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

[Ralph Goodale, Liberal, Wascana, SK]

With all due respect, Mr. Speaker, I do have to suggest that the hon. gentleman's recollection of history is just a little faulty. Alexander Mackenzie was not the prime minister in 1783. It was 1873 that he was the prime minister and he discovered on his desk the first day he walked into the office the Pacific scandal about the railway that was handed to him by Sir John A. Macdonald.

It is a bit of a waste of time to debate those ancient Conservative scandals. It was about the time that Louis Riel was becoming the member of Parliament for my district of the country. In any event, those historical references are fascinating, but it is more important for us to get on with the task of actually dealing with the circumstance today.

The major debate, as the hon. gentleman will recall, before 2006, was not about level of service agreements; it was about a costing review and whether railways were overcharging. There were in fact legal actions going on during the 1990s and the early part of the last decade that resulted in some major refunds to farmers because the railways had been caught overcharging for the freight rates they imposed for the services they were delivering, as substandard as those services were.

Until the middle part of this last decade, the issue was a costing review. In the latter part of the last decade, the issue shifted to this whole discussion about level of service, which brought about the seven year process that I talked about.

The hon. gentleman can be assured that we have no intention of delaying the legislation, either in the House or in committee, with this one caveat. We want to hear what the shippers say. If the shippers' expectations are properly and adequately addressed when we hear the testimony going through the committee, then we will be most anxious to see the legislation passed with whatever subsequent modifications the shippers might recommend.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Mr. Speaker, on a point of order, I misspoke and the member for Wascana is correct. I should have stated the date as 1873. I hope the member understands I am relatively new here and as far as I know, the member for Wascana was part of Alexander Mackenzie's government. I appreciate the correction.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

On a more serious note, Mr. Speaker, my Liberal colleague briefly mentioned penalties. This bill would enable the federal government to collect fines of up to $100,000. Does he think this would deter a company like CN, which made a profit of $2.7 billion in 2012? Is this kind of measure one of the amendments he would like to make to the bill?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, on that question and many others, we need to hear what the shippers have to say, because they are the ones who have paid the penalty for bad service up to now.

It is clearly important for any penalties in this kind of legislation to be adequate so they can actually change the behaviour about which the shippers are complaining.

In some of the provisions of Bill C-52, the penalty provisions appear to be significant. In others, they do not. Quite frankly, the question the hon. member raised should be looked at very carefully in committee. Will the enforcement mechanisms, including those penalties, be adequate to solve the problem?

The best solution for all concerned would be for the legislation never to have to be used, that it was there setting the legislative framework, but that the parties were able to find commercial results and not need to have recourse to the legislation. However, the legislation needs to be strong and robust enough to ensure that if it has to be used, it actually does achieve the result the shippers want.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I am sure the hon. member for Wascana already knows this, but I would like to assure him that Bill C-52 was crafted based on mountains of consultations with shippers all across the country. That is how the bill was formed. I am sure the member will appreciate hearing the shippers' applause for the bill as their input helped to put the bill together. The member and his party will be able to support it wholeheartedly.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, I am glad to hear the hon. gentleman's confidence. I have had the pleasure of consulting with many of those shippers myself over the course of the last five or six years. They have been very frustrated by the length of time this has taken, but they are hopeful that it will now come to a successful conclusion. They do though have a number of technical questions, partly for clarification reasons, to understand exactly what the legal and practical consequences will be of some of the wording that is included in the bill. They also have at least some suggestions for improvements where they think some of the areas need to be strengthened.

Bill C-52 is important legislation that should be intended, and I think is intended, to level up the imbalance in the playing field that was described by the review panel that reported in the fall of 2010. We all now need to be focused on ensuring it does accomplish that objective. We will know that when we allow shippers who want to be heard the opportunity to come before the committee, give their testimony, give their approval or criticism whichever it may be. If they have specific recommendations for making the bill better, then I hope the committee will be open to receiving those recommendations for improvements.

[Pierre Poilievre, Conservative, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, I will be splitting my time with the hon. member for Cariboo—Prince George.

As I said earlier today, I got into politics to, in my own small way, expand freedom so people could take responsibility for their own lives, earn success and own their destiny. To make space for this freedom, I believe governments should only do the things that people cannot do for themselves. It is therefore with great skepticism that I always approach any proposal that legislates government action within the economy. The question is this. Does this legislation represent an action that is needed but that people cannot do on their own? In analyzing the industry of which we speak, I believe it does.

