Bill C-8 (Historical)

An Act to amend the Canada Transportation Act (railway transportation)

This enactment amends the Canada Transportation Act with respect to railway transportation.

[Robert Ballantyne]

The 100-plus members of the association spend approximately $6 billion annually on transportation services by all modes. We advocate for our member companies' interests with regard to air freight, trucking, marine, and rail. FMA will only comment on the sections of Bill C-30 that would amend the Canada Transportation Act, and also on the government's related announcements that relate to the transportation elements in Bill C-30.

I will attempt to provide some context on how we arrived at this point with regard to rail service, provide some comments on Bill C-30, and more importantly, look at what needs to be done to ensure that the rail system and other parts of the supply chain system have the capacity to meet the future needs of rail shippers.

During the run-up to Bill Bill C-8 which amended the Canada Transportation Act in 2008, there were widespread complaints about rail service from across the country. When Bill C-8 was passed in June 2008, the government agreed to undertake an independent review of rail service. The review panel published their final report on January 2011.

One of the panel's consultants, NRG Research Group, found in its independent survey of 262 shippers that only 17% of their respondents rated their satisfaction at a six or seven on a scale of one to seven, where seven was the most satisfied. NRG also reported that 62% of shippers reported they had suffered financial consequences as a result of poor service performance. The rail freight service review panel recognized the fundamental problem, and said in its final report, “This railway market power results in an imbalance in the commercial relationships between the railways and other stakeholders.” Canadian railway law has acknowledged for over a century that rail freight is not a normally functioning competitive market.

Part of the government's response to the rail freight service review was to introduce Bill C-52, the Fair Rail Freight Service Act, which became law in June 2013. Bill C-52 breaks new ground by providing for the first time in Canadian law the right of all rail shippers to a service level agreement, and if it can't be negotiated directly with the railway, it can be achieved through arbitration. The shipper community, through the Coalition of Rail Shippers—and there are a number of our associations, some of which you've already heard from, that are members of Coalition of Rail Shippers—identified several areas where Bill C-52 could be strengthened in a way that would minimize uncertainty and give better guidance to our arbitrators. Also, some of the most significant recommendations of the rail service panel did not find their way into Bill C-52, particularly the review panel's list of elements that should be included in service level agreements at the option of the shipper.

The Coalition of Rail Shippers' proposed amendments to Bill C-52 were designed to strengthen it and make it more likely to effectively rebalance the commercial relationship and meet the government's stated objectives for the bill. The government declined to accept any of the six recommendations proposed by the Coalition of Rail Shippers. Consequently, to my knowledge at least, there have been no shipper attempts to achieve a service level agreement using the provisions of Bill C-52.

Bill C-30 provides another opportunity to revisit the shortcomings of the Fair Rail Freight Service Act. Clause 7 of Bill C-30, for example, provides the authority for the agency to extend interswitching limits “for the regions or goods that it specifies”. This amendment to the interswitching regulations will allow the agency to give effect to the government's policy announcement to extend the maximum interswitching on the prairie provinces from 30 kilometres to 160 kilometres. The interswitching regulations have been useful to shippers over many decades and are an effective surrogate for real competition. Given the current backlog of grain, this temporary provision may give grain shippers more flexibility in arranging service, and it will be available to all shippers who may have facilities located within the 160-kilometre zones that will be established.

Once a more general review of the Canada Transportation Act is undertaken, the maximum interswitching limit across the entire country should be investigated to determine if the current 30-kilometre limit should be extended.

The other significant provision of Bill C-30 that's relevant to all shippers is clause 8, which authorizes the agency to “make regulations specifying what constitutes operational terms” to be included in a service level agreement through arbitration. While it's unclear how the agency and the government will use this provision, it could be a vehicle for achieving some of the shipper amendments that were rejected during the Bill C-52 debates. FMA will certainly engage with the agency as these regulations evolve.

I'm not going to comment on the provisions related to potential fines for the railways for missing targets, or the provision that allows the Governor in Council to set targets in the next two crop years. It is acknowledged that the current backlog of grain is an unusual situation, and clearly the government felt compelled to intervene at an unprecedented level of detail.

As you've heard and you probably will continue to hear, there is concern among some of the shipper community that singling out one industry group in such a manner could cause service problems for other shippers. FMA includes among its members grain companies but also many shippers in many other industries. We've informed our membership that the targets set in the order in council and in Bill C-30 originated with CN and CPR, and we have to start from the premise that the railways would have offered those targets only if they felt they could maintain the current level of service for their other shippers.

Intervention such as that in Bill C-30 needs to be applied very carefully and only under the most extraordinary circumstances.

With regard to the future, a welcome announcement in Bill C-30 is that the statutory review of the Canada Transportation Act will be moved to an earlier date rather than its mandatory latest start date of June 2015.

Two basic issues that the statutory review should address are: one, the need to provide appropriate rail capacity for the needs of Canadian industry over the coming decades, and Mark Hemmes made some comments about the growth that is expected to take place in at least some of the agricultural commodities; two, the need to improve the relationship and trust between the railways and significantly large segments of their customers.

With regard to capacity, this will require significant investment by the railway companies, by other supply chain partners as Peter mentioned in his remarks, and possibly by several levels of government. The statutory review will provide an opportunity for an in-depth analysis of the capacity needs going forward and the role the various stakeholders should play. How this is addressed will have a significant impact on the national economy and our global competitiveness.

Last, with regard to shipper-railway relationships, it will be difficult to overcome the distrust, and to some extent, the acrimony that currently exists. In this connection, there have been informal discussions under the academic umbrella of Carleton University School of Public Policy and Administration. They run a process called critical conversation, which involves direct and confidential discussions within an academic environment among stakeholders to start a dialogue to overcome distrust. While arrangements have not yet been confirmed for critical conversations involving the railways and shippers, the planning discussions with the various stakeholders continue.

Rail service is vital to the Canadian economy, and the members of the Freight Management Association are ready to work in a constructive way with the government and the railways to improve Canadian supply chains for the benefit of the railways, their customers, and the Canadian economy.

Thank you.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you.

Thank you, gentlemen.

I do want to state that this government has shown that, first of all, the railways are Canadians' railways. We built them. They're our infrastructure. Second of all, I think we can move forward on this. This is something that I was originally critical of the government on, and that I stood up to them on, but they amended Bill C-8 in the fashion we wanted.

I'm confident that on the level-of-service review our minister and Minister Strahl will be there for western Canadian farmers and shippers again. I think it's important that we continue to have a good working relationship with the shippers' coalition and with everybody who's affected by this so that we can continue to move forward for farmers and for shippers across the country.

I thank you guys for coming.

[Humphrey Banack]

I would say the same thing. We welcomed Bill C-8. The changes it brought were very welcome in the industry. We're very supportive of the service review. We're waiting to see what the final report says in order to move forward.

[Greg Cherewyk]

We've been with the coalition since 2006, and Bill C-8 was the priority at the time. I think it's fair to say that the shipping community felt as though it made some compromises and concessions on the provisions that were included in Bill C-8 provided that there would be a rail freight service review, and the government lived up to that promise.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thanks very much, Mr. Chair.

I don't have a lot of time, Mr. Banack, but I agree with you. That's not just infrastructure that's lost--that's infrastructure that we as Canadians paid for. But that's a different topic that we'll get on to.

I've done a lot of work on the shippers. As many of you know, I've met with many of you in the past on the shippers' bill of rights. But one of the things we're really losing sight of today is that it wasn't about the level-of-service reviews or costing reviews.

When we first came into it, the first step was legislation. It was Bill C-8 and the shippers' bill of rights that we put in place. The former government, the former parliamentary secretary, didn't even address that in Bill C-25 and Bill C-44 when they were in government. It didn't address half the issues. It didn't identify shipper service issues, disconnects, or railway shipper accountability. It didn't define solutions to address service and accountability issues.

I think we need to at least admit that we already took the first step in the last Parliament. Would you guys agree that Bill C-8 was a good step forward and triggered the level-of- service review?

[Lawrence Cannon, Conservative, Minister of Transport]

Thank you very much, Mr. Chairman and members of the committee.

My officials and I are here today to discuss the 2008-09 main estimates for the transport, infrastructure, and communities portfolio. This is my third opportunity to appear before this committee and to deliver the main estimates. Since my first appearance, significant progress has been made within the portfolio. As you know, it is a wide-ranging portfolio that brings together Transport Canada, Infrastructure Canada, and 16 crown corporations.

In this portfolio we continue to tackle some of the most important issues facing Canada today, including the productivity of our economy, transportation safety and security, environmental sustainability, and the quality of life in our cities and communities, as supported by public infrastructure.

Members of the Standing Committee on Transport, Infrastructure and Communities have made important contributions in each of these areas, and I'd like to take this opportunity at the outset to thank you for your active involvement in the legislative agenda and the number of important policy decisions and questions that have an impact on the portfolio.

Specifically, I'd like to thank the members of the committee for its study of Bill C-23, which modifies the Canada Marine Act. The proposed amendments will strengthen the operating framework of Canada port authorities, helping to build a stronger and more competitive marine sector. Also key was the committee's participation in the study of rail safety and the subsequent amendments to the Railway Safety Act.

I also thank the committee for its consideration of the future role of the Navigable Waters Protection Act, the NWPA. We believe that the NWPA, one of the oldest pieces of legislation in Canada, needs to reflect current economic needs and respond to the increased volume and variety of uses of Canada's waterways. I look forward to working with you as we move forward on this and other issues central to transportation and infrastructure in Canada.

Over the past year, this government has made serious investments in transportation and infrastructure throughout Canada. In doing so, we are improving the quality of life of Canadians, and making Canada more competitive on the world stage.

As you know, we are moving forward on Canada's biggest infrastructure program ever. The Building Canada Infrastructure Plan is $33 billion worth of investments in matters that are important to Canadians, such as the environment, the economy and stronger and better communities.

Our plan provides an unprecedented, long-term, predictable investment that will allow provinces, territories and communities to plan for the future. In fact, more than half of the funding—$17.6 billion, to be exact—is going to municipalities through the 100 per cent GST rebate and the Gas Tax Fund, to modernize Canada's infrastructure.

It is expected that Building Canada, with other levels of government and funding partners, will generate at least $50 billion in new investments. Since the Prime Minister launched the Building Canada Plan last November, we have made significant progress in implementing this plan. We have signed framework agreements with eight provinces and territories, and we are well advanced and close to concluding agreements with the remaining provinces.

And, we are investing the gas tax in over 2,000 community projects.

Under Building Canada, we are making early progress through priority investments across Canada. These investments support a more productive economy, such as our $100 million commitment to improve highways in New Brunswick, and a cleaner environment. As you know, we have announced $1 billion in funding for public transit across the Greater Toronto area to reduce gridlock.

We are also making key investments to support the delivery of clean drinking water, such as the $50 million investment in the Huron Elgin London Clean Water Project in Southern Ontario.

We are supporting more liveable communities—such as the $40-million investment in the Centre of Sport Excellence in Calgary, and the $8-million contribution for the cultural precinct, Quartier des Spectacles, in Montreal.

In addition to the Building Canada plan, we continue to take action in each transportation mode. With respect to public transit, we brought investments to $1 billion per year, and in budget 2008 we've set aside $500 million to support capital investments, through the public transit capital trust.

In the rail sector, we passed Bill C-8, protecting rail shippers from potential abuse of market power by railways. We also began a review of rail freight service and signed two memorandums of understanding with the Railway Association of Canada. The first enhances the security of rail transportation in Canada, and the second addresses the issue of railway emissions. Both underscore the central role of railways to trade in Canada.

We are also making significant gains in the air sector. We are very encouraged by the progress that has been made in the year since we launched “Blue Sky”, and the momentum for more liberalized air travel continues to build.

Last June, when Prime Minister Harper met his European colleagues at the Canada-European Summit, the leaders agreed to launch negotiations for a comprehensive air services agreement between Canada and the European Union.

I am very happy to report to this committee that one year after the launch of “Blue Sky”, the third round of negotiations has begun in Brussels. This is good news for travellers and for the travel industry.

In the marine sector, as I mentioned previously, with your assistance we have moved ahead with amendments to the Canada Marine Act. I was also happy last month to announce that the Government of Canada is providing $101 million over five years to help Marine Atlantic Inc. acquire a charter vessel that will address increasing traffic to and from Newfoundland and Labrador.

We've made progress in building a more sustainable transportation system as well, and we must. Transportation accounts for about 25% of all Canada's greenhouse gas emissions. That's why we're moving forward with national fuel consumption regulations for new cars and light trucks. It's also why we're moving ahead in key areas of our ecoTransport strategy, which covers all modes of transportation.

We are also working with our provincial and territorial colleagues to improve our environment and reduce greenhouse gas emissions by delivering clean water, green energy, and cleaning up contaminated sites.

Honourable Members, this is the work we are currently doing and, as you can see, we have accomplished much together. But much more work yet remains. That is why I am asking you today to recommend that Parliament approve the spending in the Main Estimates that were tabled by the President of the Treasury Board on February 28.

The 2008-2009 Main Estimates for the portfolio, which total $4.544 billion, include $1.032 billion for Transport Canada and $2.456 billion for the Office of Infrastructure Canada. The remainder of the funding is allocated to the various Crown corporations.

Because we don’t have time to go into all the numbers, I would instead like to briefly discuss the two major components of this portfolio—Transport Canada and Infrastructure Canada.

For Transport Canada, the 2008-2009 Main Estimates—$1.032 billion—show a net increase of $173.3 million from the $859 million level in the 2007-2008 Main Estimates. The $173.3 million net increase is due to increases of $293.5 million for new initiatives, and changes to ongoing programs that are offset by $120.2 million in decreases in funding for the winding down of programs and government-wide reductions.

Of the $1.032 billion, 9.7 per cent—or $100.1 million—is for flow-through payments, including: $54.9 million for the Confederation Bridge; $41.9 million for the St. Lawrence Seaway; and, $3.3 million for the Victoria Bridge.

The remaining resources of $932.2 million, combined with respendable revenue of $345.6 million, represent a $1.28-billion budget that is available to the department to cover the following expenses: $471.7 million for grants and contributions programs; $382.5 million for personnel costs; $278.3 million for other operating costs; $78.2 million for capital; and, $67 million for employee benefit plans.

Let me now turn to the Infrastructure portion of this portfolio.

The total funding being sought is $2.456 billion, a net increase of $437.8 million from the $2.018 billion in the 2007-2008 main estimates. The $437.8 million net increase is due to the greater spending on infrastructure programs, and in particular I would like to mention $327.8 million for the provincial-territorial infrastructure base funding program, for the second year of this program, and a $197.5 million increase for the gas tax fund, which steps up in total from $800 million to close to $1 billion this year.

These increases were offset to some degree by decreases in funding for programs where most of the commitments were made in previous years.

Of course the estimates also provide for funding needed for the operations of the department and for the delivery of its programs in the amount of $37.5 million.

As Minister, I have a number of other portfolio responsibilities that do not require any appropriations from Parliament and are therefore not displayed in the Estimates. They include: the Ship Source Oil Pollution Fund; the Great Lakes Pilotage Authority; the Pacific Pilotage Authority; the Atlantic Pilotage Authority; the Laurentian Pilotage Authority; the Blue Water Bridge Authority; Ridley Terminals Inc.; the Royal Canadian Mint and Subsidiaries; and, Canada Lands Company Ltd.

Honourable Members, my limited time today does not allow me to go into detail regarding all the items on this list. However, I believe the numbers I have presented today demonstrate the importance this government places on the priorities we have identified under this portfolio.

Mr. Chairman, I welcome the Committee’s questions on our overall approach, or on any of the specific measures contained in these estimates.

Thank you.

Forestry Industry

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Mr. Speaker, at a recent meeting of the natural resources committee, we learned of a further emergency regarding the availability of rail transport services for the forestry industry. Witnesses testified that pulp cars are being artificially restricted by both national rail companies. The resulting shortage is inflating transportation costs and strangling product distribution.

The Minister of Transport has the power to step in to assist during this crisis. He can utilize the tools that were passed in Bill C-8 and force the railways to free up their railcars that are hidden in storage.

On behalf of suffering forestry workers in my riding and across the country, I call on the Minister of Transport to stand up for these workers and use all available means to ensure availability of rail services for the forestry industry.

Canada Marine Act

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, it is a pleasure to join the debate today from a Liberal Party perspective on Bill C-23, An Act to amend the Canada Marine Act, the Canada Transportation Act, the Pilotage Act and other Acts in consequence. This bill is mainly comprised of technical changes and amendments.

Normally, when the House receives bills of this technical nature, members of Parliament will often rely on the bureaucrats to highlight deficiencies in the present act or acts. In this case it is my understanding that the transport committee has made changes based on consultation with all stakeholders and this bill has everyone's support.

It is common knowledge that transportation in Canada is essential. And when I talk about transportation, I am talking about all types of transportation, including water, road, air transportation and so on.

Transportation has always been an essential part of building this country from the beginning, when our forefathers came here by boat and continued to use seaways as a primary mode of transportation until the invention of airplanes.

Furthermore, let us not forget that water was one of the few efficient ways of travel in Canada's formative years. And then, how can we forget, the building of Canada's railway from east to west which was the cornerstone of unifying and keeping this country together.

Things have evolved and our way of doing things has changed, but the transportation sector is still essential to this country's economy. The Liberal Party has always been a part of the transportation sector's evolution.

There is no denying that the Liberal Party, whether in government or in opposition, has always been a part of laying the groundwork to ensure that we have a network of infrastructure and transportation to allow this wonderful country to reach its fullest economic potential.

