[Recorded by Electronic Apparatus]
Tuesday, November 7, 1995
.0910 
[English]
The Chairman: It's Tuesday morning, and we're starting out almost on time.
We are continuing our examination of Bill C-98, the Oceans Act.
Today, from the Department of Fisheries and Oceans, we have Mr. Thomas, the senior assistant deputy minister, and commissioner of the Canadian Coast Guard.
I would suspect you are going to talk to us today about the clauses of the bill that deal specifically with the Canadian Coast Guard. I would also suspect you are going to talk about....
If you or your staff have been following the hearings, there has been a great deal of misinformation about what this bill does with respect to fees and allowing the minister to collect fees. A lot of fishermen and fishermen's organizations thought this was the bill that was going to impose a lot of cost-recovery fees on the fisheries. It certainly is not, but I think they've confused those clauses that empower the minister to levy fees with respect to coast guard services. So I would hope that during your presentation, you are also going to touch on that. I would suspect it is where you are going to get most of your questions today.
With that being said, Mr. Thomas, we will turn the floor over to you.
Mr. J.K. Thomas (Commissioner, Canadian Coast Guard, and Senior Assistant Deputy Minister, Department of Fisheries and Oceans): Thank you very much, Mr. Chairman, and good morning, gentlemen.
I was asked to come before the committee to specifically talk about the subject of marine safety and how it has been brought into the act; about how the current priorities within the government, in terms of cost recovery and program review, might impact on marine safety; and about how the merger itself may have impacted on marine safety.
Safety is one of the business lines of our new department. The others are understanding and knowledge of the oceans; managing and protecting the marine environment; managing and protecting the fisheries resources; facilitating marine trade, commerce and ocean development; and advancing Canada's international fisheries and oceans interests. But safety cuts across all of the elements of the organization, resting primarily with the coast guard. The coast guard's motto is ``Safety first, service always''. Virtually everything we do in the coast guard relates to safety.
There are other elements within the department that do impact on safety; for instance, the Canadian Hydrographic Service, which produces the charts, the hydrographic and tidal data, and so on. I'll talk about them later in the presentation, but I'd like to first of all concentrate on the activities within the coast guard. In fact, what I plan on doing is touching on each of our activities - that is, everything we do - and emphasize the impact that the activity has on safety, or its contribution to safety.
We start with search and rescue. Every year there are about 3,200 lives that are at risk, and we save about 3,000 of them. Unfortunately, that means there are about 200 deaths in Canada that are primarily due to recreational boating. We are looking at how to reduce that number significantly by working with all of the provinces to address issues such as navigation aids, how we can expand the role of the marine rescue auxiliary to help in the provinces, looking at training, looking at prevention programs, and working much more closely with the provinces and the municipalities to address boating safety. We have reached agreement with Ontario, we have now started working with B.C., and we will be moving to the prairies as a block and to all of the provinces in the Atlantic and Newfoundland as a block.
The second area that we are addressing is aids to navigation. Our challenge here is how to maintain the levels of service that users have become accustomed to, while reducing costs at the same time. The aids program is about 50% of the budget of the coast guard, so you cannot have significant cost reductions without impacting on the aids to navigation program. The way in which we are trying to do this is by using technology.
We have looked at differential global positioning systems, we're looking at electronic charts, and we're looking at a technology referred to as automated information systems. All three of those should in fact increase the levels of service with respect to navigation aids. At the same time as we're improving that accuracy, we see significant reductions in cost.
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The third area of activity is waterways development. This is more than dredging, but dredging is the largest part of it. It also includes things like managing the flow of water from the Great Lakes down the St. Lawrence River, and managing under-keel clearance for ships so that there is safe navigation.
We are looking at transferring the primary responsibility for dredging to the specific users of the ports - that's Saint John, Montreal, Quebec and along the Fraser River - and at reducing the dredging in other ports as well by transferring back to the principal users. We will maintain the responsibility for advising managers of under-keel clearance; that is, of an adequate depth for navigation.
In the area of marine communications and traffic services, again we had two separate activities. We are integrating them, and we are using some degree of technology to do that. The use of this technology will allow us to reduce costs significantly - $11 million over the next few years, in fact - and we may in fact actually increase the level of safety to mariners by having both marine traffic and communications in the same office. They will not be in separate offices, thus reducing the possibility of things falling through the cracks.
Again, with the technology we have used for the integration of these two groups, we see further activity downstream. We have reduced the number of manned sites from 44 to 23. We are going through a 50% reduction in manned sites. We see at least an equal reduction, starting around the year 1999-2000.
The next area of activities is environmental response. This deals with the safety of the environment. We have worked with industry for the last two years to put in place an industry response regime. We still maintain the mandate to ensure that the pollution is actually cleaned up, and we are totally responsible for pollution response north of 60 degrees.
The last major activity within the coast guard is ice-breaking. Our ice-breaking provides for safe navigation through ice-infested waters. Without ice-breaking, there would be a significant impact on commerce in Newfoundland, the gulf and the St. Lawrence River ports. We are looking at reductions, and we're looking at doing that with industry. We are developing scenarios with industry, and we are presenting them with a business case.
The case would be that they either pay ice-breaking...but it may be that there are other alternatives - stockpiling raw materials or finished product afterwards, depending on the materials in question; or looking at exclusion zones in which there would be no ice-breaking for a particular area, or perhaps only for one port rather than several in an area. We're working that out with industry in the first instance to see what are the most practical means to reducing the cost of ice-breaking while providing them with the level of service that they actually need.
So those are the six main areas of activity of the coast guard. Simply put, therefore, everything the coast guard does is related to safety.
We took this into account when we were doing our program review and when we were looking at our reductions. The coast guard, over phase one - that's the program review under way this year and continuing for the next two years - will reduce our costs by $56 million. There will be a further $26 million in sunset reductions, which means areas where the government will stop funding. That's a total of $82 million, and in that timeframe we are increasing revenue by $41 million. But I emphasize that this is the first three years of the program review. Our reductions to the year 2000-01 are approximately $110 million, and there will be cost recovery of about $64 million over that timeframe.
When we look at the reductions and at where we can do them and how we can do them, the main criteria that we're putting forward is that there should be minimal impact on safety. We're currently working with the industry on the west coast and in the St. Lawrence River to look at implementation of new technology to go beyond the year 1999-2000, and that is beyond the savings that I've already mentioned. And when I say we are working with industry, I mean that industry is putting up ships and money and is working closely with us in defining the actual project.
There are three main areas. We're looking at how we can reduce the amount of vessel traffic management while still providing that level of service to users. We're looking at how we can use automated information systems to assist us in that. We're looking at putting in place precision navigation with the DGPS, the directional global positioning system, coupled with electronic charts. In putting that in place, we should have a significant reduction in the number of floating and fixed aids. Industry would estimate that in the St. Lawrence River, in the Bay of Fundy, and those sorts of areas, we might have as much as an 80% reduction in aids and therefore a significant reduction in our costs.
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I mentioned what we were doing in terms of ice-breaking and in terms of the scenario approach to looking at specific geographic areas, to ask how we can do it differently but still meet the needs of the users.
So that's the program review.
The third element I wanted to touch on this morning is the impact of the Canadian Coast Guard-DFO merger on marine safety. I believe there have been both pluses and minuses. The ship safety branch was an integral part of the coast guard. It remains within Transport Canada because of their mandate on safety. We will need to work very closely with Transport Canada to ensure there are no gaps in the way we deliver safety programs and environmental protection. We are currently in discussions with them.
On the positive side, we have much stronger linkages with the Canadian Hydrographic Service on the use of electronic charts and in how we couple that with precision navigation systems. We have systems in place now - they have just been put out - by which any equipped vessel can position itself within ten yards of accuracy. The captain can then have that plotted automatically on an electronic chart, and all corrections can be made to that chart electronically. It's a level of service, a degree of precision navigation, that people would only have dreamed about years ago. It's reality now.
Another positive example is that while Canadian Coast Guard search and rescue has always worked closely with the DFO fleet, by merging the two fleets together we have single management of the one government civilian fleet.
A third area I would like to mention is the area of research and development. Our resources in R and D used to be oriented largely toward the regulatory area. Now that the regulatory area is staying in Transport Canada, we can focus more on operational safety; that is, how can we improve safety as the user actually sees it? Canada has some of the highest standards in the world in marine safety. We've been asked to help establish a search and rescue system in the Middle East as part of the confidence-building measures. They have met us in Sydney at the Canadian Coast Guard College, and we have met them in Turkey. We have been working with them for the past year.
We've been asked to help establish vessel traffic service systems in the Far East. We've been working in Hong Kong, in Saigon, and in Taiwan, to help those countries establish vessel traffic management and surveillance systems.
We are assisting with the establishment of a coast guard in Haiti, partly because we can provide French-language training, and partly because we are non-military and the non-military aspect of our organization is highly desirable by most countries.
We're also working with the circumpolar countries to develop safe operational practices in the Arctic. We have the Arctic Waters Pollution Prevention Act, which is really in two parts - one is the regulatory side, the other is the operational side - and by which we can manage and control the ships coming through the Arctic.
All of this work that we do internationally is fully cost-recovered.
The merger of the coast guard and the Department of Fisheries and Oceans and the incorporation of the coast guard mandate within the Oceans Act are clear signals that safety is paramount in Canada's ocean environment. I see the department taking whatever steps are necessary to maintain our position as world leader in oceans and marine resource management.
Thank you, Mr. Chairman.
The Chairman: Before I go over to our members, I have a couple of questions. I asked a question of Mr. Turner the other day, and I would ask it again of you.
I know there is a Standing Committee on Transport that did some stuff with respect to marine policy and came out with a report. I sat on that committee when it was down in Halifax. There were major concerns raised at that point in time about any fees for service that would be implemented and the method by which they would be implemented.
There is concern in the port of Halifax that some of the provisions of this bill will allow for cost recovery and for fees for service, and that this will be done in a manner that they don't believe is justified and that can take away from their competitiveness. They are indicating that they are not against fees for service or cost recovery as long as it is for the services that are used by that particular shipper. But they are concerned that there will be an across-the-board tax or a fee charged for services they don't use in the port of Halifax, such as ice-breaking.
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Indeed, over the years they've been extremely concerned that there's been an unfair subsidy to ports along the St. Lawrence Seaway because of free ice-breaking. They have quoted figures indicating that it can be as high as an 11% subsidy for goods that bypass Atlantic Ocean ports and go up the St. Lawrence Seaway.
Perhaps you can tell me what is the preferred option of the coast guard and whether or not you have any information that would indicate that they would not be adversely affected by that type of an application of fee.
Mr. Thomas: Thank you, Mr. Chairman. The marine services fee is mentioned in the marine policy document, and in the COA we make provision for the actual collection of the fee.
The marine services fee is targeted at commercial transportation. It is not aimed at fishers or recreational boaters. The clear reason for that is that there are already initiatives under way to deal with fishing licences and with recreational boaters through the fed-prov partnership. This is targeted only at commercial transportation.
