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

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

Mr. Speaker, I would like my colleagues to take their conversations outside, as it is very distracting. That is all right, I will continue even though I have lost my concentration.

We know that—

[The Acting Speaker, Conservative, Barry Devolin]

Order, please.

The hon. member for Saint-Hyacinthe—Bagot has the floor.

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

Mr. Speaker, it is slowly happening.

[Royal Galipeau]

You are influential.

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

I am influential, as my colleague opposite stated. I will start again from the very beginning because I lost my concentration somewhat.

As I was saying, transportation is an issue I am interested in and something that is also important in my riding. I will talk about agriculture a little later. I talk about it often because it is important to me and it plays a large role in my riding.

First, it is important to state that my party and I support the bill at second reading. We know that 80% of railway users are dissatisfied with the service provided.

It is important to say that some amendments will have to be made in committee. The bill must be improved so that rail transportation really improves in Canada.

After years of discussions, the Conservatives finally introduced a bill in response to a number of complaints from rail customers that received inferior service from the major railway companies for a very long time.

I would like to go back to the speech by my colleague, the member for Chambly—Borduas. Earlier he referred to the railway as part of Canada's heritage and to the sense of belonging that people attach to the railway in Canada. In my opinion and that of the member for Chambly—Borduas, that makes it more important to invest properly in this mode of transport, a fundamentally important one in a country such as Canada, which is very large and sparsely populated.

It is also important to say that everyone must come out a winner: the railways but also rail transport service customers, such as farmers and mining companies, which are often victims of the railways' virtual monopolies. We are talking about service disruptions, delays and disturbances that hurt the agriculture, forest products, mining and manufacturing sectors, which are not compensated for the losses.

A large portion of those goods is intended for export, which is very important for Canada's economy. Those sectors must be able to rely on effective transport in order to export their goods, not to mention the fact that many goods, as in the agricultural sector, are perishable. Producers therefore cannot afford major delays or service disruptions. Their products must be exported immediately.

Shippers have difficulty obtaining fair, reliable rail transport services. Some are not even able to secure contracts with major railway companies, and those that have contracts often suffer long delays or simply do not have enough cars at their disposal.

This entire situation undermines the ability of Canadian exporters to remain competitive in international markets, particularly agricultural products markets, as I said earlier. Farmers already face numerous uncontrollable challenges. Consider weather issues, for example, such as early frosts, excessive rain or too much sun. Farmers already deal with situations that are not easy to handle. That is the case with all farmers in my riding: we never know what will happen with the harvests, whether we will manage to make it to the end or whether everything will go well. The government thus has some responsibility toward these people, who feed Canada's population, and it must assist them, in particular by guaranteeing that their goods are efficiently transported. That is already a first step.

Following years of discussion, expert panels, an attempt at mediation and consultations with stakeholders, the Conservatives ultimately had no choice but to introduce a bill in late 2012, not very long ago.

One reason this bill was introduced was pressure from the official opposition NDP transportation critic, the member for Trinity—Spadina, who does an excellent job on the transportation file. My colleague presented a private member's bill, the Rail Customer Protection Act. The government then finally moved forward with Bill C-52.

For too many years now, farmers and other business owners have been subjected to bad rail service, and Ottawa has not taken action. Bill C-52 is a step in the right direction, but it is far from being perfect, since it does not include some major demands from shippers. I think that its wording is a bit ambiguous, which could create some loopholes. That will have to be considered in committee.

The committee will also have to consider the stakeholders affected by the problems, so it will have to consult farmers, for example, as well as stakeholders from the forestry and mining industries. That would be worthwhile. As I said earlier, 80% of customers are not satisfied with the services. That is a big number. If I had a business and 80% of my customers were not satisfied, I would be on the brink of bankruptcy.

Canadian shippers deserve fair and reliable service. They also deserve to be protected.

Every year, this situation costs the Canadian economy millions of dollars. We are talking about jobs and about goods that are lost or do not make it to the right place. Every day, many industries have to deal with rotting crops, work interruptions in plants and mines, and missing cargo. This is a real problem. Clearly, it hurts shippers and, as I was saying earlier, it hurts our global competitiveness. It costs us jobs.

The current bill is a bit weak.

