Fair Rail Freight Service Act

An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration)

This bill was last introduced in the 41st Parliament, 1st Session, which ended in September 2013.

Sponsor

Denis Lebel  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

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.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

May 30, 2013 Passed That the Bill be now read a third time and do pass.
May 29, 2013 Passed That, in relation to Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), not more than one further sitting day shall be allotted to the consideration of the third reading stage of the Bill; and that, 15 minutes before the expiry of the time provided for Government Orders on the day allotted to the consideration of the third reading stage of the said Bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and, in turn, every question necessary for the disposal of the said stage of the Bill shall be put forthwith and successively, without further debate or amendment.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:35 p.m.
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Conservative

Dan Albas Conservative Okanagan—Coquihalla, BC

Mr. Speaker, I want to thank my colleague for his speech and his work on the transport committee. It is a lot of responsibility to be a chair and I certainly would not be the person to do it.

There seems to be a fundamental misunderstanding with opposition members. They keep asking process questions and then argue that there should be results. We hear from some members that this is going too fast and then we hear from other members that this is not happening fast enough. This is a complex problem. We have a case where there is a de facto duopoly, hundreds of small industries, agricultural-based and mining-based workers, and the government has fundamentally addressed it with this legislation.

I would like him to again reinforce the fact that the whole reason for this bill being here is to build certainty and allow Canadian goods to be shipped across this country, to use the ports we have put billions of dollars into, and to see good things happen here in Canada.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:35 p.m.
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Conservative

Larry Miller Conservative Bruce—Grey—Owen Sound, ON

Mr. Speaker, that is a great question. As for his surmise that New Democrats are more worried about process, he would have to ask them about that. It seems it does not matter what the issue is, New Democrats want us to do something about it, bring in some new rules, et cetera, and when we do, they stand and vote against them. I have no idea on that point.

As to the question from my colleague, I know businesses, industry and agriculture in his riding will certainly use this new act. There is no doubt in my mind that it will work for them.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:40 p.m.
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NDP

Jamie Nicholls NDP Vaudreuil—Soulanges, QC

Mr. Speaker, to begin, I would like to tell you that I will be sharing my time with the very able member for Churchill.

I am pleased to rise in the House today to discuss the bill that would give customers of railway companies the right to establish service agreements with those companies and would create an arbitration process in case of failed negotiations. Despite its weaknesses, the bill is very important for the Canadian economy, especially for the agricultural, mining and forestry sectors, which depend heavily on rail transport.

The bill is not perfect. Still, we appreciate that after so many years of fine words and no action, the Conservatives have finally acted and introduced the bill.

On this subject, I would like to thank the hon. member for Trinity—Spadina who, by introducing her own bill on protecting customers of railway companies, was able to prod the Conservative government into action. The government presented its bill six months later. Better late than never.

My speech will have three parts. First, I will highlight the importance of strengthening the position of shippers in Canada's rail transport sector. Then I will show that the bill does not go far enough to improve services and protect shippers. Finally, I will propose amendments based on the recommendations presented to the Standing Committee on Transportation, Infrastructure and Communities by the Coalition of Rail Shippers.

Why is it important to take action to improve rail transportation services? Because rail is among the most-used means of transport in Canada. In Canada, railways transport more than 70% of goods shipped on land. The economic power of railways is considerable.

That leads me to my second point. Despite the importance of this mode of transportation for many shippers, service interruptions, delays and various problems with productivity are common among rail transporters. This situation affects many sectors, including natural resources, agriculture, forest products, mines, chemical industries and the automotive sector.

In terms of agriculture, 80% of service agreements are not complied with by the railway companies. This means delays or trains that simply do not arrive, damaged rail cars or not enough rail cars. In addition to the losses caused by this kind of problem—such as harvests that may rot—the poor quality of rail transport services undermines the ability of Canadian exporters to compete in world markets. This situation costs the Canadian economy many hundreds of millions of dollars every year.

