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.

[Wade Sobkowich]

One of the main opportunities we see in Bill C-49 is the reciprocal penalties piece. We have long been after the ability to get commercial contracts with railways. Every other link in the chain has commercial contracts. We have contracts with farmers, with penalties on both sides for failure to perform. There are contracts with the vessel owners, with the end-use buyer. That's the way business is conducted.

Until now, we've been operating primarily on railway tariffs, so that's a unilateral set of rules and penalties imposed by the railways, supported by statute. Bill C-52 introduced the ability for service-level agreements, but it lacked teeth. There was no ability to include penalties for non-performance in those service-level agreements.

We think that this will go a long way, because now shippers have the ability to try to negotiate penalties. We're talking about balanced penalties here. With regard to the same types of penalties they charge us for certain things, we want to be able to charge them for failure to do certain things. If we can have that in place in something that resembles a normal service contract that you would find in a competitive marketplace, we think that will go a long way.

[Fred Gaspar, Chief Compliance Officer, Canadian Transportation Agency]

Thank you, Mr. Chair and members of the committee.

My name is Fred Gaspar and I am the chief compliance officer for the Canadian Transportation Agency and with me today is Randall Meades, who is our chief strategy officer.

We are pleased to appear before you again and to answer any questions you may have concerning your study.

I'd like to start by offering a brief reminder about our organization and its mandate. The Canadian Transportation Agency is an independent body. As a federal quasi-judicial tribunal and regulator, we have jurisdiction over a broad range of air, rail, and marine matters. The agency essentially has three core mandates. The first is to help smooth the national transportation system, keeping it running efficiently. The second is to protect the human rights of travellers with disabilities by ensuring that the transportation system is fully accessible. The third is consumer protection for air travellers.

The Canada Transportation Act is the agency's enabling statute. It outlines the extent of the agency's authority and jurisdiction as well as the agency's role in administering the act.

The agency also shares responsibility for certain provisions of the Railway Relocation and Crossing Act and the Railway Safety Act. These provisions are focused mainly on resolving disputes and cost recovery.

When it comes to rail transportation, the agency's mandate applies to railway companies under federal jurisdiction, of which there are currently 21 active railways, including class 1s and short lines. Briefly, the agency is responsible for a number of regulatory functions that range from ensuring that federal railways carry the required third party liability insurance requirements to establishing the annual maximum revenue entitlement for CN and CP in moving western grains.

The agency also plays an important role in helping to resolve rail transport disputes. In addition to our formal adjudicative function, we also have expertise in alternative dispute resolution services, including facilitation, mediation, and arbitration services. In our experience, these methods can be faster and less expensive, producing a resolution that benefits all sides.

Of relevance today, I'd like to highlight that the alternative dispute resolution process administered or provided by the agency now includes three forms of arbitration: rail level of service arbitration, rail arbitration, and final offer arbitration.

Since 2013, under the new rail level of service arbitration framework, the agency has had the authority to impose administrative monetary penalties for the contravention of any requirement imposed on a railway company, up to a maximum of $100,000 for each violation. In addition to this, the 2014 amendments gave the agency the power to order railway companies to pay compensation as part of its level of service complaint mechanism.

Although the agency has a number of rail-related responsibilities, today I'd like to focus exclusively on Bill C-30, Fair Rail for Grain Farmers Act. It was first passed on August 1, 2014 and further extended by this Parliament on June 15, 2016.

Bill C-30 was aimed at getting grain crops to market quickly and at increasing predictability and transparency in the supply chain. As you will, recall it was introduced as an urgent response to a unique set of circumstances: an unprecedented crop year and a polar vortex.

The key new provisions that were set out in that bill empowered the agency in three new ways: to specify by regulation what constitutes operational terms for the purpose of rail level of service arbitration; to provide confidential advice to the Minister of Transport in establishing minimum grain volume requirements for the movement of schedule II grains; and, to set out an interswitching rate for areas of commodities that the agency specifies.

When the Fair Rail Freight Service Act was enacted in June 2013, it introduced arbitration for rail level of service where parties are unable to negotiate the terms of a level of service agreement confidentially.

This arbitration is limited to matters within subsection 169.31(1) of the Canada Transportation Act, and specifically, “the operational terms that the railway company must comply with” for the “receiving, loading, carrying, unloading and delivering” of “traffic, including performance standards and communication protocols”, as well as any other “operational terms” that the shipper must comply with that are related to the company's own operational terms; any “incidental” service provided by the railway company; or “the question of whether the railway company may apply a charge with respect to an operational term” or for an incidental service provided by the company.

The level of service arbitration provisions do not define operational terms themselves. At the time, the agency had no power to define them by way of regulation. The Fair Rail for Grain Farmers Act further amended the CTA to provide the agency with the authority to then make regulations specifying what constitutes “operational terms”.

In order to establish the regulations, the agency consulted broadly. We conducted targeted and focused consultations both with the shippers and the railways and with other stakeholders. Now in force, those regulations bring clarity to shippers and railways as to what might be the subject of a level of service arbitration.

Today, the regulations and operational terms for arbitration on the level of service of railways support efficient arbitration within a statutory deadline of 45 to 65 calendar days, and they've reduced the need for parallel adjudication by the agency as to the eligibility of certain matters that may be submitted for arbitration.

To clarify, an operational term refers to railway and shipper obligations in receiving, loading, carrying, unloading and delivering of traffic, including performance standards and communication protocols. They are an extensive but non-exhaustive list of terms that are eligible for arbitration.

Bill C-30 also amended the act, and requires the agency, after consulting with CN and CP and the owners and/or operators of grain handling undertakings, to provide advice to the minister on the minimum amount of grain that CN and CP should be required to move during each month of the crop year, on or before July 1 of each year preceding that crop year.

Third, and probably most important to this committee, Bill C-30 introduced provisions that enable the agency to expand interswitching to 160 kilometres for Manitoba, Alberta, and Saskatchewan. Interswitching, as you will know, is an operation performed by railway companies whereby one carrier performs the pickup of cars from a customer and hands off these cars to another carrier that then performs the “line haul”, or the majority of the carriage. The interswitching arrangement is made in cases where a shipper has physical access to a single carrier but is within a defined distance to one or more competing carriers.

To ensure fair and reasonable access to the entire railway system, interswitching has been regulated in Canada since 1904 and is a commercial agreement between railway companies whereby one railway company will carry traffic for the other railway company and vice versa, to ensure that shippers captive to the rail system have access at a regulated rate. Railway companies reconcile these costs between themselves on a yearly basis. Interswitching allows shippers to negotiate, through normal commercial processes, suitable terms and conditions of carriage with competing carriers for the line haul portion of the overall car movement.

The Railway Interswitching Regulations set the rates to be charged for interswitching services provided by the terminal carrier, thereby establishing a predictable and fair pricing regime that is applied equally to all terminal carriers providing interswitching services.

Under the Canada Transportation Act, the agency may make regulations prescribing terms and conditions for the interswitching of traffic, as well as determine the rate per car to be charged for performing this operation and establish distance zones for that purpose. The interswitching provisions of the act are considered to be competitive access provisions, allowing the shipper to choose their carrier despite having physical access to only one carrier.

Please note that the agency reviews the railway interswitching costs annually and revises the rates as required or as part of the five-year statutory review of the regulations, which was last done in 2013.

The new interswitching rate regulations now establish five interswitching zones: 6.4 kilometres, 10 kilometres, 20 kilometres, 30 kilometres, and on a temporary basis for Manitoba, Saskatchewan, and Alberta 160 kilometres from an interchange. The amendment created this new interswitching zone 5 that is applicable to movements for all commodities in those prairie provinces.

The rate for zone 5 follows the pattern established in the current rates, namely that the zone rate will apply to the first 40 kilometres of track distance travelled within the zone, and then a per kilometre rate will apply for each kilometre of track travelled beyond the 40 kilometres within the distance.

After this brief overview, we would like to thank you for your attention. We will be pleased to answer all your questions.

[Catherine Cobden, Executive Vice-President, Forest Products Association of Canada]

Thank you very much for the question. To build on David's theme I think the way we describe ourselves is that we are feeling unique in the shipper community with respect to our degree of captivity and our degree of reliance on the rail transportation system.

As you can appreciate we're in 200 communities in remote parts of our country and nowhere near the main lines in most cases and we're shipping to 180 countries around the world. This is a tremendous logistical challenge, so we're looking at it very comprehensively. Our recommendations will span the scope of what to do with respect to overall access issues. Is the transportation system the right size for the trade-flow shifts that we've been describing in our sector that I'm sure other sectors are seeing as well with the emergence of China, etc.?

Are the service conditions acceptable? Yes, we've had Bill C-52, but as you know that only moved the yardsticks forward so much. Certainly our members are feeling ongoing service issues, so we have recommendations specific to that.

Finally, in this duopoly situation we're facing is it appropriate for one-third or more of the cost structure to be pointed toward transportation costs? So we do have some questions for Mr. Emerson about the rate structure and that sort of thing as well. We think about it as access, service, and rates, and we have a very significant brief on specific recommendations that we'd be happy to submit to the committee if that would be of use to you.

Rail service

[Mark Eyking, Liberal, Sydney—Victoria, NS]

moved:

That, in the opinion of the House, the government should take steps to provide an increased level of rail service throughout Canada by: (a) recognizing that an increase in rail service and capacity is essential to the livelihood of Canadian agriculture; (b) recognizing that the ongoing review of the Canada Transportation Act provides an opportunity to rebalance the system and improve capacity and service; (c) making sure that all sections of the industry convene, with their own operational ideas, to increase effectiveness and efficiency of our transportation system...; (d) recognizing that changes to legislation are needed to address the imbalance of power along the logistics chain; and (e) making sure that all stakeholders work together to build a world class transportation system, including effective legislation and regulations.

He said, Mr. Speaker, on the domestic front, last winter we were faced with a severe crisis within our agriculture sector to effectively recognize the interests of producers and the struggle to get their record crop to market. Harvests across the prairie provinces, the world's top canola producer and second-largest exporter of wheat, jumped 14%, to a record 90 million metric tonnes, as reported by the government.

To put it simply, the system failed farmers last year, and it failed them badly. There is a responsibility throughout the logistic chain—the railroads, the grain companies—and then we had the cold weather to boot.

However, if the system failed, then we must asked ourselves, “Who designed the system? Who put it in place? Who set it up for failure? Who imposed $8 billion in costs and losses to prairie farmers?” The answer to that question is the current Conservative government. This disastrous system, the one that has failed so badly, is the one that was designed and implemented over the past three years of this current government.

Now, the current Canada Transportation Act review could not be more timely. The winter of 2013-14 saw a transportation crisis that impeded the growth and credibility of our export economy. Real hardship was experienced by farmers due to the failures of the system. For both the producers and the consumers of Canadian grain, our transportation system could not be relied upon. Shippers had to place car orders and had no idea when those orders would be fulfilled.

Of all our Canadian exports, more than 50% are reliant upon rail, and more than 70% of those exports go right to the United States. As Canada grows, the country needs a rail system to evolve, matching these trends.

In 2009, Canadian trade exports were valued at $367 billion. By 2013, they went to $479 billion, 75% of which went to the United States. When we look at 2013-14, it displayed a system that failed to adapt to the growth, especially in western Canada.

The 2012-13 grain harvest, considered a once-in-a-lifetime crop, was topped again in the following year. The farmers are getting better out west; they are getting better varieties and growing more crops, and the world needs those crops. Canadian exports of oil by rail are up over 160,000 barrels per day, from 50,000 barrels in 2012.

As Canada's economy continues to grow, our transportation system needs not only to grow alongside it, but to improve as well. A system as complicated as Canada's transportation system needs to be built upon the spirit of co-operation. The number of stakeholders and the demand on the system is going to continue to grow, which is good. It is good for the people out west; it is good for all of Canada, and it is good for the people who need our products around the world.

The Canadian Wheat Board had a variety of functions in the system. Some of them were set out in legislation, such as the single-desk seller function. Some of its functions simply developed by way of the evolution of the grain system in western Canada. It became a safeguard of the system, helping to direct traffic and providing some overall coordination.

When the Conservatives came in and made the decision to eliminate the single desk, what was going to replace that system? It was their policy decision to make, as a government.

That ship has sailed; it is over, and there was nothing put in its place to help that coordination and to get things going. We saw ships waiting in Vancouver harbour last year that had to turn around and go to other countries to buy grain.

However, Liberals do not believe that they thoroughly considered the collateral damage here, and some of the collateral damage was the total elimination of any coordinating function, oversight function, and an ability to try to use limited assets in the most cost-effective, business-like fashion. That is what is missing in this system now. It is not an issue at the moment of a single-selling desk. That is not what we are here to talk about. It is about an issue of absolute chaos in an uncoordinated system and a lack of synchronization. That is what is happening, with nothing to fill it.

Rail transportation is a very complex system. One has to get the grain from the right delivery point to the right terminal on to the right boat to the right customer in an appropriate amount of time. That did not happen last year. It happened late, and as I stated, there were billions of dollars lost by farmers out west. A very intricate and complex number of parts have to work together to make this happen. What we have seen over the past year is the Conservatives' inability to bring proper coordination to the system. They have not made the best use of our limited assets in the most cost-effective way so that we do not have a colossal mix-up. We need a smoothly functioning system that will get the most money for farmers because their product is delivered at the right place and at the right time.

In November 2013, just when the farmers were finishing their grain harvest—and they were very optimistic, as it was a great harvest and they had customers—I had the opportunity to take an agriculture outreach tour throughout western Canada to meet with farmers and identify areas that are important in my role as agriculture and agri-food critic. After visiting various farmers in Manitoba, Saskatchewan, and Alberta, even early in the fall months it was evident that our grain handling system in Canada was not providing the capability to meet industry demands.

Along with the member from Winnipeg, we witnessed first-hand the mounds of grain that were piled right to the rafters. The bins were full at the McRae's farm, at St. Andrews, in Manitoba. He was optimistic at that time, but throughout the winter things changed for him. The situation became worse.

Initially the minister suggested cash advance payments—I wonder what good that is if their crop is not moving—and a working group to look into the disaster. As the months were going by and they were losing more money, it was too little and too late. Ships remained idle in Vancouver, resulting in millions of dollars in demurrage charges and on-farm operating debts being unpaid. Grain prices were dropping, and farmers were losing that window to sell their crop.

That all came as a direct result of the Conservatives' Fair Rail Freight Service Act, Bill C-52, introduced in the House before 2012. They had the opportunity. It was supposed to rectify the imbalance in market power between the farmers and railroads. The Conservatives took the Wheat Board out and had an opportunity to put something else in its place, and they did not. Bill C-52, an act to amend the Canada Transportation Act, was a great opportunity. We could have had a real rail act then. There were recommendations made, and we would not have had the $8 billion loss that we had to deal with.

In the continued spirit of an open and fair market, a need exists for an oversight to ensure that complaints against parties can be addressed in an appropriate manner. There is a strong need for the ability for shippers to seek solutions to problems arising during their interactions with the railroads. In order to effectively address issues that occur in the fulfilment of service level agreements, the complaint mechanism must allow not only for shippers to seek arbitration efficiently and fairly, but also for each party to be on equal footing. That is very important. Everybody has to be on equal footing to make this system work because everybody is accountable.

During the passage of Bill C-52, the Coalition of Rail Shippers made several recommendations, which we in the Liberal Party supported. However, none of those resolutions were passed back in 2012.

Many prairie groups agreed that the legislation needed to be amended to make it easier to hit the railroad companies with fines over transportation bottlenecks. If it had stuck then, the railroads might have complied with it last year.

This eventually brought forward Bill C-30, which was the bill we dealt with just last year, an act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures. That was introduced by the government in March of 2013. The measures being imposed will expire in another year's time.

As I said, there is no long-term solution for the farmers. The government is putting band-aids on as we go along. There is no long-term solution that will keep the same situation from happening again and again. The crops are going to continue to do well, they are going to get bigger, and there is no solution.

Many agronomists and public servants at the agriculture department have said that these harvests are only going to get bigger and better, which is great, but we have to get those crops to the Asian markets especially and to the United States. The bill does not attempt to find a long-term solution for farmers.

The fact that the measures will expire demonstrates yet again that the Conservatives see this as a political short-term issue, while in reality, this is a structural issue farmers are faced with. The problem could very well resurface at the next harvest.

This year, as bad as it was, there are still bottlenecks, and it is not working well. Farmers are still shipping grain that was produced the year before, and last year was just an average year.

The minister has brought forward pieces of legislation that seem to be reacting to the issue rather than leading the way, on the agriculture front, on a long-term solution. It seems that members only have a chance to debate agriculture-related bills in the House when something is going wrong. There is no long-term vision. When something happens, then it is brought to the House. It seems that this is what happens every time.

The most recent grain transportation crisis is a prime example. The government waited months and months before acting. Then it scrambled together a bill that could help farmers get their grain moving. The government only acts when it needs to, and it delays action as much as possible, because it is all politically driven.

Farm lobby groups in Saskatchewan and Manitoba say that fines levied against Canada's two largest railroads stemming from the provisions in Bill C-30 do not reflect the damage caused when the companies failed to transport the minimum required grain volumes last year. The railroads are going to be fined, but even if they get the money from the railroads, it will go to the government. It will not pay the farmers who are losing money while the crops are stored in their buildings or bins.

Norm Hall is president of the Agricultural Producers Association of Saskatchewan. He represents a lot of farmers in Saskatchewan. He says that farmers are frustrated about the fallout from months of railway backlogs following last year's bumper grain crop. He stated:

“There's also some relief that the federal government did step forward, but there's still frustration. The one thing that bothers us most about this is that fine, that money, goes to government [instead of the farmers who are losing the money]. It in no way goes to those that were hurt...be it the producers or the grain companies.”

He also said that the fines are a drop in the bucket for the railways. He is a representative of the farmers in Saskatchewan.

Also, Doug Chorney, who represents many producers in Manitoba and is head of Keystone Agricultural Producers in Manitoba, said there needs to be a way to compensate shipping companies and farmers who are adversely affected by rail delays. He stated:

A fine of such [a] small amount really doesn't reflect the kind of damage poor service is impacting on shippers and farmers. We've always had challenges with reliable and adequate service from railways because of different planning issues, not always because of capacity. We do have fundamental challenges in terms of making sure we have a system that's well-co-ordinated. ....we can't be left to wait months and months for rail service.

In March 2014, the Minister of Transport said fines against rail companies could total up to $100,000 a day. What happened? She came out with $100,000 a week. That is a big change, from $100,000 to $100,000 a week.

To wrap up, what the government has done is not working for farmers. It is not working for customers around the world who need our grain so badly. We should have a long-term plan, and that is why I am bringing this motion forward.

Fair Rail for Grain Farmers Act

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Mr. Speaker, I will pay attention to your comments.

The agriculture industry is a very important economic driver in Canada. As many of us know, it supports farmers, suppliers, food processors, and all other stakeholders in the food industry.

Grains are a big part of our agriculture industry, with 15 million hectares of wheat, barley, oats, and rye grown by farmers in fields right across this country, with the majority on our prairies.

In 2013, Canada produced over 52 million metric tonnes of these grains. Some of our largest commodities are canola—I think we are one of the biggest producers in the world—wheat, corn, pulse crops, and barley. From those yields, over 50% is exported, and the rest is used in our livestock industry. It is also used by millers and brewers, and there are many other uses, such as for biofuels.

As many of us know, this year was a bumper crop. It is because of the technology farmers used, everything from the tillage systems to the varieties. They had some good weather on their side also.

Last November, I had the opportunity to take part in an agriculture outreach tour in the western Prairie provinces in an effort to meet with farmers and identify important areas to tackle in my critic role.

After we visited farmers in Manitoba, Saskatchewan, and Alberta, even early on in the fall, it was evident to me, and should have been evident to the minister, that the grain handling system was not proving capable of meeting industry demands. I witnessed first-hand the mounds of crops that were piled right up to the rafters. They were piled in garages and piled outside. It was amazing the amount of product that had still not been moved.

Upon returning to Ottawa, the situation after last fall, of course, got worse. We saw that with the big losses for some of these farmers, who could have been selling their product. Grain prices were going down. Even the government came out with an estimate that over $8 billion was lost to the prairie economy because of that.

Over the last few months, farm leaders from across this country have been meeting with our leader, the member for Papineau, and our Liberal agriculture team. Along with me, we have the members for Malpeque, Winnipeg North, Guelph, and of course, the member for Wascana, who was front and centre during the emergency debate and in keeping an eye on things.

The Conservatives were warned about the situation by the opposition and industry members a long time ago, not just by the farmers but in this House during the emergency debate the Liberals pushed forward. One would think it would have come from the Conservatives. Their members, coming from the grain region, should have been pushing for an emergency debate. However, we pushed for it on this side, and we appreciate that the Speaker allowed us that late night of debate on the situation.

The minister responded through the winter with some cash advance payments and a review panel to look into the disaster, but it was too little too late. Ships were idle at the ports. We all know about that. We had ships from Japan that were turned around. They had to go to Seattle. They had to go to the United States, imagine, where they were loaded up in a day, while they were waiting here for weeks to be loaded. It was a bad reflection on us.

There were also meetings in Singapore. One of the biggest issues among all the producing countries was, “What is going on with Canada? How come Canada has such good growers but cannot get their grains to market?” We were really getting a black eye on the international scene.

On farms, they were operating, and their debts were going unpaid. It took a lot to put that big crop in and harvest it, with the price of fuel. Meanwhile, they were not moving their grain.

It is blatantly clear that the Conservatives need to take another look at their failed rail act, Bill C-52. That was introduced last June. They scrapped the Wheat Board, and all of a sudden, there was nothing to protect farmers after that. Bill C-52 would have been the spot for that. There were amendments recommended, which they refused to put in.

What happened after that? There was nothing to help the imbalance in the market power of farmers and railroads. Many prairie farmers agreed that the amendments to this legislation were needed to clearly define service levels and to make it easier to fine rail companies for transportation bottlenecks. However, all our proposed amendments, which would have strengthened the position of the shippers and farmers, were unanimously defeated.

As a result of Bill C-52's deficiency, farmers watched their big bumper crop sit in their backyards, as customers around the world wanted our number-one quality product. We also saw customers in Canada and in the United States looking for our product and not being able to get it.

This winter in the House of Commons, the Liberals demanded that the Conservatives take action. The Conservatives finally came forward with this emergency legislation on grain transportation, which we are talking about today. We know it as Bill C-30, and it is to fix the shortcomings in the previous bill.

As mentioned by other members, the Standing Committee on Agriculture and Agri-Food studied the new bill, and although it was rushed, it provided a tremendous opportunity to improve the legislation. Many witnesses came from across Canada and many good ideas were brought forward. After hearing the testimony of dozens of farmers and stakeholders, it was obvious that this new law needed some adjustments if it were really going to enhance the entire supply chain on a long-term basis.

The bill also failed to define what rail service levels should be, to create an objective measurement of rail performance, to provide for damages payable to farmers, to clarify farmers' grain delivery rights, or to create reciprocal penalties when obligations are not fulfilled on any side.

These are the same complaints we heard last year, but once again, the Conservatives unanimously voted against all opposition amendments put forward to strengthen the bill and address the ongoing concerns.

Although this has been delayed and is weak legislation, the other problem, as many farmers know and the House knows, is that the sun will set on the bill in two years. Therefore, this is really only a short-term step to help out. How will farmers or anyone in the supply chain look at the future if this is only going to last two years?

With good farming practices and climate change, I believe that we are going to have more and more bumper crops. This is not going to be a totally abnormal year. This could be a year that is going to be the norm. If that continues to happen, there has to be something in place that will guarantee that farmers are being taken care of.

The bill is a small step in the right direction, and our party will be supporting it, because this has been delayed long enough. Farmers are out planting now. They have grain still in piles in their backyards. They are trying to get money to pay for fertilizer, seeds, and chemicals. What is happening? The grain in the bin is not going to pay for those supplies. The legislation has not passed yet.

We have to have some signal for the international community that is buying our grain. I mentioned what happened in Singapore. We have to show that the House of Commons in Canada is serious about making some moves to help move grain shipments. Every time a disastrous backlog like this develops, our international reputation as a reliable grain shipper suffers, and we lose customers.

I alluded earlier to our own processors and farmers. We have a very large livestock and food processing industry in this country. We ship a lot of our grains and oats to the United States. Most people do not realize that Cheerios come from Canadian oats. They were concerned in the United States that they would not get enough oats. What was happening did not affect just our international reputation.

At committee we heard from the former chair of the B.C. Agriculture Council, Garnet Etsell. There is a billion dollar industry in the Fraser Valley. Their poultry industry is amazing. It is one of the largest concentrations of poultry in Canada. We were told in committee that poultry farms were only a couple of days away from running out of grain. Imagine having that size of livestock industry with a couple of days of grain in the bins and seeing the trains go by and not even helping out the local farmers.

Some of them were forced to buy trucks, costing them $100 extra a tonne to ship in grain from Alberta. Their returns are fixed, and they are not going to get more because they have to ship products in. It was not really addressed in this bill how we are going to help local farmers who consume that grain.

It is key that the federal government have a long-term strategy so that our high-quality grains will be able to get to our customers around the world and around the country and so that this does not happen again. We will be going back to the drawing board. If the government is wise, we will sit down after this legislation goes through and look at a long-term vision for our farmers and our country so that we continue to be a number-one supplier of grains in the world.

We realize that there are other products out in our western provinces that are doing well, such as potash, coal, and oil. We do not believe that they should all of sudden stop shipping their products because we have a good crop. We have to look at investing in our transportation system. We have to sit down with the railroads to make sure that this is happening, but right now it is not happening.

I am looking forward to a time when the farmers' biggest concern is getting the crop planted and harvested and having buyers. They should never have to worry about getting it from their grain bins to the consumers around the world. It is our obligation as the federal government to always be there for them and to make sure that it happens. In the last few years, we have. I say that we have, because it is technically the Conservatives, but at the end of the day, it is the responsibility of the House to make sure that it does not happen again and that the system is in place to help farmers succeed.

If a young person is looking at getting into agriculture, there is great opportunity out there. However, to see what has been happening in the last year would discourage any young person from getting into it, knowing that they could do everything they could to produce a product but that they could not get it to the customer.

I will leave it at that, and I will open it to questions from any other members in the House.

[Jeff Watson, Conservative, Essex, ON]

First of all, Mr. Chair, I know you mentioned the Western Grain Elevator Association. For clarity, if I recall the testimony, I believe Mr. Sobkowich suggested that if it could be done in regulation, that would be fine by them. So to be clear on the representation by the Western Grain Elevator Association, I think that point has to be reiterated. You could check the Hansard on that, but I'm pretty certain he said that.

There are a lot of problems with this particular approach. I'm just trying to recall, Mr. Chair, from being part of the Bill C-52 debate....

Let me just start with one of the aspects, shipper paramountcy as opposed to the rail network. That is a problematic approach. For one, if I recall, the Supreme Court has been very clear that railway common carrier obligation is not an absolute, but it is circumstantial. So to be court compliant, there has to be some degree of flexibility with respect to the network as a consideration.

I don't know. I could probably go into a few more of the arguments that were raised back then, but stepping back from that, the approach that the government is taking with Bill C-30 is that issues around operational terms would be a regulatory approach. I appreciate that Mr. Eyking would prefer a prescriptive, legislated approach to that. The witnesses were mixed on the preference for that. We think we can achieve it with respect to the regulatory environment.

We've now, in terms of the earlier amendment, G-1, provided the teeth that they were looking for with respect to entering into service-level agreements. So I think between what will be achieved in the regulation and what is achieved in the legislation itself will be sufficient, and it's what the witnesses were requesting.

I think this reopens the debate that was made at the table with Bill C-52 at the transport committee, and it was rejected for a lot of very good reasons. But we think we can do adequately within the regulatory framework, rather than this.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Okay. So I'll let it stand as it is and I'm going to read the explanation for why we have it here.

Now, of course we know about Bill C-52 last year and the problems we had with that. So now we have Bill C-30 here, and as many witnesses have come forward and told us, Bill C-30 as it sits is quite vague.

What they've always said is that service levels are very important, and they say they're not meaningful the way they are. Virtually every witness told us this: they want a clear, mandatory service-level contract with enforcement remedies that are reciprocal both ways. They don't want to be tied up in courts for 10 years. As we mentioned before, some of this stuff can be tied up quite a long time.

This amendment helps fix that problem. In the first part of proposed subsection 169.31(1)(1.2) we provide a definition of service obligations that all the shippers agreed upon last year. It's precise, it's practical, and it's to the point. These are the things that an arbitrator will need to cover in any of these contracts. When this thing starts rolling out, somebody has to be an arbitrator here, and they're going to have to have more defined rules and regulations.

In the second part, in proposed subsection 169.31(1)(1.3), we shine a clear statement of principle of how you can tell when an adequate performance has been provided, which is key.

And then in the final part, we make the point about reciprocal consequences. This needs to be clearly spelled out in any contract imposed by CTA arbitration. That's what proposed subsection 169.31(1)(1.4) does.

So, Mr. Chair and colleagues, this amendment was also.... The Minister of Agriculture from Saskatchewan recommended many of these here. We even have the Mining Association, the canola growers, The Fertilizer Institute, the western grain growers, I mean the list goes on of everybody who wants more defined rules.

They're not just rules everybody has to follow, it's how we enforce them, how we process people when they're wrong done by, and how people get paid at the end of the day.

So I think they're all here, and we went through this process last year. I think this is a great opportunity to have these amendments in here, and it would give everybody in the system a better idea and something to work with.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

I think what the member opposite is trying to achieve is somehow a retroactive compensation mechanism for farmers.

What the bill is designed to do—and this amendment, in terms of improving it—is to address the issue of the carry-over and shipping going forward, and who gets compensated.

If I understood witnesses correctly, in terms of moving grain forward, we had two approaches. We could get into regulating far deeper down into every aspect of the logistics chain. I didn't hear a single witness suggest that was the route we should go.

What I heard from witnesses is that in order to move grain, they wanted the ability to move it by commercial terms through service-level agreements. Their hesitancy in approaching Bill C-52 in order to have service-legal agreements was that they didn't think there were sufficient teeth. This is to do that in order to move the grain on a go-forward basis.

You have an additional problem you're trying to raise. I think you're hoping to make this mechanism the means of going back and addressing that. The mechanism has to be taken for what it is, which is to strengthen service-level agreements. Every witness I heard wanted that. They didn't want a deeper regulation on how to move the logistics here.

That being said, I think the amendment, G-1, should be supported, as strengthening Bill C-30.

[Robert Ballantyne]

The 100-plus members of the association spend approximately $6 billion annually on transportation services by all modes. We advocate for our member companies' interests with regard to air freight, trucking, marine, and rail. FMA will only comment on the sections of Bill C-30 that would amend the Canada Transportation Act, and also on the government's related announcements that relate to the transportation elements in Bill C-30.

I will attempt to provide some context on how we arrived at this point with regard to rail service, provide some comments on Bill C-30, and more importantly, look at what needs to be done to ensure that the rail system and other parts of the supply chain system have the capacity to meet the future needs of rail shippers.

During the run-up to Bill Bill C-8 which amended the Canada Transportation Act in 2008, there were widespread complaints about rail service from across the country. When Bill C-8 was passed in June 2008, the government agreed to undertake an independent review of rail service. The review panel published their final report on January 2011.

One of the panel's consultants, NRG Research Group, found in its independent survey of 262 shippers that only 17% of their respondents rated their satisfaction at a six or seven on a scale of one to seven, where seven was the most satisfied. NRG also reported that 62% of shippers reported they had suffered financial consequences as a result of poor service performance. The rail freight service review panel recognized the fundamental problem, and said in its final report, “This railway market power results in an imbalance in the commercial relationships between the railways and other stakeholders.” Canadian railway law has acknowledged for over a century that rail freight is not a normally functioning competitive market.

Part of the government's response to the rail freight service review was to introduce Bill C-52, the Fair Rail Freight Service Act, which became law in June 2013. Bill C-52 breaks new ground by providing for the first time in Canadian law the right of all rail shippers to a service level agreement, and if it can't be negotiated directly with the railway, it can be achieved through arbitration. The shipper community, through the Coalition of Rail Shippers—and there are a number of our associations, some of which you've already heard from, that are members of Coalition of Rail Shippers—identified several areas where Bill C-52 could be strengthened in a way that would minimize uncertainty and give better guidance to our arbitrators. Also, some of the most significant recommendations of the rail service panel did not find their way into Bill C-52, particularly the review panel's list of elements that should be included in service level agreements at the option of the shipper.

The Coalition of Rail Shippers' proposed amendments to Bill C-52 were designed to strengthen it and make it more likely to effectively rebalance the commercial relationship and meet the government's stated objectives for the bill. The government declined to accept any of the six recommendations proposed by the Coalition of Rail Shippers. Consequently, to my knowledge at least, there have been no shipper attempts to achieve a service level agreement using the provisions of Bill C-52.

Bill C-30 provides another opportunity to revisit the shortcomings of the Fair Rail Freight Service Act. Clause 7 of Bill C-30, for example, provides the authority for the agency to extend interswitching limits “for the regions or goods that it specifies”. This amendment to the interswitching regulations will allow the agency to give effect to the government's policy announcement to extend the maximum interswitching on the prairie provinces from 30 kilometres to 160 kilometres. The interswitching regulations have been useful to shippers over many decades and are an effective surrogate for real competition. Given the current backlog of grain, this temporary provision may give grain shippers more flexibility in arranging service, and it will be available to all shippers who may have facilities located within the 160-kilometre zones that will be established.

Once a more general review of the Canada Transportation Act is undertaken, the maximum interswitching limit across the entire country should be investigated to determine if the current 30-kilometre limit should be extended.

The other significant provision of Bill C-30 that's relevant to all shippers is clause 8, which authorizes the agency to “make regulations specifying what constitutes operational terms” to be included in a service level agreement through arbitration. While it's unclear how the agency and the government will use this provision, it could be a vehicle for achieving some of the shipper amendments that were rejected during the Bill C-52 debates. FMA will certainly engage with the agency as these regulations evolve.

I'm not going to comment on the provisions related to potential fines for the railways for missing targets, or the provision that allows the Governor in Council to set targets in the next two crop years. It is acknowledged that the current backlog of grain is an unusual situation, and clearly the government felt compelled to intervene at an unprecedented level of detail.

As you've heard and you probably will continue to hear, there is concern among some of the shipper community that singling out one industry group in such a manner could cause service problems for other shippers. FMA includes among its members grain companies but also many shippers in many other industries. We've informed our membership that the targets set in the order in council and in Bill C-30 originated with CN and CPR, and we have to start from the premise that the railways would have offered those targets only if they felt they could maintain the current level of service for their other shippers.

Intervention such as that in Bill C-30 needs to be applied very carefully and only under the most extraordinary circumstances.

With regard to the future, a welcome announcement in Bill C-30 is that the statutory review of the Canada Transportation Act will be moved to an earlier date rather than its mandatory latest start date of June 2015.

Two basic issues that the statutory review should address are: one, the need to provide appropriate rail capacity for the needs of Canadian industry over the coming decades, and Mark Hemmes made some comments about the growth that is expected to take place in at least some of the agricultural commodities; two, the need to improve the relationship and trust between the railways and significantly large segments of their customers.

With regard to capacity, this will require significant investment by the railway companies, by other supply chain partners as Peter mentioned in his remarks, and possibly by several levels of government. The statutory review will provide an opportunity for an in-depth analysis of the capacity needs going forward and the role the various stakeholders should play. How this is addressed will have a significant impact on the national economy and our global competitiveness.

Last, with regard to shipper-railway relationships, it will be difficult to overcome the distrust, and to some extent, the acrimony that currently exists. In this connection, there have been informal discussions under the academic umbrella of Carleton University School of Public Policy and Administration. They run a process called critical conversation, which involves direct and confidential discussions within an academic environment among stakeholders to start a dialogue to overcome distrust. While arrangements have not yet been confirmed for critical conversations involving the railways and shippers, the planning discussions with the various stakeholders continue.

Rail service is vital to the Canadian economy, and the members of the Freight Management Association are ready to work in a constructive way with the government and the railways to improve Canadian supply chains for the benefit of the railways, their customers, and the Canadian economy.

Thank you.

[Kevin Hursh, Executive Director, Inland Terminal Association of Canada]

Thanks very much.

We really appreciate the opportunity to present the views of farmer-owned inland terminals.

ITAC, the Inland Terminal Association of Canada, represents the interests of seven grain terminal companies in Saskatchewan and Alberta, companies that are at least 50% farmer owned. The terminals typically handle 2.5 million tonnes per year of grains, oilseeds, and specialty crops and also have cleaning and drying capacity.

The seven ITAC members are: the South West Terminal near Gull Lake; the Gardiner Dam Terminal near Strongfield; the CMI Terminal near Naicam; the Prairie West Terminal in the Dodsland-Plenty area; the North West Terminal at Unity; the Great Sandhills Terminal near Leader; and Providence Grain Solutions, based in Fort Saskatchewan, Alberta.

We believe that farmer-owned terminals provide competitive choice for grain producers, both shareholders and non-shareholders.

On the proposed amendments to the Canada Grain Act, first I'd like to comment on the amendments to establish authorities in the Canadian Grain Commission to enable the regulation of mandatory grain contract provisions and regulate compensation paid by a grain company to a farmer if delivery date timelines are not honoured.

As details of these amendments are finalized, it's important to note that grain companies have extremely limited options for honouring delivery obligations when transportation logistics fail.

There have been complaints about the high basis deductions being charged by grain companies. Widening the basis and thereby dropping the price paid to producers for their grain is the traditional tool for discouraging deliveries when sales or logistics become limiting factors.

In the extreme circumstances encountered this crop year, producers still wanted to make sales despite record high basis deductions. Many companies had to resort to withdrawing bids altogether because they couldn't commit to more grain at any price.

Grain companies take no pleasure in wide basis levels, just as they take no pleasure in turning away business. While grain companies have faced unprecedented demurrages on waiting ships, as well as contract cancellation charges, most grain companies have not been as adversely affected financially as farmers. That's a function of grain companies being a margin-based business. Still, grain companies would much rather compete for grain instead of rationing throughput.

We ask that any mandatory contract provisions be fair and reasonable for grain companies as well as farmers, and that the lack of railway predictability is also taken into account. It's very difficult to be accountable to farmer customers when you have no idea of your future capacity.

Now, on the proposed measures for the Canada Transportation Act, we welcome the proposed continuation of minimum volume requirements for CN and CP Rail. However, that broad approach may have unintended negative consequences.

More cars are now arriving at Vancouver terminals, and that's a good thing, but cars are arriving out of sequence as the railways concentrate on low-hanging fruit—in other words, movement from the closest and easiest locations. This lack of coordination could make the west coast the next bottleneck in the system.

West coast movement is being prioritized at the expense of movement through southern and eastern corridors. The logistics system does not work very well when it's the railways deciding car movement based on meeting an overall target. Although we are unsure of the best solution, the system suffers terribly from a lack of communication and a lack of coordination.

ITAC members have serious concerns over the allocation of railcars to elevators. The railways have reverted to percentages of historical movement as a way to allocate railcars to grain companies. There is no transparency in the system, and as independent shippers there is no way to know whether we're getting our fair share of the railcar supply.

The extension of the interswitching distance from 30 kilometres to 160 kilometres seems like a good measure in theory. It will take some time to fully test its practical applications.

Grain shippers have been reluctant to open negotiations with railways on service level agreements. We welcome proposed amendments that would give the Canadian Transportation Agency the authority to regulate prescribed elements in arbitrated service level agreements, but we'd like to know specifically what those prescribed elements entail.

Some ITAC members are taking a serious look at service level agreements, but shippers across the country, both grain and other shippers, remain concerned by the lack of teeth in Bill C-52. There's no way to implement reciprocal penalties within the agreement if the railways refuse those measures.

As well, any fines that might conceivably be imposed against the railways by the Canadian Transportation Agency are payable to the Receiver General. If fines were paid instead to the aggrieved grain company suffering the lack of service, that could facilitate possible payments to farmer customers who may not have been able to deliver their grain within contractual timelines.

Attaining a service level agreement appears to be an adversarial process that will require a great deal of time and energy with a significant level of cost. In the end, will the benefits outweigh what will likely be a damaged business relationship? ITAC members also believe that after an SLA is established, there will be a need for an effective dispute settlement component that should include access to an appointed arbitrator.

Regarding additional measures, we welcome the commitment to collect more data from the railways and from all the other players in the logistics chain. This is vital to system improvements. Data needs to be as current as possible and it should be publicly accessible.

The accelerated review of the Canada Transportation Act is also welcomed.

In conclusion, it is ITAC's view that while immediate improvements in the grain transportation system are vital, it's also very important to make the changes that will move the industry along the path to sustainable, long-term solutions.

Thank you very much.

[Wade Sobkowich]

I want to make the point that we're talking about providing a more specific definition in the regulatory process to the word “operational”. If the committee believes that you can define “operational” in a way that includes penalties and potentially liquidated damages, then great. We can address it through the regulatory process. If not, then we have to go to those legislative amendments the Coalition of Rail Shippers was asking for with Bill C-52, which was to allow, first of all, to amend the legislation to be clear. We're not only dealing with operational terms, we're also dealing with other things to make sure penalties and liquidated damages are included.

[Ralph Goodale, Liberal, Wascana, SK]

Once again, thank you to this bank of witnesses for their helpful testimony tonight.

What strikes me, having sat through most of the deliberations of the transport committee a year ago in dealing with Bill C-52, is that most of these same proposals were made a year ago in relation to Bill C-52, but they were not accepted at that time, and the legislation was put through Parliament without the various considerations that are being put on the table once again.

I wonder if the witnesses tonight can give us some sense of what went so wrong. Obviously, a year ago the government didn't think these things were necessary, and then along came 2013-14 and this obvious disaster in terms of grain movement.

As this problem developed from the summer through the fall—the big crop, the weather, all of that—who was doing the system planning last year to try to anticipate these things and make sure that the system was ready to cope? Who was doing the coordination of the various elements in what is a very complicated logistics chain here in order to get the right grain, at the right place, at the right time? Who was looking at capacity?

It seems that the capacity remains now what it was a year ago. It may be in the last little while being used a bit more efficiently, but is there any significant improvement in capacity?

Who was doing the planning? Who was doing the coordinating? What's happened to capacity? Why has it been so inadequate this year? Why is that basis calculation in terms of the deductions coming off the farmer's price? Why is basis now gobbling up effectively 50% of the world price before it gets into the farmer's hands?

Can we shed some light on just what has gone so wrong from about a year ago now, when it was the considered judgment of the government that these sorts of amendments were not necessary?

[Greg Cherewyk, Chief Operating Officer, Pulse Canada]

Good evening, and thank you, Mr. Chair, and members of the committee, for the opportunity to be here tonight to discuss Bill Bill C-30 and its implications for the ag industry. We don't have a lot of time, so I'm going to focus on the areas that are priorities for our members.

Pulse Canada represents the interests of over 30,000 farmers from Alberta through to Ontario, and over 130 processors and exporters of pulses and special crops that are members of the Canadian Special Crops Association.

In the quarter that ended yesterday, March 31, our members who are participants in our performance measurement program received 49% of the hopper cars they ordered and 43% of the boxcars they ordered. Week to week, the aggregate order fulfillment range was between 20% and 60%. This represents a further deterioration of service relative to the first half of the shipping season. What's even more staggering is that during the first 30 weeks of the shipping season, 50% of the shippers in our program experienced weeks when they received no hopper cars at all.

With the introduction of Bill Bill C-30, the government sent a message to Canadian agribusinesses and their customers around the world that this type of performance simply isn't good enough. It's now clear that if service providers aren't prepared to meet the needs of the industry, there will be intervention.

With respect to some of the important and high-level components of the bill, I want to start by saying that we appreciate the commitment to advance the review of the Canada Transportation Act. With that we stress that, while we support the launching of the process more quickly, we still expect a comprehensive review that includes a thorough assessment of facts, broad consultation, and a commitment to act on the facts.

We also appreciate the strong statement made with respect to the importance of enhanced public performance reporting, and look forward to the expanded role of the grain monitor.

While I'm on the theme of having access to data on system performance and the importance of evidence-based action, I'd like to address an issue that is a top priority for our members right now. In an effort to prompt greater responsiveness from the railways to the needs of the grain industry, the government issued an order in council establishing targets of 5,500 cars per railway per week, and the requirement to move 500,000 tonnes of agriproduct per week. Bill C-30 will give the government the authority to continue to issue these orders through to August, and again into the fall peak shipping season.

Our members are being told by their railway partners that the order in council and subsequent measures will have a detrimental effect on their service, particularly through the eastern corridor to Montreal through to U.S. destinations and into Mexico.

With no additional rail freight capacity put into the system over this shipping season, and an OIC that establishes weekly car and tonnage targets, our members are being told that corridors that allow for tight cycle times and the greatest turn on assets will be prioritized.

Members are being told that they cannot service their customers in the U.S., Mexico, or through the eastern corridor and the port of Montreal.

While railways tell us this is the inevitable outcome of an order that has imposed ill-advised and unreasonable targets on the carriers, I'd like to direct your attention to some key facts that warrant your consideration.

On a Q3 earnings call in 2012, during a period of time when the government was considering the introduction of Bill C-52, CN reported:

On the asset side we’re moving cars 8% faster than last year. [...] In fact in September we set a record for car velocity reaching an average of 217 miles per day. These velocity gains are being achieved while handling record volumes. This quarter was our busiest of any third quarter in CN's history averaging over C$1.050 billion GTMs per day, up 8% from last year. So overall very solid performance on the operational side of the equation. [...] rest assured we've not lost any of our passion for...efficiency but at the same time we’re making a meaningful difference for our customers and our supply chain partners pushing forward on our Service Excellence agenda.

In the third quarter we met 96% of unconstrained orders placed by our customers and provided the cars on the day requested 89% of the time.

Within this report CN also specifically highlighted their enhanced service to the grain industry, proudly stating:

The trust and dependability we've developed to establish in this robust pipeline has allowed CN to sustain a record of spotting...in excess of 5,000 cars per week for the last six weeks, which is a record for CN.

While the railways would have their customers in other sectors as well as customers within agriculture believe that the OIC that establishes targets of just over 5,000 cars per week will have a negative and unanticipated consequence on their service, I would point out that you have evidence that they are capable of hitting these targets while achieving efficiency objectives and delivering a reasonable level of service to customers across all sectors and throughout the agriculture community.

That being said, in order to ensure that the OIC achieves its objectives and meets the needs of the grain industry, we know that it must go beyond establishing a broad target. It must also establish clear expectations for movement of all commodities through all corridors to all destinations, to ensure that the implementation of the order results in fair and equitable treatment to all shippers, be they small, medium, or large.

We recommend that a discussion be held immediately with Quorum, the official monitor of the grain handling and transportation system, so that additional guidance and direction related to the order in council and follow-up measures can be structured in a meaningful way to ensure that performance can be measured and monitored over the coming days, weeks, and months.

This leads me to my final point. As we head into an expedited consultation on regulations related to service level agreement provisions, it is absolutely imperative that the regulations be established with clear guidance in the legislation. Building on the language found in section 5 of the Canada Transportation Act, under our national transportation policy, we must state clearly that the system is in place to meet the needs of its users. This simple but extremely important statement is widely regarded by the broadest range of stakeholders in the shipping community as key to ensuring that service levels are established in a manner that supports the competitiveness of Canadian companies and the overall growth of the Canadian economy.

With that direction, we begin to break away from capacity and performance levels that place the efficiency of the rail network ahead of the needs of its customers. With that direction, we can begin to ensure that economic growth is not governed or constrained by the rail network. With that direction, we can get back to focusing on the top priority of every one of our members: to be and to be seen to be the most consistent and reliable supplier of the products that we produce and market to the world.

Thank you.

[Scott Streiner]

That concern was expressed by the government at the time that Bill C-52 was being considered, that paradoxically perhaps these sorts of penalties through arbitration might work against shippers in getting full compensation for liquidated damages.

[Jeff Watson, Conservative, Essex, ON]

One of the issues raised by the opposition and certainly raised also by shippers during the discussion on Bill C-52, and we're hearing it raised again here in the discussion of Bill C-30, relates to punitive damages, liquidated damages, compensation for shippers. If I understand the opposition, and I'll try to frame this appropriately what I think I'm hearing, they're suggesting to make service level agreements mandatory, define their operational elements in the Canada Transportation Act, and add a penalty regime. It's essentially the resurrection, if you will, of the arguments made on Bill C-52. There were a number of persuasive arguments on why that was somewhat difficult. It certainly wasn't simple, and it may have some unintended consequences.

First of all, is there any other commercial regime for addressing commercial contracts where in fact liquidated damages are set out beforehand in a piece of legislation? We're dealing with commercial contracts here.

[Jeff Watson, Conservative, Essex, ON]

Chair, interswitching sounds...[Inaudible—Editor...]cabotage for the airlines.

Officials, thank you for appearing this afternoon.

I'll start first of all with what was Bill C-52, the Fair Rail Freight Service Act. I try not to say that too quickly because I can't say it five times fast.

Bill C-52 in part attempted to address the issue of service level agreements which are voluntary, as you know, by making some improvements. The first was the creation, if you will, of administrative monetary penalties which would be imposed, if I recall correctly, by the Canadian Transportation Agency after arbitration. It would be per violation. That was some attempt to establish the punitive measures for breach of obligations for services.

Is that a fair representation of what was done with Bill C-52?

[Jeff Watson, Conservative, Essex, ON]

Thank you to our ministers for appearing today.

With respect to the idea of penalties, I presume, Mr. Chair, not only are the complaints from shippers not something new—they've been complaining about railways since Confederation—but if the idea of penalties was so simple and so popular, it would have occurred a long time ago, presumably.

The Canada Transportation Act, for example, is not new. It certainly isn't ours either. It was brought forward under a previous government and this issue has not been addressed there. I presume that's because, while it may be popular, it's not necessarily simple. I think the approach of having this done under review is sensible.

We did take a look at this with respect to Bill C-52 at the transport committee. There were a number of issues raised at that particular time. I guess what we're driving at is the difference between penalties for failure or breach of obligations versus liquidated damages.That's where the nub of this issue broke down in the committee.

Our government, of course, with Bill C-52, put in place the administrative monetary penalties to deal with issues of breach of service. The liquidated damages in commercial contracts are actually uniformly dealt with in courts. Is that not the case? Right.

In fact, it's difficult to presume a full range of potential penalties for a full range of potential situations and then enshrine all that in a piece of legislation. I think that's the issue of what I understood in your statements earlier today. Is that a fair enough assessment?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Let me start with the last point first. I've had meetings with Lyle Stewart as late as Thursday afternoon, talking about the way forward.

At the table on day two we also had potash, which is a major commodity in Saskatchewan. They're very concerned that their own provincial government is going too far in grain and it's going to affect their capacity to move.

That's why we're putting forward a balanced approach, working with the numbers the railway say they can do without disincenting, say, potash, or coal, or timber, or all of the other bulk commodities.

I would say penalties don't move grain. It will maybe get somebody's attention, but it's the regulations we put in play, it's the transparency along the full supply chain that is fully missing.

You made reference to Bill C-52. There's much more comprehensive enhancement of the full supply chain in here and it actually builds on the foundation that Bill C-52 provided.

I would say to my colleague Minister Stewart that penalties don't move grain, and by expanding this or that isn't necessarily going to do it. It's the full package we have here all dovetailed together.

When you talk about damages paid to farmers, I look at it from a different direction, Mr. Eyking. I look at it from farmers not paying the bills for things they don't control: demurrage and storage and all of these other things that pile up when they've already sold their grain. They've dumped it in the pit at the elevator. It's no longer theirs, and yet they're held hostage at this juncture by the shippers, by the railways, by the ports, by everybody all the way along. We saw it this year in a stretched basis. They were offered far less than what it was worth in the world price.

I'm more concerned about the bills the farmers are forced to pay than damages accruing and paid to farmers. That's very hard to administer. If we can put service level agreements in play that allow the shippers and the railways to work out their differences, then those costs don't continue to hemorrhage down to the farm gate. That's the point I want to make on that.

On the regulations and amendments, of course we'll look at any amendments that come forward. That's the nature of the committee hearing. You are masters of your own destiny. I know the right amendments will come forward at the end of the day from what you've heard.

It's hard to write the regulations ahead of time when you're not sure exactly what all the amendments will be. I've done a number of round tables, I'm not even sure how many now, in different areas across western Canada in the last two months. I have a pretty good idea what a lot of people are going to say. I know they're fine-tuning their asks. All of the shippers are starting to coalesce around the crop logistics working group that I put together in 2011, looking at logistics as we made changes to the single desk of the Wheat Board.

There's some fine-tuning being done in that respect, so I'm not going to predetermine what those regulations will be, or predetermine whether or not an amendment will be acceptable.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Ministers, for coming here today.

I guess it's too bad you have to come here today. When you look at the rail act of last year, Bill C-52, an act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), was a great opportunity and we could have had a rail act then. There were recommendations and we wouldn't have this $8 billion loss right now. That being said, we have to go forward over the next few days in our committee and roll up our sleeves to try to get some recommendations to you.

I have three questions. I'll ask the three of them and then you can figure out how you are going to answer them.

First, will your government accept the amendments that farmers are going to be bringing to the table here over the next few days? Are you open to these amendments?

My second question deals with regulations. We talk about regulations, but Bill C-30 creates more of a legal authority to produce regulations. I'm guessing that you have more draft regulations on hand. Will those regulations be given to our committee so we can look at them before we vote on the bill?

It was already mentioned about how the government will deal with the shippers and the railroads and try to lay out a precise definition of what service levels the railways are expected to deliver.

The third question is how will the performance be measured? How will damages be paid to farmers if those services have failed?

Minister Ritz, perhaps you could comment on the comments from the Minister of Agriculture for Saskatchewan who said that it is too late of course, but there's not enough teeth in there and not enough penalties or compensation in this framework to go back to farmers.

Transparency of Payments Made by Mining, Oil and Gas Corporations to Foreign Governments Act

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I want to begin by thanking the member for Ottawa Centre for putting forward this bill. In the past, we have had bills before this House that have dealt with corporate and social responsibility. It is an important issue, and I am most pleased to speak to it today.

I want to read one part of the bill. This is, “An Act respecting the promotion of financial transparency, improved accountability and long-term economic sustainability...”. That strikes me as almost the Conservative mantra, when I see that.

However, the reason I am particularly interested in this bill and pleased to have the opportunity to speak to it today is that in my capacity as critic for international human rights for the last eight and a half years, I have had numerous delegations. In fact, in a one-month period about a year ago, I had indigenous groups from Guatemala, Colombia, Honduras, the Philippines, and Mexico, all of whom accused their governments of removing their communities from their traditional lands to allow mining exploration and development, some of which was conducted by Canadian mining interests.

I know that Canadians from coast to coast to coast believe that Canadian mining interests would operate and function with the values that we hold dear about human rights in Canada. Unfortunately, from time to time that has been called into question. This bill would require that Canadian mining, oil, and gas corporations submit annual transparency reports that disclose all payments provided by them or their subsidiaries to a foreign government for the purposes of further mining, oil, or gas activities.

We know there have been Canadian companies called into question around Libya and other countries. We have some court cases that are underway. This type of legislative responsibility is important, not for the good mining companies, not for the people who follow the rules and have some pride in what they do, but for those companies that we would call into question their activities and how they proceed in foreign lands.

I spent time in Saudi Arabia, in the 1970s, and in that country at that time bribery was a huge undertaking. Nearly anything one needed or wanted to get done had a bribe attached to it. That is a culture that needed change. Part of the change is that countries that provide workforces to a country that functions on bribery have a responsibility to start that change.

From the reports of abuses that I heard from the indigenous groups who visited me, it is clear that part of the equation for change in those countries is contained in this bill. Clear reporting on those transactions will ensure that Canadian companies continue to use the proper due diligence in those countries with murky governments, and we all know what we are talking about here. There are governments out there that will use torture and will attack their own citizens. Members of the leadership of these indigenous groups are physically at risk as a result of standing up for what should be rights to their own traditional lands.

New Democrats have long supported transparency and accountability by Canadian corporations overseas. The member who sponsored Bill C-300 is with us here today. In fact, in that bill we had an opportunity to further corporate and social responsibility in the world by having Canada become a leader. Unfortunately, even though it was a minority Parliament, we lost, if I recall, by some 12 votes. We see that this bill further complements legislative efforts that the NDP members and others have made in this House to encourage that kind of responsibility and sustainable and transparent management practices in the Canadian extractive sector, which is then used around the world.

We also believe that the responsible management of natural resources means that part of the arrangement must provide the people of these countries with social and economic benefits. Rather than having all of the profits skimmed off, when they have a corrupt government that is practically willing to give away the resources in these countries, there must be some responsibility to ensure that the people who have lost their land receive the benefits.

It is clear to NDP members, as well, that corporate transparency about payments to foreign governments should further Canada's national foreign policy objectives, and we think it would do that.

Part of our goals as a country, for many years, has been to encourage the development of democracies around the world. Part of that, particularly, is governmental accountability. If there is a trail of transparency where we can see where the monies have flowed, when those get off base, it would be something that we could identify and act upon.

With this bill, Canada would join the growing international community that is starting to move toward disclosures of this nature. Another speaker earlier quoted the Barney Frank initiative in the United States. We also believe that enforced regulations would create a more level playing field for all Canadian companies.

In these countries, we know bribery happens and huge amounts of money are fed to governments under the table. When Canadian companies are abiding by the rules and being responsible but have been defeated in getting a chance to explore for a certain resource because someone else outbid them under the table, we have to develop international rules and regulations to ensure it does not happen.

Today, the EU, Australia, and the U.K. are considering standards similar to what was just imposed in the United States. Bill C-474 would put Canada on the path to joining those nations that believe their companies must show a commitment to corporate and social responsibility when dealing with resource development, particularly in the developing world. It would ensure that Canadian corporations are accountable for the payments they make, as I have said over the last few minutes.

The bill complies with the corporate standards of the extractive industries transparency initiative. Payments are required to be identified, under this initiative, and separated according to the specific extractive projects to which they apply. It is very direct, maybe in some terms simple, accounting for what people do, but if that payment is not linked to a specific reported project, it must be listed separately. If a payment that is listed generically is believed to apply to a specific project, the bill would authorize the Minister of Natural Resources to launch an investigation. That is what I would call true accountability.

The Transparency International bribe payers index ranks the oil and gas and mining industries as the fourth and fifth most likely sectors to issue bribes. Consider that for a moment, because Canada is a leader in resource development in both of these areas. We do not want our companies tempted or compromised into feeling they have to pay bribes in these other countries.

Two-thirds of the world's poorest people live in countries rich in natural resources. As I said before, if Canada is party to the extraction of those resources, it is part of our responsibility to ensure that those poor people benefit from that extraction and the sales of their resources. Note that I said they are their resources. Effective environment and labour standards in developing countries often depend on advocacy and activism by local populations; thus the groups that visited my office over last summer.

This bill would make sure local people are aware of the payments made to their governments by Canadian extractive companies. Beyond that, it would show where the give and take has been in those agreements and where the principles have been tested for the Canadian companies. We hope to be able to say that this bill would encourage those Canadian companies to the point where we will never see on record any evidence that they have bribed, been part of any coercion, or had anything to do with it. My belief is that companies do not do it, but this would ensure that it is not done and it would ensure direct accountability.

When the leaders of those nations see that there is an accountability chain that could cause Canadian companies to withdraw from their country, perhaps that is just the one lever that might be needed to start the change to where they treat their own people with dignity, they do not push them off the lands for exploration, and when the lands are taken and the delivery of the resources is done, the people benefit in a true way.

Fair Rail for Grain Farmers Act

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, I am hopeful on the last point, that the government will at least make the gesture of making it possible for all of the witnesses to be heard. It would be pretty unseemly if some farm organizations and farm groups from western Canada were shut down or shut out simply because there was not enough time, when it is obviously possible to make time if we have the political will to do that. Anybody who would be shut out would be constituents of the government in large measure, so I do not think the government would be inclined to do that. I hope we will see that kind of generosity and flexibility from the government.

In terms of the willingness to accept amendments, I hope the experience from last year will be instructive to the government. Last year, many of these same issues were before the House and before the standing committee in consideration of Bill C-52, the legislation dealing with service level agreements. The arguments were all made. The government brought in the whips and voted down all the amendments. Now it is clear that was the wrong thing to do. At least some of those amendments would have made a difference. Some of those amendments could have prevented the problems we are now having, or at least reduced the consequences of those problems.

Based on that experience, I hope the government will be more open to hearing what the farm organizations are truly saying and respond to that testimony with concrete changes to the legislation. The government did not do a good job last year. It has an opportunity now to fix it. With that experience so recently in mind, I hope the government will learn from the mistakes made a year ago.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, I am tempted to say “here we go again”. The House is once more dealing with legislation to patch up the grain handling and transportation system in western Canada. Just about a year ago, we were doing exactly the same thing.

Back then, it was called Bill C-52 and it was legislation to create service level agreements between shippers and railways. Just about everybody told the government at the time that Bill C-52, as originally presented, would not work, but the Conservatives refused to listen to any of that advice. They refused each and every amendment. They voted them down. They basically told farmers and others to get stuffed. They put on the whips and they voted against every single idea that was presented to the standing committee to try to make Bill C-52 useful. They forced it through with absolutely no change.

Sure enough, as everybody predicted at the time, it failed. Not a single service level agreement was ever completed under the useless Bill C-52.

That is one of the reasons the grain industry is now in such chaos. Grain shipments are months and months and millions of tonnes behind. Piles of crops are stranded on farms across the prairies. Some are now spoiling. Feed users and domestic processors cannot get the supplies they need. Terminals are half empty. Ships are waiting. Demurrage charges are horrendous.

