STANDING COMMITTEE ON CROWN AND CENTRAL AGENCIES Hansard Verbatim Report No. 19 – April 21, 2005 Legislative Assembly of Saskatchewan Twenty-fifth Legislature STANDING COMMITTEE ON CROWN AND CENTRAL AGENCIES 2005 Mr. Graham Addley, Chair Saskatoon Sutherland Mr. Dan D’Autremont, Deputy Chair Cannington Ms. Doreen Eagles Estevan Mr. Andy Iwanchuk Saskatoon Fairview Mr. Allan Kerpan Carrot River Valley Mr. Warren McCall Regina Elphinstone-Centre Hon. Mark Wartman Regina Qu’Appelle Valley Published under the authority of The Honourable P. Myron Kowalsky, Speaker STANDING COMMITTEE ON CROWN AND CENTRAL AGENCIES 363 April 21, 2005 [The committee met at 15:00.] The Chair: — Thank you very much. Committee members, we have Mr. Kerpan, Ms. Eagles, Mr. D’Autremont. And we have Saskatchewan Transportation Company Mr. Iwanchuk, Mr. McCall, and filling in for Mr. Wartman is Mr. Taylor. The Chair: — Order. I call to order the Standing Committee on Crown and Central Agencies. I thank everyone for being here. Before I recognize Minister Sonntag to introduce his officials The agenda before the committee is the consideration of and make any opening statements, these meetings that are being Saskatchewan transportation corporation 2000 annual reports, held today had been scheduled much earlier — later last year which should take us to approximately 4 p.m. unless there’s . and earlier this year — but unfortunately some . [inaudible] questions are exhausted. And then at that point we will switch . occurred that we had to reschedule. To that end, we also to SaskWater 2003 annual report and related documents. have in the interim, in the meantime, 2004 annual reports for STC have been tabled. And although it’s not part of the agenda, Before we begin, I have a list of documents that are to be I’ve checked with the minister and he is prepared to deal with tabled, and they are so tabled. I won’t read them all in. We also both reports concurrently. have Andrew Martens from the Provincial Auditor’s office with some officials, if he wanted to introduce his officials and make There’s other matters that need to be dealt with at a later date any brief statements that he wanted to make. and Provincial Auditor’s statements, that sort of thing. So just to let committee members know that if they did have questions Mr. Martens: — Okay. Thank you, Mr. Chair. With me today on ’03 and ’04 the minister would be prepared to answer them is Charlene Drotar, who’s the manager responsible for the work in best ability. So I would recognize Minister Sonntag to of Saskatchewan Transportation Company audit for this year. introduce his officials and make any statements he has. As well we have Brian Drayton, partner with Meyers Norris Penny, and Debbie Ooms, a senior manager with Meyers Norris Hon. Mr. Sonntag: — Thank you very much. Good afternoon, Penny, who did the audit directly. I’ll ask Charlene to give a Mr. Chair, and committee members. First of all, of course, let brief overview of our results and then ask Brian to do the same me begin by introducing the STC officials with me here today. thing. Charlene. Immediately to my right is Ray Clayton. He’s the president and CEO [chief executive officer]. To my left is John Millar, Ms. Drotar: — Thank you, Andrew. Good afternoon, Mr. director, strategic planning and communications. Behind me is Chair, and committee members. Our objective under The Nial Kuyek, senior director, customer services and operations. Provincial Auditor Act is to form three opinions. We form an And someone who has planned to be with us, Shawn Grice, opinion on the reliability of STC’s [Saskatchewan senior director, finance and administration, is not with us today. Transportation Company] financial statements, an opinion on His wife is in labour so if he’s watching us today, he should not whether STC has adequate rules and procedures to safeguard be. He should be with his wife. public resources, and three, we form an opinion on STC’s compliance with legislative authorities governing its activities. I’d like to make just a few opening remarks before STC officials and I answer your questions. The Saskatchewan I’m pleased to report to the committee for the year 2003 . or Transportation Company has been providing service to the sorry, December 31, 2003, STC’s financial statements are people of Saskatchewan for 60 years now. It’s been an reliable, STC did have adequate rules and procedures to important lifeline to countless people, especially in rural safeguard public resources, and STC has complied with Saskatchewan but really all across our province. The majority legislative authorities governing its activities. We are also of STC passengers are seniors and students and people with pleased to report that we have had