Debates of October 23, 2018 (day 41)

Thank you, Mr. Thompson. Minister Schumann.

Thank you, Mr. Chair. When we come in front of committee next week, we are going to bring you the most up to date balance sheet that we have because that changes all the time with liabilities and invoicing and stuff. The other thing we have got to make quite clear here is: we are forecasting that we are going to break even this year, even with all the liabilities of flying all the freight in. Thank you, Mr. Chair.

Thank you, Minister Schumann. Mr. Thompson.

Okay. If I understand this correctly, if we didn’t have these situations happening, we would have had an extra $3 million from the operations of MTS this year? Thank you, Mr. Chair.

Thank you, Mr. Thompson. Minister Schumann.

Thank you, Mr. Chair. Yes, approximately, we would have had an extra $3 million in revenue to the bottom line. Thank you, Mr. Chair.

Thank you, Minister Schumann. Mr. Thompson.

Thank you, Mr. Chair. I thank the Minister for that. I got a little bit of clarification a little bit better there. When we talk about the rebates to the clients that have these vehicles that are not getting shipped in there, it is great that the department is going to give back the rebates, but will the department make a commitment to these same owners that they will charge them the same freight rate this year for next year? Thank you, Mr. Chair.

Thank you, Mr. Thompson. Minister Schumann.

Thank you, Mr. Chair. I guess I have to lay it out maybe a little simpler. We are giving the rebate back for what we are charging people to haul their vehicles in this year, and we are delivering them next year for free. Thank you, Mr. Chair.

Thank you, Minister Schumann. Mr. Thompson.

Thank you, Mr. Chair. I think the people of the communities are happy with that. What is that cost going to be if we are providing it for free? Thank you, Mr. Chair.

Thank you, Mr. Thompson. Minister Schumann.

Thank you, Mr. Chair. We can actually maybe get that information for you, as well. There are 10 vehicles, and they range from $2,790 to $4,750, depending on their size. Thank you, Mr. Chair.

Thank you, Minister Schumann. Mr. Thompson.

Roughly about $40,000 at the high end. Okay, thank you. When we talk about the petroleum revolving fund, when we talk about this, now we are saying that, using the Minister’s words and I apologize if I didn’t get them exactly right, they are going to eat the cost of the petroleum, the freight being back and forth. That is great that we are getting the petroleum and that into the communities, and I think that is great to hear.

My question, though, is: this revolving fund, how does that impact the cost of fuel next year for all communities? Because I am assuming the purchase is bulk, that is how the cost, you come out with it; you are able to purchase the best product for the best price. Now, we are seeing using the freight to pay for it. Now, it is going to be another cost to all of the Northwest Territories. Just not that because we are going to see the smaller communities being impacted. Maybe I am wrong, but can we please clarify that? Thank you, Mr. Chair.

Thank you, Mr. Thompson. Mr. McCormick.

Speaker: MR. MCCORMICK

Thank you, Mr. Chair. The petroleum products revolving fund also has attached to it a stabilization fund of a million dollars. That is a fund for stabilization, stabilizing the fuel prices. Those extra costs that we are going to incur this year will sit in the stabilization fund. There is a band that the Minister is allowed to charge a little bit up and down on the fuel prices. There is no urgency.

Assuming we don’t have another year like we had this year, there would be urgency to jump that all in fuel next year. We can take some time and work our way out of that stabilization fund, Mr. Chair. That is exactly what that stabilization was designed for so we wouldn’t have these big price shocks hitting consumers from year to year. Thank you, Mr. Chair.

Thank you, Mr. McCormick. Mr. Thompson.

Thank you. I thank Mr. McCormick for explaining that. Will the Minister provide this information at the meeting and explain exactly how that works so we can understand that? I mean, for me, I understand a little bit better, but I would like to be able to get that information out to my communities, even though they are not on the large shipment process. With this petroleum product eating the cost, the freight, it has an impact or could have an impact. I am hearing from Mr. McCormick that it doesn’t, but can we get that clarified and presented at the committee meeting? Thank you, Mr. Chair.

