The Nova Scotia Legislature

The House adjourned:
October 26, 2017.

HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

ECONOMIC DEVELOPMENT

Tuesday, September 12, 2006

COMMITTEE ROOM 1

Bay Ferries Ltd.

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Ms. Diana Whalen (Chairman)

Hon. Judy Streatch

Mr. Keith Bain

Mr. Chuck Porter

Mr. Howard Epstein

Ms. Vicki Conrad

Mr. Leonard Preyra

Mr. David Wilson (Glace Bay)

Mr. Harold Theriault

[Mr. David Wilson (Glace Bay) was replaced by Mr. Wayne Gaudet.]

IN ATTENDANCE:

Mrs. Darlene Henry

Legislative Committee Clerk

WITNESSES

Mr. Paul Taylor, Deputy Minister

Office of Economic Development

Mr. Glenn Wadman, Operations Manager

D.B. Kenney Fisheries Ltd.

Mr. Gregory Shay, President

Comeau Lumber Ltd.

[Page 1]

HALIFAX, TUESDAY, SEPTEMBER 12, 2006

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Ms. Diana Whalen

MADAM CHAIRMAN: I'd like to call the meeting to order, if I could. I know that it's just nine o'clock now. First of all, I would like to thank our guests who have come today to talk about the issue of the Digby ferry and its possible closure, which is looming. I'd like to thank the members of the committee for agreeing to hold this meeting today rather than have this meeting held as an organizational meeting, which was originally planned. As we know, the date for the possible closure of the Digby ferry is October 31st, and perhaps a decision date as early as the end of this week for Bay Ferries themselves.

In holding the meeting, I had invited Mark MacDonald, as well, who is the President of Bay Ferries Limited. He was unavailable, and was unable to send somebody else to take his place here at the meeting. So we're hoping that the witness from the Department of Economic Development will be able to help us in regard to explaining the overview of the issue and what is at stake and what is being done.

I would like to begin by asking the members to introduce themselves. Perhaps we will start with Mr. Preyra.

[The committee members introduced themselves.]

1

[Page 2]

MADAM CHAIRMAN: The members of the committee will see we have committee business today and I would like to put it to the end of the meeting, if we could, and just proceed right on with the issue of the ferries, if everyone is in agreement. Good, thank you.

I would like to ask our guests to introduce themselves today and then we will determine, I guess, how we begin. My thought was to begin with Mr. Taylor for the Office of Economic Development and then talk about the direct impacts on industry, if that would be good. So perhaps the three of you could introduce yourselves.

[The committee witnesses introduced themselves.]

MADAM CHAIRMAN: Very good. I wonder if we could begin with Mr. Taylor. I don't know if you had any prepared remarks or if you could simply talk about the issue so we could frame the issue for the committee.

MR. PAUL TAYLOR: Nothing in the way of a formal, prepared statement, Madam Chairman. I would like to open by saying, though, since the Bay Ferries announcement was made of their intention to close the service on November 1st, we have been working with the federal government, the Province of New Brunswick and with the various municipalities that would be most directly affected by the closure, to try to understand the significance of the impacts of this ferry on the regional economies here in eastern Canada, who would be most affected, what the impact would be particularly on government, and on the industries certainly in southwestern Nova Scotia, from my perspective.

We have retained some professional consulting help to assemble that information for us. That information is now in the process of being provided to decision makers in all of those jurisdictions, hopefully, to be able to arrive at a joint resolution between those jurisdictions on what they are prepared to do to try to ensure the survival of this ferry service that has been around now for going on to 200 years.

That is the context setting for now and I certainly await your questions.

MADAM CHAIRMAN: I'm sure there will be many questions, thank you very much. I wonder if Mr. Wadman would like to speak directly, as one of the industries affected.

MR. GLENN WADMAN: The members of the committee have been provided with a one-page handout that I brought along with me. I thought to be very simple and straightforward, I did a straightforward comparison of the cost of a one-way trip, Westport to Boston, the ferry versus the road. You can see on wages that we would have to double up, because of the labour commitments we have to have two drivers; fuel, we

[Page 3]

basically have a 75 per cent increase in the cost of fuel because of the kilometres driven; and then we save the $359 on the ferry. We net out that to drive around it's $551 per trip, one-way. That's a raw cost, there are no accruals built in there for depreciation, repair and maintenance, profit and whatever.

In a nutshell, I had one of our drivers take this off last week; from Digby to the Saint John bridge, it's 650 kilometres. The driving distance, Westport to Boston via the ferry, is 700 kilometres. So in essence, you are doubling the trip, in driving kilometres you are doubling the trip, which in the summertime is a significant problem. In the wintertime, when you look at some of the challenges on the Cobequid Pass and especially on the Tantramar Marshes, it's a scary proposition to get a call that you have a truck stuck on the Tantramar Marshes for a day with 30,000 pounds of lobster aboard that need to get there alive, and that's worth maybe $0.25 million. It's just incredible to think that this service could be threatened.

I don't know if I'm being too long-winded, but I would like to point out that we at D.B. Kenney Fisheries see that the governments and the people at the table need to have a two-pronged approach here. We need an immediate 12- to 18-month solution, because Bay Ferries tells us now that people are cancelling trips, and in the long term, we need this service to go back to Marine Atlantic, where it came from, so that it can be an integral part of national transportation infrastructure.

I would like to ask, or request, or beg - I'm not quite sure of the proper words here - that our Premier become directly engaged with the Prime Minister of the country on this file. At a meeting with Minister Hurlburt from Economic Development, he informed us that Lawrence Cannon, federal Minister of Transport, has stated that this ferry will not go back to Marine Atlantic. Minister Hurlburt so graciously informed us that the only way to change that decision would be to speak to Minister Cannon's boss. I would guess the only person here who can really access Minister Cannon's boss would be our Premier. So I would ask that he chase the Prime Minister across the country and get a meeting.

To close, I would like to point out that Canada is a country that was founded on transportation infrastructure. I would like to point out to Minister Cannon and Prime Minister Harper that as a country, we decided to build bridges across the Great Lakes, not drive around, the road is there, we can drive around, so why did we build a bridge? I would also point out that we decided to dig a tunnel and put some bridges through the Rockies rather than drive around. If infrastructure to facilitate the movement of people and the movement of trade is okay in the Ontario economy and it's okay in the Alberta-British Columbia economy, I believe it's okay in the Nova Scotia-New Brunswick economy. Thank you.

[Page 4]

MADAM CHAIRMAN: Thank you very much, Mr. Wadman. I wonder, Mr. Shay, if you would say a few words about your industry, as well. I know there are going to be many questions afterwards.

MR. GREGORY SHAY: Thank you. I'd like to say a few words, yes, but I don't have anything organized to present and leave behind. I just have a few rambling notes, so just bear with me.

MADAM CHAIRMAN: That's fine. We know this was called on short notice.

MR. SHAY: Just as a bit of background, my name is Gregory Shay, and I operate three small businesses in Digby County, Nova Scotia. I'm the past chairman and lifetime director of the Maritime Lumber Bureau, and a past president and lifetime director of the Forest Products Association of Nova Scotia. This morning I'm more particularly interested in one company, Comeau Lumber Limited, which is the largest of my three companies. It's in the lumber processing sector. It's one of the independent sawmills in the province, one of the few remaining, I might add. We employ over 55 people directly, year-round, at our site in Meteghan. We process another $3.5 million worth of logs. Those dollars go back into the local community every year for landowners, contractors and trucking interests.

What is very important to us is transportation infrastructure. I'm not here to specifically speak about the forest products industry, but I will just remind you that the industry in the province is over a $1 billion industry. It employs well over 12,000 to 13,000 people directly and it is a huge exporter of lumber and forest products, which requires transportation infrastructure. So we definitely need transportation infrastructure that gives us some options to move our products.

I know the entire industry isn't in southwestern Nova Scotia and certainly doesn't use the marine ferry in Digby, but certainly there are large interests in the South Shore, in the pulp and paper sector, and I'm sure the Christmas tree people are very concerned about this Digby ferry issue and their access to the New England States market.

[9:15 a.m.]

Our competition in the forest industry is not here in the Maritimes. Our competition is in Quebec and Ontario, where they have well-developed road systems and quick access to the American marketplace. Our competition is in British Columbia, where they have good railway systems for hauling mass volumes of lumber efficiently and effectively. And our competition is also overseas, where they have - I've seen first-hand - well-developed truck delivery systems on their highways, truck configurations that are optimizing fuel and weights, and they have water-borne transport that can deliver wood in mass volumes anywhere along the Eastern Seaboard, which is our marketplace.

[Page 5]

So we have some serious, legitimate, competitive challenges to face today in southwestern Nova Scotia.

Unfortunately in Nova Scotia, southwestern Nova Scotia is becoming increasingly more isolated from our marketplace. We desperately need this link in southwestern Nova Scotia. We lost our rail system a long time ago, you probably remember that. We have no air service out of Yarmouth anymore, which surprisingly enough to me, I thought the fisheries guys would find particularly critical to have, but it's not there and it's something that's being fought for at various levels but is not there yet.

Contrary to what some people in Halifax believe, from discussions I have had with NSBI representatives and other political leaders, there is no more commercial truck service out of Yarmouth on the ferry. There hasn't been for some time and we don't foresee any in the future in the discussions we have had with Bay Ferries. So our options are quickly running out for transportation. Of course we all know in southwestern Nova Scotia that the 100-Series Highways are substandard and very unsafe; in fact, not finished in a lot of places.

This continues to add up to southwestern Nova Scotia being more isolated and far removed from the marketplace. My approach to this problem is that I look at it a little bit differently than some of the other guys in the sector, some of the fisheries guys and maybe even the tourism people. I agree with everything that Glenn has said about the short term and the immediate urgency to fix this. The way I see it is the Digby ferry issue is a lightning rod for a much greater fundamental problem that we have in Nova Scotia. Ever since Confederation, we probably all know, or most of us know, the Maritimes have been sacrificed for transportation infrastructural projects for the development of Ontario and Quebec and their industrial base. This is no secret, it has happened ever since Confederation, with the St. Lawrence Seaway, railways to the west and other key infrastructure areas.

My biggest concern most recently is that in southwestern Nova Scotia we seem to be taking the place of the Maritimes proper and we are becoming more and more isolated from the HRM area of Halifax. As far as I can see, there is no provincial strategy to develop rural Nova Scotia, particularly southwestern Nova Scotia. I believe that has generally been accepted by various federal governments as well as their senior policy advisers over the last 20 or 30 years of economic development, that one of the key principles that's important to developing rural infrastructure in Canada is transportation infrastructure, but for some reason that's being overlooked here.

