Proceedings of the Special Senate Committee on the
Pearson Airport Agreements
Evidence
Ottawa, Tuesday, September 19, 1995
[English]
The Special Senate Committee on the Pearson Airport Agreements met this day, at 7:00 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. This week because we have had so many changes in our schedule, I thought I would remind you what we are doing this week. I think we are in week seven, are we not? Our distinguished first witness will be introduced in a few moments.
On Wednesday, that is tomorrow, we are here all day with the Honourable Jean Corbeil. On Thursday, that is the 21st, we will hear from the Deputy Minister of Justice, Mr. Thompson and some senior officials from the Privy Council Office. That will likely go the entire day. At 7:00 p.m., on Thursday, we will hear from Jack Matthews of the Paxport Group.
Now, the business at hand, a ruling by the Chair was made on Thursday afternoon, copies available in both languages. Senator Jessiman asked that the consideration of this matter be delayed until today. Rule 18(4) of the Senate states that:
All decisions of the Speaker shall be subject to appeal to the Senate and such an appeal shall be decided forthwith without debate.
Is there a desire by any member of the committee to appeal this ruling, now would be the appropriate time?
Senator Stewart: Point of order please, just for clarification, because I think this could be quite important for future matters. The question is - please, do not misunderstand, there is no spin on the question, Chairman. There is no reflection on the present chairman, but I should like to know from the Chair, as advised, whether it is appropriate for the chairman to participate in the vote where the question is whether the chairman's ruling shall be sustained?
The Chairman: In the event of an appeal, I have always assumed that the Chair has a vote, but if you are asking me a question if there is an appeal -
Senator Stewart: No, I am not asking - I am asking if it is appropriate.
The Chairman: For the Chair to vote to sustain his own ruling?
Senator Stewart: Yes.
The Chairman: Frankly, I do not think it is.
Senator Stewart: All right.
Senator LeBreton: Then therefore I wish to appeal your ruling of Thursday, September 14, 1995.
The Chairman: The Chair, having ruled on the issue raised by Senator Bryden, Senator LeBreton appeals from the ruling of the Chair. Is it the pleasure of this committee that the chairman's decision be sustained? The clerk will take a role call and announce the results.
Mr. Gary Levy, Clerk of the Committee: Honourable Senator Bryden?
Senator Bryden: Can I hear that question again?
The Chairman: There has been an appeal from my ruling, and the question is, is it the pleasure of this committee that the chairman's decision be sustained?
Senator Bryden: Yes.
Mr. Levy: Senator Graham?
Senator Graham: Yes.
Mr. Levy: Honourable Senator Jessiman?
Senator Jessiman: No.
Mr. Levy: Honourable Senator Kirby?
Senator Kirby: Yes.
Mr. Levy: Honourable Senator LeBreton?
Senator LeBreton: No.
Mr. Levy: Honourable Senator Lynch-Staunton?
Senator Lynch-Staunton: No.
Mr. Levy: Honourable Senator Stewart?
Senator Stewart: Yes.
Mr. Levy: Honourable Senator Tkachuk?
Senator Tkachuk: No.
The Clerk: Yeas, four. Nays, four.
The Chairman: Well, as you know honourable colleagues, in the case of a decision being taken in the negative, the rule of the Chair is not sustained and is thereby set aside.
Now, Mr. Nelligan, would you introduce our first witness, please?
Mr. John Nelligan, Counsel to the Committee: Our first witness tonight is Her Honour Ms Hazel McCallion, who is Mayor of the City of Mississauga, and I understand she has with her to assist her a Mr. Larry Petovello, who is the Manager, Special Projects of that city.
Have you a statement to make, Mayor McCallion, at the outset or are you just here available for questions? Are you prepared to take the oath?
Ms Hazel McCallion, Mayor of Mississauga: Yes, I am.
(Hazel McCallion, sworn:)
(Larry Petovello, sworn:)
The Chairman: Your Worship, you may please proceed.
Ms McCallion: Thank you very much, Mr. Chairman and members of the committee. I appreciate the opportunity to provide some details to you and also to register my strong concern for Canada's most important airport, Pearson. It has been sadly neglected.
First, I should like to define my politics because I see this committee is made up of - I am basically Conservative with a Liberal point of view, great social conscious, and looking for a lot of reform in government.
Senator Kirby: Clearly a democrat.
Ms McCallion: I want to go back on the history, even back to Terminal 3, because as you know the airport is in Mississauga. Sometimes that has been rather difficult to convince Ministers of Transport that it is, and especially the present one. So, I feel that I must go back to Terminal 3.
The contract awarded on Terminal 3 was without any discussion with the City of Mississauga in which the airport is located. Huang and Danczkay came to see me after the contract was signed to advise me that they were proceeding with the airport - with the construction of Terminal 3. I asked if they were applying for a building permit and they said they did not need one. I stated that there are levies to pay. We have levies in the city of Mississauga. They said they did not have to pay it.
