Mr. Chairperson (Marcel Laurendeau): Good afternoon. Will the Committee of Supply come to order, please. This section of the Committee of Supply has been dealing with the Estimates of the Department of Highways and Transportation. Would the minister's staff please enter the Chamber at this time.

We are on Resolution 15.1. Administration and Finance (b) Executive Support (1) Salaries and Employee Benefits $438,900.

Mr. Gerard Jennissen (Flin Flon): With the minister's approval, I would like to move on now to another larger theme which would be railway transportation in the Port of Churchill. I would like to start off again with Mr. John Heads' Manitoba Transportation Action Plan to the Year 2000, because in 1990 when that report came out, there were several recommendations on what the provincial government should do with regard to railway transportation, some suggestions for improving it.

The first suggestion was, and I will quote it to the minister and let him react to it, determine whether it is in the interest of the province to continue burdens on the railways in such areas as payroll tax, diesel fuel tax and increased property taxes on railway right-of-way.

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Hon. Glen Findlay (Minister of Highways and Transportation): It is probably not uncommon for everybody who pays taxes to think that they are paying too much relative to somebody else. We hear it quite often from different categories of taxpayers, and, clearly, when we go to WESTAC meetings the railroads quite often do raise the tax issue and say they are paying too much. They say relative to their U.S. competitors they are paying too much, and on it goes.

The province did recognize that we were out of sync on one particular category of tax, and that was diesel fuel, and I believe it was three budgets ago, phased over a period of time and starting July 1, 1992, we reduced the fuel tax on diesel for railroads from 13.6 cents down to 6.3 cents in three steps from '92 to '95, which put us pretty much in sync with all provinces except Saskatchewan, which remains up at 15 cents a litre. So we responded to level the playing field, to attract the rail industry here and to not offend the rail industry in terms of taking more tax than would be the average across the country.

Property taxes were mentioned there, and I know when the property tax assessment bill was in the House here about two years ago, there was some major discussion involving Rural Development and the railroads as to what was the appropriate level of assessment on rail properties, particularly, I believe, rail properties other than where the rail track is. There was ultimately a decision made in that context, and I could not tell the member to what degree taxes were changed or altered. I think it would be best to ask that of the Minister of Rural Development (Mr. Derkach).

But, clearly, on diesel fuel, we have responded as a province. I think B.C. is a province that has maintained fairly high property tax assessments on the railroads, and I think on at least a bridge or two, in terms of taxation, there has been some reductions in B.C. in recent years.

Railroads are gaining a little sympathy in terms of taxes. As I think I tried to indicate the other day, I for one do not believe that the railroads' success over the next 20 years is guaranteed. It is going to take a lot of effort to maintain their competitive viability in North America, particularly I am thinking of CN and CP, of course, and we have to give serious considerations to requests on taxes and other things that they bring forward.

Mr. Jennissen: I thank the minister. The second recommendation made by the same study may perhaps look a little ironic now, but I will quote it anyway, is to examine all opportunities to increase CP Rail's car and locomotive heavy overhaul activity in Winnipeg.

Mr. Findlay: Mr. Chairman, a lot of things certainly are changing in the rail industry, and it has been a recognition by both CN and CP that some of their locomotives are old, and they are in the process of buying new locomotives. I can recall I think particularly CP buying a hundred new locomotives recently, GE locomotives. CN has bought some new locomotives. When GE puts the engines in, I think they are a million dollars apiece, those locomotives, or a million plus. I notice in just recent days here that CN has signed an agreement with GE to do the locomotive maintenance in Symington, I think it is Symington Yard here in Winnipeg, and the hope is that they can do more than just the CN locomotive maintenance at the yard there on a contract with GE.

We signed an agreement, I believe, with CP about two years ago, again associated with GE engines where they were going to be increasing some level of the Industrial Benefit Program for the province of Manitoba.

This comes back to both railroads having to make decisions that increase their efficiency, decrease their costs, and I support decisions like that which allow them to have a better chance of surviving as competitive rail entities in the future.

Mr. Jennissen: As the minister knows, and in fact has made quite clear, there are global changes in the transportation systems happening everywhere, and they impact on us quite negatively in Manitoba. For example, the loss of the Crow rate and rail line abandonment have serious negative consequences for all of us. Not only that, there is a job loss. I think it is fair to say that we have lost at least 5,000 rail jobs since this government came to power, and perhaps that is not a fair way to characterize it, but certainly there have been thousands of jobs lost in the rail sector; I would estimate 5,000.

Does the minister have any suggestions how we can ameliorate ourselves in this trend in job loss? We know it looks bleak over the next 20 years, but in other jurisdictions, other countries, they are certainly aware of the scarcity of fossil fuels, and they are certainly aware of environmental issues, which I would suggest should give trains a high priority.

Mr. Findlay: The member identifies losing 5,000 rail jobs, but we are still a very large centre of rail job location in the province of Manitoba compared to any other place, other than maybe Quebec, and Alberta is challenging us a little bit in terms of total rail jobs, but I am sure the member is talking just about rail jobs associated with operating the railroad on the rail line. Clearly, with newer equipment, better technology--it is like the telephone system. You need less people to maintain newer technology, newer equipment. We saw this reality three or four years ago and pursued very aggressively getting new-technology, rail-related jobs to Winnipeg. That caused me to pursue getting the customer service centres here for both CN and CP. We did succeed in that direction. Both CP and CN have their customer service centres here for dealing with customers all over Canada.

I think, with CN's case, they had something like--I am not exactly sure of the number, but about 11 service centres, customer service centres across Canada, and they now have one. It is all in Winnipeg. That is over 500 jobs down in the Eaton's--[interjection]

No, CP is in the Air Canada building and CN is in Eaton Place. There are over 500 jobs in the CN centre and around 200 jobs in the CP centre. So we brought those kinds of jobs. They are higher technology jobs. If we had not made that initiative to get them here, they would have been located somewhere else. So we are losing, yes, at the rail end in terms of jobs. We are gaining in the customer service nature of jobs, but that is a reality. We at the same time are gaining significantly in transportation jobs associated with the trucking industry. Again, that is a reality; it is happening. There are shifts taking place.

I would contend today versus, I think the member said, when we came into power, there are more jobs in the transportation sectors here in Manitoba now than there were then, in total. I am talking rail, trucking and air-related job activities. I dare say there are more today than there were then, but many of them were in newer technologies than existed at that time. The customer service centre is clearly an example of that.

There are shifts taking place. One could pick just one little segment and say, well, we are losing rail jobs, but you have got to look at the bigger picture. Have we got more total transportation jobs or less. I contend we have got more, and we have got some of them in the area of where the new technology is being put into place.

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Mr. Jennissen: The minister may be correct that perhaps in totality there are more jobs, but I am wondering, you know, how high paying those jobs are as compared to, let us say, 10, 15 years ago. It seems to me that, especially in some of the high-tech industries--yes, there are many jobs created, but these are McJobs, very often paying very poor wages.

Mr. Findlay: I would say no. The average salary in the customer service centre is up in that $35,000-plus category, which are not McJobs. Trucking jobs today are well-paid jobs. I have heard young people say, I and my wife are going to spend the next number of years on the road as co-drivers; we are going to build up our nest egg and then we are going to settle down. There is good money to be made. Yes, there is a commitment there in terms of being away from home a lot. There are pretty long hours. I think that is true in every job today; you have to work longer, harder to stay competitive. I know the member mentioned the word "competitive" in his opening remarks. It is a reality.

I do not buy the argument that they are lower paying jobs. When we brought the customer service centre, I said the average is around $35,000, and there are some pretty high paying jobs in there because the CN centre has been identified in the telecommunications industry as being a very top-rate, first-class centre and is used as an example for incoming companies that are looking at, you know, a customer service centre that they might want to copy and be setting one up for themselves as we try to bring more and more of those kinds of jobs to Winnipeg.

It is in the 5,000 to 6,000 job category now. It is the way of doing business. If that is the way the companies are going to go, we have got to work to get those jobs here, but they are reasonably well paying jobs. I have never encountered any young people working in those places that are dissatisfied with either the workplace, the work environment, or the nature of remuneration or the opportunity for growth in those jobs.

Mr. Jennissen: Mr. Chair, what in dollar terms does the minister estimate it will cost extra to make up for the wear and tear on Manitoba roads just for one factor, the loss of the Crow rate, which then led to consequent rail line abandonment? How much did the feds offset this in terms of whether it is infrastructure grants or Western Diversification, whatever? What is the figure it is going to cost us to make it up, and what do we get back from Ottawa?

Mr. Findlay: I want to spend a few minutes on this question because it is exceptionally complex. The real short answer is it is nearly impossible to give definitive numbers to what the member has asked for in any kind of defensible position that, you know, five years later somebody would ask were your numbers right or wrong, probably a 100 percent chance they are wrong.

In the business of grain movement, growing of grain, marketing of grain as to where it was going and what was happening, it became evident to myself, partly because I am a farmer, and partly because I was in Agriculture, the minister, and then in Transportation. It became evident to us that there was a tremendous change happening out there, whether it was talking to truckers, talking to elevator managers or looking at the growth of the grain feeding industry, particularly in hogs, and we became aware that southeast Manitoba is a feed-deficient area and realized they are all hauling feed in. Where is it coming from?

I went and called UGG and Manitoba Pool, the two biggest elevator companies in Manitoba. I said it is becoming apparent to us that a lot of the grain that goes in your front door is leaving that elevator by truck as opposed to by rail, which was the standard model one would think was always happening. This would be about two years ago, two and a half years ago I made that phone call, and at that time they both acknowledged that about 25 percent of the product going in the front door was actually leaving by truck, whether it was special crops going to processing, whether it was feed barley or feed wheat going to a feeding operation somewhere, whether it was canola going to a crushing plant, those kinds of examples, or flax going into a crushing plant in North Dakota, or malting barley going into the U.S. There was more and more of that already happening as the discussions of removal of the WGTA Crow benefit or increased abandonment was going on.

So there is an evolution in that direction already driven by the commerce of high cost of exporting that grain, that feed grain, low value grain to places like Thunder Bay or Vancouver for export, more and more desire to feed that here. We were promoting it as government, to feed it here and have the value-added industries of producing meat from that grain. Then there is higher value, more jobs.

