Thursday, June 22, 1995

LEGISLATIVE ASSEMBLY OF MANITOBA

Thursday, June 22, 1995

The House met at 10 a.m.

ORDERS OF THE DAY

(continued)

COMMITTEE OF SUPPLY

(Concurrent Sections)

HIGHWAYS AND TRANSPORTATION

Mr. Deputy Chairperson (Ben Sveinson): Order, please. Will the Committee of Supply please come to order. This morning this section of the Committee of Supply meeting in Room 254 will resume consideration of the Estimates of the Department of Highways and Transportation.

When the Committee last sat, it had been considering item 2. Highways and Transportation Programs (n) Policy, Planning and Development (1) Salaries and Employee Benefits on page 90 of the Estimates book and on page 65 of the yellow supplement book.

Mr. Gerard Jennissen (Flin Flon): Yesterday we left off talking a little bit about the northern hemisphere distribution lines and the whole multimodal concept. I think the minister did not quite finish. I wonder if he could just give me a little refresher on that for a few minutes. Just exactly what does that involve, the whole WINNPORT concept?

Hon. Glen Findlay (Minister of Highways and Transportation): Mr. Chairman, I gave the member a brief comment on what is going on. I will elaborate the different partners and the amounts of money that have gone into the two-phase study that NHDA and WINNPORT have been doing. The federal government, through Western Diversification, has put in $620,000. We put in directly $500,000. The private sector, which includes the Winnipeg International Airport, is putting in $710,000 for a sum total of $1.83 million. The two-phase study has gone over '94-95, '95-96. My most recent information is expecting to have the study process done by about October of this year. They are doing market research, logistics analysis, strategic planning, marketing and potential product development.

I would have to say that I was talking to one of the principals last night, and he said that the opportunity there is fantastic, but the risk of bringing it all together is very high. The magnitude of what has to be done scares a few people, to put it bluntly, but no question of the opportunities there. As I mentioned, our distances from St. Croix or Amsterdam make us a very attractive location for this to happen. Our comparative cost with other locations in North America for similar centres make us a very attractive location. A 24-hour airport, the bottom line, critical--a lot of cargo movement needs to be able to come in overnight.

There has been some concern by people living close to the airport about noise. Clearly, the kind of aircraft we have in the air today have noise attenuators on them. There is a federal law to require all aircraft to have noise attenuators to be phased in over a period up until, I think, about '97, if I am not mistaken.

I happened to have been coming back from a ministers' meeting out West a few months ago, and the pilot asked me to come up front. So I went up and talked to them for a while. He said, do you want to land with us? I said fine. So he put down the jump seat, and I landed with them. He said, do you notice that I am turning way south of Winnipeg? I said, yeah, I thought it was kind of unusual. He said, we as an industry are going to be responsible; we used to turn in close to the city. Coming from the west, they turned just in over Charleswood, and, of course, there is noise associated with the turn. He said we are now turning a mile south of the city so that we do not offend the citizens when we are coming over the residential area, we are more or less gliding into the airport, and it is much quieter.

So on the part of the pilots and the industry, it is very responsible consideration of not trying to harass the people any more than absolutely necessary. The zoning by-laws in Winnipeg, and particularly the R.M. of Rosser, have left that area very available for continued use of the airport 24 hours and expansion to the west if the warehousing concept of NHDA and WINNPORT does materialize.

So it is very much in the development stage, a lot of optimism about it, lots of opportunity, but, at this stage, nothing is concrete other than the fact that they are talking with potential customers in Europe and in southeast Asia to determine if they can strike contracts with people to move products through here or to move products in to some major activity with that product, further assembly, distribution and then export it from here, particularly going south. There has been talk about a duty-free zone for the activities on the airport. That will come secondary if we can get something put together in terms of people utilizing or businesses utilizing the airport as a fly-in and distribution location.

So that is the best I can say at this point, and we await further response from the study that is being done by the principals involved.

Mr. Jennissen: Yes, reading up a little bit on the background of this, I was looking at the YWG Report from August 1994, and some of the ideas seem to be coming from a Dutch model. Is that correct?

Mr. Findlay: Certainly they have been looking at the Dutch model. There is no question about that. But they have had major discussions with people in Japan, Korea, Taiwan, and they are trying to assemble information to determine what strategic advantage they have to sell to companies that might want to use us as a facility. There are two major ones in the States now: one by Dallas and the other is by Huntsville, Alabama. There are two major similar-type operations in the U.S.

Mr. Jennissen: The concern I have, if you base it on the Dutch model, it might not be that easy to transplant that model because, you know, your markets are really tight there and high population and so on. It is not simply a matter of transplanting it.

Mr. Findlay: No, you have to develop something that is unique to the types of people who might utilize Winnipeg as a location for bringing in major cargo to split the loads for distribution to here but no question that any model elsewhere could be used as an example to build upon.

Mr. Jennissen: Referring back again to this particular little pamphlet, YWG Report, August 1994, just one comment here, one quote: All the experts agree that Winnipeg offers logical international distribution opportunity as a result of our geographical location, says Faiman--I guess the fellow's name is--but only if we can develop a point-to-point intermodal distribution system.

Maybe, could you clarify that point-to-point intermodal distribution system?

Mr. Findlay: The grand plan that, you know, is in the back of everybody's mind is that a cargo plane will come from Amsterdam, as an example, or from Tokyo or Seoul, South Korea. It will come here with seven containers on it, I think is what they can hold on 747s. Come here, the containers will be broken here, and then the components in the containers will be loaded onto rail or onto truck for ground distribution going, as I said earlier, particularly into the U.S. So the "point-to-point" means to Amsterdam-Winnipeg- Chicago, and it is air to Winnipeg and either rail or road to Chicago from here. So that is the point-to-point intermodalism. You have air-rail or air-road and Winnipeg being the centre point is where the loads are broken and reloaded.

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Mr. Jennissen: So the model is basically the air links, and then the spokes radiate out from the major air links. Is that correct?

Mr. Findlay: That is the theory behind it; that is right. It also means distribution within Canada, but the biggest consuming market, of course, is in the U.S. So the focus--and they have had a lot of discussion with potential users of the service, our customers, in Minneapolis, Chicago and other cities in north-central U.S.

Mr. Jennissen: Well, it is certainly an exciting concept, and, you know, hopefully it works because, if it creates employment and opportunity in Manitoba, we would all be very happy.

The concern I have, however, is that in the grand plan I am wondering if in the planning process it is broad based. I am not sure it is. It seems to me I can see a lot of industry figures, a lot of government names, a lot of, you know, trucking and airline names, but there should be certainly some citizen coalitions involved perhaps and environmental people involved. I am certain that the unions and the worker who will eventually be impacted by this, positively or negatively, would have to have some input. I just hope that when the grand plan is put together, we have views from all sectors, not just from a very narrow sector.

Mr. Findlay: Well, in the process of Plan Winnipeg and zoning changes associated with the airport, there is clearly opportunity for public input there. At this stage, when it is very much in the development stage, the leaders have, you know, focused on those industries or individuals or groups of individuals who are prepared to put some money up to shoulder some of the costs. You will see, by the numbers I gave you, it is approximately a third federal, a third provincial, a third private sector to shoulder the costs. Some of the companies involved, just for your information: Air Canada, Atomic Transport, CN North America, CP Rail, Interlake Freight Systems, Kleysen's, Matrix, Reimer Express, Transport Data Network International, Unicity Distribution Systems, Unicity Customs Brokers, Winnipeg International Airport, Aikins Macauley, Bank of Montreal, James Richardson, ID Engineering, Atkins Underground in the construction area, D.G. Eppler Diversified Construction Services, Maple Leaf Construction, Nelson River Construction, Tellier Construction, and development consortiums like Genstar, Ladco, Novamet, Qualico, and Whyte Ridge Residential Developments.