I also feel that from a business point of view, and in respect to consultants and reports, I find those a little bit dangerous and they make me very nervous when we hire consultants to study the economic impact of a piece of our public transportation infrastructure. I think that it's a bit of a red herring. I don't think it's the business

[Page 6]

community's responsibility to try to prove the economic viability of a public piece of the transportation infrastructure. Quite frankly, I think we have plenty of responsibilities now with our employees, with our customers, with our suppliers, with our lenders, with governments, it goes on and on. I don't think it's our responsibility to justify - like we are trying to do now - a major, important link to our transportation infrastructure.

We need the option for the ferry, I don't know how else to sum it up. We are having a lot of difficulties in the business sector now. I'm sure you guys have heard that from every sector across the province and every region. Everybody is facing insurance issues and fuel issues and regulatory issues and out-migration. These are all issues that we have to face and we should be spending our time on, as businesses, trying to combat, and not spending our time here on stuff like this.

I think that sometimes the province applies its principles and its decision-making process and the renewal or completion of infrastructure projects inconsistently. One thing that bothers me a lot, the most recent example, is the bridge that burned in Pictou County a little while ago. It seems to have no apparent commercial value or significant economic impact on the community other than for the local benefit of commuters and residents, yet the next day in the paper there was a senior Department of Transportation and Public Works official who stated unequivocally it would be replaced with a temporary bridge very quickly, until a full, permanent bridge could be rebuilt, probably next year sometime.

Now, on the surface, obviously I don't know all the details and the decision process but what's the difference between that land bridge and the water bridge that we need so much for our marketplace? I don't see the difference. There is a difference; the difference is magnitude. The difference is in the magnitude of the economic impact that that Digby ferry system has on the economy of southwestern Nova Scotia. That's the difference, it's huge. While there might be an up-front capital investment to maintain that service and eventually, probably, replace that vessel, I think the economic benefit that we acquire from having that far outweighs, exponentially, the benefit of that and any other particular bridge in Nova Scotia. Getting back to Glenn's statement about the bridges, they're all part of the system, and how do you justify building the bridges when you can drive around something, but you can't keep the ferry going when you could drive around something?

The business community in southwestern Nova Scotia - this is a plea, I guess - it's predominantly made up of small, private businesses, family-owned businesses. They've made a living and they've survived over the years. My business is 100 years old - not me, I'm not 100 yet, but the business is. They've survived over the years by being innovative and creative and working with - actually what is one of the greatest resources that this province has that unfortunately is long overlooked - the natural resources, those

[Page 7]

on the water, in the water, those on the land and under the land. That's how a lot of business in southwestern Nova Scotia have survived and prospered.

They don't look, typically, for bailouts. They don't look for handouts. They don't look for concessions from their employees. They don't look for concessions on electricity rates. They don't look for all of these nice packages. All we want is some transportation infrastructure to conduct our businesses with. That's what the government's responsibility is, I think, to provide an environment for the businesses to operate under. To provide the physical and the regulatory environment that we can conduct our businesses under. I don't see that being done, particularly in the rural parts of Nova Scotia.

I have been rambling quite a bit, which means I've lost my place in my notes, more or less. At the end of the day, this ferry is very fundamental. It's part of our 100-Series Highway system. The ferry in Digby and Saint John is just as critical to us as Highway No. 101 and Highway No. 103. We cannot lose it. It should never have been privatized. It's part of an infrastructure that should not have been put into public hands, because, as we've been told by people in the ferry business, every ferry service in the world, somewhere, government funding is involved somehow.

So if it can't justify itself as a stand-alone business entity, but is an important component of the infrastructure of the country, it should never have been privatized. I'll just end it there. Thank you very much for your time.

MADAM CHAIRMAN: I'm going to turn it over to members of the committee to have questions. The first hand I saw is Mr. Theriault.

MR. HAROLD THERIAULT: Thank you, panel. Everything you're saying down there, I truly believe it. You really didn't even have to come here to say this, but I'm glad you did. I want to touch on western Nova Scotia a bit, and its fishery alone. Probably the fishing industry of this country, half of the fishing industry of this country is in western Nova Scotia alone. The lobster fishery alone, $0.5 billion. I won't say figures about the lumber industry or the tourism industry. I'm not sure if any of you have the answer here to what I'm going to ask either, but I wonder, how many billions of dollars go across that bay, or come back across that bay, I should say, not old Nova Scotia money or old Canadian money, but new American money being brought into this province?

I think if we had the figures on that today, it would blow us away here. If we're going to disrupt it by the matter of a boat in the Bay of Fundy, I think there's something very wrong here. I would like to know if there are figures. Maybe I'll go on a little bit more here, because I want to touch on a consultant, too.

[Page 8]

I was contacted last week by some business people in western Nova Scotia, asking me where and who this consultant was and is. They had never been approached. A person representing probably 50 fish plant operators in western Nova Scotia had not been approached by this consultant, who is supposed to be going around doing consulting work to see what the economic impact would be in western Nova Scotia. The lumber industry, I don't believe, was approached by this consultant, whoever this consultant is. I'm not sure who they are, because three months ago it was supposed to have been put together down there by wardens and mayors, I believe that was the handle of that, and they were going to take care of it.

My phone rings daily, what's going on with the ferry? What's going on with the consultant? Why aren't there some answers coming out of this? So there are probably a couple of questions there, if somebody could answer, from this panel. What is going on with this consulting work that doesn't seem to be happening? And maybe you could give us a rough idea of the economic impact that this would have, not on western Nova Scotia but this whole province.

MR. PAUL TAYLOR: I can certainly deal with the question on the consultant. The consulting companies are actually one primary consultant and two subcontractors to the primary who were hired jointly by the Office of Economic Development and ACOA. The principal of the primary consulting firm, Belleclaire Consulting, is a fellow by the name of Frank Schwartz. He's an economist. Jim Frost is the other principal consultant on the file. He is a transportation expert, someone who used to work for Marine Atlantic, and who knows the ferry services, not only in Eastern Canada but right across North America, intimately, as well as Europe. Those are the two principal folks who have been working on this file for the last, basically four or five weeks.

Their report has been submitted to the parties that have contracted them. It is being digested now, as we speak, to be distilled down into a series of recommendations to the parties that I named earlier, the two provinces, the Minister of ACOA, the municipalities in southwestern Nova Scotia and the City of Saint John. The question that will be generated from that report is, what are those parties prepared to do to save this ferry service based on the information that's contained in that report?

The report really attempts to identify some of the questions you were asking: the nature of this service, who it serves, what kind of traffic goes across that connection, who would be impacted directly by the cessation of the services, what kind of taxes flow from the service, direct taxes and indirect taxes to those levels of government, and some of the various options that could be considered to deal with the situation that Bay Ferries has announced, that they're going to close as of November 1st, what options are available to governments to deal with that situation.

[Page 9]

MR. THERIAULT: Thank you, I guess. But why hasn't this consultant approached an organization like the Nova Scotia Fish Packers Association, approximately 60 dealers that they represent, or places like Bowater, a pretty big organization, Comeau Lumber, a big organization? These people have never heard tell of this consultant. I don't believe they've even consulted with people like Destination Southwest Nova Scotia tourism group, which is a big organization. I don't believe they've been in contact with them. I wonder, how is this consultant finding out the impact if they haven't talked to these big organizations that have the big economic impact?

[9:30 a.m.]

MR. PAUL TAYLOR: The consultant hasn't been dealing with this situation on a company-by-company basis, they've been dealing with it on a sectoral basis. So they have generated detailed numbers for us on the impact on the fishery, the impact on the tourism industry, the impact on the general freight industry, the impact on the lumber industry. They know, they have the numbers of what's going back and forth across that ferry, when, for how long, how those numbers have changed over the years.

They have generated the impacts, as I said, not from an individual company that is shipping what across that line, they have the statistics from the company - by way of having signed a confidentiality agreement with Bay Ferries to access their detailed information on who is using that service, by type of freight - so they have been able to generate impacts for us for each individual industrial sector, but the industrial sector in total, rather than on an individual company basis.

Throughout this process it has been a bit of a challenge to coordinate that many government jurisdictions all focused in the same area, but we have had excellent co-operation from all parties involved, particularly at the municipal level. The municipalities on both sides of the bay have been quite willing to contribute information from their perspective. I know Warden Thurber, one of the principal roles he has played in this exercise is to ensure that we are aware of the impacts he is receiving and the comments he is receiving from individual companies in southwestern Nova Scotia. That's a role that he stepped up to the plate and agreed to play, to make sure he could funnel the results of conversations that are being held with individual companies in southwestern Nova Scotia as to the significance of the impacts on a personal and a company basis.

MR. THERIAULT: I was told that as of last week, maybe 10 days ago, that we didn't have until October 31st to get this decision made. I was told by many businesses that I talked to, maybe more than the consultant did, I'm not sure, but those businesses said if we haven't got some kind of an answer by September 15th, which is three days from now, that we are going to make alternate business transportation plans somehow

[Page 10]

for our businesses. So this is three days away that we're talking about. Just where is this report and do you know when it may be out, within three days?

MR. PAUL TAYLOR: Certainly I would agree with your comment that right from the day that Bay Ferries made its announcement, in particular commercial users of that service have been considering their options, from that day right straight forward. The closer this situation approaches to November 1st, Bay Ferries certainly expects their commercial traffic to adjust and take advantage of whatever other alternatives are available, including the option that was referred to earlier, about taking that more expensive option of driving around. So absolutely, the longer this goes on, the more the commercial traffic that is currently using this vessel is at risk to the go-forward of this ferry service. That's certainly front and centre in the mindset of every one of those jurisdictions sitting around that table, as it is in Bay Ferries.

At the same time, we have a number of jurisdictions here that are expected to play a role in any future continuing operation of this ferry service and those jurisdictions have to have been given the time to be able to assess whether they are willing to play a role. That's the purpose of the report. As cruel as it may sound, I don't think any one of those jurisdictions has approached this file saying we are prepared to save this ferry at any cost. They have all approached it from a point of view of, we want to know what this ferry service means; we want the facts and the figures; we want to know what the impacts will be and on that basis, we're prepared to make decisions as to what we're prepared to do so save it, based on what those impacts are.