Many sales have been lost outright; others have been deferred, and the prairie price is now down by 35% or 40% compared to where it was last year. Good customers like the Japanese are simply going elsewhere to buy the grain that they would normally come to Canada to get. World grain conferences are talking incessantly about the “unreliable” Canadian grain system. Some farmers have not had any income since last year. They are rolling last year's debt into next year's debt.

When all that is added together, and by the government's own calculations as specified in its March 7 order in council, the impact of this disaster is now in the range of some $8 billion in costs and losses. That is $8 billion scooped out of the prairie farm economy, most of it taken directly from the pockets of farmers.

The problem has been dragging on for very nearly six months now, and the best the government can forecast is that it will take another six long and painful months to clear the backlog that now exists.

Grain companies are going to have a banner year. The deductions that they are taking off farmers' cheques have never been higher. Railways are going to have a banner year. In fact, they have gone to New York and boasted to their shareholders that this year's grain problem is just a “modest” little thing. They tell their shareholders not to worry, because grain shippers are captive shippers anyway, and there is no other way to move the product. There are no serious financial penalties for not moving it, so eventually the railways will get paid in full.

The only ones here who are out of pocket for that $8 billion are the farmers. Crisis legislation is obviously necessary. Indeed, it is long overdue.

How did this mess arise? Everyone blames everyone else. They blame the weather and the big crop that came from the bumper harvest last year. It is always somebody else's fault. No one is responsible and no one is accountable for the failure and the damages.

However, let us think of the painfully damaging message this sends to prairie farmers. Of all of the participants in the grain system, the farmers are the ones who did their jobs very well last year. They produced maybe the best crop in history. Now the system is telling them not to dare do that again, because the rest of the system cannot handle anything more than just an average crop. Neither do we have the will to give grain any sense of priority, so the farmers are being told to just be content with mediocrity.

That is what the system is saying to farmers through the massive failure this past year.

That is simply not good enough.

The system failed farmers this past year. It failed badly. There is responsibility all around: for the railways, for the grain companies, and maybe even a bit for the cold winter. But if the system failed, then this is the question that must be asked: who designed the system? Who put it in place? Who set it up for failure? Who has imposed $8 billion in costs and losses on prairie farmers?

The unequivocal answer to that question is this: the current Government of Canada. This disastrous system, the one that has failed so badly, is the one that was designed and implemented over the past three years by the current government. That is where the buck has to stop.

So, we are faced will Bill C-30.

I think one thing in the bill that almost everyone, except the railways, would applaud is the change with respect to inter-switching. That would, possibly, simulate competition at a great many more delivery points across the Prairies. That would be a good thing. I note that some of the farm organizations are welcoming this move. They are also describing it as a modest improvement. However, it is an improvement and we all hope that it will work.

The legislation would also re-legislate the order in council from March 7, the one that ordered the railways to move a certain volume of grain in a certain timeframe. Significantly, however, the legislation would not improve upon the order of March 7. The railways would not be asked to do significantly better than they would otherwise have done anyway, with the onset of spring.

The question is, why not? That is the question being asked so eloquently by the minister of agriculture in the Province of Saskatchewan. He is a very practical, business-like, down-to-earth minister. He is a no-nonsense kind of guy. He would not propose a volume or a penalty system that was outlandish, outrageous, or impossible to achieve.

The Province of Saskatchewan, through the minister, has asked for about an 18% increase in the volumes to be shipped, and for penalties to be at the rate of $250,000 a day instead of $100,000 a day. He has looked it, he has examined it carefully as someone who knows the system, and he is saying, “Why not?” That would help, too, if the government could have a positive answer for Minister Stewart.

The rest of Bill C-30 would largely enable legislation to authorize the creation of future regulations. There would be no immediate action. It would simply be a matter of future hypotheticals if regulations were ultimately to be forthcoming.

We ask the question: why are there no legislative guarantees for farmers? A regulation could be changed by the stroke of a pen in the middle of the night. Right now, no one knows what those regulations might say. It would be very helpful if the government would table the draft regulations before the standing committee so it would know what those regulations would likely do when they finally come in.

For example, would there be comprehensive monitoring from one end of the system to the other to measure, analyze, and report publicly on grain marketing transportation and handling and the outcomes the system is actually generating?

Would there be complete transparency?

Would there be regulation on the basis calculations and the deductions that come off farmers' grain cheques and go into the pockets of grain companies? That basis spread, today, has never been wider in Canadian history, meaning that the grain companies are getting a lot of money and the farmers are getting less.

Would there be any sensible business-like coordination of grain handling and transportation logistics to replace the absolutely chaotic free-for-all that exists today? No one is out there directing traffic, so we have a snarled mess.

What about short lines? What about producer cars? These were the issues raised by the Parliamentary Secretary to the Minister of Foreign Affairs.

What about servicing domestic customers, like the feed grain users in the Fraser Valley, and the cereal manufacturers in eastern Canada?

Would there be a full costing review to track all revenues and costs to follow the money in the grain system to see how the efficiency gains have been shared or not shared over the past 22 years when then there was the last costing review?

Would there be any new capacity or surge capacity in those service level agreements? Would there be any precise definition about what service the railways must provide? How would performance be measured, and would farmers get liquidated damages when the system fails? Penalties paid to the government do not help farmers. The damages need to be paid to the farmers who have incurred the losses.

Why has all of this been left out of Bill C-30? It has been left to be done by regulation, maybe sometime. Why were these specific amendments voted down when they were last considered by the government a year ago in the context of Bill C-52? When will farmers get to see any of those proposed draft regulations? I think it would be very wise for the government to make sure that farmers and all of us have a chance to review those regulations before the standing committee is called upon to vote on Bill C-30.

Finally, will the government accept common sense amendments to try to fix the mess in grain handling and transportation, in the interests of farmers who, I repeat, are the ones and the only ones who are picking up the tab for all of this disaster?

Concerns about the inadequacy of Bill C-30 have obviously been expressed by many members of Parliament on all three sides of the House, and concern is coming from others as well: I mentioned the Minister of Agriculture in the Province of Saskatchewan; the Saskatchewan Association of Rural Municipalities has expressed concern; the Saskatchewan Canola Growers Association; and of course, the parliamentary secretary.

As the bill goes speedily through second reading today, which I think it should, and into the Standing Committee on Agriculture and Agri-Food for detailed consideration, the government needs to ensure that all of those who have these concerns, all of those who are going to be vitally affected for better or for worse by the outcome of Bill C-30, have the opportunity to be heard.

There are only about four meetings of the committee normally scheduled between now and when the House would adjourn at Easter. This matter has to be resolved before the Easter break. It would be very important for us to hear from all parties today, saying explicitly that, whatever extra hours or extra meetings of the agriculture committee may be required to make sure all the witnesses are heard, those meetings and hours will be added to the committee's agenda, so we can have a full ventilation of this subject. No one will feel they have been shut down or cut off, and we can all be assured that, when the final decisions are taken, the full information was before the committee and the decision is taken with full knowledge of what the circumstances are.

On behalf of the Liberal Party, I can say we are more than happy to have as many meetings as it takes to make sure everyone is heard. I think that is what I heard from the deputy agriculture critic for the NDP, and I hope the government would give us that assurance before the end of the afternoon, so we can all make sure that the agriculture committee does its job properly.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, in answer to some questions earlier, the Parliamentary Secretary to the Minister of Agriculture said that the agriculture committee will ultimately determine the witness list and the way the bill will be dealt with at the committee stage. With regard to all the witnesses who may want to be heard, I recall a year ago, when Bill C-52 was before the standing committee, that there was a long list. The committee had six or seven meetings to accommodate all the witnesses.

Between now and the Easter adjournment, there would likely be only four regular sittings of the agriculture committee to deal with this legislation. It needs to be dealt with surely before the House adjourns for Easter. I wonder if, from the NDP perspective, the hon. member would agree that if necessary, to accommodate the witnesses, we would all agree to extend the hours of the agriculture committee, have the committee meet around the clock if necessary, to ensure that every single farmer and representative of a farm organization who wants to be heard on this vital legislation has the opportunity to present to the committee.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Mr. Speaker, I actually have an article here, and I would like to quote the Parliamentary Secretary to the Minister of Foreign Affairs. He said:

Without a consistent car supply, western Canadian shortlines and the loading facilities located on them are left in an extremely precarious position.

He goes on to say that the long-term solution to the crisis lies in mandatory service level agreements between shippers and railways, with reciprocal penalties during times of poor service.

I think he is actually standing up because this has been going on for months. I know that both opposition parties have worked very hard. We have asked questions. Last year, when Bill C-52 came to committee, we worked very hard and had a lot of amendments to make sure that it had more teeth and was a good piece of legislation that would help.

People are standing up across the country and saying that this is not enough. Now we have some members getting up, shortly after the tabling of this bill, to say that it is not enough and that we should work together to make it a better piece of legislation.

I am really hoping that the government will work with us, because on committee we are outnumbered. I can do the math. I am hoping that there is more openness and that the government members will actually listen to witnesses and to us when we come forward with amendments to make this a bill that will actually work and prevent long-term problems.

Agriculture and Agri-Food

[Gerry Ritz, Conservative, Minister of Agriculture and Agri-Food]

Mr. Speaker, what farmers asked for a couple of years ago was the opportunity to market their crop at the time and price and place of their choosing. We did that with no help at all from the opposition.

We have moved forward on that rail review. We had Bill C-52 a year and some ago. The opposition did help us in that one, and that was welcome, but we also briefed them yesterday on the next steps: a piece of legislation going forward that will address a lot of what the member is asking for.

I am not sure just exactly what he misinterpreted from that yesterday. I thought we were very clear and very succinct in exactly what that piece of legislation would do.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, the so-called emergency action announced today on grain is little more than what the railways had already projected to do themselves in the weeks ahead.

Second, the government needs to fix the useless railway service legislation, Bill C-52, designed by the government, which fails to define service, fails to measure performance, and fails to impose damages payable to farmers.

Third is compensation. The system designed by the government has imposed costs and losses of $5 billion over the last five months. Will farmers get any of that money back?

[Lisa Raitt, Conservative, Halton, ON]

You know what? I'm going to answer all your questions, because I think it's a good opportunity to explain, from our point of view in Transport Canada, what our analysis is of what has occurred.

In order to learn how to fix going forward, you have to understand the problem, and there seems to be a focus on amendments to the Fair Rail Freight Service Act from last year, which is a different conversation, and not the one that addresses our problem here right now.

The railways provide a capacity for a normal year, a five-year average, and they do so when they're putting their business plans together. Unfortunately, and fortunately, because this is a two-sided coin here, we have a great harvest and the farmers did extraordinarily well in bringing in production. We do expect that rail should have the capacity to have a surge, a swing, on how much they can provide.

That was exacerbated by the weather we've seen this year. Minus 25 degrees and below causes trains to have to be shortened, and there are concerns with respect to the health and safety of people working in operations.

We ended up having the situation of a huge crop, 33% more, which, if you take a look at it, is 20 million tonnes more than we normally see. That would mean 10 million tonnes for each railway to carry, because they're about fifty-fifty in grain in the country. That exceeds the entire potash industry, for example, in one year, in one fell swoop.

As for what we've done, we met with the CN and CP CEOs on Saturday and went through what they can do and how many cars they can move. They understand the urgency. Of course, I have met with the Canadian Federation of Agriculture and I've met with the grain companies.

The Fair Rail Freight Service Act was passed last year for the purpose of having shippers and railways communicate with each other in order to ensure that we have a smooth system. That legislation has not been utilized by grain or by the railways up to this point, and that's a difficulty. We'd like to see that utilized. More importantly, we'd like to see the railways start accelerating how much they're moving in the Prairies right now, and they've indicated that they would do so.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Mr. Speaker, there is a $5-billion disaster in the Canadian grains industry. It is not the farmers' fault. It is the utter failure of the Conservative government's rail bill, Bill C-52.

The law must be amended to better define rail services, to measure proper performance, and to compensate farmers with liquidated damages when the railways fail.

Liberal amendments to Bill C-52 would have fixed all these mistakes. Why did the minister and all those western Conservative MPs vote against these amendments?

Grain Transport

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

Mr. Speaker, I was at the transportation committee when Bill C-52 was discussed, and it was clear that the grain shippers were not happy that they were not going to be able to negotiate certain aspects, which they are feeling now. The aspects of that bill they cannot negotiate are what they are being hit with: these big expenses.

In addition was the demise of the Wheat Board. While it was cheered wildly on the other side of the House, there was one thing the Wheat Board was able to do that is not possible now without it. That was to pay farmers and subsidize the transportation of grain eastward through Thunder Bay and Churchill in order to go westward. The Wheat Board did that as a regular part of its business, because it knew full well that the port of Vancouver could not handle a bumper crop. The port of Vancouver cannot transport all the grain that comes off the prairies to China. It just cannot do it. It is physically impossible, and here we are.

We knew it was going to happen, but the Conservatives are discovering it for the first time. We are having what is called an emergency debate, because there is an emergency. Farmers are not going to have money this year. They are not going to be able to plant crops next year if they do not have money this year.

The government has indicated that it wishes to use its legislative authority against Canadian National Railway. Will it do so, not just for the workers? Will it use its legislative authority—

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

Mr. Speaker, I do want to start by reviewing what our House has accomplished over the preceding five days since I last answered the Thursday question.

Bill C-51, the safer witnesses act, was passed at third reading. Bill C-52, the fair rail freight service act, was passed at third reading. Bill C-63 and Bill C-64, the appropriations laws, passed at all stages last night as part of the last supply day of the spring cycle.

Bill S-2, the family homes on reserves and matrimonial interests or rights act, has been debated some more at third reading. Bill C-60, the economic action plan 2013 act, no. 1, was passed at report stage. Bill S-8, the safe drinking water for first nations act, was passed at report stage, was debated at third reading, and debate will continue.

Bill S-14, the fighting foreign corruption act, was passed at second reading. Bill C-56, combating counterfeit products act, was debated at second reading. Bill S-15, the expansion and conservation of Canada’s national parks act, was debated at second reading. Bill S-17, the tax conventions implementation act, 2013, was debated at second reading.

On Bill C-62, the Yale First Nation final agreement act, we adopted a ways and means motion, introduced the bill, passed it at second reading and it has since passed at committee. I anticipate we will be getting a report from the committee shortly.

Bill S-16, the tackling contraband tobacco act, was given first reading yesterday after arriving from the Senate. Bill C-65, the respect for communities act, was introduced this morning.

Substantive reports from four standing committees were adopted by the House.

On the private members' business front, the House witnessed three bills getting third reading, one being passed at report stage, two being reported back from committee and one was just passed at second reading and sent to a committee.

Last night was the replenishment of private members' business, with 15 hon. members bringing forward their ideas, which I am sure we will vigorously debate.

The House will continue to deliver results for Canadians over the next week. Today, we will finish the third reading debate on Bill S-8, the safe drinking water for first nations act. Then we will turn our collective attention to Bill S-15, the expansion and conservation of Canada’s national parks act, at second reading, followed by Bill S-2, the family homes on reserves and matrimonial interests or rights act, at third reading.

Tomorrow we will have the third reading debate on Bill C-60, the economic action plan 2013 act, no. 1. The final vote on this very important job creation and economic growth bill will be on Monday after question period.

Before we rise for the weekend, we hope to start second reading debate on Bill C-61, the offshore health and safety act.

On Monday, we will complete the debates on Bill S-15, the expansion and conservation of Canada’s national parks act, and Bill S-2, the family homes on reserves and matrimonial interests or rights act.

Today and next week, I would like to see us tackle the bills left on the order paper, with priority going to any bills coming back from committee.

As for the sequencing of the debates, I am certainly open to hearing the constructive proposals of my opposition counterparts on passing Bill S-6, the First Nations Elections Act, at second reading; Bill S-10, the Prohibiting Cluster Munitions Act, at second reading; Bill S-12, the Incorporation by Reference in Regulations Act, at second reading; Bill S-13, the Port State Measures Agreement Implementation Act, at second reading; Bill S-16, at second reading; Bill S-17, at second reading; Bill C-57, the Safeguarding Canada's Seas and Skies Act, at second reading; Bill C-61, at second reading; and Bill C-65, at second reading.

Mr. Speaker, I am looking forward to having another list of accomplishments to share with you, and all honourable members, this time next Thursday.

Suffice it to say, we are being productive, hard-working and orderly in delivering on the commitments we have made to Canadians.

There having been discussions among the parties that it will receive unanimous consent, I would like to propose a motion. I move:

That, notwithstanding any Standing Order or usual practices of this House, the member for Peace River be now permitted to table the Report of the Standing Committee on Aboriginal Affairs and Northern Development in relation to Bill C-62, An Act to give effect to the Yale First Nation Final Agreement and to make consequential amendments to other Acts.

Business of the House

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

Mr. Speaker, now that we have been sitting for a week under our Conservative government's plans for a harder-working, productive and orderly House of Commons, I would remind all hon. members of what we have been able to achieve since just Victoria Day.

Bill C-48, the technical tax amendments act, 2012, was passed at report stage and third reading. Bill C-49, the Canadian museum of history act, was passed at second reading. Bill C-51, the safer witnesses act, was passed at report stage and we started third reading debate, which we will finish tonight. Bill C-52, the fair rail freight service act was passed at report stage and, just moments ago, at third reading. Bill C-54, the not criminally responsible reform act, was passed at second reading. Bill C-60, the economic action plan 2013 act, No. 1, was reported back from committee yesterday.

Bill S-2, the family homes on reserves and matrimonial interests or rights act, was passed at report stage and we started third reading debate. Bill S-6, the first nations elections act, was debated at second reading. Bill S-8, the safe drinking water for first nations act, which was reported back to the House this morning by the hard-working and fast running member for Peace River, has completed committee. Bill S-10, the prohibiting cluster munitions act, was debated at second reading. Bill S-12, the incorporation by reference in regulations act, was debated at second reading. Bill S-13, the port state measures agreement implementation act, was debated at second reading. Bill S-14, the fighting foreign corruption act, was debated at second reading.

We will build on this record of accomplishment over the coming week.

This afternoon, as I mentioned, we will finish the second reading debate on Bill C-51. After that, we will start the second reading debate on Bill C-56, Combating Counterfeit Products Act.

Tomorrow morning, we will start report stage on Bill C-60, now that the hard-working Standing Committee on Finance has brought the bill back to us. After I conclude this statement, Mr. Speaker, I will have additional submissions for your consideration on yesterday's point of order.

After question period tomorrow, we will get a start on the second reading debate on Bill S-15, Expansion and Conservation of Canada’s National Parks Act. I am optimistic that we would not need much more time, at a future sitting, to finish that debate.

On Monday, before question period, we will debate Bill S-17, Tax Conventions Implementation Act, 2013, at second reading. In the afternoon, we will hopefully finish report stage consideration of Bill C-60, followed by Bill S-2 at third reading.

On Tuesday, we will return to Bill S-2 if necessary. After that, I hope we could use the time to pass a few of the other bills that I mentioned earlier, as well as the forthcoming bill on the Yale First Nation Final Agreement.

Wednesday, June 5 shall be the eighth allotted day of the supply cycle. That means we will discuss an NDP motion up until about 6:30 p.m. This will be followed by a debate on the main estimates. Then we will pass to two appropriations acts.

Next Thursday, I would like to return back to Bill C-60, our budget implementation legislation, so we can quickly pass that important bill for the Canadian economy.

Fair Rail Freight Service Act

[The Speaker, Conservative, Andrew Scheer]

Pursuant to an order made on Wednesday, May 22, the House will now proceed to the taking of the deferred recorded division on the motion at the third reading stage of Bill C-52.

Call in the members.

The House resumed from May 29 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 third time and passed.

[Niki Ashton, NDP, Churchill, MB]

Mr. Speaker, the member made reference to those who are involved in grain farming. One of the things I had the opportunity to speak to when referencing Bill C-52 was how unfortunately the government, as exemplified in this bill but also generally in their approach across the country including passenger rail, leaves Canadians shortchanged.

I will use the example of the cuts to Via Rail that services Churchill, a port, as the member will know, that has historically been very involved with exporting grain. However, as the Wheat Board was gutted, it has missed out as well.

I am wondering why this member and his government are willing, time after time, to shortchange those hard-working farmers in farming communities when it comes to delivering fair, equitable access to rail services for passengers but also when it comes to making sure that industries are able to get a fair deal on rail transport.

[Pierre Lemieux, Conservative, Parliamentary Secretary to the Minister of Agriculture]

Mr. Speaker, Canada's agriculture and food industry creates jobs and promotes economic growth.

That is why our government remains committed to working hard to help this vibrant industry continue to grow. We are investing in innovation to allow our farmers to remain competitive, and we are opening up trade in order to help farmers get the best price for their wheat and barley crops.

Our government wants to reduce red tape so that farmers can spend their time working the fields, not filling out forms. It wants to help farmers increase international sales through the most aggressive trade program in our country's history.

Of course, if farmers are going to serve these overseas markets, they need efficient and effective transport systems to get their product to port, and that is what Bill C-52 is all about.

Last year, Canada's grain producers exported some $17 billion in world-class grain products, representing up to 85% of their total sales on the farm. These dollars not only drive growth on our farms; they also drive growth for our economy and jobs for Canadians, from combine operators to truckers to port terminals.

Our farmers and our economy depend on efficient, effective and reliable rail service to move these crops off the farm to our valued customers in Canada and around the world. In fact, last year Canadian farmers paid over $1 billion to move regulated grain by rail. On the prairies, grain travels an average of 1,400 kilometres to reach a port destination.

Thanks to the fair rail freight service act, the government is contributing to strengthening this vital link between the farm and the consumer's table. The fair rail freight service act also supports our government's program to promote economic growth and long-term prosperity across our great country.

Our government is committed to ensuring that all shippers, including grain shippers, can negotiate agreements that bring greater clarity and predictability on service. With this proposed legislation, we deliver on that commitment.

This bill is good news for Canadian farmers, and I am pleased to report that it has been welcomed by the farm leadership across all of the major exporting sectors in agriculture.

For instance, the Canadian Federation of Agriculture said:

Passage of Bill C-52 will provide a legislative tool needed to make railways more accountable to its customers. It is a good first step in improving rail service and costs to industry.

The Grain Growers of Canada said:

We fully support the federal government's aggressive trade agenda and global commerce strategy. Timely and efficient rail service is a critical part of Canadian farmers' market access so this will help us be more globally competitive.

Also, the general manager of the Canadian Canola Growers Association said:

The railway is a critical link between our farms and our export customers. To fully capitalize on the new trade opportunities being pursued by Canada, shippers need this legislation to ensure Canadian agri-food products reach our customers in a reliable and timely manner.

Clearly, farmers believe this bill would help them grow profitable businesses by building a strong and effective supply chain. Bill C-52 would do that by giving shippers, including farmers, the right to a service agreement with railways.

The core of the bill is a new process to establish those agreements when commercial negotiations are not successful.

This provision will be a powerful tool for our agricultural sector, since it will strongly encourage shippers and rail companies alike to negotiate a commercial agreement. The fair rail freight service act will help farmers grow their business.

The bill would bring clarity and predictability to the commercial relationship between the shippers and the railways, and it recognizes the need for railways to manage an efficient rail shipping network for the benefit of grain shippers and the entire supply chain.

To put Bill C-52 in perspective, it is part of our government's broader commitment to work with industry to build a modern and dynamic grain industry in Canada.

Of course, marketing freedom for wheat and barley farmers is a key part of that strategy. The sky did not fall under marketing freedom, as some doomsayers had predicted. Quite the opposite in fact, farmers new-found freedom is breathing new life into the grain industry across the prairies.

Farmers are saying that wheat is a cash crop now, and that they can sell their wheat and barley when and where they want, locally or south of the border, at harvest time or later, whenever the market is right for them.

They can also maximize the profit they make from their crops by shipping their wheat as soon as it is harvested and freeing up storage space for other crops such as canola or peas.

The modernization of the Canada Grains Act is part of our effort to provide Canadian farmers with a 21st century grain industry.

These changes, which received royal assent in December, will reduce farmers' regulatory burden and cost, improve the Canadian Grain Commission's producer payment protection program, and eliminate mandatory services that are no longer required, saving producers up to $21 million in extra costs.

To ensure that we stay the course in this exciting new direction for our grain industry, the Minister of Agriculture has renewed the mandate of the crop logistics working group. This forum of experts from across the industry will work to improve the performance of the supply chain for all crops through stakeholder collaboration with a focus on innovation, capacity and measures of performance.

As well, Agriculture and Agri-Food Canada continues to work with Transport Canada on an in-depth analysis of the grain transportation supply chain to make a strong system even stronger. Farmers, grain marketers and the railways are partners in a world-class industry that brings us the food on our tables.

Canadian railway companies and farmers have helped build our great nation. They will also help prepare our country for a bright future by delivering high quality grain to the world's steadily growing population.

This bill before us takes an important step towards a stronger and more efficient rail network to help farmers build their businesses and keep our economy on track. I am pleased that all members in this House are supporting this bill, because it is the right thing to do and it is good for our Canadian farmers.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

This is actually quite insulting, and most of all, undemocratic. The Conservatives are forcing us to sit until midnight from Monday to Thursday, and yet this makes the 37th time we have a time allocation motion. Talk about mixed messages.

We want to discuss the issues, but the government limits the time for debate again and again. In addition, these are badly thought-out bills riddled with flaws. I will list them a little later in my speech.

This has been an ongoing trend with the Conservatives since they came into office. I am specifically thinking of omnibus Bills C-38, C-45 and C-60.

I speak of the Conservatives' incompetence because they are bringing forward bills full of flaws and weaknesses. They are not holding proper consultations. In committee, recommendations from many of the witnesses are rejected out of hand, as are the amendments proposed by the NDP, or anyone else for that matter.

They realized that Bill C-38 was flawed. Then they made hasty additions to Bill C-45 to rectify the other bill they had just introduced.

This makes no sense at all. It lacks credibility. It shows a lack of respect for the democratic process, for the people who were consulted and for those who were not. It shows contempt for the elected officials who serve the people who rely on them to make decisions. We cannot make good decisions because we cannot have a debate and carefully examine everything that should be considered. So yes, it is insulting and an outrage.

The official opposition will support Bill C-52 because it is, finally, a first attempt at establishing the right to service agreements between rail companies and shippers.

This is the first step that shippers have been waiting for for decades. It also establishes an arbitration process, led by the Canadian Transportation Agency, to impose penalties in the event negotiations fail and for violations of arbitration decisions. There are therefore constructive, positive elements, but there are also a number of elements that shippers and the official opposition were calling for but that were rejected.

Four NDP members proposed amendments, based on recommendations from shippers. Those members were the transport critic, the member for Trinity—Spadina; the deputy critic, the member for Trois-Rivières; the member for Notre-Dame-de-Grâce—Lachine and the member for York South—Weston.

What were those amendments and recommendations? I will explain them. They were not that complicated, and they would have really helped shippers.

We recommended including details about the service agreements. It seems to me that service agreements should, at the very least, be signed and contain details. I do not understand why that was rejected. We asked that the term “operational” be deleted because it would limit the ability to negotiate and arbitrate service agreements. Again, that seems to go without saying. It does not make much sense to limit the measure we are trying to implement. We wanted to include a dispute resolution mechanism in service agreements for breach of contract. We also asked to limit the ability of railway companies to levy penalties and charges that are not in the service agreement.

The rates are already exorbitant and the railway companies are abusing their power. Since there are only two main companies, there is a quasi-monopoly when it comes to shipping freight. The rates being charged to the shippers are too high. They prevent the entrepreneurs and the shippers from being competitive on the international market. We cannot even limit the capacity of the rail carriers to charge penalties that are not included in the service agreement. Nothing good will come of that either.

We proposed limiting arbitration when service agreement negotiations break off and issues are raised by the shipper. The last amendment sought to limit the capacity of rail carriers to raise network-related problems during arbitration.

All these amendments could have improved Bill C-52, but they were not considered. They were completely rejected.

Again, we are here to let the House know that people are not happy about this.The bill has other flaws. What about lost revenue. The Conservatives claim they want to strengthen the economy, but they are diminishing the capacity of the regions to prop up their regional economy, given that the affected sectors are the farming, forestry, mining, manufacturing and natural resources sectors. Most of these sectors are in remote regions.

The Conservatives are contradicting themselves again. They would have us believe that their position and their bills are best, but then they sabotage everything they are trying to do by not taking the time to do proper research. They do not take the time to consult the experts in the areas affected by their bills. That is part of the incompetence that we are talking about here.

Shippers are currently paying the price of service disruptions, damage to their crops and service delays by railways. What is more, they have no other option. As many of my colleagues have said, 70% of surface goods are moved by rail in Canada, and 80% of these shippers are not satisfied with the service they received. That is serious. That means that service is considered to be poor in four out of five cases.

That is why these types of agreements needed to be made after all these years. However, now that they are finally being made, they are more negative than positive. The money from the $100,000 penalties imposed on railway companies under this bill is not used to compensate shippers. Instead, it goes to the federal government. Yet, it really should be given to shippers who create jobs and who have to pay late fees and fees for services that the railways failed to provide.

This money is being sent to the wrong place. What is more, these penalties do not really act as a deterrent since we know that companies such as CN are making $2.7 billion in profit a year.

In short, we are going to allow this bill to move forward, but it has many shortcomings. We must listen to experts on this.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I am rising in the House to speak to Bill C-52, concerning rail freight. This is another bill we are debating under a gag order, which has been imposed for the 37th time.

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

Mr. Speaker, there are two points that my friend across the way and I can agree on. I am going to leave the tragic case of the circus elephant behind because I am not sure that this bill directly speaks to that particular provision. I do not see it in the legislation. There are two things that we can agree on. One is the importance of rail. Eighty per cent of all of our freight moves on rail.

The second is that we have a particular challenge posed to us in Canada in that we have two large rail companies that almost entirely dominate every sector of the market. In the U.S. and in other circumstances there are other options for those shipping products. Canada has a duopoly. These companies have been shown by the Competition Bureau at various times to collaborate and coordinate, to raise prices, to offer less service without retribution because they know they are the only options people can go to.

We only get to address the rail system every once in a while. Does my colleague believe that any steps in Bill C-52 would do much to go after the service fees that have been talked about by many shippers in this country? They have had problems and real concerns that the pricing may be non-competitive. When there is a market with only two players in it, non-competitive pricing can pose a real problem to such a fundamental industry as the shipping industry in Canada.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, that is right, my hometown killed an elephant. It was back in a day when rail was king. It was a day when everything moved on the rails and some things, I guess, had to move out of the way.

This bill would bring Canada and the rail system in Canada back to those days of service by our railways. They were days when goods and resources were moved by rail.

There is no question that rail transportation plays a central role in the success of our resource companies and our resources in this economy. In fact, Canada's natural resources industries are the largest users of rail freight services in the country, even to this day. Taken together, Canada's forest, mining and energy industries account for two thirds of all carload rail traffic in Canada. We know that the manufacturers and suppliers to these vital industries and many other vital industries, which provide everything from trucks to pipelines, also depend on railroads to transport their products and materials to market.

Our goal is to provide Canadian shippers and railways with a means of agreeing on service levels and ensuring a more effective supply chain. That is exactly what this proposed legislation will do. With this new legislation, we are highlighting the important role that railways play in supporting our economic prosperity. The goal of the legislation is to encourage railways and shippers to work together and it creates a strong incentive for them to do so.

Bill C-52 is designed to provide shippers with greater reliability and predictability in rail service. It is essential to the success of our natural resources industries. It recognizes the needs of shippers in doing their business and the needs of railways to manage their rail assets effectively. The relationship between railways and shippers is vital to Canada's economy as a whole. We know that when shippers can move more volume, it means more exports, revenue and jobs in Canada.

Here is the bottom line. Improving rail service in Canada will help to unlock the potential of our great natural resources. As most Canadians realize, there is a great deal at stake.

Here are some statistics. In the mining industry last year, more than half a million carloads of coal, sulphur and fertilizer were transported by CP Rail. In 2012, CP Rail alone moved 67,000 carloads of forest products. Many of those in urban ridings may have only sat at a crossing and watched that economy move by them as they impatiently waited for the gate to go back up. However, in rural and resource Canada, that is money going by. In fact, it is about $20 million worth of goods a day.

Additionally, Canadian Pacific recently indicated in its 2013 outlook that its crude oil by rail prospects continue to strengthen as the company expects to move to double the movement of crude oil to 140,000 carloads annually by 2015. That is from today's current volume of 70,000 carloads. That is a doubling of carloads of oil being moved by train.

It would be a lot more efficient to move it by pipeline, I suppose.

Right now, natural resources are directly and indirectly driving almost 20% of the nation's economy and supporting over 10% of all the jobs in Canada. Natural resources are poised to play an even greater role in the future. Our opportunities for growth in Canada's resource sector, arising from the rapid economic ascent of some of the world's most populous countries, are unlike anything we have seen in our history. We have estimated that there are some 600 major resource projects currently under way in Canada or planned in the next 10 years, worth approximately $650 billion in investments.

While global economic conditions may be a factor in investor decisions to move forward, the size and number of the projects is substantial. Whatever the short-term obstacles, the longer-term outlook is one of increased value and a demand for Canadian resources.

We can point to tremendous opportunities that are happening right now across the country, from oil and gas in Alberta, to liquid natural gas in British Columbia, to offshore gas in Newfoundland and Labrador, to new discoveries of minerals and metals in the Ring of Fire in Ontario and in northern Quebec. These opportunities will continue for many years to come.

For generations, agriculture and natural resources have brought employment, growth and opportunity to every region of Canada. We must continue to harness this potential. Long-term growth and development in many of these sectors depend upon our railways and their ability to get the products to market.

In a recent report, the International Energy Agency emphasized that global energy demand will continue to grow by more than one third by 2035, being led by emerging economies like China and India. These trends represent opportunities for Canada's energy exports in helping to meet growing global energy needs. Because one thing that we know for sure is that these growing economies will need resources, resources that are abundant here in Canada, such as minerals and metals, lumber, oil and gas. This trend underscores the urgent need for Canada to diversify our energy export markets, such as that of Asia-Pacific.

Growing and emerging economies highlight the urgent need for Canada to develop infrastructure to export our resources to new markets and to ensure that our railways run smoothly.

Simply put, we know that developing an efficient transportation system is crucial to ensuring that our resource industries can compete globally.

The fair rail freight service act would provide the tools to build a strong and efficient rail network in Canada. This important legislation would support Canada's resource sectors as they continue to create jobs and prosperity right across this country. In these challenging economic times, it is good news for our natural resources sector and good news for all Canadians. With this new legislation, we would build on our country's legacy of railway and natural resources. We would be setting the stage for a brand new era of growth and prosperity in Canada.

Just as we mentioned at the beginning, the country started with a growth in railways and a use of railways to transport those resources from coast to coast and to build this country.

The resource industry today, in Canada, requires this act and railways to ensure that the resource industry can supply the world.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, it is great to be here tonight, even at this hour. I guess it is great to be here this morning, now. I appreciate the opportunity to discuss Bill C-52.

The Conservative government has proposed new legislation to improve Canada's freight rail service—

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, despite the recent interruption, we have to deal with the serious issue of Bill C-52, all the same.

The bill does in fact respond to some of the concerns of shippers, as has already been mentioned. The members of the NDP are still standing, they are still awake, and they are still ready to debate all the bills that have an impact on Canadians and the people in my riding.

The thing that is important to remember in this bill is that, in committee, shippers and businesses made six fair and reasonable proposals that would lead to something that was equitable. Unfortunately, the Conservatives flatly rejected those proposals, despite the fact that these were recommendations made by experts, by people who know the field and its problems.

I do not understand why the Conservatives stubbornly insist on going in one single direction and on taking a purely ideological view of everything they do.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I rise today in support of Bill C-52, the fair rail freight service act. The purpose of this bill would be to amend the Canada Transportation Act in order to improve the reliability and predictability of rail freight service in Canada.

Over the past years, Canada's economy has managed to thrive amid a turbulent global economic downturn. Our success is in great part due to our Conservative government's focus on strengthening our economy. Bill C-52 would greatly improve Canada's rail freight service and consequently contribute to protecting and fostering the growth of our economy.

A great number of Canadian businesses, from grain and forest products to coal and chemical products, use rail services to ship their goods across the country or around the world. The range of sectors that rely on rail is reflected in the range of witnesses who testified on this bill at the Standing Committee on Transportation, Infrastructure and Communities. As my colleague, the hon. Minister of Agriculture and Agri-Food, said, “This bill is good news for Canada's farmers as it will help ensure all shippers are treated fairly by the railroads”.

Now let me explain how we reached the step of introducing this great legislation, and why all members of this Parliament should support it.

The years prior to 2008 were a time of unprecedented growth. Increased trade with Asia contributed to capacity constraints in the transportation system. In 2008, the government launched the rail freight service review to look into issues of rail service reliability that were brought to our attention by stakeholders. As part of the review, the government appointed an independent panel of three eminent persons to develop commercial and, if required, regulatory solutions to improve supply chain reliability. During the review, the panel held broad consultations with 85 shippers, railways and other stakeholders, and received over 141 written submissions. In December 2010, the panel submitted its final report to the government. It recommended several measures to improve rail service.

For example, the panel recommended the use of service agreements to define the commercial relationship between a shipper and a railway. It also recommended having a facilitator work with industry to develop a commercial dispute resolution process.

Our Conservative government agreed with the review's commercial approach and carefully reviewed the panel's recommendations. In March 2011, in a response to the panel, we announced a number of measures that we would undertake to improve the efficiency, effectiveness and reliability of the rail-based supply chain. Our commitment goes beyond the panel's specific recommendations in order to benefit the entire rail-based supply chain. Let me quickly go over the government's response.

The first measure we implemented was a facilitation process to develop a template of what service agreements could look like in a commercial dispute resolution process between shippers and railway companies. On October 31, 2011, the government appointed an independent facilitator, Mr. Jim Dinning, to work with shippers and railways. In his final report to the minister, Mr. Dinning provided clear direction for both shippers and rail companies, moving forward. This included a template service agreement and a streamlined dispute resolution process for parties to use in their commercial negotiations. This government believes this process served its intended scope and purpose. We successfully brought shippers and railway companies to the table to jointly pursue practical solutions that reflect their needs and the reality of their day-to-day business together.

To support these commercial tools, our Conservative government committed to tabling this bill that would also give shippers a right to a service agreement with the railways, and provide a process to establish an agreement should commercial negotiations fail. Bill C-52, the fair rail freight service act, would do just that. It would give shippers a right to service agreements with the railway companies, and would outline a low-cost, timely and efficient arbitration process to establish such agreements, if shippers and railway companies cannot agree commercially of course.

This legislation would align well with what the review panel recommended in its final report. As shippers told the Standing Committee on Transportation, Infrastructure and Communities, this piece of legislation would serve as a strong backstop to commercial negotiations.

First and foremost, the new provisions would create a strong incentive for the parties to negotiate service agreements commercially and to use legislation only as a backstop if commercial discussions fail. This reflects the panel's focus on commercial approaches to addressing service issues. If parties cannot negotiate an agreement commercially, the new provision outlines an arbitration process under the auspices of the Canadian Transportation Agency, which shippers would access to establish one.

The new provision prescribes service elements at a high level. Framing the provision broadly gives shippers the flexibility to ask for what is important to them, such as the number of cars needed for a shipment. This is in line with the approach suggested by the panel. It would also give the arbitrator the flexibility to tailor the service agreements to each case. If appropriate, the arbitrator could impose elements such as performance standards and communication protocols.

The new service arbitration process to establish an agreement would be fast, matching the 45-day process the panel proposed, although it could be extended by 20 days at the discretion of the arbitrator in some of the more complex cases. The arbitrator's decision on service would be final, binding, confidential and non-appealable. All told, this is a strong new provision that would improve rail service and make it more predictable and reliable.

Shippers echoed this sentiment during the hearings held at the Standing Committee on Transportation, Infrastructure and Communities and said that the new provision would enhance their leverage to negotiate commercially with railways.

To quote the testimony of the Canadian Propane Association on the bill at the standing committee, “...it contains all the mechanisms...we requested some years ago: a right to a level of service agreement, an arbitration process, and administrative monetary penalties”.

While introducing this legislation is a key component of our Conservative government's response to the rail freight service review, it is not the final piece. In collaboration with Agriculture and Agri-Food Canada, Transport Canada is currently leading an in-depth analysis of the grain transportation supply chain to focus on issues that affect that sector and help identify potential solutions.

Finally, we are also committed to establishing an industry round table covering commodity sectors in the near future. The commodity supply chain table would provide a forum for commodity exporters, railways and other members of the commodity supply chains to address issues that affect commodity freight systems. This would be an excellent venue for all players in commodity supply chains to work together to improve the reliability and competitiveness of Canada's export market.

As members can see, our Conservative government is well on its way to fulfilling its commitment to help ensure that Canada has the rail system it needs to support a strong economy and our domestic and international trade.

Bill C-52 is a comprehensive package that supports the government's focus on economic growth, job creation and prosperity for Canadians. We are working to benefit the entire rail transportation system. As shippers and railways move forward in defining their bilateral relationships through service agreements, and as stakeholders come together under the commodity supply chain table, it will be important for parties to work collaboratively to improve the efficiency, effectiveness and reliability of the entire rail-based supply chain.

In closing, I strongly encourage all members of the House, from all sides, to vote in favour of this very important legislation.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Speaker, my colleague has really hit the nail on the head. As you know, Mr. Speaker, our government's number one priority is jobs and economic growth. That is what is at the foundation of Bill C-52. It is to help support Canada's economy, to support our important resource centre, particularly in the western parts of our country, and to ensure that our resource industries, our small and medium-sized businesses, can get their products to market.

We are a trading nation. It is absolutely critical that businesses can rely on transportation networks, in this case our rail networks in the country, to sell their products, to get their products to market and to do that efficiently and effectively. That is exactly what this legislation will do.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Speaker, I am very pleased to rise this evening to speak to Bill C-52, the fair rail freight service act. The bill would amend the Canada Transportation Act to improve the reliability and predictability of rail freight service in Canada.

From the birth of our nation at Confederation to the present, railways have played a very critical and significant role in the forming of our great country. However, the world has changed over this period. Revolutionized by changing technology, the globe has been made smaller by faster, more efficient means of transportation and communication.

At the same time, the fundamentals of our economy have stayed the same. We are a trading nation and we need a transportation system to move our products to market. Nowadays shippers have a range of choices: air, rail, truck, marine when they transport their products to market. Shippers make business decisions regarding how best to transport their goods to market and the quality of service is a key component of this.

The “just in time” world has changed customers' expectations of service, making them demand greater precision and reliability. The fierce competition of the global economy combined with Canada's size and proximity to markets increases the pressure on service as we compete to sell to the world. Each mode works to respond to these demands. In our diverse economy, a shipper's transportation requirements depend on what he or she needs to move and the best mode of transport to get it there.

For example, pharmaceutical companies rely on air cargo to move medicines around the globe quickly and under controlled conditions. Retailers rely on trucks to move food and consumer goods from distribution centres to stores to serve shoppers. Of course our natural resource sector and manufacturing sector rely on rail to move raw materials and finished goods such as automobiles to market.

Our Conservative government has an interest in how the entire transportation system functions in support of the country's trade. Economic growth remains this government's top priority. This is demonstrated by our transportation and trade corridor initiatives that promote the efficiency and effectiveness of the system as a whole to bolster international trade.

To keep our transportation system as competitive as possible, we work with other levels of government and multiple stakeholders to ensure that we have appropriate policies and programs in place. Effective rail policy and legislation is a core element of our Conservative government's approach to ensuring the transportation system remains prepared to support our trade agenda.

Rail plays a prominent role in our economic success because it creates efficiencies by its economies of scale. It offers a means to transport bulk commodities and heavy goods over long distances at a relatively low cost. Because of this, rail has remained a critical part of our economic success and our ability to trade, especially as we promote our responsible resource agenda. This is why our government has made rail freight service a priority and has brought forward Bill C-52.

The Canada Transportation Act contains measures that contribute to the productive functioning of a rail-based supply chain and shippers' ability to obtain the rail service that they require.

The Canada Transportation Act provides a series of provisions that shippers can use to address rate and service issues. To start, if a shipper feels that a railway's rate is too high, the shipper can challenge the rate through the final offer arbitration provision of the Canada Transportation Act. Both the shipper and the railway present their cases before an arbitrator, and the arbitrator selects one of the offers to establish the rate.

In addition to the rate or the price for moving traffic, a shipper may feel that the railway's charges for additional services, such as the cleaning of cars, are too high. Through another provision in the Canada Transportation Act, the shipper can complain about such extra or ancillary charges to the Canadian Transportation Agency. If the agency finds the charges are unreasonable, the agency may establish new charges.

Finally, if a shipper feels that the railway has not been fulfilling its obligation to provide suitable and adequate service, the shipper can seek redress under the level of service complaint provision. The agency would investigate the complaint and determine whether the railway has fulfilled its obligations. The agency has broad powers to order corrective measures if it determines that the railway is not fulfilling its obligations.

The Canada Transportation Act clearly provides shippers with a suite of measures to help them manage their commercial relationship with the railways.

Bill C-52 would constitute a new provision on service to assist shippers. The new provision provided in the fair rail freight service act is an additional measure that would complement the existing suite of provisions under the Canada Transportation Act, some of which I have just described. The bill's goal is to provide shippers with the right to a service agreement and a process to establish one in the event that commercial negotiations fail.

Increasing the clarity and reliability of rail freight service is important to shippers. Shippers told us they would like to have a comprehensive service agreement in place in order to plan their business. Bill C-52 would provide this by giving the arbitrator the ability to impose detailed elements of service. Specifically, an arbitrator could establish operational terms that railways and shippers must follow to move traffic. This could include commercial or communication protocols, with internal escalation procedures and performance standards and metrics as appropriate. Operational plans to address potential service failures could include recovery plans to address how to recover from a force majeure, and finally, there could be the provision of incidental services by the railway and whether the railway can charge for the operational terms and incidental services that the railway is required to provide.

The new service arbitration provision would provide shippers with a fast 45-day process to have the terms of the rail freight service established if they cannot negotiate them commercially.

Bill C-52 would create a new enforcement mechanism to hold railways accountable for providing the imposed service. Administrative penalties of up to $100,000 for violation could be issued to a railway company if the agency confirms a breach of an obligation in an imposed service contract.

Bill C-52 would provide shippers with a powerful new tool to strengthen rail freight service, in addition to the existing provisions. Shippers would still retain the right to use any of the other measures in the act, which shippers told us was very important.

Shippers have supported the introduction of the bill as critical to addressing rail freight service issues and improving their leverage with the railways.

In conclusion, throughout the history of this great country, freight rail transportation has played a vital role in developing our economy. Many shippers rely on rail to get their products to market efficiently, predictably and at competitive costs. When they have challenges with their rail service or with rates, they can use existing measures in the Canada Transportation Act.

The fair rail freight service act, Bill C-52, responds to shippers' needs for better rail freight service. In a fast, powerful and effective manner, our government has made this a priority. I hope that all members join me in supporting the bill.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I thank my colleague who, in passing, does an excellent job as leader in the House of Commons.

The same thing can be said for the Standing Committee on Environment and Sustainable Development, on which I serve. Experts put forward recommendations and, unfortunately, most of the time, they are not followed.

For weeks, for months, it has been recommended that we carry out a study on combatting climate change. Climate change is a top priority for all Canadians and for the people of Drummond, who raise the issue with me every day. Yet the Conservatives flatly refuse to conduct a study on combatting climate change in the Standing Committee on Environment and Sustainable Development.

The same thing occurred here regarding Bill C-52. Experts who know what they are talking about, who are well versed in what is really needed, proposed six reasonable recommendations. Yet, because of a deliberate, ideological, head-in-the-sand attitude, or plain arrogance, perhaps, as my colleague so astutely pointed out, the expert recommendations unfortunately fell on deaf ears.

We are going to vote in favour of the bill because it at long last addresses needs that have been evident for years. Yet this is not enough. Once again, the Conservatives have missed a golden opportunity to do something positive.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I wanted to say that the shippers, of course, are happy that someone is finally trying to meet their needs and that the first steps have been taken. Unfortunately, as I mentioned, there were six proposals that were not answered and were simply dismissed. I cannot explain that.

I must also mention something very technical, as my colleague called it. Arbitration can pose a problem since it is only available for shippers who are negotiating new contracts. Consequently, shippers will have no right to arbitration for their older contracts. That was one of the proposals that was made and rejected so brusquely.

A number of proposals of that kind were made and, instead of providing rapid, reliable assistance to all shippers through a conflict resolution process, Bill C-52 provides a limited arbitration procedure only for a small group of shippers. That is a good example of a situation the Conservative government has not been able to address, and it explains why the bill is unsatisfactory.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I would like to begin my speech on Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), by pointing out that this is the 37th time that we have been faced with time allocation. It is the 37th time that we have been gagged and that we have been prevented from discussing, debating and proposing opposition arguments to improve the bills before us. This is the Conservative way, since their ideological blindness makes them think they can do whatever they like. They put on their blinders and refuse to listen to anyone who puts forward solutions and amendments to their problem.

In this regard, I would like to speak about the excellent work the NDP members have done on this bill in committee. I would like to name the NDP members of the committee, because it is important. First of all, there is the outstanding member for Trinity—Spadina, our transport critic, who has been doing a great job for a long, long time. There is our wonderful deputy critic, the member for Trois-Rivières, our exceptional colleague from Notre-Dame-de-Grâce—Lachine and the member for York South—Weston. Once again I would like to say that they are doing excellent work in committee.

It is now 11:10 p.m., and I am very proud to rise in the House, convinced as I am that it is important that we go on discussing this bill, that we go on arguing and explaining that, even though we are going to vote for the bill, it is only a first step. My colleague spoke very clearly on this point earlier, calling it a baby step.

It is a first step, a tiny baby step, even though shippers, farmers, mining companies and the various other companies that use the railways have been asking for this legislation to be reviewed for years now. Unfortunately, no one delivered on that, as the expression goes. The government has produced a bill that is very disappointing. We are going to accept it because it is a first step in the right direction, but considering the number of years that we have spent waiting for improvements, the government could have done better.

On that point, in committee, and I mentioned this earlier during question period to the other members, and I want to say it again, there were six proposals made by shippers and businesses. Those six proposals were not asking too much. They were very reasonable, and they had been studied and analyzed and brought forward by experts. They were then assembled into nine amendments by the New Democrats and tabled in committee. We submitted those proposals in a very professional manner. As people who do their job properly, we decided that even though it was a bill from the Conservatives, we could improve it.

Unfortunately, in their ideological blindness and their desire to get everything done fast and without consultation, thinking only of their own interests, the Conservatives brushed those proposals off. I am truly saddened to see that.

I would like to talk about the Conservatives’ short-sightedness for a minute. As I said when I was asking questions, the railway is important not only for shipping freight, but also for transporting people. We should invest a lot more in shipping freight, and we should invest a lot more in transporting people. If shippers can rely on an efficient railway, they will use it more, and even more businesses will use it too. In Drummond, some businesses use it, but if it were more efficient, more businesses would use it.

If we had a policy, a national public transit strategy, a national rail transportation strategy, as the New Democrats are calling for, and as the NDP’s excellent transport critic, the member for Trinity—Spadina, is calling for, we could reduce our greenhouse gas emissions and do a lot more to combat climate change.

The Conservatives do not think that combatting climate change should be a priority. I serve on the Standing Committee on Environment and Sustainable Development and, unfortunately, this is the message we get week after week.

In the two years that I have been in the House of Commons, we have been told that combatting climate change should be the Canadian government's top priority. We are told that climate change is currently the government's major challenge and that it will be for future generations as well. It should be a priority in committee.

However, unfortunately for them, the Conservatives favour studies that are less pressing, when they should be addressing climate change, and making it a priority.

The government should have a national public transit and rail transportation strategy to ensure on-time delivery. Currently, in 80% of cases, things go wrong, and 90% of shippers complain that they are dissatisfied with the service. Those are not passing grades. They do not encourage Canadians, shippers and big businesses to make more frequent use of rail transportation. Rail transportation should therefore be a part of a pan-Canadian strategy to combat climate change.

In the NDP, we are very proud to have this long-term vision, which is not just about the interests of big business, but also about the interests of all Canadians.

On that note, Canada is the only G8 country to not have federal funding and a national plan for transportation. This attests to just how far we lag behind other nations, when we should, in fact, be dynamic leaders. In the NDP, our vision is clear and progressive. It demonstrates why it is important to reform the Canada Transportation Act.

The NDP has three main demands regarding this bill. First, Canadian shippers deserve fair, reliable, bang-for-their-buck rail transportation. That is why it is important to strengthen the position of shippers vis-à-vis the CN and CP monopoly, which is something that Bill C-52 fails to address.

Shippers made six reasonable, practical, modest recommendations in committee. Unfortunately, the Conservators flatly rejected them all without giving them the time of day, while the New Democrats once again did all the work.

It is also important to remember that other improvements are necessary. For that reason, the NDP will continue to work very hard with shippers, forestry companies, mining companies and other businesses to improve the bill, which does not sufficiently address the issue of the lack of competition in this sector.

In closing, I repeat that we are going to support this bill. Unfortunately, it is only a baby step towards what should be accomplished, namely creating a national transportation strategy and a national strategy to fight climate change.

Those are the two greatest challenges for us to tackle on behalf of future generations, our children, our grandchildren and the people of Drummond, who come to see me often. They are worried about the environment and concerned about having a high-quality, efficient and reliable rail system.

The NDP is here and will continue to work very hard for a better rail system and a better public transit system.

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, I am pleased to rise to speak in support of Bill C-52, the fair rail freight service act. My comments today will describe our extensive consultations with stakeholders from across the rail-based supply chain. These consultations helped shape Bill C-52 and helped to ensure that it would take a fair and balanced approach to enhance the effectiveness, efficiency and reliability of rail-based supply.

In 2008, the government initiated the rail freight service review to address ongoing concerns regarding rail service. As part of the review, the government appointed an independent panel of three eminent persons. The panel's mandate was to provide recommendations on how to address rail service issues, including both commercial and, if necessary, regulatory solutions.

In issuing its recommendations, the panel consulted extensively and broadly with stakeholders in the rail-based supply chain. Indeed, the panel held broad consultations with 85 shippers, railways and other stakeholders and received over 140 written submissions.

Taking full account of input provided by stakeholders, the panel submitted its final report to the government. The government carefully considered the panel's recommendations as well as stakeholder views presented during the review and announced a number of key commitments to enhance the efficiency, effectiveness and reliability of the rail-based supply chain.

A key commitment of our Conservative government was to develop legislation that would provide shippers the right to a service agreement and a process to establish one should commercial negotiations fail.

As part of our commitment for legislation, we launched a consultation process, inviting input from stakeholders. During the summer of 2012, we asked stakeholders for their views on the development of a new legislative provision to give shippers a right to a service agreement and on what process should be followed to establish one should commercial negotiations fail.

The response from stakeholders was robust and fulsome. Extensive consultations spanned a number of months, including meetings with shippers, shipper associations and railways that provided the opportunity to listen to a diverse range of views regarding rail service issues and a legislative provision to address those issues.

In addition, a variety of stakeholders provided extensive written input, including shippers, shipper associations, railways, provinces, municipal associations, ports and terminals. These stakeholders came from across the rail-based supply chain and had operations throughout various regions of the country.

I have described the formal processes of the review and our invitation to stakeholder input over the summer months of last year. I would also like to note that we have continued to hear the views of stakeholders on an ongoing and informal basis.

Throughout these consultations, we heard from a diverse range of stakeholders, including large, medium and small shippers, shippers of various products, including agriculture products, coal, potash and forest products, ports and terminals from east and west coasts of Canada, class 1 and short line railways and other levels of government. We listened carefully to stakeholder views and considered their input to develop a legislative provision that would ensure the best possible outcomes for the supply chain as a whole, as well as for the Canadian economy.

The fair rail freight service act responds to key points raised by stakeholders throughout the consultations, which I just described. For example, shippers reiterated that the legislation had to provide leverage in their negotiations with the railways to ensure they could get the rail service that met their needs. Shippers have also expressed that a process to establish agreements must be timely and efficient. Additionally, shippers have asked for a mechanism that would hold railways accountable for service failures.

We have heard these concerns. The bill provides every shipper with the right to a service agreement and a process to establish one where commercial negotiations fail. Service agreements would help give shippers more clarity on the rail service they can expect to receive. While we expect that most would be able to negotiate agreements commercially, the arbitration process ensures that shippers identify the elements to be addressed to ensure they can get the rail service that truly meets their needs. Furthermore, the arbitration process is 45 days and can be extended for up to another 20 days at the arbitrator's discretion. This timely process would allow shippers to focus their resources on growing their businesses.

In response to the request of the shippers for greater railway accountability, the bill provides for the Canada Transportation Agency to apply an administrative monetary penalty of up to $100,000 for each railway service failure. This is a strong mechanism to hold railways accountable.

The bill is a balanced approach, which is reflective of stakeholder views in several other respects as well. For example, both the shipper and the railway must first try to resolve the matter commercially. Should commercial negotiations fail, there is a process for an arbitrator to establish an agreement. The arbitrator would have sufficient flexibility to impose an agreement that is tailored to the given situation. In this flexibility, the bill recognizes that there is no one-size-fits-all solution and that railways have an obligation to provide service to all users on their network.

It is clear that the fair rail freight service act is the product of listening to input provided by stakeholders. The bill's approach is firmly grounded in the views and concerns expressed by stakeholders from across the rail-based supply chain. This bill provides shippers with leverage to ensure they can negotiate with the railways to get the rail service that truly meets their needs.

Shippers have expressed their support for the bill, indicating that it meets their fundamental request for more leverage in their negotiations with railways. Bill C-52 balances the requirements of the railways to provide adequate and suitable service to all other customers. The balanced approach responds to concerns raised by shippers and railways, but more importantly ensures that the Canadian economy is the ultimate winner. Efficient and reliable rail service is key to the long-term prosperity and growth of the Canadian economy.

To remain competitive in global markets, shippers have to get their products to market. Canadian shippers work hard to maintain their global reputation as reliable suppliers. To enhance Canada's international competitiveness, shippers need a fluid rail-based supply chain to move product from farms, mills and mines to market, in a predictable, reliable and efficient manner. The fair rail freight service act ensures shippers would get the rail service that meets their needs, allowing them to grow their businesses and take advantage of global market opportunities. Railways would be able to manage their networks in a manner that benefits all users, and the Canadian economy would be better positioned to take advantage of new opportunities, thereby supporting long-term economic growth and prosperity for all Canadians.

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 third time and passed.

[Jinny Sims, NDP, Newton—North Delta, BC]

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

Before I get going, I cannot help but mention that here we are, trying to debate an important piece of legislation, and yet the government has moved time allocation once again. This is the 37th time. What does the government have against parliamentary democracy? Why is it so determined to shut down debate and to prevent members of Parliament from having their say on important pieces of legislation? My colleague said how important this legislation is, and because it is so important, I am very disappointed that the Conservatives had to use these tactics yet again.

When we look at this bill, it actually gives our rail freight customers, or shippers, the right to service agreements with rail companies, especially CN and CP. It also puts into place, as my colleague said, a Canadian Transportation Agency-led arbitration process for failed negotiations, and penalties for violating the arbitration results.

This all sounds good, but I want us to take a look at what this means. By the way, we are speaking in favour of this bill. However, we do not believe this bill is complete. It does not address all the issues that the shippers, farmers and everybody needed it to address, but it does go part of the way.

We call this bill a baby step in the right direction. As good behaviour should always be rewarded, it is a piece of legislation going in the right direction. We have heard that this will not alleviate all the challenges faced by the shippers but it will go a long way in addressing a few of them. It is one of those cases of “better something than nothing”. That is why we are supporting this bill.

At this time I want to acknowledge the work done by the member for Trinity—Spadina on this file. She is an amazing critic for the transportation file. She is dedicated, passionate and has worked incredibly hard with different organizations of shippers, and representatives from the mining companies, the pulse growers, the Canadian Wheat Board, the automotive industry, as well as the mineral and chemical companies.

It is her commitment, compassion and not letting go of this issue that I believe has forced the Conservative government to bring this bill to this House right now. Quite honestly, they have been dilly-dallying over this piece of legislation for a very long time, long after the report was out. They have had lots of time to act.

The member for Trinity—Spadina has a private member's bill, Bill C-441, rail customer protection act. It is her absolute advocacy and outreach, and that kind of work in the House, as well as the pressure from the shipping community, that has put pressure on the Conservatives to table legislation.

I think we should always give credit when members of Parliament put in an incredible amount of work to benefit our farmers, mining companies, automotive companies that have to move cars, and, of course, all the other resource industries as well, including forestry. We are absolutely delighted with the work that the member has done.

I also want to pick up on something that was said just a few minutes ago. CN made a profit of $2.7 billion in 2012, in one year, yet when I look at the penalty they will face, it is $100,000. By the way, that penalty is not paid to the shippers; it will be paid to the government.

I look at that and ask which lobby group has been successful. One just has to take a look at this bill. I have talked with shippers in my riding and visited a port where grains and legumes come in. This is when I learned something absolutely amazing, which you will be surprised at as well, Mr. Speaker. Did members know that Canada is the largest provider of pulses to India? In my naiveté, I always thought that lentils, chickpeas and all of those legumes were being brought to Canada from India and other countries. I was quite shocked to find out it was the opposite. It was the Canadian consul in Chandigarh who told me. He presented the figures and asked me if I knew that Canada is the largest exporter of legumes to India. A lot of those legumes go through the port of Vancouver and the port of Delta.

What I have heard from business people in my community, those who receive and ship, is the travesty that exists right now. They actually have to wait, sometimes for days and days, because the promised carriages do not arrive. If they are slow to unload a trolley—I think it is called a trolley—when it arrives, they end up having to pay fines, but there are no consequences for the railway companies if they are late, do not send enough trolleys or if the trolleys that arrive are damaged and, therefore, cannot be used.