So it is a broad cross section of companies, big and small, have put money forward to try to make this thing come together. As the thing develops, I am sure there will be opportunity for wider input. I think, before you can talk to the public in any kind of specifics, you have to have something on the table. So far, all we have is concept on the table, not material opportunities to operate. But Plan Winnipeg has been discussed; zoning by-laws have been discussed. They will have to fit within all of those by-laws of the city and meet all other federal and provincial restrictions that apply to the airport. I guess, at this stage, I think I can share, myself and the member are both hopeful that it will materialize in some productive way so that there are jobs and opportunities created.

I think fundamentally it is fair to say it will happen somewhere, that people see the economic merit of intermodal distribution by this concept, global freight, will use this kind of principle somewhere. Whether they continue to do it out of Huntsville, Alabama, or Dallas or whether some other location in the northern U.S. beats us out in the process of attracting the customers that are going to use this kind of service remains to be seen. I think we have been jumping into this early enough to be in the forefront of decision making to try to attract the activity through here, but if the Grand Forks air base was ever to close, we would have a very serious competitor because they would be into this big time right off the hop, trying to utilize their major airport.

I think we are in a good position, no guarantees, so it is difficult to bring other individuals in to discuss pros and cons until there is something on the table in terms of a formal opportunity.

Mr. Jennissen: I can see that up to a point, but still I feel that even at the initial phase, the visioning is taking place, the broad outlines are sort of being sketched out, I would still like to see some worker input. I would like to see some union names on that list, and obviously there are not any, because you know the impacts eventually down the line are going to be tremendous on working-class people. I would hate to see well-paying jobs now being lost, let us say in the rail industry, and these people now get involved with this other type of transportation system and being paid a lot less. That is one of the worries I have.

Mr. Findlay: Nobody is screening the gate on who can participate. Any group or group of individuals who wanted to participate could share the cost and participate. I think that is fair to say, another thing is, we are not talking a whole pile of flights here. They are kind of thinking 10 flights a week would bring in enough cargo to start. It would be a nucleus to start the process. I know of no way that they intend to limit participation. I mean, the opportunities are so large and the continent is so complex, they want all the players at the table they can possibly get to help make it materialize.

Mr. Jennissen: Is the Transport Institute at the University of Manitoba involved in any of this, like this would be an academic sort of approach but probably quite useful?

Mr. Findlay: Yes, UMTI is involved, and some of the work that we do is done by them through sort of an ongoing contract to the amount of--we have a $50,000 ongoing contract with UMTI and request them to do various kinds of studies. They have done some in this context.

Mr. Jennissen: Does any of this come out of this particular booklet? Actually, there is a bigger one that goes with it. This is the Manitoba and Transportation Action Plan to the Year 2000 that was done by the Transport Institute. This just happens to be a summary of it, but they had some long-range plans, and I am just wondering if that was used at all in the planning of this.

Mr. Findlay: We cannot say. The concept, as I said earlier, came from, kind of, three different individuals: Hubert Kleysen; Lynn Bishop; and Winnipeg 2000. They concocted the idea, now maybe got some lead-in information from that study or from wherever, but it was spawned by those two individuals and Winnipeg 2000.

Mr. Jennissen: I guess the reason I am asking is because I found this a rather fascinating document, going through it, and supposedly this is to be an action plan up to the year 2000. One of the comments from Marshall Rothstein is: The study sets forth targets for employment in each segment of the industry for the forthcoming decade and, based upon a comprehensive analysis, recommends the steps that should be taken by government to achieve the targets.

I am not sure if this thing just got shelved or whether it actually is used or is being used. That is the question that I have.

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Mr. Findlay: It is part of many studies and discussions that are used in the process of trying to unfold the future. I do not know of anybody today in transportation who can sit down with a grand plan that is going to work for the next five or 10 years because it is such a changing industry in all the different modal concepts. I mean, you have seen the trucking industry go through a lot of evolution over the last five years. You have seen the air industry go through major evolution in the last three or four years, and now you see the rail industry going through incredible evolution. So where it will all end up, hopefully, all the players, major players, will find a way to survive and we can maximize the employment in the various sectors, and create--I mean, WINNPORT and NHDA, to me, represent an opportunity for new jobs associated with the transportation of goods through this province.

Mr. Jennissen: Could the minister explain also then how the strategic and sectoral investment, which $5 million, I guess, went to the Winnipeg Development Agreement, the five million bucks earmarked for transportation? Is that sort of a further phase? How is that money to be used?

Mr. Findlay: The Winnipeg Development Agreement, the $5-million commitment, the initial component that we have involved now, which is about 10 percent of that, in the first two phases of NHDA WINNPORT studies, the further expenditures are contingent on a positive outcome of the two phases that are now being done, basically, in the completion portion of the second phase. So, if there is not a successful conclusion of those phases, it would be difficult to expend the rest of the money in that context. Actually, we had hoped there is success, and you move on.

Mr. Jennissen: I heard the minister speak a while ago about future transportation direction, and then he mentioned a term I had actually not heard before, and that was Team West, dealing with four western provinces and two territories in it. It sounded very interesting. I wonder if you would comment on that.

Mr. Findlay: When the premiers met a year ago, the western premiers, four premiers, Manitoba, Saskatchewan, Alberta and B.C. plus the two territorial leaders, Yukon and Northwest Territories, there was a decision that we should try to concentrate our efforts on transportation-related issues in the four provinces and the two territories because you can see lots of activity occurring at the federal end that, you know, maybe we would be stronger if we responded jointly in the West. So the premiers asked that Team West be formed, and we were the lead province in the process. A number of studies were done, and a number of papers were written. We are going to report to the premiers, western premiers, the next time they meet.

They were to have met in June, but, because of events that happened yesterday, Saskatchewan has been delayed. I would presume they will be rescheduling that meeting before long in its initiative to try and work together as four provinces and two territories as much as we can.

I think it is fair to say, in experiences I had in another portfolio, we probably worked together better than maybe we have historically in transportation, and any event that happens to the Ottawa end affecting transportation is not just provincially restricted, it is across all kinds of borders. That was the purpose of the initiative.

Mr. Jennissen: I would presume that, certainly, the CN privatization and the impact level in the West almost forced us to work together as a group.

Mr. Findlay: Changes to the WGTA--we were talking changes before, and now we are talking the effective elimination of it. It is going to have a dramatic change on how commodities move, directions they are moved, what mode is going to be used to move them. All those events have taken place, plus the air policy that they brought out, which we talked about earlier. There has been a number of things happen and then, again, most recently, the marine policy position paper they put out. So there are a lot of forefronts here, and maybe the idea is to try to see if we could not develop uniform positions in the six jurisdictions in the western part of this country.

Mr. Jennissen: I think my honourable colleague would like to ask some questions as well, so I will turn it over to him.

Mr. Daryl Reid (Transcona): I wanted to ask a few questions relating to the Winnipeg Airport Authority and the Winnipeg Development Agreement as it ties in with that. I believe there has been at least two and maybe into the third one for the Airport Authority public meetings just recently, where the public is informed of any progress that that particular board has made with respect to the transfer of responsibility from the federal government transportation department to the independent or private board.