I think to be fair to those jurisdictions, they have to be given time to digest the information. We're just a little over 60 days since this company announced that they're shutting this service down. It has taken a lot of time from a speed of zero to get up to the point where we have information in front of people to make decisions that involve millions of dollars. I think to be fair to each one of those jurisdictions, knowing the risks, they do need the time to digest that information and decide what role they want to play.

MR. THERIAULT: Thank you, Mr. Taylor. Just one more question, maybe for the other two. What does go on financially - what would the price tag be of business, roughly? Mr. Shay, you may know. Are we talking about a couple of billion dollars?

MR. SHAY: Again, I don't like to try to defend the economics of the whole infrastructural debate, because I think it's very difficult to get a real hard handle on. I think that what the consultants will do is probably come up with some best estimates based on some statistical information on traffic volumes and the values on those volumes. But I can't tell you for sure how much of the forest industry, the $1 billion industry, travels on the Digby ferry. All I can say is that from a business operator point of view, if you want any economy in Nova Scotia, in southwestern Nova Scotia, you have to start providing us with some environment to do that, to conduct that business in,

[Page 11]

and that means roads and ferry service and other infrastructure issues. That's all I can say as a small-business operator. I can't give you those types of numbers.

I don't know what the immediate impact on me will be. I can tell you today that it's getting harder and hard to get trucking contractors to come from central Nova Scotia down to southwestern Nova Scotia to pick up our lumber products. That's a real impact, because that will close our business down if we can't move.

MR. THERIAULT: Thank you.

MADAM CHAIRMAN: Mr. Epstein.

MR. HOWARD EPSTEIN: It's not always the case that we call meetings on short notice. We seem to have profited this time by doing just that. It has been awhile since we've heard such good, plain, common sense as I think we've heard this morning from both Mr. Shay and Mr. Wadman, and my thanks to both of you for your information, your comments and your suggestions.

Mr. Taylor, though, I might start with you. I have some questions about a small newspaper article from July 1st, which would have been very shortly after the company announced its intention. So this was just at the end of the June, I think, that it was announced and they gave, really, three months' notice that they were thinking of closing the service, or that they were intending to close the service. An article in the business pages of The ChronicleHerald, July 1st, quoted provincial Transportation Minister Hurlburt saying that his office - presumably that means his officials - ". . . had already been in touch with Bay Ferries, federal cabinet minister Peter MacKay and New Brunswick officials." He's quoted as saying, "We're going to get everybody to the table and see what we can do."

What I was wondering was whether any such meeting has actually been held, and if so, has any such meeting been held at the ministerial level? (Interruptions) Do you want to see this?

MR. PAUL TAYLOR: Sorry, I was just wondering who you were referring to, as calling for the meeting.

MR. EPSTEIN: As the article presents itself, it sounds as if Mr. Hurlburt was planning on trying to convene such a meeting. We heard a reference that Mr. Hurlburt might have been speaking with the federal Transportation Minister. What I wondered was whether anyone at the Cabinet level in Nova Scotia has sat down with the federal Minister responsible for ACOA to discuss this issue.

[Page 12]

MR. PAUL TAYLOR: Yes, there has been certainly one significant meeting at the ministerial level that involved Minister MacKay, Minister Hurlburt, a representative - the minister's name now escapes me - the Minister of Environment from the Province of New Brunswick, mayors and wardens from southwestern Nova Scotia, and the Mayor of Saint John, New Brunswick, all convened to certainly share their concerns about the cessation of the ferry service and their willingness to commit the time of officials in each of those organizations to do the type of work I was just talking about with the member earlier.

MR. EPSTEIN: So there were ministerial-level discussions, which really moved to the point of studying what might be the economic impact of the closure?

MR. PAUL TAYLOR: Yes.

MR. EPSTEIN: But so far, no discussion, or is there any discussion beyond what we heard from Mr. Wadman that the feds really aren't interested in taking back the service? Has there been discussion yet as to any action that might be taken beyond studying the issue?

MR. PAUL TAYLOR: In terms of specifically setting up a Crown Corporation at the federal level?

MR. EPSTEIN: Whether it's a Crown Corporation, whether it's financial subsidies, whether it's anything else. I'm wondering, has there been any discussion of options?

MR. PAUL TAYLOR: The result of that initial meeting was each of those organizations assigned people to form a working group to go out and find the consulting help to help them assemble those numbers, recognizing this fell right in the middle of the summer period. The task assigned by each of those political members was to put this working group together, go gather the data, find out what the impact of this ferry is, and bring that data back to the group I referred to in the first part of your question, so that they could then consider what role they would be willing to play in trying to solve this problem.

MR. EPSTEIN: Did I understand you to say that Frank Schwartz, the economist, his study has now been finished?

MR. PAUL TAYLOR: Yes, it has.

MR. EPSTEIN: So that's something that you've seen, or officials in your department have seen?

[Page 13]

MR. PAUL TAYLOR: Yes, they have.

MR. EPSTEIN: And that will be available to the feds as well?

MR. PAUL TAYLOR: Yes.

MR. EPSTEIN: Was the other sponsoring agency at the municipal level? Was that what you said?

MR. PAUL TAYLOR: Well, ACOA and ourselves, the Office of Economic Development, we are the ones that actually retained the consultant, but the results of the work are being made available to every one of those parties that were around that table.

MR. EPSTEIN: So the study has been done, it's available to your department, but I thought I understood you to say, in the beginning, that you didn't yet know what the economic impact was of the closure. So, in fact, if the study has been done, I guess you do know what the economic impact is. Is that something you're able to share with us today?

MR. PAUL TAYLOR: Of all the numbers I've seen on this file in the last two months . . .

MR. EPSTEIN: Well, we know there are 100 jobs that are going to be lost.

MR. PAUL TAYLOR: I think the total is in the neighbourhood of 140 jobs; 110 of those are with the ferry service directly, and the other 30 are in the catering and shore support systems that service the ferry. The majority of that employment is in the Province of New Brunswick. The direct impacts, as in loss of economic value of this ferry service - not unexpectedly to the two gentlemen to my right - the major hit that will be taken in the economy is in the commercial users of that service, particularly the forest industry, the fishing industry and the tourism sector.

MR. EPSTEIN: Tourism, yes, absolutely.

MR. PAUL TAYLOR: As these gentlemen would know, there is some seasonality to that service. Certainly, the big impacts that will be felt are those two months immediately leading up to Christmas, the peak of the lobster season, when a lot of fish products are moving across that vessel into the New England area. I absolutely agree with the gentlemen to my right, the cessation of that service will be directly felt by the industries in southwestern Nova Scotia who rely on it.

[Page 14]

[9:45 a.m.]

One of the challenges that we see - the two big challenges that have changed in the last five years, and I think there was a comment made earlier about the fact that the ferry services do not tend to run with a positive bottom line. This does appear to be one of the few privately operated ferry services in this country that does not receive some form of public support. Most of the other ones, either at the federal or provincial level, are supported with public money.

The two challenges that the vessel service is under: significant increases in costs in the last five years, both from an insurance and a fuel point of view; but, at the same time, significant decreases in ridership on that vessel in terms of the number of people using it, the number of passenger vehicles and the number of commercial trucks using it.

MR. EPSTEIN: And depreciation and maintenance for vehicle for the ferry itself.

MR. PAUL TAYLOR: They are down, I think those numbers are in the range of 25 per cent to 30 per cent in the last five years.

MR. EPSTEIN: Is the economic impact study going to be made public? Is that part of the plan?

MR. PAUL TAYLOR: I presume it is.

MR. EPSTEIN: Any dates?

MR. PAUL TAYLOR: No, I don't know.

MR. EPSTEIN: Any dates for when the follow-up group is likely to meet?

MR. PAUL TAYLOR: The follow-up group - the staff has . . .

MR. EPSTEIN: The representatives - so all representatives of ACOA and . . .

MR. PAUL TAYLOR: The staff has met three or four times now, both in person and in conference call, to finalize, to make sure this report covered the landscape that it was expected and that it was accurate and that it had all the data in it. It's now being digested in the way of - the way these things operate in government, as they do in most businesses, that big report is being distilled down into the facts for Premiers, for ministers, for mayors, for city managers to look at and say this is what this thing means to us.

[Page 15]

MR. EPSTEIN: Okay, so we can expect that at the political level, the relevant ministers will have this information already, or any time now, would that be fair?

MR. PAUL TAYLOR: Any time now, yes.

MR. EPSTEIN: Okay, good, thank you. Can I ask some questions, I think, of, I guess probably Mr. Wadman. I was looking at some newspaper clippings, things that followed the announcement that there was likely to be a closure. I was particularly struck by an editorial published in the Digby Courier on July 6th this summer. I don't know if you saw it, I would perhaps be surprised if you didn't. It was the one called "Ferry demise not the end". Did you see that editorial at all, or do you remember it?

MR. WADMAN: No.

MR. EPSTEIN: Can I just give you a bit of the tone of what it was that the local newspaper editorial board was saying. They observed that there was an immediate shock, of course, in this announcement, but they essentially were cautioning against panicking and they expressed some confidence in the resilience of the local entrepreneurs. I guess that would be yourself and also Mr. Shay and others in the community. One of the things mentioned specifically was the alternative of flying your fish products, rather than trucking or taking them by truck and ferry. I wonder, do you have any comments for us about this?

I notice that the sheet you gave us compared ferry and road but it didn't include a column for flying. Is there a reason for that?

MR. WADMAN: Well, there are no airports in western Nova Scotia.

MR. EPSTEIN: Well, they said there are airports in Digby and in Yarmouth, are they just . . .

MR. WADMAN: We have the asphalt, but we have no planes.

MR. EPSTEIN: No flights, okay, no one servicing them.

MR. WADMAN: It becomes very difficult to get it off the ground. Many of the products - live lobster, there is a lot of live lobster that goes out through the Halifax airport. As a matter of fact, in the winter, in the months of December and January, it's very common because the Halifax airport can't handle the volume of live lobster, we actually have dealers in western Nova Scotia packing live lobsters in 10-, 15-, 20-kilo cartons, putting them on trucks, taking them on Bay Ferry and they will go into Logan airport in Boston, some of them will go as far south as New York, some of them will go into Trudeau airport in Quebec, to catch international flights.

[Page 16]

MR. EPSTEIN: So if they're shipping to Europe, for example . . .