Our Canadian ports are fundamental to the development of trade. They enhance the opportunities for every Canadian to access our abundant natural resources across the country, so that they can be sold to foreign markets that can utilize the product for value added or for direct consumption.

Trade is a key factor in the Canadian economy and without the necessary infrastructure and means of transportation, Canada would be unable to reach its maximum potential to benefit all Canadians.

With that being said, as parliamentarians we cannot afford to miss opportunities to promote our Canadian ports. These kinds of initiatives would compel us to utilize portions of our infrastructure funds, in addition stimulate our rail network and a pan-Canadian road network to encourage growth, and to develop an economy that goes beyond a micro-economy and expand it to a regional and national one.

In 1998, under 13 years of successful Liberal government, the Canada Marine Act received royal assent. The Canada Marine Act was the first comprehensive piece of legislation to govern several aspects of Canada's transport legislation.

The Canada Marine Act was a component in the commercialization of the St. Lawrence Seaway, the framework for a strategic gateway and trade corridors, and included provisions for the further commercialization of federal ferry services.

In 2003, a review of the legislation was compiled to ensure that the government continued to make all the ports in Canada economically competitive, specifically ports in British Columbia, Ontario, Quebec and the Atlantic provinces.

May I remind the Conservative government that the bill before us comes from a Liberal bill, formerly C-61. I am pleased that the Conservatives have the ability to recognize good fundamental pieces of legislation that are beneficial to the Canadian economy and place partisanship aside.

If it were not for the NDP and the Bloc forcing an election, good pieces of legislation such as Bill C-23, Bill C-7, Bill C-3, Bill C-11 and Bill C-8, all based on Liberal transport bills which died on the order paper, could have been passed much sooner.

The Standing Committee on Transport, Infrastructure and Communities heard from port authorities, other stakeholders and read written submissions to the committee on Bill C-23. An overwhelming consensus between stakeholders seems to exist, indicating that the committee should move forward and adopt Bill C-23 which is why we are debating this in the House today.

Some of the benefits of Bill C-23 include access to contribution funding. The fact that access to contribution funding will now be permitted, the Canada Port Authority can apply for contribution funding for infrastructure and security for environmentally sustainable projects.

The bill also addresses governance. With the changes in the governance policy in the Canada Marine Act, the port authorities would now be more in control of their destiny as they would have the ability to promote a more stable, long term management framework.

Bill C-23 would also allow for borrowing limits. With this act, the port authorities would now have the ability to borrow and, thus, would directly allow the Vancouver Port Authority, the Montreal Port Authority and the Halifax Port Authority to move to a commercially based borrowing system.

Bill C-23 would also allow for amalgamation. In the act, the Fraser River port, the North Fraser Port, would be allowed to amalgamate with the Vancouver Port, which would allow for a centralized body and would, in turn, be beneficial to all British Columbian ports in terms of efficiency, whether it be financial resources, human resources or other benefits that would arise from centralization.

The bill also addresses enforcement. Bill C-23 would also give the port authorities the ability to enforce minor violations by having the ability to impose monetary penalties, making it easier to enforce and manage minor violations.

Again, it is my understanding from members of the transport committee, and I cannot stress this enough, that all the stakeholders appearing before the committee spoke positively toward the bill. Members in the House should not confuse the positive aspects which came out of the committee that considered, deliberated and debated Bill C-23.

I urge all members to support the legislation for the good of the Canadian economy.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

This is not particularly to the amendment. I'd like to just go on the record as saying, Mr. Chair, that during the lead-up to the creation of Bill C-8--the debate and the passage--no one in industry or in the opposition raised this particular concern, prior to Bill C-8. The Canada Transportation Act was reviewed in 2001. No one called for a review at that time. As a matter of fact, no provincial minister, that I'm aware of, has called for a review.

Now, Bill C-8 has combined the idea of a group final-offer arbitration, something that our shippers and farmers have been calling for for some time. Right here I think we should thank the Minister of Transport for giving us Bill C-8.

The level of service review has been a major commitment that our farmers and our shippers were requesting, and we're doing that. There again, I think our agriculture minister, Minister Ritz, promised a review, and he's seeing it gets done. As a matter of fact, I don't think there's a government since railways were formed that has done more to help.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Well, Mr. Chair, we've seen some reports from the industry and several different agricultural shippers. We've discussed with them the possibility of there being some prohibitive cost to railways, and this is something I think we should include within the level of service review that is already being undertaken by the Minister of Transport, after the passage of Bill C-8.

[Marta Morgan]

We have worked very closely with the other associations representing shippers, who have the same interests we do, and with whom we have worked together on Bill C-8. We are working with these associations to provide our collective input to the government. I could ask our partners if there are documents we can provide to the committee.

Our association has not sent a letter to the minister. However, we can give you certain documents which outline the point of view of shippers with regard to the review of the services. We could also come back before the committee, Mr. Chairman.

[Marta Morgan]

I can say two things to that in response, Mr. Chair.

One is that I think the industry now needs to take advantage of some of the provisions that were recently enacted in Bill C-8, which should make it more effective for industry to raise complaints with the Canadian Transportation Agency on level of service.

Second, from a policy and legislative perspective the government needs to be encouraged to quickly get going on this rail service review to make it real, to collect the data about what's going on with individual shippers like this, and to look for some real solutions.

[Marta Morgan, Vice-President, Trade and Competitiveness, Forest Products Association of Canada]

Thank you very much, Mr. Chair. Thank you for inviting us here to testify at this committee today.

I would like to introduce David Church, who's the director of transportation at FPAC. He's here at the table with me.

I know that the president of FPAC, Avrim Lazar, has been here to testify in these important hearings already.

We are the national association for the forest products industry. We have members from coast to coast. We represent producers of pulp, paper, and lumber, among other products. So we cover quite a representative swath of the Canadian industry.

We're very pleased to be invited here again today to speak to you about issues of transportation, which are quite near and dear to our hearts. I will be focusing my remarks today on the issue of rail transportation. We have provided for you a leave-behind in French and English that covers the substance of my remarks, so I will keep them brief and leave lots of time for discussion.

The forestry sector is a major client of the railroads; it represents about 25% of the total income of Canadian railway companies. Transportation costs are the second biggest expenditure for that sector.

A cost-effective and efficient transportation system is a critical competitiveness factor for the forest products industry. As with so many other Canadian resource industries, we tend to be located in remote areas and must travel long distances to get our products to market. With regard to the rail system in particular, its efficiency and cost-effectiveness are critical to this industry and its future in Canada. You well know the difficult times the industry is facing right now, from the many witnesses you've heard from during the course of this investigation you're conducting.

There are two key elements of rail service. One is cost, and the other is service. I'll tackle them separately.

We conducted a study, which we released last year, that looked at the cost of rail service to forest companies in Canada. Based on widely accepted methodologies, we concluded that the forest industry is paying $280 million in excess rail charges per year—to the two major rail companies, primarily—above and beyond what would be paid if there were competition in the rail network in Canada.

You will have probably seen last week that the Canadian Wheat Board commissioned a similar study in which they found that grain farmers are paying in excess of $175 million over and above what they would pay under a competitive situation.

The heart of the issue with rail service in Canada is that in a large part of our economy, particularly our export-oriented economies in rural areas, shippers only have access to one line. In our industry, 90% of shipments only have access to one of the two class-1 railways or to a short line that's attached to one of them.

The other issue, and I would say this is an issue that has really been even more predominate in the minds of our members over the last three years, is that of rail service. Rail services comes down to two issues. Do you get the cars that you ask for and that you need to ship your products, and do you get them when you ask for them or at some other time that is not necessarily when you need them?

This has been an increasing problem. It's been a significant issue for our members over the last three years. We have many complaints from our members on these issues. Even in a commodity business such as lumber, for example, the issue of timeliness and reliability of service is becoming more and more important. We've all heard the phrase “just-in-time delivery”. How it works in our industry is that we have huge customers with North American reach, such as Home Depot, for example, who don't want you to just ship them the lumber and dump it in their yard. They want you to know how much they have of your lumber on their shelves, they want you to manage their inventory, and they want you to be able to deliver when they need it.

So to the extent that our transportation system can't provide that kind of service, the costs then fall back upon the Canadian shipper, because it's certainly not the large U.S. buyer who, at the end of the day, is going to bear those costs.

FPAC has been working very hard with other shipper associations and with members on both sides of the House. We have noted with much appreciation the non-partisan consensus around Bill C-8, which was recently passed very quickly by both the House and the Senate, and we're very appreciative of the leadership that was shown on both sides of the aisles on Bill C-8. We are hopeful that this bill will provide some meaningful avenues for shippers to challenge both high rates and poor service by the railways.

The bill contained a number of provisions that should allow shippers to more effectively challenge ancillary charges, which are charges such as fuel charges and demurrage charges that are tacked on top of the rate. It will allow shippers to band together to challenge some of these charges, which is a great advantage because it allows shippers to pool their resources on individual cases where the issues are common to them. It also removes a provision of the Canada Transportation Act that made it very difficult to challenge the level of service being provided.

So all in all, we commend Parliament. This is a positive step; it's in the right direction. We're hopeful that it will be effective and it will move the bar somewhat in terms of providing some avenues of recourse to shippers.

When Bill C-8 was introduced in Parliament, the ministers of transportation and agriculture committed that within 30 days of its passage they would launch a rail service review. We have been working with officials at Transport Canada providing them input with our views on what this review should consist of and how it should be conducted.

It's essential, in our view, that this service review be conducted as quickly as possible, that it be independent, that it be comprehensive, and that it allow for the full participation of shippers. We are hoping that the service review will result in recommendations for practical steps to improve rail service.

So to the extent that this committee is looking at transportation as it affects the forest industry, we would encourage, Mr. Chair, that you support the rail service review and that you support a full, comprehensive, and independent review with meaningful recommendations to come out the other end.

It should be understood, however, that the most fundamental challenge in the long term regarding rail service--and the reason that we find ourselves in this difficult situation as shippers--is the fundamental lack of competition within the rail system. I think you would hear this whether you were looking at the forest industry, or agriculture, or coal, or any other shipper whose products and facilities are located in rural areas.

There are potential solutions to this problem. They are probably not solutions for today. We've just had a bill that's recently passed. We have a rail service review that's about to be launched. But I do think that in the medium and longer term we need to reopen the debate around issues such as running rights and how to make competitive line rate options actually workable--options that already exist within the act. Until we actually tackle this issue of a real competitive threat, we are unlikely to see the competitive outcomes that we'd like to see in terms of the kind of service and rates that shippers receive.

I'll stop there. Thanks again for inviting our testimony today, and I'd be pleased to take questions when it's appropriate.

[Ted Menzies, Conservative, Macleod, AB]

Volkswagen might be upset.

HasBill C-8, on shippers' rights, impacted you positively?

[The Speaker, Liberal, Peter Milliken]

I have the honour to inform the House that when the House went up to the Senate chamber, Her Excellency the Governor General was pleased to give, in Her Majesty's name, royal assent to the following bills:

Bill C-8, An Act to amend the Canada Transportation Act (railway transportation)—Chapter 5.

Bill C-2, An Act to amend the Criminal Code and to make consequential amendments to other Acts—Chapter 6.

Bill C-44, An Act to amend the Agricultural Marketing Programs Act—Chapter 7.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

The royal assent on Bill C-8 is this afternoon at 3:30, if anybody's interested.

[The Chair, Conservative, Merv Tweed]

Okay. I guess if we are passing out accolades, I will let the committee know that I received a personal phone call from the grain shippers to thank us for our speedy passage of Bill C-8. They were very pleased with that too.

It is good to see the committee receiving good news.

[Kevin Bender, Director, Western Canadian Wheat Growers Association]

Thank you, Mr. Chairman.

The Western Canadian Wheat Growers Association welcomes this opportunity to appear before you all today.

I'm a director of the association, and I farm near Red Deer, Alberta. I also sit on the board of directors of the Alberta Canola Producers Commission, and I recently completed a term in the Canadian Canola Growers Association. However, my views here today will be primarily from the wheat growers' perspective.

Joining me today is Blair Rutter, our executive director from Winnipeg.

The Western Canadian Wheat Growers are a prairie-wide voluntary farm organization. For 38 years we've been advocating forward-looking farm policies to improve the profitability and sustainability of our farms. Our board of directors consists of 12 farmers who have a passion for agriculture and the determination to make farming more profitable. It is our optimism about the future of our industry that keeps us energized.

Grain prices are currently strong in western Canada, so that's helping to fuel our optimism. We know, however, that good grain prices can be fleeting, so that's why we're always seeking policy solutions that will help make farming more profitable on a long-term basis. We see biofuels as an excellent opportunity in helping us to achieve that goal.

Bill C-33 makes provision for regulations that would require gasoline to contain a 5% average renewable content by 2010 and diesel and heating oil to contain 2% average renewable content by 2012. The wheat growers support this legislation and urge committee members to give it their full support as well.

Currently, there are five commercial ethanol plants in operation in western Canada and two more that will be opening soon this year. Combined capacity of these plants will be 500 million litres, which would, in total, consume about 1.4 million tonnes of wheat, or approximately 7% of the average wheat production in western Canada. Of course, these wouldn't use wheat exclusively; corn and other cereal grains would be part of that as well.

While ethanol has been produced on the Prairies for more than 25 years, we really are in the infancy stages of a large-scale biofuels industry in western Canada, so it's difficult to predict the full impact. In our view, biofuels and bioproducts represent a great opportunity to create a more sustainable future for our industry. Over the next few minutes, I'll talk to you more about the value of biofuels to prairie grain farmers.

First of all, increased ethanol production will help reduce our dependency on foreign grain markets. There are always a number of risks when you're exporting grain offshore. We're vulnerable to tariff and trade barriers, labour disputes, railway service disruptions, and high ocean freight rates. In the past year, the prairie grain business has been disrupted by two railway strikes and a trucker walkout at the Vancouver port. Having more grain processed domestically helps mitigate the impact of such disruptions.

Another benefit of the ethanol industry is that it would provide farmers with another local outlet for marketing their grain. As we've discovered in the canola, oats, and pulse sectors, local users of grain improve competition and help support local prices. The value of ethanol and biodiesel plants will be particularly evident when grain downgraded by weather or disease is able to be used for biofuel production.

Increased local processing also reduces our dependency on shipping grain by rail. In western Canada, our industry continues to be constrained by service and performance issues in the rail sector. In this regard, the wheat growers were very pleased to see transportation legislation, Bill C-8, passed by Parliament, and we thank all parties for their support of this legislation. It's my understanding that it has been passed by the Senate and is just awaiting royal assent.

The fact remains, however, that in western Canada the two main railways haul about 65% of the grain we produce. In our view, one way to improve rail service and increase competition in grain handling is to increase the amount of grain that is processed locally. Wheat varieties that are well suited to the ethanol industry often have agronomic advantages and so they represent a good rotational fit on many farms. Promoting a biofuel industry also creates more jobs and economic activity in rural areas. For those farmers who invest in these facilities, it also gives them an opportunity to capture a greater share of the value chain.

Finally, processing more of our grain locally helps ease the growing congestion on the rail lines and at ports. Rather than shipping our grain long distances, we think it makes more economic and environmental sense to process it closer to home.

In our view, there's no question biofuel plants provide tremendous value to grain farmers and communities across western Canada. We note that the renewable fuel standards contemplated in this legislation include provision for next-generation feedstocks, including straw and other biomass material. The wheat growers also support these forward-looking provisions.

We recognize and appreciate the concerns raised by the livestock sector with respect to the possible increase in feed grain prices resulting from the development of a biofuels industry. Many of our members also have livestock operations, so we take these concerns very seriously.

We note that studies in the U.S. have shown that livestock operations have flourished around ethanol plants. This is also the case in Canada. In fact, the oldest ethanol plant in western Canada—the Pound-Maker facility in Lanigan, Saskatchewan—is a fully integrated ethanol and feedlot operation. Other ethanol projects under development have a strong livestock component.

We think it's worth noting that many of the wheat varieties that are well suited for ethanol plants are much higher yielding than varieties used in the milling industries. Often, yield per acre is substantially higher than that of milling varieties. If the ethanol industry expands significantly in western Canada, we could see higher production of wheat, corn, and other feed grains. The resulting distiller dried grains, or DDGs, produced from these plants will provide the livestock industry with a relatively lower-cost feed grain supply.

Admittedly, we don't know what the full impact of biofuels on the livestock industry will be. However, we believe that it's too early to assume that the growth of the biofuel industry will be negative for the livestock sector.

The wheat growers want to see the development of a biofuels industry that is sustainable, without the need for mandates or subsidies of any kind. We recognize that some argue that the biofuel industry will not be viable without government intervention or support. We do not share this view. Of course, economic viability will ultimately depend on the price of the oil and the feedstocks. However, we believe that technological improvements in processing and in variety development will be such that biofuel production will one day be economical and sustainable without government intervention.

Regarding wheat variety development, our association would be remiss if we did not comment on this committee's work in recommending the removal of kernel visual distinguishability, known as KVD, as a criterion for the registration of new wheat in western Canada. The removal of this constraint will lead to the development of wheat varieties that have yield and starch profiles that are well suited to the ethanol industry. We applaud your committee and the federal government for your foresight in bringing about this policy change.

Bill C-33 will also help spur the development of new markets and new uses for our crops. For example, the fractionation of wheat, barley, and other grains offers significant opportunity for the development of healthier food, pharmaceuticals, and industrial products.

In summary, the wheat growers support Bill C-33. The legislation will provide Canadian farmers with greater marketing opportunities and will lessen our dependence on export markets. The development of a biofuels industry will lead to greater investment in crop research and development and in processing technology. It also offers an excellent opportunity to create jobs and economic activity in many rural communities. We ask your committee to endorse this legislation and ensure that it is passed in the parliamentary session.

