AGENCY REVIEW
ONTARIO NORTHLAND TRANSPORTATION COMMISSION
CANADIAN RED CROSS SOCIETY, SUDBURY
CONTENTS
Wednesday 21 February 1996
Agency review
Ontario Northland Transportation Commission
Hon Chris Hodgson, Minister of Northern Development and Mines
Matt Rukavina, chair, ONTC
John Wallace, president and CEO, ONTC
Brian Stevens, General Chairpersons' Association
Glenn King, General Chairpersons' Association
City of Elliot Lake
Fred Bauthus, chief administrative officer
Township of Michipicoten
Doug Woods, reeve
Canadian Red Cross Society, Sudbury
Maryanne Rivet, assistant lab manager
Subcommittee report
STANDING COMMITTEE ON GOVERNMENT AGENCIES
Chair / Présidente: Laughren, Floyd (Nickel Belt ND)
Vice-Chair / Vice-Président: Martin, Tony (Sault Ste Marie ND)
Bartolucci, Rick (Sudbury L)
Crozier (Essex South / -Sud L)
Ford, Douglas B. (Etobicoke-Humber PC)
*Fox, Gary (Prince Edward-Lennox-South Hastings / Prince Edward-Lennox-Hastings-Sud PC)
*Gravelle, Michael (Port Arthur L)
Johnson, Bert (Perth PC)
Kormos, Peter (Welland-Thorold ND)
Laughren, Floyd (Nickel Belt ND)
*Leadston, Gary L. (Kitchener-Wilmot PC)
*Martin, Tony (Sault Ste Marie ND)
*Newman, Dan (Scarborough Centre / -Centre PC)
*Preston, Peter L. (Brant-Haldimand PC)
*Ross, Lillian (Hamilton West / -Ouest PC)
*Wood, Bob (London South / -Sud PC)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Miclash, Frank (Kenora L) for Mr Bartolucci
Colle, Mike (Oakwood L) for Mr Crozier
O'Toole, John R. (Durham East / -Est PC) for Mr Ford
DeFaria, Carl (Mississauga East / -Est PC) for Mr Bert Johnson
Wildman, Bud (Algoma ND) for Mr Laughren
Also taking part / Autre participants et participantes:
Brown, Michael A. (Algoma-Manitoulin L)
McLeod, Lyn (Fort William L)
Ramsay, David (Timiskaming L)
Bisson, Gilles (Cochrane South / -Sud ND)
Clerk / Greffière: Manikel, Tannis
Staff / Personnel: Pond, David, research officer, Legislative Research Service
The committee met at 0933 in committee room 2.
AGENCY REVIEW
ONTARIO NORTHLAND TRANSPORTATION COMMISSION
The Vice-Chair (Mr Tony Martin): Good morning, everybody. If you'll take your seats, we'll get rolling here because time is of the essence and we want to get this job done.
The first presenter this morning is the Minister of Northern Development and Mines, Mr Hodgson, but before we go any further, I'm going to be leaving the Chair so that I can be more active in today's discussion. I'm going to ask Mr Colle to take over.
Mr Bud Wildman (Algoma): Mr Chair, I have a point of order. Perhaps before I raise that, is it possible to get some information from Mr Hodgson as to how long he expects his presentation before the committee to be?
Hon Chris Hodgson (Minister of Natural Resources, Northern Development and Mines): Probably 10 to 15 minutes, in that range, and then 10 to 15 minutes of questions and answers, if that's suitable.
Mr Wildman: It's in that regard. Since this is such an important issue for Mr Hodgson and for northern Ontario communities, that length of time really is not adequate for the committee or for Mr Hodgson, and so I move that we change the order of business to afford Mr Hodgson more time so that he can make a more proper presentation and there would be better questions. I move that we forgo the briefing that is scheduled for 10 am and extend Mr Hodgson's time for an additional half-hour.
The Acting Chair (Mr Mike Colle): Is that okay with the minister or the committee as a whole?
Mrs Lillian Ross (Hamilton West): According to standing orders, is it incumbent upon the minister to be here?
Mr Wildman: No, he's invited to be here.
The Acting Chair: No, it is not.
Mrs Ross: I'm opposed to that then; I think we've got enough time with Mr Hodgson.
The Acting Chair: We've got a motion here basically to ask if the committee supports the extension of the time designated for the minister, from 9:30 to 10:30.
Mr Wildman: Mr Chair, if I could briefly speak to the motion -- I don't want to take up a lot of the minister's time -- Ms Ross is completely correct: The minister is not obligated to be here. But I'm sure he would want to be. This is to afford him more time so that he can make a proper presentation on behalf of the constituents he serves in northern Ontario. The question before the committee really is not whether the minister will be here an additional half-hour per se, but whether we're going to afford him more time so that he can be if he wishes to be.
Mr Gary L. Leadston (Kitchener-Wilmot): I'm not aware of the minister's timetable. He has allotted the required time to meet with us and I'm sure we've all been briefed on the issues. Perhaps some are more knowledgeable on the subject than others, but I wouldn't require the minister or any witness, at the last minute, to stay longer than their allotted time without having some prior agreement or consultation with them. The same as any other witnesses who are appearing today; I think it's inappropriate to ask any one of these to stay longer than their required time unless we've had some discussion with them in advance.
Mr David Ramsay (Timiskaming): It might be appropriate maybe to request the Chair if he would ask the minister if he could stay another half-hour.
The Acting Chair: Perhaps that's where we should begin. Can you stay past 10 o'clock? Is that possible?
Hon Mr Hodgson: As I think the opposition knows full well, I offered to spend a full day in northern Ontario on this issue. It would have to be in the reading break when committees don't usually sit, and I realize that would interfere with the opposition's holiday schedule. However, I did offer to spend a whole day in the north on this and, as I understand, it was rejected. When I agreed to come here this morning, that was the second option as opposed to travelling throughout the north at a later date when it was convenient to all members, other than their holiday schedule.
Unfortunately, as the member who made the motion would know after being in cabinet, there are commitments that are made months in advance that you have to be at and today there's a woodlot association convention that he knows full well I have to attend. I had to squeeze this in this morning because this is an important issue.
I don't set the rules of the committee, but I was invited and voluntarily I came, unlike the history of other ministers of previous governments who very seldom appeared before committees.
Mr Wildman: On a point of privilege, Mr Chair: I appeared before any committee that ever invited me.
Hon Mr Hodgson: The member for Algoma, we could debate this for the next hour on how many times you appeared.
The Acting Chair: Members of the committee, we're going to basically run out of time here if we continue this. Let's wrap this up. Mr Newman.
Mr Dan Newman (Scarborough Centre): I just want to add that I believe that all parties would have agreed to the agenda and Mr Wildman should have brought it up with his representatives on the committee.
Mr Bob Wood (London South): I move the question now be put.
The Acting Chair: That's a non-debatable motion. First of all, we have to vote on whether the question be put or not. All in favour of the question being put? Opposed? I think that carries. The question is put.
The motion by Mr Wildman, that the order of the agenda be changed to extend --
Mr Wildman: To extend the time for the minister by one half-hour.
The Acting Chair: All in favour of the motion of Mr Wildman? Opposed? That does not carry.
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Mr Wildman: Mr Chair, just for my clarification, the result of this motion is that we are not extending the time to afford the minister more time to defend his position before this committee.
The Acting Chair: Whatever your interpretation is, basically your motion lost.
Hon Mr Hodgson: I'll try to be brief, given that the member for Algoma has cut into my valuable time here before the committee. It is an important issue and I'm pleased to have the opportunity to lead off this review of the role, the mandate and the operations of the Ontario Northland Transportation Commission, a schedule 2 crown corporation.
For over 90 years, the ONTC has been a significant contributor to the growth and development of transportation and communications services in northern Ontario. At the current time, its services are separated into two categories: commercial and non-commercial. The government of Ontario provides a subsidy, which will be $8 million in 1996, in support of those non-commercial services which are not self-sustaining in a fiscal sense but for which the corporation is directed to maintain certain levels of service.
It is appropriate that as we approach the new century, the ONTC and the government of Ontario review their financial relationship and craft a new partnership, one that frees the corporation to renew its entrepreneurial capabilities and seek long-term development opportunities.
This government realizes its responsibility to northerners and will provide appropriate financial assistance for those essential transportation services where viable options cannot otherwise be maintained. There is, however, a greater responsibility this government carries to all Ontarians, one that speaks to the mandate that we were given by the electorate to get the financial affairs of Ontario in order and restore the economic leadership that has been lost in the last decade.
This province has accumulated a deficit -- as I'm sure everyone in the committee is aware -- of $100 billion and it is growing by $1 million every hour of every day. This is punitive to all Ontarians and it restricts the economic environment and development opportunities that businesses like the ONTC need to flourish.
We are asking no more of the ONTC than we are of ourselves; namely, to strive for greater efficiencies and set new priorities. These activities will establish stability, generate growth and create new jobs. In fact, I commend the corporation for its efforts to date to lay some of the groundwork in this direction. It too has realized that there are new and important challenges ahead.
In its most recent annual report, board chairman Matt Rukavina spoke to a restructuring plan that is necessary to gain greater market share of potential business, increase efficiencies and cost-effectiveness. The ONTC is committed to a visioning exercise to determine where the corporation should be headed over the longer term, five to 10 years from now. We want to facilitate that exercise. President John Wallace -- I believe Matt and John are both going to appear before this committee today -- similarly spoke of the necessity of the ONTC to adapt to this changing environment to ensure long-term viability.
The government is asking the ONTC as a crown partner to share fairly in the effort to reduce expenditures and engage in cost containment. To this end, the corporation will give up $6 million in subsidy this year. That represents 4% of its operating budget in the 1996-97 year. Next year, it will give up an additional $4 million, or 3% of its 1997-98 budget. Given its commitments to northern transportation services, I believe this is fair, equitable and manageable -- I underline "manageable."
These expenditure reductions are not being made in isolation. We are providing some of the tools that will help the ONTC manage the budget adjustments. By allowing the corporation to withdraw norOntair from the northern marketplace, the net effect on the company's balance sheet is the need to absorb only $500,000 of the reduction in subsidy; norOntair accumulates annual losses of $5.5 million. A pilot project, norOntair was given a mandate to expand air service throughout northern Ontario, and it was done 25 years ago. It has fulfilled its role and proven the commercial viability of the passenger air service in northern Ontario.
It is not the government's role to usurp the marketplace and hold back private sector development. The ONTC was to develop that market 25 years ago. They've done an admirable job. I am encouraged by the private sector carriers' response to the new availability of air service opportunities. If there are communities that are left out in the new mix, the board, along with myself, will be working with the local interests and carriers to examine service options.
Additionally, we have committed to the ONTC that it will be able to use the assets from the sale of norOntair aircraft, likely about $15 million, in that range; it's a guesstimate, of course. This money will stay in the north to support the ONTC's restructuring and bridge financial needs until new developments prove fruitful.
The $8-million subsidy in place for 1996 is fair support for the ferry and rail services. The corporation will, in the coming year, enter negotiations with the federal government to determine its level of support for passenger rail operations. Rail passenger service along the Highway 11 corridor between Cochrane and Toronto has a long and colourful history. It is my hope that the federal government -- and maybe we can have all-party support on this -- will recognize this role and responsibility in the provision of such services.
We have indicated to the ONTC that we place a priority on the marine service to the Manitoulin and Moose Factory islands and the passenger rail operations to Moosonee. Our ongoing subsidy beyond 1997 of more than $4 million annually reflects that commitment. We firmly believe the corporation can realize some greater efficiencies and cost containment on those services. However, we realize that there is a limited commercial viability there, but a significant responsibility due to the lack of alternative services.
In regard to marine services, we have indicated to the corporation that proceeds from any lease agreement they are able to secure for the Nindawayma ferry vessel will accrue to the company and can be used to support the operating losses of the primary ship, the Chi-Cheemaun, which runs between Tobermory and Manitoulin Island.
So we are facilitating the ONTC's efforts to renew its entrepreneurial role in northern Ontario. We will assist further by providing support to the board of directors. The board will reflect a more strategic business profile and be able to provide leadership and sound planning to the corporation.
The ONTC will be free and in fact encouraged to pursue new revenue-generating business opportunities. Past governments have, in their paternalistic approach, placed restrictions on new ventures. We will not do that. There are partnership opportunities that the corporation has and will pursue that will strengthen its economic profile and portfolio in northern Ontario.
We have asked the ONTC to report back to my ministry within a year. We will work with them through that period in any way that we can assist the development of a long-term vision and business plan, one that will ensure a diversified northern transportation and communications corporation that respects its roots, caters to the appropriate needs of northerners and builds towards economically secure communities.
I'd like to thank you for the opportunity to appear before your committee and I welcome any questions or discussion on the ONTC.
Mr Michael Gravelle (Port Arthur): Good morning, Minister. I want to actually set the record straight, if I can, rather quickly. We certainly wanted to have a meeting with you regarding the whole review of ONTC and we requested that this be done on February 21 in Sault Ste Marie. We understood you were available. I think it's a little bit offensive for you to sit here and say that we would not meet with you in May because of our not wanting to use our schedules that way.
Hon Mr Hodgson: Why won't you?
Mr Wildman: It was all decided --
Mr Gravelle: The fact is we wanted to meet with you on the 21st.
Hon Mr Hodgson: But the ONTC is going to be there through the end of the next century.
Mr Gravelle: We recognized the need to have this discussion, this review, before March 29, when norOntair will be going out of service, so it was very crucial. The government turned down that request and would not even make a call to you, sir, to request whether you would be available; they wouldn't even do that. I think it's important the record is clarified. It certainly wasn't a question of us not wanting to see you in May. I'll look forward to seeing you in May. I'll be up there myself and I'm sure my colleagues will be there too. You name the date and place.
But for this issue the importance was that we discussed this in the north and we tried very hard to convince the government to give you a call to see if you were available and apparently you were, but they wouldn't make the call. That's an important distinction to make.
Also, I see no reason why we couldn't have started at 9 o'clock this morning. We didn't agree to the schedule. We suddenly saw 9:30 to 10 am. I think you would have been willing to give an hour to this discussion at least, if not more. I just wanted to set the record straight and I'll pass on to my colleagues.
Hon Mr Hodgson: Do you have any questions?
Mr Ramsay: Welcome, Minister. With the announcement from the ONTC that they would be putting an end to the norOntair air service, some of the private sector airline companies in the north, northern Ontario and northern Quebec, have shown some indication they may come in and take some of the routes. My concern would be that it looks like at first blush, for a start, not all but some of the communities are going to be covered.
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The problem I'm thinking about down the road is for how long will those communities be covered when, say, Air Creebec, which has given indication that they're going to be servicing the Highway 11 corridor through my riding and feeding into maybe Sudbury -- what if they feel in a few months that there's not the uptake that they were expecting and they start to drop out? My concern is not necessarily who owns an air service, but are our communities going to have air service. I was wondering what you were going to do about that to ensure that at least we would have the air service we used to have in northern Ontario.
Hon Mr Hodgson: That's an excellent question. That's one that concerns everyone, why this hasn't been done years ago. We're going to have to work with each community on an individual basis. The board, with the chairman and the president, has met with the municipal leaders that are affected in those towns. We're encouraged by, as you mentioned, the private sector response. So far they've said they're going to pick up a number of communities. There are some that still haven't been spoken for, and we're going to have to work with those communities.
I'm going to go up and meet with community leaders tomorrow, with the chairman of the board and the president of the company, and we're going to have to work with each community to make sure that air service is viable and is provided.
Mr Tony Martin (Sault Ste Marie): I just have a couple of quick questions, because you're not here that long. The first one is somewhat rhetorical, the second one I'm very serious about.
I'd like to know, Minister, who represents northern Ontario at the cabinet table. Second, in light of the fact that you refused to come to Sault Ste Marie either today or March 7, and yes, have offered to come after the horses are out and the gates are closed, and in light of your refusal today to stay even a short time longer so that we could have a fuller discussion with you about a thing that affects the north most fundamentally, ie, transportation, with whom and when and where have you consulted with people about this review of the ONTC? I know you're meeting tomorrow about norOntair in Sudbury, but that's after the fact. You've already made your decision. You've already decided to cut ONTC by 60%. Who did you talk to about that? Who did you consult with?
Hon Mr Hodgson: Thank you very much, Mr Martin. As you know, there are two roads in politics. I know that you work very hard for your constituents and Sault Ste Marie's affected by the norOntair part of the ONTC. The ONTC is a $150-million corporation. It provides a vital economic development tool as well as a service to northerners. I know you like to make it personal and attack the motives of the minister.
Mr Wildman: Is he imputing motives?
Hon Mr Hodgson: I can tell you, though, that we're talking about a quest for solutions. Municipal leaders throughout the north have been involved. They're continuing to be involved to make sure there's adequate air service there. We want to give the tools to the ONTC to free up so they can provide service.
Mr Martin: Who did you consult with?
Hon Mr Hodgson: As you're aware, Mr Martin, there's a board comprised of northerners that runs this.
Mr Martin: Who did you consult with before you decided to cut them by 60%?
Hon Mr Hodgson: Studies have been done for years.
Mr Martin: Which ones? Could you table them today?
Hon Mr Hodgson: I think the reality is that we can't go on spending. Who speaks for northerners? I think you'll find that with the municipal grants, with a number of decisions that have been made, northerners' concerns are and will be taken into consideration. As the northern Ontario ministry becomes the lead ministry for the north, I think that'll become more apparent over time.
Mr Wildman: What we're concerned about is air service. You made a --
Hon Mr Hodgson: You're not concerned about the whole ONTC?
Mr Wildman: We will deal with that later. Right now, we're concerned about air service. Because the decisions are already made, your tenders on norOntair's assets are due Friday.
Hon Mr Hodgson: That's right.
Mr Wildman: And you're meeting now with us at this point and with municipal leaders tomorrow. We've seen an announcement that Air Creebec will be going to fly to Hearst, Kapuskasing, Kirkland Lake, Earlton, Sudbury and Timmins, which is encouraging, but as my friend indicated, we're not sure how long that's going to last. I'd like you to answer a specific question. What carrier is going to service Gore Bay, Elliot Lake, Hornepayne, Wawa and Chapleau after March 30?
Hon Mr Hodgson: We have until March 30. So far, we've found carriers where the private sector stepped in for the other communities. I'll be meeting with community leaders. The board will be working and the corporation will be working with those towns that are affected to try to provide air service after March 31.
Mr Wildman: But you don't know if anyone's going to?
Hon Mr Hodgson: I'm not a futurist.
Mr Peter L. Preston (Brant-Haldimand): My question to begin with was why are we closing down norOntario. I think you've done a pretty good job of telling us. It's dollars, dollars, dollars, but I'll let you tell us the rest.
Hon Mr Hodgson: The board felt that there's no longer a need for the government to run an airline in northern Ontario. As I mentioned, it was 25 years ago that this was set up --
Mr Wildman: That's absurd.
Mr Preston: Just a minute, please.
Hon Mr Hodgson: The mandate is now complete. It has done its job. There's a viable private sector capacity in northern Ontario to deliver air service and we're going to work with all the communities that are affected. Right now, 14 of the 17 affected communities are proposed to be covered by the private sector. norOntair costs $4.3 million to the taxpayers and $1.9 million additionally to the ONTC. The real question is, how can we work with the private sector to make it so we have reliable service that's effective and cost-effective?
Mr Michael A. Brown (Algoma-Manitoulin): You didn't call tenders on the --
The Acting Chair: The minister has the floor. Continue, Mr Minister.
Hon Mr Hodgson: That's all.
Mr Gary Fox (Prince Edward-Lennox-South Hastings): Mr Minister, what's your vision of the future of the ONTC?
Hon Mr Hodgson: That's a good question. The vision for the ONTC, in my opinion, should be efficient and entrepreneurial and responsive to the needs of northerners. By reducing the taxpayers' subsidy to the ONTC, we have already undertaken to make the company more efficient. This is freeing up capital for needed reinvestment and recapitalization within the organization to be used for northern Ontario. By removing the restrictions on the ONTC to pursue new business ventures we are making the corporation more entrepreneurial. I might add --
Mr Wildman: When you use $15 million in assets --
Mr Preston: Mr Chairman, we weren't ignorant enough to interrupt continuously.
