they came to us.

Mr. Bowie: I would like to clarify some of the misconceptions or misunderstandings about the way the bill works and the way the environmental assessment law works.

All of the ports in the system right now are covered by the Canadian Environmental Assessment Act. In the Canada Marine Act, we have ensured that the new Canada Port Authorities will also be covered by the Canadian Environmental Assessment Act. There is no change in the status quo. A provision in the legislation says these Canada Port Authorities are subject to regulations under this act.

The problem today that needs to be addressed is that the agency has not yet developed regulations which will apply to harbour commissions, local port corporations, or the ports authorities. Because of this legislation, and because of the fact that 18 ports that are now under five different regimes are being put into one specific regime, the CEAA has been provided a great opportunity to say, "We can look at 18 agencies that we did not know how to deal with before." Their priority is to develop environmental assessment regulations for the 18 new Canada port authorities. They are now in the process of launching a review of this particular situation. They are involving the ports in this review. The regulatory advisory committee, of which the two members were here, are also part of this review.

Regulations, guidelines, whatever this review determines is appropriate for this situation, with all of the interested parties involved, are expected to be in place by the time that the new Canada Port Authorities are established. That is their plan. It is interesting that, in fact, this legislation has provided a trigger to deal with an issue that has been there for some time.

Senator Spivak: I do not understand. You still have not explained to me why it was necessary to remove that trigger which many environmental lawyers think is essential. When the act was done, this was a last-minute compromise. I was present when the Canadian Environmental Assessment Act was brought in under Mr. Jean Charest, the minister at the time. The provinces, at the last minute, when the Senate was reviewing the act, became very concerned about the applications to provincial authorities and so forth. Therefore, the triggers were left in place, and that was sort of a compromise.

I am sure you have every intention of having regulations and so forth, but why did you remove the trigger here? Why did you feel that was necessary?

Mr. Bowie: We have not removed the trigger.

Senator Spivak: In three places, it says you have, because the Navigable Waters Act does not apply. That is what it says clearly in the legislation.

Mr. Bowie: I should explain that the Navigable Waters Protection Act is intended to protect navigation in Canada's waters.

Senator Spivak: It has been used 371 times to trigger the screening under the CEEA.

Mr. Bowie: I want to put it in the context of why the act was developed initially, because the trigger was added later in response to the environmental concerns.

The act is there to ensure proper regulation of Canada's waters and to ensure that navigation is protected in these waterways. In most of the waterways, the Canadian coast guard has responsibility for assessing projects and determining whether a project will have an impact on navigation.

There are exceptions to that and the exceptions today are that the seaway and ports have staff on site to deal with those issues. They have harbour masters and experts in navigation in order to undertake their activities. Today they are excluded from that provision in the Navigable Waters Protection Act because they have the specific on-site resources to deal with that.

In the legislation, we are continuing the existing exclusion they have right now because in the ports they have, in the absence of specific regulations for environmental assessment, the Canada Ports Corporation took it upon itself, while recognizing its environmental obligations and responsibilities, to develop a voluntary environmental assessment process. That is being used today, and this legislation will ensure that that continues to be used in the future.

If you look at that section, you will see that the NWPA does not apply if there are existing regulations in place to ensure, first, that navigation is protected and, second, that environmental assessment processes are in place. That is the key. The NWPA continues to apply, as it does today, until new regulations are in place.

We are looking to the CEAA regulations to address that issue, but if they are not ready in time -- and the department recognizes that they may not be ready in time -- we have a second safeguard in that the NWPA stays until other regulations pursuant to this legislation are put in place. It is covered in two ways.

Senator Spivak: Are you saying that the Navigable Waters Protection Act will stay in place awaiting new regulations?

Mr. Bowie: Absolutely.

Senator Spivak: There will not be an hiatus. That is not what we were told before.

How do we know that those new regulations will have the same force as a trigger under the Navigable Waters Protection Act? I say that because, if you look at the history of the Canadian Environmental Assessment Act, in the beginning there were only cabinet guidelines. These triggers are what give the federal government authority. After harmonization, there is a great deal of dispute now that environmental protection ought to be more on the side of the provinces than on the side of the federal government. That, of course raises the question of the federal government's ability to have equal environmental protection across all of Canada.

I suppose I must accept what you are saying. I am still puzzled as to why you felt you needed to remove this rather than to extend the Navigable Waters Protection Act to those ports or entities that do not have it. I suppose we need to look at this a little further.

