Debates of June 6, 2006 (day 6)

Thank you, Madam Chair. Madam Chair, I move that in accordance with the Rule 6(2) that we extend sitting hours to conclude the item under consideration.

Your motion is in order. It’s not debatable. All those in favour? All those opposed? The motion is carried.

---Carried

Page 20, Transportation, operations expenditures, not previously authorized, corporate services, $536,000.

Agreed.

Mr. Ramsay.

Thank you, Madam Chair. I just had a couple of questions on the $222,000 for airports not previously authorized. It gets back to discussions we had with the Minister of Transportation last year, actually it was two years ago now, about the $6.2 million coming from CATSA. In my estimation, and I wanted to ask this question, whether or not the Government of the Northwest Territories knew upfront that this bomb detection equipment and the baggage screening system would require us to have an on-staff electrician and an on-staff millwright to look after this equipment on an ongoing basis. It’s $168,000 a year. If we weren’t advised by CATSA that that was the case, it seems to me that they should be paying the price for that, not the Government of the Northwest Territories. They imposed us to have this type of security measures at our airport, so why aren’t they paying? I guess that’s the question, Mr. Chairman. Why is CATSA not paying to have this work carried out? Thank you.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, this request has come in and it impacts on a number of things. One is the size of the footprint of the building is one of the areas that has increased the impact of O and M that is required. Yes, the department is requesting two more positions -- one electrician and one millwright -- as the Member stated.

As well, there is a change in contract for janitorial services as a result of the increased size of the facility. As well, because of the increased size of the facility, the power consumption has increased as well.

One of the issues that is outstanding and the department is continuing to try to negotiate with CATSA is around the recovery from them. At this time, we’ve only got a commitment for about $22,000. So the baggage and screening system, the total amount there is $219,000. Other commitments that are not related to that total $138,000. Those are those two positions, as well as some other minor areas and the janitorial contract, less the pre-approved amount of $210,000. The department is now requesting $222,000 to deal with the areas and overrun areas in this project. Thank you.

Thank you, Mr. Minister. Mr. Ramsay.

Thank you, Mr. Chairman. Mr. Chairman, I am still trying to understand why it is that CATSA is not paying these additional costs. I haven’t heard that from the Minister yet. Why isn’t CATSA paying for the additional costs? The other thing is, I find it incredibly hard to believe that we need an electrician and a millwright to look after the conveyor system at the airport. Why can’t we go out and hire a millwright that is an electrician? Why do we need two people? Thank you, Mr. Chairman.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Mr. Chairman. In the area of the recovery being sought from CATSA, the department has identified the fact that most jurisdictions right now are having their difficulty accepting what CATSA has put forward as their amount. There seems to be a unified amount for these areas of O and M. I don’t believe many jurisdictions have agreed to that, so the discussion is ongoing. For further discussion around the CATSA discussions, we could probably have the Minister of Transportation provide a little more detail in that area in what has occurred in other jurisdictions as well. Thank you, Mr. Chairman.

Thank you, Mr. Roland. Minister McLeod.

Mr. Chairman, the conveyor system is very complicated and requires technical people to operate it. It has 16 independent conveyors which lead to the main conveyor belt. The cost associated with operating has been fairly large. We recognize that. We had anticipated initially to recover a good portion of this from CATSA. The amount of $222,000 is something we have been discussing with CATSA in terms of them compensating a portion of it. Our ask on this was $150,000. They have taken the approach that they will only fund $22,000 of it. This is based on their application of national policy. I believe that’s what they call it. They are taking the same approach to all other airports. We are still negotiating this arrangement with CATSA. We are certainly not satisfied with the response to date. However, we have new additional costs for personnel, an electrician and a millwright. I am not sure if we can combine the two. I don’t know if our agreements will allow us to do that. There is an increase of power for $24,000; there are replacement parts; there is a contract with the manufacturer. That’s what adds up to $222,000. We have to recognize that we have increased the footprint of this facility by 62 percent and that’s really added to all our costs. Should we have forecasted this…We did an initial forecast. Unfortunately, we looked at facilities in other jurisdictions and tried to make our best evaluation. However, we always anticipated that we would negotiate this with CATSA, at least a good portion of it, and we haven’t been able to make that come to a successful conclusion. We still are trying. However, the position they have taken has been fairly firm and we are not making a lot of headway.

Thank you, Mr. McLeod. Mr. Ramsay.

Thank you, Mr. Chairman. Mr. Chairman, when the airport in Yellowknife was renovated to accommodate the security screening equipment -- and I believe at the time the entire project was just over $11 million, $11.2 million -- I think it was $6.2 million that the Government of the Northwest Territories was going to receive from CATSA and the difference was going to be made up by increased landing fees, I believe, or some fees at the airport. Maybe I could just ask the Minister which fees those were that were increased to offset the capital cost of this renovation project and why can’t we look at drawing from that to pay this $222,000? Why wasn’t that an option? Thank you, Mr. Chairman.

Thank you, Mr. Ramsay. Mr. McLeod.