There was some discussion last year with respect to the fact that certain segments of the public were excluded from any participation in those Airport Authority board activities, and I am referring specifically to employees of the airport operation and any consumer-interest groups. Can the minister tell me, has that oversight, we will call it, been rectified to this point in time, and are the employee groups and the consumer groups involved in any of those activities?

Mr. Findlay: The federal government had the whole process on hold, as the member knows, for a number of months as they developed new accountability principles and broader representation from the public. Mr. Young announced those, I would have to think, in November or December of last year, something like that. He came out here and announced that the negotiations between the Winnipeg Airport Authority and Transport Canada would restart. They resumed on February 2, 1995. We do not have the list of membership in front of us at the moment. I know there are more accountability principles and accountability means to the public. I kind of recall there is a broader representation base on the Airport Authority than was the case originally.

We have a provincial appointment on there, and it is Mr. Robert Foster from Wardrop Engineering. If the member wants a breakdown of the actual membership, we can get that for him, but we do not have it with us.

Mr. Reid: We would appreciate it. The minister can send along that information to the transport critic for his reference, and he can relay that information to myself. I would appreciate receiving that.

Can the minister tell me--he indicated that the province has a representative on that board now. Is our representative playing an active role in the transfer of the responsibility of the airport from the federal government to the Airport Authority board? Is our representative actively involved in those discussions?

Mr. Findlay: Yes, he is definitely involved in the discussions. The kind of person that we could appoint, we were restricted to somebody who is not elected and not a bureaucrat. So it had to be outside of government in both contexts. It is a citizen; I narrowed it down.

Mr. Reid: I realize that there were some criteria that were put in place to limit the representatives we could have on the board. I was just worried that there was some development taking place as far as the transfer agreement and any responsibilities and any of the future funding arrangements without the province having some say in it. I mean, the economic future of the province, in a way, hinges what happens with the airport, just looking at the WINNPORT proposal that we have that has been worked on for a number of years now.

That is why I think it is important for the government to have someone actively involved representing the provincial interests at this board. That is why I think it is also important to have the employee and the consumer group interests also represented on there. I know this was a problem when this group, the Airport Authority board, started. It was comprised solely of business people, although I think that there was one academic person from the University of Manitoba, Barry Prentice, that was involved with it.

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Without all the other public representative groups involved in that discussion, some of the basic program development ideas may have excluded those portions of society that might have had some specific interest that should have been included in the development agreement. That is why I am trying to learn here whether or not those groups have been involved in the development of the Winnipeg Airport Authority board and the business plan that is set up for future long-term, hopefully, benefit for the province. That is why I am asking the minister if the employee groups, the government, the provincial government and the consumer groups have been involved in that development of that agreement.

Mr. Findlay: I cannot give the member any greater information than I have already given him, and that is, the perception was, greater accountability was what the federal government set up. In terms of what he said about the airport being key to further economic development of Winnipeg and Manitoba, absolutely. It is the hub of opportunity in the future. It is the central component, and we view it as very, very important. That is why we are keenly interested in Route 90 being continually upgraded to allow the truck interface with the airport.

We probably might prefer that somebody, a senior person from the department, was involved. You would have a real direct link then for the government to be sure that our interests are represented. The fact that we have a citizen at large representing the government, which is somewhat removed from us, we get input, but he is there as a citizen. He is our appointee, yes, but he is still there as a citizen, though he represents citizens of Manitoba as much as he will represent the government.

Somebody might say, well, they are one in the same anyway. Nonetheless, we all want to see development happen. We do not want to miss opportunities, and I do not know of anybody who speaks against the Airport Authority principle in terms of being the right way to maximize the economic development potential of the airport associated with everything else that is going on in the province of Manitoba.

Mr. Reid: Well, Mr. Chairperson, for the information of the member for Inkster (Mr. Lamoureux), we think the concept of WINNPORT and the Northern Hemisphere Distribution Alliance holds tremendous economic opportunity for the province of Manitoba, and, in principle, we have supported that from the beginning. We have had the opportunity to listen to some of the presentations that were made, I think it was about two years ago now, when this plan, this concept was being developed. So we do support that, even though, maybe, the member opposite has some reservations about where others may stand on this issue.

There was some discussion in the minister's comments here a minute ago or left me with the impression that the government's representative will also be a representative of the public. Does that mean that that individual will represent the consumer interest?

Mr. Findlay: Well, I would have to think so. He is a consumer. He is a citizen at large. He works for an engineering firm. We also have, on the advisory committee, Rolly Savoie, so that is as close as we get as a government, is the advisory committee, and the decisions are made by the actual board, of which Mr. Foster is a representative.

Mr. Reid: I might have known that the federal government would have taken someone from the business community to act as a representative of the provincial government at the same time as a consumer-interest person. Here we go again. We have all business people representing the board activities. We have nobody from employee groups, and we have now a business person coming from a private company, which I am not disputing. The government had to do that by the mandate that was set out. But now that individual is also representing the consumer-interest groups, and it seems to me to be a conflict here, that we have an individual, probably capable--otherwise would not have been selected to do this work--representing an interest group for which he has no mandate to fill.

So to me that is a conflict, and I do not see why that individual should represent--and perhaps if the minister feels the same way, he could pass on those concerns along to the federal government, saying there needs to be someone from the public, considering that we have over two million passengers a year using the Winnipeg Airport that should be representative of that group. I know the member for Inkster (Mr. Lamoureux) does not support that concept, that the public should be represented, but I think that they should be.

Mr. Findlay: Well, I cannot say anything more. We will get the list. There may well be the level of public representation that the member would like to see on that list. My basic memory is that there is, but I would like to hold further comment till I see the actual list. I think it is eight or nine people. I think it is nine people in total. We would expect that there is somebody, several people who would fit into the category of representing the public, in the broad sense.

Mr. Reid: Other airports in Canada have been considering this. I believe only the Vancouver International Airport actually has a departure fee, whether it be for domestic or international flights, and it is a varying dollar amount that has to be paid by a departing passenger at the time, just prior to boarding the aircraft, which has caused some inconvenience, I know, of talking--[interjection] Well, in a sense, some people have indicated to me that it is a harassment fee. Is the minister aware? Is the Airport Authority considering implementing such a departure fee for the Winnipeg International Airport?

Mr. Findlay: Well, the airport authorities need to have a source of revenue to do the kind of development they want to do in the future, and, clearly, the way Vancouver does it is seen as an unnecessary harassment. You have paid your ticket, you get on the plane, and now you are paying some more. I think it a lot more convenient for consumers if the fee is incorporated in the ticket price. So you pay once, and it is done.

Any discussion I have had with anybody associated with that process, I have said that to them. I said: the fee, the separate fee, when you board the plane, is not consumer friendly at all. I do not think people would argue if they knew that a $10 fee, or whatever it is, is incorporated in the ticket price. Everybody is treated equally in that respect.

I understand the airlines are not very supportive of that, but I have said to the Airport Authority individual I was talking with: we should advocate in as strong as possible terms that any fee that is necessary be ticket price incorporated. It is a lot more consumer friendly for the travelling public.

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Mr. Reid: I think we had some discussion on this in the Estimates last year, and the difficulties that I see with a departure fee are, whether it be wrapped into the ticket price or as a separate item that the travelling public has to pay, those monies that are collected from that go toward the upgrading of the airport facilities, including the runways and the tarmac. Yet there are other entities, other users of the runways and the tarmac facilities that do not have to pay for that through that type of a fee. Is there some other structure that is in place? Is the minister aware of any other structure in place that will capture revenue that will go towards defraying the costs of upgrading or maintaining of those runways and tarmac?

