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.

Speaker's Ruling

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, I am glad to be able to rise and add to this debate on the third reading of Bill C-52.

Today is an important day in history, as it turns out, because this date in 1887 was the first day a train actually arrived in Vancouver. That train had a picture of Queen Victoria on the front of it, which I am sure the members opposite will be very glad of.

Our rail system has some problems, and those problems have been caused by years of neglect by governments with respect to the monopolistic position the rail companies are in vis-à-vis the rail shippers, the people who actually use the rail system. I will not go into the problems we have with the rail passenger system, which has suffered untold neglect by both the Liberals and the Conservatives.

In 1995, the Liberal government decided to sell CN, which was at the time one of Canada's biggest rail shipping companies. I am not going to answer a question from the members to my left about whether we are going to re-nationalize CN. That is not the point. The point is that when a public entity is given to the private sector, one must look at the consequences of that decision. If one of the consequences is to have created a virtual monopoly, then one needs to have put in regulatory controls to balance the playing field. That the Liberals did not do. I have heard from the member for Winnipeg North that the member for Wascana is a champion for the shippers, but from 1995 to 2006, his government was in power, and the Liberals did nothing to protect the rail shippers from their decision to privatize one of Canada's two large rail-freight operations. The shippers finally complained loudly and long enough that this Conservative government said that it would do something about it. That was in 2007.

Here we are in 2013, and I hear the parliamentary secretary and others saying to hurry up and pass this bill. We have been talking about this for seven years. Let us hurry up and have a bill to talk about. Finally we do, and it is flawed. That is one of the reasons I am here to talk about this bill today. It is not that we are not supporting it. We do sometimes have to hold our noses and support flawed legislation, because it is at least one step forward. However, we could have gone six or seven steps forward, and the Conservative government chose not to.

In 2008, as a result of a lot of pressure from the shippers, who said that they were being held hostage by the rail companies, there was a rail service review. That service review came up with a report in early 2011, before the current government was elected. In its platform, the Conservatives pledged to do something about it, but interestingly, even though the rail service review was in, it was not in the Speech from the Throne. There was no indication that this bill would be part of the legislative agenda of the current government. In fact, the Conservatives did not actually propose legislation. When the rail service review report was put in place, the Conservatives then tried mediation. They tried to talk it out between the parties and see if they could work it out. The problem is that talking does not work if one of the parties is so enormous that it absolutely controls the other.

Then the member for Trinity—Spadina put forward a private member's bill, Bill C-441, that would deal with all the steps of the problem. It would deal with the service level agreements, the price and a whole bunch of the issues the rail shippers had determined were their problems in dealing with this David and Goliath situation. All of a sudden, the Conservatives said, “Whoops, we forgot. We had better put a bill forward”, and Bill C-52 magically appeared.

The trouble is that Bill C-52 does not actually deal with some of the shippers' problems. It deals with one in particular, and really, that is all that has happened in this bill. It would deal with one of the shippers' problems, which is that they do not have the right to a service level agreement in their negotiations with the rail companies.That means that they do not have the right to negotiate, to firmly fix in their contracts with the rail companies, that, yes, a train will arrive on Saturday when their grain is ready to be shipped; yes, there will be 12 boxcars; yes, those boxcars will make it to Vancouver by two weeks from Saturday. Those are the kinds of things the shippers said they just cannot get.

Finally, we have a piece of legislation that would actually deal with that, in a roundabout way, by saying that if the shippers cannot work it out with the rail companies, then they would have the right to an arbitrated process. Therefore, the shippers would now have a right to an arbitrated process that would give them that service level review.

I am being reminded, Mr. Speaker, that I will be splitting my time with the member for Brossard—La Prairie.

Therefore, one piece of the puzzle would be solved. As a result, this party will be supporting the bill at third reading but wishes that it had gone further.

The shippers would now have the right, as a result of the bill, to an arbitrated service level agreement. However, that arbitration would come at a cost. The shippers themselves would have to pay for half the cost of that arbitration process.

