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EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, June 20, 1995

.1544

[Translation]

The Chairman: Pursuant to Standing Order 108(3)(d), we will consider the Draft Report on Chapter 6 (Federal Transportation Subsidies - The Atlantic Region Freight Assistance Program) of the May 1995 Report of the Auditor General.

With your agreement, we will proceed with the examination of this report in camera, as is our custom.

[English]

We'll proceed in camera as we did before, if there is agreement.

Some hon. members: Agreed.

[Proceedings continue in camera]

[Public proceedings resume]

.1550

The Chairman: We'll proceed as we did before with the draft report, paragraph by paragraph.

Are there any comments on page 2, paragraphs 1 to 4?

What about on page 3, paragraph 5?

[Translation]

Paragraph 6. Mr. Laurin.

Mr. Laurin (Joliette): Mr. Chairman, I would like paragraph 6 to be reworded, particularly to clarify the rates being discussed here. It mentions a minimum rate of 28.5%, which would result in a combined rate of 48.5%. Something is missing here to explain how you go from 28.5% to 48.5%. I'm prepared to let the researchers change the wording so that this difference between 28.5 and 48.5% can be explained.

The Chairman: You will try to explain that so that the transition between the different rates is clearer and more explicit.

Paragraph 7.

Mr. Lavigne (Verdun - Saint-Paul): I would like to go back to number 6.

The Chairman: I usually wait for your comments if you have any. I check the reaction of people around the table.

Mr. Lavigne: Don't we have to vote on changes to a paragraph?

The Chairman: Normally, yes.

Mr. Lavigne: Is this unanimous? We're asking.

The Chairman: Normally, yes, but I wait for the reactions of the members of the committee. Generally, when there is no reaction, it's because people agree.

[English]

Mr. Lavigne: Do you accept the modification of that? I'm not used to it, because in the other committee we ask all the people. Everybody is happy or agreed?

[Translation]

The Chairman: That is the modus vivendi of the committee. I wait to see whether anyone raises their hand. But if there's no reaction, we take for granted that it's agreed.

[English]

Mr. Lavigne: Okay. So everything is all right. No problem.

Ms Whelan (Essex - Windsor): Mr. Chairman, what was the change?

The Chairman: The exact change?

Ms Whelan: Yes.

[Translation]

The Chairman: Could you repeat it?

Mr. Laurin: Paragraph 6 of this text states that the maximum basic subsidy rate for west-bound shipments is 28.5%. Later, it says that this is where the combined rate of 48.5% comes from. It's far from obvious that there's a cause and effect relationship between 28.5 of and 48.5%. I would just like something to be added in the text that would explain how you get from 28.5 to 48.5%.

Ms Whelan: We're adding it, then.

Mr. Williams (St. Albert): The English version is fine.

Mr. Laurin: They will explain where this 20% difference comes from. What can this 20% difference be attributed to? That's what I'd like to see indicated in the text.

[English]

Mr. Lavigne: Do you want to have an explanation of the 28% and 48%?

Ms Whelan: No, I understand that. We don't know the wording that's going to be added yet.

The Chairman: Brian will give you more explanation.

Mr. Brian O'Neal (Committee Researcher): I wouldn't add anything to this necessarily. I would just rewrite it to make it clearer why we end up with a combined maximum rate of 48.5%. But it won't effectively change anything; it's just to make it clearer.

Ms Whelan: Okay.

The Chairman: Does everybody agree?

Some hon. members: Agreed.

The Chairman: Are there any comments on paragraphs 7 to 9?

.1555

Mr. Williams: Somewhere under section 3, ``Observations'', I would like to have a recognition of the fact that the testimony by the Assistant Deputy Minister of the Department of Transport clearly indicated that no statistical data collection and analysis have been conducted by the National Transportation Agency over the last many years, if not the last 70 years the program has been in existence.

Many of the problems came to light through significant effort by the Department of Transport, which resulted in the summary report on the Atlantic region freight assistance program information paper being published in July 1994. Therefore the National Transportation Agency and the Atlantic region freight rate assistance program have been, in my opinion, severely negligent in managing the program. I'd like to see a paragraph with that observation in there.

I would also like to have a paragraph in there pertaining to figures 7 and 8 of the same report, on pages 18 and 19. We must bear in mind that the whole rationale for paying out $100 million of federal taxpayers' money was to help the freight rate costs of the hinterland of the maritime provinces. Yet when we take a look at these particular charts, we find the vast majority of the subsidy was paid for the shipment of goods around the lower part of the province of Quebec.

Had the National Transportation Agency been doing its job by preparing adequate statistical reports, they would have found out the program was not being paid out for the whole concept of why we had the program in the first place, which was to help alleviate transportation costs primarily in the Maritimes, as well as the lower part of the province of Quebec. Through their negligence, we have paid out hundreds of millions of dollars over the last number of years for little or no benefit. The report shows that.

The Chairman: You want a paragraph making what you're saying more explicit?

Mr. Williams: I would like to have two paragraphs, Mr. Chairman: one pointing out that no statistical data analysis was done by the organization, and the second pointing out that had it been done, we'd have found out the program was not providing the support it was designed to.

The Chairman: Do you want those paragraphs anywhere, or between 6 and 7?

Mr. Williams: Somewhere under the ``Observations'' section. I don't know exactly where the most appropriate place is to put them, but I need two paragraphs stating these two specific points.

Mr. Shepherd (Durham): In addition to that, we should possibly make reference to the fact that the Auditor General reported on this problem in 1987. Even though there was a study by Transport, in fact it was delayed in itself.

The second point - maybe this is another paragraph, but I don't know - is that in the examination of the Auditor General, they made reference to the possibility of artificial freight rates such that there could be a potential for defalcation, or however you want to describe it, upwards of $25 million a year in this program.

[Translation]

The Chairman: Do you have any comments about this?

Mr. Laurin: I would suggest to my two colleagues that they take a look at paragraphs 10 and 11 to see whether their content addresses their concerns.

.1600

Having spent several days reading the document, they may have forgotten the content of paragraphs 11 and 10, which dealt with the topic just mentioned, if I remember correctly.

[English]

The Chairman: Do you know, Mr. Williams and Mr. Shepherd, if paragraphs 10 and 11 relate to your suggestion?