Let us now try to determine the source of these problems. One of sources of these problems is, of course, the virtual monopoly. As the hon. member for Okanagan—Coquihalla said earlier in his question, the problem is the monopoly held by the railways in Canada. In most regions of the country, shippers cannot choose their railway carrier because they have access either to CN or to CP. Even in cases where both companies are present, one of the two usually charges prices that are much too high, which does not leave shippers with much of a choice. To some extent, the monopoly situation was made possible by the Liberals when they were in power. They are the ones who privatized CN in 1995. By failing to set out protective measures for shippers, they reinforced the virtual monopoly we have today.

At the time, one option would have been to privatize railway activities while ensuring that the rail transportation system remained public, which also would have been beneficial for VIA Rail. Right now, VIA Rail mostly has to use rented tracks belonging to CN.

When I was deputy critic of transport, I met with the Western Canadian Shippers' Coalition and it let me know what it needed to help foster economic growth in the west, on the Prairies. I am sure it is going to be happy to see this very bill come to life. It has been waiting for more than five years. It has been waiting for seven years for this legislation to come to life.

Just to clarify for Canadians, the Western Canadian Shippers' Coalition is made up of important Canadian companies, like the Alberta Newsprint Company, Al-Pac Forest Industries Inc., Canadian Forest Products Inc., Canadian Oilseed Processors Association, Canadian Wheat Board, Coal Valley Resources Inc., Coalspur Mines Ltd., Dunkley Lumber Ltd., Grand Cache Coal Corporation, Lehigh Cement, Chemtrade, Millar Western Forest Products and Suncor, among many other important Canadian companies. Many of these companies are in the natural resources sector.

The government tends to think that it is the best friend of the resource sector. The sector relies on the government as a regulator to ensure reliability in terms of service. The result, if it is done properly, is that companies prosper and flourish. Without leadership, without the government taking on its role as regulator, the companies simply endure or, even worse, sometimes flounder. This legislation would allow the companies to simply endure. It is not good enough to let them prosper and flourish.

The NDP would prefer to see these companies prosper and contribute to the health of our resources sector and the agricultural sector. In committee, there were amendments proposed by these two sectors. The NDP listened, but the government was in such a rush to fall behind, that it really did not listen to what these companies were asking for. I am going to read what the companies asked for and what the Conservatives did not consider.

One thing they wanted to do was to fix the service agreements. They wanted, one, to include details on service agreement components; two, a deletion of the term “operational” as it would limit the ability to negotiate and arbitrate service agreements; three, to include a dispute resolution mechanism in service agreements for breach of contract; four, to limit the ability of railway companies to levy penalties and charges that are not in the service agreement; five, to limit arbitration for failed service agreement negotiations to matters raised by the shipper; six, to limit railway companies' ability to raise network issues in arbitration, for example, finding convenient excuses for not agreeing to shippers' demands in contract negotiations and arbitrations.

New Democrats felt that these were very reasoned amendments and the government had a choice: it could listen to the resource sector and Canadian farmers or it could listen to a monopoly with a long history of manipulating government throughout Canadian history. Unfortunately, it looks like it chose, for these amendments at least, the side of the monopoly, as the member for Okanagan—Coquihalla mentioned.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:45 p.m.
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NDP

Jamie Nicholls NDP Vaudreuil—Soulanges, QC

It is a duopoly. Sure, I will give him that.

I would like to read a quote about monopolies, which goes like this:

They had begun to consider the Government...as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

That is a quote by Franklin Roosevelt, a democrat. Contrary to allusions by the government, the “D” in NDP stands for “Democratic”. We are the only party over the past 50 years to stand up for the democratic rights of all Canadians and not just a select few. When we hear the smears from the other side, we know our principles. We do not abandon those principles for the sake of power. We do not remain silent in the face of adversity.

