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

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Speaker, I would like to thank my colleagues the House who gave me the opportunity to participate, along with my colleague, the House Leader of the Official Opposition, in the debate on a bill that is extremely important for the country. In my opinion, Canada was built on the railway.

If there is something that MPs, aside from the hon. member for Trinity—Spadina, do not talk about in this House very often, it is rail service, which is not necessarily seen as a priority. It is sad to see that, since the rise of the automobile, we talk less and less about the railway, on which Canada was built. It is a subject that is overlooked. From a transportation perspective, it is a big mistake to have allowed the railway to slowly be forgotten over the past 50 years.

In Gatineau, our infrastructure takes a beating. Temperatures between -40^oC in the winter and +40^oC in the summer and a large number of heavy trucks and other vehicles damage our infrastructure. Our bridges and roads are constantly in need of repair, if they do not need to be replaced completely. This creates urban sprawl. It is difficult to deliver goods.

I was shocked to see the statistics related to Bill C-52, given the tireless efforts of the NDP member for Trinity—Spadina, who even introduced a private member's bill in this regard. People may not be aware that 70% of our goods are transported by rail. Of course, this is a whole sector of trade.

We have a government that prides itself on always being there for the economy and on having action plans. However, the government needs to take action rather than just talking about its action plan.

I asked the Minister of State for Transport a question about the fact that this has taken five years. I would like to believe him and I find it quite amusing that the government refers to time in terms of what is happening here. Five years may go by quickly, as though it is only nanoseconds, but at some point, we should not be satisfied with this type of situation.

One thing that frustrates me about this House is how long everything takes. When we know that the stakeholders are in agreement, when we know what the problem is, we have to stop playing petty politics and simply resolve the matter. That is why we were elected in the first place and why we are here in this House. Our job is to get these things done.

The leader of the second opposition party wants us to speed up the process. No one opposes the idea of speeding up the process as long as we know that everyone is willing to really listen to the complaints and suggestions. When we complain or make suggestions, it is not to play petty politics, but to ensure that, at the end of the process, we have legislation that makes sense and meets the needs of small businesses. It should be noted that this bill affects small and medium-sized businesses.

Let us move away from the duopoly for a moment. I like the expression the minister of state used. This is a great idea for a new Parker Brothers game, but this game will not necessarily be fun for small and medium-sized businesses. It verges on what I would call forced negotiations. It is hard to negotiate when you have a sword hanging over your head.

Considering that rail service is the driving force of our economy, there is a serious problem here. As parliamentarians, we must try to solve this problem regarding the balance of power. Indeed, this will serve small and medium-sized businesses, but at the end of the day, who will it really benefit? It will benefit our constituents, all Canadians who need these products and services, who need them to get to the right place safely and quickly.

Speeding up the process will save money. So we have a big job ahead of us. Yes, we are always looking for ways to speed things up.

As the House Leader of the Official Opposition pointed out—and as justice critic I see this quite often—it is all well and good to show up with non-partisan proposals guided by the common good and respect for legislation and charters, but we always seem to hit a brick wall. The government does not even bother to find out whether the proposals have merit, which is seriously undemocratic.

For some members of the House, these are extremely important issues because they affect their constituents who have small and medium-sized businesses and who use rail services. These people have a few things to say about this issue. If we listen carefully we will see that they may have something worthwhile and important to say, which can benefit the debate. It does not help to always be so paranoid and think that people only ever speak to take down their opponent. On the contrary, sometimes they speak to enlighten the debate and improve the situation.

As the House Leader of the Official Opposition so eloquently explained before me, the NDP plans on supporting the bill at second reading so that it can be sent to committee. I truly hope that the government will pay close attention and that enough expert witnesses will be invited to guide parliamentarians from all parties, so that they can draft a report on the committee's deliberations. Then, when we return to the House, the official opposition will be reasonably satisfied that this was taken seriously, that we were listened to and that the people who have a vested interest in this bill were heard. If that is the case, we will have the best bill possible to help the rail service, an industry that is fundamental to this great, beautiful country we call Canada.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, it was incredible to watch time and again the ideological battle by the government against grain farmers who voted consistently to keep the Wheat Board. Somehow the Conservatives had a mandate to get rid of it even though farmers, consistently in 13 consecutive votes, said that they wanted to keep it.

