EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 26, 1996

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[English]

The Chair: Order, please. I want to welcome everyone to our first meeting looking at the proposed marine fees.

As you know, we met with the commissioner last Thursday and received a presentation from him. This morning we have our first witnesses on the proposal from the commissioner of the Canadian Coast Guard. I would like to welcome Mr. Frank Nicol.

Mr. Nicol, would you introduce your associates. Then we'll take your presentation.

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Captain Francis Nicol (President, Shipping Federation of Canada): Good morning,Mr. Chairman and members of the committee. My name is Frank Nicol and I am the president of the Shipping Federation of Canada. Assisting me today are my colleagues, Mario Minotti, treasurer of the federation, and Ms Sonia Simard, my executive assistant.

I would like to thank the committee for this opportunity to present the views of the federation on the cost recovery issue. Before I begin, I'll present you with a little bit about who we are and who we represent.

The Shipping Federation of Canada, an association representing international shipping, was incorporated by act of Parliament in 1903. The federation represents about 80 Canadian companies, which own, operate or act as agents for over 350 steamship lines worldwide. Our members act on behalf of nearly all ocean vessels trading to and from ports in central and eastern Canada.

Rightly or wrongly, it is a fact that Canada does not have a deep-sea fleet. Canadian exporters and importers rely almost entirely on the ships consigned to our members' care to transport their overseas commerce. The activities of our members generate thousands of jobs in Canada and thus they perform an integral role in our export economy.

The federation is acutely aware of the relationship between the competitiveness of Canada's marine sector and the economic health of our nation as a whole. The federation has been involved since the beginning in the debate on the marine services fee. We have been active in the public domain and we are a member of the Marine Advisory Board established by the former Minister of Transport, the Honourable Doug Young.

The federation recognizes and supports the government's efforts to eliminate its deficit and has accepted the principle of cost recovery in cases where commercially necessary services are efficiently provided. However, we believe that the coast guard's plan to impose cost recovery of $20 million in the forthcoming fiscal year, increasing to $40 million the following year and $60 million in 1999-2000, is premature. There are prime factors leading to this conclusion.

First, the recovery fees were developed without a comprehensive impact study of their effects on the marine sector and its infrastructure as well as the effects on national, regional and municipal economies. In a nutshell, the coast guard embarked on this project without a full understanding of the potentially dislocative impact on marine transportation.

Second, a complete review of levels of service and spending reduction options provided by the coast guard has yet to be completed. From the outset, the federation has asked that cost recovery be linked to substantial and simultaneous cuts in coast guard spending. However, we understand that the coast guard must meet its budgetary obligations this year. Consequently, despite the fact that the $20 million target appears to be an arbitrary figure chosen without the benefit of an in-depth study of its potential impact, the federation has nevertheless agreed to accept the coast guard's decision to recover the sum in the first year on the clear understanding that the fee is to be imposed for the aids to navigation service only, on a trial basis and for one year.

Turning now to the formula itself, the federation, both publicly and as a member of the Marine Advisory Board, has strongly suggested a national rate charged to the cargo. I should also tell you that we registered strong objections to the various other proposals put forward by the coast guard since January. Prior to commenting on the latest coast guard proposal, I would like to explain the rationale behind the federation's preferred option of a national approach to cost recovery.

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In the absence of a comprehensive impact study, we believe a national approach is the option that presents the least risk of unpredictable dislocations in traffic and disruptions to local economies; respects Canada's traditional approach to delicate economies and regional disparities; and least encourages unnecessary and harmful rivalry among Canada's regions.

Clearly, we understand that a national approach is not everyone's first choice. Generally, every company, sector, or region of the country will support a formula that provides a perceived competitive edge over its neighbour, who in many cases is a competitor. Needless to say, everyone can develop a sound rationale to support their particular approach. Naturally, with a wide and diverse membership such as ours, the federation cannot become involved in regional rivalries.

Interestingly, a national approach was the second choice of many of our members. It was generally perceived as the common denominator - the least likely to do significant harm overall.

Unfortunately, the coast guard's proposals have all been regionally based, the first two being established on an east-west split, while the most recent has subdivided the east into two regions, known as the East-Inland and the Atlantic. In every case each region has a different formula and different charges, something that may contribute to additional administrative work and costs for the coast guard and users alike. The coast guard's efforts have had the regrettable effect of intensifying rivalries among regions, and indeed, in some cases within regions.

This said, we are also here to comment on the most recent proposal. While not a national rate, the March 15 proposal is the most acceptable package of elements to date. First, unlike the other two proposals, it introduces the principle of distributing the burden of supporting remote and low-cargo-volume areas such as Newfoundland among all three regions, a principle advocated by the federation since the earliest attempt by the coast guard to regionalize cost recovery. Second, the coast guard has accepted that this proposal would only be implemented on a trial basis, and only for the forthcoming fiscal year. Third, the coast guard has agreed to conduct a full impact study before proceeding to the next phase of the cost-recovery program.

Two important shortcomings remain. The approach adopted in the Atlantic may see prohibitive fees levied at certain ports. The coast guard has already indicated, however, that it is open to some modification, such as a cap on tonnage charged and perhaps a ceiling on the mileage. Notwithstanding this assurance, it remains for the marine community to ensure such proposals afford the protection required.

Also, we continue to question the wisdom of collecting what is, for the time being, a tax, through the use of different fee structures for different parts of the country. This is a dangerous precedent.

We recognize the coast guard has been faced with the almost impossible task of developing a cost recovery program that will satisfy directly conflicting opinions. Unfortunately, in its efforts to accomplish this elusive target it has exacerbated regional conflict. We cannot help but feel that to a degree the coast guard has brought this dilemma upon itself. As a national organization with a national mandate, it may have been better served by developing a national solution to a national problem.

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To conclude, we continue to believe in the current circumstances and in the absence of a thorough impact study a national approach is the option that is the least likely to do significant harm overall. However, recognizing that the coast guard has delivered a proposal that, to the best degree yet, addresses the concerns of our members, and acknowledging that the coast guard needs to conclude this process to meet its financial obligations, the federation is ready to consider the implementation of the most recent proposal provided that a comprehensive economic impact study will be undertaken and that the whole structure of the cost recovery fee will be reviewed before proceeding to the second phase of the program.

Mr. Chairman, we'd be happy to answer any questions you may have.

The Chairman: Thank you very much, Mr. Nicol.

You're saying that your federation represents 80 companies. Are these 80 companies Atlantic, inland, and western?

Capt Nicol: About 15% is between Ontario and Manitoba, and the balance is evenly divided between the Maritimes and the Montreal Gulf of St. Lawrence. The make-up of our board of directors reflects this.

The Chairman: You are member of the Marine Advisory Board, are you not?

Capt Nicol: Yes indeed, Mr. Chairman.

The Chairman: Have you made your views known through the board to the commissioner of the coast guard?

Capt Nicol: Yes, Mr. Chairman.

The Chairman: Are those views the same as the advisory board's views in general?

Capt Nicol: No. Within the Marine Advisory Board I think the three main carrier groups all opted for a national rate. Those were the Shipping Federation, the Canadian Shipowners Association, and the St. Lawrence Shipowners Association. I think the shippers and some others on the board convinced the commissioner to go with a regional make-up.

The Chairman: Thank you very much.

We'll begin our questioning now. Mr. Bernier.

[Translation]

Mr. Bernier (Gaspé): I see that you are in favour of a national rate. In any case, that's what most of the people I've met have said and that's why I've asked hearings to be held on the matter. I hope that the minister will be able to hear the views expressed by those in the industry.

Although you appear to be in favour of a national rate, I don't quite understand why, as you say in page 5 of your brief, that you're willing to go along with a form of billing this year even though that is not what you expect. It's hard for me to understand because you say that this is based on rates for navigational aids. I like your term "national rate" but not all sectors will have to pay for ice breaking and dredging. It's only the tip of the iceberg that is visible.

I don't understand how you can adopt a so-called national position and at the same time be ready to give a blank cheque to the coast guard. You say you're willing to go along with it but for a year only when we know very well that if you give the government an inch it will take a mile the following year. I'd like you to elaborate on this point.

[English]

Capt Nicol: The Shipping Federation made a commitment to the coast guard to participate in the $20 million cost recovery program. Certainly this is not a national rate. It's not what we want, but it is the most acceptable proposal put forward so far and has certain elements that seem, at least for the time being, to satisfy the east to west. The rate in the new At and East inland is also not very much different from the proposed national rate of 14¢.

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While it's not what we want, it is a compromise we are prepared to live with for one year only, on a trial basis, and until such time as a thorough impact study has been accomplished. Only when the impact study is completed can we really find out the effects of the increases in various regions.

[Translation]

Mr. Bernier: I know that the shipping world is a small one and that you want to cooperate with the coast guard but I suppose that during a negotiation stage, it was a sounder practice to expect people to carry out first of all their duties. You and most of the people I've met seem to display a willingness to take part in reducing the canadian deficit. That is quite laudable but to expect this of the coast guard in the process of negotiations...

In any case, there's talk of recovering $40 million next year. So you'll be putting your money in the bank this year and it will be $60 million next year.

I think it is important when we enter a new era of management to get things right. If we get things off to a wrong start, we may have trouble putting them right afterwards.

How can we give the coast guard the opportunity to do something this year when you know full well that an economic impact study is key to the resolution of all the problems. We are going to have to assess the impact of this on the ports and on the industries requiring your means of transportation.

That is how I see it. Mr. Martin's first aim is to reduce the deficit. You say you are willing to help him but you're already paying taxes.

Secondly, reductions and cost rationalizations will have to be made within the coast guard.

What I'm most interested in is knowing how one will be able to estimate the costs you will be charged. When there's an ice breaking job to do somewhere, we don't know exactly how much work it will involve.

This is just a comment I'm making but if you had to make a quick choice this morning between telling the minister to skip a year and do the job properly... You are saying that your members would prefer to pass the hat for a year and pay $20 million, that is hand over a blank cheque.

[English]

Capt Nicol: Well, we would hope it wasn't really a blank cheque. We did give a commitment to the Marine Advisory Board. We were made aware that the commissioner had lost $20 million, if you will, from his budget and that it had to be replaced. We have continued to work with the coast guard to come up with a solution. The solution is not perfect, I agree.

With regard to what you say about a moratorium or postponing it for a year, we certainly would have no objection to seeing that come into place. It would give us a year longer to look at it and evaluate the impact of the change on the marine community and its infrastructure. However, unless the government is willing to make up that $20 million to the coast guard, I don't see how the coast guard can manage. This is $20 million that the coast guard is not going to get. We have committed to participating in the recovery program. We will continue with that commitment. However, if there is a moratorium, we would be pleased to go along with it. It would suit us.

[Translation]

The Chairman: Mr. Rocheleau.

Mr. Rocheleau (Trois-Rivières): Mr. Nicol, I'd like to congratulate you for the clear and courageous position you've taken. You are not afraid to state publicly that you are not in full agreement with the commissioner's position.

In that connection, I'd like to know your opinion relating to point 2, namely that we should start by significantly reducing the costs within the coast guard. An effort should be made to put one's own house in order, before asking others to pay. The commissioner's answer to this is that he's already done his job by reducing the coast guard's operating expenditures by $133 million, according to the information contained in the document distributed to us.

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I would like to hear your comments. Do you consider this to be acceptable? In your view, is it sufficient or are there further savings to be achieved as some have claimed?