So that has been going on all the time, and, yes, it will continue to escalate. We have lots of rural jobs associated with the trucking industry, lots of five-truck, 10-truck small companies, one truck per person kind of company. A farmer may run a truck in his spare hours, hauling grain in every direction you can imagine in Manitoba, just meeting each other on the highway. You can haul grain one way across Manitoba, and get a back haul going the other way.

There is a tremendous commerce now that did not exist 10 years ago in moving grain, and it is happening by truck. You kind of would wonder when an elevator company like Pool would take in canola. They have a crushing plant at Altona, they have a crushing plant at Harrowby, and they were moving it there by truck, always have, take it in the elevator. It is hauled on a road to the elevator, and then it is hauled by B-train from that elevator to those crushing plants. One would say, why did it not go by rail? A number of factors involved there. There are the reasons why they made the decision to use trucks over the years. That is going on.

We certainly argued that the federal government has a responsibility to offset the impact of moving grain from rail to road. Every prairie province clearly has, and that is why we argued, as I mentioned yesterday, for the Crow adjustment fund, infrastructure adjustment fund that it should go to roads, and it was not anywhere near enough. It would maybe cover 10 percent of what was going to happen in the next year or two, but my deputy makes a good point. With the increased truck traffic, there is absolutely more diesel fuel being burned by trucks hauling grain. We are, at this current moment, getting half of the gas tax that they are paying--is provincial tax. The other half is federal gas tax, and we are not getting any of that.

If the federal government, in the prairie provinces, would allow the provincial governments to receive that federal tax as paid on diesel fuel that is burned in trucks hauling grain, it would move a long way toward creating the revenue we need to offset the impact of their use of roads. It will be an argument that will go on forever and has been going on ever since the first round of abandonment started back in the '60s. The provinces have made very little progress in this discussion with the feds. They just say they do not have any money, we are not going to do anything. At the end of the day, we have no choice but to respond as best we can as provinces, because we are closer to the user, closer to the citizen, closer to the taxpayer. By default, we have to accept all the responsibility even though we will argue forever and a day that there is a need for a federal commitment, a federal response. The silver lining on all this is more jobs created here in the trucking industry, and these are jobs scattered all over Manitoba.

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I think the member will also recognize that, in the industry of moving ore and moving timber, there has been an escalation of trucks on the roads and moving more product and moving in very long hauls. I was surprised here--about three months ago I went to a ribbon-cutting ceremony opening a transfer plant in Transcona for taking fertilizer off of rail which had come from Saskatchewan, potash from Saskatchewan, taking it off of rail here in Winnipeg, transferring it to trucks and then hauling it into North Dakota, Minnesota, Iowa, down in there, and 2,600 B-trains a year are going to make that trip. Now the jobs are created here from that activity, but there was an economic advantage for them to move it from rail to truck here as opposed to doing it somewhere closer to where the end product was being received.

So those are the kinds of changes that are happening. They are driven by economic decisions, and the government is going to have to work hard to keep up to be sure that the infrastructure serves all users.

I am sure the member has had letters from people saying, get those trucks off our roads. We, of course, write back and explain the value of having trucks out there. So the public sees more activity. Some of those would like the roads for leisure and pleasure and see it as a disadvantage to their leisure and pleasure, but we are going to have to work hard to be sure the roads are safe, that the rules of the road are safe and that the safety requirements for truckers are universal across the country, and, through our inspection process and their compliance, be sure that they are driving as safe as possible trucks on our roads. Considering the number of trucks out there, their accident rate is phenomenally low. Maybe once in a while there is a spectacular one that gets your attention. It is just like an airplane crash. There are very, very few of them, but whenever one happens you think the world is coming to an end.

So to get back to the basic question, we will always argue for more federal dollars in every way we can, but I guarantee they will never fill the total need or the level of impact that they have created on us by their federal decisions.

Mr. Jennissen: Yes, the minister makes a good point. I was especially interested in the one about the fact that a lot more diesel is being burned, because as the rail industry rationalizes and some of their lower density lines are being, I guess, eliminated, is the word, there is more reliance on diesel trucks or big trucks, and, of course, Ottawa makes more money. So if there ever was a reason for Ottawa to be paying us some more money, I guess now would be the time. That is for sure. So I certainly do not disagree with that.

I would like to ask the minister if he has any updates on some of the rail lines that have been abandoned, the smaller rail lines in Manitoba. Now we all know and we are very fortunate to save, at least it looks like we have saved, the Bay Line and also the Sherridon sub, but there are a number of others controlled by CP and CN that have either fallen by the wayside or appear to be falling by the wayside. There were some initiatives on using some of those lines. I believe some of them were to be used for transporting gas, gas pipelines, I believe.

So I would like to ask the minister if he could give me an update on some of those subdivisions like Lyleton, Russell, Neepawa, Oak Point, Steep Rock, Erwood and Cowan, among others.

Mr. Findlay: Yeah, I am going to give them to the member as two groups: CP lines and then CN lines. In the category of CP lines, there is the Russell subdivision from Binscarth to Inglis, and it was abandoned August 1, '96. The Gretna subdivision from Altona to Gretna, abandoned also August 1, '96. The Lyleton subdivision from Deloraine to Waskada was abandoned August 1, '96, but there has been a group of farmers there in the process of forming a company to raise the money to buy the line. My understanding is that $400,000 was talked about as the amount that CP wanted for them to buy that line. They have raised the money, involving local farmers, investors, and from Brandon, Gord Peters's company, Cando Contracting. So we understand they have raised the money. We understand that $400,000 was requested. We presume then that the deal is going through and that one will be operated as a short line. The fourth one under CP lines is the Arborg subdivision from Winnipeg to Arborg. It is designated for a transfer to a short-line operator. No further date of any action has been announced.

On CN lines, we have the Rossburn subdivision from Rossburn to Russell, abandoned August 1, '96. We have the Oak Point-Steep Rock line that the member mentioned, Winnipeg to Steep Rock. It is designated for discontinuance, and it was offered on April 20, '97, to the province and municipalities. The Cowan-Winnipegosis subdivision from Dauphin to Minitonas and Sifton to Fort River, designated for discontinuance. The Erwood sub from Swan River to Birch River is designated for discontinuance, and the Miami-Hartney sub--that is the line running from Morris to Elgin, designated for transfer. Then all the northern lines which are in the course of transfer from CN to OmniTRAX, the final negotiation is still underway there, but we do fully expect that OmniTRAX will operate short line on those lines and take ownership of the Port of Churchill which will be key to their using those lines.

So there are significant lines involved, more by CN than CP, and as I mentioned, there is quite a network of lines in the North, some 810 kilometres to be short-lined, and the Lyleton sub to be short-lined some 17 kilometres.

Mr. Jennissen: I thank the minister for that answer. In early April, the Canadian Wheat Board officials actually launched a complaint against the major rail line companies for upping their fees again. It would cost the prairie farmers another $85 million. I am wondering if the minister would comment on that, specifically in light of the fact that they say, well, we are making these lines more efficient; we are making things work better because we are getting rid of all the unprofitable parts, and yet there seems to be backlogs. They cannot seem to get the grain to market on time. It is almost as if despite the so-called efficiency there is no payoff, and yet somehow they are building in more profits, and it is hurting the farmer. I wonder if the minister could comment on that.

Mr. Findlay: This is a very large issue. If we can get a positive outcome of what has been initiated here by all the players in the system, maybe we will have a better system in the next five years. This past winter, going back to November, clearly some things started to happen in the grain transportation industry that led to up to 40 ships sitting in anchor outside of Vancouver waiting to be loaded. Severe winter certainly impeded the ability to get grain through the mountains, particularly snow slides. The issue became very serious late January, early February. The federal Minister of Agriculture held a meeting in Calgary with all the players there, trying to design a way to recover from what appeared to be significant shortfalls in grain movement to the West Coast. Ultimately, a lot of finger pointing got started. The Wheat Board first, I guess, pointed fingers at the railroads, made some very negative comments in press releases. Then CN, particularly CN, started making some negative comments about the Wheat Board and other players. The Wheat Board ultimately launched a complaint under the CTA which they have to rule on in 120 days.

As ministers of prairie provinces and B.C., we take a broader view of what is taking place, particularly I will comment more from what I believe. I do not for a moment think that one player was at total fault in what happened this winter. The reason I say that is because one of CN's letters clearly indicated that they were very close to meeting their targets in terms of grain hauled to Vancouver, within a few percentage points. They also indicated that the transfer elevators in Vancouver were very close to being full. They were never less than two-thirds capacity. If I remember right, 600,000 tonnes is what they hold, and they had 430,000 to 450,000 tonnes, which sounds like a lot of grain. It begs the question: Why was that grain not being loaded on those ships?

CN also pointed to a fact that they identified some 1,300 cars that were picked up in Saskatchewan in the last quarter of '96, that were empty; they were not loaded. So it is easy to point fingers at the railroad. It is easy to say the winter in the mountains should have been the problem. I think there is a lot more problem here than first meets the eye. I have met with people from Sask Wheat Pool, other members of what was called the SEO group, the senior executive officers of the grain companies, railroads and the Wheat Board.

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The four western provinces wrote letters to the federal minister saying it is time for an inquiry as to who all has to change what they do to increase the efficiency of grain movement. I would say it was about 10 years ago we took great pride in western Canada, we exported 30 million tonnes. Last year we exported 18 million tonnes. This year it will undoubtedly be less. Something is not right in the efficiency of the integration of the grain handling and moving system and ship-loading process.

So I do not think there is any one party at fault. The Wheat Board and CN have kind of taken shots at each other which is maybe unfortunate. We are advocating at this point, and the most recent letter I have written to the federal ministers is that they reconvene the CEO group which, about two years ago, had a recommendation on the table which every player was around the table and everybody gave a bit and they came up with a series of recommendations of changing the system and rewards and penalties in the system. The federal government decided to ignore that report, fundamentally ignore it. All they ever did was get into a fight over who should roll in those 1,300 government rail cars, and they never even resolved that. I think the federal government has got some blame here for not acting on a major report where all the players can see that they all gain a bit but it would make a better system.

I say, reconvene that CEO group. Let us get those players around the table. I originally thought that they could do it with themselves just at the table, but because of the Wheat Board and the CN taking shots at each other, as they are, I think there are some hostilities there that would be very difficult to resolve. The deputy and I have talked about this in the last week or so, and we are of the belief that it is time to bring those parties together with a neutral chairperson, maybe even a chairperson or a co-chair that has ability on dispute resolution. Let us get the hostility dealt with first, and then we will come to the table and work on the issues that are of importance. We are in the process of proposing that to the federal minister, as this thing unfolds. It cannot be left hanging. It cannot be allowed to drag out.

