REGS Committee Meeting

THE STANDING JOINT COMMITTEE OF THE SENATE AND THE HOUSE OF COMMONS FOR THE SCRUTINY OF REGULATIONS

LE COMITÉ MIXTE PERMANENT D'EXAMEN DE LA RÉGLEMENTATION DU SÉNAT ET DE LA CHAMBRE DES COMMUNES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 15, 1999

• 0830

The Standing Joint Committee of the Senate and the House of Commons for the Scrutiny of Regulations met this day at 8:30 a.m. for the review of statutory instruments.

Senator Céline Hervieux-Payette and Mr. Gurmant Grewal: (Joint Chairmen) in the Chair.

[English]

The Joint Chairman (Mr. Gurman Grewal (Surrey Central, Ref.)): Good morning. The committee invited the Hamilton Harbour Commissioners and officials from the Department of Transport to appear before us on the matter of Hamilton Harbour Commissioners' land use and development bylaw.

Both the commission and the department have opening statements to make, after which we shall proceed to questions from members of the committee.

Please note that the proposed budget of the committee will be discussed at the end of this morning's meeting. The next meeting of the committee will be on April 29, at which time we will hear from officials from the Department of Fisheries and Oceans.

I welcome the witnesses to the committee. Please proceed.

Ms. Laurel L. Wilson (Chair, Hamilton Harbour Commission): Thank you, and good morning. I am accompanied by Mr. Bob Hennessy, the Port Director; Mr. Scott Smith, our legal counsel, and the secretary to the board of commissioners; and Mr. Jeff Brookfield, our Port Planner.

At the outset, let me clarify to the committee the circumstances surrounding the commissioners' letter that was sent as a response to your letter of January 25. In reading the committee minutes, I notice there was a concern expressed that the commissioners' reply was not signed personally by me. For the record, I should like to inform the members that, at the time, I was out of the country. I had been briefed on the commissioners' response and concurred with the contents; in the interests of time, I then authorized Mr. Smith to sign the document on my behalf.

The undertakings of the letter therefore constitute a formal commitment to Parliament by the Hamilton Harbour Commissioners.

While I will elaborate on the issues raised in the letter in a few minutes, let me first make some general comments regarding the land use control by the Hamilton Harbour Commissioners. The Hamilton Harbour Commissioners have controlled use of the waterfront lands since the act of incorporation in 1912. For many years, this was accomplished by leases, policies, and our general bylaw number 84.

In 1986, the commissioners passed bylaw 108, which specifically dealt with the use and development of its lands on piers 25, 26, and 27. The purpose of the bylaw was threefold: first, to regulate the lands for harbour purposes in conjunction with provincial regulations that applied to other purposes; second, to provide predictability and certainty to the public and for the users of the port with respect to permitted uses and development of port lands; and third, to provide for procedural fairness and consistency among the port customers who locate and make substantial investments in port lands.

In 1990, the land use and development bylaw was expanded, through bylaw 114, from three piers to cover all the piers and property owned by the commissioners. It is the amendments to that bylaw that are currently before the committee. We wish to address issues with respect to that bylaw that have been raised recently. The first is the belief that the bylaw regulates private land. It does not. It has never been used for that purpose, nor will it be. We are not aware of any complaints from port landowners, either to the commissioners or to the Government of Canada, regarding the regulation of private lands. Indeed, there has not been one complaint in the 13 years in which the bylaw has existed.

The bylaw as shown in the schedule attached to it only controls the lands owned by the commissioners and an additional five small parcels owned by governments. There are no private lands regulated by the bylaw. We welcome any efforts to clarify the bylaw so that this point can be made very clear.

The other point that we wish to make is that the bylaw was submitted and followed full regulatory procedure required by the government for the Hamilton Harbour Commissioners' bylaws prior to its obtaining Order-in-Council approval. This included the following: pre-notice to the City of Hamilton; publication in the Government of Canada regulatory plan; preparation of a regulatory impact analysis statement; pre-publication in the Canada Gazette Part I; Governor-in-Council confirmation of the bylaw, and publication in the Canada Gazette Part II. Again, the bylaw and its precursor have been in the public domain for 13 years.

To us, the bylaw approval process always seems to take a long time. Our previous experience has shown that periods of four or five years are not unusual. Therefore, we apologize to the committee if our actions have contributed to any delay but, based on past experience, we did not attach a particular significance to the length of time required to process these amendments. We would only state that, from our standpoint, we are prepared to provide whatever assistance the committee requires to finalize the matter. Thank you.

The Joint Chairman (Mr. Grewal): Thank you very much. Mr. Sully, please.

Mr. Ron Sully (Assistant Deputy Minister, Programs and Divestiture Group, Department of Transport): I would like to thank the committee for the opportunity to explain the department's position regarding the questions on the Hamilton Harbour Commissioners' Land Use and Development By-law.

Accompanying me today are Mr. Randy Morris, Director General of Port Programs and Divestiture, and Mr. Bruce Bowie, Executive Director of the Canada Marine Act Implementation Task Force. We also have with us Mr. Barrie LePitre, General Counsel with Legal Services, Transport Canada.

Just to review the matters I would like to touch on, in the first instance I will summarize the work to date on the amendment to the bylaw. Second, I would like to explain briefly why, in the fall of 1997, work on the amendment was suspended. I would then like to describe the department's current plans with respect to the bylaw, and finally comment on the delegated legislative authority under the Canada Marine Act.

As you know, when the department first received the September 1993 letter from the committee's legal counsel outlining concerns with the Hamilton Harbour Commissioners Land Use and Development by-law, officials of the Hamilton Harbour Commissioners began work on the amendment of the bylaw in consultation with departmental officials. Work on the amendment was well underway in the fall of 1993, and the commissioners gave public notice of their intent to amend the bylaw in the 1994 federal regulatory plan.

In June, and subsequent to that, there were a number of exchanges of correspondence on this matter. Then, in June of 1996, Bill C-44 was introduced; however, as you will recall, that bill did not receive final parliamentary approval before the 1997 election call. I should note here that Transport Canada officials and the commissioners continued to work on the amendment in any case.

Before officials were able to reach consensus on the amendment, however, the draft Canada Marine Act, Bill C-9, was reintroduced in the House of Commons on October 2, 1997. With the progression of Bill C-9, work on the amendment was suspended because the focus turned to the development of the new legislative regime that was expected to address the problem. As it now stands, however, the department is working towards finalizing the letters patent for the new Canada port authorities over the next several months and developing the operating regulations for those ports.

Indeed, even when the Port of Hamilton becomes a Canada port authority, an existing regulation such as the Hamilton Harbour Commissioners' Land Use and Development By-law would continue to apply for 12 months, or until replaced, to the extent that it is compatible with the Canada Marine Act. As a result of this, work has now recommenced on an amendment to the Hamilton Harbour Commissioners' Land Use and Development By-law. The department and the officials of the Hamilton Harbour Commissioners are working to reach consensus on what might be acceptable wording of an amendment to section 3.1 of the bylaw, a section that has been a particular concern to the committee, as well to other sections at issue.

At this point, I should explain that, by virtue of the Hamilton Harbour Commissioners Act, the commission is largely an autonomous and independent body in terms of its day-to-day business operations. With respect to the delegated legislative authority of these bodies for such activities as the making of bylaws, the minister cannot direct the commissioners. Rather, under the current Hamilton Harbour Commissioners Act, an existing regulation such as the Hamilton Harbour Commissioners' Land Use and Development By-law is made by the Hamilton Harbour Commissioners and confirmed by the Governor in Council.

[Translation]

I would now like to take this opportunity to give you an overview of the new accountability regime set out in the Canada Marine Act. The coming into force of the Canada Marine Act means that Canadian port authorities must now maintain a high level of transparency in order to protect the interests of the general public. Very clear obligations are spelled out in the provisions of the legislation, the letters patents and the bylaws.

I will now outline for you some of the principle components of the Canada Marine Act which have an impact on the accountability regime.

[English]

Each Canada port authority will have a board of directors that is accountable to the federal, provincial and municipal governments that appointed its members, as well as to port users, other stakeholders, and the general public. The selection process for board members will be significantly influenced by a variety of port users through their design of nomination processes and their recommendation to the minister of nominees to the board.

The annual meeting of the port authority will be advertised, and the community and the public will have the opportunity to express their views with respect to the manner in which the port is being managed. There is a requirement for each Canada port authority to maintain corporate records such as board resolutions, financial statements and accounting records. In addition, port authorities are required to submit their audited financial statements to the Minister of Transport. Canada port authorities will also be subject to the Access to Information and Privacy Act.

There will be control in areas such as acquisition and disposition of real property, changes in permitted activities and borrowing powers. There will also be a requirement for the port authority to develop a detailed land use plan that contains objectives and policies for the physical development of the real property that the port authority manages, holds or occupies. Notice of these plans will be published and any interested parties will be invited to make representations to the port authority concerning the proposed plan.

As you can see, under this public accountability structure, the public is being given access to the plans and operations of Canada port authorities.

It bears repeating that, under the current Hamilton Harbour Commissioners' Act, an existing regulation such the Hamilton Harbour Commissioners' Land Use and Development By-law is made by the Hamilton Harbour Commissioners and confirmed by the Governor in Council. By contrast, under the provisions of the Canada Marine Act, regulations respecting the use of the port will be made by the Governor in Council.

That concludes my opening remarks. We are prepared to try to answer any questions you might have at this time.