MR. WADMAN: Yes. Now live lobster is a very specific, high-end product and yes, there are more air shipment options. The air shipment is not an end-all market. Perhaps 50 per cent of the product goes into dealers in the United States who want to buy truckloads. It's just not commercially viable to take 30,000 pounds of lobster and put it into 1,000, 30-pound boxes and truck it to Halifax, put it on a plane, fly it to Logan airport and then take it off, truck it to a dealer who then unpacks it and puts it in his tanks and then, as he sells it in a retail-type format, repacks it and it goes again. You would be looking at a 15- or 20-cent cost on a truck via the ferry, versus maybe $1 a pound by air freight. If you can imagine what fuel has done to commercial freight rates on a truck, just imagine what fuel has done to commercial freight rates on an airplane. Then, of course, you have the security concerns. It just goes down the road, the amount of extra cost that has been added in.

I guess I'll answer every question with the same thing: this 42 kilometres is a part of our National Highway System, and it behooves the federal government of this country to maintain the National Highway System.

MR. EPSTEIN: I certainly don't disagree with you. It's a very good point, and you made it very clearly before. Before you leave today, I'll make sure you get a copy of this editorial. You might want to have a chat with them. I guess I also wanted to assure Mr. Shay I wasn't thinking that your lumber could necessarily go by plane.

Do you also share in the suggestion, the one solid suggestion I think we heard from Mr. Wadman, that this should be taken up at the level of our Premier and the Prime Minister in order to try to get some movement on that, or did you have another suggestion for us?

MR. SHAY: There's no question, I think this deserves the highest level of recognition and attention that is available, and that goes to the top of our leadership structure. It's urgent for us. We don't have time to dither and wait to see who wants to offload the responsibility or take the responsibility. We need to get it settled. What's disconcerting to me is that of all the jurisdictions that are involved in this, as Mr. Taylor has cited, all, in theory, are leaders in their own right, and nobody wants to be a leader in this area and resolve the issue. That really bothers me a lot. It's problematic in our whole structure, I think. Someone has to step up and get this thing dealt with.

We've already cited the dates that are required, so that people who have extreme sense of urgency can make plans. It's important that somebody who is a leader in this country or in the province be just that and take the bull by the horns and deal with it, instead of all the jurisdictions trying to figure out which way they can slither out of this

[Page 17]

and take the least amount of responsibility for it. They'll have to sort that out later, because we can't wait for that to happen.

MR. EPSTEIN: A perfectly good point. Can I ask you both what happens if come the end of October, the first of November this ferry actually does close? What happens if there's no immediate prospect of it opening again? What alternatives do you have?

MR. SHAY: In our case, we just have the road. Like I said, it's getting increasingly difficult to get third-party trucking contractors to come down here.

MR. EPSTEIN: So it will put your cost up, essentially that's what it will do.

MR. SHAY: Roads will continue to be dangerous. The winter season exacerbates the danger. Bowater has expressed a very deep concern on the extra financial impacts of not having the ferry service to go around it. On the South Shore and Liverpool, they're certainly a much larger player in the economy of southwestern Nova Scotia than I would ever be.

MR. EPSTEIN: Are you going to be able to put your costs up and sell your product if you have to do that?

MR. SHAY: We can't put our costs up to sell our product. We are already burdened by an exchange rate that is just about killing us, and all the others, insurance, fuel rates - there are too many other cost burdens now that we have to bear in the American marketplace. With our particular situation, there's an oversupply of lumber in North America, so we have to bear any extra costs.

MR. EPSTEIN: And what's the answer for you, Mr. Wadman? What are your alternatives?

MR. WADMAN: Our alternatives are going to have to be hiring extra drivers, which is a problem in itself right now. With the out-migration to the West, hiring - if the industry winds up needing 50 more tractor-trailer drivers, those individuals just simply do not exist right now. So we're going to have to pay a premium to convince somebody who is in Alberta to move back to Meteghan to drive a truck. The big things - we can drive around, sure, it's going to take double the manpower, it's going to have a 70 per cent to 80 per cent increase in cost, and we lose.

The only niche, really, that Nova Scotia has left in the seafood market is what we call just-in-time seafood. It's fresh fish. Basically, my plant is working today producing haddock. We're going to catch the 11:30 a.m. ferry out of Westport. We're going to catch the 1:30 p.m. ferry in Digby. We're going to be in Boston for six o'clock in the morning at our customers. If I have to drive around, there are six or seven extra hours there. So

[Page 18]

I either have to lose six or seven hours production on one end, or be six or seven hours late on the other end, and lose six or seven hours of sales.

The bottom line is, if you want fish tomorrow morning at 7:00 a.m. and I can't be there, you're not going to wait until two o'clock in the afternoon, saying, Glenn's a great guy, we'll wait until 2:00 p.m. You're going to go around and say, who can be here at seven o'clock, and if you can find a domestic U.S. supplier, if you find a guy from Iceland - right now Iceland is flying a jumbo jet into Boston a couple of times a week with fresh fillets - whatever.

The world is a really big place, but it's only about the size of a coffee cup because of their transportation infrastructure. I mean, when we have one of our big competitors, Iceland, flying jumbo jets full of fresh fillets into Boston, and we can't put a ferry on? We can't keep 42 kilometres of highway open? It really says what our federal government thinks about this area of the country. I hate to get back to that.

MR. EPSTEIN: A good point, thanks a lot.

MADAM CHAIRMAN: Thank you. Ms. Conrad.

MS. VICKI CONRAD: Thank you, Mr. Wadman, Mr. Shay, and thank you, Mr. Taylor, for being here and sharing some thoughts. There is no question that good infrastructure is a vital part of the economic well-being of rural Nova Scotia. I see two crucial issues out of this: one, being the transportation of goods and services from the Digby area, with the loss or potential loss of this ferry; and also the fact that potentially 140-some-odd jobs will also be lost in the communities of Digby, and in rural Nova Scotia we can't afford to lose one job, let alone 100-some jobs.

I'm hearing that there's no real time frame yet for the consultation process to be completed, in terms of the economic impacts. I hope that beyond this table the province is also sitting down not only with our federal counterparts, but also with other stakeholders in the industry, such as yourselves, at the table - Bowater, Christmas tree producers, tourism - to get a really good look at what that economic impact really looks like.

With that, should the ferry service actually close its doors on November 1st, has the department been working with industry and businesses to look at what those alternative plans will be, or planning for that eventuality if it does happen? That's very important because just to leave these businesses out there on their own, looking at what alternatives, what they need to move forward with now. Even if the ferry service is to survive in some way, those plans should be taking place now. I'm wondering, is the department working closely, or has plans to work closely with the forest industry, with the fishing industry, with tourism, and look at alternative solutions?

[Page 19]

MR. PAUL TAYLOR: This working group I referred to earlier has, from the outset, had representations from not only Economic Development, but as well as the Department of Tourism, Culture and Heritage, as well as the Department of Transportation and Public Works. So they're working with us not only through the process of dealing with the options for trying to keep the ferry service running, they are also working within themselves to deal with the issues that will result if that ferry service stops, in particular the Department of Transportation and Public Works, around alternatives. One was referred to earlier here, is there any possibility of doing things like air freighting fresh seafood out of the Yarmouth area to a collector area in Halifax, and hence on to marketplaces?

[10:00 a.m.]

One thing that this report in general has certainly confirmed, there are alternatives available to move products out of southwestern Nova Scotia. However, those alternatives are more expensive, and hence that's where the negative economic impact comes from. You can move things out, if you're a price taker in your marketplace and your transportation costs to that market have gone up a result of the closure of this ferry, your margin has gone down, if not your whole business. So it doesn't take the closure of a business to result in a negative economic impact; it takes companies like these two gentlemen here, to take a $100,000 hit off their top line as part of that negative impact.

So the alternatives are there, but they are more expensive. So yes, people are looking at the - nobody wants to be there, but people have to consider what will happen if we are there and that ferry service is no longer running as of November 1st.

MS. CONRAD: Looking beyond that, too, that hopefully-not scenario where we're looking at the ferry closing its doors, what about the 130, 140-some-odd folks who will be without jobs in that area? Is the department considering that as part of this consultation process, and looking at what the strategy will be for those jobs lost, as well as the other economic impacts?

MR. PAUL TAYLOR: As I referred to earlier, when looking at the impacts, the direct employment impacts, the majority of those employees are in the Province of New Brunswick, quite a large majority of them are in the Province of New Brunswick. That's certainly one of the reasons why the Province of New Brunswick is at the table with this group, looking at ways to keep this service running.

Certainly if the service goes down, there will be people out of work in Nova Scotia. I do understand it's one of the reasons why time is of the essence here. It is not only the loss of the commercial contracts. I am aware that the people who are working on that service now, they, as well, can see the November 1st date coming. Some of those

[Page 20]

people already have alternative means of employment lined up, and they need to know whether they should take those options now.

Yes, there will be impacts on direct employment in Nova Scotia, but they will not be - I don't think they'll be as significant here in Nova Scotia as they will be in New Brunswick.

MS. CONRAD: I also understand that our MP Minister Keddy had suggested that perhaps a smaller vessel is something that government could look at, and this smaller vessel would be similar to - perhaps set up similar to Baltic Ferries subsidies and what that kind of subsidy situation looks like. I understand that Baltic Ferries subsidies work, such as where Denmark and Sweden heavily rely on subsidies to link the Baltic States in an effort to promote their trade and integration, and between the Nordic, Baltic and European countries. Those ferry services also make a lot of money for the "booze cruise" type of trips between states where passengers are getting on one end for a weekend cruise, getting off at another destination, but in the meantime it's life on the ferry, it's what they're going for, not necessarily getting off at the other end of the destination and spending money there.

I'm wondering if that's something that the department is considering, especially in light of the fact that there has been a proposal in front of the department from a company that has been entertaining Shelburne Municipality in setting up a ferry service from Shelburne to Boston. I understand that particular company is looking at this sort of destination package on their particular ferry. If that is in front of the department, how does that kind of compare to what we're faced with now in Digby? Is the department looking at that particular ferry service coming out of Shelburne, but perhaps not taking this situation that the Digby ferry - not suggesting as seriously, but how do you compare those two different distinct services, and potential services?

MR. PAUL TAYLOR: I think it's fair to say that not only companies like Bay Ferries, but other marine operators are constantly looking for ways to cater their service to the way the market is going. You have identified - I get out of my depth rapidly in the tourism sector, but one of the trends that helps explain some of the numbers we've seen not only on the Digby-Saint John run, but certainly the Yarmouth-Bar Harbor and Portland runs is exactly as you said. The marine market has changed, and it has certainly changed being led by the type of cruise ferries one sees in Europe where people are not getting on these ferries to go from A to B anymore, they're getting on these ferries to, yes, go from A to B but a big part of their reason for getting on that ferry is for the ride itself - the gambling opportunities, just the entertainment factor as in a cruise on the vessel.

