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

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is with pleasure that I rise to speak to Bill C-52 this afternoon.

It is a bill that we have been anticipating for a good number of weeks now. In fact, the Liberal Party has been advocating for this legislation, from what I understand, since 2008, and for very good reason. We need to understand and appreciate just how significant our rail lines are to our nation. We do a phenomenal amount of transportation through those rail lines, from coast to coast to coast. Every community across Canada needs to have a strong, viable rail line or access to such a rail line in order to succeed. At the end of the day, CN and CP own a vast majority of all the capital infrastructure that allows us to transport the many goods and products moved every day.

In fact, living in Winnipeg's north end I often pass through the CP yards. We can go over the Arlington bridge and get a very clear indication of the massive size of CP, and that is the smaller of the two railways. CP does less than 40% of the overall transportation of goods and services compared to CN, which does close to 60%. When we drive over that Arlington bridge, we can look on either side and see huge compounds where trains are loaded, offloaded, and their contents transferred to go in different directions, and so forth. We can drive down Inkster Boulevard or Sturgeon Road in the north end, or take a multitude of different bridges that go over the trains, in any single day and see the number of trains, the hundreds of rail cars full of a wide variety of commodities.

Given the importance of our trains in that rail infrastructure, one would think that would be a higher priority for the Government of Canada to recognize—and when I say “to recognize”, that means to get the job done.

The issue that we are debating today is nothing new. As I indicated in a question previously, the shipping industry as a whole, the stakeholders in that shipping industry, have been calling for very specific action virtually since 2007, because of the sense of frustration they have felt over the years. That frustration is based on the sense of fairness.

To what degree is there fairness in the relationship between our rail lines and our rail operators, in particular, CN and CP, which handle about 95% of the traffic? There is a sense of frustration that there is no level playing field, that those two dominant rail lines have too much power and control over freight costs and the type of delivery provided.

I must applaud my colleague from Wascana. The member from Regina, Saskatchewan has been a long-time advocate for this change. I know first-hand because I have heard him on numerous occasions in the last couple of years speak of how badly we need to have the legislation that is before us today. I know he has worked with many of the different stakeholders to try to get a better understanding of why these shippers are in the position they are in, and why it is so critically important that we do more.

He has taken the time, not just in recent weeks or months but for years, to try to raise the profile of this issue with the government. I know that he has already had the opportunity to speak when it was first discussed at second reading. I think he has done a fantastic job in ensuring that the Liberal Party is well-positioned to understand this issue and, ultimately, to take it forward.

I believe that the member for Wascana brings a great deal of credibility as to why this is such an important issue, because he was a former minister of finance. As such, he understands the economics and contribution of our rail lines and how important they are to our overall economy and GDP. He brings an immense amount of credibility to the debate on this issue and has allowed the Liberal Party to be well positioned on it.

We are suggesting that the time has come for the bill to get out of the House and into committee. There are many stakeholders out there who have vested interests, some in the millions and tens of millions of dollars, who want to participate in this debate.

Many people may not realize that one of the largest stakeholders in the rail lines is Bill Gates, the founder of Microsoft, who has billions of dollars invested in CN. However, as much as I might like his product, I am very much concerned for the other end, the people who have the $500,000 farm investment or their life's earnings through generations of families and who want to get their product to market. They are the ones I am really interested in hearing from.

That is not say that CN, CP and the short lines should be denied profits. Only the New Democrats would attempt to do that. We recognize that profits are necessary in a capitalistic market to succeed. However, we also recognize that there is a responsibility to be fair, but we have failed in that. The people who have suffered the most as a direct result are the prairie farmers, the shop floor of a manufacturing business in Ontario, the mining that takes place all across Canada and family businesses. They rely on the rail lines to get their products to market and do not have much of a choice in terms of selection.

Whether wheat, barley or potash, there is a litany of things that a farmer or small corporation uses trains for to get their products to market. This is what they have to go up against. One report canvassing the farming community indicated that it could only rely some 50% of the time on rail cars being in the right place at the right time, even though they had placed their order already. How can one manage a farm operation in the face of this? I think that most if not all members of the House would recognize that is just not right and that there needs to be a consequence.

When we look at Bill C-52, we see a bill that is at least moving us somewhat forward. We are not necessarily happy with all of the details of the bill, but I suspect that there will be a number of amendments proposed once we get to committee, and we look forward to hearing these.

However, the real challenge for the government is to recognize that it has denied the industry the opportunity to provide that direct public feedback. It has held off on this legislation, not once or twice, but on several occasions. Not only did the Conservatives do one study, they did two studies. They have only been in government for six or seven years, yet they have had two studies on the issue.