Thank you again for this opportunity to address you. We look forward to any questions you may have.

Rail Transportation

[Lawrence Cannon, Conservative, Minister of Transport]

Mr. Speaker, I am pleased to advise all members of the House that Bill C-8 is supported by both parties in the Senate. Senators are aware of the fact that the support for the bill was unanimous and that clause by clause on Bill C-8 was completed in a record 15 minutes in committee.

Given that no one in either house opposes Bill C-8 and that there are no unresolved issues remaining, it is my understanding that Bill C-8 should get through this week for our shippers and people needing this.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, Bill C-8 makes amendments to the Canada Transportation Act that will help protect rail shippers from potential abuse of market power by railways. This is great news for rural Canada and for Canadian farmers and manufacturers.

The Grain Growers of Canada and the Saskatchewan Association of Rural Municipalities both voice their support for the bill and encourage the Senate to pass it in a timely manner.

Could the Minister of Transport, Infrastructure and Communities inform the House when he expects the bill to pass the Senate?

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

We'll get to the numbers in just a second.

You led into the issue that I wanted to bring up, and that's reducing transportation costs to our farmers--not just costs, but also headaches.

As you know, Bill C-8 is a fairly comprehensive bill, one that faces a long and arduous task in the Liberal-dominated Senate. We need to do something for our producers in western Canada that significantly helps them to turn their costs downward on things like transportation and input. In my area anyway--the Westlock and St. Paul area--this is one of the areas that would significantly....

Anyway, could we get the numbers now, Mr. Chorney, that you were...?

[Richard Phillips, Executive Director, Grain Growers of Canada]

Thank you.

He touched on the biodiesel part from the Grain Growers; I'll just touch on some ethanol thoughts.

I have five brief reasons why we are happy to see an ethanol industry develop and why we would support Bill C-33.

Number one—and I'm speaking more from a western Canadian perspective—it reduces our dependency on foreign grain markets; in western Canada we're heavily dependent on exporting, and when you're exporting your grain offshore, you're vulnerable to tariff, non-tariff barriers, currency fluctuations, labour disputes, and ocean freight rates. The more grain we process locally, the more we avoid those issues.

Secondly, it reduces our dependence on shipping grain by rail. I've been before the committee before and I've talked about Bill C-8 and the need to get some shippers' provisions in dealing with the railways. In western Canada, the two main railways haul about 65% of the grain we produce, so anything we can ship to local production and local value adding will reduce our dependency on those railways. We hope you have followed up with your Senate compatriots and encouraged them to put Bill C-8 through quickly.

Thirdly, it provides us with another local option for marketing our grain beyond some of the feedlots and the other smaller value-adding processors that we do have out there. As we've seen in the corn, canola, oat, and pulse sectors, there's nothing like local buyers of grain to support local prices. From our perspective as producers, the more competition for our grain, the better.

Fourthly, it creates jobs and economic activity in rural areas. It's not just the truckers hauling in the grain, but it's the electricians who have to service the plants and the plumbers who provide the water. There's a lot of work and a lot of services needed to keep an ethanol plant running. That all spins off into other jobs in the communities as well.

On the environmental aspect, even leaving aside the arguments of some of the studies, the fact that we're not using fuel to haul our freight all the way to port to get to overseas markets--we're just taking it down the road to a local ethanol plant--that alone is a huge environmental savings, in my mind.

What are the challenges that we see? Number one, keeping producer ownership where there's a strong interest in investing. My father and I have put a fair amount of money into our local ethanol plant. It's a challenge because there are people coming in. Some day if we're successful there will be a takeover bid, I'm sure. So whatever structures can be put in place to encourage and enhance local producer ownership in the plants, we think, is critical to the long-term success in western Canada.

On keeping our livestock sector strong, I know there are some challenges out there with the feed prices right now. Whatever we can do, beyond even the dry distillers grain that is going to come out of these ethanol plants, the livestock sector is an important market for our feed grains.

I have three or four quick suggestions. We think if the committee is looking at what they could do in addition to Bill C-33, there is research into the feedability of these dry distiller grains to the beef, and especially into the monogastrics like hogs--what are the maximum rations we could use? There is also research into the component parts of wheat and corn that could be removed even before the ethanol process, like the germ. Besides the DDGs, there are many other enzymes and products in kernels of corn that could be used for other purposes. Lastly, there's research into wheat and corn varieties that are best suited to ethanol production. Let's do what we can to improve upon the formula of one unit of energy in and 1.4 units out in ethanol. Those are a couple of suggestions.

I look forward to the questions. Thank you.

[Bob Friesen]

Thank you.

Mr. Lauzon, I think you mentioned several things. One is transportation, and of course we supported and thank you for how quickly you brought back Bill C-8 when you came back to the House. We're also asking for a full costing review on the efficiency cap, and have already talked to the minister about that, as a complement to what's being done in Bill C-8.

On fertilizer prices, let's be clear about one thing. The prices aren't high just because fertilizer companies are running 24/7 and there's a big demand. My guess is they would be high even if there was an abundance of fertilizer, because they've seen grain and oilseed prices going up. They know that farmers are going to pay the price. So there's something there that we need to deal with as well.

There's a further complication in fertilizer prices. I think everybody knows that grains and oilseed farmers have a little more cash from 2007, but they had a deep hole and paid a lot of bills in fall 2007. So if a farmer couldn't afford to buy his fertilizer in the fall because he paid other bills, he will have to wait until the last possible moment in the spring before he buys fertilizer. He's looking at an increase of several hundred dollars a tonne, and natural gas prices have gone down. So that's another dynamic that we somehow have to deal with.

[Richard Phillips]

Just in closing on the fertilizer point, what we see is a huge demand for this fertilizer around the world, and as Canadian producers, we're going to be competing to keep those products here in Canada. What can the committee do? What can the government do? I think if there's anything that could be done to stimulate the production, if there are new mines that people are looking at, if there are incentives that could be put in place for more production.... I don't think we're going to have a situation in which we're going to try to limit the exports of fertilizer. I don't think the Government of Canada is going to go to the companies and say they can no longer sell to China. If we can't decrease the demand for fertilizer, then we're going to have to increase the supply. That would be what we would see coming down the road.

The other piece we would briefly like to touch on is grain transportation. We've done a lot of work on this file with the Grain Growers of Canada. We would like to thank all members of this committee for the work they've done in getting Bill C-8 through the House quickly. As you know, when Bill C-8 gets through the Senate, one component of it is the promise that there will be a level-of-service review of the railways 30 days following. Grain transportation is one of the larger costs that we also have in western Canada for all of the export commodities. So we want to see things going forward like the level-of-service review. We would be quite interested in seeing a costing review also of the railways, and anything that could be done to enhance competition on those rail lines would be well received by the producers. Again, with supply and demand, if there are only two suppliers, then you pay the price. So whatever can be done to increase competition of the railways and increase the supply of fertilizer would be steps in the right direction for this committee.

Thank you.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, since this is the first Thursday question of the year, I want to formally welcome everyone back to the House of Commons. Hopefully, we will be even more productive in 2008 than we were in 2007.

Judging by the first sitting day, I think we will be.

So far, the House has passed Bill C-8, on railway transportation, and Bill C-9, on the settlement of investment disputes.

Moreover, Bill C-31, An Act to amend the Judges Act, and Bill C-27, on identity theft, have been referred to committee.

This is a rather good start.

We hope to keep up that level of productivity by quickly passing our legislation to strengthen the security certificates process, which started debate at report stage today. That is of course Bill C-3. We now have a House order to assist us in facilitating that debate. We will continue to debate the bill until report stage is completed.

While all members of the House do not understand the importance of the bill, I believe that the official opposition does. I hope that we can work together in a spirit of cooperation and bipartisanship to have it passed before the date identified by the Supreme Court of Canada as the date by which it would like to see the law passed, February 23.

Following Bill C-3 tomorrow we will continue with the unfinished business from this week, namely Bill C-33, renewable fuels; Bill C-39, the grain act; Bill C-7, aeronautics; and Bill C-5, nuclear liability.

Next week will be a safe and secure Canada week.

Debates will continue until the bill is passed by this House.

After that, we will debate Bill C-25, which would strengthen the Youth Criminal Justice Act, and Bill C-26, which imposes mandatory minimum penalties for producers and traffickers of drugs, particularly for those who sell drugs to children. We also hope to discuss the Senate's amendments to Bill C-13, on criminal procedure.

Finally, in keeping with next week's theme, I would suggest that my hon. colleague opposite explain to his colleagues in the Senate the importance of quickly passing the Tackling Violent Crime Act, the bill which is overwhelmingly supported by Canadians across the country, and which was the number one priority of the government throughout the fall session of Parliament and which passed this House last fall. It has already been in the Senate longer than its entire time in the House of Commons, yet the Liberal dominated Senate has not even started committee hearings on the Tackling Violent Crime Act.

While the elected accountable members of the House rapidly passed the bill, which I would like to remind everyone was a question of confidence, unfortunately it looks like the unelected, unaccountable Liberal dominated Senate is up to its old tricks again of delaying and obstructing in every way. Let me be clear. This government will not stand and allow Liberal senators to obstruct, delay and ultimately kill the bill. The Tackling Violent Crime Act was quickly passed in the House and Canadians expect the Liberal dominated Senate to act in the same fashion and pass it quickly.

Canada Transportation Act

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I am very pleased to rise today to speak on Bill C-8, which people will remember was previously Bill C-58 and which is an act to amend the Canada Transportation Act. We are dealing in this case specifically with railway transportation.

I have already regaled the House with the rich history of my family in that I come from a long line of railway magnates. My great-great-grandfather was John P. McNeil. The “P” did not stand for anything. It was just that every man in the village of Iona was named John so they had to distinguish him from his eight brothers whose first names were all John as well. There were John Roderick, John Francis, John Albert, John Alec and John P. They ran out of names because the Scottish only name people after dead people and there just were not that many dead people in the family.

The great John P. McNeil was a porter on the Sydney Flyer. My grandfather told me that the family did not eat at night until John P. came in. It did not matter how late. The kids would wait out in the hallway for John P. to come in. He would sit down and when he had finished eating, he would say, “McNeil has dined”. That meant the children could eat.

That is actually a tradition that goes back to the 1200s and even before that when the McNeils were on the island of Barra. It was a raiding base for the Vikings. The McNeil, who was the clan chieftain, claimed the right to eat before all the lords of the earth. That is an actual historical fact, not that any of my relatives ever lived in the castle. I think they pounded seaweed on the shore for a living and then were sort of unceremoniously removed from their land and sent to Cape Breton, where they had to find work. Some of them went to the coal mines, but John P. worked on the Sydney Flyer.

Mr. Speaker, I know you are waiting for me to get to the punchline, but I think it all adds to the story.

I do not know if John P. had many great skills, but one of his skills was that he could always tell that a bootlegger was coming into Sydney. When they were coming in on the train, he would say, “A man who has a bottle of whisky in his suitcase always puts that suitcase down with just a little more care than if it was just his long johns”.

Of course there was not enough work for all the McNeils, so they had to move to Ontario and work in the mines. The ones who did not want to work in the mines worked on the railway, the great Temiskaming and Northern Ontario Railway. Part of my long, illustrious history is that my uncles, Andy and John, were porters on the T and NO Railway.

My mother tells the story about their travel along that railway from Timmins to North Bay in the summer. They would load up on the car in Timmins with a ticket that would last them as far as Schumacher, which was about two miles down the road. They would have their sleeping bags and coats. Obviously they were going on a long trip. They were always terrified that someone was going to notice that their ticket was for only two miles, not for 250. My uncles knew everybody on the train and used to travel up and down the train line for free to go stay with the aunts.

I know, Mr. Speaker, that you are wondering what this is all leading to. It speaks to my passion and yours. I am very glad that you are in the chair because of your deep love of history and railway. I know that you will give me a little leeway to sort of draw out what exactly the point of this discourse is.

I would like to move forward now to the 1980s and my own interest in the railway. We are talking about the government and its vision for infrastructure. It is putting in all kinds of effort on the gateways and ports but if people ever travel across this country they have to understand that it is not just the gateways, the ports or the megaprojects that make infrastructure work in this country. It is actually being able to connect them to the various places that makes it work, which of course goes back to my family's history on the railway.

The railway plays an important role in connecting. We have seen over the last number of years how much of the railways have been left. In some parts of the country they are being torn up and there are other areas where we have not built the necessary infrastructure.

As I said, I would like to speak about the 1980s, when a famous Scottish band came to Canada. This is a true story, although I know it sounds like a joke. A Scottish band came to Canada. I think it was called Aztec Camera. The band members landed in Halifax at that great port and then flew to Montreal. They played in Montreal and then drove to Ottawa. They left Ottawa and drove along the great highway. When they got to Toronto they thought, “This is what we always thought North America was”. Then they were told, “Your next gig is in Winnipeg. There is the bus. Now drive to Winnipeg”.

About 16 hours up the highway on the way to Winnipeg, a highway consisting of two lanes of traffic, moose every 10 feet, trees and no lights, the road manager looked at the driver, who was Canadian, and asked him if he could not have picked the Trans-Canada Highway to travel across the country. The driver said they were on the Trans-Canada Highway.

Anyone who has driven across this country knows that long, terrible drive through northern Ontario. Northern Ontario is made up of some of the prettiest country in the world, but Highway 11, which I live on, is in a terrible state. It is the truck transportation route for this entire country. If goods have to be moved west to east, they have to be moved along that little strip of moose pasture that runs between the rocks. People in northern Ontario ask why so many trucks need to be on these two lanes of traffic when the rail line is sitting right there and half the time is empty. That is the issue in northern Ontario.

We need to connect the infrastructure of this country so we do not just have great port plans and great transportation links with our major trading partner, the United States. We need a forward looking plan to ensure that goods coming off container ships from the Far East can be transported across this country in an efficient, economical and environmentally friendly way. The train, of course, takes on an important light.

Our role in Parliament is to look at how to improve the transportation networks of this country. Bill C-8 addresses a number of concerns that have been raised by shippers dependent on railway transportation. Over the years shippers have raised many legitimate concerns about how pricing is done on railways and about access to goods.

They also have raised concerns about the duopoly that exists right now with Canadian Pacific and CN and their ability to basically call the shots for anything that is going to be shipped in certain areas of the country. This financial stranglehold has a major effect on competitiveness and trade.

Many people who ship goods, whether they are agricultural products or products being shipped out of a mine's large bulk operations, are very dependent on the prices they receive from CN or CP for the cost of bulk transportation. Under a duopolistic regime, these shippers have very few alternatives to get their products out.

We know that there are 30 federally regulated railways in Canada, but many rail shippers are still captive shippers who are still dealing with these two big players. We need to look at how we ensure fairness in a system that does not have major competition and a system where it is not practical to bring in competition on these lines.

One of the changes we are looking at is a change to ensure a little fairness in pricing and how pricing is done so shippers get a fair deal, whether they are shipping grain or copper concentrates to ports.

The amendments to the Canada Transportation Act in Bill C-8 would help address some of the shipper concerns about rail service and rates that have been raised time and time again while at the same time providing regulatory stability to the railways to encourage needed investments to keep our exporters and importers competitive in international markets. This is key. We really need to ensure that the railway system maintains a sense of strong commitment to invest.

As Canadians, of course, we want to invest in our railways because they do play such a vital role and they always have, the Brian Mulroney regime notwithstanding.

A number of the amendments brought forward in Bill C-8 were actually developed in concert with shippers who brought their concerns to Parliament.

We are looking at the regulatory impact of the bill. One amendment would remove the requirement for a shipper to prove substantial commercial harm before applying to the agency for certain competitive remedies. That is a fair amendment. It is unlikely to be abused because we are talking about long term customers of the railway.

We also need to allow shippers to jointly apply. Right now they can apply only individually for final offers of arbitration on a common matter. If there are disputes, they could be grouped together and thus would not be drawn out. A ruling could be received fairly quickly.

We need to give the agency the authority to establish charges or the associated terms and conditions that would apply to shippers for the movement of traffic or incidental services.

This also will allow for the suspension of any final offer arbitration process if both parties consent to pursue mediation.

Again, these are reasonable requests that are being brought forward to actually help address these longstanding concerns.

It would also permit the CTA upon the complaint of a shipper to investigate charges and conditions for incidental services and those related to the movement of traffic contained in a tariff that are of general application and establish new charges or terms and conditions if it finds those in the tariff to be unreasonable.

Once again, I think these are all fairly straightforward and reasonable.

This would increase the notice period for augmentation in rates for the movement of traffic from 20 to 30 days to ensure that the shippers receive adequate notice of rate increases. Once again, when we are dealing with large bulk transport we need to have some sense of security and some sense of stability in terms of pricing if we are dealing with products.

It would require the railways to publish a list of rail sidings available for the grain producer carloading and to give 60 days' notice before removing such sidings from operation. Once again, if we are going to take out some of that infrastructure that people are dependent on, we have to give the shippers some advance notice so they can begin to make other arrangements.

We also need to ensure that the abandonment and transfer provisions apply to lines that are transferred to provincial short lines and subsequently revert to a federal railway, including the obligation to honour contracts with public passenger service providers.

This is a fairly straightforward and fairly technical bill in which the government is trying to bring in these amendments. As I said, it is to give our shippers some sense of fairness in a market that does not allow very large scale competition. We all know that markets with more competition are generally ones that will favour larger investment and larger use, but certainly with railway, because of the incredible cost of infrastructure and also the history, we have the two big giants. We have always had the two big giants, augmented by many smaller lines and by provincial lines.