I looked at the ledger with one of these business people in great detail, who wanted to show me the impact it was having on his business. Let us say that he does not get the shipment on time, that the shipment of pulses that arrives from the Prairies does not get to his place on time. In the meantime, he not only has trucks and truck drivers waiting but labourers waiting to unload, and he has time booked at the port. Guess what? He has to pay all of them, through no fault of his own, just because the railway company is delayed or because it does not deliver all the trolleys he was expecting on that date.

I thought it must just be a few dollars here and there. I was surprised at how much these shippers pay if they do not empty the trolleys on time. However, I was also shocked at the port fees they still had to pay if they did not take up their spots and how the costs escalated the longer they waited. Really, we are not talking about simple costing. This bill has compensation—no, not compensation, a slight penalty for the railway companies of $100,000 when they make $2.7 billion in profit. Guess who that money goes to? It does not go to offset the real costs incurred by the shippers and receivers, those who grow and ship the goods. That money goes to the government.

I have been shaking my head on that one, thinking this makes very little sense. Does the government really have a vested interest in making sure that this new piece of legislation really works, if it knows that every time CN Rail is late, it is going to get $100,000? That does not seem like a penalty. It seems like the government has built in a bonus for itself. We really have to take a look at that.

Our railway system is the backbone of our country. There is no doubt about it. From some of the early CP and CN stories we have all read about, glorious or not so glorious, we know that 70% of our surface goods are moved by rail. That is a significant amount. When we say that there are shippers who actually suffer the consequence of this, we are not talking about a small number of people.

This is another figure that absolutely astounded me. It is that 80% of service commitments for agricultural rail customers are not met by rail companies. I think 80% would get a big F if I were grading them for service. Let us say, out of 100 times, 80 times they fail to meet their deadlines. We are talking about produce that has to be moved quickly and people are waiting for it. We are also talking about some produce that could get spoiled, but we are also talking about the ricochet or cascading costs that I just mentioned earlier.

There are delays. There are insufficient numbers of rail cars. Some rail cars arrive and they are damaged. Sometimes they order 12 rail cars and guess how many arrive? For one person I was talking to, shippers might only get half the rail cars they ordered. That puts all kinds of stress on the system. Once again, when we look at the losses incurred by the shippers, the bill fails to address that. I would urge my colleagues, even at this late stage because it is in their hands, to really take a look at that.

The rail freight service review said that 80% of shippers are not satisfied. By the way, we are not talking about one industry. Of course agriculture plays a huge role in this area, but we are also talking about forestry, natural resources, manufactured goods, mining, chemicals and as I said earlier, all the agricultural belt. Key stakeholders in agriculture, mining and forestry industries, not just individual people but associations representing these industries, have been calling for freight legislation for years.

Let me give some examples: Pulse Canada, Grain Growers of Canada, Forestry Products Association of Canada and the Mining Association of Canada. Once again I would say that as I have talked with many business people in my community who are involved in the shipping industry they have been so full of praise for the member for Trinity—Spadina who has done such great work on this file.

Canada's shippers deserve fair and reliable rail freight service for the good money they are paying. Right now with the way our country is, CN and CP seem to hold a dual monopoly. The impact of that monopoly has not been addressed by Bill C-52 because the one area that has not been addressed is pricing. That is a critical part as well, and it is not only pricing, but also the fact that there is no compensation for the shippers.

There were six recommendations from the shipping community at the committee stage, sensible, practical and modest. They were all rejected. This is an all too familiar pattern. I sit at the immigration committee as vice-chair, and it does not seem to matter what amendments we propose. Even amendments that the minister thinks would be really good ones because we take up his wording just get rejected.

However, these were not amendments from the opposition. These were amendments suggested by the shipping community, the business community, the people who are the backbone of this country who pay taxes and who were looking to the government to show them a level playing field. Once again, the government has failed to show a level playing field to all the industries I mentioned, including agriculture. Once again, it has chosen to stand closer to the big corporate friends like the railway lines, CP and CN.

Members know that the NDP is not going to give up. We are not planning to go away. We are planning to work harder than ever. We will continue to work with the shipping community to tackle the issue of gouging through uncompetitive rail freight rates.

Do members know what? This was an opportunity for the government to address that issue, to take a holistic approach, instead of taking a baby step, a very tiny baby step. In here, we can talk about the economy. We can talk about growing jobs. We can talk about all kinds of issues. However, here was a concrete opportunity for the current government to do something that would help to bolster our economy, agriculture, the mining industry, the forestry industry and the automotive industry. Once again, it was very short-sighted and just decided to take a baby step.

One of the key things we have to take a look at is that when we look at the moving of goods and think that 70% of our surface goods are moved by rail, in this huge country—and by the way, as we know, moving goods by rail is much more environmentally sound than it is to move them by road—the government had an opportunity, at this time, to support the pulse growers, the grain growers, the mining industry and the forestry industry.

We know that disruptions to rail freight services and unacceptable service costs cost the Canadian economy hundreds of millions of dollars every year. The businessmen I have talked to when I have taken a look at the losses they incur, when they incur those losses, they impact the community I live in. They impact right across this country. A few of the business people have been telling me that they absolutely—

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, the issue with respect to what historically was called the “Crow's Nest rate” is that it ran into a serious impediment in the mid-1990s with the new World Trade Organization, which explicitly ruled that this form of structure in our freight rates constituted an illegal subsidy for the future. Accordingly, the government had to react with changes that provided a period of compensation for the loss of the subsidized rate and it tried to put the system on a more commercial basis for the long term into the future.

That was a very difficult transition for farmers. Those in the farming community in our country deserve a great deal of credit for having the strength and ingenuity to work their way through that period of great change and emerge successfully at the other side. However, they now need fair legislation that will give them the service they are paying for, and that is why Bill C-52 should be better than it is.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, Bill C-52 only applies to new agreements. Contract breaches and service interruptions are often related to existing agreements. The shippers have no recourse and they suffer financial losses. Sometimes these losses also cause job losses. If the crops are just waiting and are not sold, there are repercussions for the economy.

The bill is incomplete and it is imperfect. Perfection is difficult to attain. Still, the bill does not in any way reflect the six recommendations the shippers made in their testimony to the committee.

What does the hon. member think of the serious effect this has on the shippers' quality of life and Canada's economy?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, thank you for attempting to regain a little order. It is much appreciated.

What I was saying was that there is significant disappointment, not just in the House but in the shipping community. The legislation does not fully achieve the objectives that the shipping community had been hoping for. They have been waiting for this legislation for a long time.

The debate about level of service agreements in the country began in 2006-2007. Before that period of time, the focus was on costing agreements and the level of freight rates and whether or not farmers and other shippers were receiving the full value that they thought they should receive. The argument was all about having costing reviews and the timeliness of costing reviews, what revenue was raised by freight rates and how it was shared or not shared across the entire continuum, from the shipper to the port and ultimately to export destinations.

In 2006-2007, the focus really zeroed right in on the issue of level of service agreements. That is when this debate really began.

The government took a while to think about that, but in 2008, the government said it agreed that there was a legitimate issue, that service levels might well be deficient and there ought to be a review of the level of service provided by the railways to the various shippers.

I should make the point that we are not talking here about just the agricultural sector. As large and as important as the agricultural sector is, the shipper community includes those who move virtually anything by rail. It includes the forestry sector, the chemicals sector, the fertilizer sector, mines and minerals, and manufactured goods. It is a broad cross-section of those who rely upon our railway system. They made the general complaint that they thought the services they were getting were in fact deficient.

As I said, the government agreed in principle, but there was an issue here, starting in 2008, and it said it would have a formal review. That review panel was appointed in the fall of 2009. It got to work pretty quickly and completed its work in about a year. It finished its report in the fall of 2010. The report was officially published at the beginning of 2011 and by about March, the government said it accepted the report of the review panel and that it intended to implement the report.

The panel essentially said that the marketplace for transportation services was basically a non-competitive marketplace, that there was not a fair balance between the shippers on one side and the railways on the other and that there was indeed an imbalance of market power that was biased in favour of the railways. That report of the review panel appointed by the government came out at the beginning of 2011.

In March of 2011 the government said that it essentially accepted that principle and that it would do something about it. The discussion continued to go on without a specific proposal from the government. In fact, it referred the whole matter back to another review process, chaired by Mr. Jim Dinning from Alberta. He was not able to move the yardsticks any further in trying to reach consensus between the railways and the shippers, so the process dragged on through 2011 and through 2012. By the end of 2012, in December of last year, the government finally tabled legislation. We are now halfway through 2013.

I would just remind the House that this whole process began in 2007. It has been a long time, and the shippers have waited patiently for legislation that they hoped would address their concerns. Unfortunately, they are disappointed. They find this legislation to be deficient.

The shippers essentially wanted four things in the legislation. First, they wanted in legislation the enshrined right that they would be entitled to an enforceable level of service agreement with the railways. That was number one.

Number two, they wanted the legislation to lay out what constitutes the basic services that the railways are to provide and how performance or non-performance would be measured. That was their second request. They wanted some clarity and some specificity about what constitutes service and how it is measured.

Number three, they wanted it very clear that if there were a breakdown somehow in the system, if the level of service that they contracted for was not in fact delivered as promised, then they would be entitled to recoup damages for the deficient service that they were delivered.

I would note that the review panel had reported, when it examined all of the anecdotes presented by shippers, that the typical agricultural shipper in western Canada could expect to get exactly what it ordered from the railways only 50% of the time. That is a pretty compelling statistic. If we can count on the transportation we have ordered to deliver only 50% of the time, we have a big problem if we are relying upon the railways to actually perform in that manner. Obviously the situation was serious and the shippers wanted the opportunity to recoup damages. They hoped they would not have to do that, but they wanted the opportunity to recoup damages if in fact the level of service fell below what was expected.

Finally, the fourth element was the dispute resolution mechanism.

The right to have a level of service agreement was point number one. They could negotiate that. If the negotiations were not successful, then it would be referred by arbitration to the Canadian Transportation Agency and the agency would impose an arbitrated agreement. That actually is in the law and that is a good part of Bill C-52. It is the other elements of the ask that are missing. The clarity with respect to the definition of what services are to be provided and the consequences if the level of performance falls short. In other words, the ability by the shippers to recoup damages.

Those two things, the clarity of the definition and the ability to recover damages, are not in Bill C-52. Those are the two primary reasons why the shipping community feels that this legislation is deficient.

The government's answer with respect to the definition of level of service is that it is just going to rely upon the traditional language that has been in the Canadian Transportation Act for 40 or 50 years and it does not need to upgrade that language or make it any more specific to satisfy the concerns of shippers. I think quite frankly that the government is going to find out that this is a false conclusion on its part. The definition in the act is what has caused the problem in many ways over the last number of years. It is not clear. It is like nailing Jello to the wall. To simply say, “we're going to carry on with those same definitions of service levels in the future and cross our fingers and hope for the best”, the government, the shippers and the railways are going to be disappointed. The language has proven to be deficient in the past and the definition of insanity is continuing to do the same old thing over and over again and expecting a different result.

We are not going to get a different result, so the definition in this legislation is not adequate to change the water on the beam, to solve the problem that the shippers have been complaining about and that the government's own review panel concluded was in fact a legitimate problem and that the shippers were not crying wolf.

Second, on the issue of enforcement, what happens when the level of service turns out to be deficient and it does not measure up to the standards that the shippers have every right to expect? The government's answer is not to give the shippers damages. The government's answer is to establish a system of administrative monetary penalties, in layman's language, fines for railway substandard performance. Some might think that is a kind of penalty and enforcement mechanism, would that not work? The problem is the fine goes to the government. It goes into the general revenue fund.

It simply becomes an additional revenue source for the treasury of the Government of Canada and bears no relationship whatsoever to the transportation problem out in the field. What the shippers need is the ability to recover damages. If a shipment is not delivered on time and it misses a customer or a market, that is a monetary penalty that shippers have to pay. They lose income, lose profit and incur added costs because the transportation system has failed them.

It does them no good whatsoever to say we will slap the railways on the wrist and they will pay a fine to the government. That does not move an extra bushel of wheat, that does not move an extra tonne of lumber. All it does is transfer a bit of money from the railways to the government. Meanwhile, the shipper is stuck with the same problem: deficient service for which there is no remedy because they cannot recover damages unless they go through the elaborate process of going to court.

We just had a discussion about small shippers and the disadvantages they have. The railways have deeper pockets for the lawyers in the court process than the shippers have and, undoubtedly, that imbalance will continue to function in favour of the railways and to the disadvantage of the shippers.

Probably the greatest illustration of the discrepancy remains on the playing field. Remember, the panel said the original problem was a lack of balance on the playing field. It was tilted in favour of the railways and the shippers were largely in a captive market situation. They were not in a position to find some other railway to move their product and they were not in a position to enforce their legal rights because they did not have the legal rights, so they were stuck in a disadvantageous position.

Perhaps the greatest illustration of that discrepancy is the fact that railways can, and always have been able to, level unilateral demurrage charges against the shipper if the shipper fails to deliver their side of the bargain on time or in the way the railways had expected. The railways can extract a cash penalty from a shipper called demurrage if the shipper falls down on its obligations, but on the flip side of the equation, the shipper does not have the ability to recover a cash penalty or cash damages from the railways if the railways fail to perform. Therefore, the railways have the power to punish the shippers, but the shippers do not have the power to punish the railways. That is a classic illustration of the fundamental market imbalance that exists in this situation and the imbalance that the shippers had hoped would finally be rectified by this new legislation.

Those are the fundamental problems. The legislation creates, to a certain extent, some steps forward. There will be a legislated right on the part of all shippers to have level of service agreements with the relevant railways. They can first try to negotiate those agreements and if the negotiations succeed, great. Everybody hopes that is the way it will work, that they will not need recourse to the legislative and regulatory framework so that the parties will be able to work out a deal. However, if the shipper is not able to successfully conclude an agreement with the railways, the legislation takes an additional step, which is good, in saying that the shipper can then to go to the Canadian Transportation Agency and get an arbitrated settlement from the agency. Those steps in the legislation are positive steps forward.

However, let me repeat that where it falls down is in the language that is in the act or, more accurately, that is not in the act defining what “level of service” means. The same vague old language is being used that has been there for decades and that vague old language is part of the problem. There needs to be greater clarity about what constitutes level of service and the way level of service is measured. The second major deficiency is that when there is a failure to perform on the part of the railways, there is no ability on the part of the shipper to go to the Canadian Transportation Agency through some form of dispute settlement process and obtain liquidated damages to address the practical problem that the shipper has, that their goods are not moving because the railways have failed to perform.

Paying a penalty to the government does not do the shipper any good. The money is in the pocket of the government, not in the pocket of the shipper and the shipper is the one that has experienced the problem.

Those are the issues that were discussed at committee. Those are the issues that members of this House, both in committee and otherwise, have discussed with the shipping community across the country. They say that, because of the legal provision in Bill C-52 that would create the right to have a level of service agreement, the legislation is a step forward. It is, as they put it to me both verbally and in writing, better than nothing. They would like substantially more, but it is better than nothing.

On that basis, that it is some small improvement over what has existed in the past, Liberals will be reluctantly supporting this legislation. We would prefer to have it vastly improved. There still is an opportunity to do that. The parliamentary process is not yet complete.

Hopefully before it is complete and before this legislation is given royal assent, the government will have the opportunity to reflect on those two key points. First, a more effective definition of level of service and the way it is measured; second, the way proper service is enforced by the railways, by giving the rights to the shippers to have liquidated damages, as opposed to just a penalty paid to the government.

If the government would change those two things, the shipper community members would be a lot more satisfied with this legislation than they are today. I think all of us are reluctantly accepting it the way it stands, but the government will find it will be revisiting this issue in a year or two.

There is a statutory review of the Canada Transportation Act in the year 2015. This is going to come back again, because this time the government has not seized the opportunity to do it right, the way it should have.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, it is a pleasure to participate in this debate on Bill C-52. During the course of this debate, all sides in the House have said they are glad to see this piece of legislation before the House. At the end of the day, it will probably garner pretty general support.

However, there is indeed disappointment, not just in the House but among a very significant number of those in the shipping community, who had been hoping and working for years—

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I thank the hon. member.

Bill C-52 is a step in the right direction. Nevertheless, the shippers made six recommendations to the committee that were not considered by the Conservatives; none of them were accepted. Yet we know very well that these new agreements will not address contract breaches.

Since there are two main railway companies providing these services, if there is an interruption of service the shippers cannot count on another railway company to transport the goods. That affects their ability to compete on the world market.

How does the hon. member propose to improve this bill, which is really a mess at present?

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

Mr. Speaker, I thank my colleague from Parkdale—High Park for her excellent speech and her responses to the people who asked her questions. I am always impressed by what a fine job she does as finance critic. I am convinced that Canada would be much better off if she were Minister of Finance today.

I rise in the House today to speak to Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), which comes to us from the office of the Minister of Transport, who is also one of my riding neighbours.

I want to say that, although the NDP and I are preparing to support this bill, which is a step in the right direction, we found the government's closed-mindedness during the study in committee unfortunate.

As opposition members, both Liberal and New Democrat, we put forward amendments that were supported by witnesses and experts in the field, and the Conservatives systematically voted against them.

I also want to congratulate my colleague from Trinity—Spadina on the incredible job she does as transport critic. Seriously, I would immediately substitute her for the minister from Roberval, who is the Minister of Transport, and transit in Canada would be much better for it.

To get to the heart of the matter, for those not familiar with this bill, I want to say that it partly addresses the problems of railway transportation service customers that do not have access to adequate service as result of the monopoly held by the major railway companies.

However, since the bill covers only new service agreements, current agreements and contract breaches, which are major causes of revenue losses for shippers, are not affected by Bill C-52. That is one of its deficiencies. We would have liked to remedy that in the Standing Committee on Transport, Infrastructure and Communities, but that was not done.

I will mainly address three points, given the time I have today.

First, Canada's shippers deserve fair, reliable railway transportation service that is worth what they pay. The need to strengthen the shippers' position against the monopoly of CN and CP is only partially addressed in Bill C-52, as I mentioned.

The six recommendations from shippers, in committee, were reasonable, practical and modest. That is why we proposed them. Yet the Conservatives rejected them without even considering them. I will elaborate on this later.

There are other areas that need improving.

I would like to stress that the NDP, especially the member for Trinity—Spadina, the NDP transport critic, will continue to work with shippers. Shippers shared their concerns with us, and it is clear that despite the passage of this bill, this file will not be closed.

We are going to continue to work alongside shippers to improve Bill C–52 and address the problem of excessive prices caused by a lack of competition. This is a problem, for which the Conservatives are to blame, because we know that they are in bed with the lobbyists for the major rail companies.

Personally, I believe that the bill is biased. The Conservative government has acted shamelessly. It could have taken a closer look at the bill and what shippers wanted instead of systematically siding with the rail lobby.

Shippers are often SMEs. I stand up for SMEs. My riding is located in rural Quebec, in Saguenay—Lac-Saint-Jean. The main industries in the region, for those who are not aware, are forestry and aluminum production. The Niobec mine, not to mention agriculture, can also be found in my riding. All of these products can be shipped by rail.

This bill and the future of Canada's railways directly affect me. At the end of the day, the more that is done to improve the rail network, the stronger the economy that uses this mode of transportation will be. Rail transportation is far more environmentally friendly than transportation by truck.

Concerning my first point, many shippers are not satisfied with the services they receive given the price they pay for those services. They are especially critical of the rail transportation service interruptions and the hundreds of millions of dollars in costs to the Canadian economy year after year.

For Canadian industries, this may mean that harvests rot in the fields, that plants and mines are just marking time and they miss the ships meant to transport their products. It may also mean that inadequate rail freight services hurt Canadian exporters, jeopardize our competitive position internationally and cost jobs in Canada.

We cannot afford to suffer losses on the international marketplace just because the railways are unable to organize their services properly.

In addition, the clients of rail freight services, from farmers to mining companies, are penalized by the virtual monopoly in rail services. In most parts of the country, shippers cannot choose which rail carrier to use because they only have access to CN or CP. Such is the case in my riding. Even where both rail companies provide services, one of them usually sets its price too high, leaving the shipper with hardly any choice at all.

Shippers routinely defray the cost of service interruptions, delays and a range of performance shortcomings by CN and CP. Pickups and deliveries are made on time or not at all. The number of cars requested is often different from the number of cars provided, and the cars provided are sometimes damaged.

The situation affects many sectors, such as natural resources, manufacturing, agriculture, forestry products, mines, chemicals and the automotive sector.

For the most part, the products of these industries are intended for export. The poor quality of rail transport services undermines the ability of Canadian exporters to compete on the international marketplace.

As an example, soybeans from Argentina have a competitive advantage on, for instance, Japanese and Chinese markets because they are delivered more quickly and more punctually than soybeans from Canada, even though the distance covered by the Canadian products is substantially shorter. This clearly shows that there is a problem with our rail system.

Shippers have told the Conservative government about their dissatisfaction for years now, but the Conservatives have not taken any real measures. Since 2007, their approach has been to talk about it and wait. They started off by promising to ask a panel of experts to study the issue.

I know that the Conservative government likes to postpone the passage of good bills endlessly. However, at some point, you have to move from consultations to actually taking action.

What we want is clear. Farmers and other businesses have been footing the bill for years for the poor quality of rail freight services and have never really been able to get Ottawa’s attention. I am pleased that they have a listening ear in the member for Trinity—Spadina.

In order to truly remedy the situation, the NDP advocates strengthening the shippers’ position. We are on the side of businesses and exporters, and we are determined to get them the rail freight services they deserve.

Bill C-52 will cover only new service agreements, not existing ones, and that presents a problem. It means that many shippers will continue living with unreliable and unfair services with no access to the resolution process when existing service agreements are violated.

Arbitration is available only to shippers negotiating new agreements. Instead of offering all shippers speedy, reliable assistance through dispute resolution, Bill C-52 offers a limited arbitration process to a small group of shippers.

The arbitration process presented could be very expensive for shippers and place an unfair burden of proof on them by asking them to prove that they need the services of the rail transportation company.

One of the things we are calling for is the inclusion of penalties in service agreements, to compensate shippers for service interruptions, damage and lost productivity.

In its present version, the bill provides for maximum fines of $100,000 to be paid to the federal government, not the shipper. In order for fines to have a deterrent effect, they should be higher, given that CN made a profit of $2.7 billion in 2012.

The NDP will stand up for farming, mining and forestry communities, like the ones in my riding, and will fight to put an end to the unacceptable treatment and unreliable rail transportation services provided by the big rail companies.

We need a stronger bill to protect the customers. We will work with shippers to get them the fair and reliable rail transportation services they deserve.

The poor quality of rail transportation services causes Canadian shippers hundreds of millions of dollars in damage every year. Canadian jobs are at stake. We have to act now.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, I will be sharing my time with the member for Chicoutimi—Le Fjord. I also want to thank my colleague from Trinity—Spadina for her work as our transportation critic, for her tireless work with a community that is invested in seeing improvements to the Transportation Act and for her efforts to improve the bill.

Bill C-52 would amend the Canada Transportation Act. It is a bill that is long overdue.

Rail transportation is the backbone of the Canadian economy. It is in the DNA of our history, and it is something that touches a huge part of our economy. More than 70% of all surface goods in Canada are shipped by rail. We are a vast country and a country that is open to the world. It is very export oriented, and having good transportation networks is absolutely fundamental.

Many of us are familiar with the railway industry. I know that in my family, my grandfather, my husband and my mother all worked in the railway sector. It is part of our country, part of our history and part of our current economy. It touches so many Canadians.

What we have been finding through the study on the bill and leading up to the bill is that 80% of service commitments for agricultural rail customers, which means that they deal with food, feed and farm materials, are not met by the railway companies. There are serious delays, insufficient numbers of rail cars, et cetera. A rail freight service review found that 80% of shippers were not satisfied with the service they received.

What is the root of the problem? One would think that after a couple of centuries, we would be getting our rail service right, but sometimes when governments rush to fix one problem, they create other problems. Sometimes when governments have ideological blinders on, they are wilfully blind to the problems they are creating.

In 1995, the Liberals were in a rush to show that they were jumping on board the privatization bandwagon. They wanted to prove to the world that they could privatize with the best of them. One of the companies they rushed to privatize was CN. They privatized the company, CN. They privatized the tracks. What they forgot to do was put in any safeguards for Canadians, safeguards for shippers and safeguards for our passenger rail service in terms of access to the railway tracks. They basically turned it over to the private sector.

CN is doing very well. It made a profit of $2.7 billion. Bravo. It is doing well. It was just announced this week that the CEO made a salary of $48 million. I am sure he worked hard for every single penny of it.

The trouble is that these ideological decisions create problems. It was the Liberals in 1995 that unleashed this, and frankly, neither the Liberals nor the Conservatives after them, for almost 20 years, have done anything to fix the problems until this bill. It is with insufficient measures that they are trying to address the problems.

Let me say up front that this is a bill we will be supporting at report stage and third reading, but it is a weak bill. It is a bill that does not do the job Canadians really need it to do.

The bill would give rail freight customers or shippers the right to service agreements with rail companies. It is shocking that they have not had this before now, especially with the two majors, CN and CP. It also puts in place an arbitration process, led by the Canadian Transportation Agency, in cases of failed negotiations or where there are penalties for violating the results of arbitration.

This is positive. Canadians deserve fair and reliable freight services. This is obvious and logical.

Shippers pay good money, but they need a stronger position vis-à-vis the two main companies that form a duopoly. Together they have a kind of two-party monopoly. Their power is only partially addressed by Bill C-52.

There were recommendations by the shipping community at the committee stage that were sensible, practical and modest, yet the Conservatives ruled them out of hand with no serious consideration.

As the official opposition finance critic, I certainly know this. With every budget bill we have massive omnibus budget bills. We have been dealing with another one this week, Bill C-60, which again, is an amalgamation of all kinds of changes to different laws, many that have nothing to do with finance and budgets. We have seen that they never accept one amendment to any of their budget implementation legislation. Experts in their fields have testified at the finance committee that the government will have problems if it bullies ahead with certain changes, such as getting rid of the inspector general of CSIS. The expert who helped set up CSIS told us that this would cause problems, but it did not matter. The Conservatives are more expert than the experts, and they went ahead and made the changes anyway.

In this case, they heard expert testimony about why certain changes should be made. However, the Conservatives gave them no serious consideration. They rejected the changes out of hand, which is a bit sad, because this House ought to be about discussion, debate, learning, and ultimately, compromise to get the best laws possible for Canadians.

The bill needs further improvement. The NDP will continue to work with businesses and shippers across the country to improve this legislation and to tackle the issue of uncompetitive freight rates and gouging of the shippers. What we heard from businesses across the country was that they are getting poor customer service. They have had disruptions in rail service and unacceptable service costs. We heard about produce rotting, because it could not be shipped. We heard about lost contracts, because there was no guarantee that the goods could be shipped reliably, which made Canadian businesses unreliable suppliers. We heard about missed connections with ships for travel and shipping. This is a daily occurrence for industries across Canada.

Poor rail services are hurting Canadian exporters, damaging our global competitiveness and costing us jobs, which is a little ironic from a government that talks a lot about jobs. However, when the rubber hits the road, it often misses the train. That is what has been happening with this legislation.

There are a number of key amendments we put forward that the shipping community pushed for. They were championed by the NDP and defeated at committee. Without the rejected amendments, this bill remains only a partial success. Nevertheless, it is still worthy of our support. I want to stress that we are dissatisfied with the outcome. It is not what the shippers really wanted to see. Therefore, there is a need for future strengthening of this legislation.

Sadly, I see that my time is just about up. There is so much else to say. Thanks for the attention of this House. I look forward to the questions of my hon. colleagues.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, I want to thank the member who has provided the first informed and educated question of this question period.

Let me say that it is our government that has made the economy the number one priority. It is our government that focuses on jobs, growth and long-term prosperity for Canadians. It is our government that has the lowest debt-to-GDP ratio of any G8 country. It is our government that has the strongest job creation record of any country in the G8.

Our government has created the conditions for business to thrive and to grow in this great country of Canada. In the interests of fairness and support for business, we have introduced Bill C-52, which the member has commented on, which would help small business. It would help big business. It would help the energy sector. It would help the mining sector. It would help all sectors of our economy, from one end of our country to the other.

Thank goodness that we have the best finance minister in the world and the best Prime Minister and leader that one could ask for to lead our economy as the number one economy in the G8.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, our government consults more than any other government in Canadian history. There were extensive consultations, not on the economy, but on Bill C-52. In fact, on the bill itself, for example, Kevin Bender, president of the Western Canadian Wheat Growers Association said:

These measures will create the conditions for improved railway performance and accountability. It will help ensure all shippers can gain access to an adequate level of service.

This goes on and on. I have, from the president of the Grain Growers of Canada, from the chemistry industry, from the Forest Products Association of Canada, quote after quote on how Bill C-52 would create a fair, open, accountable and legitimate form of commercial interaction between the shippers and the railways.

The member talks about a lost opportunity. I will tell him about a lost opportunity. 1993 to 2006 was a lost opportunity when the Liberals were in power in this country. They sat on their hands, did nothing and left the country in a mess. It is our government that is picking up the pieces and giving Canada back to the Canadians.

[Mark Adler, Conservative, York Centre, ON]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, it does not surprise me. The NDP members feel the Liberals nipping at their heels, so they are a little excited and a little nervous.

We are here to talk about Bill C-52, so let me begin.

[Mark Adler, Conservative, York Centre, ON]

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

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

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

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

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

[Niki Ashton, NDP, Churchill, MB]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

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

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

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

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I think it is imperative that we give credit where credit is due, and actually it was the shippers, who come in many different forms, who took the approach of lobbying all three political parties half a dozen years ago. They indicated that we needed to enact legislation that would allow for things like service agreements.

It is fairly widely believed that the field is not level in terms of shipping products throughout North America, particularly in Canada, where the scale has been heavily in favour of the rail. This is one of the reasons we had to have service agreements.

I have known for many years, and particularly the last three or four years, that the member for Wascana has represented the Liberal Party exceptionally well by applying pressure on the government to act on this issue.

The Liberal Party will support Bill C-52 to go forward, but I have a specific question for the member on the amendments that were brought forward. Why was the government not prepared to accept some of those amendments? The amendments would would have made this legislation that much stronger, and the bill could have received that much more support from the different stakeholders.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, today I rise to speak in support of Bill C-52, the Fair Rail Freight Service Act. I will focus my remarks on how this bill will contribute to strengthening the shipper-railway relationship as it facilitates the commercial negotiation of service agreements.

Canada's freight rail network is a vital link to global markets and supply chains, because it facilitates the import and export of millions of dollars worth of commodities and manufactured goods each and every day. Our economy relies on the billions of dollars of revenue generated by Canadian manufactured goods and export commodities, such as grain, pulp and paper, coal and potash. Canadian consumers and businesses also depend on containerized goods, arriving daily from Asia and Europe, moving to cities across the country in an efficient manner.

Bill C-52 will help the thousands of companies that rely on rail to ship these goods and will help the Canadians who are employed by these sectors. Given the importance of rail to Canada's economy and trade, ultimately Bill C-52 will contribute to Canada's economic growth and job creation.

The goal of Bill C-52 is to support the adoption of service agreements between shippers and railways. Service agreements can help strengthen the shipper-railway relationship. They can make it easier for businesses to plan how they will transport their goods to market. In recent years, the railways and their supply chain partners, including shippers, ports and terminals, have signed many such agreements. These agreements have improved rail service, collaboration, communication, and ultimately, supply chain efficiency. In short, service agreements are a tool to bring greater certainty and reliability to rail freight service.

This bill supports best practice in the industry. To achieve this, Bill C-52 has two parts. It would provide shippers with the right to a service agreement, and it would offer service arbitration to establish the terms and conditions of service in the event that negotiations fail. Most importantly, the new provision would create a strong incentive for the parties to negotiate service agreements commercially.

A shipper who wanted a service agreement could approach a railway. In turn, the railway would be obligated to respond to the shipper within 30 days. This would ensure that shippers and railways would first try to reach commercial solutions to tailor their service relationships.

In the event negotiations failed, the shipper would then turn to service arbitration to receive an imposed service agreement. However, before arbitration could begin, the shipper would be required to provide advance notice of 15 days to the railway. This 15-day period would further support commercial negotiation, as it would allow both parties one last chance to reach a compromise before service arbitration started.

In the end, it is expected that the current use of service agreements would be expanded. Going forward, any shipper who needed a service agreement would be able to obtain one either commercially or through service arbitration.

Some may try to say that this proposed legislation would be adding red tape and would burden rail companies. To this I would like to respond, no. We are providing a solution in case of service failure. We expect railways and shippers to continue working together and building on the success of the proactive measures from the rail freight service review.

This proposed legislation is important, because it provides the framework to enhance the standard level of respect for service agreements. This has many benefits. By facilitating better collaboration between shippers and railways through negotiating service agreements, parties could then agree on clear service elements and performance standards. Shippers and railways would clearly know what was expected of each other and would be able to work better together to make their day-to-day interactions more efficient.

Service agreements could also strengthen the relationship between shippers and railways by determining what to do when there is a service failure. Communication protocols could be put in place and recovery plans could lay out how and when service could resume.

Canadian shippers and railways could also use service agreements to lay the foundation for how they could expand their businesses together. Negotiations on a service agreement could be an opportunity for a shipper to discuss traffic growth plans and see how railway service could be adapted to respond to growth. The legislative right to a service agreement, supported by an arbitration process if commercial negotiations fail, would therefore be quite powerful.

Across Canada, shippers, whether large or small, whether shipping intermodal containers or raw commodities, would be entitled to obtain service agreements establishing a road map with the railway to achieve the benefits I just explained.

However, do not take only my word for it. This is what Mr. Rick White, General Manager of the Canadian Canola Growers Association, had to say about Bill C-52. He said:

The Canadian Canola Growers Association is pleased to see the inclusion of a number of important elements in Bill C-52, including the right to negotiate a service level agreement if commercial negotiations fail. With over 85 percent of canola seed, oil and meal exported to more than 50 markets worldwide, effective and efficient rail service is critical to the success of farmers and our entire industry.

That brings me to Canadian trade and our gateway and corridor initiatives. The railways played a primordial role in Canada's settlement and economic expansion, and they continue to play a key role. Rail networks are a core part of Canada's transportation system.

Our Conservative government has worked to strengthen Canada's transportation system in various ways, including with strategic gateways and trade corridor initiatives. Through these initiatives, our Conservative government, along with its partners, has made significant investments to reduce congestion along key corridors and to build capacity to capitalize on growing trade opportunities. Our gateway initiatives also encourage stakeholder engagement and dialogue as a key means of improving how our gateways function. Evidence shows that this gets results. Through working together, stakeholders have been able to address operational issues and enhance the performance of our gateways.

The proposed new legislative measure on service agreements supports such partnerships. It is through such partnerships that we can achieve an efficient and reliable supply chain. This would allow us to meet demand in existing, expanding and new trade markets. In this sense, the legislation would support our government's economic agenda.

In my role as chair of the Standing Committee on Transport, Infrastructure and Communities, I had the opportunity, as the other members did, to hear first-hand from shippers and other stakeholders about the importance of this legislation. I was pleased to hear that there was an astounding amount of support for this bill, and the committee heard this testimony from the groups involved. Whether it was Port Metro Vancouver from British Columbia; the Manitoba Minister of Infrastructure and Transportation, Steve Ashton; or the Halifax Port Authority, Canadians from coast to coast to coast were supportive of this legislation.

That does not take away the fact that in agreements like this, not everyone gets everything he or she wants, but I think everyone would have to admit that we came out with a balanced bill. That is why I am here speaking in support of it.

Let me just take a few minutes to read some of the testimony we heard on this legislation:

Bill C-52 is extremely important to Port Metro Vancouver.... Past performance of the railways has made Bill C-52 necessary. I think the bill has appropriately walked the fine line of mandating action but allowing for the flexibility to tailor agreements to the needs of each shipper.... I would recommend proceeding with the approval of Bill C-52.

I think we need to accept the fact that in some circumstances it won't be possible for a party to actually, in good faith, negotiate an agreement. In that sense, Bill C-52 does suggest a mechanism for resolving that impasse.

The legislation includes the right to ask an arbitrator to establish an agreement. In that sense, Bill C-52 is an improvement and it needs to be passed.

I will not re-read the entire transcript of the meetings we held, but this gives the House an indication of the testimony we heard at our committee.

So far I have discussed the benefits of the bill in terms of the service agreements that are in place and how the bill expands Canadian trade. I have also gone over some of the testimony that was heard at the transport committee during the study of the bill.

I would now like to shift the focus to a sector that is very important to me, agriculture. I represent the rural riding of Bruce—Grey—Owen Sound, and while shipping by rail is not extremely common in my neck of the woods, I have certainly seen that farmers are very concerned about how their product is transported from the farm to the markets.

Having been a farmer myself, I know that the agriculture business is full of uncertainties. That is why I am very happy that we will be moving forward with Bill C-52 to ensure that Canadian farmers will be protected by these service agreements so that they know they will always have a viable option to ship their product.

As I said, agriculture is one of the main pillars of my riding and certainly one of the main pillars of the Canadian economy. Canada's agriculture, and indeed the entire agri-food industry, plays a vital role in creating jobs and keeping our economy strong. However, our farmers depend on efficient, effective and reliable rail service so that they are able to move crops off the farm to valued customers, not just in Canada but around the world.

That is exactly what Bill C-52 will do for our hardworking farmers. It will ensure their right to a service agreement with railways to enhance clarity, predictability and reliability when shipping their product.

Furthermore, I would like to expand on the nature of the bill and indicate that the bill is not only a benefit to the shipper but that the rail services will also benefit from the changes that will be brought forth in the bill. The bill does not pit shipper against rail service. The goal of this legislation is rather to encourage railways and shippers to work together.

The fair rail freight service act would help shippers to manage and expand their businesses while ensuring the railways can operate an efficient network for the benefit of all users. This will ensure a strong, competitive rail freight supply chain, which is critical to the success of the Canadian economy. In these challenging global economic times, all sectors of the economy must work together to drive growth, create jobs and ensure long-term prosperity.

Before I wrap up my comments, I would like to proactively answer some the questions that opposition members of the House may have with regard to the bill. I will begin with the possible question that may arise about why the bill had not been tabled earlier. The response to this is quite simple: it takes time to get things right.

On this piece of legislation, we took the time necessary to hold in-depth consultations with stakeholders on the matter. We carefully reviewed the submissions that we received so that we could advance with a framework that would benefit all parties involved. It was a long process, but as members can see by some of the quotes I presented earlier, it has worked, and we have a very useful bill before us in the House.

I would like to take this opportunity to thank all the members of the Standing Committee on Transport, Infrastructure and Communities. I see members of that committee from all sides of the House here. We did not always agree on everything, but at the end of the day we have a good bill, and I would be remiss if I did not mention the strong work and support by the Minister of Transport, Infrastructure and Communities. This is a bill that many people, including shippers, have asked for, for a number of years. The minister has done it, and we are here today discussing it in the House.

Another question that is brought up around the bill is the notion that new provisions in the bill will negatively affect the efficiency of Canada's rail system. This is not true. The arbitrator must consider the efficiency of the rail network and railways' obligation to provide service to all shippers when making decisions.

Finally, I will respond to the possible question of why there is not a list of elements that must be included in a service agreement under the bill. This is because there is not a one-size-fits-all solution to these agreements. Every situation between shippers and rail services will be different and will require different needs. Therefore, this approach will ensure that the arbitrator has the flexibility needed to make the appropriate decisions.

I think there will be few of these arbitration decisions, but there would be that flexibility for the two parties to sit down, and the arbitration process would occur only when a custom-made deal that works for both parties cannot be worked out.

To conclude, service agreements are an important commercial tool that supports the shipper-railway relationship because they bring clarity and predictability to rail service. As some associations put it after the tabling of the bill in December 2012, this will serve as a platform for continued collaboration with Canadian railways.

This bill would work wonders for shippers and rail services in Canada and would be of enormous benefit to all sectors, including the agriculture industry.

The government's objective is to facilitate the adoption of service agreements between shippers and railways for those shippers who want one, and Bill C-52 would accomplish this.

I urge members to join me in supporting this bill. I hope that my colleagues across the way will show their support for this bill and vote in favour of its passage.

We have heard from many members during the discussion on this bill, and while I mentioned agriculture quite a bit, because there are a lot of agriculture products that travel, the bill would affect everything from forestry to fertilizer to potash. Therefore, this bill is very important.

Saskatchewan is the largest producer of potash in the world, a lot of which is exported, and rail allows it to get moved. As well, the mining industry transports all kinds of products. There is even talk right now of more crude oil moving by rail. I think we all have to admit that pipelines would be the preferred route, but business will always look at every opportunity out there, and rail is one of them.

The House resumed from May 23 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 third time and passed.

Bill C-52—Time Allocation Motion

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

Mr. Speaker, I want to recall a little history.

I had the honour of experiencing a byelection in 2007 and the general elections in 2008 and 2011. I am very familiar with the schedule of the last few election years here at the federal level, having experienced several of them. Indeed, elections may have had an impact on the progress of certain business.

Nevertheless, since the NDP members agree on the bill, they will still agree even if we debate it for several more hours. That is what the hon. member just said. We believe it is time to move on.

However, at the Standing Committee on Transport, Infrastructure and Communities, they talked about the ideological struggle to abolish the Canadian Wheat Board, the degree of difficulty experienced by heavy-duty trucks between -40 ^oC and 40 ^oC, our government's inaction on railway security measures, cuts at VIA Rail Canada, opposition to the introduction of rail service, and so on.

I have four pages of similar topics that they discussed and that were not necessarily related to the bill being discussed in committee. When time is allotted to us, we should use it to address the proper subjects and to advance arguments that relate to them at the time.

At the committee meetings regarding Bill C-52, we discussed a range of subjects. I can name others: the potential risks associated with the transport of bitumen by pipeline, the national transit strategy, the closing of rail lines between Gaspé and Chandler, and so on. I have four pages of subjects.

If the relevance of the topic at the time we discuss it is so important to them, they should have set an example in committee. Today it is time to pass this bill for the Canadian economy. The government is only acting in the interest of the economy and the people who want to create jobs.

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Speaker, we are delighted to hear that the minister is unblocked, finally.

That said, I think this is the fourth time in four days that I have risen to criticize this process, something that now seems to be standard practice for this government. They bring in a gag order to end debate.

What the Minister is not saying is that in 2006, the Prime Minister prorogued the House because he was about to be clobbered by the opposition parties. Such actions tend to derail bills. There were elections after that in 2008 and 2011.

Today, all of a sudden, on this beautiful May 29, we are told there is great urgency—in fact, we hear this every day. This is the fourth bill of its kind, and they are not trivial bills either.

There was Bill C-48, which dealt with all kinds of tax amendments, Bill C-49, meant to change the name and mandate of a museum, and Bill C-54, the Not Criminally Responsible Reform Act. These are not inconsequential bills.

Now we have Bill C-52 before us. I believe the cat was let out of the bag yesterday when a colleague of the minister rose to say that they were ultimately not interested in what people from the various ridings had to tell them. What interested them was what they, the Conservatives, had to say on those matters.

In their view, once we agree on a bill, we should be quiet, stay politely seated and not say another word because, in any case, they are not interested in what the people of Gatineau have to say, through their member, on the merits of the issue.

Only three hours were allotted for debate at third reading. That is appalling. It is a hijacking, not of a train, but of debate. It is shameful. For reasons unbeknownst to us, this is now part of this government's normal procedure.

I do not want to know whether the bill is good, since we are going to vote for it. I want to know why we are being compelled to do it this way. To date, the minister does not appear to want to give us an answer that is sensible and acceptable, at least for the people of Gatineau.

Bill C-52—Notice of time allocation motion

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

Mr. Speaker, I must advise that an agreement has not been reached under the provisions of Standing Order 78(1) or 78(2) concerning the proceedings at third reading of Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration). Under the provisions of Standing Order 78(3), I give notice that a minister of the Crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of proceedings at said stage.

Business of the House

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

Mr. Speaker, as you know, our government has moved forward this week to conduct business in the House of Commons in a productive, orderly and hard-working fashion, and we have tried to work in good faith.

We began the week debating a motion to add an additional 20 hours to the House schedule each week. Before I got through the first minute of my speech on that motion, the hon. member for Skeena—Bulkley Valley interrupted with a dubious point of order to prevent the government from moving forward to work overtime. His was a bogus argument and the Speaker rightly saw the NDP delay effort as entirely devoid of merit and rejected it outright.

During its first speech opposing the motion to work hard, the NDP then moved an amendment to gut it. That amendment was defeated. The NDP then voted against the motion and against working overtime, but that motion still passed, thanks to the Conservatives in the House.

During the first NDP speech on Bill C-49 last night, in the efforts to work longer, the NDP moved an amendment to gut that bill and cause gridlock in the House. I am not kidding. These are all one step after another of successive measures to delay. During its next speech, before the first day of extended hours was completed, the NDP whip moved to shut down the House, to go home early. That motion was also defeated. This is the NDP's “do as I say, not as I do” attitude at its height.

Take the hon. member for Gatineau. At 4 p.m., she stood in the House and said, “I am more than happy to stay here until midnight tonight...”. That is a direct quote. It sounded good. In fact, I even naively took her at her word that she and her party were actually going to work with us, work hard and get things done. Unfortunately, her actions did not back up her words, because just a few short hours later, that very same member, the member for Gatineau, seconded a motion to shut down the House early.

I am not making this up. I am not kidding. She waited until the sun went down until she thought Canadians were not watching anymore and then she tried to prevent members from doing their work. This goes to show the value of the word of NDP members. In her case, she took less than seven hours to break her word. That is unfortunate. It is a kind of “do as I say, not as I do” attitude that breeds cynicism in politics and, unfortunately, it is all too common in the NDP.

We saw the same thing from the hon. member for Davenport, when he said, “We are happy to work until midnight...”, and two short hours later he voted to try to shut down the House early. It is the same for the hon. member for Algoma—Manitoulin—Kapuskasing and the hon. member for Drummond. They all professed an interest in working late and then had their party vote to shut down early. What is clear by their actions is that the NDP will try anything to avoid hard work.

It is apparent that the only way that Conservatives, who are willing to work in the House, will be able to get things done is through a focused agenda, having a productive, orderly and hard-working House of Commons. This afternoon, we will debate Bill C-51, the safer witnesses act, at report stage and third reading. After private members' hour, we will go to Bill S-12, the incorporation by reference in regulations act, at second reading.

Tomorrow before question period, we will start second reading of Bill S-14, the fighting foreign corruption act, and after question period, we will start second reading of Bill S-13, the port state measures agreement implementation act.

Monday before question period, we will consider Bill S-2, the family homes on reserves and matrimonial interests or rights act. This bill would provide protection for aboriginal women and children by giving them the same rights that women who do not live on reserve have had for decades. After question period, we will debate Bill C-54, the not criminally responsible reform act, at second reading, a bill that makes a reasonable and needed reform to the Criminal Code. We are proposing to ensure that public safety should be the paramount consideration in the decision-making process involving high-risk accused found not criminally responsible on account of mental disorder. It is time to get that bill to a vote. We will also consider Bill C-48, the technical tax amendments act, 2012—and yes, that is last year—at third reading.

On Tuesday, we will continue the debates on Bill C-48 and Bill C-49, the Canadian museum of history act.

On Wednesday, we will resume this morning's debate on Bill C-52, the fair rail freight service act, at third reading.

On Thursday, we will continue this afternoon's debate on Bill C-51. Should the NDP adopt a new and co-operative, productive spirit and let all of these bills pass, we could consider other measures, such as Bill S-17, the tax conventions implementation act, 2013, Bill C-56, the combating counterfeit products act, Bill S-15, the expansion and conservation of Canada’s national parks act, and Bill C-57, the safeguarding Canada's seas and skies act.

Optimism springs eternal within my heart. I hope to see that from the opposition.

Speaker's Ruling

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, we need to look at the reason the legislation is before us today. It is not because of the Conservative government. It is not because the NDP is having a tiff. The reality is that we have stakeholders, such as our industries—agriculture, forestry, minerals, chemicals, fertilizers, oil and gas—and of course our manufacturers. They provide the jobs that Canadians really and truly want. That group of people led to the pressure for the government to materialize Bill C-52. They worked in co-operation with opposition parties. They want a sense of co-operation coming from the House of Commons and they are not seeing that. The government turned a deaf ear to even a simple, effective amendment from the deputy leader of the Liberal Party.

My question for the member is this: would he not agree that this legislation could be improved if we had amendments that were accepted by the government?

[Dan Harris, NDP, Scarborough Southwest, ON]

Mr. Speaker, it is a pleasure to rise again to speak to Bill C-52. When many people were going to bed last night, we thought we would be debating a different bill this morning. However, from time to time the government does like to make late-night changes to throw the opposition off and to play games.

I now find myself in a position of supporting a bill that is only a half measure. Once again, a bill has come back to the House from committee wherein the Conservative majority has shown complete disdain for the testimony and recommendations made by key stakeholders. Once again, the Conservatives had a chance to significantly improve a bill at committee, but as in all other committees, it used its majority to shut down sensible and considered amendments, which could have easily improved this essentially flawed legislation.

Canadians are watching and seeing quite clearly how the government lacks any of the accountability it once supposedly so lovingly cherished and promised to Canadians. The recent growing scandal in the Senate only acts to highlight the arrogant sense of Conservative entitlement that the members on this side of the House see every day during our work in committees. This arrogance will come back to bite the government in the rear. Sadly, it also means that Canadians end up paying the price for the government's bad decisions.

The Conservatives had a chance to get Bill C-52 right but instead chose to do only half a job. They could have chosen to help strengthen a very significant part of our economy. Instead, they once again caved in to powerful lobbyists and decided to protect their big rail buddies, leaving Canadian shippers holding the bag and the costs.

Poor rail freight service is hurting Canada's exporters, damaging our productivity and global competitiveness and costing us jobs. We cannot afford to lose international business because big rail cannot get its act together.

Disruptions to rail freight services, as well as poor, unacceptable services, are costing the Canadian economy hundreds of millions of dollars every year. Idle manufacturing plants and mines, rotting crops and missed deliveries to outgoing ships due to inefficient and dreadful rail services are a daily reality for Canadian industry.

It is important to note that rail transport is the backbone of the Canadian economy. More than 70% of all surface goods in Canada are shipped by rail. However, 80% of service commitments for agricultural rail customers are not being met by the rail companies due to such issues as delays and an insufficient number of railcars. The recent rail freight service review, which has been mentioned time and time again today, found that 80% of shippers are not satisfied with the services they receive. That means there is only a 20% satisfaction rate, which is abysmal. In any other industry, without this existing duopoly with CN and CP, businesses would be run into the ground for having such poor service records. Rail freight customers, from farmers to mining companies, are suffering from this virtual monopoly. In most parts of the country, shippers cannot choose between rail service providers because they only have access to either CN or CP, and that is if they still have rail service.

Rail line abandonment has been brought up more than once today. A couple of weeks ago I was driving through Arnprior, which is not far from here, expecting to cross the railway line, but it had been torn up. In the prairie provinces, the short lines that give access to the agricultural industry and farmers to reach the main line terminals and distribution centres are being ripped up. In the last 15 years, we have lost more than 10,000 kilometres of rail in Canada, which has been torn up because CN and CP have chosen to change the distribution methods. There is really no cost to them; they will not suffer, because there is no other game in town.

We have seen some real entrepreneurship in the prairie provinces where farmers, local municipalities and communities have banded together to bring rail service back into their communities. They are forming co-ops to save their short lines and bring their products to market in a more effective way, no thanks to the current government or the one before it.

Shippers are routinely suffering from service disruptions, delays and various forms of non-performance by CN and CP. Deliveries and pickups are done on time or are skipped altogether. Frequently, even the number of ordered railcars is not matched by delivered railcars, and sometimes cars are damaged. A broad range of industries is affected by the situation, from natural resources to manufacturing, including agriculture, forest products, mining, chemical, and the automotive businesses. A large portion of the goods in these industries is destined for export. Lacklustre rail service is thus hurting Canada's exporters' ability to compete in global marketplaces. For example, soybeans from Argentina enjoy a competitive advantage in markets like 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 coming from Canada.

For years now, shippers have been voicing their discontent, but no concrete action was taken by the Conservatives. Bill C-52 would be a half-hearted attempt to level the playing field for industries that are dependent on reliable, speedy rail freight services. Hundreds of millions of dollars in economic losses, decreased competitiveness in the global marketplace and lost jobs apparently do not interest the Conservatives.

Shippers are so desperate that any form of protection is welcome, which is why so many industry groups are supporting the spirit of this bill. However, the watered-down Conservative bill comes as a disappointment for many across those industries. Since 2007, a talk-it-out-and-wait tactic has been employed, starting with the promise of an expert panel review. The rail freight service review started in 2008. The independent panel tabled its final report in early 2011. Half a year later, the Conservatives initiated a mediation process that did not yield any results; it was more wasted time from the other side. Presumably, with the backing of the Conservative government, CN and CP management were unwilling to make any meaningful concessions. The mediation process, led by retired Conservative politician and university chancellor Jim Dinning, failed and his report was released in June 2012.

Parallel to the end of the mediation process, my colleague from Trinity—Spadina tabled a private member's bill, Bill C-441, the rail customer protection act. The private member's bill, coupled with advocacy work from the shipping community, put pressure on the government to follow up on the promise to actually table legislation.

It is also interesting to note that CN undertook a massive lobbying effort last year, first to prevent the bill and then to water it down. Dozens of documented visits to government offices and a media campaign showed its determination to keep the status quo. I would remind the House again that the status quo means that 80% of shippers are unsatisfied with the service that CN and CP are delivering.

Bill C-52 would focus squarely on commercial agreements between rail companies and shippers from a procedural point of view, having the rights to a service level agreement arbitration process in the case of failed negotiations, but not at any other time. Also, it would not address the other elephant in the room: pricing and cost. Certainly it would give an arbitration process, but any penalties garnered from that would not go back to the shippers to compensate them for their losses and their costs; they would go to the government.

The member for Elmwood—Transcona earlier today spoke about how they would have recourse to the courts. Yes, of course they would, but that would bring many costs and time and effort there, with no guarantees, of course. We should be designing bills that would not seek to actually draw people into the legal system. We should be avoiding having people unnecessarily go to court. As for the $100,000 limit on the fines, CN made $3 billion in profits last year, so a $100,000 fine could just be classified as the cost of doing business.

The consensus of the shipping community was to deal with pricing later and tackle service level agreement issues first. While Bill C-52 would fall short on a number of stakeholder demands, it is prudent to support the bill as the shipping community believes it would be a good first step. The task now is to address shortcomings and strengthen the bill to the benefit of the shippers and also to ensure that they get what they need in future rounds of negotiations.

The NDP proposed nine amendments at committee that were summarily rejected by the Conservatives. As my colleague, the member for Notre-Dame-de-Grâce—Lachine mentioned, there was only one Conservative question during all of those amendments, so they really were not interested in hearing about the suggestions we were making.

All those industry groups that the Parliamentary Secretary for the Minister of Heritage mentioned over and over again also submitted several recommendations to the committee, which the government also ignored. I would like to hear him answer why the government ignored those questions the next time he gets up to try to grill us on nationalization.

I am looking at the time, Mr. Speaker. I would definitely like to have some questions from my hon. colleagues before we hit question period, so I will wrap up now.

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

Mr. Speaker, I am not sure if my colleague opposite was listening to my speech, because I was not talking about nationalization. However, I did mention that the Liberals sold CN in 1996.

Since the member asked me how things are working in my committee, I am happy to tell him that we have problems.

Since I was elected, 99.3% of the amendments we have proposed over the past two years have not been accepted by the Conservatives. That is not what I call teamwork. I will not talk about how things were before I arrived, because I was not here. I am talking about what I have seen so far.

We had another problem in committee, and I actually moved a motion on that. The committee chair decided that the meetings will be one hour and forty-five minutes long instead of two hours. In my view, that affects my participation in the committee, because I am often the one who has less time to speak. Given the sequence of speakers, I get less floor time.

The Conservatives do not ask us questions and do not want to talk with us. That is another problem facing the committee right now.

I did not ask specific questions about nationalizing CN. Rather, I am interested in what we can do with Bill C-52 to improve Canada's rail system.

[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.

[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?

[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.

[Robert Aubin, NDP, Trois-Rivières, QC]

Yes, two steps, and we might even be on our way toward a solution. It is in that frame of mind that we will be voting in favour of Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration). It is more a matter of railway transportation in this case. Arbitration is probably the most interesting thing about this amendment to the legislation. I will come back to that a little later.

For those who may not have heard much about this bill, let me briefly talk about what the problem is. In Canada—a vast country if ever there was one—it is advantageous to transport bulk commodities over long distances by train. It makes sense. It was meant to be. It is impossible for some shippers to even think about a mode of transportation other than rail transport.

If we had to use trucks to transport the goods shipped by a single train with several cars, first of all, it would be difficult to even get a fleet of trucks that could transport these goods. Second, this would clearly have a major impact on the environment, and third, the trucking company would become completely unproductive from an economic perspective. Rail transportation is therefore the most popular and preferred method of transportation for economic and environmental reasons.

However, as we all know, freight rail services in Canada are managed by the virtual monopoly of two companies: CN and CP. However, as I will explain later, although there appears to be competition between the two companies, that competition tends to disappear in many situations. It is difficult for shippers to negotiate contracts that meet their expectations and benefit from competition in a monopoly situation.

It is easy to say that at least Canada has two railway companies, CN and CP; however, the healthy competition that should lower prices is strangely absent. Instead, the territory, and therefore the market, is shared between these two companies. We have two companies holding a virtual monopoly rather than real competition.

In regions that have access to both CN and CP, unfortunately, one of the companies often demands prices that are too high, which once again leaves shippers with only one choice.

For several years, shippers have faced problems not only with fees, but also with delays, service interruptions and lack of available cars. There are also problems with outdated and broken cars that let part of the harvest spill out onto the tracks.

I put myself in the shoes of someone who produces grains, chemicals, natural resources or whatever watching money spill out onto the tracks as the train heads towards the port. Every time that happens, the individual's profit margin and overall profitability take a hit.

This immediately results in higher costs for shippers and a drop in profitability. Furthermore, in an economy in which the just-in-time strategy is very often the norm and is an obvious competitive advantage, shippers are caught in a David and Goliath struggle that is difficult to resolve without the government's help.

I will leave it up to my colleagues to figure out who is David and who is Goliath. I think it will be easy enough, except that in Canada, David never manages to prevail over Goliath.

Quality rail service is critical for shippers. These products are being exported, and I think it goes without saying that our exports suffer greatly in the fiercely competitive international markets as a result of numerous flaws in Canada's rail transportation system.

Businesses pay the price every time, because they lose a contract, or they have less room to manoeuvre or they make less profit. David was at least able to make the government aware of the problems he had with Goliath, but it took a lot of effort. I would say this is a marathon rather than a sprint. Efforts to raise awareness began in 2007, but it took until 2013, today, for the government to bring in a meagre bill.

I should also mention the work done previously by my colleague from Trinity—Spadina, who introduced Bill C-441, which members will certainly remember and which had loftier ambitions for dealing with this matter.

Nevertheless, there is a glimmer of hope. In 2015, we will replace this government that is plagued by scandals and poor management, and we will be able to do more about this.

I have to admit that I support this bill because of the shippers, as I mentioned earlier. This puts me in mind, appropriately enough, of the little engine that could, except that in this case, we are talking about a big engine that moves slowly indeed. It really needs a nudge.

What is in Bill C-52, an outstanding bill in the eyes of the Conservatives?

Obviously, the main point is that shippers will be able to use an arbitration process to settle their disputes with a railway company that, as we know, has a virtual monopoly.

To be eligible for arbitration, the shipper must demonstrate that attempts have been made to arrive at an agreement with the railway company, which is not easy to begin with. In its decision, the arbitrator establishes the level of services the railway company must provide and its obligations to the shipper. That would be part of the contract, I suppose. Contracts are confidential, which is why I said “I suppose” in the previous sentence.

In addition, Bill C-52 will only apply to new contracts between shippers and railway companies.

Furthermore, the maximum penalty is $100,000. I guess $100,000 for a company that made a profit of $2.7 million is not very scary. What is worse is that, if imposed, the fine will not go to the shipper to make up for the inconvenience, but into government coffers. Is this a new tax or a new fee? I have no idea. I will let the public decide whether this is appropriate or not.

Since I am quickly running out of time, I will move on to the conclusion right away.

I will support this bill, although it is a reflection of a tired government that is more concerned about image than substance. These days, even its image is taking a hit.

All shippers who work daily to provide Canadians and international clients with the best of their acquired expertise can count on the NDP, not only to allow this legislation to move forward in its early stages, but also to follow up and assess the effectiveness of the measures put in place by Bill C-52.

The solution is simple: in 2015, elect an NDP government that will once again make it possible for all Canadians to proudly believe that we can build a more just society where everyone's efforts will bear fruit.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is important that we recognize the true reason we have this bill before us today. It is not because the government wants to provide good, sound legislation. Yes, there is some reason to be encouraged by the legislation we are debating today, but let there be no doubt that the government has fallen short. The bottom line is that there is some legislation likely to be passed at some point in the near future that would improve upon the system. But it not something that has been driven by the government.

Virtually since 2007, maybe even a year or two prior, possibly during the organizing of shippers, stakeholders who have an interest and felt that there needed to be something done in terms of legislation, ultimately came together. They started not only to put pressure on government, but also to ensure that opposition parties were in that loop, so that shippers and all Canadians would benefit by good, sound legislation.

