Bill C-30 (Historical)

Fair Rail for Grain Farmers Act

An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures

This enactment amends the Canada Grain Act to permit the regulation of contracts relating to grain and the arbitration of disputes respecting the provisions of those contracts. It also amends the Canada Transportation Act with respect to railway transportation in order to, among other things,
(a) require the Canadian National Railway Company and the Canadian Pacific Railway Company to move the minimum amount of grain specified in the Canada Transportation Act or by order of the Governor in Council; and
(b) facilitate the movement of grain by rail.

Admissibility of Amendments in the Fifth Report of the Standing Committee on Canadian Heritage

[Blake Richards, Conservative, Banff—Airdrie, AB]

Mr. Speaker, I am rising on a point of order.

The point of order concerns the report that was just tabled: the fifth report of the Standing Committee on Canadian Heritage respecting Bill C-10. I would respectfully submit that several of the amendments contained in that fifth report must be struck out because the committee exceeded its authority.

Last Monday, June 7, the House adopted a time allocation motion limiting committee deliberations to only five further hours. The part of the House's order that is relevant to this point of order says, at pages 104.3 and 104.4 of the Journals:

That, at the expiry of the time provided in this order for the committee stage, any proceedings before the Standing Committee on Canadian Heritage on the said bill shall be interrupted, if required for the purpose of this order, and, in turn, every question necessary for the disposal of the said stage of the bill shall be put forthwith and successively, without further debate or amendment.

At the committee's second meeting, on Thursday, June 10, those five hours had expired and the Canadian heritage committee proceeded to the disposal of the committee stage of the bill, in accordance with the House's order.

The chair of the committee, the hon. member for Coast of Bays—Central—Notre Dame, informed the committee that, by the terms of the House's order, the amendments that had been placed on notice could not be moved and therefore could not be voted upon by the committee. The Liberal-Bloc-NDP majority on the committee, however, then overturned the chair's ruling, thereby forcing the committee to consider these amendments without any debate, without any opportunity to question expert witnesses from the department of Canadian Heritage and without any opportunity to hear the wording of the amendment read aloud.

Those events are recorded in the relevant minutes of proceedings for the committee's second meeting on June 10. The amendments subsequently considered by the committee are recorded in those minutes of proceedings, as well, for the committee's meeting on Friday, June 11. Both sets of minutes, as noted in the comment in the fifth report immediately preceding the chair's signature, have been laid upon the table, among others.

House of Commons Procedure and Practice, Third Edition says, at page 779:

Since a committee may appeal the decision of its Chair and reverse that decision, it may happen that a committee will report a bill with amendments that were initially ruled out of order by the Chair. The admissibility of those amendments, and of any other amendments made by a committee, may therefore be challenged on procedural grounds when the House resumes its consideration of the bill at report stage. The admissibility of the amendments is then determined by the Speaker of the House, whether in response to a point of order or on his or her own initiative.

That is why I am rising today on this point of order. In overturning the committee chair's ruling and forcing amendments that had not been properly moved to be voted upon, I respectfully submit that the committee exceeded its authority by contradicting the House's order, which required that “every question necessary for the disposal of the said stage of the bill shall be put forthwith and successively, without further debate or amendment.”

To be clear, the questions necessary to dispose of the clause by clause consideration of the bill are questions on the clauses themselves, not amendments that have simply been placed on notice.

The Chair has previously considered a similar case, from which I believe in the current circumstances a distinction may be drawn.

On November 29, 2012, Mr. Speaker, one of your predecessors, the hon. member for Regina—Qu'Appelle, made a ruling at page 12,609 of the Debates, concerning the proceedings of the Standing Committee on Finance respecting Bill C-45, the Jobs and Growth Act, 2012. In that case, the committee had adopted a time-tabling motion concerning its study of the bil. It contained language that was similar to that which the House adopted last week in its time allocation motion concerning Bill C-10.

In the case of the finance committee, the chair made a similar ruling to the one made by the hon. member for Coast of Bays—Central—Notre Dame and, again, the committee had overturned that ruling.

Following a point of order in the House concerning the finance committee's report on the former Bill C-45, the former Speaker did not set aside the committee's report on the bill. The distinction between these two cases, I would argue, is that the finance committee was interpreting a motion that the committee itself had adopted. In the current case, seven members of the Canadian heritage committee substituted their own judgment for how an order of this House, voted upon by the entire House, should be interpreted.