I have only one minute left. I always get carried away and I did not even get to half of what I wanted to say. That is okay. I will continue quickly.

I find that the bill is a bit weak. It does not necessarily cover existing contracts. That could be something to look at in committee.

I would like to close by saying that 70% of our goods are shipped by rail. That is a good reason to invest properly in this means of transportation and to protect the shippers who use this service so that they have a fair and reliable way of transporting their goods.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Speaker, we know that trucking is expensive. We need to rebuild and improve our roads. In the spring, there is freezing and thawing; it's a never-ending cycle. And so, in terms of bulk shipping, the railway really seems to be an ideal solution for the future and for the economic development of a country such as ours.

Does the hon. member not believe that a solution for the future could be a modern and efficient means of transportation, such as a modern and efficient railway that could be rebuilt from one end of the country to the other if we would choose what mode of transportation we want to focus on in this country?

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

Mr. Speaker, I would like to thank the member for her very relevant question. I wanted to touch on that point in my speech, but I did not have time.

At times, companies get frustrated and have no desire to use rail transportation because it is so inefficient. These companies turn to trucking. That is not ideal for infrastructure, namely roads. Roads degrade more quickly when trucks use them over and over again.

Investing in rail transportation infrastructure is a good thing; it is also good for the environment. The number of trucks on the roads will decrease significantly if the rail system is used properly. And, consequently, greenhouse gas emissions will be significantly reduced.

The environment is an essential part of quality of life for Canadians from a sustainable development perspective. It is simple: a reliable rail system is part of a sustainable development plan.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Speaker, I still have many questions to ask. If you give me the opportunity, I will ask others.

I would like to talk about local and regional development, as well as attractiveness. There are significant economies of scale when services are pooled. A transcontinental railway was built as our country was being shaped. There were far fewer people in the country then and there was not enough money to pay for such a project. It was achieved by investing in the country's development over many years.

Can the member talk about the possible economies of scale for our small businesses and about their development if they were to use intermodal transportation, such as the train, instead of trucking?

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

Mr. Speaker, once again, I thank my hon. colleague for this very relevant question.

It follows the same principle as sustainable development and the environment, which I was talking about earlier.

For instance, eight SMEs, which have less goods to ship than a large company, could decide to get together and use rail rather than road transportation, since they are located more or less in the same place and their goods are going to roughly the same destination.

Our SMEs would be more profitable, because transportation would be cheaper, faster and more efficient. It would also be easier for them to develop a market across the country and maybe even internationally than if they used only road transportation.

And getting back to a sustainable development perspective, this would also reduce greenhouse gas emissions.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I rise today not only as the member for New Westminster—Coquitlam and Port Moody but in my capacity as western economic diversification critic for the NDP.

Like my NDP colleagues, I will also be supporting Bill C-52, an act to amend the Canada Transportation Act, to send the bill to committee for further discussion. We do, however, have serious concerns with the bill as my hon. colleagues before me have pointed out, including the member for Trinity—Spadina, who is the NDP transportation critic. She outlined some of those concerns in her speech earlier.

Rail transport is the backbone of the Canadian economy. More than 70% of all surface goods in Canada are shipped by rail, so we can see how critically important it is to get this right. Eighty per cent of service commitments for agricultural rail customers are not met by rail companies because of issues such as delays, insufficient number of rail cars, inefficiencies and unreliable service. The rail freight service review found that 80% of shippers are not satisfied with the services they receive. Eighty per cent is a significant amount. Over three-quarters of all customers have a concern.

I just want to talk about the importance of rail to my riding of New Westminster—Coquitlam. Specifically I am talking about Port Moody where we are celebrating 100 years of history. Just this weekend I was at a book launch hosted by the Port Moody Heritage Society for Tracks in Time. Obviously the title is in reference to trains and the influence that trains have had on the development of our community and on the west coast, and in fact, of all Canada. The rail system is of critical importance to our community. We celebrate the Golden Spike festival in Port Moody every Canada Day. This just points to how important trains are to our community.

Talking about the importance of trains not only to the community but to the rest of my riding, it is important to focus on the efficiency and the service that trains provide to Coquitlam, Port Moody and of course New Westminster. It is important for the economy not only in my riding but in western Canada and indeed all of the country. It is critical that we look at ways to improve train service in this country.