So I advised Huang and Danczkay after much discussion that I would suggest that they build the largest septic tank that they could find for Terminal 3, because we would not hook them up to either the sewage system or water.
So then we began a battle between Huang and Danczkay and the City of Mississauga. After about six months of discussion, they finally applied for a building permit, went through site plan control and met our levy policy and gave me a cheque for $3.5 million which represented the levies on the airport.
But it was unfortunate that the city had to - that I had to spend the time that was taken to get them to be convinced of that. In addition to that, in the contract as signed by the government to Huang and Danczkay, they had permission to set up their own ground transportation at the airport. I just could not believe that at one airport we would have two ground transportation systems, one for Terminal 3 and one for Terminal 1 and 2.
Again, after another battle with not only Huang and Danczkay but the federal government, they bought out that portion of the contract, I understand, made some deal with Huang and Danczkay and we now have and will continue to have, I hope, one ground transportation system at the airport.
We, as a city, regulate that ground transportation in the way in which we licence taxis and limousines to serve the airport, and I believe we have the best ground transportation system in Canada at Pearson.
So that goes back to Terminal 3. By the way, it is interesting that I believe those who quoted on Terminal 3 included Matthews, and I see from many reports that have come out in the press that it is interesting how Matthews - by the way a large developer in Mississauga, very successful, very co-operative with the city. As you know, we have led Canada in development for years including last year, and therefore we treat all developers the same way, and that is why over the years that we have had enormous amount of development. There have been no scandals because developers know that they either follow the rules or out they go. One or the other. If they want to develop in Mississauga, as I told Huang and Danczkay, you follow the rules, and if you do not then you have trouble.
It is interesting that Matthews did not win the third terminal even though, according to what is being said by many people, that he had a lot of political influence in Ottawa. I found that very strange, but anyway, now we come to the situation of the proposal call for Terminals 1 and 2.
After it was announced that the government was proceeding with a proposal call on Terminal 1 and 2, the province became very interested in the airport. And so did the past President of the Metro Board of Trade, Mr. Bandeen, and proceeded again without any consultation with the City of Mississauga to set up what I called an illegal airport authority made up of Mr. Bandeen, Mr. Meinzer, members of the Metro Board of Trade. They did have the courtesy to call one of my residents, Bruce Highland asking him to sit on this what I call illegal airport authority. Mr. Highland had the courtesy to call the mayor to say he had been invited to sit on it and should he. I said yes, go ahead and find out what is going on because if you are not there you will not know what deal the Metro people are cooking on the airport.
There was a meeting at a hotel on the airport strip that was called. I'm not sure who it was called by. Whether it was called by Mr. Pouliot, the Minister of Transportation for the Province of Ontario or Ruth Grier, the Minister of GTA, Greater Toronto Area as well as municipal affairs.
At five o'clock the day of the meeting, my city manager came to my office and said, "Madam Mayor, I have just gotten a call wanting me to be at a meeting. Mr. Corbeil is coming in from Ottawa and Mr. Wilson to meet with Mr. Pouliot, Mrs. Grier, Gardiner Church and I feel that you should be there". So away I went, not invited but I went anyway. I do go to places that I am not invited.
I got to the hotel and Mr. Pouliot and Mrs. Grier, Gardiner Church and Alan Tonks invited me up to the room to meet with them awaiting Mr. Corbeil and Mr. Wilson's arrival from Ottawa. Their whole intent was to proceed with a local airport authority because it was certainly concocted by the province, Gardiner Church and Metro.
I just sat and listened very carefully to the discussion, and then Mr. Corbeil arrived and Mr. Wilson and then we all met in the conference room. Gardiner Church and Mr. Pouliot and Mrs. Grier asked that Mr. Corbeil delay the proposal call on the airport so that they could continue with what I call the illegal airport authority which left all the regions around Metro out of it. Mr. Corbeil said very clearly at that time that he did not believe there should be any delay in getting on with the changes that have to be made at the airport. You go ahead and form your local airport authority because it is going to take us a long time to have the proposals come in, analyze, et cetera, because it is such a major contract, and therefore there will be time for you folks to get organized, and maybe the two will come together, the review of the proposals received et cetera and so forth. So in no way did he discourage the local airport authority from being formulated and ready to be negotiated, I guess, when the proposal calls would be thoroughly analyzed by the government.
I also supported Mr. Corbeil that there be no delay. I even said that if there is any delay, I would suggest that you board up Terminal 1 at the airport. It is so inefficient, and I have a report which I will present to you from our fire department which has inspected it which clearly indicates - I have had to get the health department into Terminal 1. I have had all kinds of complaints over the years about the elevators not working, about the possibility of a disaster in the stairs when the elevators do not work. The parking structure is falling apart.
So, I said if there is any delay in getting on with renovating Terminals 1 and 2, then I would suggest you board it up, so I did not support any delay. That did not certainly please the illegal airport authority.