The Chairman: The concern is not for fishermen or recreation. Their concern is for commercial traffic.
Mr. Thomas: That's right, but that's the first group. That's who we are targeting.
The fee is being phased in over four years, 20-40-40-60, which is one of the recommendations that came from the users. They wanted a phased-in approach.
We have put forward a number of options. There has been no decision, so I can't say what the coast guard's preferred option is. What I can say is that there are a number of options being considered by the clients, the users.
In fact, this week there will be a meeting of the Marine Advisory Board, which represents all the shippers in Canada - that is, the main shipping interests of oil, grain, forestry products, coal and steel - as well as the carriers, foreign-flag carriers and Canadian carriers, from one coast to the other. We will be meeting to see if we can arrive at a consensus as to what is the preferred option.
It's not likely that the preferred option will be a tax. We put forward a tax because during the discussions of the Standing Committee on Transport there was a suggestion that an ad valorem tax might be appropriate so it was put forward as an option.
We also put forward an omnibus fee, which means that you take all the costs and divide them equally among the ships. We did that because an omnibus fee is the approach used in every other country around the world.
We also put forward an option that dealt with service-specific fees; that is, you would pay only for the services you actually used. From the discussions I've had so far with industry, I would say there is primarily a leaning toward a service-specific fee.
The Chairman: That would certainly be the position taken by the Port of Halifax. If they don't use a service, the shippers going through their port should not be charged a fee for a service they don't use.
Mr. Thomas: That's correct. I would say that it seems to be generally held by most of the users, but we wanted to put out a range of options.
We've also had options put forward apart from those that we've tabled, because we asked for them. For instance, one of the options put forward by the east coast, supported to some extent by the west coast, is the notion of a flat rate plus a fee on top of that for service-specific. They are constructively trying to see how we can put forward a model that would actually work across Canada.
Nobody wants to subsidize another part of the country in terms of fees - that is, you don't want to pay for fees that you're not actually using - but at the same time they realize that it is a country and we may have to look at something like that. So there has been some support for a proposal that would have a kind of flat rate and service-specific added on top of that.
We're looking for an economic impact analysis to be completed by the end of November or early December. The results of that, plus the consultations we're having now in terms of the options, will be pushed back out to industry through the Marine Advisory Board and anyone else who asks for it. We expect that the minister will be able to make a decision in about January.
The Chairman: There are clauses in this bill that clearly indicate that any fees charged must be only on cost recovery. Two concerns have been raised.
One is that the costs of these services provided by the coast guard are too high because you're too inefficient as the body delivering these services. Subsequently to that, some users appearing here have said quite clearly that if you're going to be charging us a fee we should have the right to buy the service from somebody else. In other words, in terms of ice-breaking services or whatever, they don't want to necessarily have to go with what they see as an inefficient service delivery model, the Canadian Coast Guard, but should be allowed to go outside of that.
I'm not saying that the coast guard is inefficient, I'm just paraphrasing what they said last week. That's one of the concerns.
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The second concern is that other things relating to infrastructure problems in the nature of the department, of the coast guard, would eventually find their way down into some base fee so that more costs of the department would be transferred down. Is there a possibility under this legislation that we could see more cost passed on to users, which are basically infrastructure costs for administration of the department? If it's service-specific you can say that it costs x number of dollars to provide that. Is there a possibility that these provisions would allow for the broadening of those definitions and that some of the administrative costs of operating the coast guard could find their way down?
Mr. Thomas: As to the first part of the question, it is cost recovery so that, unlike tax, we can only collect fees up to the amount of our actual cost; that is, we cannot exceed actual cost.
I agree that we may have been inefficient. We have been taking steps over the last couple of years and the programs are in place now for significant reductions, which I outlined earlier on in the presentation. We have programs that we are developing, as fast as we can, with industry to put in place new steps for further cost reductions. There are $130 million over this timeframe, and it could be $50 to $60 million with the three new initiatives that I talked about.
They're not new, in the sense that we have been working at the first phase of implementation, but we're talking about a much fuller implementation, starting in about the year 1999-2000.
In terms of optionality - that is, can users look to other sources for their services - the way we have looked at this is that if the overall cost to the Crown can be reduced, yes. For instance, 60% of our aids are now contracted out. If we can find other opportunities for contracting out, and overall that's more efficient for the government, then by all means we would do that. We have gone out to seek tenders, to seek information, for instance, on ice-breaking. We have done that. We have talked to two different organizations on that. At this point, the costs have not come in as lower than the cost at which we can deliver it.
We're not competing with the private sector. We want to deliver the cost as efficiently as we can, but there are two main advantages to help us deliver it as efficiently as we can. One is that we are self-insuring whereas the private sector needs to insure the vessels. The second thing is that we multitask our vessels so that the same vessel used for ice-breaking also does aids, also does search and rescue and, depending on the nature of the vessel, it may also be helping the science programs or the enforcement programs of the department. So the same vessel can be tasked across a range of Department of Fisheries and Oceans programs, and that is much more difficult to do in the private sector.
So we're using it internally as a leverage to force and drive our costs down to be competitive in that sense with what the private sector might do.
In terms of more costs coming down from infrastructure or overhead, when we talk about the cost we're talking about the total cost and that includes all overhead. So that's already included in our costs; these are not incremental operating costs, it's a total cost approach. So we look at the operating costs and we add onto that overhead, capital depreciation, and the cost of capital. Those are the four main elements of the cost. So whatever we do to reduce our operating costs - for instance, the $130 million is primarily operating costs - helps. As to reducing overhead, with the merger of the DFO and the Canadian Coast Guard, there will be a reduction in overhead of 44%. We will have an overhead level at a rate that is about competitive with most of the private sector, and lower than most departments in the government.
If you look at the capital side, with the merger we have committed to a reduction of $25 million in the fleet through multitasking. So our capital costs go down. Therefore, all components of our costs are going down as part of the base line for these marine services fees, but it is a total cost approach to marine services fees.
.0935
The Chairman: I guess the concern would be that there are certain services offered by the coast guard that are essential for safety. Has the coast guard, inside itself when it does its books, indicated that to keep ice-breaking services for some remote northern communities costs x number of dollars and that's a cost borne by the government and not passed on to the other commercial users?
For search and rescue and those types of things there is a cost to provide and maintain that service. I think some of the shippers are concerned that somehow some of those costs are going to trickle down and they're going to be picking them up.
Mr. Thomas: No, they won't. That's not the case. The marine services fee is being attributed to only two areas: aids to navigation for commercial transportation and ice-breaking for commercial transportation.
We have separated out the costs of flood control in the St. Lawrence and Miramichi, for instance, as being a public cost. We have separated the cost of ice-breaking in the Arctic as being a public policy issue. We are looking at cost recovery in the north, but we're doing that separately because it's quite a different model from what we have in the south.
The Chairman: With this bill we have before us, if there were a new minister or a new commissioner of the coast guard or a new deputy minister of transport who decided to pass that off because we have to save another $30 million, could they do it under the proposed legislation?
I guess that's my question. They're looking for a level of comfort that at some point in time in the future, in another round of reductions in what it costs to provide services to these departments, they're not going to get nailed with services that are in the public interest.
Mr. Thomas: Certainly the coast guard could not do that on their own. It's public policy that we don't charge for search and rescue, for instance. I can't go out and do that willy-nilly. It has to come down as a government direction. I don't see that happening, because internationally you don't charge for search and rescue. You'd have to go back and try to change international policy, and I don't see that happening.
If you look at the Arctic, we're talking about a specific service, and we're trying to make that as regionally specific as we can, whether it's the Maritimes region as a whole or whether we break that down to talk about the Bay of Fundy, the south shore, and the straits. We're trying to make it as specific as we can so that you wouldn't be paying for ice-breaking in the north, for instance. Nor have we included it here. We've tried to break out even from the users so that passenger vessels and ferry vessels are separate from commercial transportation of goods, for instance.
What's in the COA is very general. It's a standard clause that is being put into all government legislation. It's based on a particular model that has been examined thoroughly and is seen as being appropriate wording. We have not come up with new wording ourselves as to what should go in the legislation.
The legislation itself does not provide the coast guard with a freewheeling access to funds from the private sector. It just doesn't do that.
The Chairman: I have a last question. You mentioned that the coast guard would be able to further reduce costs through the introduction of new technologies on aids to navigation. Who's going to pay for that?
If there's a new technology, if there's a new way to do this, if you're going on this global positioning, that's costly to get. I would suspect it costs money to implement a system like that and over the short, medium or long term there could be cost savings over the old system. If it costs you $30 million or $50 million or $70 million, is that cost going to be directly passed on or is that a cost of doing business? Who's covering that cost? Is it the user?
Mr. Thomas: The cost of putting in place DGPS is significantly lower than what it costs us to have the aids in the water. The cost to put in DGPS south of 60 is roughly $15 million. It will be in place and operational at this time next year. It is largely in place right now. That's really small money compared to the total cost of having the aids in the water, pulling them out for maintenance, the ships, the shops and everything that's involved with that.
That's being funded as part of the cost of doing business, but the pilot projects we're working on with industry on the west coast and in the river are cost shared. The private sector has put up the money in order to buy the equipment for aboard the ship.
.0940
The technology we're looking at here is automatic information systems, AIS. It would take a signal from the satellite down to the ship and combine it with information from the ship. It could be the last port or where you are going. It would pick up course and speed because of the precision navigation.
It broadcasts it ashore, and it also broadcasts it to other ships.
In broadcasting it ashore, you pick up other information. For instance, if it's in the river, it might be what the river depth is, because an extra six inches of depth is very valuable to transportation. Depending on where you were, it could be other information that they want to be broadcast back to you.
So that technology has a value to the person who's driving the ship, in terms of precision navigation, but it also has a value to people ashore. For instance, it could be the agent or it could be the customs people who want to know where the ship is coming, when, and what goods are on board.
So we see it being coupled with electronic data interchange, using the same basic infrastructure.
What we're doing with industry now is testing four different technologies that essentially do the same thing in order to see which one is preferred and which one seems to be the best downstream. So in this case industry is contributing funds to both the equipment and ship time.
[Translation]
Mr. Bernier (Gaspé): Everything we heard this morning was most interesting but that's a lot to digest after coming back!
First of all, I would like to know what the Coast Guard does as far as navigational aids are concerned. Will they be similar, Mr. Deputy Minister, to the systems used in aviation? Will people have to file a flight plan or rather, a sea route plan, and will the controllers be able to track them? Has a cost-efficiency analysis been conducted?
My second question relates to the introduction of a new fee or a new tax. At page 4 of your document you list operating costs totalling $841 million and you indicate that you would recover $394 million. However, there is no analysis for each of the services offered. So, a few questions come to mind: Which costs can be reduced? What's their use? Is each one of them being currently discussed with the industry? What could be modified?