[English]

Capt Nicol: Yes, I do believe there are further savings to be accomplished out there. There are the costs associated with vessel traffic services, or VTS, as it's more commonly known. These could be reduced considerably.

The shipping industry is working together with the coast guard on a pilot project on the St. Lawrence River, where we're using modern technology in the hopes of replacing navigation aids - which some day are going to become obsolete - such as buoys and lights. We're looking at employing DGPS, an electronic position fixing device, and some other technological devices that may help us dispense with many of the costly navigation aids that are available.

The savings there have not yet being taken into consideration, of course, because we haven't had the results of the test we're doing. But there are further savings to be made.

[Translation]

Mr. Rocheleau: I'd like to know whether your members have noticed any change in the behaviour of the coast guard, which is supposed to have cut its expenses by $133 million, and the type of service it provides or no longer provides? Have you felt the impact of this reduction of $133 million in spending?

[English]

Capt Nicol: At this moment, no, we don't feel the impact of it, but we will be seeing it by the year 2000. It will be an annual savings, I believe, of $133 million by the year 2001, as I recollect.

We're not advocating a blank-cheque approach to it, I would hasten to assure you. Our acceptance is conditional on it being on a trial basis for one year, with a complete impact study before bringing in the second phase of cost recovery.

The Chairman: Thank you. Mr. Culbert.

Mr. Culbert (Carleton - Charlotte): Good morning. It's good to have you here. Thank you for coming on relatively short notice and making your in-depth presentation.

I noticed that in your presentation you're indicating or suggesting or recommending a one-year trial period. I guess my first question is, what then, and what type of comparison or study would you contemplate that should be carried out, and by whom?

I'm also wondering what type of research, if any, you or your organization have done relative to our future competitiveness with our U.S. coastal ports, specifically the Atlantic and the Pacific, and how you found that those new rates being established would continue to put us in a competitive fashion.

I'll just ask my questions, and you can maybe make note of them.

I'd also like to ask if you're familiar with the assessment of the impact of the marine service fees options on commercial shipping interests. The final report, which was done by the IBI Group, was dated December 29, 1995. What are your thoughts on the recommendations in that report?

Capt Nicol: Your first question - you had quite a few questions, and I didn't get them all written down - referred to the impact study. I guess we'd be very interested in seeing what effect cost recovery charges have on driving traffic to other ports.

For example, we know there is great competition between Vancouver and Tacoma and between Montreal and New York and Halifax and the U.S. east coast ports. I think we have to be very careful that increased or new cost recoveries don't change the traffic patterns, don't increase the rates to a degree at which traffic is likely to use U.S. ports instead of Canadian ports. We don't know. That's just something we have to say.

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In the current proposal in particular, and particularly with regard to tankers, we can see that it has a very bad effect at places like Port Hawkesbury, where the tankers would be paying a phenomenal charge, as compared with the nothing that they were paying this year. These are the kinds of impacts that must be brought to our attention - the effect on the traffic, the effect on shippers, and the effect on communities. For example, there are the more remote areas in Newfoundland - the Botwoods and the Stephenvilles. If we put the rates up there to a particular level, it may cause those mills to close. It would be too expensive to operate ships out of those ports. These are the kinds of things we have to look at.

Mr. Culbert: Have you done any comparisons with those U.S. competitors, those ports? Since you represent some 350 various shipping fleets, you must have done some comparisons over a period of years to see how we are currently. Knowing how any new, increased coast guard fees would add to that, you must know how you see that comparison at the present time.

I agree with you. Certainly we don't want to put ourselves out of the marketplace. It's extremely important to our communities and to the people who work in our port communities, and we want to assure that we are in fact competitive.

I appreciate the fact that you're recommending a comprehensive consultation process or study after or during the first year of operation, or before second and third years are implemented. At the same time, I think we would want to also have some idea. I asked the same question of Mr. Thomas last week, when he was making a presentation to us as well. So I think it's very important, and if you have any of that material and have done some of that work, we would certainly appreciate your comments on that as it currently exists.

Capt Nicol: As it currently exists, I don't have exact figures, Mr. Chairman. I regret that. But I am informed that the margin between the east coast ports - U.S. and Canadian - is very small, and I believe the same holds good on the west coast.

We have had cases in which a few cents a tonne, for example, would drive a bulk cargo down the Mississippi to go out through New Orleans, rather than down the seaway. It doesn't take an awful lot; the shipper invariably goes with the bottom line. If there's a 10¢ difference, that's the way he'll go. He may be shipping hundreds of thousands of tonnes over a period of time, so it's significant.

Mr. Culbert: Are you familiar with the U.S. fees and how their fee structure goes for their ports? Not that it's what we're here to discuss, but obviously we have to be in a competitive position. There's no question about it. I'm always concerned with that, and I want to assure that these changes will keep us in that competitive condition - and also any future changes, as you indicate. But are you familiar with what their costs are for similar navigational aids, for example?

Capt Nicol: I'm not exactly familiar with them. I know they have the harbour maintenance tax down there, which is based on... It's an ad valorem charge on the value of the cargo, which initially was one of the options that we considered but discarded eventually. I believe the legality of levying the fee like that has been called into question in the U.S., but I'm not 100% sure.

Mr. Culbert: Just as a way of finishing up, I might ask for a comment on what would have been your first choice from the perspective of administration, simplicity and so on, that being a national rate system. As you know, there were some difficulties certainly in establishing anything that could be agreeable because of the diversities of the regions served, whether it be the east coast, central Canada or the west coast. That was probably the reason for the more or less regional type of rate structure that is in the proposal today. Although it would probably have been everyone's wish or desire to have that simplicity, from the recommendations that came forward from the industry that is exactly what the industry had requested, and basically many of the recommendations here, contained in the latest proposals, are what the industry had requested, in many cases.

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Capt Nicol: Well, of course our industry is wide and diverse. It includes, I suppose, shippers and ports and carriers, and it is likely you will get many different answers to these questions.

However, if we look at the rates we are going to end up with throughout the country, I don't think they're going to be very much different from what a national rate would have been, in the final analysis. As a matter of fact, if we look at container ships on the west coast, they're going to pay a lot more under the proposal than they would under a national rate, and they're competing with Tacoma.

Off the top of my head, as I recollect - I did a quick calculation - under the most recent proposal for the west coast a container ship of about 55,000 gross registered tonnes going into Vancouver would pay about $3,400 or $3,500 a trip. Under a national rate the same vessel, loading or discharging 10,000 tonnes of cargo there, which is a usual amount loaded and discharged at that port, would pay about $1,400. So there is a significant difference. However, that's one area.

In the Atlantic at this moment the cost rate on the tonne per mile seems to be much less than the national rate. However, by the time adjustments are made for a ceiling on the mileage and a cap on the tonnage - for smaller ports such as Dalhousie and the big tanker ports such as Statia Terminals at Port Hawkesbury a 50,000 tonne-per-tanker cap is being discussed - by the time those caps are introduced, we may see the rate increasing to almost the same as the national proposal, which was 14¢. As a matter of fact, I think in the Atlantic, just on a per-tonne basis, introducing one cap works out to about 11¢ or 12¢.

I turn around from time to time because Mr. Minotti is the figures man of the group here.

Mr. Culbert: Finally, you indicated you do have some rate comparisons as currently exist for both the east and the west coasts in comparison with U.S. ports. Did I understand you correctly?

Capt Nicol: No, I don't have the comparison with me. But perhaps we can get it, Mr. Chairman. If you wish us to look for it, it's available, I'm sure.

Mr. Culbert: I guess my next question was whether, if you had it, it would be available to this committee.

Capt Nicol: It certainly would, yes.

Mr. Culbert: Thank you.

The Chairman: Thank you, Mr. Culbert.

[Translation]

Mr. Rocheleau.

Mr. Rocheleau: Mr. Nicol, I think everyone agrees that the purpose of this exercise is to establish a user pay policy. It is obvious that shippers make use of navigational aids and also benefit from dredging but in the case of ice breaking, particularly in the St. Lawrence, it is not quite as obvious.

Some claim that the federal government should refund the private businesses that clear the ice on the river. Under the present policy, the federal government is supposed to be passing on costs because it breaks the ice on the river for the benefit of the private sector but the main and historical role of the coast guard has been to prevent ice jams and floods.

It has been claimed that the coast guard is providing a service to the private sector by breaking ice on the river when boats, particularly those of the Canadian Pacific, are equipped so that they can navigate the St. Lawrence and others can follow in their wake. Apparently this practice is becoming increasingly frequent.

Do you agree that this policy will result in very significant costs? According to the argument of my colleague opposite, there's going to have to be a competitive situation in the St. Lawrence River where costs will soon be imposed for navigational aids, dredging and ice breaking. In the case of ice breaking, it could be quite significant. Do you agree on the principle of designating this as user pay?

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[English]

Capt Nicol: Ice-breaking, again, is a very complex subject. It's not on the table, as far as the cost recovery project is concerned, for the first year; however, we are working hard to see what we can come up with for the future.

There is an ice-breaking task force. One of the first conclusions the task force arrived at was that those who do not use the services of ice-breakers should not be obliged to pay for them. Now, while that's placed in the negative, it's not saying that those who do use them will pay for them, because there has to be some flexibility to take care of regions that are economically depressed, or where ice-breaking is needed for flood control or something of that nature.

There are certain areas where ice-breaking has always been for flood control - the stretch of river between Montreal and Quebec, for example. Way before we had winter traffic there was ice-breaking there to control flooding. All the areas around Lac St-Pierre, St. Lambert and Longueuil would all flood without ice-breaking. The water can dam up and go up 14 feet overnight. The ice just goes straight to the bottom there.

So ice-breaking services there, flood control, and the cost of providing them should not be met by commercial users. Indeed, as you said, in commercial shipping today we're seeing a lot more ice-strengthened ships. Canada Maritime has embarked on an ice-breaking building program. The ships they're building are very powerful. They indeed help to keep the ice moving in the river. So that is a consideration as well.

But there are certain areas, such as the gulf, where the charge for ice-breaking may be worthy of consideration. We're looking at various ways where that charge could be levied on an equitable basis.

It's going to be difficult for small ports around Newfoundland but certainly not for the St. Lawrence, where the flood control is essential.

[Translation]

Mr. Rocheleau: Mr. Nicol, concerning the application of a special rate for the St. Lawrence and the Great Lakes, Commissioner Thomas said that people were exaggerating. It seems there was quite a stormy meeting in Montreal last week because the effect would be to bring up the cost from .14¢ to .15¢. So it seems there is no real reason to get alarmed.

Do you agree with the reaction of Commissioner Thomas when he claims that a special tariff for the St. Lawrence - Great Lakes region would have a negligible impact?

[English]

Capt Nicol: I'm sorry, sir, I'm not quite sure I understand the question. Can you just repeat it one more time?

[Translation]

Mr. Rocheleau: Commissioner Thomas was answering those who criticized his proposed three regions, that is the western region, the St. Lawrence and Great Lakes and the Maritime region. People from the St. Lawrence - Great Lakes region claim that this would result in significant additional costs and they were critical of this. He said that this was not so, that if there were a uniform national rate, it would cost .14¢ a ton and if there were a central rate for the St. Lawrence - Great Lakes region, it would cost .15¢ a ton, that is .01¢ more. So he claimed that they were exaggerating the effect. Do you think that this is true?

[English]

Capt Nicol: Says he. I've heard this argument too. Well, every cent counts, of course.

How can I best put it...? Do you mind if I consult with certain of my colleagues here?