Mr. Williams: It does not specifically state the two explicit points I wanted to bring out,Mr. Chairman. One is that the statistical data, which are part of managing an organization or an operation of this size and magnitude and cost, were not gathered. There was no data collection to speak of, as far as we can tell. Second, had that data collection and data analysis been done properly, as we find out in this report from the assistant deputy minister of the transport commission, we would have found out that we were spending money and not achieving the objectives of the program.

The Chairman: Are there any objections to what was suggested by Mr. Williams andMr. Shepherd?

Ms Whelan: I'm not objecting to the fact that there should be other things added. I think when you add other things, you have to add all the other things, such as the fact that there was a change in provincial guidelines and what year that took place. The implication by Mr. Williams is that this was going on and on, when we know that when the provinces stopped regulating what would be charged, that's when one of the real problems started. I think the entire explanation has to be there.

Mr. Williams: Paragraph 15 talks about the deregulation, Mr. Chairman, and 1988. That is in there. The point is that had proper statistical analysis been done by the NTA, they would have found that the subsidy program was being paid for short-haul trips in the southern part of the province of Quebec and negligible amounts were going to the other provinces.

Regulation or no regulation, this was not exactly what the program was designed to do. It was designed to reduce the costs of transportation in the Atlantic region. Part of that was the southern part of the province of Quebec, but they got by far the lion's share of the subsidy. Nova Scotia, New Brunswick, P.E.I. and Newfoundland got next to nothing. Had the statistical data been collected and analysed, they would have found that the program was totally skewed and the money was all going to transportation in the southern part of the province of Quebec.

It's not that I'm picking on Quebec; I'm picking on the fact that the data analysis wasn't done and should have been done by the NTA to ensure that the money was being spent appropriately in accordance with the directives of the program.

Mr. Shepherd: I wouldn't want to see reference to the province of Quebec. I don't think that's quite accurate. In any case, it traverses at least two provincial boundaries, and that isn't the way the program was set up in the first place. It talked about a territory.

Mr. Williams: I'm looking at figures 7 and 8 on this report that we had at the hearings. Especially in figure 8, you can see that virtually all the money was paid in the south shore of the province of Quebec. Newfoundland, by far the most distant of the provinces, got a negligible amount. Presumably that is where transportation costs have to be the heaviest.

However you want to phrase the statement, I really want in here the fact that because the NTA did not do its job of analysing the program it was charged with the responsibility of managing, we ended up spending the better part of $100 million in an area that really was the periphery of the area it was designed to help. Surely the southern part of the province of Quebec is a lot closer to Montreal, Toronto, and Ottawa than to Halifax, Saint John, and everywhere else, yet these far outreaches got negligible amounts of subsidy.

The point is that the NTA had no idea who was getting the money and how far they were carrying the goods.

.1605

[Translation]

Mr. Laurin: Mr. Chairman, I have no objection to having it included in the report, all the more so since on page 3 of the report it shows that Quebec received 26% of the subsidies, Nova Scotia 29%, and New Brunswick 40%. So Quebec was not the most favoured province. If you want to repeat it in the report I have no objection, in light of the statistics, but it is already in the report that we examined. Is it really necessary to repeat the whole report? It's a question we should ask ourselves, but I'm not going to dwell on it at length. Perhaps it would save time to add the paragraph, since the exact figures would then be quoted, and the truth on Quebec's share would be known.

The Chairman: Do you agree that what was suggested by Mr. Williams and Mr. Shepherd be added to the report?

[English]

Mr. Shepherd: The basic thrust is the statistical analysis, but I don't think the regionalization and concentrating on the province of Quebec means very much.

To me one of the biggest issues here was the domicile of the carriers. They were all in New Brunswick, as far as I can see. The actual carriers of the trucking companies themselves all seem to be working out of New Brunswick. I think we're getting into a hornets' nest when we start trying to figure out who and where and when.

[Translation]

Mr. Laurin: Irving is not from Quebec!

[English]

Mr. O'Neal: I was just going to offer a suggestion somewhat along the lines of what Mr. Shepherd was proposing. Perhaps without getting into the specifics of the issue, we could say that because the NTA wasn't doing this sort of analysis, it was in no position to judge whether or not the program was meeting its objectives.

Mr. Williams: As suggested, it shows that it wasn't. Whether you mention the province of Quebec or not is not the important thing. The fact is that the subsidy was not doing the job it was designed to do.

Ms Whelan: I think it's critical and I'm going to object. If you want, we'll have a motion and I'll voice my formal objection.

The fact of what happened in the provinces should be included. The provinces set the rates until a certain point in time. That should be part of this report. That was part of the evidence before us. They determined what their rates were.

When we want to say now that the NTA is responsible for the fact that they didn't look at the unreasonableness perhaps of the rates, they couldn't look at that unreasonableness until after the provinces no longer set the rates. I don't recall the exact timeframe, 1987 or 1989, but that should be in here. I think that's critical and important. If you're going to accuse the NTA of not acting properly, which I believe Mr. Williams is doing, then all the facts need to be on the table.

That is a very critical fact and it is not covered by paragraph 15. It should be spelled out very clearly in a separate paragraph how the rates were set. Maybe I've missed it in another paragraph, but Mr. Williams referred me to paragraph 15. It has nothing to do with how the the rates were set by the provinces prior to that.

The Chairman: A final comment on that.

Mr. Williams: I'm not sure it's a final comment, Mr. Chairman. We're going to finish this.

The Chairman: A comment on your addition.

Mr. Williams: I'm not talking about the deregulation or regulation of the rates. I'm trying to say that the point is that the NTA, which is charged with the responsibility of managing a $100-million-a-year program, failed miserably because it failed to do any data collection and find out how the money was being spent and so on.

I used for the example the geographic distribution of the freight that the subsidy was being paid on, which had nothing to do with whether the rates were controlled or de-controlled. My point is they did not do the job properly, and I want to know who is going to be accountable for it.

I agree with my colleague that it's fine to say that the rates were deregulated in 1988, and fine if she wants to have paragraph 15 strengthened. I'll go along with that recommendation too.

Ms Whelan: Paragraph 15 is not the rate set by the province. If it is, I am not reading it properly. Was paragraph 15 supposed to cover the rates?

Mr. O'Neal: No, but I did try to cover that off in paragraphs 8 and 9, where the mechanics of the subsidy program is discussed. I didn't mention the provinces. If the committee wishes, we could make some reference to the fact that the rates were regulated by the provinces.