As I said earlier, I am a firm believer--knowing some of the players, having talked to different ones over the last two or three months--that there is not one player totally at fault. Everybody has got some little bit of blame here. Originally, I had a fairly hostile letter from CN that indicated we were sticking our nose in. I said, well, if everything you say is right, you have no trouble defending yourself around the table with everybody. Ultimately, we got a letter back with the tone way down saying, we are prepared to come to the table. That is where you have got to get everybody, to the table to find a way in which the system can work, to get back to exporting 30 million tonnes. I mean, I remember in the early '80s how it was such a big mountain to climb to get that 30 million tonnes. We achieved it in the mid-'80s, and we have never been able to get back there since. There has got to be some reasons why. We have certainly, in a certain sense, better equipment out there, newer locomotives. We thought we had better efficiencies in the system, but it is not fully true.

I find it unfortunate that the Wheat Board has taken the tack to launch a complaint as opposed to saying, let us be party of a process where you all come around the table and try to find resolutions that everybody can live with. It is not about finding fault with each other, and that has been what has going on in the grain industry for the last 20 years. Everybody says, the other guy is at fault and I am okay, but it is not good enough to approach this issue that way. It is too complex, too many players, too much integration. Everybody has to hand off to each other, and there have to be efficiencies in the process. There is no question about it. It cannot be done by pointing fingers or government passing acts and ordering this and ordering that. That is such a convoluted, slow and difficult process, and, until you have willing players prepared to do their share, that system will not work.

So that is where it is at, and it is a moving target. I would say, at this point, initially both railroads did not want to be part of it. Then CP said they would, and, as I mentioned early, finally CN has indicated that they would be part of a process of coming together. Now I have got to find the will at the federal end to call it together, because there is no sense of all those players coming to a resolution this time if the federal government is going to ignore the recommendations, because ultimately they have the power, they have the legislative capability to put in place whatever recommendations come out of any kind of discussion process. They were all a little bit cheesed with them because they had recommendations two years ago. They chose to ignore them. Now we have got another problem.

This is not the first winter that we had slowness in the movement of grain, and Mother Nature will create problems in the mountains again and again and again. Knowing that, we should get some grain out earlier before the winter season strikes and be prepared to shift into really high gear when winter is over. I gather just recently in the Co-Operator, there are some comments that there is another snag in the system. So this is complex, it is unfortunate, but it cannot be allowed to continue because the economy of western Canada is hurt big time by this. We are talking different reports, $35 million, $65 million, maybe $100 million of income is lost. That is serious. It hurts all our economies, and maybe even more so it hurts our reliability in the eyes of our buying customers in Japan or China or wherever. We cannot reliably deliver on our contracts, and that is very serious. Unless your buyers have confidence you can meet your contractual commitments, there is big trouble.

That is really the long answer, but it is that big an issue, that complex, and I cannot report at this moment there is a process in place that is going to lead to giving me comfort in saying that it is leading to a resolution. It is hopefully developing. The four western provinces are on the same track.

The federal government, to its credit, has recently said we need incentives and penalties in the system just like exists in the movement of potash and sulphur and coal, but it does not exist in the grain industry. If somebody does not do their part, no penalty. That is not right today. If there are contractual commitments at different stages in the process, there have got to be contractual commitments and penalties for every player through the system.

Mr. Jennissen: That is a very good point the minister makes. In fact, I can quote Barry Prentice who says pretty well the identical thing. Prentice also wondered if deregulation would help smooth out the problems. Currently, there is no penalty paid by railways, or anyone else, if shipping agreements are not fulfilled. Instead, the cost of those problems is shouldered by the producer I think, which is basically what the minister is saying.

The point the minister made earlier that intrigued me, from 30 million tonnes of grain in the '80s to 18 is quite a drop. It seemed to me, as the minister was talking, he was saying that the elevators were full, the ships were waiting, so is the bottle neck then the ports? Is that where the problem is? Is that where the demurrage occurs? I am not sure.

Mr. Findlay: I really do not know the answer to that. I am just picking bits of information that different players have brought forward. The elevators are full. The railroads said they were hauling up to what was expected, almost to what was expected of them. There was lots of grain in the export terminals, but there were ships sitting out in the ocean. I say there are some questions along there as to--if all those points are true and everything I have said has been what somebody has reported--if all those points were true, why were the ships not being loaded with the grain that was there?

Now what it could easily be, it was the wrong grain for the sales that were in place. So it was an organization problem maybe, but we are speculating, getting bits and pieces of information coming from different directions. We are speculating as to what the answers might be. I say the only way you can get to the truth and to the bottom of this is every player gets around the table, everybody parks their six gun at the door when they come in and all their biases, and let us deal with the issue. We have a chairman who will keep the discussion on focus about the issue that must be resolved. It takes a very good dispute-resolving chairman to do that. It should not be one of the members in the group. It should be somebody independent who has got no vested interest other than moving the process through.

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There are some good dispute-resolving people out there that are trained in this process. I think they are needed here now. This is no longer, in my mind, a political question. It is a very significant economic question for all the players, because everybody collects their tariffs off when action happens, and when action is slowed down, everybody loses, and particularly, the member mentions, the farmer. At the end of the day he pays for everybody's shortcomings. The ship sitting out there, he pays its demurrage. If grain is not hauled from his elevator, he cannot haul, so he cannot sell his. He has to store it on his farm. If the price goes down while that is in place, so good luck, sorry about that. He pays the price. He has no say, he has no authority to change anything. He has no ability to inflict a penalty on anybody who did all these stupid things. This has been the history of the grain industry. Today, with the high cost and the need for cash flow, everybody is net 30 days. He cannot wait six months for the next pay cheque. He has to roll steadily. The member could put himself in a position--you are a lawyer, if people do not pay your bills, it is kind of hard to pay your bills. If you get a cheque every six months, it is a long drought in between.

If somebody is committed to expect to sell some grain and halfway through that period it does not materialize because others failed to do their job, the banker does not like to listen to the argument. He says I am on a net 30-day. I have to pay my staff every 30 days, and he is right.

In the interests of fairness, there has to be some significant federal leadership here to bring this to a resolution. They have to come to the table committed to accept the outcome of the discussion process, not ignore it for political reasons after that process is done.

Mr. Jennissen: I agree with the minister. We want to move more western grain out. Of course, it is obvious that if we can move it three directions, that is, east, west, and north through Churchill, we would I am sure have better luck in getting the volume increased.

At one time we talked about a million tonnes through Churchill. Of course, that has not been happening, unfortunately. It was interesting the minister's comment about the farmers being at the short end of the stick always. Certainly, my father was a farmer in Saskatchewan. I was involved as well, so I know all about that feeling. I guess as long as farmers are rugged individualists, they will probably be taking that. So, I have often wondered, maybe tongue in cheek a little bit, if they were more unionized, maybe they would have a stronger voice. I do not know.

Anyway, I would like to move to the Port of Churchill itself and go back to, actually the one recommendation from the Churchill Task Force, report of the Churchill Task Force Gateway North, January 1995. In fact, I think Mr. Don Norquay was one of the illustrious members of that task force. I think they did come up with a very good report.

(Mr. Neil Gaudry, Acting Chairperson, in the Chair)

I would like to read the first recommendation which is, public commitment to the preservation of the transportation infrastructure and services. Although this does not really mention railroads per se, it does have some interesting things to say. I will quote: Government should make a commitment to the continued maintenance and operation of the existing transportation infrastructure and services, due to their identified public benefits, and particularly the major economic benefits of the spaceport Canada project. Government should ensure the continued operation of the grain elevator at the port, as the elevator is essential in order to maintain and build the traffic necessary to achieve long-term viability.

Actually, they do mention the transportation system as well. I had not noticed that. That was certainly, I think, a fairly powerful recommendation. In light of the fact of the changes, perhaps we are not as directly involved anymore as you would have been at one given time. At any rate, the port supposedly will go to OmniTRAX and, supposedly, will do good things for Manitoba.

There are still some unresolved issues. In fact, if I can mention some of them, in an article from the Winnipeg Free Press, May 7: Port sale near say feds. Some of the issues that come out of that article concern me somewhat. The first one is the unresolved dredging issue of who pays for this, why is it--well, I guess it is necessary, but I have heard arguments pro and con that river flows were altered for hydro power needs, so on and so on. I guess the end result or the end question will be, who actually will shoulder the bill, because apparently that port will have to be dredged to make it a fully functional port. Would the minister comment on that?

Mr. Findlay: Mr. Chairman, the Churchill task force was a very good process. It brought players to the table and out of the recommendations the member read, there is a lot of mention of government this, government that. What became apparent after was that it is difficult to force things to happen unless somebody has an economic investment that causes them to work hard to really make it happen, and that is why the Gateway North process came into being which eventually evolved to try to negotiate with CN to take ownership of the lines, then CN identified the Sherridon line.

Then there was need for CN to be sure that they did a deal with somebody who could really operate the system, both in terms of maintenance of the system, operating the equipment on the tracks but also be able to generate activity down that track for whatever reason, whether it is for tourism or whether it is for movement of products north or moving a product south and be able to do business out of the port with the rest of the world. Then that is when OmniTRAX stepped in and signed an initial agreement with CN and are continuing, as I mentioned, in the final negotiations which will, hopefully, wind up by the end of May.

They are negotiating with CN relative to the line and all the interchange aspects between CN and OmniTRAX. They are negotiating with the federal government on the port, and there is no question that part of that negotiation is that the port be in an acceptable situation so that the deep-sea ships can operate there, and there is a dredging factor involved. That is all under negotiation. You have seen the May 7 article which indicates, as I said, May 31 as a hopeful conclusion. I think Axworthy was quoted there. That is as close as we are to knowing what is going on. We are not privy to that discussion. It is between the feds and OmniTRAX with regard to the port.

I would recommend to OmniTRAX that they get all these issues clarified now because if they do not get all the issues clarified, it will impede the ability for their economic plan to unfold and as Manitobans, we want the economic plan to unfold, the use of the track, the use of the port, creating the jobs, the economic activity and have a shot at making the million tonnes or million and a half tonnes or two million tonnes, whatever it can be. But if all these elements are not structurally brought together at this critical stage, they will drag on for years as arguments and the line's ability to succeed will be jeopardized.