It comes back to the old point I brought up, that we don't have our impact study yet. We really don't know. We're all accepting this on the basis of one year to help the coast guard get over the hump. In that year we really have to do a very thorough impact study to see what the actual effects are. We're all guessing at what the effects are - you know, 5¢ here, 1¢ there. No one really knows.

Let's find out. Let's find out if it is going to dislocate the traffic. It might not. Let's find out. Once we see that... Is it going to change the traffic patterns? Are communities going to suffer? No one really knows. We can look at some communities and say, no, they're going to do well, but there are many others that we can't tell until we do the study.

So we certainly don't want to pay an extra cent. The commissioner is right. It's not too much different from the 14¢ that was proposed for the national rate. But hopefully it will only be in effect for a year and we will get back to a national rate.

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The Chairman: Mr. Wells, please.

Mr. Wells (South Shore): I'd like to get a little bit more information on the companies you represent, because you're taking a position that's contrary to what was expressed by and large in the Atlantic region, and you said 50% of your clientele would come out of the maritime region. Do you represent every shipper in the maritime region? Just give me an idea of your structure and who you represent and perhaps who you don't represent.

Capt Nicol: We don't represent any shippers at all. We represent owners, agents, carriers, operators, charters, people who are involved with the ship, not the cargo. We don't represent cargo interests, and the shipper, of course, is the export or the cargo interest. So when I speak of the industry, I don't mean the maritime industry at large, which would include ports, and shippers and other infrastructure involved. I'm talking about the people who are actually involved with the ship itself: the owners, the operators, and the agents.

I would say we must represent at least 90%, and probably more, of the ships in the maritimes. I should qualify that. These are ships involved in international trade, not the domestic trade. The domestic trade, of course, is looked after by the Canadian Shipowners Association, which is a sister fraternal organization.

Mr. Wells: And were you expressing the unanimous view then of your affiliated members?

Capt Nicol: I think I mentioned that it certainly was not unanimous. There are many people in Halifax and other ports who prefer the 10-mile option.

There's absolutely no magic bullet to this cost recovery. You're not going to get unanimity. For example, the chairman of our executive council, our board of directors, has ships in Halifax and he has ships on the west coast. He benefits from some of the proposals in the Maritimes, but he didn't want it. He never did. He wanted a national rate. Now he's seeing that the national rate's going to cost him more than on the west coast, so he would have preferred to have had a national rate.

As to others who are serving Halifax, some have expressed publicly that they would prefer the national rate. Many, the majority I would say, in the port of Halifax want the 10-mile. But of course we saw what the effects of the 10-mile were on the Port Hawkesburys and the Dalhousies of this world, so this is why we're having to further refine it. I have said that we can tacitly accept it for the first year until the impact study is completed.

Mr. Wells: The fine art of compromise at work.

Capt Nicol: It is indeed.

Mr. Wells: I want to read a statement and get your reaction to it as it relates to your position on a national rate. This was a comment, I think, made based on the first coast guard proposal, but I think it would still apply to yours because you're still proposing a national rate.

It stated that under the coast guard proposal, ports such as Halifax and Port Hawkesbury, which use fewer coast guard services, would be subsidizing competing inland ports, in particular the port of Montreal, which tend to be more dependent on coast guard services. This would appear to violate the general principle of user pay, user say, and run counter to national transportation policy as set out in Bill C-101, the Canadian Transportation Act.

I know you alluded to this in your comment about subsidizing inland ports and having one area subsidize another. Perhaps you could also comment on it from the point of view of each region in terms of remaining globally competitive, not being able to control the rate if they can't control its cost. Then someone on the east coast has no control over the costs or the lack of cost control on an inland port of the west coast. What is the fairness in a national rate that does not allow any particular region to reduce its cost but still not be able to reduce its rate because other regions don't?

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Capt Nicol: What we have is not cost recovery. An arbitrary figure of $20 million has been plucked out of the air. The coast guard needs $20 million, so we've taken that figure out of the air. Really you can't apportion that out to a particular service or a particular region. It's just $20 million the coast guard has to recover. It's a tax. It's not really cost recovery. It's not really user-pay. It's just a tax, and I think it should be treated like that until such time as we have the full benefit of the impact study.

Mr. Wells: Okay. I guess we'll agree to disagree on that.

There's an element of user-pay in this whole concept, whether you will be advocating we take the whole $181 million and then charge it across the industry... I'm sure you're not advocating that. If you prorate that down to $20 million and take it proportionately, you come to the same thing. Everything, I guess, is a tax if someone has to pay it, but you're paying it because you're using a service, right? Isn't that the rationale?

Capt Nicol: Yes.

Mr. Wells: You're only paying that $20 million if you use the service. The balance is subsidized by the general taxpayer.

We can agree to disagree on whether it's a tax or user-pay, but would you comment on the second comment about one port being able to control the cost if it's a national rate, and not done on a regional basis?

Capt Nicol: If we look at the ton-mile, for example, a ship going into Halifax uses an awful lot more buoys and pays an awful lot less than a ship going into Dalhousie or Belledune, which has one buoy. It comes all the way up the gulf and there's nothing there. There's no navigation. I've navigated the gulf many times. There are very few navigation aids in the Gulf of St. Lawrence. You only start to get them when you get up towards Les Escoumains, the pilot station. That's really where you start to see them. There's the occasional buoy scattered here and there.

A bulk carrier going into Dalhousie has one, maybe two buoys at most, and that vessel is going to pay about $16,000 a pop. Every time she goes in there, it's going to cost them $16,000. That's with the current proposal as it stands, before any modifications are made. The coast guard is talking about modifications, but before these modifications are made, that's how it stands at this moment.

Is that fair? I don't know. There's one buoy and they're paying $16,000, whereas a ship going into Halifax might only be paying $500, $600 or $700 and it's using a lot more navigation aids. That's a thought.

The commissioner is now looking at trying to take some of the burden off the Dalhousies of this world and spreading it throughout the Maritimes. That's not user-pay either. That's sort of spreading it a little bit like a tax. I'm not saying it's unfair to do that. I'm just saying it's away from the principle of direct user-pay. Do you follow?

Mr. Wells: I follow you. I disagree with you, but that's okay. I just wanted your comments.

Capt Nicol: I think that's a very concrete example.

Mr. Wells: I don't disagree with everything you say. Don't get me wrong. I understand the difference between the inland ports like Dalhousie and Halifax, but I don't support the national rate. I was looking for you to perhaps convince me that I'm wrong, and you haven't done that. I don't look at it as a tax. I look at it as perhaps the Atlantic subsidizing inland ports. You don't see it that way.

Capt Nicol: Well, I have to tell you our board is equally representative of the... As a matter of fact, you would probably find there's a slight bias in favour of the Maritimes on our board of representatives if you look at the revenue and the number of ships as compared with the number of members on the board. The chairman of the board and some of the other big lines operate only out of Halifax. They don't operate out of the river. Yet they want it to go. The board decision was not unanimous, but it was very close to it. These are people who operate out of Halifax.

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The Chairman: Mr. Scott, please.

Mr. Scott (Skeena): First, please accept my apologies for being late, but I think there was some miscommunication yesterday between my office and the clerk. We were under the impression there was no committee meeting and then we found out this morning that there was.

I have to agree with Mr. Wells. You say some things I agree with and some things I disagree with. I'm just trying to get up to speed by reading your brief while you've been speaking and I've been listening to the exchange between you and Mr. Wells.

There is a great deal of concern over the fact that these cost recovery fees should actually be for fees paid for services that are actually required and actually used. I think that is part of the position you've taken. That is certainly something I think we could all agree with. The fees paid should actually be for services required and there should be some ability on the part of the users to determine what they actually require and whether or not they're paying a reasonable rate for that service.

In the case of buoys, one idea I've heard is that you would pay per buoy as far as the navigational aids are concerned, depending on which port you were going into. That seems to make sense to me. Another idea I've heard tossed around is that there are some services the coast guard is providing right now that maybe private shippers and ports could provide for themselves.

More to the point, I think that this is not a tax. At least the idea behind it is that it's not a tax. It's a cost recovery for a service that has been rendered and that heretofore has been paid for by the Canadian taxpayer. There are certainly going to be some adjustments before the fees can be levied in a manner exactly consistent with user-pay principles. I certainly understand and share the concerns you have with that but my concern with it is that it does end up being a true user-pay system, not a tax.

You are very strongly recommending a national approach to cost recovery. That is certainly a position I can't support simply because it's going to end up with low-cost ports cross-subsidizing high-cost ports. Would you not agree with that?

Capt Nicol: Maybe I could just go through your questions as you posed them. I wouldn't agree at all with pay per buoy. If you go into Halifax, how are you are going to pay? Credit card? How are you going to do that practically? You're maybe going to have people taking risks to do away with the buoy so they pay less. I really don't think pay per buoy is very practical. I really don't.

Here's another argument for the national rate. Look at the Great Lakes, for example. I think Transport Canada had a study a few years ago to indicate that maritime activity in that region generates about $2.4 billion per year. We have to be careful in these whole cost recovery exercises that we don't do anything to damage that economy. As I said earlier, a few cents a tonne could perhaps drive this cargo down the Mississippi.

We have to be very careful that we don't kill the goose that is laying the golden egg when we apply this cost recovery. If we apply it without a lot of care and consideration and without all the proper information we need, we really might do a lot of damage to different economies throughout the country.

Just to go back to the buoys for a second, you mentioned that certain shippers or certain ports would perhaps care to have their own buoys there and they would take care of them, look after them, replace them and maintain them themselves. That is a possibility, but I guess when the future comes I doubt they're going to have the financial wherewithal to go ahead and make technological developments that will assist the port in the future.

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We're all part of a system here and we all benefit a little bit from each other in this country. That's what it's all about. If everyone goes off on their own in different directions, then it can lead to all kinds of complications. You can have one set of ports becoming a bit more obsolete and another one becoming more technically advanced. All kinds of problems like that can arise.

Mr. Scott: When I say we should have pay-per-buoy, I think a rate could be figured out for each port. There are not a lot of ports. I don't understand why a rate can't be established for each port based on the number of navigational aids and based on the service the coast guard is providing.

You talk about economic damage. I come from the west coast, and I consider, for example, that the west coast ports by and large are quite economical to operate. They're quite economical from a coast guard point of view. There are not a lot of navigational aids. There's no ice-breaking. I think the west coast represents in the order of 20% of coast guard costs nationally. But if you go to a national rate, according to the B.C. Chamber of Shipping they would end up paying about 40% of the costs.

You of course will recognize that the port of Vancouver is in direct competition with the port of Seattle. When you talk about doing damage, that could drive a lot of... Again, they are competing very much on pennies, as you put it. If you increase their costs artificially, beyond where they should be, then they could very well lose shipping traffic to Seattle and Tacoma, and possibly other American ports.

My home town of Kitimat is a port, although there is no port there in terms of a port authority. About $1 billion of goods are shipped out of Kitimat per year. There is no coast guard presence there whatsoever. I spend a lot of time in the waters there. I see a coast guard vessel maybe about once a year. The navigational aids are very few in number. The cost that would be imposed on the port of Kitimat by going to a national rate, and subsequently on the shippers there, all of which are in very competitive businesses as well - we're talking about lumber, pulp, and aluminum and the products that are required to make aluminum - would really put these people off balance in terms of their competitiveness.

I wonder how you would address that.

Capt Nicol: I'll try to go through these points.