One of the things that helps explain the lack of tourism numbers coming through on these marine services coming into southwest Nova Scotia could, in part, be the fact

[Page 21]

that those same people are disembarking in Halifax, off rather large cruise ships. We have seen a dramatic reduction in the coach tours coming into Nova Scotia through southwestern Nova Scotia. It's difficult to do person-to-person tracking as to whether they would have been five years ago on a coach tour and this year they're disembarking on the Carnival Victory in Halifax Harbour. There is a strong growth in the number of people who want to get on a cruise boat and come into Halifax Harbour, as opposed to get on a bus and come through a ferry into southwestern Nova Scotia.

Certainly, the Department of Tourism is very much aware of these changes in the trends. As I said, I'm going to get out of my depth rapidly in telling you what I know about their discussions with operators and trying to turn these services more into cruises, as opposed to A to B transportation systems.

MS. CONRAD: Thank you. For Mr. Wadman, Mr. Shay, have you, outside of the Digby area, been talking to other people in the industry in other counties that will be negatively impacted, should the ferry service shut down, i.e. Bowater? I haven't been in discussions with Bowater myself. I'm from Queens and I understand that they do ship some of their product by way of the ferry service, but I'm not sure of the stats on that, just how much goes by road and how much actually goes by ferry.

I also am aware that our local Christmas tree industry relies on the ferry service a lot, and also some of our fishing industries out of Queens. Of course, as we all know in rural Nova Scotia, what happens in one community or municipality has severe impacts on neighbouring municipalities and communities. So what happens in Digby is a big concern to me in Queens. What happens in Queens, I'm hoping, is just as big a concern to folks in the Digby area. We are all very connected.

That being said, have you reached out to those industries to grow this voice, to get together at the table and to make your views known, as a group, to the province and then hoping that the province will carry that voice on to our Ottawa counterparts? Either one.

MR. WADMAN: I'm a past president of the Nova Scotia Fish Packers Association. Normally the Executive Director of the association would be here today, but the FRCC is in Yarmouth dealing with the lobster question, so I'm kind of sitting in his place.

We have about 65 member companies in the association. I do probably active day-to-day business with 10 to 15 or maybe 20 of those companies. The concern is universal, right across the board. There are 65 of us and we may be the best of friends, but we are the worst of competitors. For all intents and purposes, the northeastern United States is the bulk of our market, 60 per cent to 70 per cent of our stuff goes into the northeastern U.S. and we are all in there competing. We have all - I mean processors

[Page 22]

from down your way, from Clark's Harbour, from the French Shore, from Meteghan, Yarmouth, Argyle, Pubnico, you name it, we're all going in the same markets, we're all competing very straightforward in the same market and we're all looking at the same thing. If this piece of highway disappears, we're going to have to hire two drivers, we're going to lose processing time, and we're going to lose that just-in-time delivery ability on fresh fish.

MS. CONRAD: Getting back to that infrastructure, and my colleague, Mr. Epstein, had touched on the airport service. There is the airport coming out of Yarmouth, there is a small airport in Queens, there is a small airport, I understand, in Digby, but as you noted, pretty much just asphalt right now. Has there ever been any discussion within the industries about the viability of promoting that airport service or that infrastructure to be maintained, to be promoted within the province in a bigger way?

Certainly, for the lumber industry, it's a little bit more - you're not going to be shipping a lot of stuff by air, for sure, but certainly the fish products, and whether or not that, within seeking alternative solutions - has the industry ever gone before the province and said, look, we really need to get serious about not only our wharves, harbours, ferry services and our road infrastructure, but we need to have those airports up and running, or well maintained, or thought of as an integral part of our rural infrastructure?

MR. WADMAN: I think there have been ongoing discussions over Yarmouth for years. I've been here in western Nova Scotia for 20 years, and since the airport started winding down, I think there have been ongoing discussions. You have to understand, in the seafood business, the air-shipment business only lends itself to a certain class of products, and that is the high-end. Fresh live lobster, fresh scallop, clam meat, the very high-end products. Most of the, shall we say, commodity products cannot take the extra burden of 30 cents to 50 cents a pound for air quality packaging material. The very first thing is once you start shipping fish by air, you have to have waterproof, leak-proof containers, because, as the airlines have continuously explained to us, leaks of saltwater in midair are catastrophic.

So you take something like a frozen haddock fillet at $2.50 U.S. or $2.70 U.S., the market can't absorb 30 cents or 40 cents a pound for packaging, plus another 30 cents or 40 cents a pound for transportation, when to go on a truck you're looking at, frozen packaging runs between 9 cents and 10 cents Canadian; frozen freight into the U.S. runs about 12 cents. So what we're doing, say in the frozen fish business, is taking a packaging cost structure of 21 cents by road, and we're replacing that with a packing cost structure, going by air, of maybe 70 cents. It's like when you go to get your favourite food - you're from Queens, so woodchips. (Laughter) They're an extra 50 cents a bag. Unfortunately, because of the competition in the market, we have very little ability to pass along to the Americans, the cost increases.

[Page 23]

I hate to harp about it, but one of the big things that's keeping prices down these days is foreign competition, and our biggest competitor in the frozen and salt fish end of it is China. We're competing. We're down here, 50,000 of us, west of Halifax competing with a country that has a population of 1 billion. In the last three years, we've lost 50 per cent of our exchange rate where China has an exchange rate that's set against the U.S. dollar. It's Chinese federal government policy, setting the yuan at this rate against the U.S. dollar, to keep us competitive.

[10:15 a.m.]

If you really want to understand the impact, take a lobster dealer. In 2002, we were selling lobsters in Boston at $7 a pound and when we crossed back into the border at Calais- St. Stephen, it was worth $10.50 Canadian. Today, we are still selling lobsters at $7, so you would think the world is a great place, but when we cross back into the border at Calais-St. Stephen, today - I checked - it's probably worth $7.87. So we've lost $2.66 cents a pound. The price has stayed the same, the transportation costs have stayed the same, interest rates have gone up, fuel costs have gone up, everything has stayed the same, but the price has gone down. The actual net back into our pockets has gone down $2.66 a pound.

The challenges are tremendous. I'm not saying we're not up to them, but when somebody comes and takes the highway - I hate to keep on this one. I would love for somebody to come in to do a Star Trek-type of thing, have the Borg come in and take 42 kilometres out of Highway No. 401, and let's just see how that Ontario economy booms along.

MADAM CHAIRMAN: Ms. Conrad, I'm going to interrupt you now to go to the next, because we have three more on our list of members who want to speak, and we're in the last hour. Before I turn it over to Mr. Gaudet, I think Mr. Shay had a comment he wanted to make.

MR. SHAY: Very quickly, if you'll allow me, I'd like to respond to Ms. Conrad's questions. First of all, the math for the lumber industry is very similar to what Mr. Wadman just explained. We are in dire straits for those reasons that he cited, and on top of that the lumber prices are at their lowest cycle in the last 18 years. Nonetheless, I just wanted to respond, back to the industry issue, you asked if other sectors or other areas of the industry were involved. Certainly, when the Fish Packers Association spearheaded this industry group to get this movement going in southwestern Nova Scotia, I was involved and a senior representative from Bowater is directly involved on this committee. They have a keen interest in this and a strong concern. Also, I haven't talked to the Christmas tree guys specifically, but we also involved Steve Talbot who is the Executive Director of the Forest Products Association. Certainly, the entire industry is concerned about this.

[Page 24]

Again, it's the bigger issue of our whole transportation infrastructure. We require that to move our products. We have a board of directors meeting actually in a couple of weeks in Pictou County, and this item is on the agenda. I would expect to see some form of letter come to the province on this issue, for the record, to support the ferry in Digby.

MS. CONRAD: Can I just quickly ask who . . .

MR. SHAY: Robert Oxenham.

MS. CONRAD: Thank you.

MADAM CHAIRMAN: Mr. Gaudet.

MR. WAYNE GAUDET: Madam Chairman, I want to start off by thanking our witnesses for their presentations this morning. I think for all of us, since Bay Ferries announced back in June that they were looking to stop operating the ferry service come October 31st, many people, many businesses, many sectors of our economy have expressed the huge impact the cancellation of the ferry service will have on our local and provincial economies. This morning I want to focus a little bit on our provincial government's role. We've been hearing all along from many business leaders from many sectors of our economies, but we haven't heard too much from our government officials.

I recall hearing the Minister of Economic Development saying that we're working hard on this file. I'm sure that the government staff, government officials at both levels of government are working hard on this file. The frustration that I'm hearing, especially from the people of Clare, is nobody seems to know what our government is doing on this file. Maybe this morning, to try to better understand the process that our provincial government is engaged in, to maybe, hopefully, get a few answers that we can share with many people who do ask us questions, I want to start off with Mr. Taylor.

Could Mr. Taylor indicate to us, in terms of what's going on, in terms of negotiations, and I'll have a whole series of questions that I will ask, but maybe, at the offset, if we could have a sense of what's going on between the federal government, between the provincial government. I know Mr. Taylor, in his opening comments, indicated there have been some discussions with the government in New Brunswick. I recall, a couple of months ago, attending a meeting here with the Minister of Economic Development and other provincial Cabinet Ministers, a meeting with wardens and mayors, especially from western Nova Scotia, and I haven't heard anything since. That was about two months ago, Madam Chairman. I'll begin with Mr. Taylor, if he could maybe try to bring us up to date in terms of where we're at.

MR. PAUL TAYLOR: Certainly, I'll try. Since that initial meeting you referred to, as I mentioned earlier, the elected representatives from all five of those jurisdictions

[Page 25]

did, very early on, commit their resources, their staff time, to do the homework necessary for them to be able to make a decision on what role they are going to play in trying to keep this service going.

I will reiterate at the outset here in my comments, though, I think it has to be clear that Bay Ferries really hasn't asked any of those levels of government for anything. So when you use the term negotiations, that's not the term that would apply in this case. What has happened since they announced their intent to close the service, the communication back to the company has been that governments are very interested, obviously, in seeing this service stay operating, so Bay Ferries doesn't do anything in the short term that will make cessation of this service inevitable, or certainly guarantee that there has to be a break in service come November 1st. Work with us to see if there is something that government entities can do to assist with this business model that you have, to see if this service can be saved, that it doesn't inevitably have to shut down.