As I mentioned before, for competition to flourish in our country, sound, organic and healthy competition, it requires co-operation. The government should have listened to the good people who work on the farm or the people who work in the resource sector. Instead, time after time, Conservatives choose to listen to the privileged few to enable their abuse of power and give them carte blanche to crush Canadian competitiveness. Canadians deserve better.

In 2015, the NDP will provide the leadership to steer our economy out of the perilous straits, out of scandal and corruption to that prosperous future Canadians long for and desire.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:50 p.m.
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Conservative

Dan Albas Conservative Okanagan—Coquihalla, BC

Mr. Speaker, I am glad we have had an exchange of ideas, talking about the difference between monopolies and duopolies. There are many things in the speech the gentleman has brought up tonight, and they are worthy of noting.

First, when it comes to resource development, a conclusion is quite obvious from the policies that the NDP espouses on a daily basis, particularly if we look recently to the election in B.C., where the New Democratic Party and its economic policies, particularly around resource development, were flatly denied by British Columbians.

When the member says that the NDP represents rural communities and represents the resource sector, I would ask them to take a stark look in the mirror and see if that is true. Definitely in my province of British Columbia that is not the case.

Again, this is a complicated issue. I would like to ask the member whether he agrees with us that government does have a responsibility to listen, particularly in cases where there is a complex, difficult issue, where there is a duopoly, where there are numbers of shippers that are unhappy with the services they receive and they are all competing for the same services.

When you are going from a system that is predicated right now on these companies having to be taken to court to a regulated system—

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:50 p.m.
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NDP

Jamie Nicholls NDP Vaudreuil—Soulanges, QC

Mr. Speaker, the NDP is the party that supports the people who work in this sector every day. In the resource sector, in the agricultural sector, we are the ones who are there on the ground helping these people out when they have problems with their employer or when they feel that injustice is being done. We are the only ones in the House who truly support these workers in these sectors.

To help them, the government should take on its role as a regulator, which is to provide fairness in an industry and to allow competition to happen so more jobs can be created. In its role as a regulator, it has not done the job. The Conservatives had a choice. They could have chosen healthy Canadian companies and their workers, or a duopoly. They chose the interests of the duopoly over those of great Canadian companies that make our economy work.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:50 p.m.
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Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, I can assure the member that his party is not the only one that represents the workers. There are other parties in the House that believe we represent the workers just as well, if not even potentially even better.

With respect to Bill C-52, we also represent the interests of small businesses. It is the shippers in particular who are most impacted by this, and indirectly the workers too. However, we are talking about large and small businesses that have been anxiously awaiting this measure.

In regard to CN, the member brought up the fact that the Liberals privatized it in 1995. A few years later was when this issue came to light. Does the NDP take the position that it would buy back CN or nationalize a railway?

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:50 p.m.
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NDP

Jamie Nicholls NDP Vaudreuil—Soulanges, QC

Mr. Speaker, the member for Winnipeg North missed my point. When a government, be it Liberal or Conservative, takes an ideological position—in this case, the Liberal government taking an ideological position of privatization without really thinking of the consequences of that ideological decision—then we end up having to do repair legislation, as we are doing tonight.

The member says that the Liberals also defend the workers, but all I have heard for the past few months is Liberals defending the rights of middle-class workers. What about the workers who are having difficulty, who are not in the middle class? I have not heard anything from his party about that. I find it very rich that the member for Winnipeg North brings this up and pretends to be the defender of working people in Canada.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 7:55 p.m.
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NDP

Niki Ashton NDP Churchill, MB

Mr. Speaker, I am pleased to stand in the House to speak to Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration). This topic has been a very important one for my constituents and for people across rural communities and, particularly, western Canada.

Before I go further, I want to acknowledge the hard work of my colleague, the member for Trinity—Spadina, who for years has been a real advocate when it comes to fairness in the transportation industry. She has worked very hard on reforming this act, in particular, and bringing the NDP position forward.