In my own region, the Ontario Northland is a provincial line that runs from Hearst. It used to be by rail but now it is by bus. From the Kapuskasing-Cochrane region and actually from Moose Factory the train line runs provincially down south to North Bay, and from North Bay south it becomes one of the CN lines. We are still moving provincial goods along that line. It is still a provincial railway.

It is of paramount importance in our region, because right now if we want to move out any of the goods from the mines, in particular the sulphuric acid cars that are coming out of the Horne smelter in Rouyn-Noranda and the Kidd Creek smelter in Timmins, it is superior by far to move it on the train lines.

These are massive bulk operations, so the shippers need to have some security. As well, we are moving out copper concentrates and zinc concentrates from the Horne smelter in Noranda and also from the Kidd smelter in Timmins. We need some stability in regard to knowing the pricing. As for what is being forwarded in this legislation, even though it is coming in on a provincial line, as I can see from my own region and our dependence on railway traffic, these changes are practical.

Certainly in western Canada the rail lines play an incredible role in the movement of goods and people. As we know, when we are driving across the country and we get to one of those rail sidings when the grain cars are coming along, we can pretty much read from one end of the newspaper to the other before the train has passed.

I am always thrilled to see those train cars come along. I see them coming to the port in Thunder Bay where they end the journey so the freight can then travel by boat. When we see how much can be transferred on those lines, it is truly impressive.

Certainly with the whole move we have seen to the container shipping system, which has actually revolutionized transportation and commercial dealings around the world, we in Canada need to make sure that our railways are in the game and are there with prices that shippers can actually trust so they choose the railway as opposed to simply putting their product onto our overstretched highways.

Whether it is provincial or federal, the investment in highways just has not kept up. In so much of our country, as I have said, we are dealing with two lanes of traffic, except on the busy 401 stretch. Having that massive amount of truck traffic has not been a bonus for our economy. It is costly to the taxpayer because of the impact on roads. We do have a railway system, but we need to ensure that system.

Before I close I will speak a little bit about the whole vision of a national infrastructure plan. As I said, the government is focused on the terminal ports and the gateways for trade, but in order to make trade work in this country we need a vision that says infrastructure and transportation go hand-in-hand. Whether it is the port or whether it is the highway, the two lanes of thin traffic that has to cut through the Canadian Shield carrying the goods, that has to be part of the equation as well.

Infrastructure also goes all the way down to a vision for our municipalities. They are increasingly having to carry the burden of maintaining infrastructure that used to be provincial or federal.

In my little community of Iroquois Falls over 30 kilometres of public highways has just been downloaded and called local roads. There is no base in the taxation to cover off the cost of those roads so they eventually start to deteriorate. It makes it very difficult to attract business to regions when the fundamental infrastructure, whether it is roads, bridges or sewage, begins to deteriorate because the ratepayers, average citizens, are having to pay for it on their water bill or municipal housing bill because there is no provincial or federal commitment to infrastructure.

We have to make infrastructure a priority in the House. The infrastructure deficit being felt across our municipalities right now is affecting regions of the country to maintain a competitive ability to attract business.

I had wanted to speak about infrastructure because railway is part of infrastructure and I will end on that and say that we are very interested in Bill C-8. We think it is a practical bill and the kind of bill that has been brought forward because there have been consultations with many of the shipping and trade associations, including the Canadian Wheat Board. I know that might upset some of my Conservative colleagues but the Canadian Wheat Board certainly felt that there were issues dealing with grain transportation and fairness of price.

We spoke with the Forest Products Association of Canada. We are hauling logs through northern Ontario. I know that in northern Canada rail plays a big part in hauling our wood, our finished products and our logs.

The Canadian Canola Growers Association is in support of this along with the Mining Association of Canada. If are going to do large scale mineral development in this country, at the end of the day we have to ship the products out and rail, by far, is the vehicle of choice to move concentrates or finished products out of mining operations to the ports, particularly the ports on the Pacific right now because the Chinese boom has certainly fuelled a major boom in base metals. We know that is a fact in my region of Sudbury as well as Rouyn-Noranda and Timmins. The railway plays an incredible role in the movement of base metals to serve the expansion in the Far East.

The Western Grain Elevator Association has shown its support for the bill along with Pulse Canada and the Inland Terminal Association of Canada.

At the end of the day, we are talking about some practical amendments to the Transportation Act to ensure fairness of price and that the overall dominance of the market by the two big giants does not come at the expense of the people who need to be able to ship products, who need certainty in price so that they can make long term planning decisions and investments in the economy that will help it continue to grow in the 21st century.

I look forward to seeing the hon. Speaker tonight at the Robbie Burns dinner. I know he apparently has some Scottish background. As one who also has a Scottish background, I wish him all the best, two days after Robbie Burns day.

The House resumed consideration of the motion that Bill C-8, An Act to amend the Canada Transportation Act (railway transportation), be read the third time and passed.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I am pleased to speak to Bill C-8, An Act to amend the Canada Transportation Act (railway transportation), on behalf of the Bloc Québécois. I would say at the outset that our party will be supporting this bill. Why? Because this bill, which has been discussed, amended, reworked and adjusted in committee, will provide a way to resolve a dispute that has been going on for a number of years between shippers and the railway companies—or at least, so we hope.

In recent years a whole series of tariffs has developed to counteract the Canada Transportation Act, which allowed for an arbitration system for disputes about the costs of railway transportation. That was permitted by the Act. Over the years, however, the railway companies have added what they called related charges to the shipping bill, charges that included parking, transshipment, fuel price increases and customs clearance. In other words, there is a whole list of charges that shippers had no say about; they had to pay.

Obviously, with respect to this dispute, Transport Canada had asked both the shipping industry and the railway industry to come to an agreement. For several years, talks were held, but no agreement between the shippers and the railway companies was possible.

It is important to say this. The railway lobby has been much in evidence throughout this lengthy process. They have lobbied based on the claim that this would destabilize the entire market. It is time for this situation to end, given that shippers are having to deal with only one transporter, as is the case for a number of companies located in remote regions, in Quebec and elsewhere in Canada, where the only really decent and safe way to ship goods is still the railways.

The Bloc Québécois has always come to the defence of railways. With globalization moving increasingly toward combating greenhouse gases, this mode of transportation is a good way of contributing to not polluting the way road transportation would do, for example. So the more preference we give to railways, the better it will be for the environment.

That is why, in our view, it is important for this dispute to be resolved. But will this settle the entire matter? Let us look at clause 3 of this bill, which will amend subsection 120.1(1) of the Act to read as follows:

If, on complaint in writing to the Agency by a shipper who is subject to any charges and associated terms and conditions for the movement of traffic or for the provision of incidental services that are found in a tariff that applies to more than one shipper other than a tariff referred to in subsection 165(3), the Agency finds that the charges or associated terms and conditions are unreasonable, the Agency may, by order, establish new charges or associated terms and conditions.

This is exactly what I said before. It would be possible to apply the agency’s decisions to any related tariff that did not directly impose transportation charges. The issue here is therefore the railway industry’s bad habit of billing for all the other charges so that they were not applied to transportation charges, which were subject to arbitration by the Canadian Transportation Agency.

Second, this bill will allow several shippers to file a joint appeal of charges. That is the objective. This bill will affect our forestry and manufacturing industries primarily in their role as shippers. These sectors are experiencing very difficult times. The Bloc Québécois is the only real party in this House to defend the manufacturing and forestry sectors. The Conservative government did not come to their defence. Rather it presented an assistance plan contingent on the adoption of a budget, without taking into account the gloom that persists in Quebec regions. This government pays no attention to the interests of citizens or of the real public, but focuses on being elected.

The Conservative members from Quebec prefer to rise and defend the Conservative Party rather than the interests of their citizens. That is the choice of the Conservative members from Quebec, but not of the Bloc Québécois members. We will never hesitate to stand up in this House to defend the interests of citizens who are losing their jobs. It is not right to invest in the military, nuclear and oil sectors and to not help those losing their jobs, especially in the forestry and manufacturing sectors. That is why, once again, we will rise today to defend the interests of the manufacturing and forestry sectors.

This is not going to solve their problems. Bill C-8 will not solve all the problems today. However, these industries have been afflicted by this irritant for many years. For too long, Transport Canada allowed businesses to do what they wanted. It is time to put an end to all tariff systems other than the one tied to transportation costs. That is what we are trying to do today by permitting the arbitration by the Canadian Transportation Agency of disputes concerning all these other charges. It is important.

No bill has ever had such universal support from the shipping industry. Quebec businesses were invited to appear before the committee, and they were represented by national associations, because there truly was unanimous agreement. The request was not to touch the bill as tabled, apart from a few amendments made in committee following debate.

So this bill represents a request from the entire shipping industry in Quebec and Canada. Obviously, part of this bill directly affects western Canada and railway transportation.

The Bloc Québécois will agree that disputes should be settled on a national scale. We are pleased to support this bill.

Once again, it is often the small details that steadily move things along. Once we have passed the bill at third reading, as we are in the process of doing, and it receives royal assent—soon, we hope—this little dispute over the other charges can be settled.

I repeat that this bill also addresses another issue. Several shippers will be able to submit a matter jointly to save money. Obviously, as a result, in issuing the order in accordance with the bill, the agency must take into account the following factors: the objective of the charges or associated terms and conditions; the industry practice in setting the charges or associated terms and conditions; in the case of a complaint relating to the provision of any incidental service, the existence of an effective, adequate and competitive alternative to the provision of that service; and any other factor that the agency considers relevant.

The agency has full latitude to take whatever measures it may deem necessary in order to settle the dispute.

For the railway companies, the bill aims to strike a balance. The proposed paragraph 120.1(4) provides that:

Any charges or associated terms and conditions established by the Agency shall be commercially fair and reasonable to the shippers who are subject to them as well as to the railway company that issued the tariff containing them.

Once the agency hands down its decision, the railway company shall vary its tariff accordingly. This is an obligation of result. It is very important that this be done as soon as the agency reaches its decision.

Why this dispute resolution? It is important that the railway companies also understand that the forestry and manufacturing sectors in Quebec and Ontario are on the verge of economic disaster. In the finance minister's economic statement, the picture of the forestry and manufacturing industries showed that they had been in a recession in Quebec and Ontario for two quarters.

Naturally, economists agree on this. When the situation facing the forestry and manufacturing industry is blurred by adding natural resources, which then includes oil company revenues, the problem is concealed.

That is what the Conservative government ultimately did. It did so in such a terrible way, by trying to suggest that the problem facing the forestry and manufacturing industry in Canada and Quebec was ultimately the same everywhere.

In distributing its billion dollars, the government did so per capita, that is, of course, per resident. With a minimum of $10 million per resident from the outset, Alberta has more money than Quebec to resolve the forestry and manufacturing crisis.

Once again, we denounce this Conservative approach, this manner of always acting in the interests of a few, rather than in the interests of the voters and citizens of Quebec.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Mr. Speaker, for the opportunity, on behalf of the NDP caucus, to enter into the debate on Bill C-8, An Act to amend the Canada Transportation Act as it pertains to railways. We should note that it was known as Bill C-58 in the previous Parliament.

On behalf of my colleague from Windsor West, I would like to announce today that we are in support of Bill C-8. We will be supporting it at this stage of debate because we feel that it addresses many of the valid concerns that railway shippers have over the current conditions of the Canada Transportation Act which allow for the potential abuse of market powers by the railways.

We should point out that it is the view of the NDP at least that at the present time the Canadian Pacific Railway and the Canadian National Railway have a virtual duopoly on shipping prices. It is a new word to me. It is not a monopoly but a duopoly. Their financial stranglehold, as it were, is choking Canadian shippers who rely on the rail system to transfer their products from the farm or the mine to the market. Currently, for those producers, transportation costs are their second or third largest cost for these bulk shippers. Under this duopolistic regime, these shippers have no alternative way to transport their products.

Our point is, even though there are more than 30 federally regulated railways in Canada, something I did not know until today, many rail shippers are in fact captive shippers. That is, only a single railway company offers direct service to their area. For these shippers, the rail transportation environment is not naturally competitive and in the absence of adequate legislative measures, a railway company could take advantage of its position as a monopolist in the region. That is why we are welcoming these legislative measures that will afford some protection to these captive shippers.

A monopolist railway would have the incentive to offer lower levels of service at higher prices, we believe, than it would under more competitive market conditions. We welcome this attention to the rail transportation system, if I might, because it brings to light perhaps a larger issue facing Canadians in that Canada as a nation made a strategic mistake 20 or perhaps 30 years ago when it chose to start dismantling our rail transportation system and putting the emphasis of freight on trucks.

If there is anything I have heard you, personally, Mr. Speaker, speak about in the House of Commons, it is the fact that for all kinds of good reasons, for the environment, for the cost factor, to save on fuel, we should all be trying to get the freight off the trucks and put it back on the rails to the largest extent possible so that most of its transportation, most of the distance that is shipped is shipped by rail. That will take a shift in mindset for Canadians. It will take an analysis of our whole transportation infrastructure in this country.

I welcome the opportunity to debate Bill C-8 today on the rail transportation system as it pertains to the Canada Transportation Act, but I also welcome and invite other members of Parliament to join in what could be a very exciting period and opportunity as we revisit the whole transportation infrastructure as an integrated network of transportation that will meet the needs of the 21st century.

In that light, in that context, I draw the attention of members of the House to a report that was very quietly released just a couple of days ago without much fanfare. Hardly anybody noticed, it would seem, and certainly the media did not notice. It is called the “Asia-Pacific Gateway and Corridor Initiative”, put out on behalf of or commissioned by the current Minister of International Trade and Minister for the Pacific Gateway.

In terms of transportation, this is the most important piece of work that I have come across in my 11 years as a member of Parliament because it finally comes to grips with the notion that we made a policy mistake a number of years ago when we got away from railroads and started tearing up the tracks to smaller communities.

God knows that with the experience in western Canada, we have not been nation building. We have been tearing up the tracks. We have been abandoning communities in terms of access to rail transportation.

I should recognize and again credit the authors of this brief 40 page report, one of whom, Mr. Arthur Defehr, is from Winnipeg and the owner of Palliser Furniture, which I believe is in your riding, Mr. Speaker, Mr. Jeff Burghardt and Mr. Richard Turner. This blue chip panel travelled the world and looked at efficient transportation networks, with an emphasis on Asia and on the revolution that occurred in transportation, shipping and freight, with the shipping containers and the new urgent need for Canada to get on board with handling these containers in a more effective, integrated approach.

The Asia-Pacific gateway is obviously looking at the ports and the terminals, but this report reminds us of the need and the potential for inland ports, for distribution terminals far away from the congestion of Vancouver and Prince Rupert. Perhaps, and I put this to the House as a member of Parliament from Winnipeg, a place like Winnipeg would be the ideal location for a great inland port.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I am resuming a speech started on December 10, 2007. As a result of the interruption, I still have 10 minutes for the rest of my presentation.

This bill is currently in third reading. Its primary objective is to clarify the Canadian Transportation Act and strengthen the provisions that currently protect shippers against possible abuses of market power by the railway companies. It is aimed primarily at western Canada's farmers and grain transportation.

Bill C-8 tries, therefore, to strike a better balance of power between the railway companies and the people that produce and ship products, including grain producers, who do not own the rails but have to send their hopper cars all across Canada. These people feel oppressed by the railway companies.

The purpose of the bill is to strike a balance. The proposed changes respond to the concerns expressed by shippers, especially grain producers in western Canada, about railway prices and services, while ensuring that the railway companies continue to have a stable regulatory environment.

In addition to what I said last December, I would like to tell the House about a meeting I had with a francophone Albertan. In what is quite a rarity, we were treated to a fine presentation in French by the Alberta Canola Producers Commission—a commission that does not even have a French name. We were sympathetic to what it had to say because it represents 52,000 canola producers throughout western Canada.

What they want mostly from the bill—and this reflects the Bloc’s analysis as well—is the repeal of the requirement that the Canadian Transportation Agency must be satisfied that a shipper would suffer substantial commercial harm if relief is not granted. The provisions to be repealed prevent shippers from getting the relief currently provided by the act, such as the price of competing lines, which has not proved very effective.

The second point is to increase the amount of notice required for tariff changes to 30 days. Shippers will therefore have another 10 days to plan for increases, which is a more reasonable amount of time.

The third point would allow the Canadian Transportation Agency, by order, to establish new charges and associated terms and conditions on a railway company that wants to impose unreasonable charges or associated terms on shippers. Currently, shippers cannot challenge penalties or unreasonable charges for related services and associated terms and conditions when these costs are set out in a tariff. Demurrage charges are an example of penalties, while the weighing of loaded railway cars is an example of related service. Increasingly higher fuel surcharges that are arbitrarily imposed are also a concern.

The fourth point would establish criteria for the agency to determine the reasonableness of the conditions which, among other things, must be commercially fair to both the shipper and the railway company.

The fifth point seeks to set conditions for the return of railway lines to federally regulated railway companies.

The sixth point deals with the publication on the Internet of a list of available sidings where cars can be loaded.

The seventh point would add provisions to the arbitration clause, to allow parties to refer disputes to a mediator. The grain transportation sector must have a more balanced and equitable dispute settlement system.

The eighth point would authorize the shippers to join together to seek arbitration when they are not satisfied with the proposed tariff changes of a railway company. Broadening the scope of these provisions to allow shippers to file a joint complaint will help them spread arbitration costs. This is one issue that was raised, namely, that a shipper could not hold his own against railway companies when the time came to produce evidence before the Canadian Transportation Agency.

The ninth point, which is just as important, would institute an independent review of railway services.

A review is provided for and has to start within 30 days of the legislation taking effect. This review is vital to the canola industry, because it will be an opportunity to have service issues currently facing shippers subjected to an independent assessment and should produce recommendations that strike a balance between the responsibilities of shippers and those of carriers when service problems arise.