The Acting Chair: Please, the minister has the floor.
Hon Mr Hodgson: The asset sales, as I mentioned, Mr Wildman, were put into northern Ontario.
Mr Wildman: I'll agree you weren't that ignorant.
Mr Preston: No, but you are, sir.
The Acting Chair: Go ahead, Mr Minister.
Mr Martin: That's because it concerns our communities.
Hon Mr Hodgson: It's always a pleasure --
Mr Martin: That's because it concerns our communities and the constituents we represent in Ontario. You bunch of turkeys don't understand northern Ontario. You don't know where it's at. The commission was put in place in the first place by a Conservative government to make sure that there was transportation in northern Ontario and you're taking that away.
The Acting Chair: There goes the half-hour.
Hon Mr Hodgson: It's okay. I realize, Mr Martin, that you want to look like you're fighting for the needs of your constituents, and that's fine.
Mr Wildman: We want you to fight for northern Ontario.
Hon Mr Hodgson: I am, Mr Wildman. You know that.
Mr Martin: There's no fire in your belly about the north.
The Acting Chair: Members of the third party, please restrain yourselves. Any other questions?
Hon Mr Hodgson: Let's be clear here, putting up $15 million to be used for assets for northern Ontario will benefit northerners.
Mr Wildman: Oh, right.
Hon Mr Hodgson: Allowing the sale of the lease of the Nindawayma and allowing the assets to be used for northern Ontario means we don't have to cut ferry service to Mr Brown's riding.
Mr Martin: Turn it over to your friends. They'll pick up the assets at a fire sale price and then disappear.
Hon Mr Hodgson: We also have, Mr Chairman, the president and the chairman of the board who have agreed to be present today at your hearings to answer questions and talk about their vision for northern Ontario. It's a board that's comprised of northerners. That's why it's a schedule 2 agency.
The Acting Chair: Thank you, Mr Minister. Time's up.
Hon Mr Hodgson: Thanks for the committee's patience for listening.
The Acting Chair: The next portion is a briefing by Mr David Pond, legislative research officer.
Mr Frank Miclash (Kenora): Just for clarification, Mr Chair, for the record we're talking about norOntair: not norOntario, but norOntair. If the government side could actually get it right as to what the name of the organization is, it would be helpful.
The Acting Chair: That's noted. Mr Pond is ready to begin his briefing.
Mr David Pond: What I propose to do, very briefly, is to --
Mr Wildman: You're punishing the north because they didn't vote for you.
The Acting Chair: Disregard the side comments, Mr Pond. Go ahead.
Mr Pond: What I propose to do very briefly is to take you through the briefing paper I've prepared for you, which is part of your package. I hope I've formatted the relevant information on the corporation in a user-friendly way. The paper finishes with a brief rundown of the critical issues facing the ONTC at the present time. I think some members will know that norOntair is one of them, but it's not the only issue facing the corporation at the present time that members might want to think about when they're directing questions to the witnesses.
If you have the briefing paper in front of you, I'll go through this very quickly. Feel free to interrupt me at any time with questions. I'll start with a brief rundown of the structure and organization of the corporation. This is on page 2. It's a crown corporation. Currently there are five members of the commission. The chair is here today, Mr Rukavina.
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The first point to be made about this is that usually the commission operates with a larger board. My information is that the minister is about to appoint five new commissioners to bring it up to a total of 10. That's going to happen in the near future.
Another point worth making about the current membership of the commission is their backgrounds. You'll notice on this table I have here on page 2, the members of the commission come from a diversity of backgrounds. They don't all come from North Bay.
The other point I might mention, because it's not clear in the table, is that Brian Stevens, the most recently appointed member of the commission, is not just a CAW member; he's quite high up in the union. In all fairness, I should point that out.
In the past commission members, like the members of other agencies, boards and commissions, have received some kind of remuneration for their participation in the work of the agency in question. The current government has asked the commission members to take essentially a cut in the remuneration they receive as a gesture of the necessity of saving money in the 1990s. That's at the top of page 3.
The other point I'll make about the commission before I move on: The ONTC staff asked me to point this out to you when I most recently talked to them. The table here, commission meetings, the number of meetings per year -- what this table does not reflect is that every other commission meeting is held outside of North Bay in one of the other communities which the commission serves; again, this notion of getting out and meeting all of the constituencies which the ONTC serves, which are quite diverse as you all know.
Moving right along, the bottom of page 3 and the top of page 4 basically outline the division of labour set out in the memorandum of understanding between the ministry and the commission itself. The memorandum of understanding dated 1988 is quite crucial to understanding how the ONTC operates. The statute itself under which the ONTC operates is quite old and a bit out of date. So the MOU is the constituent document you'll want to look at for understanding the role of the ONTC, and I'll come back to that in a second.
One last thing before I move on to operations -- you'll see here in the paragraph in the middle of page 4 about employment. Employment at the ONTC, as I think the northern members know, has been falling rapidly. In 1985, the ONTC employed about 1,600 people. By 1997, they'll be down to 900, again reflecting the rationalization of the operation in the face of changing economic conditions.
Moving on, operations: I'm now on the top of page 5. Crucial to understanding the ONTC is that the Peterson government in 1988 formally divided the ONTC's operations into commercial operations and non-commercial. The commercial operations are expected to make money and be self-sustaining financially; the non-commercial operations aren't. At the top of page 5, I've formatted for you the current operations of the ONTC. On the commercial side is the rail freight, the telecommunications network and the bus passenger service. The non-commercial: rail passenger and marine services -- marine services of course are the ferries -- and norOntair, which is about to shut down. The government operating subsidy which you've heard about from the minister goes to the rail passenger and marine services operations and until March 29 to norOntair. The government subsidy does not go into the commercial operations.
Let me take you through this briefly. The first commercial operation I have headed here is the rail freight operation. This is the Ontario Northland Railway. It operates between North Bay and points north. It's a freight operation. You can imagine the kind of goods that travel on a freight operation, primarily minerals and forestry products.
A point worth noting here I have near the bottom of the page is most of the ONR -- that's the acronym Ontario Northland Railway -- most of its rail freight business comes from four major customers; four customers constitute 80% of its operation; seven customers constitute 90% of its operation. It's very vulnerable to a shutdown of a major customer. This happened in 1990 when the ONR lost a contract to ship iron ore from the Sherman and Adams mine. That was a huge blow financially to the rail freight operation. Hundreds of employees were laid off directly as a result.
This is part of the reason why the ONTC is now pursuing Metro's contract to ship garbage on which my colleague here's the expert. I may say some more at the end, if I get time, to talk about that. The ONTC would just love to get that contract to ship the garbage to Kirkland Lake for the obvious reason, it would bring in a lot of revenue. The chair here can carry on with that subject.
Page 7, very briefly, the telecommunications operation -- this is very profitable for the ONTC. This is the only operation that makes a lot of money for the ONTC. You can see, table 4, the bottom of page 7, the profit margin on the operating side. The telecommunications network in northeastern Ontario is very successful. It's a very successful operation. I won't say any more about that.
One point, though, we're flagging in case it comes up later is that the ONTC is scheduled to appear before the CRTC in Ottawa in 1996 for a rate hearing. The rates charged by the telecommunications network for some of the services now come under the jurisdiction of the CRTC and that will be crucial for the telecommunications network because it will determine how much money they can make. I don't know if the witnesses will have time to talk to that but I flag that for your notice.
Page 8, the bus operation -- the bus services basically the Highway 11, Highway 69, Highway 144 and Highway 400 corridor. It's a passenger service. The map here on page 8 gives you a feel for the routes. I'll come back at the end to talk about this. As many members probably know, the bus industry in Ontario is extremely competitive and, frankly, it remains to be seen whether the profit margin for this operation will continue in the late 1990s, given the competitive nature of the bus industry, especially in light of deregulation, which will be full-blown in 1998. The financial data you need for the bus services is in the middle of page 9.
I should mention these tables. The statute under which the ONTC operates requires it to operate on the calendar year. The province, as you know, operates on the fiscal year. So in places you'll see a divergence between the calendar year figures and the fiscal year figures.
In any case, you can see here that the bus service did not make money in 1994. It's projected to make money in 1995 and even more money in 1996; that's projection.
Continuing, the non-commercial side, the rail passenger, there are three trains, I think as most members know: the Northlander, which is the passenger train between Toronto and Cochrane; then turning over to page 10, the two other trains that serve Cochrane to Moosonee, the Little Bear runs all year round, basically, it's a mixed freight and passenger train, and then the Polar Bear Express runs from Cochrane to Moosonee in the summer and that's the tourist train you've probably heard about. It's marketed as a tourist train.
Now, the difficulty about looking at the finances of the rail operation is the ONTC, for public purposes, doesn't break down the money it makes on the commercial side with the rail freight and the operating costs of the non-commercial rail passenger service. They lump them together. What I've tried to do is break them down as much as possible. On page 11 you see a nice little table here. I got this from ONTC staff directly; you won't find it in your briefing package. It breaks down the amount of money the rail passenger service gets from its revenues, from the provincial operating grant, which we'll talk about in a second, and from the federal subsidy.
Let me say a few words about the federal subsidy. Under the federal Railway Act, which is about to be amended, the passenger service of the ONTC plus two other railways, the Algoma Railway and one that operates in Quebec, get a subsidy from the federal government. There is a bill called C-101, not the language legislation, which is currently before the House of Commons. It will radically amend the federal railway law. In C-101, the Canadian transportation act, there is no statutory requirement for the federal government to continue to offer a subsidy to the rail passenger service.
This is obviously of great concern to the ONTC. The minister actually referred to this. The witnesses will undoubtedly talk about this. The government has given the ONTC a commitment that the subsidy would continue for at least another year. That was a commitment made by Doug Young, the former federal Transport minister who has just been bumped into another ministry. Mr Rukavina appeared before the federal standing committee on transport on October 26 last year. He talked to the members about the subsidy and he expressed a concern that there was no ironclad guarantee that this federal subsidy would continue. This made it very difficult for the ONTC to plan the future of the rail passenger service. If you read the 1996 business plan of the ONTC, which is part of your package, the corporation says that if we lose the federal subsidy and the Toronto-to-Cochrane corridor becomes even more competitive, then the Ontario Northlander train is in serious trouble. I'll leave it at that and the witnesses can speak to that in greater detail.
Over to page 12, this is where I tried to break out the total rail operation to give you a feel for the financial state of it. You can see that if you lump the rail freight and rail passenger revenue together -- remember that the rail freight is commercial, the rail passenger formally at least is non-commercial -- compare them to total expenses, you can see that in calendar year 1994 and hopefully in calendar year 1995, the total rail operation is making some money. The projection in the corporate plan for 1996 is that it will not make money. I'll leave that there.
Moving on to the marine services, the marine services are the ferry services. As you've heard from the minister, there are essentially three ferry services in 1996: there's the ferry between Tobermory and Manitoulin Island, the ferry between Moosonee and Moose Factory, and finally, the ferry that operates on Lake Erie between Ontario and Ohio. The latter ferry service, the one that operates on Lake Erie, is under contract to the Ministry of Transportation. The ministry reimburses the ONTC for expenses plus 10%. So you can see from the table -- jump ahead a bit on page 15 -- the Lake Erie ferry service makes money for the ONTC because of the Ministry of Transportation contract. The other two ferry services, which the current government has mandated as essential to the operation of the ONTC, as you can see from the financial statistics on page 14, are not projected to make money in 1996. They share in the provincial operating grant and will continue to do so.
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I'm moving quickly, but I want to get to the end of this. Page 15 and 16, I have some data on norOntair. I won't say any more about norOntair because I think the members will hear more about norOntair later in the day. The only point I will make about that, if you look at page 16, in the table, the provincial subsidy for 1995 is a little over $4 million. A point I think that's not often made about this is, while it is true that the provincial operating grant is being cut, at the same time the ONTC is no longer responsible for funding norOntair out of that provincial grant. So that's sort of a compensating factor for the cut in the total operating grant, if you take my point, and norOntair, as you can see from the statistics, wasn't making money for the government before it was shut down.
Mr Wildman: Could I ask a question?
Mr Pond: Yes. I figured you would. Go ahead.
Mr Wildman: The minister, in his concise presentation, said that he was going to work with the communities to get the private sector carriers. Since norOntair was losing money on these runs --
Mr Pond: In total.
Mr Wildman: In total; that's not all of them.
Mr Pond: No.
Mr Wildman: Certainly on the ones that are not now likely to have service after March 30, they were losing money, such as Hornepayne.
Mr Pond: Yes.
Mr Wildman: If there were a carrier willing to go into that community, for instance, from your research, wouldn't it seem likely that the rates would increase?
Mr Pond: Yes.
Mr Wildman: And if rates increased, ridership might go down.
Mr Pond: That's basic economics.
Mr Wildman: Yes. So if ridership goes down and rates increase, why on earth would a private carrier want to go into that community?
Mr Pond: That's a question to direct to Mr Rukavina, who is in the audience, the chair.
Mr Wildman: The other thing is that in terms of the minister's comments, the assets are being --
Mr Pond: Sold off.
Mr Wildman: -- sold off and the tenders are due Friday. That's the aircraft and the equipment.
Mr Pond: And the hangar, the Dash-8s.
Mr Wildman: And the hangars or whatever. The estimated revenue from that is $15 million. I'm going to ask Mr Rukavina after if that means the $15 million will be used to subsidize air service. But is it also true that norOntair has an obligation on the pension plans, that it doesn't know exactly how it's going to proceed at this point?
Mr Pond: You'll have to ask Mr Rukavina that. I know that the corporation is currently offering a buyout package to a projected 250 employees to get them to retire early.
Mr Wildman: My question is whether the $15 million in revenue from the sale of assets would be used for that or for subsidizing continued air service to --
Mr Pond: The former -- well, it won't be the latter.
Mr Wildman: It won't be the latter?
Mr Pond: No, no, they're getting out of the air business, right? The ONTC is getting out of the airplane business. They're selling off the assets.
Mr Wildman: Okay, so the impression the minister gave that this $15 million could be used by the ONTC to stimulate economic activity doesn't mean that it might be used for air service?
Mr Pond: No. That's my understanding. That's in the corporate plan which is in your package, the 1996 --
Mr Wildman: And it's probably more likely to be used to cover the pension plan obligations for buyout.
Mr Martin: I hope people around the table understand that this whole issue is central to any future economic development in the north. If we don't have transportation in the north, we don't have anything. If we can't get our stuff around between communities, if we can't get our stuff down to southern Ontario and out in a reasonable time and in a cost-effective way, we really have nothing up there. So we're really concerned about this because it affects the livelihood of us. If you look at the impact of the north on the rest of the province, it's usually indicated that for every job in northern Ontario there are about five others created in the manufacturing sector someplace else because we produce the raw material. We try to add some value to it, but over the years we haven't had the opportunity to add as much as we'd like. Most of what we produce in the north is shipped south, and that's where the good jobs oftentimes are created, so there's an interrelated dependency there that's really very, very important. If we can't get our stuff to market, if we can't get people back and forth in a timely and cost-effective fashion, then we're in big trouble.
Would you, having done the research that you did, Mr Pond, characterize the development of the ONTC back in -- when was it, 1936? No, 1903 -- would you consider it to be then a pilot project?
Mr Pond: The whole corporation?
Mr Martin: Yes.
Mr Pond: The whole corporation was started at a time when there was very little private sector activity in the north and when there appeared to be a burgeoning natural resource industry in the north which had to be serviced to market. That essentially is why the corporation was started. NorOntair was started, as you've already heard, because at that time in the 1970s there really were no private sector operators offering air passenger service in the north at all.
It's philosophical. You see this from the ministry questionnaire which you have in your package. I'm just laying out the options for you. If you see the ONTC as a business, then it's got to make money. If you see it as a sort of public investment, the way a hospital is, you don't necessarily consider it necessary that the corporation make money. It's really a philosophical question; that's up to you members to address, not me.
I can come back to that at the end if you'd like, but that's a philosophical question for you elected members to address, not for your non-partisan staff.
Mr Martin: Whether it was started as a pilot project or not, or whether it was a fundamental piece of infrastructure --
Mr Pond: Exactly. If you regard it as an infrastructure project, then perhaps the argument can be made it shouldn't be expected to make money on an annual basis. If you regard it as a corporation serving the needs of the north in the way a private sector corporation serves the needs of the north, then you would expect it to make money, or you would expect it to minimize its losses at a time when the provincial debt is a serious problem. But that's a philosophical question for you members to address, not for me.
Mr Martin: Just one other question on your research, trying to get a handle on how this fits, the ONTC, with all of its subsidiaries, all of its parts, is able, in a way that I don't think the private sector is able, being that it's individual companies, to share costs across the board. One piece may be making money; the other piece isn't. So they're able to distribute any profits and losses in a way that individual private sector companies will not be able to.
Will that have an impact in terms of the development or the disappearance of transportation infrastructure in the north? You made some reference to norOntair, kind of an aside that I think was really important about the actual contribution by ONTC to norOntair versus what they make by way of the revenue they generate.
Mr Pond: This is no great revelation to the members, but in the past the previous governments did not regard norOntair as an entity which was required to make a lot of money on a year-to-year basis. It was regarded as a service for communities which were not, in the view of the government of the day, currently receiving adequate air service from the private sector.
Mr Wildman: That included Bill Davis.
Mr Pond: I'll leave it like that. That's not for me to get into an argument about.
One other point worth mentioning about the subsidization: My understanding is that in the rail freight and the rail passenger, there's some cross-subsidization there, but the only operation which makes a lot of money for the ONTC is the telecommunications network. That essentially carries everything else, frankly.
Mr Martin: Just one other question. How much money does ONTC generate by way of revenue when it is selling services?
Mr Pond: As a multiplication factor in the northern economy? I don't know. They may have that data. I'm pointing at the two witnesses you'll be hearing from in a minute, when I point this way. I don't know, but I presume it's enormous.
We went through this with the St Lawrence Parks Commission in the previous Parliament, as you know, sir. Historically, many years ago, organizations like the ONTC or the St Lawrence Parks Commission were regarded as employers, primarily, by the local community. They provided jobs that would not be there otherwise. That was the view of previous governments.
Now the ONTC, for various reasons -- they'll get into this -- has been downsizing for years. They've lost hundreds and hundreds of employees, for reasons they had no control over. Again, this is a philosophical question. What the role of the ONTC should be in the 1990s, that's for you members to debate among yourselves; it's not for me to tell you.
In 1988, with the MOU, the Peterson government made it clear there were some operations which were expected to make money and carry themselves and there were other operations which the government formally did not expect the corporation to be financially self-sustaining.
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The current government has said the same thing. Mr Harris said last November that the ferry service was mandated; it would continue to operate regardless of whether it made money, and the Cochrane to Moosonee rail service was still regarded by the province as a public service which would be operated regardless of whether it was a profitable operation. Mr Harris said that the Ontario Northlander, on the other hand, should be reviewed by the corporation to determine whether it was viable financially. Mr Harris said there are other options on that Toronto to Cochrane corridor the ONTC should be looking at, and when I phoned up the ONTC last week and I said, "What's your interpretation of the word `options' in Mr Harris's statement?" they said immediately, "Bus services."
Just to jump ahead here a bit, because we're running out of time --
The Acting Chair: A quick question, Mr O'Toole.
Mr John O'Toole (Durham East): Just a quick sketch. Could you characterize the ONTC's budget over the last, say, five years? Is it showing increasing deficit or decreasing? A general statement on the character of the budget.
Mr Pond: At the risk of offending the witnesses who are coming up next, the ONTC has had a lot of financial problems in the 1990s -- a lot of financial problems. If you look at table 12 on the top of page 17, their total expenses -- expenditures, I should say; that shouldn't be "expenses," that should be "expenditures" -- have declined systematically throughout the 1990s.