In your other presentation, you indicate that your aim is to reduce the costs by $97 million. That means that you will try to reduce the $841 million by $97 million, but that you will also recover $394 million. Have the current operational costs been analyzed? When will the members of this committee have access to this analysis? And how will all this work?
[English]
Mr. Thomas: In the first instance, what we're doing is not the same as what has happened in Transport Canada with the air navigation system. They have taken the whole area of air navigation and are putting it in an arm's length, not-for-profit company - outside of the government's arm, if you like.
We are not doing that. We are looking at introducing technology into the marine navigation systems in such a way that they will still be under the control and management of the coast guard within the government.
With the air navigation system, a significant difference is between Canada, the U.S., and across the country, having a pass-off from one site to another. It's not quite the same on the marine side in that you're in Canadian waters for most of it and going fairly slowly and, where we do have an interface with the U.S., in fact the U.S. Coast Guard and the Canadian Coast Guard have agreements in place.
For instance, if you come in on the west coast, the Canadian Coast Guard picks up all traffic coming into the Strait of Juan de Fuca. We manage that all the way down to a point about south of Victoria. The U.S. Coast Guard picks it up and they manage all traffic up through the Haro Strait and into the U.S. Then we pick it up again coming into Vancouver and going north.
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So we do it differently with the U.S. They look after sections and then we look after sections. We alternate.
In the areas of SAR and ice-breaking we have exactly the same thing. We have agreements between the two different organizations. So it's quite a different environment in the marine area from the one in the air.
We're introducing technology to make the precision of information more efficient. If we look at the cost information, I mentioned earlier that we're taking a total cost approach. That is, we are looking at the operating costs plus overhead plus the depreciation of capital plus the cost of capital. That's a private sector approach. That's where you get the $841 million.
That is not our budget. The $841 million is not the budget you see in the blue books, in part because overhead, as was calculated here with Transport Canada, is not in our budget and the cost of capital is not in our budget. That's a cost to the government of actually borrowing money. So our budget is closer to what you see there - the $572 million plus a capital of roughly $100 million, so it's $672 million.
Not everything we do is subject to cost recovery. We talked about some areas, such as search and rescue, the ice-breaking in the north and public policy issues such as flood control. None of those items are subject to cost recovery.
Other areas, such as dredging and recreational boating, for instance, we have under separate initiatives for cost recovery. So we go from $841 million to the next number of $394 million. We are not looking to recover $394 million. We're saying that's the cost of all the activity that is subject to cost recovery.
In fact, when we look at commercial transportation, then, the number is $181 million. So it just keeps going down. You start with the total cost, then you ask what you are applying the marine service fee to, and then you ask how much of that is attributed to commercial transportation. So you get down to $181 million.
Of the $181 million total cost applicable to commercial transportation, we are looking to recover $60 million.
Yes, we are working very closely with industry. We have monthly meetings with the Marine Advisory Board. There are about fourteen members on it. They represent industry. There's one representative from the fishing sector and one from the recreational boating sector. It's primarily aimed at commercial transportation right now, because of the marine service fee coming in.
We have been meeting on a monthly basis. For instance, at the meeting this Thursday, we will spend all of the morning focused on cost reductions and all of the afternoon determining the preferred option with respect to the marine service fee. That tends to be the way we approach the meetings.
We have all of the interested stakeholders there. We have the ports represented. We have the carriers, that is, the shipowners represented. We have the shippers represented. Depending on how we implement the marine service fee and who actually collects it, one can say the costs are always passed on, but it's not really seen that way, because people will try for competitiveness, and therefore they may do some swallowing of the costs themselves. So it's important who actually pays the fee.
Yes, we are working closely with industry in terms of what can be reduced. We have a substantive program for reductions under way.
It's important to understand the reductions aren't aimed at reducing the 20-40-40-60, that is, the marine service fee as it stands. The reductions are under way to put a cap on it, so that downstream we won't be able to go to $120 million or $180 million. We're trying to reduce our overall costs in order that, in four or five years, industry will hopefully not have to pay any more than the $60 million. That's how we're approaching the cost reductions.
Cost reductions are under way right now, and so is the marine service fee. We have detailed information on the costs. For instance, we have something like 6,000 floating aids to navigation around the country. We have gone out and talked to the users about every aid. In looking at the aid, we said, ``Are you the user? For instance, between the main sectors of recreation, fishing, and transportation, who is the main user, because that's who's going to pay for it?'' If there are two users, then we ask, ``What is the minimum aid you need? Do you need a light on it, a bell on it, or a whistle buoy?'' - and so on.
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So we try to apportion the cost for every aid to the principal user of it.
If we look at ice-breaking, our systems track what time, or even for a particular ship. So I can go back in the records and say, ``This is the ice-breaking, the number of hours we spent at this port'', or, ``This is the number of ice-breakers we spent with this shipping company because these are the ships that relate to it''. We can break it down into international shipping and domestic shipping by narrow geographic areas. We can look at the west coast of Newfoundland. The Miramichi, for instance, is a zone all by itself. I can tell you precisely the cost for the Miramichi and for whom we actually provided the ice-breaking.
There is considerable detail behind these costs, and over the past few months we have been discussing this with the Marine Advisory Board so they will get a better appreciation of what that detail is.
[Translation]
Mr. Bernier: You told me that you used the figure of $841 million because you wanted to use the same terms as the industry, but in your Blue Book, the figure is $572 million.
In the document that was distributed to us as well as in your presentation, you mentioned the $97 million reduction of the costs. How do you break it down? How is this amount broken down between the various items totalling $572 million? I need these clarifications to understand where the cuts will be and in which areas you will pursue your studies.
[English]
Mr. Thomas: The cost reductions are across three broad areas, and we refer to that as the restructuring and re-engineering. This is cutting back on the overhead in headquarters in the regions, looking at destaffing of lighthouses, and looking at the integration of the marine communications and traffic services. We're integrating our electronics technicians and our instrument repairmen who do diesel mechanics work. We are reducing our shop yard maintenance; as we destaff the lighthouses, we can reduce the number of people in the shop. Also, because we have developed a partnership with industry with respect to the environmental response organization, we are able to cut back on our resources there. In total, we're looking at reducing, through re-engineering and restructuring, by $31 million.
The second area we're looking at reducing is what we would term levels of service. There are total reductions of about $51 million.
Part of that comes in the fleet. We are seasonalizing all of our large vessels. This means that the ship will be alongside with no one on other than two or three emergency people. Every ship will be taken out of operation for two months of every year. Some of the larger ships might be out even longer than that. When they're out of service, they're not available to whoever may want them, so there is an impact on levels of service.
We are reducing our information that we provide to the private sector, what we call ``ice reconnaissance'', by $4 million.
We are implementing standards across the country from marine navigation aids. In the areas where we see that we do not need a foghorn, we're looking to take it out unless the community wants to take it over. In a number of the rivers we're taking out lighted buoys for recreational boating, because there just wasn't enough night traffic to warrant lighted buoys.
We are reducing the dredging, as I mentioned before.
We are reducing our Arctic operations by about $6 million; that is, there will be two fewer ships in the Arctic for that period of time.
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We started consultations across the country. We met with about 800 people, and 570 actually wrote to us. We also had a number of papers. What we were looking for is a number of small areas in which we could reduce the level of service or change the way we deliver the program to be more efficient.
We're looking for a further $12 million to $15 million through those consultations. We're now in phase three. We went out broadly in the consultations, we came back to our marine advisory committee and we're starting out now in the regions with very small groups, focus groups, asking where we can do more.
We're looking at a third broad area. Because of the merger we should be able to have savings of about $25 million because of the fleet integration and because of integrating the bases and warehouses and so on. There's a major aspect we see coming out of the merger. That's $25 million. Those are the main components of reductions.
I mentioned the three broad strategies earlier. Using differential global positioning and electronic charts in order to remove floating aids by 50% to 80%, depending on where you are, is not included in these numbers. That's the next step. We're using AIS technology in order to have a further significant reduction in our marine communications and traffic services. As I say, we're already cutting the number of manned sites in half. They could be cut in half again.
The third area is the scenario approach to ice-breaking. We see a significant reduction. We're not far enough ahead yet to actually be able to say what the dollar savings are. This Thursday, with industry, we're looking at the validity of some of the scenarios we're putting on the table so that we can develop them further with industry. It's very much a business case approach we're taking.
For instance, if we look at Botwood, two of the principal users are asking what happens if they don't have ice-breaking. They're saying, ``If we don't have ice-breaking then we don't have to pay for it. If we don't have ice-breaking, how would we manage the business?'' Do you stockpile? Do you truck in or whatever? It depends on what the actual business is. But two of the main users were already independently coming to the same approach and we intend to continue developing that with them.
[Translation]
Mr. Bernier: Briefly, a last question. Are the $97 million mentioned in your presentation document related to the $572 million quoted in your Blue Book or to the $841 million? I am just trying to work out how large the cuts will be.
[English]
Mr. Thomas: Is that reduced from the $572 million?
Mr. Bernier: Yes.
Mr. Thomas: The overhead that's included in here was the overhead based on Transport Canada, because that's where we were when these numbers were put together.
In coming into Fisheries and Oceans with the merger, we are taking the overhead components from Transport Canada that applied to the coast guard, from DFO and some that were already within the coast guard, and we're pulling them all together. We are putting them together and then reducing it by something like 44% across the country. There's a $36 million saving in overhead as a result of this. Part of that is then reflected in a reduced cost here.
The Chairman: Mr. Scott.
Mr. Scott (Skeena): I have two questions, Mr. Chairman. You talked about cost recovery and then you talked about the fact that search and rescue is not a cost-recoverable item.
On the north coast of British Columbia where I live the coast guard doesn't maintain much of a search and rescue capability. As a matter of fact, I'm given to understand by talking to people in the commercial fishing industry there that a great deal of the search and rescue done in northern B.C. is actually done by the American coast guard.
Is there any cost recovery on their part for performing that service or is there a quid pro quo somewhere along the line?
Mr. Thomas: There is a quid pro quo with the U.S. Coast Guard. We have agreements that cover a whole range of activities. For instance, we do their ice-breaking into Thule, Greenland. They do work for us on the west coast. They do SAR for us. By the way, they don't do all northern B.C. It's just that the panhandle comes down and they have a piece there. We tend to use the CMRA, the marine rescue auxiliary, largely in northern B.C., in the Charlottes. We're looking at expanding that.
There is no cost recovery for SAR. The only area in which we're looking at possible cost recovery is for frivolous use of SAR. For example, that is where somebody goes out without a paddle, taking none of the normal precautions, and gets themselves into difficulty. Then we might charge them for towing them in. Or it might be somebody who does windsurfing across the Atlantic and we have to go out and pull them in. I use that as an example because they try it. There are crazy people out there who do crazy things and I think when they do crazy things and there's a significant cost to finding them, or pulling them in, or towing them, they should be charged for it.
