Proceedings of the Special Senate Committee on the

Pearson Airport Agreements

Evidence

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[English]

Ottawa, Tuesday, July 25, 1995.

The Special Senate Committee on the Pearson Airport Agreements met this day at 3:00 p.m. to examine and report upon all matters concerning the policies and negotiations leading up to, and including, the agreements respecting the redevelopment and operation of Terminals 1 and 2 at Lester B. Pearson International Airport and the circumstances relating to the cancellation thereof.

Senator Finlay MacDonald (Chairman) in the Chair.

The Chairman: Come to order please. Colleagues and witnesses, ladies and gentlemen, this is our second week of our hearings.

In our first week, we attempted to have witnesses who would lay down the foundation stones about policy and procedures. In this second week, we hope to deal with more specific issues related to the Pearson Airport. This afternoon and this evening witnesses will be addressing the local airport authority issues as it relates to Toronto.

Tomorrow we will get into the formation of the request for proposals and the means by which the requests for proposals, the RFP, was evaluated. Then we will carry over to Thursday afternoon. We will then adjourn until next Tuesday, August 1st at 3 o'clock in the afternoon and for the ongoing week.

Now a few observations; obtaining the information the committee needs in a timely fashion is a laborious and frustrating process for both the government officials and committee members. It is a mammoth undertaking involving hundreds of documents, and I am aware that government officials are working long hours to provide the information we require.

As I see it, the problems we have encountered in obtaining information arises from the interpretation given by some government officials as to requirements for confidentiality. The other is the confidentiality of advice by civil servants to ministers.

With regard to cabinet confidence, no member of this committee has asked any witness any question which would breach this convention. So far as documentation is concerned, what the committee required is all the information on the basis of which the Mulroney government and the Campbell government decided to proceed, on which Mr. Nixon recommended cancellation, and on which the Chrétien government decided to cancel the contracts. Officials now assure us that this can be done without infringing on cabinet confidence.

Sometimes the committee has been placed in the ludicrous position where some information withheld from us has been released to the public under access to information or the courts in the litigation process. I am told this has occurred because different officials handle different requests for information and obviously took different views as to the applicability of the confidentiality rule. I certainly accept that explanation.

However that may be, I am asking now that senior officials of the government review each and every instance where information has been withheld from the committee with a view to making the necessary information available. The presumption should be in favour of providing information and not withholding it.

Let me now say a word about testimony we will be hearing from present and former government officials.

The questions that have been asked by members of the committee have not been unfair or unreasonable. Nevertheless, some witnesses have declined to answer some questions. I wish to caution future witnesses as follows: First, a refusal to answer any questions will not be automatically accepted by the Chair. If necessary, we will pursue and explore in detail the reasons why any witness is reluctant to answer any question. In doing so, I will seek assistance from committee counsel and from my colleagues on the committee in examining the applicability of any rule or convention of confidentiality that is invoked by any witness.

Second, let me remind senators that there is more than one way to ask a question, and to remind witnesses that there is more than one way to answer a question. What we are seeking is simply information, all the information on which decisions were made on the subject matter of our inquiry.

Third, a proper respect for the conventions of cabinet government does not require that we pretend that this is a spectator sport in which only ministers participate. We all know what the reality is. Public servants are not just implementors of government policy. They play an important role in developing that policy. They report on economic, social and political conditions. They provide information. They outline options. They analyze and report on likely consequences of alternative proposals.

The information and analysis provided to ministers by public servants is expected to be objective. This does not mean it is neutral. There is no need to indulge that fiction.

Remember that the principle we must protect is the responsibility, individually and collectively, of cabinet ministers to Parliament. It is the principle that underlies the confidentiality of advice by officials to ministers.

I believe this principle can be maintained while still providing to this committee all the information we need.

We need not pretend that ministers and their officials act respectively in watertight compartments, nor that officials, especially senior officials, have any right to complete anonymity as to their legitimate roles in important government decisions.

Now, I should like our committee counsel to introduce our witnesses. Thank you very much for coming gentlemen. Pleased to have you.

Mr. John P. Nelligan, Q.C., Counsel to the Committee: Our witnesses today are from the Toronto area. Beginning on my left, we have first Mr. Gardner Church who is a former deputy minister for the greater Toronto area in the Ontario government. Secondly, we have Mr. Gary Harrema, the former chairman of the Durham Regional Council. And then Mr. Gerry Meinzer, former Interim Chair of the Greater Toronto Regional Airport Authority. Finally, Mr. Robert Bandeen, Chair of the Greater Toronto Regional Airport Authority at the present time.

I understand that each of these gentlemen will explain to you the role that they played in general terms in the development and management of the Greater Toronto Regional Airport Authority so that you can direct your questions to the appropriate witness as you wish.

Could you identify yourselves gentlemen and tell us what role you played?

The Chairman: You are aware of the fact that we are swearing witnesses?

(Gardner Church, sworn:)

(Gary Harrema, sworn:)

(Gerry Meinzer, sworn:)

(Robert Bandeen, sworn:)

The Chairman: Who is the hit up -- designated batter?

Mr. Gardner Church, Government of Ontario: I do not know that we have one, but I will be the lead-off hitter.

My role in relation to the issues of your concern, Mr. Chairman, probably began in 1988 when I was appointed Deputy Minister for the greater Toronto area, a unique position that was not -- did not exist before my appointment and I regret to say has not existed since.

I have served in the role from 1988 to 1992. The principle purpose of the task was to coordinate the activities of government in relation to the economic development and management of growth in the Toronto region. This primarily involved coordination among the municipalities and the province, but occasionally involved integration with federal objects as well.

Principle activity that I was involved in was examining the infrastructure requirements for the Toronto region in order to maintain economic growth and accommodate the expected influx of population which is occurring.

And, we undertook a fairly exhaustive piece of work that was published in early 1989, but omitted air service from that list of subjects to be examined and were requested by the Mayor of Mississauga to conduct a study to include air service needs taking up from the 1974 Gibson inquiry. Aerocan Avionics Limited undertook the study for us and published a very extensive list of the infrastructure needs, threats and challenges facing air service in the Toronto region.

On the basis of that, I then chaired a committee of the heads of councils of the greater Toronto area. That involved all of the mayors in municipalities that had airports, plus all of the chairs of the area, and we arrived at a unanimous agreement, a basic approach that should be taken to the Toronto airports.

I think, contrary to some of the messages you may have heard by the mid of 1990, all of the municipalities in the Toronto area had agreed to a general strategy. That agreement broke down on the basis of federal refusal to pursue that strategy, and indeed there was some difference of opinion after that given the new federal approach.

I ceased to be involved formerly in September of 1992 when I took an academic secondment to teach urban and regional politics and have had no formal involvement since then, although the press have kept me actively involved.

Mr. Gary Harrema, Chair of the Durham Regional Council: Mr. Chairman, my name is Gary Harrema. I am not the former chairman, I am still the chairman after 15 years.

The regional Municipality of Durham, which is the eastern end of Metropolitan Toronto -- you may wonder why a chairman of Durham around the greater Toronto area would be as actively involved in the LAA. A number of reasons. One is economic and, as Mr. Church has indicated, Mr. Chairman, the lack of long-term planning when we were planning the GTA gave us some concern, but we also -- Oshawa resides in my community, as well as 18,000 acres of Pickering land which was purchased many years ago for a potential airport and the interest in our community is much beyond Pearson.

And so I was one of the five regional chairmen that worked very actively and met with ministers on a number of occasions to ensure that an LAA was formed so that we would not be isolated at Pearson -- be part of the overall economic and travel plan in the greater Toronto area.

I have continued to work in that fashion, having proceeded resolution through our council, sir, on a number of occasions supporting the effort, though not the chairman, very active in pursuing it with cabinet ministers, both federally and MP's, one in particular, in the area that I was working. And I still work in the political circles east of Metropolitan. We have 500,000 people in our community and I am here as one of the original people that were invited out to originally discuss this and usher it through our council.

Mr. Gerry Meinzer, Former Interim Chair of the Greater Toronto Regional Airport Authority: Mr. Chairman, I am Gerry Meinzer. I come out of the technology business in real life, the part that pays me.

As a sideline, I am also quite active in the Metropolitan Board of Trade, have been there for quite a number of years and was its President in 1992 and 1993.

The Metropolitan Board of Trade is the largest community chamber in North America and goes back in a long, long history to the mid-70s advocating the formation of a local airport authority to administer Pearson and airports generally in the greater Toronto area.

I got involved in the establishment of the local airport authority as a member of the first initiative. And when a competing interest was surfacing, it was my role as Chairman of the Regional Chairman's Task Force to try to find a degree of unanimity and form one single entity that ended up becoming the airport authority as it sits today. I am still a director of that airport authority.

We came up with a unanimous agreement on how we govern ourselves. We came up with a unanimous agreement by every region within the GTA, and we got an endorsement from every municipality that we felt was important as an adjacent community to the airport or as a key engine like the City of Toronto.

While there might have been some provisos and some questions of Island Airport and all that, ultimately the resolution in every single instance supported the formation of an airport authority. To me, it was important for the economic development of Toronto and the Toronto region that an airport authority takes over the role of managing Pearson Airport in particular, and other airports around it.

Mr. Robert Bandeen, Chair of the Greater Toronto Regional Airport Authority: Hello, my name is Bob Bandeen. I want to thank you to for inviting us here today. I look forward to being able to participate with you in trying to shed some light on the facts and the circumstances surrounding the formation of the Greater Toronto Airport Authority.

I would like to correct one thing in the introduction. I am no longer chairman of the airport authority, I am ex-chairman. Since January of this year, Mr. Sid Valo has been chairman.

The airport authority has made a decision to alternate the chairman on an annual basis, and each January we will elect another one of our members. However, I was chairman for the first two years and during the period I think that covers the work in which you are interested.

My background was I was with CN, a Crown corporation for 27 years ending up as President. I was with Crown Life for three or four or five years, I guess, and then have had my own small investment company.

My first connection with the airport authority was only in February of 1993 when I received a phone call from Alan Tonks, the Chairman of Metro, asking me to serve as a director, and I duly agreed and was elected. Subsequent meeting of the board in March of a year after we had been set up as a not-for-profit corporation, I was elected chairman. And after that had several meetings with the then minister Mr. Corbeil, and also with the various officials of Transport Canada and met with Jack Matthews, the President at that point of Paxport.

I eventually ended up having two meetings with Mr. Nixon when he was doing his review of the contract. So, those are my qualifications.

I have sitting beside me a man named Steve Shaw who was the person who has been with the airport authority as a consultant in one form or another throughout the last two or three years. And he has great access to information and data and letters, and he is here with great stacks of files. And if we need to produce a letter, he will do it. So thank you very much, Mr. Chairman.

The Chairman: Thank you, Mr. Bandeen. Well, in addition to your other very impressive qualifications and background, I noted in reading your CV that you were one time vice chairman of the Institute on Research and Public Policy.

Mr. Bandeen: That is correct.

The Chairman: So you would have some sympathy with a committee that is really trying to do an analysis and examination of public policy as it applies to privatization of airports, and particularly Pearson Airport?

Mr. Bandeen: Yes.

The Chairman: Now, I suppose that of all things that anybody listening to this committee or interested in our proceedings is the airport and the things about the airport. Where does it stand now? Have you got a chief executive officer yet?

Mr. Bandeen: If I could fill you in perhaps, Mr. Chairman. Would you like me to answer now?

The Chairman: Whoever, yes.

Mr. Bandeen: Basically, we thought we were ready to be recognized as an airport authority back in 1993, and as you have seen from the correspondence we wrote several times from the then minister and tried to make changes that would meet his qualifications. That government was defeated and the Chrétien government took over.

We were unable to meet with the then new minister for some time after his appointment. I think he was trying to get his policy in order. He came out with a policy on Canadian airport authorities in July of 1994.

We changed our by-laws and some of the other requirements to meet his principles, and he recognized us and we signed a letter of intent in early December, 1994 and have been in negotiations with Transport Canada since then. So that is the status now.

We have been searching for a chief executive officer and have narrowed the list down to a few. We are hopeful to be able to announce a new CEO by the end of August or early September.

The Chairman: Are you incorporated?

Mr. Bandeen: We were incorporated in March of 1993.

The Chairman: I see.

Mr. Bandeen: We were set up. We had our board of directors. We got financing at that time. The Bank of Commerce we eventually selected after having a contest is the term I use amongst the various banks and selected the Bank of Commerce. They have been very good. They have loaned us money to operate since we have been recognized.

We have also selected lawyers and accountants and this type of thing.

The Chairman: Have you done any engineering work or anything of that type? Architectural work?

Mr. Bandeen: We have not had to do engineering or architectural work because what we are trying to do is get the information from Transport Canada to allow us to negotiate the law of the ground lease and the rental for the airport. We are relying heavily on Transport Canada.

Once we get the lease, we will have to get into architectural and engineering, but in the meantime Transport Canada is still running the airport.

The Chairman: I see. Have you any idea when the airport will be transferred to you?

Mr. Bandeen: The minister's office has used sometime between January and June of next year. That is all I could say. We are all novices on our side on negotiating a lease and they have done it four times already. So I think they have better idea than we do.

The Chairman: On July 13, I asked Mr. Glen Shortliffe, whom I am sure you know -- I said, "Would you give us a ball park figure as to when you think that the Pearson International Airport will be brought up to world class standards that it deserves, knowing as you do that which is required?" Mr. Shortliffe replied, "The year 2002, 2003." That is seven or eight years away.

He said, "If all decisions have been taken and reached." Well, that would mean that we extend that possibly to nine years because all decisions have not been taken or reached.

Mr. Bandeen: Yes, I would hope that is pessimistic. I think that perhaps that is the time it might have taken Transport Canada to do it. But, one of the benefits of having private businessmen and entrepreneurs on the board and selecting a CEO who is an entrepreneur will be I hope to speed up exactly what you are suggesting.

The definition of a world class airport is subjective, but I feel that you look at the other airports that have been taken over by airport authorities, and you look at Vancouver and it has moved ahead tremendously. They signed their deal in April or May of 1992, and they are already building a runway -- building a new international terminal.

You look at Calgary, when you go through it. Look at Montreal, all the changes that Dorval is making for the passengers. So I am hopeful that if we sign the lease, take over the terminal, that we can move more quickly than has been suggested.

The Chairman: There are no impediments standing in your way other than those you mentioned.

Mr. Bandeen: No, we have to sign the agreement. It takes a long while, as you probably know, to build a new terminal or to modify an existing terminal. It takes a long time to do the planning and engineering. Some of this is being done, the overall planning, but the sooner we can get in there and have the lease and begin to do our own work, the faster it will occur.

I am not suggesting that there is a problem because I think there is sufficient capacity in the existing terminals to last depending on your view of the number of passengers. But, I think everyone agrees that we are fine until 1997, 1998 and maybe longer with the existing capacity.

Where we need improvement is in the runways and the second north-south runway is currently under construction. And the Department of Transport has authorized that. It is going ahead. I believe they feel the airport authority will have to pick up the cost when they take a role. That is fine. We have approved it and are working with them. That is not creating a problem. If we can get the new runway in, I think we have a little breathing space before we have to make major decisions on terminals.

Mr. Meinzer: May I add to that as well, for Transport Canada, the typical, traditional modus operandi is that the airport at Pearson consists of two terminals. The private sector owned terminal is sort of a thing by itself. I think an airport authority can bridge that gap rather quickly and come to some arrangements where all three terminals interface rather coherently rather than having two terminals run by one outfit and the other one for all intents and purposes doesn't exist. It is interesting when you made your opening comments where do things stand right now? Pearson is barely standing. Things are falling apart.

The Chairman: I am sure the committee does not know of any other gentlemen who have worked harder or are more interested in the airport than you and we wish you the best of luck.

We start the questions I think with Senator Bryden.

Senator Bryden: Thank you, Mr. Chairman. I too would like to welcome the gentlemen as witnesses.

I have some questions hopefully that each of you can help us with.

First, Mr. Church, were you the Chairman of the Heads of Council? Did you say that in your opening statement?

Mr. Church: Yes, I was Chairman of the Heads of Council's Airport Committee in its early structure, and only when it became obvious that political settlement was going to be required was the chairmanship transferred to Peter Pomeroy, the Chair of Halton region, a sister region of Mr. Harrema. And I continue to be a member, but the chairmanship passed to a political figure at that point.

Senator Bryden: What was it that the Heads of Council Committee -- what does it do, generally speaking?

Mr. Church: There are several Heads of Council Committees. You can understand I think that in operating a region that is as intertwined and as inefficiently governed as the Toronto region, there is a need for a good deal of liaison. So, there have been and there are a lot of intergovernmental agencies working on those issues.

During the Peterson years, my purpose was to try to provide some coordination and orchestration of that process. The Airports Committee consisted exclusively of those heads of council that had airports in their jurisdiction, plus the Chair of Halton, Mr. Pomeroy, who was seen as a kind of honest broker.

The purpose of the committee was to review the findings of the Greater Toronto Coordinating Committee which is the technical body which advises the heads of council study on airport infrastructure, the one I mentioned carried out by Aerocan. That group, Greater Toronto Coordinating Committee, made recommendations to the Heads of Council Committee -- I believe you have copies of the recommendations in your material -- which suggested among other things that the airports of the Toronto region had to be managed as an integrated whole, that this was essentially an economic asset, probably the largest economic asset in the country when looked at as a whole, that it needed a strategic overview designed to aid and facilitate and compete in the world market. And that under Transport Canada's management, because its mandate was essentially to operate a utility, that kind of framework was difficult to achieve. Transport Canada agreed that that wasn't their role.

So, the mayors and chairs on the Heads of Council Committee essentially were attempting to arrive at some agreement about how the airport system should be operated to achieve both the level of public utility that is needed as well as the capacity to go out and actively compete for air travel business.

Their purpose was to agree on the basic principles and then try to either meet federal government requirements or persuade the federal government to change their requirements. That is the mandate they undertook.

Senator Bryden: I want to be clear, the Heads of Council Committee, it is a committee dealing with airports?

Mr. Church: There are several Heads of Council Committee. The Airports Committee was the Heads of Council Airport Committee, yes.

Senator Bryden: That is the one you were involved with?

Mr. Church: I was involved with many of them. For these purposes, that was the relevant one. There was one on solid waste. There was another on land use planning.

Senator Bryden: That is helpful because I wasn't sure whether there was a series of these or one umbrella.

Mr. Church: I would argue there is a matrix of them. It was a fairly complicated decision-making structure.

Senator Bryden: Mr. Church, in our first week of hearings, a former Minister of Transport in the Mulroney government, Doug Lewis, gave testimony before this committee that one of the principle reasons that the Mulroney government rushed ahead with the private development of the Pearson Airport was because the relevant parties in the greater Toronto area could not get their act together. Do you agree with that position?

Mr. Church: I do not know who he would define the relevant parties as being. There was complete agreement among the Heads of Council and the provincial government, who I would argue are fairly relevant parties, as to the strategic directions that should be pursued. And that included creating an airport authority for at least Pearson and possibly for other airports in the area for the purposes of achieving those strategies. That was unanimously agreed by all parties.

There was an acceptance of the federal government view that it should be business led and business dominated. There was some concern about the federal view that there should be no political accountability for these authorities. That was an issue that was under discussion, but that is not to suggest that there was any fundamental disagreement. There was certainly desire to negotiate with the previous government some of the issues around their rules, but there was an exception of the basic six principles, and the Heads of Council were prepared to proceed.

There was at that point, and I am talking now middle to late of 1990, no dispute on those issues.

Those disputes only arose later after the federal government had made a decision not to go in the direction recommended by the Heads of Council.

Senator Bryden: Could you take your time and in your own words explain to us the process that in fact you went through, or the Greater Toronto Regional Airport Authority went through in order to attempt to have the airport at Pearson devolve under the 1987 rules to you?

Mr. Church: I think you are asking two different questions, and perhaps I could differentiate the two questions. There was the political process of achieving the consensus that was required by the federal government before negotiations would begin. Then there was the organizing process that Mr. Meinzer and Mr. Bandeen were involved in of actually trying to implement the airport authority process itself. Let me describe to you the former.

In 1989, as a result of the Aerocan study, the committee that was put together essentially had the objective of trying to agree on whether or not there were some basic principles that could govern the management of airports in the Toronto region. They agreed on a number of those. I do not have my paper with me so I do not want to be held specifically to these, but my recollections are that they certainly included the Pearson Airport and perhaps some of or all of the airports in the Toronto region of which there are, depending on your definition, up to nine, should be managed by an airport authority.

There was an agreement that the profits generated by Pearson should be used first to upgrade Pearson so that it could meet the standard that the chairman referred to so that it could be internationally competitive. Secondly, that subsidies from Pearson for the rest of the national aviation system were acceptable and reasonable and that was not a matter of concern. That had been an issue of political debate earlier.

There was an agreement that the various municipalities around Pearson, including both Mississauga and the City of Toronto, had an interest in this issue. That had been an area of significant discussion particularly from the perspective of Mississauga.

There was agreement essentially on the points laid out by the federal government in their airports policy with the exception of the definition of political accountability where there was a desire for further discussion. This agreement manifested itself most clearly, and the meetings were very routine meetings that led to this agreement. It manifested itself most clearly at the meeting with Mr. Lewis in -- Steve, when was the meeting with Mr. Lewis, December 1990?

Mr. Steve Shaw, Director of Strategic Planning, Greater Toronto Airports Authority: Right.

Mr. Church: December of 1990 when under the chairmanship of Peter Pomeroy at that point, the committee met with Mr. Lewis to lay forth this point of view. Mr. Lewis expressed very much the points that you have suggested, that Toronto was not sufficiently cohesive, that moving ahead with the renovation of the terminals was absolutely critical, and that an airport authority, if it was going to happen, certainly was not going to happen first.

Senator Bryden: Was your committee in agreement with that position?

Mr. Church: No, I think Mr. Harrema can speak to that better than I can.

Mr. Harrema: All of our councils -- as you are well aware we represent nearly 3 million people. All of our council had endorsed that an LAA we request the minister to, I guess, slow down the privatization to allow us to prepare ourselves both financially and long-term plans for an LAA rather than privatizing as we were afraid Pearson would be the only one.

Resolutions went through every one of our five regional council to that affect. We brought that forward to Mr. Lewis at a meeting that we had where the minister of GTA, Mrs. Greer was there, I believe Mr. Phillip was there at the time. You were there, Mr. Church, myself, Mr. Pomeroy, who does not have an airport in his area was considered to be the neutral chairman who chaired it.

And we requested Mr. Lewis to slow down at least to allow us to prepare or to cancel altogether to allow us for an LAA, and Mr. Lewis indicated that they were proceeding at the time and indicated that that was his top priority at the time and he was not proceeding with an LAA yet till we were much more concrete than just resolutions in council.

As a matter of fact, we were asked to reaffirm our position again for council as he said he heard some static that there was the odd council that wasn't quite on side. And we did later on. We redrafted practically everything we did, submitted it again to our council to ensure that we were still consistent with an LAA.

I think there was some controversy whether the Island Airport was causing a problem, but the metropolitan councils or the regional councils, which I am the head of one of the five, had all endorsed that we proceed that way.