The NDP position is fundamentally one of seeking fairness and a fair playing field for those who depend on rail service as part of their work, business and industry and, very important, the communities that depend on fair rail service to ensure their employers and industries are dealt with appropriately.

We in the NDP have made it clear that we support the bill at this point, but we believe it must be strengthened as we go forward. We are not pleased with the delays that the government has allowed and also the kind of cowering we have seen from it, which is not a surprise, to major corporate interests in this field.

As we know, the proposed bill will give rail freight customers or shippers the right to service agreements with rail companies. It also puts in place a Canadian Transportation Agency-led arbitration process for failed negotiations and penalties for those who violate the arbitration results.

Key amendments that the shipping company pushed for and that were championed by the NDP were unfortunately defeated in the committee. Without these rejected amendments, we believe the bill remains a partial success for the shippers and it must be strengthened in the future.

It is important that we indicate to stakeholders and to the government that this is not a done deal. As with anything, but particularly when we talk about this area, the bill needs to be further strengthened.

Bill C-52 partially addresses the fact that rail freight customers, known as shippers, have been suffering from insufficient freight services stemming from the abuse of market power by the large rail companies.

The Conservative government has finally tabled legislation, after years of talking and inaction, to address the fact that many shippers cannot even get a service agreement as rail companies have not been willing to negotiate.

As the bill only covers new service agreements, current agreements and contract violation, which are all a major source of revenue loss for shippers, are not affected by Bill C-52.

Certainly in terms of the stakeholders that have been involved, I would like to read into the record some of the stakeholders who have spoken out in support of the NDP broader position, which is that the act must be strengthened.

I recognize that the wish for this act to be strengthened comes in large part from people who work in the mining industry. As someone representing an area that depends on mining and as someone who is proud to say that I come from and live in a mining town, I recognize that in order to ship the ore and the goods that are needed for the mining industry to both do its job and to export its product, fair rail services are essential.

The Mining Association of Canada, as represented by Pierre Gratton, indicated:

Although MAC appreciates the government's initiative through Bill C-52, it is our view that the bill, unless amended, will not deliver on the government's promise...“to enhance the effectiveness, efficiency and reliability of the entire rail freight supply chain”.

Coming from western Canada, I share with many of my colleagues from there the understanding and the clear recognition of the importance of agriculture in our region, particularly agriculture when it comes to grain production. I want to read the message that was brought forward by the Grain Growers of Canada, as represented by Richard Phillips. He noted:

I think what we're looking at here is the level of service and timeliness of service to meet our sales commitments. That's what we're really talking about. [...] When Pulse Canada was down in Colombia and we'd just signed a deal there, we were looking forward to increased exports to Colombia, and the Colombians said they weren't sure they'd actually buy anything more from us because they couldn't get reliable enough delivery of product on time.

Clearly there is a concern about our ability to export. These are clearly serious concerns brought forward by our clients when it comes to reliability and timeliness of exports of a fundamental product, which is grain. That is unacceptable. It is a clear indication of why it is absolutely essential that we not see this as a "done deal" as such, but that we understand it is something that needs to go forward. We must continue to listen to stakeholders and seek a truly fair system when it comes to the rail service provided in our country.

As someone who is proud to come from western Canada, I want to read into the record the words of the Western Canadian Shipper's Coalition, as represented by Ian May. He noted:

Since the government committed to the legislation, we've heard that service has improved. I can tell you that it hasn't. I can tell you that as recently as two weeks ago we had mills just about shut down because they couldn't get boxcars in western Canada, and not just one. Whether that's coincidental with a broader understanding of Bill C-52 and perhaps the fact that it is balanced versus a shipper bill that would have levelled the playing field—and that's our language—I don't know.

The Western Canadian Shipper's Coalition, a very inclusive coalition and one that has a great deal of clout in Western Canada, is clearly stating that the bill does not go far enough, that there are serious problems in the kind of rail service that is provided and that they are getting a raw deal. That concerns me a great deal. In the last few years, and certainly since I have had the honour of being a member of Parliament for northern Manitoba, it is clear to me, day by day, the way in which people in my part of the country are getting a raw deal from the government.