I want to provide a bit of background. I know other colleagues have commented specifically about what the bill would do and would not do and some of its shortcomings.

Rail freight customers from farmers to mining companies are suffering from the virtual monopoly of power of the railway companies. In most parts of the country shippers cannot choose between rail service providers because they only have access to either CN or CP. Even in a few places where both rail companies provide access, one is virtually priced out of the market, leaving the shipper with no real choice. Shippers routinely suffer from service disruptions, delays and various forms of non-performance by CP and CN. Deliveries and pickups are not done on time or skipped completely. Frequently the number of ordered rail cars is not matched by the delivered rail cars and sometimes cars are damaged.

A broad range of industries are affected by the situation, especially agriculture, forestry and mining. In western Canada these industries play a significant part in the economy. Chemical and automotive businesses in the rest of Canada are also affected.

A large portion of these goods are destined for export. Lacklustre rail services are thus hurting Canadian exporters' abilities to compete in global markets. For example, soybeans from Argentina enjoy a competitive advantage in markets such as Japan and China because they are delivered faster and more punctual than soybeans from Canada, despite the fact that the total distance covered is significantly shorter for products from Canada. For years shippers have been unhappy but no concrete action was taken by the Conservatives. Since 2007 a “talk it out and wait” tactic was employed, starting with the promise of an expert review panel.

The rail freight service review started in 2008. The independent panel tabled its final report in early 2011. Half a year later, in the fall of 2011, the Conservatives initiated a mediation process that did not yield any results. Presumably, with the tacit backing from the Conservative government, CN and CP were unwilling to make any meaningful concessions. The mediation process, led by retired Conservative politician, University of Calgary Chancellor Jim Dinning, failed. Dinning released a report in June 2012.

The Minister of Transport promised government legislation on the topic to be tabled in the fall. Parallel to the end of the mediation process, the member for Trinity—Spadina tabled a private member's bill, Bill C-441, the rail customer protection act, in June 2012. The private member's bill, coupled with advocacy work from the shipping community, put pressure on the minister to follow up on his promise and actually table legislation.

The shipping community is organized in a coalition of rail shippers. The coalition is a loose and rather informal entity. Organizationally this group is attached to the Canadian Industrial Transport Association. The coalition consists of 17 members that represent mining, forestry, agriculture, chemical and manufacturing industries. One of the original 18 members repeatedly has been brought up in the U.S. Senate, both on the floor and in committee without decisive legislation as of yet.

The surface transportation board, a federal body, is working on regulations to address pricing and service issues, while judges have repeatedly supported shippers in court cases. I just wanted to point that out.

What is the NDP are looking for? What can be specific about?

We know farmers and the mining and forestry companies have been hurting for years due to unreliable freight services, without getting any help from Ottawa. To truly address the issue and also to give the NDP leverage in rural areas, the member for Trinity—Spadina has become an advocate for strengthening the shippers' position. She has been very active on this file.

The NDP position is quite simple. We are standing with business and exporters and we are committed to getting them the fair and reliable freight services they deserve. That will have an impact on not only western Canada but on the entire Canadian economy.

The member for Trinity—Spadina has worked on this issue, including forging ties with key industry associations and tabling an NDP bill. One of the goals is to continue to grow those ties with the NDP as the party that stands up for legitimate business interests and pushes back against market power abuses.

While Bill C-52 falls short on a number of stakeholder demands, it is prudent to support the bill as the shipping community is largely content with the legislation. They are also quite desperate to see some legislation address their issues.

The task is now to address the shortcomings and strengthen the bill to the benefit of the shippers and also to promote our involvement with the entire process. That is what we are doing here. We are trying to highlight some of those key issues that need to be worked on at the committee stage.

Bill C-52 will only cover new service agreements, not existing ones. Many shippers will be stuck with unreliable and unfair services, without any conflict resolution process in the case of violations to existing service agreements. Arbitration is only available for shippers that are negotiating new contracts.

Instead of offering quick and reliable help through conflict resolution to shippers, Bill C-52 would give arbitration a narrow scope for a small group of shippers and the outlined arbitration process could end up being too costly for companies like the Canadian Propane Association and others.