Canada is the second largest with the eighth least dense population of any country on earth. There are 5,500 kilometres separating Cape Spear, Newfoundland from the Yukon-Alaska border. On these vast lands, with much of them thinly populated, the prospect of ubiquitous railway competition is almost impossible. It is not the result of human error. It is the result of physical geography and math. As a result, we have only two class A railways in the country and many communities that require for their economic lifeblood the export of products to far away markets often have only one choice to ship those products.

Seventy per cent of Canada's goods and services are moved by surface freight. However, as I have said, we have only two class A railways to move them and in many places there is only one option. This creates immense economic imbalances between the buyer and the seller of the service. As such, there is a consensus that some redress of this economic imbalance is justified in this rare circumstance. As a result, we have proposed Bill C-52, the fair rail freight service act, which is designed to do as I just described. Allow me to describe the practices that this law would codify.

The legislation would give shippers the right to a service level agreement with a railway. A shipper would now be able to ask their railway for an agreement and the railway would be obligated to provide one within 30 days. This statutory right to an agreement would be an important gain for all shippers, including small and medium-sized shippers. This right would allow shippers to initiate bilateral commercial negotiations with the railway and clarify in writing the service agreement the railway would provide.

These agreements could identify performance standards such as frequency of service, transit times and the number and type of cars that the railway would provide to the shipper. These agreements could also include recovery plans that identified the actions the railway would undertake to recover from service failure or the communication protocols for monitoring service performance and dealing with any service issues that might arise.

In most cases, shippers should be able to reach an agreement with their railway commercially, but when they cannot, the shipper should be able to go to the Canadian Transportation Agency and ask an independent arbitrator to establish service agreements for them. Furthermore, the shipper should now be able to trigger a fast and efficient arbitration process, thanks to the bill. All he or she has to do is demonstrate that an effort has been made to reach an agreement commercially and give advance notice to the railway before commencing or requesting arbitration.

Shippers get to control the timing of launching an arbitration process. The legislation allows shippers to frame the issues to be addressed in the arbitration process by identifying the services they need. This gives the shipper the ability and the flexibility to ask for what is important to them. Every shipper operates in unique circumstances and has unique needs, and that is why these agreements will take many different forms. Tailoring service agreements to suit circumstances of both shipper and railway will allow for the diverse nature of Canada's transportation economy to continue to flourish.

Let me be clear. The bill is not about forcing our railways into an agreement, but ensuring that their obligations are met. We want railways to continue to manage an efficient, low-cost network to meet the needs of all of their customers in their network. The arbitration will follow a very efficient process to make these decisions. In a market where time means money, shippers have repeatedly asked for a process that is quick and timely so they can focus on growing their businesses.

The bill stipulates that the shipper can get an arbitrated service agreement within 45 days, although this could be extended in unique circumstances by an additional 20 days. In very complex service agreements with the shipper and the railways, the extension would be applied. The point remains that this is a fast process, to ensure we continue the operation of our rail network and get our supplies to where they are most needed.

I should note that the government acted with a great deal of meticulous care in setting up this process. We realize that in the last three decades the federal government has largely gone out of the rail business, through reduced regulation and obviously reduced ownership. This experience with a private sector railway system has been an unmitigated success. We should celebrate every day the success that our railways and their workers have created through this free enterprise system. We should congratulate them for the enormous improvements they have achieved in service standards, particularly when compared to their international peers. At the same time, without reintroducing excessive government intervention into the system, we are redressing a natural market imbalance that is inherent in most rail sectors around the world, and particularly so in a country with our geography and population.

We on this side of the House of Commons understand that a commodity-based economy, spread across vast distances, will require an efficient, effective rail system to move the commodities to their marketplace. That is why we have acted in this bill to provide a system by which our free market rail industry can continue to prosper and connect businesses with customers, and customers with the goods and services they need.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I would like to congratulate my colleague for giving such an informative, accurate and superlative presentation on Bill C-52. As proof of that, Mr. Speaker, you saw that everyone clearly understood the value of the bill. They clearly understood my friend's message. Of course, there would be no questions or comments given that situation, so he is to be congratulated.

Let us look at the genesis of the bill and understand that Bill C-52 would not be in the House were there not some disparities in the rail service that has been provided to shippers across Canada by Canada's two railways. The Minister of State for Transport this morning described that as a duopoly, which is just a hair's breadth away from a monopoly. The bill would not be in the House if the relationship between the railways and the shippers was a perfect one.