Thank you, Mr. Thompson. Minister Schumann.

Thank you, Mr. Chair. Yes, we can make sure we have someone from petroleum products to explain it to committee. Thank you, Mr. Chair.

Thank you, Minister Schumann. Mr. Thompson.

I greatly appreciate that. When I was down south, I ran into a couple of individuals, and they talked about these air ships, the new technology. Has the government started to look at that as potentially something that MTS can get into in the future? Thank you Mr. Chair.

Thank you, Mr. Thompson. Minister Schumann.

Thank you, Mr. Chair. When they became commercially available, we will have a look at it. Thank you, Mr. Chair.

Thank you, Minister Schumann. Mr. Thompson.

I hope that the Minister and the department actually really looks at it because, from what I understand, it sounds like a good idea.

The last question I do have is just in regards to when he talked about cost of freight going up the Dempster to Tuktoyaktuk. Now we have that road there. Have you guys or will you guys look at the cost of doing this? I understand that the railhead is here. This is the cost going up the railhead, but here is the cost going up on the Dempster to Tuktoyaktuk highway. Because I mean, to me, we spent a lot of money on building that road, and here is an opportunity to maybe help the communities in the Beaudel there. Thank you, Mr. Chair.

Thank you, Mr. Thompson. Minister Schumann.

Thank you, Mr. Chair. First of all, we have to point out there are millions of litres of fuel that get shipped up there. This isn't one of Basset's B-train loads here we are talking about. We are talking millions of litres.

The wear and tear on the highway would be on the Dempster, and stuff would have to be considered, but right now, as we start moving commodities anywhere around this country, marine and rail is the cheapest way to do it. There's no getting around that at this point. There are also safety and environmental issues if you were trucking it. There would be more risks involved in that. There are some other factors involved here, but the cheapest way is still, presently, in today's society is, marine and rail. Thank you, Mr. Chair.

Thank you, Minister Schumann. Next on the list, we have Mr. Simpson.

Thank you, Mr. Blake. This is, you know, MTS is, a big deal in Hay River. It's a big deal in my constituency. A lot of people were glad when the government came in and purchased MTS. I don't think anyone saw it as the government was coming in to save Hay River. The government was coming in to save themselves because they require MTS to deliver fuel.

I was up at the all-candidates forum. I sat onstage with Minister Schumann and I said, "The government shouldn't be in the business of business" and lo and behold, a couple of years later, we are running a shipping company. You know, it's not easy, and government isn't made to run these types of organizations. You have to be responsive. You have to be nimble. Those are two things that the government isn't known for.

I think that this exemplifies the need to move towards a different type of governance model, something similar to the power corporation, a cost-recovery model where you can attract the right type of people to do the work, people who have history in the shipping industry.

You know, there's been a lot of talk about, you know, shipping out of somewhere else. The Minister has pointed out many times that a lot of fuel comes through Hay River. When I look out my window, I can see the tank farm where the fuel is delivered to, and I see trains day and night sometimes, you know, for the entire summer, coming through. There is an amazing amount of fuel, and you couldn't even imagine how many trucks would be required to ship that up and down the highway. I would like to see the numbers. I would like to see the Minister come up with these numbers. I think they would probably be extraordinary, to see how expensive it is to ship it via truck.

Like I said, I think that we need to seriously look at moving towards a different type of governance model and not, you know, a few years down the road we'll start thinking about it. I think we need to look at it now and see how quickly we can move towards it. We need a long-term plan and we need a short-term plan of how we are going to start getting there.

There are a lot of small things. There was the sailing schedule, I think, went out to consumers in May. It usually goes out in November. Right there, that's a small example of something that was six months behind, right off the bat. I think that's indicative of a lot of the other small issues. Well, you know, we do have a lot of the right people in Hay River to run this as it is. We bring a lot up, and the marine training centre is addressing that, but we have a lot of personnel in Hay River. I think that they need to be able to work in an environment that, like I said, is responsive and nimble.