Mr. Lee: I hope our exercise today will be useful assisting us to understand what has occurred over the last 10 years, with specific focus on the bylaws. We also want a snapshot view of the transition that will occur, that is, starting from where this particular harbour commission is now, and, perhaps, other harbour commissions, to the transition to the Canada Ports Authority.

In your opening remarks, Ms. Wilson, you went through the process leading up to the adoption of the bylaw that is under scrutiny here. While all of it is correct — and, I do not want to overstate this — this particular committee, on behalf of Parliament, is also a part of the legislative process. This committee has a job to do. We located a difficulty, and it was our collective view that the response was not prompt enough. I do not point the finger specifically at the commission or the transport ministry; however, this is not the first time this has happened in relation to our work.

Let us look at the bylaw in question. It is the stated position of the Hamilton Harbour Commission that it does not regulate any private property. I also understood that certain leased properties were managed by the harbour commission. That is to say, the Hamilton Harbour Commission does not own the properties, it leases them. Could you confirm that the Hamilton Harbour Commission has real properties that it leases?

Ms. Wilson: Yes.

Mr. Lee: You have stated that your bylaws do not govern any private property.

Ms. Wilson: No; they do not.

Mr. Lee: Given that some citizen or some corporation somewhere owns title to real estate which the Hamilton Harbour Commission leases, that would constitute private property. If your bylaw purported to govern development or building on that property, then your bylaw would regulate private property.

Ms. Wilson: I will make one statement and then defer to Mr. Hennessy.

As the chairman of the board, my understanding is that we govern absolutely no properties that we do not own. I would defer to Mr. Hennessy to address that more specifically.

Mr. Robert Hennessy (Port Director, Hamilton Harbour Commission): Your point is correct. I believe I can quickly clear it up.

The real estate governed by the bylaw — and, there may be 400, 500 or 600 acres of it — is owned by the commissioners. As we said in our remarks, five parcels that we do not own are covered by the bylaw. They are owned by other government agencies. One is leased from the City of Hamilton. It is a parcel of about 20,000 or 30,000 square feet. There are four other parcels of about one acre each that are owned by the Government of Canada.

We say that there are no private lands. By far the majority of the lands are owned fee simple by us, and there are four small parcels, that are covered by the bylaws, that are owned by other government agencies.

Mr. Lee: I think that would clear that matter up. The ownership of the land which you have leased is totally in the hands of public agencies — that is, either the City of Hamilton or the Government of Canada

Mr. Hennessy: That is correct.

Mr. Lee: That simplifies things considerably. I was not aware of that. It would have been a simple matter to fit that information into a letter at some point.

Ms. Wilson explained why the letter that was sent to the committee did not bear her signature. While I do understand that, I hope you will understand Parliament's position that we usually do not want to be in a position of taking firm or explicit undertakings from administrative assistants. When a letter is sent, we do not know the background leading up to the sending of it. If, perhaps, an explanation had accompanied the letter, we might have been slightly more forgiving. I hope you will understand our position. When a formal undertaking is given to Parliament, we think it should look formal.

Ms. Wilson: We understand your concern. The appointment of the commissioners is just that: an appointment. I have a regular day job that requires me to travel substantially. I was on a flight that day to Paris. We sent several faxes back and forth and, after approving the final letter, I asked Mr. Smith to sign it on my behalf. I asked Mr. Smith specifically if it was acceptable and if he would sign it. We did not think it was a concern. The timing was difficult.

Mr. Lee: Thank you for that explanation.

Mr. Wappel: Mr. Sully, on page 3 of your opening remarks, your last paragraph, there is a rather dry and, I would assume, correct legal description of the powers of the minister. I am not quite sure why that was included. Is it not a fact that no bylaw can take effect until approved by the Governor in Council?

Mr. Sully: That is my understanding, yes.

Mr. Wappel: I have read the act under which the commissioners are empowered. The Governor in Council has absolute and complete discretion as to whether or not to approve a bylaw, is that correct?

Mr. Sully: That would be correct.

Mr. Wappel: I presume that the Governor in Council is guided by the Minister of Transport in its deliberations of whether or not a bylaw should pass.

Mr. Sully: Yes. It would be a recommendation from the minister.

Mr. Wappel: While the minister cannot direct the commissioners, the minister can certainly have some persuasive ability, would not you agree?

Mr. Sully: I would agree, yes.

Mr. Wappel: Thank you.

I am confused, Mr. Sully, about two points in your remarks. Work on an amendment was well underway in the fall of 1993. Reviewing the material, I agree that the letter from our counsel dealt with two substantive points, namely those dealing with section 3.1 and section 24.2. The remaining points dealt with French translation and technical wording. Work on an amendment was well underway in the fall of 1993. Then, for a variety of reasons, as you explained, the work stopped. Then you say that work has now, five years later, recommenced on an amendment to the Hamilton Harbour Commissioners' Act.

From my perspective, the time frames we are discussing are by no means insulting to this committee. Sadly, on occasion, we deal with time frames of up to 20 years. We are not particularly shocked. However, I am concerned that it appears that something can be quickly remedied here — with a word or two or with reference to the case that is in your counsel's letter — and yet it drags on and on and on. We do not seem to know whether the responsibility lies with the Hamilton Harbour Commissioners, the Minister of Transport, or a change in staff or legal counsel. We have no idea what has caused the delay.

You are working to reach a consensus on what might be acceptable wording of an amendment. That is distressing given that, back in 1993, work was well underway. What is the problem?

Mr. Smith, you wrote a comprehensive and timely response, considering the correspondence was sent out in 1993 and, by October, you were corresponding with the Canadian Coast Guard, Harbours and Ports Directorate. As a matter of interest, why them?

Mr. Scott Smith (Legal Counsel, Hamilton Harbour Commission): I quite frankly cannot answer that question. I am not sure why I wrote to them. At the time that was the body we dealt with.

Mr. Wappel: Do you know why, Mr. Sully?

Mr. Bruce Bowie (Executive Director, Canada Marine Act Implementation Team, Transport Canada): At that time, ports management was part of the Canadian Coast Guard organization.

Mr. Wappel: In your response, you pointed out on page 2 of your letter as it relates to subsection 3.1, that there was a previous case. It would appear relations have not always been neighbourly between the commissioners and the city since a legal precedent exists from the Supreme Court. You state that, to develop a bylaw relating to private lands or rights would be intra vires the corporation where shipping and navigation activities are affected.

I agree with that statement, but there is the nub of it. It was identified instantaneously on October 28, 1993, by you. Mr. Hennessy has said you have never had private lands. What is the problem with a brief, simple amendment to section 3.1, based on Mr. Justice Griffith's wording, based on your understanding, and based on the fact that there are no private lands?

Why are we here today? Why do we have to, in the words of Mr. Sully, work to reach a consensus on what might be acceptable wording? That is ridiculous. What is your comment?

Mr. Smith: The process itself, as it has proceeded, has raised additional issues which seem to run hand in glove with the original issues. It has become a process whereby we comment and we receive comments. Quite frankly, our relationship with Ottawa is excellent, and we have had much cooperation. It has certainly not been a one side, other side type of situation. We both have been working towards this end and, hopefully, we will complete it shortly.

We certainly have an agreement, a common understanding, as to what the final draft should look like. At this point, it is a question of ensuring that the wording is appropriate and that it is a proper reflection of our common understandings.

Mr. Wappel: That sounds like a lot of gobbledygook to me.

An hon. member: It sure does.

Mr. Wappel: I am a lawyer. That sounds like a lawyer's answer, and I just cannot accept that.

Turning to page 3, you state that you welcome any efforts to clarify the bylaw so this point can be made very clear. What do you think we are doing here? Our counsel wrote five years ago to try to clarify the bylaw, to make the point very clear. Suggestions were made. The position was accepted, as I understood it, by representatives of the Department of Transport. They notified you because you are an autonomous organization and they cannot control you. They asked for your cooperation in doing this. I cannot see any earthly reason why this matter could not have been resolved with a very simple amendment.

Let us look quickly at section 3.1. I know nothing about harbours. It states:

...owned, controlled or leased by the corporation. You could have suggested:

...owned, controlled or leased from public authorities. Then private authorities would be exempted in two words. What is the problem? The act is on its last legs because the new act will be coming into force. We will have to go through this ludicrous exercise again because we have to wait 12 months after the act comes into force.

The point I am trying to make, gentlemen, is that this has been a total waste of time. To me, it looks like no one cared. They just dragged their feet and let things go because they thought: Who the heck is the Scrutiny of Regulations Committee? That is what it looks like. That is why you are here. It is not because the Chair did not sign the letter, with all due respect to my friend. It looks like no one even bothered to take us seriously; and we want to ensure that we are taken seriously.

There is no magic to coming up with an amendment to section 3.1. Any of us could do that. It is a simple matter. Can we have an undertaking by both departments that it will be done and it will be done quickly? What does quickly mean to you? Does it mean five years? Can we have an answer from the commissioners please and from the Ministry of Transport?

Mr. Sully: Sir, as far as we are concerned, we cannot see why we cannot get this into the system by June. We are very close to having an agreed wording. I think we can give the undertaking to the committee that it will be in system for processing. It will be at the special committee of the council by June.

Mr. Wappel: Are you assuming you will have an agreement with the commissioners on the wording and, therefore, the Ministry of Transport will have it in the system by June?

Mr. Sully: It would be a recommendation from the minister to go to the special committee of Council.

