Agriculture Committee on March 31st, 2014

[Scott Streiner]

I would make a couple of points. With respect to the order in council, the legislation actually does two things specifically that are connected to the order in council that was issued. First of all, it extends the million tonnes per week requirement from the automatic expiry date of 90 days after the order was issued through to the end of the crop year. The order in council in effect is extended to the end of the crop year.

Second, the legislation confirms that the order in council that was issued under subsection 47(1) of the CTA is valid. Just in case there was any legal ambiguity, it confirms the validity of that order in council.

Third, it creates the ability for the Minister of Transport and the Minister of Agriculture and Agri-Food to establish similar volume requirement on a go-forward basis if circumstances demand it. At the end of the crop year, the current million tonnes per week requirement will expire, but the ministers can set a requirement without the need to resort to an order in council for volume requirements on a go-forward basis. Those may cover the entire next crop year, they may cover part of it, or they may cover none of it if the ministers determine that it's not required. Now there is a legislative provision that will allow for ministers to take that sort of action without resort to an order in council and on the basis of advice provided to them by the Canadian Transportation Agency, which in turn is required to consult with supply chain partners.

Those are the main differences. The only other thing I would underscore, and it comes back to an earlier question about the $100,000 per day, is that under the order in council the fine would apply upon conviction, as I said earlier, which requires prosecution. Under the legislation it will be an administrative monetary penalty, so it will be easier to apply in the event of non-compliance.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Very good. Thank you.

Mr. Meredith, is there anything you want to add?

[Greg Meredith]

No, I think that's a fulsome answer. [Technical Difficulty—Editor]...his last observation that was quite important in terms of speed and responsiveness of the system to a breach of obligation.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you.

Let me ask another question. There has been discussion about what's commonly known as the revenue cap but is accurately known as the maximum revenue entitlement, or the MRE. I'm wondering if you can explain to the committee how the MRE works.

I know the legislation does not involve itself with the MRE, so you may or may not have a comment on that, but I think it would be useful for the committee to know how it works.

[Scott Streiner]

The MRE is actually set through a fairly complex formula, which is in the legislation but is actually set on an annual basis by the Canadian Transportation Agency.

The purpose of the MRE is to manage, to limit, the amount of revenue that a railway can make per tonne, per amount of grain moved. It is sometimes misunderstood as a cap on total revenue. The railways will continue to make money on grain moved if they move more grain. The railways have argued that because the amount they can earn on a per tonne or a per quantity basis is limited, it still affects their economic incentives to surge capacity into the grain sector. But it shouldn't be misunderstood as preventing them from earning more money after they've moved a certain amount of grain.

That's the MRE as it currently stands. As I say, it is set each year by the CTA. As the minister noted earlier, any excess earnings are put into a special fund and used for research purposes. The MRE is not, as you note, addressed in the current legislation. However, given the fact that this issue has been raised in the past in reviews of the legislation, there is every reason to expect that it would be raised by stakeholders in the context of an accelerated CTA review.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

I agree with you. We did a study where we had witnesses before this legislation was tabled in Parliament, and there was talk about the revenue cap, or the MRE. I would say the stakeholders were of the opinion that the impact of the MRE, or the existence of the MRE, was not in fact adversely limiting rail movement of grain, but it was other factors that were. I'm sure we'll come back to this when we have other witnesses come in this week. Even though it's not in the legislation, I think you're right that it might be covered in the future review of the CTA.

[Scott Streiner]

I should probably clarify that the assessment of the MRE's impact, not surprisingly, varies depending on whether you speak to shippers or railways.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Exactly.

[Scott Streiner]

This is probably one of the reasons that, given the complexity of the formula and the divergence of views, a more careful look at the issue through a consultative process is appropriate.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Lemieux.

We now go to Madam Brosseau for five minutes, please.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I'd like to thank our witnesses once again.

I think we could all agree that we're all on the same page. We have to get this done and get it done right. I know we're all willing to work longer hours. We'll decide that when the committee sits in camera shortly after this. One thing I really want to make sure is that we're going to work hard, and we're going to have witnesses come in. We want to make sure that this will be the best legislation possible. A lot of people, even some Conservative members, have come out and said that we need to do more, that we need to amend this bill. I just want to make sure that we can do this and work together to get it done right.

I want to go over the timelines. This is a big framework and a lot of it is going to be done with regulations. The minister is going to have more power. I was wondering if you could give us an idea of timelines for these regulations, and when you expect these changes to be made. We're going to work hard for the next two weeks and send it off before we head out for our two weeks back home. I was wondering if you had timelines set up for the regulations so that we can get that out there as a reassurance for farmers, and also domestically and internationally.

[Scott Streiner]

I should probably preface the answer on this by saying that there hasn't been a formal decision on timelines, and ultimately, a decision on how much to attempt to accelerate the process would rest with ministers, not with officials. The regulatory process, as I think all members know, follows a number of normal stages. That process can be accelerated when conditions require it. I think both ministers have expressed a sense of urgency around this situation, but the extent to which the regulatory process would be accelerated would ultimately depend on a policy choice. In any event, any regulatory process would still go through some period of consultation and of gazetting so that the public were fully aware of what the government intended to do.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

This could be another few months. The ministers were adamant that this has to be done as soon as possible. If all goes according to plan, it should still be approximately a few months.

[Scott Streiner]

Highly accelerated regulatory processes can be very quick, but I would not want to quantify how fast.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Okay, you don't want to comment on that.

[Greg Meredith]

Maybe I would just add to Scott's response that there are certain pieces of the legislation that do come into force very quickly.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Yes, order in council.

[Greg Meredith]

The portion of the act that overtakes the OIC, for example, to sustain the volume requirements comes into effect with the legislation on April 7, or the first Monday after royal assent. That facility will be in place right away. Then there are ministerial decisions that can be taken to seek exemption from pre-publication in the Gazette process, which would speed things up as well.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Would compensation for farmers be decided in regulatory measures, if that were to come to fruition at the discretion....?

[Greg Meredith]

From shippers to farmers, yes.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Okay.

I was wondering if you could comment on mandatory price reporting for better transparency. We know we have that in the States. That's something I think a lot of people have been calling for here in Canada. Is that something that has been considered, floated around?

[Greg Meredith]

Price discovery is really very important for farmers. It is a bit of a challenge because, as you know, a farmer at any given time could have multiple crops on his or her field. That means they have to do multiple investigations of futures markets, port prices, and inland terminal prices. This has been talked about in the sector for some time, but it is not contemplated in this legislation.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I was wondering about interswitching distances, from 30 to 160. How did you get to 160 exactly?

[LaVar Payne, Conservative, Medicine Hat, AB]

[Inaudible—Editor]

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

We had to include LaVar's riding.

Yes, I got it.