Bill C-52 (Historical)

Fair Rail Freight Service Act

An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration)

This enactment amends the Canada Transportation Act to require a railway company, on a shipper’s request, to make the shipper an offer to enter into a contract respecting the manner in which the railway company must fulfil its service obligations to the shipper. It also creates an arbitration process to establish the terms of such a contract if the shipper and the railway company are unable to agree on them. The enactment also amends provisions related to air transportation to streamline internal processes and certain administrative provisions of that Act.

Fair Rail Freight Service Act

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I am keenly interested in this issue. I have asked various colleagues this question. I would also like to ask my NDP colleague this question.

Does he believe that the Conservative government is taking Canada’s railway infrastructure seriously?

A little earlier, I mentioned that 70% of goods are shipped by rail. In order to move forward on the green economy, we must reduce road transportation and ship goods by rail more frequently. I hope the Canadian government will eventually agree to promote the green economy and play a leadership role.

Does he believe that the Conservative government is taking the issue seriously and that it is putting money and energy in the right places?

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, I would like to thank my colleague for his question.

Because I come from the region where the railway plays such an important role, I feel bound to say that, for this day and age, the money invested and spending priorities are inadequate. What we are pleased about in this bill is that when we take a step in the right direction, it allows us to believe, to hope—we are optimists—that it will be the foundation of some good work on this issue, something that has unfortunately not been seen yet.

In my colleague’s riding of Saint-Lambert, which is just about next to mine, there have been cuts at the VIA Rail station which have had a negative impact on the services provided. Even if this is not exactly what we are discussing today, we have to consider the issue of infrastructure as a whole, as my colleague mentioned. These cuts cannot very well be something that is positive.

At the moment, there is a lack of determination and a lack of participation by those working in the field. I would hope that this bill is a sign that more attention, positive attention, will be paid to this issue, primarily for the people from Vallée-du-Richelieu and the people in my riding. If this were the case, I would be very happy to continue the discussion in a positive way.

[Dean Del Mastro, Conservative, Parliamentary Secretary to the Prime Minister and to the Minister of Intergovernmental Affairs]

Mr. Speaker, the member made a number of good points in his intervention. One of the things he indicated, which I happen to agree with quite strongly, is that it is important that we hold to account companies like CN and CP and others, which are large, private companies that are very profitable, and that we set specific expectations for them. That is why, for example, we brought forward the railway safety bill in the previous Parliament. It was a bill we worked on with other parties to come to an agreement on; then it had to be brought back in this Parliament as well.

The bottom line is that these are private companies, and sometimes when we are making an assessment of whether the money is being put in the right spot, we have to understand the railway system as a network. The member who spoke previously talked about how his freight rail service is now down to a class 2, which limits the speed to 25 miles per hour for freight. That is actually quite serviceable for freight, although not perfect. He spoke about having a derailment. Obviously, that is something we want to avoid. That is why we brought in the railway safety bill.

However, when we are talking about investments into rail, as an example, perhaps the greatest investment we could make to improve the efficiency of the Port of Montreal would be to improve the railway tunnel in the city of Windsor. Most people would not think of that, but it would actually improve the efficiency of the port services in Montreal.

I would like the member to expand a little on where he thinks we could better hold the railways to account. I think he is on the right track with that, and I think the bill is going in that direction.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

With “on the right track”, I will assume no pun was intended there

I agree with some of the points made by my colleague. I thank him for the question. This is a network and that is why we would like to see, as we are in fact proposing, a Canada-wide strategy that would enable us to make the appropriate investments at all levels, because what he said is entirely true.

The reason why the railway has a positive impact for farmers in my riding is precisely because the service goes to Windsor and farther beyond. That is a fact.

In terms of the fact that CN and CP are private enterprises, that is a difficult question. We agree on that, but when we consider the fact that the infrastructure was built by people from our region and elsewhere and that a lot of money has been invested in it, and also the government’s responsibility to ensure that we have a proper rail network, there is good reason for more dialogue between the government and CN and CP.

With this bill, certain obligations will be instituted, but this is the kind of dialogue that will happen more often. I realize that it is never easy to deal with that reality.

Lastly, with respect to Bill S-4 on railway safety, there were many points on which the parties agreed. I venture to hope this is an indication that we will be able to get along better, because it can only be a positive thing for my region if we continue to do that. I venture to hope.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I believe there are many different individuals and stakeholders who are following this debate because it is of critical importance. Issues have really been outstanding since 2007, because that is when industry, in particular individuals who rely heavily on shipping, said they needed to have some sort of legislative manner to start dealing with levels of service. There is a sense of optimism that finally we might see some sort of a bona fide service level agreement put into place, where ultimately there is a consequence or a potential for penalties and so forth. However, it is important that they be enforceable.