First, I have one last thing on the buoys. I knew there was one point that I had neglected. It's very difficult to say who uses the buoy. You'll see a commercial ship going past and you can clock that one and know that he's used a buoy. But there are fishermen and others who use the buoy. It's very difficult to ascertain how much of the buoy should be paid for by commercial users, how much by fishermen, and so on. To come up with something equitable there is a difficult task.

With regard to ice-breaking, the position of the federation, and indeed the ice-breaking task force of the Marine Advisory Board, is that those who don't use ice-breaking services should not be involved in paying for such services. So the west coast and Halifax are certainly not going to have to pay for ice-breaking services. It would be very wrong if they were forced to do that. That's the position of the federation on that particular one.

With regard to the competition of the U.S., I explained earlier that we did a quick calculation that under a national rate of 14¢ a tonne a container ship going into Vancouver would pay approximately, in loading and discharging 10,000 tonnes of cargo... I should explain that Vancouver is not a terminal port; they take out only so much of the cargo, not the whole cargo. So we'll allow for a 10,000-tonne load discharge of containers at Vancouver. At 14¢ a tonne under the national rate, this will come to about $1,400. However, under the current proposal, the latest proposal from the chamber, these ships will pay $3,400. That's certainly going to affect the competition for the container trade. I don't understand what's happening.

Mr. Scott: But there's a lot more there than just the container trade. There's no container trade in Kitimat, for example.

Capt Nicol: No, but I thought you were addressing Tacoma. I was thinking about the Tacoma area. Competition with the U.S. ports is really for the container cargo. That's the big stuff.

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For example, in Vancouver about 9% of the traffic provides about 30% of the revenue of the port. That's again the container traffic. Maybe it's not as high in volume as the bulk, but it's certainly the one that generates the revenue. Of course it's more labour intensive than bulk cargo and employs a lot of people.

It means a lot to the port. They're building a new container terminal there. They have just started a new container service, the biggest container line in the world, to Vancouver, and our chairman is very upset about this particular aspect. He also goes out of Halifax, where he's getting a deal. Going into Halifax, he is getting a good deal, because the costs are low on a tonne-mile basis. It's going to cost about $600 or $700.

Mr. Scott: So you're aware that the B.C. Chamber of Shipping has taken a position contrary to yours?

Capt Nicol: Oh yes, I am.

I don't intend to fight the B.C. Chamber of Shipping on that - that's their bailiwick - but I just point that out to you.

It's a bit of an anomaly. Take the same ship going through Halifax. It's going to cost him only maybe a variation of $1,000. Going through the west coast, the same ship, loading and discharging, is going to cost $3,500. If we had a national rate, then it would be the same for both. I just point that out. And that helps.

The Chairman: We have to go to our next witness.

In conclusion, I would like to make the comment that it appears, Mr. Nicol, as if you're not very far from agreeing with the latest proposal. As you say on page 14, in the March 15 proposal you liked the distribution of supporting remote areas. You say that ``The Coast Guard has accepted the proposal that this $20 million fee would be implemented in this fiscal year only''. I think they've agreed with that. They've also agreed that they will do an in-depth socio-economic study, beginning next month and finishing this fall, before implementing any more fees.

From your presentation, it appears to me as if the coast guard has come a long way toward meeting initial objections from your federation and that with some more consultation and with the in-depth study and with your agreement that user fees have been accepted... Everybody involved in the marine industry has accepted the concept of user fees. Mr. Thomas claims that he has spoken and listened to every region and given them exactly what they wanted as far as rates within their region are concerned.

Once this socio-economic study will have been completed, I don't really foresee a great deal of controversy separating you from the latest proposal from the coast guard.

Capt Nicol: I believe that we can live with this proposal, provided that it's for one year only and that we're allowed to review the next phase in light of a sound, thorough impact study before any new rates are developed.

Having said that, there are still the concerns in the Atlantic about the Port Hawkesburys of this world, and the Dalhousies and the Belledunes. The coast guard has to come up with a cap on the mileage there and maybe a ceiling on -

The Chairman: Haven't they agreed to a cap of 50,000?

Capt Nicol: Not that I know of. We have a cap of 50,000 in the east inland. They've talked about a cap on the Atlantic, but I'm not sure if they've developed it yet.

The Chairman: We have a person from the coast guard here, Diane Cofsky.

Is there a cap?

Ms Diane Cofsky (Team Leader, Revenue Generation, Canadian Coast Guard): We have agreed to put a cap of 50,000 tonnes in the Atlantic region and also to charge for only one leg on transshipment cargo.

We are looking at some sort of scale of fees on the mileage to give a break to the long-distance ports, such as Dalhousie, as you mentioned.

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Capt Nicol: Mr. Chairman, would it be possible to find out if the coast guard knows what this is going to do to the rate? We were talking about .004¢ per tonne-mile. Have you any idea what these caps, both on the mileage and the tonnage, would do to the rate per mile?

Ms Cofsky: Yes. Obviously the rate will increase accordingly, but we are developing this now and I believe Mr. Thomas is ready to release this today or tomorrow to the community, to the users.

Capt Nicol: In light of what's been said, our acceptance is conditional on having an acceptable cap placed on these areas.

The Chairman: Thank you very much for coming today. It's been -

Capt Nicol: I have one last thing, if I may, Mr. Chairman. Something has just occurred and I'm sorry to delay you.

I would like to address an issue that came up a couple of days ago when we were informed of an error in the coast guard's proposed fee for cruise ships. It was a typo. We were under the impression that the fee would be 1.9¢ per GRT. We found out the other day that it's actually 19¢, which is ten times more. Our colleagues on the North West Cruiseship Association are most upset about this and I would like to place their views on record. They asked me to. I'll give them to the clerk.

The Chairman: Yes. We've received them and we've passed them around.

Capt Nicol: We are also greatly concerned about that. Nineteen cents is a very big charge. It's ten times more than we expected. With your permission, Mr. Chairman, I would like to submit something on that to you within the next few days. We learned of it only a couple of days ago.

The Chairman: We'll accept that.

Capt Nicol: Thank you, Mr. Chairman, for your indulgence.

The Chairman: Welcome, Mr. Gooley. Would you tell us who you represent and who you have with you?

Mr. Richard Gooley: (Senior Vice-President of Marketing, Statia Terminals Inc.): Good morning, Mr. Chairman and gentlemen of the committee. My name is Richard Gooley. I'm a senior vice-president of marketing for both Statia Terminals Point Tupper Inc. and Statia Terminals Inc., the Florida corporation that is the parent of Statia Terminals. With me is Paul Crissman, who is the operating manager of our terminal in Point Tupper. We would both like to thank you for the opportunity to speak to you this morning.

Statia Terminals Point Tupper Inc., which I'll refer to as Statia Point Tupper, operates a 7.6-million-barrel liquids terminal facility located in the Strait of Canso, Point Tupper, Nova Scotia. Statia Point Tupper is a wholly owned subsidiary of Statia Terminals Inc., which I'll refer to as Statia, the fifth largest and independent liquids terminal company in the world.

The Statia Point Tupper facility became fully operational in August 1994, following reactivation at a cost exceeding $80 million. Statia's current investment at Point Tupper exceeds $100 million. The independently operated terminal facility represents a unique industry in Atlantic Canada and possibly in all of Canada. Statia Point Tupper's location is superior to its competition geographically, especially with regard to access to the United States east coast. It provides customers with access to the deepest ice-free harbour in Atlantic Canada, and to both the Canadian and United States markets.

Statia made a commitment to Canada and the Maritimes based on the natural geographic advantage of the facility and on the assumption that it would be treated fairly and equitably by Canada from a legal and regulatory standpoint. Statia Point Tupper's terminal operation adds value for customers by providing an infrastructure that allows them to take advantage of shipping economies of scale.

The combination of geographic location and availability of deep water allow customers to reduce their overall transportation costs versus direct shipment to the market, but the savings are limited by world freight rates, supply and demand of tanks and alternative locations and most importantly, by the ability to control costs.

Being a low-cost provider of trans-shipment services allows a customer to lower his cost while handling the cargo twice. We have no way to pass on increases in cost and cannot absorb increases that are unique to our operation.

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The marine services fee is an excellent example of a fee that will be imposed on our terminal operation but will not be borne by our competition in New York Harbour; Portland, Maine; or, farther south, South Riding Point, Grand Bahamas. These fees will obviously erode our competitive cost position relative to the cost structures of these other terminals. In fact every increase in a fee that is unique to Canadian operations diminishes the economic viability of the terminal and its ability to compete. In this context we're here today to talk specifically to the marine services fee.

Our ability to compete with international trans-shipment facilities or direct shipment to the market is continually eroding as a result of domestic legislative and regulatory actions; unbridled increases in operating costs, such as harbour dues, pilotage and spill response mandates; and now the additional costs associated with the marine services fees. The actions of one arm of government can cascade and multiply.

The best example may lie within the marine services fee proposal. In addition to fees imposed directly on cargo arriving at Point Tupper, the terminal may face requests from tug owners for increases in their rates because of their increased cost structure resulting from the fee. This pass-through of costs is available to all service providers to Statia Point Tupper, but not to our operation, since we serve the ultimate consumer of our service and that customer's options are outside Canada.

Further, Statia Point Tupper's obstacles extend beyond cost. Specifically, Statia Point Tupper believes its bid to obtain the highly sought Hibernia crude oil trans-shipment contract was substantially lower than any of the identified alternatives. However, in Statia Point Tupper's opinion, the spectre of repercussions at the provisional government level precluded the Hibernia trans-shipment group from awarding Statia Point Tupper the contract. Thus political, not economic, considerations appear to have resulted in a virtual locking out of Statia Point Tupper as a landing point for Hibernia and/or future crude oils produced from the Grand Banks.

Although disappointed by the initial decision regarding Hibernia crude trans-shipment, Statia Point Tupper has chosen to take a positive approach and will continue aggressively to seek a hearing with the participants in the various eastern Canadian frontier oil discoveries to offer its proposals on how it can economically facilitate the transportation of Hibernia and/or future crude oil produced from the Grand Banks area.

It's important to understand revenue to face the underlying issue that faces the government with regard to the marine services fees, other fees imposed and/or the revenue issues we've identified above. The basic issue is whether it is equitable to layer cost upon the facility concurrent with the placement of indirect restriction on Point Tupper's ability to generate revenues. How the issue is addressed will dictate the viability of Statia Point Tupper's future operations and growth plans.

Each element of cost-to-revenue restriction moves the terminal closer to the brink of an inability to compete with the international options available to its current or potential customers. If the imposition of this marine services fee becomes the final element of cost that renders the terminal unable to compete internationally, the facility no longer serves a purpose and it cannot survive.

Issues that Statia Point Tupper continues to seek to include in any final proposal include: the ability to provide input into the necessity of the services provided by the coast guard; a mechanism to enforce strict control of coast guard cost; a full implementation of the concept of user-pay, user-say; and the creation of either national or regional governing bodies to oversee the development of future cost-recovering mechanisms.

The coast guard's position on the marine services fee has been and continues to be evolutionary. The commissioner has shown a willingness to listen to the views of many and to make attempts to correct inequities in the structure. The most recent revisions are a result of continuing consultations across Canada last week.

Key elements of the commissioner's current proposal as they apply to and are understood by Statia Point Tupper are as follows, and I must point out this is not intended as an exhaustive list or summary but rather as a summary of the key elements.

The country-wide fees will be apportioned to three distinct regions: the western, the Laurentian and central, and finally the Atlantic. Each region will collect the fees on its regionally agreed basis.