Mr. Scott: As I mentioned, there isn't much of a coast guard presence in northern British Columbia. We do see the odd vessel, but for the most part search and rescue is carried out by the American coast guard.
The issue of light stations, which you touched on, is one that's very important to mariners in northern British Columbia and of course they're deeply concerned about the destaffing that's been proposed. You talked about one round of destaffing that's taking place and a further proposal for after 1999 to destaff again by about 50%, if I understood your remarks correctly.
My question relates to the fact that when destaffing was carried out on the east coast some years ago the auditor general had some pretty disparaging things to say about the way it was done, and about the fact that the financial targets weren't met by the government and the quality of service was diminished as a result of destaffing.
I have written to the Minister of Transport - at the time it was the Minister of Transport - and asked him for a cost-benefit analysis when we were made aware that destaffing was going to take place. I asked him some pretty specific - and what I thought were simple - questions with respect to the cost of the automated equipment.
I asked what the payback time was estimated to be, what the cost of maintaining that equipment would be and specifically what the overall saving was projected to be, given that manned light stations in British Columbia, according to the department, are costing $5 million or so a year.
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Could you tell us whether you have the information with respect to the cost-benefit analysis? I have never been able to obtain this information. I have never received a response to my requests for information. I wonder if you have that or if you can provide that to us.
Mr. Thomas: Mr. Chair, I can certainly provide the details on it. As well, I can provide an overview here. It's between a two- and a three-year payback. That means the difference between our cost investment that we have to make and when we start actually saving money. A two- to three-year payback is considered a reasonable timeframe. Across the country for all lighthouses we were looking at making a saving of a little over $6 million on an annual basis.
We have been conservative. I believe we have overestimated in a number of cases. The investments have little to do with the actual automation of the lighthouse itself, with the navigation aids. It relates more to the other marine services we have picked up over time. Marine weather is an example. We do not use the AWAC system. I say that up front because there seems to be some misunderstanding. People think we do use it. We do not. It's a system in use in airports. It came under some criticism but that's being examined separately.
We do use a number of elements. More importantly, we're looking at quite a simple approach to marine weather, and that is having people do it, having the people who are there provide the information.
We have started discussions with ``the fishing industry''. Our people in the marine communications traffic services stations are the ones who come out with the weather. They provide the weather advisories. And they need information coming in to be able to do that. They can either go out and ask people in ships, because they're tracking the large ships so they know where they are, or they can set it up with the industry, so that when ships go into areas they will be asked to please phone in and tell us what the weather is. Then we'll broadcast it to everyone.
So we think we have a reasonable basis for dealing with marine weather.
There are only about twelve sites involved in the aviation weather on the west coast. Again, we see the same sort of thing. There is a level of service that over time we have come to provide. We intend to have that safety service. It will be provided. What we are looking for is an alternate means of providing it, and we will have that before we destaff the station. It doesn't have to be the lightkeeper. It may be done through some other way in the area.
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The same thing applies to communications and search and rescue. There were blank spots where communications were not up to standard because of the geography on both coasts. Communications were not up to the standard they should be. We are looking at addressing that specifically by putting repeaters in the hills.
In the area of search and rescue, the point you mentioned, we are looking at expanding the CMRA, particularly in the northern part of B.C. where the response time is fairly high. It's just on the borderline as to whether we would find it acceptable on an ongoing basis. We're looking at how to improve that level of service, how to shorten the response time. We see ourselves doing that primarily with CMRA.
There is another aspect we're looking at. Because of the merger, we now have Fisheries and Oceans sites where we would have had fisheries enforcement. We're looking at a combination of those sites and our own and at whether we can't, through some cross-training and the multitasking of the people, have them doing enforcement as well as being more appropriately trained in order to be able to deal with an SAR incident when it comes up. That may mean some changes in the equipment. Some of the equipment isn't suitable for doing that.
There are a number of steps we're taking to address the marine safety services, and not just in northern B.C., although that is a critical area. And we see that being done before there's further destaffing.
I would like to correct a point you made. We're not looking to the period after 1999-2000 to complete the destaffing. Phase one of the destaffing is under way now and that will take the next 12 to 14 months to complete. We hope to have the safety services coming into place. I mean the ones that I mentioned, such as SAR, radio communications, marine weather and air marine weather. We hope to have an alternate means of producing and providing that information in place in order to continue with the destaffing for the other lighthouses.
Mr. Scott: Do you have a timeframe for it?
Mr. Thomas: No. It's depends on when we can get the marine safety services in place. The only ones we had a timeframe on were the first eight on the west coast. When we looked at those very closely we felt the safety services were there so we didn't have to do anything further. We do have to do something further in the other sites. We have to provide alternate means.
The Chairman: Mr. McGuire.
Mr. McGuire (Egmont): Thank you, Mr. Chairman.
I wonder if Mr. Thomas' department has done any impact studies that would show the results of these changes if implemented. If there's a list of winners and losers, what ports would benefit, what ports would die, and what effect generally would that have on the country and on particular ports in different parts of the country? Have any of these impact studies been carried out?
Mr. Thomas: Mr. Chairman, there is an impact analysis presently under way. The consultants we've hired from different firms bring together economic analysis capability as well as knowledge of the marine transportation area.
They have been meeting with users across the country and they will continue doing that until about the end of November when we expect to receive their report. The impact analysis will be complete about the end of November and that's when we see making it available, around the end of November or early December.
That will provide a better appreciation of what the impact is on shippers or carriers and whether there's likely to be an impact on diversion of traffic or not. Overall it will give you an appreciation.
In the U.S. there is a harbour maintenance tax that is about one-eighth of 1%. We are not putting in a tax. There has been no decision to put in a tax. We're putting in a marine services fee in some form, but the amount of money we'd be collecting would be less than what the Americans are collecting through their harbour maintenance tax.
If you apply the harbour maintenance tax at one-eighth of 1% of the value of cargo in Canada it would be roughly $85 million. We are looking for $60 million, so that's less than what is already being imposed on the ports south of us.
The second example -
The Chairman: There are also other costs incurred in doing business in Canada that they may not have in those ports.
Mr. Thomas: They may not, but most of the ports are privately managed.
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The Chairman: But in the port of New York the dredging is covered by the Army Corps of Engineers. It is not passed on to the user. That's a substantial investment by the U.S. taxpayer.
Mr. Thomas: Yes, but let me take one example, the port of Saint John. I use it because I happen to have some specifics on it. I visited there last week and talked to the users and to the chairman of the port.
The impact of the marine services fee on all users of the port of Saint John would be approximately $3 million. That assumes it's a service-specific fee. In other words, they wouldn't pay for ice-breaking. They would pay for the services they actually used.
There are four principal users. Irving is the largest by far.
The $3 million figure was mentioned to the Irvings in discussions with them. As well, we looked at what services are being provided. I would say that there was general agreement in principle that if those are services they require - and they do agree they require them - and if we are moving to make them as efficient as we can, which we are in the case of those two new technologies I talked about, they say, fine, in principle, they agree they should be paying for the services they are using.
So that was the marine service fee. We now move to the dredging. The dredging is roughly $2.8 million for the port of Saint John for both channels. If the port has total responsibility for the dredging, it might very well be done more efficiently in a number of areas. For one thing, they would deal directly with the contractors. Secondly, they would do only the dredging they specifically want, need, and are willing to pay for. So we can see that moving dredging into the hands of the people who are going to pay for it will be more efficient overall.
Again, Irving is the main user of the port. They were advised of this. They acknowledge this and accept it in principle.
Yes, there is an impact on the four major ports where we're doing this: Saint John, Quebec, Montreal, and the Fraser River port. But it is part of the cost of doing business, and it is specifically aimed at those ports. Through the marine service fee, they are going to end up paying a lesser charge than they might in other ports, so there is a trade-off.
Mr. McGuire: A lot of smaller ports are going to be directly affected and probably won't be able to sustain viability nearly as well as the port of Saint John, or Halifax, or the Fraser River. What about the little ports that have a seasonal nature, such as Summerside, through which 70% of the potato crop is exported? Their chances of being able to pay for dredging or ice-breaking are fairly minimal. What effect are these changes going to have on the small ports like that, and on probably many others across the country?
Mr. Thomas: That is the purpose of the impact study. I can't tell you precisely what the impact is going to be, but by about the end of November we hope to have that information. They will look at the impact on a number of different stakeholders. They will look at the question of possible diversion to other ports within Canada or to the U.S. They will look at the viability of actually doing this from a specific-company, specific-sector point of view.
Based on the consultations, my general feeling is that while it might be difficult, it is doable. We will be able to put this in place.
Mr. McGuire: In your discussions with industry you have told them where you see the cuts coming, where you want to see your $60 million or $97 million of savings over the next number of years. I imagine that industry would prefer you to not make some of those cuts and that industry might identify other areas where more savings could be identified.
Have you taken those suggestions into consideration and probably gone beyond your $97 million or have you looked at just your own internal cuts?
Often industry can point out where a department - not just yours, but any department - can make savings, whether it is by cutting personnel or services that are not required as far as industry is concerned. Have you been having an exchange of that type with industry?
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Mr. Thomas: Yes, we have, and frankly, it depends on where you're from. If you're from the west coast, then by all means you can cut ice-breaking. And certainly if you're in Saint John or Halifax, ice-breaking is not an issue. But if you happen to be escorting ships into the north shore of Quebec, ice-breaking is very important. In fact, we have correspondence coming back to us in which they are saying that the level of service is just right. They don't want any reductions. So in just about any area you get two sides of the coin.
Industry wants overhead, management and administration to be cut first. We are going through a 44% reduction in management and administration. That's from the areas of finance, personnel and informatics. On top of that the management and administration in terms of program management, not the corporate services type of management, is also being significantly reduced at headquarters and in the regions.
That's the first area they want cut, and I believe the program we have in place to reduce it should satisfy any reasonable person.
When we look at the other areas, it's more a question of not nit-picking pieces but of getting big savings more strategically. We've put the difficult ones in place.
For instance, people challenge the level of manning we have on our ships. They challenge the level of maintenance we do on our ships and so on. For the people on our ships, there is a 15% decrease in salary. They haven't had a pay increase for five years and now there is a 15% decrease in salary. I would say that's a fair reduction. It's fair by industry standards, maybe not fair by the standards of the people being impacted.
Let's look at maintenance. Yes, our ships are very well maintained, but we have our ships for 30 to 35 years and not for just 20 years. We don't write them off tax-wise after 20 years. We're reducing our level of maintenance, but hopefully not to the point that we don't get the life we need and want out of the ships.
The ships take a heavy beating. They're not just going from point A to point B. When they're going through the ice, if they're cutting through it like butter, that's very good, but most of the time they're trying to break through the ridges, which is hard on them.
It's the same thing with the buoy tenders. If they come straight out of the water, that's a piece of cake, but if they're banged against the sides.... They do take heavier wear than one would expect, and therefore they take heavier maintenance. We are still looking at how to reduce that.
