Thank you, Mr. Vanthuyne. Mr. Guy.
Thank you, Mr. Chair. Some of the information that we would need to develop a long-term plan for the organization, which is what we are looking at, are things like what is the size of the market? What is the stability of the market that you need to stabilize the operation?
We got this equipment. It was in a condition where it needed some investment to deal with some deferred maintenance issues. Clearly, it wasn't sustaining itself to what would be an optimum level, based on the challenges the previous carrier had with the shrinking market, shrinking customer base.
Part of the work that we are doing is to figure out a stable amount of business revenues you need to sustain this organization in a self-supporting mode so that it can fund its life cycle needs, and also fund its year-to-year operations, and be able to be resilient enough to respond the types of situations that we are here talking about today, but also to be able to respond to growth and shrinking in its own market as a result of economic upturn and downturn.
Part of what we are doing now is looking at some of those markets. Part of the work that we are doing around some of the additional revenues that we are generating through other work that MTS does are being used to fund some of those life cycle costs. They are being used to fund some of the fixed costs of the operation, but we need to have a good understanding, with more than one or two years of data, to get a good handle on what it would be to have a viable self-supporting organization, whether it's a Crown or whether it's another organization.
We did some work last year. We did a study to look at what some of the business models were. It was clear through that work that we needed to have a little bit more operating time under our belt to come to better conclusions. We continue to look at those options, and we will be continuing to feed the data that we collect into that work that we are doing. Thank you, Mr. Chair.
Thank you. Mr. Vanthuyne.
Thank you, Mr. Chair. That is the kind of information that I like to hear: revenues; factors around operations; operational costs; what markets we are looking at; maintenance costs; of course, we heard about climate change earlier; and life cycle costs. Those are the things that I would normally see as the factors and information that we have to consider with regard to developing a model of governance or an operating model.
I appreciate that the department needs more time to observe and get information so that they can make a better case, I suppose. Will the Minister commit, then, to presenting us with a little bit more detailed information in the public presentation coming up and, also, maybe commit to developing a five-year plan similar to that of the airport, which is currently operating off of a revolving fund? Thank you, Mr. Chair.
Thank you, Mr. Vanthuyne. Minister.
Thank you, Mr. Chair. We can certainly commit to developing a longer-term five-year business plan and having those discussions, and I will be able to update committee once we have that work done. Thank you, Mr. Chair.
Thank you. Next, I have Mr. Testart.
Thank you, Mr. Chair. I thank my honourable colleagues for starting the work on asking questions around the governance structure.
The deputy spoke to the need to find a self-sustaining model or self-sustaining revenue in the market before the government kind of cuts us loose and stops subsidizing it. I know that, currently, MTS is servicing communities and industrial operations outside of the Northwest Territories. Can the Minister just provide the jurisdictions where MTS is pursuing work? Thank you.
Thank you, Mr. Testart.
In the meantime, while the Minister is conferring, I want to welcome a visitor to the gallery, Ms. Debra Richards, constituency assistant for the Nahendeh riding. Welcome.
Minister.
Thank you, Mr. Chair. MTS is presently operating where it traditionally has in the past. The majority of our work is in the Northwest Territories, with some work in Nunavut and a small amount in Alaska. Thank you, Mr. Chair.
Thank you. Mr. Testart.
Thank you, Mr. Chair, and that is what has me concerned about maintaining MTS as an in-house essential service provider. That is the stated policy objective of the purchase and how the organization is being run.
The need to find revenues to sustain the operating costs of the organization has led to the pursuit of opportunities elsewhere, but that leads the GNWT into direct competition with private sector actors, and if we are crossing international boundaries to do that, that could set up the GNWT for a whole bunch of liabilities as it relates to international trade treaties.
Has the GNWT done a risk assessment for the pursuit of these commercial opportunities, both across interprovincial and interterritorial boundaries and international boundaries? Thank you.
Thank you, Mr. Testart. Mr. Guy.
Thank you, Mr. Chair. The work that we are doing is, as the Minister said, the traditional operating area of the asset that we bought. The work that we do, for example, this year, in Alaska was moving a power plant from a location on North Slope to the ultimate destination in Alberta somewhere. It is coming back up the Mackenzie River to Hay River, where it will be, I believe, trucked to southern Canada.
The work in Nunavut is work that we have done in the past. Most of it is customers who want their materials shipped out of Hay River. There is no other organization that offers a service from Hay River to Nunavut at this time to compete with.
