Bill C-8 (Historical)
An Act to amend the Canada Transportation Act (railway transportation)
This bill was last introduced in the 39th Parliament, 2nd Session, which ended in September 2008.
Lawrence Cannon Conservative
This bill has received Royal Assent and is now law.
This is from the published bill. The Library of Parliament often publishes better independent summaries.
This enactment amends the Canada Transportation Act with respect to railway transportation.
April 2nd, 2014 / 7:55 p.m.
President, Freight Management Association of Canada
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.
December 9th, 2010 / 10:10 a.m.
Brian Storseth Westlock—St. Paul, AB
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.
December 9th, 2010 / 10:05 a.m.
Director, Canadian Federation of Agriculture
December 9th, 2010 / 10:05 a.m.
Executive Director, Pulse Canada
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.
December 9th, 2010 / 10:05 a.m.
Brian Storseth 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?
May 8th, 2008 / 11 a.m.
Lawrence Cannon 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.
Statements By Members
April 15th, 2008 / 2:05 p.m.
Ken Boshcoff 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
April 11th, 2008 / 10:25 a.m.
Massimo Pacetti 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.
April 10th, 2008 / 10:55 a.m.
Guy Lauzon 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.
April 10th, 2008 / 10:55 a.m.
Brian Storseth 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.
April 1st, 2008 / 11:40 a.m.
Vice-President, Trade and Competitiveness, Forest Products Association of Canada
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.
April 1st, 2008 / 11:35 a.m.
Vice-President, Trade and Competitiveness, Forest Products Association of Canada
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.
April 1st, 2008 / 11:10 a.m.
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.
March 5th, 2008 / 5 p.m.
February 28th, 2008 / 3:50 p.m.
The Speaker 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-44, An Act to amend the Agricultural Marketing Programs Act—Chapter 7.