Ms Whelan: I don't think you covered it at all in paragraph 8 or 9, with all due respect, because it doesn't show that prior to a certain time period it was regulated by the provinces and then it was changed. The year isn't there. The year is very critical, because I don't believe the NTA had any right to challenge the rates or say they were unreasonable until the provinces were no longer setting the guidelines. The provinces were responsible for the rates that were charged until they stopped setting them. That's critical if we're going to add Mr. Williams' paragraphs.

.1610

Mr. Shepherd: That's fine, and we can strengthen paragraph 15. If I recall, though, the evidence was given after deregulation. In fact, the actual freight rates started to escalate after deregulation.

Mr. Williams: Well, they couldn't before.

Mr. Shepherd: Right. But the real problems occurred after deregulation.

Ms Whelan: But Alex, that was Mr. Williams' comment earlier, where for the last seven years.... Either we're talking about the period after deregulation, or we're talking about.... He's talking about the entire program period, about when they should have been interfering.

I'm saying that if we're going to talk about the entire program and the fact that statistics should have been kept, it's important that the difference at that point in time and the change be noted very clearly in the same paragraph he's talking about, not in a separate paragraph somewhere else.

Mr. Shepherd: Would you be prepared to say ``subsequent to deregulation''?

Mr. Williams: I have no problem. Yes, we should be recognizing there were two regimes within which the NTA were operating; there is no question of that. There was a regulated regime and a deregulated regime. But during the time the NTA were managing this program, they had a responsibility to manage the program. One of the things over which they had no control prior to 1988 was the tariff being charged by the carriers. That's fine. I acknowledge that and make it quite explicit in the report.

But prior to 1988 and subsequent to 1988 they did have control over other areas to ensure that taxpayers' money was spent appropriately in accordance with what the transportation subsidy was designed to do. Initially that was to subsidize rail freight from the maritime provinces into upper and lower Canada. That was the objective of the whole subsidy at the beginning. Later, when road freight became more attractive, the subsidy was changed to allow the subsidy on trucking as well as rail.

But remember, the whole idea was to allow the maritime provinces to be somewhat competitive. That was why the subsidy program was initiated right back in 1920 and 1923. According to statistical analysis started in 1992 and completed in 1994, we have found along the way that the subsidy program gravitated to short-haul trips from the periphery of the area to just outside the area. Therefore the NTA was not ensuring that the taxpayers' money was being spent in accordance with the directives of the program. They didn't bother to do the statistical analysis. That's why I think they should be held accountable for their poor management.

[Translation]

Mr. Laurin: A Point of order, Mr. Chairman.

With all due respect for my colleague, I am under the impression that we are repeating the work we did last week. I do not know whether my colleague was present the last time we looked at the report.

[English]

Mr. Williams: I want it in the report.

[Translation]

Mr. Laurin: Were you there at the time?

The Chairman: Yes, Mr. Laurin.

Mr. Laurin: It seems to me we are raising the same substantive issues that were raised the last time. I'm wondering whether this is appropriate, because we will not be able to adopt the report today. It will be necessary to meet again.

The Chairman: Given what you have just said, Mr. Laurin, we have something of a consensus to add two paragraphs, one to answer Mr. Williams' concerns, and the other to reflectMr. Shepherd's remarks. The researchers have taken notes. I am going to ask them to take my remarks into account.

In any event, prior to tabling the report in the House, I will send a copy to a representative of each one of the parties. It will then be possible to read it one last time.

Mr. Laurin: Fine.

The Chairman: If you agree, then, we are going to take your remarks into account as well as those of Mr. Williams and Mr. Shepherd, and we are going to move on. The researchers have taken copious notes.

[English]

Ms Whelan: Mr. Chairman, with all due respect, Mr. Williams agreed that my comments would be included as well.

Mr. Williams: Yes.

The Chairman: Yes, okay.

Ms Whelan: Thank you.

.1615

[Translation]

The Chairman: The researchers will take all that into account in the notes that they will draft to complete the report.

So paragraph 6 and 7 are okay.

[English]

Paragraphs 8 and 9? Okay.

[Translation]

Is paragraph 10 okay? Paragraphs 11 and 12?

Mr. Laurin: I would like to correct something in paragraph 11. This is a linguistic error in the French text. It says: ``C'est que ce semble''. It should read ``C'est ce que semble''. I'm simply pointing that out for the final draft.

The Chairman: It's a grammatical error. We'll correct it.

Mr. Laurin: Similarly, in paragraph 12 of the French text, perhaps the sixth line needs to be checked. It says: ``Le comité s'est demandé que ce faisait ceux''. It should read: ``Le comité s'est demandé ce que faisaient ceux qui sont chargés''. It's more or less the same kind of correction. I'm pointing this out in case the drafters had missed it.

The Chairman: It's a grammatical error. I will ask that...

Mr. Laurin: ``Ce que faisaient ceux qui sont chargés''...

The Chairman: We'll correct the error. That's fine.

Paragraphs 13 and 14? Mr. Laurin.

Mr. Laurin: In paragraph 14, we'd like to add something to the last line, after the words ``en mettant sur pied un programme d'examen en 1993''. Mr. Chairman, on second thought, let's forget it. I'm not doing it. It will just complicate things for nothing; it doesn't add anything.

The Chairman: So you're withdrawing your motion.

Mr. Laurin: Yes, I'm withdrawing it.

The Chairman: Agreed.

[English]

Mr. Shepherd: I think it's important to put in some kind of reference to dates in paragraph 13. You say here, ``the minister did not respond'', ``the minister of the day'', or ``the timeframe in which these requests occurred''....

Mr. O'Neal: The dates are mentioned earlier, but I could repeat them again in this paragraph.

The Chairman: Are there any more comments on paragraphs 13, 14, 15 or 16?

[Translation]

Mr. Laurin: Mr. Chairman, in paragraph 15, in the French text, line 7, it reads: ``...d'avoir un programme fondé sur pourcentage''. It should read: ``sur un pourcentage''.

The Chairman: Yes, it's another grammatical error.

Mr. Laurin: There's a word missing for the text to be comprehensible.

The Chairman: Yes, ``fondé sur un pourcentage''; we have to add the word ``un''.