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With regard specifically to the Atlantic region, we understand that foreign flag cargo vessels would be charged a fee per cargo tonne nautical mile. The fee would be charged on cargo, loaded and unloaded, with a cap of 50,000 metric tonnes per cargo, loaded and unloaded. The example mileage that has been used for individual ports has been provided by the commission.

The exception to the above would be that the cargo vessels calling on a trans-shipment facility will be assessed a fee on the inbound cargo only. Outbound shipment of that same cargo shall be specifically exempted from the fees. Statia Point Tupper is designated as qualified for such an exemption. The fee would not be differentiated based on cargo type.

Our understanding is that the coast guard's current position on the fee relative to Coasting Trade Act waivers is that fees to foreign flag vessels receiving temporary entry permits pursuant to Canada's Coasting Trade Act will be deferred or eliminated pending the outcome of an economic impact study to be conducted by the coast guard. Such study is to include the impact of the present fees as well as those associated with harbour maintenance, dredging, pilotage, etc.

Finally, we understand that vessels calling on ports for bunkers only or for ship repairs will be exempt from the marine services fees.

Statia Point Tupper continues to assert that it should be fully exempted from the marine services fee on international trans-shipment cargo handled by Statia Point Tupper, temporarily stored within Canada, but not entering the commerce of Canada. Notwithstanding this belief, Statia Point Tupper can conditionally support the commissioner's most recent approach as outlined above, subject to resolution of the fees, if any, to be charged to foreign flag vessels operating under temporary entry permits, pursuant to Canada's Coasting Trade Act.

Statia also reserves the right to withdraw its conceptual report of the commissioner's current approach should further modifications relating to mileage limitations or other changes materially impact Statia Point Tupper's estimation of fees to be incurred by vessels calling on its facility.

Small modifications to the complicated formula can have dramatic impact. For example, the proposal written immediately prior to last week's consultation sessions resulted in Statia Point Tupper absorbing over 33% of the first year's cost for Atlantic Canada, spread over 100 vessels.

In some cases, Statia Point Tupper customers could suffer a charge of over $82,000 for the unloading of one cargo and the loading of that same cargo into smaller vessels. Such prohibitive elements have been addressed by the commissioner. However, the coast guard is continuing to evaluate the mileage issues, the handling of low-value cargoes, and certainly other elements unknown to us. If amendments to the current position, as a result of any of the known or unknown factors, produces an unfair result from Statia Point Tupper's view, we will challenge such elements.

Statia and its Canadian subsidiary, Statia Point Tupper, seek only equitable treatment from the Government of Canada, at both the federal and provincial levels. Statia's investment of over $100 million, without government subsidy, is a demonstration of its commitment to Canada. We believe our operation is a model of the partnership espoused by government whereby industry invests in a free and open, competitive business climate.

Statia seeks such an environment for its Canadian company, Statia Point Tupper, and the opportunity to compete on level ground, absent artificial or unfair barriers imposed by the federal or provincial governments of Canada.

Mr. Chairman, we thank you for the opportunity to address your committee and to present our comments relative to the marine services fee and its impact on our operations in Point Tupper. We welcome your questions and discussion on any aspect of those comments.

The Chairman: Thank you very much, Mr. Gooley.

Mr. Bernier.

[Translation]

Mr. Bernier: Mr. Gooley, on page 2 of your text, in the middle of the page, you refer to the concept of user pay. I'm not quite sure I understand the point you're making. Could you elaborate on it?

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You are asking for the development of the concept of user pay and you would also like to see the creation of either a national or regional governing board. Could you elaborate on this? It does not seem very clear to me. I'm only on my second coffee but you can give it a start.

[English]

Mr. Gooley: First, let me say that Statia Point Tupper is a unique industry in itself. We're not in the port of Halifax, we're at Point Tupper, Port Hawkesbury. We were not and are not a member of the Marine Advisory Board. We are really not represented on that board. We found that our initial contacts with the coast guard came very late in 1995, far down the process. So we've had a great deal of catching up to do.

What we're saying here is that we have a facility that has very strong natural geographic advantages. Most of the vessels calling on the port at Point Tupper have GPS systems. They do not use most of the navigational aids, yet a lot of those navigational aids are still in the costs.

We don't really know how the costs were allocated by region - western, central, if you will, and the Atlantic region. We know the total cost espoused by the coast guard is $17.5 million for the full $60 million recovery, but what we're saying here is that if we are going to pay a fee for those using our port, we ought to have a say in whether or not we need the navigational aids, whether we need all the long-range navigational aids or whether the GPS systems, when in place, can eliminate a lot of those buoys.

We understand from the commissioner's comments last week that he intends to take a full study. Some of those aids may be eliminated, obviously with the cost reductions associated. We want to have a say in what aids we require at Statia Point Tupper if we are going to be asked to pay for those aids, because most of the vessels we have calling on us do not use those aids today.

That's what we're getting at. We have a cost in the coast guard. We don't understand, exactly, at this point how those costs were reduced and what measures they went through to reduce those costs. We really don't understand the allocation of the costs across regions. We don't see any validation that the costs being charged each region are correct or incorrect. We don't have the data to validate those costs.

So what we're saying is if we're going into a system where the users are going to be asked to pay, then the users need to have a way to say what services are available to them and what they need.

[Translation]

Mr. Bernier: When you say that you don't have the information necessary to determine how the commissioner can establish regional costs, am I to conclude that you would be in favour of setting a national rate in the meantime?

[English]

Mr. Gooley: Statia Point Tupper initially supported a national rate. That was our preference, and that remains, I think, our first choice. But we believe the reality for the first year of operation is that the commissioner of the coast guard has settled on this regional fee. I think we have reluctantly come to the conclusion that we would accept the fee, given our understanding of that fee today, for the first year, but we would continue to like to look at how other regions have handled their costs. We would continue to like to look at a national fee, and we would continue to like to look at ways to control the coast guard's costs and reduce those fees for everyone, not just Atlantic Canada or Point Tupper, but certainly across the country.

[Translation]

Mr. Bernier: Mr. Gooley, your facility officially began its operations in 1994 and is thus a recent infrastructure. When this business was set up, you made a number of decisions relating to investment. You considered that it was a good location, a deep water port without any ice problems. So this gave you some advantage in relation to the second phase involving dredging and ice breaking costs, costs that you would not have to assume.

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Do you not understand that for those who are already set up, and work in the Great Lakes and in Montreal, it's rather difficult to immediately implement these three phases? They are worried about having to change their practices. There are no studies telling us what the impact will be on businesses making use of marine transport.

As rational managers, would you be willing to pressure the coast guard to wait before it starts billing for individual services as it intends to do? It should perhaps first of all carry out an impact study because this will perturb many other things. As managers, would you be willing to make this request to the coast guard?

[English]

Mr. Gooley: Yes, that's an excellent argument. I wish I had made it myself. Yes, we would like to see the fees delayed as long as they can be. I'm very emphathetic to those who are in the central region or other Atlantic Canada companies.

Let me address what's happening to us. Yes, we have national geographic advantages. The continuation of the fees heaped upon us, though, have made us non-competitive. All the circumstances that were there when we made the investment are being eroded. They're being eroded through increases in harbour dues, they're being eroded through dictates with regard to spill response organizations, and now they're being eroded through the implementation of a marine services fee.

We would very much like to see a delay in the implementation of any future fees, such as the marine services fee, until the economic impact study is done and you can see from that study whether it is actually going to erode it to the point at which you cannot exist economically.

If you cannot compete in the marketplace... It was clear from previous testimony as I sat and listened intently that there are small margins for shipping companies. Those are magnified for us because we have to handle cargo twice. We provide a service only in economies of scale of freight. If the freight economics from the point of origin through Statia Point Tupper to the point of destination exceed those costs of transporting goods from the point of origin to the final point of destination, we serve no purpose in the market and the economies of scale are gone.

Certainly the marine services fee is one of those fees that would be in Statia Point Tupper's best interst to defer as long as we can. It simply is a cost that we cannot pass on to the marketplace. The marketplace we deal with is an international marketplace with revenue caps dictated by international competition as opposed to competition within the commerce of Canada. We're not competing with other Canadian companies and having an equal ground as far as it concerns a tax base, fees, and those things. So, yes, we would certainly support the delay of implementation of the marine services fee, if that were the recommendation, until the economic impact study is done.

The Chairman: Mr. Scott.

Mr. Scott: I have several questions. First of all, I know this is off point a little bit, but why did you not get the Hibernia business? I don't really see the explanation for that in here. Was it an open bid?

Mr. Gooley: Yes. Our understanding of the alternatives and the Hibernia business was that they would purchase a third ship to move oil directly from the marketplace to whichever markets they chose or that they would choose one of three bidders for that trans-shipment business. The response was delayed. The answer on the contract was delayed at two points. The final decision by the partners was that they had chosen to evaluate the construction of their own terminal in Newfoundland specifically. Our sources of information in Newfoundland and Nova Scotia would lead us to believe that the decision was not made solely on the basis of economics but on the basis of political issues as well, as I point out in our comments.

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Mr. Scott: Would that have meant a great deal of revenue to your business?

Mr. Gooley: Yes, it would have.

Mr. Scott: Yes, I can imagine.

Mr. Gooley: I apologize to the committee for bringing in an element that doesn't relate to the specific issue, but it's critical to the understanding of Statia's viability as an ongoing business. You can't impede the revenue stream and add to the cost structure and continue to operate as a viable business.

Our concern is that even in the current proposal there are great strides made by the commissioner in trying to mitigate some of the owners' penalties to the Newfoundland shipping industry. Yet on the other side of the coin we see some things where, in our opinion, on the revenue side we did not necessarily receive just a pure economic decision on an open bid process with Hibernia. We face constricted revenue and increasing costs. That is not a good combination.

Mr. Scott: I'd like to talk to you more about that sometime. I have a couple of other questions. You mentioned harbour dues. What's the impact of harbour dues? Is that a significant impact on Statia?

Mr. Gooley: Our current harbour dues are $150,000 to $200,000 annually. I believe initially the harbour dues were to pay for the short-term navigational aids in the harbour.

Were they not, Paul? They were for support of the ports and the harbour.

When we made the investment comments were made that it was for our navigational aids. That's been going up at a rate of 10% to 20% per year.

Mr. Scott: It there any discussion about taking it over yourself?

Mr. Gooley: To my knowledge there hasn't been to date, but we certainly would welcome those discussions.

Mr. Scott: How much savings do you think the coast guard could realize? We've heard a lot of people appearing before the committee saying the coast guard is not very efficient. I know that's probably difficult. You don't want to be here throwing stones at people, but I'm trying to understand it. Are there significant savings to be had if the coast guard restructures its operations?

Mr. Gooley: I wish I could give you a good answer. I'm probably not qualified to answer that question. I certainly don't have the data to support anything.

I guess we would say that before you impose fees we would like to see someone take a look at the very processes and services the coast guard gives and we would like to see a very in-depth attempt to reduce the cost of the service before it's billed out, because I think that once the billing process begins you will mask the inefficiencies through the infusion of revenue. There won't be the same incentive on the coast guard's behalf or anyone else's behalf to reduce those costs.

I don't think I'm qualified to answer. I certainly don't have any data that would support any answer I would give you.

Mr. Scott: I have one last question. Do you support in principle the notion of cost recovery if it can be linked directly to your requirements? You want to pay only for services you actually require and you want to have some say in how those services are delivered and some say as to the efficiency of the delivery of those services.