If you go over to pages 18 and 19, since the last time this committee reviewed the ONTC, which was early 1992, they've shed four operations: the trucking service, the hunting camp on James Bay, the Chief Commanda ferry, the second ferry that serviced Manitoulin Island. They've dropped them entirely; they've had to. They lost the Sherman mine contract to ship freight from the north down to Toronto. That was a huge loss for them. They've had serious problems. There's no way around it; they've had serious financial problems throughout the decade. Why that is, of course, is something you can explore with the witnesses.
Mr O'Toole: I'm just asking for a simple characterization. Are revenues slipping and expenditures increasing?
Mr Pond: It depends which operation you're talking about. The only profitable operation right now in a big way is the telecommunications network. Everything else is either marginal or, on the non-commercial side, losing money.
Mr Martin: But it's an investment.
Mr Pond: But again, that's your judgement.
Mr Leadston: On page 18, under comments and queries, the assets of the Hannah Bay goose hunting camp: What were those assets?
Mr Pond: The site and whatever structures were on the site at the time. Mr Rukavina and Mr Wallace can give you more details. I believe there was a bit of an environmental concern before the site was turned over, but it's now operated by the first nation. I don't know -- he's shaking his head. Okay, I'm wrong. I don't know whether the Cree are making money out of it. I don't know whether they consider that a money-making proposition for themselves, but certainly for the ONTC it was no longer commercially viable. Mr Wallace will give you the details.
Mr Leadston: Is there a value that has accrued to those assets?
Mr Pond: I'm sure there is and he can -- it's actually probably in their annual report for 1993 or 1994.
Mr Leadston: My second question is just a query about the status of the Nindawayma.
Mr Pond: It was originally brought on in anticipation that there was enough traffic on that route between Tobermory and the island to justify having two ferries during the peak tourism season. The second ferry was acquired in 1989, but by the time you get to 1993, 1994, there's not enough traffic to justify having two ferries. So the Nindawayma was taken off because there just wasn't enough traffic to justify having both ferries running. My understanding is it's now being chartered out, or it's available for charter service. I don't know if they have actually succeeded in chartering it out, but that's the intent.
One thing worth mentioning is that my understanding is the Chief Commanda, which is now leased to the city of North Bay, has to be drydocked in 1996 -- these boats have to be periodically drydocked -- and that may affect the financial bottom line of the Chief Commanda operation with the city of North Bay.
Mr Leadston: Did the Nindawayma not spend more time in drydock than it did in the water?
Mr Pond: That's probably true.
Mr Michael Brown: That's not true.
Mr Pond: It isn't true? Well, there you go.
Mr Michael Brown: It's not true during the period --
Mr Pond: During the peak, during the early 1990s, that wasn't true, but if you look at the total from 1989 to 1995 --
Mr Michael Brown: But up until the point that they took it out, that's not true.
Mr Pond: They took it out because they knew that the ridership was dropping, so there was no point. It's like any business operation, right? You can see that the market's not there any more; you withdraw the vessel.
Mr Leadston: Is there information available in terms of the times that it was not in service?
Mr Pond: Mr Wallace here will have the facts and figures. He's the CEO.
The Acting Chair: Maybe, Mr Pond, you could just wrap up because you've got a few minutes left.
Mr Pond: Yes, just to finish, let me just say a couple of points and then we'll stop. Just to clarify a couple of things about the cut in the provincial operating grant. As you can tell from the table on page 17, in fiscal year 1995-96, the provincial operating grant is $15 million and change. In the July 1995 economic statement, Mr Eves took $1 million off of the grant for 1996-97, and in the November 29 statement he took off another $7 million for 1996-97 and another $4 million for 1997-98, for a total of $11 million out of $15 million. It's basically a 70% cut in the $15-million grant.
There's a couple of points worth making about this. The government's position is, "Well, $11 million out of a total operating budget of $145 million isn't that much."
Mr Martin: Were you able to determine if there was any impact study done?
Mr Pond: You can ask Mr Rukavina that. There's nothing been published.
Mr Martin: In your research, did you find anything?
Mr Pond: There's nothing been published, no.
Mr Martin: No impact study was done?
Mr Pond: No, it's not been published. There may be something done within the ministry. On the one hand the argument is, "Well, you're expending 145 million bucks a year, $11 million isn't that much." The counterargument you'll get is: "That may be true but that operating subsidy was concentrated on two or three services, the ferries and the passenger train, so you're taking a lot of money from those two or three services because the cut isn't spread over the entire operation. The operating subsidy goes to the non-commercial services." The counterargument to that in turn is: "Well, you eliminate NorOntair from the mix, that's $4 million you're saving right there so that's a compensating factor for the cut." I leave those arguments with you. It's up to you to decide which argument has more merit for you.
As I mentioned earlier, it is important to point out that Mr Harris has said the ferry service and the Cochrane to Moosonee train service is still regarded by the present government, as by all previous governments, as mandated by the province. They are required to be offered to the public regardless of the cost.
The other point worth reiterating is that the Ontario Northlander's future is, in my humble opinion, up in the air, partially because of the cut to the operating subsidy, partially because of the doubt in the future about the federal subsidy, but also -- and this will be my last point -- the increasingly competitive nature of the bus industry. As you know, the bus industry in Ontario is very competitive. It will become more competitive after 1998 with deregulation, and it's an open question whether the Northlander will be able to keep its passengers vis-à-vis the bus industry. I'll stop there.
The Acting Chair: Thank you very much, Mr Pond, for that good background. The next presentation is from the ONTC itself, the president and chief executive officer, Mr John Wallace. The chair is also here simultaneously, Mr Matt Rukavina. Welcome to the south, the tropics.
Mr Wildman: Did you fly?
Mr Matt Rukavina: Yes, I always fly, and when I can't fly I take the train. I never drive.
Mr Wildman: You may not be after March 31.
Mr Rukavina: I'm confident.
The Acting Chair: If you could identify yourself.
Mr Rukavina: Yes, my name is Matt Rukavina. I'm the chair of Ontario Northland Transportation Commission, and John Wallace, our president and CEO, is here with me. I'd like to make a statement, Mr Chair. Then John will carry on from there and then we're open to questions. I don't have to leave until 7 o'clock. I've got lots of time.
I'd like to give you some insight into what Ontario Northland is all about, how it is changing and where it is heading. As you've heard already, ONTC is a schedule 2 crown agency reporting to the provincial government through the Ministry of Northern Development and Mines.
The mandate of ONTC is to operate a transportation and communications corporation providing services which will be in the best interests of its customers, the communities it serves, its employees and its owners: the people of Ontario through the provincial government.
ONTC was established in 1902 as the Timiskaming and Northern Ontario Railway and has grown into a corporation with 1,200 employees and an annual operating budget of $150 million. The policies of Ontario Northland are established by a commission composed of northerners, varying from five to 10 members depending upon terms and replacement. Currently we're at five members. So the policies, in effect, are set by the commission members in consultation with the Minister of Northern Development and Mines.
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Our operations are broken down into two distinct areas. There are commercial operations, which are businesses operated without public funding and carried out in full competition with the private sector, using a bottom-line objective to yield sufficient earnings to reinvest back into the business enterprises to keep them viable and competitive. The other area is non-commercial services operated for and mandated by the province with provincial direction on the service provision, the communities served, fares, and funding some of the operating costs on an annual fixed-price contract with some capital funding by the province of our non-commercial operations.
The commercial operations, looking at that side of the ledger, include rail freight over 700 miles of track serving the resource industries primarily of northeastern Ontario, as well as Rouyn-Noranda in northwestern Quebec. We are the fourth longest railway in Canada. Secondly, we have a telecommunications division, now known as O.N.Tel, and it provides long distance service along the Highway 11 corridor, north of North Bay up to James Bay, as far as Peawanuck through a satellite operation at Hudson Bay and across westerly to Hearst.
In addition to the long distance telephone service, we provide local service in five communities where other people haven't gone in, so we're providing those services, more remote communities. We also provide data processing, audio-visual, computer and mobile radio services to large customers throughout the north.
We have Internet access now through ONLINK that we are providing to northeastern Ontario, as well as northwestern Ontario. As a matter of fact, we provide this on a consulting service across Canada. We recently installed an Internet service in Prince Rupert, BC. We are currently in the process of installing an installation at Thunder Bay that's going to serve a good part of northwestern Ontario. We're into the Sault now, looking at a proposal, as well as Parry Sound, so this is an expanding part of our operations, the whole telecommunications business.
The third part of our commercial operations is the bus passenger services. We have a scheduled operation in a good part of northeastern Ontario, with the southern scheduled service linking North Bay and Sudbury to Toronto, as well as charter and tour services and bus parcel express, so that's the commercial part of our operation.
If we then look at the non-commercial portion, it receives some provincial assistance and that covers the rail passenger services by the Northlander train between Cochrane and Toronto, with bus connection to that train service from Hearst and Kapuskasing to Cochrane, from Timmins to Matheson and on to the train service that operates six days a week. We have the Little Bear mixed train; it's a mixed passenger and freight train, operating three times a week on the 186 miles between Cochrane and Moosonee, since there's no road link there. On that same road, we operate the Polar Bear Express, the tourist train, for a 10-week period through the summer.
We operate a marine department with three ferries, being the Chi-Cheemaun from Tobermory on the Bruce Peninsula across Georgian Bay to South Baymouth on Manitoulin Island. We operate a marine barge service across the Moose River from Moosonee to Moose Factory. It's the only way of getting freight across there in the summer period. Then we operate a Lake Erie service for MTO on a cost-recovery basis, going from Point Pelee to Pelee Island to Sandusky, Ohio.
Our third non-commercial operation -- it's in the throes of being not a part of our operation any longer -- is the norOntair service, linking 17 communities in northern Ontario.
At one time, in the good old days, if we can call them "the good old days," the global Ontario Northland operation generated annual profits of $8 million to $10 million, going as high as $15 million in some years. But times have changed, and have they ever changed. We incurred a $4-million bottom-line loss in 1992, net incomes of approximately $1 million in 1993 and 1994, and last year was basically a break-even year; we ended up at something over $2 million. There were one-time sales of assets and land. Other than that, it would have been about a break-even year. We are forecasting a deficit of somewhere between $1.3 million and $1.8 million for this current year.
Mr Wildman: Is that with or without norOntair?
Mr Rukavina: That's with norOntair ceasing as of the end of March. With those sorts of numbers, how do you generate sufficient funding to put back into the operation and carry out the very necessary capital expenditures to stay in business, if it's basically a break-even operation?
Provincial assistance towards the non-commercial mandated operations has been steadily decreasing. The assistance in 1992 was $22 million. With the provincial expenditure control plan, the government of the day also is increasing costs, that became $17.8 million in 1993. With the advent of the social contract, which we absorbed and not our employees through Rae days, because our services are under federal jurisdiction so the Social Contract Act did not apply to our operations, we were reduced in our provincial funding by $2.4 million, so that was absorbed by us.
That brought down our subsidy in 1994 to $15.3 million. During 1994, then, we could see that in the long range some structural changes would be necessary and operations would have to be different. There was a decreasing amount of subsidy. Strictly a bottom-line operation, how do you generate enough money to put back into the operation?
We then undertook a visioning exercise. We formed a group comprised of three of our senior management people, including John as our president, three of our commission members, including myself, and three people from the Ministry of Northern Development and Mines, including the deputy minister, to take a look at a visioning exercise.
To help that visioning, we sent out a questionnaire to 374 of our stakeholders and customers to get some of their views. We put all that into the mix and we came up with a vision. We concluded that exercise last year with the realization that we'd have to enter into alliances, joint ventures and partnerships in the future, as we would not be able to go it alone any longer. We also forecast -- it wasn't too difficult to do -- that provincial assistance would continue to decrease, and perhaps at an even greater rate than it had in the past.
This brings us to 1995. At the beginning of the year, provincial assistance for the mandated non-commercial services was established at $15.2 million. In July, with the government examining its projected deficit, we were requested to absorb an interim $1-million reduction, which we did, on the basis of distributing it over all the operations, including commercial services, and not resulting in the elimination of any service area.
On November 29, the provincial economic statement directed that our assistance would be reduced by $6 million in 1996 and $4 million in 1997, so that by the end of next year our provincial assistance would become $4.2 million. The subsidy will no longer cover assistance with capital expenditures for non-commercial operations mandated by the province, and that averaged about $1.75 million annually. We will have to absorb those costs somehow.
The Minister of Northern Development and Mines announced that the subsidy will be continued to provide rail service to Moosonee and ferry services to Manitoulin Island and to Moose Factory. The minister also advised that the ONTC will have a new mandate that is less constricting than that of the past and will include a greater and clearly defined role and the ability to work in partnership with the private sector, and we welcome this. So there's less red tape: "Here's the amount of subsidy you've got. Do what you can for the good of the north."
How, then, do we cope with this dramatic funding reduction? Over a five-year period, from 1992-97, we will have gone from $22 million to $4.2 million, a reduction of over 80% in provincial assistance. How do we cope?
The commission decided, with the concurrence of the minister, to curtail the norOntair operation which operates at an annual loss of over $5 million. We took a look at all of our operations. We couldn't make the bottom line fit with an $11-million reduction. What do we do with all the services? We took a look at the six areas of service that we provide. The one area we thought would be the least harmful to our operations -- something had to go -- was the air service.
With that direction, by getting out of the air service and the $5 million-plus a year of costs, one half of the funding loss of $11 million would be covered. In order to balance the books completely and try to operate with a bottom line, it was decided to offer an early retirement incentive program to our employees to reduce future operating costs and thus ensure the long-range viability of the total organization.
That's where we had to come to grips with it. We could account for about half of the $11 million. How do we account for the other half? We felt the only way to do that, and it becomes a people cost, was to take a look in the long range at an early retirement program. We have offered our employees an 80-factor plan with an incentive to have people retire. It's not the first time we've done this. We've gone through this two previous times.
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You'd heard earlier that when we lost the Dofasco contract on hauling iron ore from the Sherman and Adams mines we had to reduce staff, and 107 people took an early retirement program at that time. With the social contract in 1993, when we had to absorb the cost and not our employees, we again put an early retirement program in, and 57 of our employees took that. We are now projecting that over a five-year period perhaps 250 of our employees, starting with 90 this year, will take advantage of the early retirement program.
To put that program in, there has to be some upfront incentive. You have to have some funding to do this. We intend to use part of the assets on the norOntair sales to assist that for the long-term viability of the organization.
Let us, then, look at the norOntair service. NorOntair was established by the provincial government in 1971 to provide air services to smaller communities that were not commercially attractive for private air carriers. The objectives of this service were to enhance the opportunity for commercial and industrial development in the north, reduce social isolation and strengthen private-sector carriers.
The service was to be a demonstration project to determine the feasibility of the system, with the intent, in due course, to turn the service over to the private sector. It was also envisioned that norOntair would provide reliable air service between northern communities and for connection with the major carriers to destinations out of the north so as to provide a regional service.
Originally, private operators were contracted to fly and maintain the aircraft, with norOntair responsible for marketing, fuel purchases and administration. Ontario Northland purchased a contracted carrier, Air-Dale, in 1988, and use of private operators was completely phased out in 1993 when we pulled out of our twin operation in northwestern Ontario and that was contracted to Bearskin Airlines. From that date, from 1993, Ontario Northland operated all of the aircraft.
NorOntair started its operations with Twin Otter aircraft and one Navajo, and in 1984 the world's first Dash-8 was delivered to the norOntair service; subsequently, we got a second one in. At present, we are operating with two Dash-8 and four Twin Otter aircraft.
We have about 75,000 passenger carryings per year from the 17 communities served, with about two thirds of that on the Dash-8 routes, covering the major centres including the cities, and one third on the Twin Otter routes. All of the routes operate at a loss, with the loss greater in proportion on the Twin Otter connections; smaller aircraft, smaller communities, smaller passenger needs. As the province provided the aircraft to Ontario Northland, we didn't purchase them, and as the province assumes all of the capital costs for non-commercial mandated services, the losses would be much greater than $5 million-plus a year if we had to include depreciation costs for those capital assets. It would be something much more than that. That was a government responsibility. They provided the capital assets to us.
Our 1996 budget was established on being out of the air service by the end of February and has since been delayed to March 29, at an additional cost of $450,000 for that extra month. We have received many requests from communities and others to delay the cutoff, but how do we do that in a fiscally responsible manner at an ongoing cost of $450,000 monthly, out of a budget that is already in a deficit position and where the clock has been ticking since January on a $500,000 monthly subsidy reduction, this $6-million reduction for 1996 to be compounded with the $4-million reduction in 1997? How do we put the numbers together?
With the interest shown by private sector carriers, and there has been a great amount of interest, we are quite certain that air service will continue in the region. Where service does not occur after March 29, and there may be some communities, we will work with those communities on the provision of service. We don't have any money -- we're operating on a bottom-line basis -- but we do have expertise and contacts that will be of assistance. For example, we have computer operations for reservation purposes in all those 17 communities. We're not going to go around on March 30, if there isn't a carrier in place, and remove those at a cost and then reinstall them with another cost. We will leave those in. We are having discussions with all the communities on how we can be of assistance to them and how they can assist themselves and how jointly we can talk to the private sector to provide service in those communities.
Three private sector carriers have already indicated that they will be willing to fill some of the void left by norOntair, including competition by carriers on some of the routes, which is a healthy result. We find in some areas there are two private sector carriers interested in coming in. That's healthy; that's good. It can only be of assistance to northerners. They're going to get more frequency; there's going to be better control on fares. It's good.
After 25 years in a demonstration project, the time has come financially where we must exit the air business in the interests of ensuring the viability of our other five areas of operation and service to northerners.
What's the future, then, of Ontario Northland? I feel we will continue in the transportation and communications fields, but it must be on the basis of a bottom-line approach in various partnership arrangements, in the same way that municipalities are now looking at service delivery differently from the past traditional approaches and in the manner that the private sector has had to cope with changing economic conditions over the past few years, before the rest of us. These are different times, requiring new methods. Ontario Northland intends to cope, with renewed vigour.
Mr John Wallace: I thought I would spend some time looking at both our past and looking forward, to review with the committee some of the steps we have been taking or have been contemplating taking to adjust the organization to the shrinking public funding and also the declining revenues we are experiencing on both our commercial and non-commercial operations.
Mr Rukavina has already indicated the voluntary early retirement incentive plans. In 1990, we saw a reduction of 107 positions, and that was the result of the mine closings at Sherman and Adams mine. In 1993, along with the social contract, while the act itself did not apply to Ontario Northland, we did experience the funding reductions and we instituted permanent steps to adjust to that reduction in funding by another early retirement incentive program, and there were 57 positions that left Ontario Northland.
This time we've targeted roughly 90 jobs on the early retirement incentive program that's open now and will close in the middle of March. That 90 jobs is dependent on some changes to collective agreements and a number of other factors we are doing, because we still will be expected to continue to provide the services we're providing today. Those 90 jobs, incidentally, do not include the impact of the reductions as a result of the norOntair closure.
Mr Wildman: What is the impact?
Mr Wallace: The impact is 80 positions that are direct Ontario Northland positions.
Other cost reduction efforts we've undertaken: Mr Pond made reference to the Hannah Bay operation, which last operated in 1992. That operation we tendered for sale and then negotiated an agreement with the band in Moose Factory Island to transfer it to them. That agreement has not been completed yet. We expect it will be completed within a month. There's a land occupancy permit required from the Ministry of Natural Resources, and before that gets issued the site has to be cleaned up to its satisfaction. We expect that site will be transferred to the Moose Cree band some time within the next month or so.
In 1993 we closed the Star Transfer trucking operation, which had faced losses for a number of years as a result of deregulation of that industry and the private sector filling the void.
In 1993 we ceased the operation of the Nindawayma. We acquired it in 1989. There were increasing subsidies required for the Owen Sound operations and passenger counts were dropping, so we ceased that operation at that time.