We often refer to committees as masters of their own proceedings, but Bosc and Gagnon put that in a very important context at pages 1057 and 1058, which state:

The concept refers to the freedom committees normally have to organize their work as they see fit and the option they have of defining, on their own, certain rules of procedure that facilitate their proceedings.

These freedoms are not, however, total or absolute. First, it is useful to bear in mind that committees are creatures of the House. This means that they have no independent existence and are not permitted to take action unless they have been authorized or empowered to do so by the House.

While the case of former Bill C-45 was of a committee majority preferring its own interpretation of a committee motion, the current case of Bill C-10 is of a committee majority seeking to override the House's instruction. It was, to borrow the words of Bosc and Gagnon, taking an action that it was authorized or empowered by the House to do. Therefore, I would respectfully submit that the amendments made to clauses 8 through 47 of Bill C-10 must be ruled out of order and therefore struck from the fifth report.

I would further ask that the committee's consideration of amendments after the proceedings had been interrupted under the provisions of the time allocation order be disregarded by the Chair for the purposes of applying the note attached to Standing Order 76(1)(5) respecting the criteria considered by the Chair in the selection of motions at the report stage.

I do not make this point of order lightly. In fact, one of those amendments that I refer to was sponsored by my own party and several others were voted for by my colleagues, but that is beside the point. Our rules must be followed. Parliamentary procedure is not a body of play pretend rules that can just be set aside at the first moment of inconvenience. It does not matter whether these flawed decisions were taken by majority vote or even with unanimity because the rules of the House must be followed.

The hon. member for Regina—Qu'Appelle, in a different ruling on May 1, 2014, at page 4787 of the Debates, concerning Bill C-30, the Fair Rail for Grain Farmers Act, found that amendments that were adopted by the Standing Committee on Agriculture and Agri-Food, without procedural objection and without dissent, had to be struck from the bill because the committee had acted outside of its authority in adopting them, commenting:

The Chair has no difficulty agreeing with the parliamentary secretary that the amendment is relevant to the subject matter of the bill. Indeed, as a fellow Saskatchewan MP who represents a large number of grain producers, I can certainly agree on the importance of this issue. As Speaker, however, not only can I not simply act according to my personal beliefs, I must respect House of Commons precedents which, in the case before us, are only too clear.

The correct place to put forward the amendments to clauses 8 through 47 of Bill C-10, in light of the proper application of a time allocation order, is at the report stage here on the floor of the House.

Additionally, and in the alternative to the matter I have already raised, I would also draw your attention, Mr. Speaker, to the amendment known as amendment LIB-9.1 that was made by the Canadian heritage committee to clause 23. The Chair ruled the particular amendment out of order for exceeding the scope of the bill and that it breached the so-called “parent act” rule, which is explained by Bosc and Gagnon at page 771, by proposing to amend a section of the Broadcasting Act which was not touched by the provisions of Bill C-10. The committee, however, voted to overturn the Chair's ruling in that regard as well.

In that particular case, the Chair may simply have to regard the fifth report and note that the amendment on its face does something which the committee was not permitted to do and therefore should be ruled out of order and struck from the fifth report.

The solution for the government here is, like the case of the former Bill C-30, to propose an amendment at third reading to recommit Bill C-10 to the Canadian heritage committee so it may, once properly instructed and empowered, make Liberal-9.1 amendment in the proper manner.

[Steve Pratte]

To some degree, there is that....

In the post Bill C-30 environment from several years ago, the government struck the commodity supply chain table, which semi-annually brings together all parties—railways, shippers of all commodities, including grains—to that table to talk about forecasting, growth, and near-term and longer-term issues.

There is a step in that direction. I'm not sure if that's going to have the optimal outcome. It's run by Transport Canada with the Department of Agriculture in the background, and then there are stakeholders, small commodities, talking with the railways in front of senior officials about growth and future plans—near term and long term.

[Steve Pratte]

That is one of the positive silver linings of 2013-14 and the Bill C-30, the Bill C-49. I think the kind of communication and information sharing is on a new level, a new playing field, but certainly there's always room for incremental improvement.

[John Barlow, Conservative, Foothills, AB]

We put Bill C-30 through immediately and own-motion powers.