The railroads have deep pockets. Paying for an arbitration process, for them, would be like a small flea on the back of an elephant. It would mean nothing to them. However, to the shippers, it may mean something. There would be no assistance from the government in the cost of this arbitration process. That is one problem.

The railways have a monopoly on price, as well, and price is not part of what could be arbitrated. The price is something that would be subject to negotiations only between the shippers themselves and the railroad. The railroads would not have to do anything about the price in this arbitration process. All they would have the right to talk about and all that could be arbitrated would be the service level agreements.

Railways have a habit of charging extra fees. Airlines have extra fees now. Passengers are charged for bags. Apparently some airlines charge passengers to use the overhead bins. There is one airline in Europe that is going to charge passengers to use the bathroom.

The railways do the same thing.The railways have the ability, as a part of the service level agreement, to set up fees, which the shippers will pay if their product is not ready on the day they suggest or if there is any other problem the railways might consider the fault of the shippers. The shippers do not have any reciprocal rights.

That is something else that is missing from the bill. The shippers cannot charge the railways a fee if they are late. In fact, the government has said that if the railways break these agreements, the shippers' only recourse is to go to the courts for recompense from the railway companies.

Again, we are dealing with a David and Goliath in the courts. We now have the situation where small wheat farmers in central Alberta, who are barely making ends meet with their wheat farms because of the demise of the Wheat Board, are actually going to have to sue the rail companies, at their own expense, because the rail companies failed to meet their arbitrated service level agreements. That is yet another penalty for these poor shippers.

The shippers have told the government, and we in the NDP agree, that a mechanism by which the shippers could arbitrate a penalty regimen back to the shippers would be appreciated so that if the railways break the service level agreement, the shippers would know what they were going to get and would not have to go to court. That is done all the time in labour arbitrations and labour negotiations.

The government claims that it is not going to do it here. It is saying that the shippers should speak to the courts.

In closing, I would like to say that we in the NDP will, in fact, be supporting the bill. However, there is a lot more the bill could have done, but every single one of the amendments we proposed was rejected by the government at committee without, really, a whole lot of thought.

[Dean Del Mastro, Conservative, Parliamentary Secretary to the Prime Minister and to the Minister of Intergovernmental Affairs]

Mr. Speaker, I have been listening intently to the last number of interventions. What I think is not understood well by the opposition is the incredible value the railways provide in Canada. In fact, it is a North American industry. From any perspective, the freight railways in North America are the finest in the world. They support trade, certainly international trade and ports, and businesses.

In fact, the previous speaker spoke about wheat. There were record grain shipments just a couple of years ago, and those numbers continue to climb, as a matter of fact. Goods leaving Canada through our ports and coming into Canada through our ports are shipped by the railways. This is an incredible strength for Canada.

I think what the government has sought to do is to balance the rights of the shippers and the railways and to provide a mechanism whereby we can come to agreements that actually work for shippers and that support industries and support communities.

It is a good bill. The member should support it.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, in fact, we have said that we will support it. We are disappointed that it does not go far enough.

While the rail companies do provide a service in Canada, the shippers have said that the service has not been a fair marketplace. While we are correcting part of that unfair marketplace, we are not dealing with the whole problem. For example, soybeans from Argentina enjoy a competitive advantage in markets such as Japan and China, because they are delivered faster and more punctually than soybeans from Canada, despite the fact that the total distance covered is significantly shorter for products from Canada. Part of that problem is the ability of the rail companies to meet a service level agreement. That is part of what the bill does.

However, we on this side of the House, who actually believe in fairer and freer trade, believe that we should be in a position to compete with countries like Argentina and not allow them to overrun us.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I thank the member for York South—Weston for his presentation. I see that the official opposition is prepared to support the bill, recognizing that there are so many lost opportunities.