When we think of those stakeholders, individuals or organizations, we are talking about industries such as agriculture, forestry, minerals, chemicals, fertilizers, oil and gas, and of course, our manufactured goods. These are all critical industries from coast to coast to coast that need to be recognized in terms of their valuable economic impact for all Canadians. It has taken years now for the government to take action. It is safe to say that the government could have acted on this issue much more quickly. That is something that I would ultimately argue. I would point out a couple of thoughts in terms of the legislation, but let there be no doubt that the only reason why we have it today is because of the efforts of those industries and their appeal to government and opposition parties that we need to get this legislation not only introduced, but ultimately passed.

I would then argue that we had a wonderful opportunity to deal with the issue in such a fashion that it could have made even that much more of a positive impact. In fact, when the government first introduced the legislation, there was quite a sense of yes, finally it is there. Then there is an expectation, especially when it deals with the service level agreement, which was absolutely critical in terms of seeing any type of legislation brought to the floor of the House. That was a critical and absolute necessity in order to move forward.

The government has now had ample time to come up with the single, largest, most important component, the service agreement. Even though it is in the legislation and that is why initially there was a great deal of support for it, a lot of that support has dwindled. It is not as enthusiastic as it could have been or should have been. That is because we start to see that the government really did nowhere near what it could have done in introducing this legislation.

I know the deputy leader of the Liberal Party on numerous occasions, whether in question period or different addresses to the House, has talked about the importance of our railways and the services they provide, as no doubt all members of Parliament will.

I know the member for Wascana has felt very passionate about this issue and has done a fabulous job in representing the position of the Liberal Party of Canada on this. We have emphasized how critically important it is that we get this legislation. While the government sat and waited, the member for Wascana continued to raise the profile of this issue, whether it was inside or outside the House because we recognized what the industry stakeholders had said.

If members want take a look at those industries, some of which I listed a few minutes ago, they could easily understand why it is such a critically important issue. We are talking about the transportation of goods not only from east to west but also from north to south and around the world through our ports. It is critically important to each and every person who calls Canada their home that we do the right thing.

One could question why it took the government as long as it did to bring this legislation forward. Suffice to say, we do see it as a step forward, and therefore the Liberal Party will in fact support Bill C-52.

However, if the government had listened to what took place in committee, let there be no doubt, we would have better legislation. At the report stage, the deputy leader of the Liberal Party tried to bring in three amendments that would have dramatically improved the legislation.

The government has been afforded the opportunity to support good amendments that have been brought forward but, for whatever reason, it has chosen not to. I suspect there might be a philosophical twist to it that comes out of the Reform Party days, where the Conservative Party originated, which does not necessarily speak to the interests of all Canadians, but rather to a specific group of individuals in Canada. One could question why the government did not recognize the importance of those amendments and allow them to pass.

I would like to make reference to one specific amendment. This was made an hour or so ago, and was yet another attempt, not the first attempt, by the deputy leader of the Liberal Party to improve the legislation. It was to amend clause 11. We wanted to add the following to paragraph (2):

For greater certainty, nothing in this Act prevents the arbitrator from including in his or her decision terms providing for compensation payments to be made by the railway company to the shipper in the event of losses incurred by the shipper as a result of any failure by the railway company to fulfill its service obligations as provided under section 169.31.

This is not the only time the deputy leader of the Liberal Party has attempted to get that included in the legislation. An attempt was also made in the committee stage.

One has to question the government about why it would not. Is it not concerned about the shipper? All this amendment would have done was allowed the discretion of the arbitrator to say that given what had taken place, some of that money should be allowed to directly flow to the shipper. After all, in most cases if not all, the arbitration process will be triggered by the shipper. The individual that is most handicapped, the individual that is not on the level playing field, is the shipper.

It is a legitimate question to pose for the government. If it recognized the efforts that the shipper had put in, not only the preparation in the advocacy role of the legislation and the literally hundreds, if not thousands, of collective hours that would be put into this whole process, why then was the government not prepared to listen to what was said? Why does the government, this Reform-Conservative government, not see the value of at least allowing this amendment to move forward?

At the end of my comments I will be provided the opportunity to answer questions. I would welcome any government member to stand in his or her place to explain to the shippers why they should not be allowed any sort of compensation directly to them from an arbitrator of some sort that would allow them to be compensated. I would have thought this would be a positive thing.

Members do not have to just listen to the Liberal Party. I suspect that if members listened to some of the individuals who presented to the panel or at the committee stage when the bill was in committee, they would have heard the same sort of response, the response that there was absolutely nothing wrong with the amendment that had been suggested by the member for Wascana.

The Liberal Party will support Bill C-52, but the government has made a mistake by not going far enough. We are not too late to improve the system, if the government really and truly wants to. We have seen this in the past.

The member for Wascana, on behalf of the Liberal Party, introduced a few amendments, three of which we attempted to bring in at report stage on this bill. It is not too late. The bill still has to, technically, go through the Senate. We have seen this before when the member for Mount Royal, the critic from the Liberal Party, made amendments in the House and they were soundly rejected. However, then the Senate, in its wisdom, was able to incorporate virtually the identical amendments that strengthened the legislation.

I am an optimist. I hope the government will not only look at the amendment that we attempted to move today, but will consider some of those other amendments that would ensure a level playing field for the different stakeholders to which this legislation hopes to appeal. I hope the government is listening on that point because it is still not too late.

The railway freight review process really began in 2008. There was a commitment in 2008; then a panel would have been appointed in 2009, and then we had the report in 2010.

One of the most important aspects of the report, which I took note of, was a statement that shippers were getting the railway services they had ordered approximately 50% of the time. Imagine shippers knowing that once they deliver their product to where it needs to be picked up by the rail line to get it to its destination, 50% of the time something goes wrong so they cannot make a commitment. That is very telling.

The rail line companies have had plenty of opportunity over time, in a good faith manner, to resolve the many different outstanding issues. However, if I am a producer of commodity X and can get my product to the station, but 50% of the time there will not be a car even though it was pre-booked, what do I do, as a shipper? For shippers, that is a truly amazing situation. This is one of the reasons this legislation is important. It has raised issues of that nature.

We recognize the right to have a service level agreement. These service level agreements are absolutely critical for the government to have incorporated into the legislation. If we talk to the stakeholders, what we will find is that an unlevel playing field allows them very limited flexibility in competition. The competition is even becoming that much scarcer. There is the whole issue of rail line abandonment and improvement of our rail lines. I could probably spend a great deal of time talking about that.

In some regions in Canada, particularly in our Prairies, it is amazing how the concentration of rail lines has taken place. There was a time when we could travel all over the province of Manitoba, Saskatchewan and a good part of Alberta, and we would see all sorts of rail lines that would feed into the main line. They would go to places such as locations of commodities in our agricultural community. We would have many of these wooden elevators seen in many pictures and postcards of that rural lifestyle that was there. We have seen a much higher concentration of rail service taking place in selected areas, which many would argue would make it a whole lot more cost efficient, but none of those cost benefits seem to go down to the producer or to the shippers. However, that is an argument for which I would need an extra 20 minutes or so.

The government has really lost an opportunity to do the right thing, a better job. That is what the deputy leader of the Liberal Party attempted to do.

We can make this legislation better, and if we did that, not only would shippers benefit but, I would argue, all people who call Canada their home from coast to coast to coast would directly benefit if the government were prepared to do the right thing and accept amendments to this legislation. At the end of the day, it would be great to have a piece of legislation that would do so much more for our communities than it might be doing.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, to have a successful export policy, and for Canada to have a good reputation around the world as being a country that knows how to export, we have to deliver products on time. We cannot say that we will send a number of containers of logs or tonnes of grain, but then have the containers not show up on time. Therefore, it is critically important for our export market to have a good transportation system.

Unfortunately, a fundamental weakness with Bill C-52 is with the outline of the arbitration process, which could not only be too expensive for some shippers, but the option of arbitration is only available when contract negotiations fail and not in the case of violations to existing service level agreements.

For example, if CN promised a certain performance standard through the service agreement and violated that service agreement, that should automatically trigger arbitration. However, in this case, the bill does not say that. The bill says that one can only go into the arbitration process when the contract negotiation fails, which could take a long time, could be very costly and it is not exactly what the shippers want.

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

Mr. Speaker, I want to thank my colleague from Trinity—Spadina for her excellent work on this bill and on all of the shippers' concerns.

I would note that very recently, in fact, there have been difficulties with shipments out of this country to other countries, which is indicative, I think, of the problems that we have with the bill. Bill C-52 corrects some of the problems, but it does not correct all of the problems. The shippers are not universally happy with the results.

The NDP agrees that we are a trading nation. However, if, as a trading nation, Canada has an inefficient and outdated service model for delivering goods to its ports, we cannot compete and we will lose in the overall trading field in the rest of the world.

I wonder if the member would like to comment further on our position in the world with regard to trade when it comes to things like Bill C-52 and our attempts to make it better.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, for many years now, whether it be grain farmers, forestry companies or mining companies, what they have wanted to do is to ship their products from coast to coast to coast so that they could get loaded into a container and be exported. Eighty per cent of the shippers have been saying that the service that they are getting from rail companies is not satisfactory.

Why is that? It is because in Canada there is really a monopoly of service. CN and CP control all the tracks. They do not compete with each other, and there are no other choices. Yes, perhaps shippers could use trucks, but imagine large amounts of coal or large numbers of logs being shipped by truck. It is just not feasible.

Many grain, lentil or soybean farmers and many in the forestry industry are saying they need to get their products to the coast on time. They need to have advance warning if a train will not be coming on time. They also need to be assured that if the service is not satisfactory, there would be some kind of refund or compensation. If not, there would be a complete imbalance of power in that the rail companies could say whatever they want, charge whatever they want, deliver whatever kind of service they want and not worry about losing customers. The market is completely skewed. We all firmly believe that competition matters and that shippers should get the right price, but in this case there is no competition at all. There is a complete imbalance.

What is happening is that sometimes with no or very short advance warning, the train does not show up on time, or if it does show up, it does not deliver the products on time. As a result, the grain rots. Sometimes the company hires a large group of people to get the grain, or whatever product they are trying to ship, ready to be shipped, and the trains do not arrive. What do they do? Some of the companies, rather than booking one container, will book several, one before and one after, because if the products do not show up on time, they do not get their product exported properly. As a result, millions of dollars are lost because of poor rail freight service.

Successive governments have said they understood the problem and would do something about it. They talked a lot about it, yet nothing has been done.

The Conservatives promised that action would be taken. They first had a stakeholder panel and did a study. That study consulted everyone, and it took many years. As the report came forward, the rail companies said they did not need legislation; they would provide good service, and we should not worry about it. The Conservative government at the time agreed, but suggested a mediation process, the idea being to see how it went and then, if that did not work out, it would introduce legislation. Most of the shippers agreed to give it a try, although they did not think it would work because of the complete imbalance of power.

The Conservatives then made a promise in the last election that action would be taken. Now, two and a half years later, we finally see a bill in front of us.

Last year I got very impatient, so I established a private member's bill. I took the stakeholders' report and all of the recommendations in it and put them into a private member's bill. The shippers looked at the private member's bill and thought it was a model for what should be done and said that if the government were to take action, that should be the kind of legislation that should be made into law.

Unfortunately, we have this bill in front of us. This bill is a start. However, it does not include a model of what a service agreement should be, which means that companies that have no service agreements have to start with a blank slate. Instead of having a framework, with a model, they have no guidelines and have to start from square one with no template to back up their right to service agreements. That is very unfortunate. Negotiations need flexibility, but they should not have to start with a blank piece of paper. Optional elements should include performance measures, communication protocols and consequences for non-performance. None of that is in this bill, which is unfortunate.

This bill would only cover those that have no service agreements. Any companies that have service agreements with CN and CP would not be covered, unfortunately. In terms of conflict resolution, the shippers want a process like arbitration that covers not only negotiations for new contracts but also violations of existing contracts. Companies could have existing contracts, but if punishments are not spelled out, how would those contracts be honoured? Conflict resolution has to be accessible and affordable for all shippers. Unfortunately, this bill made it very complex. For some of the smaller companies in the forest industry and farmers, it is going to be very difficult to access because of the process and the red tape involved in this bill.

One of the critical points shippers have been talking about is that there has to be compensation for non-performance. If their products are not delivered on time, there have to be consequences. Unfortunately, there are none. Shippers need to be compensated for contract violations, not just when an arbitration agreement is reached. Any penalties have to go straight to the shippers, not to the federal government.

What does this bill do? This bill says that if CN or CP violate a contract, and compensation is awarded to the shipper and not to CN or CP, then they should pay a fine. I think the fine is something like $100,000. The amount of $100,000 is too small, and the penalty does not go to the customers. It goes to the government. That does not make sense. If I am a customer, go into an arbitration process and prove to Transport Canada that the company was not providing good service to me, the customer, one would think that the reward would go to the customer. In this case, no, it goes to the government. In some ways, that is a bit of a tax grab.

Bill C-52 covers only new agreements and not existing ones, as I said earlier. This bill would unfairly exclude shippers from any protection and conflict resolution measures. Instead, they would be stuck with continued contract violations, with retribution.

I heard my Conservative colleague say that they could always go to court. Of course they could always go to court. Why do we need a government, then? They could go to court now, of course. The problem is that the court process is long, involved, and expensive. Companies would end up spending most of the money on lawyers rather than on producing better products for their customers.

What does all of this mean? It means that a lot of Canadian customers, whether they are logging companies or grain farmers, are saying that it is hurting their exports. It is hurting Canada's productivity. It is costing our economy millions of dollars. Because they have no say over how the pricing works, they were hoping that this bill would not just talk about the service but would talk about the pricing.

We could have the best service, but if the price is too high and farmers cannot afford to ship their grain, what good is it? Unfortunately, that key component is missing from the bill in front of us. It deals only with service, service contracts and service agreements but not with pricing. That big chunk still has to be tackled through the Canada Transportation Act.

We need to know what fair pricing is. Right now, we do not know, and the government has not tracked it. We also need to know what kind of performance standards should be acceptable. There needs to be a model so that people could learn from best practices. That, too, is missing.

Yes, the shippers were happy that there was finally some kind of legislation, weak though it is. They want it passed. However, the coalition of all rail shippers came together and said that they wanted a series of amendments. They did a lot of good work. They came to the transport committee and they proposed six areas to work on.

They want to tackle the problem of what should be in the service level agreements. They want to make sure that they are legally protected. They want to allow shippers to include arbitration conflict resolution in service level agreements for non-performance. They want protection from additional service charges. That is important, because we can have an agreement, but if service charges are laid on all of a sudden, it is very difficult for shippers to plan ahead.

They want to narrow the arbitration to what the shippers' complaints are about and not allow the rail companies to broaden the scope of the arbitration. It is hard to believe that this bill, which is supposed to support the shippers, would allow shippers to put in their complaint after which CN and CP could say that they too have things to put on the table, which they could do. The shippers are slightly worried about that. I do not blame them. It is almost like protection against retaliation. If they dare challenge the CN and CP monopoly and dare to say that the service is not up to par and they take it to arbitration, CN and CP could retaliate and cost them a lot of money.

Remember, CN had a $3-billion profit last year, so it is not doing too badly. CP will also begin to have a profit margin.

The shippers' last recommendation was to lighten the burden of proof on shippers to demonstrate that they are captive during the arbitration.

Those are the six recommendations they had. They provided detailed support and documentation. They looked at the bill very carefully. They hired lawyers and different companies, whether they were logging and forestry industries, Canada Post, or the coalition itself, which all came in and said that this would make the bill much stronger.

Unfortunately, without much debate, without much deliberation, the Conservative majority on the transport committee said no and voted down all of the recommendations. That is really unfortunate. In some ways it is a betrayal of the good faith of these companies. They have been waiting for years for action. They have been waiting for legislation. They have been very patient. They waited for over a year for the negotiator, Mr. Dinning, to be appointed. They waited a year, because the Conservatives were not doing anything. Right after the election, the Conservatives had a blueprint showing how to go forward, but they did nothing. A year later, they appointed Mr. Dinning. The report took a long time, and this legislation has taken a long time.

Flawed as the legislation is, we as New Democrats support the bill, because it is better than nothing, but there is a lot of room for improvement.

Ultimately, Canada needs two pieces of legislation. The first piece of legislation would regulate and would clearly indicate to CN and CP what the performance standards should be, what the arbitration process should be, what kind of service contract should be given to the shippers, and what the results, the consequences, the penalty would be if the company failed to satisfy customers.

We also need a second piece of legislation that would provide a level playing field and deal with pricing. How much should it really be? How much should it cost? What would be the upper and the lower range? We need to let the market dictate pricing, but because the market is completely skewed right now, there is no competition. The government needs to step in and provide the support Canadian companies are desperately looking for.

All of the products Canada exports require a good transportation system, whether one is a small soybean farmer or one is shipping lentils or logs outside Canada. More and more oil is being shipped by rail. Rail service is good for the environment. It is an efficient way of moving things. We would prefer to see more train service rather than more trucks. As a result, the NDP believes that the Canada Transportation Act must be amended so that there is a level playing field for all shippers.

We support the bill, but we wish the Conservatives would listen to their constituents and these companies a lot more.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Mr. Speaker, I am pleased to speak today in support of Bill C-52, fair rail freight service act.

Before I begin, I would like to thank the hon. Minister of Transport, Infrastructure and Communities for his tremendous leadership on this particular issue. I would also like to thank the members of the Standing Committee on Transport, Infrastructure and Communities, who have recently concluded a comprehensive study of Bill C-52 and referred it back to this House.

The committee held hearings for the past two and a half months, hearing from dozens of witnesses: from the shippers representing the agriculture, mining, forestry and chemical industries, to the railways—CN, CP, the Railway Association of Canada and the short lines—as well as other important supply chain partners such as the Canadian port authorities. I am very pleased that the committee has examined this legislation so thoroughly and carefully considered all of the various issues.

Our government remains focused on creating jobs, economic growth and long-term prosperity, and that is what Bill C-52 is all about.

Transportation plays a major role in supporting our government's economic agenda. It drives and attracts international trade, which makes it essential to ensuring Canada's economic competitiveness in the world. As this House knows, after years of neglect by the previous Liberal government, in 2008 our Conservative government launched the rail freight service review to get an accurate picture of how well the rail freight transportation system was working.

The review panel recommended commercial solutions to address service issues, with legislation to be used as a backstop if necessary. In response, our government committed in March 2011 to table a bill on rail freight service, and Bill C-52 delivers on that promise.

The fair rail freight service act would strongly deliver for shippers by giving them more leverage to negotiate service level agreements with the railways. This would expand the clarity, predictability and reliability they need to succeed in global markets.

This bill would amend the Canada Transportation Act to give shippers the right to request a service level agreement from a rail company. In the event that rail companies and shippers were unable to reach an agreement on their own, the bill would create an arbitration process to establish the terms of service that a shipper is entitled to receive from the railway.

Bill C-52 would grant the arbitrator the power to define, in a forward-looking manner, the railway's service obligations for a specific shipper. The arbitrator's decision would be backed by very strong enforcement tools to ensure compliance by the railways. In addition to the existing enforcement tools that already exist in the Canada Transportation Act, Bill C-52 proposes to give the Canadian Transportation Agency the power to impose administrative monetary penalties on railways to hold them accountable for their service obligations.

During second reading, some of my opposition colleagues across the way raised some concerns about the bill that I would like to address.

First, there were questions regarding the ability of shippers to trigger the arbitration process. Bill C-52 is very clear that the shipper would trigger the arbitration process, not the railway, and the threshold to access arbitration would be quite low. To begin the process, a shipper would only need to demonstrate to the Canadian Transportation Agency that an effort had been made to reach a service level agreement commercially and that a 15-day notice had been served on the railway prior to the arbitration request. Then the shipper would present to the agency the issues he or she would like resolved and ask that these be referred to arbitration. In short, the shipper would get to frame the issues that were submitted for arbitration.

Second, some opposition members raised concerns that the level of the administrative monetary penalty would be too low. The level of the penalty would be significant: up to $100,000 per violation per arbitrated service level agreement. This amount is four times the level of other administrative monetary penalties in the act. If a railway had multiple violations, it could be fined many multiples of $100,000. This would be a very strong enforcement tool.

I would also like to speak on issues raised at committee hearings. As I mentioned earlier, during the hearings on Bill C-52, the Standing Committee on Transport, Infrastructure and Communities heard testimony from everyone wanting to share their views on Bill C-52: shippers, railways, ports and many associations that lobby for rail freight shipping in Canada. Overall, it is clear that shippers support Bill C-52. They overwhelmingly said that this legislation would give them more leverage in their negotiations with the railways.

There were some concerns raised by my opposition colleagues at committee, which I would also like to address. Some questioned whether force majeure clauses and performance metrics are captured in the scope of what an arbitrator could impose in a service level agreement. Transport Canada officials testified before the committee and made it very clear that both force majeure and performance metrics are included in the bill.

The shippers suggested some amendments that the committee ultimately judged, after careful consideration, as unacceptable. There were two reasons for this. First, many of the amendments were contrary to the approach to arbitration in Bill C-52, which would give the arbitrator broad discretion to impose the right service contract for a particular situation, in recognition of the fact that each situation is different and there is no one-size-fits-all solution. It is important for the House to understand that legislation is a very blunt instrument and rail freight service issues are often extremely complex. Therefore it is essential to ensure the arbitrator would have enough flexibility to impose a service contract that made sense, given the unique circumstances of each case. For example, shippers asked for changes to the level of service provision that would prescribe detailed service obligations for railways. This would limit the arbitrator's ability to consider the circumstances of each shipper and establish service agreements on a case-by-case basis. Under Bill C-52, the arbitrator would still be able to include every service element a shipper could ask for.

Second, some of the shipper amendments were not possible because of inherent legal risks associated with the proposals, which in some cases would be unprecedented concepts in Canadian law. The committee examined this very carefully. The shippers sought amendments to give the arbitrator the ability to impose pre-established damages or penalties that the railway would pay in the event of a hypothetical service breach in the future. This concept is not consistent with the way damages are handled in contractual law and it is not consistent with the role of regulatory agencies, which is to enforce compliance after an actual breach, not before a potential breach. It is also full of legal risks and would limit the ability of shippers to seek actual damages in court after a service breach.

Also, shippers asked that the arbitrator not take into account the railway's obligation to other shippers and users of the network. It is very clear that the way a railway serves one shipper will affect the service to another. That is the nature of the railway business. It would be completely irresponsible for the arbitrator to be denied the ability to consider the railway's network and its service obligations to other shippers. Such a proposal could have devastating consequences for our entire rail freight system, harming all shippers and threatening our economy. This is why it is important for Bill C-52 to require the arbitrator to consider the rail network and the railway's obligation to other shippers.

The railways strongly maintain that the bill is not required, given recent improvements to rail service. They warned about unintended consequences of regulation and the potential negative effects of government intervention on the efficiency of the supply chain. They are opposed to the entire premise of this legislation.

That said, the railways also requested amendments at committee stage, which were carefully considered. Ultimately, their amendments were also determined to be unnecessary. For example, the railways proposed to limit access to arbitration to only captive shippers, those that have no alternative means of transporting their goods. This amendment would unduly restrict access to service arbitration for shippers, reduce shippers' ability to establish service terms in a timely manner to address their business needs and conflict with existing shipper protection clauses in the act that are available for all shippers.

The railways also proposed an amendment to completely eliminate the administrative monetary penalties provision in Bill C-52. Again, this proposed amendment was rejected by the committee because it is important to ensure that the Canadian Transportation Agency would have a strong enforcement tool to force the railways to comply with the arbitrated service level agreements if necessary.

The testimony heard at committee clearly demonstrated the extent to which shippers and railways have very different perspectives on these issues. This underscores the need for Parliament to assess their proposals with a view to ensuring that the fair rail freight service act would maintain its original focus, which would be to ensure that shippers would have the leverage they need to secure service level agreements from the railways, but do it in a way that would not undermine the efficiency and performance of the rail transportation system as a whole. Bill C-52 would do exactly that. It would support shippers' needs for commercially negotiated service agreements and would provide a legislative backstop if those negotiations were to fail. I believe the bill would strike the right balance for our entire Canadian economy.

I also would like to speak to those benefits to the economy. By working together, Canada's railways, farmers and many others who harvest and ship our natural resources have helped to build our great country. Beyond their own businesses, they drive economic growth and create jobs right across Canada. However, those in agriculture and resource production depend on efficient, effective and reliable rail service to move their products to customers in Canada and around the world. For example, last year Canadian farms shipped more than $3 billion in agricultural products by rail. By ensuring more reliable shipping from gate to plate, as they say, Bill C-52 would help strengthen the livelihood of those who produce food in this country.

Before this legislation was tabled, the shippers asked the government to include three essential elements in the bill for it to be successful. They were, one, a right to a service level agreement with the railways; two, a process to establish a service level agreement when commercial negotiations fail; and three, consequences for non-performance on the part of the railways. I am proud to say that Bill C-52 would deliver all three of these elements.

The range of support for Bill C-52 is broad. Consider these comments:

The Coalition of Rail Shippers said, “Bill C-52 meets the fundamental requests of railway customers for commercial agreements”.

Greg Stewart of Sinclar Group Forest Products Ltd. told the committee on March 7, 2013, that the proposed legislation was “...a significant improvement and will reduce the risk” for shippers.

Jim Facette, CEO of the Canadian Propane Association, told the committee:

We believe this piece of legislation...provides a very good balance between railways and shippers. We're not coming today with any changes at all. Finding a balance is very, very difficult.... For us, it contains all the mechanisms and measures we requested some years ago: a right to a level of service agreement, an arbitration process, and administrative monetary penalties.

Mr. Facette also said that Bill C-52:

is viewed by the propane industry as a balanced approach to managing relations between railways and shippers, and the CPA urges Parliament to pass the legislation in a timely manner.

Also at committee, representatives from the ports expressed strong support for this bill. Mr. Peter Xotta, vice-president of planning and operations at Port Metro Vancouver, said:

...Bill C-52 is extremely important to Port Metro Vancouver.... Clearly, the establishment of service agreements through normal commercial processes should be encouraged, with arbitration as a last resort.

The Prince Rupert Port Authority noted that it:

...supports what we believe is the principal object of this piece of legislation, which is to ensure that there are agreements in place that provide clarity, transparency, and certainty both to shippers and to rail lines regarding the obligations of both parties in their roles in the supply chain.

The fair rail freight service act would help build a more prosperous economy. It would create a strong incentive for both shippers and railways to work together to negotiate service agreements commercially, and it would create a fast and efficient arbitration process if these negotiations were to fail to achieve the clarity and predictability that shippers need.

In conclusion, let me say to my colleagues in this House that we need to pass Bill C-52 as soon as possible to ensure that our rail system and Canada's economy are on the right track.

The proposed legislation would deliver significantly for shippers and would fulfill our government's promise to create a legislative backstop for fair rail freight service issues. However, well beyond the shippers, I would like to stress that the real winner would be the entire Canadian economy. By strengthening our agricultural and resource producers, the bill would build prosperity for many of the people we represent.

I call upon all members of the House to support Bill C-52, expedite its passage through the remaining parliamentary stages and refer it to the other place without delay.

[The Deputy Speaker, NDP, Joe Comartin]

There are three motions in amendment standing on the notice paper for the report stage of Bill C-52.

Motions Nos. 1 to 3 will not be selected by the Chair, because they could have been presented in committee.

Therefore, there being no motions at report stage, the House will now proceed without debate to the putting of the question on the motion to concur in the bill at report stage.

The House proceeded to the consideration of Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), as reported (without amendment) from the committee.

Extension of Sitting Hours

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, I will pick up where I left off. Obviously my hon. friend did not hear this and has not read the motion. I will respond to his macho riposte at the end of his comments by pointing out that the motion would do three things: first, it would provide for us to sit until midnight; second, it would provide a manageable way in which to hold votes in a fashion that works for members of the House; and third, it would provide for concurrence debates to happen and motions to be voted on in a fashion that would not disrupt the work of all the committees of the House and force them to come back here for votes and shut down the work of committees.

Those are the three things the motion would do. In all other respects the Standing Orders remain in place, including the Standing Orders for how long the House sits. Had my friend actually read the motion, he would recognize that the only way in which that Standing Order could then be changed would be by unanimous consent of the House.

The member needs no commitment from me as to how long we will sit. Any member of the House can determine that question, if he or she wishes to adjourn other than the rules contemplate, but the rules are quite clear in what they do contemplate.

As I was saying, the reason for the motion is that Canadians expect their members of Parliament to work hard and get things done on their behalf.

Canadians expect their members of Parliament to work hard and get things done on their behalf.

We agree and that is exactly what has happened here in the House of Commons.

However, do not take my word for it; look at the facts. In this Parliament the government has introduced 76 pieces of legislation. Of those 76, 44 of them are law in one form or another. That makes for a total of 58% of the bills introduced into Parliament. Another 15 of these bills have been passed by either the House or the Senate, bringing the total to 77% of the bills that have been passed by one of the two Houses of Parliament. That is the record of a hard-working, orderly and productive Parliament.

More than just passing bills, the work we are doing here is delivering real results for Canadians. However, there is still yet more work to be done before we return to our constituencies for the summer.

During this time our government's top priority has been jobs, economic growth and long-term prosperity. Through two years and three budgets, we have passed initiatives that have helped to create more than 900,000 net new jobs since the global economic recession. We have achieved this record while also ensuring that Canada's debt burden is the lowest in the G7. We are taking real action to make sure the budget will be balanced by 2015. We have also followed through on numerous longstanding commitments to keep our streets and communities safe, to improve democratic representation in the House of Commons, to provide marketing freedom for western Canadian grain farmers and to eliminate once and for all the wasteful and inefficient long gun registry.

Let me make clear what the motion would and would not do. There has been speculation recently, including from my friend opposite, about the government's objectives and motivations with respect to motion no. 17. As the joke goes: Mr. Freud, sometimes a cigar is just a cigar. So it is with today's motion. There is only one intention motivating the government in proposing the motion: to work hard and deliver real results for Canadians.

The motion would extend the hours the House sits from Monday through Thursday. Instead of finishing the day around 6:30 or 7 p.m., the House would sit instead until midnight.

This would amount to an additional 20 hours each week. Extended sitting hours is something that happens most years in June. Our government just wants to roll up our sleeves and work a little harder, earlier this year. The motion would allow certain votes to be deferred automatically until the end of question period, to allow for all honourable members' schedules to be a little more orderly.

As I said, all other rules would remain. For example, concurrence motions could be moved, debated and voted upon. Today's motion would simply allow committees to continue doing their work instead of returning to the House for motions to return to government business and the like. This process we are putting forward would ensure those committees could do their good work and be productive, while at the same time the House could proceed with its business. Concurrence motions could ultimately be dealt with, debated and voted upon.

We are interested in working hard and being productive and doing so in an orderly fashion, and that is the extent of what the motion would do. I hope that the opposition parties would be willing to support this reasonable plan and let it come forward to a vote. I am sure members opposite would not be interested in going back to their constituents to say they voted against working a little overtime before the House rises for the summer, but the first indication from my friend opposite is that perhaps he is reluctant to do that. Members on this side of the House are willing to work extra hours to deliver real results for Canadians.

Some of those accomplishments we intend to pass are: reforming the temporary foreign workers program to put the interests of Canadians first; implementing tax credits for Canadians who donate to charity; enhancing the tax credit for parents who adopt; and extending the tax credit for Canadians who take care of loved ones in their home.

We also want to support veterans and their families by improving the determination of veterans' benefits.

Of course, these are some of the important measures from this year's budget and are included in Bill C-60, economic action plan 2013 act, no. 1. We are also working toward results for aboriginals by moving closer to equality for Canadians living on reserves through better standards for drinking water and finally giving women on reserves the same rights and protections other Canadian women have had for decades. Bill S-2, family homes on reserves and matrimonial interests or rights act, and Bill S-8, the safe drinking water for first nations act would deliver on those very important objectives.

We will also work to keep our streets and communities safe by making real improvements to the witness protection program through Bill C-51, the safer witnesses act. I think that delivering these results for Canadians is worth working a few extra hours each week.

We will work to bring the Technical Tax Amendments Act, 2012, into law. Bill C-48 would provide certainty to the tax code. It has been over a decade since a bill like this has passed, so it is about time this bill passed. In fact, after question period today, I hope to start third reading of this bill, so perhaps we can get it passed today.

We will also work to bring Bill C-52, the fair rail freight service act, into law. The bill would support economic growth by ensuring that all shippers, including farmers, are treated fairly. Over the next few weeks we will also work, hopefully with the co-operation of the opposition parties, to make progress on other important initiatives.

Bill C-54 will ensure that public safety is the paramount consideration in the decision-making process involving high-risk accused found not criminally responsible on account of mental disorder. This is an issue that unfortunately has affected every region of this country. The very least we can do is let the bill come to a vote and send it to committee where witnesses can testify about the importance of these changes.

Bill C-49 would create the Canadian museum of history, a museum for Canadians that would tell our stories and present our country's treasures to the world.

Bill S-14, the Fighting Foreign Corruption Act, will do just that by further deterring and preventing Canadian companies from bribing foreign public officials. These amendments will help ensure that Canadian companies continue to act in good faith in the pursuit of freer markets and expanded global trade.

Bill S-13, the port state measures agreement implementation act, would implement that 2009 treaty by amending the Coastal Fisheries Protection Act to add prohibitions on importing illegally acquired fish.

Tonight we will be voting on Bill S-9, the Nuclear Terrorism Act, which will allow Canada to honour its commitments under international agreements to tackle nuclear terrorism. Another important treaty—the Convention on Cluster Munitions—can be given effect if we adopt Bill S-10, the Prohibiting Cluster Munitions Act.

We will seek to update and modernize Canada’s network of income tax treaties through Bill S-17, the Tax Conventions Implementation Act, 2013, by giving the force of law to recently signed agreements between Canada and Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland.

Among other economic bills is Bill C-56, the combating counterfeit products act. The bill would protect Canadians from becoming victims of trademark counterfeiting and goods made using inferior or dangerous materials that lead to injury or even death. Proceeds from the sale of counterfeit goods may be used to support organized crime groups. Clearly, this bill is another important one to enact.

Important agreements with the provinces of Nova Scotia and Newfoundland and Labrador would be satisfied through Bill S-15, the expansion and conservation of Canada’s national parks act, which would, among other things, create the Sable Island national park reserve, and Bill C-61, the offshore health and safety act, which would provide clear rules for occupational health and safety of offshore oil and gas installations.

Earlier I referred to the important work of committees. The Standing Joint Committee on the Scrutiny of Regulations inspired Bill S-12, the incorporation by reference in regulations act. We should see that committee's ideas through by passing this bill. Of course, a quick reading of today's order paper would show that there are yet still more bills before the House of Commons for consideration and passage. All of these measures are important and will improve the lives of Canadians. Each merits consideration and hard work on our part.

In my weekly business statement prior to the constituency week, I extended an offer to the House leaders opposite to work with me to schedule and pass some of the other pieces of legislation currently before the House. I hope that they will respond to my request and put forward at our next weekly meeting productive suggestions for getting things done. Passing today's motion would be a major step toward accomplishing that. As I said in my opening comments, Canadians expect each one of us to come to Ottawa to work hard, vote on bills and get things done.

In closing, I commend this motion to the House and encourage all hon. members to vote for this motion, add a few hours to our day, continue the work of our productive, orderly and hard-working Parliament, and deliver real results for Canadians.

Business of the House

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

Mr. Speaker, this afternoon we will continue the debate on today’s opposition motion from the NDP. Pursuant to the rules of the House, time is allocated and there will be a vote after the two-day debate.

Tomorrow we will resume the third reading debate on Bill S-9, the Nuclear Terrorism Act. As I mentioned on Monday, I am optimistic that we will pass that important bill this week.

Should we have extra time on Friday, we will take up Bill C-48, the Technical Tax Amendments Act, 2012, at report stage and third reading.

When we come back from constituency week, I am keen to see the House make a number of accomplishments for Canadians. Allow me to make it clear to the House what the government's priorities are.

Our government will continue to focus on jobs, growth and long-term prosperity. In doing that, we will be working on reforming the temporary foreign worker program to put the interests of Canadians first; implementing tax credits for Canadians who donate to charity and parents who adopt; extending tax credits for Canadians who take care of loved ones in their homes; supporting veterans and their families by improving the balance for determining veterans' benefits; moving closer to equality for Canadians living on reserves through better standards for drinking water, which my friend apparently objects to; giving women on reserves the rights and protections that other Canadian women have had for decades, something to which he also objects; and keeping our streets and communities safer by making real improvements to the witness protection program. We will of course do more.

Before we rise for the summer, we will tackle the bills currently listed on the order paper, as well as any new bills which might get introduced. After Victoria Day, we will give priority consideration to bills which have already been considered by House committees.

For instance, we will look at Bill C-48, which I just mentioned, Bill C-51, the Safer Witnesses Act, Bill C-52, the Fair Rail Freight Service Act, and Bill S-2, the Family Homes on Reserves and Matrimonial Interests or Rights Act, which I understand could be reported back soon.

I look forward also to getting back from committee and passing Bill C-60, , the economic action plan 2013 act, no. 1; Bill S-8, the safe drinking water for first nations act; and Bill C-21, the political loans accountability act.

We have, of course, recently passed Bill C-15, the strengthening military justice in the defence of Canada act and Bill S-7, the combating terrorism act. Hopefully, tomorrow we will pass Bill S-9, the nuclear terrorism act.

Finally, we will also work toward second reading of several bills including: Bill C-12, the safeguarding Canadians' personal information act; Bill C-49, the Canadian museum of history act; Bill C-54, the not criminally responsible reform act; Bill C-56, the combating counterfeit products act; Bill C-57, the safeguarding Canada's seas and skies act; Bill C-61, the offshore health and safety act; Bill S-6, the first nations elections act; Bill S-10, the prohibiting cluster munitions act; Bill S-12, the incorporation by reference in regulations act; Bill S-13, the port state measures agreement implementation act; Bill S-14, the fighting foreign corruption act; Bill S-15, the expansion and conservation of Canada’s national parks act, which establishes Sable Island National Park; and Bill S-17, the tax conventions implementation act, 2013.

I believe and I think most Canadians who send us here expect us to do work and they want to see us vote on these things and get things done. These are constructive measures to help all Canadians and they certainly expect us to do our job and actually get to votes on these matters.

I hope we will be able to make up enough time to take up all of these important bills when we come back, so Canadians can benefit from many parliamentary accomplishments by the members of Parliament they have sent here this spring.

Before taking my seat, let me formally designate, pursuant to Standing Order 81(4)(a), Tuesday, May 21, as the day appointed for the consideration in a committee of the whole of all votes under Natural Resources in the main estimates for the final year ending March 31, 2014. This would be the second of two such evenings following on tonight's proceedings.

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

Mr. Speaker, I thank the opposition House leader for his stream-of-consciousness therapy.

Our government, however, is very focused. Our top priority is jobs, growth and long-term prosperity. With that in mind, this afternoon we will continue second reading debate on the cornerstone item of our legislative agenda, which is Bill C-60, the economic action plan 2013 act, no. 1. We will continue this debate tomorrow.

Next Monday, May 6, will be the fourth day of second reading debate on this important job creation bill, and Tuesday May 7 will be the fifth and final day.

Once debate is concluded, the House will have an opportunity to vote on the substantive job creation measures in this bill.

On Wednesday, the House will debate Bill S-8, the Safe Drinking Water for First Nations Act. This will be the fourth time this bill is debated at second reading so it is my hope and expectation that this bill will come to a vote.

With the vote, there will be another clear choice before the House. Members will be voting to allow for national standards for on-reserve drinking water. This is a question of basic equality. I know the opposition voted against equality for women on reserves when it voted against Bill S-2, matrimonial property on reserves, but I hope they have stopped grasping at excuses to oppose equal treatment for first nations and will now support Bill S-8.

While I am speaking about aboriginal affairs, allow me to take the time to notify the House that I am designating, pursuant to Standing Order 81(4)(a), Thursday, May 9, for consideration in committee of the whole all votes under Indian Affairs and Northern Development in the main estimates for the fiscal year ending March 31, 2014.

On Thursday, we will continue to advance the economic priority of our legislative agenda by debating Bill C-48, the technical tax amendments act, 2012, in the morning. Following question period on Thursday, May 9, we will continue Bill S-9, the nuclear terrorism act at third reading. I understand there is broad support for this bill, so I hope to see it pass swiftly. Then we can move on to other legislation, including: Bill C-49, the Canadian museum of history act; Bill C-51, the safer witnesses act; Bill C-52, the fair rail freight service act; Bill S-10, the prohibiting cluster munitions act; Bill S-12, the incorporation by reference in regulations act; Bill S-13, the coastal fisheries protection act; and bill S-14, the fighting foreign bribery act.

Finally, Friday, May 10 will be the seventh allotted day, which I understand will be for the NDP.

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

Mr. Speaker, it was Harold Macmillan who once said, “Events, my dear friend, events”. That is the great variable.

As we know, we have had many events and we were delighted that we were able to get Bill S-7 approved by this House this past week, in response to events.

Today, we will continue with debate on the NDP's opposition day motion.

It being Victims Week, we will follow up on this week's passage of Bill S-7, the combatting terrorism act, with debate tomorrow on Bill C-54, the not criminally responsible reform act, at second reading.

Insofar as the government's agenda, there is actually a very significant cornerstone to that agenda; that is, of course, our economic action plan. Earlier this week, the House adopted a ways and means motion to allow for a bill implementing measures from economic action plan 2013. Our top priority is creating jobs, growth, and long-term prosperity, so if a bill following on the ways and means motion were to be introduced before Wednesday, we would give that bill priority consideration for debate Wednesday, Thursday, and Friday of next week.

In the interim, on Monday, we will return to the report stage debate on Bill C-15, the strengthening military justice and the support of Canada act. It is my hope that this debate will conclude on Monday so that we can have the third reading debate on that bill on Tuesday.

If we have the opportunity next week, we will continue the second reading debate of the not criminally responsible reform act. This is an important bill and I would hope that it will get to committee without delay.

The government will also give consideration to Bill S-8, the safe drinking water for first nations act at second reading; Bill C-52, the fair rail freight service act at report stage and third reading; Bill S-9, the nuclear terrorism act at third reading; and finally, Bill C-49, the Canadian museum of history act.

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

Mr. Speaker, the opposition House leader expressed concern that the scheduling of several opposition days, on which the opposition gets to determine the subject matter of debate in the House of Commons, showed a complete absence of a plan and a complete absence of any ideas for policy innovation. Having heard the debate and the resolutions coming from the opposition for debate on those days, I am inclined to agree with him.

Sadly, they have shown that when the opposition has the agenda, there are no new ideas and there is nothing of value spoken. However, the Standing Orders do require us to have those opposition days scheduled as part of our procedure, and that is what we are doing.

I would like, however, to respond a little bit to his comments on the time allocation on the bill yesterday. Yesterday's bill was Bill S-2, a bill to give aboriginal women and their children on reserve the same matrimonial rights that other people have. It is a bill that has been in Parliament for five years, through a series of Parliaments, in fact, and it has not yet come to a vote. To paraphrase the President of the United States in the recent State of the Union address, the aboriginal women and children of Canada deserve the right to a vote. That is why we did what we had to do, after five years of obstruction from the opposition preventing the bill from coming forward.

The bill would provide the protection they have been denied for decades. It is truly shameful that, starting with the Leader of the Opposition, every single opposition member stood up against this bill at second reading. They voted against the principle of protecting aboriginal women and children and providing them with rights equal to those of all Canadian women off reserve. They voted against giving them protection from violence in the situation of a domestic family breakdown and giving them the same rights to matrimonial homes that other women have had for decades in this country.

It is another example of how the NDP approaches things. It claims that it is for women's rights and aboriginal rights, but when it comes time to actually take action, it does not. It is “do as I say, not as I do”.

This afternoon we will continue the New Democrats' opposition day. Tomorrow is the fourth allotted day, when the New Democrats will again propose our topic for debate. Monday shall be the fifth allotted day, which will see a Liberal motion debated. Tuesday shall be the sixth allotted day, with a further New Democratic motion being considered.

Next week is victims week in Canada, so on Wednesday, the House will continue the second reading debate on Bill C-54, the not criminally responsible reform act, which aims to put the protection of society and of victims front and centre.

On Thursday morning we will consider Bill C-48, the technical tax amendments act, 2012, at report stage. After question period on Thursday, we will start report stage for Bill C-52, the fair rail freight service act, which was reported back from the transport committee this morning.

Finally, next Friday, Bill C-15, the strengthening military justice in the defence of Canada act, will be again considered at report stage.

Transport, Infrastructure and Communities

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, today I have the honour to present, in both official languages, the eighth report of the standing committee on Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration).

[Annette Gibbons]

I can only speak to the purpose of this new measure in Bill C-52, which is to provide an extra tool for shippers beyond the tools that currently exist in the act for shippers to be able to seek the level of service they would like to have from the railway.

[Annette Gibbons]

The act doesn't deal with giving the shipper any particular remedy in terms of seeking that kind of a damage. What it does do is give the shipper a remedy to complain to the agency—that's already in the act—about the service they are receiving and to have the agency adjudicate a decision, which can include ordering the railway to do certain things.

The act includes a remedy on final offer arbitration for shippers who are concerned with rates or other conditions of carriage. The act provides a remedy for shippers to complain about and seek a difference in fees that are charged by railways. Under this new legislative provision in Bill C-52, there now is an opportunity for a shipper to seek sort of a proactive setting out of the entire service relationship as it would like to see it with the railway.

Those are the key remedies. There are many others, but those are the key remedies that are there for a shipper to be able to seek assistance if the commercial relationship is not proceeding the way they would like it to.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

With respect to a breach of a service level agreement, currently the situation is that the courts can, in a commercial-to-commercial agreement...right? You go to the courts for remedy and presumably they are to enforce penalties that are agreed upon, or a mechanism that is agreed upon, in an agreement. That right is not removed from the shipper, with Bill C-52, they can still do that. The addition is the administrative monetary penalty. That would be for breach per service level agreement of up to $100,000. There are obviously dozens and dozens or more service level agreements so multiple breaches, if you will, of up to $100,000 are a new feature that could be applied in the event that rail companies are not acting in good faith. Is that correct? So there is significant deterrent value to the addition of the administrative monetary penalty.

Returning to the Coalition of Rail Shippers presentation for just a moment, I want to probe a couple of things here.

The second issue they raised is around operational term instead of term and they said that the expression “operational term” eliminates the shipper's ability to address non-rated items in or missing from a confidential contract or tariff such as force majeure.

What is a force majeure clause, for my own understanding, first of all? Are the shippers accurate in saying these clauses could not be included unless the bill is amended?

[The Chair, Conservative, Larry Miller]

I'll call this meeting to order, pursuant to the order of reference of Friday, February 8 of 2013, Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration). We do have witnesses here, I believe just to answer questions if necessary: Ms. Crook, Ms. Gibbons, and Mr. Langlois.

With that, we're going to be going through clause-by-clause. I might as well note it now because it will come up: for a lot of the amendments, the same amendment wording was put forth by both the NDP and the Liberals. The order that they will be dealt with, of course, is the order that they came in. I know in a number of cases, the NDP had theirs in ahead of Mr. Goodale.

I understand, Mr. Goodale, you had a concern with that, but that's the way it is. I think you understand that.

Ms. Morin.

[Denis Lebel, Conservative, Minister of Transport]

Thank you very much, Mr. Chair.

Mr. Chair, thank you for the invitation to meet with the committee today to address our main estimates, and update the committee on the transport, infrastructure and communities portfolio.

As you mentioned, I am joined by my colleague, the Honourable Steven Fletcher, Ms. Lemay from Infrastructure Canada, and Mr. Lévesque. Many members of our team are here, as well, sitting behind us. They are a skilled group that does great work at the Department of Transport.

I wish to thank the committee for its input over the past year relating to various issues, and I look forward to continuing our collaboration.

The main estimates we are addressing today will allow our portfolio to continue to address transportation- and infrastructure-related matters and services.

This work includes new regulations and legislation, projects to improve our transportation networks and our infrastructure, and programs that ensure the safety and security of transportation in Canada.

I've said it before, but it bears repeating: Canada needs safe and efficient transportation to achieve our government's goals of promoting growth, creating jobs, and supporting the long-term prosperity of Canadians. The economy is our priority, and we remain focused on it.

Given the important role that transportation plays in driving and attracting international trade, it is essential to ensure our economic competitiveness in the world. The funding we seek through the main estimates will help us to achieve this goal.

Mr. Chair, I know the committee is now very familiar with Bill C-52, the fair rail freight service act, as you are currently studying this important piece of legislation. I would like to thank all members of this committee for your work on this bill over the past number of weeks. Bill C-52 is a very important bill for our government because it strongly supports our economic agenda by ensuring that Canada's rail freight transportation system is well-positioned to support future economic growth, particularly in the resource development and commodity export sectors.

As you know, Bill C-52 will amend the Canada Transportation Act to create a backstop that will support commercial negotiations between shippers and railways with respect to service. This will enhance the reliability and predictability of our entire supply chain. The bill gives shippers the right to a service-level agreement with the railways that will define the terms of service a railway will follow to move shippers' goods. If a shipper is unable to negotiate a service contract with the railway commercially, it will be able to trigger a fast and flexible arbitration process through the Canadian Transportation Agency to have a service contract imposed. The bill also provides a strong new enforcement tool, an administrative monetary penalty of up to $100,000 to hold the railways accountable for their service obligations.

It is important to note that almost everyone agrees that since our government started looking into this issue back in 2008, the quality of rail freight service in Canada has improved. Bill C-52 is about solidifying and building upon these important gains. As a backstop, it will ensure that shippers have the leverage they need to negotiate service contracts with the railways. The goal is not to replace commercial negotiations; it is to provide the remedy for shippers in the event that commercial negotiations are not successful.

As we draft the bill, we worked very hard to listen carefully to the views of all stakeholders on what is a very complex issue. We have truthfully considered their proposals and we have tabled a bill that strikes the right balance for the entire Canadian economy. That's always been our goal, and I believe we have achieved it.

As I have heard support from all parties around this table for Bill C-52, I encourage this committee to proceed quickly with the conclusion of your study and refer it back to the House of Commons.

Moving on to another legislative initiative, this week we announced two significant measures to ensure that Canada has a world-class tanker safety regime through our safeguarding Canada's seas and skies act.

First, we have introduced legislation to amend the Canada Shipping Act of 2001. Some of the amendments would require certain facilities to submit plans for pollution prevention, emergencies, or any proposed major expansion or conversions to the Minister of Transport, and to empower Transport Canada inspectors to direct facility operators to demonstrate their compliance.

Second, I'm appointing an expert panel to review Canada's current tanker safety system, led by Captain Gordon Houston, former president and CEO of the Vancouver Fraser Port Authority. The panel will review Canada's oil spill preparedness, examine our capacity to respond to spills, and develop a plan for future response.

Finally, while the panel will develop a plan for the future, there are other steps we are taking to strengthen our tanker safety system. We are increasing the number of tanker inspections and aerial surveillance. We are investing in research on marine transportation risks of oil sands products. We are assessing our laws and regulations regarding marine spill liability. And we are engaging communities and first nations on their local emergency response plans.

The Safeguarding Canada's Seas and Skies Act is a good bill, and I am confident it will receive support from all members of Parliament.

Moving on from sea to surface, when I appeared before this committee last November, I noted that plans were proceeding to build a new bridge over the St. Lawrence, in Montreal. With some 60 million vehicles and $20 billion worth of international trade crossing it annually, this bridge is important to both Montreal and the country.

What I can confirm at this time is that the environmental assessment will be completed by the end of 2013 or early 2014. This year, we will move ahead on property and public utilities work to begin building the Nuns' Island temporary causeway, which we will need in order to construct the new bridge.

We're also working on the Detroit River international crossing. With more than 8,000 trucks per day, the region's Ambassador Bridge is already the busiest land border crossing between Canada and the U.S. The new crossing will provide much-needed border-crossing capacity to handle the anticipated growth in commercial and traveller traffic.

To begin implementation of the project over the next year, Transport Canada will establish the Canadian crossing authority. The department will also start property acquisition in the United States and complete property transactions in Canada. We will begin to reallocate utilities and prepare the Canadian site around the crossing for construction.

Investing in Canada's infrastructure is also a key element of the Government of Canada's plan to create jobs, growth and long-term prosperity for Canadians.

Since 2006, we have made unprecedented investments in thousands of infrastructure projects across the country, despite the systematic objections of the opposition parties. The biggest source of support for these investments has been the Building Canada Fund, which we established in 2007. While most of this fund has been committed to projects, it is important to remember that this funding will continue to flow beyond 2014, as construction continues on major projects we are supporting across the country.

In addition, we doubled the Gas Tax Fund, at $2 billion a year, and in 2011, we made it a permanent source of funding for municipalities. Thanks to our government, communities across Canada will be able to count on stable, predictable funding for their infrastructure needs.

In terms of other infrastructure funding, we are now looking to the future. But we are aware that any decisions must be made in the context of the Government of Canada's current fiscal situation and the capacity of Canadian taxpayers.

We have accomplished much through our investments in infrastructure projects across the country.

For example, residents in Nipigon, Ontario, recently celebrated the completion of upgrades to their wastewater treatment centre. In Pictou County, Nova Scotia, residents are taking opportunities to get fit and stay active thanks to the recent completion of the Pictou County Wellness Centre. And working together with the Government of Alberta, we have completed 12 important highway infrastructure initiatives that will support economic growth across the province.

Beyond local investments, we fund transportation infrastructure that contributes to trade and economic growth in Canada through our Asia-Pacific Gateway and Trade Corridor Initiative. By ensuring that trade supply chains can move people and goods efficiently, safely and securely between Canada and the rest of the world, we are improving incoming and outgoing North American trade, as well as our competitive advantage in global markets.

Since 2007, we have announced 39 strategic infrastructure investments in nine provinces under the $2.1 billion gateways and border crossings fund. This includes important initiatives in Atlantic, continental, and Asia-Pacific gateways.

We will continue to advance our gateway and corridor initiatives in partnership with other governments and stakeholders to improve our transportation system's ability to support international trade.

Unlike the opposition parties, we are focused on the economy.

You will note that these estimates indicate that planned operating expenditures for Transport Canada have decreased from 2011-12 to 2012-13. This reduction is mostly the result of savings announced in Budget 2012 and reflects measures the department is implementing to deliver more efficiently on its mandate.

Let me make something very clear. Transport Canada will continue to regulate, inspect, and oversee Canada's world-class transportation system, and it has taken measures to ensure that its core services remain properly funded and aligned with departmental priorities. These adjustments will not compromise the safety or security of travellers using any modes of transportation in Canada.

Transportation safety and security will remain a core part of Transport Canada's mandate. Canada has one of the safest transportation systems in the world, and the facts demonstrate it. The number of aviation accidents has decreased by 25% since 2000, while air travel has increased significantly.

And since 2007, the number of rail accidents has decreased by 23% and derailments by 37%. Transport Canada continues to emphasize the central importance of safety and security across all modes and to clarify the need for industry to create a culture of safety across air, marine and rail modes of transportation in Canada.

With these main estimates, we are moving forward with planned reductions in spending from our 2013 expenditures. But we will continue to ensure that the Canadian transportation system remains safe and secure, efficient, and environmentally responsible.

Over the past year, the departments under my portfolio have changed to meet the reductions announced in Budget 2012. We are working to modernize our programs and improve the efficiency of our workforce. Our employees take this challenge seriously and will strive to build greater innovation, efficiency and accountability in the portfolio.

That concludes my remarks.

I will now invite Minister Fletcher to speak to you regarding our portfolio's crown corporations.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

Thank you.

I'll start with a question for Mr. Edwards, if you don't mind.

We're seeing greater and greater integration of the North American rail network. There seems to be a consensus, which was mentioned by at least some of you, that exports will increase over time. Seeing as exports will increase, presumably some of that will be coming from the United States.

What is the impact on Bill C-52 as far as the...or what kind of impact will it have on Canadian shippers that more traffic will be coming from the United States on our rail network? What kind of impact do you think that might have?

[Greg Stewart]

No. I think Bill C-52 adequately addresses the concerns that shippers had due to the past performance of the railways. Regardless, though, I think service-level agreements need to be the priority. Commercial arrangements that encourage further understanding of each other's businesses, collaboration, and working together on innovation will only benefit both parties.

[Jeff Watson, Conservative, Essex, ON]

Fair enough.

Mr. Stewart, with you being a shipper, your perspective with respect to Bill C-52.... I just want to be clear about this, because you mentioned a preference I think that you would have service-level agreements or the current system. Are you suggesting that Bill C-52 is not something you'd like to see? I just want to be clear about that. Your position is a little fuzzy to me.

[Jeff Watson, Conservative, Essex, ON]

You are aware, however, that Bill C-52 does explicitly require that the arbitrator consider the effect on network operations for other rail carriers in the determination of their agreement. I think shippers didn't want to see that articulated. Although it's sometimes considered in arbitration, Bill C-52 specifically includes that requirement.

So I'm not sure I agree that I foresee an inefficiency being created with respect to arbitration.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for appearing before the committee, dealing, of course, with Bill C-52. Five minutes won't be a lot of time to ask questions and obtain answers. I'll try to be brief, and I hope you can be brief in your responses.

Everyone has noted that there's success in service-level agreements since the rail freight service review was initiated. Can you very succinctly characterize what the relationship was like before? Was there any difficulty in negotiating or fulfilling service-level agreements prior to the rail freight service review?

We'll start with you, Mr. Mayer, and then maybe go to Mr. Xotta after that, and we'll kind of work our way through.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Mr. Chair.

My thanks to all the guests who are here with us this afternoon.

Since I only have five short minutes, I will direct my questions to the port authority representatives.

When I read the Dinning report, among others, I felt that you had used some rather harsh words. Here's a quote from the report to give us a little background:

Port authorities reported that poor cooperation between railways and other stakeholders limits system efficiencies. All groups indicate there are no effective means to hold the railways to account...

What I have been hearing from the beginning of the hearings is that, since the bill was introduced, a number of improvements have apparently been made. I am not sure if they happened miraculously, but there have apparently been some.

My first question for you is a preamble to my second question. Do you think those improvements are temporary or do you really feel that there has been a lasting change in your relationships, even though Bill C-52 has not become law yet? If possible, could you give me a specific example?

You can answer in the same order as you gave your presentations, starting with Mr. Mayer.

[George Malec]

I would have to say that's a very concise response from my colleague.

We are conscious of the fact that this bill has been driven, obviously, by a need generated, let's say, eight to ten years ago, from shipper dissatisfaction. At this point we've seen great forward thinking and progress in terms of the commercial arrangements between shippers, port authorities, terminal operators, and the railways.

Having said that, this is an ongoing process, and we do think there is a rationale underlying Bill C-52. We do agree with the fact that we have to be very careful before we move to prescriptive solutions because of the complexity of the supply chain and the fact that these have to be very balanced. It's not just about the railway; there are all sorts of obligations on each party in the supply chain.

[Andrew Mayer]

I think we need to accept the fact that in some circumstances it won't be possible for a party to actually, in good faith, negotiate an agreement. In that sense, Bill C-52 does suggest a mechanism for resolving that impasse.

I think what's missing is an interim step to facilitate a mediated resolution of a dispute without recourse to arbitration. Arbitration really should be a last resort. If there is going to be arbitration, it should be as I suggested, something that contemplates the interests of all users of the supply chain.

[Denis Coderre, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Thank you, gentlemen.

My question will be for Mr. Stewart and Mr. Edwards. Because that's the reason we have Bill C-52, do you believe the law would give shippers more leverage to negotiate service agreements? You could have the railways saying they don't need that and some of the ports saying, well, they already have the commercial agreements, so why bother? From a shipper's point of view, what would you think?

I'll ask Mr. Edwards first.

[George Malec]

Good afternoon, Mr. Chairman and members of the panel. Thank you for the opportunity to make a commentary and presentation before the panel this afternoon.

Halifax represents something more for Canada in terms of the strategic outreach in global trade that we're engaged in today. The Port of Halifax is Canada's only deepwater, east coast, and fully Panamax/post-Panamax vessel-capable marine outlet that facilitates and supports Canada's overall trade objectives, particularly in using the Suez Canal through Southeast Asia.

To that end, what we talk about, and what we bring to the table, is bigger than just the parochial concerns of a port: we understand our relationship as a part of an overall supply chain that is important to Canada's economic development. Going forward on that concept, Mr. Chairman, right now 65% of our intramodal traffic is actually carried by rail, by CN, into the key inland markets that some of my good colleagues like Peter Xotta have already described, which benefit all Canadians.

We have of course seen a very similar evolution over the last two years. Subsequent to the evolution of the federal panel rail review process, which was a very constructive undertaking by the government, we have witnessed a very significant outreach and a very significant commitment on behalf of CN in working with our stakeholders and ourselves towards transparency and greater service levels of accountability and aggressive pricing structures to facilitate the use of the infrastructure provided in the Port of Halifax.

We were in fact the model and the first port to enter into a port authority terminal operator and rail combined key performance indicator metric, which, similar to the experiences you've heard about from Global, from Mr. Xotta, and from the Port of Prince Rupert, etc., has produced demonstrable and tangible benefits. It is our hope and intention to work with CN and our other stakeholders, because, as you have heard in commentary before, it is a complex, integrated supply chain. The efficiency of the railroad has to be equally and fairly balanced by the expectations and the commitments of shippers and, most importantly, of the terminal operators that are the main partners in the rail transfer.

We see it as a very balanced, very complicated supply chain. We favour the commercial solutions that have been proven to be very successful so far. We do reinforce and echo the comments made by some of the panellists from Prince Rupert and the Metro Vancouver Port Authority: that due to the complexity and the supply chain, it has to be treated in a very cautious manner before any regulatory process is in place. We appreciate the complexity around the supply chain. That's why we encourage a good deal of caution with respect to forced, compulsory measures under Bill C-52.

In summary, Mr. Chairman, Halifax recognizes and agrees with the comments made by our competitive and in fact complementary port partners in Prince Rupert and Vancouver. We do concur with the submissions and recommendations they've brought forward. Rather than restating all of that, we'll submit to you that it is the correct way to go forward from the perspective of the Halifax Port Authority as well.