Mr. Gooley: Yes, I think it's fair to say that we certainly support having a say in things that are going to be provided to us and a say in whether those things are necessary. ``A say'' doesn't mean that we would have an opinion that could be overridden without regard. We have no problem in being treated fairly and equitably in that process. If we are using a service, we would like fair and equitable treatment if we're going to be charged for that service, and we also want to have a say in how we do it.

Conceptually it's extremely hard to argue that you should not have to make some form of payment if it can be demonstrated that a service is being used by you specifically. But again, you also should have a very strong say in whether you need that service. In our case, we believe there are a lot of things our vessels in our port do not necessarily use that are being provided.

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Mr. Scott: Thank you.

The Chairman: Mr. Culbert.

Mr. Culbert: Good morning, gentlemen. Welcome to Ottawa.

First of all, I noticed in your presentation you were talking about the pass-through fees and your difficulties in your particular line of business to be in a position to do that. I certainly understand and appreciate that. Then you go on and talk about how the fees being proposed would certainly not be borne by your competitors in I think you said New York, Portland, Maine, and South Riding Point in the Bahamas. Do you have any comparisons in terms of the situation as to how you compete with those ports currently, whether it be New York, Boston, and so on, the eastern coast of the United States?

Mr. Gooley: I don't have that with me. We have done those analyses, yes, and we could provide you... It's very dependent on what the world shipping rates are, obviously, and whether a shipper would choose to use a time charter of a vessel or a spot charter of a vessel. But certainly we, on a continuing basis, look at the cost of using Point Tupper versus the other alternatives available to anybody moving, in our case to a great extent it's hydrocarbons, to the marketplace.

So we have data certainly on the economics of moving crude oil specifically from points in Europe or the Far East through South Riding Point, which is another large liquid trans-shipment terminal, and also in moving those direct to the marketplace. We have those things.

Mr. Culbert: Coming from the province of New Brunswick myself, I'm very familiar with how we have to be very competitive with the eastern seaboard of the U.S. and their ports. I would guess by the particular analogies you've used that you have done those comparisons. If they would be available to this committee perhaps it's something you could forward on to our clerk when you get back to the area. We'd certainly appreciate it.

Mr. Gooley: They would obviously be caveated severely. They would be points in time as opposed to over time. We would make some assumptions with world scale rates and some of those things.

Let me just give you a concrete example that you would obviously understand. In the month of March, we lost two VLCC cargoes, 560,000 tonnes, which were shipped directly to New York Harbour and directly into that marketplace. And that's absent a marine services fee. So we'd be glad to do that.

Mr. Culbert: Excellent.

Certainly I was very appreciative of your comments about the Marine Advisory Board. I wondered if you were in fact familiar with the terms of reference under which that board had been established. It certainly is one of the responsibilities of that board to gather those comments and input from people who are in the marketplace, such as yourselves. So I just make that point to you.

I was very interested in your suggestion about a waiver of fees for storage of shipments. You were talking about it being, as I understood it, only for those shipments that would be reshipped, and the only thing they would be doing in Canada would be in storage facilities. Perhaps you could elaborate on that just a little bit, because I thought that was very intriguing.

Mr. Gooley: Basically, materials that pass through Point Tupper never enter the commerce of Canada. If I might use an example, a cargo of oil from the North Sea comes in to Point Tupper, it remains in bond, it's shipped back out of Point Tupper, and if its destination is New York Harbour it never enters the commerce of Canada. It enters as a bond to warehouse, and we're not in the commerce of Canada. It's one of the advantages of bond to warehouse. We would think that those cargoes would qualify for a total exclusion from the fee structure. Obviously, cargoes moving into the commerce of Canada through Point Tupper have a different relationship. I hope that answers the question, but that's certainly what we're going to.

Mr. Culbert: Yes.

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With regard to some other comments made in your presentation, you are of course aware of the statement made on March 15 by Mr. Thomas about the impact studies that would be carried out. He referred to two studies that would be carried out on the overall socioeconomic impacts of navigational aids and all of their components. He indicated further in the same statement that this is the first time fees of this kind have been imposed and that the results of these studies will help us to make further required adjustments to ensure that marine service fees remain fair and equitable.

I'm putting a lot of faith in those statements myself, quite frankly, to ensure that it does carry forth. I appreciate exactly what you're saying, and I asked Mr. Thomas those questions last week. My bottom line is, coming from a business background, I know that you have to be competitive or you're not going to be in the marketplace, simply put. I'm sure those ports of New York, Boston, Portland or wherever would love to have the business you're currently doing in that area.

The other point I was particularly interested in was the cost based on your requirements for navigational aids in that particular port. I assume that you have a feeling, when you make that statement, there are currently a number of aids that are of no benefit to your particular area of business or to the ships that are coming into the port with your particular product on board.

Mr. Gooley: We understand there has certainly been a great deal of discussion over the past months about an evolutionary movement from the fee structure that might be implemented in the first year to something that may even go down to a port-specific fee structure.

If we move that way or if Commissioner Thomas moves that way, I think it's critical that the users of the port take advantage of all the technological advances, the things available to them, and if that can result in the elimination of a large number of the navigational aids and the costs associated with the upkeep of those aids, I think we should do that.

One of the things I've heard discussed is that we might, for instance, with specific reference to Point Tupper, remove up to 70% of the navigational aids, that we might remove the long-range aids, all the way up to the pilot buoy entering the Strait of Canso. You know, it is a significant reduction if we move towards the reduction of as much as 70% of the aids, although I don't know what percentage of the cost that would be. But those are the kinds of things we think we need to explore, and we need to take advantage of what is available on the ships using the ports, as opposed to duplicating in some cases with less suitable aids than might be available.

Mr. Culbert: In other words, it's meeting all the safety requirements that are set forth, as well as what's required by the shipping company and what might be required by yourselves, and pay accordingly.

Mr. Gooley: It's a layering. We are committed to safety, environmental awareness, and environmentally sound policies. We are in no way advocating the reduction of any of those things, but we think we should not layer those things unreasonably, we should control the cost of providing them. We should provide what's needed at an effective cost structure, and I think that's the route to competitiveness for us.

Mr. Culbert: Thank you very much.

Again we would appreciate, for the benefit of the committee in its review, that competitive information you may have from past checks with your U.S. competitors.

Mr. Gooley: Is there any timeframe for that? It's obviously very difficult to do it prospectively, but we can go retroactively for periods of time or slices in time. If there is any preference... If not we'll make our best shot.

Mr. Culbert: I don't think there are any preferences unless the time limitations we're currently working under... If we had them yesterday it would be super.

Thank you very kindly.

Mr. Gooley: We will provide it in due course.

The Chairman: Mr. Rocheleau.

[Translation]

Mr. Rocheleau: Mr. Gooley, you said that you too were in favour of a uniform rate from coast to coast, like a number of other witnesses we have heard. The three main shippers are also in favour of a uniform rate.

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How do you react to the fact that the commissioner advocates regional rates, dividing Canada into three main regions?

[English]

Mr. Gooley: I can't. I don't presume to know the rationale behind how the commissioner has moved from what initially was an east-west split. A number of comments came back, including ours, that suggested a national fee. The result was a split on three regions.

So I do not know the rationale behind the commissioner's...other than what's been provided to this committee by the commissioner or by other witnesses. I don't presume to know. I don't know.

We have focused our attention on what we consider to be the realities. We have made our opinions known as strongly as we can. Those opinions have gone into a whole range of opinions. What have come out are recommendations that have been modified, and through consultations, changed. So the reality is that we have accepted that at least for the first year, a national fee is not going to be suggested by the commissioner.

We understand that the initial fee structure is going to continue to be reviewed and that you can move toward a national structure if that were deemed to be fair and equitable. We would like to see that process continued.

Our position, I think, is that we have accepted, at least for the first year, if the fee is implemented, that it's going to be on a regional basis, and that our comments have gone unincluded.

[Translation]

Mr. Rocheleau: I think the question has some merit when we realize that the advisory committee recommended a national rate and users like our witnesses also advocate a uniform national rate. Where does the federal government get this idea? Where does the commissioner get this idea? We need an answer to this question. Why this desire on the part of the government to impose a regional rate when no one else wants it?

[English]

The Chairman: Well, I don't presume to respond for the commissioner, but my understanding is that the MAB didn't recommend the national rates, and that's why they went to the regional.

Mr. Bernier.

Mr. Bernier: I have a short one for the witness.

[Translation]

Mr. Gooley, I was impressed with your management qualities. Do you really believe that it is rational for the coast guard to establish a billing system for three regions for a year when you yourself say that this is on a trial basis and you would like to have a national rate reestablished next year? It's just another waste of time, money and paper. Why not start off with the system we want? The shortest way has always been the straight line. Why aren't you asking for that?

[English]

Mr. Gooley: First, thank you for calling me a regional manager.

We believe that a national rate spread the cost of the coast guard across the country and that it was a national rate, a per vessel rate, or something that spread the cost as opposed to placing undue burdens on others.

In some of the prior proposals made by the commissioner we could see situations, for instance, on an LR-2 vessel, which is a vessel up to 120,000 dead-weight tonnes, where that vessel calling on our facility would be charged $17,000. If that same vessel went into what is now the Laurentian and central region, it would be charged $7,500 under this current proposal.

We do not have access to, nor do we have any knowledge of, all of the consultations that have gone on by the commissioner or his staff. We don't have knowledge of those things. We have made comments. We have met with the commissioner as a company. Mr. Crissman has represented the Strait of Canso in various consultations.

What we are doing is basically reacting to the process laid out in front of us, and we can't control that process. We can't control the amount of data we get. We are simply at the end of the chain.

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We see proposals. We can evaluate what those proposals mean to us as a business, and we can comment on what that does to us as a business and how it affects us - actually, our economic life at Point Tupper - but we cannot do more than comment and provide our input to the commissioner of the coast guard as to what we think is a fair and equitable rate.

What we are saying is that for Statia Terminals Point Tupper, the current proposal as amended provides what we think is a livable rate for the first year, subject to any changes that might occur. We don't know what would happen beyond that next one.

What we have done is place some faith in the commissioner's comments that some of this structure is acceptable to the west. He has come near a resolution on the central and Laurentian, and it is consistent with a lot of the Atlantic region. We have been told that the present proposal has been supported by a great portion of the Atlantic region.

So we have to take some of that on blind faith - and we have. We've looked at and evaluated the proposal as it is on the table, and basically we are reluctantly saying that we can accept this for one year. Whether it's better to go straight-line to something different... I don't know what that something different would look like, or what the impact might be on various regions of the country. I just don't know those impacts.

[Translation]

Mr. Bernier: According to the answer you've just given us, I assume that in all the consultations undertaken by the commissioner, there was never any unified stand taken by all the Canadian marine interveners. From the very outset it was divided into two or three sectors. You had no idea of the position taken by your neighbours to the West or the Centre. You were never brought together with these people.

I'm interested in knowing about the consultation process. There is only one person who knows what everyone said. So we have to take his word. That is something that frightens me. And once your hand is caught in the wringer, your whole arm will go through.

[English]

Mr. Gooley: I appreciate your comments. To my knowledge, there have not been any meetings other than through representation on the Marine Advisory Board, which I understand has representation across the country. We certainly are not on that board. We were not contacted by that board. To this date I don't think we have been contacted by the consultant hired to perform consultations with the commissioner. We don't know of any meetings, other than through the Marine Advisory Board, that were across regions.