I want to finish by letting the House know there are others that support the position we are bringing forward. They are key stakeholders, like agriculture, mining and forestry industry associations, that have been calling for freight legislation for years, for example, Pulse Canada, Grain Growers of Canada, the Forest Product Association of Canada and the Mining Association of Canada.

In conclusion, I want to say that we are in support of it at second reading. The NDP will push for amendments at committee stage to protect shippers from the abuse of market powers through the right to comprehensive service agreements and conflict resolution processes.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I was very pleased to hear the critic for western diversification talk about the importance of shipping and this legislation for western Canada. It was really great to hear the member speak about how important it is for our economy. He cited agriculture and potash mining, which is in my riding. I was very pleased to hear the importance he placed on the economy.

Looking at the whole picture of rail, would he deem the railway an essential service?

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, the minister's question is critical. This is obviously a critical component of the economy. We have legislation that supports collective bargaining and the right for that to happen freely. We want to see fair agreements and processes in place that are democratic. We want to let those processes take their natural course.

We are definitely supportive of collective bargaining. We want to ensure that it is not just the companies getting the profits, which in CN and CP's case, are sometimes rather large profits. We also want to make sure that our workers are treated fairly, are properly looked after, have their fair share and have the right to be involved in the economics we enjoy in transportation field.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, Bill C-52 is there primarily because of concerns expressed by those individuals and stakeholders in the shipping industry, whether they are in agriculture, forestry, minerals, chemicals, fertilizers, oil and gas or industrial and other types of manufacturing. It is a fairly extensive list of individuals. Small and large businesses have seen this great imbalance that does not favour the shippers. This became apparent to the Liberal Party in 2007, when the stakeholders came forward saying that they needed to see some form of legislation. They came to the table and asked the government to do something.

One could argue that the bill before us today is a very small step, but it is a very important step. The issue is the degree to which the government is going to be prepared to accept amendments to improve the bill so that all members of the House enthusiastically support it. Would the member provide comment on the importance of the government listening to the stakeholders once the bill gets to committee so that we can improve it?

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, it is a critical question, because we are hearing a large degree of support for moving the bill forward to committee for further discussion. We have not heard a lot of comment from the government side of the House on whether the members would be prepared to listen to the opposition to hear the concerns raised here.

I am hearing some degree of support. There may be an indication of support for listening to the comments we have raised. That is critical.

The member also mentioned small and medium-sized businesses. It is critical to mention that they are really the economic engine of the country. They also need to have a stake in this and have their concerns listened to and legitimately brought into this process so that this legislation reflects their ability to move goods across the country.

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, I must say, I have rather mixed feelings as I begin my speech, because I feel like I have become an expert in the moonwalk, that dance move that makes you look like you are going forward when in fact you are going backwards.

When I first learned of the problems in the area of rail freight transportation, I had the impression, given the response and the private member's bill introduced by my colleague from Trinity—Spadina, that we were moving in the right direction. Today, however, when I see what is in Bill C-52, I really feel like we are taking a step backwards. Nevertheless, there are enough things in this bill that we do agree with for us to support it at second reading. In committee, we will try to make some changes and some significant improvements.

It is important to note that in 1995, there was a re-engineering and modernization movement that led to the privatization of CN and CP. That is no secret. A neo-liberal ideology prevailed over an objective analysis of the facts demonstrating the importance of this service, which is crucial to Canada's economic development. Although railways remain publicly owned in many countries, here in Canada, it was decided to go for broke, and since then, we have seen the privatization of profits and the socialization of costs.

Balance sheets and recent decisions relating to public transportation show beyond a doubt that the return paid to shareholders takes precedence over developing business services and moving goods and people. The reason I refer to moving goods and people is that a choice was made to prioritize shipping goods over carrying people, something else that is uniquely Canadian. Canada is one of the rare countries to have made that kind of choice.

I will leave it to my colleagues to imagine the passenger transportation challenges that await us in the years to come given that the coalition of private shippers has been complaining for years about the poor quality of the services they receive, and they are the priority clients.