Mr. Findlay: I have also discussed this aspect too, and that is that all users, people that land or depart, there should be fees collected of some degree of equity amongst all types of users, large and small, that a fee be collected toward airport improvements. There should not only be the ticket-paying public that gets on a commercial aircraft. All landings and departures should contribute, in some fashion, toward the cost of operating that total facility. So there should be a fee collection process, in the broad sense. With all these airports right across the country, I would hope that they would all adopt a very similar process, so one airport is not trying to attract business because they charge no fee for a particular type of aircraft activity. I would strongly support all users would pay some degree of equitable fee, no matter who they are, for what purpose they are using the airport. The services are used by everybody if you are landing or departing.

Mr. Reid: The minister referenced a study that was being undertaken by the principals of, I think it was, WINNPORT for the development of the airport, and that the province and the federal government, as well as the private sector, is investing some capital to the development of this project. Does the government get copies of the studies? If so, is it possible to obtain a copy of that study?

Mr. Findlay: Well, certainly the basic study that will be done by them will have some level of confidentiality about it, because there are other locations wanting to set up a similar activity. If they put out a report that says, well, company XYZ in Amsterdam and company BJZ in Seoul, Korea, is actively considering a contract with us or has a one-year temporary contract, we do not want to give the competition information that would allow them to go then and attract that customer to them after the initial period with us. I know that WINNPORT wants to put as much as they possibly can out to the public to generate interest, to show the public there is opportunity here and to attract investment, obviously, to what they would want to do in the future.

So it is in their best interest to put as much as possible, but there will be a confidentiality limit. Because of the other places that are going to compete with us, we do not want to tip our hand. I am sure they would like to get their hands on all the information from Huntsville or from Dallas that they can get for our confidential use against them. So there is a limit to what can be put out, but the idea to stimulate interest in the public is first and foremost on their minds because they have to attract capital in the long term to make this viable.

Mr. Reid: I believe my colleague referenced the fact that the Winnipeg Development Agreement is investing some $5 million into activities related to the airport. I believe there is some discussion relating to the potential to create jobs through the airport. Have there been studies done to determine what the prospect for job creation is with respect to this project in the long term and in the short term? I think the minister referenced the initial start-up point is looking for 10 aircraft a week to come in, jumbo jet aircraft to come in with cargo. What would that entail for the number of jobs, the potential for jobs at that point, and when it expands, what would be the prospect of job creation beyond that, including the development of secondary assembly?

Mr. Findlay: Well, the number I will give the member is a very nice number to put out, but I would caution, though, the use of the number. It is very much a high-in-the-sky kind of projection. Certainly the 10 flights a week, if we get the associated assembly that goes with it, if we get the free trade zone, the classification of the federal government, if we get all that which then allows the assembly to occur here, the idea of those 10 flights could generate 6,000 jobs. But I mean this could, might, and there are a lot of parameters that have to click into place for that to happen.

I would have to fundamentally say that is an optimistic, upside number, because a lot of things have to happen for the 6,000 jobs. Now if we are successful in that over the next two, three, four years, beyond that, the growth is immeasurable. We all know that so much more cargo is going to move by air in the future. Time-sensitive cargo, perishable cargo, high value cargo, the growth industry in the aircraft sector is purely cargo. Small growth in passenger, but the big growth is cargo. I cannot remember the numbers off the top of my head, but the portion of economic activity at the airport has grown dramatically in cargo versus passenger, percentage wise.

That is a worldwide phenomena, it is not just here, it is worldwide. So that is why everybody that is in the business of moving cargo knows air movement is a key element of the total intermodalism of the movement of goods. To somebody who is selling from--let us just pick a location--Paris to somebody in Tulsa, Oklahoma, it is critical being able to meet the time lines of getting that product from point A to point B, and air cargo is key to making that work. All the associated ground movement has to be totally co-ordinated, time sensitive, and you have to satisfy that customer by being on time, and air is a critical way to do it.

Mr. Reid: Are there any projections on what the requirements may be as far as provincial capital investment into the development of this project?

Mr. Findlay: The only monies that are so-called available at this point is the Winnipeg Development Agreement, the $5 million. It is impossible to predict what additional demands will be expected from the city, province or the federal government.

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(Mr. Mervin Tweed, Acting Chairperson, in the Chair)

Clearly, there will be some infrastructure cost associated with this with the roads, sewer, water that would be undoubtedly needed. We would be called upon for that in some context, but it is way too preliminary. We have none of that kind of detail. We will certainly be involved in the development of that detail, but what they will be beyond the $5 million I cannot say at this stage.

Mr. Reid: The minister referenced a free trade zone, and I have heard the concept before. I think it is to do with the area immediately surrounding the airport where there would be value-added industry established in conjunction with the WINNPORT activities. Am I correct in that?

Mr. Findlay: Yes, to me it means, and there might be different definitions, but to me it means cargo will come in, the cargo gets broken, it can be that additional assembly can happen within this free trade zone, and it does not have to deal with customs until it leaves that zone. So you do not get to dealing with customs until you have the product that is leaving the zone. That is my understanding of the principle. Is that fair?

Mr. Reid: Would a zone such as this exclude the province from any involvement by way of any of the standards or labour conditions that we would have as part of our regulatory matters in the province or legislative matters? Would it also impact on the province and its ability to have any taxation powers over a zone like this, or would that be excluded from that zone?

Mr. Findlay: What I have talked about fundamentally is associated only with tariffs. It has nothing to do with any other standards. I mean, the member knows that in the Free Trade Agreement, NAFTA, we advocated very strongly, we had our six conditions. I think he has heard them before, the labour standards, environmental codes. Fundamentally, we would not condone any kind of agreement that did not live up to those standards. So that what we are talking about is strictly tariffs here. My interpretation would be all our standards apply, that would be my interpretation. Now, there is not one in Canada to use as a blueprint, but our principles are on the table and have been for a long time. I could not imagine us allowing a free trade zone that did not abide by our standards in every other context.

Mr. Reid: Can the minister tell me when the final transfer will take place for the Winnipeg International Airport to the Airport Authority?

Mr. Findlay: At this stage they are looking at late '96.

Mr. Reid: I thank the minister for the information.

I want to get an understanding here because the minister referenced Grand Forks air base, and there has been some discussion in the U.S. about closure of air bases throughout the U.S. If the U.S. government decides to close their air base operations in Grand Forks, what type of lead time do we have with our WINNPORT activities here over the development of a competing airport activity at Grand Forks, for example?

Mr. Findlay: I know when this process started, the principals indicated, they said, at best, they had a year's advantage on them. Well, they have a fair bit of information under their belt and experience. I would have to think we have more than a year's advantage at this stage in time. There has been no indication of any closure of that airbase, which is good news for us. The Huntsville people and the Dallas people would like to have all the business through them, so there is competition out there even though it is not geographically close. They had comfort, they had a year's time at best at the beginning, and I would hope that they have at least that now.

Mr. Reid: When do we anticipate, because I believe there has already been one aircraft on a trial basis that has come into the city here, that we will see regular aircraft flights coming in? When would we get to the point of say 10 cargo aircraft a week that would be utilizing the WINNPORT plan?