[English]

Are there any comments on paragraph 16?

[Translation]

You have an addition to paragraph 17, Mr. Laurin?

Mr. Laurin: In paragraph 17, we'd like to replace the words ``le conseil juridique'' by the words ``l'opinion juridique. It would therefore read: ``l'opinion juridique donnée au ministère des Transports''.

Furthermore, after the word ``Transports'', the date should be mentioned. For the date, we indicated May 11, but since you've given us a copy of the legal opinion, we now realize it's April 3. The text should therefore read as follows:

.1620

[English]

The Chairman: Does everybody agree?

Ms Whelan: Where is the legal opinion mentioned? I'm missing this.

The Chairman: It's in paragraph 17. We'll add the date we obtained. We'll put -

Ms Whelan: But you're quoting Ms Greene's testimony.

Mr. O'Neal: No, he's quoting from the copy of the legal advice that was given to the department. Ms Greene has just supplied a copy of that to committee members. It's dated April 3.

Ms Whelan: I understand that, but my understanding is that we're talking about paragraph 17 and quoting Ms Greene. Now we're referring to an April 3 legal opinion to which she is referring. I don't want there to be any suggestion that this is a quote. I don't see this as a quote from the legal opinion, so I'm just trying to....

Is it a quote from the legal opinion?

Mr. O'Neal: It's not a quote from Ms Greene. I think I could just add a sentence that would say that this opinion was received on such-and-such a date by the department without indicating that it was Ms Greene who said so.

The Chairman: If you start with the second line, it says ``...of the NTA comes in the form of legal advice given...'' on April 3.

Ms Whelan: I don't see where this quote is in the legal opinion. It says ``...that the agency has sufficient authority to reject claims as unreasonable, when acting in its capacity....'' I'm just trying to find that.

[Translation]

Mr. Laurin: The text that was given to the lady referred to: ``Le conseil juridique''. We have to correct that first. It's not legal advice.

The Chairman: No, there's no problem.

Mr. Laurin: That may be why Ms Whelan can't find it.

The Chairman: No, there is no...

Mr. Laurin: With regard to the wording, it's exactly the same as the one we adopted last week, but we're simply adding the date.

The Chairman: There is no change. I want to check.

Mr. Laurin: We're only adding the date to last week's text.

The Chairman: That's right. I don't think there are any objections. I think our colleague simply wanted to know exactly where this correction applied.

[English]

Ms Whelan: This is the legal opinion. I don't see this.

[Translation]

Mr. Laurin: In the first sentence, there's a reference to legal opinion.

[English]

The Chairman: Ms Whelan, he only wants the legal advice to be dated.

Ms Whelan: I just don't want there to be a misinterpretation that the quote is from the legal opinion; it's not.

[Translation]

Mr. Laurin: It's not a quote. There's nothing in quotes there. We haven't quoted anything.

[English]

Ms Whelan: If you quote Ms Greene from her testimony, that's the way we always do quotes: we indent and single-space them. If you look at the rest of the report....

Mr. Laurin: Alors!

Ms Whelan: Yes, that's the way we have done it all along.

Anyhow, it's a quote from her. I just don't want there to be a misinterpretation that the quote from her is coming from the legal opinion.

[Translation]

Mr. Laurin: Mr. Chairman, after the word ``ONT'', there's a period and a sentence that begins with the words ``Ms Greene''. Therefore, it's clear that we're talking about two different things. In the first sentence, we're referring to the legal opinion provided on April 3. In the second sentence, we're not quoting Ms Greene, but we're referring to what she said to the committee. We're saying that Ms. Greene indicated to the committee, probably in her own words, that the department had been informed by its attorneys that in its capacity as a quasi-judicial tribunal, the agency had sufficient authority to reject claims as unreasonable. This is not a word for word quote.

The Chairman: Mr. Laurin, Ms Whelan, so that this is clear - it is not a quote, as we've said - we could add: ``indicated at the committee meeting of...''. We will specify the date and it will be clear that this is not a quote.

.1625

We're reporting something Ms Greene said during the committee meeting and we will specify the date.

Mr. Laurin: ``Ms Greene indicated to the committee on June 13''.

The Chairman: June 13, but that's not a quote.

[English]

Ms Whelan: Mr. Chairman, I think you're missing my point. My point is that we have the legal opinion in front of us. It comes in the form of a letter and then we refer to it. She then goes on to talk about it in general terms. That doesn't accurately reflect what the legal opinion said because you're excluding the definition of ``reasonable'', which was spelled out to clarify the legal opinion. I'm concerned that there is going to be a misinterpretation of what was presented at the committee, because the legal opinion was not presented there.

I just don't see.... Usually when we get a letter, do we not say that we received it on such-and-such a day? This sounds as if we had this legal opinion before us at the committee; we didn't.

[Translation]

The Chairman: Let's see what we can do to make it clearer. As Mr. Laurin said, there are two elements in this paragraph. There are two sentences. The first sentence deals with the legal opinion and in the second sentence, we're referring to what Ms Greene said at the June 13 meeting. If we want greater clarity, we can have two paragraphs. We can leave a line or two between the two. It's the same thing.

Mr. Laurin: I really don't see the point here. Last week, we adopted this text. We're not changing anything this week. All we're doing regarding the legal opinion in question is indicating the date on which it was provided. We all agreed with the text last week. We're not changing it this week.

The Chairman: What Ms Whelan is raising has nothing to do with the addition of the date. She's concerned that there will be a misinterpretation and that a link could be made between the legal opinion and what Ms Greene said. These are two different things.

[English]

Mr. O'Neal: Yes, I think really something could be done in that part of the first sentence that states that it ``comes in the form of legal advice given to the Department of Transport'' on April 3 - we could insert ``on April 3'' - ``regarding the extent of the Agency's authority to reject claims as unreasonable.'' Then the second sentence refers to what Ms Greene told the committee during its hearing; that is something separate.

Ms Whelan: I don't really have a problem.

Mr. O'Neal: That way we wouldn't confuse the two. People reading this wouldn't think this was a quotation from the legal opinion. Would that help?

Ms Whelan: That's fine. I don't have a problem with that, other than that you're suggesting the legal opinion came before us as evidence, and it didn't. That's my concern. When you say ``the most damning'' - I don't like that word either - ``evidence of complacency on the part of the NTA comes...'', that was not before us as a committee, was it? I thought we just received this.