I know in our council it was unanimous, even though we did not have a major airport at the time.

So when we met with Mr. Lewis and the two cabinet ministers in Toronto and some of the officials, all the regional chairmen were there to discuss the matter back in December I think that was.

I do not have the dates that we met Mr. Lewis. But Mr. Lewis bumps up to the riding I live in. I know Mr. Lewis. We called a meeting.

Senator Bryden: You said other ministers, what other ministers were there?

Mr. Harrema: The minister for GTA and the Minister of Municipal Affairs for the Province of Ontario was there. Not other federal ministers, sir, just the one federal minister was there.

Senator Bryden: This was in 1992?

Mr. Harrema: 1990. December, I think, of 1990. December 1990, sir. And I cannot recall -- I am not sure which hotel it was. Out near the airport. I recall that. I do not have minutes with me, but I know it was out there.

Senator Bryden: If I could go back to Mr. Church because we are on sort of a two part question. The first part of your answer, I think it indicated that you believed you were in a position to be recognized by the government as an LAA?

Mr. Church: No. What we were doing was getting the political requirements out of the way. The federal government required support from the municipalities. Now in Vancouver and Montreal, they required support from a few municipalities. For reasons about which you can speculate, they required absolute unanimity twice from the Toronto community. And to get absolute unanimity from 35 municipalities on anything on any day is an heroic effort, and we undertook that effort twice successfully.

Once that political agreement was in place, the federal rules required a business community to develop the airport authority. That is where, from my point of view, my role stopped because I worked for the province, and the business community then began developing an airport authority even though it was apparent that the federal government had said that they would not recognize it prior to privatization.

Senator Bryden: They made that clear to you?

Mr. Church: At the meeting Mr. Harrema referred to they made that clear to us. The last comment in that meeting, which is kind of ironic now, was Mr. Pomeroy requesting Mr. Lewis that before the terms of reference for a call for proposals be issued that they talk to us again. And it is certainly his impression that we got that agreement.

The next moment that that particular committee heard of the federal government's plans for Pearson was a brown envelope advisory from a disgruntled employee in Transport Canada that a call for proposals was about to hit the street. That was a year and a half later.

Senator Bryden: Can you then indicate to us, if you know, why the criteria that was being applied by the government to the Greater Toronto Regional Airport Authority was different than what applied in Montreal, for example, or Vancouver or Calgary? There they did not require the agreement among municipalities.

Mr. Church: In which time period are you asking this question?

Senator Bryden: Any time period.

Mr. Church: I think the criteria changed considerably from time to time within the federal government. I think most of my comments would be speculative in this respect since almost all the information we got from the federal government after mid-1992, early 1992 was in the form of unofficial leaks and rumours.

But, up until late 1991, there was a very good relationship among the three levels of government. The Ontario government recognized it had no role to play in the operation of Pearson. It did have some role to play in the access to Pearson and access to other airports, and because of the bail out of Buttonville and the ferry to the island and some of the issues around Hamilton, it was actively involved in the southwestern airports study. That role was all through the Ministry of Transportation and is what I would have described as being routine and friendly.

The other disputatious issues, it seemed to me, arose sometime either in late 1991 or early 1992 when the federal government decided to proceed with the call for proposals and insure, if possible, that there was not a cohesive Toronto response.

Senator Bryden: Were you there when that decision was made?

Mr. Church: I was there when it was communicated to us, yes.

Senator Bryden: When it was communicated to you.

Mr. Church: Mr. Harrema and I were both there.

Senator Bryden: Mr. Harrema, perhaps you could -- since I take it you are still involved -- the criteria that was applied to the Greater Toronto Regional Airport Authority was certainly not the same criteria that applied to Montreal or any of the others. Can you cast any light on why -- and it appears to be much more onerous.

Mr. Harrema: No, sir, I cannot. We did ask. And Mr. Lewis is very firm on the matter when he indicated that we had to have decisions from all our council. Why it was different we could not, did not ask Mr. Lewis. We did indicate we were rather concerned. He wanted to make sure that the facts were all clear and on the table before he proceeded, that there was support for it. He somehow had a feeling that there wasn't, even though we got it all through council, and two MP's I went to. One is a neighbour of mine, a member of the government at the time. I asked why there was a difference, and I did not get an explanation except Vancouver and Montreal had gone quite smoothly.

And we anticipated a very similar status, and we were prepared to work for that. As a matter of fact, it was somewhat concerning to our councils. "Why are you coming back? Are you not doing your work or do not they trust you?" Or as a chairman who is a member -- they have us here as a group of seven in the one report, there are really only five of us, "Are you doing something? Or what is involved?"

We could never add why, but Mr. Lewis indicated to us that privatization was the way that he wished to proceed and if we wanted to get involved in it at some stage, he did not say we would be totally excluded, but he certainly was not indicating to us that we should proceed, that he would take an LAA -- he would hold back and have an LAA at all at the time we met with Mr. Lewis in 1990. We met Mr. Corbeil later on again in 1992 and it was similar -- somewhat different meeting, but it was somewhat different meeting but similar reactions. Mr. Wilson was at that meeting at the time.

And I have to say that our council were getting to the stage, all of our council as to what was going on. Why did we have to go the extra step or the extra mile that neither Montreal or Vancouver, which we were looking at -- or Montreal was very similar to Pearson or Toronto area in that it had two airports, not just one.

And as you know they were concentrating on -- and we talked about the island. There was some controversy in Toronto. We did realize that. The Mayor of Toronto was certainly not in favour of jets landing there which was causing some concern at the time. Whether that had something to do with it, we are unable to answer, but we certainly were not encouraged at all and found it somewhat frustrating that there were two different sets of rules that we were trying to apply by. At least that is how we felt.

We brought that to Mr. Lewis' attention who only lives up the road about 30 miles from where I am. We do see each other occasionally at functions living fairly close to each other, but could not get an answer. I did not approach him at his office, just at those meetings to go beyond, but found it difficult to deal with.

Senator Bryden: Can I ask you, did Minister Lewis show you any document that indicated that the criterias for the creation of LAA's had changed from the time that they had recognized Montreal, Vancouver, Calgary?

Mr. Harrema: I may have to turn to Steve. I do not recall that I received information. Mr. Shaw might be able to answer. Mr. Shaw, there were a number of meetings I held that I was at. If you would allow me, sir, maybe to turn to Mr. Shaw to see if there was any documentation that there might have been.

Mr. Shaw: No.

Mr. Harrema: I cannot recall, and Mr. Church might, sir. I did not receive anything official that the rules had changed. Just indication by his word of mouth that that is the way he wanted it to go.

Mr. Church: There was an exchange of correspondence at some point shortly after that meeting designed to determine whether the opposition to privatization by the Heads of Council Committee was opposition to privatization per se or a concern about the order in which things were done. And a letter was sent back from Peter Pomeroy, the chair of the group, indicating that the group as a whole believed that the private sector had an important role to play and should have an important role to play, but the public policy framework had to be in place first in order to ensure that the management, not only of Pearson, but of the other airports in the area, maximized the economic potential for Toronto and Toronto's surrounding area.

That is, I think, the only formal communication during this hiatus between 1990 and 1992 that involved the Heads of Council Committee.

Senator Bryden: I am not sure in whose statement it was, but one of you indicated that a request was made, or I think repeated requests were made, to delay the process in order to get your airport authority in place before the private developer had Terminal 1 and Terminal 2 under his control. I do not know who asked that.

Mr. Harrema: I might have said that, sir, because we did ask that it be delayed to allow us and not rush the matter in both a meeting with Mr. Lewis and Mr. Corbeil to not do that, but we certainly, they indicated -- the indication Mr. Lewis and later on in a meeting Mr. Corbeil was at, their intention was to proceed forthwith and not delay.

Mr. Wilson even suggested at a meeting which I think was in 1992, that this was 10 days prior to the call for the RFP, that if we wished as an LAA to do something, to put in a proposal, but there was no intention, sir, of delaying the matter at that time.

Senator Bryden: I think you said that that request persisted right up until the RFP -- the request for proposals went out.

Mr. Church: And afterwards.

Mr. Harrema: It persisted quite adamantly, sir. Letters were written and people were approached. MP's were approached. I approached Mr. Seotons and Mr. Stevenson who were members in my community.

I asked them to speak to Mr. Lewis to delay it earlier on and then again to Mr. Corbeil, asking them, and Mr. Stevenson indicated that he would. Mr. Seotons indicated that they are proceeding for the privatization, and if we wished to be part of an LAA we should probably put in our own bid which is the only way to protect our better interest.

Senator Bryden: Put in a bid on the RFP.

Mr. Harrema: Yes.

Senator Bryden: What date was that, sir?

Mr. Harrema: I would think that would be about 1991, about May 1991 when Mr. Seotons and I would meet on various different occasions. Mr. Stevenson and I would see each other probably every other weekend. He just lives three farms up from where I live. We would occasionally talk at a social function or curling club. I never wrote them a letter, but I saw them all quite regularly and indicated the interest in our community so they were well aware of it.

I did indicate the meeting we had with Mr. Lewis which neither one were aware of. They were only aware of the privatization program proceeding.

Senator Bryden: Mr. Lewis also indicated that one of the reasons he had to proceed to privatization was because he was under such tremendous pressure to fix the Pearson situation. And one of the documents that he read from was a letter, I believe it was from the Metropolitan Toronto Board of Trade. I ask anyone who can help us here. Given that by 1992 before the RFP went out, that the country was in a recession, the existing facilities at Pearson were being utilized at about 50 per cent of capacity as I understand it, that Air Canada, as evidenced by the committee hearings before the House of Commons, had asked for the principle user of T1 and T2 had asked for a two year delay proceeding, do you have anything you can tell us why there was such a rush that could not wait to allow you the opportunity to get your LAA in place?

Mr. Harrema: As a member of the political, sir, I cannot. Mr. Meinzer, we will remember the long-term planning that it was going to take to get ready. But I cannot -- you said tremendous pressure. He said he was under pressure to have things upgraded. Mr. Meinzer might be able to make a comment on it as he was with the Board of Trade that were very actively pursuing that the upgrading of the airport be done.

Mr. Meinzer: In fact, I had in my capacity as President-elect and later as President when Mr. Lewis was no longer minister, several meetings with him. And our push was not the privatization of Pearson. Our push was to implement an airport authority. It was a single-minded direction to Doug Lewis. What we want really is an airport authority so that entire airport evolution is under community control. There was never any push to privatize it, certainly not from the user committee nor from the Board of Trade.

Senator Bryden: Maybe you cannot enlighten us on this, but there was what is referred to as a two tier approach that was used in I think the Montreal LAA. Perhaps Mr. Church, since you were involved at the formative stage, could you explain to us what that is?

Mr. Church: Yes, I can, senator. The reason time periods are critical here is that the ground rules in terms of the way the debate occurred changed quite radically in 1992. Up until 1992, at least my impression, and I was quite deeply involved, was that the discussions between the federal government and the various parties that were interested in creating an LAA they were proceeding. They were proceeding frustratingly slowly, but they were proceeding.

Because the demand on the airport facilities had dropped dramatically and the crush from 1989 was no longer an issue, it is what I thought was a wonderful strategic opportunity to get it right. This was the atmosphere that pervaded the Toronto regional planning framework. We were doing a lot of strategic planning then.

That changed with the news, first unofficial and then confirmed at a most extraordinary meeting by the federal ministers, that they were planning to privatize 1 and 2 on the basis of extraordinary, if I might say, flight data in terms of the demand that was going to be put on the facilities. At that meeting we were told that our failure to agree to all of the details of the airport authority requirements made waiting for an airport authority difficult.

The only area in which there had even been the slightest dispute with the federal policies had been around the issue of political accountability for the airport authority. It was an issue for discussion, certainly not a make or break issue. It was put forward by the Mayor of Etobicoke and supported by one or two other mayors that there should be some vehicle by which the people who were are elected in the region can express their views and perhaps exercise some degree of influence on an airport authority.

An example that was used was the issue that was under debate in Montreal, and I don't know whether it was actually implemented in Montreal, in which there was going to be the operating authority which would be business led, would be independent, and then there was going to be essentially a political advisory body constituted that appointed each of the individual members once every four years or some such thing and maintained some political oversight.

That was presented by one of the ministers, I do not remember whom, at the meeting of February 1992 as an insuperable problem. I think I wouldn't be out of place in suggesting it sounded to me very much like an item being dredged up from history to justify a position. There was certainly no fundamental dispute with the federal government over that issue.

Senator Bryden: You used the word "extraordinary" in relation to projections of airport usage when you were informed that you were going to rush on and do the private development. Can you give us some indication -- I mean we do not need detailed numbers.

Mr. Church: Unfortunately, I can't. Certainly we could take that under advisement and get that information back to you. We had, both from the Department of Transport's earlier analysis and as a result of separate analysis that have been undertaken, looked at the airport demand. And had the growth curve from 1986 to 1989 continued, there is no question that Minister Corbeil's data might have been appropriate. That was the most extraordinary growth period in the history of the country and by far the most extraordinary growth period in the history of Toronto and Toronto aviation.

It seemed illogical in the face of a very deep recession to argue that that growth pattern should continue to predict the capital expenditure pattern. That is the principle argument that was put forward by the Heads of Council and by the province at that extraordinary meeting, essentially that the data being used by the federal government to justify a rush to a call for proposal -- a call for proposal that had an extraordinarily short period of time to respond to it attached to it, that was in fact the position put forward by the municipalities at that time, that it clearly required revisiting.

Senator Bryden: The time of the request for proposals was 1992, and quite clearly the usage of the airport was down and so on. Is anyone sufficiently current to say whether we are up to full capacity at Pearson now?

Mr. Bandeen: No, we are not at full capacity. We are far from it. We are back to what 21 million last year, and 1989 before Terminal 3 was there. We were at that level. We are just back to the level.

Mr. Meinzer: We are now actually back to 1990 levels.

Mr. Bandeen: We have had Terminal 3 built in the meantime and operating.

Senator Bryden: So how much remaining capacity do you have?

Mr. Meinzer: It is built currently to handle about 30 million passengers including Terminal 3 and the expansion capability.

Senator Bryden: And it is handling 20?

Mr. Meinzer: 21.

Senator Bryden: So you would have a 33 per cent growth from where we are now?

Mr. Bandeen: We feel we will be all right till 1998-1999.

Senator Bryden: I think that the CEO from the Vancouver authority when he was here indicated that it took about a year to get up and running as a local airport authority. Even with that, in 1992, is it correct to suggest that you could have been up and running in 1993?

Mr. Bandeen: Yes, that is correct.

Mr. Meinzer: You got to accept as well that there has been the experience of Vancouver and others, and we can, I believe, now go even much faster.

Senator Bryden: Mr. Church, I am not picking on you.

Mr. Harrema: We do not mind.

Senator Bryden: I need to start somewhere and if I could start with Mr. Church and then go through. I may have some specific or isolated questions for the others, but I appreciate everyone who has something to add coming in.

In March of 1992, the Mulroney government issued a request for proposals inviting the private sector to finance the upgrading of Terminals 1 and 2 at Pearson International and to manage them under a lease arrangement. What was the status of your local authority in the Toronto area at that time?

The Chairman: You were not incorporated?

Mr. Meinzer: We were not incorporated, but at that time we were in the process of forming a local airport authority that would meet the government's requirement of everyone in the region. So we were, at that point, finalizing the regional chair's task force to see how we govern ourselves so we can come up with a single airport authority. And you may know from your own documents there was a competitive attempt at one point, and we were just at that point sorting out these two interests to come up with one.

Senator Bryden: On the 16th of March, the actual request for proposals was released giving interested parties 95 days to reply. Was there any possibility that your authority could have analyzed that request, engaged the experts that would be required, and prepared a competitive proposal within 95 days?

Mr. Meinzer: The answer is no.

Senator Bryden: I would take it that that is one of the reasons why you asked for more time?

Mr. Meinzer: One of the reasons, nor did we see the urgency.

Mr. Church: I think if I might, senator, there are a couple of issues here in terms of that timing.

When the decision was made by the federal government to proceed with the call for proposals, at the end of the February meeting or early March meeting I guess between the province, the municipalities and the three federal ministers, Mr. Wilson indicated, as Mr. Harrema suggested, that if an airport authority could get its act together and get its bid in it was welcome to bid.

On the basis of that, the provincial government agreed to underwrite, if necessary, a bid that was designed to return the policy control of the airports to the public sector early on, and that led to an effort by Mr. Bullock, who is now on the airport authority board, invited by the province to try to put together a group who believed that the strategic framework for managing the airport should be in place first. And it was an effort by the province to achieve the objectives that the municipalities wanted to achieve.

I think it is fair to say that this created a great deal of excitement between the province and the federal government which went on for some time.

Senator Bryden: Good excitement or bad excitement?

Mr. Church: Interesting excitement. And it did lead to some evidence that the solidarity in the municipal position had changed in that the City of Mississauga was now -- or at least the Mayor of Mississauga was now actively supporting privatization first, and there were occasional murmurs from others to that effect. So by that time it was fair to say relationships had become quite unpleasant, and the province was not attempting to exercise any influence over federal aviation policy or even federal airports, but rather trying to ensure that the public policy options were kept open despite what they considered to be a thoroughly inappropriate federal action.

Senator Bryden: Given that the private developer, Paxport, was chosen by the Mulroney government as having the best acceptable proposal, if they had submitted an unsolicited proposal in 1989, three years, and we know had been in -- from discussion with Mr. Lewis had been in constant discussion with the government and with his department and his successor with him and his successor, would a 95 day period have given an even starting gate then for you, if you had been in shape to go in and compete against Paxport, who had been at this for three years?

Mr. Church: We tried to do it. We must be clear. This is not the authority that had been working religiously with the federal government. This was kind of an impertinent effort to live with the new federal rules that had been announced to us literally days before.

And by dint of some fairly spectacular efforts, an initial effort that might have produced a credible bid was undertaken. It became obvious almost instantly that given the nature of the call for proposals, which required very detailed drawings and detailed electrical analysis as to what one would do with communications facilities, with the administration building, with a variety of other issues, that a complete proposal in that time frame would be very difficult.

Nonetheless, Mr. Bullock and his group made an enormous effort to make it happen. It really was not until they were informed by the federal government that their bid would not be accepted because of what they perceived as provincial involvement that they turned their material over to another group which ultimately did put a bid in on their behalf.

Certainly from what I was told by the people involved in this exercise, one would need an enormous amount of time and money to develop the kind of detail that was required in the request for proposal. That did lead to their request for an extension. That was -- I think it was called the Southwestern Ontario Airport Group -- quite distinct from the group that Mr. Meinzer and Mr. Bandeen are involved in.

Senator Bryden: Mr. Church, during the first week of our hearings when we were trying to just understand the basis on which government contracts of this size and so on are put forward, we had an expert witness from Supply and Services, a Mr. Steven Turner who set out three guiding principles -- I am sorry to have this preamble -- that should be applied to every major government contract. And while it was clear he was not involved with big leases, we had an expert, Al Clayton from Treasury Board who said the same principles applied to major leases no matter what department.

Those three guiding principles are the following: There should be competition, open bidding and fair opportunity for all interested parties to bid. In your opinion, each of you, in this instance was that principle abided by?

Mr. Meinzer: Well, no because there was, even to begin with, a debate whether an airport authority itself was permitted to bid. And so, you needed to sort out the eligibility to begin with of an airport authority to place a bid, never mind actually structuring a bid.

And ultimately, unlike the proposal that was solicited and tendered in the end, we wanted to be absolutely certain that it can be financed, because my recollection is that the Paxport proposal never talked about how they are going to pay for it.

The question of financing was much, much more bigger in our minds than it might have been in others.

If you are looking at a level playing field, the answer is no.

The Chairman: Senator Bryden, I have never put time constraints on any senators.

Senator Bryden: I have 17 years left, Mr. Chairman.

The Chairman: Seventeen years.

Senator Bryden: Unless God gets me first.

The Chairman: Could I suggest you could help me by in the future holding to maybe 30 minutes?

Senator Bryden: No, Mr. Chairman, I will not agree to that. I believe that the terms of reference were that we would thoroughly examine the facts and allow the truth to come out, whatever it was.

The Chairman: But, not single-handedly.

Senator Bryden: I have 17 years and there were people around here who have a lot more than that, perhaps present discussion excepted. Unlike the privatization of Pearson, I am not in a rush.

The Chairman: We will permit supplementaries as we go then.

Senator Bryden: Why? I believe, and I refer to council, that I have the opportunity to complete my line of questioning. Others will have the same opportunity, and I will have the opportunity to do a second round.

The Chairman: I am afraid they will not at the rate we are going.

Senator Bryden: Why?

The Chairman: Be fair. That is a long time. You have been questioning for an hour, and I am just asking you to shorten up and come back again in the second round. This does not have to be the end of it for you, but just so somebody else will have a chance.

Senator Bryden: They will get their chance unless you cut me off.

The Chairman: I will not do that. I want to ask a supplementary question. Is that all right?

Senator Bryden: No. I cannot say no, you are the chairman.

The Chairman: On the 11th of this month, Senator Kirby asked an interesting question. He asked the question of Mr. Barbeau, who was the Assistant Deputy Minister of Airports at Transport Canada. He said, "Equally, you seem to be saying that if Toronto had come forward with a proposal like Montreal, Edmonton, Calgary and Vancouver with a local airport authority which had the requisite level of support by municipal governments, you in fact would have supported that from a public policy stand point?"

Barbeau replies, "That is somewhat hypothetical, I suppose, but the answer would be yes."

So, you did have some things going for you. You were not incorporated, but you did have a fair amount of warning because it was the 17th of October that the government announced that private sector participation in the modernizations of Terminal 1 and 2 would be sought and it wasn't until 11th of March, 1992 that the requests for proposals were issued.

Now, if you had your act together, given Mr. Barbeau's answer, you had everything going for you. The government was broke. They did not want to get into airports. They did not have any money. You had it all. All you had to do was get your act together.

Mr. Meinzer: In all due respect, Mr. Chairman, like Senator Bryden said, it does take time. It does take analysis of financing. If the government policy was put out with an attempt to get some experience with airports other than Toronto in my own meetings with the deputy minister then, she had always indicated that Toronto will need to be a little different. It takes time. It is a lot easier to give away airports than to lose money.

Toronto was a profitable airport. You know that. And we needed to be sure that the rules of the game were identical to the others. And every meeting that I participated in, that was not the case. There was always discussions. How do we structure Toronto differently? It is not a question of us having our act together. Sorry.

Senator Bryden: The second of the principles of fair competition of the government is that there be equal treatment; that is, the same conditions and criteria must apply to everyone. Now once again I ask you, in your involvement in the Pearson situation, do you believe that those conditions and same treatment was being applied to the Greater Toronto Area as was being applied to everyone else, not only local airport authorities, but to the private developers?

Mr. Meinzer: I would say no. I repeat again that it was not clear to us, and we tried to get a clear answer, whether an airport authority was even permitted to bid. To this day, I do not know a clear answer to that question yet, whether an airport authority was in the end actually permitted to bid or not.

