No. H050/06For release June 16, 2006
OTTAWA — Transport Canada today called upon the Laurentian Pilotage Authority
and its Corporation des pilotes du Saint-Laurent Central Inc. pilots to
implement the following measures to ensure the Pilotage Authority's financial
stability and to guarantee fair and reasonable prices for high-quality service
for users.
The Honourable Lawrence Cannon, Minister of Transport, Infrastructure and
Communities, urged the two groups to resolve a number of issues that had been
highlighted in a recent mediation attempt with respect to their service
contract. These issues include the following:
The quality and reliability of the service provided by the Corporation des
pilotes du Saint-Laurent Central Inc. pilots, principally night navigation in
the winter and double pilotage;
The negotiation of a five-year service contract, including annual increases
that do not exceed the consumer price index;
The elimination of the productivity clause in the Corporation des pilotes du
Saint-Laurent Central Inc. service contract;
A two per cent reduction in the Corporation des pilotes du Saint-Laurent
Central Inc. service contract, and the publishing of a new tariff of pilotage
charges for the Corporation des pilotes du Saint-Laurent Central Inc. based on
the cost reduction achieved in the negotiated contract; and
Harmonizing the contracts of the two pilot corporations in order to avoid
rising costs.
The Minister also announced that the Government of Canada is rescinding a
binding decision made in October 2005 by the Canadian Transportation Authority,
which disallowed a tariff increase for pilotage fees.
"Today's decision shows the government will work toward providing a long-term
sustainability strategy for the Laurentian Pilotage Authority," said Minister
Cannon. "This is part of our commitment to being accountable to Canadians."
The Laurentian Pilotage Authority is a Crown corporation created in 1972 under
the Pilotage Act. It operates and maintains a safe, efficient and economical
pilotage service on the St. Lawrence River between Les Escoumins and the St. Lambert
Lock, on the Saguenay River and in Chaleur Bay. The authority sets
pilotage charges that allow it to operate on a self-sustaining financial basis.
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Contacts:
Natalie Sarafian
Press Secretary
Office of the Minister of Transport,
Infrastructure and Communities, Ottawa
(613) 991-0700
Kirsten Goodnough
Communications
Transport Canada, Ottawa
(613) 993-0055
Transport Canada is online at www.tc.gc.ca. Subscribe to news releases and speeches at apps.tc.gc.ca/listserv/ and keep up-to-date on the latest from Transport Canada.
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BACKGROUNDER
TARIFFS AND THE LAURENTIAN PILOTAGE AUTHORITY
The Government of Canada's decision to rescind the Canadian Transportation
Authority's 2005 binding decision, which disallowed a tariff increase for
pilotage fees, has a long history.
The discussion over tariffs began in 2004 with binding contract arbitration,
known as the Marcheterre decision. The decision awarded an increase of eight per cent
of the tariff to Corporation des pilotes du Saint-Laurent Central Inc for
the last year of a service contract in 2002-2003. The increase was retroactive
to July 2002. During that period, the authority was only authorized to increase
charges by three per cent to pilotage service users, as set out by the
Marcheterre decision. Consequently, a gap of five per cent was created between
the pilotage fees charged by the authority and the money paid to pilots.
The pilotage authority contested the arbitration award in Federal Court but lost
the appeal.
In 2005, to meet its financial obligation, the Laurentian Pilotage Authority
published a five per cent tariff increase and a temporary surcharge of 4.9 per cent
to reimburse the amount overdue to the pilots. This increase applied only
to pilotage assignments in District 1, which is the area of the St. Lawrence
River between Montreal and Quebec.
On April 4, 2005, the Canadian Shipowners Association, the Corporation des
pilotes du Saint-Laurent Central Inc., and the Shipping Federation of Canada
filed their objections to the tariff proposal with the Canadian Transportation
Agency.
The Canadian Transportation Agency conducted an investigation of the proposed
tariff amendment and concluded that the proposed tariff was prejudicial to
public interest and should not be implemented.
Without the 2005 tariff increase, the Laurentian Pilotage Authority did not have
the financial resources to continue to be financially self-sufficient as
required under the Pilotage Act. As a result, the Laurentian Pilotage Authority
submitted a request to the former Minister of Transport on October 18, 2005,
seeking his support in requesting that the governor-in-council overturn the
Canadian Transportation Agency decision.
The Laurentian Pilotage Authority was already experiencing significant financial
pressure before these recent developments. Last December, the Auditor General
informed Parliament that the accrued debt of the Laurentian Pilotage Authority
was a cause for concern and, without a turnaround of its financial situation,
there was a high risk that the Laurentian Pilotage Authority would not be able
to fulfill its mandate.
A factor in the increasing deficit of the Laurentian Pilotage Authority is the
"productivity clause" in the District 1 service contract, which pays a 50 per cent
premium to pilots for all assignments over 120 per year. In 2005, traffic
increases and a shortage of qualified pilots caused the average number of
assignments to reach 142, resulting in costs of approximately $2 million per
year with no matching revenues for the Laurentian Pilotage Authority.
Because of the imbalance between the tariffs it collects and the expenses it
must pay to the pilots, the Laurentian Pilotage Authority is losing money and is
only capable of partially paying its ongoing expenses.
In an effort to reach a compromise, agreeable to all parties, Transport Canada
appointed a mediator to attempt to find some common ground. In general, all
stakeholders other than the District 1 pilots were supportive of the mediator's
recommendations.
June 2006