We know for sure is that there is a high level of interest. From discussions and my understanding from the member for Wascana, we want to afford individuals who would like to come to the committee the opportunity to state their case, to make representations on what they feel is important.

What do I mean by saying that? We anticipate that this legislation will pass. The Liberal Party has indicated that it will co-operate on its passage to committee, because we believe it has taken far too long to get the bill before us today.

What we want in return is not something specific to the Liberal Party as much as it is specific to the different stakeholders out there. We would like to see the committee afford an opportunity those who want to come to committee to make presentations and express their concerns.

I believe that the government needs to hear what shippers and even the rail companies, CN and CP, have to say about the legislation. Given that the legislation has been on the back burner for so long, we recognize that there have been some mild, and I underline the word “mild”, modifications or changes that have afforded some marginal benefits. At least that is what some of the stakeholders have informed us, but nowhere near to the degree necessary.

I think it is very important that through the committee stage we do not try to put limits on how the members might get engaged in this. Sometimes there is even value in taking the committee off the Hill. There could be potential value in that in this situation.

At the end of the day, one of the things we are looking for is a very strong service level agreement, so that the industry stakeholders as a whole feel confident that there is something they can do to ensure that their product will get to market in a more timely fashion.

It saddens most Canadians when they hear of the waste that occurs because of delays or the lack of availability of cars. Those are very real issues that many producers have to face every year.

In the service level agreements, the producers are looking for a commitment in writing to some sort of penalty if the rail line does not live up to its commitment. I refer again to those small producers in particular, but also to all of the different stakeholders who depend so heavily on our rail lines, having their crops at certain stations at the right time in anticipation of their crop ultimately getting to market.

The same principle applies for other things. I am very proud to be a prairie member of Parliament. There is nothing like driving between Winnipeg and Carman and seeing eight or nine huge combines going through one field. One can see the tonnage of wheat being collected. Ultimately, it will end up on a train. The farmers need to feel confident that the train car will be there at the right time for them. Agriculture uses our railway significantly.

Our forestry industry is huge, whether in British Columbia, Manitoba or Atlantic Canada. There are minerals, again from coast to coast to coast, and chemicals of all sorts, as well as fertilizers. What about the oil and gas industry? Imagine how incredibly important the oil and gas industry is to our country. I disagree with the leader of the New Democratic Party. It is not Dutch elm disease. All of Canada benefits from our oil and gas production out west. I believe that the vast majority, 95%, of Canadians, would recognize the true value of it. Our rail lines play a very critical role in that area also.

The dependence on industrial and manufactured goods is very real. How many trains do we see coming across our country, from Ontario or Quebec, full of brand new vehicles destined for car dealerships? Many of them are pre-ordered. An anxious consumer is anticipating the arrival of his or her vehicle.

The list goes on. To get a good sense of how dependent we are on our rail lines, go to a major rail line, park outside for a day, and see the amount of train traffic that travels by. Watch the containers go by. Whether they are Canadian Tire train traffic, or Costco products, products from China, brand new automobiles, containers of Saskatchewan prairie wheat, Manitoba's and Alberta's endless commodities, or lumber from British Columbia, it is virtually endless. To really get an appreciation of how important rail service is to our nation, park outside a main line and watch the hundreds and hundreds of cars that pass every day and imagine the potential.

If one believes in the Canadian economy, as I do and the Liberal Party does, and that the potential is unlimited, one has to recognize that our rail line is going to play an absolutely critical role in the future development of our country. That is the reason I would ultimately argue that the government has been negligent. This has been an issue on the agenda since 2007.

We are glad to see it here today. We support the bill in principle. We want to see it go to committee. We want to have individuals make presentations and express their concerns. The idea is that the government will be receptive to the necessary amendments that would make the legislation better so that when it comes back at third reading, it will receive the unanimous support of all members of the House, given the very important role of our rail lines, which stakeholders and consumers depend on.

With those few words, I thank the House for the opportunity to speak.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, I thank my colleague for his speech.

In his speech he mentioned many positives about this bill, which we support.

Could he expand on what he would like to see in this bill? Aside from a dialogue between the various stakeholders, what would he like to see improved while the bill is in committee?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, there is a huge market to the south of us, the U.S. The bill is exceptionally vague. I think it is a major hole in this bill to not incorporate any level of assurance for the industry in terms of these service level agreements and what impact they would have on the transportation of product from Canada to the United States. That would be one major issue.

Short lines are another major issue. There are hundreds of miles of short lines. It is a relatively small percentage. CP and CN have probably about 90%, 94%, or 95% of the total industry. There is still that other 5% or 6% or so. That is just my best guesstimate.