The realities facing farmers, particularly now that the government does not feel it has to have this pitted battle with the Wheat Board on those ideological grounds, maybe has finally opened up the flood gates. The reality now of bringing Bill C-52 to the table was also the reality three or four years ago. It is somewhat better according to the minister, but according to the people moving the product, 80% of them think things are still intolerable and not acceptable.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, something I forgot to mention in my comments, and I know my colleague from Saskatchewan would share this, is that the member for Trinity—Spadina has been going around, community by community and coast to coast, talking to those very shippers that he mentioned, and has an incredible catalogue of who, under the current situation, is suffering under the regime and what kinds of improvements may be there.

Regarding openness from the government, that is not necessarily for me to say, as the government has the majority on that committee in terms of the breadth of our study and whether we actually allow people both agreeing and not. It seems to me that we would be interested in that process being open. That has not been our experience with the government. If that is what it is looking for in Bill C-52, then clearly the official opposition is willing to work with the government on this issue.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, it is with some pleasure that I rise today to address Bill C-52, which is perhaps not the best named act I have ever seen.

The naming suggests that the problems shippers face across this country will now be solved. For those of us who come from the resource regions of this country, for years we have sat with shippers in forestry, farming, chemical and manufacturing industries as they have petitioned us, as members of Parliament, to do something about the situation. Recently the Coalition of Rail Shippers was asked and polled as to what its satisfaction was with the service they were receiving from the competitive duopoly, as described by the minister. Eighty per cent of those polled described serious and significant problems with their access to rail. That is not great.

While Bill C-52 is an improvement over the status quo, it has been five to six years promised and in the waiting. We see today what I can at best describe as a half measure. As the minister pointed out, as critical as rail service is to the Canadian economy, I think we could emphasize it even more. Seventy per cent of all the goods Canadians manufacture and sell in this country go by rail. An efficient economy, which we see with some of our European partners, would have an even higher percentage. It is the most efficient way to move things across borders and large tracts of land, which are two things we contend with here in Canada.

The minister described the near monopoly as a duopoly. I will take a moment on this, because I think it is important for Canadians to realize that if, for the Conservative government, the definition of a competitive marketplace is what we have in the rail shipping industry, we have a problem. Not only are there only two significant shippers available to those who are looking to move their product, but in many regions of the country there is only one. The line going to their freight yard, farm or lumber yard is controlled and wholly owned by one shipper. If one has a problem with that company, the status quo is terrible.

Members have seen it time and again. I can think of one particular mill in my riding in northwestern B.C., in Fort St. James, that has crawled through perhaps one of the toughest times the lumber market has ever seen since B.C. started shipping wood. It has managed to have a partnership with the union, get concessions on wages and have a great partnership with the community. It finally got to a viable place after years of struggle and against all odds. This is one of those communities for which it would be an understatement to say it relies on this industry.

At the end of the day it cannot get cars to move its products to market. It has product. It has someone willing to purchase that product. In between stands a rail company that does not seem to care that it made a contractual promise to deliver so many cars on such and such a date. The mill is waiting days and weeks for the cars to show up. The wood is stacked up in the yard and they cannot sell it.

The mill has turned to me as the member of Parliament. We approached the government with appeals and have said we need two things. One, we need both the carrot and the stick. We need a way for companies to deal with the shippers in a timely and cost-effective manner so that the conflict resolution model is not onerous and expensive. Again, smaller companies get penalized under this system.

CN and CP have had many years now of extraordinary profit. Since it was privatized under the Liberal government in the late 1990s, CN has gone on to see record profits and is now run primarily out of Texas. Most Canadians do not realize that, just because the cars have a Canadian flag on the side, where the cars actually go and to whom and when is not necessarily decided under Canadian interest.

This legislation would allow the government to look to a company and say that even though it received $2.5 billion profit last year, we are going to really hit it hard by charging a $100,000 fine only if we find a serious and significant problem, only if the company looking to move its product is willing to pursue this all the way through the quasi-judicial process. At the end of the day maybe it will get fined.

To CN and CP, these very large companies, it may be an easy equation to let them go through that dispute resolution, pursue it all the way through. It is more efficient and cost-saving for CN and CP to just ignore it. At the end of the day the worst case scenario is they would get a $100,000 fine.

That might just be the cost of doing business, because these companies could turn more profit in sending those cars somewhere else even though they have a signed contract.

What is frustrating for a lot of these farmers is that they have contracts and they assume that those contracts mean something and then at the end of the day they do not, because they are beholden. The power imbalance is too great.

The Minister of State for Transport is attempting to readjust the power equation a bit. He mentioned as much in his answer to one of the questions. It has to be recognized that, in that key and critical relationship between those who make the goods and those who ship the goods, there is a disparity of power. We need to rebalance the tables a bit.