Then I go back a little further to that in which the Greater Toronto Area Coordinating Committee called together all the politicians to study or to consider conducting a study as to what should happen at the airport. Our city manager was chosen to head that study. The money was allocated by the provincial government, and our city manager did the study and then presented the report and it went nowhere. It just died because it meant that in order for - one of the recommendations in it which certainly did not go over well is that all the municipalities in the GTA would contribute towards the local airport authority. That did not go over very well I can tell you. So that was another step in the process. But it died.
After that came this illegal airport authority that Metro Board of Trade with the - I should not say the Metro Board of Trade because it was the past President of the Board of Trade, Mr. Bandeen.
Then we, the City of Mississauga felt that we better get active to decide or not to let this illegal airport authority continue. So we approached the Board of Trade in Mississauga as well as the Chambers of Commerce and the Boards of Trade around Metro. And as a result of many months - I got to tell you - of work on behalf of our past President of the Board of Trade, Sid Valo, a proper airport authority was established with all five regions appointing people to the airport authority. That now is the airport authority that is about, we hope very shortly, to take over.
Yes, the City of Mississauga - by the way, I want you to know that our people are very much concerned about airport noise. Residential development has occurred, possibly too close to the airport, and it is a very sensitive issue in the City of Mississauga.
When the airport authority was established, the City of Mississauga made a condition, that was that the Island Airport should also be taken over by the local airport authority. The Island Airport is not providing the service that it should be. It is not even safe, I understand, and it certainly does not have an appropriate link.
As a result of the tri-part agreement between the Harbour Commission, the City of Toronto and the federal government, I even asked Mr. Corbeil to break the agreement because I felt that it is very important that that island provide some of the service that Pearson is providing. There is no reason why passengers could not be flying out of the Island Airport to Ottawa, Montreal and many of the American cities to relieve Pearson because Pearson is creating all the noise.
It is interesting that the City of Toronto wanted to protect their citizens from noise. I as Mayor of Mississauga said no, don't worry about the Island Airport. We will take all the noise. Thanks a lot. So we were very insistent that the Island Airport be a part. Take it over and upgrade it and make it essential.
It is interesting, members of the committee, that the City of Toronto is very concerned about the industry that is moving to Mississauga and the commerce, and one of the reasons is because of the airport. I want you to know also that the airport is a major asset to the City of Mississauga.
We have 101 Japanese companies in our city. We have 86 German companies and we consult with each company as they move in as to why they chose Mississauga. I would say that 8 times out of 10 it is the airport. Others are because our taxes are the lowest. I am sure you know we are a debt-free city. I thought maybe Ottawa would like to know that especially.
So the airport is extremely important to us. At the same time, our citizens are exposed to an awful lot of airport noise. In fact, there was a major controversy over the north/south runway. Through that process, I was able to convince Mr. Corbeil, the Minister of Transport, to enter into an agreement with the City of Mississauga. That is that the north/south runway would only be used for 5 per cent of the airport usage, and it would only be used for landing because it is now going to be over houses that were built with absolutely no knowledge that a runway would be over their house. Some houses, the airplanes will be within 500 feet as they land.
We were in the process - in fact, we were almost finalizing the agreement when of course the election came along, and we now have to try to convince the new Minister of Transport. In fact it will be a condition that the north/south runway that we enter into agreement. Quite honestly, our past experience with the Department of Transport has not been very good in controlling noise. It is very difficult to get action on serious situations in regard to noise impact on our citizens. So, I could not - we felt that we could not accept the north/south runway without water tight agreement that would clearly indicate that it would only be used as the government said it would be and that it would be for landing only.
Let's then go to the serious - so when Mr. Bandeen, I believe he was before your committee and made statements that Mississauga was the problem. I can assure you, Mr. Bandeen was the problem. When the new airport authority was set up, you will notice that he was removed as chairman and Sid Valo, the President - or the past President of our Board of Trade as Chairman.
Now let's go to the contract. I even had a visit just before the awarding, and I do not recall the date - I had no time to look it up - from the Bronfman's in Montreal to come and see me. Claridge tried to convince me that they felt that one company should be in charge of all terminals at the airport because they owned Terminal 1. At that time Huang and Danczkay had Terminal 1 so they had bought from Huang and Danczkay.
Senator Kirby: Terminal 3.
Ms McCallion: Yes. Therefore, they had put a proposal call in along with Paxport and they were quite anxious to get my support that it would be beneficial for one owner to own and operate the three terminals at the airport. Needless to say, I had no preference as to who was going to win the contract. It was a case of the best deal, I hoped, for the taxpayers of Canada. So I just mention that. They did come to see me.
I understand, and maybe you will have evidence to this, that the contract for Terminals 1 and 2 was ready to be signed in June even though it wasn't signed I believe until later, but I have been led to believe it was ready to be signed in June, because I kept trying to find out when it was going to be signed because I can tell you that the lack of action at that airport is very detrimental to our economic development. Not only to Mississauga, to the Greater Toronto Area. Therefore, I was anxious that they get on with the changes that had to be made to bring our airport up-to-date.
