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EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, June 1, 1995

.0900

[English]

The Chairman: Order.

Good morning, colleagues. Committee today resumes consideration of Bill C-89, An Act to provide for the continuance of the Canadian National Railway Company under the Canada Business Corporations Act and for the issuance and sale of shares of the Company to the public, also known as the CN Commercialization Act.

Appearing before us this morning is a spokesperson for the Coalition pour la sauvegarde du Pont du Québec, Mr. Jacques Jobin.

Good morning, sir. Do you have a presentation for us this morning? I will ask the clerk to hand it out and ask you to begin, please.

[Translation]

Mr. Jacques Jobin (Spokesperson, Coalition pour la sauvegarde du Pont de Québec): I would like to begin by thanking you. I can have a copy of our brief distributed to each of you. I also have several copies of the brief with photos that I would like to distribute to the representatives of the three political parties here.

I would like to begin by thanking you for inviting the Coalition pour la sauvaegarde du Pont de Québec to appear. Our group represents 25 organizations in Quebec and Canada, representing two million people throughout the country. The Coalition's objective is twofold. First of all, it is to save the Quebec Bridge, an historic Canadian heritage monument recognized throughout the world.

.0910

Why save it? Simply because the bridge is in an extremely advanced stage of deterioration. At present, the cost to repair the bridge is estimated at $45 million.

The coalition's second objective is promoting the Quebec Bridge, once it is renovated, as a national monument, as a tourist attraction for the Greater Quebec City region. We estimate that this enhancement could generate very important activity for the Quebec City region. The Quebec Bridge is part of Canadian history. Prime Minister Sir Wilfred Laurier was the bridge's patron. He ensured that at the turn of the century, in 1900, construction work on the bridge began. The building of the Quebec Bridge was marked by two great tragedies which resulted in 89 deaths.

The Quebec Bridge has always belonged to the federal government. In the beginning, it was primarily a rail bridge, but with the development of the automobile, it became an important road link. Consequently, in 1949, the Government of Canada and the Government of Quebec reached an agreement enabling the Government of Quebec to use the Quebec Bridge in exchange for $25,000 per year. This agreement is valid until the years 2012.

The Government of Canada, who owned the Quebec Bridge until 1993, entrusted its management to Canadian National in the early 1920s. Canadian National maintained the bridge in a proper and satisfactory way until the early 1980s. Then, it ceased to invest the money required for maintenance, and the Quebec Bridge began to deteriorate.

Routine maintenance of the Quebec Bridge is valued at $3 million per year. However, since the early 1980s, CN has invested roughly $600,000 per year. Therefore, from year to year, the state of the Quebec Bridge has deteriorated considerably, and by looking at the photographs from 1990 that we have provided, you will be able to see that the Quebec Bridge has rusted and that it is in an unacceptable state of decay. As I said earlier, the cost of repairing the bridge is estimated at roughly $45 million.

In July 1993, and this is extremely important, the federal government and Canadian National signed an agreement whereby the federal government transferred to Canadian National the Quebec Bridge as well as the land for one dollar. We were told by the Minister of Transport's Office that the value of this land was estimated at $30 million. So in July 1993, the Quebec Bridge became the property of Canadian National, and in accordance with the agreement, Canadian National was obliged to undertake an extensive project to repair the bridge and improved the lighting. This obligation is clearly set out in section 4 of the agreement.

At the time, the federal government claimed that Canadian National was obliged to undertake the repair work, in accordance with section 4 of the agreement, in exchange for the transfer of land. In reality, since the signing of this agreement in 1993, there have been no plans to repair or maintain the Quebec Bridge, and as a result, it has continued to deteriorate considerably.

Obviously, the Coalition pour la sauvegarde du Pont de Quebec contacted the Government of Canada, CN, and the Government of Quebec through the Quebec Department of Transport to attempt to convince the three parties to agree on a program to repair the bridge which could be carried out over six or seven years and which would make it possible to save the Quebec Bridge.

.0905

If the Quebec Bridge continues to deteriorate at this rate, experts predict that in 30 years, it will have to be condemned, and possibly demolished. The cost of demolishing the bridge in 1990 dollars is estimated at $100 million.

We have attempted to convince the three parties involved to adopt a repair program and there was openess on the part of CN and the Government of Quebec to sign an agreement to that effect.

It is in this context that the bill comes into play. On behalf of the Coalition, I must say that we are extremely concerned about the consequences of this bill. If the Quebec Bridge is privatized under the privatization of CN's assets, the federal government will no longer have a moral obligation vis-à-vis the Quebec Bridge.

It is also highly likely that Canadian National, once privatized - especially if it is mostly owned by foreign interests, will not make the Quebec Bridge a priority. In fact, we have already been told that the Quebec Bridge would not be absolutely necessary for its operations, since it could use the Quebec North Shore.

It could then close the railway on the Quebec Bridge, the only railway joining the two shores which enables businesses in the Quebec City region to ship their goods via the Quebec Bridge to American markets and the Maritimes.

At the turn of the century, the Quebec Bridge was built specifically to join the north and south shores in order to enable Quebec businesses to export their goods to the United States and the Maritimes. So condemning the Quebec Bridge by closing the railway would have a disastrous economic impact on the Quebec City region.

As a result, we are here before you today essentially to say that in our opinion, considering that the Quebec Bridge is a national monument; considering that the Quebec Bridge, according to Sir Wilfred Laurier himself, is a heritage monument; considering that the Government of Canada has legal and moral obligations with respect to the Quebec Bridge and the Quebec City region; considering that the 1993 agreement that transferred the Quebec Bridge to CN obliged the latter to undertake a program to repair the bridge; considering that these agreements have not been respected; considering the danger that privatization would represent for the survival of the Quebec Bridge, the Coalition pour la sauvegarde du Pont de Québec - representing two million people - requests, here today, that the Quebec Bridge be excluded from the privatization package of CN.

We have recently learned that several CN buildings, such as the CN Tower in Toronto, would not be part of the privatization package because the Government of Canada would buy them back. Our coalition strongly believes that the federal government should adopt the same attitude with respect with the Quebec Bridge and invoke clause 6 of the bill so that the bridge will be transfered to it. That would ensure the bridge's conservation, because the federal government is in a better position to negotiate agreement with the provincial government and with CN on the survival and conservation of the bridge.

If the bridge is transferred to private interests, the federal and provincial governments will hesitate to invest public funds in property belonging to a private company, and the private company which will be the future CN will surely not consider it a priority to invest $45 million in property which is not absolutely essential for its operations.

In conclusion, as a show of friendship and solidarity, I would like to give you a book on the history of the Quebec Bridge entitled Une merveille du monde. During the construction of the bridge, Sir Wilfred Laurier said that the Quebec Bridge would be one of the wonders of the world. Through the text and the photos in this book, you will learn about how important the Quebec Bridge has been in the history of Canada. We would like to give you a copy of it.

.0915

[English]

The Chairman: Thank you very much for your generosity, Mr. Jobin.

We'll move to some questions.

[Translation]

Mr. Guimond (Beauport - Montmorency - Orléans): First of all, for the benefit of my colleagues, I would like to highlight the presence of my collegue, the member for Louis-Hébert. One of the ends of the Quebec Bridge is located in his riding. My collegue from Louis-Hébert has been following the Quebec Bridge issue very regularly and attentively, as has another of my colleagues, the member for Lévis.

Mr. Jobin, thank you for your presentation. I am not convinced that the majority of my committee colleagues around this table understand the meaning of your presentation. In addition, I believe you are a municipal councillor for the city of Quebec. They may be wondering why the city of Quebec did not make a request for assistance to renovate the bridge under the infrastructure program.

Once again, I would like to focus on the owner of the Quebec bridge and tell us why Bill C-89 is a deciding factor in the future of the Quebec bridge. I think it would be a good idea for you to emphasize the owner and explain which clauses of the bill are relevant to the Quebec bridge.

Mr. Jobin: Concerning the infrastructure program, we obtained information from the department of municipal affairs and it is impossible to invest in the Quebec bridge through this program because the Quebec bridge belongs to Canadian National. Moreover, it was impossible to obtain funding from the infrastructure program, because there was no money available.

[English]

The Chairman: When was this?

[Translation]

Mr. Jobin: Roughly three months ago, I talked to the Quebec Department of Transport. I also contacted the office of the federal Minister of Transport, Mr. Young. Unfortunately, it was not possible to use the infrastructure program.

Concerning the bill, it is important for the following reason. The Quebec bridge will become a CN asset when the company is privatized. At that point, it will no longer be in CN's interest to invest in repairing the Quebec bridge. CN will be a private business and no longer a Crown Corporation.

In our opinion, it is even possible that when CN is privatized, it will simply say that it is no longer bound by the 1993 agreement shich transferred land to CN, but we have been told by the federal Department of Transport that much of the land that was transferred under the 1993 agreement will be returned to the federal government through the implementation of clause 6 of the bill.

Finally, we are in a kind of legal vacuum because the agreement may never be respected.

I would like to draw your attention to clause 6 which says:

.0920

We feel it is extremely important that the Quebec Bridge be exempted from the assets that will be privatized by this legislation. As we explained earlier, we feel that the provisions of this bill allow the government to retain assets such as the Quebec Bridge as part of its historic and legal obligations.

Mr. Guimond: Who owns the Quebec Bridge?

Mr. Jobin: Canadian National has been the owner since it signed the July 1993 agreement.

Mr. Guimond: Why only since July 1993?

Mr. Jobin: Because before that, the federal government was the owner. It had been the owner since the very beginning, that is since 1900, when it built the bridge. Then, in July 1993, the federal government and CN reached an agreement, whereby the federal government transferred the bridge to CN. I have that agreement here.

Mr. Guimond: Could you file it with the Clerk of the committee?

Mr. Jobin: Yes, of course.

It is Order 143059. Let me read clause 4 to you in my best English!

[English]

[Translation]

Mr. Guimond: You refer to a major maintenance program. Are these independent assessments? How major is the renovation program in CN's view? How many millions of dollars would it cost?

