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

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, that is right, my hometown killed an elephant. It was back in a day when rail was king. It was a day when everything moved on the rails and some things, I guess, had to move out of the way.

This bill would bring Canada and the rail system in Canada back to those days of service by our railways. They were days when goods and resources were moved by rail.

There is no question that rail transportation plays a central role in the success of our resource companies and our resources in this economy. In fact, Canada's natural resources industries are the largest users of rail freight services in the country, even to this day. Taken together, Canada's forest, mining and energy industries account for two thirds of all carload rail traffic in Canada. We know that the manufacturers and suppliers to these vital industries and many other vital industries, which provide everything from trucks to pipelines, also depend on railroads to transport their products and materials to market.

Our goal is to provide Canadian shippers and railways with a means of agreeing on service levels and ensuring a more effective supply chain. That is exactly what this proposed legislation will do. With this new legislation, we are highlighting the important role that railways play in supporting our economic prosperity. The goal of the legislation is to encourage railways and shippers to work together and it creates a strong incentive for them to do so.

Bill C-52 is designed to provide shippers with greater reliability and predictability in rail service. It is essential to the success of our natural resources industries. It recognizes the needs of shippers in doing their business and the needs of railways to manage their rail assets effectively. The relationship between railways and shippers is vital to Canada's economy as a whole. We know that when shippers can move more volume, it means more exports, revenue and jobs in Canada.

Here is the bottom line. Improving rail service in Canada will help to unlock the potential of our great natural resources. As most Canadians realize, there is a great deal at stake.

Here are some statistics. In the mining industry last year, more than half a million carloads of coal, sulphur and fertilizer were transported by CP Rail. In 2012, CP Rail alone moved 67,000 carloads of forest products. Many of those in urban ridings may have only sat at a crossing and watched that economy move by them as they impatiently waited for the gate to go back up. However, in rural and resource Canada, that is money going by. In fact, it is about $20 million worth of goods a day.

Additionally, Canadian Pacific recently indicated in its 2013 outlook that its crude oil by rail prospects continue to strengthen as the company expects to move to double the movement of crude oil to 140,000 carloads annually by 2015. That is from today's current volume of 70,000 carloads. That is a doubling of carloads of oil being moved by train.

It would be a lot more efficient to move it by pipeline, I suppose.

Right now, natural resources are directly and indirectly driving almost 20% of the nation's economy and supporting over 10% of all the jobs in Canada. Natural resources are poised to play an even greater role in the future. Our opportunities for growth in Canada's resource sector, arising from the rapid economic ascent of some of the world's most populous countries, are unlike anything we have seen in our history. We have estimated that there are some 600 major resource projects currently under way in Canada or planned in the next 10 years, worth approximately $650 billion in investments.

While global economic conditions may be a factor in investor decisions to move forward, the size and number of the projects is substantial. Whatever the short-term obstacles, the longer-term outlook is one of increased value and a demand for Canadian resources.

We can point to tremendous opportunities that are happening right now across the country, from oil and gas in Alberta, to liquid natural gas in British Columbia, to offshore gas in Newfoundland and Labrador, to new discoveries of minerals and metals in the Ring of Fire in Ontario and in northern Quebec. These opportunities will continue for many years to come.

For generations, agriculture and natural resources have brought employment, growth and opportunity to every region of Canada. We must continue to harness this potential. Long-term growth and development in many of these sectors depend upon our railways and their ability to get the products to market.

In a recent report, the International Energy Agency emphasized that global energy demand will continue to grow by more than one third by 2035, being led by emerging economies like China and India. These trends represent opportunities for Canada's energy exports in helping to meet growing global energy needs. Because one thing that we know for sure is that these growing economies will need resources, resources that are abundant here in Canada, such as minerals and metals, lumber, oil and gas. This trend underscores the urgent need for Canada to diversify our energy export markets, such as that of Asia-Pacific.

Growing and emerging economies highlight the urgent need for Canada to develop infrastructure to export our resources to new markets and to ensure that our railways run smoothly.