In 1995 the Chief Commanda operation was transferred to the city of North Bay. We were losing approximately $100,000 a year on that operation. We negotiated a three-year agreement with the city to take it over for $1 a year, and at the end of the three-year period we will hopefully be completely out of that business, with the city taking over. Incidentally, Mr Pond referred to the Chief Commanda as the vessel that was going to require drydocking. It's the Chi-cheemaun that requires the drydocking.
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Also in 1995, we dropped some unprofitable bus runs. There was one of our four or five frequency runs between Orillia, Barrie and Toronto that we discontinued, and we also discontinued the service between Timmins, Chapleau, Wawa and Sault Ste Marie.
We are also closing and selling off any surplus property that we don't require. As an example, recently we sold the station in Iroquois Falls. We had offered it to the town for $1 and they undertook not to take it on, so we found a private buyer who will take over the Iroquois Falls station. We have also closed and demolished the station that existed in Porquis. This will not only save us the money that was being contemplated to upgrade these facilities but save us on the taxes and the heating and the upkeep of the buildings.
In August 1993, the operation of norOntair in northwestern Ontario was discontinued. We closed the archives in 1995. We closed our health and wellness centre in 1995. We have undertaken, for the last few years, a maintenance mechanization program on our rail line maintenance programs, which has led to the reduction of track forces, and whenever we have vacant positions we try not to replace them, whenever possible.
We also terminated our unilevel rail passenger coach program. We had acquired 20 single-level cars from GO Transit to be rebuilt in our shops in North Bay. This was for the Northlander passenger service. We terminated that program early; we did not continue with it to its full completion, in order to save money.
Finally, the item that's getting most of the discussion today would be the March 29 termination of the norOntair service completely.
On the other side of the issue, as opposed to cost reductions, I'd like to also talk about our efforts to enhance revenues. In 1992, we worked out an arrangement with the Ministry of Transportation for Ontario to assume the operation of the Pelee Island ferry operation, which has been a very successful takeover of that operation.
In 1992, we also took over the Toronto-North Bay and Toronto-Sudbury runs of the Gray Coach operation so we would be providing a continuous service from the north right through to Toronto on both corridors.
In August 1993, after probably five or six years of negotiating with Canadian National, we were successful at taking over the Kapuskasing subdivision, which is the rail line from Cochrane to a point called Calstock, west of Hearst, Ontario, which has been a very successful takeover from Ontario Northland's point of view. CN wanted out of that business; they were isolated up there in the sense that the rail lines to the east and west were not connecting to the CN network, so we were successful at negotiating taking that over.
Also, as a result of our success in the Pelee Island operation, we and the MTO have been in discussions over the last year or so about the future of the ferry operations in the Kingston area, whether there's a role for Ontario Northland because of our expertise in the ferry world. These are activities that are taken on at a plus to the bottom line for Ontario Northland.
It already has been mentioned that the Nindawayma has been publicly advertised for charter. We had three proposals received as a result of that request for proposals and we are currently negotiating with the successful tenderer to try to get into a charter arrangement so we will have some revenue generated from the lease of that vessel, yet the vessel will still retain in our ownership so that should it be required again at some point in the future for the Tobermory-Manitoulin Island service, it'll be available for us.
We are aggressively seeking new business, including the hauling of Toronto's solid waste, if it's proven to be environmentally safe. We are endeavouring to try to get a lot of lumber traffic out of northwestern Quebec because we are the logical routing direction. So we are attacking a number of fronts to get more rail freight revenue on our tracks.
We have in 1995, as Mr Rukavina has already pointed out, gotten into the Internet operation in northern Ontario. This past year we also entered into a contract with Canadian National to do all its local switching and yard operations in North Bay. This allowed Canadian National to win by being able to pull a yard crew out of North Bay, and we were able to absorb it within our own operations.
We are considering bidding on a GO Transit coach overhaul program that is currently being publicly advertised. Four bidders showed up to the meeting. It may be pushing the limits for Ontario Northland to take on work of this magnitude, but we are certainly seriously considering it. We haven't come to a conclusion about whether we will bid, but we are --
The Acting Chair: If I could interrupt, Mr Wallace, it might be more advantageous for the committee if we could get into questions now.
Mr Wallace: I'm just about finished. I'll just say that with some of our efforts to curb rising costs, because there is in the public sector a premise that maybe there's unlimited pools of money, we had a five-week strike in 1994 with our norOntair pilots. We also had a three-month lockout with our shop workers because we are determined that we're going to have a control on our costs. We are currently negotiating for cabooseless, conductor-only operations. Last week we announced that we're going to run our freight trains through Englehart, with a saving of approximately 20 jobs, and we're working with our shop craft unions to get a more efficient operation in our shops.
Just a couple of final matters. We are currently negotiating with the federal government officials regarding the federal funding levels for the Northlander train. We are currently preparing a three-year business plan to analyse the impact of the $4-million reduction that will be taking place January 1 of next year. We are finalizing a comprehensive review of our bus operations to identify areas of concern as we move into a deregulated environment. Finally, we intend to concentrate our efforts on improving and a better relationship with our unions, because it's really all employees of Ontario Northland who are very concerned about its future, and we all have a stake in the future of Ontario Northland.
Mr Wildman: First I'd like to thank you gentlemen for your presentation. Since you're here till 7 o'clock, I'm sure we'll have more than three minutes.
You said, Matt, in your presentation that the board decided, with the concurrence of the minister, to discontinue norOntair. Could you tell me who Jim Kilgour is?
Mr Rukavina: He's our director of air services.
Mr Wildman: I'd like the clerk, who seems to have disappeared, to distribute these to the committee.
The Acting Chair: Mr Martin will do it, no doubt.
Mr Wildman: I'm sorry for the quality of this copy of a fax, but this is from Jim Kilgour dated November 30. It says:
"The Minister [of Northern Development and Mines] announced at noon today that norOntair air service is no longer a priority for the ONTC and air service would be left up to the private sector. I'm sorry but I have no further details at this time and I will keep you informed as soon as we know anything further. There was no time frame given. My apologies to our employees for informing you in this manner, but no one at ONTC had any advance knowledge of the minister's press release."
This was sent out to the employees of norOntair by the manager of the air service. It sounds to me like the minister made this announcement without consulting ONTC.
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Mr Rukavina: Let me give you some background to my statement, Mr Wildman. You'll recall that I said we went through a visioning exercise starting in 1994 on where we were going with the organization as a whole. We projected that there would be major decreases in provincial funding on our non-commercial operations. We concluded this in that visioning exercise and we presented this to the minister in September of last year, our visioning exercise.
The worst-case scenario, in our view, was that the subsidy would decrease on all the operations down to those essential services, in our view, that did require a subsidy more than any of the others. We concluded that the Little Bear train, the Polar Bear Express and the Moose River ferry were musts because they couldn't operate in any other way; they were isolated. That would require $6 million of subsidy. We said if that worst-case scenario did take place, we needed at least $6 million. All the other services could go, then, and we prioritized. What would happen to those other services if that worst-case scenario took place? We said the first thing that could be considered would be the norOntair operation, for two reasons, that it would help the bottom line and it would generate some money from the sale of assets.
Mr Wildman: Forgive me, but we don't have much --
The Acting Chair: The three minutes is up. The government party.
Mr Wildman: This is ridiculous.
Mr O'Toole: Thank you very much for an informative presentation. I could direct this to Matt, I suppose. You mentioned in your remarks that the cost and the decision to extend services from February through March was at $450,000 per month for norOntair. What would the passenger numbers be for that period? What is the average passenger carriage per month?
Mr Rukavina: About 6,000. There are 75,000 a year, so it's about 6,000 passengers per month.
Mr O'Toole: You must in your numbers -- they're fairly thorough -- have a subsidy per passenger. So it's 75,000 passengers per year running on --
Mr Rukavina: And with a $5-million-plus deficit on those, so that's, what?
Mr O'Toole: It would be safe to say you could fly them for free, basically?
Mr Rukavina: Yes, and give everybody a --
Mr O'Toole: Yes, a train pass.
Mr Wildman: Are you suggesting that?
Mr O'Toole: No, I'm not. I just want to be clear that there is a significant amount of subsidy and maybe the demand isn't as high. Has ridership or passengership been declining?
Mr Rukavina: Air carryings have remained about constant, not much fluctuation.
Mr O'Toole: You've mentioned, obviously, the subsidy from the province. Are there any other subsidies, federal or other subsidies?
Mr Rukavina: Federal subsidy on the Northlander train operation is on the portion of the CN tracks from North Bay to Toronto. We receive a subsidy that currently is in the $2.6-million range, which under Bill C-101, that we talked about, is perhaps going to disappear. We're negotiating with the federal people on that now. The only commitment we've got is that it would remain for a year. We've tried to get a longer-term commitment, which we have not been successful at. We're also told it will not reach $2.6 million but is going to be something less than that. We're going to continue negotiating, but that presents an ongoing problem.
Mr O'Toole: Thank you for very thorough responses.
Mr Bob Wood: As I understand the economics of the transportation business, you can provide a lot more service to people through buses than you can through rail passengers. Is that correct?
Mr Rukavina: Rail passengers? No. Let me give you some of the numbers. The Northlander train carries about 45,000 passengers a year. The Little Bear train -- there's no road -- carries a little over 20,000 passengers per year. On the bus operation in the north, there's about 96,000 passengers; on our southern Ontario route, it's about 220,000 passengers. It's a bigger market with bus, particularly down south.
Mr Bob Wood: What I'm coming to is this: When you look at what the government's put in, there's a massive subsidy for your rail passenger and it loses money hand over fist. The subsidies are something like $13 million a year, aren't they?
Mr Rukavina: There is, but you get this ongoing argument with railroaders. They're responsible for the infrastructure. Who pays for the highways that the buses use?
Mr Bob Wood: Sorry to do this, but we're so tight on time. How much bus service could you provide for $13 million a year south of Cochrane?
Mr Rukavina: A lot of bus --
Mr Bob Wood: A lot more bus service than you're giving rail service now.
Mr Rukavina: But everyone will not take buses. You have two classes of passengers, we've found. When we had our labour dispute last November to February, over a three-month period we didn't run the Northlander train. We found that the bus passenger carryings didn't go up.
Mr Wildman: That was a lockout.
Mr Rukavina: But the Northlander didn't operate for three months, and it didn't affect passengers --
The Acting Chair: Sorry, time's up.
Mr Martin: Mr Chair, on a point of order: Given that we have until noon to do the business of this committee and we have the next group for 40 minutes, from 10:40 till noon, it looks to me like we have 10 minutes we're going to lose. I would suggest, as these are the key decision-makers re the ONTC and they're here before us now and we have a line of questioning we want to pursue even for that small 10 minutes, that we be allowed to take that 10 minutes and go until noon. I would ask the unanimous consent of the committee to do that.
The Acting Chair: The next presenter is scheduled for 11:10. What we would have to do is move them to 11:20.
Mr Bob Wood: On the point of order, sir: It's really up to the party that designated the next witnesses. If they want to take more with the --
Mr Martin: All I'm saying, Bob, is can we go till noon, and if we go till noon, can we have 10 minutes extra with these guys? They're the key people.
Mr Bob Wood: What are we doing? Are we going till 11:50 now? I have no problem as long as it's equally divided among the three parties.
The Acting Chair: We'll do that. We'll do the three-minute round and then come back, okay? It's the opposition for three minutes.
Mr Michael Brown: Thank you, Mr Chair. It's always a pleasure to see you, gentlemen, who we know well in the constituency of Algoma-Manitoulin.
We don't have much time and we'll get right down to it. To get this clear, you were instructed by the government to close down norOntair? That was your instruction. The board, as a board, did not say to the government, "Let's close down norOntair." The full board never recommended to the government that we close down norOntair. Is that correct?
Mr Rukavina: Well, in part. Our visioning exercise did say that if dollars dictated a reduction in service, the first service that should disappear is norOntair.
Mr Michael Brown: So there was an option and those options were approved by the board. Obviously, since 1988, with the MOU you've operated directly under, when the Minister of Northern Development said, "You're not going to get any more money for" whatever, you had to take that into consideration.
Mr Rukavina: Dollars dictate where we go.
Mr Michael Brown: Did the minister at that time say, "You must find a way to guarantee air service to those communities that presently had air service," that there must be a guarantee that the service would be provided by someone or some organization, be it yours or the ministry directly? What we're interested in is the guarantee. I have seen on Manitoulin two private air services come and go. I've seen in the Elliot Lake community four, maybe five -- I'm starting to lose track -- air services that have come and gone. You're telling me there's a $5.5-million deficit in this organization. It seems to me that many of the routes may not be very attractive to the private sector. Was there instruction to you to guarantee that these routes were served not just for a couple of months or at all?
Mr Rukavina: There was an instruction to do our best to see that air service was provided in all those 17 communities, and we are working on that. Let me turn that over to Mr Wallace. He can give you some details on what we have been doing.
Mr Michael Brown: No, we don't have much time. My specific question is, were you instructed to guarantee that there'd be air service to these communities? Not were you to work with people, were you to see if you could find ways, were you to see if you could do a few things to help them along. Were you to guarantee there would be an air service in these communities? That's the question.
Mr Rukavina: I don't recall the word "guarantee," but I think there was an implication to do the very best we can.
Mr Michael Brown: Implications and guarantees are quite different things. Could you table --
The Acting Chair: Time's up. We'll move to the third party.
Mr Michael Brown: Mr Chair, could we have an analysis of the --
The Acting Chair: You'll get another round.
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Mrs Lyn McLeod (Leader of the Opposition): Mr Chairman, may I table a question for legislative research that I think is appropriate?
The Acting Chair: Yes, you can.
Mrs McLeod: Given the reference to bus passes and usage of train, I think it would be helpful to the committee if legislative research could provide the committee, using selected northern Ontario communities across the north, with some distance and travel times by both bus and train where there is in fact a train available -- it would be helpful to indicate where there is no train available -- and use Toronto as the destination point.
Mr Wildman: Over the past three years there have been 4,500 air ambulance evacuations from nine communities served only by norOntair. Those are figures from the Ministry of Health. So this not just an economic question, it's a health question, because if there is no air service, there may not be any airport and that'll be the end of a fixed-wing air ambulance service.
In your comments, Mr Rukavina, you said that when the norOntair service began, you were mandated to serve communities not commercially attractive to private air carriers, and you indicated that all your operations in norOntair operate at a loss. Yet the minister stated outside the room here that he was guaranteeing air service to the communities. Is it your view that these communities now are economically viable for air carriers, that they are no longer "not commercially attractive" to the private air carriers?
Mr Rukavina: I can't answer that question.
Mr Wildman: I just asked your opinion.
Mr Rukavina: I'll give you my opinion. I think in some of the smaller communities there's going to be a problem to have someone come in to provide the same standard of air service they had in the past. Maybe there's some economics to a reduced type of service with smaller aircraft. This is the sort of thing we're going to get together to see.
Mr Wildman: Could you or could Mr Wallace tell me what service, whether it be reduced with smaller aircraft or whatever, will be available to these communities as of March 30: Gore Bay, Elliot Lake, Hornepayne, Wawa and Chapleau?
Mr Wallace: There is, we feel, some interest being expressed, although no one has given a commitment, for the communities of Elliot Lake and Wawa.
Mr Wildman: Hornepayne?
Mr Wallace: Hornepayne, no. Gore Bay, no, at this point. And Chapleau, no, at this point.
Mr Rukavina: There was some discussion on Chapleau.
Mr Wallace: We'll be meeting with the Chapleau representatives after the meeting of the minister tomorrow.
Mr Wildman: You can also tell us, then, that even if some of these communities might get some service -- that might be reduced, but it'll be some service -- there is likely to be a gap in air service subsequent to March 30.
Mr Wallace: Yes, that's correct, there could be a gap.
Mr Wildman: In terms of the areas where there has been some interest from the private sector, such as Kapuskasing, could you tell us what kind of indications you have, given your experience in the air service, that these services will be long term?
The Acting Chair: Sorry, but the three minutes are up. Maybe they can give that answer a little later, if possible.
Mr Wildman: I will point out to you, Mr Chair, and I'm not trying to be confrontational here, that I really think it is an affront to guests who've come a good long distance to a committee to be treated in the way these people have been treated in terms of the time given.
The Acting Chair: Okay. Mr Wood?
Mr Bob Wood: I'd like to pin you down on my question of a few minutes ago. You agree with me that for $13 million we could provide a lot more passenger service by bus than we currently do by train, setting aside the question of whether they're going to use it and setting aside the question of whether roads are subsidized or they aren't?
Mr Rukavina: The bus operation isn't subsidized by the province. We operate that as a commercial operation.
Mr Bob Wood: What I'm saying to you is that if we gave you $13 million and said, "Get rid of all passenger service south of Cochrane," you could provide a lot more passenger service by bus than you do by rail. Is that not correct?
Mr Rukavina: Yes, I think you could. But there's a compounding problem. The infrastructure is there that we need for the freight operation, so you haul passengers at the same time.
Mr Bob Wood: One last very fast question. I think my colleagues have other questions. The contract you got for the Pelee service: Was that publicly tendered?
Mr Rukavina: It was negotiated with MTO on a cost-plus-10% recovery basis. We end up with $300,000 a year revenue as a result of that.
Mr Bob Wood: And there's no public tender, I gather.
Mr Rukavina: Not that I'm aware of. The individual communities in that area used to operate the ferry service and they had some problems. MTO came to us, with our marine expertise, to take it over.
Mr Bob Wood: Are you aware of a public tender process with respect to the Kingston ferries?
Mr Rukavina: I'm not aware.
Mr Wallace: I would like to add, in the case of Pelee Island, prior to the introduction of the Jiimaan, the vessel that's currently serving down there, the operation had been operated by the township of Pelee Island. The province was investing an awful lot of money, I think around $25 million, for the building of the new vessel, the Jiimaan, and then it turned to Ontario Northland because of our expertise for the construction of that vessel, the necessary docking arrangements and so on. That expertise rested with us because of our own operations, so that's why they turned to us and there wasn't a public tender at that time.
Mr Bob Wood: There was no public tender?
Mr Wallace: There was no public tender at that time.
Mr Bob Wood: My colleagues may have some questions.
Mrs Ross: It's been my understanding that of the 17 communities that are serviced by norOntair, there's been interest expressed to service 14 of the 17. Is that correct?
Mr Rukavina: I didn't hear the question.
Mrs Ross: There's been interest expressed to service 14 of the 17 communities by another airline?
Mr Rukavina: More than one airline. There hasn't been anything direct at this stage on Hornepayne and Gore Bay, those two.
Interjection: Chapleau.
Mr Rukavina: Chapleau, there's some discussion.
Mrs Ross: Okay. On the ones where there's been interest shown, will there be a lag between the service that's provided now and --
Mr Rukavina: No. The new carriers have said they're going to come in on March 31.
The Acting Chair: The last three minutes, Mr Ramsay.
Mr Ramsay: Thank you very much for coming, gentlemen. Mr Wallace, to follow up a little bit what my question was to the minister where he was cut off, and Mr Wildman's question, we're all very concerned about the continuation of air service. I mean, we've got sort of two classes of communities here that are losing air service: those that we believe the private sector is going to be coming in and those that we believe there's going to be a gap and they may not even ever recover air service. On those that the private sector is coming in on, what makes you think and why would they be able to maintain a continuing air service when you weren't able to over the years?
Mr Wallace: There are various communities -- we've talked about Elliot Lake and Manitoulin Island having service and losing service. These all happened when norOntair was already providing service. So norOntair was in fact taking passengers away that could have been flying on these private sector air carriers. The private sector air carriers now will have a better opportunity of at least providing a viable service in some of the communities. Kirkland Lake also had a direct Kirkland-Earlton-Toronto service at one time when norOntair was also there.
I think the private sector has to be given the opportunity to come in and fill the void and see if there is enough ridership in communities like Kirkland-Earlton, where we've seen a commercial response, in communities like Hearst and Kap, where we have two air carriers saying they're going to serve those communities.