The involvement of government over the years and no grain company up there with a vested interest to move grain and CN's reluctance to use the line for whatever reasons, it just was not working. When the Liberals in '93 promised a million tonnes through there, well, that sounded good, and it is just like getting rid of the GST, it sounded good, but they could not deliver on it. They fundamentally could not deliver on it because the fundamentals, the economic fundamentals were not there to do it. I think the process of OmniTRAX coming in as owner, investor, they have got risk now, they have to fulfill their business plan. The incentive is really there now to bring it all together.

I have noticed them talk about moving grain out of the northern states through Manitoba through Churchill, and if that is economically viable, the old system was never going to get there to doing that--"them" as committed, invested. When your rear end is on the line and you stand to lose your shirt, you can sure get up early in the morning and work a lot harder and go to bed awful late and get up early the next morning and get at it, and that is what has to be done there. Because the member knows there are strong forces wanting to pull the grain east, west, south as opposed to north. So I think we are on exactly the right process to have success up there, involving dredging and everything else. Everything is resolved now so we can get on with a smooth future.

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Mr. Jennissen: Yes, I agree with the minister. However, not all the players are equally willing to sit down and participate, because Tellier has made it quite clear that CN was not going to pay a penny for the dredging, and that kind of worries me, that sort of hard-line attitude right at the start, but maybe that is just a negotiation gambit. I wonder if the minister would comment on the fact that one of the bidders for the northern CN line, Gateway North Transportation limited, basically Manitoba-based, asked the Canadian Transportation to investigate their belief--this is Gord Peters's belief at any rate--that the bidding process was tainted. Does the minister have any information on that?

Mr. Findlay: The Gateway North Transportation people were certainly directly involved in negotiating with CN, and only they know what went on directly between them and CN, and they have launched a complaint and the Canadian Transportation Agency is a quasi-judicial body and they will review the evidence, the information and will ultimately rule. I cannot comment on pro or con or on the validity of the substance of the complaint, nor probably should I at this stage.. I hope the complaint will be dealt with without impeding the process of what we just talked about in the last question about getting on with the future of Churchill. So I think I would just as soon leave it at that now, and we will let the agency do their investigation, subject to the complaint and rule and hope that the process of developing Churchill's future continues unimpeded.

(Mr. Chairperson in the Chair)

Mr. Jennissen: While we are on CN for the moment, I am just wondering if the minister has any indication how many of the 1,200 job cuts that Tellier was announcing for the future for CN were going to affect us, and it worries me particularly because CN had one of its most successful years in its 77-year history, $142 million profit. We know the company is 64 percent American owned and it just kind of worries me an awful lot when I see an American-owned company saying, we are making a lot of money, and yet, oh, by the way, we are going to cut 1,200 more jobs, and Tellier says they are going to do that. Now, how many of these jobs are going to be cut in Manitoba? Does the minister have an idea?

Mr. Findlay: The member mentions 1,200 jobs or something like that that they are proceeding to downsize this year. They had gone through significant downsizing previously, some 11,000 jobs throughout the system. We have always argued that we do not want to be proportionately disaffected relative to the other locations as they go through this downsizing. I think it is fair to say we have maintained our approximately 12 percent of the workforce in Manitoba year in and year out through the downsizing, so we have not been disproportionately affected. That has been the argument I have had anytime I have met with Tellier, and he has conceded that every province has asked for the same thing and that it would be their intention to proportionately downsize uniformly across the network. They have no reason not to believe that the same will not happen again, as they do what they are doing.

The member mentions the fact that they made profit. One must not forget that they lost a lot of money. Both railroads lost a lot of money over recent years, and when you lose money, you lose your economic viability. You lose your ability to invest in further capital replacement, whether it is in buying locomotives at a million dollars a piece or whether it is building rail lines or building bridges or coring tunnels out of the mountains. The railroads making money just means that they have some money to invest in future capital to upgrade the network to make them more viable to be an entity that will stay in business for the long run.

I always see making profit as positive, because you have some capital to invest in the future and it stimulates the economy. It secures everybody's job when the company they are working for is making profit. Losing a hundred million dollars or $200 million a year is not a very enviable position, is not sustainable. They have to turn the corner and they have, and for that we congratulate them.

The layoffs that they do are primarily like we have done in government. They are primarily attrition, early retirements. They are the direct impact on employ--although you might be out of a job earlier than you want, but at least you are not dumped on the street. The union contract that they have is very good for the employee in that regard. I will just leave it at that.

Mr. Jennissen: I would like us to move on to VIA Rail for a moment. The minister probably knows that VIA Rail cutbacks have also impacted negatively on Manitobans, specifically in the North. I believe it was only several months ago when VIA announced that at least four people were being cut; they were downsizing The Pas and I believe it was Dauphin. That is a bit sad because rail passenger service is certainly more environmentally friendly than vehicles on the road. I think a lot of countries are aware of that and know that, and more than that up North where I come from it is absolutely necessary, rail passenger travel.

We do not have roads in the far North, and so there are communities, especially communities on the Bay Line that have to rely upon railroads. Railroads are their lifelines, but it does not always appear that VIA is very receptive to our needs or even to giving good passenger service. I noticed that when VIA tried to expand to six trips a week in B.C., they were mandated to cut back or to keep it at three by the federal Transport minister. So I was wondering if the minister has any idea or is aware of any plans that VIA might have that will also impact negatively on us in the near future? In other words, is he aware of any cuts coming from VIA?

Mr. Findlay: Mr. Chairman, VIA had been receiving very substantial subsidies from the federal government over the years. The federal government started to make decisions a few years ago of reducing the degree of subsidy, and they were cutting by the hundreds of millions. It caused VIA to have to rethink the way they were doing business. Clearly, where people have a choice of how they can transport from point A to point B by air, road or rail, rail is a distinct third choice. The passenger travel by rail has really dropped off over the years, but the member does identify a unique circumstance where in the North it is the only means of ground transportation, the only means of transportation really, period. With many of the communities all the way along the Bay Line, there is no--there is a unique situation. When the Premier (Mr. Filmon) and myself and two or three other cabinet ministers met with CN, it was one of the points that we really stressed hard, that you are not only talking about closing the line and rolling it up and saying you cannot make money hauling grain to Churchill or Sherridon lines, places like that. We said you are not only impacting that, you are impacting people's only means of transportation, and we will not allow railroad to be rolled up. You must find somebody else prepared to operate it. If you do not have the ability to manage it economically, we guarantee you there is somebody else out there who will, can, and you must pursue them.

So it is a unique situation. It would have been criminal not to have that line there for those people for the passenger service, but VIA, as a whole, has been losing tremendous business over the years because of customer choice, whether it is price, whether it is service or convenience or just pure desire. I think the automobile has everybody's attention big time. Even the bus transportation industry is losing ground because people choose to have independence of their own vehicle where that is possible, but in the North that is not possible.

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I think the nature of discussion we had that day motivated CN to be very aggressive to find another service provider to maintain the line and also we identified with them, if you roll the line up you surely lose the business of interchanging that grain traffic to a short-line operator. So, Mr. Chairman, as long as the discussions currently underway are successful, we will maintain rail transportation for the people in the North.

I have no reason to think that it will not continue to be successful and am very pleased at the process of OmniTRAX coming in and operating the line. It puts it on solid footing for years to come, whereas we all know in recent years it was not on solid footing with CN and they eventually were going to walk away. Another alternative that is viable does exist, and VIA is going to have to continue to adapt its operation to where it can make a dollar.

We are not aware in Manitoba of specific job-related decisions that they are going to make other than we do know a line where they are going to continue to have an opportunity to do business, and that is going into the North, whether it is for the local traffic, passenger traffic or whether it is the tourism activity going to Churchill which moves a fair number of people every year. There is an opportunity there if properly run.

Mr. Jennissen: I cannot help but compare the way VIA operates and the way OmniTRAX is attempting to operate. OmniTRAX is at least trying to base its Canadian portion, Manitoba portion, in The Pas, so it is close to the action and close to the people, whereas VIA, whenever whenever you want to find out whether the train from Pukatawagan is late and you are in The Pas or vice versa, you have to phone New Brunswick or if you want to make a reservation--I believe it is New Brunswick, or is it Newfoundland? I think it is New Brunswick. It has always struck me as odd that you have to phone to the far end of the country in order to find out whether the train 10 miles down the road is late, and it bothers northerners. Maybe in terms of electronics it does not make any difference, but it somehow feels like it is the wrong thing.

Mr. Findlay: I know it feels wrong to have a phone answered that far away, but electronically the information is there. It is just like the customer service centres that we have operating in Winnipeg where the call comes from Alabama about information in Alabama, but it is transmitted by a phone receiver here in Manitoba. Generally speaking, the person making the call does not know where it is answered. We have a lot of jobs in Manitoba doing exactly what the member is talking about.

I would like to have the jobs that VIA has in this connection in Manitoba, too, as opposed to New Brunswick, but electronically the information can really be transported anywhere. It is really like the operation of 911. You make a call from Russell and dispatch the fire engine from Russell, but it could be answered in Brandon. That is the most efficient way. Distance is no factor with electronic transfer.

Mr. Jennissen: That is indeed true, but for an irate customer, he would just as soon be able to walk in and kick somebody in the shins. If it is 3,000, 5,000 miles away, that is pretty hard to do.

To continue, though, on a serous note, northeners have not been impressed with the VIA cutbacks or with the VIA service, in fact. I do know there was an April 1994 report on passenger rail service in Manitoba with Ron Duhamel and Elijah Harper, and they did trudge around the country quite extensively and spent a lot of the taxpayers' money. Northeners were less than impressed, because I do not think anything ever happened to any of those recommendations. In fact, I will ask the minister: Has any one of those recommendations ever been implemented? In other words, was the report just shelved and is gathering dust, or was something actually ever done?

Mr. Findlay: Mr. Chairman, fundamentally, the member is right. Two Liberal M.P.s, Duhamel and Harper, did carry out a series of public hearings in northern Manitoba--and I guess they came to Winnipeg at one point--collected a lot of information. A lot of people made presentations. I personally made a presentation to them in The Pas. That might have been the first presentation they heard advocating pretty much what the member is saying and what I had said earlier, that it is critical for the transportation needs of citizens along there--because they have no other means of transportation--to maintain passenger service via VIA.