In a nutshell, we have also heard evidence from railway companies, which are totally in favour of a review that will promote a factual analysis of occasional and related costs incurred by grain carriers. These issues are not being addressed simply in terms of intentions or ideas. That is another important aspect of this bill.

I also wanted to point out that the Bloc Québécois supports the bill because it seeks to give powers under the Canada Transportation Act.

It is a good thing that we act on this because, in the past, we have seen railway lines abandoned. There is a need to regulate that to some extent now. Line owners operate them as they please, often hiking prices without notice.

One can understand from all these facts that the Bloc Québécois is very sensitive to the plight of grain producers from the Prairies and western Canada. We are also—there is no doubt about that—sensitive to the plight of Quebec producers. This is why we stand firmly in support of supply management in Quebec.

If the Conservative government defended the interests of Quebec producers with respect to supply management as strongly as it is currently defending those of grain carriers, that would make a great difference and would reassure our producers in Quebec.

I would like to remind the House of one thing: the Bloc Québécois makes no distinction between western producers and Quebec producers. Whenever we feel that the public in general is being taken advantage of by the private sector, we do not hesitate to step in and fully and constructively play our role as the opposition with the government.

Therefore, the Bloc Québécois will certainly be supporting this bill at third reading.

The House resumed from December 10 consideration of the motion that Bill C-8, an act to amend the Canada Transportation Act (railway transportation), be read the third time and passed.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I was talking about the final item to be amended by this bill. It is important to continue. The seventh aim is to ensure that the abandonment and transfer provisions apply to lines that are transferred to local lines under provincial jurisdiction and subsequently revert to a federal railway, including the obligation to honour contracts with public passenger service providers.

Those are the amendments proposed by the bill. Indeed, the main point of this bill has to do with the disagreements between the western grain transporters and the railway companies. Although this is happening outside Quebec, the Bloc Québécois is interested in playing a constructive role and always defending the interests of those who are not treated fairly.

Bill C-8 is an attempt to strike a better balance between the power of the railway companies and the people who produce and ship products, including grain producers, who do not own the rails and who have to get their hopper cars to destinations all over Canada. They feel oppressed by the railway companies. Thus, the purpose of this bill is to strike a balance.

The proposed amendments respond to the concerns of shippers—particularly western Canadian grain producers—about railway transportation prices and services, while also providing the railways with regulatory stability. It is time to improve the balance for grain producers, among others, who use their own railway cars. The Conservative government and the Liberals have often had the tendency of giving free reign to the market, with the result that some producers may have been exploited.

Various amendments also affect arbitration. The objectives of the Canada Transportation Act, prior to these amendments, required that the Canadian Transportation Agency take into account the matter of substantial commercial harm. Bill C-8 proposes to remove the reference to substantial commercial harm, because there was always substantial harm when the Canadian Transportation Agency had to hear the arguments of the railway companies.

In the end, those who do not own the rails lose every time. The railway companies always succeed in proving substantial commercial harm where there is none. That will now be subject to arbitration, which will be a means of settling disputes between shippers and the railways—

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I am pleased to speak to Bill C-8, which has been considered and is at third reading. I must point out, this was formerly Bill C-58, before Parliament was prorogued and the bill was at second reading. Committee work has continued during this session and we are now at the third reading stage.

The main purpose of this bill is to clarify the Canada Transportation Act and strengthen the existing provisions that protect shippers against any abuse of the commercial power of the railways. It relates mainly to western Canada's grain producers and shippers.

In order to make it clear for those who are currently watching us debate this bill, I think it is important to list the main aspects of it.

First, one of the purposes of the bill is to remove the requirement for the Canadian Transportation Agency to be satisfied that a shipper would suffer substantial commercial harm before it grants a remedy, as it is an unwanted barrier to regulatory remedies.

Second, the bill extends final offer arbitration to groups of shippers on matters relating to rates or conditions for the movement of goods, provided the matter submitted for arbitration is common to all and the shippers make a joint offer that applies to all of them.

Third, the bill allows for the suspension of any final offer arbitration process, if both parties consent to pursue mediation.

Fourth, the bill permits the Agency, upon complaint by a shipper, to investigate charges and conditions for incidental services and those related to the movement of traffic contained in a tariff that are of general application, and to establish new charges or terms and conditions if it finds those in the tariff to be unreasonable.

Fifth, the bill increases the notice period for augmentations in rates for the movement of traffic from 20 to 30 days to ensure that shippers receive adequate notice of rate increases.

Sixth, the bill requires railways to publish a list of rail sidings available for grain producer car loadings and to give 60 days notice before removing such sidings from operation.

And finally, the bill ensures—

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Speaker, I thank the House for giving me the opportunity to voice the position of the Liberal Party, the former Government of Canada, on this bill.

I want to thank the parliamentary secretary for having had the elegance of thought to acknowledge that this bill was presented by the government of which I was a member and which saw another reincarnation as Bill C-58.

I think other members of both parties are probably equally thankful that the bill has seen its way not only through this House but also through committee. Witness, of course, the fact that report stage went through without comment and that we received, to all intents and purposes, the unanimous consent of all members of this House so that the bill could receive its third and final reading, be voted upon, be sent to the Senate, and be proclaimed.

Why would something like that happen? All members of Parliament have a special interest in ensuring that there is a rebalancing of the relationship between the railway companies and the shippers, be they large or small. More than anything else, I think that members of Parliament, at least from my party, the Liberal Party, the official opposition, has always looked for a balance in the relationship between those who need a particular service and those who provide that service.

The parliamentary secretary used the words “to reintroduce balance”. I thank him for thinking in terms of what needed to be done, and that is to restructure the relationship that had started to develop in a counterproductive way between the railway companies and the shippers. He noted in establishing that interest of balance that all the shippers want this and he is probably right.

Those who came before committee, those who lobbied him, that lobbied me, and that lobbied the Bloc, all said exactly the same thing. They all said that it was time that the relationship that has evolved between them needs to have the Government of Canada, through the agency, establish a relationship that would regenerate the competitiveness of the shipping industry and all those who buy our products.

What he really meant, I guess, is that without this bill we could see the competitiveness of many of our producing companies and those industries, be they agricultural, lumber, or mining, suffer at the hands of the negative impacts of the monopoly behaviour that had been established by the two monopolies in the railway industry that essentially put the shippers at their mercy.

It was not always this way. Obviously, there have been difficulties between the supplier of the service, the railway companies, and the shippers who need that service in order to get their product to the emerging markets that require Canadian produce and commodities.

What has happened over the passage of time is that the railways, as the parliamentary secretary has indicated, have established their position of predominance over the shippers that they serve. What is the result?

First of all, there has been an inconsistency in the predictability of the service required by the shippers, so that they in turn can provide for their own marketplace, a guarantee that their product will be delivered on time as prescribed by the contractual arrangement between the buyer of that commodity, usually abroad in the Pacific emerging markets, or even in the United States.

Second, that the price that was agreed to initially would suffer as a result of the delay, the ancillary services, and the other penalties that occur as a result of the railways not providing, as agreed, the kinds of services that had been contracted.

We have heard many stories in committee, many anecdotes, that have angered the shippers and, in turn, the small producers that feed into the shipping companies. As I say, whether they are farmers or lumber companies, all of them have faced great difficulties. They could not guarantee a price because they could not guarantee a time of delivery to the markets that they wanted to penetrate or they had in fact already developed.

The kind of relationship that the railways had established and imposed, in fact, upon the very people they purported to serve, proposed to serve and for whom they had made investments to serve had turned out to be counterproductive. It is counterproductive from a Canadian point of view, from a macro Canadian interest point of view, from the point of view of a Canadian economy that needs to grow and provide assurances for all of its markets that it is capable of producing a timely product with timely delivery, and a price that is competitive worldwide.

They have been unable to do that and so the parliamentary secretary calls this the shippers bill. It is more important than that. It is not just a bill that is important for shippers. It is important for the competitiveness of the Canadian economy.

As a result, we see that there are provisions in this bill to ensure that the monopolistic behaviour of the railway companies is moderated to the point that it is capable of delivery and what Canadians, through them, must have. They must have a guarantee of service at a predetermined price and in a timely fashion that will allow for a revenue stream to come back to the shippers and producers, so that they can then access the financing they, in turn, require in order to make investments in the production of said products.

It does not take much in terms of rocket science to appreciate that the bill is not a shippers bill. It is a bill for you, Mr. Speaker, it is a bill for all of us to ensure that which produces great wealth for Canada, that contributes to the positive side of the ledger in international trade is guaranteed.

We cannot put in jeopardy either our producers or shippers, the very people, the very production systems, the very industries that ensure that we will be able to generate wealth. We cannot put them in a precarious position and at the mercy of those who deliver their product from point A to point B.

That is absolutely crucial because now we are entering into the area of the viability of Canada's infrastructure. Given the great distances between not only our people but the source of those products and commodities and the markets, we need to be able to have an infrastructure that is reliable.

That does not mean simply having a road that is paved. It does not simply mean having a railway track that functions without incidents or accidents on as frequent a basis as we have seen. No, it means that we need to have that type of infrastructure function in an efficient and economic fashion that continues to regenerate the business which makes its existence mandatory.

What do we do with a bill like this one? As I said earlier, it received the support of all members of Parliament in committee and, I dare say, will receive the support of all members of Parliament in the House, unless, of course, some in the NDP decide that they want to filibuster.

They will receive the support of Canadians everywhere because, in effect, what will transpire is a new infrastructure of legislation to govern the mandates given to the railway companies and to the shippers as stewards of Canada's natural resource wealth, a wealth that needs to be materialized, realized and brought to fruition in foreign markets, so that Canadians can say, yes, this wealth will be distributed for the good of all citizens, one and all.

Mr. Speaker, the bill, as you already noted at second reading, was examined by members of the committee on your behalf very thoroughly, and I might add that, subsequent to the debate such as it was, there was no need to amend the bill.

Imagine, no need to amend the bill that saw its genesis in 2005 with the then Liberal administration, saw its regeneration again as Bill C-58 last May, and is now again before the House as Bill C-8 with not a change, not a comma, not a semicolon, not a capital at the beginning of a sentence, nothing.

Why? Because it has been a bill that has been thoroughly researched. The consultation has taken place with all of the stakeholders and even the railways have not objected as strenuously as one might expect from those who are compelled to do something with which they are, at least in the recent past, not familiar and that is equitable behaviour. But they see the wisdom of the legislation.

We will see that certain mechanisms in this bill, those clauses that ensure the balance is regenerated back between the shippers and the railway companies, are at the core of everything. When things are balanced out, everyone realizes that fairness is the basis for any relationship that develops as a result. What is fair? What is fair, of course, is that shippers contract to have their product taken from point A to a port where the railway companies will deliver the cars required or that product to be picked up at a time contracted so that everybody's expenses are diminished. That is fair.

Therefore, this bill says we are not going to dictate at which time, which day and under what circumstances said number of cars are going to be delivered, but if shippers contract to deliver said number of cars on said day at such and such a time, then railways must deliver and if they do not, there are commercial consequences in the appropriate court.

One might say, well one might say we would go to court anyway. Well, no, not when David is facing Goliath. The government has accepted the will of Parliament and we have decided no more David and Goliath relationship. We are going to ensure that the shippers are adequately protected in this unbalanced relationship.

If there is a price agreed, there shall be no changes to those prices unless companies have given at least a 30 day notice of same. We have seen this: prices subject to change without notice. That is good for those who benefit from that, but it is not good for those who project their business plan on the basis of a guaranteed price down the road. The railways have to give at least a 30 day notice that prices are going to be changed while still delivering the service which they have contracted to deliver.

It sound fair. The parliamentary secretary says that it is reintroducing balance. That is a backhanded way of saying the other guys have been taking an unfair advantage of a situation. Is that being critical? It should be. What else does it say?

My colleagues from the Bloc will recall that we had some discussion about ancillary services. What are they? In one instance, the railroad said that it had six points to consider. Another one, a shipper, pointed out that there are something like 30 to 60 items that are added on to a price.

One of our colleagues on committee said that it sounded a little bit like going in to buy a car, but after we have contracted the price the dealer says, by the way, if we want a motor it costs this much more, and if we want tires on every wheel, it costs this much more and so on. By the time we are finished, we might well be paying twice as much for the car as what we initially contracted.

Therefore, there is transparency of cost. There is transparency of the final price for the product that is being delivered, not necessarily by the shippers, because they already have to do that with their producers and the people over at the ports where they are going to deliver the material. It is something that the railways must be able to guarantee their shippers.

I think the minister agrees, because he put that into the bill. However, we need to make sure people understand that this is what balancing the relationship between railways and shippers is really all about. It is ensuring that no one takes undue advantage of a relationship of power that has developed over time.

As I said, the ultimate beneficiaries of course will be the Canadian public and the Canadian marketplace. If nothing else, it will mean that producers will get their product to market at a time when the market thinks it is appropriate to receive it.

It was not that long ago that in another capacity I was dealing with business people from China. We talked about buying Canadian product,and in particular, agricultural product. Their complaint was not so much that the Canadian product was not of exceptional quality. They really do enjoy Canadian quality. It was not so much that the price was not right, because of course it was.

However, they said, “What is the use of us buying good quality at the right price if we cannot get it to our market?” If our railways cannot deliver their product to the port of Vancouver or Prince Rupert in a timely fashion, what is the purpose of them putting their ships out off the port, wasting time, costing them money and redoubling the expectation of the price they needed to pay in the first place?

Under those circumstances, it does not do them any good to buy Canadian product. They might as well look for it some place else, they said, not because the product is not any good, not because it does not get delivered to port, but because it does not get delivered when they need it.

Therefore, if there is one criticism about all this, it is not that the bill itself will not be capable of delivering what it purports to deliver, but it highlights the importance of having an infrastructure program that includes this relationship as well as the physical infrastructure that must be put in place and which guarantees that the fruition we expect from this bill will be brought to bear and materialize down the road.

Whether it is in the Pacific gateway, as we have come to know the development of an infrastructure for delivery outside of Canadian borders out west, whether it is an Atlantic gateway, in the event that we have minerals and other products that need to go through the Great Lakes and out through the Maritimes, or whether it is in fact the gateway at the central part of the continent through Ontario, Quebec and the Great Lakes, we need to have an extension of the bill and the principles which it tries to address through the physical infrastructure that can only result in the continued growth of the Canadian economy.

As I said earlier, the bill does not punish anybody. The bill is designed to bring parties together so that the wealth of Canada, which contributes to the positive side of the foreign relations ledger in foreign trade, is an opportunity to be realized to its maximum.

I know that all members of this party, the official opposition, will vote in support of this bill at third reading for all of those principles that I have so humbly put forward. I know that the government is going to be supportive of this. I think even my good colleagues from the Bloc are going to be delighted to support it. All other good members may, but I urge all Canadians to get behind this bill.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Speaker, this is the very crux of the issue itself and of Bill C-8.

There is group final offer arbitration, which was asked for by many groups that are shippers. If the member wants more personal information for his own constituents, I will be more than happy to meet with him and provide that.

However, that is exactly what the crux of the bill is. It is to help shippers. It is to help with what we call a duopoloy situation or a duomonopoly situation, where the railways have in some instances had excessive fees, or similar types of complaints from farmers or other shippers across the country. The bill is speaks exactly to that.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am sorry I was at a committee and came here the middle of the parliamentary secretary's presentation on Bill C-8,

I do not know if he covered this, but one of the things we hear from the forest industry and other big shippers is they feel they are often left with no alternative other than to deal with CN.

I know in my experience in the forest industry, many of our mills and the company I worked for did not have any options. It was CN and that was it. Therefore, the shippers feel that in some cases they are gouged in terms of the rates.

Is there something in Bill C-8 that deals with this issue, something like final offer arbitration or some way of arbitrating these differences where CN has a monopoly position and there are no reasonable alternatives?

[Brian Jean, Conservative, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, Bill C-8 is the third and final bill amending the Canada Transportation Act. Two previous bills, one on international bridges and tunnels and other provisions of the act, were passed in the previous session.

The Canada Transportation Act is the legislative framework that, among other things, regulates the economic activities of the railways, in particular services and rates. While the act generally relies on market forces, there are a number of shipper protection provisions to address the potential abuse of market power by the railways.

I remind all members that Bill C-8 is extremely important to shippers. I am sure that many of us in the House today have heard how important the bill is.

Many members have undoubtedly heard many complaints from coast to coast about railway service and rates over the last few years. Bill C-8 strengthens the shippers' provisions in the act. By doing so, it improves shippers' leverage when they negotiate with railways, which contribute to better service and lower rates.

Bill C-8 is great news for Canada. Over time it is hoped that this will also improve the relationships between shippers and railways.

I also wish to remind members that Bill C-8 is the result of extensive consultations, dating back to the statutory review of the Canada Transportation Act that took place in 2000-01. This provided an opportunity for shippers to develop a very strong consensus in support of the bill. In fact, a couple of the members of the Standing Committee on Transport, Infrastructure and Communities, on which I sit, commented on how unique it was to see such a strong, solid consensus from an industry sector such as the shippers in this case.

I ask members to keep this in mind during third reading debate. Shippers like the bill. They want it to be passed as soon as possible. Let us not disappoint them.

The bill is also important to railways and their investors because it gives them certainty. It gives them regulatory stability and they know this. Providing regulatory stability will improve the investment climate and facilitate investments by the railways and their networks, equipment and crews so they can maintain and even expand their operations.

Canada is a trading nation and railways are important to our future growth in our economy. This in turn will help shippers compete in domestic, continental and international markets. It will also facilitate the achievement of government objectives to improve the transportation gateways in corridors in western, central and eastern Canada.