Mr. Harrema: If I might, senator, when we were sent back the second time again to ask our council, we would say, you know, "Get your act together." Our council, at the beginning, we thought we had our act together. We were able to proceed, and prior to getting an airport authority, we were told to go back once more.

Sir, you obviously must be -- you are well aware of politics or you wouldn't be where you are. When they send you back a year later asking the same question again you asked the year before, you know, there's some reluctance as to how fast you go to proceed on an LAA.

I tell you, I did not enjoy going back to council again under the request of Mr. Lewis to do it again, sir. We did not have our act together because that was part of the politics that we were in at my council, were the 32 people were wondering why I was coming back when I already had resolutions signed and sealed and by-laws passed that we enter in and nominate. The people are not here that we nominated to that authority, that we were prepared to participate, sir.

Senator Bryden: Do you know why Mr. Lewis sent you back?

Mr. Harrema: No, sir, I could not answer it. The only thing I could think of, that people in the background were coming to him in local councils who did not support us -- publicly, perhaps, going to him. I have no idea, even though the riding I live in is right next to Simcoe and it seemed different.

The Chairman: Who was the interim chairman in March of 1993?

Senator Bryden: Mr. Chairman, I wish to object. You, as everyone else, will have an opportunity to follow your line of questioning. You opened the questioning. You made your case, and I am attempting to find out following my own line of questioning. In fairness, I think we can do that. Everyone will have their opportunity. I cannot put a consistent line of questioning and be as brief as you want me to be if everyone is going to do supplementaries on every question I ask.

The Chairman: But the question you put was answered by the witness who said he had no idea as to what the problem was. We have documentation provided showing that letters were sent by the interim chairman to minister Corbeil announcing unanimous support for the LAA across Toronto, and then the response to that letter from Mr. Corbeil.

Do you want to tell us about what were referred to as deficiencies?

Mr. Meinzer: At your pleasure, Mr. Chairman, I was the interim chairman at that time. In meetings I had with Monsieur Corbeil, we had clear direction that if we get unanimous regional government approval and approval of some key communities that have direct neighbouring and adjoining interests to the airport, he would proceed to recognize us. Only when I got that approval did I write to the minister then. For him to come back and say, "Well, East York hasn't passed a resolution," and all that, to me is the clearest indication that he wasn't really serious to move forward because in the case of Montreal, none of these kind of resolutions were requested, just as one example.

Senator Bryden: Mr. Lewis also stated when he appeared before the committee that because of the urgency and also because of the involvement of the local airport authority, that he decided to pursue parallel paths; that is, to proceed as quickly as possible to solve the Pearson situation by private development, but to allow the establishment of the Toronto Airport Authority to take its course.

My question is to each of the panellists. With Terminal 3 and Terminals 1 and 2 now in the hands of private developers, what, in relation to Pearson, would be left for the local airport authority to manage, and where would you generate the cash flow to be able to carry out your responsibilities?

Mr. Meinzer: Well, if I might, the statement I made then is that we can always be a complaints department and the mowers of grass around the airport. That was essentially what would have been left. But we nevertheless felt that if a private developer would build the terminal improvement prior to the runways being given out for tender, that an airport authority could actually live with that and live around that, that there would be enough revenue generated through the operation of the air side, if you like, for an airport authority to exist. When the request for tender went out for also the privatization of the runways, then there really isn't any rationale for an airport authority left.

Senator Bryden: Just a moment, Mr. Chairman. I'm just reviewing my notes. I'm almost finished.

Finally, I would like to ask if the Greater Toronto Regional Airport Authority throughout this period, in each of your opinions, was prepared to assume the management and the responsibility for the Pearson Airport as a comparable authority had done in the other places?

Mr. Bandeen: The answer, Mr. Senator, is yes, we were. After we were incorporated in March of 1993, we wrote to the minister and announced our incorporation and asked for recognition. We felt that we were set up and ready to go. We had our board in place. We had our financing. We had selected some of our advisors in the accounting and the legal side, and we were ready to go.

Now the minister and his staff asked for changes, modifications. We made what we thought was a sufficient offer, but still never quite enough to meet the requirements of the minister.

Senator Bryden: Mr. Bandeen, in retrospect, do you think there were any modifications or changes that you could have made that would have met the requirements?

Mr. Bandeen: I think you are putting the question -- the real question is do I think that we could have been recognized under any circumstances.

I'm really not in a position to answer that question. As far as I know, the staff at Transport Canada was in favour of our recognition. Throughout this whole period, they were supportive of us.

The minister, I do not know what his position was. When I met with him, he assured me that he wanted us to have an airport authority, and if we made the changes that he was suggesting, we would indeed -- he would agree with it. So that's all I can tell you.

Senator Bryden: Well it's interesting that you say you knew the staff because minister Lewis' position is not only that he had to go to private developers because you guys couldn't get your act together, but also because everybody in the Department of Transport, other than him and his deputy, didn't want to give up the airport and that he was being stonewalled. So we will deal with -- I don't expect you to reply to that. We will deal with that when we talk to the transport minister.

Mr. Meinzer: If I can add to that, what we do have is a draft of a letter given to minister Corbeil saying that Toronto has met and exceeded all the requirements and is now ready to be recognized. We never got that letter.

Mr. Bandeen: This letter was prepared by the staff, and we only received it from your offices -- I did -- on the weekend. I didn't know it existed, but it was not sent. So that's in a strange category. It was drafted by Mr. Farquhar, who I think is going to be a witness later in the day. So perhaps you would be best to ask him.

Senator LeBreton: Mr. Chairman, can I ask a question on that?

The Chairman: Yes.

Senator LeBreton: If that's the case, if it's a letter that was prepared in the department for Mr. Corbeil's signature and Mr. Corbeil did not sign it, why would that be part of -- is that legal to have a letter that the minister didn't sign as part of --

The Chairman: Is that the letter that you are referring to?

Mr. Bandeen: Yes. I only saw it on Sunday.

Senator LeBreton: Because I could be in any office. I was in many offices. I could have written many letters that my superior decided that they didn't want to sign or they didn't agree with. Surely that doesn't end up to be a legal document. I am just seeking your advice and counsel. Is that a legal document?

Mr. Nelligan: It's a piece of paper. What its evidentiary value is is an entirely different matter.

There is a matter of some concern, of course, when witnesses before this committee have been talking about not being able to answer because that involves advice to a minister. I'm not quite sure how such documents, then, are publicly released, but that's something we'll have to go and look into later on.

Senator Bryden: But, Mr. Chairman, that particular document is included in the documents that were filed.

Mr. Meinzer: Exactly.

Senator LeBreton: We know that.

Senator Jessiman: But who? Who filed them?

Senator Bryden: I think the point is that at this stage, as far as the people who advise ministers of concerns, in their opinion, at least, or one person's opinion, the criteria had been met. Why the minister chose not to take that advice is in the hands -- in the mind of the minister.

Mr. Chairman, that's all my questions on the first round.

The Chairman: I hoped this was not going to be necessary, but as of now, I'm imposing a 30-minute time constraint on every senator's question which, I might add, is generous. Thirty minutes gives a prepared senator lots of time, particularly if there are several rounds, to prepare questions.

Senator Jessiman.

Senator Jessiman: Thanks, Mr. Chairman.

I would like to talk to the gentlemen about their present airport authority. Is it incorporated by special act, or do we have an incorporation under the Corporations Act of Canada, or how is it incorporated?

Mr. Bandeen: It's under the Corporations Act of Canada. It's a not-for-profit organization with no shares.

Senator Jessiman: Are there any members?

Mr. Bandeen: Yes.

Senator Jessiman: Who are the members?

Mr. Bandeen: The board of directors.

Senator Jessiman: They are the members, or they are the board of directors?

Mr. Bandeen: They are both.

Senator Jessiman: They are both?

Mr. Bandeen: Yes.

Senator Jessiman: Okay. And who appoints those directors under the act?

Mr. Bandeen: Well, under the act -- and this is one of the changes that the new government made -- is that there are five of the -- sorry, 10 of the directors are nominated, two from each of the regions.

Senator Jessiman: Aren't there three from Peel?

Mr. Bandeen: I was coming to that. Peel has the right to nominate a third, which represents consumers. Metro has a right to represent a third, which represents organized labour, and the provincial government nominates one and the federal government nominates two.

Senator Jessiman: And are they all appointed for the same term?

Mr. Bandeen: They are all appointed for three years but it varies. In the first instance, half the 10 appointed by the regions were nominated for two years and half for three years.

Senator Jessiman: And at the end of the term, can they be renewed?

Mr. Bandeen: Yes.

Senator Jessiman: And who renews them?

Mr. Bandeen: Again, it goes back to their nominator. The nominator has to make the official nominations.

I just went through this from metro. I had a two-year term. My term ran out in April, and metro has gone through a procedure of advertising, public hearings, and has duly nominated me for another three-year term.

Senator Jessiman: So the decisions really are going to be political as to whether or not the nominees are renominated.

Mr. Bandeen: It comes from the councils or the provincial and federal government, yes.

I'm sorry. Half of the appointees by the regions are representatives of the boards of trade. So each region has two nominees, and one is a candidate from the board of trade of that region, and the other is a candidate of the council.

Senator Jessiman: Is that the same for Toronto?

Mr. Bandeen: Yes, for Metro Toronto.

Senator Jessiman: And they can be renominated.

Mr. Bandeen: Yes. There is a maximum of eight years that a person can serve, and then they have to go off.

Senator Jessiman: Right now, how is it financed?

Mr. Bandeen: We borrow money from the Bank of Commerce, an unsecured loan.

Senator Jessiman: How much have you borrowed?

Mr. Bandeen: Pardon me?

Senator Jessiman: How much have you borrowed?

Mr. Bandeen: We're over a million dollars. I think we have a line of credit that is fairly flexible, but we're anticipating spending as much as $7 million or $8 million before recognition.

Senator Jessiman: Before recognition?

Mr. Bandeen: Before signing the lease -- a transition.

Senator Jessiman: And you've said that could be January of 1996?

Mr. Bandeen: Or more likely June, but between June and January.

Senator Jessiman: So in the next twelve months, you expect you're going to $8 million or $9 million?

Mr. Bandeen: No, 7 million in total. We're over a million now. We feel that once we get our legal and accounting bills -- we have to check out the environment and all of the things which involve you in large professional expenditures.

I hope that that estimate is too high, but we put in a high estimate so the bank would be aware of what the problem was and agreed to this.

Senator Jessiman: What will the directors be paid?

Mr. Bandeen: The directors have a fee. There's an annual fee, very much like a private corporation, and a "per meeting" fee.

Senator Jessiman: How much is the annual fee?

Mr. Meinzer: Eight thousand dollars.

Mr. Bandeen: Eight thousand dollars, and the "per meeting" fee of the board is $700, and the "per meeting" fee of a committee is 500, but if that committee meeting is on the same day, it's less than that, 250.

Senator Jessiman: What about meetings by telephone?

Mr. Bandeen: Yes, they are allowed.

Senator Jessiman: And are they paid for?

Mr. Bandeen: Yes.

Senator Jessiman: Do they have to extend for any length of time?

Mr. Meinzer: A couple of hours.

Senator Jessiman: If they are less than two hours, they --

Mr. Bandeen: No, no, there's no provision.

Mr. Meinzer: There's no provision, but typically when we're saying that we need a quick decision where it's a phone call and you go away, there is no payment for that.

Senator Jessiman: Are the 15 members now appointed --

Mr. Bandeen: Yes, they are.

Senator Jessiman: -- and in place? How often do you meet?

Mr. Bandeen: Well, we tend to meet once a month in this stage because we don't have a staff, with the exception of Steve and one or two others. We don't have a CEO. We're hopeful of getting a CEO, as I said earlier, by the end of mid-August or mid-September, at which time I think there will be fewer meetings of the board because the board is actually acting in some respects as a CEO now.

Senator Jessiman: And when you get an agreement or documents, does it have -- the board that now is appointed, does it have the power to make a deal with the federal government --

Mr. Bandeen: Yes.

Senator Jessiman: -- regardless of whatever the board decides will be case?

Mr. Bandeen: Yes.

Senator Jessiman: You knew, Mr. Bandeen, why the federal government didn't agree that you had your act together because you got a letter in October and you got a letter in June and you got a letter earlier than that. You know what it was. The City of Mississauga, for one, and later the region of Peel just wouldn't agree unconditionally. Is that not true? That's the letter that you got.

Mr. Bandeen: That's exactly what the minister said.

Senator Jessiman: And you never denied that.

Mr. Bandeen: Well, we did.

Senator Jessiman: You wrote a number of letters to the minister.

Mr. Bandeen: Well, I think we did try to establish that Mississauga -- in the initial instance, when he said that Mississauga had conditions, Mississauga didn't have conditions at that time. They subsequently did.

Senator Jessiman: But you never wrote back to the minister and said, "Mr. Minister, we have everything in place, including Mississauga." I can tell you. I have read the letters.

Mr. Bandeen: All right, you are better off than I am. I have read them, but not recently.

Senator Jessiman: Well, I'm telling you that you never said that Mississauga is in place now, and the mayor agrees unconditionally that we can go ahead.

Mr. Bandeen: I'm sure I didn't write that.

Senator Jessiman: Thank you. That's all.

Senator LeBreton: Thank you for appearing, witnesses.

You know, I think we should establish right off the top that Toronto -- it's obvious that Toronto is not the same as other airports. As the then deputy minister, Mr. Shortliffe, testified during the first week of testimony, he put the Toronto airport in proper perspective. He also pointed out that when he took over his responsibilities, he was asked to move forward with respect to LAAs. He went on to say that one of the priorities that he faced was the terrible condition that Pearson was in, and I quote him:

Pearson was a mess. It was a disgrace. And, worst of all, it was not working.

Then he went on to say that Pearson had become the hub of national transportation in Canada, and Pearson was the target of international air travel. By the time he took up his job, the reality was that Pearson was the hub. He also talked about Terminal 1 being a slum. Having come through Terminal 1 myself this past few months, I can agree.

To summarize his statement, he said that, in effect, for about something like 15 or 16 years, successive governments, although issues were raised from time to time, had not wished to take a decision with respect to Pearson. Did we want Pearson to be the hub of the national transportation system?

Of course, he talked about previous governments at one point having some wish for a Mirabel.

Now I go to the testimony -- I just wanted to put that on the record because I do not think we can -- Pearson is not the same as the other airports. I think you would agree with that.

It was the evidence of Victor Barbeau, who I'm sure is known to all of you, that there was little activity before 1990 on the local airport authority front. There were two possible groups that came forward in 1990. There was still no recognition because, and to use his words, it had not succeeded in getting unconditional support on the part of all municipalities and regional governments.

My question is -- and anyone can answer because I have some specific questions in a moment -- why did you not start in earnest much earlier to put an LAA together? It seems to me that the only impetus was the fact that the federal government, because of all of this pressure as minister Lewis testified, was going ahead with plans that you were afraid -- meaning the LAA -- that you would miss out. Is that not the case?

Mr. Bandeen: As I think I said in my introduction, I had nothing to do with it before February of 1993, so we'll have to pass over to maybe Gary.

Mr. Harrema: Well, yeah, it's quite clear that we didn't start earlier than that. There were so many rumours. If you will recall, and you may not recall, but there was quite the demonstration when they were going to build something in Pickering back in 1973.

Senator LeBreton: I remember. I have been around that long.

Mr. Harrema: Okay. I stood on where the runway was. Being a farmer, I get concerned about agriculture. It took quite a long time for a council like mine to decide whether they wanted to be in or out. It wasn't until we really saw the economic effect and the lack of it.

You called it a slum. We thought it's like a stockyard. You kind of got to do a lot of walking through a whole lot of gates to get around the place in Terminal 1.

I think there was some reluctance. We thought it was more a fed matter. We talked about it for a year and a half, two years. The politicians had not really got a gigantic amount of encouragement to proceed further. It wasn't that we saw how well Vancouver was working and Montreal. We said look it, the economic well being, especially -- number one, I have to give some credit to Mr. Tonks who said we cannot let this idly by. There was some political fighting, which caused a problem between the mayor of Mississauga and the mayor of Toronto regarding the -- we didn't want to get caught between those two. If you know the one, you'd know you don't want to get caught on that runway. That caused some of it. We were trying to kind of bridge that gap. There is no doubt that that was part of the problem. The mayor is a very good leader and certainly wasn't about to be pushed around because we wouldn't let certain planes into the airport.

I think there was some reluctance finally saying, "Well, look, this is more important than Mississauga. This is the Greater Toronto Area. We've got to get involved." I think there's some reluctance to tread -- and the other senator mentioned that they weren't on side. There was a bit of politics; there was a lot of politics. When you've been through a little town called Brougham, as a guy who was pushing for an airport, the other politicians, when you won one election by one vote, you kind of feel the lay of the land a little bit.

So we might as well be very honest with you. We took a bit of time to decide what we were doing, and it was the leadership of Alan Tonks that finally said this is too important to let us go any longer squabbling between two mayors for the greater good of our community, and that's why we didn't quite -- we talked a lot and finally said, "We'll get resolutions from our council and we will proceed on."

Mr. Church: If I might just add to that as well, I think your observation is valid in a number of arenas. My observation is that in virtually every field of major public infrastructure, Toronto went through a period of sort of smug complacency through the mid-seventies to the late eighties in which the strategic direction of the community was expected to evolve almost as a matter of divine right. Toronto was slow to get off the mark.

I think the only exception I would take with your remark is the suggestion that there were competing authorities in 1990. There were not. There were competing authorities only after Mr. Corbeil announced that a call for proposals would be put out within days. That's when the competing authorities began to function. Until then, there was unanimity.

Senator LeBreton: Thank you.

Mr. Mulder, the present Deputy Minister of Transport -- and this is a clarification because I'm not clear on incorporation. Mr. Mulder, in a response to a question by the chair told us that the Toronto local airport authority is still not recognized by the federal government. Can you just clear that up for me?

Mr. Bandeen: That's not correct. We were recognized -- well, the minister came down and signed a letter of intent. I think it was December 5th or 6th. The 2nd, I'm told.

Senator LeBreton: Of?

Mr. Bandeen: Of last year, 1994. We were duly recognized and signed it -- confidentiality -- and we were in negotiations right now.

Senator LeBreton: So that's almost over a year after the government came into power?

Mr. Bandeen: That's correct.

Senator LeBreton: I know when the announcement was made. It was made on July 13th. Interestingly enough, they have done an update which I received -- the national airports progress, a year of progress -- on July 13th this year where they referred to Toronto. Discussions are also under way for the transfer of three national airport systems here in Toronto. So here we are now in 1995, and we're still talking about getting the thing up and running.

Mr. Lewis, the former minister of transport, indicated, while discussions were ongoing in 1990, little progress seemed to be made. Of course you have seen a lot of the reports and some of the discussion this morning. I almost feel like some members of this committee are watching the O.J. Simpson trial a little too much in this rush to judgment. I keep hearing the word "rush, rush, rush", when it was anything but.

The LAA policy was announced in 1987, and of course we have had some success in some parts of the country.

The Southern Ontario Airport Strategy, the document you referred to, was in August 1989. Minister Lewis announced in October 1990 that private sector participation for T1T2 would be sought through requests for proposals, and it wasn't until March 11th, 1992, that those requests actually went out. So it's hardly a rush, I would say, unless it's a strange new definition of "rush".

What happened between 1987 and 1990 and then 1992? Was the only reason the process got going again in 1990 was the decision by the federal government to privatize T1T2? Why, all of a sudden, did you get going all of a sudden?

Mr. Bandeen: You would have to ask these gentlemen. I wasn't there.

Mr. Meinzer: I will just add and others can elaborate.

In my opening remarks, you might recall that I said the Metropolitan Toronto Board of Trade has been after an airport authority since the mid-seventies. Only when the bid documents went out to form other airport authorities like Vancouver and were kind of executed successfully was there then much more from that impetus a rush than there was because of a request to tender. It was simply the question, okay, it's now done in Vancouver. This is the way it has been established and this is the way it's going forward. That is when the business community really pushed to get the airport authority established for Toronto as well. But, politically, it's been talked about much before that.

Mr. Harrema: If I might, senator, make a comment on that.

Vancouver is structured quite differently municipally than we are. In the Greater Toronto Area, you read about the GTA. It's just an initial. It's not incorporated. It's a federation of a group of us who get together. There is no structure. There is no common law -- I shouldn't say "common law". There's no law under the Municipal Act for us to get together. There are five regional chairmen who have separate boundaries, separate jurisdictions and separate bills who got together voluntarily to put this thing together. This wasn't something that the Greater Vancouver Area, which I think is the most fantastic the way they got organized, the way their government put that together numbers of years ago. We are, you know -- and I shouldn't say this -- looking at some changes and some similarity of a structure that they have, but we don't have one. It's totally a volunteer group where the five of us get together on a very limited budget. We each chip in 5,000 a year just to chip into the initial budget to do paperwork. Of course, when you live to the east of metro, and you have the big metro -- if we called it something else -- you know, we said, "Don't let them swallow you up." You know a little bit about politics. Well, this is a lot about politics. Starting just as a federated group who got together, it did take us longer, although we talked about it. We were determined. We weren't going to get left behind Montreal and Vancouver, and we finally saw the advantages and kind of took the bit in our teeth and said we're going with it.

So that's what happened during those years. As you can appreciate, you know, sometimes there's a change of chair people. They call us chairs now instead of chairmen. You know, it takes a while to get to know where they stand on what issue. Having been around for 15 years from the first election when I was a mayor of one of the municipalities previously, I have been supporting the airport and the airport authority for over 10 years. But it took a long time to get that orchestrated because we don't have a party system. We don't have a law system to bring the five GTA areas together. We are all -- they called us, you know, a different group out there. It took longer.

I must say that, you know, it's kind of hard to get the ear into Ottawa at the time. We did not seem to have a connection on the inside which we -- you need some encouragement if you're going to proceed further unless, as proven recently on the subway, like Mr. Lastman, if you bang the drums loud enough, you scare people away. We're not quite like that. We have been working with people. So in 1987, we were working quietly with people rather than against people. At the end we said do or die, we've got to go for it.

Senator LeBreton: Thank you for that answer. Actually, I appreciate that answer because it makes it very clear that you cannot compare the Greater Toronto Area with Vancouver. So the whole Vancouver -- because you can't compare. They're not comparable.

In Mr. Lewis' testimony, he tabled with the committee a large bundle of letters that had been generated by the board of trade. Of course, we've got to again put this in the proper time frame where we're talking about the late 1980s. The economy was booming, and there was a large -- and he read some of them into the record. Do you disagree that Mr. Lewis was under some pressure by the Toronto community to fix Pearson, certainly by the board of trade? Did Mr. Lewis do anything to impede the process of setting up an LAA? Did he ever indicate that leasing Terminals 1 and 2 would eliminate the possibility of an LAA?

Mr. Meinzer: You raised a number of questions.

I think Mr. Lewis was under pressure. I was part of that pressure from the board of trade to get their act together on Pearson, not necessarily coming down on privatization or LAAs, but simply not to just keep draining money out of Pearson to subsidize whatever else, but to leave some money in Pearson to bring it up to snuff.