Bay Ferries has been, I will say, very co-operative with us. They're extremely - we should recognize Bay Ferries as a privately held, closely held corporation. They produce no publicly available financial statements, they are a private company. They are very cautious about having their business details debated in the public. They have other operations, obviously, the Yarmouth-Bar Harbor, Portland runs, the Newfoundland ferry service - oh, sorry, every time I see NFL Ferries, I think of Newfoundland ferries - Northumberland Ferries to P.E.I.

They have worked with us closely to provide us the information, by way of a confidentiality agreement that I personally signed, saying that we would restrict that information to a very few people. In fact, I, myself, have never seen the information. It was provided to our staff and a very limited number of staff inside that working group.

So the company has been working with us to provide the information we need to understand, how did this ferry service get to this point? This ferry service used to make money, as I understand it, without any subsidies. Why has it deteriorated? Has the business case deteriorated to the point where the company feels they can no longer make money on this service and, therefore, intend to shut it down? What can be done to try to turn that around?

I think, prudently, that we needed to gather the necessary information - certainly speaking from my position, the position I occupy, I didn't want to walk into Richard Hurlburt's office and say, here are my recommendations, but I don't really know what the finances of this ferry look like. I needed to be able to tell him, here is the problem, here is the long-term potential solution, here are the trends of this ferry service in the future, if it continues to operate and nothing changes, here's the size of the problem that will continue to exist. That's the type of information that every one of those jurisdictions wanted to have in its hands before they walked into their municipal council, their

[Page 26]

provincial Cabinet or the federal Treasury Board and say, this is the issue, this is the role I think we should play and here's why.

As I said in response to Mr. Epstein's question earlier, we have now, with the consultant, concluded that process of detailing that information. It's now being digested and put in front of the people who originally responded when this shutdown was announced, that being ACOA, the provincial government in New Brunswick, the provincial government in Nova Scotia, the municipalities in southwest Nova Scotia and the city of Saint John.

It's being put in front of them to say here is the extent of the problem, here is the outlook in the future if nothing changes, here is what we expect the tourism industry is going to do, here is what the forest industry is expected to do, here is what the Canadian dollar is likely to do - continuing the businesses of these two gentlemen - this is the size of the problem now, here are the options for dealing with the problem - and one of those options, quite frankly, is to let Bay Ferries shut that service down November 1st. Quite realistically, that is one of the options that people have to consider, because there is a price here of continuing that service.

As I mentioned earlier, this appears to be one of the very few services in North America of a privately owned ferry that does not or has not, over that period of 2000-05, relied on some form of government funding. The federal government made a very conscious policy decision, I think it was in the late 1990s, 1997, to get out of the ferry business. This was one of the services that they privatized by way of, as I understand it, an open public tender, and Bay Ferries won the right to continue this service. They were given operating support and capital support for a defined set of years, which then expired.

This service used to be heavily subsidized by the federal government. The federal government continues to subsidize ferry services across this country that are constitutionally protected, such as the Newfoundland service, such as the B.C. service. These are services for which there is no alternative, you cannot drive around. Hence, the Constitution protection of attachment to the federation is the result of Transport Canada's policy of continuing to subsidize them.

These two services, Yarmouth and Digby, do not fall under the category. Hence, just to make a long story short, the information has been gathered. It has been put in front, it is being put in front of all those jurisdictions to determine which of those options they intend to pursue and what role they want to play in the pursuit of those options.

MR. GAUDET: Respecting that Bay Ferries has made it very clear they want to get out of the service by October 31st, has the province made any requests to the federal government in terms of asking them to take over the service again? Has the province

[Page 27]

requested from the federal government, the possibility of a federal subsidy to run that ferry? In terms of the information that has been gathered, we are now providing this to the people sitting around the table who will be making decisions, I'm curious in terms of where our provincial government has gone on this file. Are we basically trying to work in partnership with the federal government to try to find a solution to this problem?

MR. PAUL TAYLOR: I think it's fair to say that that's the word I would use, working in partnership not only with the federal government, but certainly the Province of New Brunswick. As I said earlier, they have quite a bit riding on this ferry service, as does the Province of Nova Scotia. Certainly the local municipalities are involved in this file. That service brings a lot of people through the City of Saint John. Councillors and the mayor in the City of Saint John are very much aware of, if that ferry doesn't exist, those people are likely to bypass Saint John.

One of the impacts that again contributes, ironically, to part of the problems we're seeing with Bay Ferries is the fact that highways continue to be upgraded, they continue to be twinned and they continue to be improved. Those improved twinned highways may not reach all the way to southwest Nova Scotia, but certainly the ones in southern New Brunswick, certainly the ones running up from Halifax - the highway system is making the drive-around a more attractive alternative for some companies.

[10:30 a.m.]

There is a dividing line somewhere in Nova Scotia: if you're east of that line it makes more sense to drive, and if you're west of that line it makes more financial sense to take the ferry. That line moves, and it moves in response to a whole different set of criteria, some of which you mentioned earlier: prices, exchange rates, cost of fuel, insurance.

We are working with all five of those governments, in partnership, to try to solve this collectively. I think every one of those jurisdictions has a role to play here, because they all benefit from the fact that ferry service exists.

MR. GAUDET: I would like to start off on the roads, but I want to stay focused on this question. Mr. Taylor, we've been hearing that there are all kinds of deadlines approaching. Does government have any deadlines? Can we expect to hear from government soon in terms of what kinds of recommendations will be coming forward, what kinds of solutions they're proposing? Many people are asking questions, and we can understand why those frustrations are building up. At the same time, there has been very little that has been said by the government.

Again, I'm just trying to get a sense so that when I'm asked, again, I can basically indicate to them, yes, I understand government will be forthcoming shortly on some kind

[Page 28]

of announcement, we can expect to hear soon. I'm just trying to get a little more sense of what to expect here.

MR. PAUL TAYLOR: I would certainly expect that in the next couple of weeks, this has to land one way or the other. We have been keeping in close contact with the company. The company and its employees are as interested in whether this is going to work as anyone else. We have been keeping in close contact with the company, trying to get an idea from them as to when we are going to cross a timeline where cessation of the service becomes inevitable. We have not crossed that timeline yet, the company assures us of that. They are certainly impressing upon us, as is, I would imagine, your constituents, companies, that we are running out of time, that this has to be decided soon.

MR. GAUDET: I'll end with this last question. Is the provincial government looking at a backup plan in the event that the ferry is cancelled? We know that businesses certainly need help. It's very critical, it's vital to assist businesses to get their products to market. At the same time, it's critical that especially Highway No. 101 is completed before we continue moving on towards divided highways. So, again, I guess I should be patient here in terms of I should allow the process to evolve and the government to make a final recommendation or announcement on this file before looking at a possible backup plan, but in spite of that, I guess what I'm curious to find out is has the Department of Economic Development been looking at a backup game plan in the event that the ferry is cancelled?

MR. PAUL TAYLOR: There isn't a formal assessment of options, but we are certainly in constant discussions with the Department of Transportation and Public Works, and with ACOA and the federal Department of Transport around - and some of those alternatives have been talked about here this morning - what alternatives exist. There are alternatives. Rail is not one. If this ferry goes down, the only other alternative is to look at another operator with another type of vessel. That's one of the challenges this service is going to have, this vessel is reaching the end of its useful life. So an alternative marine system coming out of Digby or coming out of some other port is a possibility. If the economics don't work for Bay Ferries, it's probably going to be difficult to attract someone else to run a service. It would all depend on the type of vessel.

In talking to Ms. Conrad earlier about the changing in the passenger demographics, also the changes in the freight demographics going across the service, there are possibilities around - certainly one of the options is to revitalize this service using different equipment. The equipment costs money, and that will increase depreciation that comes from new equipment and will further burden the operating numbers on the service. So discussions with the Department of Transportation and Public Works around the air-freight options; certainly the road option exists but as was pointed out earlier, there is a big hit the further west you go in this province. Down the Valley

[Page 29]

or down the South Shore there is an increasingly large hit to the drive-around option to the bottom line of these companies.

So none of those alternatives is the preferred solution here. The preferred solution is to find a way to keep this operating but the alternatives are in the minds of people, they are just more expensive.

MADAM CHAIRMAN: I would like to turn the floor over to Ms. Streatch. I'm sorry for holding you up.

HON. JUDY STREATCH: That's not a problem, thank you very much, Madam Chairman. Before I begin, I would like to congratulate you on your chairmanship of this very important committee. Certainly it's a pleasure to be back around the table with all our colleagues.

When I looked around the table this morning, I reflected that there are four out of eight of us from the South Shore or the sou'west region of Nova Scotia. Now whether that is by coincidence or design, I think it's reflective and indicative of the importance of this vital service. Although I preface that with the statement that four of us are from the sou'west or the South Shore region, I think it's indicative of the importance of this service for all Nova Scotians. This goes beyond the region of the southwestern or the South Shore of Nova Scotia, so certainly those of us across the province understand and appreciate and certainly are here to support the important, vital link that this ferry service provides to all Nova Scotians.

I have three questions, Madam Chairman, so I will begin my first question. I should thank the panel who have come here this morning, as well, for taking your time to be here with us. I think I have to address the first question to Mr. Shay and Mr. Wadman. Paul, I don't know where you were in 1997 so I can't ask you. I'm wondering though, when the former federal government divested the ferry in 1997, was there a concern at that time regarding the long-term function and the long-term lifespan of the ferry service once she became divested and no longer was subsidized or operated by the federal government? I don't know if either one of you were in business or if you remember if there was a discussion at that time. I would appreciate knowing if there was discussion.

MR. SHAY: Well, Glenn is certainly a lot older than me, he might remember better, I don't know. I really can't recall back to that time. I was obviously not in business as long and not quite as involved in the community and these different issues. I really don't know what's around it. I do know that I think Bay Ferries was the only player that stepped up, which says to me that there is concern about the viability of that operation, as a stand-alone business venture. Obviously it doesn't stand alone because it had a huge federal subsidy before it was privatized and since then it has been

[Page 30]

subsidized in the ferry rate. It's the nominal fee each year for the ferry and the terminals themselves. But back in 1997, I wouldn't have been involved enough to know what had transpired then.

MR. WADMAN: Actually, there was a ferry committee in 1997. I was on that committee. It was spearheaded by the WVDA - the Western Valley Development Association, which has since gone the way of the dinosaur. The sort of leader of the committee, the chairman, was a gentleman by the name of Brock Dickerson.