But there will be communities, because of the numbers that we have been able to generate, Gore Bay as an example, that may not be able to commercially attract a carrier unless we are able to work with the carriers and do it in a combination of communities. That's why we're meeting with the communities. Then the carrier should try to see whether or not there should be a viable Chapleau-Elliot-Gore Bay-Toronto service, and that's what we're doing.
Mr Ramsay: I just have one other question. I noticed when Air Creebec made their announcement that they'd be coming to feed the Highway 11 corridor into Sudbury, they were talking about using pressurized aircraft. Do you think the ONTC has failed northern Ontarians by not upgrading their aircraft over the years and sticking with the Twin Otter?
Mr Wallace: We had plans in earlier years to try to replace the Twin Otters with a faster pressurized aircraft, but there was never the capital funding available to follow through with that.
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The Acting Chair: Okay, time's up.
Mr Martin: As there are a few minutes, we'd put a question or two on the record for research -- a couple of questions that actually I almost got kicked out of a meeting in Timmins for asking, if you'll remember.
One is, according to the mandate, who in fact does the commission speak for, the people of the north or --
The Acting Chair: Remember, this is legislative research.
Mr Martin: Yes. According to the mandate, who does the commission speak for, the people of the north or the minister?
The second question is, have there been any impact studies done re the rollout of the decisions that are being made here on the whole of the north and its economy, and if there have, could they be tabled?
The Acting Chair: Okay, thank you.
Thank you very much for coming south, and I hope you enjoy our southern hospitality here for the next few hours.
The next speaker, Mr Stevens, I guess, make your way to the front.
Mr Wildman: Mr Chair, I also have questions for the research, and it's not exactly a question, it's a request that he do some research.
The meeting is happening tomorrow involving the nine communities that do not have air service, or probably will not as of March 30, and the minister. I'll provide Mr Pond with a copy of a news report quoting the reeve of Chapleau, in which he says: "The meeting is a whitewash, a pacifier. Decisions have already been made."
I would like Mr Pond, if he would, at the direction of the committee, to contact the reeves and mayors of these communities, subsequent to the meeting tomorrow, to get their reactions to the meeting to find out if it is indeed a whitewash and a pacifier or if it's something more than that and is useful and to provide their reactions to the meeting to the committee for the subsequent meeting, which may take place in May, I understand, if the minister is available.
The other question I would like the researcher to look into is what these words from Mr Rukavina -- if he could contact the ONTC to get this clarification -- mean: that "the dollars dictate where we go." Is it the fact that the minister dictates the dollars?
The Acting Chair: Okay.
Would you please identify yourselves?
Mr Brian Stevens: My name is Brian Stevens. I'm the president of the Canadian Auto Workers local that represents mechanical shop workers at Ontario Northland Transportation Commission.
Mr Glenn King: Good morning. I'm Glenn King. I'm the legislative representative with the United Transportation Union, and I've been asked to represent the General Chairpersons' Association at Ontario Northland this morning.
The Acting Chair: If you could begin your presentation, please.
Mr Stevens: I think primarily, just in terms of introducing ourselves, we should say that there are approximately 1,200 -- you may have heard, I think, through the course of the day -- organized workers in Ontario Northland, and there's a parent body, an association called the General Chairpersons' Association, and that's on whose behalf we are speaking today. In terms of presentation we'll keep it relatively short and we would rather get to responding to some pertinent questions that you may have.
Émile St Hilaire, who is the representative for CALPA, who represents the airline pilots, was supposed to be here today, but just to give you an idea of what the employment opportunities are out there in the country, he is currently in Vancouver and was flying back this morning. Maybe Pearson's fogged in today, I don't know, but he didn't make it this morning.
In preparing for today, I was trying to think in terms of, how could we give the Legislature a snapshot of Ontario Northland? The thing that came to mind, and I'm not so sure that the MPPs are aware, but there's a book written called Steam Into Wilderness.
The Acting Chair: I've heard of it.
Mr Stevens: Well, good for you, and probably Mr Ramsay has read it as well, but maybe some others haven't.
The Acting Chair: Could you give that to us again?
Mr Stevens: It's called Steam Into Wilderness. In the interest of time, I would just like to read a bit of the preface, just to give you a synopsis of what the book is about:
"This book tells the story of the railway which encouraged development of those resources. In 1902 the Legislative Assembly of Ontario passed an act creating a board or commission which would first construct and then direct the operations of the Timiskaming and Northern Ontario Railway on behalf of the people of Ontario. It was the province's first publicly owned utility.
"Founded as a railway that would reach and expand settled areas of the northeast, the T&NO very soon became a community railway, serving basic social and economic needs of the towns and farms which grew like limbs from the main trunk of its north-south line. Few railroads in Canada have aroused such implicit approval or so little criticism among local people, most of whom have viewed the government-owned commission as an integral part of their own history. This attachment to regional interest and feeling induced a tension between north and south, between a sense of regional autonomy in the north and the control which reached out from the offices of the Premier and the cabinet at Queen's Park in Toronto.
"For the politicians in the provincial capital, over half a century, the T&NO/ONR fulfilled a further promise. It aided with remarkable efficiency the mine owners, the timber merchants, and the pulp and paper companies, enabling them to realize profits that were nothing short of spectacular. Some of this money ended amid the expansive, affluent suburbs of Toronto, the political and financial hub of the province, where brokers and agents of American capital treated the north as little more than a lucrative hinterland. As a result, much of the revenue directly augmented the profits of American corporations. The railway was thus a vital instrument, not only in the regional development of urban communities and farms, but above all of corporate fortunes controlled by men in distant offices who appreciated and used to the full this vehicle which the state had made available to them.
"In time, the railway became a transportation system, adapting under public ownership to the acquisition of buses and trucks, of boats and aircraft, even of telecommunications."
This government today is taking some of that away, and in doing so, you are pulling out of the commitment to servicing residents of northern Ontario. That, we believe, is a shame.
In terms of the provincial subsidy, I heard today something about $13 million. How much bus service could you provide for $13 million out of Cochrane? While that $13-million subsidy, I understand, from the line of questioning, is a myth around how heavily subsidized Ontario Northland is, you may have heard today that those subsidies actually provide -- you are purchasing a service, which we operate as a non-commercial service. In fact, if anything, it's being subsidized by the men and women of northern Ontario.
Recent decisions with regard to norOntair closure will have devastating effects on northern communities in many ways, shapes and forms. We're not so convinced the private sector is prepared to continue to provide the service that's currently being provided. The next question that's up will be the role of the Northlander train in northern Ontario. If those subsidies begin to disappear, as they have been announced by the Finance minister in the recent statement, that in itself will have a devastating effect not only on the communities providing passenger rail service to men and women of northern Ontario but also to the people who work, and have always worked, in northern Ontario.
Glenn, do you want to add some things?
Mr King: Yes. Just to reiterate what Brian has said here concerning norOntair, we're certainly dismayed at the government's decision to pull us out of the air industry. We feel that we have an active role to play.
Just taking a couple of quotes from the Mike Harris Northern Focus tour -- and this is dated January 1995. It's called A Voice for the North. When we're talking about airports, airports are under the gun federally too. I'm sure you're all aware of that. They say, "Access to air travel for many northerners is now being threatened."
Well, by this move with norOntair, we are under the gun. Those services are not going to be provided by the private sector when they don't make a profit, and unfortunately a lot of those routes and a lot of those communities do not have the ridership or the residents to float an airline. I feel, and our union feels, that the government has a role and is mandated to provide an effective air service in northern Ontario.
When we look at the rail industry and we hear the talk about the $13 million in subsidies, the money that the government does provide to Ontario Northland in the form of subsidies is well spent within the northern communities and I think we have a bonus to that. With the recent subsidy reductions, we're seeing our terminal in Englehart -- and I'm a railroader; I work freight and yard and passenger service there -- we're going to lose a shop facility and they're talking about taking all our tracks out there except a main line operation. Now, to my way of thinking, that's going to be devastating for the community within Englehart. There's a lot of money spent there by ONR in operating expenses and there's going to also be a loss of jobs. I was telling Brian this morning on this conductor-only agreement that we're negotiating in Englehart, we'll probably lose anywhere between eight and 10 full-time jobs in just the conductors and train men alone. So there is a devastating effect when we start talking about subsidies.
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One of the other issues that we feel should be addressed is that the ONR has to have a formidable mandate to operate in northern Ontario. They have a very vital role to play, whether it's air or marine or the rail services. If we take one of the commitments out of A Voice for the North, on page 27 -- and this is from the Mike Harris report -- it says: "We will...establish a renewed mandate for the Ontario Northland Transportation Commission. This will include a greater and clearly defined role in economic development, tourism, waste management and other transportation-related infrastructure" -- I would assume air is part of that infrastructure -- "while working in partnership with the private sector." I'm sure there's some arrangements that could be made there.
On the whole, we feel that Ontario Northland is a very viable resource in northern Ontario and the taxpayer's money is well invested in that corporation. We would hope that the committee will see fit to recommend to the government to continue our role and let us grow.
Mr O'Toole: Just a few brief questions. I've heard only the comments made by the previous presenters. How would you describe or characterize the labour relations between Ontario Northland and your own particular unions? Has it been aggressive, progressive, deteriorating? Some kind of characterization.
Mr King: That's a very difficult question. You're putting on the spot.
Mr Stevens: I guess the short answer is, it's on the mend. A previous presenter mentioned that in fact through this three-month labour dispute -- and someone threw in that it was a lockout. Well, after three months I would say that it becomes a labour dispute, whether it was a lockout or a strike. So a commitment was made by the organizations --
Mr Wildman: Industrial dispute. That's the term they use in Britain.
Mr Stevens: Okay. Anyway, both parties are in agreement that in order to continue to service the people who rely so heavily on Ontario Northland, each of us has an obligation to start working on our relationship.
Mr O'Toole: I guess in that context, that's really where I'm coming from. I sensed a great deal of sentiment in your opening remarks and I appreciate your bringing that to us, because I certainly agree that it seems to be an important link, both for the community and for the economy of the north.
With that in sight, is there any other way of providing that partnership arrangement outside of a completely conflict-based agreement; some kind of cooperative where the employee-employer type of situation -- is that the future? You see, when you're at a negotiating table, whoever is paying gets the say, technically, and that's what's happening here. I mean, you're there. You live there, obviously. You're committed to it. Is there any other format for delivering the service?
Mr Stevens: Which service, the labour relations service or the service --
Mr O'Toole: No, no. Not the labour relations; the service. The service first is the function of transportation in the north, and it should evolve, and demand will probably require that it evolve.
Mr King: I think when you're looking at service, I can't speak of any Ontario Northland employee who isn't committed to servicing the communities and it's very much in the back of our minds every day when we go to work. Certainly we do make our suggestions known to the company at our different management levels. Whether they're acted on or not, that can be another source of frustration, but we have avenues to voice those.
Mr Stevens: But just quickly, I think the short answer is that, looking at the norOntair experience, the employees thought that perhaps there may be another way to do that and they weren't given a chance. That was just ruled right out. The minister, in his announcement from his office in Queen's Park, or wherever it happened here, just said he was directing the ONTC to shut down norOntair services. So there wasn't even a chance for the employees' group, and in fact that's one of the things that is currently hampering us. The quick decision to cancel norOntair service has hampered the employees' group from trying to get some kind of a deal. Whether it will work or not, it needs time to perk, but they're not even getting the time to perk. They can't even plug in the kettle on this issue.
Mr Bob Wood: You mentioned a couple of minutes ago that really the end goal in all of this is service to people and I think you're absolutely right on that. I gather you would not have a problem -- if we see a better way of serving the north, you're not opposed to changes in the structure of this.
Mr Stevens: Clearly, Mr Wood, with all due respect, perhaps you didn't listen to my opening comments with regard to the politicization --
Mr Bob Wood: I did actually listen to your opening comments.
Mr Stevens: -- about the north and the south.
Mr Bob Wood: Just so you understand, I did listen to them.
Mr Stevens: I don't mean to be disrespectful --
Mr Bob Wood: Please don't be.
Mr Stevens: -- because I am truly grateful that I am here today and have an opportunity, as an employee, to speak to this committee. But in doing so, I had to get in the car and drive to Toronto. So when I hear an MPP saying, "If we see a way of doing it differently" -- "we" -- my guess is you're going to have a lot of adverse reaction in northern Ontario.
Mr Bob Wood: Do you have a problem with our --
Mr Stevens: I'm not ruling it out. I'm just saying if what we get is, "We will make that decision in the nice, cosy confines of Queen's Park," you will probably have a lot of opposition in northern Ontario.
Mr Bob Wood: I guess what I haven't quite got from your answer is, if we come up with a better way of serving the north, do you have a problem with our doing that?
Mr Stevens: I thought I answered your question, Mr Wood, and that is, perhaps you should be discussing the issues with residents of northern Ontario.
Mr Bob Wood: We indeed intend to do that. We're going to go up to the north in May.
Mr Stevens: Yes. Are you going to go up with --
Mr Wildman: The minister didn't.
Mr Bob Wood: No, the minister in fact is going --
Mr Wildman: He didn't. He didn't discuss of this --
Mr Bob Wood: The minister in fact is going to go up in the month of May. Just so that you're aware of that, we are indeed going to go to the north and we are going to listen to what people have to say in the north.
Mr Wildman: Go there tomorrow, the day before they tender the sale of the assets.
Mr Bob Wood: My second question, once I get an opportunity to ask it, is this: Would you like to see the northern economy be as competitive as possible?
Mr Stevens: That's kind of a loaded question. In terms of competitiveness or more profitable? That's two different roads.
Mr Bob Wood: My question relates to competitiveness. Would you like to be competitive with other areas of the country?
Mr Stevens: We currently are. Quite frankly, we currently are.
Mr Bob Wood: Would you like it to continue to be as competitive as possible?
Mr Wildman: How can you say no to that?
Mr Bob Wood: I don't know. That's why I'm asking the question.
Mr King: Are we talking competitive versus service cuts?
Mr Bob Wood: I'm talking competitive with other regions of the country.
Mr Wildman: Are you in favour of motherhood?
Mr King: That's going to be very difficult to do.
Mr Bob Wood: But do you want to see it as competitive as possible or not?
Mr King: I would like to see us competitive. I don't know how a community like North Bay would, say, compete with a community like Scarborough. I don't think you're ever going to see that.
Mr Stevens: We just don't have the economies of scale.
Mr King: We don't have it. We're shipping everything down here now.
Mr Stevens: Ontario Northland itself can't compete on the economies of scale with the other class 1 railways. Even our track layout is much different. We have more curves and grades per mile. If you ever get an opportunity during some vacation or parliamentary break, why don't you come up and sit in the cab of a locomotive and just see the kind of terrain that we go through. There are more curves and more grades in the rail operations than any stretch of rail east of the Rockies. That in itself requires a lot of capital outlay in terms of just keeping the plant up to speed. Here's a union rep making these arguments to you, but that's the truth and we know it because we live it, we breathe it, we're born in it. I'm born and raised in North Bay. I lived all my adult life there. So was Glenn and so was 95% of all the employees.
Mr Bob Wood: We've heard of certain services that obviously have to be provided, such as passenger service north of Cochrane, ferry service at Moosonee. Do you have any problem if those were put out to tender? Would you have a problem with those being tendered?
Mr Stevens: Why would you want to do that?
Mr Bob Wood: To get the best value for tax dollars.
Mr Stevens: They're currently getting that now, with all due respect.
Mr Bob Wood: I wasn't aware that passenger service north of Cochrane had been tendered. According to the chair, the southern services aren't tendered. Is the one at Moosonee being tendered?
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Mr Stevens: If what you're saying is that we're going to turn over our assets, our infrastructure, things that we value, turn that over to the private sector and somehow they're going to magically do it cheaper, I think that's an assumption that --
The Acting Chair: Time is up. We'll go to the opposition.
Mr Wildman: There isn't one passenger rail service in Canada making money.
Mrs McLeod: I will lead off, Mr Chairman, although I'm still trying to figure out the impact of the last question because I'm not sure how you publicly tender a rail service if there's only one carrier that has the infrastructure.
In any event, I would suggest to the members opposite that there are quite a number of residents of northern Ontario sitting on this side and we would be happy to talk to them about our concerns as northerners at any point that they would like to have some dialogue with us, because we get very nervous when they start talking about a better way of providing transportation in northern Ontario, particularly when I hear constant reference to rail service and bus service, which are certainly important, but to the exclusion of any discussion about the assurance of air service in northern Ontario.
When I hear the members opposite talk about a better way, it seems to me to suggest that over a period of years there has been a real concern about mismanagement on the part of Ontario Northland in trying to meet the transportation challenges. I'm not sure that the case could be made, and if that's the basis on which the government is taking action or making changes, then I would like to see indications of where they believe the mismanagement has occurred and where more efficient service can be delivered.
I think the bottom line is the one that was made in the earlier presentation, which is that the government, for totally arbitrary, in my view, financial agenda reasons, has changed the bottom line for Ontario Northland. It has nothing to do with service. It has nothing to do with how you continue to provide the service that's needed in the most cost-effective way. If that was what we were discussing here, it would be a very different kind of committee meeting. What we're talking about here is, how does Ontario Northland deal with the cutbacks that the government has made that are arbitrary and that provide no guarantee of continued effective transportation service in northern Ontario?
I can tell you that if there is one subject that gets northerners very upset, it is a challenge to the ability to deliver effective transportation in the north, because we are absolutely and totally dependent on it. That's why I've tabled the question for the committee to have some information about communities in northern Ontario, including some of those more distant northern communities, and the travel times by bus. It would take me two days to get here by bus. It would take Mr Miclash three days to get here by bus. We might be able to do it a little faster by train. Unfortunately, my community doesn't have train service any longer, so I'd have to travel a long way to get a train before I could get on it to get to Toronto.
I remember historical days when, I believe, members from northern Ontario used to get on trains to come down to do their job and they went home at Christmastime. Well, I can tell you, that is not the kind of participation that northerners have come to believe we're entitled to as citizens of this province, and I submit to you that this really should be the agenda that's on the table.
What is the responsibility of government in Ontario to ensure that the people of northern Ontario can fully participate in the business of this province, as well as in its government, and how can the government recognize some of the realities for economic development and growth in our communities so that our communities can continue to be viable? This isn't just strictly a question of whether or not you can get there cheaper by bus. It's a question of how you can provide effective transportation that is the absolute base for the economic viability of our communities and the participation of our residents in this province.
I think it's unfortunate that in the earlier presentation we didn't get time to explore the whole question of the original mandate of Ontario Northland. It was mentioned in the earlier presentation; you mentioned it in your presentation. I don't want to put you on the spot, but I think it's important for somebody to have a chance to talk to this committee about why Ontario Northland was established, what it saw as its mandate, because I don't think it simply was to provide the cheapest form of transportation in northern Ontario.
Mr King: No, it wasn't. As I understand it, Ontario Northland was originally formulated as a development route to open up and promote economic development in northern Ontario, and that's what it has done as it moved through the communities, from North Bay to Temagami, through the lumbering, mining in Cobalt, Timmins. We've always traditionally been a resource-based region and that's what we're dependent on. I think it will be a long time before that ever changes.
We have to have a way of getting our resources to market, and I think we do that very well. I think what we take out of the north in the form of transportation should be put back to it. We have no commitment from the federal government in passenger service, whether it be rail, air or bus. One concern we also have provincially with the bus is we understand that the government is committed to full deregulation in 1998. That's going to put, unfortunately, the passenger in the back seat again and they're going to be forced to stay home, because they won't have services to their communities.
But our initial role was a development role, and we ran numerous passenger services and school cars and whatever through the 1920s and 1930s.
Mrs McLeod: Incidentally, although our population base is very small and our distances great, which is why if you were to look, as one member has suggested, at a per-person subsidy for the transportation, it would look very high. That's the reality of a small population base with a very large distance to transport them.
Mr King: Yes. We don't have the population density.
Mrs McLeod: But the resource contribution, in terms of the financial contribution to the province, by having enough people there to at least manage the resource industry is very significant, I think out of proportion to the size of the population.