Simply put, we know that developing an efficient transportation system is crucial to ensuring that our resource industries can compete globally.

The fair rail freight service act would provide the tools to build a strong and efficient rail network in Canada. This important legislation would support Canada's resource sectors as they continue to create jobs and prosperity right across this country. In these challenging economic times, it is good news for our natural resources sector and good news for all Canadians. With this new legislation, we would build on our country's legacy of railway and natural resources. We would be setting the stage for a brand new era of growth and prosperity in Canada.

Just as we mentioned at the beginning, the country started with a growth in railways and a use of railways to transport those resources from coast to coast and to build this country.

The resource industry today, in Canada, requires this act and railways to ensure that the resource industry can supply the world.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, there are two points that my friend across the way and I can agree on. I am going to leave the tragic case of the circus elephant behind because I am not sure that this bill directly speaks to that particular provision. I do not see it in the legislation. There are two things that we can agree on. One is the importance of rail. Eighty per cent of all of our freight moves on rail.

The second is that we have a particular challenge posed to us in Canada in that we have two large rail companies that almost entirely dominate every sector of the market. In the U.S. and in other circumstances there are other options for those shipping products. Canada has a duopoly. These companies have been shown by the Competition Bureau at various times to collaborate and coordinate, to raise prices, to offer less service without retribution because they know they are the only options people can go to.

We only get to address the rail system every once in a while. Does my colleague believe that any steps in Bill C-52 would do much to go after the service fees that have been talked about by many shippers in this country? They have had problems and real concerns that the pricing may be non-competitive. When there is a market with only two players in it, non-competitive pricing can pose a real problem to such a fundamental industry as the shipping industry in Canada.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, I assure my colleague that the fair rail freight service act looks at ways to allow those shippers who must move product in order to get the resources that I spoke about in my speech to market, to move agriculture products across this country, and do it using the existing rail system in Canada, whether it is the two major ones or some very small short lines. This legislation would allow those shippers to have some negotiating power with those railways.

Unlike perhaps my colleague across the way, I believe that a great capitalist way of paying for goods as they are being moved is a far better way to do it.

[Erin O'Toole, Conservative, Durham, ON]

Mr. Speaker, I would like to thank my colleague from Elgin—Middlesex—London for his history lesson on St. Thomas.

I would like him to address the real elephant in the room, which is the fact that our friends in the NDP are telling us that they are going to support the bill, yet they are challenging it tonight and suggesting our government should interfere more in the commercial marketplace. Could the hon. member please comment on the elephant in the room?

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, I thank my colleague for the question, and what a great way to put it.

I will finish a bit of my history lesson. There still is a life-size statue of Jumbo at the far end of Talbot Street in St. Thomas. As one comes up the hill, there is Jumbo.

The member is absolutely right about the elephant in the room. It is a late hour and I have sat here for most of the night, five or six hours, listening to all the parties in the House suggest how much they like our bill. There is a saying back home in rural southern Ontario: my momma taught me how to say “thank you”.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I am rising in the House to speak to Bill C-52, concerning rail freight. This is another bill we are debating under a gag order, which has been imposed for the 37th time.

[An hon. member]

Unbelievable!

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

This is actually quite insulting, and most of all, undemocratic. The Conservatives are forcing us to sit until midnight from Monday to Thursday, and yet this makes the 37th time we have a time allocation motion. Talk about mixed messages.

We want to discuss the issues, but the government limits the time for debate again and again. In addition, these are badly thought-out bills riddled with flaws. I will list them a little later in my speech.

This has been an ongoing trend with the Conservatives since they came into office. I am specifically thinking of omnibus Bills C-38, C-45 and C-60.

I speak of the Conservatives' incompetence because they are bringing forward bills full of flaws and weaknesses. They are not holding proper consultations. In committee, recommendations from many of the witnesses are rejected out of hand, as are the amendments proposed by the NDP, or anyone else for that matter.

They realized that Bill C-38 was flawed. Then they made hasty additions to Bill C-45 to rectify the other bill they had just introduced.