Thank you.

[Greg Stewart]

Sinclar Group, I think, would be considered a medium-sized business. We pride ourselves in finding creative, effective ways of serving our customers. Given our size and our need to leverage the strengths of our stakeholders to meet our customers' expectations, we are susceptible to sudden changes in partners' strategic direction.

While it would be nice to think we will maintain harmonious commercial arrangements with all of our partners, reality dictates that there will be changes. A serious risk to any manufacturer is a significant disruption to its ability to get its products to market.

The amendment that gives shippers the right to enter into service agreements with the railway companies and establish an arbitration process in the event of a dispute, I believe, is a significant improvement and will reduce the risk I mentioned before. Further, I believe past performance of the railways has made it necessary to mandate that service agreements be established when requested by the shipper.

As a manufacturer, Sinclar Group is looking for greater certainty with rail supply. We want to know that the railcars will be spotted within the agreed-upon time range. We want to know that the cars will be switched out within the agreed-upon switch window. We want to know that our products will be delivered to our customers on time. Further to this, we want to make sure we are getting competitive rates to ship our products.

Establishing service obligations, communication obligations, performance standards, performance measurements, consequences, and dispute resolution processes are key to any commercial agreement. This provides the opportunity for companies to engage with the railways on important issues. That said, the conversation cannot be one-sided. It is reasonable to expect each shipper to be held to the same standard as the railway. After all, the issue at hand seems to be the equating of the commercial relationship. This will not be achieved by mandating a one-sided conversation.

I'm not an expert at logistics, let alone managing a railway; to me, the railway has a lot of moving parts—no pun intended. The railways have all the internal challenges that every other company has. In addition to those challenges, from weather, connections, turnaround times, and variable shipping distances, the railways must contend with each of these external factors to ensure Sinclar Group gets what we want.

When listening to all the challenges the railways face and industry's call for more prescriptive measures around the commercial agreements, I get concerned about the sacrifices shippers will have to make to establish functioning relationships. To me, it means the costs for shippers will go up, or the certainty associated with delivery will decrease. I believe the latter will manifest itself in longer time windows for delivery, making it increasingly more difficult to manage Sinclar Group's workforce and production.

Past performance of the railways has made Bill C-52 necessary. I think the bill has appropriately walked the fine line of mandating action but allowing for the flexibility to tailor agreements to the needs of each shipper. The past performance failures cannot be undone. We need to learn from them, establish new protections, and move forward in restoring the constructive relationships necessary for the robust national economic performance.

I would recommend proceeding with the approval of Bill C-52, recognizing that there are areas of concern that will be watched by all stakeholders. I recommend tasking those responsible for the 2015 review of the Canada Transportation Act with developing a monitoring program for the unresolved issues. This should be a transparent process and involve input from all stakeholders.

It is Sinclar Group's belief that businesses must be encouraged to work together to solve their business challenges. In our experience, CN has been responsive to the recommendations tabled to date. We feel their actions should be met with further collaboration to address the challenges faced by shippers today. Stakeholders working together as partners will strengthen their relationships through a greater understanding of each other's business. Through this understanding, I believe we will realize further innovation and service improvements.

Thank you again for this opportunity to present to the committee.

[Greg Stewart, President, Sinclar Group Forest Products Ltd.]

Thank you for the opportunity to present to you this afternoon.

I would like to introduce Gregg Koehler, Sinclar Group's sales manager. He is responsible for our company's logistics, and he will be available to answer any questions you may have following the presentations.

Before jumping into the presentation, I feel it is beneficial that I provide a little background on Sinclar Group Forest Products. The company is a third-generation family business that was started by Ivan Andersen and Bob Stewart 51 years ago. Today that company has varying equity interests in three stud lumber operations: a finger-joint plant, a panelized home manufacturing facility, and a wholesale lumber operation.

All of the operations are located in British Columbia's central interior, from Fort St. James to Prince George. Sinclar Group is a leading distributor of high-quality stud lumber throughout North American and Asian markets.

For the past three years, CN has been our largest non-governmental supplier, averaging just less than $20 million in cost to our company. Approximately 70% of all our products are shipped by rail.

As one last introductory point, I just want to point out that the comments I make pertain to Sinclar Group. I am not intending my comments to represent other organizations or companies impacted by Bill C-52.

Sinclar Group, over its history, has achieved its success through partnerships. The company started as an equity partnership and has since grown to incorporate other partners. From Tl'oh Forest Products, which is a joint venture between Nak'azdli First Nation and us, to the relationship we have with the City of Prince George to supply heat to the city's downtown, our business opportunities have been rooted in openness, collaboration, and innovation from both parties.

The relationship we have established with CN over the past few years has been focused on understanding the needs and looking for opportunities to improve performance of both parties. We have observed a steady improvement in rail service over those years. While we have experienced a few disruptions along the way, we have been able to engage CN to work through the issues. Through these challenges, both parties have been committed to understanding each other's perspectives, and the communication between the companies has significantly improved.

Most recently, we reached an agreement with CN to provide more centre-beam capacity by removing a ramp at the Nechako operation in return for a volume commitment. Currently the two companies are working on building more flexibility into the supply chain by exploring alternative shipping methods, such as intermodal shipments.

In all cases, it starts with communication about the issues and a commitment from both parties to collaboratively work together to find new solutions for the dynamic marketplace.

Over the past four years, Sinclar Group has grown its stud lumber shipments, capturing a greater share of the North American and Asian markets. We were able to achieve record shipments, in part due to the commercial....[Technical difficulty—Editor]

[Peter Xotta, Vice-President, Planning and Operations, Port Metro Vancouver]

Thank you very much, Mr. Chair. We will do our best to comment within that timeframe.

Good afternoon, and thank you for the opportunity to present Port Metro Vancouver's position as regards Bill C-52, the fair rail service act. As committee members may already be aware, Port Metro Vancouver is Canada's largest and busiest port, serving as a vital strategic gateway for domestic and international trade and a significant economic force strengthening the Canadian economy. We're the most diversified port in North America, facilitating trade with 160 economies, handling about 124 million tonnes of cargo each year.

As the fourth-largest tonnage port in North America, we offer 28 major marine terminals and three class 1 railways, providing a full range of facilities and services to the international shipping community. In British Columbia's lower mainland, one in 12 people earn a living as a direct result of port-related economic activity, estimated to be about 80,000 jobs. Consistent, reliable, and cost-effective rail service is fundamental for optimal supply chain performance, and ultimately to the success of the port and its role in serving our mandate on behalf of Canada. As such, the likely passage and implementation of Bill C-52 has the potential to hold consequences, either intended or unintended, for the core of our operation. Put simply, Bill C-52 is extremely important to Port Metro Vancouver.

With that in mind, let me address Port Metro Vancouver's views regarding incorporation of right-of-service agreements into the Canada Transportation Act and our views with respect to the process that is intended to establish service-level agreements should normal commercial negotiations fail.

First, with regard to service-level agreements, Port Metro Vancouver would like to highlight that significant progress has been made since 2010, when the rail freight service review and its related activities drove forms of service-level agreements between the railways and certain stakeholders, notably, the commercial terminal operators in Port Metro Vancouver, and the establishment of collaborative agreements directly between CN, CP, and the port authority. As a result of these collaborative, industry-led efforts, the average dwell time of containers at the terminal in Vancouver has been reduced significantly, by our estimates approximately 30% since 2010. While it's much more difficult to assess the improvement and performance around bulk commodities, anecdotal information that we receive and our efforts to measure this indicate that there's been a significant improvement in those sectors as well. Average transit times for containers between Vancouver and key eastern and midwestern rail hubs such as Toronto, Montreal, and, increasingly, Chicago have also substantially improved.

Overall, Port Metro Vancouver has witnessed an increased willingness on the part of the railways to work in collaboration with their supply chain partners, including at the senior executive level. We're hopeful that the implementation of Bill C-52 will not undermine the market-driven cooperative gains that have been achieved over the last several years.

Secondly, in regard to the process or mechanisms that should exist within the Canada Transportation Act for the establishment or imposition of service-level agreements, once commercial negotiations fail between railways and shippers, shippers have failed.

One of our key recommendations is that Port Metro Vancouver does not believe that a singular template for the development for such agreements can be appropriate, given the diversity and wide range of commercial and service relationships that exist within our gateway in particular. Rather, Port Metro Vancouver would submit that service-level agreements between railways and their customers should, one, describe the specific measurable and reciprocal service obligations of both parties with respect to transit times, car supply commitments, hours of operation, loading and unloading time, as well as volume, targets, and switching service frequencies; two, include issues management and clearly defined escalation in dispute resolution processes; and three, potentially include appropriate reciprocal financial incentives or penalties.

Port Metro Vancouver believes that a fundamental accountability should exist between supply chain partners for the optimization of output, while at the same time maintaining the respect for the need of all participants to earn a fair commercial return that encourages continuing investment. Clearly, the establishment of service agreements through normal commercial process should be encouraged, with arbitration as a last resort.

With this in mind, we would submit that at a high level, the process to establish arbitrated service agreements, once commercial negotiations have failed, must not be allowed to usurp meaningful commercial negotiations and agreements. Even with the most carefully crafted regulation, there is always a risk of unintended consequence, which could adversely affect shippers, railway companies, and other stakeholders, including Port Metro Vancouver. Port Metro Vancouver would suggest this risk is particularly acute in relation to an arbitrated process where much of the material impact of the operations of the supply chain partners will be determined through individual adjudications.

This brings me to my second key point. In this regard, we believe strongly that it is essential that arbitrators appointed to the CTA have specific and extensive background in and knowledge of supply chain management. The inherent complexities in the examination, drafting, and implementation of service-level agreements demand a detailed knowledge of the subject at hand, and Port Metro Vancouver believes that the risk of unintended harmful consequence grows exponentially should the individual charged with managing this process have insufficient applicable subject-matter expertise.

In closing, let me reiterate Bill C-52's importance to Port Metro Vancouver's interest. While we're always supportive of initiatives that increase supply chain efficiency and promote transparency and cooperation between supply chain partners, we're also cognizant that the concrete gains that we have observed in the industry since the initiation of the 2010 rail freight service review need to be preserved and fostered as much as possible.

Commercial, market-driven solutions respectful of the interest of all parties should always be given preference over arbitrated agreements, and an unintended consequence of a legislative approach should avoid, at all costs, undermining negotiations or imposing long-term, negative commercial obligations on one or more parties.

While Port Metro Vancouver is supportive of Bill C-52's intent, we also offer our caution to committee members as they deliberate on this important bill regarding the potential for harmful impacts we and other witnesses, including our friends in the Port of Prince Rupert, have identified.

Thank you again to the honourable members and chair for the opportunity to present to you today.

Thank you.

[Andrew Mayer, Vice-President, Commercial and Regulatory Affairs, Prince Rupert Port Authority]

Thank you, Mr. Chair, and thank you, members of the committee, for allowing me to present on behalf of the Prince Rupert Port Authority.

This is an important piece of legislation and is of great significance to what we are trying to accomplish in Prince Rupert in terms of facilitating continuing growth of the Prince Rupert gateway.

I'll be brief on background with respect to the port authority. I think it's important, though, to make a few comments just to provide context for other matters that I'll be raising later.

The Prince Rupert Port Authority is of course a Canadian port authority established pursuant to the Canada Marine Act statute. The port authority's powers are established through the Canada Marine Act and the port's letters patent. Prince Rupert is fortunate that we are experiencing a period of dramatic growth, and we see that growth continuing for the foreseeable future in all lines of our business.

Currently in Prince Rupert the three major terminals we have operating all rely on rail service to deliver cargo from the place of manufacture or loading onto railcar, ultimately for delivery by sea to the points of destination. Those three facilities are: the Fairview Container Terminal, for which lands are owned by the port authority and the terminal itself is operated by a private sector operator, Maher Terminals; Ridley Terminals Inc., or RTI, as we call it, which is a federal crown corporation in the business of handling and loading into vessels coal delivered by railcar from various mining locations within British Columbia and also farther away, including the Powder River Basin in the United States; and finally, Prince Rupert Grain, which is a grain and ag products facility that receives cargo from the prairie provinces and again ships that agricultural product by sea to international destinations.

One of the core objects of the Prince Rupert Port Authority is to develop marine transportation infrastructure on lands the port administers. The port lands are federal lands. The goal really is to increase the capacity of the Port of Prince Rupert to handle goods to and from Canada.

As I mentioned, we are in a period of rapid growth, so continued efficiency of the rail system—which is operated by CN in the case of Prince Rupert as the only operator—is critical to the continued efficiency of the existing terminals operating within Prince Rupert.

With respect to the continued growth that I mentioned, we are experiencing a marked increase in interest in delivering cargo through the Prince Rupert gateway to international markets and receiving cargo from international markets and delivering it, by rail principally, through Prince Rupert.

Just by way of example with respect to the expansion activities that we're contemplating and that are in the works at this time, we have an expansion of our container terminal from a 500,000-TEU—twenty-foot equivalent—container unit facility to a two million-TEU facility. The additional 1.5 million TEUs of cargo will be transported by rail as intermodal cargo.

As well, Ridley Terminals is in the process of expanding their facility to increase their capacity to upwards of 25 or 30 million metric tonnes per annum. They have an option to increase even further to 50 or 60 MTPA, or metric tonnes per annum. That's dramatic growth for Ridley Terminals.

As well, we have a Canpotex potash terminal project that has received authorization from the Minister of the Environment. Its environmental assessment has concluded, and we hope they will make a final investment decision in April of this year. That cargo will be delivered from Saskatchewan to Prince Rupert for export.

We are in the process and have actually commenced work on a major expansion of our rail infrastructure within the Port of Prince Rupert. That is the Ridley Island road, rail, and utility corridor project. This is a joint project that is benefiting from funding from the federal government, the provincial government, a substantial contribution from CN Rail, and the Prince Rupert Port Authority as well. The project is a landmark project, in that it will be constructed by first nations entities that have joint-ventured with contractors to build it out.

In addition, we have a wood pellet project, which is a new greenfield project, and another rail-based facility that will be constructed in Prince Rupert.

Additionally, CN Rail is in the process of building a second siding, which we're told will be the most expensive siding they have ever constructed in Canada, to facilitate increased rail traffic to and from the Fairview Container Terminal.

With respect to Bill C-52 and its objects, as I mentioned the Prince Rupert Port Authority supports what we believe is the principal object of this piece of legislation, which is to ensure that there are agreements in place that provide clarity, transparency, and certainty both to shippers and to rail lines regarding the obligations of both parties in their roles in the supply chain. But we also think there is another important participant or group of participants who really can't be ignored, because they are essential participants in the supply chain. Those are ports and the terminal operators who act within the ports. We rely upon efficient rail service to continue to generate more traffic through our ports, to continue to expand the capacity of our ports to handle traffic, and to facilitate growth in Canadian trade.

We've had some success with service-level agreements. In 2010, Prince Rupert Port Authority entered into a service-level agreement with our container terminal operator, Maher Terminals, and with CN Rail. It included a variety of things, but most importantly it included commitments from CN Rail and Maher Terminals with respect to rail and terminal handling service levels. As well, and I think equally importantly, it included a commitment for an exchange of data—a really key performance indicator to allow us and the rail line and the terminal to track performance and to take steps to improve service levels wherever there was a deficiency in performance.

I don't want to overemphasize it, but intermodal container traffic gets a lot of press, and Prince Rupert and Vancouver have received a lot of press recently, principally from the U.S., which has recognized the competitive advantages of west coast Canadian ports—and of eastern Canadian ports as well—as compared with American ports, which are struggling because of capacity constraints, urban congestion, and other factors.

I mention this because the “better mouse trap”, as it has been described by some commentators, that has been created in Prince Rupert and as well in Vancouver is one that we want to maintain. We don't want to see it or the integrity of the entire supply chain constrained, because that will affect us dramatically.

The Fairview Container Terminal is the fastest-growing container terminal in North America at this time. Some would argue that it's easy to be the fastest-growing when you're starting from zero; nonetheless, we've continued to expand year over year. It's the efficiency of the rail system, the efficiency of the terminal operator, and the efficiency of the vessel owners who are delivering the containers to and from the quayside that is facilitating that excellent record.

That's the background.

Our comments with respect to Bill C-52 are relatively limited. We had some concerns and expressed them during the rail freight services review process with respect to mandatory arbitration provisions, which were suggested at that time.

The concerns were that requiring arbitration as a way to conclude a service-level agreement could have an unwanted negative effect, which is to create a chilling effect on negotiations between commercial parties—the railways and the shippers. It's been our experience, when we've been involved in similar types of disputes with arbitration as a device, that sometimes parties become positional early on in the negotiation because they expect or realize that arbitration is available to them at the end, so they are cautious about taking a position that can prejudice them in an arbitration proceeding.

That said, we recognize that situations may arise in which parties acting in good faith are not able to conclude an agreement and that some way to deal with such impasses is required. Our suggestion is to take interim steps, to encourage the parties, in particular the railways and shippers—because that's where the disputes are most likely to occur in the first instance—to take active steps to negotiate in advance of arbitrating a dispute. As the legislation is drafted, with all due respect, we believe those interim steps are not adequately set out in the legislation.

During our response to the rail freight services review process, PRPA supported the suggestion that railways and shippers be assisted by a facilitator appointed either by Transport Canada or the CTA to engage in early negotiations to seek to resolve their disputes on a commercial basis, rather than by recourse to, essentially, a judge, an arbitrator.

A little bit more detail on that—

[Denis Coderre, Liberal, Bourassa, QC]

Don't you think that Bill C-52 is an insurance policy? What is the problem with having a kind of a process where at the same time you can say to the shipper, “Well, we're providing you with some more leverage, but on the other side with the railways, you have l'arbitrage, so at the end of the day, it can be on your side too.”

What's wrong with that?

[Gord Peters, President and Chief Executing Officer, Cando Contracting Limited]

Thank you very much, ladies and gentlemen. Good afternoon.

My name is Gord Peters. I am the president and co-founder of Cando. For the past five years, I've also had the pleasure of sitting on the RAC board, a position that has given me a great seat to view the great improvements the railway industry has made in the past 15 years.

The Canada Transportation Act in 1996 allowed Canadian National and Canadian Pacific to reorganize their operations by selling or leasing some of their low-density segments. The result was exceptional growth in the number of short lines, from a mere 12 in 1996 to around 50 in 2010. This was part of the partial deregulation of the rail sector in Canada, and it has created a truly entrepreneurial industry within Canada, one that we believe is vital to the smooth functioning of the rail network. Our industry is very close to the rail customers and to the communities, and we're very close to the class 1 railroads; we hear them all.

Part of our short-line industry is partially regulated federally, because they are federal railroads, and therefore will be impacted directly by Bill C-52.

In 2011, Canadian short lines, to give you an indication of their scope and size, had revenues of more than $735 million, employed close to 3,000 people, and operated more than 8,500 kilometres of track, which is close to 20% of the track in Canada. Short-line and regional railroads face tough challenges because of high costs and, in our opinion, an under-appreciation of their benefits to the communities they serve. For example, short-line railroads reduce traffic congestion on roads, reduce greenhouse gases and other emissions, and reduce the need for road maintenance and construction.

Despite the comparative capital cost advantage of rail infrastructure versus highway, one of the main challenges facing the short lines today is the ability to meet their long-term capital requirements for line and yard upgrades. Short lines typically operate low-density feeder lines that connect to class 1 railroad networks, but this is only part of the story.

Let me speak to you a bit about Cando, as an example within the short-line industry in Canada today. Cando was created in 1978. Today, we're a Canadian employee-owned company with 300 employees, operating in five provinces and several U.S. states. Cando operates three short-line railways in Canada: the Central Manitoba Railway in Manitoba, the Orangeville Brampton Railway, and the Barrie Collingwood Railway in southern Ontario. Our head office is in Brandon, Manitoba, and we have regional offices in St. Thomas, Ontario, in Winnipeg, Manitoba, and in St. Albert, Alberta.

And we have a good MP.

The Central Manitoba Railway is a Cando-owned full-service railway located in Manitoba that services a mix of on-line industrial and agriculture customers. We also have an off-line service provided by Cando through our 34-acre transportation centre in Winnipeg. In addition to interchange traffic with partners CN and CP, we offer a full suite of auxiliary railway support services, including rail car and locomotive repair, rail car storage, as well as trans-loading and logistics support for many small shippers in the Winnipeg market.

The Orangeville Brampton Railway and the Barrie Collingwood Railway are community-owned short lines in southern Ontario that partner with Cando as the railway operator. We provide local railway services to on-line customers in these communities and interchange with CP. Orangeville Brampton Railway also features the Credit Valley Explorer, a railway excursion tour that offers unique views through the Credit Valley escarpment in the heart of Ontario's Greenbelt.

Cando's short-line railway operations and industrial switching ops philosophy is very simple. We run a highly disciplined and sustainable service, with emphasis on safety, community relations, and customer service, utilizing the operations as a base on which to offer auxiliary railway support services that add value to the on-line and off-line customers. Examples include trans-loading, logistics, rail car storage, rail car and locomotive repair, tourism excursions, and contract industrial track construction maintenance. Our success has been based on a great entrepreneurial spirit and a great team.

That's the story of Cando. I could spend a lot more of the committee's time, but I will move on to what impact we believe Bill C-52 will have on the short-line industry in Canada.

Today, I'm here on behalf of the vast majority of the short-line railroads represented by the RAC. Of the 30 short lines that are members of the RAC, there are 17 companies that will be regulated under this new provision, and many of them, just like Cando, are small to medium-sized companies whose services are sold by class 1 railroads to shippers as part of a larger quotation for services.

This situation raises two issues. If a shipper requests an arbitrated service agreement and receives a new price or service, we will have to implement this service, and yet it is not clear that our role, the costs, or even the feasibility of what is requested is realistic. In other words, in terms of the unintended consequences we have talked about, short-line railways, like other network and supply chain partners, could be negatively affected.

These companies will be subject to this provision directly, but many of us might also have a much more difficult time meeting the deadlines imposed in the bill and absorbing capital cost implications or reduced revenues, if forced to offer added services with no input into what those services cost our companies over the short or long term.

Short-line railways were created in Canada as part of a deliberate public policy towards commercialization. While it is not easy to be in this business, we all love it and do what we have to do to make it profitable, including offering a range of services, having a flexible workforce, training our own people, and cutting costs relentlessly. We still have a long way to go in most provinces to create a better understanding among policy-makers about the benefits to communities and to taxpayers of supporting the short-line railway industry.

The legislation here is perceived as a check and balance on an uncompetitive dual monopoly of CN Rail and CP Rail. The reality is that the railway industry has developed into a complex system of various carriers of various sizes, suppliers, and partners all playing an interconnected and complementary role. Legislation targeting part of the system could have unintended and serious impacts on a far wider scale than was intended.

The short-line railways considered whether it made sense to ask to be excluded from this bill, but it is just not practical. What makes the most sense to us is that the committee exercise its right to recommend that this bill not proceed. With our motivated entrepreneurial teams, we feel confident that we can continue to improve the rail system.

Thank you for hearing our concerns. I look forward to the committee's questions later.

Thank you.

[Michael Bourque, President and Chief Executive Officer, Railway Association of Canada]

Thank you, Mr. Chairman, and members of the committee.

My name is Michael Bourque and I am the president and CEO of the Railway Association of Canada. My colleagues, Gord Peters, Michael Murphy, Robert Taylor from CP, Sean Finn, and Shauntelle Paul, are here as well. Some will speak, and we'll all be here to answer questions.

Today, I've divided my presentation into three sections. First, as chief myth buster for the railway industry, I must address some of the statements made by witnesses in front of your committee these last couple of weeks. In the second section, I'll speak about some of the key service and productivity changes we have made and why we believe they are sustainable for the industry, for our employees, and for our customers. Third, I'd like to inform the committee about our proposed recommendation for this committee and to speak to the list of amendments we are seeking.

Let's start with the myths. I'll address the first myth, which is that the freight rail industry is made up of only two railways that don't compete for business. Nothing could be further from the truth. In fact, Canada has a vibrant railway industry, and our association represents 55 railroads, including CN and CP, and the Canadian operations of BNSF, Norfolk Southern, and CSX. These are all class 1 railroads.

We also represent over 30 short-line railroads. You'll hear from Gord, who is the president of a short-line railroad. These are small to medium-sized entrepreneurial Canadian railroads that are very close to the customer. Railroads, especially CN and CP, compete with each other, with other modes of transport, and as part of a globally competitive supply chain with various carriers in other countries. Railways are competing all the time, which is why they constantly work with customers to improve their productivity.

The second myth I would like to address is that somehow railways are failing the country; that our cars don't show up half the time; that they're broken, they don't work. Again, the reality is something else. Canadian freight railways own, maintain, and operate over 60,000 kilometres of track in North America, which is more than 35% larger than our national highway system. Last year we moved some 4 million originated carloads of freight goods in Canada alone. That's over 11,000 carloads per day, every day. However, this figure undermines the number of rail cars that are in transit at any one time. Class 1 railroads estimate that the number of rail cars in transit every day is approximately 140,000 cars, which is equivalent to a train that is 3,000 kilometres long, or about the distance from Vancouver to Thunder Bay. Our railways are serving. In fact, they have an obligation to serve a variety of customers from coast to coast every day.

This brings me to the third myth, which is that our service is lacking. More than one person here has said here that 80% of freight rail customers are unhappy with their service. This is simply untrue. This inaccurate number was taken from a survey done five years ago. It was based on 262 responses from a total of 8,000 shippers. The survey itself included many leading questions and its results were flawed.

A more credible and more recent survey was conducted for shippers themselves last year by Supply Chain Surveys Inc. This survey reports that 72.5% of shippers reported 95% or better on-time departures and on-time arrivals performance from their carriers, an upward trend that began a few years prior to that. There is also a very credible, publicly available survey from RBC Capital Markets, the 2012 North American Railroad Shipper Survey, which found that 69% of rail customers rated rail service as being good or excellent, up from 58% in the previous year. Notwithstanding a rough winter, today our service satisfaction is on par with other modes of transport such as shipping and trucking, reflecting our collaboration with other supply chain partners.

I think l've got time for a fourth myth, so I'll leave you with the one that bothers me the most. There seems to be an acceptance, and it's partially driven by all the rhetoric that we've heard, that railway transactions occur in what people are calling not a normally functioning market, and the inference is that railways exercise and abuse market power. So I'd like to know, what is a normally functioning market these days? Is it the stock market, defence procurement, automotive manufacturing, or how about grain elevators?

Railways are an asset-based business and it's not surprising therefore that that there are not a lot of railways in such a business. It is extremely expensive to build and maintain railroads, but once they're built, they must compete in the marketplace against seaways, trucking, pipelines, and other railroads. Railways aren't any different from pipelines or shipping, or even grain terminals for that matter. Just because there are few players doesn't mean there isn't competition, nor does it mean there is abuse of market power.

Our service is improving. We've put into place new initiatives and investments to make them sustainable. High prices could be a signal of market abuse, yet Canada enjoys the lowest freight rates in the world. In fact, commodity prices have risen significantly over the past 10 years while freight rates have remained largely flat.

Enough about myths, because they could really keep me here all day.

Let me turn to a second major point that I think needs to be addressed today and that is productivity. If we go back 30 years, successive governments realized that they couldn't run railways or contribute to the rail supply chain efficiently, nor could they afford the investment in infrastructure these required. In the late 1970s and early 1980s, the Government of Canada purchased 8,000 hopper cars for transporting grain. In 1981, the cost to repair the system in Canada was estimated at $3.2 billion, which is the equivalent of $9.3 billion in today's dollars. So how would you like to be sitting here debating how we're going to find the $9.3 billion to spend on infrastructure for rail? You don't because of what's happened.

By 1995, direct subsidies for the movement of grain to railways had peaked at $650 million. Since that time we've had a tremendous turnaround in the rail supply chain sector in Canada, thanks to good public policy. A commercial approach unleashed a range of market-based forces that allowed the rail supply chain to become efficient, competitive, and profitable over the next 15 years.

Railways are doing pretty much exactly what you would hope for. They're implementing innovative measures to operate the network more efficiently, passing savings on to their customers, and collaborating with their supply chain partners. Perhaps you have heard the term “precision railroading”. It's been in the news quite a lot these last couple of years. It's a catch-all term for improving the productivity of a railroad, based on customer demand. It focuses on asset utilization, velocity, and efficiency. These areas of focus are now widely accepted in other modes of transportation as the drivers of productivity.

We've heard a lot about the term “operating ratios”, which is interesting because railways have been driving these ratios down. What other industry can you think of that has succeeded not only in improving its productivity so demonstrably but also talked about it openly? I can't think of any other industry. You could name their indicator of productivity, but in railroads we talk about the operating ratio and we move it down. These improvements have led to efficient, competitive railways that enjoy significant investor confidence.

Again, railways are doing exactly what you would hope: increasing their productivity, keeping freight rates low, enabling the competitiveness of Canadian manufacturers and producers and, indeed, the whole supply chain, winning investor confidence, making money, and reinvesting in the network. In fact, last year Canadian railways invested more than $3 billion to enhance their infrastructure and equipment, and customer service programs. In doing so, they're helping the government achieve objectives related to job creation, economic growth, and long-term prosperity—and we're not sitting here debating how the government is going to do that infrastructure.

Let me turn to our recommendations for the bill, because I just got a signal that I've got a minute left. I would first say that we have been consistent in our message that we didn't think the bill was necessary. That is our position and our advice to this committee, that you recommend to the House of Commons that the bill not proceed.

However, the government has introduced a bill, and if we have to live with it, we would like to see some improvements. We have six amendments. We've circulated them. I believe the committee has them in both official languages.

Mr. Mongeau referred to three of those: mediation before arbitration, which is number 3; arbitration by the CTA, which is number 5; and limited recourse to customers who lack a competitive choice, which is number 1.

I'll take one second to explain number 6, which is that we would like to see clauses 12, 13, and 14 of Bill C-52 deleted. That is because a number of shippers have testified that they have not requested such a provision and that the provision is not required by them and would not assist them, nor did railways ask for penalties to be included in the bill.

Now I'm going to turn it over to Gord Peters from Cando on behalf of Canada's short-line railroad industry.

[Roger Larson]

Yes. If I may, I'll take the first shot at answering that. The legislation includes the right to ask an arbitrator to establish an agreement. In that sense, Bill C-52 is an improvement and it needs to be passed. What it doesn't provide for is an ability to have the terms enforced, and that is exactly what you're describing, a mechanism to be able to.... There are commercial contracts, I've been told, that do include the ability to go to an arbitrator, and for a very low cost, within 30 days.

There's an internal escalation between the two companies, let's say. If they can't agree on how to interpret a particular clause in an agreement, then they move forward and go to a mediator or an arbitrator. They get it settled and they live with that decision for the term of the agreement.

This is not to be a punitive and retroactive penalty kind of system. This is a matter of someone saying they think the agreement says they need to have 150 cars delivered every week to their mine. In order to move their product to market, they're asking for that, and they've only had 80 cars per week for the last three months, so they're saying that they want this corrected and they want the terms to be enforced in the future.

Shippers are not interested in just penalizing—

[François Tougas]

As the minister said when he introduced his comments before this committee, this is not a normally functioning market. There are many, many parts of this market that do not work, so to suggest that normal commercial relations are going to prevail in the absence of a framework is, frankly, ridiculous.

When you have a bunch of competitors vying for a service—giving an opportunity to the receiver of that service to choose among them—all of the providers of the service try to be the winner. When you don't have that, when you have either a monopoly or a duopoly, you fall to the lowest level of service that is possible and that is still within the advantage of that supplier.

It's not to say that a monopoly will always provide bad service. That is not the case. In fact, they may provide the very best service. The problem is that we have a market structure that does not give direction to the suppliers of the service as to what they are supposed to do and for the receivers of that service to know what they might expect. There's not a normal negotiation going on. It's not a normally functioning market.

That's the problem we're trying to address. It's not the heavy hand of regulation. It's a way to establish a framework that gives parties on both sides of that negotiation an opportunity to know the things they might get, such as if they are allowed to get service five times a week as opposed to three times a week. It's those kinds of things.

All of those, even within the framework that the government has advanced in Bill C-52, are going to be imposed, so we shouldn't get stuck on the word “imposed”. Ultimately, every single provision is going to be imposed if the arbitrator thinks it makes sense. If that arbitrator doesn't think it makes sense, then it won't be imposed.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Mr. Chair.

I want to thank all the witnesses for giving us insight into their daily realities. It helps us get a better sense of the issue.

My first question is for Mr. Mongeau.

I would ask that you keep your answer succinct, as I have only five minutes to speak with each of you.

The mere fact that we're studying Bill C-52 signals to me that it's meant as somewhat of an arbitration mechanism to rectify a situation that the market has not been able to correct on its own for a numbers of years now.

In a minute or less, could you give me your opinion on this inability to reach an agreement with shippers, an agreement that would have prevented the need for a bill like this?

[Jeff Watson, Conservative, Essex, ON]

It's a separate issue from what we're dealing with, with respect to the mechanism of Bill C-52, which is to invoke an arbitration process. What I'm suggesting is that with respect to an arbitration process between commercial entities, what you're asking the government to do is unprecedented.

Can you point to another such situation that is analogous to this or where a precedent like that has been set? Everything deals with retroactivity, something that has occurred that is typically resolved by a court, if you will.

[Jeff Watson, Conservative, Essex, ON]

Even to the point of having to build rail lines, if you will, that is still unchanged.

I would argue that with respect to the elements of a service agreement, many of them are actually established in Bill C-52. The only point we're disagreeing with are the issues of dispute mechanism and penalty, which is what you want explicitly included.

This brings me to my colleague's point. It would be unprecedented to pre-establish or predetermine, with respect to agreements between commercial entities, what a penalty could be, for example, and who gets blame or responsibility within the supply chain. There are a lot of elements that would have to be tailored.

Typically, whether we're dealing with labour agreements or other issues that are non-commercial, they deal with retroactive situations, not sort of predetermined. I think you're asking the government to do something that is unprecedented, or can you point to a precedent with respect to agreements between commercial entities where this is predetermined?

[Jeff Watson, Conservative, Essex, ON]

Fair enough. Section 116, the CTA's ability to compel railroads to effectively build works or other remedies, is unchanged by Bill C-52. Is that correct? That still remains.

[Jeff Watson, Conservative, Essex, ON]

I'm simply asking whether Bill C-52 establishes a unilateral right for shippers to invoke a process in the event that negotiations are not proceeding the way that at least the shippers might perceive them to be moving.

That's what I'm trying to establish.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for appearing today on Bill C-52.

You talked about the power disparity, I think, that the shippers face with respect to the rail lines. One of the positives, I would submit, with Bill C-52 is that it gives shippers, not the companies, a unilateral right to trigger an arbitration process, which effectively is a compulsion, at least to a reasonable degree, to negotiate a service-level agreement fairly.

Would anyone disagree with that?

[Ralph Goodale, Liberal, Wascana, SK]

Thank you very much, Mr. Chairman. I appreciate the opportunity to have another panel of witnesses before us on a very important topic.

When you listen to the testimony, particularly as we've heard today from some of the shipper organizations and from one of the railways, it's really a case of black versus white. You often wonder if the ships are just passing in the night.

The government obviously conducted a rail review process. The result of that process a couple of years ago was to agree largely with the shipper perspective that there was an imbalance, and that imbalance needed to be corrected. So we have before us Bill C-52, and we have six amendments to Bill C-52 proposed by the Coalition of Rail Shippers.

I have three questions in particular that I'd like to ask the shippers, perhaps the Mining Association, the fertilizer people, and the chemical people.

The coalition amendment number one talks about a better, clearer, more specific definition of what adequate and suitable accommodation and service obligations really mean in the language of the law. Those phrases, “adequate and suitable accommodation” and “service obligations”, have been in the legislation for a long time. There's still a great deal of ambiguity about what they mean, even after years and years of usage, so the shippers are suggesting an amendment to bring some precision to the use of that language.

If the amendment is adopted by the committee and by the government and by Parliament, you'll get the precision you're suggesting. What if the amendment is not adopted? Will the legislation fix the problem or will the ambiguity continue and the problem will not be solved? That's question number one. How vital is this amendment in providing greater definition of service obligations?

Secondly, what are the service levels you are experiencing now? When the rail review process was conducted a few years ago, they reported a pretty difficult situation. The information provided by Mr. Mongeau would suggest that some of those performance levels have improved, at least in the last two or three years. What is your experience right now with service from the railways? And when I say “right now”, I want to include specifically the period of time since the legislation was tabled. Have you noticed any change in the level of service that is being experienced right now?

My final question is on this issue of administrative monetary penalties versus liquidated damages. The legislation obviously provides for AMPs. It doesn't provide for an expedited way to proceed with actual practical damages.

If you have only the monetary penalties in the legislation and no access to liquidated damages, does that really fix the problem from the shippers' point of view? The AMPs money goes to the government; it doesn't go to you. So what's your preference in terms of remedy?

[Roger Larson, President, Canadian Fertilizer Institute]

Thank you, Mr. Miller and members of the committee.

I'm the president of the Canadian Fertilizer Institute. With me today is Ian MacKay, our transportation legal counsel.

CFI represents the basic manufacturers of nitrogen, phosphate, potash, and sulphur fertilizers in Canada. Our members produce over 25 million metric tonnes of fertilizer annually. We export over 75% of this production to the United States and offshore to over 60 countries.

We are a resource-based industry heavily dependent on the railways to move our goods to domestic and offshore markets. Our ultimate customers are farmers. Delivering fertilizer products to them in a timely and effective manner is critical to the world's food supply.

I am pleased to see my colleagues from the railways here today. We have a partnership, one that is critical to the success of fertilizer companies and to the success of the railways.

Our growth in exports offshore and to the U.S. depends on our members' competitiveness. Our companies are investing in Canada's economic growth, with some $15 billion in potash expansions and about $3 billion to date in nitrogen fertilizer expansion. These investments will require the railways to invest in new rail infrastructure and stronger commitments to their customers.

Our member companies have invested in their transportation partnerships with the railways. One of our member companies has 5,500 railcars. It's the second largest railcar fleet in North America. Our other members have invested in tens of thousands of railcar long-term leases to move their potash and nitrogen fertilizers to the United States.

We are participating in research to build a new and safer rail tank car for the transportation of anhydrous ammonia. Our companies are spending hundreds of millions of dollars to build new port facilities in Vancouver and on proposals for Prince Rupert. At our manufacturing plants and mines, CFI members have built sophisticated load-out facilities with the capacity to load 80 to 140 railcars at a time. That's a train two and a half miles long.

The railways have not always met their service commitments, and it's not always just due to bad weather. While there have been significant improvements in service since the problems we experienced in 2007 and 2008, we need to recognize that recent capacity constraints have not been there due to the economic slowdown. What happens when the economy recovers to full level?

Our industry is investing in dramatic growth. Another 10 million to 15 million tonnes of potash and nitrogen fertilizer will need to be moved to our customers, and virtually 100% of this new product will need to be exported by rail.

Today, our members require sophisticated commercial service terms and agreements to meet their individual business needs. Specifically, they need to negotiate new railway commitments on the service obligations, over what I would categorize as the “generic”: a one-size-fits-all provision of adequate and suitable service as currently set out in the Canada Transportation Act. Today, generic, simply stated, will not work.

CFI is encouraged by Bill C-52, the Fair Rail Freight Service Act. We commend the government for bringing forward this important piece of legislation. We at CFI view this as a crucial step towards a better commercial balance between the railways and their freight customers.

That said, CFI has found areas in the bill that give us some cause for concern. The backstop requiring railways to commercially negotiate and deliver on service commitments with their customers, and enabling arbitrators to establish those agreements if negotiations fail to do so, is provided to some extent in Bill C-52, but it is incomplete. We can strengthen the backstop by ensuring that rail customers can ask for service agreements backstopped by commercial dispute resolution provisions.

Our members believe that railway service problems should be resolved by commercial processes. CFI has been a leading advocate of commercial dispute resolution since the beginning, since the federal debate regarding railway service started around 2006.

We were the first to develop and present a timely, effective, low-cost mediation and arbitration process to the rail freight service review panel. CFI supports commercial negotiations backstopped by mediation and arbitration. This panel cited CFI's efforts in their final report. We are pleased that the arbitration process contained in the bill mirrors many aspects of CFI's proposals.

The CFI supports all of the recommendations for changes made by the CRS earlier this week. However, today I want to emphasize two of the six recommendations that are of particular concern to the fertilizer industry.

We start with operational terms in the CRS document. This is known as recommended amendment number two. The scope of the service agreements should be extended beyond operational terms to cover all aspects of the commercial relationship between a railway and a customer. Limiting service agreements to operational terms excludes from consideration by the arbitrator a number of important terms and conditions that one routinely sees in commercial agreements. This makes little sense in practical terms and will result in shippers only being able to arbitrate some of the issues they might otherwise choose to negotiate on. The separation of operational terms from non-operational terms does not exist in commercial agreements, so we propose to the committee that the legislation be amended to strike the word “operational” from operational terms. This will allow the arbitrator to include clauses such as force majeure, dispute resolution, and other standard contractual terms found in commercial agreements.

Secondly, the bill needs to make it clear that service agreements may include dispute resolution terms to deal with service failures. This is CRS's recommended amendment number three. Shippers do not wish to undertake costly litigation to deal with a service failure or to wait for the CTA to conduct hearings. In our view, the most effective way to deal with service problems that arise after an agreement is established between a railway and their customer is under dispute resolution terms proposed by the parties themselves and settled by the arbitrator if need be. As presently drafted, the bill would not allow the arbitrator to include dispute resolution terms, meaning the bill is only treating half of the ailment.

In conclusion, the CFI notes that in Minister Lebel's testimony before this committee on February 12, service disputes relating to the Canadian portion of cross-border shipments will be subjected to arbitration under Bill C-52. Almost 50% of the fertilizer manufactured by our members is shipped to the United States. The transportation service challenges and the service issues that our members face on our exports on cross-border rail movements are the same as those faced on traffic movements within Canada domestically or to ports of export in Vancouver. Our policy and regulatory authorities need to work closely with their U.S. counterparts in an effort to establish and harmonize a commercial dispute resolution model that addresses the total shipment on cross-border moves.

It is imperative that this legislation support the new investment our industry is making in the growth, jobs, and future prosperity of our country.

Thank you for your attention, and I look forward to your questions.

[Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada]

Thank you, Mr. Chair, members of the committee, and fellow attendees.

I am Pierre Gratton, president and CEO of the Mining Association of Canada. MAC is the national voice of Canada's mining and mineral processing industry. We represent both large shippers, such as Teck, CP's largest customer by far, and smaller shippers as well.

Accompanying me is François Tougas, our counsel in this matter. Thank you for the opportunity to appear today and to share our perspective on this important piece of legislation.

In 2011 the mining industry contributed $35.6 billion to Canada's GDP, employed 320,000 workers, paid $9 billion in taxes and royalties to federal and provincial governments, and accounted for 23% of Canada's overall export value. I would add, too, that our exports actually reached a record level in 2011, the most recent year for which we have statistics.

Operating from coast to coast to coast, the industry is very important to remote communities and generates prosperity in our major cities, notably, Toronto, Vancouver, Montreal, Edmonton, Calgary, and Saskatoon, each of which serves as a centre for global mining excellence for various types of mining.

Looking forward, proposed, planned, and in-place mining projects in Canada amount to upwards of $140 billion of investment over the next 5 to 10 years. Across the country, major projects are seen in mined oil sands, coal, copper, gold, iron ore, and diamonds, among other sectors, with large investments also occurring in environmental and processing areas.

To enable the industry to become an even stronger contributor to Canadian prosperity, industry needs government policy support to meet anticipated long-term demand for Canadian minerals. The efficiency of the logistical supply chain is a major determinant of industry's contribution to the economy, and rail freight service is a major determinant of the effectiveness of the logistics supply chain.

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

The Canadian mining industry is the single largest industrial customer group of Canada's railways by far. We consistently account for over half of total rail freight revenue in Canada and the majority of total volume carried by Canadian railways annually. In 2011 the mining industry accounted for 54% of rail freight revenue and 48% of volume. As such, transportation legislation is, obviously, very important to us.

I'll give you another, more specific example. Consider one miner's economic input and the impact that the quality of rail freight service has on the success of the business model. This miner ships 24 million tonnes of coal to ports each year. At about 105 tonnes per rail car, that amounts to 225,000 rail cars annually. At 152 cars per unit train, that equates to 1,500 unit trains per year, or five unit trains per day. At, say, $150 per tonne, that translates to $15,750 per car, or $2.4 million per unit train, for a total of $12 million in coal shipped daily. When placed in context, it becomes clear how much rail freight service failures can cost miners, and, in turn, the Canadian economy as a whole. It becomes very difficult to ship other products if the mining industry is not able to ship theirs.

The biggest issue rail customers have is that they do not know what they are getting for the rail rates they pay. The remote locations of many mining operations often leave miners captive to one of the two railways and frequently stranded without alternative modes of transportation. Their captivity, coupled with railways' power to unilaterally impose rates, enables the railways to influence prices and reduce service quality without the risk of losing customers.

Shippers had anticipated that Bill C-52 would follow on the recommendations of the final report of the rail freight service review panel so that when contracting or otherwise dealing with railway companies for rail freight service, the playing field would become balanced. Although a number of the review's final recommendations are found in Bill C-52, it is the recommendations absent from the bill that present shippers with the greatest challenge.

Currently a railway is not required by the Canada Transportation Act to provide any particular elements of service to a shipper unless the railway so chooses. Furthermore, in instances where a carrier does choose to offer service elements to a shipper, the railway is not required to provide any particular level of service.

Despite the recommendation of the review to include elements of service in service agreements, and the broader shipping community's request for the same to be included in Bill C-52, the legislation before us today remains silent on this crucial issue.

Giving shippers a statutory right to a service-level agreement, as Bill C-52 has done, only goes halfway: it gives shippers a right to service without defining that service. Without including the specific elements of service a shipper needs, the bill, at best, subjects the quality of a shipper's rail service to the discretion of an arbitrator in a process that, unless amended, weighs heavily in the railway's favour.

The provisions on service in the act are sufficiently weak and vague that they have been unable to address the service failures that gave rise to the review in the first place. Given that these provisions remain unaddressed in the bill, it is our view that shippers will remain disproportionately and unreasonably subject to railway market power, and the service failures will continue into the future.

In the legislative consultation, shippers sought amendments that would establish, first, a base level of service by requiring the railways to provide specific elements of service; and second, a way to guide the Canadian Transportation Agency or an appointed arbitrator in its interpretation of the adequacy and suitability of the level of service provided by a railway company.

Bill C-52 falls short because these critical components of service remain absent. Consequently, neither the agency nor an arbitrator has guidance regarding the adequacy and suitability of a particular level of service, or even of whether an element of service must be provided by a rail carrier.

The government still has an opportunity to get this right and to achieve Bill C-52's stated objectives of economic growth, job creation, and expanded trade opportunities. The amendments we seek correspond to those of the broader shipping community as determined in consultation with the Coalition of Rail Shippers. Specifically, MAC endorses the six amendments detailed in the document tabled before the committee today, with a specific focus on recommendations one, two, and six, as described in our brief.

There is an opportunity to fix this problem. By implementing these recommendations, the government can allow for commercial negotiations, maintain Canada's export success, and deliver revenues and jobs across the country without incurring any cost. Miners want to be able to work in partnership with the railways in the movement of their products. To do so, however, requires a level playing field.

Thank you very much.

[Fiona Cook, Director, Business and Economics, Chemistry Industry Association of Canada]

Thank you, Richard.

As you noted, the key objective here is greater partnership between the railways and its customers. Close working relationships between our member companies and Canada's railways are not only key to our present-day competitiveness in international markets, but they are also crucial to future investment, jobs, and growth in our sector here in Canada.

We need more conversations and planning around demand and supply of rail. CIAC believes that with some key amendments the legislation we're contemplating here today will enable the building of those relationships.

I was here on Tuesday, and I believe members of the committee have received copies of the list of amendments that the CRS has put forward and that we stand behind.

Ultimately, the success of this legislation will be if arbitration is used only as a last resort. That's something we fundamentally believe in. There are two amendments that we believe are critical to setting the stage for that, and I will focus my comments on these.

Amendment 1, which sets out the basic elements that need to be discussed in a negotiation, is fundamental to the spirit of this bill. As members here today know, in its report the panel identified this type of framework as a key prerequisite to better commercial relationships, and frankly, we are a little surprised to see that the core elements of what a service-level agreement should contain are not set out in the bill.

This absolutely needs to be done to achieve the intent of the bill and to ensure that it works as an effective backstop. Without this definition and clarity, both parties will not be able to identify problems and workable solutions. Agreeing on the elements means more commercial settlements and less time before the agency, and I think we all want that. Again, setting out the framework for discussion and partnership is fundamental if successful agreements are to be achieved commercially—and that is the desired result.

Next, and in the same spirit of setting the table for greater collaboration and commercial agreements, we believe that removing the word “operational”, as specified in amendment 2, is critical; otherwise, you limit the conversation and end up with half measures and ineffective agreements that do not include standard clauses, such as dispute resolution—very key—and force majeure, which are found in most commercial agreements.

Removing the word “operational” will broaden the scope of discussion between railway and customers, and it will increase the workability of agreements. It will reduce the need to bring issues to an arbitrator or the courts that could be dealt with through standard and prearranged dispute resolution mechanisms—again, more commercial settlements and fewer occasions before the agency.

To summarize, as Richard stated in his earlier comments, we are pleased to see this bill. It represents many years of hard work, but it needs to be amended to be effective.

Even with the amendments, will it solve all the problems that shippers and railways currently face? No. Does it address all the issues that we identified as key in the service review process? No. Specifically, for our sector, it does not address cross-border service requirements and commitments. This is an important issue for our industry, as 80% of our shipments are destined for the U.S.

However, that being said, we are hopeful that with the amendments that have been tabled, this bill will provide the balance that is needed to work with our railway partners and develop service-level agreements that incorporate the entirety of what a railway offers to its customers, regardless of borders, such as we see in the marine, air, and trucking modes.

Bill C-52 is a necessary first step to greater understanding and partnership between Canada's railways and the multitude of industries that provide food, products, and jobs, and that support communities across Canada. The amendments that we propose will ensure that it delivers on that promise. At the end of the day, this is all about working together.

Thank you.

[Greg Meredith]

There are a number of modernization thrusts. The most significant one is the removal of the single desk. The minister also mentioned Bill C-52, the government's response to the rail freight review. This will provide producers with access to service level agreements, which has been a demand for some time.

With respect to Churchill in particular, what we've done is to establish an incentive program to encourage shippers to use the rail line up to Churchill and to use the port over the course of that four to five-month period when the port is open. This year, that program managed to incent about 412,000 tonnes of grain, including grains other than wheat. In the past, it was simply wheat. It also encourages several other companies to actively look at the rail line and the port as a shipping opportunity, and it attracted two new companies to actually use the incentive.

We expect that this will continue. There is more understanding of how the program works. There's also more understanding of how to market wheat using various ports as export opportunities. We think this year we'll see a very successful year for the Hudson's Bay rail line and the port of Churchill.

[Gerry Ritz, Conservative, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board]

Thank you, Mr. Chair. I appreciate the diligence of this committee. You're actually doing two jobs at once. I can see the headline now in the media, “SCAAF double dips.” We'll have a good story to tell coming out of this, I'm sure.

I have with me today my deputy minister, Suzanne Vinet; Mary Komarynsky, executive vice-president with the Canadian Food Inspection Agency; Pierre Corriveau, assistant deputy minister, corporate management branch at Agriculture and Agri-Food Canada; and Greg Meredith, assistant deputy minister, strategic policy branch at Agriculture Canada. On the other side, I have Peter Everson, vice-president, corporate management, Canadian Food Inspection Agency; and Paul Mayers, associate vice-president, policy and programs, CFIA.

It's always a pleasure to be at this table. I thank you for your kind invitation to be here with you today. This committee continues to do important work for the sector, including your current work on grains and oil seeds as part of larger study on the food supply chain here in Canada.

The 2013-2014 main estimates you have before you are the starting point for a transformative shift as a result of the new Growing Forward 2 agriculture policy framework that starts in just over a month from today. This new framework will invest more than $3 billion over the coming five years—that's $600 million a year in both federal and cost-shared initiatives. This is an increase of 50% in funding for cost-shared strategic initiative compared to the predecessor, Growing Forward 1.

The future prospects for the sector have created an opportunity to focus on proactive investments to generate growth and productivity across the sector from coast to coast to coast.

I would note that funding for these Growing Forward 2 cost-shared initiatives is expected to be presented to Parliament in supplementary estimates and is therefore not reflected in these main estimates. I will repeat: these estimates do not reflect the future moneys that will be invested in food safety under Growing Forward 2. To suggest that the figures you have before you represent any sort of decrease in food safety—and I know that's been done—would be playing loose with the facts, something that Canadians do not deserve. These figures will be bolstered in the supplementary estimates once federal, provincial, and territorial GF2 spending agreements are finalized in the coming days. As well, the estimates reflect the lowered draw on our demand-driven BRM programming, due to strong commodity prices.

We've had a busy agenda year since we last met. We passed amendments to the Canada Grain Act to drive the continuous modernization of Canada's $16 billion grain industry. We introduced Bill C-52 to strengthen our rail system by giving shippers the right to a service agreement with the railways that serve them. We have backstopped that process by renewing the mandate of the crops logistics working group to improve the performance of the supply chain for all crops across Canada.

We're also now more than halfway through the first crop year under marketing freedom. Already, marketing freedom is re-energizing the western grain industry. We're seeing good movement of wheat, durum, and barley, with higher volumes through the system and higher exports year-to-date. Farmers were able to take advantage of high prices selling off the combine while using risk management tools like pooling through the new reinvigorated CWB. It's called choice, it's called freedom, and it's working. Marketing freedom is only one part of our efforts to drive a prosperous market-oriented agricultural industry that will continue to help drive the Canadian economy.

Over the past year we have made some real and tangible progress, including expanding our access to the Japanese market for our high-quality beef products, a move that will double the annual value of this market, some $150 million; cutting red tape by eliminating duplication and extra cost; negotiating and putting in place a new federal-provincial-territorial framework with no gaps in federal programming; achieving a positive decision from the WTO on country of origin labelling; and forging ahead on new international opportunities for our Canadian producers and processors. Looking ahead, the outlook is bright, with a strong farm economy, growing global demand, and world-class producers here in Canada. They are, of course, one of our most valuable resources.

Yesterday, Agriculture Canada released the annual farm income forecast, along with the outlook for the medium term. I know, Mr. Chair, that we have enough copies to hand them out to everyone in both official languages and I'm happy to do that.

This news is positive for a number of key indicators of the health of the farm sector overall. Once again, the sector will report record high income levels for 2012 and can count on a continued positive outlook for 2013. For 2012 net cash income for the entire sector is expected to rise 14%. The average net operating income for Canadian farms is expected to rise 50% above the past five-year average. This is good news, Mr. Chair.

The average net worth is expected to grow by 8% to $1.8 million per farm. Over the next decade, strong global demand, particularly from major emerging economies, will underpin continued strong pricing and growth for our agricultural sector. Canadian grain and oilseed prices are expected to remain at higher than historical levels over the medium term, with modest growth for cattle and hog producers.

There is good news on the export side as well, Mr. Chair. The numbers are just in and show that fiscal 2012 was Canada's best export year on record for the agriculture and agrifood sector. The industry posted a 7.4% increase, to $47.7 billion, a new record, which is not bad with the global recession still on.

The bottom line is that it's a great time to be involved in Canadian agriculture. Our government will continue to work with industry to maintain this positive momentum so that farmers can stay ahead of emerging competitors and take full advantage of growing opportunities both here and abroad.

As a government, we must foster the right conditions that farmers require to succeed, and we'll do that by continuing to drive market development with a strong trade agenda that includes new bilateral and regional free trade agreements. We'll modernize the legislative tools that the sector requires to remain competitive by reforming the regulatory framework to strengthen the agricultural sector's capacity to take advantage of market-based opportunities here in Canada and abroad, and by focusing on transformative, proactive investments, especially innovation under the Growing Forward 2 framework, as I said, starting in just over a month.

During my more than five years as agriculture minister I've been across the country meeting face to face with producers, and the message I'm hearing loud and clear is we need to move beyond the status quo, and the time is now. We need to look ahead, not backward, toward positive, proactive initiatives that will move the industry forward.

It's this kind of proactive vision that lies behind Growing Forward 2, the new five-year framework for agriculture that came out of our FPT ministers meeting in Whitehorse in early September of last fall. Growing Forward 2 sets the right conditions for success. At its core is a 50% increase in cost-shared strategic investments in innovation, competitiveness, and market development. That's a $3-billion increase over the next five years, or $600 million a year in targeted, strategic investments to move the industry forward.

Growing Forward 2 marks a major shift in our focus toward realizing the high economic and productive potential for the Canadian agriculture and agrifood sector. GF2 kicks in on April 1, as I said, and three federal-only programs are AgriInnovation, AgriMarketing, and AgriCompetitiveness. As I said, those are federal-only programs.

AgriInnovation is now taking applications. It will focus on investments that will help the industry get new products and technologies off the boardroom tables and out into the marketplace. It will continue to support the science cluster model, which has done a great job of driving industry-led research across a number of sectors.

The new AgriMarketing program will help producers and processors gain and maintain access to markets, both at home and abroad. We'll do that by breaking down trade barriers, responding to consumer demands for food safety and traceability, showcasing on the world our top quality agricultural products here in Canada, and by showing our lighter environmental footprint.

Canadian agriculture has a tremendous story to tell, as I said, from that lighter environmental footprint to many new value-added products.

AgriMarketing will leverage that advantage and help the industry turn sales leads into closed deals. We'll also be strengthening the Market Access Secretariat. Mr. Chair, as you know and as the committee knows, they're basically our SWAT team. They're helping to take down trade barriers to technical, science-based solutions, and they've done an excellent job for us.

Trade is critical to the farming sector in Canada. A full 60% of pork, 70% of wheat, and 85% of canola and canola products are shipped beyond our borders every year. Trade brings jobs and growth to our economy. That's why our government continues to pursue the most aggressive trade agenda in Canadian history. During our time in office so far we've concluded negotiations for six free trade agreements with nine countries. We're pushing hard in other agreements, like CETA, where we continue to work toward a positive outcome. Negotiations are ongoing with more focused and frequent meetings to resolve outstanding and sensitive issues, including agricultural market access. Likewise, Canada's membership on the TPP will improve Canadian farmers and processors' access to critical emerging Asian markets.

Finally, the AgriCompetitiveness program will strengthen industry's capacity to adapt and be profitable in domestic and global markets. Through directed investments, we will work with the sector to adapt to rapidly changing and emerging global and domestic opportunities and issues they face, respond to market trends, enhance business and entrepreneurial capacity, and, of course, attract the next generation of farmers.

Of course, none of this is to say there aren't risks and challenges to farming. There always will be. Governments will continue to offer an extensive suite of business risk management programs to help farmers cope with severe market volatility and of course weather-related disasters.

Likewise, we continue to take concrete steps to ensure our food safety systems are effective, responsive, transparent, and accountable to the Canadians they serve. To that end, last fall the government passed new food safety legislation with the Safe Food for Canadians Act. The act provides the Canadian Food Inspection Agency with new and enhanced authorities to deliver effective food inspection services. It also strengthens the agency's enforcement and compliance capabilities. This new legislation is the foundation for a modernized inspection service. These estimates reflect a new investment of $11 million to modernize Canada's food safety inspection system.

So my message to this table today is that with our continued hard work, Canadian agriculture will continue to prosper and grow. Global demand, as you know, is growing for food, food that will come from highly progressive and productive farms across Canada. We are creating the conditions to unlock the potential of agriculture as a continuing economic driver by modernizing our grain industry through marketing freedom, Canadian Grain Commission reforms and, of course, rail service reforms; driving regulatory reform to spur innovation; and making proactive investments in innovation and market development under Growing Forward 2.

It's an exciting time to be involved in agriculture. Young people are once again looking seriously at a career in agriculture, either on or off the farm gate. There's much to do. Our government is committed, like you, to growing Canada's agriculture and food industry and helping it reach its full potential as an economic powerhouse in this great country.

Thank you, Mr. Chair, and as always, I look forward to the committee's questions.

[Gordon Bacon, Chief Executive Officer, Pulse Canada]

Thank you, Mr. Chairman and members of the committee.

Thank you for the opportunity to speak to you today on your discussions around the comprehensive economic partnership agreement between Canada and India.

Pulse Canada is the national industry association representing pulse growers as well as the processors and exporters of pulse crops that are exported to 160 countries around the world.

Pulse Canada has, for more than 15 years, been focused on market access as one of the members' top priorities. Access to markets in a predictable and stable trading environment is a prerequisite to building an export-oriented resource economy for Canada. For this reason it may be that no market in the world is more appropriate than is India when Pulse Canada speaks about the issue of market access and the importance of pursuing more formal agreements.

It will come as a surprise to some Canadians and to some citizens of India that Canada's biggest export to India is pulses. In 2011 Canadian pulse exports to India were valued at $633 million, or 24% of the value of Canada's total commodity exports to India. In 2012, pulse exports from Canada to India were valued at $504 million, or 21.5% of Canada's export trade.

India is Canada's single largest market for pulses, and the single largest crop that Canada sells to India is yellow peas. The range of pulse crops grown and consumed in India is wide and diverse. Yellow peas from Canada compete with peas originating in Australia, France, and the United States, but more importantly, they compete with other pulse crops like desi chickpeas, which may be grown in India or imported from Australia, or pigeon peas, which may be grown in India or imported from countries in Africa.