Mr. Bowie: I am saying that we are extending the status quo that exists today.

Senator Spivak: Yes, but it will end because these clauses in the bill say that there is no trigger for this.

Mr. Bowie: At the same time, we have initiated and the CEAA has initiated a process to resolve a long-standing issue with respect to what kind of environmental assessment processes are needed at these ports.

Senator Spivak: I take your word for that, but I am suggesting that there might be a question in many people's minds whether -- and this is a legal question, and I do not question the intent -- those regulations will function in the same way as triggers in the Navigable Waters Protection Act. There is no desire to diminish the federal ability, and I will tell you why. All kinds of large-scale projects are going on across Canada, including in my own province, which have immense environmental impact. The federal government, based on the law, has no ability to go in and order an environmental assessment. Any encroachment is viewed with alarm.

Senator Callbeck: My question is on the process. If this legislation comes into effect and a port authority is not set up, my understanding is that the federal government will offer the port first to the province, then to the municipality and then to the private sector. If in six years nothing has been worked out, it goes back to the minister.

Mr. Minister, I am very happy with the commitment you gave concerning the P.E.I. ports when you appeared before this committee on April 2.

My question is on the private sector. If the port is offered to the private sector, is a process in place for assessing whether this private sector bid is good for the community and for the users of the port?

I still have some concerns about the possibility of a large company buying the port and charging outrageous prices to their competition, or if they buy the port facilities and start selling them off, or if they buy them and let the thing run into the ground. I realize that the operating agreement addresses that during the operating period.

What is the operating period? I realize that would be negotiated, but roughly how many years are we talking about? Following that operating period, what happens to the facility? Can the company that owns the facility sell it off piece by piece if they wish, or what obligation is on them?

Mr. Collenette: With respect, I believe that we have not perhaps explained fully the process of what happens. Certain ports are designated as candidates to be CPAs. The rest are regional, local ports. It does not quite follow the sequence that you mentioned. I will let Mr. Morriss deal with it specifically.

On the question of what happens if some of these operations default, I believe last time we talked about a minimum of 10 years for these agreements.Given certain provisions, it could be up to 20 years. The question that must be asked is how can we guarantee things in perpetuity? I do not believe we can, but 10 or 20 years is a pretty good time-frame. From the document you have, you should receive some assurances when ports are divested.

Mr. Morriss could perhaps clarify some of the points you raise.

Mr. Randy Morriss, Director General, Ports Programs and Divestiture, Transport Canada: Senator, the priority interest that you have just outlined is a bit different for the local and regional ports. The process that we have had approved by Treasury Board is that we offer it to other federal departments, then to provinces and then beyond that to local interests, which includes municipalities. As you know, in some provinces it is not within the law for municipalities to take on federal assets. We combine all of the local interests, including the municipalities' interests, in the next grouping with which we deal.

Typically in a port where there is a great deal of activity, such as in the ports of P.E.I. and others, our evidence is that the local users would be very interested in being involved in the future operation of the port. It seems to us that the entity would be formed of a fairly large group of interested stakeholders in the local port. The private sector option only comes into play when there is absolutely no interest by the users and other stakeholders in forming a local entity. Then it is put to public tender, and it becomes essentially a sale by public tender. That is a long way down in the process and typically happens only in very small places where there are low-use or no-use facilities. I trust that answers your question on the process.

In terms of the operating period, it is a minimum of two years and a maximum of ten years, depending upon the financial consideration of the negotiated deal, in addition to which there is a monitoring period beyond that which can stretch for a long period of time. In some cases, depending upon the financial consideration, as long as 40 years, in which the federal Crown would have some sort of a clawback to prevent windfall profit, as I explained in my last appearance.

That would cover your points, I believe.

Mr. Collenette: There was a question about how can we be satisfied that the private sector operators who would take this over would actually meet with certain conditions. It is in their best interests; however, there is an element of risk to anything in business. A determination must be made in negotiation as to whether a project is viable with the government, and business plans must be examined. There is never any fail-safe mechanism such that a private operator would not somehow do things that would not be in the best interests of the community. That is part of everyday life.

Ms Margaret Bloodworth, Deputy Minister, Transport Canada: Honourable senators, to work at it from the other end, the purely private option is our last option. Our first option is to have -- and indeed we have had some considerable success with this -- a group that is not purely private. It may have some private people in it, but it will also have local communities -- in other words, people who have a vested interest in making the operation continue.