Mr. O'Neal: If you like, I could show you the....

Ms Whelan: This is the first time I've seen this. Did we receive this legal opinion when they were before us?

Mr. O'Neal: Yes, but I could show you the transcript of the meeting that shows what Ms Greene told the committee.

Ms Whelan: I'm not just debating or disputing what Ms Greene said. I'm saying this is the first time I've seen the legal opinion. We're referring to it as evidence that came before us when we didn't have the chance to question on the evidence.

[Translation]

Mr. Laurin: This legal opinion was mentioned by Ms Greene in her testimony. I asked her if we could get a copy of the legal opinion to which you are referring. She said yes. That's the opinion we received today. Ms Greene discussed this legal opinion. She told us that that legal opinion stated that the National Transportation Agency of Canada was told that it had the authority to act as indicated. Today, we've simply received the document that was promised to us and that we had requested.

[English]

The Chairman: Ms Greene referred to this legal advice at the meeting, but we just received it today.

[Translation]

Do you agree that we should add the date of the legal opinion in paragraph 17, as proposed by Mr. Laurin, and specify the date of the meeting, June 13, where Ms Greene made that statement, so that it is understood that those are two completely separate things and so that the text can be much clearer and more explicit?

.1630

[English]

Ms Whelan: I'd like to clarify the quote, Mr. Chairman.

[Translation]

The Chairman: Okay. The researcher will reformulate that paragraph so that it's very clear.

Paragraph 18. Mr. Laurin, do you have something to add?

Mr. Laurin: I would just like us to add a deadline. In the last sentence of the recommendation, we ask that the committee receive confirmation, at the latest, seven days after the presentation of the report. In paragraph 17, the legal opinion of the eleventh of May is mentioned. It isn't the 11th of May, but the 3rd of April.

The Chairman: Yes. We'll indicate the 3rd of April. The real date is the 3rd of April.

In paragraph 18, setting it at seven days. We'd left a space to add it, if I understand correctly.

[English]

Does everybody agree?

[Translation]

Some hon. Members: Okay.

[English]

Ms Whelan: When we tailor the report, do you want to give him seven days to tell you how he intends to act on it? I'm just trying to understand this. I don't think that's reasonable.

Mr. Shepherd: I should clarify that the NTA admitted they do have this authority. Very simply, the recommendation is to attempt to get them to put that in writing. In a sense they've already put that in evidence here, so we have written evidence that they said it. We're asking them to give a positive confirmation that yes, they agree -

Ms Whelan: [Inaudible - Editor] incorporates everything in that paragraph before. The sentence right before the confirmation sentence says ``He should also indicate how the Agency intends to act on its responsibility.'' So I'm assuming you're asking for details on how they intend to carry things out. I am just asking if you think it's reasonable to give them seven days.

[Translation]

Mr. Laurin: No, no!

[English]

Mr. Williams: I just have two things. Paragraph 18 is quoted here as saying that Mr. Rimmer, the director general, ``did not clearly state, on behalf of the Agency, that the NTA accepts that it has the authority to assess....'' Therefore we want absolute confirmation that the agency understands and has the authority.

Not only that, but we're asking the chairman of the NTA, not Mr. Doug Rimmer who only runs one part of the agency, the Atlantic regional subsidization program, to confirm it. We want it from the chairman of the NTA, who wasn't here as a witness. We want him to acknowledge that the NTA has that authority.

Ms Whelan: I'm not disputing that. I'm saying that you're also asking him to report at the same time on how the agency intends to act on its responsibility. I can read a paragraph and follow it through, and that's the way it reads.

I'm just asking whether or not it's reasonable for you to give him seven days, or if you want to have a separate...? Or are you saying that's not part of what he has to confirm? I understand that you're asking for the confirmation; I don't have a problem with that. Are you also suggesting that he can provide that other information in seven days? I don't know if that's reasonable.

Mr. Williams: If you are saying you do not think he can respond in seven days, which part are you asking about?

Ms Whelan: He should also indicate how the agency intends to act on its responsibility. I'm not sure what that entails. I'm not sure if he can do it in seven days. It's neither here nor there to me; I just don't know if it's reasonable.

Mr. O'Neal: The real purpose of this recommendation is to get them to confirm in writing that they agree with the interpretation that's been handed down by the Department of Transport. The second part, about how they intend to fulfil their responsibilities, in a sense is covered off by other recommendations that have longer time lines.

Ms Whelan: Maybe we should take that -

Mr. O'Neal: If the committee wishes, it could remove that sentence without really doing any damage to the recommendations.

Mr. Williams: Mr. Chairman, I think the confusion arises in the word ``how'' instead of ``that''. He should also indicate that the agency intends to act on its responsibility. That's what we want to know.

Ms Whelan: Is that what you wanted? I'm reading it the way it reads. ``How'' means -

Mr. Williams: I appreciate that. Could we remove the word ``how'' and replace it with the word ``that''?

[Translation]

Mr. Laurin: Mr. Chairman, I may agree to change ``how'' to ``that'', but I'd find it strange if the chairman, who was aware of this letter in April, hadn't already started to think of the way he will deal with his new responsibilities.

.1635

If, in two months, he hasn't thought of that, the problem is more serious than we thought. Normally, he has seven days on the nose to write what he's thought of over the last two months. We're not asking him to start to make a new plan. We aren't saying to him: You know that the Agency has this type of authority. Do you acknowledge having this authority and how do you exercise it and discharge your responsibility? We won't make a big deal out of it, but I think that we're trying to be very nice to this man who was notified two months ago.

The Chairman: Agreed. I think there's a consensus. We'll change the French ``or'' by the French ``date'' and ``how'' by ``that''. We'll keep the seven days.

The motion is carried

Mr. Laurin: Mr. Chairman, in paragraph 18, line 8 of the French text, it says: ``qu'il recevrait au cous''. That should be ``au cours''.

The Chairman: A letter is missing. We'll correct that.

Mr. Laurin: Thank you.

[English]

The Chairman: Paragraph 19.