You know, Pearson airport has been a cash cow for the federal government and it has been used to subsidize the airports that do not make money, and especially the white elephant, Mirabel. It is very disappointing that this airport, Pearson, does not have the most up-to-date equipment, that it has a terminal that is falling apart and a parking garage that is falling apart. And yet, it is the airport that turns in one year I believe it was $65 million profit to the federal government. So it has been a very sore point with the Mayor of Mississauga that we have been the cash cow for the federal government and it has been used to subsidize other airports.
Secondly, I am also concerned that the lease entered into with the airport authority in Montreal, I believe, has given a special deal to the airport authority, and therefore they have not had to charge, as Vancouver has, a $10 fee on passengers going in and out. I can assure you, they better not do it in Toronto at Pearson. So I say to the federal government, you better give the same deal as was given to Montreal. It is very important that the local airport authority not be called upon to have to charge because of a deal that this government will make.
Let me give you some of the deficiencies at Terminal 1. The fire alarm system needs replacement. Forty per cent of the terminal needs sprinkler protection. Loading bridges and fingers need sprinklers. Fire separations need upgrading, additional exit doors may be required, electronic door security systems require upgrading and fire hose coverage throughout the terminal requires upgrading. I can assure you that if we had the authority, I think our fire department would close it.
So here we sit. While Pearson burns, Ottawa fiddles. As simple as that. I say to you as members of the Senate committee, I do not know why the federal government can operate under a different arrangement than a municipality. If we had a contract and signed it and wanted to break it, we would have to go to court. An independent court would decide who is right or wrong. I think that the legislation that was passed, I can assure you we do not have that power at the local level. We got to put up or shut up or pay up.
I think it is sad that this delay is having such a detrimental affect on the Greater Toronto Area. The Greater Toronto Area was the hardest hit during this recession. No question about it. Here we sit with Canada's most important airport and no action. I do not know when the action is going to occur. I do not know what it will cost the taxpayers of this country.
I tell you, if we in the city were handling such a deal, we would have sat down and negotiated with the person who won the contract to see if we could have made the changes that were not acceptable to the new government, and if that was not possible, then we would have gone to court and let the court decide who was right or wrong.
I hope that the delay of this important airport to Canada has not been based on politics, that it truly is based on the good of Pearson. But I will tell you, the delay is extremely detrimental.
I can assure you that we have reports that the airports in the United States - let me give you them, Pittsburgh, Detroit, New York, Chicago - have all had billion dollar improvements. And here we sit with Canada's most important airport while Ottawa fiddles. Simple as that.
What a sad state of affairs when we think of the jobs that are being lost. I believe this government ran on the basis of jobs, jobs, jobs. Well, certainly the cancellation of that contract did not create any jobs.
Secondly, they are going ahead with the north/south runway. Interesting. So I can only say to you that as members of the Senate, we are not prepared to sit much longer and wait for action in Ottawa on this airport. We now have the airport authority. They have hired a CEO and President. He was introduced a week ago. They are ready to get on with taking over the airport, and I hope that that will be settled very quickly so that the airport authority - but I do not know how this whole issue hangs over their head. But I implore you as a Senate committee to recommend to the government that they get on with the job.
It is hard to believe when you think that Pearson is the gateway to Canada and the gateway to Canada is in bad shape. The gate needs fixing and fixing badly. This delay is very detrimental, detrimental to the businesses in the area, detrimental to the economic development of the Greater Toronto Area. And I say to you, this is very serious. There is possibly people on unemployment insurance because of the delay. Possibly people on welfare because of the delay. Certainly the jobs have not been created that this government promised. Think of the jobs that would have been created if this contract had been allowed to proceed.
So ladies and gentlemen, I say to you, I want action. I am not prepared to see Pearson burn anymore while Ottawa fiddles with it, because that is exactly what is happening. So I would be glad to answer any questions that you have, but I can assure you that I hope there is going to be action. That is why I am here. I am here to put straight the illegal airport authority that Mr. Bandeen and his group set up with the co-operation of the provincial government, because I think the provincial government felt there was an opportunity to get control of this airport.
I am here to tell you that there is a very serious situation that obviously does not effect maybe the rest of the country, but seriously effects the Greater Toronto Area and seriously impacts the City of Mississauga. So I ask you to get on with the job. I ask this government to get on with the job. Let's not sit. Think of what you are doing to the people of our area. Think what you are doing to Canada because this airport is not up to scratch. It is not the airport it should be because of neglect in the past, and now sits waiting for decisions from Ottawa.
Mr. Chairman, I will be glad to answer any questions.
The Chairman: Thank you very much, Your Worship. That was very direct -
Ms McCallion: I always am.
The Chairman: - testimony. I just have a couple of just short questions before I turn it over to my colleagues. In the contract that was cancelled, the T1 T2 partnership which was, as you know, eventually owned in the majority by Claridge, the Bronfman family, it had control of all three terminals?
Ms McCallion: That's right.
The Chairman: And there has been a great deal of testimony with regard to the synergy that that represented, the fact that under one control, they could move passengers from one air terminal to another, particularly if they wanted to repair Terminal 1, they could move them to Terminal 3 for instance, things of that type.