Mr King: I think it's important that the committee perhaps look at the revenues that we have turned back to the provincial treasury in the last, say, 60 or 70 years. We've always been a self-sustaining railway, to my knowledge. I think we've done very well, but I think it comes the day when the government has to decide too and say: "Look, we're giving you a mandate, and go and do it. We're here to help you. We're here to help those small communities." And that's what the people of northern Ontario want to hear. They want to come to Toronto. They want to spend their money down here.
A lot of times the people that I deal with on the passenger train are young, single families. They have no way to get their children down the street here to Sick Kids hospital. They come on the train. Some of them do it on the bus. Like Mr Rukavina related to earlier, it's proven by the studies that have been done that in northern Ontario we have bus passengers and rail passengers.
Lots of people that I meet on the train say, "You take my train off, and I'm not going to Toronto any more." A lot of people don't have motor vehicles up there, so I don't see any other way for them to access the services down here.
Mrs McLeod: There are so many dimensions of this. There are a great many senior citizens in northern Ontario --
Mr King: A lot of seniors.
Mrs McLeod: -- who are already beginning to feel very isolated.
Mr King: They're very concerned about where transportation is going in this province. They're very limited to where they can go from their homes.
Mrs McLeod: You touched on one issue -- again I don't want to put you on the spot, but if you care to expand on it -- and that's the role of subsidies in relationship to transportation in northern Ontario. If you wanted to elaborate a little bit more on that.
Mr King: I think in subsidies, and we've seen with the deregulation of the air industry as a whole in Canada, it's a user-pay service. If you can afford to pay $300, $400 or $500 I guess, Mr Wildman, to fly from your community down here, which is atrocious, people don't have that kind of personal resources. I know there are lots of arguments about providing people with a subsidized service, but to me we pay taxes in this province and we are entitled to some form of suitable and accommodated transportation.
Mr Martin: I wanted to follow up actually on the line of questioning that Mr Wood started and that Ms McLeod has continued, and that's the question of how important transportation is to the north. I think that point needs to be made over and over again. If we don't have first-class, high quality, available transportation, we have nothing by way of industrial development, health services, ability to connect with each other and the south.
I mentioned earlier today before you came that for every job in the north, the formula's always sort of been something like five to one in the south. We cut down a tree. We take a ton of ore out of the ground. It comes down here and it produces just a whack of -- actually a very much more lucrative job down here. We in the north shouldn't have to come, cap in hand, to the south to beg for first-class transportation services, to appeal for a slowdown at least in the decisions that are being made by this government re decisions around ONTC, which was put in place way back at the early part of this century in recognition of the fact that transportation was really important. If you look at other countries similar to Canada, Sweden for example, train service, transportation, you can whip from the southern end of Sweden up to the northern end of Sweden in a matter of hours.
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Mr King: That's right.
Mr Wildman: Sweden is about the same size as Ontario.
Mr Martin: Two or three times a day.
The Acting Chair: Please speak into the mike, Mr Martin.
Mr Martin: Two or three times a day, and that country is very competitive. We're always hearing about the new technology, the new ways of doing business and the competitive nature of that jurisdiction. We talked today about the need for Ontario to be competitive, and I don't think there's anybody will disagree with that. The question, though, I guess, is how we get there and who we include in getting there. All of us have a vested interest in making sure that Ontario, and northern Ontario particularly, stays competitive, that we have a future, that we have jobs that pay good wages.
I guess, having said all that, I want to know, because you are probably one of the most directly affected stakeholders in these decisions because your jobs are at stake and many of you have committed most of your lives -- you've worked hard, you've invested time and energy in learning, and you continue to contribute. I think, Brian, you're on the board of directors at the ONTC.
Mr Stevens: Yes.
Mr Martin: A real personal interest and commitment on behalf of your people in this. What consultation was done with you re these decisions? How did you find out about the norOntair decision, for example? How involved have you been in this whole visioning exercise that's going on?
Mr Stevens: On the visioning process, that was a process that started before my appointment to the board and actually, I think, included during -- you know, after I was appointed, that process was well underway. But in terms of consultation, primarily with the norOntair cuts, how I heard about it was I guess the same as everybody else in the province. I was being interviewed. As a matter of fact, I was being interviewed for another story and the reporter had said to me that he had just viewed this electronic press conference held by the minister and he had announced that norOntair was shut down. So I actually heard from a reporter, and I felt some injustice, more so as a resident of Ontario, but as a commission member as well. I thought those were decisions that at least there should be consultation with the commission and the operating department, the administration, and my guess is that didn't happen at any level. It was just the minister made that announcement and that's how it happened.
Mr Martin: It's too bad Bob still isn't here, but I'll talk to him after, or Mr Wood. He had said a couple of times if we make a decision that will provide transportation that's more competitive, if we do that -- and then Ms McLeod referenced the very intense feeling that we all have in the north about our transportation systems and how involved we want to be in decisions that are made. We want to be not only told, but we want to be intricately involved in that.
I know the effort that the norOntair employees made in partnership with some folks from Sault Ste Marie and others to try and salvage that service. Given that we're all interested in stability in that activity, how interested would you, as an employee group, have been -- and how interested will you be, given an opportunity to participate in the future of this very important infrastructure with this government -- if you had been invited in to sit down and talk and work out some other arrangements?
Mr Stevens: I guess the short answer is we would be very interested, but to what our role would be, we would probably want to keep some distance from an employee takeover so to say, but in terms of having input into the process and into some of the decision-making, we think we have a right, as residents of northern Ontario and as employees and as stakeholders in the organization, to be involved in some of the discussions.
Passenger rail service that's provided in our corridor is second to none in Canada, and probably, short of some of the new equipment coming on with Bombardier in the US, second to none in Canada in terms of intercity rail transportation. That equipment was built by the skilled workers who work in the shops of Ontario Northland in North Bay. We converted just shells of single-level GO Transit cars into fully electrified intercity passenger cars -- second to none in Canada, and it's just an absolute shame that the government is considering mothballing that equipment or trying to find another market. I would have thought that perhaps the government would take that as an opportunity to say: "Listen, here's a chance for us. Here's a little niche for us to try to get into manufacturing some intercity rail transportation." Mind you, it would probably not be able to compete on the level of the high-speed that's being shoved around by Bombardier, but none the less, there is a market niche there, I think, for that type of equipment, and they should be exploring that. Rather than retreating from northern Ontario, they should be pouring in.
The government has a role to play, a very important role, and that's from the turn of the century. I would like to just say that, even if there's an employee involvement, the government must continue to be involved in the operations of the ONTC.
The Acting Chair: Thank you very much, gentlemen, for making this presentation. It certainly is appreciated you've taken this interest and time to come here, and it certainly has been helpful, I'm sure, to all members of the committee. So, again, thank you for putting in this kind of extraordinary effort to come down here for this committee. Thanks very much.
The committee will stand adjourned until 2 p.m.
The committee recessed from 1157 to 1403.
CITY OF ELLIOT LAKE
The Acting Chair: Mr Fred Bauthus is the CAO of Elliot Lake, the Miami of the north, I guess they call it. Grey is the official colour of the city? I mean, the senior citizens love going there.
Mr Fred Bauthus: Young retirees.
The Acting Chair: Yes, the older adults. Anyway, we're ready to begin. If you could give your presentation, then there'll be questions that will follow.
Mr Bauthus: Mr Chairman and members of the panel, thank you for this opportunity to present our concerns respecting the operations of ONTC, particularly as they relate to the operation of norOntair. However, I'd like to say before I get into some of the other comments that we are concerned about the way that the announcements and the cut on norOntair have come about. Of course, through Mr Eves's announcement with regard to the cuts, it was announced that there would be cuts to Ontario Northland, and from that point on there was never any dialogue in terms of the actual cessation of norOntair, in communicating to the municipalities that are stakeholders in this, with the rest of the province.
What was particularly disconcerting was the fact that at no time was there any dialogue with the stakeholders, the municipalities, as to any possibilities to look at restructuring operations or services that might address the financial issues of the day. While I appreciate that we can't comment on the operational efficiency of norOntair, we would certainly be in a position to sit down and discuss the levels of service. There may have been other alternatives than just the straight cessation of that air service, and we are concerned about that. It certainly doesn't do anything to enhance the relationship and partnership arrangements between the local governments and the government of the province of Ontario.
Having said that, we also have the concern that when you go back to the rationale in establishing norOntair in the early 1970s, it was to address the economic and social needs and to assist with the diversification and the strengthening of northern Ontario. It was recognized that government assistance for air travel was a necessity, given the immense distances, the isolation and lack of population in the north. Unfortunately, even with the passage of some 25 years, that situation remains in that there are still the immense distances, the low population and the isolated communities. Air transportation is very important, particularly when you take a look at today. Northern Ontario relies on the resource industry, and over the last years the resource industry has taken a terrific beating. So the rationale to say that we were going to be able to provide government assistance with the hope that economic fortunes would change has not come about; in fact, it's gone the other way.
Elliot Lake is a very particular example of that situation. In 1990, the announcement for the closure of the mines came down. Through the past five years, the mines have been decommissioning and we're now at the point where the last operating mine in Elliot Lake will close in June of this year. The impact of that on the community is that our tax base has been decimated by some 40% as a result of the elimination of the mining sector.
However, we're fortunate, with the assistance of the province, to capitalize on our ability to utilize the housing that we have in the community and develop a successful retirement living program. To that end, we have stabilized our population to about 14,500, which is down a couple of thousand from 1988. In fact, if you take a look at our statistics, our occupancy rate is up to about 93.5%, which is a significant improvement over our figures of 1992-93, which were at about the 77% to 79% occupancy rate.
Retirement living is a very important economic thrust for us. While we recognize that it is not going to be the long-term solution to our losses in the mining industry, it is certainly a successful economic bridge to allow us to get on with other things and work with business and the government sector to improve our fortunes in the future. To date we have been successful, as I said, with the assistance of the government.
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However, air service is an important part of our ability to market the community. We are somewhat isolated. We're located halfway between Sudbury and Sault Ste Marie, some 18 miles north of the Trans-Canada Highway. So in relation to any other services, we have neither direct bus nor rail nor a direct highway link. So air service, and the perception of air service, to the community is very important and certainly adds to our ability to market the community.
Looking at Elliot Lake alone, our volume of some 3,300 passengers in 1995, most of whom were business passengers, indicates that there is a definite reliance on air traffic in Elliot Lake. The figure related to the business volume comes from the information we received in terms of the Sypher report. So it's very important that we do have scheduled air service.
But that's not the only service that the Elliot Lake airport provides. We provide, through the operation of the airport, significant services for the health sector. Last year there were over 300 transports by medevac, and those numbers are increasing on a regular basis, particularly if you take a look at the fact that we are becoming a retirement community and our demographics are aging. There is more reliance on air transport than in the past. Also, there are over 500 courier landings in Elliot Lake to provide an efficient and timely connection for those businesses and banks to transport information and data and to ensure a timely link with the larger financial and other institutions in Toronto and Sudbury. So the airport is an integral part of our operations.
If we were in a situation where we did not have a scheduled flight coming into Elliot Lake -- and if I might just make the comment, the same would be true for a lot of the other communities that are serviced by norOntair -- there would be little rationale to support a budget item, in Elliot Lake's situation, of some $175,000 for the medevac and the courier services. It would just be beyond our means.
According to the Sypher report, they indicated in that report that there would be four municipalities that would probably lose service. Elliot Lake, in my view, looking at the report, would be marginally viable provided we put on a smaller plane. However, as of this time we have not had any real expressions of interest in taking over those routes. There have been some overtures; however, the discussions have always led to the question, are there any subsidies or guarantees on seats to come into Elliot Lake? So Elliot Lake is one of those communities where it's going to be extremely difficult to have a replacement service.
There is also the concern -- and I think this has to do with the way the announcement and the timing of the announcement came about -- that we've had less than three months to address this issue. For us to get out and negotiate and determine what alternatives are there is very difficult for us to do, particularly --
Mr Wildman: How did you hear about the announcement?
Mr Bauthus: The original announcement came through as a fax to the employees from ONTC.
Mr Wildman: You didn't get any consultation?
The Acting Chair: Can you just let the speaker complete his presentation and you can ask questions when it's your turn.
Mr Bauthus: Our concern in terms of this is that three months certainly isn't adequate time for a municipality to respond to a major shift like this, particularly as we did not have all the information. Up until now there were significant subsidies in assisting with air travel in the north. We have been attempting to meet with the minister. In fact, we have a meeting with the minister tomorrow to discuss the same issue.
As I was saying, it was very difficult for us to sit down and discuss anything with any potential carriers in that we weren't sure what our position was in the sense that the majority of the municipalities, Elliot Lake included, are already carrying a heavy load in their budget to have the airport there. We fund it totally exclusive of user fees and the MTO subsidy, which after next year will be eliminated. We've had nothing really to go out and say, "We're looking for a carrier," because we didn't know exactly what our financial position was vis-à-vis the province.
That is a very brief outline of the concerns of the city of Elliot Lake. As I indicated, there are other municipalities that are also serviced by norOntair, and in that respect Elliot Lake took the lead and prepared a brief to the minister on December 22, addressing our concerns on a cooperative basis. You have a copy of that brief that was presented to the minister. In that we outline the areas that are going to impact all the municipalities, some to a differing degree, but health service is a major issue, business is a major issue, efficient operations in many respects, and having the airport and dealing with MNR, especially during the forest fire season; having these airports available in the potential trouble areas certainly has a benefit.
This certainly supports the need that the province should reconsider its position in providing assistance for air transportation in northern Ontario, which leads me to the brief that is under the heading Air Service in Elliot Lake, prepared by the economic development officer in Elliot Lake. That, as much as anything, rather than getting into all the specifics which are there for you, provides some recommendation.
Elliot Lake certainly has learned, and I think we've shown quite successfully that we're quite prepared, to deal with our issues and try to put forth business plans that are workable in the long term; however, we're going back and saying to the government, "We can't do it ourselves." We're not asking for the government to come in and just provide a handout. We're trying to say we want to go into this on a partnership basis and look at viable ways to make air service in northern Ontario work.
In the past, with norOntair there, there were some assumptions, "Well, we don't have to do anything," and it continued and now we're at a point where we have to look at other ways and means of supporting air transportation in northern Ontario. We're looking at saying, I think the key is, it's impossible for the municipalities to respond in this short time frame. We know the norOntair situation at this point is a fact and it's even moving further down the road, given that the tenders are opening on the 23rd for the sale of the assets. However, we're saying to the government of Ontario that we just don't have time to do this and to restructure it, and the impact of shutting down the air service even for a short period of time is going to be extremely difficult to resurrect if that is the case. The province must consider some other means, but in a structured way.
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We're putting forth for the city of Elliot Lake. We're looking at some opportunities, we're negotiating some opportunities, but we're going to need some assistance. Even if we were to sit down with the individual municipalities affected by the closure of norOntair and strike some individual arrangements that would work in their particular instances, even looking at decreasing subsidies, suggesting, "You're going to have to do something, you know the subsidies are going and you're going to have to work to that end," but three months is just not appropriate and proper consideration.
I've provided you with just the outline of my presentation, and also with a copy of our position paper that's certainly open for discussion, a copy of the brief and then also some letters of concern from a number of different individuals who feel air service in northern Ontario is important. We have letter in support from Brent St Denis, member of Parliament for Algoma, from Mr Wallace Kenny, the president of the Ontario chamber, and other local businesses and other concerns. I respectfully ask that you look at this. If there are any questions outside of today, I'd certainly be prepared to assist in any way we can.
Mr Preston: It's my information that Bearskin Airlines is going to fly into Elliot Lake with no interruption and no subsidy. How do you feel about that?
Mr Bauthus: How do I feel about that? It would be great if they're going to come in and continue the service. To date, there has been no dialogue with them. They have not approached us. As Elliot Lake is a municipally run airport, there are a number of things to negotiate: schedules, landing fees, agency fees and so forth.
There has been no dialogue from them. I have not precipitated any discussion with them, as I said, until I know exactly what we're prepared to offer. We certainly cannot afford to subsidize their operations in terms of waiving landing fees and agency fees if we have to provide staffing out there. As I said, the operation of the airport is costing us today, to meet the requirements, some $175,000 a year.
Elliot Lake has just gone through a situation where we've addressed a 40% reduction in our tax base and, as you're aware, a significant reduction in transfer payments from the province. We've been able to successfully deal with that to date, but it would be extremely difficult for us to address that issue.
Mr Preston: You're saying the municipality is suffering really from a lack of funds right now for various reasons.
Mr Bauthus: I don't know we're suffering any sense any more than others, but we're at the end. We've restructured and adjusted our services to the best of our ability. We have to recognize who our ratepayers are and their ability to pay. Given we're a retirement community, the majority of them are on fixed incomes and so forth. We have a number of constraints that we're working with.
Mr Preston: You're in the same position the whole government's in. The whole provincial government is doing exactly the same thing.
Mr Michael Brown: We want to thank you very much for coming down today. One of the things I don't think the government really understands, and I think you say quite clearly, is that this announcement came without any kind of consultation. It didn't really come with any kind of consultation, we found out this morning, with Ontario Northland. It was announced and that's the way it was going to be and they scrambled to reconcile that.
The community itself had no prior indication until November 29, and probably after that because the ministry did everything it could to fudge this whole announcement for a week or two, to actually sit down with the ministry, and I'm talking about the ministry, not Ontario Northland, to sort out how air service can come to an important northern community like Elliot Lake. There were virtually no discussions, or maybe "virtually" is even too strong; there were no discussions.
Mr Bauthus: In all fairness, I talked to the president, Mr Wallace, earlier in December and he indicated that, yes, the decision was made for a number of reasons, that norOntair would be closing.
Mr Michael Brown: But that was after the fact.
Mr Bauthus: Yes. The discussion was in December as part of the review and preparation of the brief we prepared for the minister on December 22.
Mr Michael Brown: Has anybody from the ministry offered any kind of guarantee that air service would continue in Elliot Lake?
Mr Bauthus: The only thing I can say to that is the media announcement that the minister indicated there would be air service in northern Ontario. There hadn't been any specific discussions with anybody in the ministry to guarantee that. I've talked to the minister's office and they've indicated that Bearskin is prepared to come in.
Mr Michael Brown: But Bearskin hasn't talked to you?
Mr Bauthus: Bearskin hasn't talked to us.
Mr Michael Brown: This is really quite interesting.
I don't think maybe members here understand Elliot Lake and I would like to ask them to come and visit us in Elliot Lake some time, but this is a community that has gone through a remarkable transition in the last five years and is continuing in that transition. What that's meant is that the industrial sector or the mining sector, which were large users of air service in the past, are essentially gone come June this coming year.
Mr Bauthus: Totally gone.
Mr Michael Brown: Totally gone. It's out of there. Rio Algom's closing. But they were a significant user of air service. Now it's probably even a more critical need that we have attracted literally thousands of seniors and other folks to Elliot Lake to live in affordable, good accommodation at reasonable prices. The problem with that is they need the air service, but often they don't have the kind of financial resources that the president of Rio Algom had. Even though they might use it less often, the need is maybe greater for --
The Acting Chair: Sorry to interrupt but time is up.
Mr Michael Brown: Thank you, Mr Chair. You're always most generous.
Mr Martin: I would as well like to thank you for coming, Mr Bauthus, today and painting for us a picture that certainly those of us who come from the north understand, and hopefully those who don't are beginning to understand, how important transportation is to northern Ontario and how important in this day and age air service is, particularly to a community, as you've shared with me before, that has no bus service in and out, that has no train, that has no boat.
The only really scheduled passenger transportation service in and out of Elliot Lake is the airplane and for you to have a future, it seems to me you need to have an airport that's functional and there for all the various uses that you've outlined in your brief and that you have air service that's dependable and that you can count on.
It paints a picture of a community that has some stability as you go through the transition that you are from a mining town to a retirement living town and the other things you will develop over the years.