Recently the railway industry in our country picked four pillars as its priorities going forward. One of those is sustainability, particularly with respect to reduced greenhouse gases and the fact that shipping goods by rail is much better for climate action than shipping by transport trailer and truck. I wonder if the hon. member has any thoughts on what opportunities we have missed in this piece of legislation to also recognize the greenhouse gas benefits of shipping goods by rail.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, one of the government's reactions to comments about the pricing portion of the bill was to suggest that shippers have another alternative. Many of them, but not all of them, have trucks as an alternative. Well, trucks consume considerably more fossil fuel and have a larger environmental footprint. As a result, we should be encouraging the use of rail rather than discouraging it through inaction on the part of the government.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, I want to thank my colleague for his speech. In the House of Commons he often speaks to transport-related issues.

We all know that freight and passenger transport is vital to Canada. In fact, that is what Canada was built on and what continues to contribute to Canada's economic prosperity.

The hon. member talked about how other countries have managed to balance the interests of the shippers, those who use the railway for moving freight and people. I would like him to elaborate on that.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, certainly Canada is a laggard when it comes to the creation of rail systems across our great land. We are one of the last countries to adopt good rail transportation strategies. We have no public transportation strategy by the government. We have no support from the federal government for public transportation in a concerted and disciplined way. As a result, we, as Canadians, are suffering from a lack of good public transit infrastructure and a lack of electric public transit, which in fact deals with greenhouse gas problems and helps the environment. We in Canada should be doing way more than we already are.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, I rise today to speak to Bill C-52, An Act to amend the Canada Transportation Act.

The NDP thinks this is a very important issue, and it is no secret that we will be supporting the bill, essentially because it is a step in the right direction. I will explain. However, much more could have been done. Unfortunately, the government missed the opportunity to do more. Before getting into the bill specifically, I would like to talk about why railway transportation is so important in Canada.

It comes as no great surprise that railway transportation is important in Canada when you consider that 70% of surface transportation of goods is done by rail. Railway transportation is an effective way of fighting greenhouse gases. My colleague mentioned that as well. We must encourage train use as much as possible.

I am glad to be able to travel by VIA Rail this afternoon to get to my riding. We must promote train use. Here we are talking about shipping merchandise. I am not merchandise, so I will get back to talking specifically about the bill.

The bill is a step in the right direction, since it tries to solve the problem of the existing monopolies. When we talk about rail service, we are fully aware that the two major companies, CN and CP, have a virtual monopoly.

The virtual monopoly is a problem. It is one outcome of the actions that the Liberal government took in 1995, which included the privatization of CN. In addition to privatizing CN, the government did not implement the appropriate regulations. That is why we are surprised to see the reaction of the Liberals when they complain about the Conservative government's failure to act. It is true and we agree that the Conservative government waited a very long time before introducing a bill. Actually it was 2007 or so. That is when studies were carried out. A report was also released in 2011. That means that we have waited for more than five or six years for this bill, which provides a partial solution to one of the existing problems.

The Liberal government at the time identified a problem. In 1995, when the Liberal government privatized CN, it had the option to look at what could be done to avoid a monopoly over rail transportation.

What regulations can we put in place to ensure that services are better designed and distributed? The lack of regulations is a problem. Take VIA Rail for example. In some cases, this company needs to rent the railway tracks from CN or CP.

That also has to do with the virtual monopoly. As a result, shippers using rail services must pay more. In addition, they are experiencing some problems with the services provided. We hear a lot about the impact on consumers, among others. Higher costs and delays are among the problems linked to the virtual monopoly.

Bill C-52 addresses some of those problems. It creates an arbitration process. That arbitration process will allow for better discussion and a better way of solving problems with certain distributors. As my colleague mentioned, penalties will be imposed in some cases. The problem is that the money from those penalties will go into government coffers, not to the shippers. The NDP is trying to protect shippers in that respect.

Studies were done and reports were released. Unfortunately, the Conservatives did not take advantage of all of that information.

I would like to thank our transport critic, the member for Trinity—Spadina. She introduced a private member's bill outlining a better system that would give greater protection to shippers.