Now, under that which is proposed, the Greater Toronto Airport Authority, if that is the proper name, will be operating Terminals 1 and 2. How do you expect that they will - if it is desirable as some of us think it is, how will they achieve these synergies unless the Toronto Airport Authority buys Terminal 3 from Mr. Bronfman?
Ms McCallion: Well, I guess you can either say it should be a monopoly at the airport or competition. You could still move passengers from Terminal 1 to Terminal 3. You just negotiate an agreement. So that is possible. I mean today companies are negotiating with one another constantly.
Then you have one person, you have one company controlling the whole three terminals, so there is pros and cons to it in my opinion. But that wasn't my concern as to who owned it. I wanted them to get on with the improvements at the time.
The Chairman: Senator LeBreton?
Senator LeBreton: Thank you, Mr. Chairman, and thank you, Your Worship. I have some questions here. How long have you been Mayor of Mississauga?
Ms McCallion: Eighteen years.
Senator LeBreton: Hearing your presentation, I can well understand why you have been re-elected so many times. What is the population of Mississauga?
Ms McCallion: 525,000.
Senator LeBreton: Is Pearson airport entirely within the boundaries of Mississauga?
Ms McCallion: There is one little corner, I would say a very small corner, that is in Etobicoke, but none of the buildings or runways or anything.
Senator LeBreton: Okay. In his testimony on July 25th before this hearing, Mr. Robert Bandeen, former head of the recently recognized Greater Toronto Airport Authority testified that Pearson is currently - he was talking about the present time - meeting the needs of its users. He expressed concern that privatization was rushed, and he said - it is on Page 511 of his testimony on the 25th of July - he said:
I think there is sufficient capacity in the existing terminals to last, depending on your view of the number of the passengers, but I think that everyone agrees that we are fine until 1997 or 1998 or maybe longer with the existing capacity.
Your Worship, on what basis would Mr. Bandeen make that statement and do you agree with that statement?
Ms McCallion: I do not agree with it because if you close up Terminal 1, which it should be, then the capacity is greatly decreased. Really they transferred a fair amount of passengers to Terminal 3, a lot of the companies moved there, but it is the capacity - the projection of capacity clearly indicated that we not only need three terminals, we need four terminals down the road. It is inadequate. There is no question about it.
Senator LeBreton: So why do you suppose he would say that with such assuredness?
Ms McCallion: I do not know.
Senator LeBreton: He wasn't basing it on any statistics or anything that was happening?
Ms McCallion: Not that I know of. No statistics that we are aware of. He was obviously opposed to privatization because it was he and his group that were asking Mr. Corbeil not to proceed, in other words, they wanted to get the local airport authority going and I said I wasn't prepared to wait for that.
Senator LeBreton: You made it very clear in your statement, and there has been previous testimony, that you would not agree to separation of Pearson and Toronto Island Airport.
Ms McCallion: No. We finally gave up on it, but very unwillingly because it is pretty hard, you know, as a politician, to say to your people, well you are going to accept all the noise but the Mayor of Toronto or City Council of Toronto is protecting their people from noise.
That is the only reason the Island airport - and by the way, I think maybe the local airport authority or the Greater Toronto Airport Authority may be assuming Island airport before they get Pearson under their wing because there is a real problem there now between the Harbour Commission and the city, and I believe Mr. Young is meeting with the Mayor of Toronto next week.
Senator LeBreton: So the testimony before this committee that in the summer of - while they were trying to get the local airport authority that all of the conditions had been met and that everyone was agreeable is not factual then because you never did agree to -
Ms McCallion: We finally removed that condition because of the fact that there was no way, even though Alan Tonks, the Chairman of Metro, was in favour of the Island airport coming under the local airport authority, it was not possible to convince the City of Toronto. So, we saw we were up against a brick wall on it so we withdrew it and went ahead and gave approval.
But Mr. Corbeil certainly said - and he even asked me in a letter to withdraw that condition, but -
Senator LeBreton: In order to recognize the LAA?
Ms McCallion: Yes. He attempted to get us to withdraw it, but politically I felt it wasn't the right thing - it wasn't proper for us to do it.
Senator Kirby: Can I ask a tiny supplementary? When in fact did you withdraw the condition of the Toronto Island having to be part of the package?
Ms McCallion: 1994.
Senator LeBreton: 1994. All right. In the interests of your citizens of Mississauga, on the whole question of noise and the north/south runway - and I am not an airport expert - but it seems to me that the Toronto Island Airport, a lot of it is over water. Why would they be concerned from a residential point of view or a noise point of view when there is not many people that live - except for the few people that live -
Ms McCallion: That live on the island.
Senator LeBreton: But what is the population of the people that live on the island?
Ms McCallion: Very few. They have not wakened up to the fact yet that jets are not as noisy as propellers.
Senator LeBreton: Props.