On the international work, we have consulted with the Department of Justice, and they have looked at any of the trade implications, and that work is ongoing. Thank you, Mr. Chair.
Thank you. Mr. Testart.
Thank you, Mr. Chair. Risk assessment is under way or is in progress; is that correct? Thank you.
Thank you, Mr. Testart. Mr. Guy.
Thank you, Mr. Chair. I'm not quite sure I understand what risk the Member is referring to, but we have done an assessment on whether we can compete in this market and do this work. My understanding is that we can. Thank you, Mr. Chair.
Thank you. Mr. Testart.
All right. Thank you, Mr. Chair. I understand that customers may want the service and it's a unique service. When it was NTCL, it was a private business. It wasn't subject to the same trade requirements, shall we say. If the GNWT is directly competing in private-sector markets both domestically and internationally, it could open itself up for liability as it relates to trade rules. This is something that has been expressed to me by both private-sector actors and just my own awareness of trade deals, including the new NAFTA. Is any thought being given to those issues, as it relates to the organizational structure of MTS? Thank you.
Thank you. Mr. Guy.
Thank you, Mr. Chair. I think those considerations would be factors into the long-term of our organizational structure that we eventually land on with this entity. It should be noted that the previous carrier was a Crown corporation for many, many years before it was privatized and failed so. As it was a Crown corporation, it was competing in those markets before privatization. Thank you, Mr. Chair.
Thank you. Mr. Testart.
Thank you, Mr. Chair. Crown corporation is also subject to different rules than the government, as an operating entity. You know, the Minister said famously on Small Business Day, when we pressed him on questions, that the GNWT is not a business; it's up to individual businesses to come forward.
Well, as it relates to MTS, it is a business, and it's in the business of shipping. The longer there is uncertainty around the arm's-length nature of this, the more liability the GNWT potentially brings itself on from the people who feel that the government is unfairly competing in both domestic and international markets.
It's imperative that we set MTS on a clear course forward. There has been a consultants' report that has made recommendations on what kind of model it should take. You know, even if that work was undertaken now and it became a Crown corporation or a special operating agency, the government could continue to subsidize its operations through direct funding or through subsidies. That would not be inappropriate, given its nature is still a government-owned business or a special operating agency.
From the evidence we have heard today is that, MTS, any decisions about its future will take five years, potentially. We might again accrue enough liability to potentially set us up for failure. Members are raising these concerns they have today. They have previously. They have in business plan reviews. They have on the floor of the House.
Is the Minister taking these concerns seriously? Can he commit to addressing these more fulsomely than just planning to address them sometime in the future? Thank you.
Thank you. Minister.
Thank you, Mr. Chair. The Member is kind of all over the place there. First of all, we need to pursue some of this private work. If we don't pursue some of this private work that's out there, the cost with running this operation would be enormous. I don't think the Member would like to see $5 a litre in the communities because, if all of a sudden, you shrink your market to where it's half the size of what you have and you continue to have a fixed cost to run this operation, the costs are going to be horrendous.
We are operating this asset exactly the way and pursuing revenues just like the company that ran it previously to us, without any effects on the market. Our staff was just recently in Cambridge Bay discussing with community members the challenges that we had this season. They made it quite clear to us when we were there, they do not want us to pull out of their market. They have made it very clear. They have had three other sailing ships that already service their community this year.
As the deputy said, there are a number of people in these communities that want their services, goods brought out of Hay River. They don't want to be bringing it from Vancouver or around from Montreal. There is a place in this market. It is a small market. Everyone's doing their own thing, and we will continue to pursue the private-sector business to offset our costs to run this operation.
We have clearly laid out what the deputy said with the data and information we are trying to pull together. We are going to make a decision in the long-run if we are going to make this a Crown corporation or other business models or what other options are available to us. It does not make sense for us not to pursue some of these other opportunities that lay out there. There are a number of people out there that can't do what MTS does. They don't have the low-draft barges. They don't have the type of equipment that we do. They don't have the staffing that we do.
At this point, on the floor of this House, we are going to continue to commit to pursuing other revenue sources. Thank you, Mr. Chair.
Thank you. A short follow-up, Mr. Testart? Twenty seconds.
Yes, I just want to use this opportunity to clarify my comments. I'm not advocating for MTS to stop doing the work it's doing or pursuing revenues. I'm saying it's an inappropriate governance model to do so.
My concern is liability and the principles of fairness and competition. I think the Minister is mischaracterizing my comments in saying, "Stop." I'm not issuing a stop work order for MTS, Mr. Chair. I am saying that, if we are going to continue to do this work, we need to do it properly.