Mr. Wappel: That means the commissioners will have agreed to whatever the wording is by June. That is something. That is only a few months.

Senator Moore: You say in the system for processing by June. Tell us again specifically what that means.

Mr. Sully: Perhaps I could ask legal counsel to explain the steps we have to go through.

Senator Moore: Members of the committee want to know when this will be finished.

Mr. Barrie LePitre (General Counsel, Legal Services, Transport Canada): The steps that would be involved are, first, the agreement in principle on the substance of the amendment.

Senator Moore: What has not been done already? I am reading the report of Mr. Sully. What can possibly be left to be done?

Mr. LePitre: There is largely agreement, as I understand it. The next step would be to ensure that the wording is acceptable to both Hamilton Harbour Commissioners and to departmental officials.

Following that, the resolution would be passed by the Hamilton Harbour Commissioners to request that the amendment be pre-published in the Canada Gazette. Then the minister would recommend pre-publication to the Governor in Council. That pre-publication would be approved by the special committee of cabinet. There would then be a period within which to receive comments. If the comments resulted in the requirement for further changes, there would be further amendment to the proposed amendment to the bylaw. Once any amendments were made, there would be the making of the bylaw by the Hamilton Harbour Commissioners. The bylaw amendment would then have to be served on the Clerk of the City of Hamilton. Thereafter, the bylaw would be submitted to the minister for recommendation to the Governor in Council for final publication in the Canada Gazette, and for confirmation by the Governor in Council.

Senator Moore: This is not a new bylaw, only a couple of small amendments; is that correct?

Mr. LePitre: The amendment process with respect to the bylaw is basically the same as producing the bylaw itself.

Senator Moore: After all of this analysis, study, and consensus-gathering, can you tell the committee when it will be finished.

Mr. LePitre: It is not possible to give you a specific date, because some of the steps are beyond the control of the Department of Transport.

Senator Moore: Assume that everything will go smoothly and in a normal fashion, which surely will happen after all this time, and give us the date.

Mr. LePitre: I am not in a position to provide you with a date. It is possible that the amendment could be finally confirmed by the fall.

Senator Moore: Fall of which year?

Mr. LePitre: The fall of 1999.

Mr. Sully: Our commitment is that the minister would make his recommendation by June at the latest.

Senator Moore: Ms. Wilson, did you review with the other commissioners the letter that you had your legal counsel sign?

Ms. Wilson: No.

Senator Moore: When you authorized Mr. Smith to sign the document on your behalf, did you discuss that action and decision with the other commissioners?

Ms. Wilson: No.

Senator Moore: I too am a lawyer and I do not think I have ever signed a letter on behalf of a client. I find that extraordinary. I have sent letters on my own letterhead on behalf of a client, but I do not think I have ever done that. I find it a very peculiar process.

Ms. Wilson: The issue had been discussed at the board meeting and the commissioners agreed that we would respond to this committee through that letter. The actual letter was presented to the other commissioners at the next board meeting.

Mr. Smith: I was also signing that letter as secretary to the commissioners, secretary to the board, rather than as counsel.

Senator Moore: When did you receive notice of today's meeting of this committee, Ms. Wilson?

Ms. Wilson: I received notice on March 18.

Senator Moore: Did you then call a meeting of your commissioners to discuss what would take place? Were they all aware of this hearing? Have you reviewed this matter with them since March 18?

Ms. Wilson: There was a meeting of the two commissioners in the week after, which was called while I was away. I was not aware that the other two commissioners had called a meeting in my absence. At that meeting, they swore in a new commissioner. Since that time, a lot has been going on. Again, it was mentioned that there was an issue before this committee and that we would be dealing with it.

Senator Moore: The other commissioners had notice of the request to appear before this committee; correct?

Ms. Wilson: I do not know if the exact date was mentioned. I believe that at the last meeting we had a tentative date; subsequent to that, the date was confirmed.

Senator Moore: Were the other commissioners advised of this by you? I assume notice would have gone to you.

Ms. Wilson: Yes.

Senator Moore: Did you notify the other commissioners?

Ms. Wilson: I cannot remember whether we specifically mentioned the date or not. We discussed the issue.

Senator Moore: Thank you.

Mr. Lee: I should like to discuss the regulatory framework within which you currently operate and the framework that will probably come to exist under CPA legislation. I am interested in your comments on this because we currently have airport authorities and port authorities that are operated locally rather than from the hub of government here in Ottawa.

The Hamilton Harbour Commission undoubtedly uses its bylaws and legal authority to manage the harbour of Hamilton. Is that correct?

Ms. Wilson: Yes.

Mr. Lee: Does the Harbour Commission purport to manage anything outside the harbour?

Ms. Wilson: No.

Mr. Lee: You acquire and dispose of assets under your legal authority, your legal existence, and your bylaws; is that correct?

Ms. Wilson: Yes.

Mr. Lee: You must have at least a couple of bank accounts.

Ms. Wilson: Yes.

Mr. Lee: Most entities such as yours do.

Having been established by statute, to whom does the Hamilton Harbour Commission account, on an annual or semi-annual basis?

Ms. Wilson: That is all covered in the act. We issue our shareholders' report to probably many more people than is required under the act. We send them to city councillors as well as the local MPs and MPPs.

Mr. Lee: You referred to shareholders, although these are not technically shareholders.

Ms. Wilson: The stakeholders.

Mr. Lee: The stakeholders to whom you would wish to be accountable?

Ms. Wilson: Yes.

Mr. Lee: Who among your stakeholders would be represented as appointees on your commission?

Ms. Wilson: Currently, of the three commissioners there are two federal appointees and one city appointee.

Mr. Lee: I have heard that there is currently a difference of views between the Hamilton Harbour Commission and the City of Hamilton in connection with financial accountability. Is that accurate?

Ms. Wilson: Yes.

Mr. Lee: The city is one of your stakeholders and you would normally account to them. Could you pinpoint for us the difference of views that has arisen and explain why you would not simply account to them as a stakeholder, as you described earlier?

MS. Wilson: We run a very successful port, and I think we have contributed in a very positive way to the economic, recreational and environmental wellness of the community. We have been able to excel at that because of our success as a business. The businesses in the port do well because they have good port facilities. We invest heavily in the port. We plan on saving some money to invest in capital in the port in order to repair, maintain and expand docks.

We view them as reserves for capital; the city views them as surplus.

Mr. Lee: Could you give us an indication of relative size of these surpluses or reserves?

Ms. Wilson: I think it is around $10 million.

Mr. Lee: You mentioned businesses. Do you carry on, in conjunction with your management of the Port of Hamilton, businesses that derive revenue?

Ms. Wilson: Very much so. A few weeks ago in the Spectator, there was an article about the state of the economy in Hamilton-Wentworth, which generally is not very good, and they listed the top 11 employers in the region. The three wealth-creating employers among the major employers in the city were National Steel Car Limited, Stelco and Dofasco. Of the 11, they are the only wealth-creating companies. The other eight employers were hospitals, education, and government. We contribute very much to the economic well-being of the region.

Mr. Lee: Your commission is established under federal statute, and your regulations are made under federal statute. Your primary function must be to manage the harbour.

Ms. Wilson: Yes.

Mr. Lee: That is somewhat less entrepreneurial than what you seem to be suggesting. Your commission generates revenues from various sources. Could you give us an idea of what kinds of revenues come from where?

Ms. Wilson: It is basically a bulk port, which means that we are bringing in coal and coke, all those things that support the steel industry, and then all the peripheral industries that support the steel industry. As to exact dollars, I will defer to Mr. Hennessy.

Mr. Lee: That is all right. We do not need precise numbers. I am interested more in structure. I am trying to determine the extent of the operations of the harbour commission.

Ms. Wilson: I do not understand exactly what you want.

Mr. Lee: I am probing a bit. You have indicated that your revenues come from this movement of bulk cargoes. Are there other sources of revenue that the harbour commission derives from its operations in Hamilton harbour?

Ms. Wilson: Yes.

Mr. Lee: Give me an idea of where your revenues come from.

Ms. Wilson: We do have some properties and we do lease properties. We have a marina. We lease dock space to pleasure craft.

Mr. Lee: Okay.

Ms. Wilson: Do you need me to be more specific?

Mr. Lee: Perhaps my colleagues do, but I am just trying to draw a linkage between the statute that creates you and the kinds of things that you are doing. It sounds like most of what you are doing relates to watercraft and port operations and your users in the port. I am wondering if it goes beyond that.

Mr. Hennessy: Perhaps I can back up and start at the beginning. We are a self-sufficient port. The monies to operate the port and to develop it are provided from the revenues derived. From time to time, we have received Government of Canada funding in the form of grants and loans over the years. The loans are, for the most part, paid off. We have not received any grant money since the early 1980s.

Our monies for capital development and for operating come from the marketplace, that marketplace being our port lands, of which there are 400 or 500 acres. Most of the dock facilities in Hamilton are owned by the commissioners. Two exceptions are Stelco and Dofasco who own their own facilities.

Senator Moore: Are they not owned by the commissioners?

Mr. Hennessy: The corporation is called the Hamilton Harbour Commissioners. They are owned by the port authority. We own about seven kilometres of docks. The steel mills, between the two of them, own about five kilometres of docks. The steel mills move their raw materials over their own docks. All other cargoes through the port, including the finished products from the steel mills, move over commission docks.