In response to that bill, the Conservatives introduced a bill that is quite flawed. I have already pointed out a few of those flaws. For example, the government could have done more when it came to arbitration. Unfortunately, it did not.

I am thinking of light rail transit on the new Champlain Bridge. It is the right way to go considering that we are moving towards an economy of the future. However, seeing how the government is managing this file, it makes us wonder whether it will act openly and transparently, particularly regarding construction of the Champlain Bridge. This corridor between Montreal and the south shore, as well as between Canada and the United States, is very important.

The government's actions worry us. It makes decisions behind closed doors and ignores what is said during consultations. We see that here. Even though the government brags about having consulted a number of people and says it stands behind shippers, at the end of the day, it introduced a bill that does not reflect all the suggestions that were made. None of the amendments, NDP or Liberal, were accepted by the Standing Committee on Transport, Infrastructure and Communities. Here again, the government is not open to suggestions.

It is unfortunate because we said that we support the bill. However, today, we are pointing out certain flaws. The government seems to be digging in its heels once again. Of course, this is a majority government that can do as it pleases. When it comes to protecting shippers, we are told that it is part of our economy. However, that is no longer the case when it comes to protecting consumers. It is difficult to understand why the Conservative government is not listening to what the opposition has to say and, in particular, to what the shippers and the witnesses told the committee.

A lot of work remains to be done. We are used to having a government that does not listen very well. We are supporting this bill because it is a first step and we are headed in the right direction. However, the government has not taken advantage of this opportunity.

As for the Liberals, they knew when they decided to privatize CN in 1995 that a virtual monopoly would be created. Why did they not introduce this type of bill? Why did they not do more and include what they are asking for today? When the Liberals were in power between 1995 and 2006, why did they do nothing about this? Why did they wait so long, and why are they getting all worked up today and saying that they are the defenders of the system and they want to protect shippers?

We have been saying from the very beginning that there was much to be done at the time. We lament the fact that it took the Conservatives so long to act and that the Liberals' failed to make progress on this file when they were in government.

I mentioned some amendments in the report that should have been included. A 2008 study, which was released in 2011, was a starting point. The NDP is not simply voicing its opposition to the bill, but is also making suggestions. We suggested including details about the service agreements. At this point, there really are none because there is a monopoly. We want a better system that better protects shippers.

There is a problem with the dispute resolution mechanism in service agreements in the event of breach of contract. With this bill, shippers must pay the fees for the arbitration process that will be put in place. Why not make the big corporations, CN and CP, pay these fees and solve these problems since they are the reason for bringing in these agreements?

[Paul Calandra, Conservative, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, as I have said a number of times, we spent a good number of years speaking to people before we brought the bill forward, consulting with Canadians and with people within the industry. We have now a very broad cross-section of people in industry who support the bill, and they want us to get on with it.

The member was quite right that the Liberals, when they had their opportunity, did nothing with this. As I said earlier, we are very grateful that the NDP joined with us to get rid of the Liberal Party and bring in an accountable government back in 2006.

I want to focus on one part of the his speech and what we have heard constantly from some of the members opposite with respect to the NDP future policy of nationalizing CN Rail.

In the context of this debate, has the NDP costed out how much it would be to nationalize Canadian National Railway, what the cost would be to the shareholders of that company and how that would improve freight rail service in Canada? Would it increase taxes to cover the cost of that nationalization? Would it make other cuts to cover the cost of that? Has the NDP costed that out, or is that all just part of the—

[The Acting Speaker, Barry Devolin]

The hon. member for Brossard—La Prairie.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, I am not sure I want to thank the member for that question, but I will do so anyway, because I am polite.

First of all, let me say that we are not in favour of nationalizing CN. What we said, and I will repeat it again, is that the problem was created in 1995, when the Liberals were in power and they decided to privatize CN without putting any regulations in place to protect shippers. My colleague should agree with us on that.