Often New Democrats talk about the underdogs, or people who have lost their jobs, or people who have fallen through the social safety net that the government continues to tear up. The underdogs we are talking about here are often major manufacturing outfits in Canada, very significant large farming interests. One would think they would have a lot of sway and power with the government, but for some reason the major rail companies that exist in this country, the duopoly, seem to be able to pull the string on the government and essentially get what they want.

We waited six years. I know the minister said it was a nanosecond in Ottawa time or in geological time. I am not sure which, but five or six years is not a priority for a government. There have probably been 90 or 100 bills on crime and punishment from the current government. This is the first one on rail, and yet rail moves 70% of the product that we sell around the world. For the government to call it a priority, I would hate to see what the government thinks is not a priority because this legislation has been a while in the waiting.

Some people listening might think this is one of those rural-urban issues that only really affects those living in the resource sections of our country, those places that grow the trees and mine the rock and produce the energy and whatnot. Nothing could be more further from the fact. This is one of those issues that crosses over the interests of all Canadians, because if we are unable to move our products in a reasonable time to market either within a province, between provinces, across borders, to those international ports in Prince Rupert, Montreal, Halifax and beyond, it hurts everybody. When things are not reasonable and we cannot find a way to solve the problems of this power imbalance between these two companies centrally and all of the shippers involved, it hurts everybody. It hurts people right across the board.

The government is seeking to get a balance. While this legislation is worthy of consideration at committee, we hope and pray that the government is open and interested in amendments to achieve the balance that the minister talked about in his comments. I come from communities that rely on that line. It is our connection to the world. It is our connection to a viable and secure economic future. When that line is disrupted for whatever reason—either through contracts that are not fulfilled by the rail companies or some geological disruption, to take some of the minister's line—it is absolutely critical to us because in today's economy, as competitive as it is, getting products to market in a timely and efficient manner is absolutely essential. We are competing with the world, and we can, but we need a good infrastructure system.

We used to have governments in Canada, of either more progressive or more conservative persuasions, that believed in the necessity to have that strong infrastructure. That was a role of government to pursue and enable the growth of the country. It was a Conservative government at the beginning that initiated the dream of a rail line across this country and drove that last spike. However since those times the present version of the Conservatives believes that the role of government is slightly different.

Here obviously what government must do is play referee on what we would argue is an unbalanced playing field. To this point, looking at a $100,000 fine for companies that are turning billions in profit perhaps suggests to the companies that the incentive is not there. When cars do not show up, when cars show up damaged and not useful and late and unable to ship the product that they are contracted for, most reasonable Canadians would say there is a dispute that would have to be filed through court. If it is the only company they can ship with, then how often are these companies going to go hard at it? Therefore they come through us. They come through MPs who represent these various constituencies and implore us to do something about it.

This legislation is the government's attempt to do something about it. It has taken us a few steps. We insist that the government be open to taking us the rest of the way, so that at the end of the day we get it right this time, because we do not take on this issue very often in Parliament. Even though it may be a nanosecond for the government, this is years of frustration for industry; this is millions if not billions of dollars lost to the Canadian economy.

[Steven Fletcher, Conservative, Minister of State (Transport)]

moved 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.

Mr. Speaker, I am pleased to rise today to support Bill C-52, the fair rail freight service act. I would also like to take a moment, since it is the first time this year that I have spoken in the House, to say that I wish everyone a great 2013 and look forward to passing great legislation, such as the act I am about to speak to.

First, I congratulate the Minister of Transport, Infrastructure and Communities for his tremendous work on this important file. I would also like to thank my colleagues, the former Minister of State for Transport, the hon. member for Yellowhead; the Minister of Agriculture and Agri-Food; and the Minister of Natural Resources for their contributions and support. In addition, there were many more people who contributed to the legislation in order to make it the best legislation possible.

Our Conservative government remains focused on jobs, growth and long-term prosperity. The bill advances these priorities. It will help shippers maintain and grow their businesses, while ensuring that railways manage an efficient shipping network for everyone.

Canadian businesses count on a reliable rail transportation system.

With 70% of Canada's surface freight moving by train, railways are extremely important to the competitiveness of our economy. In 2010, Canada's major freight rail companies, Canadian National and Canadian Pacific, served approximately 5,000 shippers and transported products to more than 10,000 destinations in North America and around the world.