India is a very complex market. Some of the market demand for pulses reflects religious beliefs of the citizens who consume only vegetarian food. But a great deal of demand is economically driven. Plant protein, like that from a range of pulse crops grown and imported into India, is more affordable than is higher-priced protein from dairy and meat. Canada became the biggest supplier of pulses to India primarily because yellow peas offer the most economical source of plant protein. Price is key. One of the reasons for a drop in exports of pulses from Canada to India in 2012 was that the Australians had a big chickpea crop and moved a large quantity of the crop right after harvest, at the end of 2012.

India is also predicting a big winter season crop of pulses, perhaps as much as a million tonnes more than last year, all of which combines to mean a change in demand for Canadian peas. But while tonnage may change from year to year, what we cannot change is our focus on competitiveness, which means we must ensure that Canadian farmers and Canadian companies are in a position to be competitive. The role of government can be to assist industry to be competitive by creating an enabling environment.

The Canadian pulse industry is very supportive of the development of comprehensive economic partnership agreements at the government-to-government level, because they provide the opportunity to create a more permanent and lasting trade policy framework that puts Canada on a level playing field with other exporting nations. They also ensure that yearly fluctuations in domestic production are not met with yearly fluctuations in import or access policy.

India would like to be self-sufficient in pulse production and has recently increased support to Indian farmers to grow more pulses. But India also needs to import pulses to meet demands. Even with a rise in Indian imports in recent years, the per capita consumption of pulses has dropped significantly in the past 40 years. Malnutrition is a problem in India, and food imports are part of how India will provide adequate and balanced nutrition. Predictable trade policy is a vital component of food security, and equally important, a vital component of affordable food.

Here is a list of things that the Canadian pulse industry has faced in trade with India that would be on our list to be discussed and resolved in an agreement between Canada and India.

While India has not applied an import duty to pulses in many years, an agreement between Canada and India should remove that existing policy option from the table. Partnerships need predictability. Food security needs predictability. A permanently open market would remove that potential restriction from ever re-emerging.

Canada's largest pulse trade challenge with India over the last nine years has been related to a sanitary and phytosanitary issue. This issue, at times, has stopped the loading and unloading of Canadian vessels. It has cost Canadian exporters hundreds of thousands of dollars on single shipments that had to be diverted after leaving Canada to be fumigated in third countries.

For many years Canada has been the beneficiary of a succession of derogations of Indian policy on fumigation as it applies to Canada. But some of these derogations have come at the last moment for a business that has a six-to-eight week lead time to get peas moved from farms in western Canada to Vancouver, and ultimately to ports in India.

The market access issue is not over. Pulse Canada recognizes that an economic partnership can't anticipate and address this level of detail but an agreement can address the timeliness and process that will be used bilaterally when issues emerge. That we are nine years and counting speaks to the challenges that have been faced with SPS issues. Partnerships need predictability, and processes with timelines to address SPS issues need to be part of that partnership agreement.

A bilateral comprehensive economic partnership also allows us the opportunity to sit down with India to discuss solutions to challenges that arise from underperforming third-party processes. India defers to Codex Alimentarius to establish tolerances for levels of chemical residues that, through extensive testing and with high safety margins, establish acceptable levels that are indicative of proper use of crop protection products and at levels that are proven to be safe.

Yet because Codex is chronically underfunded and mired in a process that ensures it is always behind in providing approvals, we're left with a situation where Canada's PMRA will approve crop protection products for use in Canada, but both Canada and India are reliant upon an international body to provide timely responses in order to make that partnership work well. There are alternatives that we need to address and perhaps consider including in the CEPA.

The precedent already exists with another UN body, the World Food Programme, where residue tolerances established in the country from which they purchase a commodity could be the guideline. This could be suggested to India: recognition that a standard developed in Canada for Canadians be acceptable to the Indian government when an international standard does not exist. Perhaps India will ask Canada to consider a reciprocal agreement, where Canada would be asked to accept tolerances established by an Indian regulatory authority for a product like tea.

Partnerships need predictability, and while it may be challenging for Canada and India to address food safety tolerance issues, it's even more challenging to think that this can be left to Codex, which has shown us that it is simply not up to the task of fixing multilateral trade issues on a timely basis.

I want to be clear to all committee members who may not be familiar with the policy and processes around the establishment of crop protection product tolerance levels. Canada is among the toughest regulators in the world when it comes to establishing safety margins. Canada currently works closely with other regulators, such as the EPA, in the United States, and the European Food Safety Authority.

Asking India to consider accepting Canadian standards is not asking India to compromise food safety—far from it. In fact, a recent Codex decision, which followed a decision by the European Food Safety Authority, set a tolerance level for a product used in Canada at two and a half times higher than what had been set by Canadian regulators. This is an issue of regulatory harmonization and not about deciding what is safe. The safety margins are in place, and this is about harmonizing the timing and methodology of policies used to establish tolerances.

Mr. Chairman, it is important for me to note that trade agreements are only the starting point to being a competitive exporting nation. Everything that impacts our ability to be competitive at destination while still providing a high rate of return to the Canadian manufacturer or farmer has to be part of the holistic approach to ensuring competitiveness.

We need trade agreements that eliminate tariffs and quota restrictions. We need a logistics system that is performing at a level that is the envy of the world and not held out as an example of one of the things that limits our ability to get products to market. We need to proactively address market access issues that arise from an asynchrony in approaches and timelines to establish maximum residue limits. The key point I'm trying to make is that addressing one essential element without this holistic approach to tackling all of the impediments to trade is akin to building an eight-lane highway that is served by a single-lane on-ramp.

Yesterday a coalition of rail shippers representing lumber, mining, agriculture, and more—products that account for 80% of rail traffic—presented a united position on amendments to Bill C-52. Trade agreements that provide market access and an efficient logistics system in Canada are all essential elements of building a competitive Canadian economy. Access and transportation are the building blocks for growing a strong Canadian export sector.

Thank you, Mr. Chairman.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank all of our guests for being here today and providing their testimony and suggestions. I think it's fair to say that, as we look at the suggested amendments, it strikes me that you probably all could have come together and just done one laundry list. That might actually have been a little simpler and have provided better clarity. But we have your written submissions, so we'll certainly consider your amendments as you presented them to us.

I was struck when Minister Lebel came before us and introduced Bill C-52 and gave us some descriptive references and answered questions. And here I want to acknowledge your support, in broad terms, for our effort to put this in place. It has been a long time coming; I think you'd all acknowledge that. But if I get the best sense of what you're trying to do, it is that you're trying to take what is now going in the right direction and make it a bit tighter. That's certainly how I feel you have presented yourselves today.

I want to make reference briefly to a couple of things, and then I have a couple of questions.

What the minister said was that he felt strongly that the bill will pave the way for better commercial relationships between railways and shippers, which is ultimately the best outcome for everyone. I'm going to stop there, though, because that prompted me to ask a question recently in a previous committee meeting about how things were going as a result of this proposed bill, that is to say, in the relationship between shippers and railways.

Mr. May, you were fairly emphatic in response to Mr. Toet when you said that service has not improved. That is certainly not the impression I have received. One might collectively sense that as a result of this kind of pending legislation, stronger efforts might come forward.

Can you and maybe those who have been impacted briefly elaborate on whether you think those relationships have improved?

Mr. May, since you were so strong one way, can you briefly comment on that? Bring some clarity to my mind, please.

[Robert Aubin, NDP, Trois-Rivières, QC]

In a press release, you gave the bill a passing grade. I have repeatedly heard people from various organizations call it a step in the right direction. But we all know a step is not enough. If the goal is to walk, we need more than a step.

If we were able to include the three priorities you identified as valid amendments to Bill C-52, do you think it could walk on its own, so to speak?

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Mr. Chair.

Thank you to our witnesses for joining us this afternoon. I would, however, like to say that I'd prefer to have fewer witnesses at our next meetings. That way, we would have more time to benefit from each witness's expertise. I would greatly appreciate that.

Since I have just five minutes, my questions will be for the Forest Products Association of Canada representatives. Hopefully, I will be able to get a better sense of the problems that shippers in my riding face.

If Bill C-52 were to come into force in the near future, what would it mean for you? Clearly, you couldn't take advantage of the measures set out in the bill with respect to existing contracts.

Does that mean that, for your association, the measures would apply in a year or two?

When the minister appeared before the committee, he told us that the reason current contracts did not qualify was to respect the confidentiality of businesses in relation to railway companies.

Do you share that opinion, or on the contrary, do you think it would be possible to apply the rules set out under Bill C-52 to current contracts?

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

So you've had a change of perspective on that.

Basically what I wanted get at is the fact that this legislation has to strike a balance with the needs of the shippers. As I said, I've done a lot of shipping in my lifetime, so I'm very cognizant of the need to get things in a timely manner, and how frustrating it is when it doesn't happen, and the challenges you face going forward.

I also want to put into context the fact that competition doesn't necessarily negate every negative factor you have in shipping. I've had many occasions where on a Friday a truck didn't show up that I needed to be move my product to the States that afternoon. It coming on Monday didn't do me any good; I missed my delivery and I probably lost a client from it. Those things happen in the trucking industry, where you have a lot of competition. I've had firms that have served me well for five or six years, and then dropped the ball three or four months in a row—continuously.

The reason I brought that up is that we're looking at what a reasonable expectation ought to be of a competitive environment that everybody should be able to accept, whether a shipper or the railways. That's the balance we're trying to find in Bill C-52. To some degree, we've found a good balance. We'll look closely at what you brought forward as your amendments, but it's important to acknowledge that.

Mr. May, you said that you found three months to negotiate a contract to be extremely long. In my business, I would be extremely happy with that. Mr. Foran can probably speak to that, because he's probably been involved with a lot of contracts. That three months is a pretty quick turnaround for a service contract. These things can take a lot longer than that in the normal commercial environment.

Would you not agree?

[Ralph Goodale, Liberal, Wascana, SK]

Thank you very much, Mr. Chairman.

Maybe I'll just run over three or four questions to start with all at once.

For efficient use of time, wait for your answers. Again, thank you to all of you for coming to talk about this legislation.

At our hearing with the minister, there were questions raised about the existence of confidential contracts already. Some shippers have them. There is language in the bill that would appear to prevent access to an arbitrated SLAs if an existing confidential contract is there.

I wonder if you could just give us some idea of how many of those contracts currently exist and how long they typically run. Is it one year, two years, or ten years? What impediment is there to accessing the arbitrated procedure? That's question number one.

Secondly, Mr. Chair, you went through the five items that the shippers have typically argued for. I gather from your testimony that those five areas are to some extent covered in Bill C-52, but they're covered only up to your level of expectation if the five or six clarifying amendments are in fact adopted. So some of your expectations are covered, but the five or six amendments here would actually make that coverage more effective and more complete. I wonder if we could have a little more explanation of that. Thirdly, there is a difference between AMPs, the administrative monetary penalties, and liquidated damages. The act provides for AMPs; it doesn't provide for liquidated damages.

Mr. Sobkowich gave us a practical example of why having access to liquidated damages is also a crucial part of the enforcement procedure here. I wonder if there are examples other than simply that of the train being late. I think it would be useful to hear some other examples. Also, in the case of grain, if we were able to find the right way to get liquidated damages into the legislation, obviously grain companies would have access to that remedy. Would some of that remedy also be shared with farmers? Would it be reflected back to producers, or is it a benefit to the grain companies that is maybe or maybe not making its way through the chain to producers? I'd like to hear a little more about that.

Reference has been made to removal of the word "operational". I think I know the point you're trying to make there, but I think we need a little more explanation as to why the use of the word "operational" in one of the sections in Bill C-52 is such a limiting legal matter.

Finally, with respect to your last two amendments and proposed section 169.37, are your fifth and your sixth recommendations for amendments alternatives to each other? I'm just trying to fully understand their legal effect. If you got amendment number five, would you also need amendment number six, or are you arguing for amendment number six only if you don't get amendment number five? Are they both necessary, or is it one or the other in sequence?

I know that's a lot of questions to dump on you at once.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Thank you for taking the time to come.

Mr. May, I have a very specific question for you. If the six recommendations in front of us do not pass, is Bill C-52 still worthy of support? I don't want to prejudge if it would or wouldn't, but given that we've been down this road for five years now, whether it's the stakeholders' review or the negotiations and mediation, I think every side understands the issues. I don't think there is anything that is not clear, and the recommendations we have in front of us are very specific.

It's all about the balance of power and who has it. Is it the 5,000 shippers, or is it CN and CP?

If these recommendations don't pass and you were a member of Parliament, what would you do?

[Greg Cherewyk, Executive Director, Pulse Canada]

Thank you very much, Mr. Chair.

I appreciate the opportunity to be here today to discuss Bill C-52 and the enhancements that we believe will help this piece of legislation become a tool that contributes to the competitiveness of pulse and special crop shippers, Canadian businesses, and the users of the rail freight system in Canada.

I'm going to refer throughout the course of my discussion here to the six amendments that you have from the CRS, so you might want to keep them handy.

In order to encourage agreements that raise the bar, that allow Canadian businesses that drive our export-dependent economy to maximize their production and their marketing capacity, without having to work through costly legal proceedings, this bill must first provide sufficient clarity, definition, and guidance so that railways and shippers understand the framework within which they're being asked to negotiate agreements. If, and only if, they cannot reach an agreement in the commercial environment, the bill must provide appropriate clarity and guidance to the parties and the arbitrators so that the legislative backstop is quick, fair, and cost-effective.

We've been consistent with our recommendations leading up to the Dinning facilitation process, throughout that process, and indeed throughout the consultation process on Bill C-52, that clarity, definition, and guidance upfront in the legislation would increase the probability of commercial agreements being reached between rail carriers and their customers. While not all of our concerns have been addressed in the current version of this bill, we've also been consistent in saying that we'll remain firm on ends and flexible on means. There's more than one way to get where we're going.

That being said, I want to turn to what we believe must be done to improve the bill, once again with the goal of enhancing competitiveness of Canadian businesses by encouraging improved levels of service, better reliability, and better consistency.

We all recall the emphasis that shippers placed on having the elements of service defined so that shippers and carriers could focus their attention on negotiating the level of service associated with each element. This was a key part of the recommendations of the rail freight service review, and they actually put elements in the final report to the government. On the first day of meetings, the committee asked if this was addressed in Bill C-52. I'll point out where you can find some of these elements and I'll also highlight what needs to be done to complete the picture.

First, let's quickly review the five core elements of an agreement, as stressed by the rail freight service review panel and by shippers throughout the Dinning process, as well as through the consultation process on Bill C-52.

First are the service obligations. To be clear under service obligations, I also include communication protocols as part of a service obligation. Service obligations are the definitions of the services that will be provided.

Second are the performance standards. The standards or commitments associated with each one of those obligations.

Third is performance measurement. The tool that allows you to determine if standards and commitments have actually been met.

Fourth are the consequences. If a party is failing to meet the standards or commitments, some form of consequence shall hold them accountable.

Fifth is dispute resolution. The mechanism that helps determine if there has been a breach and how consequences shall apply.

Under service obligations, currently section 113 of the Canada Transportation Act refers to the railways' obligation to furnish adequate and suitable accommodation for all traffic offered for carriage. During the first committee meeting, it was made clear that the framing of railway obligations in Bill C-52 links back to section 113 and the reference to adequate and suitable accommodation.

Ladies and gentlemen, we have spent the past five years demonstrating that adequate and suitable is not an adequate definition of service obligations. It's time to modernize this act; it's time to bring it into the 21st century and appropriately define the obligations of the railway to make them consistent with modern supply chain operations.

I'm sure you'll agree that the definitions of service obligations provided in our proposed section 115.1 are reasonable. They're reasonable for an agreement between a service provider and its customer in a logistics industry today. Modern supply chains in this age of the Internet are driven by information. The expectations that shippers have for the provision of information about their plans and ongoing operations could not have been conceived of when the current language of the act was first written.

It is imperative that these items are defined so that when a service agreement is considered, it is clear that these are the obligations against which standards and communication protocols will be applied. The addition of 115.1 will provide clarity and guidance, and it's a simple and effective way to encourage more commercial solutions. Finally, it will also address the antiquated language of the act that has everyone wondering how they would ever know if they'd been furnished adequate and suitable accommodation.

With regard to performance standards, the reference to performance standards is found in proposed paragraph 169.31(1)(a). Again, to make this work, to make it effective, it must link back to more than section 113; it must link back to something like section 115.1, which we have proposed. If not, the result will most likely be inadequate and unsuitable.

Turning to performance measurement, it's the tool that's needed to determine if performance has met the performance standard. While it's not referenced directly in the bill, the second key amendment that we've proposed—that is, the removal of the term “operational” from proposed subsection 169.31(1)—will allow parties to include this essential element of an agreement in their SLA.

The term “operational” unnecessarily limits the elements that can be included. The simple amendment we've proposed would broaden the scope of an agreement to include a range of critical service-related elements.

With regard to consequences, once measurement has highlighted a failure, we look for a mechanism to confirm that a breach has occurred and to ensure that an appropriate consequence is in place to hold the offending party accountable—if that is what shippers wish to include in their framing of their SLA request.

The third amendment we've proposed simply gives the shipper the right to choose to include a mechanism that would help determine if a breach has occurred and how damages shall be assessed.

With amendments that would allow for such elements as performance measurement, the sharing of information on performance metrics, and dispute resolution mechanisms, we wouldn't expect a lot of opposition. After all, these are the terms that were routinely offered to shippers by carriers in collaboration agreements; they were key recommendations of the panel; and in the case of dispute resolution mechanisms within an agreement, it was the only type of dispute resolution that the railways considered discussing in the context of the Dinning facilitation process.

The remainder of the amendments we have put forward are critical, and will contribute to a fair and cost-effective arbitration process that is set up to achieve the desired outcomes.

Amendment four is well defined in our submission, and is an obvious gap that needs to be filled. If a railway, immediately following the establishment of an agreement, can apply a tariff or a charge that cannot be challenged, it has the ability to completely subvert the intent of this bill. The arbitrator will have made a decision within a specific context. If we do not amend section 120.1 as outlined in our proposal, a railway, through a limited distribution tariff or other such means, could apply a charge that completely changes the context of that agreement after the fact.

Amendment five in our proposal also addresses a key gap. In the minister's opening remarks to the first committee meeting, he was clear that the intent is to allow the shipper to frame the issues of an agreement under this act. The bill in its current form has a gap that will allow carriers to impose conditions or inject issues that were not raised by the shipper, which is contrary to the stated intent of this bill.

Finally, amendment six stresses that proposed paragraphs 169.37(1)(d), (e), and (f) must be eliminated. With these provisions, the arbitrator must consider a wide range of issues that are often characterized as network effects. The railways will always raise the issue of impacts on the network, and an arbitrator, quite frankly, has the ability to consider their case. But compelling him or her to consider these impacts unfairly disadvantages a shipper who has virtually no way to dispute these claims, adds expense and complexity to a process that should be quick and cost-effective, and places undue and disproportionate emphasis on the railway's needs.

Railways should not have the sole right to determine what is optimal in the context of service. The objective is not to assist railways in achieving record low operating ratios, it is to maximize the production and marketing capacity of Canadian businesses and thus the Canadian economy.

Achieving that goal may mean that the railways won't always have the most profitable configuration of their network. But then, Canadian economic performance is not synonymous with railway profitability.

Our national transportation policy reminds us of this—in section 5 of the act—when it states that:

a competitive, economic and efficient national transportation system that meets the highest practicable safety and security standards and contributes to a sustainable environment and makes the best use of all modes of transportation at the lowest total cost is essential to serve the needs of its users, advance the well-being of Canadians and enable competitiveness and economic growth in both urban and rural areas throughout Canada.

Thank you for your time.

[Ian May, Chair, Western Canadian Shippers' Coalition]

Thank you, Chairman Miller.

I, too, am grateful for the opportunity to speak with this group. We're also grateful for the government's efforts in bringing this bill forward.

I want to give you perhaps a different perspective on the bill, because it will be one that comes from a group of shippers that probably makes greater use of the shipper protection mechanisms contained in the act, and I would think probably more than all other associations combined, although this is a guess because a lot of these are confidential. We have had some rather extensive and, in some cases, unfortunate experiences with them.

The WCSC members are bulk commodity shippers for whom rail freight service is one of the most important components of their business. They're typically captive to one railway or the other and collectively spend in excess of $2 billion annually on rail freight, or about $5.5 million a day.

In evaluating the potential of Bill C-52 to correct what Minister Lebel identified to this committee as the imbalance in the relationship between shippers and railways, it's prudent to examine the current regulatory provisions to discover where they fell short in this regard and in order to help assure the success of this new remedy.

To do so, we must look at sections 113 to 116 of the current version of the Canada Transportation Act. I believe they've been distributed to the members. These sections are subtitled “Level of Services”. They have been part of the rail legislation for years and set out the service rail freight shippers are entitled to and the service obligations the railways must meet.

For example, paragraph 113(1)(a) says that a railway company shall “furnish...adequate and suitable accommodation for the receiving and loading of all traffic offered for carriage on the railway”. Paragraph 113(1)(d) says that it shall “furnish and use all proper appliances, accommodation and means necessary for receiving, loading, carrying, unloading and delivering the traffic”.

While section 113 sets out the service requirements, it is section 116 that demonstrates how seriously Parliament took the delivery of adequate and suitable service. It gives the Canada Transportation Agency real authority, as follows:

If the agency determines that company is not fulfilling any of its service obligations, the Agency may

(a) order that

(i) specific works be constructed or carried out,

(ii) property be acquired,

(iii) cars, motive power or other equipment be allotted, distributed, used or moved as specified by the Agency, or

(iv) any specified steps, systems or methods be taken or followed by the company;

This is on behalf of the railway. The railway has to do all of this stuff. Those are steps, systems, and methods specified by the agency: considerable authority.

However, the conclusions of the rail freight service review panel have taught us that even legislation as clearly drafted and long-standing as this may not protect against railway market dominance. The question is why, and will the provisions of Bill C-52 as drafted provide a better opportunity for balanced relations and the consequential commercial solutions we all prefer?

In order to make that determination, one must first understand the world in which rail freight shippers operate. Taken as a group, they comprise a significant economic force and are perhaps the critical economic driver of the Canadian economy.

A 2009 study provided by the University of Toronto's Rotman School of Management revealed that just four commodity groups—oilseed and grain farming, coal mining, lumber manufacture, and pulp and paper products manufacturing—outperform our national railways by ratios of 6:1 up to 8:1 in contributions to gross domestic product, wages, jobs, and federal taxes paid.

In short, these shippers are the backbone of the Canadian economy, but without reliable and adequate rail freight service, they cannot hope to achieve their full economic potential.

The operative phrase here is “taken as a group”. Commercial interactions between shippers and railways take place on a one-to-one basis where the collective might of the shipper community is irrelevant. In fact, according to a report produced by Quorum for the rail freight service review, there are just over 5,000 shippers using CN and CP for rail freight service transportation, and 4,239 of them are listed as “small” or “very small” in the report. That is a substantial number of jobs and businesses to put through a process wherein they are significantly overmatched.

Bluntly put, a shipper needs proper rail freight service far more than a railway needs to provide it. Railways use an operating model that subordinates the needs of the customer to those of the carrier and its shareholders. Railways defend their right to do so expertly, vigorously, and relentlessly. Rather than honour the spirit of the law, railways have chosen to honour the letter of the law.

They have dedicated legal experts who, in the event of a service complaint, question everything from jurisdiction to administrative fairness, and failing an acceptable result from the agency, make full use of the Federal Court of Appeal and the Supreme Court of Canada in pursuing a favourable outcome. They are experienced and tenacious even with seemingly unimportant issues because they recognize the value of precedent. They are fully aware that victory in a small proceeding may well establish a principle that could lead to victory when much more is on the line.

For their part, shippers use the complaint process as a last resort. Service level complaints are not part of their core business and their knowledge and expertise usually ends with their own operations. They lack the information to comment on railway operational claims, and the process of acquiring experts to assist in that area is time-consuming and costly. Discussions with the agency reveal a certain level of frustrations over the manner in which shippers typically present their cases compared to the railways. Railways are well-prepared and much better acquainted with the process whereas, for the reasons previously mentioned, shippers, particularly smaller ones, are not. Since agency decisions must be based on the evidence presented, typically such decisions favour railways.

All this is to point out that the railway market dominance does not end with commercial negotiations. It pervades the long-standing service complaint mechanism as well. It's for that reason that we have recommended changes to section 115 of the act.

Here's one of our concerns. The current version ofC-52 provides a new opportunity for railways to avoid providing shippers with the service they require, one not previously seen in rail freight legislation. Proposed paragraph 169.37(d) instructs the arbitrator to “have regard to the railway company's service obligations under section 113 to other shippers”. In effect this gives the railway a get-out-of-jail free card when it comes to providing service, which could have unintended consequences for the growth of the Canadian economy, jobs, and our international trade aspiration.

Let me give you an example. Imagine a branch line with four distinct forest product shippers on it. Let's say we have a wood pellet plant, an OSB plant, a plywood plant, and a sawmill. Service has traditionally been provided by a 120-car train set on a three-times-per-week basis. While 120 cars aren't enough to handle all of the demand within the timeframe that each of the facilities requires, over the course of a year the railway manages by shorting one of its customers one week and another the next and so on. It's not great, but at least it's reliable. Service level complaints have been unsuccessful because all the shippers are being treated equally.

Now something good happens. The sawmill has expanded its international market and doubles its orders. Instead of needing 40 cars it needs 80. This doesn't work for the railway because in order to handle the extra shipments they would have to run two smaller trainsets of 80 cars each. It's still profitable but not as good as the 120 car-set, which maximizes asset utilization.

The railway's response to the request for additional cars is “We can give you 20”, which means that the other three shippers on the line will have to take a reduction. Or, the railways may offer to provide the additional cars but at a cost that significantly exceeds the current rate being paid for the original 40 cars.

This particular section of the proposed bill actually turns the current level of service provisions against improved service for the shipper, which is not exactly the recipe for economic growth that Canadians are expecting.

When the government asked for input on the establishment of rail freight service and rail freight service level agreement legislation, shippers responded that they needed a process that was simple, quick, effect and affordable. In terms of the speed of the process you have heard that it will take 45 days. While the proposed language calls for the arbitrator to render a decision within that time, the process actually begins with the shipper requesting that the railway make an offer to enter into an SLA. From that day the railway has 30 days to respond. When you add 45 days and another 20 days that the arbitrator may ask for, you can be into a three-month process before you know it.

In conclusion, we offer these brief comments on Bill C-52 to help ensure that it will accomplish its intended purpose, that of mitigating railway market dominance. We believe that the six amendments put forward by the coalition of rail shippers will assist in that pursuit. This bill brings to light an important issue for Canadian rail freight shippers and opens the door for further improvements during the 2015 statutory review of the Canada Transportation Act.

Thank you for your attention.

[Catherine Cobden, Executive Vice-President, Forest Products Association of Canada]

Thank you very much. I'm happy to be here.

I very much appreciate the committee's efforts to review this bill. As Bob Ballantyne has already stated, we, as shippers, remain united in the need for this legislation. I'm here today representing forest product shippers from coast to coast. My remarks will not be association-speak, but will actually be direct feedback from the shippers we represent.

I would like to point out that with me today is a shipper, Mr. Brian Mcgurk. He is with Resolute Forest Products. He leads their shipping from coast to coast and also happens to be the chair of the Forest Products Association's transportation committee.

We also have with us, Allan Foran, from Aikins, MacAulay & Thorvaldson. He is our legal counsel, and I offer his assistance to you if there are any legal points of clarification that you might benefit from.

On behalf of the members of the Forest Products Association of Canada, our 230,000 employees, and the 200 rural communities we represent, I would like to thank the government for the work it has done to date to prepare Bill C-52. This bill does move us forward and will give us more leverage on the day it is passed than what we currently have. We do have a few simple suggestions that are of critical importance for improving the practicality of the bill and to assure that the regulatory burden is minimized.

Before I get into those specifics, I will share with you some insights on how forest product shippers experience the world to help you appreciate why this is such a critical area to get right. FPAC member companies represent a significant slice of the rural economy. We also represent a significant slice of the railways business. We estimate that to be about 20%. While we are rurally based in our manufacturing, we serve a very wide global marketplace. Over 85% of our products from these small northern towns are shipped all over the world and into a demanding global marketplace. Whether we're shipping to China, Europe, or the U.S., we require timely, predictable, and cost-effective transportation systems to meet the needs of these discerning global customers.

I would also say that we believe in a free market economy. However, it is unfortunate that we routinely experience the challenge of living with a key component of our business, the railway transportation system, that is not free market-based. Indeed, addressing the imbalance of market power that the railways currently enjoy remains the final frontier—if you're a Trekkie—of opening up Canada to the world economy.

It is with this backdrop that FPAC applauds the intent of Bill C-52. You have taken action to enhance the effectiveness, efficiency, and reliability of rail freight supply to address the current imbalance we face in the rail system.

Minister Lebel's testimony on February 12th went further in outlining the critical intent, when he urged this committee to understand why this legislation is vital. My colleague Bob Ballantyne has already read the quote, and I'll just borrow from the very beginning of it, where Minister Lebel said, “We are not dealing with the normal free market”.

FPAC member companies fully agree with the intent of creating the conditions to allow for successful commercial relations. Obviously, that's what we agree with, and this would normally be possible in a free market condition. Ideally, we'll never have to use this legislation.

I want to point out that our bona fides on this point is very strong. In fact, we had tried to broker our own commercial deal with one of the railways on this very topic prior to this regulatory endeavour, and we failed miserably. Having led the exercise on behalf of FPAC member companies, I can say from personal experience that the shipper community does not have any other option than a strong piece of legislation being available to us to bring the discussions with the railways into better commercial balance.

Again, we fully support the intent of the bill, and in the spirit of ensuring the objectives of this bill are indeed fulfilled, forest product shippers make three important recommendations for your consideration.

Recommendation number one is that you delete all references to the word “operational”. Simply remove this one word. This will ensure that we do not undermine the objective of rebalancing commercial relations. By referencing operational data, you create the unintended consequences of adding costs, creating an information imbalance, and diminishing the intent and power of the legislation.

Recommendation number two that you delete all references to statutory obligations to other shippers and third parties. Removing this reference will ensure that we don't dilute the arbitration away from the true objective, which is addressing the inadequate service experienced by the shipper.

Recommendation number three is that you insert a new stand-alone section that would define adequate, suitable accommodation and service obligations. This one should be easy. All parties in previous processes, such as the rail freight service review and the Dinning process, were in full agreement as to the elements that defined service obligations. We argue that if this is not clearly spelled out in the legislation, we run the risk of cumbersome legal proceedings defining and eroding the intent and nature of this bill. I happen to put my faith in this committee over the lawyers in this regard.

A detailed description of these three changes has been circulated for all of you. I'm just glossing over them, but hopefully I've given you enough of a description so you can appreciate what they intend.

In conclusion, as Canadian companies aim to secure their place as the preferred supplier to the world, we must have an efficient, reliable, and effective rail system. The committee's undertaking on this legislation is therefore critical.

FPAC members appreciate your attention to these matters. We request your support for these adjustments to ensure that the bill is a workable success. Thank you for your attention.

[Wade Sobkowich, Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association]

We're thankful to the government for making rail service a top priority on its legislative agenda. The entire shipping community has been through a multitude of processes leading up to Bill C-52, which started in 2006 and which, we hope, will finally result in the necessary backstop for balanced accountability.

In order to ensure that it does not render the legislation ineffectual for or detrimental to shippers, Bill C-52 requires six sets of amendments. We cannot overstate the importance of all six. I should add that they complete the modernization required to ensure that the service pie grows in size rather than it only being divided differently. Without all of them it's possible that rather than facilitating the predicted growth in our economy, the bill might have the unintended effect of potentially constraining that growth.

Others will speak to items 1, 2, 4, 5, and 6, although l'd be pleased to respond to any questions. l'm choosing to focus my comments on item number 3 from the CRS package that I believe everybody has. It's about the need for an expedient mechanism for a shipper to be awarded liquidated damages for service failures.

This particular amendment speaks to a void in the draft version of Bill C-52 that affects smaller shippers. My perspective is that of a grain shipper. I'm a member of the CRS, but I'm with the Western Grain Elevator Association. In this regard, we speak about all grain elevators as smaller shippers since each elevator location essentially acts as a small location shipper. The best way to illustrate the problem we're trying to rectify with amendment number 3 is with an example. So here it goes in two minutes.

Typically, the time allotted for loading a unit train of grain is 24 hours. If we fail to perform, the consequences are set out in a railway tariff. We don't object to this discipline. For example, if a grain shipper is anticipating the arrival of a unit train at an elevator location on a Tuesday, normally the elevator will shut off receiving from farmers when they are loading so they can dedicate staff to loading the train. Twenty-four hours means that with about a hundred cars, it takes about 14 minutes per car to load, so the company has to be very efficient.

When the train doesn't arrive on the day the railway says it's supposed to, we're faced with added costs of labour and overtime costs on a weekend. And if the train doesn't show up on a weekend, now we've paid time and a half. Inbound loads from farmers have to be rescheduled, which causes significant problems at the farm level, and there's a danger of congesting deliveries. If the train doesn't show up for three days, now we've shut that elevator down for three days. In some cases the elevator is full and can't accept any more deliveries. When cars don't show up, those farmers have to be turned away, and that disrupts the system.

When the train moves to a terminal elevator later than expected, it is very likely that it will arrive on top of other shipments. Rail car bunching occurs, which leads to longer unloading times, exposing companies to railcar demurrage. If terminals are waiting for those cars, they are exposed to vessel demurrage, which is extremely expensive. Or perhaps the vessel has sailed, and now the terminal has to sit on this inventory. It would not be unreasonable to assume that the added costs to the shipper in this example could be $50,000. Under Bill C-52 the railways are not required to compensate shippers for any portion of these losses, and this gap is what we're trying to address to the best of our abilities to make sure that this legislation fulfills its intentions.

We propose a modification to 169.31(1)(b) to allow the shipper, at its option, to submit to the agency for arbitration terms governing whether or not a service failure has occurred and the manner in which damages are to be assessed and paid to the shipper for losses resulting from such a failure.The practical use of a service level agreement is severely limited if obtaining a remedy resulting from a breach requires the shipper to commence proceedings before the agency and/or court, or to rely on the proposed AMPs system. It's not practical for shippers to always undertake costly and lengthy agency and/or court proceedings.

Allowing dispute resolution mechanisms to be included in an arbitrated SLA will enhance railway responsiveness to service problems that arise once an SLA is established. The concept of balanced accountability between shippers and rail carriers can be achieved if mechanisms for compensation to shippers for railway failures can be determined in a simple and expedient fashion.

[Robert Ballantyne, Chairman, Coalition of Rail Shippers]

Thank you very much. I will share some of my time with Wade Sobkowich. We're certainly pleased to have the opportunity to bring the shipper perspective on Bill C-52 to this committee.

The 16 member associations of the CRS account for a substantial portion of the rail freight customer base, and the member companies in those associations are estimated to provide more than 80% of the Canadian revenues of CN and CP.

All 16 CRS member associations support the six proposed adjustments to Bill C-52 that we bring to the committee.

Bill C-52 is the government's response to the longstanding service problems that were identified and quantified by the independent rail freight service review panel and its consultants. The NRG Research Group, in its independent survey, found that only 17% of respondents rated their satisfaction with railway service at a 6 or a 7, based on a scale of 1 to 7 in which 7 meant “very satisfied”. They also reported that 62% of shippers reported that they had suffered financial consequences as a result of poor performance.

The fundamental underlying problem is one of market dominance. The rail freight market is not a normally functioning competitive market; it is dominated by the sellers. The rail freight service review recognized this, with the panel stating the following on page 41 of its final report:

This railway market power results in an imbalance in the commercial relationships between the railways and other stakeholders.

In his testimony before this committee on February 12, Minister Lebel referenced the above conclusion and stated:

It is essential for the committee to understand why this legislation is necessary. We are not dealing with the normal free market. The reality is that many shippers have limited choices when it comes to shipping their products. It is therefore necessary to use the law to give shippers more leverage to negotiate service agreements with the railways.

The behaviour of monopoly businesses has been well understood since the 19th century, and many of the lessons learned were from the behaviour of 19th-century railways. Canadian law has acknowledged this dominance for over a hundred years.

In this connection, the abuse of dominance provisions of the Competition Act—that is, sections 78 and 79 of that act—are certainly of interest.

The Competition Bureau's guidelines—and I stress that they don't govern the railway industry, but they're certainly instructive—or the bureau's general approach in evaluating allegations of abuse of dominance is as follows:

A market share of less than 35 percent will generally not give rise to concerns of market power or dominance.

A market share of 35 percent or more will generally prompt further examination.

In the case of a group of firms alleged to be jointly dominant, a combined market share equal to or exceeding 60 percent will generally prompt further examination.

In the case of the rail freight market, CN and CP together control 97% of the market by revenue. The issue of competition from other modes is a factor often raised. While in some instances there may be truck and marine competitive options, the reality is that moving to other modes in most cases is not practical, in any reasonable scenario.

There has been discussion that "commercial solutions are the preferred solutions", by government and other stakeholders. Throughout the service review and the follow-on initiatives, the shippers have stated a preference for solutions that would be "commercial", but a necessary prerequisite is that there be a normally functioning competitive market in which there is a reasonable balance between the buyers and sellers. Wherever there is no such balance, the only recourse for the disadvantaged parties is to look for a legislative framework that acts as a surrogate for normal competition.

The minister and his staff have outlined to you the structure and provisions of Bill C-52, which are designed to influence the behaviour of railways in a manner that would be comparable to there being effective competition. The CRS has noted that Bill C-52 in its operation will break new ground, with little relevant jurisprudence or experience available to the agency or arbitrators. The CRS believes the bill can be strengthened in a way that will minimize uncertainty, give more explicit guidance to arbitrators, and limit the opportunity for railways to mount legal challenges designed to either frustrate the intent of Parliament, delay decisions, and lead shippers both large and small into expensive legal battles.

The CRS has six recommendations, which I will very briefly introduce. These have been given to the committee and will be discussed by my colleagues in more detail. They are as follows:

The first one is to spell out that the service obligation is intended to meet the needs of the shipper, and then name the specific obligations.

The second one is to allow the arbitrator to rule on the whole contract between parties and not just the operational parts; that is, service is somewhat differentiated from just the operational parts.

The third is to make clear that dispute resolution terms, including damages, may be included in a contract by an arbitrator in order to reduce subsequent costs and delay in dealing with problems.

Number four is to remove a loophole whereby the railway can impose an unspecified charge against a single shipper without recourse.

Number five is to make clear that the shipper can decide which issues will be arbitrated.

Sixth is to remove undue precedence given to the railways' network obligations over and above the service obligations to the shipper.

With that, I would like to turn over the rest of my time to my colleague, Mr. Sobkowich.

[Ralph Goodale, Liberal, Wascana, SK]

Thank you very much, Mr. Chairman.

To pursue some of these issues a little more closely, I'll start with, again, the issue of the confidential contracts that may be in existence already, but of course by their very nature they're confidential, so no one knows for sure. If you were to look at proposed paragraph 169.31(3)(a), this is in the section that refers to those contracts and prohibits an application for arbitration while they're in existence.

I think it would be of some comfort to the committee if the department could consult a bit more extensively with both the railways and the shippers' coalition to give us a better feel for how many of these existing arrangements there are. Is it 8 or 10? Is it 200? How many are there? How many are beyond the timeframe that the minister referred to of just a year or two? Is there anyone out there who runs for 5 years, or for 10 years, for example? If the department had some statistics around that, I think it would give us more comfort as to how big a loophole that is in terms of access to arbitration. I wonder if the department could take a look at that.

Second, I'd be interested in your comments on the implications of this legislation for short-line rail operators. Is there anything in this bill that directly or indirectly has an impact for those typically farmer-owned or community-owned organizations that are running short-line rail systems, or are they completely exempt and unaffected by anything that is contained in Bill C-52?

Third, I wonder if you could give us a little help in understanding the new proposed subsection that appears on page 12 of the bill for section 177, which is the section that actually deals with the penalties. It talks in terms of “The Agency may, by regulation...designate” certain things as triggering penalties, and the penalties “shall not be more than $100,000”. I would like to know more about what actually triggers a penalty here and who decides.

If you have a commercial contract and one party is unhappy with the other side, typically they sue and present their case in court, but for these penalties, who will actually make the decision that a violation or, in the language of that section, a “contravention” has occurred? How does that contravention come to the attention of the decision-maker? Is it up to one side or the other to complain to the CTA, and then the CTA will decide whether or not there's been a contravention, and if so, what will be the level of penalty? Will it be not more than $100,000? I think we need a little more clarity around how those penalties work.

My fourth question, which I'll ask and then wait for answers to all of them, is that, since this is brand new legislation dealing with an area that has been a minefield of complaints for quite a few years, would it be a good idea to say that the department would, in two, three, or five years, review the practical impact of this legislation to identify whether or not the arbitration systems are working?

For example, is it just a backdrop and commercial arrangements are being worked out and nobody really has to have recourse to the legislation? Is it working out in the way that it was intended? Are shippers finding the arbitration process accessible if they need it, or are there financial or administrative barriers that are getting in the way? Would it be a good idea to have in the law a provision whereby the practical experience here gets reviewed a few years down the road to see if it's working out in the way the government intends?

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

All of the stakeholders have been involved in this process for years. We saw the reaction of these stakeholders after we announced Bill C-52. We proposed the bill to let them have the space to have a commercial agreement. That's what they wanted. We will let them have these kinds of agreements. The arbitration will be there if they are unable to have it.

We're sure that's the right tool now to support the Canadian economy.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I'm too efficient here, I guess.

The last thing I want to touch on I briefly touched on in my last question. I sense from reading some of the documentation that's gone on over the years, there's been a lot of consultation with all stakeholders going through this process and coming up with Bill C-52. Minister, could you touch on how much consultation was held and how deep that consultation has been? It might be interesting for the committee to hear that.

[Denis Lebel, Conservative, Minister of Transport]

Thank you very much, Mr. Chair.

Members of the committee, I am very happy and honoured to be here with you.

Mr. Chair, thank you for having me here today to speak about Bill C-52, the Fair Rail Freight Service Act.

I am joined by Annette Gibbons, director general, surface transportation policy, and Alain Langlois, senior legal counsel, modal transportation law, with Transport Canada.

Bill C-52 is a very important milestone for our rail industry. This legislation will help ensure that railways and shippers work together to accomplish a shared goal to improve rail freight service in Canada. It will help shippers expand their growth and their businesses, while ensuring that the railways can manage an efficient rail shipping network for everyone.

As this committee knows, rail shipping is extremely important to our country's economy. Some 70% of our surface freight moves by rail. A strong and effective railway-shipper relationship is essential, which is why our government committed to table this important legislation. It will support job creation, economic growth, and long-term prosperity in Canada.

I won't dwell too long on the road that led us to where we are today, but I think it's important nonetheless to touch on it briefly.

In 2008, our government created an independent committee to review the rail freight services in Canada. The committee carried out an in-depth study on rail freight transport. It concluded that there was an imbalanced relationship between the shippers and the railways, and that the situation needed to be rectified by leveraging the shippers' influence.

The committee recommended using service contracts as a commercial tool in order to provide a clear framework and a better predictability and reliability of freight services. In March 2011, our government accepted this commercial approach put forward by the committee. We also made a commitment to table Bill C-52 to ensure that Canada has the rail system that it needs to support a strong economy.

Most importantly, I'm confident this bill will pave the way for better commercial relationships between railways and shippers, which is ultimately the best outcome for everyone.

It is essential for the committee to understand why this legislation is necessary. We are not dealing with the normal free market. The reality is that many shippers have limited choices when it comes to shipping their products. It is therefore necessary to use the law to give shippers more leverage to negotiate service agreements with the railways.

The intent is to create the conditions that will allow for successful commercial negotiations that would normally be possible in a free market. Ideally the legislation will never have to be used.

Bill C-52 was developed in close consultation with both shippers and railways. We consulted widely and listened carefully to the input we received. Multiple sectors, including forestry, agriculture, mining, and energy, came forward to offer their views, as did the railways.

It was important to take the necessary time to carefully consider all of these complex issues and to develop intelligent and responsible legislation.

Most fundamentally, Bill C-52 creates a strong incentive for shippers and railways to negotiate service agreements commercially. It gives shippers the statutory right to a service agreement with the railways, and it will require a railway to make an offer to a shipper within 30 days of receiving a request for a service agreement.

Should contract negotiations fail, shippers could turn to the Canadian Transportation Agency to request that an arbitrator impose one. The agency is a regulatory body renowned for its expertise. The agency already manages several other arbitration and dispute resolution processes.

In order to access arbitration, the shipper needs to demonstrate that he or she made the necessary efforts to come to an agreement and that a notice was served to the railway company 15 days before the request for arbitration.

While this is a low threshold to trigger arbitration, it does require the parties to attempt to negotiate an agreement on their own before going to the agents. The shipper will be in the driver's seat. He gets to trigger arbitration, identify the type of service desired, and frame the issues to be addressed in front of the arbitrator. Both the shipper and the railway will then provide submissions to the arbitrator with their views on what the agreement should include.

Through an interest-based process, the arbitrator will have to consider the interests of both parties when establishing an agreement that is commercially fair and reasonable. The arbitrator will have to consider the shipper's transportation requirements as well as the railway's obligation to serve all shippers. The arbitrator will have the flexibility to determine what service elements are fair and reasonable in the particular circumstances of each case. There is no one-size-fits-all solution to these issues because every shipper is different.

It is essential that the arbitrator have enough flexibility to establish an agreement that makes sense for each unique situation. The arbitration process will benefit shippers because it will be fast, only 45 days, and the imposed contract will be binding and non-appealable.

To enforce these arbitrated service agreements, Bill C-52 sets out administrative monetary penalties. If the agency confirms that a railway company violated the arbitrated service agreement, it could fine the company a maximum of $100,000 per violation. This threshold is four times higher than the other existing penalties. The penalty would be applied to each violation. Therefore, if there are multiple violations of the arbitrated service agreement, the cumulative fine could reach hundreds of thousands of dollars.

This is a considerable monetary penalty for railway companies who do not respect their commitments. What I am proposing is different from the penalty system that the shippers put forward. They asked the government to give the arbitrator the power to establish a penalty system within the service agreement, therefore allowing them to be compensated later if the railway company didn't provide the services promised.

We studied this proposal very closely, but it entailed significant legal issues which made it inapplicable.

First, punitive penalties are not enforceable in commercial contracts. It would simply be unprecedented to have a regulatory agency impose pre-established penalties. Regulatory agencies address breaches of legislation after they take place, not before.

Second, such a penalty regime would disadvantage shippers by limiting their right to sue the railway in court for real damages after a service breach.

Finally, it would be an enormously complex and time-consuming task for an arbitrator to predetermine a penalty for every different kind of service failure before it happened.

For all these reasons, I'm proposing administrative monetary penalties because they will achieve the same outcome for shippers: a strong financial consequence to ensure railways are held accountable without creating unnecessary legal risk. The penalty regime will be fast, efficient, and inexpensive for shippers. I fully expect that the railways will want to avoid these penalties, so they will respect the imposed terms of service.

Now I would like to address certain points that were raised during the debate at second reading.

Some people fear that once this legislation is adopted, shippers who already have an agreement with a railway company will not be able to use arbitration before this contract is enforced.

Shippers and railway companies have entered into these agreements voluntarily, based on certain commercial expectations. Therefore it would be unfair to change the rules of the game for agreements that have already been signed. These agreements will eventually expire, and at that point, the shippers will be able to use arbitration if necessary, as laid out in Bill C-52.

Moreover, in regards to the transportation of goods to the U.S.A., Bill C-52 would cover the Canadian portion of shipments to the U.S.A. However, it would not seek to broaden the agency's jurisdiction in order to cover railway activities in the United States.

We have a different railway regulatory system than the United States. Expanding the scope of Canadian laws to include the United States would cause problems and compromise Canada-U.S. relations. Furthermore, American carriers operating in Canada would strongly oppose such an idea. Essentially, we must respect American jurisdiction just as the United States respects ours.

I've also heard concerns that there is no commercial dispute resolution mechanism established in Bill C-52.

By definition, you cannot use legislation to impose a commercial process. This bill outlines an arbitration process to resolve disputes once commercial options have failed. What the parties agree to do commercially is entirely up to them. Nothing in the bill prevents them from coming up with their own commercial dispute resolution process.

Shippers are also concerned that it may be too costly for them to use the arbitration process. This bill limits the costs that the government can control. The arbitration process has been limited to 45 days, in part to keep costs down. For the other costs, shippers may wish to enlist lawyers and experts to assist them in the arbitration process, but they control the use of such services.

It is also important to highlight that nothing in the bill diminishes the existing common carrier obligation that railways have had for over 100 years under section 113 of the act. The new arbitration process that will be established by Bill C-52 complements the existing provisions in the act.

In conclusion, when we made a commitment to table this bill, we clearly indicated that its emphasis would be on the service. The shippers supported this approach, and when it was being drafted, they did not ask for the rates to be included. The legislation lays out other measures that allow shippers to address rates and fees if the shippers believe that they are unfair.

Bill C-52 is complementary to other remedies. All of the measures in the bill will offer shippers the clarity, predictability and reliability that they need to succeed. That is what they have told us.

To quote the position of the Coalition of Rail Shippers, “Bill C-52 meets the fundamental requests of railway customers for commercial agreements.” Similarly, Pulse Canada, which represents pulse farmers, notes that the legislation will help them ensure that they are “seen in markets around the world to be reliable, consistent suppliers”.

We must act so that our rail freight system is well positioned to support economic growth, resource development, and our government's ambitious domestic and international trade agenda. We need Bill C-52 to ensure more predictable service to shippers, who help fuel our economy, farmers, who sell grain on the international markets, lumber mills, looking to expand sales overseas, and mineral producers, who ship products such as potash and coal.

Railways and shippers depend on each other to succeed. Since the rail freight service review has been launched, we have seen improvements in rail service in Canada. I commend the railways for working with shippers to negotiate for more service contracts. This bill is about solidifying and building upon those important gains.

Mr. Chair, for generations, agriculture and natural resources have created jobs and growth throughout Canada. To harness this potential and build for future growth, we need a strong rail freight system. I call all members of Parliament to support Bill C-52 without delay, so that these proposed measures will help achieve that goal.

I thank you and the committee for your time this afternoon.

Mr. Chair, thank you for your attention. My team and I will be pleased to answer any questions from the committee members.

Thank you very much, Mr. Chair.

Fair Rail Freight Service Act

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I thank my hon. colleague for this very relevant question. She explained the situation very well in her preamble.

And that is why I would like to come back to the national transportation strategy proposed by my hon. colleague, our transport critic, in her bill.

I hope the Conservatives will have a look at it, because what we really need is a comprehensive vision—one that involves investing in infrastructure and investing in our economy, especially our regional economies. This vision involves protecting the environment and protecting our roads, which would be better for everyone if they were in better shape.

Indeed, my hon. colleague painted a clear picture of the situation. Bill C-52 is merely a drop in the bucket in terms of this problem. A much more comprehensive, more overall vision is needed.

We in the NDP have a vision that includes the economy, the environment and a national transportation strategy.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I would like to thank my colleague from Vaudreuil-Soulanges for his very relevant question.

As I mentioned in my speech, that aspect is missing from the bill. It is another example of how the Conservatives failed with this bill. We will support it, but unfortunately, certain aspects of it need to be improved, including fees. That is problematic.

If we want to encourage the use of the railways and if we want farmers in a given region to be able to use them, fees needs to be affordable and accessible. If fees are made more affordable and if heavy trucks are pulled off our roads, we will improve our roads, our economy and our environment.

Railways are the way of the future. I believe that Bill C-52 is a step in the right direction, but it is not enough. Unfortunately, the Conservatives do not have the courage to finish the job concerning fees.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I am pleased to speak today to Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration).

I will say right away that we will support this bill at second reading, even though it is flawed.

Some 80% of rail freight service customers, that is to say shippers, are not satisfied with those services. They asked the government to take action and to introduce legislation compelling CN and CP to enter into service agreements with them.

As I mentioned, this bill is a first step, but it is not a panacea, on the contrary. Shippers are having trouble getting fair and reliable rail freight services. Some of them cannot even sign contracts with major railway companies, which experience significant delays or do not have enough cars at their disposal.

The Conservatives finally introduced this bill to address some of those problems after the NDP critic tabled her bill introducing the rail customer protection act last spring.

The NDP transport critic did a very good job on railways. She is also working very hard on public transit and has suggested that we have a national public transit strategy. The Conservatives should entertain that strategy, but they are unfortunately still turning a deaf ear. It would be good if they listened to all these good ideas on public transit.

As I mentioned earlier in asking my honourable colleague from Manicouagan a question, the railway is Canada's raison d'être. It is a historic and essential factor for Canada. The level of service has been declining for some time now. The government has stopped investing in infrastructure, and legislation does not have enough teeth to force businesses to invest in that infrastructure.

Consequently, we are using the roads and trucking far too much, when we could be using the railway. The benefit of doing so would be considerable, not only for our roads, which are being damaged, but also for the environment because the railway is a very environmentally friendly mode of transportation.

Bill C-52 is a first step in the right direction, but it is far from perfect, since major demands by shippers have gone unheeded. Its ambiguous wording, for example, creates potential loopholes. The NDP will seek amendments at the committee review stage to prevent any abuses of market power by requiring that service agreements be reached and putting in place conflict resolution processes.

Rail freight services are currently of poor quality, and this is costly for the Canadian economy. In fact, it costs hundreds of millions of dollars every year. Many industries in Canada have to deal with rotten crops, work stoppages at plants and in mines and missing freight on a daily basis. Poor rail services hurt Canadian shippers and undermine our global competitiveness, in addition to costing jobs.

We should rely much more on the railway, but in order to rely on it, it has to be efficient and first-class, so that businesses and SMEs use it more and more. In my region of greater Drummondville, the railway is an important industrial element, but it is not used as much as it could be. If we had a railway that was more efficient, more available and more reliable, and on which we could rely, I am sure that businesses in my region would use it more. This would be a win-win situation on all levels: our competitiveness, our economy and our environment.

The Conservatives have not provided enough money for our infrastructures. Because of this, we now have a huge quality deficit, and one example of it is the poor condition of our network of railway tracks.

In addition, the Conservatives’ bill is very weak in that its safeguards do not cover existing contracts between shippers and railway companies, and it provides only a limited arbitration process in cases where negotiations on a new contract break down. Furthermore, we need to have a more global vision, as I mentioned earlier.

Railway transportation is the backbone of Canada’s economy, as 70% of our goods are shipped by rail. It is therefore essential that railway services be advantageous both for shippers and for our railway companies. The high cost of railway services also has a negative impact on Canadian shippers. Bill C-52 explicitly excludes the issue of rates, ignoring the demands of certain shippers’ associations.

We should not forget Canada’s trade deficit, which continues to escalate. According to Statistics Canada, our trade deficit reached $2 billion in November 2012. This is clear evidence of the Conservatives’ failure. Not only does the Conservative government have the highest budget deficit in Canada’s history, but in addition, our trade deficit is clear proof of its failure across the board.

The fact that it ignored railway transportation is just more evidence of its economic failure. As I mentioned, 70% of our freight is shipped by rail. We must give much greater consideration to railway infrastructures and take a more global viewpoint. Not only was Canada built by the railway, which has quite a history in Canada, but in addition, the railway is clearly the way of the future. All modern societies are investing in railways. All societies that have a long-term vision are investing in the railway infrastructure.

We have been asking for a long time for a national public transit strategy that would include the railways. Unfortunately, once again, the Conservative government has failed. This is a very serious matter.

I am now going to digress from talking about Bill C-52 to make a brief aside. Recently, the environment commissioner issued his latest report. I would like to thank Mr. Vaughan for all the work he has done. In his latest report, he has done an excellent job for Canada and the environment. In the report, he mentions the annual financial support, in hundreds of millions of dollars, nearly $1 billion in total, that the Conservative government continues giving to coal, oil and natural gas, even though the money could be put toward a national transportation policy. This is very important. We think of public transit, but we should also be thinking about freight transportation. They go hand in hand. We will have to revisit this notion.

Everything is interrelated. Transportation is related to the environment and to our economy. It is all part of the same thing. Unfortunately, as we have shown, the Conservative government has the largest budget deficit in Canada’s history, as well as a trade deficit that reached $2 billion last November, according to Statistics Canada. In addition, there has been a lack of investment in infrastructures. I would like to add that 80% of shippers are unhappy with the services provided by our railway system.

This is clear evidence that the Conservatives have failed. The NDP must absolutely take their place so that we can implement a national transportation strategy. This will help the economy, the environment and transportation overall.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I am pleased to have 10 minutes to talk to the House about my party's viewpoints and my own on Bill C-52, which I have here in my hands. This government bill amends the Canada Transportation Act.

I would like to preface my remarks with a comment on the atmosphere here this morning. We are talking about and debating a government bill, but none of the MPs who have agreed to debate this bill in the House belong to the governing party. There are three possible reasons for that, reasons that may be unknown to members of the public, who I hope are listening on CPAC.

It may be a strategic move to put a lot of pressure on the opposition members, forcing them to work hard in the hope that they will exhaust their resources. But I have news for the government: we have many very young MPs who can work very hard for long hours. If that is its tactic, perhaps it should think of a new one.

If that is not the case, then it might be something that worries me a little more: contempt for the parties affected by its own bill, perhaps even contempt for the work of parliamentarians. We belong to a Parliament. When we are here on the Hill, we are paid very well to do our jobs as parliamentarians.

The government introduced a bill of major importance to the Canadian economy, but its members could not even be bothered to stand up in the House to explain their government's position. That reminds me of the time a few years ago during an interview while Parliament was prorogued when the current Prime Minister—only for another two years—came right out and said that he thought shutting down Parliament would be better for the economy. He was quite serious when he said that.

After considering all the possibilities, we think we have the answer. We see this as a very clear demonstration of the utter contempt this government has for our parliamentary duties. All modern legislation has regulations. Many members of the current government seem to live in a fantasy world of libertarianism. We sometimes wonder if it should not be called the conservative libertarian party of Canada, whose answer to everything would be the invisible hand of the market.

In good legislation, there is no place for that kind of fantasy. Furthermore, I challenge any one of my colleagues across the floor to name a single piece of legislation, from anywhere in the world, that has followed that logic through to its conclusion and has been beneficial for the people. It simply does not exist.

Modern legislation needs to strike a balance among people—the buyer and seller, those who need a service and those who provide that service.

There are near monopolies or duopolies, as in the case of credit cards and rail freight transportation. There are just a few huge companies that provide a service to thousands of users. It is impossible to think that, within such a completely unbalanced framework, the invisible hand of the market can balance everything. That is impossible.

That is why it is our duty as parliamentarians to ensure balance and some degree of fairness, and to promote commerce not just for a small number of huge companies, but for all Canadian companies.

Let us come back to the bill before us today, Bill C-52.

I would like to point out that my party and I will be supporting Bill C-52, despite its many weaknesses. We will do so mostly to address the needs of this country's rural areas. But this bill is merely half a step, and not quite in the right direction.

However, out of respect for people in rural areas, who really need to have their processed goods and raw materials shipped efficiently, even a small, flawed, sideways, ill-conceived step is better than nothing. Therefore, we will be supporting this bill.

I was saying earlier that we are dealing with a duopoly that has created a ridiculous situation: 70% of our primary processed materials, our natural resources, are shipped by rail by two companies. Eighty per cent of shippers are dissatisfied. It is impossible that 80% of the country's entrepreneurs have suddenly caught the “complaints” bug for no reason. We have to think of the consequences of this situation.

At present, some shippers are unable to enter into reliable and clear agreements that would allow them to provide services themselves to other companies, even internationally, with reliable transportation.

Shippers that have an agreement regularly have to deal with delays that are so long they result in catastrophic scenarios where assembly lines in Canada are slowed down. I will say it again because it is such a big problem: time and again assembly lines are slowed down. It is not because people are not qualified or are not willing to work. It is because they are waiting for parts that have been delayed by an inadequate rail transportation system. This represents tens, if not hundreds of millions of dollars in lost efficiency.

For other shippers, it is a question of the lack of availability. For example, a certain tonnage of materials could be shipped to China, but shippers are unable to sell their products. It is not for lack of supply or because they cannot meet demand. It is because the link between Fermont and China is slowed down by poor rail service. How do you put a price tag on such losses in a global economy?

I would like to point out a fairly disturbing aspect of the Conservative's approach to the economy. They spend a lot of time botching free trade agreements. They have been signing agreements with many countries as quickly as possible, even if the agreement is flawed and provides for much less than what Canada could require. The Conservatives are focusing on quantity.

Meanwhile, they are not making the necessary efforts to ensure that Canadian companies remain competitive. Some ways of achieving this would be through decent transportation, a credit card system that does not charge exorbitant fees, and a research and development program. Although our Canadian entrepreneurs have a great deal of expertise, we must make their job easier so that they are able to be competitive.

The government has not managed to do that, but it is rushing to open markets left and right by signing agreements that are all too often flawed.

To summarize, the Conservatives do not care about keeping companies competitive. We should not be surprised to see an increase in our trade deficit, which recently reached $2 billion.

The bill is flawed and was introduced only because one of our colleagues, who introduced a bill on the protection of railway customers, exerted a lot of pressure. Her bill was clearly worded and truly designed to help those experiencing this problem.

As I mentioned earlier, the bill is weak, particularly when it comes to the arbitration process, because it puts the burden of proof solely on shippers.

One of the clauses of the bill says that both parties must consent to arbitration. As a result, if a large company says that it does not want arbitration, the case will end up in court. My colleague from Côte-Nord can attest to this. An SME could, once again, end up in court with a mega-corporation. We know how these types of situations turn out.

We will support this bill, but we hope that it will be improved by the standing committee.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, before being interrupted by question period, I was talking about elements that destabilize economic activity in certain industries.