[Translation]

Mr. Laurin: I'd like to correct the text of paragraph 19. It's not a substantive correction. On the third line it says, in French: ``et de s'assurer''. That isn't logical. We should put in something like: ``et qui permet de s'assurer''. The ``et'' should join two similar things. So we could say: ``élaborer une nouvelle procédure d'examen des demandes qui révèle toute augmentation... et qui permet de s'assurer que les transporteurs ne font pas leur demande''. Otherwise, it doesn't make any sense.

The Chairman: That's an improvement of the French wording. In English, we have:

[English]

``...for determining that the claim...''

[Translation]

It doesn't change. Agreed. We'll make the grammatical and syntactical corrections.

Paragraph 20. You have something to add, Mr. Laurin?

Mr. Laurin: Yes. I'd like my colleagues to look at the text of paragraph 20. The first recommendation of the report would be replaced by the following:

[English]

The Chairman: Ms Whelan.

Ms Whelan: I'm not sure I really understand why we want to submit it to the Auditor General. I would assume the way the recommendation stands right now, it's to be submitted to us. I see no sense to submit it to the Auditor General first. I think the committee should see things first. We were the ones who decided that a program that's been wound up needs to be looked at further, so we should look at it.

[Translation]

The Chairman: Mr. Laurin, do you want to explain?

Mr. Laurin: I think you have to read the entire paragraph to understand all the changes. We want the National Transportation Agency to set criteria for itself. Once the Agency has set these criteria, we'll tell it to ask the Auditor General for an opinion on the criteria chosen. That's the first recommendation.

Then, having these criteria before him, the Auditor General will evaluate the reliability of the criteria chosen by the National Transportation Agency, and, if he feels it is necessary, he'll recommend appropriate changes within a reasonable timeframe.

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When the Auditor General has done his work, if he feels that his recommendations have not been followed, he will let us know in the subsequent report, as he has done in the past, concerning the report we've just considered.

[English]

The Chairman: Mr. Shepherd.

Mr. Shepherd: First of all, I disagree with the process in the sense that I agree with Ms Whelan that it's really our duty here to require the recording of this information. Presumably, there's a question of practicality. We're not going to be here when this happens. Having said that, presumably we communicate whatever information we have to the Auditor General's department.

The second thrust of your intervention really is getting to the point where you're asking the Auditor General to act more as a comptroller, to tell people what to do. I don't think that's within his mandate.

The Chairman: Ms Whelan.

Ms Whelan: I personally think the Auditor General had a role here for seven years and, in my opinion, didn't fulfil it the way he should have under this whole program. I think we're having him spend a lot of time and effort on the wind-up of a program when we know there are many other programs and policies that should be examined. I think this is not a useful aspect for any of us.

I said this months ago, and I maintain it now. The government made a very good decision in winding up the program and in recognizing the problems with it, and I think there are a lot of other programs that the Auditor General should be looking at. We, as a committee, should be able to determine the effectiveness of how things should be wound up.

The Chairman: Mr. Williams, do you have any comment on that addition?

Mr. Williams: I prefer to leave it off, Mr. Chairman, because if you're waiting until August 1, I think August 1 is about the day the program ends, is it not?

Ms Whelan: It ends July 1.

Mr. Williams: Is it July 1 or July 31?

Ms Whelan: July 1. Read the book. We're wasting a lot of time.

Mr. Williams: Therefore, I agree with Mr. Shepherd's intervention, the fact that it is not the role of the Auditor General to make decisions on behalf of the NTA. Therefore, I prefer that he make comment on the decision, but it's not his role to make decisions on behalf of the NTA.

[Translation]

The Chairman: I'd like to make one last comment.

Mr. Laurin: Mr. Chairman, that's not what we're saying. We aren't telling the NTA to submit its criteria to the Auditor General. We're saying: ``Set criteria for yourselves''. It's probably already been done. Then, we say: ``Seeing that the Auditor General has already made recommendations to you in the past, go to see him and ask him for an opinion on the criteria you've chosen.'' They will either apply or not apply the Auditor General's opinion. They don't have to do so, because they are not accountable to him. However, in any case, the Auditor General will sooner or later give an opinion on the criteria they've chosen.

There are still millions of dollars in this program, Mr. Chairman. It receives 110 million dollars a year. There are still millions of dollars to distribute from June 30 till the months of September or October, because the bills will continue to come in. The people concerned must therefore set new criteria to distribute the funds that remain in the program.

We have to make sure that this time, they choose the right criteria, because the last time, the Auditor said: ``Your plans are no good.'' Therefore, they should set criteria, and they should ask the Auditor General for his opinion on these criteria and then, the Auditor general will do his job. They'll send us the criteria they've chosen. We'll have them afterwards.

The Chairman: We'll accept one last comment, then I'll ask that we vote. I can see there's no consensus on this.

[English]

Ms Whelan: Mr. Chairman, I think we're wasting a lot of time on a program that's over and done with in ten days.

Again, we have other reports - and I want this to be on the record. I made it very clear that we should be studying other aspects of the Auditor General's report because of the long-term effect, such as the health report, yet we've wasted time looking at a program that's ended. We're sitting here wasting more time debating how the program's going to be wrapped up.

Do you not think the NTA is a little bit nervous about how they're going to wrap up the program, after having been here? If that's not enough, then I think we're all wasting our time being here.

I'm just a bit frustrated by the fact that we haven't even looked at the health report. It affects all of us. It affects our future in this country and we're wasting time on a program that's ending in ten days. I want that on the record.

I'm just disappointed that our Reform colleague doesn't see the need to go on to other programs, to look at how we could be saving funds, when we've ended a program that we felt was costing money.

.1645

Mr. Williams: I think, Mr. Chairman, this is a perfect example of how money has been wasted by the hundreds of millions of dollars through lack of accountability by people who are patronage appointments. I think this will serve as an example to others to smarten up and make sure they spend the money wisely. This is just an example. So be it that it's ending in ten days.

The Chairman: We'll vote on the suggested amendment by Mr. Laurin.

[Translation]

The amendment is defeated.

[English]

Mr. O'Neal: Perhaps I could ask the committee's advice on this. We haven't specified a time in this recommendation. Perhaps I could include a seven-day deadline, to align it with the previous recommendation, and also to settle this before the program is phased out.

The Chairman: Seven days, very well.

[Translation]

Clause 21. Mr. Laurin.

Mr. Laurin: The amendments I made to clause 20 were defeated, but no others were passed. Should we assume that the current wording will be kept?