Mr. Findlay: There are several stages that the process and development has to go through yet. Yes, there has been a trial and there will probably be more trials done to try and show customers or potential users that it can work here. The best date we can offer now is by 1997 things would be starting to formalize. It is a long lead time, a lot of development. Everybody is operating with optimism as opposed to the factual contract opportunities. They are continuing to meet with people in Europe and in Southeast Pacific. I mentioned Seoul, South Korea, because I see that as a real opportunity, the growth of South Korea. We are closer to Chicago through here than it is to go through Los Angeles from South Korea. Japan has always been the country talked about in the southeast Asian area, but South Korea is coming on strong, and even Taiwan.

They are in discussions, bringing people in, trying to influence them that this is the place to do business. 1997 may seem like a long time away, but that is the projection at this time.

Mr. Reid: Is there any opportunity because the freshwater fish industry of the province, which is essential to a good part of central and northern Manitoba, plus we also have one of the processing plants in Winnipeg here, to have that as one of the initial development marketing opportunities for us?

Mr. Findlay: Clearly they look at the overall agri-food category as a very major opportunity. Food needs to move quickly and one area that they really talked a lot about is fresh chilled pork. Yes, they have talked about fish, too. Over the course of time, I have heard both of these particular categories of food mentioned. They realize there are markets in Japan, Korea, Taiwan and other parts of southeast Asia. It will come down to whoever has marketing responsibilities for those two commodities to strike sales with people there and then to use this facility as the conveyance to get it there in a time-sensitive situation.

The issue of fresh chilled pork has been on the table for several years. I made two missions to Japan, and it was always the top of the discussion agenda to try to get it to happen. The idea then is that you had a fresh chilled cryovac process and you had 42 days' shelf life. It was ship-transferred across the ocean. By the time you left here and it got there, you had already used up 35 days, so you now had at best seven days of shelf life left when the pork gets there. People do not want to buy frozen meat, they want to buy fresh. If you can air cargo it, economically, you would get it there within two or three days of when the animal is butchered. Then you have it real fresh. You do not have the cryovac expense. You get to put a fresh, high quality product on the shelf for the consumer in Japan.

Let me tell you, I am not one who buys the groceries here but I have been to the supermarket occasionally. The way they present food in Japan puts us to shame. Honestly, it does. Presentation is key in selling food in Japan.

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(Mr. Deputy Chairperson, in the Chair)

If you can get a high quality, good, fresh-looking piece of meat there, your chances of selling it are improved immensely. So just a bit of background from previous experience, but no question they see the agri-food as a major component because of the time-sensitive need of getting that product there, with fish, pork or any other form of food.

They did not initially concentrate on food, but in the process of discussions over the last number of months they have come to realize that food is a very high potential.

Mr. Reid: I thank the minister for the information. I, too, see the food industry as an opportunity that we could explore probably quite quickly, and it would be pretty good opportunities for our province in the food processing industry to tap into those markets. That is why I am interested in the fact that WINNPORT can play a significant role in speeding up the transportation time. I am hoping that the WINNPORT people could be working in conjunction with that type of value-added agricultural sector, and I think freshwater fishing falls under that, industries to allow them to develop as quickly as possible those market opportunities for us before someone else taps into those markets.

I want to switch my questioning a bit to some of the rural airports in the province that the federal government has in a sense abandoned and turned over to the various municipalities and also dealing with some of the provincial airports as well. There has been some discussion with respect to the people that the province laid off, and I think there were 18 people at various rural airports, and that the province went ahead and installed automated weather-sensing and information systems. Can the minister indicate what is taking place with those atmospheric conditions--

Mr. Findlay: AES.

Mr. Reid: --the AES systems at this point?

Mr. Findlay: The Atmospheric Environment Service.

Mr. Reid: The Atmospheric Environment Service. I thank the minister. What is happening with that equipment, because we have been told that there has been some fault with that equipment and that some of it may be related to--even some aircraft--accidents that have taken place over the last number of years? Are we currently utilizing that equipment at our airports in Manitoba?

Mr. Findlay: I am going to try to clarify the complexity of this issue. We employed the people who did services for AES, the people that we laid off. AES still collects the information that they need. I guess there are two levels of equipment. There is what is known as the AWAS equipment. That is the one that has been identified as having some technical problems. There is a different level of capability, a little lower level of capability-type equipment that AES is currently using in the province which has no identified glitches in terms of performance. I met with the federal deputy a month ago, six weeks ago, something like that, asked him about this, and they clearly recognized the technical potential shortcoming of the AWAS equipment. So there is a moratorium on that until the glitches are resolved.

What they have put in the airports where the layoffs occurred is an automated form of equipment but lower technical capability than AWAS but not known to have glitches in it and only in Berens River. AES has hired staff in Norway House and Island Lake for the interim to do services.

Mr. Reid: So that staff that has been hired--

Mr. Findlay: --by AES.

Mr. Reid: --is to supplement or to replace the AES system until such time as they can work out the bugs with it, or will those people be permanent?

Mr. Findlay: It is a contract between those individuals and AES. Whether it is short term or longer term, I would imagine, depends on the success of resolving the technical difficulties of the AWAS system, and that applies not only here but right across Canada.

Mr. Reid: The equipment that the province is using at the airports for which we have responsibility, it is a lower standard of equipment in the sense of its detecting abilities, and does it provide the same level of information, same quantity of information or type of information to the aircrews utilizing the airports in those areas?

Mr. Findlay: The staff that are located at the 22 manned airports that we have collect basic information, temperature, wind, pressure, visibility, so it is very manual.

Mr. Reid: I am not sure if my colleague has asked this question. Are there any plans with respect to the staff at those 22 manned airports? Are we going to continue to use human services versus technology that may be available?

Mr. Findlay: They perform many other functions in overall operation of the airport and the maintenance of the airport, so there are no plans at this stage to change that at all.

Mr. Jennissen: I would like to ask the minister what he considers will be the negative impact of Bill C-89 on the province specifically with regard to farmers and northerners, VIA Rail and so on. I guess what I would really like to get at is we must have some contingency plan or scenarios, that is a worst-case scenario and I suppose also a best-case scenario. Let us say everything went wrong, that is the lines are deserted. What would we do? Is there a plan in place?

Mr. Findlay: Let us be sure we are talking about the same bill. Bill C-89, that is amendments to the National Transportation Act, involves the elimination of WGTA--

Mr. Jennissen: I call it the privatization of CN.

Mr. Findlay: It facilitates that. The member asks for a worst-case scenario. It is difficult to predict what that will be. I guess for us the worst-case scenario occurred about a year ago and that was that there will be only one railroad operating in Canada. It was not a desirable resolution at all to the railroad difficulties.

I think the member full well knows that the railroad difficulties basically were east of Manitoba, that is in eastern Canada where all the freight movements were, just tremendous freight movements occur but, nonetheless, that is what they were losing big-time money. We wanted for sure that there be two competing railroads in western Canada. I guess when the CN offer was refused at least CN was still alive in some fashion and the commercialization that is being undertaken now, my own perception is it will lead to a viable CN to compete with CP, not only in Canada but in terms of North America.

The worst-case scenario would be that CN collapsed and I do not see that happening at all. I do not know what we would do if they did because there is no way we could jump in and take any ownership or anything like that. So I think it is on a very positive route. I am optimistic, and I sense most people are optimistic that it is on a better path of resolution so there is economic viability for both railroads than was the case in the past.

My discussion with some of the senior people, they realize more so now than they did a few years ago that they really have to respond to customer needs, to keep customers satisfied and when you are say you are going to pick a load up or deliver it on a said date that it has to happen and it cannot be two days earlier or three days later.