There is the notion of the coast guard having lots of resources, because if you look at the ships they look good and if you look at the people on board and so on.... But we're taking as many reductions as we can - I noted what they were - and I'm not sure we can take any more reductions of the efficiency kind. I think we now have to move to the stage of actually taking ships out of service. That's the approach we're now working out with industry. We're asking where we can actually take ships out of service.
The Chairman: Mr. Dhaliwal.
Mr. Dhaliwal (Vancouver South): I have a couple of questions. One is in terms of the competition between Seattle and Vancouver, for example, and how the tax component plays into that. As you know, there's a real concern that we might lose some of our business to Seattle.
There are a number of concerns. Obviously one is the fee. Another is any taxes that may go up, in terms of property taxes that are now grants in lieu of taxes. There's a concern about what our competitive position is in terms of that. Do you have any information on that?
How is the $60 million that is going to be covered through marine services going to be split in the country? Do you have any idea? How much will be from British Columbia and how much from the other parts of the country? That would be interesting to know.
Here's another thing. When I toured the Victoria coast guard in Victoria, I noticed we have a lot of equipment for clean-up of spills. Perhaps you can tell the committee how much of it is a cost-recovery factor, where we split with the provinces on dealing with spills, and if we need to have all that equipment. Are there other ways? Maybe we're looking at privatizing that or reducing our involvement or contracting out, as opposed to the government doing clean-ups.
Maybe you can comment on those for the committee.
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Mr. Thomas: Thank you, Mr. Chairman. In the first instance, the Seattle-Vancouver competition, I think it's generally held that the main factor is the tax situation, which I have nothing to do with. But it is one of the factors that compounds with the marine service fee to make a difficult situation even more difficult. I understand that.
When we do the impact analysis, we are not restricting it just to the marine service fee. For instance, we've asked the consultants to look at the impact of phasing out the WGTA in terms of shipping through the Great Lakes and what the subsidies are from ARFAA in the Maritimes. We want them to try to take that into account. And likewise, they are to take into account what's happening with the tax situation, with getting out of the grants in lieu and having the port pick up the taxes, whether that is a fishing harbour like Steveston or whether it's the main port of Vancouver. It's exactly the same issue.
That is happening across the country, and I realize that down south of the border there are some tax benefits, if you like, that are not available here. We will look at that in the impact analysis, but that is not part of my ball game, as they say.
In terms of how the marine service fee is split across the country, I can provide that information to you. I don't have it with me, but I will provide it.
As for spills equipment across the country, yes, we do have a lot of equipment across the country because the coast guard had total responsibility for spills up until this summer. We have been working with industry and in fact we are now in the process of certifying response organizations. Burrard Clean in the west is the response organization on the west coast. We have them all across the country. Those response organizations are required to be able to respond to a 10,000-tonne spill within a certain timeframe.
The coast guard, not the response organizations, is still totally responsible for spills north of 60. That's one of the reasons for having equipment. And we do have some stockpiled in the north, but we have it largely in St. John's and on the west coast so that we can move it up north by air.
Secondly, there are always small spills, what we call ``mystery spills''. Sometimes it's more efficient just to go out and do them rather than to get into a contract with industry, because we put in a claim to the SSOPF - the ships source oil pollution fund - but you can only do that if you know who made the spill. Otherwise the money keeps on going out of our pocket in terms of a contract, so if we were contracting with Burrard we'd be paying them without having the money for it or a source for getting the money back. If we actually know who made the spill, we can have it cleaned up and charged back against the fund. There is the difficulty of actually replenishing our resources, because since we started the partnership with industry, we don't put money into it anymore.
The third thing is that in establishing the capacity with an industry - industry actually established it and they've made significant investment - one part of the game rules is that we will not sell our equipment to a particular response organization because that would undermine others.
Let's go back to what caused us to do this in the first place. The response organizations in industry were there to supplement what we already had or vice versa. It wasn't there ``instead of''. There's a minimum spill capability - 10,000 tonnes with industry - and across the country.... For instance in St. John's the coast guard could probably respond to a 10,000-tonne spill as well. On the west coast we also have significant capability.
That is seen as really cheap insurance for a big spill. There isn't any money to be saved there. It's equipment in place. You can't really sell it to anybody else other than response organizations, and they have already have their new equipment in place. It's being used now only for what I would call minor spills or mystery spills, where it seems to be the most efficient way.
The Chairman: Okay, to finish this off, you mentioned some stuff, and I think it's important that the committee have it if it's available.
You indicated that in the port of Saint John you have talked to the port officials as well as to the users. You've identified service-specific fees of about $3 million in that port.
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You've also indicated that in the four areas where dredging will be handed over to the ports you have a dollar figure for that as well.
For the major ports, can you provide us with a breakdown as to the amount of service-specific fees anticipated in each of those ports as well as for the four areas - Saint John, Quebec, Montreal and the Fraser River - and the amount of money that is anticipated based on current annual expenditures for dredging? Is that available now, Mr. Thomas?
Mr. Thomas: Yes, it is, Mr. Chairman.
The Chairman: Can you get that to us as quickly as possible? I think one of the things we would want to consider as a committee is the impact on the competitiveness of some of our ports. The port of Halifax generates over $300 million in net economic impacts in the Halifax area. That's substantial. We have fought for years to be competitive with the U.S., where there is less of a rigorous and costly regulatory regime. We fought to have avoidable costs of rail addressed in Canada so that we could be more competitive.
Now, on top of all that, if these fees come in, if there is $60 million or $30 million or $100 million in fees, it may have a substantial impact on the competitiveness of ports on our seaway and on the east and west coasts. If you could provide those figures, I think the committee would be interested in having a look at them.
Mr. Thomas: I can certainly do that, Mr. Chairman. I can also volunteer to provide a more in-depth presentation on the marine service fee if the committee wishes. I have only touched the surface of it this morning. You may want that at some time.
The Chairman: I'm interested in the process. What is the process here? There's a paper out, it has options in it, and it clearly identifies that one of the options, which is a fee for service, was preferred by the House of Commons committee, but they agreed there would be some administrative problems with it.
I'm interested in finding out what the process is. Committees of the House of Commons do a lot of things. We do a lot of overviews, a lot of reports, and make recommendations, but ultimately how does this thing get decided? Is it solely a decision of the minister after consultation? Will there be more public discussions after the coast guard goes out across the country and deals with users? How does this happen? Do we just wake up one day and see a press release telling us what the option is? Could you take a minute and tell me what the process is?
Mr. Thomas: The options paper, the consultation paper, was put out very broadly to several hundred people. We have been using the Marine Advisory Board as the focal point for bringing comments together so that, for instance, one of the members of the Marine Advisory Board from the west coast meets with a large group on the west coast to get all their comments. Generally speaking, they are heads of national associations, and when they come to the table they are representing their associations. They're our focal point for consultations. That's what industry wanted, that's what Scott recommended, and that's what we're doing. That's the main piece of the process.
Second, we're going out very broadly with the impact analysis. The people we're meeting with are the people suggested by the Marine Advisory Board members. And anybody else who wants to be consulted can be, but we're focusing in on those people the stakeholders are telling us to talk to.
We'll come together with a preferred option by about the end of November. We will have the impact of that option on the various ports, on the shippers and on the carriers across the country.
In December and, roughly speaking, into January we will try to put together that package to help the minister arrive at a decision as to what is best from the government's point of view so that he can make a decision in January.
He would then go through the normal regulatory process, put it in the Canada Gazette, and say, here is the option, or here's what we're doing in the marine service fee. Through the regulatory process we would go through the next wave of public consultation, where we would get further input from the public on it. Then we would see what adjustments, if any, need to be made. It depends on the input.
The Chairman: Okay. I want to thank you. We will get you back here. The issues of which you speak are of interest. It seems that since the merger it's with our committee now, not with Transport, and I guess we'll have some reading to do on some of the Standing Committee on Transport's deliberations, hearings and recommendations. The things of which you speak today are clearly of critical importance to our competitiveness in some of the ports.
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We heard some other witnesses say that in that very competitive environment, if they can find a way to reduce services.... One of the problems they have, I think, is that when the coast guard is mandated to deliver a service and delivers a service they believe is too costly, if they believe there's another way it can be accessed at a cheaper cost it impacts on whether or not they get the business into Canadian ports in many cases.
I'm sure that debate will continue to unfold in the fall and early in the year.
Thank you for appearing today. We will have you back for probably a whole session on the merger and some of the fee structures.
Mr. Thomas: Thank you very much, Mr. Chairman. I appreciate the opportunity to come in and talk to you today.
The Chairman: From the Canadian Meteorological and Oceanographic Society we have Dr. Campbell, executive director, and Dr. Lawrence Mysak, member, and professor in the department of atmospheric and oceanic science at McGill University.
Who will be leading off? Dr. Campbell.
Dr. N.J. Campbell (Executive Director, Canadian Meteorological and Oceanographic Society): Mr. Chairman, thank you very much for the opportunity to appear before the committee on Bill C-98. We are here on behalf of the Canadian Meteorological and Oceanographic Society. I am the society's executive director and also was a former director general of the Department of Fisheries and Oceans.
With me is Dr. Lawrence Mysak, who is a member of the society, professor of the department of atmospheric and oceanic sciences at McGill University and the chair of the National Academy of Sciences of the Royal Society of Canada.
The purpose of our visit here is to provide you with some information about the society. We function as a major organization to promote and develop oceanography and meteorology in Canada. We are a non-profit organization made up of members from all across the country.
As far as I'm aware, this is the first time that any of us have been present at a parliamentary committee or dealing with matters parliamentary. We have presented a brief for the study done on science and technology. If I may proceed, I will ask Dr. Lawrence Mysak to say a few words on behalf of the society.
Dr. Lawrence Mysak (Member, Canadian Meteorological and Oceanographic Society): Thank you, Dr. Campbell.
Just for the interest of members here, my background is quite diverse. I was a professor of mathematics at University of British Columbia and also a professor of oceanography there for 20 years. I've now been at McGill University for 10 years as professor of atmospheric and oceanic sciences. I'm also director of the Centre for Climate and Global Change Research and am in my third year as president of the National Academy of Sciences, which is an 800-member academy of the Royal Society of Canada. So I think I speak with a fairly broad background and some interest and expertise in this very important brief.
On behalf of the society, I would like to make three main points. First, in the preamble, we suggest that you expand paragraph four, which reads:
- WHEREAS Canada promotes the integrated management of oceans and marine
resources;
- to include ``wishes to confirm its intention to cooperate in the stewardship of global
oceans''.
A very important example of this is in the migration of fisheries and how these are controlled by ocean conditions. One very good example is the return of the Fraser River sockeye.
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I heard some discussion earlier today about the Fraser River region. The Fraser River sockeye spend half their lives in the open ocean in the northeast Pacific. When they return they must return via either the north end of Vancouver Island or the south end. That very much determines where the fisher people will go to catch these fish. Therefore it's very important to know what is happening in the north Pacific, and that, it turns out, is related to year-to-year changes which are part of natural climate variability.