Mr. Jobin: According to information from Canadian National, the Quebec Ministry of Transport and a number of independent entrepreneurs, it would cost about $45 million to restore the Quebe Bridge.

Mr. Guimond: You do not want CN once it's privatized to renege on the program and to say that it has nothing to do with the $45 million renovations, nor do you want CN to say that even if it is responsible for the program, it is not a priority and that it will therefore shelve the plan. That is why you're appearing here today and why you say that clause 6 and clause 12 of Bill C-89 should be amended to ensure that the federal government remains responsible for the $45 million maintenance program. Is that right?

Mr. Jobin: Yes, it is. You are quite right, Canadian National as a Crown Corporation is sensitive to the will of its political masters and is saying that it is not responsible for the program and cannot afford to invest $45 million in the Quebec Bridge since the federal government and not CN was the owner of the bridge when it fell into disrepair.

So CN, the Crown Corporation is saying that it cannot afford the renovations and that it does not feel responsible for them. We are wondering what a privatized Canadian National would do, one that might belong to foreign interests? We are quite sure that a privatized CN would not consider the renovations to be a priority and given that the state of the bridge is deteriorating as each day passes, the cost of renovating it could be extremely high.

.0925

[English]

Mr. Fontana (London East): I thank you for your presentation, but let me understand the facts correctly. The federal government owned it, and in 1993, transferred it to Canadian National, that has an obligation as per an agreement there, in conjunction, I might add, with the Province of Quebec.

If I understood what that agreement said, it also said that the Province of Quebec was supposed to participate in the maintenance of the bill. You have just read that part. I wouldn't mind seeing a copy of that agreement.

If I could, though, I think you're interpreting clauses 6 and 12 wrong, and I'll tell you why. I'm very sympathetic to what you're talking about, that obviously there were certain undertakings made by CN, a previous federal government, and so on.

I think we can find out a lot more, but I think you're reading clause 6 wrong. Clause 6 deals with non-rail assets. It's talking about real estate. It's talking about things that CN now owns that are not key or part of the railroad's infrastructure.

Therefore, in regard to asking for an exemption using clause 6, if we gave it to you, I guarantee you that every municipality across this country, every piece of track that has some historical value, every bridge, every train station across this country, everybody will say that they want an exemption. That's not what clause 6 is all about. Clause 6 is about non-rail assets.

That's not to say we're not sympathetic to what you're talking about, an obligation that was made by CN to repair a bridge. I think there is an agreement there between CN, which is a crown corporation, and CN as a private corporation. I must tell you that agreement still stays in place.

If you would give us a copy of the agreement, now that you've brought this to our attention, we will ask Mr. Paul Tellier at Canadian National for an explanation as to why they are not living up to, as you put it, their obligations in terms of maintenance.

Now, can I also ask you a question? You said the bridge was not necessary to CN's rail network. They are not using it now for trains.

Mr. Guimond: No, they're using it.

Mr. Fontana: Are they using it now for trains?

Mr. Jobin: Yes.

Mr. Fontana: But you said it wouldn't be used sometime in the future.

[Translation]

Mr Jobin: A privatized CN might decide not to use the Quebec Bridge any longer. CN has told us that it is using the Quebec Bridge mainly for political reasons because as a crown corporation it cannot very well decide not to use it given the important economic spin-offs its use has for the surrounding region.

[English]

Mr. Fontana: What's the alternative to this bridge? CN must have an opportunity. Is there another bridge? Is there another crossing?

Mr. Guimond: You stay on the north shore or you stay on the south shore. This is the connection between the north and south shores.

[Translation]

Mr. Jobin: I would like to comment on a few things you said. First of all, the Quebec Bridge is no ordinary bridge. It isn't just a piece of track.

[English]

Mr. Fontana: I know that. You've made your argument on historical.... I don't want to get into that.

Is it a bridge that's necessary for CN to do business? If it is, then obviously it's going to maintain that bridge as a private corporation, as a crown corporation. That's why I've asked you if it is necessary that CN use that bridge.

So let me finish my argument. If CN doesn't feel that bridge is necessary to its railroad operations, why don't you buy it from CN? Why don't your 2 million people invest some money, along with the provincial government, along with the municipal government, and buy the bridge for its historical purposes?

[Translation]

Mr. Jobin: CN officials have made it very clear to us that they were practically forced to sign the 1993 agreement. CN, a crown corporation, didn't necessarily want the Quebec Bridge when the federal government transferred it in 1993. I think the federal government forced it upon CN back then. Yet at that time the federal government did not provide CN with the $40 million that were needed to repair the bridge.

.0930

The Canadian Government now says that it did transfer some property with the Quebec Bridge but that some of this property will be returned to the federal government under a specific clause in the Privatization Bill.

So a privatized CN will come back to us and say that they never got a fair consideration for the Quebec Bridge. CN says that as things stand it doesn't need the bridge and that trains can travel along the north shore. So, if the bridge is owned by a private corporation, it is quite possible that for financial reasons, that corporation will decide that the rail crossing is no longer necessary since the trains can travel along the north shore. Obviously, if that is the case, it would be surprising for the corporation to invest $45 million in repairing the Quebec Bridge. It would also be extremely surprising were the Quebec Government and the Canadian Government to agree to invest this sort of money in a bridge belonging to a private corporation.

[English]

Mr. Fontana: I understand the question.

Can I just ask you one question? Are you here to fight to retain the bridge as a necessary transportation bridge CN has to continue to use or are you here to argue that you want this bridge kept for historical purposes? There's a big difference.

[Translation]

Mr. Jobin: Could somebody translate that for me properly? I missed something...

Mr. Guimond: You could try using an earpiece. Do you want to save the bridge to maintain the rail link or for historical reasons?

[English]

Is that correct, Joe?

Mr. Fontana: Yes, thank you very much. We make a good team, Michel.

[Translation]

Mr. Jobin: In fact, it's a bit of both. On the one hand, no one can deny that the bridge is part of our heritage. On the other, if a privatized CN were to close it, the economic impact on the surrounding region would be very great indeed.

I have talked to people from businesses such as Déchawa, which is based in Quebec City, and they have told me that 35% of their merchandise is shipped to the Maritimes or the United States through the Quebec Bridge. If the bridge is closed down, then Déchawa would have to go through Montreal, which would entail extremely high cost increases. In a sector that's as competitive as paper,...

[English]

The Chairman: On that, I think the chairman has the unenviable task of making a decision on whether or not the witnesses have had the opportunity to make their point and whether we've heard the point sufficiently.

Given the time, I'm going to have to say that on that point, I think you're very passionate. Those who are part of your coalition to safeguard the bridge in Quebec should be proud of the presentation you've made to us today. We thank you for your representation today, gentlemen.

Mr. Guimond: You should discuss with Jean Chrétien about the province, because he's a former mayor of Quebec City.

The Chairman: Can we not make this a political thing right now? We heard the evidence -

Mr. Fontana: Tell him we'll get him some answers.

The Chairman: Joe, please, order. I've congratulated the witnesses.

We thank you very much for your presentation and for answering our questions.

[Translation]

Mr. Jobin: In closing, I would like to thank members of the Committee. Speaking on behalf of two million people, it is with great conviction that I impress upon you how extremely important this matter is. We are counting on your sense of fairness and justice. Thank you.

[English]

The Chairman: Thank you, gentlemen.

.0935

Colleagues, we now invite the Canadian Pulp and Paper Association to join us at the table. David Church is the director.

David, will you be the spokesperson?

Mr. David Church (Director, Transportation, Recycling and Purchasing, Canadian Pulp and Paper Association): Yes, I will.

The Chairman: Welcome to the committee. We look forward to hearing your submission. Could you introduce those who are with you today?

Mr. Church: Mr. Chairman, we appreciate the opportunity to appear before you today on Bill C-89, the CN Commercialization Act.

Mr. Brian McGurk is the corporate manager of transportation for Avenor Inc. in Montreal. They have operations in New Brunswick, Quebec, Ontario and British Columbia.

Mr. Russ Lewis is the director of transportation for Stone Consolidated Corporation and Stone Container Canada. He is the chairman of the transportation and distribution section of the Canadian Pulp and Paper Association. His company has operations in New Brunswick, Quebec and British Columbia.

As well, Mr. Mel Nunweiler is general distribution manager for Canadian Forest Products in Vancouver. He is vice-chairman of our transportation and distribution section. He has operations in British Columbia and Alberta.

You have before you a copy of our submission. I think I'll turn immediately to page two of that submission, which starts with the position of the Canadian Pulp and Paper Association.

In principle, CPPA supports the commercialization of CN North America. In its appearance before the government task force on the Canadian National Railway system in December of last year, CPPA expressed its belief that the discipline imposed by private ownership and the pressures generated by the requirements of private shareholders will improve the cost performance of CN.

CN's commercialization should have the effect of improving its financial performance. Nonetheless, Bill C-89 should not be considered solely on the basis of its likely benefits to CN.

The Minister of Transport has stated that the government will be introducing legislation in the House of Commons to modernize the transportation regulatory regime in which CN will operate. It's now expected that such legislation will be introduced later this month. The objective of obtaining the best possible price for CN must not be achieved at the expense of a competitive rail transportation system in Canada.

The sale of CN to the private sector and its ultimate success as a coast-to-coast railway must have the full support of CN's customers as significant stakeholders in this process. Simply stated, railway customers require a competitive rail transportation system to access domestic and international markets, otherwise production will suffer, plants will be relocated, and employment will be decreased.

Should this happen, the benefits of CN's commercialization will be illusory, and the purchasers of CN's shares will be making a questionable investment.

CPPA has participated in a number of meetings with Transport Canada with respect to proposed changes to the regulatory framework. We are deeply concerned that the types of changes that are essential to customers have not been forthcoming. At a meeting last Monday with Transport Canada, CPPA expressed grave concerns that recent changes have been included that had not been previously discussed.

Such changes include provisions that would unnecessarily restrict access by customers to the National Transportation Agency. Transport Canada has repeatedly indicated that existing shipper rights would be protected. We have not seen any provisions that provide such protection.