I can remember very plainly at that time some public meetings in Digby, having some people there from Marine Atlantic, who I mistakenly referred to as CNR and got corrected, and saying that the federal government at that time should not privatize this service. I was on the committee but not in the inner workings, so I believe that Bay Ferries was the only active player, but I'm not 100 per cent convinced there.

I would like to say, for the record, and I heard the words used by Mr. Taylor and by my friend Greg here, about the federal government's subsidy to this ferry in the past. The word "subsidy" was offered in the mid-1990's by the Martin Government as a propaganda word to frighten people. There was never a federal subsidy for the Digby ferry. The federal government operated the Digby ferry. You don't subsidize yourself. When we got into the cost-cutting, downloading, moving services from federal to provincial to municipal to local to the guy who is working, the word "subsidy" came out as a justification propaganda. There has never been a federal subsidy for this ferry and people should understand that. The federal government operated this ferry; you don't subsidize yourself.

I think what they did was, they either took their operating budget and called it a subsidy, or they took some calculation between operating budget and revenue generated and called that a subsidy. I never, ever did get a clear explanation. In 1997, I can remember leading a faction of the committee saying that this ferry should be maintained as part of the federal infrastructure maintained by the government.

It was the era of cost-cutting, it was the era of deficit reduction. It just went nowhere.

MS. STREATCH: Thank you very much. I guess hindsight is always 20/20 for all of us, regardless of what table we sit around.

I am a big believer in partnerships and I know that we had lots of discussion around the table this morning regarding partnerships. As you were presenting some information, Mr. Taylor, on the consultants who have been out discussing with the municipalities and the industry and certainly federal and provincial governments, I'm

[Page 31]

wondering as we build this partnership, because I don't think anyone is going to be able to move forward in the days to come in any sector alone, as we build these partnerships.

The provincial, the municipal and the federal governments can all come to the table, as they will, and within their means and certainly I would fully expect all levels of government to come to the table, but I'm wondering, would it be beneficial if industries - I'm going to address my question to you first and then I would like to discuss it with the two representatives from industry here as well, because I have had discussions like this with some of the Christmas tree producers in my area. Would it be beneficial to the consultants and to the process as we move forward if we had commitments from industry, from all sectors, to a certain level of participation or usage of the ferry service?

MR. PAUL TAYLOR: Well, I can certainly say it would be beneficial to Bay Ferries. They are in the crystal ball business right now, as are we, in trying to look out into the future to see where this service will be four or five years from now and what kind of bottom line it will be producing. I remember back in my old statistics courses at university and one of the questions was, what's the difference between risk and uncertainty? Well, risk you can measure and uncertainty you can't.

Companies hate - and I won't speak for these gentlemen - but companies hate uncertainty. They hate looking out into the future and not even being able to put a probability that something will happen. They just know it's out there and if it goes against them, their bottom line is going to take a hit. Anything that can be done by the potential users of that ferry to give some sort of certainty to Bay Ferries as to what their future revenue stream could be makes it a lot easier for them to decide whether they are willing to stick this out in the long run.

Eventually we are talking a near term and a longer term issue here. The near term issue is how do we get past November 1st and ensure that the service continues. The longer term issue is, if this service continues, something eventually has to be done about that boat and that brings a whole new level of risk to a company like Bay Ferries. Anything that can be done to alleviate that risk, to give them some certainty as to their revenue stream in the future would be, I'm sure, worth its weight in gold.

[10:45 a.m.]

MS. STREATCH: Thank you. I have heard both of you plead passionately this morning for the continuance of this service. How would your industry - I don't know, we can't ask you to sign commitments, I'm not asking that, but I'm wondering, how does industry come to the table, short of doing exactly what you're doing, and ask governments to sit down and make sure that this is there for you? How do we get industry onside, so that Bay Ferries and/or governments know that the use will be there by - because I think we all understand that the majority of the use is industry right now,

[Page 32]

so how do we ensure that that service is there for both the forestry, the fishery and certainly other general freight?

MR. WADMAN: Again, in the seafood industry, it's next to impossible to guarantee the amount of usage because you have to understand that the industry is - we, in essence, are hunter-gatherers. We go out, as fishermen, and find the fish, we either capture it or kill it, and ship it. Our level of shipments are directly proportional to our ability to go out and find stuff and kill it. At its very basis, that's what it is. We find fish, we kill them, we put them in a box and we ship them to the market, with the exception of live lobster and a few other small things that we don't.

You can take quotas that are issued by the government and say, okay, we're going to take 26,000 tons of haddock on Georges, which evolves into this many fish, which should be this many trucks. We could have anybody with a computer and a spreadsheet do a calculation. In the fishery, one of the people who never gets talked to is the fish for their opinion. We have a saying back in my home country, God called him a cod, that's why he put a tail on him, or we call him a cod, that's why God put a tail on him.

It's nice to say we're going to catch 20,000 tons of haddock, but if the fish decide to swim - in our Georges Bank fishery now, we're fishing four miles from the U.S. Those fish wake up tomorrow morning and the water temperature is changed one degree, they move to the U.S. Okay, Bay Ferries traffic just went down by 50 trailer loads, or 100 trailer loads. It's very difficult in our business to say what we're going to do.

MR. SHAY: It's similar. I'm sure it would be beneficial for Bay Ferries, but I don't know how practical it would be. It would be great for me if the North American lumber market could guarantee my revenue stream for the next 10 or 15 years. It would make my life a lot easier, but there are just so many variables in the marketplace and in running a business that I think it's not practical to expect to be able to make any guarantees. I think the best you can do is make projections based on historical movements.

I don't want to belabour it, but I don't think you can roll up the 100-Series Highways and put them back down again with the ebb and flow of economic activity. The fundamental underlying question is, do you want an economy in southwestern Nova Scotia? If you do you have to start putting some infrastructure down there and maintaining it so we can conduct business.

That's the only thing we can offer, to continue to be in our communities, create the businesses, employ the people, make the products, and ship them out. I think it's not reasonable to expect us to give guarantees on how much of the highway we're going to use, how much of the ferry we're going to use, how much of the airports we'll use, if they're there, this type of thing. Certainly, I'm sure all industries would love to sit

[Page 33]

together and talk to Bay Ferries or whoever the operators are and discuss movement and to try to encourage movement, and talk about projections, but to cast stuff in stone like that is just not realistic.

MS. STREATCH: Madam Chairman, if I could, one last quick question. Not to correct my honourable colleague from across the way, but I'm sure that the Member of Parliament for South Shore-St. Margaret's would be delighted to know that he has been elevated to the level of ministerial. It is, indeed, not Minister Keddy, though I'll pass on your best wishes for his ministry when I see him.

I would like to echo my colleague's comments regarding a smaller vessel. The Minister of Fisheries was on the South Shore this weekend, federal Minister Loyola Hearn, the provincial Minister Ronald Chisholm, and Gerald Keddy had numerous meetings with members of the fisheries community. One of the issues that certainly came up time and time again was the Digby ferry, so that message was delivered. The discussion at that level and indeed as we noted earlier was what about the viability of a smaller vessel, given the seasonal commercial traffic. Again, I go back to the Christmas tree industry, which is ramping up, the fishery certainly is seasonal, forestry can certainly have a longer season than the rest of us, but would a smaller vessel - I guess, Mr. Taylor, I'll ask you - be a more reasonable, acceptable alternative to Bay Ferries? Could we move forward in a more hopeful way if it were a smaller vessel that we were discussing?

We've all heard some crazy figures, and the Princess of Acadia, I understand, has to be replaced within the next number of years, she has a limited lifespan regardless of what happens on October 31st. Would that small vessel be a better alternative?

MR. PAUL TAYLOR: I certainly understand Bay Ferries itself has been constantly running a series of simulations as to what the post-Princess of Acadia world would look like. The results of those - I haven't been told this, but I would have to presume that the results of those simulations are reflected in their announcement in June, that they don't see, under the present circumstances, the replacement of the vessel leading to a turnaround in the results of the operation.

Obviously a newer vessel and a smaller vessel will save them money on their fuel bill, for starters. A smaller vessel probably could be better tailored to the commercial realities of the service you talked about. There is a certain seasonal peak to this, with the Christmas trees and certainly the lobster season, pre-Christmas, as referred to earlier, and likewise there's a tourism peak, obviously in July and August, the tourist traffic coming into Nova Scotia and back into New Brunswick. There could be alternatives around two vessels going across on that run, a smaller commercial vessel and a seasonal passenger vessel to take the tourist traffic.

[Page 34]

There are all kinds of alternatives that I know Bay Ferries has been very active in trying to assess what they could do about this service, both with the existing vessel and to renew the capital in another vessel. The fact that they have chosen to announce the closure of the vessel would indicate they haven't found one that, wholly on their own, will work.

MADAM CHAIRMAN: A very short answer, if you could, because we only have 10 minutes left in our meeting.

MR. WADMAN: I've heard it said that a replacement for the Princess of Acadia is $70 million. I've heard the numbers kicked around that trade, to-and-fro, on the ferry, $2 billion. If we can get the federal government to step up to its responsibility, an investment of 3.5 per cent of the annual trade, not a very big bill for our federal government to absorb.

MADAM CHAIRMAN: I'm going to turn it, quickly, to Mr. Preyra. I do apologize, I've said we have just a short time, so maybe you could compress your question, and perhaps our answers will be short.

MR. LEONARD PREYRA: Do I have five minutes?

MADAM CHAIRMAN: Yes.

MR. PREYRA: Madam Chairman, I also want to thank the witnesses for appearing today, Mr. Taylor, Mr. Shay and Mr. Wadman. The minister asked where Mr. Taylor was in 1997, and I can answer that question. He and I were coaching an under-11 girls' soccer team that lost every single game that season and tied the last one. Five years later, we had one of the best teams in the province. That's just my way of declaring a conflict of interest, as well as to say that I knew where he was in 1997.

I'm glad to see that Mr. Taylor in particular brings the same level of diligence to his job that he did in preparing a girls' team for a soccer tournament. I wanted to ask him about the Schwartz report. It sounds like it could be a great source of information for everyone, particularly in the public discussions. I'm wondering, will this committee see that report, and will it be available for public discussion, as soon as possible?

MR. PAUL TAYLOR: I would presume the report is going to be made public, but since we jointly contracted this with ACOA, I have to just ensure that ACOA and the province are jointly onside with the release of the report and when and in what form.