Transportation Modernization Act

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Speaker, as a member of that committee, I can certainly vouch for the parliamentary secretary's comments. It was extremely collaborative. Many of the amendments brought forward were wordsmithed and shaped in order to bring this forward.

One of the primary things we tried to do was understand what the previous government had tried to accomplish with Bill C-30. We discovered that the interswitching provision of 150 kilometres, in spite of the difficulties being faced by grain shippers in the season it was brought forward, was never actually used. It did not work.

Although the intention was there to improve the system, our committee focused on ways to take that concept and make it a lot better. I am going to give my hon. friend another opportunity to really underscore the value of the reciprocal penalties as being a far more potent tool for shippers to have, and through the shippers, the producers, in order to get compliance and co-operation from the railways.

[Sean Fraser, Liberal, Central Nova, NS]

Mr. Speaker, we have spent a great deal of time on questions in this debate about the role of Bill C-30 versus the long-haul interswitching included in Bill C-49. Bill C-30 provided a short-term solution to respond to an immediate need, but it did not solve the long-term problem of the transportation of western Canadian grain. It also did not provide any solution for the rest of the country in different industries and different regions.

Although I lived in Alberta for about five years, I am proudly Nova Scotian. I am curious if the hon. member could offer some thoughts on the importance of extending efficiencies in our transportation system to different sectors of the economy and to different regions, to make sure that our transportation system works for everyone and brings the greatest growth to the Canadian economy.

[John Barlow, Conservative, Foothills, AB]

Mr. Speaker, I want to thank our shadow minister for transportation for all the incredible work she has done on what is an ominous and very difficult bill to try to wade through.

She is exactly right. We cannot underestimate the financial impact of inaction on Bill C-49. We went through this in 2013-14 and the impact on the Canadian economy was in excess of $8 billion. That is why we put forward Bill C-30 to ensure we would never have those types of issues again.

We are certainly hearing from our stakeholders that this has not only impacted this year's harvest, but will very likely impact next year's harvest. They have nowhere to store their product. Their bins are full now. Until things start moving, there is not going to be anywhere to store their products.

Nutrien in Saskatchewan has shut down an entire potash mine because it cannot move product. There is no demand for those inputs because farmers are at a loss as to what to plant this year, or if they will be able to plant. They have full bins and road bans are in place. This has caused such stress among our agriculture sector. I really want to highlight the fact that the implication this has had is not simply a matter of frustration. It has really impacted people on the ground and their families.

[John Barlow, Conservative, Foothills, AB]

Mr. Speaker, it is pleasure to rise today and speak to Bill C-49 and the motion put forward by the government.

The message I want to get forward today is really about what brought us here and whether Canadian agriculture had to go through all this pain and suffering when we really did not achieve much at the end. What is disingenuous with the entire process is that over the last several months the Minister of Transport and the Minister of Agriculture were telling our producers, stakeholders, and shippers to hang on and be patient, that once Bill C-49 was passed it was going to resolve all of their problems and we would not have a grain backlog in the future.

I am going to speak more on the agriculture side than I will on some of the other elements of Bill C-49.

The inaction by the ministers and the government on this issue for almost a year has been mind-boggling. Last June my colleague, the shadow minister for transportation, put forward a list of amendments that would have addressed many of these problems we are facing, but they were turned down. Now we have them back on the table from the Senate. They went through the Standing Committee on Transport, Infrastructure and Communities and again through the Senate. Now they are here, and the Liberal government is saying it will be supporting a number of those amendments. I am not sure what changed over those 10 months; the Liberals could have supported those amendments last June, but they did not.

It was the start of time after time when the Liberals were given numerous options to get Bill C-49 through the process as quickly as possible, as well as to address many of the problems that our grain farmers across western Canada have been facing. Every time the Liberals were given an option to address the situation, which became a crisis in January and February, they did nothing.

Last summer, we encouraged the government to extend the provisions of Bill C-30, the Fair Rail for Grain Farmers Act, which extended interswitching and mandatory minimum volumes, a process that we had in place in 2013-14 when we went through the previous grain backlog. This addressed many of those problems. Our stakeholders, producers, grain terminals, and shippers were satisfied. They were quite pleased with that process. It gave the rail lines some accountability to ensure that they were able to move grain as well as other products, whether it was lumber, mining, or oil and gas. We want to make sure that all our producers have an opportunity to get their commodities to market.