Serious issues affecting the rights of customers are not being satisfactorily addressed. Transport Canada, of its own initiative, has deleted the level of service provisions from the legislation, which requires the railways to provide adequate equipment and facilities. In its place, Transport Canada intends to provide for a substantially reduced level of service obligation in the final-offer arbitration section of the National Transportation Act.

.0940

This is unsatisfactory to railway customers. The final-offer arbitration section is not designed to accommodate the expeditious relief shippers require when they fail to receive adequate rail service. Moreover, the inclusion of a public-interest test and the running rights provisions and the deletion of public interest elsewhere in the legislation are inconsistent and unacceptable.

Briefly, CPPA wishes to address the type of transportation environment that is required to permit the commercialization of CN to be achieved on a basis consistent with our country's best interests. The transportation regulatory reform legislation will permit CN and CP Rail to sell their abandoned rail lines without regulatory intervention. A reduced network will result in less capacity and greater market power in the hands of the railways. This will decrease the negotiating powers of CN's customers.

While CPPA recognizes that Canada's railways require greater freedom to eliminate infrastructure, this cannot be achieved through the enhancement of railway monopoly powers over customers. Pro-competitive initiatives such as expanded and accessible running rights are required to provide a balance between entry and exit.

CPPA strongly supports the recommendation of the Nault commission that all railway companies be allowed full running rights over all railway lines and that current provisions of the National Transportation Act to this effect be strengthened so as not to exclude any possible qualified operator. The implementation of this recommendation will permit short-line railways that come into existence as a result of the sale of unwanted federal lines to have access to more than one railway. These short-line railways will likely fall under provincial jurisdiction and the existing provisions of the National Transportation Act prevent them from conducting their operations on the lines of CN and CP.

The Chairman: Mr. Church, I wonder if I could interrupt. I have been glancing ahead at your submission. Do you have anything that pertains directly to Bill C-89?

We appreciate the submission you're making here, which is heavy on the side of the NTA regulations. That process we will be embarking on by the end of June, when the minister presents the amendments to the National Transportation Agency regulations. At that point we'll be dealing more specifically with things such as running rights, abandonment processes, and all that kind of thing. But right now we're dealing with the enabling legislation, which sets out more the vision of a privatized company and the financial arrangements around that. Do you have anything in particular on Bill C-89 directly?

Mr. Church: Mr. Chairman, we believe the two pieces of legislation are inextricably linked -

The Chairman: I was going to use the exact same phrase about two minutes ago, but I thought I would leave that one with you. We can appreciate that. But you're dealing exactly with stuff that's not in the bill. What we're dealing with today is stuff that's in Bill C-89.

Mr. Church: We're looking to you for assistance in ensuring the position of customers and that the need for competitive rail transportation for the railways' customers are taken into consideration in the two pieces of legislation.

The Chairman: Absolutely. In fact, your organization in all likelihood will be requested to make a presentation again when those particular amendments come down to this committee, so we can have a thorough examination of those amendments.

Have you looked at Bill C-89, and are there any particular clauses you can make any suggested amendments to?

Mr. Church: We have reviewed Bill-89 and we support the commercialization of CN. We don't have any specific comments about the provisions that are included in the legislation.

The Chairman: Would you mind, then, if we went to some questions, to your organization, on Bill C-89?

Mr. Russ Lewis (Chairman, Transportation and Distribution Section, Canadian Pulp and Paper Association): One of the points we wanted to ensure is that a process is going on and the process will be before the draft legislation is completed. We want to bring to your attention the concerns we have. We understand there are only a few more days to do that. We realize we have another opportunity to do that when the bill is formally introduced -

The Chairman: Absolutely.

Mr. Lewis: - but we know this is an opportunity now, when they're forming the framework -

The Chairman: No, that's where we differ. As chairman of this committee, I have an order to look at Bill C-89.

.0945

Now, the opportunity you have under...potential differences you might have or constructive suggestions you might have for amendments to the NTA as you know, are discussed directly either with your representative and Transport Canada or through direct intervention through letters or faxes or wires to the department. That's probably the best avenue for that approach.

Mr. Fontana: On a point of order, Mr. Chairman, I think, no, you might have it a little wrong, too.

The Chairman: Why is that? You mean we can't take suggestions?

Mr. Fontana: No. All NTA amendments will come before this committee, and it's this committee that will make the decisions.

Transport Canada, as you know, is going through a consultation process, as it has been for the past number of months, talking about rail issues. All of the amendments come to this committee. The politicians decide what amendments will be put forward.

You will have an opportunity right here, sometime in July, I would imagine, to address the very concerns you've addressed today. That's the process.

The Chairman: Thanks, Joe.

I'm not saying we won't be doing that. I've already explained that we will receive that legislation. What I'm saying is that the department and the minister are always open to suggestions by the stakeholders and the users to receive input as to constructive suggestions to any NTA amendments. That's what I'm saying to this group.

I'm also saying to this group that this isn't the proper forum in which to do it - that is.

We do accept the submission, of course, you've made to us, but I'd like to get to some questions as they pertain directly to Bill C-89.

Mr. Guimond, do you have any questions?

[Translation]

Mr. Guimond: Mr. Chairman, members of the CPPA, having worked for Abitibi-Price for 14 years myself, I'm quite familiar with the pulp and paper industry.

I would like to raise a point of clarification because I'm convinced that my honourable colleagues missed a point made by the previous witness, on what line will a plant located in Shawinigan, Grand-Mère or Trois-Rivières be able to ship its paper to Halifax harbour?

[English]

Mr. Church: I will turn to Mr. Lewis, who has a mill in Grand-Mère.

Mr. Lewis: If I understood your question, it is how a mill in Shawinigan or Grand-Mère would get to the port of Halifax. Both mills, in Grand-Mère and Shawinigan, are served by both CN and CP. They each independently have their lines down to Trois-Rivières, or the other direction, Garneau, to the CN Montreal or Quebec City route.

Mr. Guimond: And they cross the Quebec City bridge?

Mr. Lewis: I believe they do, sir.

Mr. Guimond: The Quebec bridge is the only possibility to cross from the north shore to the south shore?

Mr. Lewis: No, I don't think it's the only possibility, sir.

Mr. Guimond: The only possibility...if you go east you can ship from Shawinigan to Montreal through the south shore.

Mr. Lewis: Most of our traffic from those mills does go east toward Montreal, either to west -

Mr. Guimond: Daishowa in Quebec City sends, by train, 35% of its production to Halifax using the Quebec City bridge.

Mr. Lewis: I'm not aware of the percentage, sir. If they ship traffic to Halifax it's likely they do ship it over that bridge. In our case, I would say the preponderance of our traffic from Shawinigan or Grand-Mère would be going in the westerly direction toward Montreal and then over the bridges there into the U.S.

Mr. Guimond: Thank you.

The Chairman: Go ahead, Mr. Gouk

Mr. Gouk (Kootenay West - Revelstoke): Thank you, Mr. Chairman. My comments basically were much like yours.

I appreciate your concern. We've had many people come before us and express concern about the regulatory aspect of this. Our problem is that we don't have any regulatory proposals yet, and we're not into that.

Bill C-89 is very pressing because we're dealing with the clause by clause later this morning and then it goes back to the House for final reading. So again, as the chairman asked, I would ask if you have any concerns about any of the specific aspects of Bill C-89 or any comments on any provisions contained in it.

.0950

Mr. Church: No, we don't really have any specific comments with respect to Bill C-89, other than that we believe the privatization of CN will promote greater efficiencies for the railway. But we are concerned that the privatization of CN should also be linked with the rail renewal legislation to ensure that there is a competitive rail transportation system in Canada.

Mr. Gouk: Yes. I think we basically have two separate problems. Most of us agree on the idea that CN has to be privatized, and that is a problem in itself and is being dealt with by Bill C-89. The other one is that we know the entire rail industry needs an overhaul, which will be the next part of the regulatory change.

I would be happy, as I'm sure the other members here would, to have any submissions or ideas you have between now and the time when you might have the opportunity to come before the committee again on that particular legislation.

The Chairman: Seeing no more questions, gentlemen, I just want to wrap it up by saying that, to quote the minister himself, he is most assuredly concerned about the burdensome regulatory process that is handcuffing the railroads today. He says:

You can take some comfort in the fact that the minister is very serious about making the regulatory reform less burdensome on yourselves, as users of the system, and on the railroads themselves as well.

Mr. Church: We believe giving the minister the jurisdiction to commercialize CN might put him in a difficult position given the rail regulatory reform legislation that will be coming before you. But we believe it would be a mistake to maximize the sale of CN shares by reducing competition in the rail industry.

The Chairman: Mr. Fontana wants to reply to that.

Mr. Fontana: I have to challenge that statement, because a public or private CN corporation has nothing to do with regulations. Would you use the same arguments for a privatized CP?

The government realizes that shippers and the railroad community need some regulatory changes in order to make our transportation much more efficient, in order for shippers to get a competitive break so you can sell your products to your customers across the world. We know how much transportation costs your organization to ship, and that's no longer acceptable. That's why we're changing our marine and rail policies: to ensure that the clients who buy your goods can get them at the most effective cost. When 50% of your goods include the cost of transportation, that's no longer acceptable in this country.

So I think CN privatization will be a win for shippers. The regulatory framework will be a win for shippers also, provided that there are certain protections such as shippers' rights and running rights and so on. Those will be addressed in the next round.

In order to ensure a successful sale of CN, I think we've been told by everyone, including the investment bankers, CN, and the minister, that you need new regulations, a new regulatory framework in order for anyone to buy into a new railroad. That's why they're linked.

But I couldn't agree with the premise of your remark that said that we're doing this only to maximize the opportunities for CN. There's a lot more at stake in this, and it's called the transportation system in this country.

The Chairman: One final comment, gentlemen.

Mr. Mel Nunweiler (Vice-Chairman, Transportation and Distribution Section, Canadian Pulp and Paper Association): That was a very good summary, but we would like to emphasize that we want to make sure that the transportation rail network that is left will be very competitive, because that will make it efficient and therefore will benefit all of us.

The Chairman: Great. We're on the same team on that point. We'll be looking forward to seeing you again when the NTA legislation comes before us, the regulatory changes.