The relationship has been far from perfect. The shippers could be appropriately called “captive shippers”; there is little or no alternative for shipping their products. These are primarily bulk products from the agriculture, mining, oil and gas and propane sectors. Rail is the most economical and most profitable way to ship bulk shipments across Canada. I am sure that is a point that will not be debated.

I am happy to support Bill C-52 because I have spent some time working with a particular sector that is prominent in my riding, the forest sector. While that sector reaches all across the country, my riding of Cariboo—Prince George, which I am sure my colleague from Prince George—Peace River would agree, could be appropriately called the forest capital of the world. In my riding, and the Peace River, Okanagan—Shuswap, Kelowna—Lake Country, Kamloops—Thompson—Cariboo, Kootenay—Columbia and Okanagan—Coquihalla ridings, we all have sawmills, pulp mills, fibre mills and pellet mills. I can honestly say that those ridings combined probably ship the bulk of forest products from their locations to the U.S., Asia and abroad.

I serve as the chair of the Conservative forest caucus, and the members I just mentioned are part of that. I can remember, going back six years ago when I took on that position, that we were talking with the CEOs and the leaders in the forest industry across the country. They were telling us about some of the challenges they have; one of them was the rail service they were getting.

There were a number of other things, which our government has successfully addressed. One that we can be very proud of is the green transformation fund, which was a real winner in the forest industry across the country. It helped us to stay in tight competition with our U.S. counterparts. That is good because the U.S. is still our biggest market for forest products. We send the bulk of our products into the U.S. by rail, as we send to the coast for shipments overseas.

I remember this meeting from about four years ago. We had solved most of the problems and challenges and we asked what was left. They said we still need to deal with the service we are getting from the railways.

My colleagues and I made a promise to the leaders of the industry. We said that it was number one on our bucket list, that we would see this fixed. We said that we would get this solved one way or another and we began to work on it.

I will not say we did not have encouragement from colleagues across the way. It is a common interest. I thank them for their assistance.

We pushed that forward. There were a multitude of meetings where we got a very clear understanding of the problems with which the forest product shippers were faced. Also, it became evident that they did not have any means to seek remedy to get those problems fixed. There were problems such as were mentioned today, where an individual was expecting to have 65 railcars on site for the week of July 5, had a promise they would be there, only to find that after the shipper had geared all the production to be shipped that week, there were 37 cars, not 65. When the shipper called up the rail lines to ask where the rest of the cars were the answer was that they had not been able to get them, that they would give them to the shipper as soon as they got them.

That is not good enough. When railways make a promise to shippers that they will have 65 or 75 cars in that particular week, they have to keep that promise because an agreement, honesty and a good working relationship is all about that.

When shippers have cars show up to the pulp mills, where they are shipping rolls and bales of pulp and paper out of their mills and lo and behold there are holes in the roof and it is raining, they know there will be damage to the cargo inside. That is unacceptable. They need to have a way to seek remedy to that.

Shippers can be in production and all of a sudden 27 cars show up that were not ordered. When they phone the rail line, they are told that they probably will need them. If they say they do not need them for two weeks, they are told they already have them. They are then paying demurrage on them every day they are sitting on the site while they are trying to gear production to get them full. They did not ask for them, but they have them and they are paying rent on them until they use them.

The way it has been in the past is if the captive shippers, as I will call them again, were to bring their complaints to the rail lines, they could not seek a remedy that would be lasting. That is why they looked for help from the government. They tried to have a commercial arrangement that would solve things, but that was just simply not possible.

They looked to the government. We were pleased to step in and get this service agreement done so it would satisfy the shippers across the country, while at the same time it would make it something that the rail lines could work with. We know how important they are to moving goods back and forth across the country. It has to be an agreement that works for both sides. I think we have that.

It has been applauded by the shippers' coalition and major shippers across the country, since we put it all together after continuous discussions with them, trying to figure out how we could solve the problem. What would the remedy time be? How long would we give to get the agreement to work, to get the thing fixed? We have fines in there for not having remedies.

I am proud to stand here with my colleagues who have forest industries in their ridings, who were there to make that promise to the forest industry that we would get this fixed. These folks are from all across the country.

Our government has now done it. I want to thank the minister and the minister of state for their hard work in putting this together. I thank the forest industry for giving us the opportunity to put this together for it, to work with it. We thank it for their input.