Senator Callbeck: I am concerned about the question as to whether there is a process that will assess if this is a good thing for other communities and for the users. For example, when the private sector was bidding on shortline railways, was there not a process whereby the community became involved? Is there anything like that?

Mr. Morriss: Senator, there is a process in the sense that when we approach a particular entity or group of people who we feel might be interested in operating the port, we provide that once they form an entity. We then provide them with the full range of data around the port -- the technical date, data on the land, financial data, and so on. We also provide funding at the front end to allow them to produce their business plan or to conduct the feasibility studies they might be required to do.

We work with the communities on the business plan as well to ensure, from the base of knowledge that we have as a public facility, that it will make some sense with respect to marine operations, with which we are familiar. We also encourage them to take that business plan to financial institutions to see if it holds water. We do everything we can to establish at the front end of the equation all of the building blocks that would make the port facilities successful.

Senator Callbeck: I realize that communities are involved. However, my question was more geared to after you have gone through all the steps. If a private developer takes it over or wants to take it over and makes a bid, is there any process there for the community to have any say or input?

Mr. Morriss: There is no formal process except to say that, by then, the community has had the opportunity to deal with it and be part of it. We have been in situations where we are down to the private company. We have then entered into discussions with that private company to ensure that the private company is prepared to permit public access to the wharf in the future. In a small place, that is one of the major concerns -- continued access to the facility. Typically, we work out an arrangement with the private sector company on behalf of the community. It has not happened often, but it has happened.

Where you get down to the private sector, we would then not have an operating port. If we tried to involve everyone in town, no one would be interested. It is not a question of going to the private sector because we cannot make a deal in the community. We broker the deal as long as we must in order to bring the parties to the table. It is only when there are no parties at the table, except one or two people who might be interested in bidding, that we go the private sector route.

Senator Callbeck: Did I understand you to say that if the private sector or a corporation buys the facilities, they do not sign this agreement?

Mr. Morriss: That is correct. If we are diverging from the point of view of the Crown putting money into the equation or the value of the asset being to a certain level to invoke an operating and monitoring criteria, it is transferred as an operating port. Therefore, we have those documents.

If we have gone through the list, no one else is interested, and we are down to a public tender, then it is a sale in fee simple of whatever property there is and the facility.

Senator Callbeck: Would there be no guarantee of public access?

Mr. Morriss: In the terms of the deal, we often talk about whether public is required. However, there are no documents like those because we are not imposing any operating period or monitoring period beyond the time of the transactions.

Senator Bryden: If you go through the process, and with all the best will on everyone's part, you get to the point where the only way to get rid of this port is to go to public tender. Do you sell off the assets so that it stops being an operating port, when it is an essential facility for the community and the region? Is there any mechanism to address that situation?

Ms Bloodworth: That is why we have the clause that permits the minister to continue to operate the port. What Mr. Morriss has described is our attempt to form a group and to work with them to operate a port. If we assume that we have tried and failed, then the normal situation -- which does not happen very often, but in those circumstances we call it a normal situation -- is that there is not much business or interest in that port. We do have circumstances of that happening. In such a case, we would put the port up for public tender and ask who is interested in buying it.

If, on the other hand, what we have is a situation where it is an operating port with much interest but for some reason we have failed to put together a public-private group interested in running it, then we have the power to continue to operate. That is clause 72.

Senator Bryden: Would you be prepared to confirm that where such a situation as outlined in clause 72(8) occurs that we would need --

Senator Forrestall: A notwithstanding clause?

Senator Bryden: We do not need a notwithstanding clause. What we need is an opportunity to give confirmation to certain circumstances in which the minister would exercise that discretion under clause 72(8).

Ms Bloodworth: We could certainly look at that, senator. I would need to think about the circumstances. Are you talking about the minister giving assurances at this stage that are not in the bill. I described what is in the bill, but are you referring to something separate from the bill?

Senator Bryden: We are attempting to see how we can get this bill through in a manner with which most people are comfortable. We are touching now on the prickly points.

Mr. Collenette: Senator Bryden has put his finger on a key that we must address. It has been raised by my colleagues in the House as well.

We will try to get back to you with some examples and some reassurances, Madam Chairman. The senator is reflecting apprehensions that are in Atlantic Canada, and they are justified.