What the government is doing is making this an even stronger trading nation, ensuring we have all the inventory and assets necessary to become that strong nation.

When asked at committee stage whether Bill C-8 would cause the railways to cancel any investment plans, Mr. Cliff Mackay, president of the Railway Association of Canada, replied:

The short answer is no, we will invest. We need to invest. It's part of our business. It's very important.

I believe Bill C-8 re-balances the regulatory framework in an appropriate manner. Shippers are clearly looking forward to the new provisions. At the same time, however, there should not be a significant impact on railway investments. The bill is necessary for our future, and the government is going to pass it.

During the consultative process in the summer of 2006, the minister encouraged the railways to look at potential commercial solutions to address the concerns of shippers. The intention was that improved commercial mechanisms would complement amendments to the shipper provisions.

The railways discussed a commercial dispute resolution proposal with shippers. For some period of time, we heard at committee that they discussed this. Good progress was made, but discussions eventually broke down as both sides could not find a solution that was satisfactory to both sides.

The government is hopeful that the discussions will resume once the bill is passed and sets a framework for those. An effective commercial dispute resolution process is preferable to regulated remedies. A commercial approach would be more expeditious, less costly and less confrontational and better for long term relations.

I will briefly discuss the main provisions in the bill that have been endorsed by the committee.

Under the existing section 27 of the act, the agency must be satisfied that a shipper would suffer “substantial commercial harm” before granting a remedy.

Shippers have long objected to this test. As members can imagine, it can be quite onerous. The railways argue that this test is consistent with the commercial approach reflected throughout the act and have pointed out that based on agency decisions to date, the provision has not prevented shippers from accessing remedies. The government concurs with shippers that the substantial harm test is not required.

It is a serious matter for a shipper to seek a remedy under the Canada Transportation Act.

First, it can have an adverse impact on a shipper's relationship with a carrier. Many shippers across the country only have one carrier, one railroad to deal with, and this relationship is very important to them.

Second, pursuing a regulatory remedy can often be extremely expensive. For small farmers, independent operators, it is almost impossible in some instances to afford or even to launch such a discussion.

The test itself is unwarranted and is being dropped under Bill C-8, great news for shippers.

The bill also contains a new provision that would allow shippers to complain to the agency if they were not satisfied with railway charges or the conditions associated with such charges, other than freight rates. The principal remedy for freight rates will continue to be final offer arbitration. The charges I refer to include what are often referred to as ancillary charges such as fees levied for cleaning or storing cars.

The new provision would also deal with such charges as well as some other charges related to the movement of traffic, such as demurrage. Demurrage is a payment incurred when a shipper takes too long to unload or load a car. Sometimes these circumstances happen as a result of something beyond their control.

The agency will have the authority to review complaints about such charges and to order a railway to revise the charge or so stated conditions if the agency finds them to be unreasonable. These charges have become an issue with shippers over the past few years and shippers are very pleased that the Conservative government has introduced an effective measure to address them.

The last major element of Bill C-8 is the introduction of group final offer arbitration, commonly referred to as group FOA. The existing final offer arbitration provision is one of the more popular remedies with shippers. A shipper can apply for final offer arbitration if the shipper is not satisfied with the railway's freight rates or associated conditions.

Under the process, the shipper and railway each submit their final offer to the arbitrator. The arbitrator must select either one or the other and is not allowed to change or modify either of the final offers. Imagine what that would lead to. It encourages the two parties to be fair and reasonable, which is most important, or else they lose the arbitration itself. The process often leads to a negotiated settlement and that would be good news as well.

Bill C-8 would allow a group of shippers to apply for final offer arbitration subject to three main conditions.

First, the agency must be satisfied that the group attempted to mediate the matter with the railway first. This is to encourage a commercial solution if at all possible, and would be in the best interests of the Canadian shipping industry.

Second, in addition, the matter must be common to all the shippers.

Third, they must make a joint offer, the terms of which apply to all of them.

The concept of commonality in terms of both the matter and the offer is essential to group final offer arbitration. Otherwise it simply would not work and we would all be wasting our time. In this case it will be and it is again great news for shippers around the country.

The former Bill C-58, which was reinstated as Bill C-8, was tabled on May 30 of this year. At that time, the minister announced there would be a review of railway service. This would commence within 30 days after the bill itself has passed.

It is important to note that shippers strongly endorse the proposed review and look forward to it. The review will focus on solutions to railway service issues, including commercial solutions. Transport Canada officials have had some preliminary discussions with shippers on the terms of reference for this study. More consultations will take place before recommendations are submitted to the minister and before any final decision is made, again, great news for Canadians.

There is a widespread support for Bill CC-8 among all political parties. As I mentioned, the former Bill C-58 was tabled in the House on May 30 of this year. Second reading debate was concluded in one day, on June 14. It moved very quickly, with all party support for the most part of all clauses of the bill, before the session was prorogued.

The Standing Committee on Transport, Infrastructure and Communities heard witnesses at three meetings last month. The witnesses included the minister, the railways and the shippers. We have heard from stakeholders.

The committee heard a clear desire for the bill to be passed expeditiously without amendments. I have seen many emails and have had many phone calls from shippers across the country. They want the bill passed as quickly as possible.

The standing committee was able to conclude clause-by-clause review in less than 30 minutes. The committee approved one technical amendment to clarify that the new power being given to the agency to address complaints about railway charges would not apply to freight rates. In essence, it was simply an amendment to ensure and to clarify that we would have less litigation.

The bill is extremely important to shippers from coast to coast to coast from all types of industry. They have been waiting for results since 2001. The statutory review of the act was completed in 2001.

The bill would also provide regulatory stability sought by the railways. This is good news for Canadians because we are a trading nation. The economy of Canadians is tightly woven with the success of our shipping from coast to coast.

The standing committee dealt with the bill very quickly. I want to personally thank all members of the standing committee for their efficient review of the bill.

I now urge the House and all members to get behind the bill and to pass it as quickly as possible so Canadian shippers and manufacturers can rely on the great work of the House.

The House proceeded to the consideration of Bill C-8, An Act to amend the Canada Transportation Act (railway transportation), as reported (with amendment) from the committee.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, 2007 has been a great year for Canada and a great year for the House of Commons.

Next week is the last week of the fall sitting and the last week before the new year. The sitting and the year have been extremely successful for the federal government, as we have introduced legislation in all of our priority areas and have delivered results for Canadians.

However, since we have only a few sitting days remaining this year to address important tax cuts, security issues and other priority bills still pending, Canadians are expecting us to work very hard in the coming days to produce results for them.

We want to see our priority bills passed in this House and sent to the Senate so that they may become law before Christmas. As a result, next week will be 2007, a year of results week.

We plan to build on our past achievements by debating and passing the budget implementation bill, which would lower taxes for all Canadians by reducing the GST to 5%, as well as by bringing in tax cuts for individuals and corporations.

We will debate Bill S-2, An Act to amend the Canada-United States Tax Convention Act, 1984, which must be passed by Parliament before January 1 to ensure that it is implemented and we can benefit from that.

We will also debate our railway transportation bill, Bill C-8, and our bill on the settlement of international investment disputes, Bill C-9. Both bills will help create jobs and provide economic certainty for Canadians.

Our government will continue to show Canadians that we are serious about tackling crime and strengthening the security of Canadians. Next week, we expect that our security certificates bill, Bill C-3, will be reported back from committee. The bill will then be debated at report stage and third reading. We hope the hon. members of the House understand the importance of passing this legislation so that it may be considered and passed by the Senate before the deadline imposed by the Supreme Court.

We will debate any amendments made to our Bill C-13 on criminal procedure, currently being examined by the Senate.

Speaking of the Senate, the government hopes that the tackling violent crime act will pass the Senate so Canadians can feel safer over the Christmas holidays knowing that the bill has been enacted into law.

Canadians also expect their institutions to be more accountable and democratic. We have built a record of results on this file as well, with the passage of the Federal Accountability Act and Bill C-31 to improve the integrity of the voting process. Next week we will continue with our plans in this area by debating Bill C-29, which closes a loophole in our campaign financing laws that Liberal leadership candidates used to bypass campaign contribution limits last year.

We would also like Bill C-6, on the visual identification of voters, and Bill C-18, on the verification of residence, to be sent back by committee. It is important for these bills to become law, so that they can be implemented in time for the next byelections.

Tomorrow I will also seek consent to send Bill C-30, the specific land claims bill, to committee. This bill to create certainty and allow land claims to be resolved more quickly is a welcome addition and the country will be better off the sooner its process is put in place.

This year, 2007, has been an excellent year for Canada. Our economy is booming, the country is united and there is integrity in government.

We have achieved a lot this year. Our government has delivered real results for Canadians in 2007 and will continue to do so next week and in the new year.

Transport, Infrastructure and Communities

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, I have the honour to present, in both official languages, the first report of the Standing Committee on Transport, Infrastructure and Communities.

In accordance with its order of reference on Monday, October 29, your committee has considered Bill C-8, An Act to amend the Canada Transportation Act (railway transportation), and agreed, on Tuesday, December 4, to report it with an amendment.

Canada Marine Act

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Speaker, when debate adjourned last night, I understood I had three minutes. This is wonderful news. It is one more minute for a politician to talk.

When I left off debate, I was talking about the opportunities that Canada has in the area of international trade. As we know, Canada is a trading nation. It is one of the most successful trading nations in the world. In fact, it is perhaps the most resource rich country in the world. The nations of the world are beating a path to our doorstep not only for our resources and commodities but they are also looking to us for the technological expertise and much of the information we can deliver to make the world a better place.

When I left off debate, I was raising a number of reasons why we face challenges in Canada in trying to maximize the benefits we get from international trade. The first of these reasons was the awful truth that previous federal governments had essentially abandoned any significant effort to build our national infrastructure and the result was an aging infrastructure that was ill-suited to compete with the demands of the 21st century.

That is why the Conservative government, of course, introduced a $33 billion building Canada fund, which is a plan that is going to rebuild and renew our national infrastructure. It is the largest investment of its kind certainly in the last 50 years, if perhaps not in Canadian history. The building Canada fund is going to be rolled out over the next seven years.

There is a second reason why we have challenges in the area of making sure that we compete internationally for trade. That was the fact that the level of service in transportation, specifically railway transportation, was in a critical state of affairs. For many years virtually everyone in the shipping industry had complained about the fact that the level and quality of service delivered by our large national railways had declined.

To address this concern, our government introduced Bill C-8, which goes a long way to improving the level of service in our national railways. It ensures that the dispute resolution mechanisms available for shippers are efficient, low cost and timely.

The third reason why Canada is beginning to have challenges in the area of its gateways and trade corridors is the fact that our country does not have the legal flexibility given to its ports to be able to adapt to a rapidly changing economic environment. When I talk about ports, I am talking about marine ports, such as the port of Vancouver, the port of Montreal, the port of Halifax.

There are numerous other inland and marine ports across Canada that have challenges. They have transportation pinch points that restrict the ability of those who carry on trade with Canada and within Canada to get the job done. That is why we have introduced Bill C-23. It provides much more flexibility to the ports to be able to adapt to changing environments.

One of the areas where we are providing more flexibility is, for example, in the area of land management. Ports will now have more powers and authority to manage their lands, to lease them, to sell them, and to use them for the purposes they deem necessary for their businesses. We have also expanded the whole area of legal authority and the ability to borrow money, which again had been severely constrained until now.

We believe this flexibility is going to allow our ports to become even more dynamic because if we do not become more dynamic in the area of trade and ensure the infrastructure in Canada is in place to adapt to increasing trade, we are going to lose out.

There are many other ports across North America now that are competing with us and they are very aggressive. We need to make sure that our ports in Canada have the ability to meet the challenges of the 21st century.

I am thankful for the opportunity to address this very important issue for Canadians.

[The Chair (Mr. Mervin Tweed (Brandon—Souris, CPC)), Conservative, Merv Tweed]

Good morning, everyone. Welcome to the Standing Committee on Transport, Infrastructure and Communities, meeting 5.

Pursuant to the order of reference of Monday, October 29, 2007, we are continuing with Bill C-8, an act to amend the Canada Transportation Act on railway transportation.

Joining us today we have Helena Borges, director general, surface transportation policy, and Alain Langlois, legal counsel.

As previously agreed upon, we're going to move forward with the clause-by-clause. I believe that currently there are two amendments that are out there, so I hope everybody has those in front of them.

Barring any questions or any concerns, I think we'll proceed.

(Clauses 1 and 2 agreed to)

(On clause 3)

[Marta Morgan]

In the legislation as it currently stands, there is one option that works very well for shippers when they have a problem with base freight rates and that is final offer arbitration. Under the current act, that is the only method that has proven effective for us, but it is very costly. It can cost a million dollars per case. So there must be a major problem with base freight rates for us to turn to final offer arbitration.

What we are seeking through Bill C-8 is to cover other aspects that have arisen, incidental tariffs and service, because for these two services and the related tariffs, shippers have no recourse when a problem arises. That is the fundamental problem. The companies have the option of offering these services, setting the prices they want, but the shippers, on their side, have no power, because they must absolutely use CN or CP. So the power always remains in the hands of the railway companies. So there is an imbalance. There is a slight imbalance in the base freight rates, because at least we have final offer arbitration, but as regards the other aspects, there is no balance in the legislation as it currently stands.

[Robert Ballantyne, Chairman, Canadian Industrial Transportation Association, Coalition of Rail Shippers]

Thank you very much, Mr. Chairman. We'll be a lot less than ten minutes with the opening remarks.

Again, we do appreciate the opportunity to appear before the standing committee to discuss Bill C-8.

The Coalition of Rail Shippers is comprised of 17 industry associations, and I would like to read who they are. They comprise the Animal Nutrition Association of Canada; the Canadian Canola Growers Association; the Canadian Dehydrators Association, those are the alfalfa producers; the Canadian Wheat Board; the Forest Products Association of Canada; the Grain Growers of Canada; Inland Terminal Association of Canada; Pulse Canada; the Canadian Chemical Producers' Association; the Canadian Fertilizer Institute; the Canadian Industrial Transportation Association; the Mining Association of Canada; the Propane Gas Association of Canada; the Western Canadian Shippers’ Coalition, which also has in their membership the Alberta Forest Products Shippers Association and the Canadian Oilseed Processors Association; the Western Canadian Wheat Growers Association; and the Western Grain Elevator Association.

This coalition, as you can see, is very broad, and the member companies of the associations represented in the coalition account for at least 80% of CN and CP's revenues.

The group represents widely varying industries, as you can tell, including agriculture, primary industries, resource processors, manufacturers, and retailers from all parts of the country.

The three witnesses represent all members of the coalition and we will be able to give a variety of perspectives in answer to your questions.

I won't reintroduce my two colleagues, as you did introduce them, Mr. Chairman.

The fundamental problem with railway freight is that the market does not work in a normal competitive manner, and the bargaining power between the CN-CPR dual monopoly and rail shippers is tilted very much in favour of the railways. Bill C-8 and the announced service review begin to redress this imbalance.

This bill has come out of a long process of discussions, negotiations, and ultimately a decision by the minister and his staff to move forward.

Shippers represented by the CRS group are in many different businesses, but at the end of the process this was a package that could address everyone's most significant concerns. This bill is an excellent starting point to achieving balance between shippers and railways, and as such, the members of CRS support the passage of Bill C-8 , as written, as soon as possible.

An important part of the package is the announcement that the government will undertake an independent review of railway service within 30 days of the passage of the bill. The CRS group strongly supports this initiative that will address service problems faced by shippers in industries across the country. The amendments in Bill C-8 will facilitate a climate that will promote more normal commercial dialogue between buyers and sellers in the rail freight market.

We will not repeat the comments made in our submission to this committee. I will just finish by saying that the CRS group urges rapid passage of this important piece of legislation, as written.

We would be pleased to answer any questions the members may have.

Thank you, Mr. Chairman.

[The Chair (Mr. Mervin Tweed (Brandon—Souris, CPC)), Conservative, Merv Tweed]

Good morning, everyone, and welcome to the Standing Committee on Transport, Infrastructure and Communities.

This is meeting number four, pursuant to the order of reference of Monday, October 29, 2007, on Bill C-8, an act to amend the Canada Transportation Act on railway transportation.

Joining us today, from the Coalition of Rail Shippers, is Mr. Robert Ballantyne, who is chairman of the Canadian Industrial Transportation Association; Mr. Wade Sobkowich, executive director of the Western Grain Elevator Association; and Marta Morgan, vice-president, trade and competitiveness, Forest Products Association of Canada.

We welcome you to the committee.

As in previous meetings, we'll ask you to make your presentation of ten minutes and then we'll have questions and answers from the committee members.

I would ask Mr. Ballantyne to please begin.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I know quite a bit about it, and I was hoping to ask you a little bit about a bill that's currently in front of the transport committee right now, Bill C-8. Are you familiar with it and the changes it's making?

[The Chair, Conservative, Merv Tweed]

We'll expect it when it is translated. Other than that, thank you very much.

I do want to advise our committee that if you do have any amendments to Bill C-8 , I would ask that you get them to Mr. Doug Ward, legal counsel, as soon as possible. I'd like to say Thursday noon at the latest, and that way we can get the information back to you so we can be prepared for next Tuesday.

With that, and seeing no other questions, the meeting is adjourned.

[Marc Shannon]

When one looks at the legislative summary that accompanies Bill C-8, clause 3 deals with incidental or ancillary charges not directly related to the movement of traffic, such as demurrage. So really, I think all we're saying is that the intent expressed in that summary should be reflected in the clear wording of the legislation.