There are some growing pains that have happened in the railroad industry. Let me tell you--you mention the farmers--there is no way that the bulk of commodities produced on the farm can go to their points of export cheaper by any route other than the rail. I think there is a lot of viability for short line railroads as feeders towards the main lines which, you know their expertise is main line haul. Move it fast from here to there, large trains, and probably some of the difficulty in the grain industry is not so much the rail activity as is all the shunting around at the ports, particularly Vancouver, right downtown Vancouver you have all these grain cars moving from elevator to elevator, and greater efficiency in that context will be helpful.

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The turnaround time for grain cars is, I think, 16, 17, 18 days, at best, but the potash industry they can get it to Vancouver, I was told turnaround time was six days. We would love to have turnaround time of six days with grain cars, but there is not only the rails involved, it is all the handling at the loading end and the unloading end.

So I cannot give comment on contingency plans for a worst-case scenario. We are like everybody. We are kind of moving along with this moving target and, hopefully, whoever the new ownership is expands the rail opportunities for CN, therefore serving shippers of many commodities, bulk commodities particularly, in all of Canada, but for us, I guess, most particularly in Manitoba and western Canada.

Mr. Jennissen: Still the likelihood of some of the smaller feeder lines being abandoned is highly likely. Right? And therefore that would put more stress or more pressure on the Highways budget. I think there is a figure associated with that, is there not?

Mr. Findlay: Yes. That has been going on. There have been a lot of abandonments over the last 25, 30 years. Adjustments have occurred. There are not a lot of lines likely to be furthered abandoned in Manitoba. Saskatchewan is where the big potential future abandonment is going to occur. Yes, it will put more pressure on us to upgrade more roads to RTAC standard. Just an example I can give the member, the Rossburn line. The line running from Neepawa through Rossburn to Russell, a little turkey trail line, has been identified as one that may well close.

But the people on that line are going to need an RTAC link to Highway 16, because the CP line is along 16 and clearly Highway 21, and right in the middle of it is one that we have to look very quickly at getting upgraded to handle the kind of trucking that will come down there. There is a lot of grain growing up there. So we will have to accommodate the shipper, the farmers' needs to get to the mainline where the elevators will be where he can sell his grain. Yes, there is more pressure on us. It will require more planning to ensure we do the right roads for the long term to accommodate the primary efficient movement of commodities.

Mr. Jennissen: I would like to ask the minister now some questions regarding Churchill. The Churchill line as well. There was a Churchill Task Force, and they came up with the Gateway North report. In fact, I have a copy of it here. There is also a Gateway North interim committee, and I think they have released the report. I do not know how sensitive that is or confidential. Could we have an update on obviously some negotiation going on, some possibility of it operating as a short line?

Mr. Findlay: The interim committee of Gateway North has put together a concept paper, which they mailed to the Honourable Lloyd Axworthy on May 12 and also to the Province of Saskatchewan. At this stage, we have heard nothing back. We are not aware that anybody has heard anything back from the federal government. As the Province of Manitoba, we have supplied secretarial support to the ongoing process.

The interim committee of Gateway North would like to be able to do a feasibility study on their concept, and from the private sector they have raised something in the vicinity of $50,000 towards that. But, until there is some comment back from the federal government as to whether they will respond to the request put in front of them in any favourable way, it is very difficult to initiate the feasibility study. Until we hear something back from the federal government, it is somewhat in limbo at this point. But it is a good concept paper. It develops, it lays out the potential of economic viability of the port line and a lot of other activities. It is good.

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With the federal government's idea that we have to commercialize everything, a user-pay kind of principle, this concept paper is on that line. It fits into their broader agenda to allow opportunities that exist economically to occur. Whether it is moving grain through there, whether it is moving ore through there, whether it is tourism or whether is it associated with Akjuit spaceport or Keewatin resupply, all those are involved in it. Plus there are additional opportunities that are seen as possible. That the mining industry can and should play a role in opportunities through that port in the future is the broad expectation. It is a concept paper. No federal response at this time. Once the federal response shows some kind of favourable consideration, then the feasibility study will want to get going. A small step at a time.

Mr. Jennissen: Hopefully, then, Gateway North is aiming towards a sort of a regional railroad rather than a really short line railroad, which would only possibly be the bayline which is not economically viable, perhaps. Is that correct?

Mr. Findlay: Well, the bayline is the core of it. Yes, they feel they need to have some feeder lines associated with that, that would give them a catchment area. I think the member is well aware that Churchill's major catchment area has always been in Saskatchewan, and that is why the participation and support from Saskatchewan is very critical. After yesterday, now we can get on to, hopefully, getting a broader level of support from Saskatchewan.

Mr. Jennissen: The minister mentioned Akjuit spaceport and I think that has tremendous future potential, but does that not also hinge on a viable railway as well as a good port and a good airport? I think the airport is safe; I think it is federally protected. But we need the rail line, and we would, of course, need some port facilities too.

Mr. Findlay: I cannot imagine Akjuit functioning without the rail line to move in the rockets; it just has to be. That is why the rail line is very critical. Akjuit is out raising their capital right now, and we would hope that they are able to get on with their plans of the development of the site, and that is why we have talked about highways up there before. I mean, our development is contingent on them starting their capital investment in site development there.

Mr. Jennissen: I remember the minister saying in the House about when the port manager there was phased out, or whatever, that that was sending the wrong signals. I think you are right, but could you elaborate a little bit on that?

Mr. Findlay: Well, we only know what we read in the paper sort of thing. The member, I am sure, has the same level of information. Given the sensitivity of all the things that are going on, it is the wrong signal at this time for us. As I said to some press person yesterday, if the person who was managing that plus two other locations was located in Churchill and managed the other two as satellites, I would feel a lot better about it as opposed to the reverse. So it is not a good signal, given all the expectation, hype and work that people have put towards trying to develop an economically viable concept for Churchill, the bayline and many other activities.

Mr. Jennissen: I guess the minister is saying that the federals are saying, you know, they are very supportive of Churchill, but, at the same time, it is a bit ironic when this happens.

Mr. Findlay: One speaketh out of both sides of one's mouth.

Mr. Jennissen: Speaking with forked tongues, I guess, we used to call that.

Anyway, I was wondering if the minister would give me a little update on the Arctic Bridge feasibility study? It was more than just a junket of the Premier (Mr. Filmon) to the Soviet Union, I presume, or the former Soviet Union. Did that go any further?

Mr. Findlay: Well, the interest has developed between Churchill and Murmansk, Russia. The member used an unfortunate phrase there called the "junket of the Premier". The Premier has been to Russia, I have been to Russia. I was with the then Minister of Industry, Trade and Tourism, Mr. Stefanson, when the initial agreement was signed, and it is simply trying to express an opportunity for business to be done between those two ports. They are northern, isolated ports. Churchill can be classed similar, and there is real potential opportunity there now.

One has to realize that the economic events in Russia have not been, maybe, as productive as one might have thought a few years ago, but the study that was done, the Arctic Bridge study was completed November of '94, and the further follow-up activities involving Industry, Trade and Tourism, not this department, there is co-ordination between Gateway North and the Arctic Bridge concept. So the concept is very much alive. How it develops--and the governments at both ends are trying to facilitate the opportunity to happen through there--for any further information I would ask you to inquire in Industry, Trade and Tourism.

You know, you always explore every opportunity where there might be some hope. For that country there was hope, all kinds of hope, and some of their hope has been dashed by the frustration of trying to develop their economy. I know when I was there I felt it would take 20 to 25 years because it was such a learning curve that had to happen for the citizens in the whole country to understand what made the market economy in the rest of the world function.