Let us hope the bill will pass through the House and committee quickly. Maybe it can be approved. It is pretty good right now. At the end of the line, we will bring out the best product that these shippers can possibly expect.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I thank the member for his comments. He has acknowledged some points. I think everyone would agree that there is a requirement for action, that there is a concern. I am glad to see he had a more balanced assessment than the previous speaker, his colleague, the parliamentary secretary. The parliamentary secretary seemed to suggest that we do not need really government involved at all. His mindset is to just let the market decide. However, the member did lay out where he thinks government has a role. I want to get from him the concerns, though, we have had about this process. If we go back to 2007, I think it was—the member might correct me—his government talked about a wait and see approach, that we would try to kind of work things out.

We now have a bill in front of us acknowledging that it did not work.

Would he comment not only on what he thinks should be in the bill but also on the oversight in the bill—that is, to make sure that all the parties involved are going to live up to their commitment? Would he explain to us a bit more about the enforcement of the legislation and how we could actually ensure that products get to where they need to be, for everyone's benefit?

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I am sure the member for Ottawa Centre agrees that government regulations should be a last resort. That is why we gave the two parties, the shippers and the rail lines, a period of time to try to work this out in a private commercial agreement.

Unfortunately, they were not able to do that.

Based upon that, we knew it had to be done. We have had many talks with the stakeholders. We listened to all sides of the story and looked at the challenges they have and tried to put a bill together based upon the input from the stakeholders on both sides. We think Bill C-52 contains the substance we need, including the period of time from when the complaint is first brought, the time allowed to resolve it and, if not resolved, a brief arbitration period, which can be extended for a short time. At that time, if the railways, for whatever reason, fail to rectify the situation they are subject to fines of $100,000 per day per complaint. If one single shipper has five complaints about bad rail cars, that would be $500,000 a day. If we multiply that by the number of forest outfits across the country, it could be significant.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Speaker, the member across the way and I share a common city and we share a common region in northern British Columbia.

He talked about the fact that this legislation is coming, has not been passed yet. He spoke to the importance of the issue and the importance of the issue in the riding, especially to grain farmers and to forestry producers who actually want to ship out product. My brother worked in a mill that literally could not ship out product. It had to shut down its pulp mill, waiting for cars.

Again, because the bill has not been passed yet, I would like the member to emphasize how important it is to get it done.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, to my colleague across the way, whether shipping is within North America, south of the border to our biggest market, the U.S., to either coast or across oceans, continuity and reliability in the shipping of our products is so important to our producers. That is what we are trying to accomplish, so that when producers want a specific number of cars in a specific time period, they can count on it. Their whole business and Canada's international trade reputation demands that those cars be there when they need them and that the product be shipped when it is supposed to be.

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, I will share my time with my hon. colleague from Saint-Bruno—Saint-Hubert.

I would like to begin by wishing all of my constituents and colleagues a happy new year since this is my first speech in the House this year. I would also like to congratulate my colleague from Trinity—Spadina for her tremendous and brilliant work on this issue. I am sure that we have her to thank for the fact that the Conservative government decided to do something about this issue.

I would like to go over some facts and talk about why this bill came into being.

Rail transportation is the backbone of Canada's economy because 70% of our goods are shipped by rail. That is why it is critical that rail transportation services benefit both rail transportation companies and shippers.

The cost of rail transportation is also hurting Canadian shippers. Unfortunately, Bill C-52 is silent on the issue of rates because the government ignored the demands of a number of groups of shippers.

Canada's trade deficit continues to grow. It hit $2 billion in November. We cannot allow Canada's products to lose more ground competing on the world markets.

Rail transportation is essential not only to competitiveness, but also to the domestic economy. We also need rail transportation services to help keep trucks off the roads and to curb our greenhouse gas emissions. Although railways still make up a considerable proportion of surface transportation, frustrated businesses are turning to trucks when possible, and that is devastating to our environment. That is important to note.

We must also look at the economy as a whole, since Canada's trade deficit is increasing. As I mentioned, it reached nearly $2 billion in November, and our economy cannot afford to lose even more ground in light of the global situation.

The Conservatives' reluctance in the past to do anything for Canada's rail shippers shows their overall attitude towards rail transportation. Whether it is their inaction on new railway safety measures, cuts to VIA Rail Canada or their opposition to bringing high-speed rail service to Canada, the Conservatives refuse to give Canada's railway network the attention it deserves.