I want to indicate the cutbacks to Via Rail, for example, have directly impacted the people of northern Manitoba and will continue to impact as tourism picks up in the summer. The people who are affected are those who live on the Bayline and in Churchill, who depend on reliable, quality rail service provided by Via Rail.

I also want to indicate the lack of imagination and commitment to another transportation hub, which is the Port of Churchill. It is truly a gateway to Arctic trade and to opportunity, not just for Manitoba but for all of Canada. Yet the government has squandered opportunities to truly make investments. The gutting of the Canadian Wheat Board as we knew it played a major role in setting us back. As we know from last year, the shipments through the Port of Churchill are nowhere near where they ought to be.

I also want to indicate the government's failure to invest in an all-weather road network across northern Manitoba, something that could improve the quality of life of many first nations and Metis people in that part of the country, as well as the economic development opportunities.

Again, time after time, we are seeing a government being short-sighted toward the interests of northern, rural and western Canadians, and we see it in this bill that must go further. I agree with my colleagues that western, northern and rural Canadians deserve far better.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 8:05 p.m.
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Conservative

Lawrence Toet Conservative Elmwood—Transcona, MB

Mr. Speaker, I listened with great interest to the comments from my colleague from Churchill. She started off talking about her colleague from Trinity—Spadina, the great comments she had, and the great work she was doing on this file.

It is interesting to note that one of her propositions is that there would be absolutely nobody looking at the overall network. Whether this network is owned by a government, as it used to be, or it is a private enterprise, the member wants the shipper to be able to go to the rail company and say, “I want you to ship my goods and I do not care what else you have in your network; it has to be completely ignored. I do not care if your network gets overwhelmed or collapsed; nobody should be taking that into account. Only worry about my one shipment or my shipments over the course of this year”.

Does the member not realize that there is a thing called “the folly of the commons”? That is when there is a field that can only handle so many sheep, and if someone wants to put 1,000 more sheep in it, the field that is feeding that network is killed off. There is absolutely no gain in that. In fact, what happens is that the individual destroys not only that shipper's ability to ship, but everybody's ability to ship, and nothing gets to market. Is that really what the member wants to see happen in this situation?

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 8:05 p.m.
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NDP

Niki Ashton NDP Churchill, MB

Mr. Speaker, I certainly appreciate the member's contribution. I was a bit surprised by the repeated reference to sheep. We are a bit beyond that, although some days I wonder about the government's members and any comparisons to that.

However, this member is my neighbour in my province, and I know he represents an area that very much depends on rail transportation.

My question for him is this. Recognizing the importance of industry and of customers getting a fair deal from their rail transportation companies, is that not critical to expanding the economy? Is it not critical to ensuring that people in his constituency and in our province have a brighter economic future? Therefore, instead of criticizing, would he not join with us in calling for his own government to do better?

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 8:05 p.m.
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Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, I will pick up on that point of recognizing the valuable contributions that our rail lines make to the province of Manitoba, as I suspect they make to all provinces. If I can gloat for a bit in terms of the province of Manitoba, in particular the city of Winnipeg, whether it is our CN shops, our CP shops, or the potential of CentrePort, there is all of this humongous network that is virtually nationwide. However, Manitoba, because of its geographical location, is actually in a great position to do that much more. The potential is there, and it is real and tangible.

One of the core aspects of being able to ensure we have that future growth of demand depends on the shippers, and it depends on a number of elements that will allow for that growth to proceed. That is why it is so critically important that we have this service agreement, and that is why, in essence, it could have been better. The bill itself, in principle, is good and worthy of supporting, but it would have been better had there been some amendments—

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 8:05 p.m.
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NDP

Niki Ashton NDP Churchill, MB

Mr. Speaker, the NDP's position is clear. This bill can and must go further when we are talking about truly making it a fair deal and looking at how we can strengthen service agreements and the ability of clients and industry to engage in arbitration when things are reaching a breaking point.