I think the Liberals did it just to indicate that they showed some interest. At the end of the day, nothing different has happened. The report, as far as we know, has collected a lot of dust, and it is disturbing to all the people who made recommendations, who made presentations that nothing has come out of it that has changed anything. [interjection] It has just been mentioned to me that they were probably at that point proposing to make more cuts then they ended up really making, so maybe that was the positive outcome of it. They got enough messages that they felt that they could not politically carry out some of the additional cuts that had been proposed at that point, but, in terms of anything else changing, no, nothing has happened.

Mr. Jennissen: In fact, to prove, I think, at least for us, that VIA does not really care about northern passenger service, I would like to read just a few portions of a bulletin that came from VIA on equipment maintenance. It is an equipment maintenance service bulletin, bulletin C-100, and the subject is HEP1 cars on the Winnipeg remote service.

Perhaps the minister is aware of this. This came out, oh, three or four weeks ago, and I will not read all of it, but parts of it go like this: The WMC's assigned equipment for HEP1 cars does not require the same level of maintenance programs as all other HEP1 cars assigned to the Winnipeg maintenance yard, I believe it is. Furthermore, they say, these cars are specific to the remote service in northern Manitoba and so on. This service does not compare with the service given on the silver and blue, the easterly class. Later on in the same bulletin: approving the reduction of the level of the preventative maintenance, and then it lists the cars, and it talks about minimum required inspections and so on, but the whole tone of this is that we can live with a two-tier system that northerners are not worthy of having decent inspection on cars.

Now, I phoned VIA right away and, in fact, put out a press release even, and they phoned back a day or two later--and I think some of the unions also agitated strongly against this. A day or two later, VIA came back and said it was a memo mixup, but we do not believe that in the North. I do not know if the minister agrees with us and perhaps trusts VIA a little more than we do, but we think it was that we backed them down just prior to an election. I wonder if the minister agrees.

Mr. Findlay: I would agree. It is incredible that any company today dealing with safety could think they could get away with making that kind of statement, that you can do less preventative maintenance because you live here versus you live there. I can relate more closely to the trucking industry where we as a province have a lot of say in what the safety regulations are, whereas with rail it is federal.

There is no such thing as two classes. It is the same for everybody, and you must maintain the highest level of preventative maintenance possible. Otherwise, you end up with accidents and you are subject to legal recourse if you have not done that kind of maintenance and an accident happens. So it is unacceptable today, completely unacceptable, but the rail safety issues are a federal responsibility.

Yes, I am sure that some Liberal M.P.s got pretty nervous when they saw that kind of release coming from VIA and had to do something to close off the complaints.

Mr. Jennissen: We are definitely into an appropriate pre-election fed-bashing mood, but before we dance in the streets, maybe just get back on the topic, and that is, two of those particular cars that they were not going to maintain up to the standards that we desired were cars that were made prior to 1910.

I could not for the life of me believe why VIA would suggest less maintenance would be needed on cars that are that old--that would not be used anywhere outside of Bolivia, I believe--considering the distances, the terrain, the cold winters and so on. I honestly believe that they do not have a clue about northern Manitoba, and, furthermore, and this is more painful, they do not care. If you have a complaint, you phone New Brunswick, I guess. Mr. Terry Ivany is on holidays or something, I am not sure.

I guess my question for the minister is, would he lean on VIA for better services for northern Manitobans?

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Mr. Findlay: Well, I do not know if we can lean on VIA any harder, but this is a publicly run system, and might I say when we are dealing with private sector people, we do not have these kinds of troubles because they are a little more aware of public opinion, just like what the member mentioned, that it is deemed inappropriate and unacceptable to do what they are doing.

Sometimes the public sector thinks it can get away with this. I think the member might be a bit of a supporter of the public system, and he might remember that I am a little bit of a supporter of the private system, and I think the private system is always very conscious of customer thoughts, customer satisfaction, customer safety, because their lifeline depends on it. There is not an automatic pay cheque at the end of the month or the end of the year if you do not listen to the public very carefully.

In the public system, that same level of accountability is not always as good. We have stiffer and stiffer safety requirements in Canada for obviously good reasons, and I do not think it is fair that some company or some group, whether it is public or private, thinks they have the right to do what the member has just mentioned. So we will do what we can through our activities at staff or administerial levels to be sure that the acceptable Canadian level of attention is paid to safety continuously by all service providers, public or private. We have a very good and enviable safety record in Canada, exceptional record, but it is not 100 percent perfect. There is constant need to be ever vigilant to maintain it at the highest possible level.

Would it be okay to have a short break now?

Mr. Chairperson: Will the committee take a five-minute recess? [agreed] Five minutes.

The committee recessed at 3:52 p.m.

The committee resumed at 4 p.m.

The Acting Chairperson (Mr. Mervin Tweed): We will call the committee back to order, and I guess we will continue to proceed.

Mr. Jennissen: If we could continue on the point we left again with VIA. Does the minister have any idea how VIA's plans in northern Manitoba are going to mesh with OmniTRAX? The reason I ask that is when I talked with Mike Ogborn of OmniTRAX several weeks ago at the Hudson Bay Route Association meeting in The Pas he was not clear himself apparently on the maintenance of the rail cars and so on. Obviously VIA is running over OmniTRAX tracks, I believe, so there has to be some kind of meshing, but I believe it is not for lack of trying on OmniTRAX's part. I am just wondering if the minister has any idea of how those two operations are going to mesh.

Mr. Findlay: OmniTRAX will own a rail line, which naturally they would want to maximize the number of customers they would want using that rail line, and, clearly, VIA had a contractual arrangement, agreement, whatever, with CN for the use of the line or use of whatever other service facilities they needed. I would think that that contractual arrangement that CN had with VIA should be a matrix from which to develop whatever OmniTRAX and VIA would negotiate as an agreement for use of the line. I do not see any problem there or any reason to be concerned because OmniTRAX have every reason in the world to want to have VIA there and VIA, in terms of operating their business, has to use the line. So the two partners will naturally come together, and it is not that they start from scratch to negotiate a contract because there is already one that exists between the previous owner and VIA.

Mr. Jennissen: One point I want to make, Mr. Minister, and actually put on the record is that I am up to this point impressed with what OmniTRAX is doing. I am extremely impressed with the fact that they are consulting with northerners and aboriginal people, for example, before they decide on logos or colours of their engines. They went to Pukatawagan and talked with aboriginal people. I have met OmniTRAX people in Lynn Lake, spokesmen. Mike Ogborn, in particular, is very well spoken and very sensitive to northern issues. He stopped in places like Swan River and Winnipeg, and he is out there beating the bushes for business.

I guess it intrigues me that an American company from Denver can come and set up headquarters for its Canadian component in The Pas and show that kind of sensitivity when our own company which was owned by the people seemed to not give a hoot whether we existed at all. That bothers me I guess as a Canadian. I know this is more of a philosophical reflection, but perhaps the minister can comment.

Mr. Findlay: I guess it is the perfect chance to get you converted. I am glad that the member sees it that way, and I am very pleased that OmniTRAX is respected that way. I am not surprised that they are out there trying to satisfy their customers because they have risk, they have investment, they have to run a business, they have to attract customers, and they are doing the right thing obviously if the member sees it as positive in terms of dealing with the aboriginal communities, other communities along there to be sure that they are seen as a good corporate citizen so that they get the business.

But that goes back to what I said earlier. When you get a publicly owned system, there is not the attentiveness to the customer in terms of service, quality or reliability that the private sector has to consider because they have their own money on the line. That is why I say, maybe I can convert the member because he is seeing more and more in this discussion the last two days that the private sector is pretty responsive, responsible. There are always a few bad actors, no question, but our system of rules and regulations is there to catch those as best we can. But the the public sector delivery system that theoretically should work does not have the attentiveness, as good a quality of response to customer needs. It is something to do with the psychology of the person. If your job is on the line and your salary is on the line relative to the job you do, you motivate you. If you know you have a guaranteed job regardless of what kind of job you do, you are not as motivated. I do not mean that to be critical because I know most public employees are committed. A few maybe are not, and it is those few who tend to stay in the job that could cause a bad image for everybody. In the private sector, you get peeled out fairly quickly if you are not good, responsive employees.

So I guess that is how I am going to try to convert the member for Flin Flon, but I am very pleased that he sees OmniTRAX that way. I hope that the people along the line do see them that way, because I agree with them. I think that they will be a very positive entity out there in the future for increasing the level of activity, the degree of service on that line for passenger use or for hauling freight. There are still negotiations going on, so we cannot say it is 100 percent there, but we are comfortable that it is proceeding towards conclusion. I hope that nothing to do with the federal election causes anything to be disrupted in this process of arriving at the very final agreement.

I am glad that the member said what he said. You may say why would somebody from Denver want to do this? Well, I always use the argument that everybody has to be from somewhere. We live in the global village today, so whether you are from Ukraine or from Denver or from The Pas, you are fundamentally the same kind of person. If you have investment, you have the same desire to retain your investment and have a return on your investment and that motivates good service. If you are not motivated that way, you are ultimately going to fail.

Mr. Jennissen: First of all, I want to thank the minister for his kind invitation to convert me, I think. I have been on the horse on the road to Damascus, but I guess when I was converted when lightning hit me, I fell off on the left side, not on the right. So I would like to speak in favour of the public sector. There certainly are some negatives on both sides, but there are also positives on both sides. I would not want the minister to think that I had a late-in-life conversion.

I would like to change the topic slightly, that is to the future of Churchill itself and, again, some sort of pointblank questions at the ministers, basically updates. One of them is something that we have talked about a lot, that is the spaceport, the Akjuit space centre, and what is the outlook for that. [interjection] The spaceport, the space centre at Churchill. [interjection] Yes, could the minister give us a status update? I heard that there was great potential there. I heard about even Russian technicians and engineers being involved in a launching of perhaps some rockets. I am not up on it, and I wonder if the minister could give me an update.

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Mr. Findlay: Mr. Chairman, I can tell the member that fundamentally the news remains very positive with regard to the spaceport at Churchill. They are in a process of negotiating financing contracts with people who will want to launch rockets from there. The member mentioned Russian scientists, and yes, they did sign a contract for Russian launch vehicles. I suppose a lot of the information that we might like to impart is reasonably confidential and I would just summarize it by saying there are no obstacles in the way, there is no reason to have any concern. They continue to develop their plan, their business plan of acquiring customers.