I wonder if the member would provide comment in terms of that aspect of the legislation, which seems to suggest that we would have some form of service level agreements that would appease a great number of the different stakeholders, on the condition that it is enforceable, that there are penalties, that it would provide for a better quality of service. That is one of the driving forces behind this debate. Shippers want to see better quality shipping being conducted, better service levels so when they want, need and have paid for a car that it will be there for the shipping of their product. Would the member want to comment on the service level agreement concept?

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, I thank my colleague for his question. This is certainly something positive. However, there are obviously consequences associated with passing a bill like this one. It is somewhat pointless to have agreements between the stakeholders—the producers, the shippers and the railway companies, like CN, in this case—if they do not have the tools to enforce those agreements.

That said, this is to some extent the approach my colleagues will take when they examine the bill in committee and also look at the question of arbitration. We do want shippers to have the tools they need in order to take full advantage of this legislation. It is quite important that CN and CP be called on to make better agreements with shippers. But that may still pose a problem if the legislation and the legal situation tilt too heavily in favour of the railway companies.

My colleague and I have raised two very important points relating to arbitration, to ensure that we enact legislation that has teeth. Once the bill is passed, we are really going to have to make sure that the agreements made are complied with.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I am pleased to rise to discuss the bill, Bill C-52, an act to amend the Canada Transportation Act.

As the previous transport critic for this party during the 2008 to 2011 era, through that time I recognized that there was a great demand across the country for changes that would assist shippers in dealing with the duopoly of the rail system in Canada and the conditions that occurred.

Quite clearly, the concerns were greater among the smaller shippers than among the larger shippers. Therefore, the ones that could command the greatest use of the railway had greater opportunities to strike better deals. The problems lay in a stronger fashion with those that did not have the quantity and the continuity of freighting that would attract the rail systems.

I remember meeting with the pulse association, people who provide agricultural products that are not grain but beans, soy, peas and that measure of agricultural product, which is growing considerably in Canada but in smaller batches in different areas across the country. Their problems with getting their product through the rail system were paramount to them. They said they could not deal with the system as it is right now. The types of producers, the locations of those producers across the country and the nature of the product meant that the rail companies were not attracted to them as customers as much as they were to larger producers.

I will be very interested to see how it will play out across western Canada now with the loss of the single desk for grain, how that will play out with small producers, smaller aggregations of those who are moving grain.

The Conservatives sold the idea of getting rid of the single desk on the basis of enabling grain to be moved to different places by the producers in a fashion that would allow them to value-add to their product. Let us see what happens when this occurs in a system where the need for freight is paramount, where we have to move the product and where farmers are not protected by the larger system that existed under the single desk. We will see what that does and how it works. I am sure the committee will hear representation on that matter as well, as it moves forward.

In looking at the rail system, we have heard a lot of talk about infrastructure. The parliamentary secretary mentioned the great investments that the government has made in the rail system. I would raise, for instance, the investment the government is making in one of the big problems with our rail system, the level crossings. There are some 1,400 level crossings in this country. They are being added to incrementally by municipalities all across the country. The Conservatives identified $27 million a year over five years to invest in level crossings.

When we do the math, that does not turn out to be something that will really solve the problem we have with level crossings. Some level crossings can cost between $30 million and $40 million to fix. These are major requirements in the rail system.

If we take a good look at it, the rail companies are not primarily responsible for what has happened with level crossings. This is a co-operative effort that extends across governments, provincial highway authorities and municipal governments. Everyone has a hand in level crossings. Why does the federal government have to play a role? The federal government can be the final arbitrator there. With the profits rail companies are making, they should be a big part of this as well.

Of course, the government does not collect taxes in a decent fashion from corporations that actually make profits, and cannot reinvest for the public good and the good of those corporations. The chances of the infrastructure issues, that is, of rail being fixed across this country, are very remote if the present spending level of the federal government continues.

I am glad that the NDP has such a strong transport critic today, one who has pushed very hard on these issues.

The service agreement review went through and finished in 2011. Members are now seeing an act in front of Parliament, Bill C-52.

The first part of the bill sets up terms and conditions for contracts for railways and shippers. If a shipper wants to enter into a contract with a rail company, it can describe the traffic to which it relates, the services requested by the shipper in respect to the traffic, and the undertaking the shipper is prepared to give to the rail company with respect to traffic for services. How will one make sure that the rail companies will be well served when their cars arrive? How will all of this fit together?