Thank you very much, Mr. Church and colleagues, for being with us today and for answering our questions.

Mr. Church: Thank you very much. We appreciate the opportunity.

.0955

The Chairman: Colleagues, we invite to the table the United Grain Growers, and its president, Mr. Ted Allen. We welcome Mr. Allen back to the table.

We look forward, Ted, to your submission. Did you bring a brief?

Mr. Ted Allen (President, United Grain Growers Limited): We have no formal submission.

The Chairman: Oh, terrific. So you're going to talk to us about Bill C-89.

Mr. Allen: Right.

The Chairman: Great. All right, at your leisure, sir.

Mr. Allen: Thank you very much, Mr. Chairman and members of the committee.

We have a few points we'd like to make about CN privatization. As you may or may not know, grain comprises a very significant portion of the traffic and revenues of both major Canadian railroads. As such, we have a strong interest in this bill.

First of all, I would like to say that as a general principle it is in our industry's best interest to see as much competition in this industry as possible. As such, we think it is essential that we have at least two very strong viable rail carriers in western Canada. To that end, though, I think it is in the interest of all of us for them to become financially strong by driving costs out of their system rather than simply by increasing revenues.

It is a fact that these carriers provide a service. There are far more jobs at stake in the industries they serve as opposed to the carriers themselves. So it is vitally important that the resources and the other industries these carriers serve stay viable, competitive and healthy.

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We're not particularly interested in the railways simply becoming profitable by raising their revenues but rather by driving costs out of the current system. We think there's a huge opportunity for them to do so if the structure of the industry and the rules of commerce are created by government in a way that makes this possible.

I have just a bit of a footnote on some of the things we've been reading that suggests that an appropriate level of debt for CN might be $1.5 billion. Our information is that at this level of debt CN would barely scrape by in being able to attract a credit rating that would allow them to be investment grade.

We believe it's important that some cushion or margin of error be allowed to be placed into the CN system. Perhaps a level of debt in the neighbourhood of $1 billion would provide some small cushion or level of comfort that would allow the privatization to have a better opportunity to succeed and to be more attractive to the privatization process the government appears to have in mind.

On this issue, I know there's an argument against too much debt reduction, because it would disadvantage their major competitor, CP. Nevertheless, we feel that a more appropriate level of debt might be $1 billion, as opposed to the $1.5 billion, which leaves absolutely no margin of error in terms of maintaining investment grade credit rating.

I'd like to talk now very briefly about another issue that concerns the grain industry and that we believe will concern the investment community, and therefore should also concern the government. The issue I'm referring to is that in a number of areas it appears that the government has not entirely divested itself of the notion of using rail transportation as an instrument of social policy. This may have been appropriate at another day and another time, but I think it's a little difficult to be both fish and fowl.

We believe these elements of social policy that still appear to be being pushed onto the railroads should be removed if the government is serious about converting these entities into purely commercial operations. I would refer to just a couple of them in the area of the western grain transportation sector.

There is a provision in Bill C-76, the budget bill, that basically says that if a railroad abandons uneconomic trackage, there is a $10,000-per-mile penalty assessed against the railroads in further rate-setting exercises. This means that if a branch line is uneconomic to operate but it is uneconomic by less than $10,000 per mile, there is no incentive to abandon the track. At the same, this penalty is not visited on the railroads if they hive off these operations into short-line railroads.

One's first reaction to that might be that this is wonderful. But if you critically examine this issue, you find that what you've done is created a hothouse environment, if you like, a skewing of the economic numbers to create short-line railroads. This will slow down the natural and orderly consolidation of uneconomic branch lines and will therefore slow down the movement of traffic to what would be more economic lines.

.1005

In general, this will reduce the opportunity to introduce the efficiencies into the system to the benefit of all the players - farmers, grain companies, and carriers - and force the system to continue to operate in a way that is less than cost-effective, to the best interest of no one.

In addition, we have an interesting amendment, proposed by the finance committee, that we believe is very bad legislation from a number of perspectives. The amendment basically adjusts the freight rate upwards for every farmer in western Canada by an incremental number, a small number of anywhere from 4$ to 18$ per tonne. Then that incremental rate increase over what had been the schedule is to be rebated by the railroads directly to the operators of the two existing short-line railroads.

One then has to ask why this does not make sense. In a historical context, the people on the two existing short lines previously got two subsidies and the rest of the industry got one. The two subsidies to the short-line people were that they got a fixed amount of money off the top of what was called the Crow benefit and then in addition, they along with everyone else shared in the general distribution of the Crow benefit. So they got two subsidies and every other farmer got one subsidy; he shared in the distribution of the Crow benefit.

Now, farmers have lost the Crow benefit, the short-line operators want to continue to be subsidized, and there is no federal money available for that. They have persuaded the finance committee to tack a small amount onto everybody's rate and then to have that money rebated to them. So everybody else has gone from one subsidy to zero and these people are proposing to go from two subsidies to one. The difference is that the one remaining subsidy is not going to come from the federal treasury but from their fellow farmers.

It would also appear that it's a very inefficient subsidy in that this grain could be trucked from the farm for between one-quarter and one-half of the cost of the subsidy that's being proposed for the rail operator; it's not cost-effective. In addition to that, Minister Goodale announced that he was eliminating cross-subsidization with his change to the pooling process on grain. We are introducing a new element of cross-subsidization.

I am going into all of these points on the CN privatization bill to demonstrate to you that in point of fact, there are still some elements of social policy that the government is attempting to mix with its goal of privatization, and those two goals are contradictory. I really think the government and this committee have to focus their thinking. Do they want to create a purely commercial entity or do they want to continue to utilize rail as an instrument of social policy?

With that, Mr. Chairman, I think I'll conclude my remarks. I look forward to any questions you might have for me.

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The Chairman: Thanks, Mr. Allen. Boy, I would have thought you would be arguing more that we were going too far to privatize the system, rather than mixing in the two.

I wanted to quickly respond to your first comment. If it's any comfort to you, not one witness who has come before us has said there isn't room for two competitive railroad companies in this country.

About reducing the debt to $1 billion, you're right it would probably be unfair for the government to reduce the debt of one company below that of an existing privatized company, namely CP. It would be seen as unfair, and frankly, pretty risky for CP in the financial markets.

It would also be unfair to the taxpayer, because as the financial experts have explained to us, if the total of non-core assets, like the surplus cash, and the sale of non-core real estate assets don't quite hit $1 billion - and we're talking about a small remaining component of $200 million to $300 million coming from shareholder proceeds - that might have to expand. We're not so sure the taxpayer would be very happy with us if that expansion were allowed to take place.

Mr. Allen: First of all, as I indicated, this number is a judgment call. It's a balancing act between not disadvantaging CP and not creating a financial cripple. My fear is that at $1.5 billion you will be creating a financial cripple, which will inhibit competition and will not enhance the competitive environment out there. But it's a judgment call.

The Chairman: You're into grain, I'm into politics, and probably neither one of us knows enough about economics to make that call. But I hear you.

Mr. Allen: It's a judgment call.

Actually, I'm a graduate in economics. They call it the ``dismal science''.

The Chairman: Well, I just put my foot in my mouth, didn't I?

Some hon. members: Oh, oh.

Mr. Allen: I don't claim to be an expert.

The Chairman: I guess I could hide behind the fact that neither of us knows the whole story.

Mr. Guimond: I want to thank you, Mr. Allen, for your presentation. Last year, on the same date, I met you in Thunder Bay when we had our subcommittee hearings, chaired by Mr. Comuzzi. I'm glad to see you again and I just want to thank you for your presentation.

Mr. Allen: Thank you.

The Chairman: Please go ahead, Mr. Gouk.

Mr. Gouk: Again, I'll touch on that same area, which seems to be a sensitive one.

I'm concerned they're going to do exactly what you say and move it down to $1 billion rather than $1.5 billion. We have heard from financial experts who were consultants to the process and those who were going to market it and both have indicated a market range of $1.5 billion to produce a triple-B credit rating, which in theory should give a bit of a cushion there. Whether the rating is triple B, triple B-, or double B+, they aren't trying to move to the absolute cellar of the credit-rating system.

As you and I have discussed before, on the other side of the equation are the premium assets that have been alluded to, that CN may have purchased by less than prudent financial investments, which they will still have when this is over. They paid a debt price to get those assets.

If you leave them with the assets and remove the debt penalty that you get for having those assets, if you have a real level playing field in terms of the financial aspect only, you will have given an advantage to the CN corporation.

Mr. Allen: As per our previous conversations, I guess we will agree to disagree. If you were to visit all the sins of the ancestors on the child, I think it would be grossly unfair. If the sins of the predecessors of this honourable and august body were to be visited upon you, you might not go broke, but you might get shot.

Mr. Gouk: That's the advantage of being a new party.

.1015

Mr. Allen: So in my view, if this is really a new operation and they're going to start from scratch, you need to forget about the mistakes of the past and start from day one.

Mr. Gouk: Again, one of the ways out of it may be through future legislation dealing with the change in regulations, and revisiting the regulations and joint running rights. If the other company has access to some of these deluxe features, that may serve to balance out some of the inequities.

Are there any other areas of Bill C-89 that you have concerns about or comments on?

Mr. Allen: Not in a specific way. As a statement of general principle, it is in the country's interest, the shippers' interest, and the carriers' interest to deregulate this system, which has imposed tremendous additional costs, so we can drive a lot of costs out of the system. Otherwise, while we're busy worrying about CP and CN, some U.S. carriers are going to eat them alive. There are far more people and jobs in the resource and manufacturing sectors dependent on an efficient transportation system than there are in the transportation sector.

Mr. Jordan (Leeds - Grenville): I'll just try this on the economist.

Whether it's $1.5 billion or $1 billion - we're not sure what the ideal is - the fact is, we should have an awareness of being too high or too low. Isn't that really what you're driving at? I don't know how anybody could argue that $1.5 billion was too much or not enough. It isn't that kind of exercise, in my view. I think, though, there are risks going both ways. Is that not the point we should be concerning ourselves with?