Ms McCallion: So, it is very interesting. The other thing is that the connection to Pearson is not good from Metro Toronto. There has been a study done encouraging - funded by the provincial and federal government to have a rapid transit to the airport. They did the study, but as usual, no action. Governments love doing studies and doing nothing with them.
Senator LeBreton: Only dealing with the problem when it becomes urgent.
Ms McCallion: Right.
Senator LeBreton: In your opening statement you expressed very explicitly the state of Pearson, and especially Terminal 1, and I believe it is a shame, particularly punitive to your region that the government took this decision.
Is the failure to develop Pearson the result of years of ongoing, unresolved political issues or do you believe there was wrong doing on the part of the developers in the delay? Do you believe the developers are in any way responsible really for causing the government to make this decision, from your point of view in dealing with the developers?
Ms McCallion: I do not know any of the details of the contract, except that I was able to convince Mr. Corbeil when the proposal call went out that the proposal would be subject to meeting all the conditions of the City of Mississauga and the Region of Peel, which the proposal on the contract on Terminal 3 did not have that in, and that is why it had all the problems.
I was able to convince the federal government that that should be a condition. That was in the contract and that is what I was interested in, that whoever won the contract had to meet all our conditions; park dedication, levies, road accesses, permit, site plan, control, and that was in the contract or in the proposal call, and therefore in the contract, yes.
Senator LeBreton: Exactly.
Ms McCallion: I do not know the financial details at all.
Senator LeBreton: You wanted to get it going?
Ms McCallion: I wanted to get on with the job.
Senator LeBreton: We were discussing previously in the committee - you certainly documented the problems of Terminal 1. Senator Tkachuk and I seem to have - we seem to always ask questions about Terminal 1. Was there a health problem at Terminal 1 at all?
Ms McCallion: I had to send the health department. The airport manager at the time recommended that the contract for the maintenance be cancelled because of the poor performance of the maintenance people, but word came through from Ottawa, carry on.
Senator LeBreton: With the band-aid solution?
Ms McCallion: No, just carry on with the maintenance contract. I had complaints from citizens that went through the airport on health matters at Terminal 1. Then we had all kinds of elevator problems.
Senator LeBreton: Tunnels closed.
Ms McCallion: Right. So, it has been a problem over the years, Terminal 1. As I say, I said to them board it up. If you are not going to get on with making the changes that are being made, board it up, close it up and transfer the service to Terminals 2 and 3.
Senator LeBreton: On the issue of security, being that it is international, that is the responsibility of the RCMP I understand?
Ms McCallion: Yes, but Peel Regional Police are also in there.
Senator LeBreton: When you look at Terminal 1 and when it was built and in view of the new world reality, is there any security problems there that you know of?
Ms McCallion: Not that I know of. Peel Regional Police works with the RCMP. In fact, in the ground transportation, we provide staff to the Department of Transport from our licensing department to control parking, et cetera. I convinced them that they should not have RCMP issuing parking tickets. I thought it was a waste of time. They could have somebody else doing it.
Senator LeBreton: Do you collect a revenue?
Ms McCallion: No, we do not. Provincial and federal governments never share revenues with local municipalities.
Senator LeBreton: Even though the local police issue -
Ms McCallion: We get grants in lieu on the airport, the City of Mississauga. That is another issue that really bothers me. If a taxpayer in Mississauga does not pay their tax bill, they pay a penalty. The federal government does not give you their money in grants in lieu, we had three years they were behind, they do not pay interest or penalty. Interesting.
Senator LeBreton: Even at that, you are still able to run Mississauga with the good economic records you attested. Do you have faith now that the Greater Toronto Airport Authority - there has been so many names of this airport authority, I am never sure what it is supposed to be called. Do you have faith it would be able to meet the urgent needs of the airport with the development plan and financing and rapid construction start? And how long do you believe it will be - let's assume, although I hate the word assume, they were able to get up and running immediately, how long will it take before Pearson is a world class airport which is envisaged in your view?
Ms McCallion: I think if the contract is completely scrapped and the plans are scrapped - by the way, we were impressed with the plans. We reviewed them thoroughly because it is in our city. Our staff reviewed them and we, the politicians, reviewed them and we were pleased with the design that Paxport came up with. If that is scrapped, you are talking three to five years.
Senator LeBreton: Just to get started?
Ms McCallion: That is of great concern. It would be my suggestion that a solution be negotiated between the government, take over the plans that were prepared and get on with the job. That is the only way that you are going to expedite it. Otherwise, if you start from scratch again, we are in trouble, in deep trouble.
Senator LeBreton: So you are saying three to five years just to get the plans drawn up?
Ms McCallion: It will take two to three years to do a whole new set of plans. We want to see the plans as we did the last time. We want to see them to see how it fits in with our concern with the airport.
I hope that does not happen. If that happens, we are in trouble, deep trouble. I would highly recommend that the government negotiate. I know if I was in charge, I would sit down and negotiate and get the plans, unless Mr. Nixon found something wrong with the plans. I do not think he did.
Senator LeBreton: I get the sense if you were in charge, we would have the airport.