So, yes, to a great deal we have not just relied on... We have contacted other people in the region. We have attended regional meetings with other shippers. Whether all shippers in the Atlantic region, or all impacted parties, were represented in each of those meetings, I do not know. I think only the commissioner can say who was invited, who attended, and some of those things.

We understand that once our finger's in the wringer our whole arm will go, but we don't know that we can avoid putting our finger in the wringer. That is the difficulty for us as a company. We've been told that our finger is going to be put in the wringer.

The Chairman: Mr. Wells.

Mr. Wells: I have just one question, really, although there might be a number of parts to the question.

You've said you don't understand the rationale of the commissioner. I'm trying to understand it. Maybe if I give you my understanding of the rationale you can comment on the various aspects of it.

I think it can be broken down into perhaps three parts. We're dealing with three regions. Each wanted a different approach. They couldn't agree on a national rate or a national approach, and this was the only way to really accomplish this in the first year, with the understanding that there will be a study of this, and maybe we'll get as detailed as port-specific, which seems to be something you agree with. On the other hand, you're saying you want a national rate, which to me is not port-specific, so I don't understand. In my view, there's a contradiction in what you're saying there.

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Another rationale is that you should pay for the services you use. In other words, others should not have to pay for costs in other regions. Whether you agree with that or not, it seems to be one of the rationales. Again, it seems to me that you were saying you don't want to pay for services you're not using, but by supporting a national rate you seem to be saying that we should be supporting services we don't use. So again I see a contradiction in your position there.

The third rationale that I understand the commissioner to be using is that each area wishes to pay for their own costs on a regional basis. By doing that they can control their own costs, and therefore there is an incentive for them to reduce their costs to make their particular region more competitive. Again, you can get more port specific; it would give an individual port a reason to control its costs if it were going to be done on a more port specific basis, which also seems to benefit you. But you're saying you agree to a national rate.

So the three rationales seem to be consistent with what would support you, but you're disagreeing, so I find in each of your comments an inconsistency with what you're trying to accomplish and what you're promoting.

Mr. Gooley: If I might, first I'd like to put the process in context. As a company, we are very much at the end of this chain. We have no representation on the Marine Advisory Board, so Statia has spent a great deal of time since October, November, and December 1995 simply trying to come up to speed with where the rationale is and where the process was at the time.

Our initial position was that if you're looking for one way to implement this in the first year, we certainly didn't agree with a situation that prompted me to pay $82,000 to trans-ship one cargo. We thought the most equitable way in the first year was to simply look for a national fee. That was our initial position.

We are not fighting this fee, as the commissioner has today. We believe the consultation process, as it's gone through time, has given a rate which is acceptable to us individually. I think what I'm saying is I cannot address whether that is equity across Canada or whether it is equity across the Atlantic region. We support it. I think what I did was to state that our initial position was to support a national fee. We don't know what the number in a national fee would be, so if you ask me today if I support a national fee or not, you have to tell me what that number is and what the impact is on me.

Mr. Wells: How can you say you support it if you don't know what the number is?

Mr. Gooley: We support the approach and the concept of a national fee. That's what we did. We never saw anything come out of the commissioner's office that said here is the cost of that proposal. We were seeking a philosophy.

We have evaluated what has come out and we have reacted to the process, and as we sit here today we are saying that we will accept this process. We don't know if this proposal is correct or incorrect. We don't know if the allocation of costs to the Atlantic region versus the central region versus the western region is true and accurate. We don't know that. We know the costs that have been defined as applicable to the regions. We don't have any breakdown of those costs, and I don't believe the commissioner has a breakdown. I think they are pure allocations.

So if you look at the objective of Statia Terminal's Point Tupper, we are simply doing our best to remain a competitive, viable business through a reaction to a process.

If I might go back, I would say that our initial position was that if you were going to implement a fee, the most reasonable system was a national one. We really believe strongly that on international movements, we could be exempted from anything. We might never come into the commerce of Canada. We have GPS systems on all of the vessels coming into our port. We don't know that a fee is applicable to Statia Terminal's Point Tupper at all.

Mr. Wells: So wouldn't a port specific system be more beneficial to you?

Mr. Gooley: We don't know what costs are going into port specific or what control we have on those costs. If you tell me that I'm going to maintain a coast guard office in Halifax or I'm going to absorb for Port Hawkesbury 50% of a coast guard office in Halifax to handle long-term navigational aids that start at the pilot buoy, which bring ships to my port, and if I'm paying pilotage and harbour dues and those things, if port specific means that I pay for all the administration costs for Dartmouth, Halifax, or whatever, then no, I don't support that. I don't believe that's user-pay, user-say. I don't believe it's payment for services that I'm receiving.

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As individual companies, we are reacting to a mechanism that is a cost recovery mechanism through which the Canadian government is asking the coast guard to recover its cost. We are a user of some of those services. We will disagree, I'm sure, with Commissioner Thomas on how much of those services we actually use, how much of those things we actually need and how much control we have over those things. But we do not control the process. We are in a position of only reacting to the process. Our position today is that the reality is that we are going to get a fee, and of all the proposals that have come to this point, this proposal is as equitable as any. I think that's our position.

The Chairman: Thank you very much. I find it hard to believe that nobody's been talking to you, because certainly somebody's been talking to the commissioner and to the minister. I think the commissioner is using you as an example of how a 50,000-tonne cap would be beneficial to a smaller port. I don't know whether it was Mr. LeBlanc, the MP from the area, but I know somebody has the commissioner's ear on the problems past proposals would have on your business. This latest proposal was designed to help you out.

Mr. Gooley: Yes, sir. Mr. Chairman, I'm not critical of the commissioner's reaction to our comments. What I am saying to this committee is that we had to seek these people out. We had to seek out the position of the Marine Advisory Board. We had to seek out a meeting with the commissioner. He has been very receptive to our views. We think we have placed a great deal of logic in front of him. We have demonstrated our position with facts, and we are heartened to see that he has reacted to those in a positive fashion.

I think the message I bring here today is that as a company in Port Hawkesbury we had to do a great deal of work to seek out the ear of the commissioner. We had to seek out the ear of Mr. LeBlanc, and he's been very helpful. So it's not a matter that nobody listens to us; it's a matter of where we are in the process. Up until the most recent revisions made by the commissioner, we were a significant piece of the revenue collection process, yet we had no formal representation on any body that was designing that process.

The Chairman: Maybe with the expanded board, which is coming, you may.

Mr. Gooley: We may be asked to join.

Mr. Chairman, only the most recent proposals and revisions have prompted... Before last week, before the revisions that placed a cap on the tonnage, which placed the fee on the inbound cargo only, before those two revisions were put in place, a VLCC cargo, 280,000 tonnes, coming to Port Tupper and moving out into the marketplace would have garnered a fee of $82,000. Each one of those VLCCs with its trans-shipment would have sustained an $82,000 charge.

There was an absolute assurance, in our view - which we pointed out to the commissioner and which he heard very clearly - that this would absolutely move every piece of business out of Point Tupper to direct-ship to the market in Portland, to direct-ship to market in New York Harbour, or the economics on that kind of fee would have driven people to go 2,500 miles one way farther from the North Sea to South Riding Point in Grand Bahamas and bring their cargo up the east coast and still have a lower-rate point-to-point delivery than we could have done moving into Point Tupper and back to New York Harbour. So we have been listened to.

The Chairman: A final point - maybe it's piggy-backing on Derek's - is that in paragraph 3, page 2 of your presentation, you're advocating a full implementation of the concept of user-pay, user-say at the same time as you're advocating a national rate. How do you rationalize those two statements?

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Mr. Gooley: I think I'd like to rationalize our initial position by saying that we don't think our international cargoes should necessarily have a fee. We're not coming into the commerce of Canada. If that is not accepted, we say that if we're going to pay a fee we need to have a say in what we're going to be charged for. We need to have a say in what that is. We don't think the coast guard is in a position today to say you need this or you don't need this.

If we come to the point at which the most reasonable fee becomes national, regional, or whatever, we can't dictate as one individual company what that fee is. Whether it's national or regional, we think there has to be somebody who says here is where your costs will be cut, these are things that are needed, these are things that are not needed, here is a fair and equitable mechanism. It has to have representation either across the region or nationally.

I don't believe we are contradictory, but we are saying regardless of whether it's regional or national, an issue we cannot resolve, we think there has to be representation to control the cost of the coast guard, have input on a proactive basis, with data to support it, and understand the implications of various mechanisms that provide the fair and equitable treatment. I think that's all we're seeking.

The Chairman: If there are no further questions, I'd like to thank you very much, Richard, for coming in. You've made some very succinct points.

I wanted to tell the committee that tomorrow we will have the Chamber of Maritime Commerce beginning at 3:30 p.m., the Canadian Shipowners Association, and the Maritime Shipping Federation of B.C.

We'd like to go in camera to deal with Mr. Bernier's motion, so in five minutes we will reconvene to deal with the motion.

[Translation]

Mr. Bernier: Mr. Chairman, I'd rather it not be done in camera. I think it would be a sign of respect to our witnesses who have come here this morning and to those who will be coming later on to let them hear the proposal I intend to table. If there are some people having trouble accepting this proposal, I think our witnesses are entitled to know.

If I may, I'd like read it. I've already tabled a copy with the committee. I believe the interpreters can...

[English]

Mr. Culbert: On a point of order, Mr. Chairman, that motion - a copy was circulated to me earlier - is a procedural motion, and I would kindly suggest to you that since it is a procedural motion it should be done in committee.

The Chairman: Is there any other discussion?

[Translation]

Mr. Bernier: Mr. Chairman, I intend to read the proposal and there will then be a vote on whether we should debate it in camera.

[English]

Mr. McWhinney (Vancouver Quadra): On a point of order, I think the procedural point raised should be ruled on. There is not time for grandstanding. We're not in a public relations exercise.

The Chairman: I'll defer to my experts. All right, go ahead, Mr. Bernier.

[Translation]

Mr. Bernier: Thank you, Mr. Chairman. The official opposition moves that committee members write to the minister of Fisheries and Oceans asking him to suspend his decision on marine service fees in order to take into account testimony from interveners from the marine industry wishing to be heard as well as recommendations from the committee on the matter.

My aim, gentlemen, is to demonstrate that we do respect our witnesses. When we heard the commissioner last week, he told us that the minister will be deciding in the next two or three weeks although we are only beginning our process of hearing testimony. The industry...

I have the floor, listen to what I'm saying!

[English]

Mr. McWhinney: On a point of order, please behave yourself. The member indicated that he would read a motion and now he's making a speech. We have an agenda to finish at 11 a.m. and it would help if the member cooperated and observed parliamentary rules.

The Chairman: I think he's properly made his motion. If there is any discussion on it, the meeting is open to discussion on the motion.

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Mr. Culbert: Mr. Chair, I certainly listened to the motion. I don't know what your parliamentary procedure would be here at this committee, whether you require a seconder for that, but I would like to put forth an amendment to this motion that has been put forth. I could read it into the record, if that's appropriate at this time, Mr. Chair.

The Chairman: Can you give it to us in writing, Harold?

Mr. Culbert: Yes. Do you want it read into the record first, and then presented in writing?

The Chairman: It doesn't make any difference, as long as we get it in writing. Go ahead.

Mr. Culbert: The amendment would be as follows:

That the members of the committee request that the Minister of Fisheries and Oceans confirm that in his decision regarding marine service fees he will take into account comments made by representatives from the marine sector making presentations to the standing committee; and in addition that the minister consider any recommendation on the issue to be reported on or before April 19, 1996, by the Standing Committee on Fisheries and Oceans.