Thank you, Mr. Testart. Your time has expired. Next, I have Mr. Beaulieu.
Thank you, Mr. Chairman. Mr. Chairman, I'm not really sure where to start with this. I haven't been obviously impacted in the people that I represent, but I see that other people around the territory have been impacted by, I guess, we don't want to use the word "mistakes," but maybe a bit of a miscalculation on the part of the people doing this.
For the most part, the weather, the ice, and all that is pretty well consistent from year to year. I mean, I'm not saying it's the same every year. I mean the one thing that's predictable is that the weather is not predictable. That's what I'm saying. When NTCL or a company like that operates or MTS operates, they would operate with that knowledge that the weather is not predictable.
I think that rather than a mistake or blaming Mother Nature, I think it was a miscalculation on the part of MTS. That miscalculation cost a lot of people a lot of money in the Member from Nunakput's riding and also for Nunavut. I also feel that it was a miscalculation on the part of the government, period, too, and by NTCL. Originally, I was not in favour of it but had no say in it. There were other companies that would bid for the work and felt that they had more knowledge of the shipping than what the government would bring in, but that's water under the bridge.
I have a question for the Minister. That is: after this year, what is MTS doing to debrief to make sure that they try to do better calculations when they are trying to ship into those communities that they were not able to completely ship in? Thank you, Mr. Chair.
Thank you, Mr. Beaulieu. Minister.
Thank you, Minister. The first thing I want to highlight for the Member: I think us buying MTS had a positive impact on him because Lutselk'e had two years of delivery of goods and fuel in his riding.
What we are going to do from this point forward is, as I have said in various different statements, we are going to hire another communications person, work closely with the communities on goods and delivery of services to the communities. We are working with Coast Guard on the sea ice issue and a number of other issues that we are going to address, hopefully, with him going forward around navigational aids and all kinds of things around the sea ice conditions and marine infrastructure investment and stuff.
Like I have said in the House before, people continue to say this is an error, and it is not an error. There was a multitude of effects that got us to this point. I disagree with the Member; us buying MTS was probably the smartest thing we have done. If we wouldn't have bought this, the chances of even having delivery up there by us wouldn't have happened. I believe that company would have been stripped and sold out, and we would have had to rely on delivery to the Arctic coast coming around from Montreal or Vancouver, which would have added significant costs to the Government of the Northwest Territories and to the residents in those communities. That is a point we can ponder, but that is my point on it, and I believe that we did the right thing to service these communities.
An unfortunate event happened this year. We are taking the unprecedented step to help mitigate these circumstances. We are delivering all of the fuel to the communities that need it to make sure that they get through the winter. We are taking the unprecedented step of delivering all the goods and commodities to the community on a case-by-case basis.
We have reached out to every one of the customers in the communities. Paulatuk has 33, Kugluktuk had 11, and Cambridge Bay has 24, and we have talked to every one of them. There were some people that were clearly upset that the boats didn't arrive, but that is the challenge of living in the North, and that is the challenge of climate change. We are taking this step, which is going to cost us a significant amount of money, to be able to help those people up there, and they are quite happy.
Can you imagine what would be going on in this House right now if we didn't take the unprecedented step of flying in all of these commodities and goods into these communities? That could have been the case if it was in a private stakeholder's hands. I think we did the right thing, and we just need to remind people that this is a challenging environment. Thank you, Mr. Chair.
Thank you, Minister. Does that answer your question about debriefing, Mr. Beaulieu?
Thank you, Mr. Chairman. Mr. Chairman, when I was talking about not being affected, I was talking about what happened up there, I realized that stuff was delivered in Lutselk'e like it was every other year for years and years.
My other question is: the Minister referred to the cost of trucking fuel into Inuvik, for example, and I would advocate trucking fuel to Tuktoyaktuk, but Inuvik would be another situation. Has the MTS looked at the possibility of making or building something like a Synchro Lift that could pull the barges and ships up on shore in Inuvik to see if that is something that is feasible? Thank you, Mr. Chair.
Thank you. Minister.
Thank you, Mr. Chair. As I have stated in previous questions, we are talking millions of litres of fuel. It does not make sense to build a Synchro Lift in Inuvik. We already bought an existing facility. The majority of the fuel comes on the railhead to Hay River. The railhead does not go to Inuvik, as far as I know, unless I am missing something.
