Madam Speaker, this is a very important piece of legislation, one that has had its roots way back in the first session of this Parliament and perhaps even further back than that.
For years the country has debated the future role of its transportation sector generally and quite clearly since the mid-1980s, 1986 or 1987, the future of rail. As everyone knows, it was on the promise of access to markets by way of rail that was one of the most compelling reasons the colonies, upper and lower Canada and the maritime provinces, came together and formed Confederation.
The debate may go on for a long time as to whether that ribbon of steal was actually a cause for the expansion of the economy like we wished to see in the Atlantic provinces, but I will not argue that today. I am sure my comments have been heard in that regard in other debates in the past.
Suffice it to say one of the things that has happened in the last number of years is that we are no longer dealing with a domestic market in the transportation sector which we can protect. Protectionism has gone the way of the dodo bird. In the last dozen years we have seen an explosion of competitiveness.
Canadian businesses have had to become more competitive. It does not matter which sector we are dealing with. We have had the free trade agreement, we have had the NAFTA, we have had the GATT. There have been agreements under TRIP on intellectual property. Every country that seeks to expand its economy has had to look outward.
The transportation sector is really no different. In the past we have hung our hat on public interest and public policy in order to protect these industries. There were so many regulations dealing with rail and air transportation that they would literally choke a stable of horses, not just one horse.
Clearly one of the things this government and the previous government, to give it a little credit, saw was there had to be a reduction in the regulatory burden in the transportation sector.
In 1987 when the government came out with the new National Transportation Act there was great debate about whether when we deal with rail line abandonment or rail line sale the argument would still be made that a line should be kept because it was in the public interest. I have debated that with myself and with others over the last number of years, in particular since I was elected to the House of Commons in 1988. One of the concerns I have had is that we still are able to maintain a national rail line from coast to coast.
One of the problems we have had, however, in the rail line is that both lines, Canadian National, a crown corporation recently privatized, and Canadian Pacific, were not as competitive as they had to be. One of the reasons they were not as competitive as they should have been is they had some protected markets.
They had an onerous regulatory burden that in my view led to some industries' in Atlantic Canada being less competitive on the international market, in particular the U.S. market, than they had to be to maintain their market share, to do value add in their industrial sector and continue to employ Canadians.
What has happened in the rail sector? Over the years we have seen both of our national rail lines, Canadian Pacific and Canadian National as a crown corporation, losing enormous amounts of money. It seems that when the economy goes into a cyclical downturn, and we can almost project when those things will happen, the bit of money made by these two very large and important companies during the good years is more than lost, many times over, in the bad years.
Over the last number of years both of these companies in the bad times have lost over $4 billion. For Canadian National Railroad, which was a crown corporation, the Government of Canada repeatedly has had to recapitalize that business.
When we came into power we said we had to have a national rail system. I come from a part of the country where a national rail system is essential. It has been there for many years. Unfortunately that national rail system has not allowed my part of the world to be as competitive with its industries as it should be.
Perhaps it is because both those large railroads, Canadian National and Canadian Pacific, when they were covered and wrapped in the warmth of burdensome regulations which protected both of their markets for that sector of the transportation business did not allow my part of the world to be as competitive as it should be.
A few years ago when I was in opposition I was fortunate enough to visit Hamburg. I visited with some interests promoting rail lines, both CP and CN. The thing that absolutely astonished me was when I looked on the wall of the office there was an ad from Canadian National: "Canadian National, serving Canada from Montreal to Vancouver". Somebody had forgotten to tell them there was another part of Canada, the closest part of Canada to Europe, Atlantic Canada.
The rail line at that point was still in place from Sydney to Montreal and somebody had forgotten to market the line. CN, it might be argued, in the past had selectively and intentionally demarketed the line from Montreal east.
Then this bill came in. In the past session of Parliament it had a different number. In this session it is Bill C-14. I was fortunate enough to sit on the privatization task force of CN, commercialization as we called it at the time. One of the things we heard over and over again when we spoke to shippers, when we spoke to provincial ministers, provincial governments and municipalities is that if rail is to continue to have relevance two things had to be done.
First, we had to recognize that rail in Canada could no longer be protected from outside forces, in particular the United States. Rail in the United States had undergone a renaissance. It had by and large been privatized. It had gone through shrinking and now is in an expansion mode.
It had been recapitalized primarily by the private sector and was competing on a daily basis through its connections with U.S. ports, particularly on the east coast but also on the west coast around Seattle and on the south Pacific coast around San Diego for Canadian bound traffic.
If the Canadian transportation sector in rail was to remain competitive, something had to change. CN again last year had a good year, it made some money, but that has not been the recent history of CN. It was clear to me that within a very short period of time, if it was still a crown corporation, CN would have to dip back into taxpayer pockets and would have to be recapitalized.
Quite clearly the government does not have the funds to do that. Members from all sides, particularly from the Reform Party, like to tell us all the time we have to accelerate our withdrawal from certain areas the government has traditionally supported. We have to leave it up to market forces. I believe that has to be the case.