We charge to use those docks. At one time we operated them ourselves as terminal operator and stevedores. We never did the stevedoring as terminal operators. Now we lease the docks to private stevedores. A substantial part of our revenue — and why we are here with the bylaw — comes from our lands and the regulation and operation of our lands. It is where we get the money to keep the port going.

We do get some money from harbour dues, which is, in effect, a tax on the users. Every boat that comes into the harbour pays a per-tonne charge to the commissioners for bringing that boat into the harbour. That is only about 15 per cent of our revenue.

We also operate a full-service marina, which includes providing docks, storage, a boat brokerage, and a repair facility. We will teach you to sail. We are even going to do the licensing from the new government licensing scheme. We have been in that business since 1938. That provides about 50 per cent of our total revenue.

Mr. Lee: That sounds like a fairly viable operation. Can you just enlighten me as to why the City of Hamilton would find it necessary to go to court to require more information or something else from you?

Mr. Hennessy: I cannot speak for the City of Hamilton, but the dispute has come up in the past, even in my history at the harbour commission. First, let me return to the reporting. We report annually, with our annual report and audited financial statements, to the Minister of Transport and to the City of Hamilton. Then we give wide distribution to a glossy version of that to customers, to anyone who wants one. The dispute has always centred, in my view, on whether the lands and operation of the harbour commission are autonomous and we are responsible to the federal government or that we are trustees and are responsible to the City of Hamilton. The City of Hamilton, I believe — not speaking for them — believes that we are trustees accountable to them. The commission, throughout its 87-year history, and with some support from the time we have been in front of the courts on this issue, believes that they are an autonomous body responsible back through the Minister of Transport, to all the people of Canada, to run a port authority, as opposed to the land being in trusteeship to the city for local uses. We have a broader view and the city has more of a local view. The city would be best to speak to what they think.

Mr. Lee: I understand the streak of independence. Something similar exists in Toronto. Accounting to all the people of Canada is a pretty broad base. The people of Canada would not pick up the phone and call you too often, I presume.

Mr. Hennessy: I will explain what I meant. There is also a dispute, as was referred to earlier, as to the level of the reserves for the commissioners and whether they are available for distribution to the city. There is a formula, determined by the courts — and we are going through that process — to determine whether they should be paid over or whether they can be retained by the corporation.

Getting back to the question on land use issues, the commissioners have always felt that, as well as being accountable to the people of the city and the community in which we operate, we have to deal with broader issues sometimes than what the city sees. Those issues include the farmer in Simcoe who wants to move his grain or the manufacturer in Goderich that has a piece of heavy equipment he wants moved. We are developing and operating our lands on a broader basis than I think just strict local issues. That is what I meant by that comment of being accountable to the people of Canada. That was perhaps a bit of an overstatement.

Mr. Lee: Thank you.

The Joint Chair (Senator Hervieux-Payette (Bedford, Lib.)): You were talking about leases. There are very long-term leases, some that can last up to 99 years, and there are leases that can be a short as five years and are renewable. In terms of the leases you are talking about on pieces of property that are leased by the harbour, do you generally lease on a long-term basis or do you generally use renewable leases? With whom are you signing these leases? Is it only one entity or many entities?

Mr. Hennessy: We have somewhere between 1 and 200 commercial leases in the port. Our standard term is for five years. We do have 10-year leases, but that would be in the minority. We grant renewal periods in leases for periods of five years and some agreements provide for two and three five-year renewals. The first term would be five years, and then there would be three renewal terms — that is, provided that the two parties can come to terms on the rate for the renewal periods.

The Joint Chair (Senator Hervieux-Payette): Perhaps I was not specific. I am not talking about the leases that you operate and that you lease back with other people. I guess you may sublease at a certain point, but I am talking about the property that does not belong to the harbour.

Mr. Hennessy: We lease only one parcel, which is less than half an acre. It is leased from the City of Hamilton. I cannot tell you the term of that lease. It might even be month to month or year to year.

Mr. Wappel: Mr. Hennessy, how long have you been the port director?

Mr. Hennessy: Since 1984.

Mr. Wappel: I was reading the Hamilton Harbour Commissioners Act. The chair of the commissioners has said that your powers are found in that act. Is this right?

Mr. Hennessy: Yes.

Mr. Wappel: Is there any other place we could look to see where your powers are, or is it solely in the act?

Mr. Hennessy: Our authority is derived from the act.

Mr. Wappel: Section 16 of the act provides, I presume, the source of the dispute between the City of Hamilton and the commissioners because of its rather loose wording, if I may put it that way. The last clause thereof requires surplus profits to be paid over to the City of Hamilton. The dispute is over whether there are surplus profits when you take into account cost of works or improvements, performance, et cetera?

I can understand your position. I can also see where the poor wording of that section has caused some conflict. Section 17, however, requires that your books shall be open at all times for audit by the City of Hamilton. Is that the case?

Mr. Hennessy: Yes; absolutely.

Mr. Wappel: They can come in any time and audit your books.

You mentioned a marina. Where is the authority in the act to operate a marina?

Mr. Hennessy: It is not specifically mentioned in the act as a marina. However, we are in the business of servicing boats. Whether it is recreational users who are using the navigational facilities of the commissioners or using the harbour or our docks — that is, both small and large boats — it is simply an extension of our services. It does not matter if the users are commercial, with large boats carrying cargo, or if they are individuals with personally owned boats.

Mr. Wappel: Nothing in the act specifically authorizes the commissioners to operate a marina, would you not agree?

Mr. Hennessy: I cannot take you to a section of the act that has the word marina in it, no.

Mr. Wappel: There is not one. However, there was an amendment to the act in 1961 to permit amusements. I presume that means an amusement park or a carousel. Mr. Lee also mentioned the selling of ice cream. There is no such amendment, for example, relating to the operation of a marina, is there, although that could have been put in that amendment? In other words, there is no amendment that specifically mentions marina.

Mr. Hennessy: Not that I am aware of, no.

Mr. Wappel: Where is the authority in the act to operate a sailing school?

Mr. Hennessy: Again, that would be an extension of the marina business. It is not a specific authority in the act.

Mr. Wappel: There is no specific authority in the act to operate a marina business. You have simply extended your business to operate the sailing school. That would be in the harbour, is that correct?

Mr. Hennessy: Primarily, we are in the harbour; we also have vessels outside harbour.

Mr. Wappel: What kind of vessels and where are they?

Mr. Hennessy: I am not accompanied by our sailing school director today, but as best as I understand our sailing operation, we have operated that school for about 25 years. It operates primarily in the harbour. There are various programs in that school, starting from what we call a young salts program, which is for five, six and seven year olds, right up to adult programs, where we will teach you celestial navigation so that you can buy a boat and take it across the ocean after you have completed our courses.

Some years, as many as 2,000 people have gone through our program. Today, our numbers have decreased, however, and we are probably closer to 800 to 1,000 people who have gone through the school each year. We operate about 20 or 25 boats within the harbour. To get to your question, we operate three of the boats out of the harbour; but for the summer we send the larger boats that are 35 to 40 feet in length up to Georgian Bay. They are the upper end of our program. We use those boats to teach you heavy-weather sailing, celestial navigation, and that type of course.

Mr. Wappel: You are telling me that the Hamilton Harbour Commissioners, which operate the harbour of Hamilton on Lake Ontario — at least, the last time I looked at a map of the Province of Ontario the harbour was on Lake Ontario — own at least three vessels which you tell me are sailed in Georgian Bay?

Mr. Hennessy: Yes.

Mr. Wappel: Last time I looked, Georgian Bay had no physical geographical connection with the Hamilton harbour. Is not that true?

Mr. Hennessy: Yes.

Mr. Wappel: What is your authority for operating boats in Georgian Bay under the Hamilton Harbour Commissioners' Act?

Mr. Hennessy: I believe there is a section in the act. Everything that we do is not specifically itemized in the act. The act of 1912 could not have anticipated all the business units that we run in 1998. There is a general authority.

Mr. Wappel: Yes, and it happens to be section 20(h), which states:

For regulating and controlling the operation and use of all canoes, sailing boats, row boats, motor boats and other kinds of craft within the limits of the area over which the Corporation has jurisdiction. Do you claim jurisdiction over Georgian Bay?

Mr. Hennessy: No.

Mr. Wappel: What are you doing in Georgian Bay, then, and what are your craft doing in Georgian Bay? Under what legal authority do you do it?

Mr. Hennessy: Give me a minute.

Mr. Wappel: Certainly. Perhaps Mr. Smith can help you. He is legal counsel. Mr. Smith, what legal authority do you have?

Mr. Smith: I will defer to Mr. Hennessy on this point.

Mr. Hennessy: I need a minute. I did not come prepared to speak to the sailing school.

There is a section in the act that allows the commissioners to do things necessary for the purposes of operating the port. That is the section that we are relying on. It does not restrict the commissioners necessarily to the harbour. We go outside the harbour for other things in terms of doing trade development.

Senator Moore: That is to drum up business for the operation of the port. It has nothing to do with running a sailing school. That is a real stretch.

Mr. Wappel: You have bought three boats over $100,000 each, have you not, out of the so-called capital funds of the commission?

Senator Moore: Boats that are 30 or 40 feet long are fairly big boats.

Mr. Wappel: Your last acquisition was between $135,000 and $150,000, was it not?

Mr. Hennessy: I cannot tell you specifically, but your information is probably correct.