You talk about Terminal 1. You know, if you're lucky, you might come through there alive. They have given up on level 3 and level 4 to even fix the parking lot. It's not fixable any more. When the board of trade put pressure on Doug Lewis, it was that kind of a scenario that we wanted to avoid.

Doug Lewis also said that the minute everybody in Toronto and the Toronto region agrees with governance of an airport authority, he would be the first guy to recognize it, is a comment that he made to me. Comments to others were actually quite different. But I personally never got the impression that Lewis was opposed to an airport authority.

Senator LeBreton: Thank you.

Going back to Mr. Shortliffe -- did you have a supplementary?

Senator Jessiman: Yes, I have.

If I may, the request for proposals was March 11th, 1992, and then on September 15th, 1992, Chairman Tonks was then metropolitan chairman.

Mr. Harrema: Still is.

Senator Jessiman: He said that the Metropolitan Toronto Council is on record as being fully supportive of this renovation program. So they were supportive of it. They wanted their LAA. They said that was a caveat that had to be consistent with being an LAA, but they were supportive of the private sector bidding on this and getting a lease. Now surely to goodness you can't come down and say they shouldn't have gotten it. You were supporting it.

Mr. Church: I don't think there's any dispute, Mr. Chairman, that all of the municipal leaders supported private sector participation in fixing up the terminals, in building the runways, in providing the ground-oriented transit that was needed, in upgrading the general aviation facility, in replacing the collapsing Buttonville Airport, in lengthening the runways at Mount Hope, in developing a new general aviation facility in Pickering. All of these, which were outlined in the Aerocan study, were supported by all of the municipalities.

The unvarying position, until the meeting with Mr. Corbeil, had been that the GTA management framework had to be in place first in order to make sure that the barn wasn't empty by the time it was handed over to the authority to manage. That was a view that was not shared by the minister of the day.

Senator Jessiman: I have no further questions.

Senator LeBreton: I have two more questions, Mr. Chair.

Going back to Mr. Shortliffe's testimony, he indicated that the main impetus to go the privatization route of the Terminals 1 and 2 early in the process was a lack of an entity with which to deal. He kept making the point to us as we questioned him on the LAA that there was nothing, no entity to deal with. There was pressure on the government from people in Toronto, mainly, and Canadian travellers and international travellers to fix it. So is it not a true statement, then, that there was no entity to deal with when the announcement was made to have an RFP process? Is that not a true statement?

Mr. Bandeen: That's a true statement. There was no incorporated entity.

Senator LeBreton: I have got a question specifically for you, Mr. Bandeen.

What information did you have in the late summer and early fall of 1993 that led you to believe that somehow the Pearson T1T2 deal was not good for Toronto and the airport authority? Did you read the report of the evaluation committee, which as we know consisted of six government officials and four outside experts? Were you not satisfied with that evaluation committee? I just wanted to know whether there was something at that time that led you to believe that this was not good for Toronto and for the government and for the people of Canada.

Mr. Bandeen: Well, there were two things that I would like to mention.

One is that we weren't okay with the negotiations that were going on because we were outside. We were not recognized. We were not official, and there is no reason why we should have been. We wanted to get recognized so indeed we could be there. We were anticipating that if they did sign this deal and we were recognized at a later date, then we would take over as the landlord. So we felt we'd like to be involved in the discussions and the negotiations so that there would be something that we could live with.

Also, on the other side, there were at least one, then an employee of the federal government, who was extremely upset by the negotiations and what was going on. He never revealed any of the negotiations to me. He wouldn't.

Senator LeBreton: Could you name the individual in the federal government who was extremely upset?

Mr. Bandeen: It was Chern Heed, who was the manager of the airport. He subsequently left the employment of the government, and I think he's in Hong Kong with a new airport. He's sort of an assistant general manager there. He was quite perturbed, and he led me to believe that it wasn't for the good of Canada or the good of the people. That's hearsay. I never saw the documents until much later. I do know he was very agitated.

He subsequently quit the government. He quit the negotiating team, quit the government and, as I say, is employed in Hong Kong.

Senator LeBreton: So then, Mr. Bandeen, may I ask you, your comments that were reported in the Toronto Star on September 26th, 1993, when you used the word "it's really scandalous", perhaps was a little bit of rhetoric on your part, maybe in the middle of an election campaign?

Mr. Bandeen: I wasn't in an election campaign.

Senator LeBreton: Some of your cohorts were.

Mr. Bandeen: We were in a campaign -- not in a campaign. We were trying to understand what was going on. Perhaps that was over-exuberance.

Senator LeBreton: I think there was a lot of over-exuberance by many people on this particular file.

Thank you, Mr. Bandeen.

The Chairman: Just a followup before I recognize Senator Tkachuk.

On a question pursued by Senator Jessiman with respect to the letter from Alan Tonks, the chairman, to the Honourable Michael Wilson dated March 6th, 1992, the letter reads as follows:

While other centres have been able to move toward a Local Airport Authority, we have experienced some difficulty. These problems may be quickly solved, but other matters such as runway and terminal capacity need to be addressed now. Privatization of T1 and T2 should, in my opinion, proceed as long as a future option for a viable airport authority is not precluded.

Mr. Church: That was in March after the meeting with Mr. Corbeil, and I did indicate that the unanimity of the group came apart when the decision to go ahead with the privatization was made.

The Chairman: Then at the meeting of the heads of council, a copy of which was sent to you by the city manager of Mississauga -- is it Mr. or Mrs. Lychak.

Mr. Church: Mister.

The Chairman: That's December 3rd, 1990, a copy to you. Apparently you weren't present. This is a meeting with Douglas Lewis. Mr. Lychak notes that the minister needs to understand very clearly that even though the various councils in the GTA are not prepared to unanimously support a local airport authority at this time, these councils very much want to pursue and analyze in detail the pros and cons of setting up a local management structure.

At the meeting, there were two -- you were assisted in the technical advisory committee of the GTA by Mr. Barbeau and Mr. Michael Farquhar.

Mr. Church: I wasn't part of the technical advisory committee, sir. I was chair of the heads of council group.

The Chairman: I see. Did you receive reports?

Mr. Church: Oh, yes, regularly.

The Chairman: Weren't they encouraging you. Weren't they talking about windows of opportunity and things of that nature?

Mr. Church: I think we had very good relationships with the staff of Transport Canada. As I think I indicated in my initial comments, we were of the view -- and I agree entirely with Senator LeBreton -- that Toronto was late off the mark. We, both as a staff group and as political groups, expressed some concern about the very long period of time, not simply in relation to airport issues but virtually every other capital issue, that Toronto as a set of communities had simply not taken on the issues that other communities such as Vancouver or Pittsburgh in the United States were taking on. So there was very definitely a period of internal review going on in Toronto between 1987 and 1992 about what we had to do to make sure that this community could provide jobs for the folks that were going to be there in 10 or 20 years, and the airport issue was one of the issues that was being discussed.

I don't think there's any question that there was, in the community, a recognition that the airport, not just Pearson but the other airports, were one of the critical infrastructure issues that had been ignored by us, by the provincial government, and certainly by Transport Canada. There was a general sense that, yes, we were now behind the eight ball and had to do something about it. No question about it.

The Chairman: And a final question to Dr. Bandeen.

In light of the questions put to you by Senator LeBreton and the remarks attributed to you in the newspaper long after the evaluation process had taken place and after the contract had been let, your disappointment in not being allowed to participate led you to make statements which sort of was like pulling the tent down around your head referring to a scandalous situation. I don't understand that.

Mr. Bandeen: I think I was referring to the fact that we had no information on the contracts, even at that stage of the game.

The Chairman: Well, at that statement stage of the game, the evaluation report was public knowledge, was it not?

Mr. Bandeen: I think so, at least the evaluation of the original submissions.

I believe that the actual contract was signed in October, October the 7th or some such date.

The Chairman: Yes, that's correct.

Mr. Bandeen: And this was September 26th.

The Chairman: I was referring to the evaluation report, not the contract.

Mr. Bandeen: The evaluation report was the evaluation of the original submissions.

The Chairman: The request for proposals. Yes, the winner.

Mr. Bandeen: Yes, the winner. There was an evaluation, and I was aware of it, yes.

Mr. Chairman: You had read that.

Mr. Bandeen: But we weren't aware of any of the negotiations that went on after that or the financial terms or any of the terms.

Senator LeBreton: But did you read the evaluation?

Mr. Bandeen: I don't know. I would have to check on that.

Senator Jessiman: Did you read the request for proposals?

Mr. Bandeen: I did read the request for proposals.

Senator Jessiman: That provides quite a bit of what ended up in the contract.

Mr. Bandeen: But we had no idea of that, you know, the contract negotiations. We weren't a party because we were not recognized. I'm not suggesting that we should have been a party, but our whole purpose through the summer was to try to get recognized and be a party to the negotiations, which we were unsuccessful in doing.

Senator Tkachuk: This has been a little bit confusing for me, so I'm going to just try and organize a time frame here.

This is just a question of public policy, whether we lease certain aspects of the airport and all the rest of it.

In 1987 was when the federal government issued their public policy proposal. So was there any airport authority groups in 1987 in Toronto or surrounding area?

Mr. Church: No, sir.

Senator Tkachuk: Was there one in 1988?

Mr. Church: No.

Senator Tkachuk: Was there one in 1989?

Mr. Church: Yes. By then the heads of council had organized themselves into a group to attempt to arrive at a consensus on the conditions that they would support an airport authority.

Senator Tkachuk: There was no airport authority.

Mr. Church: There was no airport authority incorporated, but you asked if there was some momentum. By 1989 there was the beginnings of some momentum.

Senator Tkachuk: Was there more than one group?

Mr. Church: Not in 1989, no.

Senator Tkachuk: What about in 1990? Now you have some momentum in 1989, right?

Mr. Church: Yes.

Senator Tkachuk: So what happened in 1990?

Mr. Church: In 1990 the heads of council agreed on the framework for an airport authority, and I believe the first steps were being taken by Mr. Meinzer in terms of putting one together at that point in time.

Senator Tkachuk: Now who was in the -- I don't know much about Toronto. How many groups are in the GTA? Is that what you call it?

Mr. Harrema: Five, sir. There are five regional municipalities. They are made up of Durham, York, Peel, Halton and Metropolitan Toronto. There are about 3 million people.

Senator Tkachuk: Three million people. Where is the airport?

Mr. Harrema: The airport is in the Region of Peel.

Senator Tkachuk: And in what city?

Mr. Meinzer: Mississauga.

Senator Tkachuk: Is Mississauga part of this?

Mr. Harrema: Yes, it's part of Peel. It's within the Regional Municipality of Peel.

Senator Tkachuk: So there are five regional authorities, and in 1990, you had agreed to what?

Mr. Harrema: To proceed with an LAA.

Senator Tkachuk: So what happened in 1991?

Mr. Harrema: We kept proceeding saying "Hey, we want to organize, get people nominated to the board, and we hope the government will recognize us into becoming one."

Senator Tkachuk: Again, was there another group involved, or you were still the sole group? This was it?

Mr. Harrema: There were some changes of regional chairmen, sir. Some retired and some got defeated and so on, but it was the same basic group.

Senator Tkachuk: Was there any other groups organizing an authority?

Mr. Harrema: No, sir.

Senator Tkachuk: So this is 1991 now. We are still talking about naming people to a board, but we haven't quite done it yet. What happened in 1992?

Mr. Harrema: All the people were nominated. Our council nominated -- all the people nominated. We all nominated people to the board. We wanted to make an LAA.

Senator Tkachuk: A board of what?

Mr. Harrema: Of local airport authority.

Senator Tkachuk: Did you have a local airport authority?

Mr. Harrema: No. We said, "These are the people we want on the local airport authority."

Senator Tkachuk: All of the municipalities agreed?

Mr. Harrema: Yes, sir.

Senator Tkachuk: All the regions agreed?

Mr. Church: By 1992, there had been a split. After the call for proposals was --

Senator Tkachuk: I asked that question.

Mr. Harrema: You said 1991, sir, I think.

Senator Tkachuk: No.

Go ahead. 1991 and 1992 is fine. Whatever.

Mr. Church: It was 1992 the call for proposals were put out. So after the call for proposals in March of 1992, two groups emerged representing two different points of view. Up until that point, there had been cohesion. After that point, any argument that there was cohesion --

Senator Tkachuk: So who were the two groups?

Mr. Meinzer: Let me perhaps just shed some light on it.

The groups didn't emerge in parallel. There was one group formed, and then within short succession thereafter, a second group surfaced.

Senator Tkachuk: Who are these people?

Mr. Meinzer: The first group formed was a group of people that were nominated by regional councils, as Mr. Harrema already indicated, business people out of their respective communities to set up an airport authority. There was then a second attempt by Mississauga to set up a different airport authority. The different airport authority looked to be more broad-based, smaller, community-based. It was subsequent to that that we suggested that in order to get our act together -- this is all in the summer of 1992 -- that the regional chairs agreed to a task force to bring the two groups together and establish not only one group, but how it governs itself. I chaired that task force on behalf of the regions, and we came up with a unanimous agreement.

Senator Tkachuk: But the airport is in the city of Mississauga, is that right?

Mr. Meinzer: Yes.

Senator Tkachuk: So when I land in the airport, Pearson, I'm landing in the city of Mississauga?

Mr. Meinzer: You do.

Senator Tkachuk: They are pretty important to this process.

Mr. Meinzer: Absolutely.

Senator Tkachuk: So in 1992, they don't agree. They have their own group, and you have a task force now in 1992 putting the two groups together.

Mr. Meinzer: Correct, and we did.

Senator Tkachuk: Meanwhile, the policy of the federal government is announced that they perhaps want to lease Terminals 1 and 2?

Mr. Church: I think the order was different, sir. The policy of the call for proposals was announced.

Senator Tkachuk: Sorry, a call for proposal.

Mr. Church: Then the first authority that was intending to try to put in a bid emerged, and then the competitive authority emerged. That was the order.

Senator Tkachuk: So we have 1987 when we had the policy emerge. Now, my wife teaches math, but I never was very good. We've got one, two, three, four, five years now. Now Rome wasn't built in a day, but let's try to get an airport authority here. We have five years. We now have two groups trying to form an authority and a task force, is that right? You just told me that. I just want to know that for sure.

Mr. Meinzer: Two groups are trying to form an authority, and the two groups agreed to participate in the task force to amalgamate into one.

Senator Tkachuk: So what happened in 1993?

Mr. Meinzer: First of all, in 1992, the task force did agree and made recommendations to the regional chairs. We were at that time advised that we had met all the conditions for recognition.

Senator Tkachuk: By whom?

Mr. Meinzer: By the officials of the federal government.

Senator Tkachuk: Who?

Mr. Meinzer: Specifically Mr. Farquhar. He came to our first meeting.

Senator Tkachuk: Did he write a letter to you?

Mr. Meinzer: I don't think he wrote a letter at that time. I don't recall, but he came to the meeting and said, "Yes, you have met the conditions," at which point then we sought recognition. We said now that we've met the conditions, we're incorporating now, so we will seek recognition. As far as I am concerned, that was end of my particular chairmanship. Once we were incorporated, Dr. Bandeen was elected as chairman.

Senator Tkachuk: When did you incorporate?

Mr. Meinzer: Formally in April 1993.

Senator Tkachuk: So this is 1993 we are now talking about. Let's go back to 1992.

Mr. Meinzer: Right.

Senator Tkachuk: When was the meeting with Mr. Farquhar?

Mr. Bandeen: 1993.

Senator Tkachuk: So let's finish 1992. What is the state of affairs in Toronto or the greater Toronto airport?

Mr. Church: Perhaps I should begin the year, and then Gerry can finish it because there was --

Senator Tkachuk: Quickly, though. The chairman will be strict about his 30 minutes and I want to finish this.

Senator Kirby: We're happy to give you a second round.

Mr. Church: In the early part of 1992, there was one evolving group. Then with the decision to privatize, two groups emerged, one in order to make a bid, the other essentially to try to gain separate recognition.

It was fairly apparent in the subsequent six weeks that the group that had been organized to make the bid was not going to be allowed to make the bid effectively, and it --

Senator Tkachuk: You are talking of whom?

Mr. Church: I'm talking about the group that emerged first to make a bid.

Senator Tkachuk: A bid on what?

Mr. Church: On the terminals.

Senator Tkachuk: A private group?

Mr. Church: Yes, a private group.

Senator Tkachuk: You have to name the name.

Mr. Church: I think it was called the South Central Airport Group or Airport Authority.

Mr. Meinzer: Airport Authority.

Mr. Church: This was the first group to emerge to try to become an airport authority. It emerged directly as a result of the decision to call for proposals and Mr. Wilson's comment at the meeting that a group like that would be entitled to bid.

Senator Tkachuk: So we have three groups?

Mr. Church: No, that's the first group to emerge. The second group to --

Senator Tkachuk: Just a minute. I'm confused here. Go back.

We're in 1992. We have two groups. We have a task force putting the two groups together.

Mr. Church: It's the order that's important here.

Senator Tkachuk: Okay, then give it to me by date.

Mr. Church: There's one group until March of 1992.

Senator Tkachuk: Yes.

Mr. Church: It's essentially led by the politicians attempting to ensure that all of the needs are met to an airport authority.

With the decision by the federal government to proceed with a call for proposals, a different group, but it was the first group to emerge to try to become an airport authority, emerged. It was endorsed by the heads of councils. It was endorsed by the municipalities, with the exception of Mississauga and Peel.

Senator Tkachuk: So that's the second group?

Mr. Church: That was the first group.

The second group to emerge emerged directly in competition with that group.

Senator Tkachuk: Okay, and they were?

Mr. Church: I'm not sure what we called them.

Mr. Meinzer: PRAC.

Senator Tkachuk: Who are they?

Mr. Meinzer: Pearson Regional Airport Corporation.

Senator Tkachuk: Who are these people?

Mr. Meinzer: It was led by the then president of the Mississauga Board of Trade with the endorsement of the mayor of Mississauga.

Senator Tkachuk: Who composed that group? Maybe I shouldn't be asking you, but what do you know about it?

Mr. Meinzer: What I know about it is that it was originally supported by the town of Markham.

Senator Tkachuk: Yes. Who else?

Mr. Meinzer: It was supported by --

Senator Tkachuk: Markham resides in what group? What area?

Mr. Meinzer: Opposite end to Pearson.

Senator Tkachuk: It's in York, and York is part of the regional authority?

Mr. Meinzer: Yeah, each region of York is a different region of Peel.

Senator Tkachuk: Okay, but the city of Markham resides in --

Mr. Meinzer: The town of Markham resides in the Region of York.

Senator Tkachuk: And York is part of the airport authority, the other one?

Mr. Meinzer: The Region of York -- none of the regional governments endorsed the new initiative.

Senator Tkachuk: Well, no, I'm asking you a question. York is part of the sort of group of --

Mr. Harrema: Greater Toronto Area.

Senator Tkachuk: -- Greater Toronto Area. Within York there is a city called Markham, which is kind of in a breakaway state and is, with another city, Mississauga, where the airport is located, forming another group.

Mr. Meinzer: That's right.

Senator Tkachuk: Now who else was involved?

Mr. Meinzer: There were discussions with the town of Richmond Hill, which is just to the north of Markham.

Senator Tkachuk: Were they part of that group?

Mr. Meinzer: They did not sign on. There were discussions with Newmarket. All in the York region, they did not sign on.

Senator Tkachuk: Not very happy, these groups.

Mr. Meinzer: And there were discussions with the city of Oakville, a neighbouring municipality of Mississauga who did not sign on. That's where it ended. At that point, I said "Hey, let's get our two groups together and form one."

Senator Tkachuk: Okay, now, about what time of the year is this in 1992?

Mr. Meinzer: You are talking about June.

Senator Tkachuk: June of 1992.

Mr. Church: The groups existed for about three months together.

Senator Tkachuk: Three months.

Mr. Meinzer: If that long.

Senator Tkachuk: It's pretty confusing.

Mr. Meinzer: Yes, it was.

Senator Tkachuk: Oh, yeah, and lots of politics here.

Mr. Harrema: Rome wasn't built in a day, but Caesar didn't have to get elected.

Senator Tkachuk: That's right.

So now we got the two groups getting together in June of 1992 saying, "We better get together because we're not really together on this." So now what happens?

Mr. Meinzer: So the two groups came together essentially to agree on how do we govern the airport authority, who appoints, the appointment process, the number of people out of each regional municipality, and the particular nominees that were candidates for the nomination to the one single group. That's how we formed the airport authority that, in essence, exists today.

Senator Tkachuk: So basically you started the discussion in June of 1992, arguing about -- or not arguing, but debating about who should sit on this thing.

Mr. Meinzer: Well it was, if you like, a debate. Perhaps, yeah, it was a debate.

Senator Tkachuk: How many members?

Mr. Meinzer: Only five people, one per region.

Senator Tkachuk: So, like, you were arguing about how many members would be on the board.

Mr. Meinzer: Oh, yes.

Senator Tkachuk: And what else did you argue about? Eight thousand bucks or how much should people be paid?

Mr. Meinzer: No, remuneration wasn't an issue.

Senator Tkachuk: That was all done?

Mr. Meinzer: You have to remember that in these five regions there's 30 municipalities, and we're trying to come up with a governance structure, and we did.

Senator Tkachuk: It's hard, though.

Mr. Meinzer: And nobody did it before, but we did do it. When the final strokes came down, we did get unanimity.

Senator Tkachuk: And now the unanimity was achieved by what date?

Mr. Meinzer: I think the meeting with the regional chair was September 1992.

Senator Tkachuk: September when?

Mr. Meinzer: Yeah, September 1992. I'm just looking to see whether I have the exact day. I don't have the exact day.

Senator Tkachuk: So we have 1988, 1989, 1990, 1991, 1992, September of 92, and we still don't know the date when you are kind of organized, but you are kind of organized, are you?

Mr. Meinzer: We're organized at that point.

Senator Tkachuk: September of 1992. Do you have a spokesman?

Mr. Meinzer: Yes.

Senator Tkachuk: Spokesperson, sorry.

Mr. Meinzer: Yes, I was its interim chairman.

Senator Tkachuk: And were you selected around that time?

Mr. Meinzer: I was then confirmed to the authority, yes, together with my colleagues out of the other groups and colleagues out of the first airport authority.

Senator Tkachuk: Now, was Mississauga happy?

Mr. Meinzer: Well, they appointed somebody to it.

Senator Tkachuk: But were they happy? Was Markham happy?

Mr. Meinzer: Yes.

Senator Tkachuk: Richmond Hill?

Mr. Meinzer: Yes. In fact --

Senator Tkachuk: Newmarket?

Mr. Meinzer: The region of York at that point became unanimous behind our recommendation.

Senator Tkachuk: Let's go back to Mississauga. You know about Richmond Hill. What about Mississauga?

Mr. Meinzer: The only condition Mississauga had always stipulated was that Toronto Island Airport needs to be part of it, but they did support us.

Senator Tkachuk: Yeah, but Toronto Island Airport wasn't part of this.

Mr. Meinzer: It wasn't part of the airport transfer policy at all.

Senator Tkachuk: This wasn't part of the government's intention?