Mr. Allen: Very much so. I am uncomfortable with $1.5 billion, because according to my information, which may be flawed, that is really very much on the line. Any little slip from that $1.5 billion will create a financial cripple that will in effect eliminate the competition in the industry.

Mr. Jordan: Again, there's risk there. But we can also bring in somebody who can say there's plenty of contingency built in with the figure we're using. So I don't know. The proof will be in the pudding.

You started by saying that two viable strong carriers would be the ideal. If you want to ship your grain, it would be nice to have the choice of A or B.

Mr. Allen: It would be nice to have ten choices, but realistically two are about all we can hope for.

Mr. Jordan: We don't have two now, do we?

Mr. Allen: Well, from our perspective we currently do. But as we see the world unfolding, we're concerned that's not going to continue to be the case. We have two that are on relatively equal footing, but we certainly don't have two cost-effective, efficient carriers. I don't blame the carriers totally for that. It's partly a result of the environment they've been forced to operate in.

Mr. Jordan: One of those two, though, isn't viable. The only reason it's in business is because the taxpayers have been subsidizing it.

Mr. Allen: The taxpayers have been subsidizing both of them, actually.

Mr. Jordan: That's right, but one is being subsidized to a greater extent than the other. So we really don't have two viable forms of transportation now. We have one, and another that's a lame duck.

Mr. Allen: As they're currently constructed, if you're looking at them in a North American context, I would debate whether either one of them is definitively viable. I think there are some major steps that both companies have to take internally to become totally competitive and viable in a North American context.

Mr. Jordan: I agree with you. But the only place where you will ever determine whether there's room for two is in the marketplace.

Mr. Allen: Right.

Mr. Jordan: This bill is endeavouring to test whether or not there's a market for two. In some parts of Canada I hope there is. I'll never go on record as saying I think there is in every part of Canada, because I don't think that's being realistic.

.1020

Mr. Allen: We have focused our concern on western Canada because that's where our business is located.

Mr. Jordan: Is ``social policy'' a fancy name for politics?

Mr. Allen: No.

Mr. Jordan: It's pretty close.

Mr. Allen: I think in the past there was a time when using rail carriers as an instrument of social policy probably made good sense. When this country was being built, Confederation was predicated on a promise of a rail linkage. We didn't have the kind of effective road network we have now. We didn't have air transport.

I think the day has passed when we need a nationally owned rail network. To impose on the private network all kinds of rules and constrictions because we needed that as a nation, in terms of our identity.... I think that day has passed. I think this committee is recognizing that in looking at this current bill.

Mr. Jordan: The minister says these trains don't make his heart go thump-thump any more. Is he getting away from the nation-building aspect of it?

Mr. Allen: I think he's recognizing that the need for that has passed and we can no longer afford to impose costs on our taxpayers and shippers, which are the only two groups there to pick up the tab. To support operations that are redundant in other ways doesn't make any economic sense.

The Chairman: And there wasn't any competition. There was no air freight back then. There was no trucking back then and those kinds of things that compete these days.

Mr. Allen: With regard to the current situation, there are large areas of western Canada where one railroad is the only real option.

We talked about not getting into the new NTA, but -

The Chairman: Good.

Some hon. members: Oh, oh.

The Chairman: Joe, just a quick comment, and then we're going to wrap it up.

Mr. Fontana: You're right that the marketplace is always going to determine the success or failure of any enterprise. That's what free enterprise in the capitalist system is all about. As a government that wants to privatize CN, we have to make sure we reach that appropriate balance. Let's face it, we have to be very respectful of the taxpayers' dollars that went in, and what the taxpayers' return should be coming out of a public corporation. I think that's the balance we're trying to achieve.

I think you hit the nail on the head that the greater challenge for Canada is not whether or not we have a private or a public CN but whether or not we have a transportation system that is efficient and competitive, and whether or not both of our railroads can compete with our American counterparts.

To a large extent, Canadian railroads that have a handicap vis-à-vis the Americans because of our regulatory framework have been doing great things in the past couple of years with these shackles around their ankles, which we intend to shed so we can compete with the American railroads. The greatest threat to our Canadian railroads is not necessarily CN and CP fighting against one another but fighting against some American railroads.

When you were being critical of the finance committee in terms of protecting short lines and the Crow rate, you seemed to have forgotten that we put a cap on your freight rates. Isn't that social policy? Isn't that a subsidy? I think it's selective memory on your part, sir. I must correct you. While you can argue one point, you can't be both fish and fowl. If you really want the true marketplace then we should have taken the cap off altogether and let the marketplace determine what you should pay to move that grain of yours.

Mr. Allen: Let's look at this cap. First of all, the cap is set at a level high enough that if the rail charges are higher than it, the grain isn't going to move on Canadian railroads anyway.

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I didn't criticize the change in the Crow. I criticized the finance committee for raising that cap in order to rebate from 99% of farmers to another 1% who happen to be on the short lines.

Mr. Fontana: But your association has successfully lobbied the finance committee, as I understand it, to extend that Crow rate beyond the five-year sunset that was put in place under Bill C-76. So now you want the protection far longer than that.

Mr. Allen: Which association are we talking about, sir?

Mr. Fontana: The grain producers; obviously the people who have everything at stake in the freight rate. So you might argue that the rate is sufficient to take those fluctuations into account. But the fact is that the grain growers and shippers and everyone else want that protection to go on beyond the five years when it was supposed to come off.

Mr. Allen: There's a very simple reason for that. We have been asked to absorb this one change and we're going to go to an NTA, but we don't know what the NTA is looking like.

Mr. Fontana: In other words, social policy, right?

Mr. Allen: No.

The Chairman: We have an agreement to disagree.

With that, I'll thank you very much, Mr. Allen, for bringing us your submission and answering our questions here today. We'll probably see you during the NTA stuff.

Colleagues, we're going to take a five-minute break and then we'll come back to clause-by-clause.

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PAUSE

.1034

The Chairman: Order.

Pursuant to Standing Order 75(1), consideration of clause 1 is postponed. That's the title. We'll do that at the end in the usual way.

I want to introduce the people at the table. They are officials from the Department of Transport led by Assistant Deputy Minister Moya Greene.

Welcome. Thank you very much for joining us.

They're here to answer our questions if any arise.

.1035

Clauses 2 to 5 inclusive agreed to

On clause 6 - Transfer of property

The Chairman: Shall clause 6 carry?

[Translation]

Mr. Mercier (Blainville - Deux-Montagnes): No, no. Mr. Chairman, let me read out clause 6.

Mr. Chairman, if clause 6 is adopted, the House would give the Minister the power to decide which property that does not belong to the system he wishes to buy back from CN. Secondly, if we adopt this clause, we will be giving the Minister the power to decide the consideration, that is to say, the price that would be paid for this property.

We will not be presenting amendments at this stage, but we believe that we cannot give the Minister such power unless the House can decide what property the Minister can buy back, and secondly, what the consideration will be. We think that this gives too much power to the Minister, and we will be making an amendment saying that any transfer of assets worth more than one million dollars from CN to the government will have to be approved by the House. We will be making an amendment to this effect at report stage.

Mr. Guimond: We request a recorded vote on this clause.

[English]

The Chairman: All right, a recorded vote on clause 6.

Clause 6 agreed to: yeas 7; nays 2

Clause 7 agreed to

[Translation]

Clause 8 - Mandatory provisions in articles of continuance

Mr. Mercier: Mr. Chairman, we will be bringing forward an amendment to clause 8 at report stage, and you will receive the text of the amendment. We agree with clause 8 in its entirety, and we agree on its purpose, which is to keep a single corporation or a single group of individuals from having too much power over CN.

However, we do object to one thing: there is a provision stipulating that if several corporations belong to a single group or if there are links between them and if each one of the members purchases more than 15% of all the shares, each one of these corporations could purchase voting shares, despite this, even purchasing more than 15% of all the shares, as long as they swear an oath or make a statutory declaration stating that they would not collude or come to an agreement among themselves regarding their interests in CN.

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We suggest that this option be limited to Canadian individuals and corporations, because we think that in practice, the corporation's directors who are responsible for ensuring that those who have sworn this oath respect it will not be able to control foreign owners to ensure that they do respect their oath.

Given that we do not want paragraphs (5)(a), (b) and (c) to apply to foreigners, these paragraphs allow the option of swearing an oath that there will not be collusion among the parties, I move that clause 8 be amended by adding immediately after line 26 on page 5 the following:

[English]

The Chairman: Mr. Fontana, did you want to respond to this amendment?

Mr. Fontana: I'd respond only that I think this amendment is tantamount to essentially not making it possible for CN to privatize.

One of the things we've tried to make a point of is that there isn't enough capital money in Canada to accommodate the size of this share offering, and that's why our investment bankers wanted to ensure broad representation and broad marketability across Canada and the United States. Hence, imposing this kind of restriction I think would make it impossible for both CN and this government to achieve their objectives.

So obviously we will be voting against the amendment.

[Translation]

Mr. Guimond: Mr. Chairman, I would just like to say that I don't intend to begin a debate on this particular point today. I think that we'll always have time to do that in the House. So I don't want to respond specifically to the remarks made by my colleague, the parliamentary secretary to the Minister of Transport.

However, I would like to specify that even though the Bloc Québécois is tabling an amendment to clause 8, it totally supports paragraph 8(1)(c), which stipulates that the headquarters of the new corporation will remain located in the Montreal Urban Community. You will doubt that...

[English]

The Chairman: Taken.

I have a point of clarification from Mr. Gouk.

Mr. Gouk: It's more general, but I want to make sure I'm not getting too far afoot.

I've heard Mr. Mercier declaring all his intentions to make further amendments in each specific area as we go through at report stage. I just want it confirmed by the chair that this is not a requirement to make that declaration.

The Chairman: No, it's not. You don't have to make the declaration here at all.

Mr. Gouk: Okay. I don't want to get chastised by the chair again for being tardy.

The Chairman: It's not me who would chastise you; your whip might.

Mr. Guimond: I would ask for a recorded vote on -

The Chairman: Hang on.

Mr. Guimond: Excuse me.