The one thing you want the outside world to think about Elliot Lake, I'm sure, is that it's a stable community that has all the amenities of modern-day life and if you want to get in and out in a hurry for whatever reason, you can. Certainly, I think even the folks across the table would agree that's probably something we should all be striving for for your community as we look at the future and economic development etc.
There was some reference made this morning to the fact that 14 of the 17 communities have been approached now by private air services that are interested. Can you tell us how many companies have approached you and what the conversation has been to date and how you feel about that. Does it give you any sense of comfort or assurance?
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Mr Bauthus: We've had one company approach us directly. We've talked with them, and I understand they've also talked with ONTC, with regard to our loads and so forth. The comment that came back was that they were wondering to what extent we'd be prepared to guarantee seats on the plane. I left our discussion with them and I said that after we talked with the minister and we understood where we were in terms of any potential assistance or what we could do if we were with our backs to the wall and that, we'd come back to them. There is another interest that just started last week with regard to some operations respecting the airport itself, not the carrier or the transportation.
Mr Martin: In other words --
The Acting Chair: Sorry to interrupt, but time is up.
Mr Miclash: On a point of clarification, Mr Chair: We've had a government member state that Bearskin Airlines is going into Elliot Lake, but yet we have the chief executive officer of this community, with us here, who says he's heard nothing about these arrangements. Did I understand that clearly?
Mr Bauthus: I have not talked directly with them. In fact, I shared a limousine with the president of the company a couple of weeks ago in Timmins, and there was nothing raised there.
Mr Miclash: Maybe we can have the government member explain where he got that information.
The Acting Chair: I think that's basically a question that is noted on the record, but it's not appropriate, I think, for this morning's presenter to answer that.
Mr Miclash: I just want to get some clarification on that, Chair.
The Acting Chair: If they wish to clarify, they can a little later.
Mr Preston: The information was given out this morning.
Mr Michael Brown: From a press release?
Mr Preston: That gentleman over there.
Mr Wildman: Rukavina didn't say that. He said that there were some discussions. That's all he said.
The Acting Chair: Anyway, thank you very much for coming down from Elliot Lake. The committee appreciates it.
Mr Bauthus: Thank you. If there's any other information --
The Acting Chair: We have copies of your brief. Thank you.
TOWNSHIP OF MICHIPICOTEN
The Acting Chair: The next presenter is Reeve Doug Woods. Welcome, Mr Woods, and please make your presentation.
Mr Doug Woods: Good afternoon, ladies and gentlemen. My name is Doug Woods, and I'm the reeve from the township of Michipicoten at Wawa, Ontario, which is located 240 kilometres north of Sault Ste Marie on the Trans-Canada Highway, Highway 17. Thank you for giving me this opportunity to appear in front of you this afternoon to make a presentation on the subject of transportation as it relates to my area of northern Ontario.
The recent announcement by the Ontario Northland Transportation Commission and the government about the regularly scheduled norOntair service, which services both large and small centres in northern Ontario, was received with a certain amount of concern by the members of council and those who live in the municipality. This comes on the heels of other announcements relative to public transportation in northern Ontario. The most recent announcement also came from the Ontario Northland Transportation Commission, in June 1995, advising us that the Ontario Northland bus service, which connects Timmins, Chapleau, Wawa and Sault Ste Marie, would be discontinued due to low ridership.
Council responded to this announcement with a resolution of concern, and I believe the Premier, the Minister of Northern Development and Mines, our MPP, Mr Wildman, and officials at Ontario Northland were all forwarded copies at the time. We understand the position taken by the ONTC in discontinuing this regularly scheduled bus service between these communities due to lack of ridership and appreciate that with cost-effectiveness uppermost in your minds, unprofitable services such as this should be reviewed and discontinued if a need is not proven. Over the years, we have also been advised of the reductions and changes in services and schedules to our communities by Greyhound Bus Lines and we have taken a most understanding approach towards these announcements, appreciating that the service cannot be continued without subsidy.
In the 1970s, when Ontario Northland introduced the regularly scheduled norOntair airline service to our communities, we were particularly pleased to embrace this new method of passenger travel for smaller, more remote northern communities, or as a method of connecting us to the larger northern Ontario cities and to southern Ontario by other commuter airline service. We have enjoyed this additional method of travel throughout our province for the past 25 years now. We have come to rely on this service as an additional method of travel available to us, not only for its passenger potential but for the potential to move freight in and out of our community to accommodate the ever-diversifying business sector, particularly in the mining and exploration industry, which, although having proven to be volatile in the past, is nevertheless an important part of our ongoing economy.
We now come to the most recent announcement made by the provincial government and ONTC: that the norOntair service we have enjoyed for the past 25 years will be discontinued on March 30 because of the lack of subsidy dollars being made available to the ONTC by the province of Ontario.
Our council took the time to digest this announcement and felt it would be in our best interests to find out precisely how this announcement would impact on the economy of our community and our region, if at all. Council authorized the commissioning of an economic impact analysis of the withdrawal of the norOntair service from the Wawa Municipal Airport. This study was done by a well-recognized aircraft consulting group called AvGroup Corp.
I believe it is fair to say that the members of council understood completely the rationale behind the government's recent announcement. The subsidized passenger airline service through ONTC has been in place for some 25 years. The service has been utilized, however extensively, by the 12 or so communities which the airline company has serviced, and the Ontario government now felt it was time to withdraw the subsidization available and allow the private sector to pick up any potential business they felt they could realize a profit from. This rationale has all been appreciated and accepted by the members of council, and indeed our community.
However, the results of our economic impact analysis have shown very clearly that the withdrawal of such a regularly scheduled airline service would have a tremendous negative impact on our community. I have brought with me a copy of this report and I would be pleased to leave it with the Chair of the committee so that you may peruse the information at your leisure. I have also forwarded copies of the document to the Minister of Northern Development and Mines, the Minister of Transportation and other government personnel who have requested this information from us.
The real purpose behind my presentation to you this afternoon is to make you aware of, and hopefully help you understand, the differences in travelling in southern Ontario, say, below the Parry Sound-Muskoka line, when compared to requirements which residents of northern Ontario face in order to enjoy the same mobility as you have been accustomed to in the south.
How many of you would travel from Toronto to Kingston, or from Toronto to London, or from Toronto to Sudbury, to attend a doctor's appointment, enjoy a day of shopping or seek specialized services? The residents of Wawa make these trips on a routine and regular basis, travelling approximately 240 kilometres one way, from Wawa to Sault Ste Marie, for these and a host of other reasons. This is a two-and-one-half-hour car trip one way, and then after our business has been completed we turn around and drive home for another two and one half to three hours.
The provincial highway system is a blessing to us and is used routinely and regularly by our residents and by those bringing goods and services into our community. We find our highway system to be acceptable but feel that there is always room for improvement with respect to the provision of better road service.
As you may know, most large cities in Ontario, including northern Ontario, which have an airport adjacent to their community are aware that these airports are all maintained and operated by a senior level of government. We are all aware that the federal government has taken the approach recently that it would like to get out of the airport business. These cities which obviously will become affected by the announcement are presently considering the option of becoming airport operators so that the service can continue to be made available to their residents, businesses and industries which presently support the services or whether to walk away from the issue. These federal facilities -- and I speak of the ones located in North Bay, Sudbury, Sault Ste Marie, Thunder Bay and some others -- are not supported by the municipal property taxpayer, to the best of my knowledge, in raising funds to pay for the capital, maintenance and operating the facility. It is an essential service provided by a senior level of government and taken advantage of by the local residents as well as the business and industry located in the city or the immediate vicinity.
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Conversely, all small northern Ontario communities that are fortunate enough to have an airport within their municipal jurisdiction find that the majority of the costs of operating and maintenance of that airport vest with the local property taxpayers through their municipal councils. Our council has, since the opening of the Wawa Municipal Airport, paid most of the costs of operating and maintaining the facility. The employees working at the Wawa Municipal Airport are municipal employees. So you can see the first difference between a large city airport and small, local facility: One is supported by the federal government; the other, in the main, by the local taxpayer.
The second difference I would like to draw to your attention is the matter of provincial subsidies to airports in Ontario. I understand that the large airports I have mentioned are financed by the federal government and various airlines that use the services available at these facilities. I am not aware of any provincial government subsidies being applied to these airports and I would not expect the province to subsidize or support in any meaningful way a federal facility. However, on the other hand, the Ministry of Transportation has for years subsidized the operation and maintenance of smaller municipal airports and greatly assisted in the capital development of them as well. The recent announcement that airport subsidies will be reduced by 50% in 1996-97 and by a further 50%, to a zero subsidy, in 1997-98 leaves the entire cost of operating the smaller airports with the municipality. I am sure that you will see that the difference becomes obvious: The smaller airports will now be completely funded by the local taxpayer and the larger, more attractive airports will be funded from other sources, most likely not by municipalities.
Now we are faced with the announcement that the only regularly scheduled airline service into our community will cease operations on March 30. I am sure you will appreciate the decision that I myself and council are faced with almost immediately should no private airline service come forward to advance a passenger schedule available to our residents.
Allow me to recap:
We now pay most of the costs of operating and maintaining our airport, with some MTO subsidy. In our case, the subsidy has been $39,000 from a total expense of $222,000. Recognizing that we have other sources of revenue generated by our airport, the taxpayers I represent in Wawa must pay $72,000 a year in order to make this service available.
The MTO subsidy of $39,000 in 1995 will be reduced to $19,600 in 1996, with the difference being picked up through other innovative revenue-generating sources and those taxpayers whom I represent.
The only regularly scheduled airline service is due to cease operations March 30. We now lose rent within our airport terminal building from norOntair agent space as well as other revenues, such as fuel sales, that we might have enjoyed from this service.
Obviously, the challenge to my council is, do we continue to operate the Wawa Municipal Airport with no MTO subsidy and no regular passenger airline service?
Our airport is also utilized by the medical practitioners in northern Ontario and becomes a most vital service for those patients who cannot be appropriately treated in small northern Ontario hospitals. Medical cases judged by the attending physician to be beyond the capability or expertise of the local hospital to meet the requirements of the patient are flown to larger hospitals which are staffed by specialists and other experts who provide service not available to us in small, rural communities throughout northern Ontario.
Medical emergencies are another frequent user of our air ambulance service. I am sure that you're aware of the long, isolated stretches of Trans-Canada Highway and other less travelled secondary routes which have experienced vehicle accidents on a more regular basis recently than we have seen in our past history. This past year or so has been particularly bad for a large number of highway collisions along Highway 17, which is serviced by our local hospital-ambulance service.
One would think that with the cutbacks the Ministry of Health is also imposing on small hospital outlets throughout Ontario and the potential for the reduction of medical services in many of their isolated locations, such as Wawa, rather than to continue to fund them, funds would be better spent supporting a well-maintained local airport which can accommodate medical emergencies and other air ambulance service so that prompt, first-class medical attention is within reach of those who may need these services. Our sick and infirm, accident victims, demand no less attention because they may require this medical attention from a northern Ontario location, rather than from a more populated, available and appropriately staffed medical facility in southern Ontario.
While I'm on the subject of subsidies, I would like to draw to your attention the fact that in recent municipal budget discussions, it has been brought to our attention that our municipality pays more to support provincial government-mandated services, such as social services, homes for the aged, children's aid society and the regional health unit, than our present level of unconditional and specific transfer payments from the province bring into the community. On close examination, we have determined that if the province relieved us of our obligation to support these provincially mandated organizations and kept the conditional and unconditional transfer grants which we presently receive, including the MTO airport subsidy, we would be further ahead financially to pay our own way on a cost and carry basis.
I find this factor very interesting when I speak to upper level government representatives who are attempting to ensure that standards of services are provided for all residents in Ontario yet do not support these provincial initiatives with the necessary funds to ensure that all of us pay equitably for the services provided.
I feel it incumbent upon me also to advise you that the Minister of Natural Resources uses many of our small northern Ontario airports as convenient locations to land forest firefighting aircraft, pick up aircraft fuel etc so as to maintain any efficient forest firefighting aircraft service from airports which are much closer to the scene of action than are larger, more metropolitan airports. The availability of these smaller, properly maintained runways has proven to be of great assistance, and our most recent example of this during the 1995 Dubreuilville fire has proven beyond a reasonable doubt that there is definite need to maintain small northern Ontario airstrips for a variety of reasons.
Can we afford to maintain this vital component of municipal infrastructure? Can we afford not to maintain this vital component of municipal infrastructure? The government's decision to withdraw regular scheduled airline service has not made our decision any easier.
Ladies and gentlemen, distance in northern Ontario is against us. We are accustomed to travelling many hours and long distances from one community to another, for whatever reason. As I set out to you previously, would you travel from Toronto to London or Kingston to take advantage of the same services which I must travel from Wawa to Sault Ste Marie to enjoy? This factor, I believe, must be realized by our provincial lawmakers and the issue must be treated with a great deal of sensitivity and regard. There is a difference in distance when you live in northern Ontario as compared to living in southern Ontario.
Population is also against us. It is very easy to justify a service being provided to the population when the numbers warrant that service and profits are easily realized. For the same service, let's say medical service, for instance, to be enjoyed by all residents of the province of Ontario would indicate that certain allowances are required for those of us who are located in more remote sites, away from the so-called Golden Horseshoe of Lake Ontario, in order for us to enjoy the same service as is being made available to the larger population base found in this vicinity.
We all understand that a portion of our provincial taxes subsidizes the Toronto Transit Commission and indeed any other public transportation commission in this province. We do not take advantage of these public transportation systems because they do not apply to us. We do not complain about the subsidies being provided to public transit systems which are primarily located in larger systems in southern Ontario.
We are concerned, however, when the subsidy to provide some fairness in potential services is removed from northern Ontario for cost-cutting reasons. This makes us feel very uncomfortable and not wishing to be placed in the position of becoming second-class citizens in our own province. I would implore you to look very closely at these standard levels of transit service to us so as to ensure that those of us living in more remote northern communities of this province are not arbitrarily denied access to the service because of our meagre population base.
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In summation then, I would ask you to consider very carefully continuing some sort of support, in subsidized dollars or otherwise, to ensure that all residents of Ontario, particularly those residents living in northern Ontario, continue to enjoy transportation systems and services which allow us to continue to be linked with southern Ontario so that we may enjoy access to large hospitals, medical specialist services, a wide variety of shopping and a host of other business, professional, leisure and social experiences which are not available to us living in northern Ontario.
I thank you for your time and attention.
Mr Michael Brown: Thank you for I think just an absolutely complete presentation. How would your council feel if the Ministry of Northern Development was to guarantee an air service to your community and that it would be up and running by April 1?
Mr Doug Woods: I think they would be very happy about that.
Mr Michael Brown: Have there been any discussions with the ministry that would guarantee -- and I stress "guarantee" -- an air service to your community?
Mr Doug Woods: Not to this date, no.
Mr Michael Brown: You will be attending the meeting tomorrow in Sudbury?
Mr Doug Woods: That's correct, yes.
Mr Michael Brown: Is that your first contact with the minister regarding this particular issue?
Mr Doug Woods: Formal, yes.
Mr Michael Brown: We all recognize we're in a world where things are changing and we have to deal with issues in a different way and we have to find new and better and fine ways of doing it. But I'm not sure you can do that in three months. That's what we heard from Elliot Lake and that's what I've heard from Gore Bay. It's what I've heard from all the municipalities that I've been in contact with over this issue.
I've driven the highway up to Wawa a number of times and been to your fine town, and I just wonder, you were closed for the winter. I mean, it's not something that's unusual in Wawa. You're in one of the parts of the world that you get a lot of snow. There are obviously medical emergencies during that where you can't use the highway system.
Mr Doug Woods: I think the highways between Wawa and the Sault have been closed between 12 and 15 times this year, and in those cases it's not always been storms in the Sault and in Wawa. Planes could land in both places.
Mr Michael Brown: It's in between.
Mr Doug Woods: It was in between.
Mr Michael Brown: Yes. It's a beautiful stretch of highway, and I would encourage all members to drive it, but there are times of the year when I wouldn't want to particularly be there.
On the municipal airport itself, how much in subsidies will you be losing when you lose not just the direct subsidy, which we know is going over the next two years, but the landing fees that you're now receiving from norOntair and whatever other fees you might receive?
Mr Doug Woods: Our landing fees from norOntair are not a great deal of money. In fact, in my opinion, we've been subsidizing the ONTC for the last 25 years, because we've never raised their rent or their fees for landing there -- until this year. We did this year when we heard they were pulling out. We figured we'd get what we could.
Mr Michael Brown: I like the way you think.
The other issue I guess we didn't really address is the tourism side of this from a standpoint of I know Wawa is a major tourist attraction. A large number of people arrive from all parts of North America, by small plane anyway, in Wawa, during the summer months in particular. Has there been a kind of economic impact of what it might mean to lose that kind of fly-in tourism we're used to in our part of the world?
Mr Doug Woods: I think the best way I can answer that question is just to tell you that we consider the airport an essential service. We are not intending to close it, no matter if the regular schedule airlines pull out or not. We need it both for, as you said, tourism, we need it for industry development. The mining industry is on the upcline, especially gold. Also, and probably most important, we need it for the air ambulance service.
Mr Michael Brown: It's critical for the air ambulance service.
Mr Doug Woods: Definitely.
Mr Wildman: Doug, I really appreciate you coming and making the presentation. I agree with my colleague from Algoma-Manitoulin: The drive from Wawa to the Sault is probably the most beautiful in Canada east of the Rockies, along Lake Superior, but because of that, when the lake is not frozen over, when the bays aren't frozen, you get an awful lot of snow in the Montreal River and Matachewan areas, and that closes the road a lot.
I notice from the attachment you tabled with the committee the consultant estimates that the economic benefits to the township of Michipicoten for having air service are about $600,000 annually.
Mr Doug Woods: That's correct. That's what we would lose.
Mr Wildman: So you're looking at that kind of loss to your economic activity in the community if the air service discontinues.
Mr Doug Woods: Yes.
Mr Wildman: Also, the Wawa airport doesn't only serve Wawa, obviously; it serves the whole region. So you're serving your community, but in a sense you're also of central importance to places like Dubreuilville, White River and the areas east towards Chapleau as well.
Mr Doug Woods: That's correct, yes.
Mr Wildman: And you have now the development of a new major plant just east of Wawa. Have they indicated to you, the Jagar plant, what impacts it would have on their business if they can't have access to air travel?
Mr Doug Woods: No, but they are probably one of the prime users at the present time of the airport.
Mr Wildman: Okay. You also mentioned and my colleague asked you about the air ambulance service. I would like to go on from that. Just as most northern small communities, and also small communities in southern Ontario, the township of Michipicoten has had some difficulty attracting physicians over the last number of years from time to time. Is that not correct?
Mr Doug Woods: That's to say the least, yes.
Mr Wildman: If you can't attract them now, what is your anticipation of that situation if there were a circumstance where the airport no longer continued to operate and so you wouldn't have access to fixed-wing air ambulance service?
Mr Doug Woods: I really don't know what the effect to the community would be. As you're well aware, Bud, the doctors we do have now are very dedicated to it, partly because they do have an avenue of access. They are overworked because they are understaffed and they do use the facility to get away even for a day or so.
Mr Wildman: So you have the two aspects. You have the aspect that in order for a doctor to get respite, he and his family can go for a weekend to the Sault or to Toronto or whatever, but there's also the question if they don't have the assurance that in an emergency they can call in a fixed-wing air ambulance to evacuate one of their patients to a larger centre, be it Sault Ste Marie or Sudbury or Toronto, you don't know whether that would affect their willingness to continue to practice in the north.
Mr Doug Woods: We'd probably lose more doctors.
Mr Wildman: That's a serious concern. Also, last summer we had a circumstance where the Ministry of Natural Resources carried on a major forest fire emergency response in the area of Dubreuilville, just northeast of Wawa. Was the airport in Wawa significant in that operation?
Mr Doug Woods: They used the airport for all their water bombers, for flying in supplies. Actually, the whole facility basically was taken over by the MNR for the week to 10 days it went on.
Mr Wildman: So you're --
The Acting Chair: Thank you. Time is up.