This makes no sense at all. It lacks credibility. It shows a lack of respect for the democratic process, for the people who were consulted and for those who were not. It shows contempt for the elected officials who serve the people who rely on them to make decisions. We cannot make good decisions because we cannot have a debate and carefully examine everything that should be considered. So yes, it is insulting and an outrage.

The official opposition will support Bill C-52 because it is, finally, a first attempt at establishing the right to service agreements between rail companies and shippers.

This is the first step that shippers have been waiting for for decades. It also establishes an arbitration process, led by the Canadian Transportation Agency, to impose penalties in the event negotiations fail and for violations of arbitration decisions. There are therefore constructive, positive elements, but there are also a number of elements that shippers and the official opposition were calling for but that were rejected.

Four NDP members proposed amendments, based on recommendations from shippers. Those members were the transport critic, the member for Trinity—Spadina; the deputy critic, the member for Trois-Rivières; the member for Notre-Dame-de-Grâce—Lachine and the member for York South—Weston.

What were those amendments and recommendations? I will explain them. They were not that complicated, and they would have really helped shippers.

We recommended including details about the service agreements. It seems to me that service agreements should, at the very least, be signed and contain details. I do not understand why that was rejected. We asked that the term “operational” be deleted because it would limit the ability to negotiate and arbitrate service agreements. Again, that seems to go without saying. It does not make much sense to limit the measure we are trying to implement. We wanted to include a dispute resolution mechanism in service agreements for breach of contract. We also asked to limit the ability of railway companies to levy penalties and charges that are not in the service agreement.

The rates are already exorbitant and the railway companies are abusing their power. Since there are only two main companies, there is a quasi-monopoly when it comes to shipping freight. The rates being charged to the shippers are too high. They prevent the entrepreneurs and the shippers from being competitive on the international market. We cannot even limit the capacity of the rail carriers to charge penalties that are not included in the service agreement. Nothing good will come of that either.

We proposed limiting arbitration when service agreement negotiations break off and issues are raised by the shipper. The last amendment sought to limit the capacity of rail carriers to raise network-related problems during arbitration.

All these amendments could have improved Bill C-52, but they were not considered. They were completely rejected.

Again, we are here to let the House know that people are not happy about this.The bill has other flaws. What about lost revenue. The Conservatives claim they want to strengthen the economy, but they are diminishing the capacity of the regions to prop up their regional economy, given that the affected sectors are the farming, forestry, mining, manufacturing and natural resources sectors. Most of these sectors are in remote regions.

The Conservatives are contradicting themselves again. They would have us believe that their position and their bills are best, but then they sabotage everything they are trying to do by not taking the time to do proper research. They do not take the time to consult the experts in the areas affected by their bills. That is part of the incompetence that we are talking about here.

Shippers are currently paying the price of service disruptions, damage to their crops and service delays by railways. What is more, they have no other option. As many of my colleagues have said, 70% of surface goods are moved by rail in Canada, and 80% of these shippers are not satisfied with the service they received. That is serious. That means that service is considered to be poor in four out of five cases.

That is why these types of agreements needed to be made after all these years. However, now that they are finally being made, they are more negative than positive. The money from the $100,000 penalties imposed on railway companies under this bill is not used to compensate shippers. Instead, it goes to the federal government. It really should be given to shippers who create jobs and who have to pay late fees and fees for services that the railways failed to provide.

This money is being sent to the wrong place. What is more, these penalties do not really act as a deterrent since we know that companies such as CN are making $2.7 billion in profit a year.

In short, we are going to allow this bill to move forward, but it has many shortcomings. We must listen to experts on this.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, it is an honour for me to still be awake at this hour, at 12:35 a.m., and to ask my NDP colleague a question.

In her speech, she spoke briefly about the rural reality. In my region, the riding that I represent, forestry, mining, aluminum production and agriculture are very important.

Could she explain to the people of Chicoutimi—Le Fjord who may be watching at this late hour how the NDP's amendments could have improved rail transportation in my riding and across Canada?

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I thank my colleague from Chicoutimi—Le Fjord for her very relevant question.