Ms McCallion: Ladies and gentlemen, I just hope that this wasn't cancelled because of an election promise. I got to tell you, it really bothers me. That is why politicians across this country are very unpopular in my opinion. It is because of things that they do.
I can assure you that I do not know if Mr. Nixon spent the time or if he could have, in the short time he did it, to really assess the contract, but I do believe the federal government should have sat down and negotiated. I have had to do it as mayor of the city. When we are not happy with a contract, I have sat down and negotiated and came up with solutions because there can be compromises. There can be changes made, but not just say sorry, out the window. I find that hard to accept as a business person, having worked for a company that built oil refineries across this country and the synthetic rubber plant in Sarnia, I find it hard having been in the construction business for 25 years to find out that somebody just throws a contract into the wastepaper basket instead of sitting down and negotiating.
You then try to come to a conclusion, and I do not like the conclusion I come to. I just do not like it.
Senator LeBreton: You mentioned in your statement that you had been approached just before the announcement of the overall winning bid from the Bronfmans. Were you approached by any other lobbyists, and if so, did they have any influence on anything that you were doing in terms of the decisions you were making on behalf of Mississauga?
Ms McCallion: No. I want to say, the Bronfmans, they did not do a lot of lobbying. I guess not too many people lobby me, I have to tell you. They were very kind in their lobbying, they dropped in to see me.
Senator LeBreton: Did you ever meet with Mr. Robert Nixon?
Ms McCallion: Yes, he came to see me.
Senator LeBreton: How long did he meet with you?
Ms McCallion: About a half an hour.
Senator LeBreton: Was there a set agenda or did he have specific questions?
Ms McCallion: No. I said, I know nothing about the contract, Bob, absolutely nothing. I just tell you, I am very concerned that there is any delay on improvements at Pearson, very concerned, and I certainly emphasized that. I did not know the details of the contract and I do not think it was my responsibility.
My concern is the airport is in my city and it needs improvements and it needs it badly and we should get on with it. That was my emphasis to him.
Senator LeBreton: Did you have - after that half hour meeting, do you remember if it was early on in his mandate?
Ms McCallion: Yes.
Senator LeBreton: Did you have any follow up meetings with Mr. Goudge or Mr. Crosbie?
Ms McCallion: No.
Senator LeBreton: That is all the questions I have, Your Worship. Thank you very much.
Senator Kirby: I really only have a couple of issues I want to raise. One picks up on a point that Senator LeBreton raised, which is the grants in lieu of taxes problem. By the way, many provinces - provinces are also sometimes late in paying grants in lieu of taxes.
Ms McCallion: Both of you are guilty of it, provincial and federal. We have to pay our bills, you folks do not have to.
Senator Kirby: Yet they call it the senior levels of government, right? First issue I want to raise is, am I right that you met with Mr. Corbeil when he was Minister of Transport sometime during the election campaign or you talked to him about the grants in lieu taxes problem?
Ms McCallion: During the election campaign? I do not recall meeting with Mr. Corbeil during the election campaign.
Senator Kirby: I want to give you a letter from Mr. Corbeil to you. It is letter I, document number 001391 just for the record. I just want to give you a copy of the letter. There is something in it I didn't understand. This is a letter from Mr. Corbeil to you dated October 20th, which is five days before the election. I will come to that in a minute. You will notice that the opening paragraph says, "In our discussion of October 6th - " I do not know if that was a phone call or a meeting. Do you know?
Ms McCallion: That would be on grants in lieu. I have been talking to both the federal and provincial governments for years about grants in lieu.
Senator Kirby: On October 6th, in fact, did you have a meeting with Mr. Corbeil or just a telephone conversation? You obviously talked to him, because he begins his letter that says, "In our discussion -"
Ms McCallion: It was to do with grants in lieu.
Senator Kirby: Was it just a phone call?
Ms McCallion: Yes.
Senator Kirby: Explain to me what the problem is. I guess I am surprised that moving to privatization was going to cost your municipality $3.7 million. How could that be? Generally privatization would increase revenue not decrease it. How did that happen?
Ms McCallion: We get grants in lieu. As such, the City of Mississauga retains the total grants in lieu. When Terminal 3 was privatized, it is then assessed under the provincial government's assessment legislation, and as such, we must share the money with the school boards and with the region. The sharing with the school boards is 65 per cent of the grants in lieu, 15 per cent to the region. So what he is saying there that when Terminal 3 was privatized we do not get grants in lieu on Terminal 3, it is assessed.
Senator Kirby: What you are saying is that even though - I am quite familiar with how grants in lieu work because I was involved in provincial government for a long time. I didn't understand that in Ontario even if property taxes are exactly the same as grants in lieu of taxes -
Ms McCallion: No, they are not.
Senator Kirby: It is richer if in fact -
Ms McCallion: Grants in lieu has been a figure established by the federal government. For instance -
Senator Kirby: It is not based on the property tax rate or valuation or anything?
Ms McCallion: It is not based on valuation. It is a figure that the federal government picks out of the -
Senator Kirby: In some jurisdictions it is, in some provinces it is.