Mr. Wappel: I am reading your memo of October 24, 1997, in which you say — and I am paraphrasing — that particulars of the vessels and supporting document are attached, that the vessel is a CS-40, and that a budget of $150,000 should be approved. The memo also refers to $135,000 for the initial offer, leaving some leeway to move up. It asks if the vessels are to be used in the cruising program on Georgian Bay.

What is your legal authority for authorizing that kind of payment out of the contingency funds that would otherwise perhaps be paid to the City of Hamilton, for example?

Mr. Hennessy: Again, we are relying on the general section that says we can do things that increase the usefulness and effectiveness of the harbour.

Mr. Wappel: That is the only thing you could possibly say, Mr. Hennessy, because you have no legal authority for it.

I bring this to the attention Mr. Sully because page 4 of his remarks indicates the new accountability regime under the Canada Marine Act. If the new accountability regime of the Canada Marine Act will mirror the accountability regime that we just heard about from the Hamilton Harbour Commissioners, you folks have a lot of work to do.

I cannot see any legal justification for purchasing 40-foot yachts to operate a cruising school in Georgian Bay. That is the longest stretch that I have heard on the authority of the Hamilton Harbour Commissioners. I cannot see any authority in there. Everything in the Hamilton Harbour Commissioners Act states that it operates within the limits of the areas over which the corporation has jurisdiction. What areas are those? They are in section 4. The Harbour of Hamilton, which includes the waters of Burlington Bay and Cootes Paradise, together with all the inlets thereof, excepting however Burlington Channel. None of those is contiguous to Georgian Bay. Am I right?

Mr. Hennessy: No, sir, they are not.

Mr. Wappel: Thank you.

Senator Moore: I wanted to ask about the revenues. First, could you table a copy of your latest audited statements with our committee?

Mr. Hennessy: We can do that, sir.

Senator Moore: What were the total revenues in the last audited year? What were the gross revenues for the port?

Mr. Hennessy: The last audited year would be 1997, and I am unsure of those figures. The unaudited revenue for 1998 is about $13 million. We are just in the process of doing the audit.

Senator Moore: That is primarily a bulk port. Handling bulk traffic makes up what percentage of those revenues? You mentioned that the marine makes up about 15 per cent. The tonnage tax is about 15 per cent.

Mr. Hennessy: The tonnage tax would represent, sir, the revenues that we derive from most of that bulk tonnage. The bulk cargo tonnage tax at 15 per cent would be the answer to your question.

Senator Moore: Do you lease lands to others?

Mr. Hennessy: Yes, sir.

Senator Moore: What percentage of your annual gross is made up of rental income?

Mr. Hennessy: It is the bulk of the balance, I would say.

Senator Moore: That is, 70 per cent?

Mr. Hennessy: It is approaching that. There may be investment income in there from the reserves. We also operate an equipment rental business that rents lift trucks and equipment of that nature to the stevedoring companies that handle cargo in the port. Save those two items, rental of land would provide the rest of our revenue.

Senator Moore: You mentioned also wharfage fees. Where is that? What percentage would they generate?

Mr. Hennessy: I do not know if I mentioned wharfage fees.

Senator Moore: You said you charge people to berth alongside these wharves.

Mr. Hennessy: Our general taxing power is to charge a ship coming into the harbour. We charge per tonne of cargo; those are the cargo rates referenced. If it is a foreign ship, there is a charge for every 12-hour period it is tied up. That would be included in the 15 per cent figure. Domestic ships, which are most of the ships that call at the Port of Hamilton, do not pay a berthing charge.

Senator Moore: You charge by the linear foot, those foreign ships?

Mr. Hennessy: It is so much per vessel per 12-hour period. I think it is so much per gross registered tonne, sir, per 12-hour period. That is a fairly standard charge in the industry.

Senator Moore: As a former municipal councillor, I would be alarmed to know that one of my commissions is running operations that do not relate to their mandate and is spending this kind of money. I am amazed that this has been allowed to happen. Little wonder there is a legal case against you.

The Joint Chair (Senator Hervieux-Payette): You are talking about leasing revenues and so on. For my own understanding on these financial matters, in terms of borrowing authority, either it would be for major renovations or construction work. I am talking about over a period of time. If you have a big reserve, you may finance everything. You may not go to the bank to borrow but you simply deposit your money. I hope you do not go to a bank because the interest rate is not too good.

When you plan major renovations, is there a limit beyond which you must have ministerial permission to do that work? Do you have plans which must be approved in advance by the ministry? You have authority to run the operations, but when it comes to, let us say, substantial improvements, do you go to the government to ensure that these new investments would be confirmed and authorized? Otherwise, you might just go ahead and build a totally new harbour for $200 million.

There is probably a limit on what you can do in terms of financial engagement on the part of your mandate. What is the size of management of your own money in which you can engage?

For instance, when you build a marina or buy equipment for the harbour or when you buy the boat, do you have an unlimited possibility of spending and borrowing? I want to know, in terms of managing the whole spending, how you manage that.

Mr. Hennessy: The authority to manage the funds that the commissioners generate rests with the board of commissioners. For outside borrowing, we are pledging, I suppose, the assets of the corporation to borrow money. We are limited to $4 million. That was done through an amendment to our act in 1957.

The Joint Chair (Senator Hervieux-Payette): Since you came on board in 1984, you have made major renovations and have had to borrow more than $4 million and, as such, have gone through the process of getting authority from the department; correct?

Mr. Hennessy: We have not borrowed any money since 1984. In terms of major renovations, we have built additional docks, terminals and other facilities, which I would consider major for a port like us, in the order of about $3 million, but that was funded from revenues.

The Joint Chair (Senator Hervieux-Payette): You used operating revenues on a yearly basis, not even spread over a number of years? There was no borrowing whatsoever?

Mr. Hennessy: No.

Senator Kelly: As a supplementary question, as long as there are sufficient funds, are you allowed to spend it in any direction you wish? As long as you do not need to borrow, you do not need specific approval from the ministry or any place; correct? You can just spend it?

Mr. Hennessy: That is correct.

Senator Kelly: What would be the limit? Suppose, for example, that your surplus had grown to $200 million. Is there some point at which someone — the city or the federal government — says that they might like some of that? In a corporate environment, as money accumulates, various divisions will have plans, which may be totally legitimate, but they must come to the board item by item. It must be part of a process. They cannot simply say, The money is there so let us spend it. We have a great idea. You are saying that you do not have any such accountability requirement.

Mr. Hennessy: The absolute answer to your question is that the reserves held by the commissioners can be spent by the commissioners pursuant to the authority in the act.

Senator Kelly: The answer is that you do not have any further accountability.

Mr. Hennessy: They do not have to ask anyone for permission to spend their own reserves.

Senator Kelly: Even if it were $200 million or $300 million?

Mr. Hennessy: I think that would be correct, but perhaps I could elaborate a little on that. The check on that is that we report annually to the Minister of Transport.

Senator Kelly: After you have spent it.

Mr. Hennessy: Every year we provide audited financial statements to the Department of Transport, the city, and our users. If we were a $13 million-a-year corporation with a $200 million reserve, I can assure you that our users, who are paying us the money, would be looking for a rate reduction. They do anyway. The marketplace does provide some balance.

Senator Kelly: I understand. I do not approve of it, but I understand.

Mr. Lee: In terms of the management of the water craft assets, the sail boats, can I assume that these boats would occasionally be used for promotion of the Hamilton Harbour Commission's general business purposes, that they are not only used for sailing students?

Mr. Hennessy: That would be incorrect. The boats are for the sailing school and we are very meticulous about that. They are used for customers. It is a business venture for us.

I take your point that we are up in Georgian Bay. We have been there for 20 years. It is an extension of the program that we run in the harbour. I understand your point that you do not think we have the authority. We do have a harbour boat for business promotion which stays in Hamilton Harbour. We do go onto Lake Ontario with it infrequently. However, we do not use the sailing school boats for promotional purposes.

Mr. Lee: You do not use them for purposes other than sailing training, and you are telling us that you are very strict on that.

Mr. Hennessy: We keep a log of use. Staff do not use them; the commissioners do not use them. It is a business venture.

Mr. Lee: I want to return to the statute on the aspect of accountability and your relationship to an accountability mechanism.

Section 14 of the statute says that the corporation may hold, take, develop and administer, on behalf of the City of Hamilton, lands that the City of Hamilton turns over to you for the purpose. Can you indicate what proportion of the lands that you now control or own were turned over by the City of Hamilton under section 14 in the last many years? Surely some of your lands were turned over to the Harbour Commission by the City of Hamilton. Are you aware of what proportion of your lands were turned over by the City of Hamilton rather than being acquired directly by the Harbour Commission by way of purchase or expropriation?

First, are there any?

Mr. Hennessy: Yes, sir. You are testing my memory. I believe that there are between 10 and 20 parcels of such land.

Mr. Lee: What is the proportion of the land assets managed by the Harbour Commission?

Mr. Hennessy: In terms of total acreage, I believe that it would be 50 to 100 acres of the 500 to 600 acres that we own.

Mr. Lee: So it is approximately 10 per cent?

Mr. Hennessy: Yes. To clarify that, some of those lands were turned over and some were market value transactions, so you cannot simply assume that they were turned over.

Mr. Lee: You may see where I am heading. As I read section 14, it mandates the commission to administer these lands on behalf of the City of Hamilton.

