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

[The Acting Speaker, Conservative, Bruce Stanton]

Order, please. The hon. member for London—Fanshawe will have two and a half minutes remaining for her remarks when the House next resumes debate on this question and the usual five minutes for questions and comments.

The House resumed from February 4 consideration of the motion that Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), be read the second time and referred to a committee.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I have mixed feelings about Bill C-52. This is difficult because I want to encourage our rail services and I support the bill. However, there are significant gaps not addressed by the legislation that absolutely need to be brought forward. In committee we will try to make some needed improvements to the bill.

My colleague from Trinity—Spadina consulted several experts, including exporters, and many of them brought up the issue of price. Absent from Bill C-52 is the important and unregulated discrepancy in rail fees, for example, between CP and CN. Why are existing discrepancies not addressed in the bill? Rail freight transportation must be more efficient and effective. It needs to provide reliable and sustainable services. Unregulated rail fees are another aspect to look into and this can be done at committee.

Trains move goods and people. Trains are a key mode of transportation for Canadians in the 21st century. I myself try to travel between my riding of Notre-Dame-de-Grâce—Lachine and Ottawa by train as much as possible.

Rail freight transportation provides a service to our Canadian farmers and producers who ship their goods to market by train. This mode of transportation is essential to Canada's economic development, but does it currently benefit our farmers, producers and our Canadian shippers' associations as much as it benefits CN and CP? Does it benefit public transportation as much as it supports commercial interests?

A look at balance sheets and recent decisions at CP and CN show that these companies are run for their shareholders, not for the users of public transportation or small family businesses that rely on rail freight transportation. This decision was a choice, a choice made to serve shareholders and profits over customers. We have seen this before and we know this leads to poor quality services.

The Coalition of Rail Shippers has been stating for years that it receives poor quality services from CN and CP because of this pricing issue, and they are priority clients. Listen to the private shippers. They tell us that CN dictates the market. CN is the largest player in Canadian rail freight transportation. According to a report by the Coalition of Rail Shippers presented at the Canadian maritime conference in 2010, “CN and CPR together control 94% of the market by revenue”.

This market lacks competition, innovation and regulation. This is not the way to support Canada's economy or to encourage Canadian success. It is important that Bill C-52 gives freight shippers the right to enter into service agreements with railway companies and establish an arbitration process in the event of a dispute. This is what freight shippers told us they needed.

Rail shipping is the backbone of the Canadian economy. Transport Canada estimates that over 70% of all goods shipped over land go by train. The reason is easy to understand. In our very big country, rail shipping is often in bulk and it would be difficult to ship these large quantities by truck. Shipping by boat, which is sometimes more economical, is not available everywhere for obvious reasons.

Canada was built by train and the railway is a vital link between faraway communities on a vast land.

I would like to talk about an activity that I did in my riding. I organized a screening of a movie called Rocky Mountain Express. Its filmmaker is based in my riding. About 100 of us watched this wonderful movie, which talks about the history of the train in Canada and how it built the west of Canada. It was amazing. It really showed us how our country was based on rail.

We might be surprised by the poor quality of rail shipping services in Canada right now. The Conservative government is not the only one responsible for this situation, but it is guilty of inaction on this file. Day in and day out the Conservative government claims to work for the Canadian economy, but Canadian businesses are suffering from this unreliable service, the result of which is hundreds of millions of dollars in economic losses every year. This affects a broad range of industries, especially agriculture, forestry and mining.

The rail freight service review found that 80% of rail shippers are dissatisfied with the services provided by rail carriers. This is 80% of loyal customers. Unreliable service and high prices continue to hurt rail customers. This issue is not addressed in Bill C-52. We, the official opposition, will continue to push for fair pricing for all shippers, prices that are in line with the services received from carriers.