As my hon. colleagues know, our government launched the rail freight service review in 2008. Its objective was to address ongoing issues raised by shippers concerning the reliability and consistency of rail freight service. We appointed an independent three-member panel to conduct a comprehensive review of service issues and problems related to the rail system in Canada. The panel was asked to submit recommendations to improve the efficiency, effectiveness and reliability of rail shipping in order to support trade and economic growth. The panel held broad consultations across the country, hearing from both shippers' representatives and railways.

Their recommendations proposed the use of service agreements to increase the clarity and predictability of rail service. These agreements would clarify and clearly define the services that railways would provide and how shippers and railways interact. This proposal is based on the idea that by working together to develop these agreements, shippers and railways can improve the efficiency of the supply train rail freight system and in doing so enhance their contribution to Canada's competitiveness in the world economy.

It is worth nothing that service agreements are a commercial tool, which our government believes is the best approach to improve the relationship between railways and shippers. We base this view on the fact that shippers and railways have always worked together commercially to define their private business dealings. Sometimes, however, shippers have been unable to negotiate contracts with railways to address service issues. Many shippers would like these agreements to know what service they can expect from the railways in order to manage their businesses and plan for the future.

On March 18, 2011, our government announced that it accepted the panel's commercial approach. In fact, we went beyond the recommendations. We put in place four key measures to improve the performance of the entire rail supply chain. First, we launched a facilitation process to bring together shippers and railways to negotiate a template service agreement and develop a process to resolve commercial disputes. This process focused on improving the private commercial relationship. This six-month facilitation, which was led by Mr. Jim Dinning, took place in 2012.

Second, we committed to table legislation to give shippers the right to service agreements with railways and to establish a process for obtaining an agreement if commercial negotiations fail. The fair rail freight service act would fulfill this commitment and give shippers the certainty that they would be able to obtain service contracts from the railways.

Third, we committed to establish a body of rail shippers to address logistics and develop standards to improve competitiveness. This group, known as a commodity supply chain table, will soon be established. Finally, we determined the need for an in-depth analysis of the grain supply chain to focus on issues that affect that sector and help identify potential solutions. This study is under way and should be completed soon.

Together, these measures deliver on our Conservative government's commitment to ensure Canada has the rail system it needs, one that supports strong economic growth and long-term prosperity.

It is worth noting why the legislation is needed. Canadians and Canadian businesses depend on rail to transport products to markets, both here in Canada and around the world, and it has to be done efficiently. We drafted the fair rail freight service act by working closely with and listening to the stakeholders involved. Shippers from a wide range of commodities and manufacturing sectors have told us what is important to them and what they need. Rail companies also explained the obligations they have to serve all shippers and the constraints they may face in carrying out their business.

This consultation helped us develop reasonable and intelligent legislation that would reflect the interests of both shippers and railways to meet the needs of the Canadian economy. This consultation also helped us develop reasonable and intelligent legislative proposals that reflect the interests of all the various stakeholders throughout our economy. The fair rail freight service act would create a strong incentive for issues around rail shipping to be settled through commercial means.

By requiring railways to offer agreements to shippers that requests them, the legislation would give the shipper the legal right to ask for a service level agreement. When a shipper requests an agreement, railways would have 30 days to offer one. The agreement would cover the terms of service that the railway and the customers would follow to move the shipper's goods. It could also include communication protocols and performance indicators, such as frequency of service, transit times and the number and type of cars, as elements that the rail companies would provide for their customers. This right to a service agreement would provide an effective tool for shippers to use in their discussions with railways.

In the event that negotiations for such an agreement fail, Bill C-52 proposes a fair, speedy and inexpensive process to establish the service contract. The shipper would be able to go to the Canadian Transportation Agency to ask an arbiter to impose an agreement. To make such a request, the shipper would have to demonstrate that an effort had been made to reach an agreement commercially and that a 15-day notice had been served to the railway prior to the request for arbitration. The shipper would trigger the arbitration and frame the service issues to be addressed. The shipper and the railway would then each have the opportunity to provide submissions to the arbiter with their views in respect to the contract.

This process, however, would be an interest-based arbitration. This means the arbiter must consider the interests of both the shipper and the railway in establishing the service contract. The legislation would provide guidance to the arbiter on factors to consider when establishing a service contract, including the shipper's transportation requirements and the overall obligations of the railway to provide service to all shippers. The arbiter would have the flexibility to determine the right service contract for each individual case. Every shipper is different. There is no one-size-fits-all approach. In establishing a contract, the arbiter must consider the unique circumstances in each case. As a result, arbitration decisions would be fair and reasonable for both parties.