[Cliff Mackay]

I can't give you any hard numbers. My colleagues may have a view specifically from a particular company's point of view, but I must tell you, we haven't tried to do a financial impact analysis of Bill C-8.

Our largest concern, as I said earlier, sir, is not so much with the specifics, although we do believe some change is necessary to the current act in front of you; it's more with the perception that may be created that we're shifting back towards regulation of prices, and that perception is something quite—

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I've heard that you aren't supportive of it particularly, and yet, on the other side, I'm feeling the sense that you know the bill will go, whether there will be...and in that 30 days I think you're looking forward to the option of having that review done.

I haven't seen, actually, anywhere where you've talked about the financial impact of Bill C-8 on you and what that actually would be, or if you've done any work on it to help us with what that impact would be.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman.

Thank you to the witnesses for coming out.

Actually, Mr. Allen, I'd like to just follow up on that, if you wouldn't mind. It's interesting that in one of the areas of my constituency right now there is a line that had been shut down. Now a short-line railway is interested in coming in and being a part of it, supported by the local county municipality because they see this as an opportunity to start to remove goods. It will likely take some trucks off the road, but obviously they want to make sure they can get their products from point A to point B so they can get on the main lines and away they go.

How does Bill C-8 specifically affect you?

[Jeff Watson, Conservative, Essex, ON]

The Commissioner of Competition has suggested, as far back as 2001, that it was necessary to remove something like that. It is something that doesn't exist in any other economic legislation, so perhaps we view that as an unnecessary hurdle. The agency would still have to be convinced that the relief is necessary in order for it to be granted.

I want to move on to group FOA. You've suggested somehow that group FOA is adversarial, to use your term. I actually think group FOA presumes the exact opposite. If you're going to be adversarial in a group FOA, or an individual FOA, and take extreme positions opposite from each other, you stand to lose more when the arbitrator picks one solution over another. I think actually what FOA does is to force you to more common ground in the middle, so that each side is roughly pretty close. I don't see how that becomes adversarial.

You've suggested that you prefer mediation. It's still in Bill C-8. Does that mean we can expect that resolutions will happen in the mediation stage, as opposed to having to get to group FOA?

[Jeff Watson, Conservative, Essex, ON]

That's a little clearer. I think all that good money coming in from trade from Asia is enough to ensure that there'll be a lot of investments moving forward.

There's another impression that I think you've left here, and I want to clarify this in front of the committee today. You've almost left the impression that the removal of the commercial harm provision, which we're proposing in Bill C-8, equates to no test at all for shippers. I don't think that's a fair assessment. There still is the test remaining to prove that they actually need the relief. Is that not correct? You essentially want to require them to have two tests instead of one. Of course, there is no commercial harm test in any other economic legislation in Canada, as far as I understand it, but you would still like to require shippers to have two tests instead of one. Is that correct?

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair. Thank you to our witnesses for appearing today.

I have a lot of things to cover, and unfortunately I don't think I'm going to get to all of them here today. I want to get to the question of investment.

I want to be clear on this point. Will the passage of Bill C-8 in this form cause you or any of the companies you're representing, Mr. Mackay, to not make certain investments in Canada? If that's the case, which ones?

[Don Bell, Liberal, North Vancouver, BC]

Thank you.

By nature of background, let me first of all say that I fully appreciate the role the railways play in the economy of Canada. I've said they are the economic backbone.

As you know, the gateway initiative was started by our previous Liberal government in recognizing the potential growth from the Pacific Rim, not only for opportunities for western Canada but for all of Canada, and the opportunities for the railway systems as the prime mover of goods from the ports, not only to other parts of Canada but into the United States as well.

We enjoy the advantage, for example, through the ports of Prince Rupert and Vancouver, of being anywhere from one and a half to two days closer to Shanghai, a major Asian port, by natural sea route. The only way we can maintain that advantage of earlier contact and getting those goods into central Canada or Chicago or the midwest is by having an efficient rail system that can take advantage of those one to two and a half days and deliver those goods.

Mr. Mackay, you talked about the investment the railways have made. The Government of Canada, again through the commitment of the previous government, and followed up by this government, invested federal moneys in the Port of Prince Rupert. It isn't just the railways that are making these investments. The benefit to the economy of Canada has been recognized. We're talking about container cargo being up 300% by 2020. We recognize that there has to be an improvement to the way the railways operate, both in terms of capacity and efficiency, I guess you'd say, of existing assets. There's going to have to be an investment, and the investment will pay back in profits.

My concerns are the issues my colleague, Mr. Volpe, mentioned earlier about the safety record of CN in particular, which this committee is investigating, as well as the ministers panel. There are concerns of ours relating to the efficiency and the continuity, if you want to call it that, of services. Derailments can affect the confidence in terms of overseas shippers and their ability to take advantage through our ports of that one-and-a-half-day or two-day advantage we have. If we're going to have derailments as frequently as they seem to have happened, it tends to erode some of that confidence. I just put that out there as a point.

More particularly, there are two aspects that I'm interested in.

One is the issue raised by B.C. Chamber of Commerce and the national chamber of commerce about shipments to the grain terminals. I guess it's the switching or the right-of-service access in Vancouver. I gather that's being addressed, but that has been a major concern.

The other is the whole issue.... I think I heard you suggesting that the shippers were basically the cause of the discussions of the CDR not proceeding. The minister made a reference in his presentation the other day that unfortunately the two sides were unable to reach an agreement. One of the things we heard from the shippers is that the legal cost to support a complaint under CDR is in the neighbourhood of $100,000. That's just the legal costs.

I guess the concerns I have are that we talked.... Mr. Fast made reference to the size. There has been an image of intimidation, that in a somewhat monopolistic approach, the railways, by virtue of size, have been able to be bullies, if you want to call it that, with some of these shippers. I guess that's the reason for the kinds of provisions that are being suggested in Bill C-8. It's to try to level the playing field.

You said the group FOA needs to work well, and you say it must be equal in terms of their interest for group FOA. I'm saying it also has to be fair. What we were hearing in the presentations in fact is the necessity for having the system apply to all the parties in a group FOA and apply to them once the decision is made. But it's not necessarily realistic that the problems be equal in terms of the impact initially, because it's the very nature of the service and the way railways run that it may vary. But they may have a common thread in terms of a particular concern, and by grouping together they can assist themselves financially in managing to meet the financial clout, if you want to call it that, of the railways in competing.

I'd appreciate your comment.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for appearing here today.

I'm looking at the amendments here that you're suggesting, but I do need to go back. If I go to my riding and talk...I don't have another business that is universally more despised than the railroad industry. That's just a fact. I don't think it's all railroads. CP and CN are in my neighbourhood.

If you talk to the people adjacent to your properties, if it's not the trains idling for hours where we couldn't get them to stop or move away from personal properties, it's shippers. Maybe you don't have complaints because they feel intimidated and they actually don't complain to you, but they don't want anything else done because they're scared they're not going to get their cargo moved after that. There are the derailments--a whole series of things--and it's a sad situation, quite frankly.

It could be a great Canadian conspiracy to hold the railroads in such despise.

I'll not only give you an opportunity to respond, but obviously you've seen the evidence come forward with all the groups and organizations expressing concerns and wanting a new process. We've been through several machinations of legislation. Now it's boiled down to Bill C-8.

What can you say in terms of these amendments that you're proposing right now that would be, I guess, more fair to your business?

And second, what would it do for productivity in Canada if your amendments went forth? Would it assist in better operations overall? It's obvious that you have to do some public relations in an entirely different way. If you haven't heard that enough here today, you'll hear it continually if nothing changes.

What would your arguments be back to those who would raise concerns about these amendments in the bill for your operations and how, in your opinion--I would like to hear it--it would benefit the shippers and so forth that you're serving if these amendments went forth?

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Shannon, in fact, my colleague asked the minister's representative if there have been fewer disputes between the shippers and yourselves since Bills C-58 and C-8 have come to us for consideration. We are told no, there are the same number of disputes and unresolved situations.

This means that, even with a bill, you still cannot come to a friendly understanding on independent cases. That was our question. Are there fewer disputes brought to arbitration? No. There are just as many.

The fact that a bill has been tabled does not prevent you from keeping your monopoly. It is difficult for us to believe you. You tell us that there will be a meeting this afternoon in order to settle the dispute. But it is five past noon. It is too late. We are going to pass the bill. Your monopoly and your short-term profit-driven vision is going to mean that you are going to have to live with this bill.

In the past, I have not seen you trying to come to terms with your clients in any kind of open way.

The products from our regions must be delivered. The opposite is something that we want to avoid. In the last two or three years, we have not felt the will on your part to settle differences in the quickest way. Transport Canada tells us that things remain the same, and that there has been no move forward. You have not tried to settle differences as quickly as possible. Quite the opposite, you have dug in your heels. It is difficult for us to believe you today.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you, Mr. Chair, and thank you, gentlemen, for appearing before us this morning.

I know this is a touchy situation for a lot of people, especially for you, because you've been painted by everybody as the group that needs to be looked at rather warily. So why don't I just defer to type and say that that's exactly where I come from.

Mr. Patenaude, just before we go into the substance of C-8, can you just very briefly tell me why it is that CN is the subject of a headline every second day with respect to safety in its system?

[Jean Patenaude, Assistant General Counsel, Canadian National Railway Company]

Thank you very much, Mr. Chairman.

CN certainly appreciates the opportunity to appear before you today on Bill C-8. I'd just like to address something that Minister Cannon raised when he was here, and Mr. Mackay alluded to, and that's the commercial dispute resolution process. As the minister mentioned, in the summer of 2006 he basically challenged the railways to find a commercial solution to concerns that had been expressed by some of the shippers. We strongly agreed that this was the appropriate way to proceed, and as a result, both CN and CP worked very hard to develop the commercial dispute resolution process--the CDR, as I'll refer to it--as we believed that it addressed the needs of both the shippers and the railways.

The CDR represented a significant number of compromises by the railways, but we were quite willing to make those compromises in order to attain the regulatory stability that is essential in order for the railways to continue to reinvest large amounts of capital into the railway system. We were also anxious to find a less confrontational way to settle disputes with our customers. The CDR was intended to deal with disputes related to level of service, transportation rates, and the application of optional services fees.

What we proposed was a two-step process specifically to address the concerns that had been expressed by the shippers. First, the shippers had said that the railways did not listen, or that it was hard for the shippers to find someone in authority to speak with them when there were issues. We agreed, at the request of the shippers, that we would submit any dispute that they were raising to compulsory mediation. This would ensure that there would be someone with authority who would be listening to the shippers to try to find a solution.

In addition, if the mediation did not solve the problem, we proposed that in addition to existing statutory remedies the shippers would also have the option of going to binding commercial arbitration. The shippers had mentioned that they wanted to find commercial solutions to problems that are really of a commercial nature. So we proposed binding commercial arbitration, a system that basically works in most of the other areas of business in this country. We want to make it clear that we were not asking them to renounce or to give up any of their statutory remedies. We presented this proposal to a number of shippers and their representatives. Many of our customers were quite interested in the proposal.

Unfortunately, some of the shippers, through their associations, insisted, as Mr. Mackay said, that the CDR apply to U.S. as well as Canadian movements, and this was something we could not agree to; therefore, the discussions were not successful. However, we still have maintained the CDR in a contract form. We've put it up on our website and it is available for all customers who wish to take advantage of it. Many of our customers told us they like the proposal, but they saw no need to sign on at this time as they had no problems with our services. They indicated that if in the future problems arose, they would be interested in using the CDR.

I suppose it's not surprising that shipper associations did not rush to accept the CDR. They knew that if the process failed, the minister would introduce legislation, which of course is exactly what happened with Bill C-8. We have a number of specific concerns with the bill, as Mr. Mackay has referred to, but in the end our biggest concern is the continuing move toward re-regulation of the rail sector. Mr. Mackay referred to the deregulation of rail in Canada and how it's been a resounding success. It has triggered innovation and improved efficiency in the rail system and the rail industry to the benefit of all, including shippers. It has allowed the railways to improve service and asset utilization, and by any measurement, the railway service offering is dramatically better than it was ten years ago. Transit times are shorter and more reliable, car velocity is higher in real terms, and rates have decreased.

These improvements have led to a financial performance that has enabled the railways to make further capital investment in the rail system, and Mr. Mackay has referred to that. But in order to invest, there is a need for stability, and we need a regulatory regime that allows us to continue doing the things necessary to make our railway more efficient. We are concerned that this legislation is likely a step backwards.

The provisions of the FOA group create another adversarial process. To us it really is building a ring for us to fight with the shippers, whereas there should be a better process, such as the mediation and arbitration process. A very important thing is that unlike class action proceedings in law, there is no requirement for the group of shippers to show that they are in fact a true group, and in fact there's also no need in the current legislation that the decision apply equally to all of the group members.

We know that shippers do not like paying optional charges. They are in place to drive efficiency and discipline in the system. The railways cannot afford to have shippers use the yards and the equipment as warehouse space. Many shippers with private car fleets keep them parked in the railway's yards because they lack sufficient storage space of their own. All these things create congestion in the yards and affect the railway's efficiencies. Yards are there to sort cars, and congestion is expensive to CN, to the system, and ultimately to the customer.

We don't question the right of shippers to final-offer arbitration. This is a remedy they have now. We understand that there is a need for a remedy, but we do have many concerns with the FOA process as it currently exists.

[Cliff Mackay, President and Chief Executive Officer, Railway Association of Canada]

Thank you, Mr. Chairman.

I intend to speak for most of the time, and then I'm going to ask my colleague Mr. Patenaude to say a few words as well.

The Railway Association of Canada, as many of you know, represents some 60 railways across the country, which number represents virtually the whole railway community in Canada: the large class 1 freights, the short lines, regional railways, intercity passenger and commuter railways, as well as a number of tourist operators. I'm very pleased on their behalf to be here today to speak on Bill C-8.

Just to give some background, the state of Canada's transportation system is far different today from what it was 10, 15, or 20 years ago. The current reality of Canada's transportation infrastructure is that there is no longer any excess capacity in the system. Our transportation system is coping with current demand; however, it's widely recognized that our current system will not be adequate to facilitate the projected growth in traffic for the future. This is particularly true with intermodal containers moving through our west coast ports as a result of the growth in the Asian market.

The federal government has recognized the overall transportation challenge associated with this increased trade and has implemented the Asia-Pacific gateway and corridor and the national policy framework for strategic gateways, and it has recently announced both an Ontario-Quebec continental gateway and corridor and the Atlantic gateway. All of these initiatives are being funded under the Build Canada fund.

For its part, Canada's class 1 freight railways have estimated that they need to invest at least $2 billion in infrastructure and rolling stock in the next decade or two just to accommodate the west coast growth. As such, it's imperative that railways be provided with regulatory certainty as well as the ability to attract the investments necessary to match the level of infrastructure necessary to allow for the growth in our economy.

The days of relying on excess capacity to meet growing traffic are clearly over. The bottom line is that putting in place regulations that would create greater regulatory uncertainty simply will not help us to meet the challenges of the future.

Let me speak just briefly, then, Mr. Chairman, about deregulation. Deregulation has proved to be a resounding success. It started with legislated reform in 1987, which allowed railways and customers to make separate commercial deals, and it developed further from that point with the amendments to the Transportation Act in 1996. If you measure what's happened as a result of all of this, as measured by revenue per tonne-kilometre, average freight rates in Canada declined 31% in real terms from 1988 to 2006. This has allowed shippers not only to move more goods but to move them at lower cost.

I should say that since deregulation, particularly since the mid-1990s, railways have spent more than $15 billion to improve their systems. This was double the amount of investment that took place during the same period of time under the regulatory regimes of the 1970s and early 1980s. Over the coming year alone, railways will be investing more than $2.5 billion in their infrastructure, which represents something in the order of 20% of our total revenues.

Railways, Mr. Chairman, face stiff competition, not only from other modes of transport, such as truck, but also from other railways. This fact was recognized recently by the OECD in a report. They say the clearest example of competition between integrated railways occurs in Canada, where two largely overlapping networks are capable of providing a wide range of substitute services.

Railways can lose business to competitors, and they do lose business to competitors. We need to continually strive to improve our services to our customers.

One example of some of the new things we're doing is that recently the class 1 railways have developed, in collaboration with shippers, a process called commercial dispute resolution—CDR, in short. CDR is a commercial option for shippers to address and resolve issues concerning rail freight rates and service and ancillary charges without having to go to the much more cumbersome and sometimes costly processes that are provided by government through the CTA.

Unfortunately, the members of the shippers council have not yet formalized the CDR process. Our understanding is that they are seeking to expand this process to the U.S. jurisdiction.

Our view at the moment is that clearly the CDR was developed to operate in Canada in the context of the Canadian regulatory environment, and the U.S. environment is very different. We hope that in the near term the shippers will reconsider and come back to the table. We think this is an initiative that is very good for them as well as for us.

Let me now turn and speak very briefly about Bill C-8 itself. The RAC understands and appreciates that the federal government undertook significant efforts through consultation with shippers and railways to propose a legislative framework that balances the interests of both parties. Bill C-8 is the outcome of this effort. However, notwithstanding all this effort, the RAC continues to believe that Bill C-8 is not necessary and we do not support the bill going forward.

Having said that, we understand there are a number of other parties who very much wish the bill to go forward, and in that context we would ask the committee to address our concerns in their deliberations about the current legislation.

Contained within our written submission, which is somewhat longer than my comments this morning, we'd like to propose changes in three sections--sections 27, 120, and 169--of the Canada Transportation Act. As such, we respectfully would submit the following for your consideration when you review the bill in detail.