That is something we do not see in Bill C-52, which says that agreements governed by the new law would be made only with new customers and new contracts. Therefore, anyone who has been using the services for years, and who is a long-standing loyal customer, would not have access to the 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' inaction has been going on 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. 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 need to intervene now and legislate? Why can the parties involved not come to an agreement 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 is that rail freight customers, the shippers, are not satisfied with rail freight services. Therefore, 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 and here are some examples. 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 would 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 to the shippers.

We could talk all day 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 said earlier, that CN and CP probably feel as if the Conservative government is in their corner. The Conservatives simply do not give Canada's rail network the attention it deserves.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I would like to congratulate my colleague on her excellent speech and for having the courage to give it in the language of Shakespeare, which is not her mother tongue.

Arbitration is not an option in every situation. While this bill is a step in the right direction, arbitration should be more flexible, but still have rules. Rules are needed to provide a framework for arbitration and negotiation.

Would it not have been easier to insist that arbitration be used in every dispute?

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I would like to thank the member for his question and his comment.

As I said at the beginning of my speech, we will support this bill, which is based on the bill introduced by the member for Trinity—Spadina last spring.

But I will say again that it is lacking many elements, and arbitration is one. That is why the bill needs to be studied in committee, as soon as it gets there.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, I enjoyed my colleague's speech.

An NDP member worked very hard on this bill. For some time now, the NDP has been calling for improved rail freight and rail transit contracts. This is very important, especially for the forestry industry. People in Chapleau, Kapuskasing and Espanola count on this service and appreciate that the train still runs through their communities.

Could she explain how the bill could be of more help to industries, specifically the forestry industry?

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I thank my hon. colleague for her question.

Canada's railways are essential to the forestry, mining and agriculture industries. This bill will help those sectors manage supply and demand.

Canada is one of the only countries that has decided to put moving goods ahead of moving people. And we should continue to do so, because our country is so vast. There are some places we simply cannot get to by truck. In northern Ontario, for instance, sometimes the train is the only reliable mode of transportation.

This bill will improve things in that regard. It will give shippers that sign transportation contracts a more level playing field for negotiations with CN and CP, which together earn 94% of train revenues in Canada.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, I thank my hon. colleague for her speech.

I share her disappointment, especially considering that, as she said in her speech, the railway has been so fundamental to the history of this country. As a method of transportation, it has really lost its lustre.

I wonder if the member could describe how she sees railway transportation in the 21st century. What would it look like? What direction should it take? At the same time, this will illustrate how this bill does not meet the expectations.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

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

As I mentioned, I take the train. Unfortunately, I do not take it every week because sometimes I need my car. However, I try to take the train as often as I can when travelling between my riding and Ottawa. The train takes 15 minutes less than driving.

In my opinion, the 21st century train is not like that. It is much more user friendly and attracts clients. When I get on the train, I can take up four seats because unfortunately there is no one around me.

We have been talking about high-speed trains for a long time. There is a lot to do. But what stands out is how expensive it is to take the train right now. Two companies have a monopoly. The intent of the bill is to improve service for everyone.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, in today's context of a free trade environment and a free and highly competitive global market—hardly anybody talks about globalization anymore these days, by the way—the key is to develop a healthy trade environment that is conducive to the development a modern, flexible, solid and reliable infrastructure.

Rail transportation in Canada represents a significant share of the economy. It contributes approximately 70%. In Quebec, the figure is slightly lower, and in the rest of Canada, slightly higher. This creates another problem too: more trucks on our roads are a threat to another infrastructure. Nevertheless, approximately 70% of all freight in Canada is shipped by rail.

It is consequently essential for these freight services to be profitable not only to the rail transport companies, but to shippers as well. The cost of rail freight services is a problem for Canadian shippers.

By failing to address some of the issues surrounding fees, the bill disregards the demands being made by some groups from the shipping community. As I mentioned in my preamble, in establishing a free, highly competitive market, the freight transport link in the chain is extremely important to the development of our economic strategy, and in particular for the prosperity of some regions in Canada and Quebec.