As we have already heard, many shippers come from the regions. For example, around 50% of local jobs are tied to the forestry industry and benefit from rail freight service.

I have an example of an amendment here that says, “include details on service agreement components”. These service agreements did not exist before, but now they do. If someone wants to refer to the agreement to see if there was a violation, they need to have access to the details. Otherwise, that would be tough.

If they do not have the information needed to verify that and take their case to court, if they cannot refer to these details, it is a bit tough.

[Niki Ashton, NDP, Churchill, MB]

Mr. Speaker, I congratulate my colleague on her excellent speech. I would like to hear her thoughts on what the government is doing.

Our party thinks we need to improve this bill and strengthen it. We proposed amendments that reflect the demands made by the industries that rely on rail service, but the government stopped short of improving and developing a strong, fair bill.

Would my colleague say that this is something we often see from the government? What does that say about how the government represents the concerns of Canadians and Canadian industries?

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I would like to thank the hon. member for Churchill for raising the point about respecting democracy in the House and in committee. MPs should consult people, take into account all the stakeholders who provided us with information and ensure that we are making fair and representative decisions in every area.

Shippers were not respected here since the bill does not make any mention of the six recommendations that they made in committee and that were then presented as amendments by the NDP.

What is more, the bill is still flawed. If the Conservatives wanted to be democratic and wanted to act in good faith, they would not have pushed through the bill so quickly. Earlier, the hon. member for Drummond was saying that the Conservatives were blinded by a short-term ideology. It is true that their ideology is shortsighted. It is so flawed that at some point in the future the whole bill will need to be reworked and we will have to get back out there and consult with people again.

The industry has lobbied the Conservatives. People from railway companies have put pressure on the government dozens of times. That is why the bill is so flawed.

[Pierre Lemieux, Conservative, Parliamentary Secretary to the Minister of Agriculture]

Mr. Speaker, Canada's agriculture and food industry creates jobs and promotes economic growth.

That is why our government remains committed to working hard to help this vibrant industry continue to grow. We are investing in innovation to allow our farmers to remain competitive, and we are opening up trade in order to help farmers get the best price for their wheat and barley crops.

Our government wants to reduce red tape so that farmers can spend their time working the fields, not filling out forms. It wants to help farmers increase international sales through the most aggressive trade program in our country's history.

Of course, if farmers are going to serve these overseas markets, they need efficient and effective transport systems to get their product to port, and that is what Bill C-52 is all about.

Last year, Canada's grain producers exported some $17 billion in world-class grain products, representing up to 85% of their total sales on the farm. These dollars not only drive growth on our farms; they also drive growth for our economy and jobs for Canadians, from combine operators to truckers to port terminals.

Our farmers and our economy depend on efficient, effective and reliable rail service to move these crops off the farm to our valued customers in Canada and around the world. In fact, last year Canadian farmers paid over $1 billion to move regulated grain by rail. On the prairies, grain travels an average of 1,400 kilometres to reach a port destination.

Thanks to the fair rail freight service act, the government is contributing to strengthening this vital link between the farm and the consumer's table. The fair rail freight service act also supports our government's program to promote economic growth and long-term prosperity across our great country.

Our government is committed to ensuring that all shippers, including grain shippers, can negotiate agreements that bring greater clarity and predictability on service. With this proposed legislation, we deliver on that commitment.

This bill is good news for Canadian farmers, and I am pleased to report that it has been welcomed by the farm leadership across all of the major exporting sectors in agriculture.

For instance, the Canadian Federation of Agriculture said:

Passage of Bill C-52 will provide a legislative tool needed to make railways more accountable to its customers. It is a good first step in improving rail service and costs to industry.

The Grain Growers of Canada said:

We fully support the federal government's aggressive trade agenda and global commerce strategy. Timely and efficient rail service is a critical part of Canadian farmers' market access so this will help us be more globally competitive.

Also, the general manager of the Canadian Canola Growers Association said:

The railway is a critical link between our farms and our export customers. To fully capitalize on the new trade opportunities being pursued by Canada, shippers need this legislation to ensure Canadian agri-food products reach our customers in a reliable and timely manner.