Senator De Bané: What I understood when Mr. Morriss gave us his explanations about a month ago was that when a port is transferred to an operating entity, there is a period of monitoring. If that operating entity fails, it might fail either because it has lousy managers or because that port is not viable and cannot have any kind of business. If it fails because of lousy managers, then the department will take it over and manage it until they find a more competent entity. If it fails because there is no viable business, it makes no sense for the taxpayers of this country to continue funding the business.

I think the overriding principle is the one given to us by the minister in our first meeting with us, where he said:

However, if all else fails, clause 72(8), which was included at the behest of Mr. Byrne, an MP from Newfoundland, provides for continuation of the ports that are not transferred by the end of the program. That is an absolute guarantee that if there are absolute political needs the government will have to continue with those ports....

Some will say that just means the minister can make a decision for or against a port. Any government that makes a negative decision would have to justify the action and pay the political price.

I think the bill as it is now covers all those different hypotheses. If it fails because the managers are lousy, the department will take it over and operate it until they find a better manager. If, politically, it is vital for that community to have a port, the minister says there is an "an absolute guarantee" it will continue, unless the minister is politically inept, in which case he will pay the political price.

Senator Johnstone: Mr. Minister, you seem to be laying our concerns to rest one by one.

Looking ahead several years, my concern is that there be sufficient protection built into the bill for the small ports. We know that you are a very knowledgeable and compassionate minister, with a great knowledge of the situation. Will there be sufficient protection for the small ports a few years down the road when we are perhaps dealing with a new minister? I am speaking of six, eight or ten years down the road.

Mr. Collenette: Even now, without this bill, if we had a callous government -- this, as we know, is a very compassionate government -- it could cut these ports adrift. It could reduce subsidies even now.

The point I made last time, and Senator De Bané quoted it, is that the political price is very severe if you upset a whole region of local interests. We have just been through a reorganization of Marine Atlantic headquarters. I guess we did not explain the decision adequately enough, and the local authorities and the provincial government mobilized themselves. We were able to assure them and do some other things.

In a democracy, the ultimate guarantee is public pressure. However, even without this bill, someone could come along and do nefarious things to ports in P.E.I. It has not been done and it will not be done because governments have a certain respect for the aspirations of parts of the country to have certain facilities.

The government is not a steamroller, and there must be a consensus in operating a democracy. The provisions in this bill will, I think, give you those guarantees.

Senator Johnstone: I accept that.

Senator Perrault: I am from the West Coast where I say, in all modesty, that we have one of the world's greatest ports. There is a great deal of enthusiasm there for these changes. No one has suggested that if these changes are enacted by Parliament, we will have ushered in an era of Nirvana in relation to legislative reform. However, the attitude there is to give it a try, test it, and find out how sound it is.

The minister has provided the assurance that there will be a review after four years -- presumably before four years, if necessary. It is very assuring and forthcoming to hear the minister adopt that attitude. Most people living on the west coast appreciate what he is attempting to do.

This has not been an easy process. There have been hundreds of witnesses over many months and under different ministers to get this bill where it is at the present time. One of our witnesses the other day said, "I wish this clause had been changed, but it is worth a try." This bill is a great advancement to what we have at the present time, and we would like to see the bill pass.

I think that I represent the consensus of opinion on the west coast that this is a much-improved piece of legislation over the current act. The minister has given us certain commitments. I think they have been good commitments, and I will be very supportive of this measure.

Senator Bryden: Mr. Minister, I want to thank you and your officials for listening to what has occurred at these proceedings and also for responding to a great number of people. I know ministers do not just sit down and invent these responses out of thin air. A lot of work goes into the responses.

For some of us, your participation has enhanced our understanding. In my mind, it has improved the level of confidence in both yourself and your department that there is a will to continue to do the right thing.

What is of particular concern to me in the bill relates to the smaller, commercial ports. It is up to all of us to find the best way to confirm that will now and for the future. That is what this committee will need to address.

I have one question related to the control over the harbours. We heard evidence that when a harbour is divested and deproclaimed, at that point the boundaries dissolve. There are no boundaries and there is no transfer of jurisdiction. At present, there is no way of transferring it.

The question from the point of view of safety is who has authority to ensure that ships navigate the harbour safely once the harbour has been deproclaimed?