Second, section 17 says that all books, documents and papers, et cetera, shall at all times be open for inspection by the audit department of the City of Hamilton. Earlier you were saying there was a dichotomy between the desire of the commission to be an independent federal entity and the view of the commission as a quasi-trustee for the City of Hamilton.

I suggest to you that those two sections, very clearly or at least by implication, create a relationship. It looks like the commission has a relationship with the City of Hamilton. It is stated right in the statute. So, although you may see a dichotomy and a pull between the two extremes, I do not see how you can depart from the middle ground that your commission is in bed with, in fact, probably is constituted as a sometime trustee for the City of Hamilton.

I do not know how you could even suggest that you would not have the utmost in good faith accountability requirement to the City of Hamilton.

Mr. Hennessy: I agree. Under the act, we are clearly trustees for surplus profits. It has been determined by the courts that we are trustees for surplus profits, if they are determined surplus. We agree that we are not trustees for the land. We settled that in the mid-1980s with minutes of settlement.

Concerning your question about the transfer of being trustees, as I and others read section 14, we would be trustees for the land to the extent that such terms were agreed upon at the time of transfer.

Mr. Lee: I believe that that is a fair interpretation of that section.

Mr. Hennessy: There are no trustee agreements with regard to any of the lands that the city has transferred to us. They were simply transferred in fee simple either as a grant or for funds.

Mr. Lee: After the Hamilton Harbour Commission becomes a port authority, there will be a transition period. At the end of the transition period, which is approximately one year, the current regulations, which we are discussing here today, will cease to exist. They will be replaced by something. Could you or officials from the Department of Transport describe what this framework of regulation would be replaced with?

Mr. Bowie: The Canada Marine Act says that, to the extent that existing bylaws are compatible with the Marine Act, they will remain in place for a period of up to one year after the act comes into force for a particular port. Prior to the termination of that period, there will be these bylaws. The operational bylaws will be replaced by operational regulations that will apply to all of the 18 Canada port authorities across the system. We are now in the process of developing these operation regulations under the regulatory process of the Government of Canada.

Mr. Lee: So we will have a drawing back of the regulatory function into the Department of Transport, which will design a template or an operating regulatory framework for all the port authorities and impose it on them?

Mr. Bowie: Yes, and there are a number of factors that these regulations will deal with. The primary factor is the control of navigation within the harbour and the authorities and requirements with respect to control of navigation. However, the regulations will also deal with the use of port property and environmental protection.

Mr. Lee: Would I be incorrect in assuming that this is a consolidation of the regulatory framework for the port authorities?

Mr. Bowie: That is the objective. There are a number of regulatory regimes currently in existence under the Canada Ports Corporation Act, the Harbour Commission Act, and various other harbour commission acts, and this would consolidate the regulatory regime.

Mr. Maloney: Much of the discussion this morning has centred around your sailing school and marina operation. Is recreational boating, power or sail, allowed within the confines of the harbour?

Mr. Hennessy: Yes.

Mr. Maloney: Is it popular?

Mr. Hennessy: Yes, sir.

Mr. Maloney: The revenue from that operation is roughly 15 per cent, you indicated. What profit does that generate?

Mr. Hennessy: It varies from year to year. We are running about a 20 per cent margin on that operation, if memory serves me right.

Mr. Maloney: In your dispute with the City of Hamilton, have they objected to your operation of the marina or sailing school?

Mr. Hennessy: The objection is not so much to the operation. Part of the dispute centres on the fact that I think they would like some of those lands transferred back to them. In terms of objecting to the operation of the sailing school, no. It is largely a community-based operation, sir. In fact, we run some programs in conjunction with the City of Hamilton.

Mr. Maloney: Would you say it contributes to the quality of life in Hamilton and surrounding areas?

Mr. Hennessy: Yes, sir. We have a program for the disabled in the sailing school. By far, the majority of the people that use that sailing school are young students. Some of them even come back to work for us. It contributes to some of the major exposure the harbour commission gets. It is a community-based program. Many people who go through that program come to the harbour come up later in life and tell us that they took a course in our sailing school 15 years ago. It has been a very popular program for us.

Mr. Maloney: Are there other boating clubs within the harbour area?

Mr. Hennessy: Yes, sir.

Mr. Maloney: Do they have boats the same size as you have up in Georgian Bay?

Mr. Hennessy: I cannot say, sir.

Mr. Maloney: Has the city ever objected to your operating boats during the summer in Georgian Bay?

Mr. Hennessy: I believe there are certain aldermen currently raising the question with one of our commissioners, but there has not been a formal objection put before the board.

Mr. Maloney: Would you consider that course a natural progression of the program from the young salts as people progress up the ladder?

Mr. Hennessy: Yes, sir.

Mr. DeVillers: The sailing school operation is carried on in Georgian Bay. We heard that several times. Georgian Bay, as we all know, is a large and beautiful body of water, part of which I happen to represent. In which ports or harbours do you operate the school in Georgian Bay?

Mr. Hennessy: We use the town dock in Midland. We do not operate there, really. We send the boats and the students up, and we bring them back. There is no school there.

Mr. DeVillers: It is an up-and-back trip?

Mr. Hennessy: They go up for the summer. We send the students up on a weekly basis. The courses are usually of one-week duration. The students meet the boat at the Midland town dock. We have an arrangement with the town. We do the exchange. The old students get off, the new ones get on, and the program carries on. At the end of the season, we bring them back down through the lake area through the Welland Canal. That is part of the course. We charge for that trip and book students for that trip because it is an interesting experience.

There is one other thing that I neglected to mention with respect to this program. I do not diminish the committee's point about the fact that it could be a breach. I understand where you are coming from on that. We try to operate that sailing school on a break-even basis so that it is not a drain to the commercial users of the port. We are only marginally successful in doing that. We have to subsidize it somewhat. The things we do with school children and the disabled does not come anywhere close to paying our cost of operating those programs. The Georgian Bay end of it is where we derive the revenues, about 27 per cent of our revenue. It is a very profitable part of our business. It is the people thinking about buying the big boats who want to have that experience. They have the money to pay the higher rates and is there that we generate the revenues to support the part of the program we run in Hamilton. We are not just up there on a whim. It was thought out. We have been up there for 20 years.

The Joint Chair (Senator Hervieux-Payette): I will need some guidance here. We have at least two time frames, which is having everything completed before June or sometime in the fall. I do not know what you have to do to reach a consensus. As far as I am concerned, personally, I would not mind if the minor correction were done early and then you could work for another year on your new regulation.

I have a question for the deputy minister. Under this law, or any other law that governs harbours, what is role of the ministry when people are doing something outside of their legislation? You certainly were not there 20 years ago, unless you were appointed deputy minister out of school. What is the process? Do you review the activities? You receive a report from them, therefore you know where they are deriving their revenues and what kind of activities they are conducting. What if they had a dance school? In this case, it is a sailing school, but where do you draw the line?

I would like to know what is the role of your ministry in relation to all the various harbour legislation now that will be governed by one single legal authority. What would you do if you disagreed with one of the activities?

Mr. Sully: No, I was not there 20 years ago. I would like to defer to legal counsel on this question.

Mr. LePitre: I would reiterate some of the remarks made previously, including the remarks in the opening statement. You asked about both regimes. With respect to the existing regime, the role of Minister of Transport is quite limited. The Minister of Transport really appears in the amended Hamilton Harbour Commissioners legislation in only one place, and that is in respect to the borrowing that was discussed earlier and which has not taken place since 1984. There is also the responsibility for financial reporting to take place on an annual basis. Apart from that, the role of the minister is quite limited.

With respect to the Canada Marine Act, the minister does issue the letters patent in respect of the new Canada port authorities, and those letters patent indicate the sorts of activities a port authority can undertake, either as an agent or a non-agent. It is through those initial letters patent and supplementary letters patent that the activities will be established, and the minister does have the responsibility for issuing those instruments.

Through the regulatory process mentioned earlier, under section 62 of the act, regulations in respect of shipping and navigation, environmental protection, and use of the port are made by Governor in Council. In this particular case, since the Minister of Transport is the minister responsible under the act, those regulations would ordinarily be made on the recommendation of the Minister of Transport.

With respect to the Canada port authorities, the role is significantly different.

The Joint Chair (Senator Hervieux-Payette): I understand your answer, but you did not answer my question, which was: If they had a ballet school, what you would have done? You say the minister cannot intervene when the law under his jurisdiction is not being applied. I am perhaps giving a foolish example, but who is in charge of ensuring the people are within their mandate? Do the local authorities have to take a court injunction? Does the Government of Canada intervene? Who is ensuring that the law is being applied?

Mr. LePitre: From a financial perspective, there is a responsibility for an accounting to take place. If the accounting were given in a way that gave rise to questions about whether or not the activities were within the scope of the act, that is something that would be taken into account when the accounting is made to the Government of Canada. Whether or not amendments to legislation would flow from the results of that accounting is something that the government would have to consider. Apart from that, it may be that the question of whether or not something is within the mandate of the commission would ultimately have to be the subject of a determination by the courts, if the legislation were unclear as to the point or if there were a question of interpretation as to the extent of the mandate or whether or not the language allowed for the activities taking place.

The Joint Chair (Senator Hervieux-Payette): Perhaps we could ask legal counsel if he is an in agreement with your opinion.

Mr. François-R. Bernier (General Counsel to the Committee): I actually had a couple of things that I wanted to ask the witnesses to clarify. I am not sure that I can express an opinion on the answer that was just given.