Finally, the fair rail freight service act would provide a strong enforcement mechanism to ensure compliance with arbitrated service contracts. It proposes the use of administrative monetary penalties to hold railways accountable for their service obligations, as defined in the arbitrated contracts. If a railway breaches its service obligations, the shipper would be able to complain to the Canadian Transportation Agency. If the agency confirms the violation, it could apply a penalty of up to $100,000 for each violation by the railway.

Taken together, these measures of the right to service agreements, an efficient and speedy process when commercial negotiations fail and strong enforcement for arbitrated agreements would provide shippers with clarity, predictability and reliability when they need to grow their businesses and plan for the future.

Our primary objective is to encourage better commercial relationships between railways and shippers. This legislation creates a very strong incentive for parties to settle agreements privately. In most cases, shippers and rail companies should be able to negotiate terms and agreements on their own. Second, over the last number of years rail companies have improved their service. Shippers themselves acknowledge that service has improved, and I would like to take a moment to congratulate the rail companies for this progress. Despite this fact, we must pass Bill C-52 to solidify and improve upon these gains to ensure that Canada's rail system is well positioned for the future. We must ensure the entire rail system in Canada will be able to support the expected increases in shipping, which is bound to occur due to our government's robust trade agenda.

As demonstrated by several new and developing free trade agreements, Canada is turning increasingly towards global trade to generate economic growth. This means we need efficient and effective transportation networks to give Canadian businesses a competitive advantage in the world markets.

Before I conclude, I would also like to note that this legislation supports our government's responsible resource development agenda. In our efforts to modernize the grain sector, as we expand Canada's international exports, we need a rail transportation system that can move our resources to global markets efficiently and reliably.This legislation will make an enormous difference for our shippers in the resource sector. It will give grain farmers more predictable service as they work to sell their grain on the international market. It will give lumber mills more reliable service as they expand sales to Asia, and it will improve service to exporters of minerals, such as potash and coal. By improving the reliability and predictability of rail service, we help to strengthen Canada. We help strengthen Canadian companies and help increase Canadian companies' overseas sales.This legislation will create jobs, make Canada more competitive in the world economy and will make Canada a more attractive place to invest.

This proposed legislation offers a strong new tool to enhance the relationship between shippers and railways. Our Conservative government is proud to be taking this strong action to enhance efficiency, effectiveness and reliability of the Canadian rail freight system. I am convinced that these proposed measures will help build an even stronger freight rail system and contribute to Canada's success in international trade.

Bill C-52 will promote growth, create jobs and build prosperity for all Canadians. I encourage all members in this House to vote in favour of this legislation and refer it to the Standing Committee on Transport, Infrastructure and Communities without delay.

I would like to thank the many stakeholders, parliamentarians, and the shippers and rail companies, for their input in this process. We have come forward with legislation that I think has very broad support and will, as I have said many times already, make our country stronger. We live in the best country in the world, at the best time in history to be alive, and now we can ship our products more easily.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, let me wish you and all hon. members a happy new year.

I believe that 2013 will be a very productive year in the House of Commons.

The House has been a productive place in the last 200 sitting days. Between the election and today, Parliament has seen three-quarters of the government's legislation pass through at least one of the two chambers, and in fact a majority of the bills we have introduced have made it all the way to entering the statute books. I do look forward to seeing the government add to this record of accomplishment.

On the question of Bill C-32, I will again offer to my friend that we could pass that bill right now, at all stages, if the NDP is agreeable. I believe that would be a reasonable course of action.

Today, of course, we are debating an opposition day motion for the New Democratic Party. Tomorrow and Monday will see us start to consider second reading of Bill C-52, the fair rail freight service act. If we have time, we will go back to the second reading debate on Bill C-48, the technical tax amendments act, 2012. Wednesday will see us finish third reading of Bill C-43, the faster removal of foreign criminals act. Tuesday and Thursday shall be the second and third allotted days. I understand that both of those days will go to the official opposition. Then, if we have not previously finished Bill C-52 and Bill C-48, we will return to them next Friday.

Finally, there have been consultations among the parties respecting a take note debate on the situation in Mali. I am pleased to move:

That a take-note debate on the subject of the conflict in Mali take place, pursuant to Standing Order 53.1, on Tuesday, February 5, 2013.

Fair Rail Freight Service Act

[Rob Nicholson, Conservative, Minister of Justice]

moved for leave to introduce Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration).

(Motions deemed adopted, bill read the first time and printed)