It is very clear that time and again the current government is short-sighted when it comes to building true economic opportunity. In western Canada, often the Conservatives use overblown rhetoric about what they are doing on behalf of our provinces, and yet here is a perfect example. Western Canada and the industries in our region depend on rail service. Clearly we have heard from stakeholders that they are getting a raw deal and that the government can do better. Yet, instead of taking the opportunity to listen to important stakeholders, whether in the grain industry or mining, we have been left with a half-baked bill and an approach that certainly does not represent the best interests of western Canadians.

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 8:10 p.m.
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Conservative

Mark Adler Conservative York Centre, ON

Mr. Speaker, it gives me great pleasure to rise today in the House to talk in support of Bill C-52, which proposes to amend the Canada Transportation Act.

Before I begin my remarks, I want to say that of course Canadians from far and wide know that our government is focused on what matters most to Canadians, which is jobs, growth and long-term prosperity. It is our government that has been praised and has received accolades from international organizations from around the world, from the OECD to the IMF, and Forbes magazine, which says that Canada is the best place to be doing business.

There is a reason for that. There is a reason why international organizations praise this country. There is a reason that Governor Branstad of Iowa says he is afraid to bring potential investors to Iowa. It is because his state is so close to Canada that he knows he may lose investors because the Canadian economy is doing so much better than the U.S. economy. There is a reason for all of these things.

As I said, our government focuses on what matters most to Canadians. The Liberals on the other hand focus on dividing Canadians. They talk about their Quebec leader and how superior they are to the rest of Canada. Their leader has said that Canadians who do not speak two languages are lazy. They say they are against reforming the Senate. They are for the status quo because they are afraid of losing 24 senators in Quebec.

We have to give the NDP credit on the other hand because at least they are consistently wrong. Let me propose something to the NDP. Rather than being called the “New Democratic Party”, they should be called the “Old Democratic Party” because it is the same old policies from the sixties and seventies: high spending, high taxes and reckless spending on crazy social engineering schemes—

Fair Rail Freight Service ActGovernment Orders

May 29th, 2013 / 8:15 p.m.
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Conservative

Mark Adler Conservative York Centre, ON

I am happy to receive such praise from the opposition, and I look forward to their support of Bill C-52.

I would first like to thank the Minister of Transport, Infrastructure and Communities for his steadfast and laser-like focus on creating the bill that is before us today to bring fairness to this sector of our economy. Of course, I also want to thank my colleagues on the transport, infrastructure and communities committee, particularly our chairman who has done yeoman's work in making sure the bill got through the committee expeditiously.

As the minister said on December 11, 2012, “This bill will help shippers maintain and grow their businesses while ensuring that railways can manage an efficient shipping network for everyone”.

Bill C-52 supports the interests of the entire economy. Given the importance of rail service to our country, shippers need to have service clearly defined and they need to know that the railways will deliver rail service efficiently and effectively. That is the only way shippers can properly plan and seize market opportunities.

I would like to talk about some of the new provisions that are proposed in Bill C-52. First, the bill would give every shipper the right to a service agreement with the railway and would provide an efficient and effective process for establishing such an agreement when commercial negotiations fail. That is key. Every shipper would be able to request a service agreement with their railway. That is an important point. The railway would now have 30 days to respond. This particular change is an important gain for all shippers, including small and medium-size businesses. It would ensure that they have an opportunity to negotiate service with the railway directly.

Second, if the parties cannot agree commercially, the shipper would have access to a timely and efficient process to establish an agreement. Under the auspices of the Canadian Transportation Agency, shippers would be able to request an arbitration process. This important arbitration process would establish, in a clear and comprehensive manner, how the rail service would be provided by the railway.