In the fall, when Bill C-49 was first brought to the House, we saw that it was a massive document and that it was going to be extremely difficult to get any sort of consensus on a bill that dealt with everything from video recorders and locomotives to an air passenger bill of rights to interswitching. How were we possibly going to be able to find some sort of satisfaction among all stakeholders and within all the different points of view in our industries, let alone here in the House of Commons or in the Senate?

At that time we saw that this was going to be an issue. With the size and the scope that Bill C-49 entailed, we knew that getting it through that process with any sort of expediency was going to be nearly impossible. Once again we provided what I thought was a thoughtful resolution to the Liberal government, which was to split Bill C-49 into two bills. We would take many of the aspects of the bill that had to do with grain and grain transportation through the process as quickly as possible. Some of the other contentious issues that had to do with airline rights and other issues would take longer to go through the process, but we knew there was no time crunch or time sensitivity of the kind that there was on the grain side.

Last fall, with a larger-than-average harvest and the challenges CN and CP were facing in terms of meeting the contracts, we saw the rail line numbers dipping with each weekly report that was coming out.

We raised the alarm bells last fall that this was going to be a problem. We encouraged the government to split Bill C-49. I recall being in this House last October making almost the same argument that we were not going to get Bill C-49 through this process in a timely fashion to prevent another grain backlog. Again, it fell on deaf ears.

The result of that inaction last October, before we got to this point, was rail service that put us in a grain crisis. It is a crisis that still exists today. I do not think we can miss that point. Although we are here now, no problem has been resolved. We have road bans across the western provinces. We have more than 30 transport ships off the coast of British Columbia waiting for product. Those demurrage costs of $10,000 a day and up are now being passed on to the producers. Who will pay those additional costs that are now being passed on to our farmers across western Canada?

We have to keep that in mind as we have this discussion and this debate today. The crisis our farmers have been facing since last fall is still there, and it is not going away anytime soon. It is going to impact their fall season. They cannot move grain right now. Many of them are finally in the fields seeding. Road bans are in place in many of the western provinces, inhibiting their ability to actually transport grain to the terminal.

They are watching us today with a lot of focus on the decision we will be making in this House. How are we going to address the problems they are facing? The crisis has become so bad that our most recent report says that almost half a billion dollars' worth of grain is sitting in storage bins across western Canada. That is grain that our producers and our farmers cannot sell. They are unable to sell their product and get it to the terminal and then to the coast.

These same farmers who are unable to sell their product still have bills coming in. There are mortgage payments, lease payments on land, equipment purchases, and input costs as they try to get ready to start seeding. There are programs in place through Farm Credit Canada and the advanced payments program, essential programs that are in place to help in these times of extenuating circumstances.

I know that our producers do not want to have to rely on those assistance programs for a product they work hard all year to plant and harvest and are now trying to sell, but are unable to because of logistics.

As my colleague from Guelph said, we had an emergency meeting of the agriculture committee. I want to commend my colleagues on that committee for agreeing to have that emergency meeting with many of our stakeholders.

One of our witnesses at that meeting was a young farmer from Saskatchewan. I thought he put it quite well. He said, “We have to face so many uncertainties when we are in agriculture: uncertain weather, uncertain input costs, uncertainty when it comes to the commodity prices. The one thing we should be able to rely on is a reliable transportation system, which we do not have right now.”

One of the key issues with Bill C-49 is that it does not resolve those problems. We have gone through this entire process. As I said earlier, the Liberal government, the Minister of Transport, and the Minister of Agriculture and Agri-Food, through this entire process, have said that we should be patient, because Bill C-49 would address all the problems. Then just a few weeks ago, we had both ministers admit publicly that Bill C-49, indeed, will not resolve a lot of the problems that have been raised.

The government is asking our producers to suffer through yet another grain backlog, which should never have happened. The government had all the tools in place to address this problem, yet it did nothing. I can understand the frustration of our producers across the western provinces. They are looking at us today to take action to ensure that they never have to face this sort of issue again.

We have had many of our grain, barley, and pulse growers here over the last couple of weeks as they have had their days on the Hill. They have raised some other points that I do not think we have talked enough about as we have gone through this process. Not only is this grain backlog causing them to suffer because they are not able to sell their product, it is tarnishing our reputation as a reliable trading partner around the world. A lot of our producers are not getting a premium price for their product, because for all intents and purposes, Canada does not have a reputation for being able to get their contracts out in a timely fashion. We cannot meet our commitments to other countries. When prices are high in the fall, in October, November, and December, we should be selling our crops. We are not getting them to market, to the terminals, and to the west coast until the spring, sometimes a year later, so we are missing out on those premium prices, because we have an inept logistical system and an inept transportation system, a transportation system that has very little to no accountability.