Mr. Meinzer: No, it was not.

Senator Tkachuk: Oh, okay. Was this only your intention?

Mr. Meinzer: No.

Senator Tkachuk: Do you know what the government wanted?

Mr. Meinzer: We knew that the government said that this was not an airport -- the Island Airport is not an airport that we have exclusive jurisdiction over, let's not talk about it.

Senator Tkachuk: Okay, but it would be part of the group. It could be.

Mr. Meinzer: We were constituted that we could be part of the group.

Senator Tkachuk: And Mississauga wanted that to be part of the group?

Mr. Meinzer: Sure.

Senator Tkachuk: They did, or else they weren't that happy about playing ball, and Pearson Airport sits in the city of Mississauga, a fairly important player.

Mr. Harrema: Very.

Senator Tkachuk: So the mayor of Mississauga might be talking to people about "Gee whiz, I wish this was done and this was done because this is in our city and maybe they don't represent all of us."

Is there now unanimity, or is there a little bit of discord here? I want to get to this because the last little while, I have been listening to how wonderful everything else was for your group and how terrible it was and how confusing the government was. So let's get down to this. Was Mississauga happy?

Mr. Meinzer: Mississauga is in the Region of Peel, and the Region of Peel endorsed the report.

Senator Tkackuk: But Mississauga is not happy.

Mr. Meinzer: I don't know.

Senator Tkachuk: Listen. You know about Richmond Hill and Newmarket. Tell mow about Mississauga.

Mr. Bandeen: We have their resolution of February 17th, 1993, of the council of Mississauga. It's four paragraphs. I can read it, if you wish. It's fairly straight forward and reads:

Whereas the Region of Peel Council passed a resolution on November 26, 1992 endorsing the formation of a Local Airport Authority for the Greater Toronto Area pursuant to a report dated November 19, 1992, from Emil V. Kolb, Chairman, Region of Peel, titled, "Regional Chairmen's Task Force on Establishing a Local Airport Authority";

And whereas that report was referred to the City of Mississauga, the City of Brampton, and the Town of Caledon --

• - all of which make up Peel --
• - for comment on representation on the Local Airport Authority, and any other related issues;

Now therefore be it resolved that Mississauga City Council, support the establishment of a Local Airport Authority for the Greater Toronto Region and endorse the recommendations in the report dated November 19, 1992, from Emil V. Kolb, Chairman, Region of Peel, titled "Regional Chairman's Task Force on Establishing a Local Airport Authority";

And further that Mr. Sid Valo, member of the Mississauga Board of Trade be recommended to the Region of Peel for appointment to the Local Airport Authority for the Greater Toronto Area.

Senator Tkachuk: Okay, so now we're in 1992 --

Mr. Bandeen: 1993, February 17th.

Senator Tkachuk: Oh, that's 1993.

Mr. Bandeen: Yeah.

Senator Tkachuk: I'm back to 1992 here when you guys are all organized now, and you've got yourself an organization and you were not incorporated yet.

Mr. Harrema: No.

Mr. Bandeen: No. But the Region of Peel approved it November 19th, 1992, and Mississauga approved of their action and nominated Mr. Valo on February 17th, 1993.

Senator Tkachuk: When did you incorporate? March 1993?

Mr. Meinzer: Yes.

Senator Tkachuk: What was your first order of business?

Senator Jessiman: What was it called?

Senator Tkachuk: What did you call it?

Mr. Bandeen: Greater Toronto Regional Airport Authority.

Mr. Meinzer: It was the Greater Toronto Airport Authority.

Mr. Bandeen: Was it?

Mr. Meinzer: Yeah, that was the incorporation.

Senator Tkachuk: Meanwhile, you are proceeding to establish the Toronto Airport Authority while there's a call for proposal going on.

Mr. Bandeen: That's right.

Senator Tkachuk: Right?

Mr. Bandeen: Correct.

Senator Tkachuk: So there is a call for proposal going on, which you knew about. You were fully aware of Terminals 1 and 2, but you are proceeding rapidly to have this done, proceeding reasonably rapidly considering you have had a number of years to do this. So you are now in March 1993. You have incorporated, but you are running on a parallel track. So what are the discussions taking place about what's happening? What discussions are taking place?

Mr. Bandeen: We had meetings with the minister at our request, and he agreed and came down and met us in Toronto. We discussed with him the possibility of us being recognized quickly so that we could be involved in the negotiations. My understanding from discussions with him would be that they were going to proceed with the privatization of Terminals 1 and 2, but that if we were set up as an airport authority, we would be expected to take their place, you know, and be the landlord.

Senator Tkachuk: You would be the landlord?

Mr. Bandeen: Yes.

Senator Tkachuk: So he told you that?

Mr. Bandeen: In our discussions, yes. That's if we were recognized.

Senator Tkachuk: But he didn't say you wouldn't be?

Mr. Bandeen: No, no.

Senator Tkachuk: So you have got the two terminals contract out, you are moving along, and lo and behold you may end up being the landlord. Was this good?

Mr. Bandeen: That was the policy of the government.

Senator Tkachuk: But from your point of view, what were your discussions? Was this good or was this bad?

Mr. Bandeen: We would have preferred to have taken over the whole airport, but --

Senator Tkachuk: You are taking over the whole airport, right?

Mr. Bandeen: But we would have preferred to have Terminals 1 and 2 in our hands, but that was government policy. We were aware of it, and so we went along with it.

Senator Tkachuk: And you proceeded?

Mr. Bandeen: Yes.

Senator Tkachuk: So it didn't stop the process, the question of leasing Terminals 1 and 2?

Mr. Bandeen: That's correct.

Senator Tkachuk: As a matter of fact, to the point of having discussions with the federal government about maybe revenue sharing. This is about money, is it not?

Mr. Harrema: I think so.

Senator Tkachuk: It is about money.

Mr. Harrema: It's about planning the future of the airport, and that includes money, big bucks.

Senator Tkachuk: Big bucks.

Let me ask you gentlemen why you think an airport authority is better than the federal government or better than a private developer owning the whole airport?

Mr. Church: I don't think it was ever argued that it was better than a private developer owning the whole airport. In fact, there was a strong body of opinion that once an airport authority was in place, a long-term contract with a private authority might be a very good idea. I think it should be very clear that nobody argued that a private authority was not -- I shouldn't say "nobody". There were a few who did, but the predominant opinion among many of the municipal people and certainly most of the provincial people was that private sector acumen was absolutely necessary in the operation of this enterprise. The issue was one of getting the strategic framework in place for it to be done right. That was really, in the long and the short of it, the only area of disagreement and it was fairly fundamental and fairly important.

The advantages of either -- well, the advantages of an airport authority as we saw it at the time over Transport Canada can be best described from the different objectives of the two bodies. The objective of Transport Canada was essentially to maintain a passive facility to handle whatever traffic came by. They were not in a position to advocate Toronto as a business centre, to advocate the airport as a place to land for purposes of doing business. They weren't in a position to compete with Montreal, Pittsburgh or Atlanta or New York. They were in the business of providing essentially a facility. No one would argue that Transport Canada should have been in any other business.

Senator Tkachuk: Yes.

Mr. Church: But it was a very strong view of the community -- and I think it still is, and I think I can speak well beyond the political leadership -- there was an enormous support for the view, admittedly belatedly -- and I agree with you entirely that it was belatedly -- but there was an enormous support for the view that it had to be managed much more strategically from the point of view of becoming competitive, from incurring job creation, in encouraging a vastly superior environment for both the travelling public and the industries that it supported.

This became, I think, an enormous issue politically, locally, because of the fact that for the first time in 30 years, Toronto began to recognize that it didn't have a God-given right to economic growth and that these kinds of instruments became very important.

I chuckled as you made your point. I don't think there's any question that Toronto was slow off the mark, and any suggestion that that was the fault of the federal government is simply wrong.

Senator Tkachuk: I may have more, but thanks very much.

Senator Jessiman: I have a couple of supplementaries.

The Chairman: I'm sorry, but we're going to adjourn now until 7 o'clock with the same witnesses.

The committee recessed until 7 o'clock p.m.

---

Ottawa, Tuesday, July 25, 1995

Senator Finlay MacDonald (Chairman) in the Chair.

The Chairman: Thank you very much, gentlemen, for staying over. We will try to get you out of here. We will have two taxis for you at 8:15, downstairs.

As I understand it now, Senator Jessiman will ask a couple of questions; then we will turn it over to Senator Kirby. As usual, we will wind it up with our committee counsel asking clean-up questions.

Is that agreeable? Let's go.

Mr. Meinzer: And if he cannot finish, he can take the ride to the airport with us and we will finish there.

Senator Jessiman: I direct this either to Mr. Meinzer or Mr. Bandeen. We were talking about this new airport authority that you had incorporated and, am I correct, the proper name of it is "Pearson Regional Airports Corporation"?

Mr. Bandeen: No. I think that was the technical.

Mr. Meinzer: Well, that was the counterpart one.

Senator Jessiman: Wait a minute. Now, this is the 30th of June, 1992, and it is written by Sid Valo, who I understand is the chairman. And in 1992, he is writing this now to all local airport authorities. Are you telling me that's the wrong name?

Mr. Meinzer: Just to backtrack for a moment, you might recall that I said, in earlier testimony, that there were two competing interests?

Senator Jessiman: Yes.

Mr. Meinzer: And this was the one competing interest that had the little towns involved.

Senator Jessiman: This is another group?

Mr. Meinzer: This is the Mississauga initiative, as compared to the Toronto initiative, if you'd like to differentiate them.

Senator Jessiman: And they really, when they had incorporated their little corporation, they really haven't incorporated for the right purpose.

Mr. Meinzer: They were never incorporated.

Senator Jessiman: They called it a corporation but they weren't?

Mr. Meinzer: No. They were not incorporated.

Senator Jessiman: They call it PRAC. What they wrote and said to the government was this:

We'll be a federally incorporated non-profit entity whose purpose will be to assemble a representative group of professional business and professional women and men endorsed by local regional and provincial governments to negotiate the transfer of Pearson to an LAA. PRAC will not be the LAA itself but rather the negotiating team. The initial step in the LAA formation process requires that a negotiating group seek the endorsement of the local municipal governments, regions and the province.

So they were at least saying they were going to incorporate a company for the purpose of negotiating for that purpose.

Then on, July 7, 1992, written to the same person, Mr. Michael E. Farquhar says:

As you will note from the attached process chart and as I have stated in the past, the only group with which airport transfer negotiations will be conducted is the actual local airport authority. We do not negotiate with the local group but only pursue with the local group discussions and provide information and data.

So right to July 7, 1992, at least, that group wasn't properly organized.

Mr. Meinzer: That's correct.

Senator Jessiman: I want to go back to your present organization. I had to learn, from one of you gentlemen, who made up Metro Toronto, and I am told that there are four cities and one borough?

Mr. Meinzer: Five cities and one borough.

Senator Jessiman: Five cities, sorry. There is Toronto, Etobicoke, York, North York, Scarborough, and East York is the borough. Right?

Mr. Meinzer: Right.

Senator Jessiman: And is it true that, at the last municipal election, a majority of voters in the City of Toronto elected to abolish Metro?

Mr. Meinzer: That is true, and I was a candidate for mayor so I'm very much in that campaign, yes.

Senator Jessiman: My question then, what is the procedure, now that we've got the biggest -- I assume that's the biggest municipality, is it, the biggest city?

Mr. Meinzer: It is, yes.

Senator Jessiman: What is the procedure to cease to have Metro? What is the procedure? Who does it?

Mr. Harrema: The abolishment would be by the provincial government. The sole authority. The name of the game was politics, and the provincial government would have to abolish Metro by changing the act.

Senator Jessiman: My question now is, when you've got the biggest part of Metro saying we don't want the darn thing -- and we had a Metro Winnipeg and we got rid of that, so I can visualize maybe you are going to get rid of Metro.

Mr. Meinzer: Maybe.

Senator Jessiman: Is there some provision in your charter for your LAA that says, now, we haven't got a Metro, and Metro has three nominees -- who would nominate?

Mr. Church: That would be provided for in the act that abolished Metro. Speaking hypothetically, if a new system were created, the successor rights would be determined in the legislation.

Senator Jessiman: Okay. So that's what you expect would happen?

Mr. Meinzer: Yes.

Senator Jessiman: Is it also true that Etobicoke, although it is now one of the three to be represented on the three nominees, that they're asking for direct representation?

Mr. Bandeen: They are not asking for -- they wanted the right to nominate one of the three representatives from Metro.

Senator Jessiman: And are they still wanting that?

Mr. Meinzer: It's too late.

Mr. Bandeen: They didn't take action. My renomination was up and they advertised in the newspaper. They got 22 applications to be on this board, and they had a nominating committee meeting in Metro and I was nominated. Etobicoke's representatives weren't even at the meeting.

Mr. Meinzer: It is a question as well -- my office happens to be in Etobicoke. So is the one of the appointees from York region. So you have a dual interest.

Senator Jessiman: Is there some agreement among the five of you guys as to how you rotate, the three nominees?

Mr. Meinzer: It is Metro. It is the Metro council and each municipality is represented by its mayor on Metro council.

Senator Jessiman: So if it broke up then, as the gentleman said, it could be that the other legislation -- the government would take care of it.

Mr. Bandeen: One of the things I should have corrected when we were earlier saying that the airport is in Mississauga -- it is, but part of it is in Etobicoke, a very small part.

Senator Jessiman: The eastern part.

Mr. Bandeen: Yes. There's no runways and there's no terminal buildings. I think there may be a hangar. But I didn't want Metro Toronto to be downgraded by not claiming part of the airport. So a very small part is in Metro Toronto.

The Chairman: Senator Kirby, and then Mr. Nelligan?

Senator Kirby: Thank you, Mr. Chairman. I will be very brief, as I indicated to you earlier.

I really want to ask the witnesses if they can, kind of, help me on a couple of issues I am, sort of, confused on, because we've had -- this is only our fourth day of testimony and we already had some fairly conflicting evidence. And so I wonder if you can, kind of, help me understand why we might be getting conflicting messages from some of the people who have appeared before us.

I have just got three or four issues. The first one really deals with the question of whether or not it was really urgent that the terminals at Pearson be developed. The minister came before us last week and gave us an argument which said that, effectively, it was absolutely critical that everything be done immediately. You people came this morning and said -- this afternoon, and said that there was no urgency.

Indeed, you quoted figures to show that, given what had happened to Toronto as a result of the recession, and indeed to Ontario as a result of the recession, that in fact the demand at Pearson had substantially declined and, with Terminal 3 coming on, in fact there was more than adequate capacity. In fact, I think you said, even today, you're only up to 20 or 21 million, and they've got capacity for 31 million.

Can you help me understand why we are getting one set of evidence last week, which talks about this near calamity and extreme urgency, and you people come today who live there, who understand, who studied the issue very closely, and tell us that it wasn't urgent? Can someone help me and tell me why? Why the difference?

Mr. Meinzer: I think perhaps both answers are accurate. There has been a push to get Pearson up to snuff. Pearson has been a model of neglect, it didn't matter which government was in power. It was a terrific cash cow for a lot of other things.

But at the time, when the government in power then and Minister Lewis were ready to act, there certainly wasn't any urgency then. There may have been an urgency in 1987-1988 in the peak, and as the peak was still growing, to act, but certainly there was never an urgency that, all of a sudden, you've got to do this in 45 days.

Senator Kirby: In other words, the urgency had in some sense -- in better words, the crises had been survived, in fact your sense is. Anybody else want to comment? Mr. Church?

Mr. Church: The only comment I would add to that is there was an urgent need to do something. Clearly, there was very wide agreement that the aviation system in south-central Ontario desperately needed a framework within which development could take place, and still does. And from my point of view, the economic development of the region depends on us getting that sorted out fairly quickly in the next little while.

Senator Kirby: Can I just pursue that for a second? Because you were very careful, I think, when you used the word "aviation system"; you didn't say "airport terminals". "Aviation system", to me, means a lot more than airport terminals. Indeed, as someone who used to get stacked up over Toronto in the late 1980s, I was always more concerned about having a runway than a new terminal.

Two questions: Why do you think the focus was on terminals, not runways? And secondly, what do you mean by the broader question of the aviation system?

Mr. Church: I think, if you start at the broadest level and work down, the broad question is: How do we organize the facilities we have now to produce maximum economic opportunity in the regions, and what are the infrastructure needs of those facilities?

You have the largest general aviation airport in Canada on the verge of closing, being propped up by an ad hoc agreement, desperately needing replacement. That's Buttonville.

There's a need to deal with General Motors just-in-time inventory requirement, the biggest employer in the region. The City of Oshawa has done a wonderful job of accommodating that in the short term. There's a need to have a long-term point of view.

There's a fantastic facility in Mount Hope Airport sitting there, well-designed --

Senator Kirby: That is the Hamilton airport?

Mr. Church: In Hamilton, well-designed --

Senator Kirby: I know it know it as the Hamilton airport? Is that right?

Mr. Church: It is the Hamilton airport.

Senator Kirby: I've never heard it called Mount Hope.

Mr. Church: And you can't shoo carriers into it, but you can creat circumstances that improve the competitive environment for that facility.

There is a need to ensure that we've got ground transit and transport that link the various airports.

There is a question as to whether or not the Island Airport is meeting its maximum capacity to create jobs.

There is a serious question of whether or not the runways are a more urgent issue than terminals.

Those were the strategic issues that were identified in 1990 and that the municipalities endorsed as the critical, strategic issues.

Senator Kirby: But given that litany of issues -- and you raised far more than I would have known -- why was the sole focus on terminals?

Mr. Church: I don't know.

Senator Kirby: Does it make any sense to you?

Mr. Church: It never did to me.

Senator Kirby: Anybody else want to comment on that?

Mr. Meinzer: It's a lot simpler to transfer a terminal as compared to building a runway that has to go through environmental hearings. And there is certainly a time lapse that is very, very different than restructuring the ownership of a terminal.

Senator Kirby: So what you are saying is, what you do is you solve not the important problem but the one that is solvable? Is that a fair interpretation of what you just said?

Mr. Meinzer: You may want to tackle the things that are within your power to tackle more easily than another. But let's make no mistake about it; Toronto Airport, as a whole, and the system in general but especially Pearson, needed to have some work done and needed to have a plan that everybody committed to, that this is way this airport in its entirety is going to evolve.

Senator Kirby: And fixing the terminals in and of itself didn't solve that problem.

Mr. Meinzer: No.

Senator Kirby: Can I ask you just two other questions? One, I'm a little puzzled about the process. A bunch of the letters that, I think it was, Senator Jessiman actually referred to, talk about correspondence that had gone back and forth between, I think it was, Minister Corbeil and Mr. Bandeen, but there were other letters back and forth as the process went along.

I guess I'm kind of puzzled about the following question. To what extent do you really think the LAA process was truly being encouraged by the government, versus them saying that?

I'll tell you why I ask that. People don't like the Vancouver analogy. I'm happy to use the Montreal analogy, because the city structure in Montreal is fairly similar. You have a Montreal urban community and you have a whole bunch of municipalities. It is closer to the Toronto model.

And we know two things. One, there sure wasn't two votes at every municipality in the Montreal urban community. And we know, secondly, that unanimity was not required.

So my question to you, I guess, is, given the fact that the government seemed to be imposing upon you all kinds of conditions that it hadn't imposed upon the other city -- which is the best analogy, I think, if you're looking at the structure of urban government -- how do you account for that while, at the same time, they tell you they are encouraging you? It seems to me they are saying one thing and doing another. Am I right or wrong?

Mr. Meinzer: It started with my letter to the minister then, Minister Corbeil, on the 9th of March.

Senator Kirby: Which year?

Mr. Meinzer: In 1993, when we formally incorporated, saying that we have now, after our discussions with him and his officials, met all the conditions, and I am pleased to say, here it is, recognize us. We requested recognition and a meeting with him.

And I get a response to that letter on the 6th of May saying that Canada's only borough of East York has not passed a resolution endorsing it, and he wanted unanimity of all that, even though, in any discussion we had with him earlier, it was not required.

Senator Kirby: And it wasn't required in Montreal?

Mr. Meinzer: It was certainly not required in Montreal. It wasn't requested in Montreal and, you know, things moved forward. And in fact, I don't think it was done by each and every one in Vancouver either.

Senator Kirby: Did anybody in the course of -- because you people were involved in these discussions, Mr. Church, going back as far as 1989 and so on. Do you have any idea why they were single -- clearly, the game was different in Toronto? Any idea why? Did anybody say to you, "We're going to treat Toronto differently because...", and then finish the sentence?

Mr. Harrema: Because there's lots of capacity in Montreal and Calgary. Mr. Corbeil made that statement and why that was, and it is not --

Senator Kirby: What's the relevance of that statement to my question?

Mr. Harrema: That's maybe why we weren't pushed. We couldn't figure it out either.

Mr. Bandeen: There was some thought that they were trying to encourage the use of Montreal and Calgary and Vancouver at the expense of Toronto. This was suggested by one of the ministers.

Senator Kirby: One of the federal ministers?

Mr. Bandeen: Corbeil, I think, actually.

Senator Kirby: One of the federal ministers?

Mr. Bandeen: Yes.

Mr. Harrema: Mr. Corbeil said that at a meeting we were at.

Senator Kirby: Can I be clear, that they were trying to encourage cities other than Toronto, in lieu, or encourage Montreal specifically in lieu of Toronto?

Mr. Harrema: Well, they made that comment, whether they encouraged in a different way or not, yes.

Mr. Bandeen: But as to your question, I had got the feeling, after several letters and several meetings, that they wanted to go ahead with the airport authority but they were delaying this until they had the contract negotiated with Paxport.

Senator Kirby: But you'd also -- as I understood the testimony this afternoon, that once the terminals were completely in private hands and the runways had been privatized, as the tenders had been called for, then the fact is that it was just a game to say you would create an LAA because the LAA (a) wouldn't have any power and (b) wouldn't have any money?

Mr. Bandeen: Well, they could have money and they could take the place -- I don't agree with that. That was Gerry's statement. I think there was a function for an LAA, a very, very reduced one, but at least --

Senator Kirby: Not the same as the LAA in other places?

Mr. Meinzer: No.

Mr. Bandeen: It would at least then be a coordinating force to get the runways and the terminals together, and also do the marketing and the sale and development of the --

Senator Kirby: But it would not be an LAA with anywhere near the same meaning of the word "LAA" that it was in the other four cities?

Mr. Bandeen: That's correct. It would depend how you took the revenues from these people and how much you had to pay over to Ottawa. That would all have to be negotiated.

Senator Kirby: And I think you said earlier, Mr. Meinzer, that in fact you didn't even think it made sense because the revenue base was effectively naught?

Mr. Meinzer: Certainly, from my own point of view and that of my board of trade, there was no point having one. What we tried to do at that time is, when the contract was moving forward with Paxport, our objective was, "At least don't go any further with the runway development so there is some source of coordination and some sort of revenue coming to the airport authority."

Senator Kirby: But you were never even given that assurance?

Mr. Meinzer: No.

Senator Kirby: So the strategy appears to have been: Stall until there is not enough left and then settle with the LAA.