The Chairman: Unless other amendments are made, that is what has been agreed to. If you have other amendments to suggest, go ahead.

Mr. Laurin: The current provision does not specify any date. We should at least indicate a date. The 1st of August?

The Chairman: Yes. A suggestion was just made to include a time frame of seven days after the report. Do you agree, Mr. Laurin?

Mr. Laurin: That's just fine. I won't add anything.

The Chairman: You have something to add to paragraph 21?

Mr. Laurin: The first recommendation in paragraph 21 began as follows:

We would like to add the following to the end of this paragraph:

The Chairman: So that's your suggestion. Are there any other comments?

[English]

Mr. Shepherd: I guess I don't really see the - 1984 is really stretching it. We're really going back. I don't really see the purpose. We know the industry was deregulated in 1988, which really was the impetus of most of the problems. Furthermore, we know what other programs it administers, the western freight subsidies and so forth. So I don't know why we're asking those questions.

[Translation]

The Chairman: Mr. Laurin, would you like to respond to this comment?

.1650

Mr. Laurin: The question was already asked in committee. We know that the National Transportation Agency currently runs other programs. If it is running those other programs the same way it ran the first for years, because transportation subsidies date back to 1923 and there are established administrative traditions in that sector, I doubt we will get very good results in the next few years.

Since 1984, the whistle has been blown a number of times. Messages were sent to the Transport Department, but there was no follow-through. The Transport Minister even adressed the National Transportation Agency. Or rather, the Auditor General sent messages to the National Transportation Agency, but they fell on deaf ears. That is why we are going back to 1984. Why didn't the Department react in 1984 when it was questioned? Why did the NTA not react to the Auditor General's recommendations? They should explain that to us if they want to make us feel confident about the way they are running the other programs for which they are now responsible. That is why we want to go back to 1984.

[English]

Mr. Williams: I think the request is fairly reasonable, Mr. Chairman.

The National Transportation Agency, as far as I'm aware, is going to continue on beyond the expiry of this particular program. This is $100 million of their mandated spending and they have just taken an absolutely disastrous way of handling it. I think the request is perfectly reasonable, to say if you handle $100 million this poorly, what are you doing with the rest of the stuff you are looking after?

Mr. Shepherd: Just for clarification, what is the NTA's mandate after these programs have been terminated?

Mr. O'Neal: In general, I imagine the mandate will stay the same. Unless there have been any massive changes proposed to its mandate, it will continue.

Mr. Shepherd: I'm sorry. It is administering other programs, other than the ones that have been curtailed? Is that what you're saying?

Mr. O'Neal: Yes.

[Translation]

Mr. Laurin: That is the question I personally asked Ms Greene, in committee. She answered that the Agency's mandate was to run other subsidy programs, but she failed to list them.

The Chairman: Who is in favour of adding the paragraph suggested by Mr. Laurin at the end of the first recommendation?

[English]

All those against adding that paragraph after the first paragraph - that is the recommendation after the first one.

Amendment agreed to

.1655

[Translation]

The Chairman: Do you have anything else to add to paragraph 22?

Mr. Laurin: ``November 30, 1995'' should be put in the blank space in the recommendation.

The Chairman: So: ``submit the results by November 30, 1995, at the latest''.

Mr. Laurin: That is the first thing, but there is something else.

The Chairman: In paragraph 22: ``set the deadline for November 30, 1995, at the latest.''

[English]

Is there any comment on that?

[Translation]

It's the last line of the first recommendation, in paragraph 22. Where there is a dash, we would put: ``November 30, 1995''; ``and submit the results to the Committee by November 30, 1995, at the latest''.

Amendment agreed to

The Chairman: You have one last addition, Mr. Laurin?

Mr. Laurin: Yes. At the end of the recommendations in paragraph 22, a new paragraph should be added, which would read as follows:

[English]

Mr. Telegdi: Mr. Chairman, I don't want to get into a long debate on this and I don't think this is going to be acceptable to anybody else on the committee.

It makes absolutely no sense that we should be entering these two paragraphs, particularly in light of the fact that the whole validity of the program was questioned, that where the money ended up was questioned in terms of the original intent, and now we're going to search around...that somehow we should be compensating for something that didn't meet its mandate and probably has done a great deal of harm to the transportation industry in this country. It makes absolutely no sense, and there's no way I would support the inclusion of either one of those paragraphs. Hopefully we can vote on it fairly quickly.

Ms Whelan: I agree.

Mr. Shepherd: I agree with Mr. Telegdi.

Mr. Williams: I think this is just another request by the Bloc to get more money out of the federal government before they run off, Mr. Chairman, and therefore the answer should be no.

[Translation]

The Chairman: Mr. Laurin, you would like to make a comment?

Mr. Laurin: Mr. Chairman, we just want to see more fairness in the distribution of subsidies. You're giving a horse to the Western Grain growers, and a rabbit to those who counted on the Atlantic region transportation subsidies. We think there should be more fairness. That is why we are proposing that additionto the text.

.1700

Now, since I do not expect my colleagues to support that new paragraph, I would like to ask for your permission to table a dissenting report on just that part. We would agree on the rest, but we would like to table a partial dissenting report on that section.

The Chairman: We will vote on it first. All those in favour of adding the new paragraph suggested by Mr. Laurin?

[English]

All those against?

[Translation]

Amendment negatived

The Chairman: You have a question, Mr. Laurin?

[English]

Mr. Williams: I have one request too, Mr. Chairman. Based on the fact that the National Transportation Agency has been quite remiss in fulfilling its mandate and its function, I think we should be asking the Treasury Board to develop some kind of guidelines for this type of organization. I don't want to find out sometime down the road that another agency like the NTA shows up here because, as was pointed out by the AG, they just haven't managed the program they were given the mandate to do.

Therefore, perhaps Treasury Board should be developing some guideline or advisory to all organizations that are responsible for subsidies that would say, you check your management and make sure first of all that you're collecting the data to do sufficient analysis to ensure that the mandate of the subsidy program is being achieved. I think we need a recommendation along those lines.

The Chairman: Do you want that to be added to the report?

Mr. Williams: Please, Mr. Chairman.

The Chairman: Are there any comments?

Ms Whelan: Does anybody know if there is such a mandate right now?

Mr. Williams: It's being ignored if there is.

The Chairman: Is there a suggestion?