I think he will agree that the Liberals are to blame for their inaction, but then he also needs to look in the mirror and ask himself why the Conservatives did nothing about this when they came to power. Why did they wait so long? When they finally decided to do something, they introduced a bill that does not go far enough and does not do enough to protect the rights of shippers. That is the problem we have with this bill.

Instead of making up ridiculous stories, the Conservatives should really focus on what is going on here and on the bill, which unfortunately still has flaws. It is a step in the right direction, but it needs improvement.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, at times the New Democrats lose their focus and want to take shots, whenever they can, at the previous Liberal government.

It is important for us to note that the shippers, the industries—agriculture, forestry, minerals, chemicals, fertilizer, the oil and gas industry, our very important manufacturing industry and others—collectively, back in 2006-2007, then came to the opposition and the government of the day saying that they needed this type of legislation brought in. That is where the issue originated.

We could be very critical and agree that the government took quite a while to respond, but we do have legislation before us today. We in the Liberal Party will be supporting the legislation through third reading, but we want to see amendments to the legislation.

The deputy leader of the Liberal Party proposed three amendments at the third reading stage. Had the amendments of the member for Wascana been allowed, would the NDP have supported them, which would have been of great benefit for us?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

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

First of all, we do not mean to bash anyone, but I am simply explaining why we now have this problem. With regard to the privatization in 1995, one cannot help but wonder why no one looked at the possibility of not privatizing the tracks. That issue could have been debated and we could have avoided our current situation, with a virtual monopoly, poor service, and so on.

As for amendments, we proposed some at the Standing Committee on Transport, Infrastructure and Communities. They essentially supported what the shippers coalition was calling for. We proposed some things, but unfortunately, the Conservative government did not accept any of our very well thought-out amendments.

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

Mr. Speaker, first I want to say that I will be splitting my time with the member for Surrey North.

I want to thank my colleague from Trinity—Spadina for all of her hard work and passion in this field. I will start with a short resumé of what happened and why we are here today.

Essentially, the bill gives rail freight customers and shippers the right to enter into service agreements with railway companies. It also establishes an arbitration process, led by the Canadian Transportation Agency, to resolve disputes in the event negotiations fail and sets penalties for violations of arbitration decisions.

I would like to give everyone some background. In 1995 the Liberals, who were in power at the time, decided to sell CN. The problem was that they neglected to put in place an effective regulatory framework for rail transportation. As a result, railway companies held a virtual monopoly. The Liberals were in power until 2006 but did nothing to address this problem. There was nothing in place. The problems likely to arise in these situations usually affect prices. Indeed, since railways had a virtual monopoly, users sometimes had to pay very dearly.

In committee, witnesses told us that sometimes the trains arrived without enough cars. In other cases, trains failed to come in on time. Finally, in 2006, when the Conservatives rose to power, they came under a lot of pressure. Seven years later, the bill is before us. We will support the bill, but I would still like to add something.

I had the chance to speak to Bill C-52 at the last reading stage. Since then, this bill has been studied in the transport committee, of which I am a member. This bill is a first step in the right direction and I support that, so I will vote in favour of this bill. However, it is important to note that several witnesses who came before the transport committee to speak about this bill wanted amendments. With the suggested amendments, this bill would become a robust tool and industry standard for Canada.

The committee received a list of six amendments that were the bare minimum of what the Coalition of Rail Shippers and other witnesses would like to see in this bill. The Coalition of Rail Shippers is the main rail freight customer stakeholder organization in Canada. These witnesses are experts in their field and key actors in their industry. It is important that the House acknowledge the amendments suggested by this organization. It is also important for us to consider the expert testimony that the transport committee received.

The following six key amendments were suggested by the shipping community: first, include details on service agreement components; second, delete the term “operational” as it would limit the ability to negotiate and arbitrate service agreements; third, include a dispute resolution mechanism in service agreements for breach of contract; fourth, limit the ability of railway companies to levy penalties and charges that are not in service agreements; fifth, limit arbitration for failed service agreement negotiations to matters raised by the shipper; and, sixth, limit railway companies' ability to raise network issues in arbitration, i.e., finding convenient excuses for not agreeing to shippers' demands in contract negotiations and arbitration.