Mr. Meinzer: That is the only thing I would read into it.

Senator Kirby: Can I just ask you one last question which has to do with the terms of reference of RFP which, like any RFP, are long and complicated? And I think it was Mr. Church who made the observation that they were extremely detailed because they talked about drawings and other stuff. I haven't read the terms of reference but I take your word at that.

You people said you tried to develop a response to the RFP, and you also said, I think, in Mr. Church's words, you quickly came to the conclusion that you couldn't do it in the allotted time frame. I guess I'd like you to expand on that a bit.

I think what I'd really like to understand is whether you really, sort of, made a serious effort, or whether you concluded that, even if you bid -- forget, for a moment, the issue of whether or not an LAA could bid. I understand that issue was on the table. But I am trying to understand whether there was any real practicality of another serious bid coming in, in the 95-day limit or time frame, given the fact that I presume you people knew a lot more about the airport than any other outside group would have done, other than the Paxport group.

Mr. Church: I'm not sure I'm qualified to answer that question fully. I can certainly report that the South-Central Ontario Airport Authority -- which we acknowledge was not an authority but rather an authority-in-waiting -- made an enormous effort to meet the requirements. Ultimately, the work that they had done was incorporated into another competitive bid. Whether that competitive bid stood a realistic chance of being considered, I think, is a matter of personal opinion.

Senator Kirby: And I wasn't pushing on that. What I was trying to understand is whether or not, given the complexity of the RFP, whether or not a truly competent bid was possible to generate in the 90 days you had to do it.

I read from what you said this morning, Mr. Church, that that was probably not even possible because --

Mr. Church: People who were preparing it indicated that that was not possible, but my perspective on that is second-hand.

Senator Kirby: Anybody else want to say anything on that?

Mr. Meinzer: It was clear, as a community attempt, there was no way it was possible. And bear in mind the comment I made earlier in my testimony, that we are also, as part of our exercise, looking very carefully at the financing of all that, which was not, to my knowledge, a requirement of the bid by Paxport. We were looking, as a self-sustaining body, how do we finance all that? It wasn't just a question of responding to the bid. It was also the question: How do we come up with the money?

Senator Kirby: So from your point of view, though, there was, realistically, only one bid that could ever in fact meet the terms of reference, given the shortness of the 90 days?

Mr. Meinzer: It was certainly not within our capability to meet it.

Senator Kirby: Thank you very much, Mr. Chairman. That's all I had.

Mr. Nelligan: If I can just get a clarifying answer on that last question, do I take it from what you say, sir, that one of the concerns in making a request -- or rather answering a request for proposals was your concern that you could not raise the necessary cash to finance it?

Mr. Meinzer: No, it wasn't a concern whether we could raise the necessary cash or not. It was a concern that we had all the financial picture intact, period.

I am quite certain that we would have raised it. Question is, we had to analyze the finance-ability of it all which we did not have time to do in such a short period of time.

Mr. Nelligan: The other question I have, and I can put it to each of you in turn -- Mr. Bandeen has already answered it. He has told us that he spoke with Mr. Nixon.

Have you other gentlemen had an opportunity of discussing these matters with Mr. Nixon when he was carrying on his investigation? You all did?

Mr. Harrema: Yes, sir. We had a joint meeting with Mr. Nixon, the five regional chairmen, at -- somewhere near the airport, I recall, where Mr. Nixon asked us questions on LAA, where we were. We met for about an hour, all five regional chairmen, those that were regional chairmen at the time -- well, they are the existing ones now -- met with Mr. Nixon to discuss the LAA matter -- leading up to the LAA, sir.

Mr. Nelligan: And you, Mr. Church?

Mr. Church: Yes, I met with Mr. Nixon to explain to him our perspective as to why the approach that was then being taken to the airport system in Toronto was deficient and the criticisms we had of the framework at that point in time.

Mr. Nelligan: And you, Mr. Meinzer?

Mr. Meinzer: I met with Mr. Nixon together with one of my vice-presidents and one staff member at the Board of Trade, to convey the Board of Trade's position that we feel that the airport authority should be the umbrella group and, even if the terminal privatization went ahead, we can live within that but let's not go any further.

Mr. Nelligan: In order to assist the Senate, I wonder if each of you in turn could tell us anything that you discussed with Mr. Nixon that hasn't already been the subject of questions here today. I know that is broad, but I'm just trying to get some grasp of what information was given to Mr. Nixon.

Can you start, Mr. Bandeen?

Mr. Bandeen: Yes. We sent a letter to Mr. Nixon and then followed it up with an attachment, which I think has been distributed or is available to the committee. I think we gave it out this morning -- or this afternoon. And if not, I'd be happy to produce it.

Mr. Nelligan: We would be very pleased if you could make that available to everyone.

Mr. Bandeen: Fine.

Mr. Meinzer: The only discussion that I had in my conversation with Mr. Nixon was also the question of the Toronto Island Airport, whether it should be included or not included. And it was our position at the time: Let's keep it clear and focus on Pearson where there is a mandate to move to an airport authority. Such a thing is not the case in the case of the island. The island is not a federal airport by itself.

Mr. Harrema: Mr. Nixon, when we met, in my discussion with Mr. Nixon was why were we quite as anxious to have an LAA, and we indicated why we wanted to go beyond Pearson. We were not just looking at Pearson. We wanted an aviation structure, an airport authority that would manage other airports outside of that, where the privatization was looking narrowly just at Pearson and not at Buttonville, Oshawa or even Pickering down the road. And I think there was another -- whether it was Mount Hope or not, I am not sure which, Mr. Church.

That was our discussion -- my discussion, why we were pushing as hard, because I had an interest in Oshawa and in Pickering land and thought it could be better managed if there was an umbrella group. That was a discussion I had with Mr. Nixon when we were all there, the five of us.

Mr. Nelligan: And you, Mr. Church?

Mr. Church: Along somewhat the same lines but perhaps understandably at a more detailed level, we certainly discussed with Mr. Nixon how and why it was very desirable to proceed towards a solution to the requirements of the system and not get tied up exclusively in the issue of the contract, and that it was terribly important that we have some momentum to ensure that a working facility was in place, regardless of whether or not the new government decided to kill the agreement or not.

Mr. Nelligan: And just to clarify, Mr. Meinzer, is the present Greater Toronto Regional Authority an umbrella group, as you requested?

Mr. Meinzer: Yes, it is an umbrella group that is constituted to look after all the airports within the GTA, excluding Hamilton. We are confining ourselves to the five regions within the greater Toronto area, but we structured ourselves to be able to look after any of the airports where we feel it is in our interest and where whoever owns it feels it is in their interest to convey it to the airport authority.

Mr. Nelligan: Was such an application made to the previous government for an umbrella authority?

Mr. Meinzer: No, it is simply the way our bylaws are structured. Our request to the previous government was really focused on Pearson alone.

Mr. Church: The chairs, however, requested of the previous government that kind of authority.

Mr. Nelligan: I am just a little confused. When you said that your bylaws are structured that way, have your bylaws been changed since the --

Mr. Bandeen: No. Actually, our title, we're called the Greater Toronto Regional Airports -- with an "S" on it -- Authority. We always have been. And we had the authority to go ahead, but we were applying only for Pearson initially, because the Island Airport is not totally run by Transport Canada. As a matter of fact, it is not run by Transport Canada. I think it is owned to some extent.

Mr. Nelligan: This was one of the problems that you were facing from the start.

Mr. Bandeen: Yes.

Mr. Nelligan: Mr. Bandeen, you had two meetings. Why were you called back for the second meeting?

Mr. Bandeen: I can't remember. We went to the first meeting -- I sent Mr. Nixon a letter on October 29, outlining what we felt he should look at and review. It is a three-page letter, and I think we distributed it -- this morning?

And then on the second time, we had the board's submission to Mr. Nixon which is a two-page document which just outlines what we think that he should do and what happens, depending on what he finds out.

I think it's best you get it and read it. It is a three-page document.

Mr. Nelligan: We will see that the members get it. Thank you, sir.

The Chairman: I have just one. We have all talked about lobbyists the last few months. We are going to have them here before us. They are all willing and able and enthusiastic about coming. As a matter of curiosity, did you fellows have a lobbyist?

Mr. Bandeen: No. We had no money. When I told you that the Bank of Commerce financed this, they would not advance us any funds until we got recognized by the government of the day and signed a letter of intent, and that was only in December of last year.

Senator Jessiman: Did you find a copy of that letter of intent?

Mr. Bandeen: Yes, we did. We made it public at the time.

Senator Jessiman: If we do get that, Mr. Chairman -- I haven't seen it.

Mr. Bandeen: After that, the Bank of Commerce would loan us money, but we already owed people $600,000. Let me tell you, we weren't hiring lobbyists. We were hiring lawyers and accountants and public relations.

The Chairman: Thank you for your assistance and your forthcoming, direct testimony which has been very helpful to us. We appreciate it very much. You have lots of time now to make your plane.

Mr. Bandeen: Yes, we do. Thank you.

Mr. Meinzer: Thank you.

The Chairman: Our last witness is Mr. Michael Farquhar, director general of airport transfer.

Perhaps you can prime the pump by giving us a general overview and a few opening remarks.

(Michael Farquhar, sworn:)

Mr. Michael E. Farquhar, Director General, Airport Transfer, Transport Canada: Good evening, Mr. Chairman, and ladies and gentlemen. I am Michael Farquhar, director general of airport transfer in Transport Canada. I am a career public servant in the federal public service for 28 years. I have served in a number of departments including the Department of Finance, Treasury Board, Privy Council Office, and Federal-Provincial Relations Office.

Since 1976, I have been in Transport Canada in a number of senior executive positions. And in 1988, which is the period in which you are interested, I was director general of surface policy and programs and had responsibility for railways and highways and various things on the ground.

In the late spring of 1988, the deputy minister had asked Victor Barbeau, who was the assistant deputy minister of surface policy, to assume additional responsibilities with respect to the whole issue of airport devolution and airport transfers. And Mr. Barbeau was named executive director of the Airport Transfer Task Force in the department and, shortly thereafter, he asked me to come over and join him as deputy executive director; the fact being that both Mr. Barbeau and myself had not had any involvement with respect to airports and our mandate was to move very quickly to implement the government's 1987 airport policy initiative.

My specific responsibilities in 1988, and really up to the present, have been with respect to the day-to-day development of policy and negotiations respecting airport transfers. And this involved, of course, the transfers to local airport authorities in Vancouver, Calgary, Edmonton, Montreal, and ongoing with respect to discussions with Toronto, Winnipeg, and so forth.

So that is my background and my involvement with respect to the subject matter in which you are interested.

Mr. Chairman, I have a chronology of our involvement as officials in terms of airport transfer discussions with Toronto. And bearing in mind your opening comments this afternoon about respecting the wishes of the committee for officials to be as forthcoming as possible, I certainly intend to be very responsive. And if it would be helpful to the committee, I would be pleased to make available a copy of that chronology, and perhaps we can touch on some of the issues.

I think, senator, you were getting quite clear on the order, and this may be helpful to the members of the committee.

Also, if it would be helpful, senator and members, there may be two or three items which came up during the earlier testimony today which I perhaps could comment on and maybe clarify some of the timing and some other issues which I think came up and I think could benefit from some comment. If that would be helpful, I would be pleased to do so or, if you wish, I will just respond to questions.

The Chairman: Yes, that would be very helpful.

Mr. Farquhar: The first issue I think I wanted to touch on is the question of --

Senator Kirby: This is not to be difficult but just to ask a question. I wasn't clear. I thought Mr. Farquhar implied -- correct me if I am wrong -- that he had an actual kind of written-out --

Mr. Farquhar: Yes, I've got a chronology that I could just distribute if you wish.

Senator Kirby: Yes, it just seems to me that might be helpful to have this in front. That is all I was going to ask. Thank you. You didn't say that but you kind of inferred it. I thought if it was, it would be helpful for us to have it.

Mr. Farquhar: I thought it would be helpful. I'm sorry, it is only in English, Mr. Chairman.

The first issue I wanted to just comment on is the question that came up earlier concerning the requirement for resolutions from local governments endorsing the structure of an airport authority, and was that a requirement with respect to the first four, and did we change the policy and so forth.

The whole approach to airport transfers obviously evolved over the period from 1987 right up to the present. But the requirement that a specific resolution from a local government actually emerged, I believe, in early 1990. And it was very specifically related to requirements of local government support for the concept of an authority itself prior to the signing of the letter of intent which started the negotiation process.

And there was some question with respect to Calgary and whether or not there was a clear indication of support from the council of the City of Calgary for the Calgary Airport Authority. As a consequence of that uncertainty -- or lack of precision, if I can put it that way -- there was a requirement that there should be a specific resolution from council which would endorse the structure of the authority. That is where the process changed from the earlier one which was letters from perhaps the mayors of the communities at large and so forth.

From that point forward, whether it was Toronto or Winnipeg, or subsequently Ottawa and so forth, there has been a requirement of a resolution of support for the structure of the airport authority from the principal local governments. It did not necessarily imply unanimity from every single government but certainly from the principal local or regional governments in the region served by the airport.

I hope that clarifies the sequence of the requirement for that endorsement.

The second issue I wanted to touch on -- and I think it was addressed by the earlier witnesses, but I think it bears repeating -- it was clear that the government's policy came out in 1987, and it really get going when the Airport Transfer Task Force and the Airport Transfer Advisory Board were created in the summer of 1988.

But it was clear that Toronto -- and not just Toronto, but Ottawa, as well, was an another example -- were very slow to respond. The real response was in the four communities with which we eventually negotiated. The approach of the government of the day was that it would be responsive to indications of local interest in pursuing airport transfer negotiations. By and large, that interest would come from the chamber of commerce or the board of trade in the particular community. It was to come from the private sector because these discussions and negotiations were not with other levels of government; they were with local boards of trade, representatives of the community.

In the case of Toronto, for example, unlike Winnipeg, unlike the four that we transferred earlier, there was what I would describe, no particular white knight, an individual from the community that was prepared to take the lead in the private sector to bring together a group that was prepared to spend some of their time to pursue the responsibilities of formally creating an airport authority. As a consequence of that, that's a principal reason why things did not proceed very quickly with Toronto. I think the previous witnesses from the community essentially reflected that.

In the chronology that I've distributed, I think you'll note that I and Mr. Barbeau met in, I believe it was, November 1990, with the Greater Toronto Area Technical Advisory Committee, which I think was referred to earlier. If I can just refer you to the chronology, I think, on -- it is not shown on that particular list, but, I believe, November 18 of 1990, Mr. Barbeau and I presented a comprehensive briefing on the airport transfer policy initiative, the principles, the mandate for negotiation and so forth, to the technical committee. And this was really a committee of officials of the greater Toronto area heads of government council that had been created for the purposes of exploring the possibility of getting going with a transfer initiative.

Until March, I believe, of 1992, really, there were no discussions certainly between officials and Toronto people with respect to airport transfers.

Nothing occurred, to the best of my recollection and looking in my files, during the entire period of 1991. And we always were in a position to be responsive to any local interest. Whether it is Toronto or Ottawa or anywhere else, it didn't matter. If there was an expression of interest, we as officials had a mandate to provide information to the private sector, local governments, and so forth, on the government's policy.

As you heard earlier testimony, there was some difficulty in bringing together all the different local interests in the Toronto region, the boards of trade and so forth. And I believe, on June 15, 1992, I, along with the airport general manager and one of my colleagues and another colleague from the airport, met with, I believe it was 18 representatives of all of the boards of trade and chambers of commerce in the Toronto area, and this is, I believe, June 15, 1992, and gave a comprehensive briefing at that time.

And I received a reply back from Mr. Valo who was with the Mississauga Board of Trade and is now the current chairman of the greater Toronto area airports authority, saying that this was extremely helpful and, in two hours, we learned more than we'd known in two months and two years and so forth.

I think that started the very serious process in the Toronto community of the private sector interests getting together to put together a viable local group for the purposes of pursuing discussions.

That was the sequence. Then they were working over that period. Again, the chronology, I think, picks up in the fall of 1992. And you will see in February of 1993, I met, along with the airport general manager, with the future Greater Toronto Regional Airport Authority's pro tem board of directors to, again, get into a lot of detail about how do go from here to incorporate yourself and so forth.

And as you heard earlier, they incorporate themselves, I believe it was, March 5th, or thereabouts, of 1993.

At that point, we then told them, once they were incorporated, they had to get resolutions of endorsement from the various local governments. And I think the correspondence then deals with that from the period of March through to October.

The issue which, I think, again, has arisen here and understandably has created some confusion, concerns the nature of those resolutions of endorsement from the various governments. And I think it is fair to say, in terms of a reflection of the community will, I think a reasonable person would suggest that, if there is an endorsement from the five regional governments, the City of Toronto, the City of Mississauga, and the City of Etobicoke, that would represent the key interests, given that all the governments are represented in one fashion or another in the regional structures, but the key cities as well.

And the dilemma in terms of the clear-cut resolutions -- most of the resolutions had little wrinkles of one fashion or another. But the key element centred on the Toronto Island Airport and whether or not that airport would be or would not be transferred at the same time. That was the dilemma that was confronting the local community and the government at the time, because, in the past -- with the previous government and the present government -- the emphasis is on local operation of the airport and expression of local interest to operate it.

And the regional government of Peel had passed a resolution and, I think, re-passed it as recently as, I believe it was April or May of 1993, putting on a condition that the Toronto Island Airport should be transferred at the same time.

And as you know, there is a tripartite agreement with respect to the Toronto Island Airport, and the federal government could not, of itself, have transferred that airport without the participation of its partners.

From our perspective at the time, there were a number of means by which you could address this issue. And clearly, the minister's view, as expressed in a number of letters which he sent, was that the resolution should be clear and unequivocal; transfer Pearson, period, without any conditions saying something else should or should not occur.

And I think, really, the question boiled down to: Do you have a clear resolution, which was clearly a decision for the minister to make; or other options would be, can you address this particular concern in other means by ensuring in your legal documentation that there is no impediments that would prevent the possibility of transferring the Island Airport at some point in the future. And clearly, on the basis of our experience as officials, it would be prudent to negotiate the transfer of one airport at a time. Because if you didn't, you end up with a potential situation of a tail wagging a dog, whereby if you succeeded, for example, in transferring the Toronto Island Airport to the airport authority but for some reason failed to transfer Pearson, then it becomes a rather ludicrous situation of an airport authority managing the Island Airport but not managing Pearson, which was its essential raison d'être .

That essentially is the background with respect to the conditional support and resolutions that faced the minister at the time. And his correspondence reflects what his conclusions were at that time.

We had made it very clear to the representatives of the authority that this was a matter which clearly the minister and the government of the day would decide, and that they should be dealing directly with them, as they did. I think the chronology and the correspondence addresses that.

I think those were all of the issues that I wanted to briefly touch on, Mr. Chairman. I hope that's been helpful and I would be pleased to respond to any questions or elaborate.

The Chairman: Yes, that is very enlightening. Yes, we got the clear impression from the last witnesses that the requirements of unanimity and the need for non-conditional expressions of approval, which they considered to be -- I don't know if they used the word "unfair", but weren't employed in other areas, really had their genesis in Calgary, where, in effect, to use the old-fashioned express, the government wanted to show evidence of public support.

Mr. Farquhar: Of local public support, and a proxy for that would be local elected representatives in the community.

Senator Kirby: Just a short supplementary, just so you are clear, because the way the Chairman asked the question and what you said, I wasn't sure there was 100-per-cent consistency.

As I understood what you said, unanimity was not required but a clear strong show of support was.

Mr. Farquhar: That's correct.

Senator Kirby: But unanimity explicitly was not required.

Mr. Farquhar: No. There is nothing saying that every single municipality served by the airport --

Senator Kirby: I will come back on that later. That is what I thought.

Mr. Farquhar: Indeed, I think, the reality is, if you take Toronto, you are dealing with, I believe 40 to 42 different governments which is an onerous task at best to get unanimity on anything. And that is why I think the government viewed the resolutions from the five regional governments and, as I mentioned, the three cities, the three key cities, obviously ones in which the airport is located, as being critical to it.

And I think it was an extraordinary accomplishment that, by and large, all of the governments, to one extent or the other, supported the basic concept of local operation of an airport, along the lines of the general policy of airport transfers, which, as you probably are aware, has been under discussion and debate in government since 1978.

Senator Kirby: Thank you, Mr. Chairman.

The Chairman: Out of the mists of time, I am trying to remember something, Mr. Farquhar. Did you appear before the Standing Senate Committee on Transportation with regard to airport transfer some years ago?

Mr. Farquhar: I may have at some point. I have appeared before various committees and spoke at various things. I also get mistaken for my eldest brother who happens to be president of Carleton University. Sometimes he shows up and they wonder why is he showing up to comment on airport transfers.

The Chairman: I was trying to find today, and I had a devil of a time, the airport transfer act or --

Mr. Farquhar: I likely did appear before a committee, senator, when we were dealing with the Airport Transfers (Miscellaneous Matters) Act.

Senator Kirby: Is that in the title of the act?

Mr. Farquhar: Yes, in parentheses.

The Chairman: And it dealt almost entirely with employee issues and official languages.

Mr. Farquhar: That's correct, and official languages was the issue of rather extensive discussion amongst your colleagues.

The Chairman: That was the predecessor to the transfer. In other words, these miscellaneous matters had to be the framework of transfer.

Mr. Farquhar: In fact, the tabling of the Airport Transfers (Miscellaneous Matters) Act was a condition precedent for the transfer of the first four airports. Indeed it was passed and, furthermore, there are amendments to the act subsequent to the initial act to deal with the income tax status and the seizure of aircraft and so forth, that we had to deal with. But as it turned out, the legislation was passed before the airports were, in fact, transferred.

Senator Hervieux-Payette: I was wondering, for everybody's -- I think it's important to know, what is your line of authority? Where are you in the organization? You said what you are doing, but where are you located? How many people have to approve what you are doing?

Mr. Farquhar: I am director general, and as director general, I report directly to the assistant deputy minister of airports and I am on the board of management of the airports group, which is the senior executive cadre --

Senator Hervieux-Payette: So you report to Mr. Barbeau?

Mr. Farquhar: Mr. Barbeau directly, and he in turn reports to the deputy minister. And with respect to, specifically, airport transfers, particularly in the earlier years before Mr. Barbeau became assistant deputy minister of airports, he was wearing two hats and he was the executive director of the Airport Transfers Task Force, and I was the deputy executive director. It was a very small group of about 10 people.

Senator Hervieux-Payette: Can I presume then that, since we go back, that you were involved in developing the criteria for the new policy of the local airport authority? Mr. Barbeau commented about certain sets of authority, up to over 30 criteria.

Mr. Farquhar: Yes, the 36 supplementary principles which were developed. Those were essentially -- they described what an airport authority was. It was a not-for-profit corporation, et cetera. And it provided principles related to personnel, the structure and so forth, financial liability, joint ventures, et cetera. Essentially, it was a cabinet-approved document which was made public to provide us as officials with our negotiating mandate which, as we went along, of course, we reported back to ministers of our progress in negotiations.

Senator Hervieux-Payette: So this was the policy framework within which you were free to operate your transfer bureau.