excellent co-operation in the limited incomes. STC links these passengers with their friends course of our work and continue to have good working and relatives, their university and college classes, and their relationship with Meyers Norris Penny and with STC’s medical appointments. And STC’s express service carries management. thousands of parcels and parts and other types of freight every year for businesses and individuals, playing an important part in That concludes my opening remarks, and we would be pleased Saskatchewan’s economy. to answer any questions the committee may have. Let me turn for a moment to STC’s 2003 financial results. Mr. Drayton: — Good afternoon. I represent Meyers Norris Despite an operating loss of 2.85 million for the year under Penny, the appointed auditors of the organization for 2003 and review, the operating grant STC received from the government 2004. Our report is contained on page 29 of the 2003 annual holding company was only $1.6 million. The company applied report of STC. Our report is unqualified, that is, standard audit 600,000 which it had used . which it had, I should say, in report, that in our opinion the financial statements do present unspent grants from previous years against its 2003 operating fairly the operations and financial position of STC at December losses. 31, 2003. The Provincial Auditor has reviewed our reports and concurred with the conclusions that we have drawn. And I too STC’s 2003 operating grant helped the bus company to carry would like to acknowledge management’s full co-operation. We about 260,000 passengers through a network of 275 were given complete and unrestricted access to all of the communities over the course of the year. STC, for clarification, financial records and any other information that we requested only receives operating grants for its passenger operations. STC during the course of our audit. And I’d say that would be the freight operations, which compete in an open marketplace, not extent of my comments as well. only earns enough to pay for its own expenses but freight 364 Crown And Central Agencies Committee April 21, 2005 operations must also cover certain other corporate costs. Any communities for drivers’ rest periods. profits left over from freight operations are used to help subsidize passenger operations. STC spends close to 80 per cent of its budget here in Saskatchewan and virtually all of the Avon products sold in It is important to note that STC’s subsidy amounted to only 12 rural Saskatchewan are shipped through STC. So when Avon per cent of the company’s revenues in 2003; 88 per cent of says they’re calling, it’s courtesy of STC. With those facts in STC’s revenues were self-generated. To put STC’s subsidy in mind I’d now be pleased to answer any questions that might perspective, we need to look at the public passenger come from the committee members. transportation industry across Canada. The Chair: — Thank you, Minister Sonntag. I’ll open the floor STC’s 12 per cent subsidy level compares with a 93 per cent to questions. Mr. D’Autremont. subsidy level to the Toronto Transit Commission, a 61 per cent subsidy to VIA Rail, a subsidy of up to 50 per cent to the Mr. D’Autremont: — Thank you, Mr. Chairman. Well, Mr. Saskatoon Transit system, and a subsidy of up to 65 per cent to Minister, welcome to you and your officials. I am somewhat the Regina Transit system. amused by your last statement that when Avon comes calling it’s courtesy of STC. Does that mean STC doesn’t charge Avon Nova Scotia provides a subsidy of $4.5 million a year to for shipping its products on STC? provide bus service to rural communities, and Quebec provides a $2 million subsidy every year. Next door in Manitoba, Hon. Mr. Sonntag: — STC charges. Greyhound provides the intercity bus service. However, as a trade-off for servicing non-profitable lines, Manitoba has given Mr. D’Autremont: — So it’s then courtesy of Avon that STC Greyhound’s subsidiary, Grey Goose, authority to operate all is in part able to transport goods and passengers across the charter bus services in that province. province? The high cost of equipment and fuel, employee costs, and Hon. Mr. Sonntag: — You’re absolutely right. declining passenger revenues are common factors facing intercity bus services across North America. Those reasons Mr. D’Autremont: — Thank you, Mr. Minister, for clarifying remain as true for Saskatchewan as for any other jurisdiction in that. North America. It is in this context it is important to take a look at who uses STC services. Mr. Minister, you stated that STC serves 275 communities, that, along with other carriers, you service about 400 communities Passenger information gathered by STC indicates that the across the province.