The clarification I wanted to ask related to the previous answer. Did I understand correctly that the sailing school operation, as it takes place within the harbour, would lose money were it not for the other operations in Georgian Bay? Is that correct?

Mr. Hennessy: Yes.

Mr. Bernier: The Georgian Bay end of it is not only high end but also a little more spectacular.

Is it your contention that, while there may be a question — and you understand the questioning of that aspect — you feel that operating a sailing school within the limits of the harbour is within the powers of the Hamilton Harbour Commissioners and within the object and purposes of the act?

Mr. Hennessy: Yes. We see it as an extension of one being involved in the community and doing things for the community, which we do pursuant to the act, and also as an extension of our marina program, the part of the business that is associated with it.

Mr. Bernier: I do not think being involved in the community is set out by S.C. 1912, c. 98. It is your view, then, that those operations within the harbour are authorized by the act. Could I ask again to which particular provision of the act you are referring?

Mr. Hennessy: I have not really turned my mind to the general authority given to us to operate the lands and docks within the harbour, whether they are large or small docks. We have never made a distinction, and we have been in this business since 1938.

Mr. Bernier: That is for the committee to say, but perhaps it is time that the commissioners do turn their minds to their statute.

Mr. Hennessy: The only other section we could rely on would be 15(4), with respects to boats, which says that we can operate any type of motor power or appliances or plant or machinery for the purposes of increasing the usefulness of the harbour. That is a general section, but many of the powers of the act are general as opposed to specific.

Mr. Wappel: It is painfully obvious that the way this act was drafted, there is virtually nothing the Minister of Transport can do, including if the commissioners wished to operate a ballet school on commission lands. We have identified a potential problem here, a problem of lack of accountability. I am urging the officials from Transport Canada, when drafting your letters patent for the various port authorities, not only to make them generic but also to make them specific to the port.

I cannot see how Georgian Bay relates it Hamilton. However, this may be a wonderful program; it may be fantastic and humanitarian. It may be authorized by letters patent but it is not authorized by this statute. I urge officials from the department to look carefully at these kinds of things.

In your opening remarks, Mr. Sully, you said that there would be limits on the ability to purchase real property. I suggest that there be limits on the ability to purchase personal property as well. If a particular port wishes to purchase, for example, a $200-million dredging machine, then they will not have carte blanche to do that.

Your point was correct, Madam Chair. There is no answer to your question other than the minister has no authority to deal with it. I am urging ministry officials to ensure that the letters patent are very specific on all aspects of things. This is an example, and this situation — that is, if the ministry and the commission wish to solve it — can easily be solved within the letters patent of the new authority. There is no problem with that. However, if it is not dealt with, then I ask the legal counsel: Who sues? Who has an interest if the Hamilton Harbour Commissioners do something that is not mandated, in this case by the Harbour Commission Act of 1912 or, subsequently, letters patent? An ordinary citizen of the City of Hamilton? A disgruntled alderman? Does it require a resolution of city council or a curmudgeon?

Who has the authority to take on the port authority in the event that the port authority is or is seen to be doing something outside the letters patent after they are issued under the new act?

Mr. Bowie: In terms of the Canada Marine Act and the requirements with respect to letters patent, clearly there is a requirement under the act to be quite specific about the power of the port authorities to undertake certain activities. A major component of the letters patent is to identify the specific activities that port authorities will undertake.

The minister issues the letters patent and any supplementary letters patent. That is an issue that is controlled.

Mr. Wappel: Does he have power to revoke?

Mr. Bowie: Yes. That is certainly an issue controlled by the minister. In some cases, for example if there are activities outside of the core activities, there is involvement of ministers — Treasury Board and financial — in terms of the approval of those kind of activities.

In terms of accountability, within the legislation Mr. Sully mentioned the high degree of transparency of the port operations. We also must keep in mind that these are commercial operations. They have a requirement under the legislation to be self-sufficient; as well, they are accountable to the users of the system in terms of how they spend the money the users are providing to the port. There is that kind of discipline on the actions of the new port authorities as well in terms of accountability to the users who are providing the revenue that allow the authority to make expenditures in various ventures. There are a number of checks and balances in the legislation to address those issues.

The Joint Chair (Senator Hervieux-Payette): Since we are discussing the time frame involved to remedy the situation, perhaps Senator Moore can give us an idea of the framework that you would like to see us address in an effort to resolve this matter.

Senator Moore: I have some questions which might lead to the establishment of the framework. First, I agree with my colleague Mr. Lee. I do not think you are autonomous. When the city fathers or the powers of the day drew up the legislation, the statute and the by-laws to create this entity, I do not think they intended to create something that was totally autonomous and did not have to account to anyone. I do not think they intended that a financial statement would be sent out once a year and then you could do what you wanted to do. I do not think that was the intention.

Second, I hope that the letters patent prepared by the department are clear that the activities to be undertaken by the authority relate to the port only.

That is why they are there, not to run sailing schools, whether in or out of the harbour or in another body of water. I hope that is clear in the letters patent that you prepare.

I want to talk about the $10 million. Are there any current plans for the expenditure of those moneys?

Mr. Hennessy: Yes, sir.

Senator Moore: What are those plans, in what amounts, and what is the timing?

Mr. Hennessy: We prepare annually a forward-looking capital budget, which anticipates some of the projects and needs of the port for five years forward. The reserve funds, which amount to about $10 million, would be applied towards those capital works.

Senator Moore: How much?

Mr. Hennessy: All of the funds would be used because the capital budget requires not only cash from reserves but also looks forward to the cash generated from revenues over the next five years. In terms of our docks, roads and shed refurbishment over the next five years, we do not have enough money to do all the things we want to do. We are projecting about $25 million.

Senator Moore: We will have, under this statute, a new port authority here. Are you talking about spending some of that money in the next 12 months?

Mr. Hennessy: Yes, there is an approved capital budget for this year, sir.

Senator Moore: How much of it will be spent in the next 12 months?

Mr. Hennessy: Can I give a range? I do not know specifically.

Senator Moore: You said you have a budget.

Mr. Hennessy: I just cannot pull the figure up, sir. It is in the range of $2 million to $3 million, based on our usual annual capital expenditures. That does not necessarily come out of reserve. It will also come from revenues.

Senator Moore: Once the authority is in place, then the residue in the reserve account will be turned over to the new authority?

Mr. Hennessy: I believe so, sir, yes.

Senator Moore: Is that what you intend?

Mr. Hennessy: It is a continuance of the existing operation.

Senator Moore: Can someone in the department give me a clear answer to that?

Mr. LePitre: Yes. The Canada Marine Act provides for a continuance regime in circumstances where a Canada port authority is established. In that regard, basically, the assets, obligations and properties that exist immediately before the transition in the predecessor entity — in this case, the Hamilton Harbour Commissioners — get continued in the new port authority.

Senator Moore: What are we looking at, in terms of a time frame, to get the CMA in place? Will this happen before the fall, hopefully, vis-à-vis the other bylaw time frame you gave us earlier?

Mr. Bowie: The time frame for the 18 Canada port authorities includes three Canada port authorities that were actually put in place on March 1. There are another eight Canada port authorities scheduled to come into place on May 1 of this year. For the remaining port authorities, the current schedule, subject to completion of all of the legal work required, would be for July 1.

Hamilton is in the third category, for July 1, assuming all of the legal work and discussions and negotiations are completed by that time.

The Joint Chair (Senator Hervieux-Payette): My question dealt more with our original reason for meeting. If it takes as much time to complete this transfer as it took for this little amendment, it might be July 1, 2004.

Counsel tells me that the department could ask for an exemption from the pre-publication of that minor amendment. That would remove 30 days from the process. It would be granted because this is not a substantive question. It is really a minor thing.

If done in a proper manner, my colleagues would expect that, before the end of this session, the whole process could be finished. If it drags into the fall, we would expect a firm commitment from both parties to complete this before the end of June. Perhaps my colleagues have more patience but, from what I gather from this committee, members would appreciate your very best efforts. This is a small, minor correction undertaken many years ago. You can correct everything in your bylaws and you have 12 months to do that.

This is certainly more than a wish. We retain the power to remove the regulations before the end of June and to have them quashed. We do that occasionally but it would be more appropriate to see it modified before the end of June.

Will the two parties agree? Your board must meet at least every two or three months. What is the schedule for your board meetings at the harbour commission?

Ms. Wilson: We meet once per month.

The Joint Chair (Senator Hervieux-Payette): You need to discuss this with the ministry and you are all here today. Could you come up with a conclusion so you could propose this amendment at the next board meeting?

Ms. Wilson: Certainly it can be done in May and no later than May. There is a board meeting next week. Certainly by May we can put something together.

Senator Moore: It must be before them already?

The Joint Chair (Senator Hervieux-Payette): You have a board meeting very shortly. I do not see any major substantive changes except that private property does not fit with this law. It is a minor change and it would comply with the mandate of our committee. This is our duty. We are not here just to digress about regulations. It is our parliamentary duty and we would greatly appreciate that this process is finished. Our only other option is to quash the provision.

Mr. Sully: Madam Chair, I myself am not a lawyer. When I was first exposed to this issue, I had the same reaction that this seems to involve only a few words. However, the draft we are working with now seems to run to six or seven pages. A number of technical changes must be made as well. We are very close to agreement; we are at the point of agreement on the last words.