Mr. Farquhar: That's correct.

Senator Hervieux-Payette: Can I presume then that it was equally applied to all airports that were in the process of being transferred? There were not criteria that were applied more to one than another? The set of criteria were not only just general but was made in a way that there could not be any major differences between the local airport authorities, so that there would not be any distortion in the application or implementation of the policy?

Mr. Farquhar: One of the mandates we had in the past, and again, with the present minister, with respect to the ongoing airport transfers, which is fundamental, is that we are consistent and equitable in the treatment of all of the different sites in terms of our airport transfer discussions. I might add, and perhaps Mr. Barbeau had alluded to this last week, that the minister of day also created a private sector airport transfer advisory board which was chaired by the deputy minister Mr. Shortliffe. And we as officials reported regularly to the advisory board in terms of getting their input and observations on what we were doing and their guidance and their particular perspective on the discussions.

And one of their views, very clearly, was that we should be consistent to the absolute maximum extent possible, recognizing, of course, that a Vancouver airport is quite different from an Edmonton airport in terms of size and its particular operating role.

Senator Hervieux-Payette: Especially its location.

Mr. Farquhar: Yes, and I come from the west coast, so I can relate to that.

Senator Hervieux-Payette: We received documents comparing the LAA to the private operations and saying that -- and also, a comparison between the LAA policy of 19 -- I mean, the first one, and now the one from 1994; that you were in a way passive, passively implementing LAA. Today it is an active role, that you knock at the door of the local authority that might form a group, and you incite them and you help them to put it together and so on.

I was wondering, at the time of putting together the four -- they were the major ones, Calgary, Montreal, Vancouver, Toronto and so on -- were you just sitting in your office in Ottawa and waiting for them to knock on your door and decide to put an LAA in place? How did you proceed to implement the policy?

Mr. Farquhar: Interesting enough, before our task force was created in the summer of 1998, Minister Crosbie, in 1997, came out with a framework policy for future development of airports which dealt with the prospect of devolving and/or commercializing federal airports, either by privatizing them in the pure sense, transferring them to not-for-profit airport authorities, commercializing them. And Terminal 3 in a sense was a component of that.

The communities of Vancouver, Calgary, Edmonton and Montreal moved very quickly to come forward with unsolicited proposals before there was a clear negotiating mandate and supplementary principles to guide the prospect.

There were a number of interested parties in those communities already that were very enthusiastic about the concept of local operation of airport for local economic development reasons.

Winnipeg was another community that had moved fairly quickly with interest; Thunder Bay and Moncton in particular, at that time, they progressed less slowly, particularly in terms of getting local individuals involved substantively in local governments.

So when we came in, we had parties that were literally waiting there. Within a matter of days after Victor Barbeau took on his responsibilities that the minister had given him, he was out there -- and I had came on just very shortly after that. We went out and visited all of these groups to discuss with them the policies and principles we were developing as a mandate for negotiations, to get their comments, observations and input. So from that perspective, we were very quickly off the mark.

But we were not -- if I can use the phrase -- under a mandate to go out and flog airports. The government wasn't saying, hey, we have got some airports, take them, get rid of them. It was saying, if there is a local interest, we would be pleased to respond to it.

Under the 1994 policy of the present government, it is saying that we have seen the success of the first four authorities. You've heard from Mr. Emerson last week and he quite an enthusiast of the concept.

And the government is saying -- and the fiscal context is different today than it was in 1988 -- let us be more proactive; let's go out and encourage communities. I deal with the large airports, the national airport systems airports which are the 26 largest ones. But let's go out and encourage them to come forward under the policy mandate which was changed by the present government in two fundamental areas, which I think we should note because it helps to create the context.

Number one, it makes provision -- it is permissive, not obligatory -- for the federal and provincial governments to nominate people to be appointed to the board.

But again, they cannot be politicians or government officials; they have to be private-sector individuals. That was in response to caucus members and members of the public suggesting there could be merit in that.

From the federal perspective, there was a view -- and this applies particularly in the case of Toronto perhaps -- that if you have a person who is nominated by the federal government, part of their mandate -- and indeed by the provincial government -- part of that mandate would be to be able to bring a perspective that was more national than local and parochial to the deliberations of the board of directors. I think that was the rationale behind that. Again, they could not be elected officials or government bureaucrats of any level.

The second part of it was to -- and the word I prefer to use is to essentially codify the public accountability of the airport authority. That entails, I think, 20 public accountability principles which the government issued as part of its policy in 1984, related to the precise structure of the board, the number of government-of-any-level nominees, issues related to tendering, issues related to annual meetings.

Many of these were implicit and, indeed, are covered by the first four authorities, because this was very important to not only the federal government of the day, the previous one, the present one, but to the local governments; they wanted to ensure that these were accountable bodies. Those public accountability principles were codified and are now obligatory with all the authorities we are dealing with.

Indeed, in the case of Toronto, which signed a letter of intent on December 2, I believe, of 1994, their by-laws and letters patent reflect these new public accountability principles.

Just as an aside, if I may, Mr. Chairman, last fall, in September, I was asked to appear as a witness in a similar fashion as this evening, in front of the Thunder Bay City Council which had been wrestling with the whole issue of, "Do we endorse an airport authority or don't we?" There had been an active group in that community for a number of years but they had not got to that stage.

So the whole issue of public accountability was first and foremost of importance to the local representatives there. We were able to say that these public accountability principles, that were part and parcel of the July 1994 announcement, were very explicit -- not to say that, with the first transfers, these matters had not been certainly taken into account; they just had not been as explicit.

We can talk for a great length, but what we as officials have accomplished totally irrespective of the government of the day, is we have learned a great deal and have evolved in terms of our approach to this whole initiative. We have streamlined it. You have heard how long it took for the first transfers. We have streamlined that. We have generic documentation. We have tried to make the process much more easy for a local group to deal with and to address some of these issues.

We learned a lot, because we started out with a black page six years ago. This was an unprecedented undertaking by any government in terms of the transfer of federal assets out of the federal government. Apart from Air Canada, I think it was the largest transfer of federal assets and employees.

Senator Hervieux-Payette: Mr. Chairman, I hope you will be flexible on my number of minutes since I was very quiet earlier.

Mr. Farquhar: I was going on at length, Mr. Chairman. Please shut me up if I go on.

Senator Hervieux-Payette: I have prepared for a number of questions but if you go on like that, I think we will be here until midnight.

Senator Kirby: I was going to say jokingly, Mr. Chairman, that I know that when I was in the public service, appearing before house communities, the 10-minute rule -- one of the standard strategies, since questions could only last 10 minutes, when you didn't really like the line of questioning, you simply gave a very long answer. In spite of your political background, I am sure you will take a very liberal interpretation.

The Chairman: After Senator Bryden, Senator Hervieux-Payette is a delight.

Senator Hervieux-Payette: Since we were trying to find out how we adopt with, in fact, what I would call a two-track policy -- in one instance, we had real clear sets of rules and, on the other hand, so far, I was not given any document that was giving the guidelines.

But I was wondering if you were involved in the development of the request for proposals so that the private sector operation of Terminals 1 and 2 would be at least operating in line with the guidelines that were set up for local airport authorities so there would not be two sets of rules, two sets of revenue, two sets of transfer guidelines that would govern both the local airport authority or the private sector authority when it comes to the management of the terminals?

Mr. Farquhar: I think it is important to make a distinction between the two initiatives. While they are complementary, they are quite separate. The airport transfer issue with which I am involved deals with the transfer of the operation and maintenance of the entire airport. The issue of the redevelopment of Terminals 1 and 2, which I was only peripherally involved in, in terms of being only a member of the board of management of the airports group, dealt with the private-sector redevelopment of specific terminals at the airport, not the overall management of the airport.

The redevelopment of Terminals 1 and 2 of itself did not foreclose the possibility of an airport authority. What occurs and, indeed, it will occur with respect to Terminal 3, is that all of the existing contracts, licences, leases and so forth, that the government has with operators on the airport are assigned, provided there is no specific impediment, to the airport authority.

So were there to have been a specific contract, a valid contract with private-sector developers of Terminals 1 and 2, those would have been assigned to the airport authority as if it were Transport Canada.

Senator Hervieux-Payette: But for me, in French, we say, "Mettre la charrue devant les boeufs". I don't know how to translate that.

Mr. Farquhar: Put the cart before the horse.

Senator Hervieux-Payette: Put the cart before the horses. Because I have the feeling that if we had proceeded in an orderly manner, the LAA would have been established. And then if we wanted to proceed with the operation of Terminals 1 and 2 by the private sector, because there was an emergency, then of course, they would be part of the process, they would agree to the process, and it would make their life much easier in order to manage the overall blanket airport authority.

If they are in a straightjacket for Terminal 3 and Terminal 1 and Terminal 2 and what is left is more or less servicing the three terminals -- because, of course, they need some runways and some roads around and services that are connected to the terminal operation. But in fact, we would, even at the federal government level at this point in time, have no flexibility in the future. We would be, as a government, forever -- for 57 years, at least, certainly longer than anybody here will be able to see the end of the story -- be able to witness future development that would need major changes in the policy that would not be able to apply once the private sector is operating the three terminals. Where would the flexibility come from for the future?

Mr. Farquhar: Clearly, you have had previous witnesses who have testified with respect to the policy. Mr. Lewis commented on it from the government's point of view at the time. You have heard the views of the authority earlier. I think the reality, from my perspective, as one engaged in discussing airport transfers, was that we did not have a local representative airport transfer planning group, let alone authority, with whom we could discuss the policy until, essentially, June 1992. That was the first time when the boards of trade came together.

Because as you heard earlier, during that early spring period, there were two competing groups that had been created in the region. The government's view of the day was that the local community must itself decide who will represent it.

We as officials, dealing with airport transfers, did not have a body with whom we could discuss until well into the latter half of 1992.

Senator Hervieux-Payette: But right now you could have played an active role in putting the group together and knocked on doors, like I suppose you're doing in the maritimes or other places where they don't have any local airport authority.

Mr. Farquhar: As officials, we had a very precise policy mandate which we discussed earlier.

Senator Hervieux-Payette: When you were going through that process, the problem that seems to emerge and was the most important in the Toronto Airport was the runway, the construction and all of this. I mean, was there any discussion, when you were discussing transfer either to the private sector or to the LAA? Any discussion as to who would undertake to do that and how it would be financed? Because it seems that this question just has evaporated in the discussion of the terminal.

The question of runways seems to have more or less disappeared. Where was it gone? Since you were in charge of airports, you certainly had a preoccupation to have capacity for the planes to land.

Mr. Farquhar: Again, I wasn't in charge of airports; I was responsible for the airport transfer policy initiative. And again, our discussions, in which I was involved with local representatives from the community, your witnesses you had earlier today, dealt with the creation of the airport authority.

Because, clearly, one is not in the position with any degree of legality, if you like, to be pursuing substantive discussions about who is going to be doing what at a particular time with a corporate entity that, in fact, was not incorporated officially until March 1993 and, indeed, not recognized because they had no equity as an entity to be getting involved.

In terms of whether or not the authority would be financially responsible for some of, any, all of the costs of a runway would be a matter for discussion and negotiation once that authority had signed an agreement with the government to negotiate. Of course, that had not occurred until December 1994.

Senator Hervieux-Payette: This I understand. But if the government had proceeded with the contract with Paxport, or eventually with Claridge, you would still have today the mandate of creating an LAA in Toronto and playing an active role and solving the problem of Mississauga, Island Airport, and do all the sophisticated things to put all these units together to make it work.

Mr. Farquhar: No. My mandate would have been to negotiate with the recognized airport authority under the government's current principles and to transfer the operation of the airport to the authority, and that would include the existing contracts that were in place at the time the airport was transferred. After that point in time, the decision making would be at the authorities and not the federal government's. So if there was a contract in place, whether it is for rent-a-cars, Terminal 3, those are assigned to the authority and it then is responsible, not the government.

Senator Hervieux-Payette: But my understanding this afternoon from the discussion from the people from Toronto was that they wanted to have a say before rather than after. I guess that is all what we understood on this committee.

We had a comment by the minister, your minister of the time, as to the length of time or the speed to proceed with the transfer; and I was wondering if you yourself you were part of that process? I mean were you on a 32-hour-a-week schedule, or what was the -- I understand it can be the impression of the minister that things were not moving fast enough, but what you said a few minutes ago that we were innovating, that you were more or less working within the large policy framework but you had to define the rules all along, so was there any undue delay? Was it because there was a difference of opinion on the parts of the officials to put the process in place of the privatization? What was the reason or the rationale why things were -- or why would Mr. Lewis complain that things were not proceeding, since you are with government for 28 years? Was there at that time any undue length of time to come to grips with these issues?

Mr. Farquhar: I think if Mr. Lewis was frustrated, which I think was what he expressed, I believe Mr. Shortliffe was frustrated. The private sector Airport Transfer Advisory Board was frustrated with the delays. Certainly, the four local airport authorities were frustrated; and, perhaps most of all, I, Mr. Barbeau and our task force were frustrated because we were engaged in an unprecedented initiative, not just in Canada but in the world. This had never been done before. And none of us, whether it was government officials, elected people at any level of government, and certainly the local authorities, appreciated how long this exercise would take.

I have given a number of speeches over the last few years at various meetings, particularly in the United States, and I am caught up by my own words because I would be saying back in 1989 that we intended to transfer these airports by the end of 1990, and then subsequently six months I had to change that and change it.

The reality is that we started out in evolving a policy which -- we had the principles in 1989 and we then proceeded -- and I have a chronology of the sequence -- again, if that would be helpful to the committee, I could make that available -- of the steps along the way; I could certainly distribute that -- but we were developing a policy with four separate local apport authorities from four different parts of the country. We had to develop legal documentation from a blank page ending up with close to a thousand pages of legal text. We had to deal with four local airport authorities, with legal advisors to these four authorities, with legal advisors to the financiers of these four authorities; and the difficulty was that all of the authorities did not always agree on the different positions they wished to take. And so we were caught trying to balance all of these issues.

As was mentioned earlier by the chairman, we had to develop and have passed through the Commons and the Senate an Airport Transfer Miscellaneous Matters Act, and subsequent amendments, the purpose of which was to address official languages issues, to ensure that they were protected with the new authorities, to deal with our employees and the continuity of pension benefits -- again, all of this was unprecedented -- and subsequently to deal with the income tax status of the authorities and also to give them the ability to seize aircraft in the event of default.

We also spent, I would comment, significant time in reviewing the near final legal text with independent outside people with respect to audits, with respect to insurance, personnel issues, financial issues. So we took a great deal of time to have the clauses and articles independently reviewed. And that is what took the time.

In the end, there is a period of approximately four to six months after we sign an agreement to transfer, before the transfer takes place, during which the authorities themselves put in place all of their administrative requirements, their transition measures. We have to give our employees at that time nine months' notice after all agreements had been reached.

So, in fact, while it may seem like a long period of time, it really was done in retrospect rather expeditiously given the unprecedented nature of about, I would guess, three years from serious start to finish. Today, with the new thrust, we have generic legal documentation. We have very precise principles; and we have far more precise financial terms and conditions. So there is not much scope for negotiations under the new policy compared to what we had before. That should considerably shorten the period down to between 12 to 15 or, at most, 18 months from the signing of a letter of intent.

So we worked extremely hard. We were a small group; and I don't think there was any time wasted, but it was just a very challenging task that was, again, quite unique.

Senator Hervieux-Payette: And that you seem to be proud of, and I think you should.

But I was wondering, before we end, did you use all that expertise, that experience, was it transferred to the group that was in charge of preparing the request for proposal and then analyzing the proposal eventually so that there would be certainly a lot of the expertise that was built up in your team that would be used for the -- make sure that we were not developing, I would say, creating too much distortion between the transaction on the one policy, established policy, and the other one which was one part of a policy?

Mr. Farquhar: That is, I think, a very good question. In terms of the legal approach to it, clearly, the Justice Canada lawyers that were involved with our initiative, a number of them also were involved with the T1T2 issues, so certainly they had experience to the extent they were involved with our initiative.

One or two members of my staff helped out in the broader work with respect to the T1T2 initiative in, I guess, three specific areas: We provided the benefit of our experience with respect to dealing with employees, and particularly with legislation; secondly, we tried to be of some assistance with, particularly, the Department of Customs in terms of an agreement related to inspection services; and, thirdly, to some extent, we tried to be of help with respect to valuating of the chattels at the airport in terms of Terminal 1 and 2 that would be transferred. So, to that extent, our experience, I think, was applied. Beyond that, I was not directly involved in the day-to-day discussions and negotiations, so I can't really say how much of that was drawn upon. But certainly the documentation was there and available should people have wished to use it; and we were there to provide whatever help we could.

Senator Hervieux-Payette: From all the services that eventually now I mean the Government of Canada would receive from the local airport authority like Customs and Excise and other functions that it -- of course, security with regards to the border for certain large airports like Vancouver and Toronto, I mean the assessment of the costs of services that the Government of Canada would have to pay I mean was done by your team and was it established I mean more or less, as I say, on comparable ground from one airport to the other airport?

Mr. Farquhar: Yes. There is legislation that governed a number of these issues. The most specific one relates to the provision of inspection services. There is particularly the Customs Act and now I think Agriculture Canada has a piece of legislation which states that facilities must be provided free of charge to house Customs inspectors; and that obligation has been passed on to the airport authorities, as if they were Transport Canada. We have to provide space at our airports to house Customs, Health, Agriculture and so forth, as now do the airport authorities under a memorandum of agreement with the inspection services departments.

Senator Hervieux-Payette: I will just see if I have finished.

One last question: To my recollection, and because you were early part of the group of transfer and you were involved, I mean, I was under the impression that the privatization approach when Terminal 3 was going on had been contemplated by Toronto, Winnipeg and maybe others that I am not aware of, and that only, finally, Toronto went with the privatization. That is the first part of my question.

My second part was I was under the impression that when there was some private sector people interested in that privatization approach, it was only with airports that were making profits. I mean there were not people knocking on doors of the government to privatize the smaller airports that were creating a year-after-year deficit, of course, and that there was no formula, in fact, put in place to offset the deficit of these airports so that even there could be some private but there would be some kind of a subsidization for either local airport authority or for the privatization of some operations so that they could have at least a standardized service throughout the country when the number of passengers was not there to justify the transfer.

Mr. Farquhar: Again, I should reiterate the distinction between the privatization, the term you are using, with respect to the redevelopment of Terminals 1 and 2, which is the correct terminology. With respect to what we talked about earlier, and the earlier testimony related to the airport authorities, that was not a privatization, and it is important that the distinction be made. It is a devolution or a transfer to a not-for-profit private sector entity; and that principle, which applied to the first four, applies to Toronto, applies to Winnipeg, and is very much a part of the national airports policy of July 13, 1994. So it is consistent throughout. So you can be certain that that consistency is there.

Senator Hervieux-Payette: But you don't remember that some private sector people were interested to acquire --

Mr. Farquhar: Oh yes.

Senator Hervieux-Payette: -- Vancouver airport?

Mr. Farquhar: No. What I think you may be thinking about is the first authorities wanted to have the opportunity to purchase the airport, to buy the airport, privatize the airport, and that would have been unprecedented in the world, unless -- if there was no regulation of any sort. The agreements with the first four authorities do, indeed, have a paragraph in it which -- clause in it which says that at the end of five years the authority should it so wish can approach the government and ask the government -- and I can't give you the precise words but the intent is -- whether or not it wishes to consider the possibility of considering discussing said. You can appreciate that, Senator Kirby.

Senator Kirby: Only lawyers could write something like that.

The Chairman: Or bureaucrats.

Mr. Farquhar: Good bureaucratese or bad bureaucratese.

What I should point out, though, which I think is important, obviously, under the present policy with respect to the big airports, the current government has said explicitly that there will be no selling of the big airports; they shall be leased.

The Airport Transfer Advisory Board, if you recall, the private sector board which the government created in 1988 -- without, I don't think, revealing confidences -- was very adamant in insisting that this was a national asset, these lands, the airport lands in urban communities and that certainly from its perspective it was recommending to the government of the day that certainly those airports should not be sold; and I guess in negotiations there is give and take and I think it is part and parcel of the effort to conclude negotiations, the brilliant or otherwise minds of the bureaucrats and the lawyers came up with the clause I referred to earlier -- to provide the possibility, but it left it strictly in the hands of the government of the day to make that determination, whether or not it wished, in fact, to enter into discussions about the possibility of selling the airport. So I think that is probably what you were referring to, I think.

Senator Hervieux-Payette: I was under the impression that the same thing could have happened, you know, that there would be a Terminal 1 question in Vancouver, or the same thing in Winnipeg, and that private sector operators were interested to come in and just lease the whole terminal and do the operation of the terminal, including, you know, parking spaces, hotels and related services.

Mr. Farquhar: There is a number of elements here because, clearly, an airport authority, as the government does, can invite the private sector to bid on the construction of a hotel. Or, indeed, an airport authority could invite a private sector enterprise to operate all of its concessions in the airport terminal to the private sector. That is their decision -- that is an operational decision -- provided those decisions in no way take away from their responsibilities to the public and the Government of Canada under the terms of the ground lease, and that in no way would that be financially penalizing the government in terms of the rental payments. So there is scope there for what it is going to do, provided it does not adversely affect the financial bottom line to the government.

Senator Hervieux-Payette: Thank you.

The Chairman: Senator Kirby.

Senator Kirby: Thank you, Mr. Chairman. Normally, we alternate sides.

The Chairman: No, we haven't been doing that.

Senator Kirby: That's okay.

I wonder if -- I just want to clarify a couple of the points to make sure I have understood them correctly.

First, just on the unanimity issue for a minute, we were clearly told by the witnesses while you were in the room the witnesses this morning made it -- earlier this afternoon -- made it pretty clear that unanimity was required by the government. You pointed out that the government wanted a strong indication of local support but did not absolutely require unanimity. That was the policy.

In a letter on the 6th of May from the minister back to Mr. Meinzer, he pointed out, and the documents we have got made clear, that in that it was the minister said that they couldn't proceed with the LAA until such time as the Borough of East York had actually also authorized -- passed a resolution.

Mr. Farquhar: I think, senator, that if I recall --

Senator Kirby: No. The letter I am referring to is actually the borough -- it says City of East York, but in fact East York is a borough, but anyway, that is --

Mr. Farquhar: Correct me if I am wrong, but I believe that letter talks about clear unequivocal resolutions of support, but I believe it flags a number of areas such as the Borough of East York and one or two others, and I believe it mentions the Toronto Island as well, as examples where the resolutions passed by various governments were conditional. I don't think in the letter it specifically says that that specific community should have an unequivocal resolution, although perhaps --

Senator Kirby: What the letter actually talks about is the need to get the unconditional support of all -- I am happy to use your words -- emphasize "all" which to me means unanimity -- I think "all" and "unanimity" mean the same thing -- regional and local municipalities, including the Borough of East York, and I guess my question is -- I will come back on the Toronto Island in a minute. I guess my question is why -- do you have any idea why unanimity was required in Toronto but not required elsewhere?