These amendments are sensible, practical and, might I add, modest. Unfortunately, all six amendments were defeated at committee by my colleagues opposite. My NDP colleagues and I moved nine amendments at committee. The committee is there to provide space and time for parliamentarians to consider bills of law in depth. How can we uphold the value and ethics of this democratic place when already during witness testimony it is clear that the Conservatives are unwilling to make any changes to the bill? Why are the Conservatives blocking parliamentary work at the committee stage?

Here, I would like to point out that the Conservatives asked only one question about the nine amendments that my three colleagues and I proposed. I am somewhat annoyed by that approach. Committee work is meant to foster discussion.

I remember when I was elected two years ago, members from all sides told me that there were too many attacks in the House. I was also told that at times there are more monologues than discussions. However, I was also told that it is different in committee, and that it is in committee that the real group work happens because everyone wants to move this country forward. That is what I was expecting.

I found myself serving on a committee where the Conservatives did not ask any questions. We proposed amendments to move things forward, but they did not want to discuss them. We talked about our amendments and we explained them. We explained why we wanted to amend the bill and which expert testimony we based our amendments on. They had absolutely no interest, however, because their minds were made up before they even heard the witnesses.

As I said earlier, I will support the bill because it is a first step in the right direction. Without the rejected amendments, the bill remains a partial success for the shippers. I look forward to participating in strengthening the bill in the future by working with the Canadian shipping community and fighting the issue of price gouging and uncompetitive rail freight rates.

The NDP has participated in efforts to provide the shipping community with better legislation and regulations for quite some time, and we will continue to be involved in this process to benefit shippers by addressing the shortcomings of Bill C-52.

Earlier I mentioned that several witnesses at committee honoured the amendments brought forward by the Coalition of Rail Shippers. These included Pulse Canada, the Mining Association of Canada, the Forest Products Association of Canada and the Grain Growers of Canada. All those groups wanted those six amendments to be adopted.

In February I raised some concerns that I had with the bill, including pricing discrepancies between CN and CP; the lack of market competition, innovation and regulation, because CN and CP operate as a duopoly; and the poor quality of rail freight transportation services.

The parliamentary secretary just asked my colleague a question about the fact that we have one of the nicest systems in the world, but I have some statistics.

According to the Rail Freight Service Review, 80% of shippers are unhappy.

I am not so sure that it is the nicest system in the world. I hope not, according the statistics.

At the last reading, I stated that the rail freight service review found that 80% of shippers are not satisfied with the services that they receive. This poor quality of services is affecting Canadian exporters, damaging our reputation in the global market and costing us jobs. We cannot afford to be left out of competitive business deals because the CN and CP cannot guarantee satisfactory service.

I will finish by saying that we must make rail freight services work again for shippers across Canada. We can accomplish this with strong legislation, a strong Bill C-52. I will support it even if I still believe that some amendments should have been adopted by the government.

[Paul Calandra, Conservative, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, I am interested to hear how the NDP now is in such favour of working together at committee because I was here when our government was a minority and the NDP, the Liberals and the Bloc would turn down every single amendment that government members brought forward. They would turn down witnesses. They would turn down reports. They would force committee studies, but now, all of a sudden, the Canadian people have spoken and they have given this government a majority mandate to get the job done across this country. All of a sudden we have heard time and time again that opposition members do not agree with the Canadian people. We know that.

I keep hearing this and I am wondering if the hon. member at committee asked about the nationalization of CN Rail, because the opposition members constantly talk about it in their speeches. I am wondering if the member asked questions about how much that would cost, whether the people who use the rail service are in favour of nationalizing CN Rail, how much it would cost Canadian taxpayers, how much it would cost shareholders of CN Rail to nationalize it and how nationalizing CN Rail would actually help freight services.