Contracts, of course, do not apply to written agreements already in place. A company that has already established a written contract with a rail company is not available to deal with this under this legislation. They are locked in.

In the case of many of the larger producers, that may be to their advantage. They do not have to renegotiate anything. The ones that provide a lot of freight movement have a deal set up.

Seeing what is happening in the industry here with the failure of the pipelines that have been proposed for Canada, I would say that we are going to see greater rail traffic carrying oil and gas products across this country. That may change the dynamics of the rail system as well. The larger producers may find themselves competing with other very large producers as well. We will see how that plays out.

The second part of the bill deals with arbitration. Once one has established a contract or is unable to agree on a contract, there is a process of arbitration. That is good because, of course, it is sometimes very difficult to come to agreements.

Small producers in a remote location are looking for the rail company to arrive in a good fashion with the cars. They are going to leave them there. The cars are going to be in good shape. They are going to take the cars away after they have them filled.

There are many variations that have to be examined in a contract between two parties that carry out this kind of work. Is the shipper going to be ready to provide the product to fill all those cars when they are delivered at the site? If they are not, is there some measure of compensation to the company for leaving the cars there longer? If the company does not supply the cars in a good fashion, is there a way to compensate the shipper, who may be backlogged at the receiving area with the other mode of transportation that caused them to bring it to the railway? These are complex, detailed issues that have to be worked out between shippers and the rail company. Of course they will require some arbitration.

What is the hammer that the company keeps under this legislation when it comes to negotiating or dealing with arbitration? Under proposed subsection 169.31(4), the following applies:

For greater certainty, neither a rate for the movement of the traffic nor the amount of a charge for that movement or for the provision of incidental services is to be subject to arbitration.

There is the hammer for the company. It can set the rate for the cars sitting in the dock. It can set the rate for the movement of the material out of the area. It can decide the nature of the movement, the volume of the movement taking place, and how cost effective that is with its service charges that fit over top of that. All of those issues are not going to be subject to arbitration.

The company holds a very strong hand there when it comes to exactly what it is going to cost to do the work. Still, the arbitration should take into account the rates. In any business arrangement, the rates are very important. They cannot simply say “We are going to have a service contract, and you do not get to talk about the rates. The only thing you can talk about is what is going to happen”. Those two things have to work together.

The government, by excluding that from arbitration, has given the rail companies a very strong position in Bill C-52. I hope that it will be seen in committee as something that needs to be worked on. There needs to be some work done to make this fairer, more equitable to all of those concerned, especially the small producers across this country who do not have the leverage to make the deals, as was the case even before this bill.

After this bill there should be some leverage for those small companies so they can make sure that services are being provided to them in a good fashion at a reasonable rate. That is what we should be doing in government, being fair to both sides. The basis of government is trying to come up with solutions that work for all parties.

Some of the other concerns here also fit with small companies, the small shippers, such as the degree of difficulty they may have in working in arbitration, the timeframes that are outlined, the process that is outlined, all of which are very complex and very expensive. The costs will have to be borne by the shipper. The cost of the arbitration is to be split equally between the shipper and the rail company in all cases, according to this legislation.

How does that work? If the arbitration is in favour of the small shipper, they still have to pay the piper for the work they have done.

What I would like to see in this is some means of establishing rates and conditions that would apply across the country, so that some kind of equivalency develops among the arbitration systems and that, across the country, what is decided in one place has some relevance to what is going on in another, so that we have some fairness in the system.

I do not see that yet. Perhaps some of my Conservative colleagues who may have some ideas about that may want to express them. I think it is more likely to be taken up in committee, however. This bill needs a lot of work.

What is the record of this majority Conservative government in offering up amendments? I have to say it is abysmal. It is totally abysmal. These people do not believe in amendments. The Conservatives believe that what they put forward is good enough for the country. They are in charge and they know what is right. This is what has happened with almost every single piece of legislation that has gone through the House to date.

Where are the amendments? When I worked in the transport committee, when there was not a Conservative majority, we worked together, we looked at the issues and we came up with solutions that were mutually agreeable. Then we created amendments that we all agreed with.

Transportation is a fundamental and vital service to this country. It is not something that should be dealt with by parties working against each other. I was always very pleased with the previous transport committee chair, the member for Brandon—Souris, who was very fair and understood that transportation was a vital and important part of this country, which needed to be expressed as such.

This bill should be amended. It should be considered very carefully for what it actually accomplishes and what it should accomplish.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I would like to thank the hon. member for the Western Arctic for his comments, particularly toward the end of his speech, where I think he made one of the most important points in this debate.