We are talking 40 to 50 million litres a year. You start trucking that up to Dempster, the wear and tear, the safety issues, the environmental issues that come with that, the costs associated with that, I don't even have to do an analysis on it; I know it is going to be way more than you would ever ship out of Hay River.
Shipping by rail and marine is by far the most cost-effective way to do this, and that is why we have no intention of building a Synchro Lift in Inuvik, as long as I am the Minister. Thank you, Mr. Chair.
Thank you, Minister. Mr. Beaulieu.
Thank you, Mr. Chairman. It might be cheaper than flying fuel in, though.
Mr. Chairman, it is very difficult to sit here without any information at all. We don't have any information. I am asking the Minister if they have looked at something. He says they don't have to look at it. He is talking about wear and tear on the road. I think that, if you drive stuff in the winter over the highway, a gravel road driven in the wintertime can handle a lot more when the road is frozen than, obviously, the Minister realizes.
What I am saying is we should look at other possibilities, because unless the department or MTS does a proper debriefing and does better planning and does better calculations on how to deliver material and fuel into those Arctic communities, we are going to have to start looking at something else. We can't have a repeat of this. The possibility of building something that may appear costly today? I mean, it appeared costly to me when the government bought NTCL. I wasn't in favour of that, but like I said, I had no say. That is a costly thing that the government was prepared to do, but in order to make sure that they don't make the same miscalculation in the future, I am saying, take a look at that. What is the cost of that? We don't know. The Minister is not going to look at it because it's too costly, but he doesn't know what the cost is, just knows that it is going to be too costly. He thinks it is going to be damaging to the road, but if the road is frozen, it may not be.
Those are the types of things I think that the government is going to have to look at and not just say, "We didn't make a mistake. We're not listening to anyone. We are going to fly in what we can, and everything is going to be fine in the future." I think we should start to make sure that the government is looking at what they have done this year to make sure that doesn't happen again in the future. Thank you, Mr. Chair.
Thank you, Mr. Beaulieu. Your time has expired. There is no one further on my list, so I will allow closing comments to Minister Schumann. Minister Schumann.
I am going to make it brief, but one thing I just talked to deputy what I want to do when we come in front of committee next week, I am going to find out exactly how many litres of fuel we delivered to the Arctic communities, and I am going to get a quote of how much it is to truck it to Inuvik to give committee a fair comparison on what it would cost. I think they are going to be pretty shocked.
For my closing comments, I thank all committee members for their questions. I think it is good that we have a public forum here to get this information out to the public. I need to reassure the public, when they are listening to this, that the Government of the Northwest Territories has taken the unprecedented step of buying MTS to protect the people of the Northwest Territories around delivery of fuel and goods to the communities, particularly the High Arctic. We took the unprecedented step to do that. I believe it was the right step to do, and I believe Cabinet does, and I believe most Members do.
We are operating in a very challenging environment. Some people want to put the blame on us for the commodities and goods and fuel not getting delivered this year, and I am not going to wear that. This is an unprecedented event that happened. There is a multitude of things that took place. The department is working very hard to mitigate this. We are taking the unprecedented step of flying in these things to these people so that they can get on with their lives in a cost-effective way, and I don't think you would have seen that if the private sector would have purchased this asset.
I thank committee for their questions today, and I look forward to the briefing next week. Thank you, Mr. Chair.
Thank you, Minister. Mr. Beaulieu.
Thank you, Mr. Chairman. Mr. Chairman, I move that the chair rise and report progress.
Thank you, Mr. Beaulieu. There is a motion on the floor to report progress. The motion is in order and non-debatable. All those in favour? All those opposed?
---Carried
I will rise and report progress. Sergeant-at-Arms, you may escort the witnesses from the Chamber. Thank you to the witnesses. Thank you to the Minister.
Mr. Speaker, your committee has been considering Bill 7, Chartered Professional Accountants Act, and Minister’s Statement 103-18(3), Marine Transportation Services, and would like to report progress with one motion carried, that Bill 7 is ready for a third reading as amended. Mr. Speaker, I move that the report of the Committee of the Whole be concurred with.
Do we have a seconder? Member for Nunakput. Motion is in order. All those in favour? All those opposed? Motion carried.
---Carried
Thank you, Mr. Speaker. Mr. Speaker, I move, seconded by the honourable Member for Range Lake, that Bill 8, Emergency Management Act, be read for the third time. Mr. Speaker, I do request a recorded vote. Thank you.
The Member requested a recorded vote. The motion is in order. To the motion.