MR. PREYRA: I have a question also about the federal position. Everyone here seems to say that the federal government would be the lead player in anything that might happen here. I know, Mr. Taylor, that you're not in a position to speak for the federal

[Page 35]

government, but could you tell us what the federal position is at this late date? Is there a consistent, coherent position on this issue?

MR. PAUL TAYLOR: I think it's safe to say their position is the same position as everyone else sitting around that table, the federal government can see the size of the impacts of this service on the economy of southwestern Nova Scotia, of southern New Brunswick. They, like the province, don't want to see that disappear, and want to play a role in ensuring that it doesn't disappear. It's a matter of bringing all of the parties together to see that that kind of commitment can be put on paper to actually result in the service being continued.

MR. PREYRA: Has the federal government put any clear commitment on the table?

MR. PAUL TAYLOR: At this point, none of the parties have - as I said, the parties are, at this point in time, digesting the results, analyzing. They're doing their assessment of what does this mean to the Government of New Brunswick, what does this mean to the Province of Nova Scotia, what does this mean to the City of Saint John, and formulating within themselves what that will translate into in terms of what I'm willing to do to protect that kind of benefit that's flowing to my jurisdiction.

MR. PREYRA: Given that the people have been talking about September 15th as being the deadline, is it not late to be having these discussions without any kind of concrete offers on the table from any of the parties?

MR. PAUL TAYLOR: As I said previously, we've been making sure - to go back again to the fact that, really, Bay Ferries hasn't asked us for anything here. They have said, we intend to shut this service down. Really, governments, if you have any bright ideas as to why that's the wrong move to make, please let us know, if we're missing something here, if you're prepared to do something to help us with this business plan that we don't see much hope for, by all means we're willing to talk to you.

So we've stayed in close contact with the company. Those discussions, well, we would have talked to them as of yesterday afternoon. As I said in answer to a question previously, we certainly have not yet crossed the timeline where it is now inevitable that the service is going to close. I don't want to say that in a way that tells the employees of Bay Ferries that this is a slam dunk. All I'm saying is there is still time left in both the companies' and the governments' minds to deal with this issue in a way that we would all say was successful.

MR. PREYRA: All the witnesses here have talked about this as a transportation infrastructure issue, yet we don't see the Minister of Transportation and Public Works playing a lead role in this matter. Is it just the way the government is organized, or is it

[Page 36]

a fact that the Minister of Transportation and Public Works just does not see this as a transportation infrastructure issue and that's why the government is not involved in this way with this issue? It's being treated as an Economic Development issue.

MR. PAUL TAYLOR: Very early on, very early in July, three departments were immediately involved in this file: my own, Transportation and Public Works, and Tourism, Culture and Heritage. The Executive Council made a decision at that point in time to appoint one of the departments as a lead. The other two have been fully involved, in terms of participating in the working groups. They've all had their senior representatives at that table, ensuring that the information on the transportation impacts, transportation options, as well as the impact on the tourism industry were all brought to that table.

I wouldn't go so far as to say that the minister hasn't been involved. Certainly his senior staff, right up to his deputy, have been involved in this right from the get-go.

MR. PREYRA: But certainly the witnesses have been saying that transportation infrastructure is what this is about, and the government seems to be sending a signal that it's not by not appointing that department as the lead.

MR. PAUL TAYLOR: Well, certainly it is a piece of transportation infrastructure, but the way that piece of transportation infrastructure benefits the province is directly an economic matter. When we looked at the impacts of this service, it wasn't on the transportation sector - there were obviously direct impacts because there are people working on this service, but those impacts, those direct impacts pale in comparison to the economic impacts that would be endured by those three economic sectors: tourism, forestry and fishing.

MR. PREYRA: A question for the two witnesses.

MADAM CHAIRMAN: We only have a couple of minutes left, Mr. Preyra.

[11:00 a.m.]

MR. PREYRA: One last question?

MADAM CHAIRMAN: If it can be really short, because we don't have a chance to wrap up.

MR. PREYRA: Both witnesses have talked about the importance of the Premier being involved. Have you had discussions with the Premier about this issue, and what has been the response of the Premier to your meetings and your recommendations?

[Page 37]

MR. WADMAN: No, and we're hoping that you guys are going to pass our message to the Premier.

MR. SHAY: No discussions. We haven't heard anything. I haven't heard anything from the Premier, no statement. I don't catch the paper every day, but I don't know what his position is.

MADAM CHAIRMAN: Mr. Theriault.

MR. THERIAULT: Madam Chairman, I would like to make a motion that the Standing Committee on Economic Development make contact with the Premier's office immediately and press on the Premier's office to bring a resolution to the Digby-Saint John ferry of this province, immediately. We have only two to three days to do this, I think, because business has told me what they are up to and by September 15th, if we don't do something here - so I mean that immediately, today, we have to do this.

MADAM CHAIRMAN: So not just a letter but the committee should contact. Yes, Mr. Epstein.

MR. EPSTEIN: Well, I will certainly support that. I think that's right. We have certainly heard about a pressing issue and it's good that we dealt with this even before we set our agenda. I don't know if you recall the lists that got circulated, but the topic of access to Nova Scotia was one that we had put on our list and indeed, we meant to encompass in that the problem with the Digby ferry, along with other forms of tourism and commercial access in and out of Nova Scotia. So I'm glad that we have turned our minds to this today, while there's still some time to get on the record.

I think it has emerged correctly that, indeed, this is the kind of problem that may have to be resolved at the level of First Ministers talking to one another, I agree with that. It is clear that there is some engagement already to clear up the problem that might have been predicted 10 years ago, but we're stuck with it so we have to deal with what's in front of us now. I think the timeline, the no-divergency is one that is appropriate to note. I don't see that we should hesitate to support this at all.

I have just one question maybe for the mover. Did I hear him say Premiers, plural, or did he mean the Premier's office?

MR. THERIAULT: The Premier's office.

MR. EPSTEIN: Okay, sorry. I was wondering if he meant New Brunswick, as well as Nova Scotia, but that's fine.

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MS. STREATCH: I'm just wondering, Madam Chairman, thank you, if I could hear the motion again, please.

MR. THERIAULT: I move that the Office of Economic Development press the Premier of this province for an immediate resolution to this problem.

MR. GAUDET: No, no, our committee.

MR. THERIAULT: That's what I said - the committee.

MADAM CHAIRMAN: In repeating it you said the Office of Economic Development, but you would like this committee?

MR. THERIAULT: For this committee to contact the Premier's office of this province, for an immediate resolution to the problem of the Digby-Saint John ferry. Isn't that what I said?

MS. STREATCH: Could we add to that as well something on the fact that we implore upon the Premier to involve all levels of government, so that we make sure that we bring everyone who has . . .

MR. THERIAULT: Whatever the Premier does best.

MS. STREATCH: I would propose, Madam Chairman - and we can rework the wording - that we implore upon the Premier of Nova Scotia to bring all levels, or all players, so that we are asking the Premier of this province to recognize the importance and, as we said earlier, the vital role in getting all those players involved, I would propose as part of the . . .

MR. THERIAULT: I will agree with that.

MS. STREATCH: Great.

MADAM CHAIRMAN: There is a motion on the table.

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

That's good. I would like to offer just a moment for closing comments, if either Mr. Shay or Mr. Wadman would like to say anything further. I thank you very much for coming in and making the trip today on short notice. It has meant a lot, I think, to help us shine a light on this issue, and hopefully be part of a solution.

[Page 39]

Any final comments you would like to make? I think you have been very eloquent throughout.

MR. WADMAN: I would like to say, and I guess I keep beating on this, in the short term I believe there is a role for ACOA, hopefully this afternoon, to come to the party. In the long term, one of the reasons I'm so adamant on the federal government taking it back on Marine Atlantic, is that I'm afraid if we get into a multi-tiered, multi-jurisdictional subsidy to keep the ferry going, that our friends in the U.S. will dream up a countervail duty on seafood products, or lumber products again. As we have seen from the recent little dust-up on softwood lumber, our American friends, even though there is free trade, can get slightly protective.

MADAM CHAIRMAN: Thank you. Mr. Shay, any final comments?

MR. SHAY: No, just to say thank you for your time and I know this was rather short notice. I hope the members of the committee have a better appreciation of the importance of this to southwestern Nova Scotia and maybe hopefully pay some more attention to the economy of southwestern Nova Scotia and do some things that will help us out down there. I appreciate your time and thanks.

MADAM CHAIRMAN: Thank you very much. I think one of the things that was said today, if I could, is that in fact it is very important to southwest Nova Scotia but it will have impacts across Nova Scotia. I think that was said very well by Ms. Streatch as well. It's certainly the reason we called the meeting today, we believe this is a big problem for the entire province and we all need to take some time and attention.

We have some business to attend to. Mr. Epstein.

MR. EPSTEIN: I was just going to suggest that the committee move all the business of the committee, including agenda setting, to our next date. We could perhaps try to find a date as soon as possible to proceed with the question of agenda setting and vice-chairman and whatnot.

MADAM CHAIRMAN: That would be very good. I had thought that we would either do it at our next meeting, which would be October 10th, the second Tuesday, or we could set the agenda in between, and have something lined up for October 10th.

MR. EPSTEIN: We had thought that we were going to spend one meeting, probably an hour rather than the full two hours, on agenda setting itself. I'm wondering if we can do it a week from today, in the morning. Is that at all possible? Just to focus on agenda setting, and do it more quickly rather than to wait a month before we do our agenda setting.

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MADAM CHAIRMAN: Could we perhaps do agenda setting with just a member from each caucus? I think that would be possible if you're comfortable with that.

MR. EPSTEIN: It is possible to do that, if that's okay with the other caucus.

MADAM CHAIRMAN: I think we could commit to that. (Interruptions)

MS. STREATCH: Agenda setting only, one member from each caucus?

MADAM CHAIRMAN: That's right.

MS. STREATCH: One week from today?

MADAM CHAIRMAN: That's right. We can arrange the location if this room is not available. We'll meet at another location, but we can e-mail each caucus and just say where that meeting will take place, but we'll assume it's 9:00 a.m. next Tuesday, one representative from each. That would be very good. There has been a list of suggested topics from the NDP caucus. So we'll have the other two lists at the next meeting. I thank you very much. I'd like a motion to adjourn, please.

MR. PREYRA: So moved.

MADAM CHAIRMAN: Thank you very much, Mr. Preyra.

We are adjourned.

[The committee adjourned at 11:07 a.m.]