It would be nice to get more clarification. That is why I would argue that what we really need is that the government have an open mind going into the committee stage and that it listen to the stakeholders and be prepared to amend the legislation. I suspect that there will be a number of amendments.

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

Mr. Speaker, at this point, can the member throw support behind a national transportation strategy? I do not know if the member's party has taken a position in favour of a national transportation strategy. I think we really need to look at this one relatively small but important piece of legislation in a larger context.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, a national transportation strategy is not new. One could probably trace it back through the last decade as one of those issues that needs to be dealt with. The Liberal Party has been advocating for it for a number of years. At the end of the day, I suspect that it is in all of our best interests.

There are opportunities in terms of passenger transportation. I would love to be able to hop on a train, for example, to go from Winnipeg to Regina. I cannot do that. Yet those are two very important communities, not only in my life but in the lives of millions, I would argue. The transportation corridor from the 905 belt to Montreal, Quebec City and Ottawa all the way down to Hamilton and Windsor is a wonderful opportunity.

There needs to be that overall transportation strategy. I suspect that at least three of the four political parties are going to have a detailed strategy going into the 2015 election.

[Frank Valeriote, Liberal, Guelph, ON]

Mr. Speaker, I want to thank my friend from Winnipeg North for his compelling speech.

As a member of the agriculture and agri-food committee, I want to confirm many of the observations he has made with respect to the abuses the farming community has been subjected to. They include the condition of cars, which is so bad that upon arrival they have lost wheat through holes in the floors of the cars. There is the late arrival of cars, when farmers have been asked to have their produce available days in advance of the arrival of those cars. There is a big complaint from overseas about the inability to deliver on time.

I am just wondering if my friend could embellish a little and talk more about the abuses our farmers have suffered and how long overdue this legislation really is.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is, in fact, a very important issue, so I appreciate the hon. member raising the question.

At the end of the day, it is all about quality service. It is not good enough when one loads a product into a car and one actually sees seepage because of a container's poor quality. There needs to be more accountability, and that is, in essence, what the individuals who require this service are calling for. Today it is very limited. There is a great imbalance.

This bill is a step in the right direction. The question is whether it is going to be a very small step or a decent-size step? If it is a decent-size step, it would imply that the government is actually going to listen to some of the presenters at the committee stage. For it to be a decent-size step, there will have to be amendments to make this bill better legislation. If we do that, members will be able to address some of the issues my colleague has just raised.

This goes to the core of the issue. Shippers have to have the cars on time. Those cars have to transport that commodity to its destination at any one of Canada's coasts. That has to happen in an efficient manner that does not take away from the quality of the product being transported, which has been an issue raised by many individuals. They want their quality product to arrive in the same condition in which it went into the train. Who can blame them for that? After all, they want to have repeat clientele. They want to continue those agreements well into the future.

For example, members know that prairie farmers produce the best product in the world. They want that best product not only going into the cars but also departing the train as a first-class product.

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

Mr. Speaker, I would like to know what my colleague thinks about the NDP's criticism that Bill C-52 does not address rail fees.

When members of our party consulted exporters, many of them criticized the huge variations in prices, depending on which company they chose—CN or CP. Unfortunately, this bill does not address these price discrepancies.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I recognize that when one talks about freight rates, one needs to be cognizant of the fact that it is hard to put a set rate in legislation. There might be some guidelines one can incorporate in regulation in a very general framework as it is set up in the legislation itself. I would like to think that members will see some suggestions on that point.

There would have to be specific types of amendments. One has to be careful when talking about the market value of a box that contains whatever type of product. One has to leave a certain amount of that issue to the private sector.

I approach things with a relatively open mind. Hopefully, the government will do likewise. At the end of the day, it is about shippers and consumers.To a certain degree, it is also important for Canada's rail lines and their longevity. Members want CP and CN to grow and prosper. It is not about denying profits to these two corporations or the short lines. It is more about providing a guarantee of quality of service and a sense of fairness and that farmers in the prairies are not being taken advantage of because of the dominance of two rail lines.

When we go to committee, these are the issues we have to ensure are addressed. If we do not do that, then there are far too many individuals, groups, corporations and businesses that will lose out. I ask the government to do the right thing. I conclude by saying that I trust and hope that the government will seek and make the necessary amendments so that members can unanimously pass this legislation at third reading.

[The Acting Speaker, Conservative, Bruce Stanton]

Before the hon. member for Louis-Hébert resumes debate, I must inform him that I shall be interrupting him at 1:58 p.m. for statements by members.

The hon. member for Louis-Hébert has the floor.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, I am pleased to rise today to discuss this bill, as this may be the dawn of a new era in rail transportation. It has been my sense that the sector has been in decline for decades.