Earlier today, the Minister of Transport was talking about one of the amendments the Senate had brought forward, which I think is critical. It is on “own motion powers” for the Canadian Transportation Agency. That was an amendment brought forward at the standing committee for transportation. It was an amendment brought forward by many of our stakeholders. They want accountability for the rail lines. If there are issues, and our stakeholders see issues, the Canadian Transportation Agency, once it receives a complaint, or even if it does not receive a complaint, can take action to try to address some of those key issues. It is a key part of Bill C-49.

The Minister of Transport earlier today spoke very highly about this part of the bill when he said that we are giving the CTA its own motion powers, which will make such a critical difference for our producers. In fact, in the amendment the Liberal government has put forward, there are no own motion powers. It states in the amendment that the authorization goes to the Minister of Transport. He will be the one who decides if the CTA can take action and put forward some guidelines, a template, on what action can be taken.

Let us put that into a perspective that I think all of us in the House today can understand. That is like my parents saying, “You know what, son? You can do whatever you want with your life, as long as it's okay with mum and dad”. That is what the Liberal government's own motion powers are in Bill C-49. Who is going to give that any credence? There is supposed to be some accountability in Bill C-49 for our shippers. However, this only comes into effect if it is okay with the Minister of Transport. It is okay for people to make their own decisions, but they have to ask the minister first. That has nothing to do with own motion powers. It is really quite hollow hearing that this is going to be a critical part of the bill, because it is taking the arms of the CTA and tying them behind its back.

As we have gone through this process, every step of the way we have offered the Liberal government a solution. My colleague, the shadow minister for transportation, has offered another solution today. She has brought forward an amendment that will concurred the Senate amendments to get this bill passed as quickly as possible.

We are not saying that we agree with every aspect of Bill C-49. In fact, I think we have heard in the debate today that there are still some significant issues with the bill. We also listened to our stakeholders. They need something that will give them some piece of mind that there is going to be some sort of legislation in place to help them address some of the problems they are facing.

We have had stakeholders like the CFA. They represent 200,000 farm families. The Grain Growers represent 50,000 active producers, and they are asking for no further delays on Bill C-49. They want it passed immediately. That is what my colleague's motion today will do.

We want to ensure that we can get this bill passed as quickly as possible. Again, every time we have offered an option or a solution to get this bill through the process, the Liberals have put in yet another step and delay.

They are saying today that if they do not support our motion, and they want our support to pass their amendments and the minister's motion, this all of a sudden will be a quick process. That is simply not the case. If the Liberals do not accept our motion and they pass theirs, Bill C-49 will go back to the Senate, and the Senate will have to agree to the Liberals' amendments. It is yet another obstacle to keep Bill C-49 from passing. This is going to be a ping-pong ball that will go back and forth, or maybe not. Maybe the Senate will agree to the Liberal amendments, but we do not have any assurance of that.

There are amendments they could have passed almost a year ago. There have been opportunities put forward to pass Bill C-49, or, what preferably would have been the case last fall, to extend Bill C-30, and we would never have faced any of these issues.

I am really encouraging our colleagues across the floor to support our motion today, pass the Senate amendments, go right to royal assent, and give our stakeholders the assurances they are looking for to ensure that they can get their job done. What this comes down to is our stakeholders' inability to get their products to market. We have a great deal of concern that this will spill into the fall as farmers get ready for next year's harvest. That has been the disconcerting part of it all.

I think my colleague across the way can understand the comments we heard at our emergency meeting last month on the grain backlog. Many of those witnesses came forward and said that they have given up on it this year. They know that they are not going to get their grain to market and are hoping that this does not impact next year's harvest and next year's shipping season.

I want to highlight that this bill is certainly not perfect. There are lots of concerns about what is in Bill C-49. I want to read some comments from the Premier of Saskatchewan, who has been extremely vocal in his concern about Bill C-49 and the problems it has caused in Saskatchewan. We have seen that Nutrien has just announced that it has laid off or is laying off more than 600 employees, which is going to impact maybe up to 1,300 employees in rural Saskatchewan. The Saskatchewan Premier said, “This is a direct result of the federal government not taking action where there is a huge problem, and they have the clear authority to fix it.”