Rail shipping is the backbone of the Canadian economy. Over 70% of all goods shipped by land go by train. The reason is relatively easy to understand: you do not need a university degree in geography to see that in our country, rail shipping is often bulk, and it would be difficult to replace it with shipping by truck. And shipping by boat, which is sometimes more economical than by train, is not available everywhere, for fairly obvious reasons.

Canada was built by the train, and the railway is a vital link between communities in an enormous country. So we might be surprised at the present state and poor quality of rail shipping services. The Conservative government is not the only one responsible for this situation, but it is guilty of not tackling the problem head on in time to rectify this situation.

Day in and day out, the Conservative government claims to be working for the Canadian economy, but everywhere in the country, businesses are suffering from unreliable service, the result of which is hundreds of millions of dollars in economic losses every year. In addition, poor service leads to higher prices for some goods, chemical fertilizers being one example.

To put it more simply, over 80% of rail shipping services customers are not satisfied with the services provided by rail carriers—in other words, nearly everyone. This is 80% of loyal customers. MPs may have experienced this themselves, as customers of a store or a business. They may have started by getting excellent offers so they would become customers, but as soon as they became regular customers, they were taken for granted. And then their relationship gradually deteriorated and all the benefits were offered to new customers to expand the customer base.

That is something we see in Bill C-52, when it says that agreements governed by the new law will be made only with new customers, new contracts. And so anyone who has been using the services for years, and who is a long-standing loyal customer—if we can talk about loyalty in the case of a virtual monopoly—will not have access to the same rules that Bill C-52 seeks to put in place.

Clearly, there is room for improvement. We could make these improvements in committee if the government would be open enough to come to the table and participate in meaningful discussions and listen to the best suggestions to get the best bill possible.

I would like to come back to the fact that 80% of customers are dissatisfied. Something had to be done and something still urgently needs to be done, but the Conservatives clearly have not done anything because this matter has been dragging on not just for weeks and months but for years.

Why have the Conservatives taken so long to do something? Here is what I think may be happening.

First, rail freight customers are often farmers or mining companies. These customers have to deal with large railways that have a virtual monopoly over rail transport. I spoke about this earlier.

In most regions of the country, shippers cannot choose a rail transportation company because they have access to only one or the other. Even in cases where the two railway companies are present, the competition struggles to play the role it should and to influence the basic economic principle of supply and demand.

Why do we now have to legislate? Why can the stakeholders not come to an agreement among themselves? In all likelihood, CN and CP benefit from the tacit support of the Conservative government and, in that context, they are not at all prepared to make real concessions.

The result, as has been mentioned, is that 80% of rail freight customers—shippers—are not satisfied with rail freight service. So, of course, they have asked the government to take action and to introduce legislation that would require CN and CP to reach agreements on the level of service provided to shippers. After years of empty words, the Conservatives are now being forced to act as a result of pressure from the shipping community and the NDP.

Under duress, the Conservatives finally introduced a bill designed to solve some of these problems after the NDP critic's bill was introduced last spring. That bill, which was entitled the Rail Customer Protection Act, was much clearer and covered all customers.

The government is using half-measures. Quite frankly, although the Conservatives' bill is a step forward, it is a weak step. Here are some reasons: the protective measures do not cover existing contracts between shippers and rail transport companies; the bill offers only a limited arbitration process for unsuccessful negotiations of new contracts; the arbitration is available only for shippers who are negotiating new contracts instead of providing fast and reliable help for all shippers; Bill C-52 will cover only new service level agreements, not those that already exist.

Furthermore, the fines mentioned in Bill C-52 would go to the government and not the shippers. We could talk all night about the amount of these fines, which seem a bit weak to me for such big companies. The ability to interact, discuss and negotiate is undermined when the fines go into the government's pocket, which supports what I was saying earlier that, rightly or wrongly, CN and CP probably feel like the Conservative government is in their corner.

I will move on from what is missing from the bill, since I am running out of time. I will no doubt have an opportunity to speak more to this in committee. I have a short conclusion.

Rail transport is not the only file on which the Conservatives have been dragging their feet. They implemented new railway safety measures. They made cuts to VIA Rail Canada and prevented the introduction of high-speed rail in Canada.

The Conservatives simply do not give Canada's rail network the attention it deserves.