There are other launch locations in the world. I can remember a presentation that I sat in on from the spaceport people, and they were going to be negotiating with people currently launching in such places as Edwards Air Force Base or Cape Kennedy, and naturally those locations will fight hard to keep the business. If I was somebody who was in the business of wanting a location to launch, I would be having both sides negotiating one against the other, looking for the best possible deal, but there are so many technical advantages to launching from Churchill as opposed to those other two locations that I mentioned that the natural advantage is Churchill. We are very confident that Churchill will see launches in '98-99, and they continue to do what work is necessary to achieve that.

Without a rail line, that whole thing might be in jeopardy. The rail line security for the long term is so much better today than it was two years ago, so that little obstacle towards their success has been removed with OmniTRAX coming into the picture, hence naturally an OmniTRAX advantage to have them as a client, too.

So it is all going in exactly the right direction, and as I say, I have heard nothing to give us any concern whatsoever about their ability to get their game plan up and running. The only thing that has happened really is, it always takes longer than initially expected to go through all the process of negotiation that takes place, and as I mentioned earlier, people currently having those contracts will fight hard to keep them. That is one of the reasons it does take more time.

Mr. Jennissen: I thank the minister for the answer. I have always heard that the fate of Akjuit spaceport did depend on the viability of the railroad, but I am not quite sure why that is. Just for my own information, is that because the pieces of equipment they are hauling are of such huge size that it cannot be done by ship?

Mr. Findlay: It is to get the rockets. Let us say company X in California wants to launch rockets. It has to get them there and they are long, they are big and the rail line is the way to get them there. The last time I talked with Akjuit people, they talked about having to have unusually long rail cars to move the rockets up there, and the other thing is the communications business today is so much dependent on orbiting satellites. There are so many low-orbiting satellites constantly being put up. They might have a five-year lifetime, whether it is for television or just general communication. There is a lot of business to be had, but these rockets are not small. The rail is for the transportation of the rockets.

Mr. Jennissen: Just several more questions on the Port of Churchill, and some of these perhaps do not really fall under the rubric of Highways and Transportation. I am wondering if the minister knows of any initiatives or directions that OmniTRAX may be going or plans to go that would make both OmniTRAX and the port more viable. I am thinking here tourism, back haul possibly Voisey Bay, although I think that is out, but also, I believe, hauling container ships from Greenland. The Royal Arctic Line, I think, it is called. Is that all in the works? Are there any other initiatives that could make the port grow?

Mr. Findlay: Mr. Chairman, I think, suffice it to say that the attitude of people in the business community in Manitoba, particularly those who do business in the North, is very much like what the member opposite mentioned, that OmniTRAX is viewed very positively, and anybody and everybody that has something that they want to offer, or a recommendation for OmniTRAX to do business, those recommendations are being made.

OmniTRAX has part ownership of an elevator in Estonia. I think that is where the thought of moving grain out of the northern U.S. as well as western Canada to that facility was something OmniTRAX would consider. There has been mention of moving ore from Voisey Bay into Thompson for processing. Clearly, any kind of ore product where there is processing in the North, there is the opportunity to bring it in there.

I have also heard of potential of moving--I cannot think of what it is right now. It is currently brought in through Vancouver to Alberta from some part of the world--phosphate rock. Phosphate rock is an option, that it may be more cost-effective to move phosphate rock from Florida, which is one of the places it is mined, through Churchill to where it is converted into fertilizer in Alberta, as opposed to the current process. So there is a tremendous number of opportunities, and, as I said earlier, everybody who has opportunities or ideas is making them available or making OmniTRAX aware. OmniTRAX has given the commitment that they will follow up every lead possible to see whether there is a viable business opportunity.

So from two or three years ago when you were all gloom and doom and wringing your hands about Churchill, I think the world of opportunity is really wide open now, and I think a lot of successful things will unfold there that may not have even been thought of two or three years ago. Again, I only can say there is great potential. The potential of realizing some of those dreams is so much better now than it was when CN was the owner of the line.

Mr. Jennissen: Regarding the Port of Churchill, I received a letter from a Mr. Alexei Stroganov, the president of the Russian Trade House located in B.C. It is an open letter to the Right Honourable Jean Chretien, and I am sure maybe the minister received it as well. If not, I can certainly table it. It is a long letter, but it is a fairly interesting one, and I am not sure how serious to take it. There are a couple of paragraphs I would like to read into the record and have the minister respond to it.

Mr. Stroganov states in the second paragraph of his letter: Although I have no way of knowing how the deal is structured--that is the deal with OmniTRAX and the Port of Churchill--it is obvious to me that it is not so much the rail line that OmniTRAX is after as the Port of Churchill itself. They know exactly what they are doing. With creative marketing and progressive management, the port could be turned into a major multicommodity depot, and its efficiency could equal, or even surpass, some North American ports that enjoy a year-round shipping season.

Then perhaps, one more short paragraph. Here he is suggesting, I think, a consortium composed of people involved with Russia's northwest ports and Canadians, and he is saying--I am quoting again--it is a very realistic plan that needs leadership and commitment of both sides. It could become a dynamic working model for the long overdue active implementation of the Arctic Bridge Agreement. Innovative and efficient shipping and trade alliances with Russian partners can be formed. The movement of goods and services along this unique trade route can be increased beyond the boldest prediction of experts over the decades that the Port of Churchill has been operational. This is precisely what OmniTRAX is after.

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I guess what he is saying is: Why did Canadians, along with forces in the former Soviet Union, not form a large consortium? They could have done it, and they could have focused on the Arctic Bridge Agreement as sort of the nucleus to start all of this. I guess he is saying, by default, why did you give it to a small railroad company--not so small railroad company--in the United States, and perhaps not--give is the wrong word.

Mr. Findlay: I think this goes back to what I said in my previous answer, that two or three years ago we were standing around wringing our hands because CN had not done what they might have done. The federal government was not doing what it maybe should have done in terms of making sure Churchill was used, and it seemed that the majority of the forces that should be working toward using the port and the rail line for the kind of economic activity that the individual mentions in the letter, just was not happening. We have had years and years and years where that public system, Canadian-owned, had its chance, and it never happened. It just never happened. Actually, the amount of grain exported there was going down and the willingness to make any effort to increase it was not there.

We talked to the Wheat Board, we talked to CN and we talked to the federal government. You would have nice discussions, and say, oh, we will do something, but nothing happened to increase what was going on, and now we have come around full circle to say, well, if the public sector, public ownership cannot get the job done, let us see if the private sector can do it. Clearly, there is a great opportunity that has not been delivered yet, but the opportunity and the optimism is so much higher today.

We were involved in promoting the Arctic Bridge concept. I mean, I was in Russia with Eric Stefanson at the time, and it must have been about '92, when the agreement was signed with Murmansk. The concept was there, but you had to have players prepared to make it work and governments, we can philosophize, we can promote, we can say it is a great thing to do, but somebody has to come to the table and say, yep, I am prepared to invest. There is an economic opportunity, there is a business opportunity; I am going to do it. You cannot do it just because it sounds like a good idea to do. It has to make economic sense. It has to be able to pay its bills, at least, and have a longevity that warrants the kind of capital investment that the investor has to put in.

So what the member read from the letter, and I would not mind having a copy because I do not think we do have a copy, it is there to be done. You know, doing business with Russia has tremendous potential in the future, but they are on a learning curve as to how to do things. I mentioned OmniTRAX having an ownership, part ownership in an elevator in Estonia. You know, there are connections there. We know that the Russians have a tremendous capability with icebreakers, which is important for Churchill, very important. They claim they can at least double the number of months per year that that port is used by using their icebreakers. So a lot of good things are potentially there to happen, and now we have a motivated company there to make it happen. [interjection]

I want to tell the Leader of the Opposition, that his member for Flin Flon (Mr. Jennissen) is getting converted today.

Mr. Gary Doer (Leader of the Opposition): Pardon?

Mr. Findlay: I want to tell you that your member for Flin Flon is becoming converted today. He is seeing the value of private sector activity.

An Honourable Member: There is not a chance.

Mr. Doer: He always believes that the private sector should work on behalf of people, not just people that own the private sector.

An Honourable Member: It was one and the same.

Mr. Doer: I have great faith in the member for Flin Flon.

Mr. Jennissen: With regard then to the Arctic Bridge agreement, is the minister saying it was just one of those nice ideas and very much like the Harper-Duhamel study of northern passenger transportation? We went out and we spent a lot of money, we travelled around, but nothing came out of it?

Mr. Findlay: I would not say that nothing came out of it. The idea evolved, and now the idea is in front of OmniTRAX to work with the kind of companies that want to do business through that connection with northern Russia, whether it is Murmansk or some place else. Like, I think the letter you read from was somebody from Russia talking northern ports. It is the same concept, and a lot of paperwork, a lot of investigation and discussion has taken place, and people from Russia have visited here. It is a long road to Damascus for Churchill, and all I say, a lot of ideas are there. OmniTRAX is the architect of making it happen, and everybody that has an idea, an interest or sees an opportunity is working with OmniTRAX, and OmniTRAX is prepared to work with them to find those viable opportunities to function and carry out business through Churchill.

Naturally, the writer of the letter sees opportunities that Russia should benefit from this process, and clearly, the potential is there that that will happen. Naturally, we might like to get back to selling grain to Russia, which we have not done for some time. They used to be our biggest customer. Five, 10 years ago they were the customer for western Canadian grain. Today they buy nothing, and if their economy gets going to the point where they can start buying grain, we can then start doing business with them again.

Mr. Jennissen: The minister could then actually, if he wishes to be very optimistic, envision the possibility that Churchill is the northern end of that north-south trade flow, perhaps part of the Central-North American trade corridor, so that Churchill will be the northern terminus and way down Mexico way, I guess, Louisiana, Texas, and so on would be the southern end of that. I mean, it would make sense.

Mr. Findlay: We certainly or I certainly advocate in discussions about the NAFTA highway, the north-south corridor, it does connect from ocean to ocean, north to south, from Mexico all the way through to Churchill and Hudson Bay. So that may sound a little far fetched, but it is not unrealistic, and it was OmniTRAX who identified grain moving out of the northern United States to go that way. That, I say, was very positive in terms of their seeing the opportunity.