Mr. Fontana: Except, though, on a point of order -

The Chairman: I'd just appreciate it if would you go through the chair. Don't make up your minds to start -

Mr. Fontana: I did - except now Mr. Gouk has made this intervention with respect to putting amendments at report stage.

It's clear that while the rules of the House of Commons allow for that, this new process of sending the legislation here prior to second reading was to allow for maximum discussion, maximum debate, putting forward good amendments so that the total committee can have those views expressed and be able to vote for or against some good amendments put forward by all members of the committee.

The Chairman: Okay, thank you, Joe.

Mr. Fontana: If in fact now this new mechanism is going to be used in a way that will delay or do anything, so that you start introducing amendments in the House of Commons - why, I don't know; maybe it's a bigger stage, and you think you're going to make much more impact - the fact is, that's not the way the new system is supposed to work.

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You said you wanted more power, you said you wanted more input from committee members; but now you're going to circumvent the committee system to go to the House of Commons. I find that....

The Chairman: I want to end the debate on this. The bottom line is that your answer is, yes, you will have the opportunity to put amendments in the House.

Mr. Gouk: On a point of privilege, given that the parliamentary secretary has cast negative sorts of feelings towards people who would, as he put it, ``pervert the system'', I point out that the system is set up to work in a certain way, and unless they plan to pass all of my amendments at this level or to vote down any areas where I will vote against clauses, then my next recourse, according to parliamentary procedure, is to deal with it at report stage.

The Chairman: Yes, that's correct. But what he's saying is that you could be putting all those amendments that you might be putting in the House -

Mr. Gouk: No, that is not true.

The Chairman: Let me finish.

He was just saying that the process is being struck so that you now have the opportunity to put here all the amendments that you would normally put in the House -

Mr. Gouk: I'll give you one very clear example.

The Chairman: - and go through the whole process here now, so that when we did the House business, we could get through it more quickly and more efficiently in order to get the bill through.

Mr. Gouk: One very clear example: on any one clause, if someone votes against it, that is a form of amendment, simply by saying, ``I don't want that in there''. That is the way -

The Chairman: Not as the format of an amendment. No, it's not.

Mr. Gouk: It's the equivalent to making an amendment -

The Chairman: No, not at all.

Mr. Gouk: - because when you vote against something and then it goes to the House, you are then perfectly appropriate in moving an amendment to delete that clause, and there is no way in which you can make that amendment here.

Mr. Fontana: No.

Mr. Gouk: That is an avenue that is open, Joe. Read your rules. That is a proper procedure.

The Chairman: In any event, I'm going to end this discussion now.

On clause 8 - Mandatory provisions in articles of continuance

The Chairman: We have an amendment.

Mr. Guimond: I would like to have a recorded vote, please.

[Translation]

Mr. Mercier: Mr. Chairman, I would have liked an explanation of the scope of this provision, because I believe that Mr. Fontana has misunderstood it. I don't see why it wouldn't be possible to sell CN publicly by means of an international offering, because this provision we're studying simply prohibits foreigners from acquiring up to 50% of the shares for one particular group by swearing an oath. I don't know whether I can ask for an explanation of this. The purpose seemed clear to me.

[English]

The Chairman: We understand.

Mr. Guimond: We have a question to the -

The Chairman: Do the officials want to respond?

[Translation]

Mrs. Moya Greene (Assistant Deputy Minister, Policy and Coordination Group, Transport Canada): I'm sorry, Mr. Mercier, but I didn't understand the question.

Mr. Mercier: Well Madam, Mr. Fontana's objection to clause 8 lead me to think that he may not have understood its scope and that perhaps I expressed myself poorly. I would have liked to have explained the scope of the provision, which is just that foreigners cannot swear such an oath. Only nationals can do so, because we think that in practice, the directors of CN will not be able to verify whether or not foreigners are respecting their oath.

Mr. Guimond: Mr. Chairman.

[English]

I want the advice of the legislative counsel before that of people from Transport Canada. Is this possible?

The Chairman: It's your option. I have no problem with that. Sure.

Mr. Mike Clegg (Legislative Counsel): The purpose of this particular amendment is not directed to the right of holding shares by non-Canadians, nor is it directed specifically to the 15% level.

Paragraphs 5(a), (b), and (c), which are referred to at the beginning of the amendment, are the paragraphs that permit shareholders who would otherwise be deemed to be affiliates to swear that they will not collude and they will not act as a voting bloc. Therefore, in effect, having done that, there could be groups that are actually affiliated in law but not in voting practice in CN having more than 15%.

The purpose of this amendment, moved by the Bloc, is to allow this swearing not to collude to be available only to Canadian nationals - individuals and corporations - so that with respect to foreign holdings there would not be in any case amongst affiliates more than 15% by any one group or affiliated group, and they would not be allowed to make an oath of non-cooperation.

Only Canadians would be allowed to do that. So there could be no circumstance at all where an affiliated block of foreign holders could hold more than 15%. That does not prevent foreign purchase, or foreign purchase up to 15%.

.1050

Mr. Gouk: Collectively, foreigners could buy 100%. They just can't be -

Mr. Clegg: They couldn't be associated at all.

Mr. Fontana: Mr. Chairman, I stand to be corrected. The way Mr. Mercier was explaining it, I thought he was talking about shares and everything else. I understand now, thanks to the interpretation of the legislative counsel, in fact it talks about mechanisms to protect non-collusion and everything else.

I still believe, though, there are sufficient safeguards in the legislation, as prescribed in this legislation as well as in other pieces of law in Canada that in fact are there for the protection to ensure there will not be collusion on that 15% rule. Therefore I still think the amendment is out of order.

The Chairman: No, it's not out of order.

Mr. Fontana: Well, it's not out of order, but it's not acceptable.

The Chairman: Not acceptable, all right.

Given the explanation, is the Bloc interested in withdrawing the amendment?

Mr. Guimond: Yes, with unanimous consent we will withdraw the amendment.

Mr. Fontana: Then they'll introduce it in the House again.

You have introduced it now. Fine, thank you. The amendment is defeated anyway.

The Chairman: Not yet; we haven't voted yet. We're going to take this thing one step at a time. Nothing is decided until every member of this committee votes on it.

Let me make it perfectly clear. I'm going to call for a vote on the amendment. Mr. Guimond has asked for it to be recorded.

Amendment negatived: nays 6; yeas 2

Clause 8 agreed to: yeas 4; nays 3

The Chairman: Colleagues, just as a point of interest, the gentlemen sitting to my right is Chuck Bellemare. He is the legislative clerk. He knows all about his kind of stuff.

I'm sorry not to have introduced you a little earlier, Chuck.

Clauses 9 and 10 agreed to

On clause 11 - Dealing with shares, etc., by Minister

Mr. Gouk: Mr. Chairman, I have an amendment on clause 11.

The Chairman: Actually, you're requesting a new clause, aren't you?

Mr. Gouk: Yes.

The Chairman: It's 11.1. So we have to pass clause 11 first.

Mr. Gouk: No, you don't pass 11 and then add a new clause. Is that the right way?

The Chairman: Yes, that's the pattern we have.

Mr. Gouk: Can I just get a clarification? In this particular case I don't think it's a problem, but if I feel I need to add something to a clause and it can't be done until after the clause is voted on, would it then be the obvious way to vote against the clause and then to amend it?

Mr. Fontana: No, you have to amend it first.

Mr. Gouk: How in God's name can this work? If I don't like something unless it has my inclusion and we vote on it before we get in inclusion....

It doesn't make any sense to pass the clause and then add something to it.

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The Chairman: We'll get an explanation for you from the legislative clerk.

Mr. Charles Bellemare (Legislative Clerk): We're looking at amendment R-1 here. It's a separate clause which, for convenience, has been numbered 11.1. If the amendment passes and the bill is reprinted it would be renumbered as 12. It's not in any way associated with clause 11. It's a separate clause and stands on its own.

Mr. Gouk: At what time, then, should it be introduced?

The Chairman: As a new clause - and you're suggesting that it be called 11.1 - we've slotted it to come after clause 11. So we'll deal with clause 11 and it will be agreed with or not agreed with, and then you will make an amendment clause 11.1.

Clause 11 agreed to

The Chairman: Mr. Gouk has a suggestion for a new clause 11.1.

Mr. Gouk: You don't want the whole thing read, do you?

The Chairman: You can deem it read as printed.

Mr. Gouk: Yes, could we do that.

Just by way of explanation, I have not been able to receive a legal opinion as to whether or not the provincial securities commission act would cover insider trading, because these shares are going from the federal government, the Crown, to the marketplace. As such, I feel it's appropriate that there should be an insider trading provision placed in this bill to ensure that does not take place.

The Chairman: Why don't we get some legal counsel first?

Mr. Clegg: Mr. Chairman, I did consider this issue in connection with this amendment. Unfortunately, the complications of securities law and insider trading that exist in provincial legislation are so complicated there was not time for me to develop a final legal opinion as to whether every transaction under this act would be subject to a provincial securities regime. However, every stock exchange in Canada is covered by securities legislation of some province.

Generally speaking, it would appear that there would be a way of dealing with any insider trading, whoever the insider was. If it was a trader on a stock exchange - and I see that the ADM is agreeing with me there.... This is the problem in dealing with matters that come up during consideration of a bill; we jump into a different area of law. Sometimes there just isn't time to give a member the very detailed opinion we would like to be able to do. But I haven't been able to make a final opinion on that.

Mr. Fontana: Perhaps Ms Greene could also augment what the legislative counsel has said.

The Chairman: Yes, I recognize that. I'm sorry, I thought you wanted to speak to it. Moya.

Ms Greene: Mr. Chairman, the intention is to register the shares of CN on the securities exchanges in Toronto and in New York. Therefore, I believe the insider trading provisions under provincial securities law, and certainly under New York securities law, would be applicable to this issue. In addition, there are penalties for insider trading under the Canada Business Corporations Act. It is my view, without doing any research at all on this matter, that the concern of Mr. Gouk is covered.

Mr. Gouk: In keeping with that, if in fact it is covered by other jurisdictions, then that's fine, but I would suggest that we don't know that for a fact. We have an educated guess based on a lot of experience; we have the legislative counsel who cannot give us a definitive answer on this; and if we don't put it in and it turns out it isn't covered by that jurisdiction, we have a potential problem. If we put it in and it is covered, there is absolutely no cost or problem created by this being in the legislation.