When a bill is introduced in the House, it is usually because there is some problem that needs addressing. Laws are not passed just for the sake of passing them. We do not set out to bore people. We are not in the business of hurting market sectors. We are here to make things better.

The Liberals acted hastily when they privatized CN in 1995, and they failed to think through the consequences. Monopolies were created in some regions of the country and duopolies in others, and we know what this led to.

In my riding, for instance, one of the consequences of the privatization has become a recurring election issue: the upkeep of the Quebec Bridge and its rail lines. The matter has been before the courts for seven years and is the direct result of privatization. The Conservatives only ignored the problem. When CN was privatized there was no consideration given to the consequences for the users of the different services. It is not worth mentioning VIA Rail because we all know what the problems with it are. We will have other opportunities to discuss this. The users of these transportation services have had problems for years.

The government has finally decided to act, but it is doing the bare minimum, and more needs to be done. We intend to support the bill at second reading and propose amendments to improve it.

If the Conservative government ends up introducing regulations, one can be sure that it is because the problem has dragged on for some while and something really must be done.

Is the fact that it is a private company the cause of the problem? No, the problem is that there is a monopoly. In this situation, there are two conflicting priorities: a company's need to make a profit and provide a dividend to its shareholders, and the service that it must provide its customers.

If there is no incentive created by competition, customer service suffers for the sake of shareholders' dividends. Moreover, an increasing number of sections of railway are being closed in rural regions, more and more services are being dropped and more and more cuts are being made to passenger service. This era has seen the decline of rail transportation.

And that is despite the fact that ours is a huge but sparsely populated country with vast distances to cover. That is why we need an efficient long-distance transportation system that causes as little environmental damage as possible. Rail transportation would fit the bill, but the government is letting the system go downhill.

The government waited years to act. It should come as no surprise that people using the service began to get together. I am not suggesting that they began to unionize, because that would freak some people out. People who use the system felt the need to talk to one another about how the level of service does not make sense. They started to exert pressure on the government because the level and quality of service were poor.

Globalization means that we have to deliver products all over the place, and quickly. Obviously, if someone has a product, be it from a forest, a mine, a farm or anywhere else outside a major centre, that product has to be packed up and shipped quickly. Global competition means that we need to provide this kind of service and we need the infrastructure to do it.

So the question is, how can we balance the need for a business to make a profit—be it a farm or a major corporation in a remote location—with the needs of many companies that often have no alternative form of transportation? Throw into the mix the need for transportation to be as green as possible. How can we bring these needs in line with each other? This has always been a problem.

That is why, in January 2011, Transport Canada released a final report on its rail freight service review. The committee's mandate included the following:

Conduct a review of the rail-based logistics chain...with a focus on service provided to Canadian shippers and customers...

Identify problems and issues with respect to railway service including those stemming from other elements of the logistics chain.

Rail transportation is one part of the logistics chain for shipping to various clients.

For shippers located on shortlines, determine if there are any problems with logistics and, if so, the source of the problem including service, operating, or marketing practices of the main-line carriers.

Signs were already pointing to a deep-rooted problem. At the end of the report, of course, there are a number of recommendations. There is a whole range. For example, the first recommendation is as follows:

The Panel recommends that railways, in collaboration with their stakeholders, continue to develop commercial measures to improve rail service.

In 2011, it was acknowledged that there was an issue. That was two years ago.

The second recommendation is as follows:

Prior to implementing changes in local train service, railways should consult affected stakeholders and provide a minimum notification period of 10 working days.

That recommendation relates to previously identified service issues.

And here is the third recommendation:

Railways should enter into good-faith negotiations to establish service agreements upon request by stakeholders...

That recommendation truly concerns the scope of Bill C-52, and the bill addresses only the third recommendation.

There is a fourth recommendation:

The Panel recommends that railways, assisted by a facilitator appointed by Transport Canada, should engage in negotiations with stakeholders...

That happened a bit later. I will speak to that in a moment.

And the fifth recommendation is as follows:

Railways should provide improved supply chain visibility through enhanced reporting.

Basically, there is a lack of communication between the service provider and the clients. Plain and simple. We could keep going.

Last year, in May 2012, the facilitator's report also came with recommendations.

The first recommendation is as follows:

Transport Canada should make the service agreement template...available to rail freight stakeholders...

There is mention of a service agreement template, a dispute resolution process, and so on.

This is a fundamental problem. Clients often have no choice. Even rural or more remote areas are producing goods.

That is the beauty of globalization. We can produce goods across the country and deliver them to anywhere in the world. To do this, we need world-class infrastructure. We have a serious problem when it is totally impossible for users to get adequate service.