I will tell the member one comment I heard there. It may be a bit of a tangent, but one comment I heard there I will never forget, and it was the strangest comment from the strangest place. An individual, who I would put around 40 to 45, who had been a fairly senior bureaucrat in the communist government, came up to me at a social function where their business people and our business people were meeting and said to me, he says, only one government in the world. I looked at him, I was thinking U.S. He says, no, it is a world economy, it is what governs the whole world. Everything else falls out from there. [interjection] Their frustration in being able to make it work there is what is causing them their frustration, and we hope that this can work. It will take some time for it to develop.

Mr. Jennissen: Very interesting ideological shift there, the minister quoting a communist official, but anyway--

Mr. Findlay: Well, he was quoting a capitalist. [laughter]

Mr. Jennissen: Okay. I am just curious why Murmansk was chosen. That is all. Was it because Murmansk, too, as a northern port, was really underutilized, is that the main reason?

Mr. Findlay: Well, I was there when it was signed, and the Murmansk people are the ones from Russia who initiated the interest from there. Like the local government people from Churchill are driving this, as are the local government people from Murmansk. We were in Moscow, and they came down to meet us in Moscow. So it was the local people, seeing their isolation, wanted to try to develop an opportunity of using their port more with us. So it was driven by the local people at Murmansk.

Mr. Jennissen: Regarding the utilization of the Churchill port, I recall the other day I phoned someone named Sid Allen from The Pas, who has been, in the past, very active in the Hudson Bay Route Association, and he mentioned something about nickel finds in Newfoundland or Labrador--I believe Newfoundland--and he thought there was a possibility of that being shipped through Churchill back to the Inco smelter in Thompson. He seemed to feel strongly about that. I know nothing about the issue. I am just wondering if the minister knows.

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Mr. Findlay: Well, certainly, we know that we have processing capacity here, and the individual who made the comment was looking at it in theory, but our contacts with the company involved would indicate that they believe the find is so large that they would want to develop a processing close by the mine. And, you know, the Newfoundland people would want to see the processing done there too. In theory, I guess it is possible, but, practically, it looks like they would be wanting to do the processing there, whether in whole or in part, who knows?

Mr. Reid: I have some questions relating to railways, as the minister would probably expect from me.

Does the minister or does the department, Highways and Transportation, meet with senior officials of the railways, the three railways--VIA, CN, CP--on a regular basis to discuss issues of mutual interest and how they affect both the industry and the province?

Mr. Findlay: Yes, department officials have regular meetings with both railroads and have developed reasonable understandings with VIA people through the Churchill Task Force. In fact, one of the officials had a meeting scheduled for eleven o'clock this morning, but he is here now. So, yes, continuous ongoing discussions, conversations with the two railroads.

Mr. Reid: If I understood the minister correctly, then, he said a VIA Rail official was here. He did not--

Mr. Findlay: No, a CP official had a meeting scheduled with one of our officials.

Mr. Reid: What was the last time that the minister or the department people met with CN and VIA officials?

Mr. Findlay: The staff have been in discussion with VIA officials in May and as recently as two weeks ago with CN officials.

Mr. Reid: Can the minister relate to us the topics of discussion during the meetings with CN and VIA, since they were just recent and that he has not had the opportunity to meet with CP yet?

Mr. Findlay: In the discussion with VIA, it was at a TAC meeting. We talked about Churchill, the Gateway North submission and other general topics. When we met with CN, we talked about, again, the Gateway North interim report and a number of other items of general discussion about rail renewal processes and expectations what the federal government might or might not do. In both cases, Churchill was part of the discussion, but beyond that it was reasonably general topic discussion.

Mr. Reid: Did the minister in his discussions with both VIA and CN talk about the employment prospects for the province of Manitoba, any of their shop-related activities that are currently operating within the province and the future that both areas might expect, and also line-related activities with respect to the railway and the services for the future on those lines?

Mr. Findlay: Well, certainly, staff at the table here and other staff have been in discussion with CN officials. The general gist of the expectation from CN as they go through their downsizing, right-sizing, whatever you want to call it, I believe the figure is 10,000 jobs over three years--that was their target nationwide.

Mr. Reid: It expires at the end of this year, yes?

Mr. Findlay: Yes, they are in the third year of that process. You know, we have been demanding that we not be treated any differently in terms of percent of total employment base in Manitoba versus other regions, and we still are around that almost 13 percent of the total workforce of CN here. I think the member is fully aware that in terms of the total number of employees we are second only to Montreal in Canada.

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I guess I always like to say, well, CN, if you are going to be commercialized and your major economic activity is in the West, why does the headquarters not move west of Montreal, like to the centre of the country? I do not think they would be too receptive to that. Nonetheless, our argument has been, do not treat us any differently than other regions of the country in the broad scope of your employment considerations, as you adjust to however you feel you have to adjust, and we say that to both railroads. That has been the bottom line in discussion at all staff levels with CN, and they seem to have responded in that sense that we run just close to that 13 percent total employment.

Mr. Reid: Did the minister ask when he was meeting with VIA and CN officials, unless I did not hear the answer in the minister's response--

Mr. Findlay: Of which?

Mr. Reid: Did the minister ask the questions, what are the short- and long-term prospects for employment for the province of Manitoba for those two railways? The fact is that we have a maintenance facility for VIA here in the city of Winnipeg; plus we also have CN's only remaining major overhaul facility in Canada headquartered here in the city of Winnipeg? What is the prospect for those two operations?

Mr. Findlay: I think the member can realize that the senior people in CN are not about to be giving us their plans for the future. There is a high level of confidentiality within the operation of their organization, and I do not think it would be appropriate for us to pry too hard. We do not want to be treated negatively. I have been given hints that we still sit very well in their eyes in terms of being an attractive place to carry out the functions they currently have here. These are confidential decisions of the companies. In order to survive competitively, they have to make their decisions within the economic framework that they think works.

I guess if I was to say anything about the net benefit of their commercialization process, it is that, historically, CN jobs tended to get moved around for political reasons. Once commercialized, I do not think there is any possibility of that happening in the future. The decisions to leave jobs here should be on the basis of it is the most economically viable place to carry out the functions. Winnipeg will always be a hub in rail, and I think we have every reason to think we are an attractive place to be.

As the member knows, we have lowered the fuel taxes to subtract the place to do those activities. We will continue to negotiate with the company to be sure that we are attractive and that we are efficient, and they will make the decisions to keep the jobs here, but for the right reasons.

Mr. Reid: The minister is accurate. They have lowered the fuel tax, but the problem we have always had with that is that you did not get any assurances of employment numbers, some stability in employment numbers for the province. If you are going to give away something, you usually try and get something in exchange, or some comfort level as the former Minister of Transport used to say, that we would retain certain employment levels in the province, and that was the problem we had with giving away some of the fuel tax revenue.

Are we opposed to the fuel tax revenue? As itself, yes, but if you are going to get something in exchange when you give that away, because the revenues, as the minister and his government has always said, are tight for the province, get something in exchange for it so you have people working within the province if you are going to give up that fuel tax revenue.

I am still concerned about the operations here, that the Transcona shop, which is now the sole shop for CN in Canada, has reduced its employment levels from 1990 in the range of 3,000 to 4,000 employees, and they are down to 1,250 employees right now. That is a significant drop in just a five-year span. The employees in the shop are worried about their long-term and short-term employment prospects.