Mr. Chairman, we did incorporate a cost recovery program for the initial capital cost for this project for the expansion of the passenger terminal building. We did receive money for the capital cost from CATSA. The fees we did increase were the landing fees and general terminal fees. That is not something we have looked at in this case. We are looking at an increase through a supp to accommodate the extra costs. I guess if there is no desire to move forward with this, we would either have to take it from within, from another project. I am not sure where we would take it from, but we would have to find it within. We would probably look at incorporating another fee if that was something that we would have to do. That is not something we are looking at doing at this point. We recently raised two of the fees, so it’s not something we are in a hurry to do again. We still have these costs that we have to deal with.

Thank you, Mr. McLeod. Mr. Ramsay.

Thank you, Mr. Chairman. Mr. Chairman, I do believe this is part of the issue with expanding the terminal and including the security equipment and I believe it should come out, on an ongoing basis, of the increase of landing fees and terminal fees in addition to that money helping out with the capital costs. That’s an area the Minister should have looked at to try to recoup this money on an ongoing basis, so that it’s not something that appears in our budget from year to year. I will just leave that as a comment. There is a motion later to delete this amount, but I will listen to what my colleagues have to say about it. Thank you, Mr. Chairman.

Thank you, Mr. Ramsay. Next I have Mr. Braden.

Mr. Chairman, three years ago, not long after the calamity of 9-11, security across every transportation system in Canada was ordered to strengthen and for good cause and good reason. As we know, of late, our country is still dealing with the consequences of international terrorism threat to our safety. So it was not something that there was any real grounds to objecting to on fundaments. But the impact on our market, if you will, and our community of a safety system or an inspection system that the federal government alone contributed over $4 million to has a consequence of us, we determined that we were going to spend $6 million more than that to bring it into play, gave me great concern when it was first rolled out, Mr. Chairman. We had basically an imposition put on us with no room to negotiate or work with the federal government to how these costs could be absorbed by our relatively small market. As the Minister just told us, just of late, these increases just came into play on the 1st of April this year where we are adding to the cost of doing business of the airlines and we are adding to the cost of travelling and freight for consumers up here. These are all things I take a great deal of interest in, Mr. Chairman, because they are costs that are, generally speaking, within the government's control. When they add to the cost of living and doing business up here, it’s something we really need to pay attention to.

So now that we are looking still at further consequences, and not insignificant consequences, to the cost of doing this or keeping the system going, Mr. Chairman, I wanted to ask the Minister, Mr. Roland, how much in terms of ongoing maintenance and O and M had been negotiated with CATSA? Was it something that we had written up or negotiated a couple or three years ago and it was a fixed rate? What kind of a negotiated base were we dealing with here?

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. As the Minister stated in this area, the department had put forward negotiations in the area of over $150,000 anticipated for this. CATSA has come across with their national standard, I guess is the way to look at it, of $22,000. Most other jurisdictions were in the same position to say that is not adequate. The department has done a fair bit of calculations in doing this work. They have used the manufacturer’s technical information to build an estimate of what this would cost. As well, because the footprint is bigger, there is more space to heat and so on. They have done the work in that area to look at the non-related issues of the conveyor belt system. Their consumption, based on the manufacturer’s technical information, was $23,748. The service contract for maintenance of this system as well is another $14,000, and replacement parts and so on to have on hand over a two-year period is estimated to be $35,000 per year for maintaining a minimum inventory of replacement parts in that area, as well the positions that were discussed that need to help deal with that. Part of this is the electrical consumption estimations are about $74,000 per year and the propane consumption increased by another $44,000 in that area. So they have done a fair bit of detailed estimates on this. Unfortunately, as the Minister stated, our position is opposing what the CATSA group has provided for ongoing O and M and as with other jurisdictions, discussions are still ongoing. There is no timeline as to when we might get conclusion to those discussions. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Mr. Chairman, when this project got rolling and got up and started to take form and shape, did we negotiate a fixed amount CATSA was going to reimburse us for O and M before we really knew what the true costs were going to be? Did we negotiate ourselves into a corner on this by agreeing to a fixed amount and now we really have no recourse, we have to swallow this one, Mr. Chairman?

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, the negotiations that were concluded were the capital program. The negotiations for O and M were always ongoing and no conclusion has been brought to those. Thank you, Mr. Chairman.

Thank you, Mr. Roland. Mr. Braden.

Well, Mr. Chairman, I don’t quite know where to go from here. The federal government really has a big hammer on this and the question that we have, I suppose, as the Minister is asking today, is that we take this unanticipated, unrealized, and take it out of general revenue rather than pass it on to the consumer. Is that what the Minister is seeking?

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. The reason it has come forward this way is, yes, if we have approval of funds in this manner, there will be no other additional costs passed on to the consumer. If we cannot have approval of these funds, the department will have to look at its approved base of operations. If it can’t find it from there, it would have to come back with another fee structure. Thank you, Mr. Chairman.

Thank you, Mr. Roland. Mr. Braden. General comments. Page 20, Transportation, operations expenditures, corporate services, not previously authorized, $536,000.

Agreed.