For many years, shippers have raised concerns that they have faced additional costs or lost sales when rail service is inadequate, particularly when they face regular problems such as delays in receiving rail cars. Canadian businesses or farmers can agree that this situation is a significant challenge for their operations. Shippers generally acknowledge that railways have made improvements to freight service in recent years. However, shippers believe that an effective enforcement mechanism is essential to ensuring that improvements continue.

This brings me to the third important point. We want to ensure that railways are held accountable in the event of service failures. This would be achieved through monetary penalties. These financial penalties could reach up to $100,000 for every confirmed breach of an arbitrated service agreement. Specifically, the financial penalty would take the form of an administrative monetary penalty under the auspices of the Canadian Transportation Agency. This consequence would ensure greater railway accountability.

Now, let me explain how this new provision would work. When a shipper is concerned that a railway has breached a service agreement that the agency had arbitrated, he or she could ask the agency to examine the situation. If the agency confirms a service failure in such a case, it can apply the monetary penalty to the railway company for a confirmed breach.

This potential and significant financial penalty would provide a strong incentive to comply with arbitrated service agreements. The amount of the penalty imposed would depend on the severity of the service breach. As with any administrative monetary penalty system managed by a regulatory body, the penalty would be payable to the Crown and not to the shipper. The agency is the appropriate body to confirm whether a breach has occurred, and can set a penalty accordingly. Indeed, the agency's role under this new provision would be to look at the reason for the breach and determine the right consequences, case by case.

Giving the agency the authority to impose the administrative monetary penalties is a sound approach. During consultations for this bill, both shippers and railways acknowledged the agency's expertise in rail freight service issues. In addition to this strong new enforcement tool, shippers will also have access to two other mechanisms to address railway service problems.

Of course all shippers will retain their right to file a complaint on service with the agency. All shippers will also retain the right to seek damages resulting from railway service failures through the courts. These rights apply regardless of whether shippers have agreements arbitrated by the agency or agreements they negotiated commercially.

First, a shipper can file a complaint with the agency under the existing level service provision under the act, which requires railways to provide adequate and suitable service. If the agency confirms that the railway has not met its service obligations, it has broad powers to order a range of corrective actions to be taken by the railway.

The new provision on service agreements complements this existing remedy for examining rail service complaints. If a shipper has a service agreement that defines clearly the railway's service obligations, this will provide a more precise reading of when obligations are not met, and facilitate the filing of a complaint in such a case if a shipper deems it necessary.

Second, shippers will continue to be able to sue for damages incurred due to rail service failures. Seeking damages through litigation is an especially important option for those shippers who are seeking compensation for significant lost sales or costs incurred due to a railway service failure.

Shippers wanted to ensure that any new enforcement tool, such as administrative monetary penalties, does not undermine any existing remedies. This strong new enforcement mechanism would not in any way disrupt, replace or erode existing shipper remedies.

I am confident that in most cases shippers and railways would be able to work out service agreements commercially that include communication protocols to be followed when service failures occur. Moreover, I expect commercial agreements would also identify recovery plans to mitigate the impact of any service failures.

The great strength of Bill C-52 is that all of its elements would help drive commercial negotiations.

Through the implementation of the bill, shippers will be in a better position to negotiate service agreements with the railway in the commercial forum. Both railways and shippers have expressed their preference for commercial solutions.

As all stakeholders continue to work in collaborative partnerships, I firmly believe that Bill C-52 includes a strong enforcement mechanism. It provides the best way forward in supporting commercial solutions and innovations that strengthen our rail freight system, a system that will foster Canada's economic growth, a system that will support shippers and railways as they strive to grow their businesses, capture new opportunities and create jobs and prosperity for Canada and Canadians.

I strongly encourage all members of this place to vote in favour of Bill C-52, a bill that would not only help strengthen our railway system, it would support our growing economy and lead to jobs, growth and long-term prosperity.