We see that people are dissatisfied and have lost confidence. We also have to consider the economic consequences for users of this service, one of which is the erosion of market share. We often forget this, but we are sacrificing Canada's economic driving force.

That is why I think this bill is a step in the right direction. We are slowly trying to solve the problem through this legislation. Although it does not do everything we would like it to and it does not come close to creating a national transportation strategy, at least we are trying to come up with solutions. We are getting closer to something better for the entire supply chain from the perspective of producers in rural and remote areas.

If we do not address this issue, Canada's ability to compete will be compromised. God knows that Canada's competitiveness is important. We therefore cannot allow rail service and our providers' ability to improve that service to deteriorate.

[The Acting Speaker, Conservative, Bruce Stanton]

The hon. member for Louis-Hébert will have eight minutes to speak when the House resumes debate on the motion.

The House resumed consideration of the motion that Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), be read the second time and referred to a committee.

[The Speaker, Conservative, Andrew Scheer]

The hon. member for Louis-Hébert has eight minutes to finish his speech.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, when I had to interrupt my speech, I was talking about the report on the mediation that was unfortunately not successful. We tried to open a dialogue between the clients and the service provider. We were unable to resolve the problem and that is why we have this bill before us today.

CN and CP wanted nothing to do with this bill. But it might be a kind of wake-up call for these two companies. It is a little bill that does not do too much or ask for much and that we would like to see improved. For the rail companies it is a sign that everything is not just fine.

There are things to improve, and these companies will be tasked with improving them. If they do not, other more restrictive bills will be introduced. Even though, depending on the region, they have either a monopoly or a duopoly, they will have to develop a corporate culture based on customer service. They will have to find a balance between profit and customer service, so that customer service is not sacrificed for the sake of profit. That is the message we must get across.

I would now like to talk about the vision of transportation as such. In some respects, this bill manages a crisis. We have let the rot set in and we have waited until the very last moment. Minimal action has been taken. However, it is not our job here in the House of Commons to engage in short-term crisis management. Our job is to stamp out a vision for our country for tomorrow, for the day after tomorrow and for decades to come. Right now, we lack this vision.

I would therefore like to share with you some elements of a vision which has been dubbed, among other things, a national transportation policy. It would be entirely appropriate to address issue. It is my hope that once the bill passes second reading stage and has been referred to a committee, committee members will expand the debate to consider the overall evolution of the rail transportation system.

We live in a global world. We have a phenomenon called the Internet. It allows a supplier to advertise a product on the web and a customer anywhere in the world to buy that product. The logistics of delivering that product is the ensuing challenge. For Canada, a country of wide open spaces, the rail transportation system is absolutely critical to the process of delivering goods.

So then, it is important for us to continue focusing on this issue. However, I want to stress the importance of striking a balance. Much has been said about striking a balance between an industry’s ability to make a fair and reasonable profit and the possibility for captive customers to have a service that meets their needs and allows their business to grow. Such a service would help people stay in their regions and prevent a population exodus. It would be one way to develop resource regions. This matter is extremely important to us.

On the question of balance, we can take it further. We can talk about striking a balance between the transportation of people and freight. Even though there are problems with respect to freight transportation, passenger rail service often takes a back seat to freight transportation. How many times must passenger trains pull over onto a siding to allow a freight train to pass?

It all comes down to a matter of balance. Therefore, we need to examine all of these aspects and put an end to any short-term vision. We need to come up with a plan for a rail infrastructure worthy of the 21st century. This is important.

We are still living with an infrastructure that is a holdover from the 19th century, albeit an infrastructure that helped cement our national unity. Why not take another stab at improving it so that the companies that provide the service as well as the users and citizens can all benefit.

Finally, I want to stress that the main reason we want a national passenger and freight transportation policy in place is to be able to plan and make the right moves at the right time, rather than merely react to situations.

A business owner always looks to get a positive reaction from customers. Right now, there is no positive response and that is why this legislation is before the House.

In conclusion, I will say that this is a step in the right direction, a very small step. Everyone has agreed to support it. In fact, everyone is operating on the principle that a bird in the hand is worth two in the bush. So we are taking this small step today. We hope to improve service to suppliers. We hope the government will accept some of the amendments that will be proposed. Ultimately, we are probably addressing the most glaring part of the problem, but, since there have already been some reports and mediation attempts, and because we at least want to solve certain problems, I believe this requires cooperation by everyone, and especially by the various stakeholders, so that the House has to intervene as little as possible in the development of the railway system. It will be important for citizens, suppliers, customers, the economy and especially for Canada that we resolve that.