The second point I would like to make concerns clause 42, which describes the functions of the minister. As a preamble, let me say that I noticed in the present bill it states that the minister may conduct various surveys, research and so on. I think the minister's hand should be strengthened and the word ``shall'' could be an important insertion there. I think the activities proposed there are extremely important and the word ``may'' is a very lightweight phrase.
Going further with this point, in the view of CMOS the powers of the ministers have omitted to mention the role of the department in conducting research and studies in the context of the global climate system, of which the oceans form a fundamental part. I mentioned that my background is oceans and climate. The important point here is that, seen as a whole, the planet receives its heat from the sun in the lower latitudes, in the tropics and the planet loses heat at the polar regions. Therefore, heat is transported from the low latitudes to the high latitudes.
As far as we can determine, the heat is transported equally by the atmospheric circulation patterns and the oceans. As much heat is transported by the oceans as by the atmospheric circulation patterns. Therefore, the global ocean is a very important part of our climate system. Canada has played a major role in conducting world ocean studies that deal with climate. Therefore, we feel that a phrase should be added in clause 42, perhaps following paragraph 42(b), to the effect that the minister shall:
- conduct systematic assessments and research on the role of marine waters in the Canadian area
of interest, as part of the global climate system.
It was recommended that the government could benefit enormously by profiting from the expertise of non-government officials, such as people in research and universities or in industry. Therefore CMOS strongly recommends that there be a provision for the establishment of science advisory bodies that could aid a federal department or agency like the Department of Fisheries and Oceans.
For an addition after paragraph 43(b), perhaps subparagraph (b)(iii), we propose a phrase like ``establish marine science advisory bodies and appoint or designate, as appropriate to members of these bodies''.
I have read the bill and have noticed a couple of terms that were never clearly defined. These are very important terms that probably have different meanings for different people. These are the terms ``hydrography'' and ``estuary''. These words are used repeatedly without definition in the bill.
Hydrography is a confusing term because it means a different thing to Europeans than it does to us. We would define hydrography as:
- that branch of applied science which deals with the measurement and description of the physical
features of the navigable portion of the earth's surface and adjoining coastal areas, with special
reference to their use for the purpose of navigation.
The second term I mentioned was ``estuary''. Estuary can be defined as follows:
- a semi-enclosed coastal body of water that has a free connection with the open sea and within
which sea water is measurably diluted with fresh water derived from land drainage.
The Chairman: Yes. Thank you.
We had some people in the other day who talked about science generally. They were concerned that this bill gave too much power to the minister to direct science. I asked some specific questions in terms of what was wrong with that. I think that is exactly what is wanted in a bill that seeks to consolidate and to put a sharp edge on the sword, rather than having five or six different ministries peripherally involved with marine science research and development. I think it would be desirable to have this focus, this primary responsibility.
In your letter to Mr. Tobin, which is attached to your brief, you indicate that the legislation should make a stronger commitment to the role of Fisheries and Oceans in ocean science. You alluded to it briefly. What exactly do you mean by that? We had a witness the other day who didn't think we should do that. That witness thought we should go in the other direction.
Dr. Campbell: I guess the confusion you're referring to is the marine research done by the Geological Survey of Canada in terms of marine geophysics. That's a difficult question to answer. At one time, the geophysics and geology group was part of the marine sciences branch, in the days when the organization was with mines and technical surveys. When the fisheries and oceans section out of EMR was transferred to Environment, the geology stayed with EMR or mines and technical surveys. The argument was basically that geologists and geophysicists work together and the fisheries biologists and oceanographers are off in another little cubby hole.
I don't think it's really critical which way it goes as long as they're well coordinated. Our two main establishments, the Bedford Institute of Oceanography for the east coast, and the institute in Sydney, B.C., are co-housed, so in a sense they are cheek by jowl. I have not experienced any difficulty in working with them or in being associated with them even though they are in different departments.
I think one can make the argument either way, but I don't feel at this point in time that it's critical unless the problem arises as to funding and how the sciences should be funded. I think then it has a different bearing, but in terms of conducting the work it's not a problem. We share the ships and we share the equipment. Basically it's a coordinated and cooperative development.
Dr. Mysak: From a university perspective, I think the problem arises when it's time to do research in marine science and ocean sciences. While we can conduct certain projects, we cannot conduct them without the assistance and help of the many excellent marine scientists we have in Canada. There has to be a central department which provides the services, provides ship time, etc. Universities cannot afford to run ships and conduct large-scale projects. We have to do this in cooperation.
Secondly, so we can understand the nature of the fisheries and marine ecosystems, let me point out that this is not just a biological problem in isolation. It is very much linked with the physical factors of the sea and also to climate factors and climate changes. Climate is not just a CO2 problem, a global warming problem. There are always going to be climate cycles, climate fluctuations from year to year, from decade to decade and from century to century. And I think to have this appreciated in a department of fisheries and oceans is very vital.
The Chairman: This last question deals with this whole area that nobody wants to talk about. It's about federal-provincial jurisdiction. But when you deal with rivers and lakes, when you deal with an ecosystem, it's very difficult to say this is where it begins and this is where it ends so therefore we'll just deal up to this point. Other witnesses have made that point very clearly and very pointedly.
When you deal with estuaries, you use the St. Lawrence River as an example, and you propose a definition that could be put in the act for greater certainty. Just as a point of interest, if that definition were put in, how far up the St. Lawrence would we be dealing with, according to your definition?
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Dr. Campbell: The extent of the salt water intrusion reaches to around Three Rivers. It's not fixed at Three Rivers. It depends on the state of the tide. That's about the furthest intrusion of salt water.
Mind you, by the time it gets there it's getting rather dilute. Fundamentally it has not been a problem because the department and the universities work very closely with those in Quebec who are concerned or involved in oceanography, namely the Université du Québec at Rimouski. Fundamentally, they're partners with us.
It hasn't created a problem, but by and large we are not working up there because of the problem with maritime or shipping traffic. It's a little risky to put an oceanographic ship up there for any length of time. We tend to stay below Quebec City.
The Chairman: Mr. Bernier.
[Translation]
Mr. Bernier: I shall be brief, Mr. Chairman, because I'm not very familiar with weather forecasting and oceanography. First of all, I would like to thank the witnesses for coming this morning. I listened carefully to what they had to say and I shall keep it in mind for the clause-by-clause study of the bill.
You said that the limit reached by salt water is around Trois-Rivières. Many people in Quebec ask themselves the following question: since, under the bill, the Minister could decree marine environment standards, couldn't that create a conflict with the Quebec Environment Minister or at least wouldn't he have to set guidelines concerning standards applicable to tributaries that flow into salt water? Maybe Mr. Mysak could answer the question.
Mr. Mysak: Thank you very much. I will.
[English]
All I can say is that we can't change the nature of rivers and how they interact with the ocean. It's a fact of nature. I think we have to live with it and cooperate on this issue. I don't think environment in this issue is a case where you can divide one or the other. It's not black and white. I think the only way it can work is through cooperation.
As Dr. Campbell said, we've had excellent cooperation between the Institut Maurice-Lamontagne in Mont-Joli and the Université du Québec at Rimouski. We have many colleagues there. My colleagues at McGill also work with people at Rimouski and Laval. So far there have not been any difficulties.
[Translation]
Mr. Bernier: I often like to say that researchers are like fish that know no boundary. Maybe you ignore political boundaries, because you talked a lot about definitions. Don't you think that allowing the Minister to set standards should be decided in consultation with the Minister of Environment of the Province of Quebec or of the other provinces for that matter, if we want to avoid possible conflicts? Don't you have any definitions or improvements to the definitions to suggest?
[English]
Dr. Mysak: Not really. I can only say that the definitions we've proposed are not original. They have been around for decades. You can't change the definitions of science just to suit the political powers.
The Chairman: He concedes.
I thank you for coming forward. Oceanographic science and marine science are very interesting. I have the BIO in my riding. I certainly understand the importance of it, not just to pure science but also to jobs in private sector partnering.
Mr. Dhaliwal indicated he didn't have a question, but I've obviously sparked some interest.
Mr. Dhaliwal.
Mr. Dhaliwal: Thank you very much, Mr. Chairman.
I have one question about your page 2. You wanted to add ``conduct systematic assessments and research on the role of marine waters...''. I wonder if any of this work is presently done by the Ministry of the Environment.
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Dr. Mysak: The Atmospheric Environment Service does conduct climate research mainly from an atmospheric point of view in the development of climate prediction models and collection of climate data. They are working with oceanographers, mainly in the university sector, dealing with the development of a couple of atmosphere ocean models. In terms of work directly in the marine waters.... The ice central branch, which is the Atmospheric Environment Service's prediction of ice movements and so on, is already in the atmospheric environment service....
For your information, I think it's a pity that in this country we do not have a joined atmospheric and oceanic federal department, as in the United States where they have the National Oceanic and Atmospheric Administration. The oceans covering 70% of the globe obviously interact strongly with the atmosphere through wind-driven currents, precipitation, evaporation, rainfall, run-off, and so on, and therefore the two are very strongly coupled.
Since the fish depend on atmospheric and climatic changes as well as on ocean current changes, to me it's a given that these should be together. At McGill we've taken the lead this way and have redefined our studies from those of an old meteorology department to those of a department of atmospheric and oceanic sciences. Our department is unique in Canada.
Mr. Dhaliwal: I'm trying to clarify that further. Are you saying that some of the services provided in the environment ministry should be brought over under this act? Or is this a service that is not provided at all by government? Or are you saying that we should consolidate these services under this bill? Is that what you're saying?
Dr. Mysak: I'm obviously not going to rewrite this bill. I just made a general statement. But clearly I think the close cooperation between what is going on in a marine way and in atmospheric sciences, like ice services, should also be done in cooperation with this bill. I don't think you could revise this bill without knowing the jurisdiction of the Atmospheric Environment Service within Environment Canada. I think it's a very good bill as it is. I'm glad to see the science component is brought in along with the management of the ecosystems.
Mr. Dhaliwal: Thank you.
The Chairman: Thanks very much for helping us today. The brief you've given us will be considered when we sit down and do clause-by-clause consideration and report the bill.
Dr. Mysak: Thank you.
The Chairman: Our next witnesses are from the Shipping Federation of Canada. We heard from the the Canadian Shipowners Association and the Maritime Chamber of Commerce the other day.
From the Shipping Federation of Canada we have Captain Nicol, the president, and Captain Ivan Lantz, manager of.... No, we don't. Who do we have here?
Captain F.C. Nicol (Shipping Federation of Canada): Mr. Chairman, Captain Lantz couldn't be with us today, so I've brought a colleague, Sonia Simard, with me.
The Chairman: Okay. For the record, we have Sonia Simard, from the Shipping Federation of Canada.