Mr. Morriss: Senator, the deproclamation process does not change any of the other federal statutes that apply to marine activity on the surface of the harbour waters. All that deproclamation achieves is that it removes the minister's regulatory authority under the Public Harbours and Port Facilities Act for activity on the water.

When we did the analysis of this issue, we discovered that there were literally dozens of pieces of federal legislation that in some way or another overlap what happens under the Public Harbours and Ports Facilities Act and the associated regulations. Therefore, when we bring this program forward, the research on which is not yet completed, it will be subject to a full public consultation process as to how we would go about this. Quite simply, the concept is that the minister's authority to regulate what is happening on the water in certain harbours would be removed, as we have already done in 199 cases where there was little or no use for the harbour. However, all the other pieces of federal legislation, such as the Canada Shipping Act, the Navigable Waters Protection Act, all the environmental legislation, the Fisheries Act and so on, would continue to apply to the surface of the water.

For example, if we were to deproclaim Port X, we would strongly encourage the entity that was formed to have someone be the focal point of management of their harbour. They would make the call to the appropriate department, depending upon the issue that came up concerning the harbour, and those departments would respond as they do now. There would be effectively no change in how the other pieces of federal legislation are administered.

Senator Bryden: To be more specific, the harbour considered to be the most vulnerable to a major spill is Come By Chance. A harbour master currently manages that harbour and is responsible for the turn-around times of the ships, et cetera. If that harbour is deproclaimed and the port is divested, whose principal function will it be to ensure that a major spill does not occur at Come By Chance?

Mr. Morriss: There are no Transport Canada facilities at Come By Chance. It is simply a declared public harbour. However, Come By Chance is also a compulsory vessel traffic service control area and a compulsory pilotage area. The harbour master's role there is one of oversight to collect our harbour dues. When the port is deproclaimed, we will no longer collect harbour dues. In the old days, the harbour master collected fees for navigational aids, VTS and all those kinds of things, which are now done by other departments. We think that is an overlap of jurisdiction.

To answer your question, when the harbour master is gone and the port is deproclaimed, the same statutory requirements on the companies will apply. For example, in the worst case scenario of two vessels colliding and a spill occurring, they are obligated under the law to report that immediately to the vessel traffic centre. The coast guard swings into action to get the spill under control, and all the normal federal statutes apply.

It is a misconception to think the harbour master is continually eyeing the harbour with binoculars and controlling what is going on there, particularly in a big place like Come By Chance. Electronic and other devices do that. The harbour master is something of a convenience. There is a factor of loss of convenience in this, but we will take care of that when we talk to the businesses that work in those harbours so that, if necessary, they will have someone to call. They are obligated under the law to report any incidents.

Mr. Collenette: Mr. Morriss is saying that the role of the harbour master has been obviated by modern technology and changes in methodology or government service. The principal reason for their existence is to collect a fee, which we are now yielding. It does not make much sense to keep someone to collect a fee that the government does not want to collect.

Mr. Bowie: We believe the existing legislation is sufficient to cover anything that may be necessary in those harbours that are deproclaimed. However, just in case, we have added a provision in this legislation, under clause 104. It is enabling legislation for regulations in harbours that are not covered under Part I or Part II. If there is determined in the future to be some need for regulations for the reasons you have identified, and for some reason the existing legislation does not cover it, there is an enabling regulatory authority in this bill.

Senator Forrestall: I wish to ask a question that Senator Johnson would have asked had she not had to leave for an important engagement.

While I have been to the Port of Churchill on a number of occasions and have participated in debates with respect to its ongoing livelihood, I hesitate to phrase her question in any way other than this: Because of the uniqueness of the Port of Churchill and its role as an important gateway for certain grains going in certain directions from Canada, what is likely to be the future of that port? It is so short term and generally one commodity. Could you enlighten the people of Churchill about the care, warmth and compassion you have for that beautiful city on the bay?

Mr. Collenette: I am not sure that I have to enlighten the people of Churchill. I think they are ecstatic about the sale of the port to Omnitrax and the rail link to that city. Omnitrax has applied some interesting concepts. One, I believe, is the use of lighter aluminum cars which permit heavier loads, therefore cutting the cost over the permafrost, versus loading boxcars as Canadian National used to do, which was very inefficient. They have been able to cut costs. They have made capital improvements at the port. They are now talking about exporting more grain, as well as other commodities that would come up from the U.S. They are also talking about bringing in commodities such as raw iron ore pellets from places like Russia. They are bursting with ideas. A company from Texas does not put money into an operation unless it thinks it can make money.