The Chairman: Do you want to respond, Ms Greene?

Ms Greene: The one point I would make is that it does seem on a very cursory reading of Mr. Gouk's amendment that he is proposing penalties that are different from those that are contained in other legislation. I certainly do not want to delay the proceedings, Mr. Chairman. It's certainly up to you. Perhaps by this afternoon we could have a more definitive view of whether this was (a) necessary and (b) appropriate.

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The Chairman: The chairman elects to deal with the matter now, so I will put the question.

Shall the proposal by Mr. Gouk, new clause 11.1, carry?

The new clause is defeated.

Mr. Gouk: Wait a minute. I heard one yea from me and one nay from -

The Chairman: Do you want a recorded vote, Mr. Gouk?

Mr. Gouk: Yes, maybe we should do that.

The Chairman: Or a show of hands, if you want.

Mr. Gouk: A recorded vote is probably appropriate.

Amendment negatived [See Minutes of Proceedings]

On clause 12 - Discharge

Mr. Gouk: Mr. Chairman, I have an amendment. This is definitely an amendment this time.

The Chairman: On a point of order, Mr. Mercier.

[Translation]

Mr. Mercier: Clause 12.

[English]

The Chairman: I'm just asking if there's an amendment here first.

Mr. Gouk: Perhaps we could deem it to have been read again, as circulated to everyone.

The purpose of this is that we have heard testimony from the minister and from the various securities people that $1.5 billion is the amount that is necessary in order to bring CN within a marketable credit rating. To ensure that we won't end up with some wild variations, such as was proposed here this morning, I would like to see confirmed in legislation that this is in fact what we're going to do.

It limits the amount of the debt that can be paid down to, first, whatever assets are sold off and the resources of CN within itself and, then, if necessary, any additional debt reduction by the Government of Canada - not to exceed debt reduction levels of $1.5 billion.

The Chairman: We've heard this argument on many occasions.

Mr. Fontana, did you want to respond?

Mr. Fontana: Only this. I understand where Mr. Gouk is coming from. I think we're all on the same wavelength in that even the minister and CN are trying to get it to $1.5 billion. However, I suggest that to be so finite as to say $1.5 billion six months in advance of when this whole exercise is going happen is a little bit narrow-minded in the sense that we have to wait for all those other pieces and until we're ready to go the marketplace, which might not be until September or October. There could be certain variations here and there.

Who knows? There might be more revenues from the sale of those assets.

So fixing it at $1.5 billion is being too precise, even though your philosophy is noted and we obviously have the same concern about not going beyond that for the taxpayer, and also for CN. So we understand where you're coming from, but unfortunately we are going to have to vote against the amendment.

The Chairman: Will a show of hands be okay?

Mr. Gouk: I think any time there's a conflict, while we're doing clause-by-clause consideration on this, where there's a difference of opinion, it should be recorded.

The Chairman: I have to ask, though, because sometimes members will say that just a show of hands is enough.

Mr. Gouk: Just record it. There's probably only one more.

The Chairman: I can't tell you how many people will be reading it.

We'll vote on the amendment to clause 12.

Amendment negatived [See Minutes of Proceedings]

Mr. Guimond: Mr. Mercier wants to make a comment on clause 12.

The Chairman: Sure.

[Translation]

Mr. Mercier: We also object to the provisions, in clause 12, giving the Minister the power to enter into any agreement concerning the discharge of any debt, and also to pay out of the Consolidated Revenue Fund, or from the proceeds of any sale of shares, CN debt. We are of the opinion, Mr. Chairman, that we hereby give too much power to the Minister outside of the House's control.

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The Minister is allowed to enter into an agreement with CN respecting the discharge of CN's debt, and also to pay out of the Consolidated Revenue Fund, in other words out of the taxpayer's pocket, or from the proceeds of the sale of shares, amounts required for discharging such debts. We think that gives the Minister too much power outside of the House's control, and that any transactions concerning CN's debt must be reviewed and approved by the House. We will submit an amendment to that end during the report phase.

[English]

The Chairman: Thank you very much, sir.

Clauses 12 to 15 inclusive agreed to

Mr. Jordan: Why did we change to a show of hands instead of the...?

The Chairman: Because I'm -

The Clerk of the Committee: Because the chairman asked if that's what you wanted.

Mr. Jordan: It's too late now, but we should have had a recorded vote on that.

The Chairman: It's too late. The clause carried seven to one - the one lone dissenter, Mr. Gouk. That should be good enough, right?

On clause 16 - Works for the general advantage of Canada

The Chairman: Do you have an amendment?

Mr. Mercier: I have a comment.

[Translation]

Clause 16 is hardly for the general advantage of Canada since it brings under federal jurisdiction the railway and other transportation works resulting from the consolidation or amalgamation of two or more of those corporations. We feel that only those transportation works that are interprovincial in nature should be declared to be works for the general advantage of Canada, thereby excluding those which are wholly located within the boundaries of a province and which should consequently not be declared to be works for the general advantage of Canada and be put under federal jurisdiction.

[English]

The Chairman: Thanks, Mr. Mercier.

Are there any other comments on clause 16? Mr. Gouk.

Mr. Gouk: I have a comment because of this method of passing the clause and then adding a new paragraph to the clause. I want to make sure we're in the right procedure. I have a new addition to clause 16 that I wish considered.

The Chairman: As is the way we have received it in the past, you are suggesting a new clause 16.1.

Mr. Gouk: Yes.

The Chairman: We will vote on clause 16. If it passes, it will be clause 16. If new clause 16.1 happened to pass, it would be renumbered in a new bill, so it would become clause 17.

We'll deal with clause 16 first.

Mr. Guimond: I would like a registered vote on clause 16, please.

Clause 16 agreed to: yeas 6; nays 2

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The Chairman: There's a submission for a new clause 16.1. Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman. I would contend it is part of clause 16, but however it is fitted in, if the committee sees fit to pass it....

This is a new clause that reads:

The reasons for that were presented primarily by the Halifax Port Corporation. I believe it is important not just to a port but to an entire region of Canada.

I would like a recorded vote.

The Chairman: Mr. Fontana, did you want to reply?

Mr. Fontana: Mr. Chairman, I would say simply that I think what Mr. Gouk is talking about is much more in terms of regulation.

How is it, or why is it that he should impose on CN something that is not imposed on CP, for that matter, in terms of where it can and can't operate? That's an unrealistic business restriction that I'm sure a free enterpriser like Mr. Gouk would not impose on any private corporation.

If he wants to argue about a national rail network from coast to coast, I suggest he do that in terms of the regulatory framework and not necessarily by speaking about one particular company and how it can or cannot operate and where it can and cannot operate. I think it's ludicrous to suggest that you can impose that on any one corporation.

The Chairman: Mr. Gouk.

Mr. Gouk: If Mr. Fontana expects me to vote against it because I'm a businessman, then I would expect that as parliamentary secretary he will vote in favour of it because his party and his minister propose to put restrictions in the form of official languages and in a pinned-down headquarters that are not prescribed to other companies of this nature. He supports that, so I would assume that he would support this in order to be consistent.

The Chairman: The chair might intervene for one moment, because I think the explanation that was given to the committee at the outset by the minister was that while the official languages and the headquarters being in Montreal, or in Canada, which is important to the minister -

Mr. Gouk: But can't it just report to the minister?

The Chairman: - had no effect on the saleability of the company, a restriction, as you're suggesting in proposed new clause 16.1, on the rail line between Montreal and Halifax would have some kind of effect on the saleability of the company.

Mr. Gouk: I would like to comment on that. There are two aspects.

First of all, we're not imposing this on a private company as yet. They are not private companies out there, and we're not arbitrarily imposing some restriction on a private company. We have a crown corporation, which has different methods of operating, and I think it is irresponsible to simply dump it and all of the obligations we have undertaken as a country and as a federal government without a transition period where it is for the good of a major portion of this country.

The Chairman: Mr. Gouk, you're absolutely right.

Mr. Gouk: May I finish? You didn't like my interrupting you.

The Chairman: Sorry.

Mr. Gouk: I think, first of all, we have that obligation. Secondly, that rail line is there and it is operating. It is reasonable to expect that it will continue to operate.

The point raised by the Halifax Port Corporation was that it needs that kind of security in order to be able to finance the kind of infrastructure expansion it needs for the new types of vessel it's handling.

Keep in mind that we have also just passed a report that will potentially take ports like Halifax out of the government domain and make them borrow the money on the market without government backing.

Finally, there is a sunset clause involved in this. It is not forever and ever, amen; it is for a 10-year period, a transition period, if you will.

Mr. Hubbard (Miramichi): Mr. Chairman, from our legal advice here, it is my understanding that under the British North America Act the railway is guaranteed by the federal government to go as far as Halifax. Is this not true in terms of the obligations of our federal government to maintain a railway line from central Canada to the port of Halifax?

The Chairman: Ms Greene, there are a couple of things you could probably comment on here.

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Ms Greene: If it's any help to the committee, Mr. Chairman, here's the first point with respect to Mr. Gouk's concern. I would submit that there may be a better way to deal with it. You and others before the committee have pointed out that service obligations, in the context of a sale of a company, will impair the value of the company.

However, service obligations, from a regulatory point of view, are not uncommon. In fact, the National Transportation Act, which regulates how railways are to be operated in Canada, will define a clear process, which it does now, for the continuation of the network. Because that is a framework that applies to the whole industry as opposed to one company, it does not have any impact on the value. But this would be considered a condition of sale, and it would have an impact on the proceeds that the taxpayer can expect to get from the sale of the shares.

With respect to Mr. Hubbard's point, the federal government has a constitutional power to regulate interprovincial railways. Whether that is an obligation or not depends on how it's defined in the regulatory framework.

As I say, the regulatory framework sets out a clear process for establishing what the network will be at any given point in time.

So if that's any help to the committee, I'd like to submit -

Mr. Hubbard: There are legal people here. Is there a legal section in the BNA Act that speaks of a railway that would be provided and operable?