Unfortunately for the industries, they are not compensated by the parties responsible for these disturbances. We are talking here about hundreds of millions of dollars every year. Seventy per cent of our goods are shipped by rail. Considering the $2 billion trade deficit and fierce international competition, we cannot afford to opt for the status quo or for a half measure like the one proposed in Bill C-52. This situation, unfortunately, gives a trade advantage to our competitors around the world. They have the capacity to deliver their goods more rapidly and more punctually, despite the fact that our Canadian products often have a shorter distance to cover.

Unfortunately, for too long now, the government has not wanted to act. The Conservatives have been waiting since 2007 to introduce this bill, and when we take a look at their inaction and the cutbacks they have made over the past few years, we may conclude that they do not understand how important our railway system is.

On our side of the House, through the bill introduced by my colleague from Trinity—Spadina, we have conveyed the shippers’ demands in an attempt to restore the balance in their relationship with the railways. Canada needs a national transportation strategy.

Greater use of rail transportation would have a positive impact on the quality of our environment and would help reduce greenhouse gas emissions significantly. Unfortunately, when shippers cannot obtain services from our only two rail service providers, they will rely even more heavily on trucking, which will have a negative effect on our economic activity from an environmental point of view. We sense a lack of commitment by the Conservatives to our railway network, as evidenced by the lack of investment in railway infrastructures.

We must therefore restore the balance between the railway companies and shippers. Our position is a simple one: we are on the side of businesses and exporters, and we are determined that they should receive the railway services they deserve and that they need. As usual, this government is on the side of big businesses that have a near-monopoly and is not interested in protecting SMEs through a bill that would have given them a leg up in international markets. If the government ultimately gives in, it will be attributable primarily to co-operation among the various industrial associations that banded together to advocate for legislative changes to the Canada Transportation Act.

Therefore, I would ask the government to work with us when the bill is being considered in committee. The competitiveness of our companies and our SMEs depends on an efficient rail transportation system. Canada’s economic vitality also depends on it. Our businesses need good services in order to make investments and create jobs. We will therefore support this bill. We ask that the government co-operate with opposition MPs to improve the bill and contribute to Canada’s solid economic growth.

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.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, I am very pleased to speak today about a bill to improve the rail transportation system.

On this beautiful snowy day, we are getting back to rail transportation. It is probably the means of transportation that is least affected by the bad weather we are having today.

As I said, I am pleased to speak today about a bill to improve our rail transportation system. I will be clear from the outset: we will support this bill in order to send it to committee.

We will also support it because the majority of shippers are mostly or partially satisfied with it. We are going to respect their position and support this bill.

There is something that sets us apart from the other parties recognized in this House: we listen carefully to the opinions and needs of Canadians and our country's businesses.

We consult them because we want to know what their needs are. That way, we can develop good public policies. We are not jamming measures down the throats of Canadians and businesses. At times, the party in power takes steps and imposes measures that no one wants.

However, my colleagues and I strongly believe that this bill must be amended since it does not fully meet its objective. The best that can be said for this bill is that it is only a half measure.

Many of the demands of shippers were not included in the bill. What is more, the wording is very ambiguous. Some provisions must be examined more thoroughly in committee because they could potentially create loopholes.

The scope of Bill C-52 is also limited since it will cover only new agreements and, unfortunately, will not apply to existing agreements. That is a bit ridiculous. The bill is supposed to help shippers but, in reality, it applies to only a small number of them. Those who already have an agreement will be left to fend for themselves and will be at the mercy of the large CP and CN rail companies.

Shippers will have to make do with low quality services until their contract ends.

How can the Minister of Transport believe that this is a good bill that meets the needs of all shippers if it targets only a small fraction of existing agreements?

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

In most regions of the country, shippers have no other choice than to use CN and CP. Canada's rail transportation market is basically a quasi-monopoly. Having the dominant position in the market allows the rail companies to charge often exorbitant prices, and shippers are put in a position where they have no choice but to accept the price charged by the rail company. That is what happens when this type of market is not regulated enough.

The goal in committee will be to seek amendments that prevent potential abuse of power by requiring service level agreements between shippers and rail companies.

We also need to establish dispute resolution processes. This bill offers only a limited arbitration process. It is available only for shippers who are in the midst of negotiating new contracts. It will not apply to existing agreements.

Instead of offering fast, reliable dispute resolution for all shippers, as we are asking for, the bill is limited to a small group of shippers. The proposed arbitration process may be too costly for many shippers. The burden of proof may be unfair if they have to prove that they are in need of services from the railway.

We would also like to see tougher penalties included in the agreements in relation to service levels, in order to compensate shippers for service disruptions, damage and loss of productivity.

As it stands now, the bill provides for penalties of up to $100,000, which would be paid to the federal government rather than to shippers. Since shippers must cover their losses, this would obviously impact the price they charge consumers. We lose on two fronts, because it hurts consumer prices, and it makes Canadian businesses less competitive and less productive in international markets. Considering that CN made about $2.7 billion in profit in 2012, penalties need to be higher to really act as a deterrent.

Let us be very clear: 80% of rail freight customers are currently unhappy with the rail service. They are victims of the near monopoly held by railway companies.

That near monopoly impacts sectors like agriculture, mining, forestry and auto manufacturing. Missing rail cars and other disruptive events result in rotting crops, service disruptions and delays. There is no compensation for all the forest, mining and manufacturing products that are wasted this way, many of which are actually intended for export.

A number of factors disrupt economic activity in these sectors and impede Canada's economic prosperity. These resources and products are largely intended for export. Unfortunately for these industries, those who cause disruptions pay no compensation.

I will continue...

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I am pleased to have the opportunity to join my colleagues in speaking to Bill C-52.

Because I represent a rural region, this issue is very important to me and my constituents. I thank my colleagues who spoke before me and who have done a good job of highlighting these very important aspects.

If the bill is enacted as it now stands, it will 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 fulfill its service obligations to the shipper.

Bill C-52 also provides for the creation of an arbitration process to establish the terms of such a contract, if the railway company and the shipper are unable to agree on a fair and equitable agreement after lengthy negotiation.

The bill comes in response to numerous pleas from shippers all over Canada and the hard work and unflagging efforts of my colleague from Trinity—Spadina, whom I would also like to congratulate.

After years of discussion, through both the panel of experts and consultations with stakeholders, and after my colleague’s bill was introduced last year, the Conservatives realized they had a duty to present this bill, at last. It is an attempt to respond to the complaints from rail shipping services customers who are being offered poor service by the biggest companies, which have a virtual monopoly over the market.

It is really high time that this government examined the problems in this situation, because the difficulties experienced by shippers everywhere in Canada are quite real and have a direct impact on the economy, particularly in rural regions.

In Canada, as several of my colleagues have said already, over 70% of freight is shipped by rail. However, a study of rail shipping services shows that 80% of shippers are dissatisfied with the services they receive. This is probably because 80% of the commitments the big companies made to them were not honoured. Clearly there is a problem and it is time for the government to take action.

Here we have the rough outline of a bill; there is still much to be done.

At present, the situation is hard on the shippers. Rail freight customers have trouble obtaining fair and reliable service. Some customers cannot even obtain contracts with a major railway. Some with contracts have other difficulties, such as serious delays, the insufficient number of railcars available to transport all the goods their industry requires, or the countless interruptions in service that decrease their profits and may eventually result in lost jobs.

The fact that shippers often do not have a choice of carrier is also a serious problem. They have access to CN or CP, but not always to both. Those who have a choice between the two companies still have to pay too much, especially small businesses in rural ridings. Such small businesses often are just getting by and then have to pay these fees. That makes it very hard for them.

The situation I have described affects many sectors of the economy, including natural resources, agriculture and forestry. To a large extent, these industries produce goods for export, but they are at a great disadvantage because of the poor quality of the rail services they depend on.

The cost of services, the major gaps in the rail network and the way the system operates are all detrimental to Canada's overall competitive position on the world's markets, in addition to causing job losses and costing our economy hundreds of millions of dollars.

The most seriously affected industries are found mainly in the rural areas of the Canadian west, and in British Columbia, Quebec and Ontario. It is a widespread problem and will affect thousands of people across the country. They need the government to act quickly and they need legislation that goes further than Bill C-52 does currently.

I think of my riding, Portneuf—Jacques-Cartier, where a number of large businesses employ thousands of people all over the area. Although they are located far from the major urban centres, they are served by rail lines—for freight, at least.

I think of the many small and medium-sized businesses all across my riding, and some large firms as well, such as Alcoa in Deschambault-Grondines, Ciment Québec in Saint-Basile or Graymont in Saint-Marc-des-Carrières.

At one time, the Bowater plant in Donnacona was served by a rail freight line. Now, unfortunately, the business has shut down. It has declared bankruptcy and limited the former workers' access to pensions. That is another matter we can debate at another time, I hope.

As I said, these businesses represent a large part of my riding's economic activity. They need good-quality, reliable rail services in order to plan their freight shipments, to be efficient, to grow and to contribute to economic growth and development in the region.

I also think about the farmers who depend on railways to ship their produce all across the country. I think about the forestry industry. which has been such an important part of the economy throughout the region, particularly in Saint-Raymond de Portneuf, Sainte-Brigitte-de-Laval, Lac Beauport and Stoneham-et-Tewkesbury. This industry has been neglected by the government and, on top of that, suffers from the problems affecting the railway network.

As I mentioned, Bill C-52 is a step in the right direction. It has some good elements in it. This is why I will be supporting it at second reading, so it will be sent to committee where it can be considered and improved.

Among other things, some consideration must be given to the safeguards that Bill C-52 sets out. These safeguards will not cover existing contracts between shippers and railways, which will leave many clients with no recourse. A few shippers will be able to benefit from certain safeguards when they negotiate their new contracts, but all the others that have already signed contracts with the big companies will have to endure the unfair treatment that already exists. They will have very few options, just the very limited ones available now.

In addition, the arbitration process set out in Bill C-52 must also be given further consideration. The process is very limited and is likely to be prohibitively expensive for the shippers. They will not necessarily be able to go all the way to the end of the process and defend themselves against big corporations, which often have many more resources. This aspect of the bill must therefore be re-examined.

Another troubling element is the fact that Bill C-52 totally ignores the issue of the high rates that shippers are charged by transportation companies. This has been one of the most important demands by shippers for years now. As I mentioned, they have to deal with a virtual monopoly, and sometimes even with a real monopoly because they have no options, aside from one of the two main railway companies in their area. Small shippers and small companies that need railway services have practically no bargaining power. They have to accept the rates they are charged without being able to fight back against the railways. This issue has been ignored by this government for many years now. It is still ignored in the bill that is before us today at second reading. I hope the Conservatives will support the amendments that the NDP will be putting forward, because it is high time that action was taken.

Canada’s trade deficit is increasing. If I am not mistaken, it was $2 billion in November. We are losing ground on international markets, but the Conservatives continue to drag their feet when it comes to rail transportation. We need to go beyond Bill C-52. We need to protect our shippers, and we must also provide our country with a genuine nation-wide strategy for rail transportation, both for passenger and for freight transportation.

In my riding, only one municipality has rail service: the municipality of Rivière-à-Pierre. It is located in the northwestern corner of the riding, on the rail line that goes to Saguenay–Lac-Saint-Jean. These trains provide services primarily to hunters who go out into the wild and enjoy nature up there. There are very few passengers. The government must take action.

Let us start with Bill C-52, but let us go further and develop a real strategy for the railways.

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

Mr. Speaker, I have mixed feelings about Bill C-52. This is difficult because I want to encourage our rail services and I support the bill. However, there are significant gaps not addressed by the legislation that absolutely need to be brought forward. In committee we will try to make some needed improvements to the bill.

My colleague from Trinity—Spadina consulted several experts, including exporters, and many of them brought up the issue of price. Absent from Bill C-52 is the important and unregulated discrepancy in rail fees, for example, between CP and CN. Why are existing discrepancies not addressed in the bill? Rail freight transportation must be more efficient and effective. It needs to provide reliable and sustainable services. Unregulated rail fees are another aspect to look into and this can be done at committee.

Trains move goods and people. Trains are a key mode of transportation for Canadians in the 21st century. I myself try to travel between my riding of Notre-Dame-de-Grâce—Lachine and Ottawa by train as much as possible.

Rail freight transportation provides a service to our Canadian farmers and producers who ship their goods to market by train. This mode of transportation is essential to Canada's economic development, but does it currently benefit our farmers, producers and our Canadian shippers' associations as much as it benefits CN and CP? Does it benefit public transportation as much as it supports commercial interests?

A look at balance sheets and recent decisions at CP and CN show that these companies are run for their shareholders, not for the users of public transportation or small family businesses that rely on rail freight transportation. This decision was a choice, a choice made to serve shareholders and profits over customers. We have seen this before and we know this leads to poor quality services.

The Coalition of Rail Shippers has been stating for years that it receives poor quality services from CN and CP because of this pricing issue, and they are priority clients. Listen to the private shippers. They tell us that CN dictates the market. CN is the largest player in Canadian rail freight transportation. According to a report by the Coalition of Rail Shippers presented at the Canadian maritime conference in 2010, “CN and CPR together control 94% of the market by revenue”.

This market lacks competition, innovation and regulation. This is not the way to support Canada's economy or to encourage Canadian success. It is important that Bill C-52 gives freight shippers the right to enter into service agreements with railway companies and establish an arbitration process in the event of a dispute. This is what freight shippers told us they needed.

Rail shipping is the backbone of the Canadian economy. Transport Canada estimates that over 70% of all goods shipped over land go by train. The reason is easy to understand. In our very big country, rail shipping is often in bulk and it would be difficult to ship these large quantities by truck. Shipping by boat, which is sometimes more economical, is not available everywhere for obvious reasons.

Canada was built by train and the railway is a vital link between faraway communities on a vast land.

I would like to talk about an activity that I did in my riding. I organized a screening of a movie called Rocky Mountain Express. Its filmmaker is based in my riding. About 100 of us watched this wonderful movie, which talks about the history of the train in Canada and how it built the west of Canada. It was amazing. It really showed us how our country was based on rail.

We might be surprised by the poor quality of rail shipping services in Canada right now. The Conservative government is not the only one responsible for this situation, but it is guilty of inaction on this file. Day in and day out the Conservative government claims to work for the Canadian economy, but Canadian businesses are suffering from this unreliable service, the result of which is hundreds of millions of dollars in economic losses every year. This affects a broad range of industries, especially agriculture, forestry and mining.

The rail freight service review found that 80% of rail shippers are dissatisfied with the services provided by rail carriers. This is 80% of loyal customers. Unreliable service and high prices continue to hurt rail customers. This issue is not addressed in Bill C-52. We, the official opposition, will continue to push for fair pricing for all shippers, prices that are in line with the services received from carriers.

That is something we do not see in Bill C-52, which says that agreements governed by the new law would be made only with new customers and new contracts. Therefore, anyone who has been using the services for years, and who is a long-standing loyal customer, would not have access to the rules that Bill C-52 seeks to put in place. Clearly, there is room for improvement. We could make these improvements in committee if the government would be open enough to come to the table and participate in meaningful discussions and listen to the best suggestions to get the best bill possible.

I would like to come back to the fact that 80% of customers are dissatisfied. Something had to be done and something still urgently needs to be done, but the Conservatives' inaction has been going on for years. Why have the Conservatives taken so long to do something?

Here is what I think may be happening. First, rail freight customers are often farmers or mining companies. These customers have to deal with large railways that have a virtual monopoly over rail transport. In most regions of the country, shippers cannot choose a rail transportation company because they have access to only one or the other. Even in cases where the two railway companies are present, the competition struggles to play the role it should and to influence the basic economic principle of supply and demand.

Why do we need to intervene now and legislate? Why can the parties involved not come to an agreement themselves? In all likelihood, CN and CP benefit from the tacit support of the Conservative government and, in that context, they are not at all prepared to make real concessions. The result is that rail freight customers, the shippers, are not satisfied with rail freight services. Therefore, they have asked the government to take action and to introduce legislation that would require CN and CP to reach agreements on the level of service provided to shippers. After years of empty words, the Conservatives are now being forced to act as a result of pressure from the shipping community and the NDP.

Under duress, the Conservatives finally introduced a bill designed to solve some of these problems after the NDP critic's bill was introduced last spring. That bill, which was entitled the rail customer protection act, was much clearer and covered all customers.

The government is using half measures and here are some examples. The protective measures do not cover existing contracts between shippers and rail transport companies. The bill offers only a limited arbitration process for unsuccessful negotiations of new contracts. The arbitration is available only for shippers who are negotiating new contracts, instead of providing fast and reliable help for all shippers. Bill C-52 would cover only new service level agreements, not those that already exist. Furthermore, the fines mentioned in Bill C-52 would go to the government and not to the shippers.

We could talk all day about the amount of these fines, which seem a bit weak to me for such big companies. The ability to interact, discuss and negotiate is undermined when the fines go into the government's pocket, which supports what I said earlier, that CN and CP probably feel as if the Conservative government is in their corner. The Conservatives simply do not give Canada's rail network the attention it deserves.

The House resumed from February 4 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.

Business of the House

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

Yes, I have a plan, Mr. Speaker.

This afternoon, we will continue today's NDP opposition day.

Tomorrow, we should finish the second reading debate on Bill C-52, Fair Rail Freight Service Act. Then, we will resume the second reading debate on Bill C-48, Technical Tax Amendments Act, 2012.

Before question period on Monday and Tuesday, the House will debate third reading of Bill C-42, Enhancing Royal Canadian Mounted Police Accountability Act. After question period those days, we will turn to second reading of Bill C-51, Safer Witnesses Act.

On Wednesday, we will debate second reading of Bill S-12, the incorporation by reference in regulations act. I do not expect that this bill, which responds to views of the Standing Joint Committee for the Scrutiny of Regulations, would need a lot of House time. I hope we can deal with it quickly. We could then turn to report stage and possible third reading of Bill S-7, the combating terrorism act.

Next Thursday shall be the fourth allotted day, which I understand will see the Liberals choosing our topic of debate.

On Friday, we will resume any unfinished debates on the bills we just mentioned, or we could also consider dealing with any of the many bills dealing with aboriginal issues. That being raised as a concern, we have Bill S-2 dealing with matrimonial property; we have another bill dealing with safe water for first nations; and we have another bill dealing with fair elections for first nations. On all of these bills we would welcome the support of the official opposition. We have not had that to date, but if we do, we can deal with them very quickly on that day. I would be delighted to do that. I will await with interest the response from the NDP.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Mr. Wells, do you have any comments on C-52?

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I'd like to thank you all for making your presentations and sharing your experience with us at the committee. I think it's really important to talk with people who have different points of views, and it's nice to talk with you.

It seems to be a common thread. It was mentioned a few times that the farm is getting to be a weak link in the chain. I know when I've met with farmers and hung out in their kitchens, they talked about the changes to AgriStability and how they were worried that there was no consultation. It's something I hear a lot in my riding and when I visit farmers elsewhere too. It's something we hear more and more often. It's something that kind of makes me nervous.

We're here, and in a few years, 40 years, we're going to have a massive population to feed, and we have to be very responsible in how we do it. I think this conversation is very pertinent.

I have a question. Transport is something we're studying and debating now in the House. I was wondering if you can comment on Bill C-52. Do you have any comments or suggestions on that, Mr. Rosaasen?

Fair Rail Freight Service Act

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, rail freight customers, from farmers to mining companies, are suffering because railway companies have a virtual monopoly when it comes to the vital rail lines that Canadians need to get goods to market.

In most parts of the country shippers cannot choose between rail services because they only have access to either CN or CP. Even in the few places where both rail companies provide access, one is usually priced out of the market, leaving the shipper with no real choice.

Shippers routinely suffer from service disruptions, delays and experience all kinds of examples of non-reliable performance by CN and CP. Deliveries and pickups are not done on time or are skipped completely. Frequently the number of ordered railcars is not matched by the delivered number of railcars and sometimes cars are badly damaged.

When a shipper contracts a specific number of railcars, that shipper needs to know those cars will be available. Anything other than this kind of reliability is bad business and bad management. Unfortunately, we know that 80% of the service commitments for agricultural rail customers are not met by rail companies.

After years of talking, the Conservatives have finally tabled legislation to address a number of key rail freight customer grievances after years of inferior service by the big rail companies. Bill C-52 is a step forward, but is far from a perfect solution.

Key demands from the shipping community have, quite simply, not been addressed. Bill C-52 would also create loopholes because of its ambiguous language. The Conservative language is weak. Its protective measures do not cover existing contracts between shippers and rail companies and offers only a narrow, costly arbitration process for failed negotiations for new contracts. Key demands like the shippers' call to include penalties for rail companies in service agreements, performance standards and an easily accessible conflict resolution process were ignored.

While NDP members will support this legislation, we will also push for amendments at the committee stage to protect shippers from the abuse of market power through the right to comprehensive service agreements and conflict resolution processes.

Rail transport is the backbone of Canada's economy, with 70% of all surface goods shipped by rail. It is crucial to make rail freight services work for both rail companies and shippers. We cannot take the importance of the railroad for granted.

It is also critical to note that current pricing for rail freight services is also damaging Canada's shippers. Bill C-52 explicitly excludes pricing, despite the calls from all parts of the shipping community to address the pricing regime. This has a significant impact on Canada's trade deficit, which is, by the way, ballooning. It reached almost $2 billion in November alone. We cannot afford to lose even more ground when it comes to global competitiveness for Canada's products.

A broad range of industries are affected by the situation created by the virtual monopoly of current rail service providers. I have already mentioned agriculture, but we must not forget other key industries like forestry and mining as well as chemical and automotive businesses. Many of the goods produced by these industries are destined for export.

Lacklustre rail services are hurting Canada's exporters' ability to compete in global markets. For example, soybeans from Argentina enjoy a competitive advantage in markets like Japan and China because they are delivered faster and more punctually than soybeans from Canada, despite the fact that the total distance that needs to be covered is significantly shorter for products from Canada.

Rail freight is not only central to Canada's economy; we also need strong rail freight services to take trucks off the road and tackle greenhouse gas emissions. While the overall share of surface transport for goods remains high for rail, frustrated companies switch to trucking where possible and the environment loses.

Rail freight is only one aspect where the Conservatives are slow to act. From new rail safety measures to cuts at VIA Rail and blocking the introduction of high-speed rail in Canada, Conservatives do not give Canada's rail network the attention it deserves.

The bill has taken a long time to come to the House. For years, shippers have been unhappy but no concrete action was taken by the Conservatives. Since 2007 they employed a talk it out and wait tactic, starting with the promise of an expert panel review.

The rail freight service review started in 2008. The independent panel tabled its final report in early 2011. Half a year later in the fall of 2011, the Conservatives initiated a mediation process that did not yield any results. Presumably with the tacit backing from the Conservative government, CN and CP were unwilling to make any meaningful concessions. The mediation process, led by retired Conservative politician and University of Calgary chancellor Jim Dinning, failed. Dinning released his report in June 2012 and the Minister of Transport promised government legislation on the topic to be tabled in the fall.

Parallel to the end of the mediation process, fortunately, the member for Trinity—Spadina tabled private member's Bill C-441, the rail customer protection act, in June 2012. The private member's bill by the member for Trinity—Spadina, coupled with advocacy work from the shipping community, put pressure on the minister to follow up on his promise to actually table legislation. However, CN undertook a massive lobbying effort last year, first to prevent any effective bill, then to have it watered down. Dozens of documented visits to government offices and a media campaign show the determination of CN to keep the status quo.

Rail customers have banded together now and are organized in the Coalition of Rail Shippers. The coalition is a loose and informal entity, but it wants something positive for its industry. It wants something positive for the people who produce the goods, who create the wealth in this country, the men and women who do the work to make this country tick and be productive.

Shippers are having a hard time getting fair and reliable freight service, and that is simply unacceptable. We can and should do better for those that rely on our rail system. Our manufacturers, farmers and resource industries depend on our rail system. If rail were made more fair and affordable, consumers would also see an advantage.

This is a country that emerged as a strong, independent nation because of the accessibility of our railways. Let us not abandon those who would continue to build our Canada.

[Alexandrine Latendresse, NDP, Louis-Saint-Laurent, QC]

Mr. Speaker, I would like to thank the hon. member for Winnipeg North for his question. That is the reason we decided to support this bill. Despite it all, we think that we have to go in that direction.

Like him, we agree that many amendments should be adopted in committee. We therefore want Bill C-52 to go to committee and for the amendments proposed by his party and ours to be seriously considered and possibly adopted.

I am fully prepared to be hopeful and optimistic. However, statistically speaking, if we look at the number of bills that have been amended in committee since the Conservatives got a majority, chances are not in our favour. Still, we think it is important to continue in that direction.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I appreciate the comments, but not all of them, especially at the tail end. I like to think that the Liberal Party has done exceptionally well in supporting our rail line industry.

To highlight that particular fact, I would go to the member for Wascana, who has been a long-time advocate, as I indicated earlier, someone who has been raising this issue for the last couple of years in particular, since 2007: the stakeholders.

Many of the stakeholders came forward and said we needed to bring in some sort of legislation that would enable a fair playing field between the shippers and the rail providers, CP and CN. That is what we are focusing our attention on, because there is an imbalance of power.

Having said that, we recognize that Bill C-52 is but a small step forward. I argued earlier, and will repeat it now, that we are hoping the government will be receptive to a number of amendments to the legislation once it gets to committee stage, thereby allowing a fair playing field so our shippers can feel comfortable knowing that their car will be there when it is supposed to be, that the quality of the car will not take away from the product once it gets to the market. Those are the type of assurances they want.

I wonder if the member might want to focus some of her response on the fact that it is absolutely, critically important that the government amend this legislation when it goes to committee. Does she not agree with that?

[Alexandrine Latendresse, NDP, Louis-Saint-Laurent, QC]

Mr. Speaker, I am here today to speak to Bill C-52, which would amend rail transportation legislation.

It really surprised me that I could find something to be angry about in a rail transportation bill. Perhaps "angry" is a bit strong. Exasperated may be a better word.

What could I find so exasperating in an attempt to provide recourse for unsatisfied users of rail shipping services? It is very simple. It is as though the government is pretending to fix the problem to give the illusion that it is taking action. Members will notice that I said "exasperating" and not "surprising", since this is becoming a trend.

Bill C-52 is another example of the Conservative government's chronic mismanagement. Rail transportation fuels Canada's economy. Of all the countries in the world, Canada is one that was built by the railway. The railway was behind every aspect of our growth.

The quality of rail infrastructure still has a direct impact on Canada's entire economy today. This is not news to the government; it knows that.

Usually, the Conservative government—as patriotic as ever—would defend our businesses' access to the rail system. Nearly 150 years ago, at the start of our Confederation's growth, it was the country's lifeblood. It was an almost heroic era when Canada dreamt of defying the world.

That was the 19th century. While the situation is quite different today, it is easy to explain. Rail companies are extremely prosperous and make ridiculous profits. And that is understandable because without them, Canada would be paralyzed and would have almost no economy.

A crucial detail that I should point out, even though it may be useless to do so, is that there are only two rail companies in Canada. The minister spoke of a “duopoly” when describing the situation, and that was fine in the first hour of discussion. But I do not like that term because “duo” means “together”, not just “two”. And that is the crux of the issue.

The ridiculous profits I mentioned keep piling up. Let us face it, there really is no competition. These two companies share all of Canada's rail transportation business and more, and they always have. These are two major, historic Canadian companies, if we can still call them Canadian now that they have been privatized.

That is the government's only motivation: do not upset the large corporations that are raking in huge profits. If any disputes arise between those companies and the small shippers, let us give the companies the power to shut them up quickly. Some would even say with nickels and dimes.

One might speak out and say that it is counter productive, that it is irrational to do that. Yes, that is true, but this would be forgetting that, first and foremost, these people, the government and the railway companies, know each other and talk to one another. These people are perhaps not exactly in collusion, but they definitely share certain sympathies. Yes, they are sympathetic to one another.

In addition, in the intellectual shackles of puritanism, which is the basis of the entire Conservative approach, it is clear that the fittest gets his power directly from God and must not be opposed. Success comes from God almighty. Put that all together and there you have the inspiration for Bill C-52 and for everything else, of course.

Here is what bothers me about the result, Bill C-52. I already know how the Conservatives will respond: “The economic recovery is too fragile. We must not make any waves. We have to ensure that we have everything going for us. We cannot do anything to compromise the railways' efficiency, not for the measly crumbs, not for a company worth, at worst, $100,000.”

After all, we are not reinventing ourselves. These people are not likely to engage in such deep reflection now in the middle of February.

This is the same old story. After dragging its feet for so long, now the government is stubbornly defending a characteristically weak and contemptuous bill. Let us rename it: Bill C-52, an act that says that railway companies can break any contract they like for $100,000, and be done with it. What a bargain.

Rail lines are real structures that result in exchanges and economic benefits that are just as real. There is a direct impact at all levels of economic life. If remote shippers can no longer rely on the two national companies, they might not exist at all. If shippers are neglected, they and their communities are not being allowed to participate in the country's development.

All paths starting on the margins lead to the centre. Coming from a government that claims it will leave no stone unturned to achieve prosperity, it is rather strange. For people who take every opportunity to proclaim to the world that supporting the right is the best way to ensure the well-being of business, it is more than revealing.

Is that the Conservative government's great recovery plan for outlying regions? Yes, undoubtedly. Bill C-52 is striking proof. Develop resources, process them, but do not try to sell them because all the railway cars are taken. This is more proof that there is no plan and that this will have to wait, again. However, be happy, there are a lot of people lined up to talk to the government and you can chat with them. There is the manufacturing sector, my entire generation and all aboriginal peoples of Canada. You will surely find something to talk about to pass the time.

I would like to acknowledge the work my colleague from Trinity—Spadina has done on the issue before us today. I say "colleague" because that is how we refer to each other here, even though I would prefer to use a word that better represents the respect I have for her. She not only wants to do everything, she can do everything. If the official opposition transport critic says that she has met with all of the stakeholders, it means that she has met with all of the stakeholders, even the ones who were hiding. And if she says that a clear majority does not like anything in this bill, it means that there is damning and incontrovertible evidence.

The government can pull all kinds of adjectives out of the Oxford English Dictionary to defend itself, evade the issue and have us believe it worked very hard to restore balance, but no one is listening. That is what I find so exasperating. I hope I am being clear. I find the gaps in logic between what this government claims it is doing and what it is actually doing appalling. The urgent need to fix the problems with the rail companies was a perfect opportunity for the overconfident Conservative government to show that it could do its job. And what happens? It is the first to jump into bed with the rail companies. Nothing gets in the way of love, not even having the lights out.

When Canada has a problem, it would make sense to look elsewhere to see if other countries have found solutions, not to copy them, but to at least draw some inspiration from them. We do not live in a vacuum. And I mean that in a geographic sense, because intellectually speaking, it is obvious that the other side has sucked people in with their empty rhetoric.

Over the past 50 or so years in Canada, the concern that we used to have for our rail system has all but faded. When passenger rail travel became less common, trains and the incredible rail system that stretches like fingers across the country no longer captured our imagination as they once did. The superhuman effort that rallied half a continent quickly died. Yet trains in Europe are flourishing. How often have I heard Quebeckers talk about travelling in Europe and how astounded they were by the quality of rail infrastructure in the European Union?

The pride that you feel is overwhelming when you arrive at Berlin's central station and see “Bombardier” in huge, white letters in the middle of the large window. But you quickly see the unbelievable difference between the European trains that Bombardier builds and the antiquated trains we have here because there is no political will.

The European Union will stop at nothing to ensure that its rail system, which is a huge tangled web of railways that it inherited from the national systems of 27—soon to be 28—countries, is the most competitive in the world. Europe understands our own historical example better than we do ourselves. Without an outstanding, competitive rail system, our country would almost not exist. Bill C-52 may look like a simple legal adjustment concerning a situation that the public can quietly neglect. In fact, quite the opposite is true: it is the government that is neglecting it. When blood flow is cut off to an organ, it dries up and dies. And nolens volens, the rest of the organism will die along with it. That may be a somewhat silly and dramatic image, but it is fair to a certain extent.

In closing, a country is like a house and Canada is like a house built on a beautiful, huge plot of land. It is a land of dreams. We can build little out buildings, create gardens and build a chicken coop. The house itself, which is already huge, could easily be improved, since we have the wood and the carpenters needed to do so. When the NDP has the last word in the affairs of the house, we will work hard to make this house, which we all share, more comfortable, more manageable and even more beautiful. We will add new rooms for children and grandparents, as well as a library and bicycle storage.

For years the Liberals spent their time changing the carpets and arguing about what to call the house, and the Conservatives boarded up the windows because it was too drafty and heating is too expensive. You have to spend money to make money. The right-wing faction should understand that.

The Conservatives need to create jobs in rail transportation instead of allowing themselves to be wooed by the rail companies who have everything to gain by seducing them. In any case, that has already happened, and here is the result of their six years of efforts: Bill C-52.

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, I must say, I have rather mixed feelings as I begin my speech, because I feel like I have become an expert in the moonwalk, that dance move that makes you look like you are going forward when in fact you are going backwards.

When I first learned of the problems in the area of rail freight transportation, I had the impression, given the response and the private member's bill introduced by my colleague from Trinity—Spadina, that we were moving in the right direction. Today, however, when I see what is in Bill C-52, I really feel like we are taking a step backwards. Nevertheless, there are enough things in this bill that we do agree with for us to support it at second reading. In committee, we will try to make some changes and some significant improvements.

It is important to note that in 1995, there was a re-engineering and modernization movement that led to the privatization of CN and CP. That is no secret. A neo-liberal ideology prevailed over an objective analysis of the facts demonstrating the importance of this service, which is crucial to Canada's economic development. Although railways remain publicly owned in many countries, here in Canada, it was decided to go for broke, and since then, we have seen the privatization of profits and the socialization of costs.

Balance sheets and recent decisions relating to public transportation show beyond a doubt that the return paid to shareholders takes precedence over developing business services and moving goods and people. The reason I refer to moving goods and people is that a choice was made to prioritize shipping goods over carrying people, something else that is uniquely Canadian. Canada is one of the rare countries to have made that kind of choice.

I will leave it to my colleagues to imagine the passenger transportation challenges that await us in the years to come given that the coalition of private shippers has been complaining for years about the poor quality of the services they receive, and they are the priority clients.

Rail shipping is the backbone of the Canadian economy. Over 70% of all goods shipped by land go by train. The reason is relatively easy to understand: you do not need a university degree in geography to see that in our country, rail shipping is often bulk, and it would be difficult to replace it with shipping by truck. And shipping by boat, which is sometimes more economical than by train, is not available everywhere, for fairly obvious reasons.

Canada was built by the train, and the railway is a vital link between communities in an enormous country. So we might be surprised at the present state and poor quality of rail shipping services. The Conservative government is not the only one responsible for this situation, but it is guilty of not tackling the problem head on in time to rectify this situation.

Day in and day out, the Conservative government claims to be working for the Canadian economy, but everywhere in the country, businesses are suffering from unreliable service, the result of which is hundreds of millions of dollars in economic losses every year. In addition, poor service leads to higher prices for some goods, chemical fertilizers being one example.

To put it more simply, over 80% of rail shipping services customers are not satisfied with the services provided by rail carriers—in other words, nearly everyone. This is 80% of loyal customers. MPs may have experienced this themselves, as customers of a store or a business. They may have started by getting excellent offers so they would become customers, but as soon as they became regular customers, they were taken for granted. And then their relationship gradually deteriorated and all the benefits were offered to new customers to expand the customer base.

That is something we see in Bill C-52, when it says that agreements governed by the new law will be made only with new customers, new contracts. And so anyone who has been using the services for years, and who is a long-standing loyal customer—if we can talk about loyalty in the case of a virtual monopoly—will not have access to the same rules that Bill C-52 seeks to put in place.

Clearly, there is room for improvement. We could make these improvements in committee if the government would be open enough to come to the table and participate in meaningful discussions and listen to the best suggestions to get the best bill possible.

I would like to come back to the fact that 80% of customers are dissatisfied. Something had to be done and something still urgently needs to be done, but the Conservatives clearly have not done anything because this matter has been dragging on not just for weeks and months but for years.

Why have the Conservatives taken so long to do something? Here is what I think may be happening.

First, rail freight customers are often farmers or mining companies. These customers have to deal with large railways that have a virtual monopoly over rail transport. I spoke about this earlier.

In most regions of the country, shippers cannot choose a rail transportation company because they have access to only one or the other. Even in cases where the two railway companies are present, the competition struggles to play the role it should and to influence the basic economic principle of supply and demand.

Why do we now have to legislate? Why can the stakeholders not come to an agreement among themselves? In all likelihood, CN and CP benefit from the tacit support of the Conservative government and, in that context, they are not at all prepared to make real concessions.

The result, as has been mentioned, is that 80% of rail freight customers—shippers—are not satisfied with rail freight service. So, of course, they have asked the government to take action and to introduce legislation that would require CN and CP to reach agreements on the level of service provided to shippers. After years of empty words, the Conservatives are now being forced to act as a result of pressure from the shipping community and the NDP.

Under duress, the Conservatives finally introduced a bill designed to solve some of these problems after the NDP critic's bill was introduced last spring. That bill, which was entitled the Rail Customer Protection Act, was much clearer and covered all customers.

The government is using half-measures. Quite frankly, although the Conservatives' bill is a step forward, it is a weak step. Here are some reasons: the protective measures do not cover existing contracts between shippers and rail transport companies; the bill offers only a limited arbitration process for unsuccessful negotiations of new contracts; the arbitration is available only for shippers who are negotiating new contracts instead of providing fast and reliable help for all shippers; Bill C-52 will cover only new service level agreements, not those that already exist.

Furthermore, the fines mentioned in Bill C-52 would go to the government and not the shippers. We could talk all night about the amount of these fines, which seem a bit weak to me for such big companies. The ability to interact, discuss and negotiate is undermined when the fines go into the government's pocket, which supports what I was saying earlier that, rightly or wrongly, CN and CP probably feel like the Conservative government is in their corner.

I will move on from what is missing from the bill, since I am running out of time. I will no doubt have an opportunity to speak more to this in committee. I have a short conclusion.

Rail transport is not the only file on which the Conservatives have been dragging their feet. They implemented new railway safety measures. They made cuts to VIA Rail Canada and prevented the introduction of high-speed rail in Canada.

The Conservatives simply do not give Canada's rail network the attention it deserves.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, Bill C-52 is there primarily because of concerns expressed by those individuals and stakeholders in the shipping industry, whether they are in agriculture, forestry, minerals, chemicals, fertilizers, oil and gas or industrial and other types of manufacturing. It is a fairly extensive list of individuals. Small and large businesses have seen this great imbalance that does not favour the shippers. This became apparent to the Liberal Party in 2007, when the stakeholders came forward saying that they needed to see some form of legislation. They came to the table and asked the government to do something.

One could argue that the bill before us today is a very small step, but it is a very important step. The issue is the degree to which the government is going to be prepared to accept amendments to improve the bill so that all members of the House enthusiastically support it. Would the member provide comment on the importance of the government listening to the stakeholders once the bill gets to committee so that we can improve it?

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I rise today not only as the member for New Westminster—Coquitlam and Port Moody but in my capacity as western economic diversification critic for the NDP.

Like my NDP colleagues, I will also be supporting Bill C-52, an act to amend the Canada Transportation Act, to send the bill to committee for further discussion. We do, however, have serious concerns with the bill as my hon. colleagues before me have pointed out, including the member for Trinity—Spadina, who is the NDP transportation critic. She outlined some of those concerns in her speech earlier.

Rail transport is the backbone of the Canadian economy. More than 70% of all surface goods in Canada are shipped by rail, so we can see how critically important it is to get this right. Eighty per cent of service commitments for agricultural rail customers are not met by rail companies because of issues such as delays, insufficient number of rail cars, inefficiencies and unreliable service. The rail freight service review found that 80% of shippers are not satisfied with the services they receive. Eighty per cent is a significant amount. Over three-quarters of all customers have a concern.

I just want to talk about the importance of rail to my riding of New Westminster—Coquitlam. Specifically I am talking about Port Moody where we are celebrating 100 years of history. Just this weekend I was at a book launch hosted by the Port Moody Heritage Society for Tracks in Time. Obviously the title is in reference to trains and the influence that trains have had on the development of our community and on the west coast, and in fact, of all Canada. The rail system is of critical importance to our community. We celebrate the Golden Spike festival in Port Moody every Canada Day. This just points to how important trains are to our community.

Talking about the importance of trains not only to the community but to the rest of my riding, it is important to focus on the efficiency and the service that trains provide to Coquitlam, Port Moody and of course New Westminster. It is important for the economy not only in my riding but in western Canada and indeed all of the country. It is critical that we look at ways to improve train service in this country.

I want to provide a bit of background. I know other colleagues have commented specifically about what the bill would do and would not do and some of its shortcomings.

Rail freight customers from farmers to mining companies are suffering from the virtual monopoly of power of the railway companies. In most parts of the country shippers cannot choose between rail service providers because they only have access to either CN or CP. Even in a few places where both rail companies provide access, one is virtually priced out of the market, leaving the shipper with no real choice. Shippers routinely suffer from service disruptions, delays and various forms of non-performance by CP and CN. Deliveries and pickups are not done on time or skipped completely. Frequently the number of ordered rail cars is not matched by the delivered rail cars and sometimes cars are damaged.

A broad range of industries are affected by the situation, especially agriculture, forestry and mining. In western Canada these industries play a significant part in the economy. Chemical and automotive businesses in the rest of Canada are also affected.

A large portion of these goods are destined for export. Lacklustre rail services are thus hurting Canadian exporters' abilities to compete in global markets. For example, soybeans from Argentina enjoy a competitive advantage in markets such as Japan and China because they are delivered faster and more punctual than soybeans from Canada, despite the fact that the total distance covered is significantly shorter for products from Canada. For years shippers have been unhappy but no concrete action was taken by the Conservatives. Since 2007 a “talk it out and wait” tactic was employed, starting with the promise of an expert review panel.

The rail freight service review started in 2008. The independent panel tabled its final report in early 2011. Half a year later, in the fall of 2011, the Conservatives initiated a mediation process that did not yield any results. Presumably, with the tacit backing from the Conservative government, CN and CP were unwilling to make any meaningful concessions. The mediation process, led by retired Conservative politician, University of Calgary Chancellor Jim Dinning, failed. Dinning released a report in June 2012.

The Minister of Transport promised government legislation on the topic to be tabled in the fall. Parallel to the end of the mediation process, the member for Trinity—Spadina tabled a private member's bill, Bill C-441, the rail customer protection act, in June 2012. The private member's bill, coupled with advocacy work from the shipping community, put pressure on the minister to follow up on his promise and actually table legislation.

The shipping community is organized in a coalition of rail shippers. The coalition is a loose and rather informal entity. Organizationally this group is attached to the Canadian Industrial Transport Association. The coalition consists of 17 members that represent mining, forestry, agriculture, chemical and manufacturing industries. One of the original 18 members repeatedly has been brought up in the U.S. Senate, both on the floor and in committee without decisive legislation as of yet.

The surface transportation board, a federal body, is working on regulations to address pricing and service issues, while judges have repeatedly supported shippers in court cases. I just wanted to point that out.

What is the NDP are looking for? What can be specific about?

We know farmers and the mining and forestry companies have been hurting for years due to unreliable freight services, without getting any help from Ottawa. To truly address the issue and also to give the NDP leverage in rural areas, the member for Trinity—Spadina has become an advocate for strengthening the shippers' position. She has been very active on this file.

The NDP position is quite simple. We are standing with business and exporters and we are committed to getting them the fair and reliable freight services they deserve. That will have an impact on not only western Canada but on the entire Canadian economy.

The member for Trinity—Spadina has worked on this issue, including forging ties with key industry associations and tabling an NDP bill. One of the goals is to continue to grow those ties with the NDP as the party that stands up for legitimate business interests and pushes back against market power abuses.

While Bill C-52 falls short on a number of stakeholder demands, it is prudent to support the bill as the shipping community is largely content with the legislation. They are also quite desperate to see some legislation address their issues.

The task is now to address the shortcomings and strengthen the bill to the benefit of the shippers and also to promote our involvement with the entire process. That is what we are doing here. We are trying to highlight some of those key issues that need to be worked on at the committee stage.

Bill C-52 will only cover new service agreements, not existing ones. Many shippers will be stuck with unreliable and unfair services, without any conflict resolution process in the case of violations to existing service agreements. Arbitration is only available for shippers that are negotiating new contracts.

Instead of offering quick and reliable help through conflict resolution to shippers, Bill C-52 would give arbitration a narrow scope for a small group of shippers and the outlined arbitration process could end up being too costly for companies like the Canadian Propane Association and others.

I want to finish by letting the House know there are others that support the position we are bringing forward. They are key stakeholders, like agriculture, mining and forestry industry associations, that have been calling for freight legislation for years, for example, Pulse Canada, Grain Growers of Canada, the Forest Product Association of Canada and the Mining Association of Canada.

In conclusion, I want to say that we are in support of it at second reading. The NDP will push for amendments at committee stage to protect shippers from the abuse of market powers through the right to comprehensive service agreements and conflict resolution processes.

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

I am influential, as my colleague opposite stated. I will start again from the very beginning because I lost my concentration somewhat.

As I was saying, transportation is an issue I am interested in and something that is also important in my riding. I will talk about agriculture a little later. I talk about it often because it is important to me and it plays a large role in my riding.

First, it is important to state that my party and I support the bill at second reading. We know that 80% of railway users are dissatisfied with the service provided.

It is important to say that some amendments will have to be made in committee. The bill must be improved so that rail transportation really improves in Canada.

After years of discussions, the Conservatives finally introduced a bill in response to a number of complaints from rail customers that received inferior service from the major railway companies for a very long time.

I would like to go back to the speech by my colleague, the member for Chambly—Borduas. Earlier he referred to the railway as part of Canada's heritage and to the sense of belonging that people attach to the railway in Canada. In my opinion and that of the member for Chambly—Borduas, that makes it more important to invest properly in this mode of transport, a fundamentally important one in a country such as Canada, which is very large and sparsely populated.

It is also important to say that everyone must come out a winner: the railways but also rail transport service customers, such as farmers and mining companies, which are often victims of the railways' virtual monopolies. We are talking about service disruptions, delays and disturbances that hurt the agriculture, forest products, mining and manufacturing sectors, which are not compensated for the losses.

A large portion of those goods is intended for export, which is very important for Canada's economy. Those sectors must be able to rely on effective transport in order to export their goods, not to mention the fact that many goods, as in the agricultural sector, are perishable. Producers therefore cannot afford major delays or service disruptions. Their products must be exported immediately.

Shippers have difficulty obtaining fair, reliable rail transport services. Some are not even able to secure contracts with major railway companies, and those that have contracts often suffer long delays or simply do not have enough cars at their disposal.

This entire situation undermines the ability of Canadian exporters to remain competitive in international markets, particularly agricultural products markets, as I said earlier. Farmers already face numerous uncontrollable challenges. Consider weather issues, for example, such as early frosts, excessive rain or too much sun. Farmers already deal with situations that are not easy to handle. That is the case with all farmers in my riding: we never know what will happen with the harvests, whether we will manage to make it to the end or whether everything will go well. The government thus has some responsibility toward these people, who feed Canada's population, and it must assist them, in particular by guaranteeing that their goods are efficiently transported. That is already a first step.

Following years of discussion, expert panels, an attempt at mediation and consultations with stakeholders, the Conservatives ultimately had no choice but to introduce a bill in late 2012, not very long ago.

One reason this bill was introduced was pressure from the official opposition NDP transportation critic, the member for Trinity—Spadina, who does an excellent job on the transportation file. My colleague presented a private member's bill, the Rail Customer Protection Act. The government then finally moved forward with Bill C-52.

For too many years now, farmers and other business owners have been subjected to bad rail service, and Ottawa has not taken action. Bill C-52 is a step in the right direction, but it is far from being perfect, since it does not include some major demands from shippers. I think that its wording is a bit ambiguous, which could create some loopholes. That will have to be considered in committee.

The committee will also have to consider the stakeholders affected by the problems, so it will have to consult farmers, for example, as well as stakeholders from the forestry and mining industries. That would be worthwhile. As I said earlier, 80% of customers are not satisfied with the services. That is a big number. If I had a business and 80% of my customers were not satisfied, I would be on the brink of bankruptcy.

Canadian shippers deserve fair and reliable service. They also deserve to be protected.

Every year, this situation costs the Canadian economy millions of dollars. We are talking about jobs and about goods that are lost or do not make it to the right place. Every day, many industries have to deal with rotting crops, work interruptions in plants and mines, and missing cargo. This is a real problem. Clearly, it hurts shippers and, as I was saying earlier, it hurts our global competitiveness. It costs us jobs.

The current bill is a bit weak.

I have only one minute left. I always get carried away and I did not even get to half of what I wanted to say. That is okay. I will continue quickly.

I find that the bill is a bit weak. It does not necessarily cover existing contracts. That could be something to look at in committee.

I would like to close by saying that 70% of our goods are shipped by rail. That is a good reason to invest properly in this means of transportation and to protect the shippers who use this service so that they have a fair and reliable way of transporting their goods.

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am pleased to speak to Bill C-52. I will be sharing my time with the member for New Westminster—Coquitlam.

Rail transportation is of particular interest in my riding. First of all, I would like to say that my party and I support this bill at second reading.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, to follow up, the member said that the freight rates should be going to arbitration. The first thing that comes to my mind is the importance of the arbitrator and how that arbitrator might be selected. I wonder if he could further expand on that point. How would he like to see an arbitrator, who would deal with issues that come out of Bill C-52, selected or appointed? How would he envision that working?

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I am pleased to rise to discuss the bill, Bill C-52, an act to amend the Canada Transportation Act.

As the previous transport critic for this party during the 2008 to 2011 era, through that time I recognized that there was a great demand across the country for changes that would assist shippers in dealing with the duopoly of the rail system in Canada and the conditions that occurred.

Quite clearly, the concerns were greater among the smaller shippers than among the larger shippers. Therefore, the ones that could command the greatest use of the railway had greater opportunities to strike better deals. The problems lay in a stronger fashion with those that did not have the quantity and the continuity of freighting that would attract the rail systems.

I remember meeting with the pulse association, people who provide agricultural products that are not grain but beans, soy, peas and that measure of agricultural product, which is growing considerably in Canada but in smaller batches in different areas across the country. Their problems with getting their product through the rail system were paramount to them. They said they could not deal with the system as it is right now. The types of producers, the locations of those producers across the country and the nature of the product meant that the rail companies were not attracted to them as customers as much as they were to larger producers.

I will be very interested to see how it will play out across western Canada now with the loss of the single desk for grain, how that will play out with small producers, smaller aggregations of those who are moving grain.

The Conservatives sold the idea of getting rid of the single desk on the basis of enabling grain to be moved to different places by the producers in a fashion that would allow them to value-add to their product. Let us see what happens when this occurs in a system where the need for freight is paramount, where we have to move the product and where farmers are not protected by the larger system that existed under the single desk. We will see what that does and how it works. I am sure the committee will hear representation on that matter as well, as it moves forward.

In looking at the rail system, we have heard a lot of talk about infrastructure. The parliamentary secretary mentioned the great investments that the government has made in the rail system. I would raise, for instance, the investment the government is making in one of the big problems with our rail system, the level crossings. There are some 1,400 level crossings in this country. They are being added to incrementally by municipalities all across the country. The Conservatives identified $27 million a year over five years to invest in level crossings.

When we do the math, that does not turn out to be something that will really solve the problem we have with level crossings. Some level crossings can cost between $30 million and $40 million to fix. These are major requirements in the rail system.

If we take a good look at it, the rail companies are not primarily responsible for what has happened with level crossings. This is a co-operative effort that extends across governments, provincial highway authorities and municipal governments. Everyone has a hand in level crossings. Why does the federal government have to play a role? The federal government can be the final arbitrator there. With the profits rail companies are making, they should be a big part of this as well.

Of course, the government does not collect taxes in a decent fashion from corporations that actually make profits, and cannot reinvest for the public good and the good of those corporations. The chances of the infrastructure issues, that is, of rail being fixed across this country, are very remote if the present spending level of the federal government continues.

I am glad that the NDP has such a strong transport critic today, one who has pushed very hard on these issues.

The service agreement review went through and finished in 2011. Members are now seeing an act in front of Parliament, Bill C-52.

The first part of the bill sets up terms and conditions for contracts for railways and shippers. If a shipper wants to enter into a contract with a rail company, it can describe the traffic to which it relates, the services requested by the shipper in respect to the traffic, and the undertaking the shipper is prepared to give to the rail company with respect to traffic for services. How will one make sure that the rail companies will be well served when their cars arrive? How will all of this fit together?

Contracts, of course, do not apply to written agreements already in place. A company that has already established a written contract with a rail company is not available to deal with this under this legislation. They are locked in.

In the case of many of the larger producers, that may be to their advantage. They do not have to renegotiate anything. The ones that provide a lot of freight movement have a deal set up.

Seeing what is happening in the industry here with the failure of the pipelines that have been proposed for Canada, I would say that we are going to see greater rail traffic carrying oil and gas products across this country. That may change the dynamics of the rail system as well. The larger producers may find themselves competing with other very large producers as well. We will see how that plays out.

The second part of the bill deals with arbitration. Once one has established a contract or is unable to agree on a contract, there is a process of arbitration. That is good because, of course, it is sometimes very difficult to come to agreements.

Small producers in a remote location are looking for the rail company to arrive in a good fashion with the cars. They are going to leave them there. The cars are going to be in good shape. They are going to take the cars away after they have them filled.

There are many variations that have to be examined in a contract between two parties that carry out this kind of work. Is the shipper going to be ready to provide the product to fill all those cars when they are delivered at the site? If they are not, is there some measure of compensation to the company for leaving the cars there longer? If the company does not supply the cars in a good fashion, is there a way to compensate the shipper, who may be backlogged at the receiving area with the other mode of transportation that caused them to bring it to the railway? These are complex, detailed issues that have to be worked out between shippers and the rail company. Of course they will require some arbitration.

What is the hammer that the company keeps under this legislation when it comes to negotiating or dealing with arbitration? Under proposed subsection 169.31(4), the following applies:

For greater certainty, neither a rate for the movement of the traffic nor the amount of a charge for that movement or for the provision of incidental services is to be subject to arbitration.

There is the hammer for the company. It can set the rate for the cars sitting in the dock. It can set the rate for the movement of the material out of the area. It can decide the nature of the movement, the volume of the movement taking place, and how cost effective that is with its service charges that fit over top of that. All of those issues are not going to be subject to arbitration.

The company holds a very strong hand there when it comes to exactly what it is going to cost to do the work. Still, the arbitration should take into account the rates. In any business arrangement, the rates are very important. They cannot simply say “We are going to have a service contract, and you do not get to talk about the rates. The only thing you can talk about is what is going to happen”. Those two things have to work together.

The government, by excluding that from arbitration, has given the rail companies a very strong position in Bill C-52. I hope that it will be seen in committee as something that needs to be worked on. There needs to be some work done to make this fairer, more equitable to all of those concerned, especially the small producers across this country who do not have the leverage to make the deals, as was the case even before this bill.

After this bill there should be some leverage for those small companies so they can make sure that services are being provided to them in a good fashion at a reasonable rate. That is what we should be doing in government, being fair to both sides. The basis of government is trying to come up with solutions that work for all parties.

Some of the other concerns here also fit with small companies, the small shippers, such as the degree of difficulty they may have in working in arbitration, the timeframes that are outlined, the process that is outlined, all of which are very complex and very expensive. The costs will have to be borne by the shipper. The cost of the arbitration is to be split equally between the shipper and the rail company in all cases, according to this legislation.

How does that work? If the arbitration is in favour of the small shipper, they still have to pay the piper for the work they have done.

What I would like to see in this is some means of establishing rates and conditions that would apply across the country, so that some kind of equivalency develops among the arbitration systems and that, across the country, what is decided in one place has some relevance to what is going on in another, so that we have some fairness in the system.

I do not see that yet. Perhaps some of my Conservative colleagues who may have some ideas about that may want to express them. I think it is more likely to be taken up in committee, however. This bill needs a lot of work.

What is the record of this majority Conservative government in offering up amendments? I have to say it is abysmal. It is totally abysmal. These people do not believe in amendments. The Conservatives believe that what they put forward is good enough for the country. They are in charge and they know what is right. This is what has happened with almost every single piece of legislation that has gone through the House to date.

Where are the amendments? When I worked in the transport committee, when there was not a Conservative majority, we worked together, we looked at the issues and we came up with solutions that were mutually agreeable. Then we created amendments that we all agreed with.

Transportation is a fundamental and vital service to this country. It is not something that should be dealt with by parties working against each other. I was always very pleased with the previous transport committee chair, the member for Brandon—Souris, who was very fair and understood that transportation was a vital and important part of this country, which needed to be expressed as such.

This bill should be amended. It should be considered very carefully for what it actually accomplishes and what it should accomplish.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, I am very pleased to speak to Bill C-52 today. The railway, or shipping by rail, is very important in my riding. As I often say in my speeches in this House, the river divides my riding in two, but the railway also does the same thing. This is not just a legacy; it is also a very important economic asset for us.

To begin, I would like to say a little about my experience since 2011 when I was elected, and even before that time, from what I hear from my constituents and other elected representatives in the region, in particular the mayors, concerning relations with CN and CP. This is very important in connection with the subject we are addressing today.

We need to look at the role these companies are called on to play in our communities and see what a key role the railway has played in the history of Quebec and of Canada. In any history course, even at the university level, we still talk about the railway as a core element of our country's collective history. When we look at it that way, there is a duty to work with the various stakeholders. Today, we are talking about the stakeholders that ship various products, in the farming sector in particular.

In my riding, I am in an odd situation when it comes to this subject. On the south shore, Montérégie is located right in the middle between Montreal and the more urban part of the south shore, but also in a somewhat more agricultural and rural area. Let us not forget that there are also farmers in my riding. I can think of neighbouring ridings, like Shefford or Saint-Hyacinthe—Bagot, where there are people in the farming community who use the railway. We can really see how much the railway connects those regions to Montreal, and beyond there to other destinations, including Quebec City, Ottawa, or the other end of the country.

When we consider these facts, we feel we must take action to support our farmers, but we also want to protect the communities living alongside the railways. We therefore need CN to work with us. That is why this bill is important. We are talking about agreements with shippers, but this is also an indication of the need to go beyond that and call on CN to co-operate more on other issues. Those issues all involve the same objective: improving and making better use of the infrastructure we have had for over 100 years now.

Getting back to my previous point, when I was talking about the work I had to do with CN, I have to say that it is not always an easy company to work with, quite frankly. I say that with all due respect because good things have been accomplished. I would not want anyone to think otherwise, and I am definitely ready to work with them. However, the fact that we needed a bill to make CN co-operate on one particular issue shows that the company could do with an attitude adjustment and a little more flexibility given that it has a monopoly or a virtual monopoly on rail services in my region and across Canada.

I have seen this problem on two particular files, including the rail electrification one. This AMT proposal would modernize and improve rail services. It would reduce costs for producers using the services and for public transit users. Yes, it would be expensive in the short term, but in the long term, it would provide economic, environmental and other benefits.

We have had to deal with a lot of problems on this file. CN categorically refused without offering any explanations or agreeing to talk about it. This is another very important aspect of the bill before us today even though it is about a different issue with CN.

As for the other file, I heard a comment on the other side of the House about increasing train traffic. That is interesting, because that is exactly the kind of thing we want to see. That obviously means that the economy is doing well, including the local economy.

However, this increase is combined with the phenomenon of urban sprawl, which we are seeing more and more in Montérégie, particularly on the south shore. People are leaving the Island of Montreal to move to the suburbs, including our region. They are building homes around train stations to be able to use public transportation. II am talking about commuter trains. So these homes are seeing an increase in vibrations.

My riding office in Saint-Basile-le-Grand is in an old train station. It is no longer in use, but, obviously, since it is an old train station, we are close to the tracks and we feel the vibrations. It is not a big deal to us. It does not happen too often when employees work from 8 a.m. to 5 p.m. or 6 p.m., for example. However, I think everyone can agree that it can be more difficult for someone who lives close by.

Speaking about the importance of the railway calls to mind some comments made by one of the mayors in my riding. Gilles Plante, the mayor of MacMasterville, told me as well as CN officials that while he did not want to hinder CN’s work or impede rail traffic, he did hope that a happy medium could be found.

Co-operation with CN on this front is necessary, but not always easy to get. We are still waiting for answers to requests made by citizens regarding rail traffic.

There is a reason why I bring this up and relate these stories of issues that I have been focusing on since being elected to represent my riding. As I have said before, the aim of the bill is to compel CN to negotiate agreements with shippers to prevent the company from unfairly benefiting from the monopoly it holds over our producers, in particular farmers.

If I might digress for a moment, I would especially like to congratulate the member for Trinity—Spadina for her work, for the bill she introduced, which made the minister realize that the time had come to act on this issue.

This bill is seen as a step in the right direction. However, hard work is needed to sustain this momentum. I am hearing from the farmers in my region and I know that some colleagues represent ridings where farming is even more prevalent. The message is always the same when the topic of public transportation or the railway system comes up. They acknowledge that this is a very important industry, one that needs to be modernized.

We lag far behind Europe in this area. Of course I am not saying that everything is wrong. I am sure that a government member is prepared to rise and say that everything is going well. I am not saying that things are going badly, but simply because things are not going badly does not mean that things cannot be greatly improved. This is true of the railway system. Things are going very well back home. People benefit from the service, but much more could be done. If improvements were made to the rail infrastructure, the costs in the short term would be great, but in the long term, as I said, users and shippers could enjoy lower prices.

As far as urban sprawl is concerned, as I said earlier, this is a positive phenomenon. It means that people are settling in our region, that the population is increasing, that more families are moving into the area and that our local economy is thriving. These are things that I am very proud of and very pleased to see. Mainly it drives many of the issues I champion in the House and in my work as a member of Parliament.