One of the other issues, too, with when you discuss, you know, maybe shipping out of somewhere else and maybe moving to somewhere is the fact that there are the personnel in Hay River who have been doing this for years, you know. It's not just the physical infrastructure, but it's also the people.

Those are just a few things I wanted to point out, both for the Minister and for, you know, the public because there's been a lot of talk of maybe we need to ship out from somewhere else, but, you know, there's a reason that Hay River exists as it does, and it's because of, you know, mostly because of commercial shipping and commercial fishing. It is the port of the North for a reason. I just wanted to point that out. Thank you, Mr. Chair.

Thank you, Mr. Simpson. Minister Schumann.

Thank you, Mr. Chair. Comments are noted.

Thank you, Minister Schumann. Mr. Simpson.

Nothing further. Thank you.

Thank you. Next on the list, we have Mr. Vanthuyne.

Thank you, Mr. Chairman. I'm certainly appreciative of everybody's comments. Also, I would be remiss if I didn't say that, you know, and I appreciate that a lot of people think this way, that we need to be very kind of thankful, grateful for the efforts that the Government of the Northwest Territories has put in, in terms of saving what was a sinking ship, for lack of a better term, and appreciating the efforts that the government has done to make sure that this critical services are being provided to residents of the Northwest Territories. I want to commend the department for that.

You know, this really does lead to: what does the future look like for MTS? I appreciate that the Minister and the department are going to come and present to standing committee in the coming days.

I will put it here, though, on the floor, because it has been touched on, but more detail would certainly be what we would be looking for in the presentation. That is: what is the future of the MTS going to look like? Some have suggested that there needs to be a new governance model. You know, right now, it's essentially, although it's running under a revolving fund, it's essentially a division of the Government of the Northwest Territories.

Have we put any planning into: will it remain that way? Will it maybe be considered a Crown corporation at some point in time, maybe a P3 operator or, in fact, maybe even an outright sale to an owner/operator? What would be the operation model that the government is considering? Is it just status quo, or are we doing work to actually consider other models? Thank you, Mr. Chair.

Thank you. Minister.

Thank you, Mr. Chair. As I have stated in the House, this is early days on this purchase of this asset. We are having to look at those options going forward. As I have said in the House many times, we need more than one or two seasons' data to have a look at this, but the department is certainly having to look at various models of what the end game will be. Those decisions will be made once we get more data and input to be able to make a decision around that. Thank you, Mr. Chair.

Thank you. Mr. Vanthuyne.

Thank you, Mr. Chair. Are we aware of any other jurisdiction that has a similar model, where there's a government-operated marine transportation system? Thank you, Mr. Chair.

Thank you. Minister.

Thank you, Mr. Chair. Off the top of my head, no, but we would have to do a jurisdictional look to see if there was something out there similar. The only thing that comes to mind to me is some of the MTS tables is Newfoundland and their ferry system, but that's not doing cargo or stuff. Thank you, Mr. Chair.

Thank you. Mr. Vanthuyne.

Thank you, Mr. Chairman. When the Minister refers to data, what kind of data? Like what kind of data sets are required for us to make some of these future decisions with regard to the government's model or business model for MTS?

Thank you. Minister.

I can maybe take a crack at it, and then maybe the deputy or someone wants to step in. The easiest way I look at it, from a business point of view, is, first of all, if I were a business guy, why would I want to buy MTS? When you get into a situation like this here, there is so much risk there that, to me, for that type of investment, it would be very challenging to turn a profit in this environment. There is so much risk involved around climate change alone and even sovereignty.

There are a number of things that I think we will have to look at from a data point of view. It would even be from a policy perspective to regional uses of what is going on up in the High Arctic. There are a number of factors that need to be considered in this. Politics is also something, I think, that comes into it to a certain degree, but does it make sense? You would have to look at our other Crown corporations and their governance model and how they are working. I think the previous question, are there other models out there of other governments running an operation like this, that would certainly probably feed into that as well. Thank you, Mr. Chair.

Thank you, Minister. Mr. Vanthuyne.