On a best-efforts basis, we will certainly try to expedite this matter and have it resolved as quickly as possible. I will reiterate the commitment to have our recommendation in to special committee of Council for the first steps not later than June. I cannot promise to have the whole issue addressed by the end of June, having in mind our requirements to respect the regulatory process.

I take the point of counsel that we can look into whether there are any steps that we can remove, but I suspect we will not be able to wrap up the whole thing by the end of June.

The Joint Chair (Senator Hervieux-Payette): We are in a situation where you want to correct other things and go far beyond the request of our committee. You can redraft all your regulations and it will go through the process. We are talking about one minor change.

Why not do that separately? You can try for your seven-page modification and come back later in the year. We are addressing here the correction that was asked for. I believe that it is two different things. I cannot comment on the seven-page document I have not seen.

It is a matter of proceeding step by step. Under your proposal, there would be three steps. I suggest that you make a minor correction. If there is a major correction to be made, make it, and proceed with the long process. Then you will have your bylaws.

Why should we stall this process again with major changes that are not requested by this committee?

Mr. Sully: I was reminded that in the first instance other changes were requested by counsel. I suggest that we meet with counsel after this meeting and determine the extent of the changes that would be acceptable to the committee.

If it turns out to be just that very narrow question, I would still like to beg the committee's indulgence to allow us to take the time necessary to do it properly and respect the process. There may be shortcuts, but I am told that it would be very difficult to finish this by the end of June if we respect the regulatory process. I cannot commit to finishing the process by June, although we can certainly have our recommendations in to special committee of Council.

Mr. Wappel: I think Mr. Sully makes a reasonable request. I think it would be helpful for them to work with counsel. Assuming that June is June of 1999, it is not that far away. Working with counsel, perhaps a few shortcuts could be taken. The ministry appears to be willing to do whatever it can to facilitate the closure of this file as quickly as possible. I think we should accept that suggestion.

The Joint Chair (Senator Hervieux-Payette): Is there a consensus respecting this course of action, or does anyone wish to make a comment?

Mr. Lee: Only to the extent that I wish to thank the witnesses for enlightening us on more than one policy envelope. I found it useful, as I am sure the entire committee has.

The Joint Chair (Senator Hervieux-Payette): Yes. Although some of us are lawyers, we have become more educated in the process. As legislators, it is important to understand the application of the new legislation and the process. This has been a benefit to us all. I thank you for helping us to understand the issue.

The Joint Chairman (Mr. Grewal): I am happy with the direction that we are taking. We will find a solution to the problem in this way. I also thank the witnesses for their assistance. I believe that the time frame is important so that we do not drag the issue out further.

We will proceed to deal with the budget. The total amount is $224,800, which is $12,800 more than last year's budget. That is primarily because of the increase in salaries this year, which is about 2 per cent. Last year, salaries increased by 2.5 per cent.

On page 2, there is $5,000 for transportation and communications.

Is this new money?

The Joint Clerk of the Committee (Mr. Tõnu Onu): No, although it happens very rarely. If there were to be a conference pertinent to the committee's work, at least we would have money for registration fees. It certainly would not cover any major travel.

[Translation]

Ms. Venne: I heard that we had been invited to travel to Australia to observe the work of a committee similar to ours. However, it does not appear that this trip is on the agenda. I understand that we did not discuss this in committee. If ever we adopt this budget and subsequently decide that we want to see how committees in other countries operate, what happens then? Can we amend the budget, or must we make some contingency plans right away?

[English]

The Joint Chairman (Mr. Grewal): That is a good question. I was wondering about it myself. I see $7,000 there for transportation and communication.

[Translation]

Ms. Venne: Not even half of the members will make the trip.

The Joint Chair (Senator Hervieux-Payette): I think I have the answer. While our budget must include projected expenditures for the coming year, there is no way of knowing whether some other parliament in another country will hold a conference. A conference could be held in the United States, in which case the cost would be lower, but it could just as easily be held halfway around the world, or in Australia.

I would like us to settle the question regarding Australia. Counsel has informed us that even if a limited number of committee members were to attend a conference of this nature, there would be no obvious benefit to our committee. The expenditure could, however, be justified given the nature of the conference. If someone decides to hold a conference on reform, change or some other subject of interest to us, we can submit a supplementary budget and request additional funding during the course of the year. A request would be made to both houses. We cannot request a budget for conferences, even if it is only $50,000, without knowing exactly what the money will be used for. That is a bit of a stretch.

Ms. Venne: What do we normally do when this type of situation arises? If we can simply request additional funding if ever we are invited to attend such a conference, then I would have no problem with that. I would like to know exactly what kind of conference is being held, whether in Australia or elsewhere, before being told that it is not feasible for members to attend. I think it would be interesting to have that information before a decision is made.

The Joint Chair (Senator Hervieux-Payette): Since this conference seems to have been held for several years now, perhaps you could summarize for us the comments you made to the subcommittee on agenda and procedure when it was called upon to either approve or reject the idea of sending a delegation to the conference and the request for a supplementary budget.

Mr. Bernier: Let me clarify that your committee did in fact receive an invitation to attend a conference in July. Either way, a response to the invitation is in order. It would involve sending a delegation to attend the regional conference of Australian parliamentary scrutiny committees. Each state has such a committee, in addition to the federal government.

I pointed out to the subcommittee on agenda and procedure that compared to Commonwealth conferences, Australian regional conferences were, in my view, far more useful because these committees had much in common with our Canadian one. I also pointed out that based on my experience, smaller delegations tended to be more productive than larger ones in cases like this.

I think the full subcommittee on agenda and procedure should decide whether or not to accept Australia's invitation and request a supplementary budget. First of all, we need authorization to travel. Generally speaking, the budget does not provide for expenditures of this nature. Separate requests are made, once the budget is approved. However, if the committee wants to get this supplementary budget approved, it will need to decide quickly because April is already upon us and the conference is slated for July. The appropriate travel reservations and accommodation arrangements need to be made. The committee will have to decide what it wants to do either today or at its next meeting.

[English]

The Joint Chairman (Mr. Grewal): If I may comment on that, perhaps we should try to figure out roughly how much it would cost, then I can mention it at a meeting of the Board of Internal Economy at the House of Commons and try to find out whether it would be supplementary budget or how it could be arranged.

Mr. Bernier: Supplementary to that, I think the clerk already has a figure, per head.

The Joint Clerk (Mr. Onu): For a ticket to Sydney, Australia, where this conference is being held, economy fare is $7,000; and business class, to which members would probably be entitled, given the length of the trip, is $8,500 per person.

Mr. Bernier: The total cost would be between $10,000 and $15,000 per person.

Mr. Wappel: I have two comments. If we were going to do this, it would seem incumbent upon us to approach the airline to see if we could swing a deal on the price of the tickets because it does not make sense to pay full price. Those are full price quotes, I presume. Surely if 10 or 15 of us are travelling, even five, there would be some discount given to us by the airlines, particularly if we make the arrangements well in advance.

I have a more substantive point. As I understand Mr. Bernier's comments, this is not the kind of meeting that he would recommend that we attend because it is not of a worldwide nature.

Mr. Bernier: No.

Mr. Wappel: Or is it the other way around, that you would recommend that we go to this one? This is better than the one, for example, that was held in Westminster.

Mr. Bernier: The Commonwealth meeting. There you are dealing with small jurisdictions where publication of regulations is by taking a hammer and posting a regulation on the telephone pole. It is very awkward because you are not approaching questions of regulations from the same perspective, whereas in Australia, you are. In terms of stages of development of the regulatory process, we live in largely similar jurisdictions.

Mr. Wappel: I think we should make the effort to try to go, given the fact it is in the summer so we are not losing any time from our parliamentary duties. Admittedly, it will be winter there, but it is mild. Perhaps we can go up to Darwin to study some regulations closer to the equator. It will never be approved, but I think we should make the effort. This committee hardly has the weight of Justice or Transport or any of those other committees, but I did think we should make the effort. I would not be in favour of paying full price for airfare for this entire committee and staff. Surely an airline would make a deal with us, as would hotels.

The Joint Chair (Senator Hervieux-Payette): You must remember that we have over 20 people on this committee. If we send a delegation, we have to send someone from every party. We are not talking about a small group. I am seeing estimates of expenditures between $50,000 to $200,000, so I must say that the scope is large. We need to ask the clerk to prepare at least some kind of realistic budget. No matter how good we are at negotiating, we have to have the lowest cost, a realistic and reasonable cost.

I am quite willing to go to the Internal Economy Committee to try to arbitrate that, but then I will have to ask you in the House of Commons to be cheerful when we ask for a supplementary. My colleagues might not be too excited about additional budgets at this point in time after the adventure of the last few weeks.

I want this to be in the back of your mind. We cannot have our cake and eat it too. You cannot be travelling and engaging in big work with committees and not spend any money.

Mr. Wappel: This committee has not travelled for a long time. My irritation is seeing other people eat the cake and me not getting a lick at it.

The Joint Chair (Senator Hervieux-Payette): You are a volunteer.

Mr. Wappel: I will go.

Senator Moore: Do you want a motion on that or do you want to wait?

The Joint Chair (Senator Hervieux-Payette): We want a motion to adopt the regular budget.

Senator Moore: I so move.

Mr. Wappel: I second that.

The Joint Chair (Senator Hervieux-Payette): Is it agreed?

Some hon. members: Agreed.

The Joint Chair (Senator Hervieux-Payette): Carried. Thank you.

The committee adjourned.