However, that makes life tough for farmers because municipal elected officials, regional conferences of elected officials, RCMs, members of the National Assembly and so on all wind up facing the same challenges: finding a way to promote urban sprawl and growth back home, but also ensuring that our farmers still have an environment conducive to their production.

There are a lot of local products in the Richelieu valley, where my constituency is located, and they are the pride of our region. Tourisme Montérégie has done a lot of work, and even in the surrounding areas, in Rougemont near Marieville in my riding or elsewhere, local products are of outstanding quality. People attending the Chambly Bières et Saveurs festival in the summer can enjoy beer—it is very good—as well as superior-quality food products. We want to continue producing those products. They are healthful and good for the economy, and they are also good for our heritage, even though that may seem like a cliché. That, in a way, is our physical and environmental heritage.

The work we are doing with CN is extremely important: we are looking for a way to juggle the reality of modernization with that of agricultural tradition, which is very important in my riding. That is why I am very pleased to support this bill at second reading. It is a step in the right direction, as a number of my colleagues and I have said.

However, I believe that the committee work will be very important, and the work to be done over the next few months and years even more so. As I emphasized earlier, we have to prod CN on other issues as well. We have to demand even more from those people and from all stakeholders involved in railway issues, who will show us the way because we find it hard to move CN on these issues.

I would like to go back to the vibrations issue. This is fundamentally important for this bill because, once again, we are talking about shippers. Freight trains are increasingly long and that is very good. However, we wonder, and we have also put the question to CN, how it is possible to reconcile these two realities. My office is located beside the railway, and I also live near it. Sometimes drivers want to cross the tracks, and it is nearly rush hour and along comes a train transporting freight from elsewhere in Canada. Then they realize that the train is nearly 200 cars long. Sometimes people wait a long time at the stoplight. We realize that some work still has to be done to reconcile this urbanization reality with the fact that these trains have to pass through.

I am not saying that this is not important. I am referring to the situation facing my colleague, the mayor of McMasterville. We want to keep this in our municipalities. We do not want to tear up the railway. It is part of our heritage and we know how much it benefits our communities. No one would ever say otherwise. However, I think we need to do some work on it. This bill urges CN to do something for farmers. We could also urge it to do more for Canadians in the regions.

The railway is such an important part of our heritage. I recall a Knights of Columbus dinner that was held in November. One of the members, Gilbert Desrosiers, who is very well known in my riding, received a painting done by a local artist whose name escapes me at the moment unfortunately. It was a picture of what we, back home, call the black bridge. There is a large CN logo on the bridge. It is hard to miss. Whether you are on the Richelieu highway, on the shore or in a boat on the Richelieu River, you can see this railway bridge. It is practically an institution in our riding. It is part of our heritage.

I say that half-jokingly, but I am also serious. It illustrates people's sense of belonging. We want to make this infrastructure work in our region because we know what a remarkable asset it is.

I know that I am revisiting issues that I have already raised. However, since I have the time, I will again address the issue of the electrification of the rail line. It is very important, and CN’s attitude to this issue poses a problem.

I often have conversations with my colleagues, who are ministers and members of the National Assembly. We all more or less have the same vision as far as objectives for public transportation are concerned. A common vision in the region is a good thing, and helps steer progress.

On the other hand, it is understandable that the AMT has projects and that CN is a source of friction. Indeed, they have differing interests and their situations are not the same. Yet, what has been most disturbing in this issue is the lack of dialogue. When this decision was made, the AMT did not seem to know why; CN simply said that it was too expensive, that that was that, and that it was no longer in the cards.

Had the original developers of the railway, both in Quebec and elsewhere in Canada, said that building the railway was too expensive, little progress would have been made. That is precisely the kind of mentality that CN and CP need to do away with. We do not deal with CN and CP as much back home, but these companies still have a role to play, and some of my colleagues do deal with them. That kind of mentality cannot be allowed. We know that it is expensive. We know that it is an investment. I believe that, in the long term, it is going to help reduce costs and promote the kind of environment that is so important for our farmers.

For example, the closer one gets to the Cities of Richelieu and Chambly—which are in my riding and are adjacent to the municipality of Saint-Jean-sur-Richelieu, in the riding of Saint-Jean—the more railways there are. However, they are mostly outdated and no longer in use. The municipality would really like to use this infrastructure and space. However, CP is dragging its feet, at least I believe that it is CP that is doing so.

All of this to say that when a municipality wants to use infrastructure and cannot do so, it is extremely problematic. When municipalities ask for answers, there needs to be an immediate dialogue. CN and CP have everything to gain by engaging in such a dialogue. It can only help them to do their job.

A CN representative, who I will not name out of respect, told me that if Canadians were to communicate directly with CN and tell them about their problems, CN would be in a better position to respond. However, that might not be so easy since these issues are localized. That is no secret. Residents in the region communicate with their elected representatives. Residents with those kinds of concerns call their mayor, municipal councillor or member of Parliament.

When citizens call elected officials and the elected officials contact CN, I think that this corporation should understand that it is time for action. The fact that it does not come directly from a citizen is no excuse not to act. We are very ready to act.

I appear to be very critical toward CN and CP, but it bears repeating. We understand they have had great success and that they are still successful. However, in certain respects, they must be more open and engage in more dialogue.

This is why I am pleased that this bill was introduced. The government has decided that these corporations must speak and work with people. There are certain standards to be met.

If this is representative of things to come in terms of the railway, in my riding in particular, then I will be quite pleased to continue supporting them and engaging in a dialogue with them.

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

Mr. Speaker, I would like to respond to my Conservative colleague's first point. He welcomes the investment his Conservative government has made in rail transport. However, I remind him that, in 2010, the people in the community, in Chambord, criticized the condition of the rails. That was not just one stakeholder, but rather a lot of people in the community.

I also believe the Conservatives were still in power when a derailment occurred in 2011. The Sûreté du Québec suspected a defect in the rails.

The Conservatives may be proud of the money the government is putting into rail transport, but it is clearly not yielding the desired results. I am not necessarily saying they are incompetent or poor managers of taxpayers' money, but people can draw their own conclusions.

Then my colleague said that the NDP could have voted for or against such and such a bill. The NDP is truly a very reasonable party. For example, this Bill C-52 is adequate. It could be better. It could resolve the disparity in rate-setting by companies that hold a monopoly. However, we are pleased that Bill C-52 is a step in the right direction and we will support it.

As we have previously seen, the Conservatives have introduced some atrocious bills despite their good intentions. I am not ashamed to say that we are opposed to bad Conservative bills. That is why I encourage my colleagues to support the initiatives of my colleague, the transport critic.

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

Mr. Speaker, it has probably become quite clear from my questions and comments that Canada's railway system is something I care about a great deal.

During my 10-minute speech, I will not necessarily focus on the details of the bill. My NDP colleague just did that, as did many other NDP members, including the hon. member for Trinity—Spadina, our transport critic, who is doing an incredible job in this area.

Bill C-52 affects me personally. We have heard a lot about how this bill will have a national impact and about its many deficiencies, which the NDP has criticized.

I just mentioned the fact that the difference between Canadian Pacific's and Canadian National's rates is quite significant, from one bidder to the next. This aspect bothers the NDP. We would have liked to see the federal government show some leadership on this. Unfortunately, this bill was introduced after five years of dragging their feet, and it was only introduced thanks to the hard work of my colleague from Trinity—Spadina, our transport critic. Fortunately, the NDP is the official opposition and it will hold this government to account.

In my speech I am not going to talk about the national impact or the consequences for big cities. I respect the people of Montreal and Toronto, for whom rail transportation means something different. However, I come from northeastern Quebec and, in the regions, the rail system is mainly used for the transportation of various goods.

Over the past few days, I took the time to find out whether our exporters in Saguenay—Lac-Saint-Jean are satisfied with the rail service they are receiving. Unfortunately, I came to the same conclusion as the other opposition members: there are many shortcomings.

I even managed to get my hands on a study conducted by the City of Saguenay. It is a few years old, but the conclusion was the same. I will share it with the House. This will bring something different to the debate since it pertains more to the regional reality.

This study has to do with issues around rail freight transport in Saguenay—Lac-Saint-Jean.

Editor's note: The findings in this report reflect discussions with most major regional users, including those in the pulp and paper, softwood lumber, fibreboard and aluminum industries, as well as smaller users in other industrial sectors. They basically reflect the comments made.

I just named the economic and industrial sectors that are very important in the region. We export a lot of these products. The people watching at home may be wondering what their rail system looks like. I will explain.

Two companies share the Saguenay—Lac-Saint-Jean railway system: CN and the Compagnie de chemin de fer Roberval-Saguenay or RS, a division of Alcan [or Rio Tinto Alcan]. The CN railway falls under federal jurisdiction and the line ends in Jonquière. The RS railway is a private railway that falls under provincial jurisdiction. The RS railway starts at the Port-Alfred facilities in La Baie and its primary purpose is to provide service to the Alcan plants in the region. As part of a confidential agreement with CN, however, RS provides service to the companies east of Jonquière, including clients from the Chicoutimi and La Baie industrial parks.

The city of Saguenay has two freight transshipment centres: Nolitrex (Jonquière) and Transit PAG (located in La Baie since January 2000), as well as one wood chip transshipment centre (Jonquière). Two other transshipment centres operate in Lac Saint-Jean, in Hébertville (Groupe Goyette) and La Doré.

Northern Quebec Internal Short Line (NQISL)

The NQISL operates the Saguenay-Lac-Saint-Jean, Chibougamau and Abitibi network for CN. Quebec has 11 short lines and private companies, including RS. Unlike the other short lines, which are independent entities that operate secondary lines for CN, CN has maintained control over the NQISL. The NQISL is a semi-autonomous division of CN, wholly owned by CN. The NQISL has a monopoly in the region and operates the largest rail network in Quebec, with 1,756 km of track, including 422 km in Saguenay-Lac-Saint-Jean.

NATIONAL FACTORS

Compared with all the rail companies in North America, the railway has adapted poorly to the new realities of transportation, including the just-in-time factor. Transportation times are long, rail cars get lost and the rates are less competitive, compared to the more efficient trucking industry, which has regained a large share of the market.

Following a string of budget cuts at CN at one point in time, rail car maintenance was neglected as was reinvesting in equipment. Today, the industry is faced with an aging fleet of rail cars. Certain types of rail cars, specifically closed cars that are not watertight, are in poor condition. This situation affects a region like ours in particular since the pulp and paper industry is directly impacted. According to our sources, CN is poised to modernize its fleet of pulp and paper rail cars. [I believe the modernization has already been done, since this study was conducted several years ago.] Other less important industrial sectors have been neglected, however, and will likely have to continue making do with outdated or ill-suited equipment.

CN’s operating system appears to be poorly adapted to the size of Canada and the unique characteristics of sub-regions like those in Quebec. CN’s national service centre is located in Winnipeg. Some customers can go to Vancouver for a price and to Winnipeg to request a rail car that will be sent from Edmonton to a transshipment centre in Montreal. From Montreal, the freight can then be shipped to the Saguenay. The transaction can then be billed in Toronto. Each time, a different person is involved in the process. The system is highly complex and rather daunting for the user. Customers can easily encounter many pitfalls. Another issue is the lack of knowledge of the Quebec market, especially a region like the Saguenay, as well as a strong tendency to apply national standards and rates, allowing little room for regional differences and for contact between a customer and a supplier.

Most of the customers who were consulted said that CN was not highly service oriented and took advantage of its monopoly, especially since the large-scale cuts in recent years. Mention was made of unilateral decisions where CN notifies rather than consults with its customers. [This happens regularly.] Another told us: “You want two rail cars and you get 20. When you want 20 rail cars, you get two.” Others spoke of lengthy delays for one thing or another.

REGIONAL FACTORS

In early 2002, the industry was hit with a major rail car shortage that affected all Canadian railway companies. The softwood lumber industry was primarily affected. Manufacturers picked up the pace of shipments to the United States before the American tax was scheduled to take effect. The softwood lumber industry was hopeful that the situation would sort itself out after May 23. Whether or not that happens remains to be seen. [Many years later, we can see that the situation has not improved.] However, even though this situation was exceptional, there had been a long-standing shortage of CN rail cars, except for major clients. In an October 8, 1999, report, Quebec's transport ministry stated the following about the Saguenay-Lac-Saint-Jean: “...because of the shortage of rail cars, regional transshipment centres may lose customers—indeed, some already have—to transshipment centres in Quebec City where rail cars are easier to obtain.” This situation does not adequately support regional development, nor does it encourage the NQISL to develop regional markets and seek new clients.

The NQISL seems uninterested in small customers, occasional customers and potential customers. Except for major users, most shippers get the sense that CN wants to focus on choice customers—aluminum and pulp and paper—while ignoring smaller customers and sectors. For example, occasional customers can wait weeks to get shipping rates for their goods.

The general consensus is that CN is using its regional monopoly to charge excessively high prices. This could make rail transportation unaffordable for small businesses and could cause larger companies to opt for other means of transportation, such as trucks, which put additional pressure on our roads.

For example, recently, a client got an initial quote of $9,280 to send 10 cars to Calgary. That was lowered to $4,390 following a single phone call to a CN higher-up.

For example, a major regional company got rates from Canadian Pacific out of Quebec City that were so much lower than CN's rates, they almost covered the cost of shipping goods by truck on Route 175 even though CP has a longer route through the Eastern Townships compared to CN's direct line between Quebec City and Montreal.

For an 11-kilometre segment, a major part of Saguenay's industrial base—Chicoutimi and La Baie—is served by a third company, RS, for which this is not a priority. Although RS provides very good service, this results in a prohibitive surcharge for shippers just for those few kilometres. This situation could cause problems in the future for the La Baie sector, which has 75% of the new City of Saguenay's industrial development space as well as major regional marine and air transportation infrastructure.

I would like to provide some other information about my region that may be relevant:

Transportation is a determining factor in the location and development of industry. Transportation is more important in regions such as ours than it is in larger centres. More than anywhere else, we need proper, modern, competitive transportation systems if we want economic growth, particularly given recent unemployment statistics...

The railway is an essential mode of transportation in the region. Trains carry approximately one-third of all goods shipped regionally or inter-regionally, 40% of goods shipped inter-regionally via ground transportation and two-thirds of goods shipped across the continent via ground transportation.

The NQISL is the only rail company that gives the region access to provincial, national and continental markets.

In 1996, the break-even point for an internal short line was 37 cars shipped per kilometre of track per year. In the region, the NQISL is definitely profitable, moving more than 61 cars per kilometre, which translates to more than three million tonnes of goods annually (57% of that being forest products).

I painted a regional picture of the rail transportation system and I would like to quote some local stakeholders, particularly the mayors of Saguenay-Lac-St-Jean municipalities. I will not limit myself to my own riding, Chicoutimi—Le Fjord, and I will even venture into the riding of the Minister of Transport, Infrastructure and Communities, who may not show the other side of the coin, since he will want to protect his government's bill.

I would like to read part of a fairly recent Radio-Canada article from November 16, 2010. In the article, people were complaining about rail service.

The town of Chibougamau and its municipal development agency are calling on the federal government to intervene to improve rail service to Lac-St-Jean.

The preliminary report just released by Transport Canada on railroads in Canada's small communities worries Développement Chibougamau, because the document talks about long-term solutions to improve service across the country, but it says nothing about the infrastructure on the Triquet-Faribault line, which links Chibougamau to Saint-Félicien.

Saint-Félicien is in the municipality of the Minister of Transport, Infrastructure and Communities.

The town of Chibougamau, Développement Chibougamau and Génivar submitted a position paper to the federal government last March denouncing the sorry state of the track, railway cars and service on the Triquet-Faribault line.

The general manager of Développement Chibougamau, Pierre D'Amour, also pointed out that mining exploration is booming in the region. “Our fear is that there will be downsizing and that less profitable rail lines will be shut down,” he said. “For us, that would be a catastrophe.”

Too slow

Chantier Chibougamau ships one-quarter of its production by train, but would like to ship more to improve its environmental record.

The company's communications officer, Frédéric Verreault, explained that, for the time being, it is impossible for them to increase rail shipments because the train travels at 40 km an hour owing to the condition of the tracks.

“A moose racing a train carrying our products would get to Lac-Saint-Jean faster.”

A rail shipment to Toronto takes more than a week; it can get there in 24 hours by truck. According to Frédéric Verreault, the decision about the shipping method is an easy one. “The just-in-time concept is central to our relations with our clients,” Mr. Verreault pointed out.

The Chantier Chibougamau representative would like the federal government to invest just as much in rail service as it does in seaports.

I will quote another newspaper article from one of our regional weeklies:

Last week, we published an item about the Forest Products Association of Canada (FPAC), which was urging the federal government to “act decisively” on the various problems associated with the rail transportation of goods. We have further information this week.

You will remember that, in 2008, the government committed to reviewing poor rail service provided to rural industries by establishing a review panel, which made recommendations.

However, today, the FPAC considers it inappropriate that all measures will be delayed for another three years.

The association pointed out that the government is counting on CN and CP to implement the changes on a voluntary basis and that regulatory measures will not be enacted until after 2013.

Last Friday, La Sentinelle contacted Susan Murray, executive director of public relations for the Forest Products Association of Canada, to find out if the government had responded to FPAC's press release entitled “Forest Industry to Government: Fix Rail Service Now”. She said that the government had not responded.

When contacted by La Sentinelle for comment on the FPAC's press release, the mayor of Chibougamau said she agreed with the association.

She also said that the railway is of the utmost importance for the region's mining and forestry companies, as well as those in James Bay and Matagami.

In her opinion, these companies are stuck because CN has not made any investments in its infrastructure for years.

She also wondered about future projects, namely those that will be implemented in the James Bay sector. “Will CN have the reactive capability to support these projects?” she wondered.

I would now like to mention what the Mayor of Saint-Félicien had to say.

...the Mayor of Saint-Félicien, Gilles Potvin, is also concerned about CN's lack of investment. Mr. Potvin is of the opinion that the Saint-Félicien-Chibougamau line is essential for the Saguenay-Lac-Saint-Jean region because it provides access to the port of Grande Anse. He said, “It is a key area for the future of the region. We have to be concerned about it.”

For the past few minutes, I have been talking about the state of the railway in Chambord, which is in the Minister of Transport's riding. Here is a newspaper article that was published a year after the two articles I just quoted. It reads:

Train Derails in Saguenay-Lac-Saint-Jean

CHAMBORD—Three cars derailed on part of the Saint-André line in the Chambord area of Saguenay-Lac-Saint-Jean late Sunday night/early Monday morning. According to Sûreté du Québec spokesperson Hélène Nepton, Sûreté du Québec was informed of the incident, which was allegedly related to a defective rail, at approximately 2 a.m.

It is disappointing.

In closing, I will let people draw their own conclusions about the fact that another train derailed in Chambord one year later, in 2011, because the track was not being properly maintained even though local stakeholders had asked the federal government to take action, to take responsibility and to invest in the railway.

I am proud to be from the Saguenay-Lac-Saint-Jean area and, as the member for Chicoutimi—Le Fjord, which is home to part of the CN and RS railway, I am calling for the federal government to take responsibility and finally invest in rail transportation. It is important for the Canadian economy.

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

Mr. Speaker, I will elaborate on what my colleague said. Just a few seconds ago, she mentioned that two rail companies, CN and CP, have a monopoly. She also mentioned that 80% of exporters are dissatisfied with the poor service, such as when goods do not arrive on time or in good condition.

When exporters want to shop around and get the best price or the best deal, they ask for bids from these two major companies, which, quite frankly, have a monopoly. There is also a big difference in rates. That is why I believe the NDP approach is reasonable.

What we find particularly unfortunate about Bill C-52 is that the Conservative government had a good opportunity to legislate or have input on the rate difference.

I would like to know what my colleague thinks of the fact that Bill C-52 says nothing about rates, which I believe Canadian exporters want the federal government to address.

[Djaouida Sellah, NDP, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I would like to thank the member for his question.

We are discussing Bill C-52 today because nothing has been done up to this point, obviously. Unfortunately, the government waited until there was a crisis and the shippers and the NDP put pressure on it to introduce this bill.

This is not ideal, but it is better than nothing. That is what the shippers are telling us. They are not really satisfied with the bill, but they hope it will be improved upon in committee.

[Djaouida Sellah, NDP, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I thank my colleague from Winnipeg North. I listened closely to his question.

We believe this is a first step in a crisis situation. The Liberals had until 2006 to introduce a bill, but unfortunately they did not do so. This is what we are suggesting. We are in favour of Bill C-52 going to committee, so witnesses can be heard and amendments will probably be made.

[Djaouida Sellah, NDP, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, Bill C-52 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 fulfill its service obligations to the shipper.

In point of fact, clients of the rail transportation system, like farmers and mining companies, are victims of the near-monopoly held by railway companies: service interruptions, delays and other disruptive situations at Canadian National and Canadian Pacific are harmful to industries such as agriculture, forestry, mining and manufacturing, which do not receive compensation. A large proportion of the goods are intended for export. Poor rail transportation services damage the ability of Canadian exporters to compete on the international marketplace, particularly in terms of agricultural products.

Moreover, a number of shippers have difficulty, not just in getting good service, but in getting any service at all. Shippers complain that they are not able to sign freight contracts with the big railway companies. This situation is detrimental to Canadian exporters. Steps must be taken, especially because right now the trade deficit is very high. I would like to point out that the trade deficit reached $2 billion last November.

Statistics show that 80% of railway clients are dissatisfied with the service they receive. As the situation is one of a quasi-monopoly, it is important that the government take action to ensure that clients are better protected. It is the shippers who have to pick up the pieces if their goods do not arrive on time. This causes huge inconveniences.

When perishables are being shipped, the situation is disastrous, because by the time the goods arrive at their destination, they may be rotten or just not usable. This hinders Canada’s competitive position. For example, Canadian soybean growers are placed at a competitive disadvantage vis-à-vis their Argentinian competitors, not because of the quality of their product, but because of unreliable shipments. The growers should not have to bear the cost of this situation.

Rail transportation of goods is vital in many respects. First of all, since 70% of goods are transported by rail at some point, we need to have an efficient system. Secondly, rail transportation makes it possible to keep trucks off the roads, thereby limiting greenhouse gas emissions that result from the transportation of our goods. By ensuring that a certain number of trucks are not on the roads, we avoid putting additional pressure on our road infrastructures, that do not really need it.

I come from the Montreal area. Like my constituents in my riding of Saint-Bruno—Saint-Hubert, when I use the highways, I can see many trucks, and I can also see the state of the infrastructure, which is underfunded. Therefore, we need a rail transportation system that is efficient and accessible, so that we do not make the situation worse. Moreover, we need investments to restore our existing infrastructure.

Inaction on this issue will be costly for the Canadian economy. The situation cannot continue. Inadequate rail service is costly for Canadian businesses, and it is detrimental to the economy and to the labour market. In 2008, the government set up a panel of experts that studied the issue for three years. Their report was submitted in early 2011.

The government also initiated a mediation process that served only to show that Canadian National and Canadian Pacific lack the will to solve the problem and to provide adequate service to shippers. Although this bill could be improved, it is part of the solution.

Bill C-52 will cover only new service level agreements, not those that already exist. Many shippers will therefore continue to live with unreliable and unfair service, without having any recourse to dispute resolution if violations of existing service agreements occur.

Furthermore, arbitration is only available for shippers who are negotiating new contracts. Instead of providing fast, reliable dispute resolution for all shippers, Bill C-52 is offering a limited arbitration process for a small group of shippers. The proposed arbitration process may be too costly for shippers and require an unfair burden of proof by asking shippers to prove that they need the services of the rail company.

To find a comprehensive solution, we also have to consider the question of rates. While some members of the shipping community wanted to address problems with rates in this legislative process as well, the Conservatives made it clearly known that they will not be examining that aspect before the next legislative review of the Canada Transportation Act, in 2014 and 2015.

Of course we have to tackle the problems associated with service level agreements, but we also have to consider how we can make rail transportation more affordable. We have to tackle the problem in its entirety to ensure that our businesses, some of which are in rural communities, are an important element of the local economy.

The situation affects numerous sectors, such as natural resources, manufacturing, agriculture, forestry products, mining, chemicals and the auto industry. No one is really spared.

It is also important to note that the mining sector is the second largest employer in first nations communities, after the public sector, of course.

Improving rail services for shipping goods from mining companies could have a positive impact on the economic situation of the aboriginal peoples in some regions of the country. The government should be working with first nations leaders to improve their living conditions and the economic circumstances of the aboriginal people. There needs to be a sense of urgency to move quickly on this issue.

I will conclude by saying that it is most important that we not solve problems by halves. We have to tackle the problem in its entirety. I know that Bill C-52 is a small step forward, because this is a crisis.

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

Mr. Speaker, I thank my colleague from Winnipeg North for his question.

I touched on the issue of committee work. In fact, I asked him a question regarding this during his own speech. I said that I wanted debate in committee broadened to go beyond the scope of Bill C-52 and focus on problems, so that rail transportation can get better.

I hope that my colleagues will agree with me regarding the need to open up debate and see what members have to say about other issues in the report that the bill does not address.

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

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

At the beginning of his question, he mentioned that there were continental relationships when it comes to shipping. That fact is undeniable. If there is one thing that CN and CP customers want, it is that their goods be delivered as quickly as possible. That is the problem. And the reason the government has decided to act after many years of standing idly by is that market-driven logic unfortunately failed this time.

Moreover, that is why, in my speech, I called on CN and CP to change their corporate culture, which is focused solely on profit, in an environment where it is really not possible to be ruled by completely market-driven logic. Indeed, you cannot create 10 competitors for CN and CP just like that. As members are aware, this kind of infrastructure makes it is quite difficult to develop competition.

I said in my speech that CN and CP should view this bill as a warning sign that things are bad and that they need to improve their practices. We are here solely because there is a problem that needs to be addressed through Bill C-52.

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.

[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.

[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, 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.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, it is a pleasure to rise today in support of Bill C-52, with the understanding that it is not exactly the bill that was needed. However, I have absolute faith that our critic, the member for Trinity—Spadina, will be in there valiantly fighting for the amendments to improve this legislation, which does not go far enough.

I also want to acknowledge and thank the member for the amazing work she has been doing on her transportation portfolio. I know in my riding of Newton—North Delta, one of the most critical issues for the residents there is to have a national transportation strategy to help provide a framework so that we can have good, comprehensive public transit that will help us get rid of the gridlock, for the movement of goods and for people. When people do not have to sit for hours and hours in traffic gridlock, their mental health improves and they are much more productive at work.

Today we are here to talk specifically about the amendments to rail freight provisions. We are talking about rail freight customers. We live in a huge country, which is geographically challenged, or I might say, advantaged. We have a diverse climate. When I left Vancouver last night at 11:20, it was still 6°C. Then when I arrived here to our beautiful, balmy weather in Ottawa, it was minus whatever.

Moving goods for mining companies, farmers and even for people who want to ship cars across the country, we realize that shippers have a huge geography to contend with. It was with that in mind that our forefathers had the foresight to build a national railroad. It is unfortunate that we have not been good caretakers of the national gift that was given to us. We have seen it face quite a few challenges. On the passenger side of rail, my colleagues who have rail service in their areas tell us how wonderful it is, but out where I live in B.C. we have had much of our passenger rail cut and the rest is not running that regularly.

When we talk about freight in Canada we are not talking about moving goods 100 miles or 300 miles, we are talking about moving goods thousands of miles across the country, going through mountainous terrain, our prairies, from coast to coast to coast. As well, there is the incredible challenge of our climate, yet we have to keep our freight moving throughout the year.

I am an absolute fan of trains, be they freight trains or passenger trains. Having grown up in England I had access to some of the best train service way back before the British privatized their train service. Britain is now looking to see how it can buy back the rail services and move toward nationalizing that national treasure once again.

I want us to look at some of the key facts surrounding this issue in Canada. We usually talk about quality service. However, here is a fact: 80% of rail freight customers are unhappy with their services. When I think that 80% are unhappy, that means that only 20% are happy. If I were teaching in my classroom today and I was grading a paper that was only 20% okay, it would not receive a very high mark or even a passing mark. As a matter of fact, it would be an abysmally failing mark, and I feel that is exactly what we are doing. We are failing our mining industry, our farmers and other shippers in industries that transport goods using the freight service.

Our services are so unreliable. They cost the Canadian economy hundreds of millions of dollars every year. If there were no other argument, surely my colleagues across the way could accept the fact that when it costs our economy hundreds of millions of dollars a year, it is an issue they need to address immediately. It is not something we should tinker with part of and then just leave alone for a long time.

By the way, I do not give much credit to my colleagues who are sitting in opposition either, the Liberal Party, because it was under them, under their stewardship, that the CN was privatized in 1995. They privatized the track. There is another way, which other countries are looking at where they keep the track and privatize the actual rail service. However, it was that kind of privatization, without checks and balances, without guarantees, without getting contracts in writing into the future, that is jeopardizing the transportation of goods. I want my colleagues to remember that.

We always have to look at our history. History is a great teacher. Basically what we are looking at here today is that if 80% of the people are unhappy and the unreliable freight service is costing us hundreds of millions of dollars each year, just think what it is costing the companies that invest. Think of the rotting crops for farmers who cannot get the service they need when they need it to move their goods from, let us say, the Prairies out to the west coast to be shipped away, or to the east coast. The transportation is stopped. Imagine the idled plants, even on our coastline, that are waiting for the railways to arrive, but they are running late and so they have backlogs. Imagine the mines that miss their shipments. These are the day-to-day realities that these industries have shared with us.

This is a missed opportunity by my good colleagues across the way to come forward with a comprehensive piece of legislation. This particular misstep will continue to hurt Canada's exporters, damaging our global competitiveness and costing us decent jobs. The bill takes a baby step in the right direction, but when we are dealing with hundreds of millions of dollars and peoples' livelihoods, baby steps are not always what needs to be taken. This is a missed opportunity for the Conservatives to address the bill in a comprehensive way.

What we find when we read the bill is that the protective measures do not even cover existing contracts between shippers and rail companies. As well, the legislation will only offer a narrow, costly arbitration process for failed negotiations for new contracts. Key demands, such as the shippers' call to include penalties for rail companies and service agreements, performance standards and an easily accessible conflict resolution process were basically ignored in this piece of legislation.

By the way, these are not the key demands of the opposition. These are not key demands that we have dreamed up. Our critic has done an amazing job consulting with the industries that feel the most impact.

Once again I would say the government is pandering to its corporate friends instead of the industries it needs to be supporting so that Canada can grow its export business and thus address its own economic strength.

Our rail transportation system, despite all its problems, is the backbone of Canada's economy, with 70% of all surface goods shipped by rail. As a matter of fact, if anyone has ever travelled through the Rockies by rail, there is a point where one can stand and see the beginning and the end of a train, because of the geography and the way the rail track was built. If anyone ever gets the opportunity, they should go see that. It is truly amazing. Watching that for what seems like forever, it really strikes home just how much Canadians rely on rail to transport our goods.

Pricing for rail freight services is also damaging Canada's shippers. Bill C-52 explicitly excludes pricing, despite the fact that many in the shipping community were calling for this very thing. One has to think, what is the driver for the Conservative government? It certainly is not listening to the people who need to move crops, who grow crops or mine minerals, or the people who are using the freight service. The government is not even listening to the shippers.

Canada's trade deficit is ballooning. I know the Conservatives like to live under the delusion that they are fine economic managers. However, when we look at the real world outside, it is a very different story. I would like to invite some of them to visit my riding and see that reality for themselves.

Canada's trade deficit is ballooning, reaching almost $2 billion in November. I am not talking about hundreds of dollars or hundreds of millions of dollars. I am talking about $2 billion, a number I do not think many of us could even write down or imagine how many zeroes come after the number two. We would have to go back to our high school days to remember that. We cannot afford to lose even more ground by taking little baby steps. This is the time when the government could have been bold, addressed all the issues and moved us forward in the right direction. We have to be competitive in the global market. Canada's products can only be competitive when we see an improvement in that figure of the 80% of people who are unhappy with the freight service.

Rail freight service is not only central to Canada's economy, we also need a strong freight service to take trucks off the roads and tackle greenhouse gas emissions. I am not going to try to persuade my colleagues across the way about the need for environmental protection. Whether it has been in the omnibus budget bill or other actions around the Kyoto protocol, the government has shown it has absolutely no commitment to regulations that protect our environment. As a matter of fact, it has shown it is not willing to make any movement toward making improvements to protect our environment.

At the same time, I feel it is my moral responsibility to point out to government members that, if it were improved and more people were happy with it and it were running on time, et cetera, at least our railroad service would take many trucks off the road. More people would use the freight service because they were happier with it, and thus it would be good for the environment.

I know that deep down, somewhere, even if not when they are sitting here in the hallowed House but when they are back at home with their children and grandchildren, Conservatives must think about planet earth and what we must do to protect it, if not for ourselves then for our children and grandchildren.

It would have made environmental sense to have addressed some of these issues in a more comprehensive manner. Rail freight is only one aspect where the Conservatives are slow to act. I could give many other examples, but I do not think there is enough time in the day.

From new rail safety measures, which we have been calling for, to cuts at VIA Rail and blocking the introduction of high-speed rail in Canada, Conservatives do not give Canada's rail network the attention it deserves. It is absolutely so. There is nothing more relaxing than sitting on a train and travelling to work and home. I have done this at another stage in my life, and I can say it is far superior to travelling by car to work and back and sitting behind the wheel getting all tensed up.

We are not the only ones who are saying that this bill does not go far enough. There are others who agree with us. As I said previously, the official opposition's critic, the member for Trinity—Spadina, has done an amazing amount of legwork on this. Actually, she has met with many of the movers and shakers in this area. She, herself, has formulated policies and amendments that she is bringing forward based on what she heard, not on some ideological shift way out there or a need to look as if she is doing something, but based on listening to the customers and those who move their freight.

Key stakeholders in agriculture, mining and the forestry industry associations have been calling for rail freight legislation for years; for example, and I am only going to name a few, Pulse Canada, Grain Growers of Canada, Forest Products Association of Canada and the Mining Association of Canada. They want, and we want, to have strong legislation to protect rail customers. However, once again the government has given in to inaction or a tiny baby step of action, which creates a great deal of dissatisfaction.

Let me just sum up a few things. Rail transportation is the backbone of our economy. More than 70% of the surface goods in Canada are shipped by rail. I would say that we need to make sure even more are shipped by rail, to get the trucks off our roads. Eighty per cent of service commitments for agricultural rail customers are not met by the rail companies due to delays, an insufficient number of rail cars, etcetera. That is quite a shocking figure. Agriculture cannot live up to its commitments 80% of the time because of the fault of the railway services. That is quite an eye-opener in itself.

The rail freight service review found that 80% of shippers are not satisfied, as I said earlier, but within that whole group, we have agriculture, a key backbone of our country. How can we live with a service where 80% of agriculture commitments are reneged on, not due to any fault of their own but due to the railway service?

We stand with the farmers, and we know how little respect my colleagues across the way have had for the farmers, and we stand with the mining and forestry communities to end unacceptable treatment and unreliable freight services from the big rail companies. We need a stronger bill and we will do everything we can. I have absolute faith in our critic. We will do that through amendments to protect rail customers, and we will work with the shippers to get them the fair and reliable freight services they deserve.

Unreliable rail freight services cost hundreds of millions of dollars in economic damages. Canadian jobs are on the line. Surely the time to act is now and not to keep waiting. Waiting for Godot will not solve this problem.

[Olivia Chow, NDP, Trinity—Spadina, ON]

I will try to answer that question, Mr. Speaker, in the few minutes I have.

My private member's bill would accomplish all of the things rail customers want. My bill would cover all customers, whether they have existing contracts or not. My bill would provide a model agreement so that it would be much faster and easier for the customers and the company to come to a consensus and sign an agreement. My bill proposes that there be financial consequences for bad service delivery so that the customers are compensated if their grains do not show up on time or they end up rotting at port. Customers would not have to book several containers in case the train shows up late or early.

My bill proposes to deal with price gouging and the monopoly of power the rail company has. Unless we deal with that, the situation will still be one-sided. We have to find some balance between the customers and the companies. If not, the customers will continue to be gouged, and the services will continue to be unreliable. I hope my Conservative colleagues across the way will work closely with me and be non-partisan about it.

Let us fix Bill C-52 so that it works for all customers and shippers. Let us make sure that there are substantial consequences if the services are not reliable.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, every day Canadian shippers suffer from the consequences of getting unreliable freight services.

Farmers cannot get their grain, soybeans and canola delivered to the port on time, resulting in missed ships, upset overseas customers and rotting crops. Lumber and paper companies in more than 500 forestry dependent communities cannot get their products shipped or supplies delivered because of patchy rail freight services, affecting the livelihoods of hundreds of thousands of Canadians. Mining operations, the largest employer for aboriginal people, have to idle productions because they cannot get their coal and other minerals picked up on time.

The effects are real: hundreds of millions of dollars in lost productivity; and countless lost jobs and lower competitiveness for Canadian businesses in the global marketplace. Canada's farming, natural resources and manufacturing companies are innovative and hard-working, but they lose out against global competitors when they cannot connect with their export partners and disrupted supply chains.

Why is this? Why are our farmers frustrated about delayed pickups of their crops? Why are mining companies frustrated about promised rail cars that are never delivered? Why are paper factories frustrated about damaged rail cars on which they cannot put their products? It is because we have a classic case of market power abuse. The small lentil farmer in Manitoba simply cannot get reliable and affordable freight services from a rail company like CN, even though CN made an annual profit last year of $2.7 billion. Those lucky enough to get a contract with CN and CP have to put up with service disruptions, while many smaller companies cannot even get a contract in the first place.

Eight out of ten rail customers are unhappy with the freight services they get from the big rail companies. Around 80% of rail commitments between the rail companies and farmers and grain elevators are not fulfilled. The future picture is even more dramatic. Forty-five per cent of shippers say that their rail freight services have become worse over the past three years.

Why is the situation so bad? Healthy competition in a marketplace brings prices down and creates a balance between supply and demand. However, that is not the case with rail freight services. Rail freight customers are faced with the entrenched dual monopoly. Together CN and CP dominate with a market share of close to 95%. CN alone accounts for 57% of the market based on revenues and CP accounts for 38%. The remaining 5% is 49 short-line operators that haul freight to the 2 main lines.

Around 80% of rural shippers are captive, meaning they have no choice but to go with the one big rail company that operates in their area, a textbook case of a monopoly. They have no choice but to pay higher prices, no choice but to suffer the consequence of unreliable services and no choice but to endure scheduling changes without advance notice.

Canadians have no choice but to get a black eye on the international stage for unreliable export delivery. It is a marketplace that is broken, where legitimate demand is not countered by adequate supply of services. In the words of the Canadian Industrial Transportation Association:

Railway Freight is not a normally functioning competitive market....This is the fundamental issue underlying all the price and service problems encountered by rail shippers....It is dominated by the sellers.

By that, it meant CN and CP.

What about other modes of transportation? Why can rail freight customers not ditch the rail companies and go with delivery by truck or ship?

The Canadian Industrial Transportation Association said:

—the reality of moving to other modes in most cases is not practical in any reasonable scenario. Truck equipment may not be available in the short to medium term and volumes may be too great to transfer to truck....Over the past seven decades, the railways have lost significant market share to trucking and it is likely that most traffic that could take advantage of the trucking option, has moved to truck.

In other words, trucking only works for certain distances, depending upon the value and the volume of the freight. Just to illustrate this point, a train hauling potash carries an average cargo of 10,000 tonnes. That is the equivalent 385 semi-trucks.

Leaving aside considerations like pricing and delivery time, just getting such a fleet of trucks is simply unrealistic, in most case, when the rail company decides not to show up on time.

It is not just the shippers that are captive. Many of Canada's ports are as well.

East of Montreal to the Port of Halifax, CN is the only major railway. A similar situation exists in northern B.C., with CN being the only railway serving the port of Prince Rupert. Likewise, southeastern B.C. and southern Alberta are served only by CP. In parts of northern Ontario, the CN and CP main lines are enough separated that they are monopoly rail carriers in those areas as well.

Given this situation, any efforts from the industry and the government must focus on improving rail freight services, while making the pricing competitive so rail freight customers are not left completely vulnerable.

One of the core issues is that shippers have no effective way to get the contracts fulfilled, if they are even among the lucky ones who are able to sign an agreement.

In the words of the Western Grain Elevator Association, rail companies continue to deliver unreliable services, “because they can—there are no effective legal or financial consequences”.

When it comes to consequences for non-performance we, again, have a completely lopsided situation.

By contrast, shippers have to pay penalty fees to CN and CP if they do not have the promised volumes ready for shipping or if they fail to load the rail cars on time. However, it does work the other way around. If rail cars do not show up on time or if goods are delivered late, there is no problem for CN and CP. They get away with all the unreliable behaviour, or bad behaviour, without paying a penny, or should I say a nickel today? The shipper has no choice but to suffer the economic consequences caused by the rail companies. Therefore, we have a pretty desperate picture of Canada's rail customers.

What has the government done to protect them?

For years, it kept itself busy with talking and making promises. In 2007 the government promised an independent investigation of the situation. The much-heralded rail freight service review finally started in 2008. For almost three years, its experts gathered information, talked to shippers and rail companies, commissioned a much revealing survey and came up with eight key recommendations. The final report was tabled in early 2011.

The minister of transport at that time promised legislation. Then what happened? There was an election. After the election, there was more talking.

More than half a year after the final report, the Minister of Agriculture and Agri-Food decided it was not time for action yet, so he started the crop logistics working group.

Of course, the Minister of Transport did not want to be outdone, so he kicked off a mediation process between shippers and rail companies in late 2011.

However, as predicated, the mediation was ultimately fruitless because there was a complete imbalance of power. CN and CP were unwilling to make meaningful concessions during the several rounds of negotiations. Without yielding any concrete results, the chair, Jim Dinning, released a report in June 2012.

New Democrats have stood with the shippers along the way. I tabled my own bill, the rail customer protection act, using the recommendations of these various reports. I have repeatedly called on the minister to give rail customers fair, reliable and affordable services they need to be successful and to make Canada's economy stronger.

The shipping community has consistently been asking the federal government to fix major issues. They have been talking about this for at least over 10 years. One would assume, after all those deliberations and investigations, the government would present a rock solid bill that would protect rail customers, would level the playing field and would bring a balance of power to shipping customers. Unfortunately, while Bill C-52 is a step forward, it falls short of what should be accomplished.

How? While shippers would have the right to a service agreement in the bill, there is no model, guideline or template to back up that right. Shipping customers want a model service agreement that gives shippers and rail companies flexibility to negotiate, while starting with certain elements already on the table, like performance measurements and consequences for non-performance. They did not get one in the bill.

Instead, the bill has said nothing about what should be in the service agreements. Many shippers are already afraid they have won a hollow victory. They will sit down with a rail company, knowing they have the right to an agreement, but ever component would have to be a concession of CN and CP, which is a very tough place from which to start.

It comes as a disappointment for many shippers that penalties for non-performance are not included in the bill. Rail customers desperately need to include such penalty fees in service agreements to get compensation for service disruption and the resulting damages and productivity losses. The current bill only includes fines of up to $100,000 in the case of arbitration outcome being ignored by either party. That arbitration process is only available to shippers that negotiate a service agreement for the first time.

The other problem is that such a fine would be paid to the federal government, not to the customer. To act as a real deterrent, fines would have to be significantly higher. Keep in mind unreliable rail services are costing customers millions of dollars, while CN made $2.7 billion last year.

Another shortcoming of Bill C-52 is the brand new arbitration process is only available for shippers that are negotiating new contracts. Instead of offering quick and reliable help through conflict resolution to all shippers, Bill C-52 offers arbitration to a small group of shippers. The other problem is that the outlined arbitration process could end up being too costly for smaller shippers. To place the burden of proof on the shippers to demonstrate that they need rail customer services, that they are indeed captives, is indeed unfair and one-sided.

Bill C-52 applies only to new service agreements, not existing ones. That means many shippers will continue to be stuck with unreliable, unfair and unaffordable services. They will continue to be without any conflict resolution process in the case of violations to existing service agreements.

The bill does not even tackle the elephant in the room, which is pricing. For years shippers have been complaining about uncompetitive freight rates. It is common that shippers pay prices that are three times as high as the rail companies' variable or direct costs for services, just because shipping companies can get away with it. There is no choice for customers.

The government is wasting the opportunity to get rail customers not only fair, reliable, but also affordable and competitively priced freight services to give rail customers real protection from unreliable services, price gouging and a monopoly that costs the farm, logging and mining industries millions of dollars.

In conclusion, it is clear that federal action is needed to create a level playing field for Canada's rail customers and shippers, many exporters among them. They deserve fair, reliable and affordable rail freight services to compete and survive.

Bill C-52 is a step in the right direction, but it falls short of the hopes of many shippers. The bill would not cover all rate freight customers. Many would be left behind. It would not provide a model agreement, and customers would have to start from scratch. The bill would not compensate for bad service. What would be the consequence for unreliable service? There would not be much. The bill would not curb the monopoly power of the rail company giants, and it would not end price gouging.

In committee, I will work hard to improve the bill, in line with key customer demands. I look forward to working with the government and the shipping community to address the shortcomings of Bill C-52. I am optimistic that a stronger and more useful bill is possible. It is within reach to finally make rail freight services reliable and affordable for Canadian businesses.

This country was built on railways, and we owe it to the farmers in the Prairies, the paper mill workers in Quebec and the miners in British Columbia that we make Canada's rail system work again for all.

[Matthew Kellway, NDP, Beaches—East York, ON]

Mr. Speaker, the evidence before us suggests that the government has not listened at all well to the customers of these major freight companies. Eighty per cent of them are unhappy with the service they are receiving.

Bill C-52 only goes part way in redressing the concerns and complaints of the customers of CN and CP. The major freight rail companies seem to have had the government's ear in the drafting of the bill.

[Matthew Kellway, NDP, Beaches—East York, ON]

Mr. Speaker, I am very pleased to stand in the House today to speak to Bill C-52 and to kick off today's debate on an act to amend the Canada Transportation Act.

Here is a word about the rail industry in Canada to set some context for this discussion of Bill C-52. First, rail transport is critical to Canada's economy, and 70% of all surface goods in Canada are shipped by rail.

The rail industry has to work for Canada. Under the current government, our trade deficit is ballooning, reaching nearly $2 billion in November alone. There can be no tolerance, because there is no room in our economy for the kinds of inefficiencies, excess costs and performance woes that characterize our rail system presently.

The problem is that rail freight customers are struggling to get fair and reliable services from the virtual monopoly of CP and CN that control Canada's rail system. Many rail freight customers cannot even get a contract for service from one of these companies. Those who do get them have to contract for unreliable services that are costing the Canadian economy hundreds of millions of dollars every year.

Rotting crops, idled plants and mines, missed connections to other forms of transportation, all of this is hurting Canada's exporters, damaging our global competitiveness and costing us jobs.

These issues affect a broad range of economic activity, from agriculture, forestry, mining and the chemical industry to the automotive industry.

This set of circumstances is not new. It has defined the industry for a number of years, frustrating rail freight customers so that 80% of them are now unhappy with their rail service. They have been demanding change: action from the federal government, legislation that would compel CN and CP to provide service agreements to shippers.

Change has been slow in coming, however. The rail freight service review began in 2008. We had the panel, its report, a mediation exercise, another report and then the promise of legislation from the minister.

However, it seems that it was the private member's bill, Bill C-441, of my colleague, the NDP member for Trinity—Spadina, that pushed the government at last to release the government bill we have before us.

This is a tepid response to a real economic problem. It does not cover existing contracts. It offers only a narrow, costly arbitration process for failed negotiations for new contracts. Freight customers' demands to include penalties in service agreements, performance standards and accessible conflict resolution were ignored.

It is a start, but much more needs to be done and we will support the bill through to committee for amendments to redress the weaknesses and omissions in the bill.

Before it gets to committee, I think it is useful to think through more carefully and thoroughly what opportunities are lost to our economy, to us, with our rail system structured and regulated as it is presently.

The current issues confronting freight customers stem from the fact that the rail industry in this country is a virtual monopoly. It was made that way in 1995 with the sale of Canadian National Railway, along with the tracks, to private interests.

What was made with the sale was a virtual monopoly of a $10 billion industry that sits at the heart of the Canadian economy. Quoting from a Transport Canada document on rail transport:

Of total Canadian rail transport industry revenues, CN accounts for over 50% and CPR for approximately 35%. Together, CN and CPR represent more than 95% of Canada's annual rail tonne-kilometres, more than 75% of the industry's tracks, and three-quarters of overall tonnage carried by the rail sector.

It is important for both our economy and our environment that our rail system run with full efficiency. The alternative to rail freight is on-road transportation by way of trucks.

According to the latest Environment Canada national inventory report, 1990-2010, most transportation emissions in Canada are related to road transport. Emissions from road transport rose by 37 megatonnes, or 38%, between 1990 and 2010. Of those 37 megatonnes, emissions from heavy duty diesel vehicles or large freight trucks rose by 20 megatonnes. That is a 101% increase.

It is worth noting here that the GHG emission intensity of freight rail improved by 24% between 1990 and 2008. It should also be noted that there remains plenty of room for improving the emission intensity for both freight and passenger rail travel.

We know that not all truck freight is replaceable by rail freight and vice versa, but this is a worrying trend. It is worrying not just from an environmental perspective, but it also speaks to the broader issue of congestion on our roads and the environmental and economic costs of that congestion. Clearly, the more freight we can move by rail, the fewer trucks are unnecessarily using our road network for freight transport.

The same obviously holds true for passenger travel. It is notable that while passenger kilometres—that is, passenger travel by motor vehicle in Canada—have been on a long upward trend, passenger kilometres by train have remained virtually steady since plummeting in 1990. Of course, it was in 1990 that VIA Rail lost over 45% of its ridership in the aftermath of the federal government ordering VIA to abandon certain corridors and branch lines. As a result, passenger travel on VIA fell from its peak of about eight million passengers per year in the 1980s to a ridership that has bounced around the four million mark since.

Efforts to increase rail service for passengers have been stifled by the virtual monopoly of CN and CP. VIA operates its trains on 12,500 kilometres of track, but it owns a mere 2% of that. Eighty-three per cent is owned by CN and CP, with CN owning the majority of that track. The remaining track VIA uses is short line infrastructure, which is owned and maintained to reflect the freight market that these tracks serve. Therefore, with virtually no ownership of track and no priority access to track, VIA Rail must negotiate train service agreements with these major freight carriers in order to provide its passenger service, and it finds itself in the unenviable position of sitting between a virtual monopoly and the succession of Liberal and Conservative governments that failed to recognize the enduring value and incredible economic and environmental potential of rail travel to the country.

This indifference of our government to the economic and environmental potential of rail extends well beyond freight-related issues and intercity passenger travel, right into our cities. This is certainly the case in my city of Toronto. Investment in transit infrastructure, particularly in the form of rail transit, is critical to unleashing the economic potential of Toronto's city region. Infrastructure, and transit infrastructure in particular, is a key component of a competitive business environment.

This is most certainly the view of members of the Toronto Board of Trade. They identified transit infrastructure as their top priority. The Board of Trade's 2011 annual global benchmarking study shows why it requires urgent attention and investment. Toronto finished 19th out of 24 global cities on transportation issues, including last place in commute time and, significantly, 16th for kilometres travelled by rail. There is near consensus that the absence of adequate transit infrastructure in Toronto and the Toronto city region is the biggest impediment to Toronto's global competitiveness. It has been estimated that the annual cost of congestion to Toronto's regional economy is $6 billion. That cost is projected to rise to $15 billion if no significant action is taken.

It is time to take significant action. The cost of the status quo is too great and unnecessary. It is one of the great mysteries of the current government. It continues to contradict its own marketing materials and brochures every day. It is emphatically not a sound economic manager. It stands idly while opportunities for economic growth pass it by.

Bill C-52 is just the latest example of any easy fix but also of a government that responds only when pushed, and only then half-heartedly, to opportunities to improve the economy of the country and the lives of Canadians.

The House resumed from February 1 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.

[Mathieu Ravignat, NDP, Pontiac, QC]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Unfortunately, they were not able to do that.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Ralph Goodale, Liberal, Wascana, SK]

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

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

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

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

[Ralph Goodale, Liberal, Wascana, SK]

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

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

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

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

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, I am happy to participate in the debate this afternoon on the second reading of Bill C-52, dealing with the issue of the level of railway services across the country. The House has been waiting for this legislation for several years. More importantly, shippers across the country have been waiting for this legislation for a very long time. I am sure we are all very happy that it is finally here.

The Liberal caucus intends to support Bill C-52 in principle at second reading because the shipper community is anxious to get the bill into the standing committee for detailed examination of the precise meaning, from a legal and a practical point of view, of all of the provisions in the bill. Shippers want to ensure, and we need to ensure, that their needs would actually be satisfied by the legislation.

The shippers coalition supporting level-of-service legislation, as it has become known, is a very broad and comprehensive coalition. It obviously involves agriculture, and that is a big and important part of the shipper community, but it goes far beyond agriculture. It also includes the forest products sector, minerals and chemicals, potash and fertilizer, manufactured goods and much more. They have all had common issues and a common problem, which is substandard service from the railways in shipping their products and commodities to market.

The intense debate about railway service levels has been raging across the country since about 2006. In 2007, specific requests were made by the shipper community for a legislated solution. They asked for a legislated solution because a commercial solution did not appear to be available. In 2008, the Government of Canada promised a formal review of railway services. It was not until a year later though, 2009, when the government finally appointed a panel to conduct that review of railway services. The panel worked for about a year, and by October of 2010 it had finished its work and had written its report. In that report the panel confirmed that service levels provided by the railways were seriously deficient.

To give just one example, and there are dozens referred to in the panel's report, farmers could typically count on getting the service from the railways that they needed, that they ordered and that they paid for, only about 50% of the time. That is obviously not an adequate level of performance by the railways. Similar troubles affected most other shippers right across the broad spectrum of the coalition. The details differed from one industry to another, but the bottom line was the same: the shipper community was being badly served. That is what the panel concluded in the report it wrote in the fall of 2010.

The review panel said that the problem was a serious imbalance in clout and power in the marketplace, an imbalance between the railways on one side and the shippers on the other. The shippers are mostly captive, as I said in the House earlier today. They do not have competitive options for moving their products. They are captive to one particular shipper at any given moment in time. That is what the panel concluded. It said there was little genuine competition, that shippers have no realistic commercial alternatives and that they also have no legal recourse to address the problem.

For the most part, they do not even have access to enforceable contracts that set out both their obligations and the railways' obligations, which are then binding and enforceable on both sides. That would be one's normal commercial expectation. The parties doing business would write up a contract and they would fulfill the terms of the contract or there would be consequences one way or the other. That practice seems to be missing in the relationship between the railways and the shipper community.

According to the panel that was appointed by the government and which reported in the fall of 2010, the playing field is totally tilted in the railways' favour. The panel said that if that imbalance is to be remedied it would be preferable to do it by commercial means. However, if a commercial solution is not readily available, and that is obviously the case by this long process that has gone on since 2006, then the review panel said that there should be legislation and regulations to fix the problem. That is, there should be legislation to require the railways to provide their shipping customers with service level agreements that are readily enforceable.

The railways have said, “That was then and this is now” and claim that things have improved. I think objectively a number of shippers would say that indeed there have been some service improvements over the course of the last three or four years, especially service improvements by CN. Even CN notes that the controversy about bad service and the suggestion of some new legislation or new regulations coming down the pike have, at least in part, brought about that improvement. In other words, there has been a threat hanging in the air that there may be legislation or regulations and the railways have pulled up their socks a bit. It was in response to that threat of legislation, the speculation in the community that there would be legislation, that has in fact contributed to the level of service improvements.

The review panel's report was done in October of 2010. The government then waited six months before committing to implement its recommendations. That commitment finally came forward in the spring of 2011, ironically just on the eve of the calling of an election.

After the election, action was once again postponed. Instead of bringing the legislation forward in the late spring or early summer of 2011, which was an imminent possibility, the government waited another six months. Then it launched a second review process, this one to be conducted by Mr. Jim Dinning of Alberta. That process started in the fall of 2011 and ran until the spring of 2012, again trying to find this elusive commercial solution to the problem. Unfortunately, Mr. Dinning's efforts were largely for naught and there were no significant results from that process, except for another six month delay. The government then waited another six months, until this past December, to finally table the legislation that we have before us today, Bill C-52.

This has been a painfully long wait. The discussion began back in 2006 and we are now in 2013, so it has been a seven-year process. The shippers are anxious now for action, at long last, to become promptly tangible. I think the House owes them that. We should have a sound debate at second reading on Bill C-52, but it does not need to be a protracted debate. We should discuss it properly and efficiently in the House and then move Bill C-52 as quickly as we can to committee so that we can hear from shippers and others and, on the basis of their evidence and testimony, determine if Bill C-52 is in fact good enough to get the job done.

I hope the government would ensure that there are no restrictions put on the transportation committee in hearing the witnesses that will want to be heard on this very important matter. The shipper community has been waiting a long time. Now that the bill will soon be at committee, the very least that Parliament can do is to give the shippers the opportunity to be heard fully so that all of their comments, recommendations and advice can be taken into account.

The preliminary reviews of Bill C-52 have been reasonably positive. That is encouraging. It would appear that the legislation does provide all shippers the right to have an enforceable service level agreement with the railways without discrimination among different tiers or categories of shippers. If that proves to be the case when we have the opportunity to legally and comprehensively review the legislation, then that would indeed be progress.

The legislation also appears to specify at least some of the mandatory content that each service level agreement must cover. It also appears that it would provide robust penalties if the railways fail to perform up to an acceptable standard.

The shipper community has been quite explicit about the kinds of things they want to see in these proposed service level agreements. It readily admits that with each particular shipper or sector within the shipper community there would be variations from agreement to agreement. Each one would not be an exact cookie-cutter copy of the others. There are logical differences that would need to be taken into account and there is a commercial negotiation process that would need to take place here. However, shippers have specified six subject areas that they think every service level agreement should deal with. It is important to put these on the record so that when we get to the committee we can examine the legislation to see if these six areas would be adequately covered.

The shippers say that each service level agreement that the railways would be required to provide in negotiation to their shippers should include the following. First, it should include a section covering the services and the obligations. They should spell out what each side is supposed to do to have a successful contract between the carrier and the shipper.

Second, it should include communications protocols so that when they are trying to work out their commercial relationship, or if things go wrong in the relationship, they would all know exactly what they are supposed to do to communicate with one another in an effective way, rather than two ships passing in the night that never quite get around to connecting with each other.

Third, there would need to be performance standards specified in the agreements. What is the acceptable performance to be expected in the circumstances? Fourth, there would have to be performance metrics. In other words, how do you measure the performance against the standards laid out in the agreements?

Five, there would need to be consequences for non-performance. There are obviously penalties provided in the legislation. We will have to examine as to whether they would be appropriate and sufficient to achieve the kind of behaviours that the shippers want to see. Finally, there would need to be dispute settlement mechanisms included in the agreement.

Those are the six areas that the shipper community mentioned. It is important for the committee to examine in detail whether Bill C-52 would cover those areas adequately from the point of view of the shippers.

Finally, I will mention four or five other areas, beyond the nature of the contract that I have just described, where the shippers have said they are not clear about what the legislation seeks to accomplish and whether it would get to the result that the shippers want.

First is the issue of train movement into the United States. To what extent would a service level agreement in Canada also affect the kind of service that is provided across the border by the carrier, in some cases the same railway, when that carrier is operating in the territory of the United States? What would be the impact of service level agreements on cross-border shipments of product? Of course, between Canada and the United States, that is a huge volume.

Second, what would be the relationship between the service level agreements that apply to the main line rail carriers, basically CN and CP, when the product being shipped may originate on a short-line branch railway? Would the service level agreements have any implications for short-line rail operators and their relationship with the main railway operations?

Third, there is already a section in the Canada Transportation Act, section 113, that provides some description of service requirements imposed upon the carriers. Is there anything in Bill C-52 that diminishes the value or the effect of what is already in the act in section 113? The shippers are very anxious to have that clarified. Obviously they, and we, would not want to see the beneficial impact of section 113 diminished.

The fourth question that shippers have asked is on the matter of practical access to the process. The way the legislation is set up it basically says that the parties should go out and negotiate a contract. If they cannot, then the shipper can go to the CTA and get an arbitrated solution that will then be imposed by regulation. The question from the shippers is whether there will be practical access to that process or whether the process will be so complex, costly and slow that only the biggest shippers will be able to participate in the proposed arbitration proceedings. As a result, the smaller shippers will just find it too complicated, expensive or time-consuming to be able to avail themselves of an arbitration procedure. We will need to examine the practicality of how Bill C-52 will apply to make it accessible to all.

Finally, there appears to be a section in the act that says that if a shipper already has some kind of existing contract with a railway, if they have gone out and tried to negotiate something and put it in place, then the shippers do not have access to the provisions of Bill C-52 unless and until that existing contract expires. That needs to be clarified as well. To what extent are shippers impeded from having any benefit of Bill C-52 because they have already tried in some way to have a contract and have negotiated something, whether or not it lives up the standards of Bill C-52? Would they be prohibited from trying to get a Bill C-52 solution if they already have a contract in place?

Those are some of the questions that I have heard from the shipping community. By and large they are anxious to see the legislation proceed. They are looking forward to the committee hearings because they want to be heard and they have a number of questions to ask. I think it is incumbent upon the government and upon the House to make sure that we get into those hearings as quickly as possible and that we ensure that every shipper across the country that wants to be heard can have the opportunity to present their questions and their observations to the standing committee.

I welcome the debate this afternoon. I am anxious to see progress on this subject. Everybody has already been waiting far too long. Let us get on with it and try to make a tangible difference in the level of service that is provided to the shipping community, and therefore make a tangible contribution to the well-being and success of the Canadian economy.

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.

[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)