There was some concern about the amount of public funds that went into the deal. Transport Canada did not contribute any more funds than we would have in any situation called for under the creation of this legislation. Money did go in from western economic diversification.

Being from Nova Scotia, you are quite aware of the good work that ACOA does, and money does flow through those regional development agencies over and above. However, the treatment by Transport Canada for Churchill is consistent with what is and will be applied across the board under this legislation.

Senator Forrestall: Why is it that no environmental studies were done across the country generally on the impact of Bill C-9?

Second, the $125 million is very generous, but it sounds like an official said we have to put a figure in. Someone suggested $150 million, someone else suggested $100 million, and then that was split at $125 million. This is to assist the ports in getting up to a level where they might be attractive to buyers. I am interested in this because the $125 million would not replace the cranes on the existing container piers in Halifax with post-Panamax cranes, which are $30 million or $40 million each. This amount of money has no relevance to anything that I have in the back of my mind.

My next question is: Would the minister consider expanding this fund or making it clear to entities such as the Port of Halifax that they would receive a good hearing from ACOA so they could take advantage of the process that ACOA frees up? I know that ACOA does not have that kind of money, but it could free up yet another process. My point is that if the port does not move soon, the two mistakes of the past will be compounded with a third mistake because it may be the only one they can afford. We will find an expansion that will last us another five years beyond completion, and then we will be looking for further capacity. If we move now, there is capacity to last us well into the foreseeable future and to accommodate not only Post-Panamax but even larger vessels than container vessels plying their trade.

I also have a question on economic impact studies. We heard an excellent presentation this morning from representatives of Summerside. It included an economic impact study and clearly put in front of us what would happen. I have not seen one from Hamilton, Port Alberni, Prince Rupert or Trois-Rivières. We have not seen them from the other ports. Quebec is a very essential port in that respect. We have no indication of the implications to the communities. My concern, as always, is the impact on municipal structure if you remove the flow of funds that has been in existence for years and years. How do you adjust to it and how do you accommodate it, because you will to have to replace it or shut it down. There are only two choices.

I wish to thank you for being here today, Mr. Minister. You now know that some of us still have very grave concerns about what can only be described as a shock impact of some of this. Perhaps when we get over the shock, we may be able to make some progress.

Could you comment on those questions?

Mr. Collenette: The policy on divestitures is really outside the ambit of the bill, by and large, and will continue to be, but in putting the bill together, we received outside financial advice through Nesbitt Burns, one of the big financial houses in the country. I will let my officials give you some specifics, but with respect to Halifax, as I mentioned earlier, there was a study that approved the five-year plan. I assume that dealt with the ramping-up for the post-Panamax era. We believe that Halifax will have the tools to do the job.

You raised the issue of where the $125 million will come from, and perhaps my officials can answer that.

Senator Forrestall: I am more interested in where it will go.

Mr. Collenette: You were asking why $125 million and not $150 million or $100 million.

Senator Forrestall: Yes, I want to know where that number came from.

Mr. Collenette: That was a best estimate of what would be required. I can tell you that up to now we have only spent $15 million. There is a lot of money around for these small ports.

Senator Forrestall: On behalf of the Port of Halifax, can I ask you for money just to replace the cranes?

Mr. Collenette: No, it will not go to Halifax because under the policy Halifax is big enough and old enough -- and ugly enough, I suppose, to use that analogy -- to get on and do what Senator Perrault says Vancouver is doing. He talks about Vancouver being Canada's great port, but there are three great ports in Canada. I am from Toronto, and Toronto is not one of them. They are Halifax, Montreal and Vancouver. Under this bill and under the CPA status, senator, we believe those three ports will have all the tools to do the job and raise the money. Halifax will be able to out-muscle Norfolk, Virginia, Boston and Rhode Island, and any other places on the East Coast.

Senator Forrestall: So much for partisanship in this committee.

Mr. Collenette: I am extolling the virtues of Atlantic Canadian entrepreneurship. That is not partisan.

Senator Forrestall: I want to believe you. Thank you have much.

The Chairman: If there are no other questions, thank you very much, Mr. Minister. We appreciate you appearing again before this committee.

The committee adjourned.