Is that agreed?

Some hon. members: Agreed.

[Translation]

The Chairman: Our researchers will add a few lines on that.

Mr. Laurin, just like the last time, you are asking the committee for permission to add something. The committee agrees that the Bloc québécois can add a dissenting report on that section, on the paragraph that was...

Mr. Laurin: So permission has already been granted.

The Chairman: We have the translation and everything else. Does anyone object to Mr. Laurin adding a dissenting paragraph?

[English]

Mr. Williams: I have a point of order, Mr. Chairman. Are you sure they require an approval to submit a minority report?

[Translation]

The Chairman: Yes, we made some inquiries. We were told the committee was master of its domain, but that you always had to get its support. From what I have seen in committees and from discussions with the whips of various parties, traditionally, the committee accepts, but the committee must always be asked if it agrees. That is what I am doing. So, you do not have any objections? You agree?

Mr. Laurin: Thank you, Mr. Chairman.

The Chairman: Mr. Laurin, you already have the translation and everything else. Could we have it tomorrow?

Mr. Laurin: I have it with me.

The Chairman: You already have it. Perfect!

[English]

Mr. Telegdi: Mr. Chairman, I'd be interested in finding out about the sovereignty of this committee. I would turn that down. I find it particularly divisive and argumentative. I don't see it going to the House, so I would turn it down in favour of amending it as a minority report and then we'll find out what the sovereignty of the committee really means.

[Translation]

Mr. Laurin: Obviously, we will not get out of here by 5 p.m.

The Chairman: Mr. Telegdi, the minority report always appears at the end of the majority report, and it is appended separately to the report.

Mr. Laurin: That request was never denied by any other committee.

The Chairman: It is a tradition.

Mr. Laurin: I agreed to vote in favour of the report because I expected I could add a dissenting opinion. If I had known you were going to break with a long-standing tradition, I would have voted against the report.

The Chairman: But, from what I can see, it was accepted.

Mr. Laurin: So I do not know why my colleague is going back to that.

The Chairman: He just made a comment.

Mr. Laurin: Oh, well! Very well, so I've heard your comment.

[English]

Mr. Shepherd: I would like to confirm the basic thrust of Mr. Laurin's comment. It has been the tradition of committees to allow dissenting reports, and I think in a lot of ways that keeps a degree of decorum and harmony within the committee system itself. I have no objection to a dissenting report.

.1705

Mr. Williams: We should also remember, Mr. Chairman, that it's a long-standing tradition that Her Majesty's loyal opposition support the aims and objectives of this country rather than trying to break it up. Long-standing traditions are not that important these days.

[Translation]

The Chairman: Fine. We have finished.

[English]

Mr. Laurin: At one point it will be your turn.

Mr. Williams: I came here to build this country, not to break it up.

[Translation]

The Chairman: We have finished studying the report.

[English]

Mr. Williams: I have a point of order. Are we finished with the report?

The Chairman: Yes. There is just a final question on the report.

[Translation]

Do you authorize your Chairman to make the proposed grammatical and syntactical changes to the report and to table it, as amended, with the Speaker of the House of Commons?

Motion carried

The Chairman: After making the grammatical and syntactical changes, we will present the final version to Mr. Shepherd and to Mr. Williams to get their approval on the final draft.

[English]

Mr. Williams: We have been in many of our reports, Mr. Chairman, asking the various departments to report back to this committee by a certain date. Therefore, I would ask that the research staff prepare a report to be tabled with the committee at the first meeting after the recess showing who is supposed to report back by what date.

[Translation]

The Chairman: Very well.

We gave you the report from the Sub-Committee on Agenda and Procedure, whichMr. Williams and Mr. Telegdi were party to. The next supplementary Auditor's General Report is to be tabled October 5. Since we are reconvening September 18, we will not have much time. Before you leave and while we still have quorum, may we suggest we deal with one topic first, mainly that the committee hold hearings on Chapter 5: ``Office of the Superintendent of Financial Institutions''.

Also, as chairman of this committee, I will be writing to the Auditor General, at Mr. Telegdi's request, regarding the investigation being carried out by his office on the activities of the interdepartmental committee on the transfer of assets and I will ask that the committee wait for the results of that investigation before deciding whether we will hold hearings, as indicated on the paper in front of you.

When we return, we will start by studying Chapter 5 of the Auditor General's last report, and based on information we get on the second subject, we can then move on to that.

That is what we are suggesting to you, after having held a meeting with representatives from the three parties.

[English]

Mr. Williams: Let me go on record, Mr. Chairman, for those who are listening but can't see, that I just fell off my chair.

Some hon. members: Oh, oh!

Mr. Williams: The report we just approved is an interim report, and I think we agree that we'd like to see the chairman of the NTA at a committee meeting. We call this an interim report because we don't know exactly if, as, and when we can get to this particular situation, but I'd also like to have the chairman of the National Transportation Agency back here to respond to some of this stuff. Maybe it's only half a meeting that we would have him for, but I'd like to see him.

Mr. Shepherd: This may be something we would review in the fall. Isn't that where we're going with this? You have to look at your schedule for the fall. There are some other pressing areas that we have to get on to.

.1710

[Translation]

The Chairman: What the clerk just pointed out is interesting. You know that at the end of each session, as your chairman, I write a letter to the presidents of every organization quoted in the report and to the deputy ministers of every department mentioned in the Auditor General's report throughout the year. They are the departments and organizations for which we did not hear any witnesses. I wrote to a large number of departments and organizations. We will be getting responses to those letters throughout the summer, and during the sub-committee's first meeting at the end of September, I could table them with the representatives of the various parties.

If some of the answers are unsatisfactory, we could add some of the subjects to our agenda and at the same time take your requests into account. That is my suggestion. We could start with those topics during our first meeting, and in light of the answers received and your suggestion, we can decide which department will be our priority. That is what I suggest to you. Do you agree,Mr. Williams?

Before we go our separate ways for the summer, I would like to thank our researchers, Michelle Salvail and Brian O'Neal, as well as our clerk, Bernard Fournier, for their great flexibility, their professionalism and the commitment they showed during these past few months. I would also like to thank all of you, members of the committee, for your co-operation. It was a great pleasure working with all of you. We will meet again in the fall, at least those of us who are still members of the committee. Have a good summer!

The meeting is adjourned.

;