So, yes, this whole route--a particular package will maybe travel the whole distance. It has no reason to travel the whole distance, but it travels a portion of the distance. Let us say you are removing a product out of Minneapolis. It would make economic sense to go south to get to salt water versus north. You will choose whichever one is most viable, north versus south. The north route never existed as a viable opportunity for that consideration in the past, and now with OmniTRAX involved, they are able to market their theory, their system in the United States a lot better than CN could have ever done even if CN had tried to do it, and I do not think they ever tried.

Mr. Jennissen: I would like to move on to another major topic before we actually get to roads. I know that the minister's staff have been very patient, probably waiting with specifics for certain geographic areas of the province dealing with specific roads. I notice a number of my colleagues certainly would like to ask on road number such and such why there are potholes and so on, but I would still like to focus a little bit on air travel and airports if we could.

I know the importance of air travel to Manitoba, and, of course, Winnipeg plays a central role in that. However, some of the expansions have not worked out as well as we had hoped in the aftermath of the Open Skies agreement, and I reference the American Airlines dropping its route from Chicago to Winnipeg, the regular route at any rate, a year or so ago. So not all experiments worked successfully, but at least it was an attempt.

As the minister probably knows, and I am sure he does, several weeks ago all sides of this House unanimously supported a private member's resolution introduced by the honourable member for Sturgeon Creek (Mr. McAlpine) supporting Winnport Logistics Ltd. It was one of those rare occasions where we all pulled together because we know it is a good idea. It is obvious that when Winnport Logistics Ltd. succeeds in making the Winnipeg Airport one of the world leaders in the air cargo business, many economic advantages and spinoffs would be the result for Manitoba.

Since Estimates last year, could the minister give us a status report on how the Winnport project is progressing? Now, I do not want to mislead the minister. I did talk with Mr. Lynn Bishop and others a little while ago, but from the minister's perspective, how are things going? It appears to me they are going a little slower than anticipated, but it is a very complex issue.

Mr. Findlay: I will give a short answer. I will give the executive summary, and then I will give the long answer. The short answer is, like before, like we mentioned with other activities, like Akjuit, I guess the last time I mentioned it, it always takes longer to bring a complex process to a conclusion than ever anticipated in the beginning. What you end up with is not necessarily exactly what you started out to do, but it is generally a significant version of it. I am very optimistic. I mean things are going well. There are no problems, so to speak, that are not resolvable. There have been a lot of issues along the way that they have resolved, and their direction shifted and moved over the course of time.

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But the member mentioned Open Skies first off and concern because American Airlines' connection from Winnipeg to Chicago got terminated because of lack of business. Yesterday I was at this Air Canada Alliance that was announced which is five airlines: Air Canada, United Airlines, Lufthansa, Thai International and SAS, which is out of Scandinavia, Scandinavian Airlines. It is an alliance that is a result of Open Skies, and I congratulate Air Canada for what they have done and what they are currently doing.

Air Canada told me yesterday that, prior to Open Skies, they had 13 routes into the United States. Since Open Skies, they now have 36 routes into the U.S. So the Canadian carrier is creating the opportunity for Canadian and American--or whoever--travellers to go on routes between Canadian centres, Canadian airports and the U.S., and they have gone from 13 to 36. It is almost tripling the number of routes. It is a function of Open Skies. This alliance between the five companies--and they said they are negotiating with two other companies to join the alliance--definitely creates increased efficiency for all of them and decreased cost, more convenience for the customer travelling. They do not have to go to different gates or to different counters at the airports, because the counters will come together. I think it strengthens Air Canada's competitive position in the global air transportation marketplace. I hope that Canadian can keep up and equally be able to be competitive. So there are a lot of good things happening in Open Skies.

Now, when we were talking to them, I said what you are really focusing on here is, you have 106 countries that those five airlines fly into and 578 cities, but you are talking passengers. What about the cargo side? They said, well, at this stage we are just focusing on passengers, but the cargo concept, which is growing in terms of our total business, will be a future facet of this. The concept of Winnport that has been developed here, and again it has been driven very much by private sector leadership, Hubert Kleysen, and supported naturally by the provincial government, the federal government and City of Winnipeg to a very significant extent. There is a lot of public dollars in there to help them develop their concept. They have had some hurdles; there is no question. It may be even fair to say some of the existing airlines like this would prefer to keep the business in the belly of their planes as opposed to having other planes competing with them. They have an agreement with Kelowna Flightcraft to be the airline that moves the cargo. They have been doing significant work in the Pacific Rim, countries like China, Macao, Japan, Malaysia and Singapore. That is where they see the real business opportunities. They have been focusing on it.

About six or seven weeks ago, I contacted Lynn Bishop with the idea that I wanted an update--is there anything we could do to help keep things moving for you? He was in Southeast Asia. He was there for three weeks; three solid weeks they were over there. They visited all these places, came back feeling very good that the business is there to be done. They have a service with longevity and continuity that the freight forwarders wanted. They liked the pricing process. Currently, I guess most of this is sort of day-to-day pricing. The price could change, the dependability of cargo movement, what is going in the belly of the plane is not as consistent as what Winnport could offer. I have growing comfort that they are working on the problems, the issues.

When I was at this yesterday, Lynn Bishop was there again. I had significant discussion with him. He further confirmed with me that they had letters of understanding with two major freight forwarders. Business interest is high in them. They have at their disposal, $5 million under the Winnipeg Development Agreement. Prior to that, we invested some $500,000 in the initiative when it was called NHDA.

There is $1.8 million of private sector investment in Winnport. It is not all government money that they are working with. There is a lot of private sector investment. Continually more private sector investors come on stream, whether they are banks or transportation-oriented companies. The biggest issue that they have right now to deal with and, again, continue to give me significant comfort that they believe is going okay and that is getting their landing rights in these countries. They have made their formal recommendation via Kelowna Flightcraft--which is the airline company--to the federal government, Transport Canada and Foreign Affairs, to get the necessary flight destination arrangements with those countries that I mentioned earlier so that they could fly their planes in there.

There are always a few hiccups, of course. At the other end, they may have other ideas of what tradeoffs they want Kelowna Flightcraft to fly in there, and on it goes. I have written a letter of significant support for Winnport to the federal ministers. The Premier (Mr. Filmon) is also sending one. We are doing everything we can to keep this thing moving forward. There is no sense in mentioning where the negatives might come from or who might compete with us in Canada or outside. I have highlighted maybe--other countries may have tradeoffs they want in the process of advancing those landing rights. But it is complex, takes time. The expected start-up is now more like '98. Certainly, initially, everybody was hoping for '96. It looks like '98, because it is complex.

The people on the ground doing the work are very optimistic that as the hurdles come up, they work hard to resolve and usually find a way. Right now the big decision is federal effort to achieve these landing rights that they must have to get to these countries, or find a way to allow Winnport to carry out the business end of it, of moving the freight from here to there.

It is progressing. Like I said, I have had these meetings, because every once in awhile you get a little concerned. We constantly offer them any help or assistance that they may want. We had a staff member over there for a period of three months to facilitate and help them work. We are at their disposal, staff, political support, whatever they need. It continues to move, albeit at a slower pace than everyone would have wanted, but the enthusiasm and the expectation of positive success has not diminished at all.

Mr. Jennissen: That is good to hear. Actually, the minister has anticipated my next question, which was basically whether he has contacted his federal counterpart, and also Mr. Axworthy, to smooth the way for Winnport, particularly in the access or the landing rights. I gather that, difficult as that may be for Malaysia and China, it is even more difficult for Japan. I guess that is a hard market to crack.

Mr. Bishop and Mr. Johnson, I had a chat with them a while ago, had suggested that perhaps Winnport had been a bit naive in assuming that the pieces of a very complex puzzle would fall into place that soon. I think the minister just confirmed that, and there has been considerable delay. As the minister mentioned, the hopeful start-up date would be, at least for China and Malaysia, April 1, 1998, and perhaps even later for Japan.

My question is, with such delays, are we not going to give the edge to American air cargo distribution centres, or perhaps even to Vancouver, which is closer to the Asian market?

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Mr. Findlay: Mr. Chairman, when we had these discussions, they were pretty frank. I did not want to have somebody tell me what I wanted to hear. I wanted the brass tacks, and we challenged them a little bit. Certainly on this particular issue we challenged them: Is there any sense that anybody is gaining ground on you, catching up with you, or is going to beat you, in Canada or in the northern U.S.? Firmly answered, no, nobody is any further ahead than they were a year ago or two years ago in terms of catching us. Naturally. if they stopped and said we are going to suspend discussions for six months, they would lose it because somebody else would come in and beat them out, but in terms of moving freight from southeast Asia to the populated area of the U.S., the Midwest or middle of the U.S., whether it is Chicago, Detroit, that area, Vancouver is a nonoption. There is no economic advantage. If you land it in Vancouver, you have got to haul it over the mountains. It is a lot easier to fly it into Winnipeg and then take it down the flat land by truck. So we have got certain economic advantages. If they are going to move product into the central part of the U.S., 24-hour airport here, a truck can be on 75 within half an hour of leaving the airport. If you leave Chicago, it might take you half a day or a day to get outside and all these advantages--and Chicago is not a 24-hour airport. So all of these advantages have to be part of the package.

For somebody who wants to move freight reliably, on time, we have so much to offer. I know another question the member could easily ask is: well, we have had a flood and 75 has closed down a few times, might we be looking at somebody saying, well, you cannot positively guarantee? They said, we have an alternative plan. If the weather, what circumstances we currently have cause some disruption with highway traffic, we will be one to sign agreements to land elsewhere to overcome that for that short period of time. So I give them credit. They had the answer.

Mr. Jennissen: Just as a bit of an aside, when the minister was mentioning a little while ago about carrying cargo in the belly of a plane, and I may be mistaken here, but is it true that we are the only industrialized country that does not have an airline that carries pure cargo, specializes in cargo? I think most countries do have airlines that specialize in cargo.

Mr. Findlay: I guess it comes down to what you call planes dedicated to cargo. There has been an announcement here in Winnipeg about six months ago about Purolator putting--this is their central operation. That is a cargo plane operation. Much smaller, Fed Ex would be another example. So I say that we have cargo operations here now, and we are not positive, but Air Canada or even Canadian might have planes dedicated to cargo at certain times for certain activities. Winnport is a specialized air cargo kind of business. It is just international, flying from another country into this part of Canada, whether it is from Southeast Asia or from Europe. You may have noticed what I said so far today, we have just talked Southeast Asia. That is where the concentration is because that is where the belief that the biggest business is and the most capable of doing business is with Southeast Asia because our growing trade with that part of the world is just phenomenal. I have had people come and talk about, well, if we could just get more access to that part of the world with food products, whether it is pork, whether it is specialty meats out of Winkler, they might have one cargo lot a month or a week or whatever going to their markets, but they need to fit in with the Winnport concept that has a lot of different freight forwarders moving a variety of products. They cannot do business by sending one. The cost of sending that one cargo once a week or once a month is prohibitive, but you get part of the bigger picture, and you can do that kind of business.