The change in the regulatory burden the bill sets is important. When dealing with some aspects of rail line abandonment or conveyance in the past under the old bill there were over 200 different types of initiatives needing government approval. The new bill drops it to 40 or 50, in that area.
Reducing the regulatory burden means companies that are regulated will be more efficient. More than that, by putting this bill into place and by reducing the regulatory burden, by making it easier for short lines to be established in Canada, we should be able to reduce the overall cost of rail transportation. We should be able to make businesses that rely on rail transportation more competitive.
I come from a part of the world, around Atlantic Canada, Halifax, which has a brilliant future. In Atlantic Canada our future, particularly in Nova Scotia, will be based on our ability to trade. It will be based on our ability to very quickly let go of industries which are no longer competitive, which have had to rely for far too long on government support to maintain the jobs.
We have to find out what we can do best in a place like Halifax. In Halifax the thing we will do best is trade. Before Confederation Atlantic Canada and her ports were among the busiest in the new world. They were busy because we traded. That is why we were there. We had the best port in the world, the port of Halifax. It does not require icebreaking or dredging, but in order to get to its markets it requires a rail line and a road transportation system.
Provincial governments work on their road transportation systems. There have been many announcements in New Brunswick. The premier announced in the last year over $350 million in highway construction.
In Atlantic Canada, in Nova Scotia, we have had to refocus our efforts on what we do best, utilizing our location. In real estate they say the most important thing is location, location, location. At the port of Halifax location is our most important asset. We are the closest ice free port to the huge European market. We have a skilled workforce. We have plenty of industrial land. We have a reasonable taxation regime; it is not an onerous burden.
Nova Scotia is the only province that does not charge provincial tax on diesel fuel used in rail. In Nova Scotia we are trying to refocus.
When the privatization of CN first came to the task force, I admit I had grave concerns. I still have some concerns. CN had to be privatized. CN had to rely on market forces and it has to be as
competitive as it could be to keep the business it has to keep for its new shareholders.
Privatizing CN also meant that CP, its main competitor in Canada, had to become more competitive. Those two rail lines becoming more competitive with each other also means they will be more competitive with other modes of transportation and other rail lines which are capturing Canadian bound traffic through U.S. ports and running over U.S. rail lines.
Deregulation had to take place. We had to take that onerous burden off both those rail lines. This bill seeks to address some of the concerns of an onerous regulatory burden. I have watched what CP has done in Canada. I am not going to criticize it but CP has made a very strategic decision to abandon its eastern Canadian operations. It had a rail line that went into the port of Saint John. That rail link was essential to the port generating the net revenue and the jobs it had done in the past. The port of Saint John is not doing the business it had been doing when CP still had a rail line.
CP made a decision that it was going to go through a U.S. port of call. It bought the D and H rail line down through the United States. One of the states had given it $5 million, $10 million or $15 million to upgrade it but CP made a strategic business decision to abandon the line in maritime Canada. I have a concern that CN Rail will make the same business decision.
Clearly I would have liked to have seen in this legislation a requirement that under a privatized CN Rail for a specific period of time, be it three years or five years, the newly privatized corporation would not be able to abandon the line. If it did abandon the line, that line would have to come back to the federal government and the responsibility would lie with the federal government. Why did I think that was important during the task force deliberation? It was important for two reasons.
First I know we can compete in Atlantic Canada. The port of Halifax will be able to generate the new revenue, the new traffic required but I know it is going to take a little bit of time. It is not going to happen overnight nor is it going to turn on a dime, it is going to take some time.
My concern then and what still concerns me is that over a period of time, over the first two or three years with a privatized company with CN, decisions will be made which may not be similar to the decisions CP made and would put the very existence of that rail line in doubt.
I do not think we need special treatment in Atlantic Canada. We have to pull ourselves up by our own bootstraps and we can do that. The port of Halifax is experiencing a growth in traffic, not because of government subsidy, but because we have the best darn location to be found on the eastern seaboard of North America for that type of business.
Second we are going to succeed down there because increasingly as we get more trade from Europe and as post-Panamax vessels start plying Atlantic waters as they are currently doing in Pacific waters, there are very few ports on the eastern seaboard of North America that can handle those vessels. Halifax can handle those vessels.
We have reduced our costs of operating the port of Halifax. My government has come in with a marine transportation policy which will have a local port authority established, something I have begged the previous government for. The member for Thunder Bay knows that from the past Parliament. I said to let us do what we can do best, let us compete.
My port has said that on port fees it is prepared to have user pay as long as it is reasonable, transparent and that the government provides its service that it is paying for as cost competitively as possible.
I look with a great deal of optimism on the future of rail in Atlantic Canada but those concerns I have just expressed are ones I will continue to be very vigilant about. If I do see that the recently privatized Canadian National starts talking about making decisions similar to what CP has made which would jeopardize the main rail line from Halifax to Montreal, I give a guarantee to my constituents and I give notice to my government. I will be the first on my feet in this place and any other public forum to make sure that the privatization of CN, along with the very good provisions of Bill C-14 which have reduced the owners regulations, are not used by a newly privatized company, CN.