Ms Simard, do you have a title?
Ms Sonya Simard (Executive Assistant, Shipping Federation of Canada): I'm executive assistant.
Captain Nicol.
Capt Nicol: Good morning, Mr. Chairman and members of the committee. I would like to thank the committee for this opportunity to present the views of the federation on Bill C-98, the proposed Oceans Act.
Before I begin, I will tell you a bit about who we are and what we represent.
The Shipping Federation of Canada was incorporated by an act of Parliament in 1903 and since then has represented the owners, operators, charterers and agents of vessels engaged in Canada's overseas trade. The 79 members of the federation are all Canadian companies that own, operate or act as agents for some 350 shipping lines serving Canada's shippers and importers, trading to and from ports in eastern Canada and the Great Lakes.
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It follows that all matters affecting trade and marine transportation are of prime concern to our members.
Let me begin by saying that we welcome the government's initiative to consolidate in one piece of legislation the responsibility for the management of our oceans, the promotion of sustainable development of our natural resources, and the reaffirmation of Canada's commitment to the international Law of the Sea.
I intend to limit my comments to two aspects of the proposed Oceans Act. Both have impacts on the maritime industry. One is the enshrinement of the Canadian Coast Guard as a service of the Department of Fisheries and Oceans and the mandate proposed for the coast guard as set out in clause 41 of the Oceans Act. The second is the imposition of fees for marine services provided by the coast guard as established by clauses 49 and 52 of the proposed legislation.
I will turn to the institutionalization of the coast guard and the definition of its mandate contained in clause 41 of the proposed legislation. I will not repeat this section as I know the committee is thoroughly familiar with it. Suffice to say that it gives legal recognition to the Canadian Coast Guard as an entity, establishes the position of the commissioner, and spells out the mandate of the organization, including responsibilities to provide certain services.
Although the Shipping Federation supports this move to legislate the existence of the coast guard, we believe that clause 41 of the enabling statute should be revised to more clearly define the coast guard's mandate. As the committee is undoubtedly aware, the government has established a Marine Advisory Board, comprised of carriers, shippers, and other maritime interests, to assist the commissioner to review various services provided and to develop a new approach to the provision of financing of coast guard programs.
The board's first and foremost priority is the reassessment of the levels of service required by users with respect to aids to navigation and ice-breaking services. The Marine Advisory Board is currently considering a number of options, including the elimination of some services, the rationalization of the levels of others and the commercialization of those that lend themselves to this, the use of technological developments and the provision of certain other services.
As an illustration of this last item, the federation, in conjunction with the Canadian Shipowners, representing domestic shipping, and the Canadian Coast Guard is involved in a pilot project to evaluate the use of a technologically advanced electronic navigation system in the St. Lawrence River. If the project is successful it would be expanded to other areas in Canada.
This project has the potential to significantly reduce vessel traffic service costs while improving the quality of marine traffic information. I should explain, Mr. Chairman, that in conjunction with the efforts of the Marine Advisory Board a nationwide public consultation review was initiated by the government to assess the levels of services required by users. In view of what has been learned from all of this debate, we believe that some re-drafting of the proposed legislation is required.
According to paragraph 41(2)(a) of the bill, the mandate of the coast guard is to provide services for the ``safe, economical and efficient movement of ships...''. The federation believes that these objectives of safety and cost efficiency, which are identified in the coast guard's mandate, should be applied to the marine services provided by the coast guard. This should be covered in the legislation.
Additionally, the act should be sufficiently flexible to permit commercialization of services where desirable and allow for the adjustment of both the type and level of services required to meet the evolving needs of users. The needs of users change as the years go by.
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Therefore, we recommend the addition of a paragraph (b) to subclause 41(2), which should read as follows:
- (b) Services under subparagraphs (a)(i), (ii) and (iii) shall be provided in a safe and
cost-efficient manner, and the level of such services shall be defined according to the needs of
users and the public interest.
The federation's second concern with respect to the proposed act lies in clauses 49 and 52, which provide a legal basis for the imposition of cost recovery for marine services. Again, I won't waste the committee's time by unnecessarily repeating these sections, although they do appear in our brief.
As a preliminary remark, I must point out that the maritime industry has consistently maintained that any cost-recovery program for coast guard services must be linked to cost reduction, entailing a rationalization of services and the reassessment of the level of services required by users.
Unfortunately, despite our efforts to adhere to this policy, in July 1995 the coast guard announced its intention to recover $20 million plus administrative costs from commercial shipping in 1996. This sum will be increased by increments until 1999, by which time the government will be recovering $60 million annually, plus administrative costs.
The proposal is designed to recover costs allocated to commercial shipping for ice-breaking and aids-to-navigation services. The coast guard, in an effort to develop an equitable cost-recovery formula, is currently consulting with users.
The federation is vitally concerned about the outcome of this, as it is quite possible, depending upon the type of recovery program selected, that our members will pay a major portion of this cost-recovery target.
Clause 49 of the proposed Oceans Act provides the statutory vehicle to impose fees. The federation agrees that users should pay a fair share of the cost of providing safe and cost-efficient services under the premise of ``user pay, user say''.
However, we believe that the fees levied must be linked to significant reductions in costs and major improvements in efficiencies. We are, therefore, disappointed to note that both the announcement of the coast guard cost-recovery target and the effort to develop a legal basis for the imposition of cost-recovery fees have preceded the achievement of either of these essential objectives.
Without prejudice to our position on the primacy of cost reduction, we believe that in cases where cost-recovery fees are to be levied the following mechanisms should be incorporated into clauses 49 and 52 of the bill to safeguard the interests of users and the public.
First, there should be a legislative provision to recognize the Marine Advisory Board as the commissioner's senior consultative entity. This board would be charged with ensuring that fees imposed on the shipping industry are related to safe and cost-effective maritime services, and that such fees are based on the level of services required by users.
Second, subclause 52(1) should be amended to allow users more time to evaluate the impact of any contemplated increase. For such an evaluation 30 days is insufficient. We respectfully submit that 90 days would be more appropriate.
Third, provisions allowing interested parties to lodge objections to the fees contemplated should be introduced into the legislation. In cases where an objection is filed, the minister could appoint a person to investigate whether the proposed fee falls within the ambit of a safe and cost-efficient service. The investigator should report to the minister and the proposed advisory board. Alternatively, an appeal process to an independent body would be equally acceptable. Either of these two mechanisms would fulfil the fundamental principle of ``user pay, user say'' and protect the public interest.
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In addition to the foregoing, I suggest that a financially accountable mechanism should be incorporated into the legislation, which on the one hand would require the commissioner to detail revenues generated through fees while on the other require him to justify expenditures on the various services provided. Under such a mechanism the commissioner would be obliged to submit an annual report to this committee, thus giving parliamentary accountability, and to the proposed advisory committee, thus giving accountability to the users.
I would like to stress that although clause 49 provides a general basis for the imposition of fees for services, it should be noted that such fees cannot be reasonably imposed on commercial shipping for all coast guard services enumerated in that clause.
Our industry, for example, should not be burdened with cost recovery for services falling under paragraph 41(2(b), the search and rescue program. The Standing Committee on Transport, in its report A National Maritime Strategy, stated in recommendation 30: ``Search and rescue services should be treated as essential and no cost-recovery program applied.''
Furthermore, logic dictates that services provided to pleasure craft and the support of other departments are in no way related to commercial shipping, and therefore no such fees should be imposed on our industry.
We thank the members of the committee for affording us the opportunity to present our views on these issues. We would be pleased to answer any questions. I would like to apologize for not having a copy of our brief in our other official language. I assure the committee that this will be available within the next couple of days.
The Chairman: You've been concise and to the point. I want to thank you for that.
I liked some of the recommendations. We've heard them from some other witnesses. Directionally they were the same, although the language was perhaps different.
I think you've raised a very good point about clarity being required when you deal with any sections that impose fees or give the minister the ability to levy fees. In particular, I like your proposed addition to subclause 41(2), because we've heard from others on your side of the industry about their concern that services provided by the Canadian Coast Guard must be driven by an imperative of lowest possible cost to the user. I think your point may be something that could help us ensure that takes place.
The other reference you made was with respect to a process being established so an individual or an organization may object to a levied fee. I think we'd want to look at that a little more closely. I'm not exactly sure how that would work. Ensuring better accountability to House of Commons committees is certainly something I think most members have agreed with. They've said so in the past.
We all feel that when legislation is passed, where powers are given to the Governor in Council or to the regulators, we have to ensure that there is some type of accountability for the House of Commons.... The House of Commons is the highest court in the land. We're a piece of that, and I think the recommendations you've made are fairly good recommendations.
Mr. Bernier.
[Translation]
Mr. Bernier: I don't have much else to add either. I would like to thank the witnesses for coming this morning. I listened carefully to what they had to say. I read the document and I would particularly like to underline the third recommendation concerning what I call in French the "utilisateurs payeurs et les utilisateurs consultés" which is a free translation for user pay, user say. I applaud the use of these terms and I hope that this recommendation will be taken into account. Thank you.
[English]
The Chairman: Mr. Scott.
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Mr. Scott: I'd like to echo your words, Mr. Chairman, and those of my friend from the Bloc. The brief was very concise and to the point. These arguments are something the committee should take into consideration.
The Chairman: Mr. McGuire.
Mr. McGuire: Yes, Mr. Chairman.
On page 6, in the paragraph beginning, ``The Federation agrees that users should pay a fair share...'', you go on to say that:
- ...the cost recovery must be linked to major reductions in costs and major improvements in
efficiencies with respect to coast guard services.
Capt Nicol: Is this on page 6?
Mr. McGuire: Yes. You're saying that:
- ...cost recovery must be linked to major reductions in costs and major improvements in
efficiencies with respect to coast guard services.
- ...both the announcement of the CCG cost recovery target and the efforts to develop a legal basis
have preceded the achievement of either of these essential objectives.
Now, I must be honest in pointing out that the St. Lawrence is a good area to try it out in because we have many navigation aids concentrated throughout the river, including buoys and fixed lights ashore.
Mr. McGuire: Mr. Thomas said 50% of his budget goes to navigation aids. You're saying that in the St. Lawrence you could save 80% of that figure.
Capt Nicol: Up to 80% could be saved, depending upon how successful we are with the pilot project.
Mr. McGuire: How does that translate into dollars?
Capt Nicol: Perhaps my colleague has the figure.
Ms Simard: [Inaudible - Editor] ...in one big expansion, in terms of allocation, I think they allocated $20 million for VTS to commercial shipping. With the development of aids to navigation and the project we're working on, that $20 million should be revised, taking into consideration that service will be diminished. That one example with numbers could be revised as $20 million allocated to VTS.
Capt Nicol: That's another example.
Mr. McGuire: Could you continue that?
Capt Nicol: Mainly in the short-range navigation aids, which is $213 million. We would have to apportion part of that to the St. Lawrence, but of this 80% a high proportion would be placed at the door of the St. Lawrence. Eighty per cent of that could be reduced.