Clearly, farmers believe this bill would help them grow profitable businesses by building a strong and effective supply chain. Bill C-52 would do that by giving shippers, including farmers, the right to a service agreement with railways.

The core of the bill is a new process to establish those agreements when commercial negotiations are not successful.

This provision will be a powerful tool for our agricultural sector, since it will strongly encourage shippers and rail companies alike to negotiate a commercial agreement. The fair rail freight service act will help farmers grow their business.

The bill would bring clarity and predictability to the commercial relationship between the shippers and the railways, and it recognizes the need for railways to manage an efficient rail shipping network for the benefit of grain shippers and the entire supply chain.

To put Bill C-52 in perspective, it is part of our government's broader commitment to work with industry to build a modern and dynamic grain industry in Canada.

Of course, marketing freedom for wheat and barley farmers is a key part of that strategy. The sky did not fall under marketing freedom, as some doomsayers had predicted. Quite the opposite in fact, farmers new-found freedom is breathing new life into the grain industry across the prairies.

Farmers are saying that wheat is a cash crop now, and that they can sell their wheat and barley when and where they want, locally or south of the border, at harvest time or later, whenever the market is right for them.

They can also maximize the profit they make from their crops by shipping their wheat as soon as it is harvested and freeing up storage space for other crops such as canola or peas.

The modernization of the Canada Grains Act is part of our effort to provide Canadian farmers with a 21st century grain industry.

These changes, which received royal assent in December, will reduce farmers' regulatory burden and cost, improve the Canadian Grain Commission's producer payment protection program, and eliminate mandatory services that are no longer required, saving producers up to $21 million in extra costs.

To ensure that we stay the course in this exciting new direction for our grain industry, the Minister of Agriculture has renewed the mandate of the crop logistics working group. This forum of experts from across the industry will work to improve the performance of the supply chain for all crops through stakeholder collaboration with a focus on innovation, capacity and measures of performance.

As well, Agriculture and Agri-Food Canada continues to work with Transport Canada on an in-depth analysis of the grain transportation supply chain to make a strong system even stronger. Farmers, grain marketers and the railways are partners in a world-class industry that brings us the food on our tables.

Canadian railway companies and farmers have helped build our great nation. They will also help prepare our country for a bright future by delivering high quality grain to the world's steadily growing population.

This bill before us takes an important step towards a stronger and more efficient rail network to help farmers build their businesses and keep our economy on track. I am pleased that all members in this House are supporting this bill, because it is the right thing to do and it is good for our Canadian farmers.

[Niki Ashton, NDP, Churchill, MB]

Mr. Speaker, the member made reference to those who are involved in grain farming. One of the things I had the opportunity to speak to when referencing Bill C-52 was how unfortunately the government, as exemplified in this bill but also generally in their approach across the country including passenger rail, leaves Canadians shortchanged.

I will use the example of the cuts to Via Rail that services Churchill, a port, as the member will know, that has historically been very involved with exporting grain. However, as the Wheat Board was gutted, it has missed out as well.

I am wondering why this member and his government are willing, time after time, to shortchange those hard-working farmers in farming communities when it comes to delivering fair, equitable access to rail services for passengers but also when it comes to making sure that industries are able to get a fair deal on rail transport.

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

Mr. Speaker, as far as I know, the grain shipments through the port of Churchill have not changed dramatically. They have not decreased dramatically either since the mandatory Wheat Board was brought to an end.

I will say, too, that these changes to the rail transportation system do not just involve agricultural products. For example, I have a quote here from the Chemistry Industry Association of Canada:

So this legislation is critical--not only for our industry’s competitiveness, but for Canada’s overall productivity and prosperity.

I also have a quote from the Forest Products Association of Canada that supports this legislation.

Although my speech focused on agriculture and grain products in particular, it is clear that this legislation that we are putting forward today addresses concerns in many of the sectors across Canada that rely on rail service for the success of their businesses.