So it is coming together. I say Purolator is a small example of precisely the same kind of thing, but Winnport is specialized, it is international and has the concept of being bigger in terms of on the ground, value-added industry associated with that incoming cargo.

(Mr. Peter Dyck, Acting Chairperson, in the Chair)

Mr. Jennissen: The last meeting I was at with Mr. Bishop and Mr. Johnson, I thought I heard Mr. Bishop say that at the start-up phase some air cargo could temporarily be carried by the armed forces. I am not sure if that is how he worded it. I do have a letter here to that effect, and I just wonder if the minister would react to it. It is to the Minister of Defence, David Collenette. It is a fairly short letter. It is signed by Bill Finlay and also a Mike Marion.

Here is what they are saying: Honourable Minister, could it not be feasible to tap into the underutilized resources of the air force transport fleet to be used to give the struggling private sector the help it needs to make the Winnport project viable? Instead of having to build new air transport carriers for the purpose of transporting farm machinery and the like, the project could rely on the support of the transport carriers the air force is not using at that time. This is an excellent opportunity for the government to give something back to the people and with very little capital expense. I think Canadians will be proud to see the military used for such a purpose. The freighting industry for transport of many products should be considered. Also we must as well consider where Manitoba is on the world map, the globe. Air freighters could be an asset to Manitoba airports and all of Canada and the growing export industry for rapid transport of products. Please consider these ideas and tell us your opinion. Respectfully yours, Bill Finlay and Mike Marion.

I wonder if the minister would comment on that.

Mr. Findlay: I know Mike Marion, he worked with Caterpillar. Clearly, Caterpillar does business all over the world. If they want to move large equipment like that, clearly in my mind Winnport would be the vehicle to do it. I cannot imagine the armed forces wanting to do that, because then they would be in competition with the private sector using public dollars to compete with the private sector. It never sells anywhere, no matter who is in government. It never sells. So in theory, it might sound like a good idea, but when there are private sector suppliers, it can haul that material whether it is existing carriers or whether it is Winnport through the facility they will have in the future.

Also, as I am talking here I just remembered, the combine factory at Portage, remember two, three, four years ago, they sold several, 10 or a dozen combines to Russia. Russia sent in their military planes and picked up those combines here; 747, whatever it is, cargo plane. I remember it was a big deal landing at the Winnipeg airport here, picking up these combines. So there are ways and means to move equipment like that. I guess I was a little surprised at the size of the planes that the Russians sent over here, but they were military planes. In Canada, there would be a lot of unhappy people if we had the military competing with the private sector for services the private sector could supply, and our angle, of course, is that Winnport would be the vehicle to supply those services.

Mr. Jennissen: Now, if Winnport is to succeed, there are obviously some ramifications in terms of developing the area around the airport right now. I know there is a proposed $337-million project to develop the land surrounding the airport in connection with Winnport's ultimate plans, but this is not popular everywhere and Councillor Al Golden has said, and I quote, this is a lousy deal for the City of Winnipeg compared to the deal it is for the R.M. of Rosser. Is this just some jurisdictional squabbling, or is there more to it than that?

Mr. Findlay: Certainly the idea--if Winnport becomes what it was initially expected to be, over the course of the next few years, where you will need significant warehousing space out there for the value-added activity of product brought in or transported out, there is going to be a need for land.

We had I.D. Engineering do a significant study about two years ago, and when they made the presentation to us, they brought a fellow up from the southern U.S., but it was in Texas somewhere--Dallas, Fort Worth? Anyway, it was a similar operation in the U.S. that started up a few years ago--Huntsville, Alabama, that is the place--and the one thing they impressed on us, he says: You have the land; you have no housing to the west; never allow business development or housing to encroach on the lands that you may ultimately need over the next 10 or 20 or 30 years for the continued expansion of this. Because the mistake they made down there was they did not acquire enough land, did not foresee the need for land in the future and allowed encroachment around that limited their growth.

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Subsequent to that, there were efforts made to get Rosser and Winnipeg together to jointly come up with an agreement of how to share the benefits of development of that land over the course of time. There are some 3,500 acres there in total. It will not all be developed next year. It will not all be developed in 20 years. It will be developed as success is achieved in acquiring business that needs that land for development. We have no reason to believe that the city and Rosser will not come to an agreement that is in that context. There is a lot of land currently owned, airport property, that will suffice for the immediate startup process, but there is an agreement to restrict development on the land so that it serves the purpose of Winnport's future expansion. Rosser and Winnipeg are together on it, and Al Golden does not necessarily always speak for the council as a whole. Al Golden is right often on his own agenda.

We have no discomfort with what is going on with the process involving city and Rosser to secure the economic benefits for Winnipeg and area of the development of Winnport, whether it is jobs or whatever it is. Everybody will benefit on a process of expansion over time.

Mr. Jennissen: So the minister is saying then that the intended expansion is in areas where noise pollution is not going to be a factor, or traffic in built-up areas will not be a major factor. Is that correct?

Mr. Findlay: Well, any time you have further truck activity or plane activity, naturally there is an element of noise, but there is ways and means to manage that today in the noise attenuator on planes. There are federal regulations to have older planes that do not currently have that noise attenuators, they must upgrade them over the course of time. I think, if I am not mistaken, for some of those 737s, it costs up to a million dollars to put the attenuators on. The airline industry is very conscious of not offending people close to airports. So they are doing a lot of management things in flying the planes to reduce the noise. Air cargo activity does happen at night more so than in the daytime. With a 24-hour airport you have got the capability to do that. They all know that if you want to keep it 24 hours you have got to manage your planes relative to when people want to have quiet times at night such that you do not disturb them. I do not think there is any misunderstanding of that, and I have had discussions with pilots. They do not have to have us tell us what the regulations should be in noise reduction. We know for the future of our jobs we must keep noise down, and they do various things to do that.

So there are rules and regulations, and everybody realizes that people need to have their quiet time considered, and whether it is using trucks or whether it is using aircraft, you want to keep it away from residential areas as best as possible. I think the idea, the engineering plan, for roads out there did show a road going west towards the Perimeter as opposed to going through a residential area.

Mr. Jennissen: Regarding the Winnipeg Airport Authority which is a private sector corporation since January 1, it did show a very healthy profit in the first quarter of this year. In fact, I think the landing tax at $5 per person with 700,200 passengers makes that $3.5 million. One of the concerns that I have is five bucks does not seem like an awful lot. I know some airports do charge that, I know for sure in Europe, and I think Vancouver as well. But who regulates that? I mean, can that airport authority suddenly make that $10 or $20? I know in Vancouver it is $5 for B.C. and it is $10 for Canadian, it is $15 I think overseas. Is that the same thing here?

Mr. Findlay: No.

Mr. Jennissen: Is there any regulation on that? How is that regulated? What is to prevent them from saying it is $30 next year?

Mr. Findlay: The different airports currently are certainly looking at passenger facility fees to build up a reserve for capital replacement of whether it is hangars or whether it is runways, they are expensive. I remember paying $10 at Vancouver, and we have argued that the passenger does not like the harassment of having to pay. You buy a ticket, you get your boarding pass, and then you have to go through a gate and pay another $10. We argue that it should be in the ticket, and I would hope that it comes to pass that way.

With regard to Winnipeg here, they do not want to do that any sooner than they absolutely have to, because they know that it is a bit of a hassle for the public, and they know the customer does not like it. So for as long as possible they will not have one here, and they ultimately, I am sure, will have to. But if you charge too high a fee you are going to lose customers. So you have got to have enough capital reserve to be able to do the capital replacement in the future you need, but at the same time you do not want to lose customers by having charges that are so high that your airport becomes less viable. So there is a balance there.

The same thing with the fees that they will charge for cargo planes. If they charge fees that are inordinately high relative to other locations, you lose the business. So that is the check and balance that is even more effective than government regulation, and there is a public accountability process required for these airports that require public meetings, public reporting that is all part of the agreement that they have all signed. I guess Winnipeg might have been the first one to sign the most current public accountable kind of agreement. The other ones like Vancouver, Calgary and Edmonton are coming on stream, and all the new ones behind us, whether it was Ottawa or whoever, will have the same agreement. So there is a lot of accountability to the public, very little government involvement on the boards. They are all private sector citizens there representing a wide variety of citizens on the boards. So we think it is well managed to handle the challenges of the future, and the accountability is there. If you want customers, you have got to keep your costs down.

Mr. Jennissen: Particularly, that departure tax is being charged right now, correct, at Winnipeg? It is not yet being charged?

Mr. Findlay: No, it is not.

Mr. Jennissen: I have never seen it on my ticket. I thought it was buried in the ticket price somewhere.

Mr. Findlay: No, as I said in my previous answer, they do not charge one here. It is not buried. The airlines refuse to have it buried in the ticket right now. I said that is the way it should be for customer convenience in the future, because everybody knows you have got to pay it sooner or later. If you are going to pay it, you may as well pay it in the ticket; but, no, we do not have one at Winnipeg now. Their intention is not to do it until they absolutely have to, as long as they are making some profit and they have some money that they can set aside for future capital replacement. But no specific passenger facility fee in Winnipeg now, because they cannot hide it in the ticket. The minute that it starts, you will know it.

Mr. Jennissen: So Winnipeg Airport Authority profit then was not largely based obviously then on departure tax. I thought it was.

Mr. Findlay: The answer is no.

Mr. Jennissen: If I have time for one more question, Mr. Minister, it would be maybe a couple of sentence update on the St. Andrews Airport, Winnipeg Airport Authority takeover, a bit of a status report. I am not clear on that at the moment. What is happening there?

Mr. Findlay: We will answer that next day. A little longer answer is going to be needed, but Winnipeg and St. Andrews were to be together. That was the original plan, but we will get you a good answer by Tuesday.

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The Acting Chairperson (Mr. Dyck): Order, please. The hour being 5 p.m., committee rise. Time for private members' hour. Call in the Speaker.