Mr. McGuire: Where else could the department shape up here before they continue on?
Capt Nicol: Ice-breaking is another area we have to look at: the use of ice-breakers, how they're dispatched, how they're crewed, and the ports that use them. We heard the commissioner earlier this morning talking about Botwood, Newfoundland. I guess the shore industries and the carriers have to make up their minds in which areas we can afford to keep going. Should we stockpile? Should we trans-ship through other ports?
These are questions we have to look at, and when we examine these particular questions, we have to make sure any changes we bring into place during the winter months don't spill over into the summer months.
For example, if you stop shipping a product over the winter months, is your customer elsewhere overseas going to look for another source, another supplier, for these winter months and is he going to come back again next summer? This is something that has to be considered very carefully. We stand to lose a lot of business if we're not careful in the decision we arrive at here.
Mr. McGuire: Have you expanded that paragraph in any way in your presentations to the department? Have you told them where the improvements and efficiencies in the service are from your perspective and how much they could save? Have you made those presentations to the department?
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Capt Nicol: Well, we have through the Marine Advisory Board. I represent the Shipping Federation on Marine Advisory Board and we make our points clear at these meetings. They're taken into consideration by the coast guard, although there's not an awful lot by way of decisions that has come out of the Marine Advisory Board at this moment.
Mr. McGuire: Are those reports public documents?
Capt Nicol: Yes, I suppose they are, although there is a degree of confidentiality with the board. We have been asked to maintain a degree of confidentially about the distribution of the documents. I'm sure it wouldn't apply to this committee, of course.
Mr. McGuire: I think that's a pretty major -
The Chairman: Why should it be any different in this situation?
Mr. McGuire: That's a pretty major criticism of the whole procedure here. Things are proceeding without the efficiencies being identified. How can you put a price on something or a cost on something that's going to be charged when the department itself hasn't shown where their own costs are going to be reduced or where the efficiencies are going to be put in place? It's like putting the cart before the horse.
Capt Nicol: We did hear the commissioner this morning explain how he was looking at crewing and using ships more effectively, especially when it comes to the dispatch of ice-breakers, how much advance notice they need and how they are going to be crewed.
The Chairman: Mr. Dhaliwal.
Mr. Dhaliwal: Further to my colleague's question, when you're saying they're not looking at ways to improve or to reduce costs, are you referring to the present coast guard? There's a difference between what it is now and what it is perceived to be in a couple of years from now, with the cutbacks and all the changes. Is your assessment based on what the coast guard is now, not on what coast guard is going to be in a couple of years? There's a tremendous amount of change coming about in coast guard.
Capt Nicol: Yes, I think we will end up with a much more efficient system when we've finished this whole process.
I wouldn't like to say that the coast guard is not looking at reducing costs. It is. It's just that we haven't come up with an awful lot of concrete results yet in some areas, especially with regard to ice-breaking. I think that's going to be one of the things discussed at the next meeting.
Mr. McGuire: Okay. You saw the coast guard person come out and explain where the savings are, like a $27 million saving in the merger of the DFO, and a lot of other savings that they're putting forward. It seems to me from what they've put forward, they're spending a lot of time in seeing how they can improve the cost and efficiency in a whole lot of areas.
I just wonder if you're looking at the old coast guard as opposed to the new coast guard, where all these changes are coming about. They haven't come about but they are in that cycle, that process of change.
Capt Nicol: We talk about the $27 million, but there are perhaps a lot of savings to be made in the merger. We're looking at the cost of services rather than just the merger. It's a little more difficult sometimes to see where the cost savings are going to be in some of the services.
They're not being ignored. We are working on them. It's just that we haven't come to a conclusion for a lot of them, such as how much we can save on navigation aids and how much we can save on ice-breaking. We really don't have the final figures on that.
Mr. McGuire: One of your major concerns is that with the technological changes that are coming about in terms of navigation a lot of moneys can be saved in terms of the aids and the buoys out there. They can be substantially reduced.
One of the things we should always be cautious about is that until the technology is proven we must be very careful. We've learned that at airports. We've brought in technology that's supposed to be more efficient and more cost-effective, and until we've actually done the road-testing of it.... Public safety is very important and we don't want to jump on the bandwagon until we have the pilot project and until we've seen the results, because safety is so important. Obviously this will take some time.
So we won't have proven technology right away. It something we're working towards. It will probably be some time. It may be at least two or three or four years before we have the answers as to whether we can have substantial savings as a result of new technology.
But your concern is that the coast guard will not take that into consideration, that it will not respond as quickly as they should. Is that one of your concerns?
Capt Nicol: You're correct when you say we're going to have to wait to see what the result of the pilot project is. I'm sure the coast guard will respond quickly to it.
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We may have to look at the provision of VTS services a little bit more. One area where we were successful in cutting costs was where we managed, through the Marine Advisory Board, to prevent a further expansion of the coast guard services with respect to VTS in the St. Lawrence and on the west coast. I've forgotten the exact figure now, but I think $12 million or $13 million slated for expansion sticks in my mind. We managed to prevent that until we have evaluated this new technology.
So you're right. Some steps have been taken.
Mr. McGuire: Thank you.
The Chairman: Mr. Wells.
Mr. Wells (South Shore): I have just one question. It relates to page 8 of your brief. I may address part of the question to the chairman because it's something I need clarified.
You're basically talking about not burdening commercial shipping with the cost recovery for services falling under search and rescue. I understood that search and rescue is not a recoverable expense, but looking at the clauses, it doesn't seem to be excluded. From the previous evidence, do we have some assurance, Mr. Chairman, that it is not a recoverable expense? Therefore, when we look at clause 49 about fixing fees, is there going to be an exemption? Are we considering an exemption for search and rescue, to be put right in the legislation?
The Chairman: Mr. Wells, I'm not sure. I think the fees are specific in the legislation, because this is an imposition of fees. Currently there is no framework to have imposed. My understanding is that the legislation is specific on fee for service, but there's nothing in this that would exclude.... Where's the departmental...? We'll get this settled. It's an interesting point.
Is there anything in this legislation that would allow the minister at some point in time to impose a cost-recovery fee for search and rescue? Is there anything in this proposed legislation that would allow him to do it? I'm not asking what the intent is. I'm asking if it would allow for that.
Mr. Jack Gallagher (Navigation Specialist, Canadian Coast Guard, Department of Fisheries and Oceans): No. The wording on fees in the legislation is the model given to us by Treasury Board and PCO that was put through with the Industry Act. It's the general provisions on fees that they want to see in all acts of Parliament. It's not specific for our case, for our fees, or for any other purpose of any other clause of this bill. It's a general fee provision. It's very similar to the sections of the Financial Administration Act.
The Chairman: That didn't answer the question.
Mr. Gallagher: What was the question?
The Chairman: No, the question is does this particular clause...? I don't care if it's general through the Financial Administration Act or Treasury Board. Mr. Wells asked specifically if this clause could be used to impose a fee. Could that clause be used to impose a fee for cost recovery on search and rescue without coming back to Parliament? I think that's the question.
You can tell me that the intent is no, but can it be used to do that?
Mr. Gallagher: The legislation requires us to consult before imposing fees. That is a provision in here that's not in the Financial Administration Act. That consultation would have to take place. We would have to be up front that we want to do that, that we want to recover for search and rescue.
Mr. Wells: But it doesn't -
The Chairman: But it does not require further legislative change in order to impose a fee on cost recovery for search and rescue. Somebody would have to consult. Consultations go on every day.
Mr. Gallagher: And it would require a fundamental policy shift of the government -
The Chairman: It does not require any legislative change. So legislatively this framework could allow for that after whatever's deemed to be consultation.
Mr. Wells, does that answer your question?
Mr. Gallagher: Plus the policy shift that would accompany that. That's correct. There would be no legislative change.
The Chairman: With respect, policy shifts every day. I'm never quite sure how policy is determined anyway.
Mr. Gallagher: It is tied into the international regime -
The Chairman: Yes, I understand that, but....
Does that answer the question, Mr. Wells?
Mr. Wells: Yes, I think when we look at.... You sort of put it at the end of your brief, but to me it's probably the most important thing you've highlighted. In fact, they can charge for search and rescue. The policy is not to, but the act allows it, and I think that's the answer to the question.
I appreciate your bringing it to our attention again, because when we hear people state, as we did early this morning, that it's not a cost-recoverable item, that is misleading. Under the act it is.
.1125
The Chairman: Mr. Bernier, do you have a question for the witness or do you have a question for Mr. Gallagher?
Mr. Bernier: It's for Mr. Gallagher because
[Translation]
they raised an interesting point concerning...
[English]
The Chairman: Does it relate to the witness?
[Translation]
Mr. Bernier: Well, they could at least listen to the question. It is very brief.
[English]
The Chairman: Okay.
[Translation]
Mr. Bernier: Mr. Gallagher replied on behalf of Fisheries and Oceans, and as I understand it, the current act provided supplementary levies for the Coast Guard or for the permits. And the representatives of the Coast Guard told us a moment ago that they would not ask for more money from the fishermen because the Ministry of Fisheries and Oceans has to recover $50 million. So, what I would like to know is this: does this bill, as it stands now, allow Fisheries and Oceans to collect these $50 million?
[English]
Mr. Gallagher: If I understand the question correctly -
Mr. Bernier: It's a long one for a short yes or no.
Mr. Gallagher: - it was about the fishing access fees.
The Chairman: The access fees.
Mr. Gallagher: In this legislation, absolutely not.
The Chairman: It does not deal with it.
Mr. Gallagher: That fee section is for those items detailed in [Technical difficulty - Editor] this bill. The access fees are under the Fisheries Act. Therefore, they cannot be dealt with under this fee provision.
The Chairman: It's under an bill that we expect to have introduced in Parliament very shortly.
We went through this three times already. Licence fees and access fees for the fishery are not dealt with in this bill. They would have to be dealt with under amendments to the Fisheries Act.
To our witness, I want to thank you for appearing today.
Capt Nicol: Mr. Chairman, could I add one little thing to maybe clarify something -
The Chairman: You sure can.
Capt Nicol: As for our thoughts on cost recovery, I think our concern just now is that at the Marine Advisory Board we seem to be spending more time on cost recovery and less time on cost reduction.
The Chairman: I see.
Capt Nicol: More and more, we're discussing cost recovery and methods of charging rather than getting into the meat of reducing costs more. I think that's one of the prime concerns.
Thank you.
The Chairman: Okay. I have it. That's what I wrote down. That's how I concluded your brief.
I want to thank you for appearing today. You've been helpful. If you have other words of wisdom you want to give us before we report the bill, send them over to our clerk and he'll make sure they're distributed.
That concludes our morning session. We've got one witness this afternoon at 3:30. We'll hear our last witness for the day at 3:30 p.m. in room 701.
This meeting is adjourned.