There has been great frustration among the Canadian public on their lack of voice in the enactment of legislation by the government. Certainly, we have heard it in the Idle No More movement.

As the hon. member said, what could be a more important service than transportation for all Canadians?

Of course, our critic for transportation has done a great job in trying to push through a national transportation strategy.

I wonder if the member would speak about who he thinks should be able to come forward to the committee to express what additional needs they have, what changes should be made in the legislation and what kind of process should occur to ensure that the legislation does reflect the needs and interests of all users of the rail lines.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I think the committee could perhaps start with the witnesses who could talk about equality and fairness within the system. We might actually want to look at economists, perhaps some people who study these issues around the world, how rail companies work in this fashion, so that we could see clearly what is fair, what is likely to be fair, and how to present that in committee in a good fashion. I would say that would be a first step for this bill: to examine the ethics of the bill and how it would apply to the different parties who would be affected by this.

Then we would want to take that understanding and go to the actual shippers and make sure that we cover the wide variety of shippers in this country, geographically and by the type and size of material they are moving through the country, because they are all very significant players.

I would say that would be an interesting formation of the committee. However, whether the committee is ready to put that kind of effort into this remains with that committee to decide.

[Dean Del Mastro, Conservative, Parliamentary Secretary to the Prime Minister and to the Minister of Intergovernmental Affairs]

Mr. Speaker, I know that the member made a couple of points, including a couple I took issue with, not the least of which were his comments on corporate taxes and corporate tax rates. Of course, railways, CP and CN, are among the most heavily invested in by funds that are seeking solid, stable investments, such as OMERS pension fund and the Ontario teachers' pension fund and Canada pension plan and, of course, a wide range of private sector pension funds that look after members like the Canadian Auto Workers and so forth.

When the government takes less from those companies, it actually builds up their investments and pension portfolios, which is important, because we all have a stake in that, each and every Canadian in this country. Therefore, it is important that we do that.

He also mentioned that the bill would not get into rates. One of the reasons the bill does not get into rates is that the sector is already regulated in that regard. The industry actually has North American standards with respect to freight rates. These are put onto charts and railways actually work off those charts, and rates can be determined very easily as a result.

It is important that we have that because what we really have in many cases is a virtual monopoly. However, it is competitive from the standpoint that it is regulated and the government already looks at standardized rates for all North American railways.

One of the things that is really important to recognize, which I think the member does have an interest in, is that when we are looking at new development and how we are going to encourage investment in, for example, plan nord in Quebec or the Ring of Fire in Ontario or all of the natural resource wealth that extends into the territory the member represents, how are we going to ensure that these companies are prepared to make the investments, and the service requirements are met by these companies in those areas so that we can in fact explore these resources for the benefit of all Canadians?

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, there were two questions. I will attempt to deal with the first one.

Of course, without government raising money, we cannot reinvest in things that require investment to increase productivity. If we increased productivity in the rail lines, we would then increase the profits of those rail lines. They could provide that to their shareholders.

There is a symbiotic relationship among all the things we do in this country. There is no separation into hard and fast units. Rail, and the way it has developed in Canada, has engaged most segments of our society. That is why government has a very important role. However, if government does not collect the money, it cannot invest. It is pretty straightforward.

There may be North American rates. However, quite clearly, there is also the provision of incidental services. I am sure that there is a lot of fudge room within those rates. Nothing can be delivered at the same price in the same time. Volume counts. The type of delivery and the conditions make a difference. All these things add to cost or take away from cost. To not have them in arbitration, to not have the finesse of the system available for arbitration, I think is something that will inevitably lead to abuse.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, to follow up, the member said that the freight rates should be going to arbitration. The first thing that comes to my mind is the importance of the arbitrator and how that arbitrator might be selected. I wonder if he could further expand on that point. How would he like to see an arbitrator, who would deal with issues that come out of Bill C-52, selected or appointed? How would he envision that working?

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I think arbitration, by its nature, means that we want someone who understands the nature of fairness within the system. To have that, it has to be someone who fully understands the system but is not engaged in one interest or the other. There must be continuity, with the same logic applied to different areas of the country and the same methodology, which comes from continuity, in arbitration. I would say that if this system is going to be successful, it needs those qualities within the arbitration system. One is a dedication to fairness and the second is continuity.

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am pleased to speak to Bill C-52. I will be sharing my time with the member for New Westminster—Coquitlam.

Rail transportation is of particular interest in my riding. First of all, I would like to say that my party and I support this bill at second reading.

[Some hon. members]

Oh, oh!