Transport Committee on Aug. 1st, 2025

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Dr. Lewis.

We have a motion on the floor, colleagues.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

Was it a motion or a notice of motion? I thought I heard—

[The Chair, Liberal, Peter Schiefke]

Can you clarify, Dr. Lewis? Was it a notice of motion?

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Yes, it is a notice of the motion, based on the facts and the testimony before this committee.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Dr. Lewis.

We will now go to our last line of questioning, from Mr. Kelloway.

The floor is yours. You have three minutes, sir.

[Mike Kelloway, Liberal, Sydney—Glace Bay, NS]

Thanks, Mr. Chair.

I'd like to thank the minister for being here today.

In particular, I'd like to thank you for talking about how the bank functions and how it's independent from government.

In that vein, Minister, would the bank ever tell you, the minister, about procurement details? Would they ring you up and have a conversation with you, given the fact that the bank is independent from government and you've clearly articulated how it functions?

[Gregor Robertson, Liberal, Vancouver Fraserview—South Burnaby, BC]

Through the chair, the simple answer is no. As the minister, I'm not involved in the day-to-day operations or decisions made by the Infrastructure Bank. It is an independent agency that's at arm's length from government.

I have regular updates from the CEO and contact with the chair and board, which are standard for the relationship between a minister and an independent agency that I have responsibility for.

My input is through policy direction, which is what's under way right now and going forward. That's where I have the opportunity, on behalf of Parliament and on behalf of Canadian people, to input a shared sense that we really need to focus on Canadian jobs and Canadian materials with these infrastructure investments.

However, we need to make sure, as you said when you opened your question, that the bank operates independently and has the confidence of the market and from private investors. That's how the bank can leverage billions of dollars of investment from the private sector into our public infrastructure.

[Mike Kelloway, Liberal, Sydney—Glace Bay, NS]

Thanks, Minister.

I think we can start with the baseline that we're all disappointed with the decision. Also, it's independent from government, and you are not.... As I listen to a lot of the questions today, I feel that you could be in the boardroom with the Canada Infrastructure Bank, having tea and discussing daily operations. You're clearly articulating that's not the case.

I'll go a little deeper into it. This will be my last question, which is an addendum to the procurement details. You're not involved in the procurement details. You receive updates and things of that nature.

Are you even allowed, under the legislation, to direct the Canada Infrastructure Bank to fund X, Y and Z?

[Gregor Robertson, Liberal, Vancouver Fraserview—South Burnaby, BC]

Absolutely not. There is no directing that is possible through my role as minister. The bank is independent, and the decisions on investing are made by the board and CEO. That's where those decisions get made.

I want to reinforce the fact that the procurement decision was made by BC Ferries. It was not made by the Canada Infrastructure Bank. The Canada Infrastructure Bank agreed to finance the replacement of ferries. BC Ferries had their own procurement process. Let's be clear that the Canada Infrastructure Bank did not have anything to do with choosing the winning proponent. They put the financing forward to serve Canadians with better ferry service on the west coast. That's where their decision-making took place. BC Ferries went about their procurement independently.

[Mike Kelloway, Liberal, Sydney—Glace Bay, NS]

Thanks, Minister. That's all I have. I appreciate the facts.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Kelloway.

Thank you, Deputy Minister Halucha and Minister Robertson, for your testimony today. We appreciate your time.

Colleagues, I'm going to once again suspend for two minutes to welcome the next round of witnesses.

[The Chair, Liberal, Peter Schiefke]

I call this meeting back to order.

Colleagues, it is my pleasure to welcome the next witness appearing before us today. From British Columbia Ferry Services, we have Mr. Nicolas Jimenez, president and chief executive officer.

Thank you for being here today. We appreciate your time, sir.

We are very tight on time, and everybody has lots of questions, so we'll turn the floor over to you for your five-minute opening remarks. Then we'll give the floor over to our colleagues for their questions.

Mr. Jimenez, the floor is yours. You have five minutes, sir.

[Nicolas Jimenez, President and Chief Executive Officer, British Columbia Ferry Services Inc.]

Thank you, Mr. Chair, and thank you to the members of the committee. It's nice to meet you and it's nice to be here.

I am pleased to be able to speak about how BC Ferries is delivering safe, reliable and affordable service to British Columbians and our customers. For the last 60 years, BC Ferries has been an essential public service for British Columbians. Last year alone, we transported almost 23 million customers. That was our third record-setting year in a row. We're a private company that operates provincially under independent regulatory oversight, with a legislated mandate to serve the public interest. We're a foundational part of the provincial and national supply chain, a critical part of the tourism industry in our province, and B.C.'s marine highway, moving about $8 billion in goods annually.