Mr. Farquhar: No. I wouldn't use the word "unanimity", but I take the comment there that, clearly, the minister was of the view that it was desirable that all of the governments in the region, given that most of them had passed resolutions with conditions, should have unconditional support; and in terms of why he desired that, I think --

Senator Kirby: No, I was not asking you that. The "why" I absolutely agree is off bounds viz-à-viz you.

My question was, though, am I correct in understanding that the unanimity requirement (a) was not required by the policy and (b) was not consistent with the requirement that had been imposed elsewhere, such as in Montreal?

Mr. Farquhar: I think I would say unanimity is desirable as a policy.

Senator Kirby: In politics unanimity is always desirable and never achievable.

Mr. Farquhar: I think one would in a general observation in looking at this, whether it is for Victoria or for Winnipeg, whatever, would weigh where the particular support from the communities comes from; and if it clearly is 19 out of 20 communities endorse it, then I think the view would be that that would represent a pretty broad spectrum of support. And I think that is all I could comment on that.

Senator Kirby: Okay. And that is essentially what the policy was --

Mr. Farquhar: Yes.

Senator Kirby: -- the letter goes beyond that.

Can I just deal with the Toronto Island Airport? You were involved in the Edmonton LAA, correct?

Mr. Farquhar: That is correct.

Senator Kirby: Correct me if I am wrong on this -- we all know that Edmonton has two airports.

Mr. Farquhar: Yes.

Senator Kirby: It is also my understanding -- one of which is close to town and one of which is halfway to the Rockies.

It is my understanding that the Edmonton Municipal Airport was, in fact, not included in the Edmonton LAA; is that correct?

Mr. Farquhar: That is correct. The Edmonton Municipal Airport was and is owned by the City of Edmonton from the perspective of airport transfer.

Senator Kirby: As Toronto Island is.

Mr. Farquhar: As with Toronto Island, except with Toronto Island the federal government has some involvement but not exclusive.

Senator Kirby: It is tripartite.

Mr. Farquhar: That is correct.

Senator Kirby: Nevertheless, even without Edmonton Municipal included you proceeded with an Edmonton LAA.

Mr. Farquhar: Yes.

Senator Kirby: If that is the case, why was the federal government focusing on the Toronto Island issue? By the way, you also in response to Senator Hervieux-Payette's comments earlier made the observation that you ought to proceed one at a time with airports rather than try to do them together, first of all; and, secondly, you already had an example of having done Edmonton where there were two airports and you only included one. Why the focus on Toronto? Like why was Toronto Island -- it strikes me as a red herring issue. Why was it a serious issue?

Mr. Farquhar: The Toronto Island issue was not an issue for the federal government; it was an issue in the government community because you have a resolution --

Senator Kirby: I had -- sorry, go ahead.

Mr. Farquhar: I was going to say you had a resolution from Peel which, after all, was the region that included the municipality of Mississauga -- including Mississauga -- and Peel said, "We will only agree to pursue or to support transfer to Pearson if you include Toronto Island."

I think, if I may, my view of the issue was that Mississauga was saying, "Well, if Toronto is going to have a say in our airport, Pearson, then we want a say in your airport, Toronto Island." So it was very much a local community difference of view. That was really the issue.

Senator Kirby: Yet there were a variety of ways that the Island Airport issue could have been dealt with; am I correct?

Mr. Farquhar: Correct.

Senator Kirby: And that essentially it was the ministry who made the decision to drop -- sorry, to require that Mississauga drop its insistence on including the Island Airport in the solution, that in fact there were other ways around the problem, as you found in Edmonton?

Mr. Farquhar: Edmonton is not parallel because we had no dealings with the municipal airport.

I think the issue is more the five regional governments agree either to proceed with Pearson and deal with the Island later on; or agree to proceed with Pearson and the Island together. But don't have one region saying yes to both and the others maybe. That was the issue.

Senator Kirby: And officials clearly preferred that you proceed simply with the one.

Mr. Farquhar: Absolutely.

Senator Kirby: Just on practical --

Mr. Farquhar: Yes, and in response to your question the way how do you get around that, you can build in some assurance that there is nothing that would foreclose the future transfer as long as -- within the federal mandate to transfer the airport to the authority.

Senator Kirby: On the issue of urgency, which you heard some discussion this morning, and since in one of your answers this afternoon -- I keep thinking we are in the afternoon, we are in the evening session tonight -- and you have obviously because of something you said in response to a question earlier you have obviously at least looked at or watched or whatever the testimony last week. From your point of view in the public service, what was your sense of the urgency issue?

I raise it because you heard witnesses earlier today pointing out that by 1992 all of the data had shown that Pearson in fact had excess capacity, that the boom period of the late 1980s was over. From the point of view in the public service, at least your part of it, what was your sense of how important it was that the urgency with which development at Pearson proceed?

Mr. Farquhar: One thing I guess -- and again being a non-airport technical person, this is a more general observation -- one thing I have learned over the last six or seven years is that air traffic forecasts upon which these kinds of decisions are made, obviously, are deemed to be very accurate plus or minus 20 per cent. So it is a very difficult issue and that is not -- it sounds funny.

Senator Kirby: I will resist the temptation to make a comment about how deficits used to appear that way in budgets of the late 1980s but we will ignore that. It is just an aside.

Senator LeBreton: And the fact that we inherited a huge one in 1984.

Mr. Farquhar: That is the first point, I think, that you have to deal with forecasts, and we have seen dramatic ups and downs in traffic forecasts over the last half dozen years with the recession, and we have all read about that.

Secondly, as you can appreciate, planning for a major infrastructure development, and whether the government does it, an authority does it or the private sector does it, takes a great deal of time to do the actual planning and getting on with it. So I think the perspective at the time as I understand it was that based on the forecasts at the time, based on the lead time required and so forth, there was believed to be a need to get on with major redevelopment.

It is a matter of judgment, the extent to which that development would proceed in terms of the magnitude. But I think that is the only comment I could give, senator, in terms of my view. I have to rely, as a general observer, on what the technical experts say at what point can you only get so many more people through a gate or something.

Senator Kirby: Of course.

With respect to the actual recognition, or whatever the correct terminology is of an LAA, when do you decide one is legit, you again heard the witnesses earlier today make the observation that by early 1993 they had in fact met all the conditions, and in fact they said at a meeting with you -- they quoted you as having said to them that all the conditions of the LAA had been met. Did you in fact say that to them or effectively say that to them?

Mr. Farquhar: Basically, in terms of our discussions, we try to reflect to them what we believe is consistent with the policy, and that is resolutions of endorsement. We commented, and the minister's letters clearly reflect this, on certain concerns that had to be addressed, and this was through subsequent resolutions which they passed.

I think you talked about the issue that there are different ways to deal with some of those outstanding issues that were in question, particularly the Toronto Island Airport issue, and I think we would have presented to the minister various options and suggested that on balance, for example, the requirements as stated here have been met, however there is an outstanding issue of this or that or the other thing. It can be addressed in two manners: One, you can insist upon taking this course; or, two, you can do it through another manner, through legal document -- other negotiated documentation. That is the kind of information and material that we would send to the minister. He then would have reviewed that and made his decisions.

What I can tell you is that at that period in time I made it very clear to members of the authority that the issue of recognition was a matter at the political level and that I was not in the position beyond having given them advice on the structure of the letters patent and by-laws on whether or not the minister would make a decision, and his letters speak for that.

Senator Kirby: I fully appreciate that. But they said that you did indicate to them that from your perspective.

Mr. Farquhar: From my perspective --

Senator Kirby: -- the policy requirements had been met.

Mr. Farquhar: Yes. I said, and I think this was more in May with subsequent resolutions, that the interesting thing was that Mississauga and Peel are part and parcel of the same thing and they had slightly different views depending on which hat was being worn. The reason why I would have made the comment as a personal comment that I thought it basically met the approvals was that I felt there are ways to deal with the other issues without compromising the fundamental resolutions themselves, but that that was a decision that the minister would have to take and there could well be, as I think you certainly appreciate, other issues of which we as officials certainly were not aware.

Senator Kirby: Of course. But excluding those of which you were not aware then, therefore you could not have commented on them, from your point of view the issue was up to the political level to make a final call?

Mr. Farquhar: Yes.

Senator Kirby: One last question since I thought you gave a tremendous description of a very wide diverse group of very frustrated people when you talked about the minister, the bureaucracy, the private sector, the local airport authorities and on and on, and you then went on to explain, quite understandably, the difficulty of attempting to negotiate an agreement when you have 35 municipalities involved. Some of us spent a few years of our life trying to negotiate agreements with 10 provinces. When you get to 35 I don't know how you manage it.

Can you recall any time when in a sense -- and I understand the frustration of ministers, all of us have seen it -- did you sense that the view at the political level was that the bureaucracy was deliberately slowing the process down, or was it just frustration? And, if it was just frustration, did someone attempt to explain to the minister what the problem was? I thought you did a pretty articulate description of describing it a few minutes ago.

Mr. Farquhar: I think the answer to the first question is no.

Senator Kirby: No in the sense you didn't sense any --

Mr. Farquhar: No.

Senator Kirby: You didn't sense from the political level any sense of the bureaucracy was deliberating trying to frustrate the will of the government?

Mr. Farquhar: To be very frank, no. I think it was a benevolent frustration, if I can put it that way, because in any implementation of government policy we all know that one wants to go forward. But we, and personally -- this is really a personal observation -- our personal integrity is at stake and was at stake in these whole transactions, and we also are taxpayers, and I took, and take, that responsibility extremely seriously. And I and other individuals in the department involved in the airport transfers went, I think, to great lengths -- and this took time and this delayed things to some extent -- to ensure that the government was protected and the taxpayer was protected and that there were no possibilities for contingent liabilities and so forth. That is why we did all of these independent reviews.

I think, as we look back on it, that work was well placed and very worthwhile. As you may be aware, the Auditor General conducted a comprehensive review in 1993 and essentially -- and that was a very early kind of review, let's face it -- was supportive of it, and I think the Board of Trade in Vancouver subsequently reviewed the process. Certainly, the documentation was complex. It was unnecessarily complex. But I think anyone engaged in negotiations -- and remember in this whole process we weren't the only party and when you are negotiating you don't control everything. I don't control what Vancouver wants to do. They have their own timetable. I certainly don't control Treasury Board or cabinet. So there are other factors -- or the Senate with respect to the Airport Transfer Miscellaneous Matters Act. So it did take time.

But we believe that it has proven itself because the text has stood up. We have simplified it. And I would be as diligent again as I was then and as my colleagues were because it was unprecedented. We didn't want to make mistakes if we could possibly help it.

Senator Kirby: So time was required as a process -- as an element of good government, not as a means of obstructing government process?

Mr. Farquhar: Absolutely. Because we were keen to get this thing done because we were excited that this was an initiative.

I should add that there is increasingly growing interest internationally about the Canadian approach to airport transfers, and we made available our documentation to Slovakia. In fact, I sent a lot of information just in the last week to the Minister of Transport in Bermuda. We have met with the Hungarians and many other countries that are gradually beginning to think, well, maybe Canada did do something and, more importantly, with the broader 1994 policy, is doing something that isn't just a carbon copy of the United States but is uniquely Canadian and merits further examination as being a good approach.

Senator Kirby: Thank you very much, Mr. Chairman.

Senator Hervieux-Payette: Just a short question. I was wondering in doing the whole question this afternoon, Mr. Bandeen said that he hoped to finalize his discussion with you by January, but it may go until June. So I mean are you on the positive side? I mean will you be the one that will take until June or is he going to be the one that will make the discussion last until June?

Mr. Farquhar: Of course it will be him.

Senator Hervieux-Payette: But you are ready to go?

Mr. Farquhar: We are in negotiations now, and in fact --

Senator Hervieux-Payette: And you have all your contracts -- I mean pro forma contracts, you just have to add the dates and figures here and there?

Mr. Farquhar: I wish it were that simple. Right now, we are waiting to receive specific comments back on the generic legal documentation. We haven't got into the specific financial discussions. Frankly, the pace of the transfer will be largely dependent upon the Toronto Airport Authority, indeed, others in Winnipeg and so forth -- their willingness, essentially, to accept the government's fiscal parameters which, as you can appreciate, are very, very strict. And if they accept them, then we can move very quickly.

The only timeframe that governs the ultimate transfer date is we have to give our employees six months' notice and that can really only occur after we have concluded substantively the financial negotiations and the approval in principle of an employee proposal because we can't do a transfer without the support of our employees and their interests being protected.

Senator Hervieux-Payette: How high is the pile of documents?

Mr. Farquhar: It was this high but now I think it is about that high.

Senator Hervieux-Payette: Okay.

Mr. Farquhar: It is also on smaller paper.

The Chairman: Mr. Farquhar, a Toronto LAA, or what it is now called, didn't exist in 1990.

Mr. Farquhar: No, sir.

The Chairman: And in the real sense it doesn't exist now.

Mr. Farquhar: It does exist as a corporate entity. Actually, it was incorporated twice. It was incorporated as the Greater Toronto Regional Airports Authority in, I think, March of 1993, and I think as Mr. Bandeen indicated, the present government wanted to review obviously all of its policies and determine how it wished to proceed, and it did so. And subsequent to that it required the Toronto authority to modify its letters patent and by-laws to reflect the new public accountability principles, the provision for federal and provincial nominees. It subsequently reincorporated and we signed a letter of intent with that incorporated entity on December 2nd.

Now, if your question is: Are they up and running the airport? No, they are not, and they won't be until we have concluded the negotiations.

The Chairman: I recognize they probably have a letter of intent and indemnification and so on.

Mr. Farquhar: But they are a legal entity --

The Chairman: They are presiding over -- they are impotent until --

Mr. Farquhar: It would be nice if they were for negotiation purposes.

The Chairman: If they were recognized -- if they were fully recognized as a local airport authority -- Toronto local airport authority, whatever it was, in 1993, would that have any bearing whatsoever on the private development of the airport then proceeding?

Mr. Farquhar: The pace with which the development proceeds obviously would be up to the government of the day. I think the only factor that is directly relevant is had the airport authority been recognized and we in fact had signed a letter of intent in early 1993, part of the approach we took in the past and we continue to take is that once that authority has been recognized we will inform them of existing ongoing discussions on contracts, renewal of contracts, major contracts and likely invite them to participate and make input into the deliberations on a contract, say, the T1T2.

They would not have any decision-making authority though. Obviously, in the case of a local authority, part of the objective is to represent local groups, and their views clearly would have been taken into account, I think, and it would have been a reflection of local involvement, which would be another means for local input.

Senator Kirby: Could I ask a short supplementary on that to absolutely clarify something?

The Chairman: Sure.

Senator Kirby: Are you saying, Mr. Farquhar, that had the Toronto LAA been in existence during the process in which the RFP had been put out but a decision had not been made as to who would get it, or indeed during the subsequent process before a contract was ultimately awarded, are you saying that if the LAA had been created during that period, as part of your normal operating procedure the LAA would have -- I understand they wouldn't have had decision-making authority -- but they would have been consulted and had significant input into the ultimate decision with respect to the awarding of the contract?

Mr. Farquhar: Let me speak generally and not specifically.

Senator Kirby: Okay.

Mr. Farquhar: As a matter of practice with dealing with authorities, we -- it wouldn't be us, it would be the airport management, would inform them of ongoing discussions and, depending on the nature of it, they could be brought in or certainly briefed on the ongoing contract discussions of whatever nature simply because they were ultimately to be the custodians of the airport.

Senator Kirby: Thanks very much.

The Chairman: In your discussions, negotiations, with the general Toronto airport authority, can you comment on any of the impediments which were referred to over the past year that caused a slow down or a stoppage of the development of the airport in Toronto. Do I make myself clear?

Mr. Farquhar: If what you are asking is the presence or non-presence of an airport authority impact on the department's ongoing development of the airport, the answer is no, because so long as Transport Canada is responsible for the operations of the airport we will continue to be responsible for that. So that is why we are proceeding with the runways and so forth because we have to ensure that that airport maintains its first-class standard. And that is not unique to Toronto; that applies universally.

The Chairman: Yes. I asked a question in the Senate on the 2nd of March:

-- respecting the leases and the other matters which were purported to hold up the development of the airport as a result of the government's inability, so far, to find a legislative solution to Bill C-22, would the minister, over the next few weeks, determine if there is any impediment whatsoever respecting the immediate redevelopment of Pearson airport which we might have missed?

That was my question.

The government responded as follows:

According to the Ministry of Transport, the question of the different leases and agreements between Pearson Development Corporation, the government and Allders Canada Limited has yet to be resolved. Until such time they provide a continuing impediment for the redevelopment of Pearson International Airport. This redevelopment cannot proceed until Bill C-22 is finally passed into law.

Mr. Farquhar: That is essentially a legal question, which you may want to keep and address to Justice Canada lawyers when they come before you.

As I understand, the situation still prevails because as long as there is a legally binding arrangement that one of the parties or the other we are not in the position to transfer something to an airport authority that we as the Crown don't clearly have, and I think that is the issue.

But I think I would prefer, Mr. Chairman, that our legal advisors deal with that at the appropriate time when you have them before you because it is getting a bit out of my scope.

The Chairman: It is a good answer, too. It is a good suggestion. I was going to suggest that since you were the one discussing matters with them in the negotiations, the --

Senator Jessiman: Mr. Chairman, just on one point.

The Chairman: Can I finish?

Senator Jessiman: Sure.

The Chairman: The Crown can do nothing. It can simply turn the airport over to the greater Toronto authority and indemnify the same for any liability relating to the Allders lease or any other lease.

Mr. Farquhar: One thing I have learned, and I am not a lawyer, obviously, is that I don't mess with the legal interpretation of these various issues because it is a very complex area and what appears to me as a lay person to be simple may be much more complex and I would prefer not to comment any further.

The Chairman: I understand that. Senator Jessiman.

Senator Jessiman: When did you -- when did this present government recognize this corporation, this new corporation as an LAA?

Mr. Farquhar: I think the official -- the point we like to say officially was when the letter of intent is signed. I believe that was December 2nd or December 5th, 1994.

Senator Jessiman: Is that a long document?

Mr. Farquhar: No, it is a very small document. What it essentially is -- it is not a legal document but a public document that indicates an intent on both parties to enter into formal airport transfer negotiations pursuant to the government's public accountability principles and the 36 principles that, senator, you referred to some time ago. That is essentially all it is.

It signals to all concerned that progress is being made and now let's get down to serious talking.

Senator Jessiman: That was December 1994?

Mr. Farquhar: That is correct.

Senator Jessiman: That is about a year and two months after they took over -- after the present government took over -- for them to --

Mr. Farquhar: I suspect you remember those particular dates better than I do.

Senator Kirby: It is indelibly impressed upon his mind.

Senator Jessiman: It took 14 months.

The Chairman: Any other questions, colleagues?

Senator Tkachuk: I have a couple. We were told earlier on 1992 was when, I believe, the Toronto, supposed Toronto airport authority kind of got their act together, I think in December 1992, and then they had some concern that the federal government wasn't acting quick enough in 1993 to like organize sort of affairs. So, after the election of 1993, what happened?

Mr. Farquhar: The Minister of Transport reviewed his entire portfolio, and particularly the airports issue because again it was -- had put in train a whole new thrust in terms of governments' role in the economy, and as subsequently we have seen the whole thrust of government has changed dramatically. He reviewed the specifics of the then current airport transfer policy, but he went beyond that to look at its application to all airports because, essentially, the policy that we were dealing with was dealing with the major federal airports, the major international airports, and the federal government's ongoing operational role, and the present government wanted to go beyond that and look at the entire airports structure and the role of government, and that is why it took some time because not only did the airports policy of July 13, 1994 deal with the major airports, it dealt with the regional local airports, the remote airports, the small airports, the northern territorial airports with a view to determining to what extent, if any, the federal government should continue to be directly involved in the operation of those airports.

So that policy came out in July 1994, which again provided a broad mandate for officials to pursue the kind of discussions that we talked about earlier.

Senator Tkachuk: And you began negotiations with and -- negotiations during this time, did they continue with the Toronto airport authority or?

Mr. Farquhar: Let me think. No -- actually, there weren't negotiations because they actually hadn't been officially recognized so we couldn't negotiate with them; and they had their own avenues of approach to the government locally and so forth, their own MPs. So they are dealing with it essentially on the political level during that period of time. And it was only when we got a new policy mandate and new direction from cabinet that we were in a position to proceed with the authority and, indeed, with Winnipeg which was in a similar situation that they had been working quite hard up until the election as an authority to discuss with them what the new government's requirements were and, again, to emphasize the importance that the government placed upon particularly the public accountability and how we could help the authority to accommodate these new requirements.

Senator Tkachuk: So it really took about a year after the federal government, the new federal government of 1993, to recognize the Toronto airport authority, 14 months, right?

Mr. Farquhar: If I can put it this way, when the policy was developed, which was July, it then took until about December, so I would say it is probably six months. During that period of time, of course, the bulk of the work to be done was really to be done by the airport authority, not by departmental officials because the authority had to revise its own documentations of incorporation, had to reflect the new structure, get new people involved and so forth.

So I would say, in fairness, we are really talking, perhaps, a period of five to six months after the policy came out because as soon as that policy came out we as officials were out across the country meeting with local people, meeting with the Toronto people to explain the policy and the changes.

Senator Tkachuk: Okay. That is all I have. Thank you.

The Chairman: Mr. Nelligan?

Mr. Nelligan: Mr. Farquhar, were you interviewed by Mr. Nixon?

Mr. Farquhar: Yes, I was.

Mr. Nelligan: Did you discuss anything with him other than the matters that have been discussed here today?

Mr. Farquhar: Yes, I had a short telephone conversation with him, I think, for probably 15 minutes. Basically he had said he was told that he probably should talk to me as somebody that was knowledgeable about airport transfers, for him to be essentially briefed on it from a federal official's perspective. So I outlined the policy and the process at the time.

He specifically asked me the question about what my view was with respect to the policy being changed or adjusted to accommodate federal government nominees to an airport authority board and provincial government nominees to the board. And I said -- my reply was very simply that of itself I didn't see that as being particularly significant in terms of changing the fundamentals of a local operation because you would only be talking about a small number. But I said that, again, and I was giving a personal opinion, it was my personal opinion that it was important nonetheless that these individuals continued to adhere to the criteria of not being elected officials or government officials, to retain that, if I can say, apolitical structure, so it was local people from the community. That was the essence of the discussion.

Mr. Nelligan: So, basically, you were discussing about the merits of a new policy without getting in particularly to the history of the old policy?

Mr. Farquhar: No. We strictly talked about the airport -- what is an airport authority, that kind of a discussion, and then the specifics about the possibility of provincial or federal nominees, and that was the extent of it.

Mr. Nelligan: Thank you very much.

The Chairman: Thank you very much, Mr. Farquhar. You have been a very forthcoming witness and we appreciate it very much.

Thank you so much.

Colleagues, we adjourn until 9:30 tomorrow morning.

The Chairman: Mr. Farquhar, you said you had a chart which you could also make available to us.

Mr. Farquhar: I said I had a chronology of the transfer process from -- the transfer progress from 1978 to 1992. I will make that available to you.

The Chairman: All right.

The committee adjourned.

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