Mr. Clegg: Mr. Chairman, I'm afraid I can't specifically add anything to what the officials have said in this regard.

I don't know offhand whether there's a constitutional provision equivalent to that guaranteeing a ferry link to Prince Edward Island, which was repealed when the bridge was to be built.

I would imagine that if there was such a clear constitutional obligation, the Halifax Port Corporation would have known this and would perhaps not have been so concerned when it came to the committee. But I don't know this point, offhand. I could advise the committee on this at some other stage.

I don't know whether the department can answer this question as to whether there is a specific constitutional obligation to maintain a rail link to Halifax. I believe, as the deputy minister has said, that it's couched more in a regulatory power.

The Chairman: I think that even if there is, it would be during the NTA amendment process that it would be established and that there would be an examination of that legal framework.

Mr. Gouk: I want to comment primarily on the remarks revolving around the value of the shares.

First, I think there are two ways of looking at that. The way it was suggested was that we either do it before the legislation is passed or after it has passed through regulatory changes that will produce very similar effects.

With regard to the value of shares, I think that any change in the value of shares while passing this new clause would be minimal, if there are any.

I would point this out. Say this does not go in, and ultimately there is a problem for Halifax, or any other Atlantic port, such that they lose business to the United States because of not having this assurance. Then the cost or the bottom line to the Canadian taxpayer will be much higher than any potential drop in the share value. I'm not concerned about how good the share sale goes; I'm concerned about the net result of the entire impact of this thing, and I think this protects the bottom line.

The Chairman: I stand to be corrected by the officials, Mr. Gouk, but let's go back to what this Bill C-89 is all about, which is privatizing the company and attempting put a framework in place in order to make a privatized CN commercially viable on the open market. That is what this bill is all about.

What you are suggesting by your amendment and by way of your explanation is absolutely correct. I would agree with you that we want to ensure we are doing everything possible to ensure Canadians are being serviced by that rail route, given a BNA Act, given a fiduciary responsibility of any kind, given a social obligation. But that, I think, is an argument for another day on the NTA regulations, where those ideals can be applied through regulation.

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This is more enabling. This is more the commercializing of it. To say okay, we're going to put a company up for sale but you have to do this and you have to do that, is limiting the opportunities of a private corporation, as I understand it.

Mr. Gouk: The only comment I would make on that, Mr. Chairman, as I made earlier, is the government has already seen fit to put conditions of sale in there, and it has put in two conditions that have nothing to do with marketability of the shares.

The Chairman: But I must explain to you as well that those two items do not affect the saleability of the company.

Mr. Gouk: It doesn't matter. Your very argument -

The Chairman: Saying you have to service this particular line as a private company does affect the saleability of it.

Mr. Gouk: On the other hand, your comment is that only the things pertaining to the saleability are being handled in order to market this, and yet the government has seen fit to put two clauses in there dealing with headquarters and the language, which have nothing to do with marketing the company.

The Chairman: Either I am not very good at explaining this or you don't want to accept my premise.

We will leave it as the statements that have been made. Mr. Gouk has asked for a recorded vote.

We are voting on new clause 16.1. This is a new clause presented by Mr. Gouk. It's a tie, so I have a vote.

Mr. Guimond: I hope you don't have it. We will have something like gun control.

[Translation]

Mr. Mercier: A recorded vote was asked for.

[English]

Amendment negatived: nays 5; yeas 4

Clauses 17 to 21 inclusive agreed to

The Chairman: Shall schedule I carry?

Mr. Guimond: Before that, I just want to make a announcement that we will present two more amendments, one concerning -

The Chairman: Now?

Mr. Guimond: Not now, later. I just want to advise you.

Mr. Fontana: Common courtesy.

Mr. Guimond: I appreciate your good work, Joe, but the fun will be later.

One amendment is on the pension plan. I have some notes.

[Translation]

Considering that this government intends to privatize CN, that bill C-89 contains no clause that might alleviate the concerns of CN present and retired employees, that, to this day, neither the Minister of Transport, nor the CN Chairman and Chief Executive Officer assured us that the CN pension plan wouldn't be modified and that all the legislation which might have an impact on the CN pension plan would still apply even if CN were to be privatized, considering also that the government and the Minister will not enjoy the same control over a privatized CN, we will move an amendment to bill C-89 which will generally state that the CN pension plan as it stands now and all its assets will remain unchanged.

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The plan's present funding and management rules will keep applying, and any change to the CN trust fund will only be possible with the approval of the Pension Committee.

We will also move a new pension plan clause offering some protection to CN workers and retired employees.

Finally, we intend to move another clause to ensure that the federal government takes its responsibilities to maintain the Quebec bridge, which I consider to be a major part of the infrastructure, and not only as a historical work. I take objection from the fact that some of my Liberal colleagues tried to make little of it, and to belittle it as if it were an ordinary bridge at the far end of a road in the middle of nowhere.

Those were the announcements I wanted to make.

[English]

The Chairman: I thank Mr. Guimond.

Mr. Guimond: Was it a cheap shot?

The Chairman: No, I won't call it that, but I think it was unfair to make such a leaping assumption that all Liberal members are of this opinion. I didn't see you talk to everyone and get their opinion before you made that statement, but in the interests of ecclesiality we'll let it go.

Schedule I agreed to

Schedule II agreed to

Clause 1 agreed to

The Chairman: Shall the title carry?

Some hon. members: Agreed.

The Chairman: Shall the bill carry?

Mr. Guimond: Recorded vote on the bill, please.

Bill C-89 agreed to: yeas 6; nays 2

The Chairman: He fought the fight. Democracy was carried out.

Shall I report the bill to the House?

Mr. Guimond: Yes, on division.

The Chairman: You can do the dividing. I'll just report it to the House.

Mr. Guimond: Before we finish I would like to make a comment.

The Chairman: Colleagues, just before I go to Mr. Guimond, I want to thank you all again for your flexibility. I know the schedule was tough. We had to sit morning, afternoon and night to get the bill done, and we did that, as you know, for a good reason, because there is a window of opportunity that's seen in the market and we're trying to respond to that. You all played an important part, and as chairman, I do appreciate the cooperation that has been had by this committee.

Mr. Gouk: Have you any indication as to when it will be introduced at report stage?

The Chairman: I will be presenting this bill to the House tomorrow, now that we have completed our work here, and then it will be up to the House leadership and the slot. Mr. Young will be asking for the earliest possible time, but Mr. Gray, our House leader, will have to make the determination where that will happen. Sorry, I can't give you an exact time.

Mr. Gouk: Okay.

The Chairman: But your House leader will be certainly informed as soon as Mr. Gray's decision is made.

Mr. Guimond.

Mr. Guimond: I have a small comment. I think my party and I tried to be cooperative in a lot of the discussions we had here, and I found it very difficult to accept the fact that my colleague, the parliamentary secretary to the Minister of Transport, the member from London, Mr. Fontana, never gave me unanimous consent on the fact that I wanted to withdraw my amendment.

I took a decision that we will not give our unanimous consent on Bill C-81 to pass the three readings tomorrow; we'll go only on the second reading and come back to this committee. Bill C-81 is the one dealing with the Buffalo and Fort Erie bridge.

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Mr. Fontana: Having made that decision, Mr. Guimond...the fact is that the parliamentary rules allow you to introduce an amendment, which you did, and then to seek unanimous consent if you want to withdraw it. Obviously you wanted to put it in the first place.

But let me tell you this. To want to use another piece of legislation that has absolutely nothing to do with what we were talking about today...and the fact that you want to have a good hearing and you make those remarks about the Quebec bridge.... In fact, I came to talk to you about that discussion on the Quebec bridge, when your constituents came in to talk about it, to tell you that we were trying to get some information for you, so we can share that information, to show you that some work is going on and the true situation.

I'm not sure why you're taking this so personally. You said you want to work by the rules. You said you didn't want to introduce all your amendments today. I have had an opinion that that's why we want to work in this committee, to share ideas and to share amendments and to come up with the best bill possible. The fact that you don't want to use this mechanism and you want to use the House of Commons doesn't mean you should, or really have the right to, hold up another piece of legislation, which is important - and you know it's very important - and try to play these baby politics over the fact that you want to -

The Chairman: The officials are excused, if they want to leave.

I want to round it out in this way. We all have our different philosophies and our different ideals that drive us. There has been an excellent working relationship on this committee, I think, and I hope to give everyone their say. Politics being what it is, at times we can get overheated on certain issues.

I see why Mr. Guimond is responding to something Mr. Fontana commented on. But from the government's perspective, they too have to try to do what they think is right vis-à-vis keeping the agenda short, understanding how the opportunities work for a member not to bring the amendment here but to bring it in the House instead. So there is some nipping in the bud here and flexibility there, etc. But I think for the most part when we leave this room we're off the political battlefield and we get along very well. Before we make any rash responses or comments, I think we can go away and think about this and maybe even have a beer.

Mr. Guimond: It's just a question of respect for individuals. The people of the coalition for the Quebec bridge are not very happy with the kind of hearing they have had here. We have some members who are unilingual anglophone. They made their presentation in French, and when you put take your earpieces out of your ears, you listen and you understand nothing.

They are not very happy. They want to be outside of politics. I never attended those meetings. They are not happy. In Quebec City I received a lot of bad comments about our committee, about what kind of hearing they have when they speak only in French.

I try to speak my best English, because I think I have an advantage over you: you're not able to say bien in French. It's given me a bigger head than I have already, because I'm able to give you some of my views in the two official languages of Canada.

The Chairman: I think it's fantastic that you do. You've been more than flexible on that, Michel. Unfortunately, we have to deal with personalities and we're all only human beings. Some act in a different way from others.

But I would hope the individual actions of individuals on a committee will not reflect the attitude of the entire committee, which I think did receive...and I did thank them and I did tell them what a good job they did. I applauded them for the passion and the belief they have in the Quebec bridge. I hope that will carry the day for the organization despite the actions of one or two members, whoever they may be.

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Colleagues, again thank you very much. We'll reconvene for a steering committee meeting in a couple of weeks.

The meeting stands adjourned.

;