Our customers and communities need safe, reliable and affordable service. My role as CEO is to deliver on that promise. Today our system is at capacity. Last summer our major route sailings ran at an average of 92% capacity. We left a quarter of a million people behind because we were full. Only one of our 25 routes can actually cover its own costs. Travel demand is projected to rise by about 15%, outpacing our capacity even with four new vessels. Much of our capital infrastructure is old. Many of our ferries are well past their vessel design lifespan. More than half of our terminals need significant investment to keep operating safely.

In 2024 the propellor fell off our 61-year-old Queen of New Westminster, resulting in almost 200 days of repair, countless travel disruptions and a cost to BC Ferries of about $15 million. We expect that our operating losses will continue to grow with inflation. Simply to maintain today's level of service, we also expect that British Columbians could see their fares increase dramatically. We don't have the luxury, the flexibility or even the mandate to overspend.

To replace our four oldest ships, we conducted an open and competitive procurement process independent of political interference and aligned with international best practice. In fact, we adjusted the qualifications specifically to enable Canadian shipyards to qualify. Despite two Canadian shipyards then being pre-qualified, neither chose to formally submit a proposal. Of the six compliant bids that we did receive, all were from foreign countries. We chose the proposal that offered the best combination of value, quality, delivery timelines and protections for our customers. Throughout the build, we will have a team of Canadian experts on site, in China, to ensure high standards of quality and security.

I will say that Canadian companies have made the same decision, building almost 100 ships in China over the last decade. That includes the newest vessel for Marine Atlantic, a federal Crown corporation. It came from the same shipyard where we will build our vessels.

To summarize, there were no Canadian bids. This was a choice between a foreign bid or no new ferries. Going with another foreign proposal would have cost up to an extra $1.2 billion, resulting in significant and unnecessary increases to passenger fares. Even if there had been a Canadian bid, it too would have cost more, and those ships would have taken up to a decade longer to build, during which time our customers would pay the high price, with increasing breakdowns of our older vessels. Finally, financing this project privately would have cost up to $650 million more in interest charges—yet another unaffordable fare increase that our customers would have to bear.

None of these would be acceptable outcomes for our company or for our customers, more importantly. Whether you live on Vancouver Island—in Powell River, Nanaimo or Langford—or in the Lower Mainland—in Maple Ridge, Abbotsford or Langley—or, frankly, anywhere else in British Columbia where taxpayers help support our marine highway, the cost of living is a major consideration. Our mandate is to provide a service that is as affordable and reliable as possible.

Regarding the Canada Infrastructure Bank, this current loan includes up to $690 million for vessels and another $310 million for electrification of our terminals to deliver cleaner and more climate-friendly travel in the future. To be clear, this is a loan that's received by BC Ferries, not China, and that will be repaid, with interest, by BC Ferries.

British Columbians desperately need safe, affordable, reliable new ships to keep them and our economy moving. Our decisions have saved our customers and British Columbians from unaffordable and unnecessary fare increases. I'm proud that we were able to deliver for them.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much for your opening remarks, Mr. Jimenez.

We'll start our line of questioning today with Mr. Gunn.

Mr. Gunn, the floor is yours. You have six minutes, sir.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Thank you, Mr. Chair.

Mr. Jimenez, thank you for taking the time to join us here today.

My first question for you is this: Which government departments and/or ministers were notified of the final or likely decision to purchase the ferries from a state-owned shipyard in the People's Republic of China? When were they notified?

[Nicolas Jimenez]

We had conversations with the federal Department of Transport at the officials level in mid to late April to advise that the procurement was coming to a close. We were indicating essentially where it was going to land in terms of the yard and the country of origin.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Did the government, any of these departments, express any economic or national security concerns regarding that specific contract before the public announcement on June 10?

[Nicolas Jimenez]

Well, no, but what I can say is that, actually, when we made the initial contact with the department, we were seeking counsel on how to open and continue a dialogue with others in the federal government, specifically around national security. It was through that conversation that we then made other contacts within the federal government—Public Safety Canada and others—to begin a process whereby, again, we would have an ongoing dialogue throughout the build of the program.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

On June 20, it was reported that the Minister of Transport had wrote a letter expressing her great consternation and disappointment with BC Ferries' decision to contract the Chinese state-owned shipyard and that she was surprised that BC Ferries did not appear to have been mandated to require an appropriate level of Canadian content in the procurement.

Does that make sense, that the Minister of Transport or that ministry should have been surprised by that on June 20, or should they already have known for months?

[Nicolas Jimenez]

Again, I think you'd have to ask that question of the minister and her staff.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

You stole one of my questions.... You said there were six other bids. Is that correct?

[Nicolas Jimenez]

Compliant bids, that's right.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Were any of those other bids from NATO or other allied countries?

[Nicolas Jimenez]

They were.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Was it your understanding or was it expressed to you that the subsidy, the loan that you received from the Canada Infrastructure Bank, was going to be the same, regardless of where the ferries were purchased from?