Ms McCallion: Terminal 3 is under the Assessment Act of the Province of Ontario, so therefore yes, we get the taxes and we get the business taxes as well from both, by the way. We must share that. So what I was saying, we want grants in lieu to continue and we have asked the local airport authority to support grants in lieu in continuing.
Senator Kirby: Right. However, back in 1993, at the time the contract was being signed, your concern was that you were in fact going to lose revenue?
Ms McCallion: Yes.
Senator Kirby: And you were essentially asking the federal government to make up that revenue?
Ms McCallion: We were going to lose revenue, not lose the revenue on the airport, but lose 65 per cent of it to the school boards, syphoned off from the City of Mississauga.
Senator Kirby: Since this discussion with Mr. Corbeil took place on October 6th - I guess the election was the 25th so less than three weeks before the election - did you in that discussion with him ever talk about what was the consequence if, in fact, the government was not re-elected? I mean, the polls would have suggested by that stage of the game that wasn't going to happen, so that was never an issue?
Ms McCallion: Never an issue.
Senator Kirby: You just had a discussion on the assumption that in fact as indicated in the letter in some sense the government was going to be re-elected and therefore the agreement was okay?
Ms McCallion: Pardon?
Senator Kirby: Your discussion was built around the notion that the government was going to be re-elected and therefore the agreement as of the 6th of October would be in force?
Ms McCallion: I would not want to predict which government was elected, I can tell you.
Senator Kirby: This is not a trick question. I guess I am surprised that you were less than three weeks before an election seeking an agreement from the minister with respect to a subject that three weeks later might not be his responsibility.
Ms McCallion: It was an ongoing concern, the grants in lieu. If Paxport had proceeded with the contract, or if Paxport was allowed to proceed with the contract, then we would not get grants in lieu on Terminals 1 and 2. We would lose it. It would be assessed and therefore we would have to share that with the school boards in the region. So it was a loss of revenue to the City of Mississauga. It was an ongoing concern from day one and it is now a concern that even if the local airport takes over, it has not been decided whether we will continue to get grants in lieu if the local airport takes over Terminal 1 and 2 or whether it will go on assessment. That will be a decision by the Minister of Transport and the Minister of Public Works.
Senator Kirby: Do you know what happens at other airports where there are local airport authorities?
Ms McCallion: In Montreal it continued with grants in lieu.
Senator Kirby: You don't know about Edmonton, Calgary or Vancouver?
Ms McCallion: I do not know how they operate.
Senator Kirby: They are all grants in lieu. I did not realize the money got syphoned off. In Nova Scotia that is not the way it works. Does the Municipality of Mississauga ever hire lobbyists?
Ms McCallion: Yes. No, we have never hired lobbyists. Our Living Arts Centre hired a lobbyist.
Senator Kirby: I ask because -
Ms McCallion: I am the lobbyist.
Senator Kirby: Frankly, you would be more effective than any lobbyist I have ever met. There is a document, H.
Ms McCallion: Mr. Doucet was hired by the Living Arts Centre Chairman.
Senator Kirby: Even though he said he was representing the Corporation of the City of Mississauga, he wasn't?
Ms McCallion: He was hired by the Living Arts Centre to try to get the federal government to support the building of our Living Arts Centre, to get the funding for the Living Arts Centre. By the way, he wasn't successful, I want to tell you. That is why I do not hire lobbyists.
Senator Kirby: I noticed he was the lobbyist from March 10th, 1993 to November 9th, 1994, but he was not a lobbyist. That is fine.
Ms McCallion: The funding of the living arts, my mayor's fund raising gala provides the money for the living arts but they hired him. Bruce Highman, the Chairman of the Living Arts. As far as I know it wasn't paid out of the city funds. It was paid out of city funds, maybe transferred.
Senator Kirby: They have their own independent, but you give them a grant?
Ms McCallion: That is correct. We pick up the tab for all the Living Arts Centre expenses at this point.
Senator Kirby: Thank you, Mr. Chairman. That is all I wanted to ask.
The Chairman: That is amazing.
Senator Kirby: Many of us have known Her Worship for a long time and we understand exactly how effective she can be, and some of us may be terrorized into submission.
Ms McCallion: I hope I have terrorized you into position to get on with getting my airport upgraded.
The Chairman: May I thank our witness, colleagues? Well, Your Worship, I must say I think my colleagues will agree with me that you are one of the most impressive witnesses we have had, and we wish you luck. As you know, this is an examination of public policy into the privatization of airports.
Ms McCallion: I just say to you folks, I think it is a crime, if you really want to know, that we sit with Canada's most important airport sitting waiting. As I say, and I will repeat, Pearson burns while Ottawa fiddles. I think that is sad, very sad. I have to tell you that I do not know how we can move it. But somebody better find a solution to it. And if they want us to find it, we will do it.
The Chairman: Thank you, Your Worship. The meeting is adjourned until nine o'clock tomorrow morning.
The committee adjourned.