Mr Wildman: The point, Mr Chair, is that council now is faced with the question whether or not they continue to operate this airport without the revenues --
Mr Preston: Is that coming out of my time?
Mr Wildman: The air service is coming out of northern Ontario, and you guys don't seem to see it as important.
The Acting Chair: Okay. Mr Preston?
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Mr Preston: Are you going to start the button now? All right. Thank you very much for coming here today, sir. My information is that Bearskin Airlines will be coming in to our airport without interruption without subsidy. Could I have your comments on that, please?
Mr Doug Woods: We would welcome it.
Mr Martin: Without subsidy?
Mr Doug Woods: We need an air service, so, yes, we would welcome it even without subsidy.
Mr Preston: What type of emergency evacuation plane do you locally use now, fixed-wing or helicopter?
Mr Doug Woods: Both.
Mr Preston: So the fixed-wing situation -- although the airport at this point is not going to be lost, the helicopter is available in your area?
Mr Doug Woods: Yes.
Mr O'Toole: Just a quick question. Thank you very much for your informative presentation. We all have a copy. Mr Brown mentioned tourism. Do you see this as a significant deterioration of tourism with the removal of this air service by the province?
Mr Doug Woods: With the discontinuation of an airport, it would be a drastic effect.
Mr O'Toole: That's not my question; the air service. You said you're going keep the airport.
Mr Doug Woods: No, I don't.
Mr O'Toole: Do you know why? Because most of them are chartered privately. Right?
Mr Doug Woods: That's correct.
Mr O'Toole: And someone who lives in the south shouldn't know that, should they? Someone in the north should know that.
Mr Wildman: None of us raised tourism.
Mr O'Toole: I was just trying to clarify it, because I wasn't sure what was the question.
Mr Wildman: We didn't raise tourism on this. We've raised air ambulance and --
Mr O'Toole: No, you didn't.
Mr Bob Wood: I gather from your presentation that your concern is that service be maintained. Your concern is not how it's done, but whether or not you get the service.
Mr Doug Woods: That's correct, yes.
Mr Bob Wood: You do not have a problem if we replace an outdated system with a new system of providing the service.
Mr Doug Woods: None whatsoever. No problem with it whatsoever.
Mr Bob Wood: Okay. Thank you. Those are my questions. We'll reserve any time we have -- I guess we won't, because that's the end of the witness.
The Acting Chair: Mr Preston, you've got about two minutes here.
Mr Preston: No, thank you very much.
The Acting Chair: We want to thank you on behalf of the committee for coming all this way. I think it's helped. The two briefs are excellent, and I think they are going to be very beneficial too. So thank you for making the long trek down here.
CANADIAN RED CROSS SOCIETY, SUDBURY
The Acting Chair: The next presenter is Maryanne Rivet, the assistant lab manager from the Red Cross in Sudbury.
Ms Maryanne Rivet: There are four communities that we service that utilize norOntair for the transportation of blood products. Moose Factory and Hornepayne use norOntair exclusively for all blood product delivery requirements. Timmins and Kapuskasing use norOntair in emergency situations, using other methods of transportation for routine blood product requirements.
Moose Factory is serviced by the following: NorOntair provides two departure times, with 2.5 and 15 hours for delivery. A ground courier provides one departure time, with 24 hours for delivery. Moose Factory has no bus service.
Hornepayne is serviced by the following: NorOntair provides two departure times, with four and 18 hours for delivery. A ground courier provides one departure time, with 19.5 hours for delivery. A bus provides one departure time, with 25.5 hours for delivery.
Timmins is serviced by the following: NorOntair provides two departure times, with 45 minutes for delivery; ground courier, one departure time, 14 hours. A bus provides one departure, 4.5 hours.
Kapuskasing is serviced by the following: NorOntair provides two departure times, with 1.5 hours for delivery. A ground courier provides one departure time, with 16.5 hours. A bus provides three departures, with 25, 14.5 and 11 hours for delivery.
It should be noted that at this time refrigerated blood products must reach their destination within 24 hours from the time of packaging at the blood centres.
As indicated by the above, air transportation is the most expedient method for blood delivery to these communities.
I've also included two charts, and the charts basically outline the transportation schedules themselves. The second chart is an outline of the usage of either air or ground from November to date: the number of times they were used, the number of blood products that were transported.
The Acting Chair: That is the extent of your presentation. Now we'll have time for questions. You can have about seven minutes each, starting with the third party.
Mr Gilles Bisson (Cochrane South): In fairness, I just walked into the room and to try to ask a question on it --
The Acting Chair: Perhaps we'll give you time to go over the presentation. We'll start with the government side with questions on the Red Cross.
Mr O'Toole: Thank you for your presentation and for taking the time to come down. It's a component of the service that I hadn't really thought about. So it's very important.
Is there a great deal of frequency of this kind of service; meaning, are there other testing facilities for primary kinds of blood work in the area?
Ms Rivet: No. Sudbury services all of northeastern Ontario.
Mr O'Toole: It's all out of Sudbury.
Ms Rivet: The closest centre other than us is Toronto, but Toronto does not supply our area.
Mr O'Toole: So it's done kind out of Sudbury then for everything.
Ms Rivet: Yes.
Mr O'Toole: Are there technology changes? You're a technologist, I guess, a lab person there.
Ms Rivet: Yes, I am.
Mr O'Toole: Are there technology changes? I'm not trying to get off the subject here, but are there other alternatives today for doing that kind of thing, interactive computer things and --
Ms Rivet: For blood transfusions?
Mr O'Toole: Not transfusions, no. Not hard blood; I don't mean that. Testing.
Ms Rivet: Alternatives for what?
Mr O'Toole: The testing; the technology for the testing that may be done with blood or blood tests. Not to your knowledge, eh?
Ms Rivet: I'm not sure I understand the question.
Mr O'Toole: If you're testing blood for other than transfusion purposes, for disease or infection, are there other technologies available today, other than the pure hard sample going to Sudbury?
Ms Rivet: We collect the blood in the Sudbury area, we test it in the Sudbury area, and with that, we also service all of the area hospitals. The testing that we do is strictly testing required for transfusion purposes. That's the only kind of testing we do.
Mr O'Toole: Good. The last question I have is, could you use Bearskin or one of the other companies as part of their commercial --
Ms Rivet: Time is probably our most critical concern.
Mr O'Toole: Yes, the 24 hours.
Ms Rivet: We only have 24 hours, as shown below or in an emergency. If you look at my chart on the other side, it does get used routinely for emergencies. For example, in Timmins, I've listed here only situations of emergencies. They don't use it at any other time, and there were four in November, two in December, one in January and one in February.
Mr O'Toole: Yes, I understand. Very good.
Mrs Ross: Thank you very much for your presentation. I just have one simple question, basically: I understand the need for quick delivery to get the blood from wherever it is to Sudbury, and my question is, if that service could be supplied with another carrier, would it matter?
Ms Rivet: No.
Mrs Ross: That's my only question.
Mr Gravelle: Good afternoon, and thank you very much for coming down here. I think the important point you can't make strongly enough is that it truly is a matter of life and death frequently, a situation in terms of blood and blood transfers. In other words, the timing is everything.
Ms Rivet: Yes.
Mr Gravelle: I think we need to reinforce that. I think one of the objectives we have today, obviously, in terms of studying the whole review of the process is to let people understand what exactly the needs are in the north, one of them being this one. I think probably the government members -- even one or two have mentioned they weren't aware that this was part of the service that was provided.
Have there been any discussions that the Red Cross has been involved with that you know about in terms of an alternative, in terms of the fact that norOntair is scheduled to cease as of March 29? Have there been any discussions that you're aware of?
Ms Rivet: No.
Mr Gravelle: Are you aware that the minister is going to be in Sudbury tomorrow meeting with some municipalities, I believe?
Ms Rivet: No, I was not aware.
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Mr Gravelle: So you haven't been invited. You or the Red Cross have not been invited to that meeting.
Ms Rivet: No.
Mr Gravelle: It might be useful to see if you could be at that meeting, because obviously that's an opportunity to meet with the minister, who is going to be there tomorrow.
By breaking it down even in terms of the transportation alternatives, the fact is, if plane service ceases, and not to put too dramatic a point on it, we're looking at a situation in emergency situations where people could lose their lives if they're not provided with this service. Is that too dramatic? I don't want to do that just for dramatic purposes.
Ms Rivet: No. But on my chart the instances that I have stated, the numbers in November --
Mr Gravelle: Those were emergencies?
Ms Rivet: In the communities of Timmins and Kapuskasing, those are emergencies only. That meant that there was no other transportation that could get it there fast enough. Anything else was not adequate.
Mr Gravelle: What would happen if they didn't get there?
Ms Rivet: If they had an air ambulance, they would probably be getting the patient out of there, because there would be just no way.
Mr Gravelle: Again, I think this is an example that we see so often, which is a need to educate this government in terms of the fact that the distances and the isolation and the needs of the north are so much different than they are in the south. I appreciate that some of the members opposite have spoken to me about their desire to understand that, and I hope that they will follow through on that and recognize that this is something that needs to be dealt with in terms of the transfer of blood product. It has to be treated as a priority, and I would hope that there will be some solution that will come forward. I would think that the minister, being in Sudbury tomorrow -- are you going back to Sudbury yourself?
Ms Rivet: Yes.
Mr Gravelle: I would hope that you could be included at some point in that discussion when the minister is in Sudbury tomorrow.
Ms Rivet: I would like to. I would just like to reiterate the one fact about the road closures. That is a reality in the north, and for blood product delivery, if the roads are closed, even if we have ground transportation, it's not an option.
Mr O'Toole: May I just follow through on that?
The Acting Chair: You'll get your time again. The third party.
Mr Bisson: First of all, just so that you know, I just came in from Sudbury.
Ms Rivet: Was your flight delayed as well?
Mr Bisson: No, I drove actually. I didn't have the ability to fly this morning. We were up there on committee work yesterday, and I'm down here for some other work that needs to be done.
Anyway, just by way of background, just so that government members understand, I think the point that you make in regard to the road closures is something that really they need to understand, that this is also made worse by the reason that snowplowing has been cut back by the Ministry of Transportation and does represent an even a greater problem in northeastern Ontario and northwestern Ontario when it comes to being able to get through.
Being that Timmins is the place that I call home and it's probably one of norOntair's major points, we're going to see in the community of Timmins, obviously, an effect when norOntair comes out. But I don't think people really understand the medical side to this, because there's not just a blood product issue, which is also serious; there's the question of what happens in northern communities like Hornepayne or communities that are serviced by norOntair that have no other option when it comes to airline services and probably won't be picked up by private sector carrier when it comes to doing locums and bringing specialists into those communities, in some cases physicians to do locums in order to take up the slack that needs to be taken up because no physicians are available in some of those communities for much of the time.
I'm just wondering, through your work in the Canadian Red Cross, if you can maybe shed a little bit of light and a little bit of explanation so that government members understand that if there's no air service out of Hornepayne, that means there are no specialists of any kind who will go into that community in order to do the kind of medical treatment or diagnosis that needs to be done, which means to say it's going to cost you money to get those patients out, to get them back out to Timmins or Sudbury or Toronto in many cases.
The other thing you can comment on is what it means when it comes to family practitioners as well, because in many of those communities, again, they tend to have a very big difficulty, as you well understand, to keep their family practitioners, and the only way that we're able to cover them off is to attract practitioners from other communities to go in on a locum. One of the things that attracts them is the ability to be able to fly into that community. They don't want to be out in the middle of nowhere with a 16 or 18-hour drive to get back to wherever home might be, either Toronto or London, and air service is an important part of that.
I wonder if you can comment on those particular points, the specialists and the family practitioners.
Ms Rivet: We probably wouldn't deal with the family practitioners as much, because when it comes to the transfusion aspect the chances are you're dealing with a specialist anyway because the patient is fairly ill. I have handled numerous phone calls from physicians who are considering going to service some of these communities, and when they call me, what they're asking me is, "Will you be able to supply me and make available to me," whatever blood products they may be interested in for whatever it is they're setting up. They're looking for us to be able to supply these blood products in a timely fashion.
Some of the blood products we have, as I say, have a 24-hour limit for transportation. If I tell him, "It takes me 24 hours to get it to you," after that, what happens if it's delayed 10 minutes? What happens if it's delayed half an hour? I do get calls from physicians who ask, "How can the Red Cross supply me if I'm in this area?"
Mr Bisson: That's the point I want to make with the Red Cross, that all of this is very integrated, that it's not just a question of being able to get the specialists in there, it's a question of being able to provide the services to the medical community that need to be done to support the medical needs of the community itself.
What flows out of all this is that I don't believe that in the end all the communities presently served by norOntair will be picked up by private aircraft carriers. It's just not economical in some places. The economics aren't there to support an airline going in there and landing aircraft on a regularly scheduled basis.
I figure there are anywhere from five to nine communities that will be left high and dry. What do you do when it comes to being able to move blood products out of that community for testing in your regional lab? If you can't get any air service, what happens to those communities and their --
Ms Rivet: That's one thing: We don't use the air service to transport samples back to the centre to be tested. We have mobile clinic teams that go out to these communities to collect the blood and bring it back ourselves. Therefore, we don't use the air in that aspect, not for testing purposes; we use the air service for blood product delivery.
Mr Bisson: The same question applies. If there are five to nine communities not picked up by private air carriers, what happens to your blood products that you're trying to deliver to those communities?
Ms Rivet: They wouldn't make it there. We probably wouldn't ship them. They would have to get the patient out of there. That would be the option. If we can't get the blood products to the patient, the patient has to leave.
Mr Bisson: Is that more expensive, in your mind, than trying to get the blood product in?
Ms Rivet: I wouldn't know.
Mr Bisson: If you're sending the blood product in to Hornepayne, let's say --
Ms Rivet: If we're sending a blood product in, we're paying basically for a box or two boxes. I don't know what it is to transport a patient. I would assume more.
Mr Bisson: It comes back to the point that there's not a whole bunch of common sense when it comes to that type of approach. I just want to remind members that the reason the Conservative government years ago put norOntair in place was because the private sector was not picking up the service in those communities. The Conservative government of the day said, "We need to make sure we're able to provide fair access of service for those communities in northern and northeastern Ontario, all over, that are having difficulty getting air services into their communities." If left to the private sector itself, if there ain't no money, why would anybody go into that community to provide the service? That's just the basics of economics.
I thank you for your presentation. I wish I could have been here for it myself. Unfortunately, roads coming in from Sudbury were a little bit slippery with the weather last night, so it took me an extra hour and a half to get down here, but I want to thank you none the less.
Mr O'Toole: Just to follow up, if I'm not taking unnecessary time, does road and weather play a significant factor in health care generally, not just blood care, in the north?
Ms Rivet: Yes, it does.
Mr O'Toole: Is there any relationship between weather, ie, fog, snowstorms, that would inhibit aircraft activities? Isn't there some implication not just to roads; generally the airports are --
Ms Rivet: I would imagine that yes, what you're saying is true. If there's a storm, it could affect the planes as well, but wouldn't you like to have a choice? If your choice is ground or ground, you're up shit creek. If you've got at least a choice to fly it out, if you're the one --
Mr O'Toole: I hear you, I understand.
Ms Rivet: We already don't have many choices. It's not like we even have 10 flights a day. I don't know if you noticed, the ground transportation, the point I was trying to make, I don't know if it came across clearly --
Mr O'Toole: Yes, you did.
Ms Rivet: -- there's only one departure time, so if you want the blood an hour after the departure time, too bad.
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Mr O'Toole: Without taking too much time, I want to get a better understanding. I guess the other thing is, when you're transferring and you told me -- my first question to you really had been about the testing. There is mobile testing. That was the point I was getting to.
Ms Rivet: No, it's not --
Mr O'Toole: They must have some kind of mobile testing.
Ms Rivet: We're talking about blood donor testing. It's all performed --
Mr O'Toole: Where they accept the blood. But if you're talking about transferring whole product blood --
Ms Rivet: Blood components.
Mr O'Toole: Whatever -- you're basically talking about, can hospitals maintain a certain storage? What's the shelf life for this stuff?
Ms Rivet: Different products have different shelf lives, some as low as 24 hours to as long as a year, depending on the component you're talking about. If you happen to be talking about the one for a year, you're probably not going to get into trouble.
Mr O'Toole: I'm really trying to get to the point that I think you can manage some of this stuff. I don't think a normal, intelligent health provider would risk a patient by having them in a location at a time of year for what normally would be voluntary elective surgery, other than in Sudbury.
Mr Bisson: People get hurt and they need blood.
Mr O'Toole: If there are emergencies --
Mr Wildman: What part don't you understand?
The Acting Chair: Mr O'Toole has the floor.
Mr O'Toole: I'm really just trying to say that air is not perhaps the most reliable, dependable service in a health care situation. I'd say that --
Interjection.
Mr O'Toole: No, Gilles, or Mr Buffalo, pardon me.
Mr Bisson: Close enough.
Mr O'Toole: Technically, wouldn't you transfer the patient to Sudbury, where there are complete facilities? I wouldn't leave them at the end of a runway if there could be a snowstorm.
Ms Rivet: But many of the medical situations that would require massive amounts of blood and blood products are accidents or unplanned things.
Mr O'Toole: Wouldn't they transfer the patient?
Ms Rivet: You would have to stabilize the patient, number one, before you could transport them, and chances are you would use up what you had in stock, because all of our hospitals do stock blood products. They would stabilize before they would transport.
Mr O'Toole: It's really for me to understand, but if I go back to what you're telling me, you said there were scheduled flights. If you missed the flight --
Ms Rivet: Yes.
Mr O'Toole: What if after that flight there's the accident? They get the patient to the facility; they don't bring the blood to the side of Highway 17. Anybody who thinks otherwise isn't thinking about the safety of the patient. That's the truth.
Mr Michael Brown: Just keep talking.
Mr Bisson: I'm sending that Hansard all over northern Ontario.
Mr O'Toole: You should, Gilles.
Mr Bisson: The part you don't understand is that people work in northern Ontario and they get injured and blood is not available and it has to be shipped in from somewhere. How are you going to get it if you don't have scheduled flights going in?
Mr Leadston: I appreciated the opportunity to hear your presentation. You've provided a level of information I didn't have before. But I have a sense here, particularly from my learned colleague who has set a tone of death and dying and doom and gloom, and I'm sure that's not the information and the image you're trying to portray on behalf of the agency. Do you have statistics available where there has been a death or deaths as a result of not being able to provide a blood product?
Ms Rivet: No.
Mr Leadston: So there isn't anything available? I want to put it into perspective.
Ms Rivet: Like I say, what would normally happen is decisions would have to be made quickly, but they would not leave the patient there. It is highly unlikely in today's age for someone to die because of no blood products. What they would do is bring the patient to the blood products.
The Acting Chair: The time has expired. Thank you very much for coming. I appreciate your coming from Sudbury. It's really helped to explain the importance of the Red Cross and blood delivery.
SUBCOMMITTEE REPORT
The Acting Chair: There's a report from the subcommittee in front of you, the standing committee on government agencies, Wednesday 21.
Mr Bob Wood: I'd like to move that the reading of this report be dispensed with and that the report be adopted.
The Acting Chair: Any discussion? All in favour? That carries.
Mr Michael Brown: Mr Chair, seeing as we have the representatives of norOntair and the ONTC here right at this moment and we had limited time to talk to them this morning, is it possible that we can use some of the committee's time this afternoon, that we have this resource in front of us?
The Acting Chair: You need unanimous consent for that, Mr Brown.
Mr Michael Brown: Then we could ask for that.
The Acting Chair: Is there unanimous consent to hear from the officials from Ontario Northland Transportation Commission?
Mr Leadston: Unfortunately, Mr Chair, I have another commitment and I have to go. I certainly have no objection to an informal meeting with them, but unfortunately we can't continue with the formal session.
The Acting Chair: So there isn't unanimous consent.
Mr Michael Brown: Let the record show that the government refused.
The Acting Chair: The committee stands adjourned.
The committee adjourned at 1527.