We are nevertheless going to support the bill at second reading today. The wording of the bill amends the Canada Transportation Act to require railway companies, when asked to do so by a shipper, to prepare an offer to enter into a contract that sets out the steps it must take to discharge its obligations to the shipper. It also establishes an admittedly rather rigorous process to set out the stipulations in such a contract if the shipper and the railway company are unable to reach agreement.

That was the gist of the question I asked my colleague from Notre-Dame-de-Grâce—Lachine a short while ago, and it may not have been particularly clear. What I wanted to say was that when you end up in arbitration in a negotiation, it is because something has not functioned properly in the prior discussions. This leads to legal proceedings in which there is often a winner and a loser. It is of course difficult to find a formula for dealings between a SME shipper and a multinational that would make everyone a winner, and this will not change. It would also have been useful to look into other options through which negotiation between the parties may have been facilitated.

The bill would also amend provisions concerning air transportation, with a view to rationalizing internal procedures, as well as a number of other provisions concerning the administration of the act, which are still, I might add, exceedingly complex. When the goal is to improve the situation and enhance a sector of the economy, it is important to make things easier.

However, given that the short title of the bill is the “Fair Rail Freight Service Act”, I am skeptical about its purpose. The ambiguous wording implies possible loopholes, as I mentioned, particularly in view of this government sense of equity, which is to give more to the big fish and less to the small fry.

Let us not forget that the Canada Transportation Act is an umbrella statute that governs a number of air and rail transportation markets, and that dates from 1996. Among other things, it bases the national transportation policy on establishing free competition between carriers and different modes of transportation. When a shipper in a remote part of Canada has to deal with a specific transportation company, that shipper has no choice but to find a way to negotiate a deal with Canadian National or Canadian Pacific.

An update was therefore both desirable and justified, because the players in this economic sector have been complaining for many years about chronic problems of service inefficiency and reliability from the rail network owners.

The fact is that 80% of clients and shippers say they are not satisfied with rail transport services in Canada. It is partly for that reason that they have asked the government to act, and introduce legislation requiring the main carriers, CN and CP, to reach agreements with shippers on the level and quality of services.

In reality, shippers have difficulty in obtaining fair, reliable and punctual rail transport services. Some of them cannot even get contracts with the large rail carriers, and those that do have contracts experience significant delays more often than not, only to be told that they do not have enough cars available to ship their goods and meet demands for service at the same time.

The level of dissatisfaction is high enough to prompt important questions about respect for business on the part of the major carriers, and here I am once again talking obviously about Canadian Pacific and Canadian National. As I have said, freight transport is a vital link. In remote areas and in the regions, it is important for rail transport to operate as a means of support for a number of sectors of activity, such as agriculture and forestry. In times gone by, in a neighbouring riding in the Eastern Townships, the municipality of Richmond had a port that was one of the most important transshipment points for freight in Eastern Canada. When market forces were allowed to operate without hindrance, Richmond suffered greatly from a limited choice of carriers and inferior infrastructure—it has to be said—and there was a striking decrease in population and, inevitably, a rise in the unemployment rate.

Nor should we forget that in some remote points in our great country, and now I am talking about my part of Quebec, we are often dealing with small carriers as well as American transport firms that move freight through border areas, as is the case in my riding. Some stretches of railroad have even been sold to American companies, which ship freight by rail as far as the Canadian border.

We therefore have to admit that we definitely need legislation to regulate and consolidate an economic sector that is not just important, but often vital in many rural regions of Canada. I am referring once again to remote regions. Since I became a member of this House, I have always defended the rural regions. It is those regions that give our country its identity. When they are vibrant and prosperous, they represent the very identity of Canada. I see no problem in letting market forces operate, but we must nevertheless help small companies, small carriers and small shippers, because they generate a large portion of the total freight volume in the regions.

The poor quality of rail transport services for freight thus costs the Canadian economy, particularly our many rural communities—as I have repeatedly said—that are already seriously threatened by the downturn in manufacturing and forestry, hundreds of millions of dollars every year, and hundreds of thousands of jobs.

