Mr. Speaker, I am happy to participate in the debate this afternoon on the second reading of Bill C-52, dealing with the issue of the level of railway services across the country. The House has been waiting for this legislation for several years. More importantly, shippers across the country have been waiting for this legislation for a very long time. I am sure we are all very happy that it is finally here.
The Liberal caucus intends to support Bill C-52 in principle at second reading because the shipper community is anxious to get the bill into the standing committee for detailed examination of the precise meaning, from a legal and a practical point of view, of all of the provisions in the bill. Shippers want to ensure, and we need to ensure, that their needs would actually be satisfied by the legislation.
The shippers coalition supporting level-of-service legislation, as it has become known, is a very broad and comprehensive coalition. It obviously involves agriculture, and that is a big and important part of the shipper community, but it goes far beyond agriculture. It also includes the forest products sector, minerals and chemicals, potash and fertilizer, manufactured goods and much more. They have all had common issues and a common problem, which is substandard service from the railways in shipping their products and commodities to market.
The intense debate about railway service levels has been raging across the country since about 2006. In 2007, specific requests were made by the shipper community for a legislated solution. They asked for a legislated solution because a commercial solution did not appear to be available. In 2008, the Government of Canada promised a formal review of railway services. It was not until a year later though, 2009, when the government finally appointed a panel to conduct that review of railway services. The panel worked for about a year, and by October of 2010 it had finished its work and had written its report. In that report the panel confirmed that service levels provided by the railways were seriously deficient.
To give just one example, and there are dozens referred to in the panel's report, farmers could typically count on getting the service from the railways that they needed, that they ordered and that they paid for, only about 50% of the time. That is obviously not an adequate level of performance by the railways. Similar troubles affected most other shippers right across the broad spectrum of the coalition. The details differed from one industry to another, but the bottom line was the same: the shipper community was being badly served. That is what the panel concluded in the report it wrote in the fall of 2010.
The review panel said that the problem was a serious imbalance in clout and power in the marketplace, an imbalance between the railways on one side and the shippers on the other. The shippers are mostly captive, as I said in the House earlier today. They do not have competitive options for moving their products. They are captive to one particular shipper at any given moment in time. That is what the panel concluded. It said there was little genuine competition, that shippers have no realistic commercial alternatives and that they also have no legal recourse to address the problem.
For the most part, they do not even have access to enforceable contracts that set out both their obligations and the railways' obligations, which are then binding and enforceable on both sides. That would be one's normal commercial expectation. The parties doing business would write up a contract and they would fulfill the terms of the contract or there would be consequences one way or the other. That practice seems to be missing in the relationship between the railways and the shipper community.
According to the panel that was appointed by the government and which reported in the fall of 2010, the playing field is totally tilted in the railways' favour. The panel said that if that imbalance is to be remedied it would be preferable to do it by commercial means. However, if a commercial solution is not readily available, and that is obviously the case by this long process that has gone on since 2006, then the review panel said that there should be legislation and regulations to fix the problem. That is, there should be legislation to require the railways to provide their shipping customers with service level agreements that are readily enforceable.
The railways have said, “That was then and this is now” and claim that things have improved. I think objectively a number of shippers would say that indeed there have been some service improvements over the course of the last three or four years, especially service improvements by CN. Even CN notes that the controversy about bad service and the suggestion of some new legislation or new regulations coming down the pike have, at least in part, brought about that improvement. In other words, there has been a threat hanging in the air that there may be legislation or regulations and the railways have pulled up their socks a bit. It was in response to that threat of legislation, the speculation in the community that there would be legislation, that has in fact contributed to the level of service improvements.
The review panel's report was done in October of 2010. The government then waited six months before committing to implement its recommendations. That commitment finally came forward in the spring of 2011, ironically just on the eve of the calling of an election.
After the election, action was once again postponed. Instead of bringing the legislation forward in the late spring or early summer of 2011, which was an imminent possibility, the government waited another six months. Then it launched a second review process, this one to be conducted by Mr. Jim Dinning of Alberta. That process started in the fall of 2011 and ran until the spring of 2012, again trying to find this elusive commercial solution to the problem. Unfortunately, Mr. Dinning's efforts were largely for naught and there were no significant results from that process, except for another six month delay. The government then waited another six months, until this past December, to finally table the legislation that we have before us today, Bill C-52.
This has been a painfully long wait. The discussion began back in 2006 and we are now in 2013, so it has been a seven-year process. The shippers are anxious now for action, at long last, to become promptly tangible. I think the House owes them that. We should have a sound debate at second reading on Bill C-52, but it does not need to be a protracted debate. We should discuss it properly and efficiently in the House and then move Bill C-52 as quickly as we can to committee so that we can hear from shippers and others and, on the basis of their evidence and testimony, determine if Bill C-52 is in fact good enough to get the job done.
I hope the government would ensure that there are no restrictions put on the transportation committee in hearing the witnesses that will want to be heard on this very important matter. The shipper community has been waiting a long time. Now that the bill will soon be at committee, the very least that Parliament can do is to give the shippers the opportunity to be heard fully so that all of their comments, recommendations and advice can be taken into account.