The Conservatives are taking a piecemeal approach to this country's transportation infrastructure that shows a lack of interest and a lack of investment. This is the case in my riding, which used to be a railway riding. It no longer is and we have to wonder why. One answer is the clear lack of investment to keep these railways running. Railways and their tracks are increasingly being sold off, when they could be used for other purposes, such as public transportation.

Instead of letting things go and making only occasional investments here and there, Canada needs a comprehensive approach to transportation that is based on a national public transportation and railway strategy. For years, farmers and other businesses have been paying the price for the poor quality of rail freight services, and have not managed to get Ottawa's attention.

The NDP's position is simple. We support businesses and exporters. We are determined to get them the transportation services they need and deserve.

Even though Bill C-52 does not follow through on certain demands from stakeholders, it should receive our support. I am rising in the House today because shippers are happy with it, more or less.

Now it is up to us to fill in the gaps, strengthen this bill for shippers and underscore the NDP's participation throughout the process. As I mentioned earlier, the member for Trinity—Spadina has done some excellent work on this issue.

We will keep working to ensure that we improve our country's rail transportation system and use it for what it was intended: to meet economic and environmental needs.

Unfortunately, Bill C-52 will cover only new service level agreements, and not those that already exist. Many shippers will have to continue to cope with unreliable and unfair service without any access to dispute resolution if their existing service agreements are violated.

Arbitration is available only for shippers who are in the midst of negotiating new contracts. Instead of offering fast, reliable conflict resolution for all shippers, as the NDP is asking for, Bill C-52 is offering a limited arbitration process for a small group of shippers.

The proposed arbitration process may be too costly for shippers. The burden of proof may be unfair if they have to prove that they are in need of services from the railway.

Certain shippers also wanted to tackle the issue of tariffs during the legislative process, but unfortunately the Conservatives made it clear that they would not address that issue until the next legislative review of the Canada Transportation Act in 2014-15.

Obviously, shippers agreed to look at tariffs at a later date and to focus on problems with service level agreements.

It is worth repeating that the mining sector is the second-largest employer in aboriginal communities, after the public service.

Improving rail freight transportation services for mining companies could also be of economic benefit to aboriginal people in certain areas of the country.

The whole question of rail freight is particularly important to rural areas. I come from a rural area. The industries that will be most affected by this are in western Canada, in British Columbia, as well as in Quebec and, to a lesser degree, Ontario. This represents both a challenge and an opportunity for everyone and for parliamentarians to really effect positive change for people in rural areas.

The Prairies are very sparsely populated, for instance. However, this matter is important to the small towns and rural communities of the Prairies, and those are the main groups we should be reaching out to.

Nearly 100 communities depend on the forest industry for their survival. That is the case in my riding, where most forestry-related transportation is done by truck. Why not invest in the railways that exist in my riding to transport lumber?

My colleagues and I would like to see penalties included in the agreements in relation to service levels, in order to compensate shippers for service disruptions, damages and loss of productivity.

Shippers are also afraid, and I agree with them, that this bill will not apply to rail shipments from Canada to the U.S. Why not?

In closing, this is an important piece of legislation. It needs improvements. Of course we hope this government will keep an open mind and accept many of our recommendations.

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Speaker, I thank my colleague from Pontiac, who works very hard representing the people in his part of the country, which is a very large riding. Sometimes we feel better when we take a look around us. I feel good looking at my colleague's riding from my beautiful Outaouais region.

I liked his speech for a number of reasons. The message we have been sending the government this morning is extremely important: the NDP will support the bill at second reading to get it to committee.

Having said that, this bill is not perfect. In my opinion, nothing is perfect. In this context, we would hope that our friends opposite are prepared to listen to the different viewpoints of the various stakeholders.

The government presents us with its bills as though they were perfect, necessary and very important. I am always surprised to see how long it takes them to introduce their bills. In fact, we have been waiting for this bill for five years.

Can my colleague explain why it has taken five years? Why has the government taken so long to introduce this bill, which various stakeholders have been asking for?

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, I thank my colleague from Gatineau for his very important question. I must also point out that she does an excellent job representing her constituents. It is great to have neighbours who are so active in their community.

Railways used to cross the Pontiac. As the member pointed out, the crisis in the railway industry has been around for a long time. I truly believe that the only reason the Conservatives are moving on this issue is because of the pressure exerted by the official opposition and the work of my colleague from Trinity—Spadina. They have been confronted by the facts and forced to take action. They have put forward something good, but it obviously does not take into consideration all of the industry's needs.