The Chairman: Basically, Mr. Culbert's amendment has put the motion into a timeframe. It says ``to be reported on or before April 19, 1996, by the Standing Committee on Fisheries and Oceans''. Is there any discussion on the amendment?

Mr. Wells: I'm assuming the date is reflective of the timeframe for this committee to hear submissions. Am I correct on that? Did you talk about that before I arrived this morning, that we would have these hearings going until a certain date and then we would report?

The Chairman: No, we did not have a discussion on that.

Mr. Wells: Is there a timetable for this committee, then, to complete these hearings?

The Chairman: I believe there would be a general timetable of one week after the Easter break. We should be able to report shortly thereafter. Any witnesses who were postponed would be called starting April 16, 17 and 18.

Mr. Wells: So April 19 is a Thursday, is it?

The Chairman: It's a Friday. We'll be finished by then.

Is there any further discussion on the amendment?

[Translation]

Mr. Rocheleau: Mr. Chairman, it's going extremely quickly. The amendment to the main motion says that we request the minister to confirm his decision when we are asking him to suspend his decision. It is increasingly obvious this morning that there was not an agreement between the users, those directly concerned, and the government with respect to this decision.

If the commissioner really wants to consult people, he will have to suspend his decision. He will have to take into account the testimony, particularly with respect to a uniform rate from coast to coast. He's going to have to take into account the opinion of users to come up with a solution that will satisfy everyone rather than proceeding arbitrarily, as he has suggested in the amendment. It's not a matter of confirming his decision and then consulting people. It's a waste of time.

[English]

The Chairman: Is there any further discussion?

Mr. Scott: Mr. Chairman, I can't support the amendment, and I'm going to supportMr. Bernier's motion. The reason for it is that we've heard from many different people in the marine industry who have even opposing points of view in some areas, but the one thing that's consistently coming through is that the coast guard is putting the cart before the horse. On the one side, they are going out and saying to the shipping industry that they're going to collect money from them, and on the other side there's been no move on the part of the coast guard to rationalize their services and to ensure that they're providing services that are actually required and not more.

I know we heard from the commissioner. He said they're going to make sure their services are provided in an efficient manner, but we haven't seen this yet. We're hearing from witnesses such as the one we just heard from who say that their very futures are hanging in the balance.

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I think it's a mistake for the coast guard to implement fees for services until such time as they can demonstrate to the people who are going to be paying those fees that they're getting value for their money and they're not going to be paying for things they don't need.

So I'm going to support Mr. Bernier's motion and I'm not going to support the amendment.

The Chairman: Is there any further discussion on the amendment?

Mr. Wells: The amendment would still satisfy the concerns of Mr. Scott, and I will support it for that reason.

The Chairman: Mr. Bernier.

[Translation]

Mr. Bernier: Would you please read it again? It appears to be saying that this is satisfactory. We are asking him to suspend his decision until we have heard testimony.

There are two elements in Mr. Culbert's amendment, if I've understood correctly. It refers to a specific date and also to confirmation. I'm worried about the use of the word "confirm". However, I think I might be in agreement with a cut off date. There are lots of people who would like to present their views. Personally, I'm willing to work day and night.

I don't want the minister to do anything at all before we've concluded our work. I misunderstood the use of "confirm". Could you please read that bit over?

[English]

Mr. Culbert: Mr. Chair, if I might respond, that's certainly the intent, to get the clear flow of that message through to the minister of what the intent of the motion and the amendment to the motion are. That's what it indicated, that we would as members ask the minister to confirm that those comments and presentations made to this committee would be taken into consideration prior to his final decision in regard to that. Then the only other element was setting the time element at the end of that for us to make our presentation.

Mr. Rocheleau: Can the amendment be reread?

The Chairman: Yes, reread.

[Translation]

Mr. Bernier: Could I please have a photocopy, Eugene?

The Committee Clerk: Yes, just a minute please. It's only in English.

Mr. Bernier: Even if it's only in English, the interpreters can help us.

We're waiting for the English version. Reference is made to April 19, that is the Friday following our return to the House. Since I've stopped smoking, I no longer have my calendar on the back of my pack. So that would be the following Friday.

Perhaps the clerk could tell us, based on the list of witnesses wishing to appear, whether we'll have enough time to hear them all or whether we should also sit in the evenings, on Wednesday evening, all day Thursday, Friday and through out the Easter period.

I have no objection to that, we've just started our hearing process. This morning we've heard two witnesses so we've got that much accomplished. There are a lot more left. I don't only want to hear those who are for or those who are against but a full range of witnesses.

I also said that it was not my intention to go over all the work done by the coast guard in the past two years. They received 300 briefs. I don't think that we have time to listen to 300 briefs in the coming weeks.

On the other hand, perhaps the steering committee should have a meeting to look into this and ask the industry representatives if they're willing to be heard in the time that we have left. Are they able to designate people who will be representative of their positions? I trust they can be helpful.

We'll then have to make a decision and if it is for April 19, the date suggested by our colleague, we can live with that. So by April 19 we will be handing our report in to the Minister and he will then be able to decide whether to go ahead with June 1st or not.

.1125

[English]

Mr. Culbert: Mr. Chair, if I might -

The Chairman: My information, gentlemen, is that we will have plenty of time to hear all the witnesses who have indicated they want to appear. We've taken names from the opposition parties and from the government side and from the industry who want to appear. I think by April 18 we should have no problem at all. We may have to sit evenings in that particular week, but I don't anticipate any problem seeing everyone who wishes to be heard before April 19.

My opinion, if I may give it, is that I don't see anything wrong with the motion or with the amendment because I think we can satisfy the motion and the amendment in the timeframe we have to deal with.

Mr. Culbert: I was just going to mention, Mr. Chair - and you touched upon it - my understanding is that a number of the presenters would have liked to have been here possibly this week to make a presentation to our committee. Because of the shortness of time betweenMr. Thomas' presentation last week and this week, they were not able to get their presentation or their representatives together in order to be here this week to make that presentation, but they would be very pleased to be here the week we noted.

The Chairman: That's why we have to continue the hearings the week we come back, to take those people in who couldn't come.

Mr. Culbert: Yes, exactly.

The Chairman: So are we ready for a vote on the amendment?

[Translation]

Mr. Bernier: First of all it has be read. I think that we can agree on the date. But before we vote, I want to make sure I understand the other change made by Mr. Culbert. I hope that in your party you're also taking the trouble to understand before you vote.

[English]

The Chairman: Following from the committee on the issue, the amendment reads: ``to be reported on or before April 19, 1996, by the Standing Committee on Fisheries and Oceans''.

Are we ready for the question?

A voice: I think he wants you to read the whole thing right from the start.

The Chairman: Do you want to read it from the start?

[Translation]

Mr. Rocheleau: Are we talking about confirming the decision? That is very important. Would you please read more slowly?

[English]

The Chairman: The motion is that the members of the committee request the minister, in writing, that he postpone the implementation of his decision regarding marine services fees in order to take into account comments made by representatives from the marine sector before the committee, as well as any recommendations from the committee on the issue, to be reported on or before April 19, 1996, by the Standing Committee on Fisheries and Oceans.

Mr. Culbert: That's not the amendment, Mr. Chair.

The Chairman: That's the amendment you wrote.

Mr. Culbert: No, it isn't. I have a copy here.

Mr. Bernier: Could you show Joe what the other word is that you want to change? I would agree with what he just read, but what is the other word now?

The Chairman: I'll have to reread it. I'll try it again:

That the members of the committee request the Minister of Fisheries and Oceans to confirm that in his decision regarding marine services fees he will take into account comments made by representatives from the marine sector making presentations to the standing committee; and in addition that the minister consider any recommendations on the issue to be reported on or before April 19, 1996, by the Standing Committee on Fisheries and Oceans.

.1130

Motion as amended agreed to

Mr. Bernier: Mr. Chairman, on a point of order,

[Translation]

I think we're proceeding rather quickly this morning. If you reread the amendment, I think that you will realize that it is not an amendment but a new proposal, unless the words don't have the same meaning in the two languages. I'd like an explanation.

We were asking for assurances that the Minister would wait until we conclude our work. From the wording of the proposal the Minister is merely??? asked to take into account what is said in this committee before making his decision. But that does not necessarily mean the same thing because he may have heard the industry's point of view whereas we want him to hear the opinions expressed by all witnesses.

The committee has never had any hearings on this subject. The Minister may make his decision based on the views of industry. He has already heard what I might describe as pseudo-proposals. The commissioner is the only one who has heard everyone and seen the 300 briefs. We are anxious to hear the opinions of both sides to have a better idea of how things stand in relation to the position of industry and the point of view of the commissioner.

I agree on the date but I insist on the need to request the Minister to suspend his decision. If the Minister decides to disregard our views, then he will face the political consequences. Out of respect for the witnesses we'll be hearing, we have no choice but to ask the Minister to suspend his decision until we have concluded our work.

Having said that, I submit that the vote should not have been taken since it changes the meaning of the proposal. For that reason, I'm asking you to adopt or to reject the first proposal and Mr. Culbert can then move his motion.

[English]

The Chairman: Mr. Bernier, I believe the minister is not in a position to postpone. He has to hear from the committee anyway. He has to wait for our decision. So all the motion is saying is that we are confirming he is going to do that. I don't see what the objection is, unless somebody can -

Mr. Wells: Mr. Chairman, the motion has been made, the motion has been passed, and the objection is invalid. I suggest we move on.

Mr. Bernier: My proposal -

The Chairman: I believe Mr. Wells is correct on procedure, and I want to assure you that the minister will wait until we're done.

[Translation]

Mr. Bernier: It is not an amendment, Mr. Chairman, but a new motion. I'd like to hear the point of view of the member for Vancouver-Quadra as a legal expert. I'm sure that if he were given the opportunity, he would acknowledge that it is not an amendment but a motion that goes against the spirit of the first motion.

I'd appreciate hearing your opinion, Mr. McWhinney. I am convinced that it is not an amendment.

Mr. McWhinney: I can understand your objection but the matter has already been decided.

Mr. Bernier: Is that so! Thanks a lot.

Mr. McWhinney: It's over.

.1135

Mr. Rocheleau: That's very courageous.

Mr. McWhinney: It seems to me that the motion emphasizes the same point as that proposed by your colleague.

Mr. Rocheleau: No.

Mr. McWhinney: There is a great deal of confusion over the term but it is merely to confirm that the Minister will take action and do something.

Mr. Rocheleau: Mr. Chairman, the commissioner told us last week that the government will have to take a stand within the next two weeks. With the witnesses we are hearing...

[English]

The Chairman: Excuse me. All I can do at this time is to assure you again that recommendations from the witnesses will be heard before the minister makes his decision. That's all I can say.

[Translation]

Mr. Rocheleau: But you are taking a decision in the place of the Minister. Mr. Chairman, our committee is an autonomous one. We have the right to request the Minister to suspend his decision. He may choose to follow our recommendation or not. But what we are doing here this morning is deferring to him. I cannot understand you, Mr. Chairman. Some of the witnesses we will be hearing from will be fearful.

[English]

The Chairman: I don't think so.

[Translation]

Mr. Rocheleau: This is very insulting to the witnesses and to Parliamentarians. Why are we here if we are unable to influence the Ministers' decisions in the public interest?

[English]

The Chairman: I thought we were going to respect both. We will respect both, the members here and the recommendations from the witnesses.

This meeting is adjourned.

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