Many industries in Canada have to deal day after day with losses caused by deteriorating crops that have languished too long in poor conditions waiting for transport services, with work interruptions in plants and mines for lack of parts, or with shipments that are missing or lost somewhere in the transport network.

Poor rail service hurts Canadian shippers who must meet the just-in-time standard. I do not know if my colleagues know what that means. It means that if I order it today, I want it yesterday. That is how it works in goods production and business in general. Poor service also hurts our global competitiveness and costs us hundreds of thousands of jobs. It can even cause corporations and SMEs to close their doors. It has also resulted in the rural exodus, which truly saddens me.

Having said that, a large part of the supply chain of our industrial, agricultural and forestry economy relies on a transportation system that must be effective and efficient if these economic sectors are to remain competitive in the global marketplace.

That is why shippers need measures that will reassure clients that this country's carriers will deliver on rates, fulfill their contracts and have the infrastructure needed for smooth operations.

In closing, I would say that the bill clearly does not go far enough. The government seems to believe that good faith will carry negotiations. However, I would like to point out that experience has shown that, when big business holds the upper hand, the small entrepreneur must be vigilant. That is not the right approach in some economic sectors.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I thank my colleague for his speech and for sharing his passion. He noted in his speech that there was a particular situation in his riding. He mentioned that some railway segments belong to American companies. We talked about that.

I think it is important for my colleague to say how this bill will affect the situation in his riding, how it is good for his riding and what could be done to improve the situation further. If my understanding is correct, the railway lines that belong to the United States are causing some problems in the municipality. I would like my colleague to discuss that point.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I thank my colleague. The problem is that we are no longer dealing with one carrier, but rather with two or perhaps three. So we are negotiating at several levels. These are small shippers in a remote region.

If, after taking the time to negotiate contracts with the big companies, you then have to go to the American parent company that owns a rail segment to negotiate—because they have no other choice but to negotiate with it as well—and if we have no standardized economic measures to assist these small entrepreneurs, they will once again lag behind the big companies, which negotiate as they see fit. The small entrepreneurs are being left to fend for themselves.

As I previously mentioned, some sectors, such as agriculture and forestry, have been left to their own devices.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I spent nine years working on the railway as a signal maintenance man. Prior to that, I grew up with my father working on the railway, one of the things that was crucially important and that we saw everywhere we went in our own travels.

I lived in a little town called Plaster Rock, New Brunswick. If I wanted to go to Moncton, I took a train. Today, in northern Ontario, the Ontario Northland Railway is shutting down. These smaller communities, such as the one I grew up in, rely upon that service, and the current government and the previous government have allowed that to slip away. It is not a luxury. In many instances, it is people's sole mode of transportation. We sometimes have to question where the oversight is. Where are the people who should be standing up for these workers?

I know the member for Timmins—James Bay, the member for Sudbury and others from that area have worked hard. Our northern Ontario folks have worked hard to try to keep that railway. However, where is the government on that?

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I thank my colleague. Unfortunately, the government is not around to protect those regions whose economies are hanging by a thread or, in some instances, by a railway.

A region has been abandoned in the riding of Richmond, next door to my constituency. Before Sherbrooke, Sawyerville was the biggest port for goods in my riding, the biggest freight station in eastern Canada, and it was abandoned as a result of decisions made by governments in the 1940s and 1950s, and even in the 1930s.

Regions are being abandoned, and people have no choice but to come to our offices and ask for help. They say that we have the power, that we can help them and keep their infrastructure. We should invest in that infrastructure in order to create employment. When infrastructure is reliable and viable, it creates employment. And it is viable, since we are talking about agriculture, forestry and manufacturing, industries that are extremely important to the survival of those regions.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, I would like to follow up on the comments by my colleague from Hamilton East—Stoney Creek.

Can my colleague talk about the fact that a lot of rails are being removed?

In Sault Ste. Marie, CAT has worked very hard to get rails and to upgrade the lines.

Considerable importance must be attached to rail freight, but rail transit must benefit from that as well.