Clause 1 of Bill C-8 proposes to repeal subsection 27(2) of the Canada Transportation Act, which requires the agency to satisfy itself that a shipper would suffer substantial commercial harm prior to granting a remedy or recourse. This provision is consistent with commercial principles enshrined in the various provisions of the act and essentially directs the administrative tribunal charged with the administration of the act to look at the commercial realities before imposing a regulated measure. Over the years, the provision has not prevented the shippers from obtaining redress when required, and it has acted as a reminder to all the parties and to the regulator itself that regulation is not to replace commercial relations. As such, the RAC recommends that subsection 27(2) be retained in the act.

The second point has to do with clause 3. Bill C-8 proposes to introduce an additional recourse to the agency for shippers. The intention is to provide a recourse with respect to charges established by railways for incidental or ancillary charges for services such as transportation services, things such as demurrage, car storage, and car switching services. These are services that are not associated with the core activity of actually moving the cargo. The proposed wording for this recourse in Bill C-8 is vague, in our view, and could be interpreted as applying to both incidental charges and transportation rates. The RAC believes that clarification should be added to ensure that it deals only with charges associated with the provision of incidental services.

I should say, Mr. Chairman, it's our understanding that there has been consultation with the government and with shippers, and I think there is general agreement that some clarification of this part of the act is necessary.

The third and last point, Mr. Chairman, has to do with clause 7. Here, Bill C-8 proposes to extend the final-offer arbitration recourse process to groups of shippers. First, the RAC believes that group FOA is simply not necessary. We think the existing system works. Second, the RAC believes that if the committee were to decide to proceed with group FOA, there is clearly a requirement for a certification process that should apply equally to all who choose to participate in this process. The legislation at the moment does not clarify that matter.

In conclusion, Mr. Chairman, as I said at the beginning, the days of existing capacity being available to meet the needs of Canada's rail system are clearly over. We no longer have overbuilt railways. As an industry, we are facing this new reality by investing heavily in new infrastructure and rolling stock to meet future demand. We need a stable and predictable regulatory environment that will ensure long-term financial sustainability. It's recommended that the proposed changes in Bill C-8 be implemented by the committee in order to better ensure a favourable climate for investment in the future.

Thank you, Mr. Chairman. I now ask for Mr. Patenaude to say a few words.

[The Chair (Mr. Mervin Tweed (Brandon—Souris, CPC)), Conservative, Merv Tweed]

Good morning, everyone, and welcome to meeting number three of the Standing Committee on Transport, Infrastructure and Communities. Pursuant to the order of reference of Monday, October 29, 2007, we are examining Bill C-8, an Act to amend the Canada Transportation Act (railway transportation).

Joining us today, we have our guests: from the Railway Association of Canada, Mr. Cliff Mackay; from Canadian Pacific Railway, Mr. Marc Shannon; from Canadian National Railway, Mr. Jean Patenaude; and from Ottawa Central Railway, Mr. James Allen.

It's my understanding that Mr. Mackay will be presenting. We have 10 minutes. I'm not opposed to your sharing the 10 minutes, but then we'll go to a question and answer session from the committee.

Mr. Mackay.

[Avrim Lazar]

Certainly we've been very clear about what would be useful today: refundability of the SR&ED credits; extension of the two-year window for accelerated capital costs to five years; more money for research in research innovation; and all-party support for Bill C-8, which puts competition into the rail act would be very useful. Anything that can be done to improve the accessibility of technology would be very useful, and of course the communities need support in their transition.

The best thing you can do for communities is to create a business climate where people want to invest in Canada. The refundability of SR and ED, the capital cost allowance, and the money for R and D would help the most.

I want to be very clear, though, and this is something where I think there has been misunderstanding: we don't want subsidies. We don't want you to come in and save a mill that's uneconomic. What we want to do is make this a place where mills are economic.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair, and thank you, Mr. Minister, for appearing here.

Bill C-8, obviously, is really taking care of some low-hanging fruit in terms of fixing some of the chronic problems that we have right now. My concern is that, especially coming from Windsor, where I've seen the rail system not have the proper investment and also with the rules and procedures that are in place, it's lowered our productivity as a country. There's no doubt about that.

Hence, what I'm really interested in right now are assurances with regard to the study that's being proposed. I'd like to know how much money has been earmarked for that study, and whether it's going to examine productivity with, for example, comparisons to the United States system and also with Europe and maybe some other countries in Southeast Asia.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Thank you, Mr. Chair.

Mr. Minister, in your presentation, you make two important observations. In the fourth paragraph on page 2, you say, in connection with Bill C-8, that:

the Bill is also important for the growth of international trade and the competitiveness of our economy, as we experience unprecedented levels of trade with the Asia-Pacific region.

This is a very important observation. But, since your government has never used any WTO provisions at all to curb unreasonable competition from foreign economies, we will be importing more. Then, clearly, the value of our dollar restricts our exports.

That brings me to your second observation. On the fourth page of page three, you say:

Transport Canada officials have heard increasing complaints over the last few years about poor railway service and high freight rates.

Tell me if my interpretation is correct. Bill C-8probably will fix the problem of freight rates that are too high. That will provide help to our exporters, who are sorely in need of it. But it will not solve the other part of the problem, the mediocre railway services. You are going to start a review 30 days after the bill is passed. But until then, what will happen if the railway companies react badly to the decision on freight rates and decide to provide even worse service to firms that challenge those rates? Will they have to wait for the end of the review that will start in 30 days and end who knows when? You are telling us that the review will start 30 days after the bill, but you do not tell us when it will end. We must be able to address that issue. It is not impossible that the mediocre service provided by our railway multinationals, who control all rail service, will become even worse for anyone challenging the rates.

What do you think, Mr. Minister?

[Lawrence Cannon, Conservative, Pontiac, QC]

Thank you, Mr. Chair.

I was saying that this is to ensure that both the matter and the offer are common. Without sufficient commonality, the group FOA would simply be a series of individual FOAs with little in common. This would be unworkable and unfair to the arbitrator.

Group FOA is a new concept, and will undoubtedly be subject to challenges as the parties seek to clarify what is meant by "a matter being common to all shippers" and "a joint offer, the terms of which apply to all of them". We will have to rely on the good judgment of the Canadian Transportation Agency and the courts. I want to emphasize, however, that this is a remedy that is aimed at helping shippers—it is quick, effective and less costly. There will be practical restrictions on what qualifies as an eligible group FOA to ensure that it be an effective and expedient remedy. However, it is not intended that shippers must be facing exactly the same circumstances in order to be eligible for group FOA.

Under the new group FOA provision, the agency must be satisfied that the members of the group have attempted to mediate the matter with the railway. This is consistent with the government's preference for encouraging commercial solutions before regulatory remedies are pursued.

Bill C-8 permits parties to a single final offer arbitration to suspend the arbitration process by mutual agreement in order to pursue mediation. This provides both parties with an alternative without jeopardizing the shipper's right to final offer arbitration. The FOA process will resume if mediation fails.

Shippers strongly support group final offer arbitration and are eager to see it implemented.

Bill C-8 ensures that the line transfer and discontinuance provisions apply to lines that are transferred to a provincial railway but revert back to the federal railway. This will ensure that interested parties, including governments, have an opportunity to acquire such lines before service is formally terminated. This provision closes a potential loophole.

A complementary provision requires CN or CPR to make payments to local municipalities if a grain-dependent branch line reverts and is subsequently closed. These payments are $10,000 per mile per year over a three-year period.

A new provision requires CN and CPR to maintain and advertise a list of sidings that grain producers use to load their own cars and to give 60 days' notice before closing such sidings.

I also want to speak briefly about the commitment to commence a review of railway service within 30 days of the bill being passed. This commitment has been a priority for shippers and has been well received by them.

The objective will be to focus on solutions to the problems that we have been hearing about for the past year or so. The review may include an assessment of the effectiveness of the level of service provisions of the Canada Transportation Act. We will be looking for innovative solutions to a challenging issue.

Shippers and railways will be consulted on the scope and terms of reference for the review. I expect Transport Canada to contact interested parties for their views later this year.

The government has taken significant steps to address shipper concerns through Bill C-8and the railway service review. Many, if not most of us, have heard serious complaints about railway performance. Shippers have been waiting for these improvements for over five years and are very supportive of Bill C-8. They want this bill passed expeditiously.

For their part, the railways may object to some of the provisions but they want regulatory stability. I believe that Bill C-8 provides this and a better balance between shippers and railways.

We have an opportunity to take corrective action. I encourage members to support Bill C-8. I hope that once the bill is passed, shippers and railways will become re-engaged in discussions on a commercial dispute resolution mechanism.

Thank you very much for your attention.

[Lawrence Cannon, Conservative, Minister of Transport]

Thank you very much, Mr. Chairman.

Before I begin my formal remarks, I would like to say that of course I'm happy to be here early in this new session, and I want to congratulate you, as well as the two vice-chairs of the committee, for your election. And to the new members and the veterans, I look forward to working with you all.

I'm pleased to appear before the SCOTIC committee today to discuss Bill C-8, which improves the shipper protection provisions of the Canada Transportation Act. These are the provisions that deal with the potential abuse of market power by the railways.

I have with me today Helena Borges, director general of surface transportation policy, and Alain Langlois,

our legal counsel.

Bill C-8 is the reinstated version of the former Bill C-58, which had been referred to this committee before the previous session of Parliament was dissolved. It is the third and final bill amending the Canada Transportation Act. These bills have all been based on extensive consultations dating back to the statutory review of the CTA that took place in 2000 and 2001.

Bill C-3, the International Bridges and Tunnels Act, received royal assent in February of 2007. As well, Bill C-11, which amended provisions related to the Canadian Transportation Agency, air travel, mergers and acquisitions, rail passenger services, railway noise and the grain revenue cap, received royal assent in June of this year.

Bill C-8, by far, is the shortest of the three bills. However, it is extremely important to rail shippers, the hundreds of companies that use railways to ship their goods. This bill is also important for the growth of international trade and the competitiveness of our economy as we experience unprecedented levels of trade with the Asia Pacific region. The bill will provide the regulatory stability that the railways have been seeking, which will, in turn, ensure that much-needed capacity investments are made on the key trade corridors. Improved capacity will help our railway industry and shippers to remain competitive with their counterparts in the United States.

I am sure that most of you have heard many complaints from shippers about railway service and rates. Shippers are looking for stronger statutory remedies to improve their leverage in negotiations with railways. I had very positive feedback from shippers on the former BillC-58. Shippers expressed strong support for it to be reinstated and passed as quickly as possible.

The railways feel that Bill C-8 reintroduces too much unnecessary regulation. I believe that it establishes a better balance between shippers and railways. Passage of the bill will put an end to the extensive debates that have taken place and will provide both sides with regulatory stability.

When I announced tabling of the former BillC-58 on May 30, 2007, I also indicated that the government would conduct a review of railway service to commence within 30 days after the bill is passed. I will speak more on this later.

These two initiatives, BillC-8plus a review of railway service, fulfill an important commitment I made to shippers: that I would address their concerns about railway service and rates.

The CTA is the legislative framework that regulates the economic activities of the railways. The act generally relies on market forces to govern the relationship between shippers and railways. However, as I noted earlier, there are a number of sections that protect shippers from the potential abuse of market power by the railways.

I want to note that the legislative and policy framework for railways in Canada has worked quite well. CP and CN are among the most efficient railways in the world. They both operate networks in the United States and compete quite successfully against their U.S. counterparts. They don't require any operating subsidies from government. Their financial success means they have the capital funds necessary to maintain and expand their infrastructure and to acquire new equipment.

While the framework has worked well, it's not perfect. Transport Canada officials have heard increasing complaints over the last few years about poor railway service and high freight rates. I have heard many similar complaints in my capacity as minister. Also, I know that many members of the previous committee heard from shippers and others, even when the former Bill C-11 was being reviewed by the committee and the House.

These complaints may stem from the strong performance of the Canadian economy and the fact that the supply of transportation services, including rail freight services, has been quite tight relative to demand throughout North America. Railways are of critical importance to many Canadian shippers in domestic, continental, and international markets, especially to shippers of bulk commodities, who often don't have any practical alternatives. Shippers need reasonable access to efficient and reliable service at fair rates.

I believe the time has come to rebalance the legislative framework in favour of shippers.

During the consultative process in the summer of 2006, I encouraged the railways to develop a commercial solution that would complement amendments to the shipper protection provisions. The railways developed a commercial dispute resolution proposal for discussion with shippers. Significant progress was made. Unfortunately, the two sides were unable to reach agreement. I still support a commercial approach, since it would be more expeditious, less costly, and less confrontational than regulatory remedies.

With your permission, I would like to briefly describe the provisions in the bill.

The existing section 27 of the act requires the agency to be satisfied that the shipper would suffer substantial commercial harm before granting a remedy. Shippers have long objected to this test. It is being dropped under BillC-8.

The bill amends the notice that a railway must give for increasing freight rates from 20 days to 30 days. This will provide more time for shippers to make the necessary adjustments to their shipping plans.

There are two new provisions that deal with shippers' concerns about railway freight rates and ancillary charges. I want to clarify the difference between these two terms, since different remedies apply to each.

I'll deal with freight rates first, since it is the easier concept to understand. Freight rates are simple rates applied to the movement of traffic from point A to point B, for example, for moving wheat from Moose Jaw to Vancouver.

When you look at the various rates and charges levied by railways, the payment for freight rates are the big-ticket item. Now, I want to point out that the intended remedy for freight rates is final offer arbitration.

Aside from the rate application applicable to the movement of traffic, railways levy various other charges. These charges can either be levied in relation to the movement of traffic or in relation to the provision of non-typical railway services provided by the railways.

Now, the best example of a charge that may be imposed by a railway in relation to the movement of traffic is demurrage, which is the amount paid when cars are not loaded or unloaded within the free time provided by the railways. Examples of charges that may be imposed in relation to non-typical railway services provided by a railway include car cleaning, weighing, or storing of the cars.

The amounts paid by shippers for the various charges imposed by a railway are less significant than that amount stemming from the applicable rate for the movement of traffic. However these charges have become an issue with shippers over the last few years. Amongst the concern frequently heard is the fact that these charges, or their associated terms and conditions, are unilaterally established by railways and are often unreasonable in light of their purpose.

With respect to these charges, a new provision is being added that will give the agency the authority, upon complaint by one or more shippers, to review such charges and associated terms and conditions that are contained in a tariff of general application. Now, the agency is also given the authority to order the railway to amend the tariff if it finds the charges or associated terms and conditions to be unreasonable.

The bill contains a number of factors to guide the agency. The agency will determine the period of time any revised tariff will be in effect, provided that such a period does not exceed one year.

Shippers were hoping that the issue of charges could be addressed through changes to the final offer arbitration (FOA) provisions. In our view, the agency review approach is more effective. It provides for a “one-stop shop“ to address complaints. The FOA approach could require a number of FOA applications to accomplish the same thing, because FOA decisions are normally limited to the applicants.

The FOA provision is one of the more popular shipper remedies. A shipper can apply to the agency for FOA if the shipper is not satisfied with the railway's freight rates for the movement of traffic or any of the associated terms and conditions. Under FOA, the railway and shipper each make their final offer, and the arbitrator selects one of them without modification. This encourages the two sides to narrow their differences.

Bill C-8 expands the availability of the FOA remedy to a group of shippers. In order to qualify for group FOA...

Editorial Note: technical difficulties

[The Chair (Mr. Mervin Tweed (Brandon—Souris, CPC)), Conservative, Merv Tweed]

Good morning, everyone.

Welcome to the second meeting of the Standing Committee on Transport, Infrastructure and Communities and our consideration of Bill C-8, An Act to amend the Canada Transportation Act (railway transportation), pursuant to the order of reference of Monday, October 29, 2007.

In order to open up the meeting and allow for questions and answers, I am calling clause 1 of Bill C-8, thereby permitting members to hold general discussion and ask our witnesses questions. It's just a formality to do that.

Joining us today we have the Minister of Transport, Infrastructure and Communities, the Honourable Lawrence Cannon, who will introduce Bill C-8 and answer questions.

I welcome you and ask you to proceed.

[The Chair, Conservative, Merv Tweed]

I also know that briefings will be offered to all members on this bill, if you elect to do that.

On Tuesday we will have a subcommittee only, and then on Thursday we will start the agenda with Bill C-8, with the minister and officials.

The meeting is adjourned.

[The Chair, Conservative, Merv Tweed]

I think what I'd like to do is ask the subcommittee to meet on Tuesday, and we'll set forward the agenda with those issues. On Thursday, if the committee is agreeable, we can bring the minister and officials in to present Bill C-8. I know at the end of the last session there was some urgency to get this dealt with.

If the committee so agrees, I would try to confirm that the minister and his officials be here for Thursday. We can set the rest of the agenda on Tuesday at a subcommittee meeting, but this would get the ball started.

Monsieur Laframboise.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I'm sorry, Mr. Chair. I just wanted to let you know that the minister would also be prepared to come on Thursday to introduce Bill C-8 and to answer questions for an hour.

[The Chair, Conservative, Merv Tweed]

Very briefly, for our next meeting on Tuesday, our first official meeting, I think everyone is aware that Bill C-8, An Act to amend the Canada Transportation Act (railway transportation), has been referred to the committee. I know we had some discussion about that prior to the ending of the last session. I am advised that officials would be prepared to attend next week. That is to be verified, but if the committee wishes, I would suggest that....

Go ahead, Mr. Jean.

Canada Transportation Act

[Lawrence Cannon, Conservative, Minister of Transport]

moved for leave to introduce C-8, An Act to amend the Canada Transportation Act (railway transportation).

Mr. Speaker, pursuant to the special order made previously, I would like to inform you that this bill is in the same form as Bill C-58 was in the previous session at the time of prorogation.

(Motions deemed adopted, bill read the first time and printed)