What have the Liberals done in response to that? They have done nothing. Once again, they want to put this bill back to the Senate, which would delay this process even further.

We have to highlight the financial impact these delays have had. Again, $500 million in grain is sitting in storage bins across western Canada, not getting to market. We have now seen the job layoffs in Saskatchewan at Nutrien, and that is just one company, one potash company. Certainly there will be others that will be facing similar problems.

This is having implications for rural communities. If farmers cannot sell their grain, and they cannot get it to market, it means they do not have money in their pockets to spend in our small communities. That is grocery stores, gas stations, and little movie theatres. That is charities, ball teams, and fundraisers. Those are the things that are suffering because our farmers do not have money in their pockets. They cannot get their grain to market, and that is a direct result of the inaction of the Liberal government when it comes to this grain backlog.

The Liberals could have stopped it a year ago. They could have stopped it in the fall. They could have taken action with an order in council in January or February. Every single time, they have stuck up for the rail duopoly.

With Bill C-49, there is no accountability. Why have the Liberals made our grain farmers suffer through yet another grain backlog? When it comes down to it, they have really done nothing.

[Warren Sekulic, Director, Alberta Wheat Commission]

Mr. Chair and members of the committee, thank you for the invitation to appear today.

My name is Warren Sekulic. I'm a director with the Alberta Wheat Commission. I'm a fourth-generation farmer in northern Alberta, and we will actually celebrate 90 years next year.

I am here today because the current grain transport backlog continues to impact my operation and the operations of farmers across western Canada. In addition to sharing my specific experiences, I also offer the strong support of our 14,000 farmer members for the amendment and passage of Bill C-49, the transportation modernization act, as a means of addressing the systemic issues in our freight rail system.

My farm is located 70 kilometres north of Grande Prairie, Alberta, which is over 1,200 kilometres from the nearest port, and we are totally dependent on the one railway that services this line of four inland terminals. With our limited access to processing facilities, market alternatives, or other methods of transportation, almost 100% of the grain and the crops I grow are destined for the export markets and dependent on a single railway.

As with all businesses, planning is an essential part of my operation. Each year, much work goes into planning—planning what crops I'll plant; the amount of inputs, such as the fertilizer and seed I'll need; when those inputs will be delivered; and the timing of the contracts that I will negotiate to sell my grain. Those contracts are usually aligned with when I pay my bills.

As an example, on my farm in 2013-14, as a sound farm management practice, I had all of my forward contracts in place to sell my grain to the local terminal. I had a prudent plan to deliver my grain in a timely manner so that I could pay my land rent and input costs, such as fertilizer and seed. The rent is typically due in the fall. I even had allowed a buffer for rail delays, given that they are commonplace, especially up north.

When the railway failed to deliver in 2013-14, it put my farm business and my livelihood in jeopardy. I'm contractually obligated to pay my rent, regardless of whether or not I deliver my grain. Like most young farmers, I'm cash strapped as I build equity in my business, and because of long delays that year, I needed to secure a bridge line of financing in order to ensure that I could retain my land, pay my debts, and see my operation succeed into the next year.

I am here today, at what is one of the busiest times of the year for my operation, because as I head into the 2018 planting season, we are once again experiencing a backlog in the freight rail system which is impacting my operation and farming operations across western Canada that are reliant on the freight rail system.

When it comes to rail transportation in Canada, the agricultural sector has always operated in a monopolistic environment. Each year, our farmer members grow millions of tonnes of wheat, other grains, and oilseeds. We rely almost entirely on rail transportation to ship our products from the Prairies to port terminal facilities on the west coast and to Thunder Bay and south of the border into the U.S.

Costs associated with railway failures, such as demurrage fees and lost sales, are ultimately passed down the supply chain to me, the producer. As the price-taker, I'm dependent on the price the market dictates. I cannot adjust my price, the price of the products, so ultimately these increased costs reduce my profitability.

AWC appreciates the government's commitment to legislation that will ensure a more responsive, competitive, and accountable rail system in Canada. We believe that Bill C-49 is in fact a historic piece of legislation that paves the way for permanent, long-term solutions to the rail transportation challenges that Canadian farmers have faced for decades.