There have been some changes, of course, with the employment security agreements, as the minister probably knows. The employees are worried about what is going to happen to them because the company said that at the end of this year their 11,000-employee reduction across Canada is supposed to conclude, but it is not going to stop them from reducing employment levels across the country. They are going to continue on with that, although to this point in time they have released no numbers. The only way we found out last time that they were going to reduce numbers was through a leaked document.

How many more jobs are we going to lose in 1995 as a part of that 11,000 overall Canada reduction? Has the minister asked the question of CN what we can expect for the future employment levels for the province here? What do we know for 1996, for example? It is my understanding that the six-year plan is due to come out on July 15. If the minister met with CN just some two weeks ago, it must give him some indication. I hope the minister asked the question of what we might expect for the province.

Mr. Findlay: As I look at the transportation industry, you have to look for where there are future opportunities, as opposed to saying we must hang on to the past. Everybody, I do not care where you are in society today, you have to respond to where the opportunities are, economically viable opportunities, as the railroads have to also. They have realized that to be viable they have to get their costs down. Realigning the responsibilities, what people do in terms of right-sizing, they are going through that process. It is no different than any other industry anywhere in the world, fundamentally.

We saw an opportunity because of our focus on telecommunications. We could see that many businesses, large businesses that have scattered customer service centres, would be looking at concentrating into a particular central facility. With CN we went after them with that principle in mind. Since CP is here, other call centres are here in Manitoba. Well CN, are you going to be doing that? They said, yes, we are interested in that. We sold them on the principle, locate it here. That meant that they had eight service centres, I believe, across the country, eight or nine, and now they are moving towards one.

We got a lot of CN jobs, CN-related jobs serving their customers in Winnipeg in that centre at the expense of seven or eight other locations across the country. Those are the jobs, to put it bluntly, of the new technology. Those are still CN jobs in my mind, and my understanding is that CN, in terms of choosing the employees for that location, gives opportunities for existing employees to accept those job opportunities. The process of filling that centre is ongoing.

I could ask any company, give me your five-year plan or six-year plan. I cannot ask them for that. That is their confidential operating information. I ask at the end of the day to consider us as the place to do business for a variety of the right reasons, as we asked everybody. We have had good response from CN-CP officials as to this is a good place to do business for a variety of reasons. The fact that we got the customer service centre is a lot better than having it located in Regina or Toronto or some place outside of Manitoba. We would have lost that entire opportunity. We got it here. It is here, it is growing. My understanding is, it is going to exceed its initial employment targets. It is working well.

I want to tell the member, if you want to meet a group of enthusiastic employees, go to any of the customer service centres that are located in this province. I would particularly say, go to AT&T Transtec and ask those employees about how they enjoy their job. I was there a few months ago. They have 13 locations in North America and only one in Canada. Within three months of operation, because of the nature of employees and enthusiasm of how they serve the customers over the phone, this was classed as their best of all 13 in North America. The work ethic was here, the employee attitude was very positive.

It is a good news story. We had a lot of young people there. I am talking, you know, 18 to 35 who had a variety of types of career training, who did not find jobs in their chosen field, who saw this as an opportunity and are doing well, performing well, respected by their employers and by the people they deal with on the phone.

These are new career opportunities. We do not want to miss them. Providing the basic service will always be there, but because of today's technology, it takes less people to deliver the same level of transportation, basic transportation services. I am sure the member is fully aware of that.

Now, what about the new opportunities? Service centres are new opportunities, and we got it here.

Mr. Reid: The minister referenced several things which I will comment on. He talked about the call centre here and bringing jobs to the province. From the information I have received, in talking with the people who had normally done these jobs, there has not been one new job come to the province at this point in time yet, even though the Premier (Mr. Filmon) went to a nice photo opportunity just prior to the election.

In addition to that, there has been a selection process that has been taking place by the company that has had standards that have been excluding a lot of the employees who have been doing these jobs for a number of years, under the current company system that has been in place.

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In addition to that, there has been a function of the customer call centre services already operating in the city of Winnipeg here. Employees have been doing those jobs. Those employees that have been doing those jobs for a number of years, I am told, that have been going through the selection process, have been excluded from filling those jobs in the new centre, even though they have already been doing those jobs. So there is some practice that is taking place within the company that is obviously making it much more difficult for the current employees to fill those new jobs.

We have not seen new employees come to the province here. The minister did not talk about the CRTC jobs, the rail traffic controller jobs that have been lost from the province of Manitoba going to Edmonton, Alberta. He has not talked about those job losses. The Premier (Mr. Filmon) goes for a photo opportunity on one hand, but he does not talk about trying to save the jobs for the CRTC people that are moving out of the province here to Edmonton.

The minister also referenced the fact that CN will not be influenced in the future by political decisions. What about building in the fact that the CN headquarters must remain in Montreal? Is that not a political decision that will be there in perpetuity forever that the federal Liberal government is casting in stone, preventing them from moving to Winnipeg or to the province of Manitoba or to somewhere in the West, but preferably Manitoba which is the central part of Canada, has the time zone advantage, has a bilingual workforce, has the railway-trained people already.

So there are many things that Manitoba has to offer with respect to bringing a headquarters here, for the thousand jobs. Seventy percent of CN's traffic is created in the West, is shipped in from the West. I mean, why are the headquarters not here? Why does it have to be in the East? These are the questions we have asking for a long time.

Has the minister gone to the federal government? Has he made a presentation on Bill C-89 and said to the committee--and I am not sure if the minister has gone to make a presentation when that bill was there. Has he asked them, why are they casting in stone that the headquarters for CN must remain as a private company in Montreal? Why can it not shift to another province, preferably Manitoba? Has the minister made a presentation, and if not, why not?

Mr. Findlay: I have mentioned that to the federal minister and he said, in no uncertain terms, that it was a nonnegotiable point.

Mr. Reid: So, then, political decisions are impacting the future of CN, whether it is going to be a commercial, private company or be a Crown corporation. The changes are not going to happen. There is still going to be political interference well into the future, because all the traffic could originate in western Canada and we still have the headquarters in Montreal.

I do not see that is something we should accept as a province. I think we should be putting it in the strongest possible terms to the federal government that that is not acceptable to Manitoba. I would have hoped the minister would have made some presentation.

Did you in any way communicate with the federal government to the Minister of Transport, to the committee hearings on Bill C-89, on Manitoba's position to this legislation?

Mr. Findlay: Prior to the Nault commission, Manitoba, Saskatchewan and Alberta jointly commissioned Sypher: Mueller to do an analysis for us on the proposals, and we submitted that report to the Nault commission.

We have had, as I have said to the member, discussions on the Montreal headquarters issue with the federal minister. We also have made requests that in the process of commercializing CN, the question of capitalization, debt write-off not disadvantage CP as a competing railroad opportunity for western Canada. So we have tried to allow the process to occur that is reasonable and rational for service delivery by both railroads in western Canada. I can foresee a day when--given the figures we have seen so far and the reason why the CN-CP problems have emerged, is that they are both losing big-time money in eastern Canada, and once CN is commercialized, I can see a day when almost all, if not all services of CN will be delivered in western Canada. When that occurs still having the headquarters in Montreal seems exceptionally inappropriate.

But at this stage the federal minister, as the member has rightly indicated, has indicated Montreal will be the headquarters. Whoever makes the commercial investments in CN I am sure would be interested in headquarters as closer to the scene of their economic activity than what Montreal will be, but given that it will undoubtedly be all in western Canada.

Mr. Deputy Chairperson: The time is now twelve noon. Committee rise.