The preliminary reviews of Bill C-52 have been reasonably positive. That is encouraging. It would appear that the legislation does provide all shippers the right to have an enforceable service level agreement with the railways without discrimination among different tiers or categories of shippers. If that proves to be the case when we have the opportunity to legally and comprehensively review the legislation, then that would indeed be progress.
The legislation also appears to specify at least some of the mandatory content that each service level agreement must cover. It also appears that it would provide robust penalties if the railways fail to perform up to an acceptable standard.
The shipper community has been quite explicit about the kinds of things they want to see in these proposed service level agreements. It readily admits that with each particular shipper or sector within the shipper community there would be variations from agreement to agreement. Each one would not be an exact cookie-cutter copy of the others. There are logical differences that would need to be taken into account and there is a commercial negotiation process that would need to take place here. However, shippers have specified six subject areas that they think every service level agreement should deal with. It is important to put these on the record so that when we get to the committee we can examine the legislation to see if these six areas would be adequately covered.
The shippers say that each service level agreement that the railways would be required to provide in negotiation to their shippers should include the following. First, it should include a section covering the services and the obligations. They should spell out what each side is supposed to do to have a successful contract between the carrier and the shipper.
Second, it should include communications protocols so that when they are trying to work out their commercial relationship, or if things go wrong in the relationship, they would all know exactly what they are supposed to do to communicate with one another in an effective way, rather than two ships passing in the night that never quite get around to connecting with each other.
Third, there would need to be performance standards specified in the agreements. What is the acceptable performance to be expected in the circumstances? Fourth, there would have to be performance metrics. In other words, how do you measure the performance against the standards laid out in the agreements?
Five, there would need to be consequences for non-performance. There are obviously penalties provided in the legislation. We will have to examine as to whether they would be appropriate and sufficient to achieve the kind of behaviours that the shippers want to see. Finally, there would need to be dispute settlement mechanisms included in the agreement.
Those are the six areas that the shipper community mentioned. It is important for the committee to examine in detail whether Bill C-52 would cover those areas adequately from the point of view of the shippers.
Finally, I will mention four or five other areas, beyond the nature of the contract that I have just described, where the shippers have said they are not clear about what the legislation seeks to accomplish and whether it would get to the result that the shippers want.
First is the issue of train movement into the United States. To what extent would a service level agreement in Canada also affect the kind of service that is provided across the border by the carrier, in some cases the same railway, when that carrier is operating in the territory of the United States? What would be the impact of service level agreements on cross-border shipments of product? Of course, between Canada and the United States, that is a huge volume.
Second, what would be the relationship between the service level agreements that apply to the main line rail carriers, basically CN and CP, when the product being shipped may originate on a short-line branch railway? Would the service level agreements have any implications for short-line rail operators and their relationship with the main railway operations?
Third, there is already a section in the Canada Transportation Act, section 113, that provides some description of service requirements imposed upon the carriers. Is there anything in Bill C-52 that diminishes the value or the effect of what is already in the act in section 113? The shippers are very anxious to have that clarified. Obviously they, and we, would not want to see the beneficial impact of section 113 diminished.
The fourth question that shippers have asked is on the matter of practical access to the process. The way the legislation is set up it basically says that the parties should go out and negotiate a contract. If they cannot, then the shipper can go to the CTA and get an arbitrated solution that will then be imposed by regulation. The question from the shippers is whether there will be practical access to that process or whether the process will be so complex, costly and slow that only the biggest shippers will be able to participate in the proposed arbitration proceedings. As a result, the smaller shippers will just find it too complicated, expensive or time-consuming to be able to avail themselves of an arbitration procedure. We will need to examine the practicality of how Bill C-52 will apply to make it accessible to all.
Finally, there appears to be a section in the act that says that if a shipper already has some kind of existing contract with a railway, if they have gone out and tried to negotiate something and put it in place, then the shippers do not have access to the provisions of Bill C-52 unless and until that existing contract expires. That needs to be clarified as well. To what extent are shippers impeded from having any benefit of Bill C-52 because they have already tried in some way to have a contract and have negotiated something, whether or not it lives up the standards of Bill C-52? Would they be prohibited from trying to get a Bill C-52 solution if they already have a contract in place?
Those are some of the questions that I have heard from the shipping community. By and large they are anxious to see the legislation proceed. They are looking forward to the committee hearings because they want to be heard and they have a number of questions to ask. I think it is incumbent upon the government and upon the House to make sure that we get into those hearings as quickly as possible and that we ensure that every shipper across the country that wants to be heard can have the opportunity to present their questions and their observations to the standing committee.
I welcome the debate this afternoon. I am anxious to see progress on this subject. Everybody has already been waiting far too long. Let us get on with it and try to make a tangible difference in the level of service that is provided to the shipping community, and therefore make a tangible contribution to the well-being and success of the Canadian economy.