Passage of this bill is imperative, especially in light of poor rail service that shippers have been experiencing in western Canada this year, with the poorest period of car order fulfillment dropping as low as a combined 32% between CN and CP, reaching the levels experienced during during the 2013-14 crisis. In any other business, this lack of performance would be unacceptable, but in the grain sector, these service levels are all too common.

Because of this poor service level, currently I am left with a significant amount of grain on my farm, grain that was all contracted for delivery in October, November, and December. This type of backlog causes a cascading effect, not only on my operation but across the entire system. For instance, I had peas contracted for delivery in November, and when railcars didn't arrive to take my peas as scheduled, I had to bear the cost and resources of bagging my peas and leaving them on the ground in temporary storage, pending the availability of railcars to make up this shipment.

As the snow starts to melt now and the railway has still not fulfilled my delivery, I have to now use further resources to move the peas from bags to bins so that my product doesn't get damaged.

I, like most farmers, have contracts scheduled with terminals on a fairly ongoing basis, so when cars eventually do arrive for my peas contracted in November, the contracts that I have in place for March delivery of my canola get pushed into April. April contracts get pushed into May, May into June, and on and on. This is further complicated by spring conditions in which road bans are instituted, making it almost impossible to deliver my grain if delayed trains do arrive. This is not a fictitious backlog; this is reality.

As I and other farmers ramp up our operations to prepare to get our seed in the ground for this growing season, we are feeling the impacts of the current backlogs in the system. Farmers who haven't had the opportunity to deliver their grain in as long as six months are strapped for cash flow to buy inputs for this year's crop, and systemic rail failures often cause delays in receiving inputs, such as my fertilizer, which has actually been delayed since December.

In January I was in Ottawa to deliver this same message to the Standing Senate Committee on Transport and Communications. Now it's March, and while I have moved some of my grain, I am still significantly behind. From all indications, between the backlog and the spring conditions, as well as my focus on getting the crop in for next year, I will likely not deliver my grain until we're into April or May. For some of my contracts, that's almost eight months later than what the contract stipulated, which is eight months of not getting paid.

For these reasons, I am advocating for the amendment and passage of Bill C-49, the transportation modernization act, as a long-term solution to addressing the ongoing freight rail failures.

With respect to the role that reciprocal penalties play in this legislation, railways have long had a variety of measures that govern shipper efficiencies, including asset use tariffs. These tariffs are used to penalize shipper failures through monetary fines in order to gain shipper efficiencies. For example, when the railway spots my cars at a local elevator and the grain company fails to load them within 24 hours, the grain company faces an automatic monetary penalty. On the other hand, if the railway shows up two weeks late, there are limited or no penalties. Therefore, the railways are the only link in the grain logistics supply chain that are not held to account.

We were recently made aware that CN Rail has included a form of reciprocal penalties in their service level agreements. On the surface, this seems like good news, but these penalties are still extremely one-sided. As an example, they give CN the ability to spot cars at any time in a period of more than a week, while grain companies are still required to load these cars within 24 hours or face penalties. Bill C-49 provides the ability to establish service level agreements with truly reciprocal penalties.

Under Bill C-30, which expired on August 1, 2017, interswitching provisions, which allowed shippers to access any interchange within 160 kilometres, proved to be a powerful and effective competitive tool to improve competitiveness for grain shippers.

[John Barlow, Conservative, Foothills, AB]

Thanks again, Luc. You're exactly right.

Tyler, you touched on it. I remember speaking in the House about this last September and October; we did want to work across the floor. We adamantly supported splitting the rail transportation off of Bill C-49. We would move it through. I think if that had been the case, we would have caught some of these proposed amendments that you're bringing forward, like the long-haul interswitching and those types of things. If it had been a separate bill, we could have addressed some of these points then, but because it's such a huge bill, it's now stuck in the Senate on something that has nothing to do with what we are talking about right now. That's the frustrating part of this entire discussion.

I like to think that when we went through this in 2013-2014 as the government, we knew what we were facing. Bill C-30 would have addressed some of these issues in good faith. We said, “We're warning you that this is going to happen, so let's try to address it.” It is frustrating for us, but it's more frustrating for you as producers and stakeholders that you're having to go through this again when there was opportunity to try to fix this situation.

Rick, you brought up an interesting point that I think we missed out on, and it's a fact that Tyler brought up too: we're missing markets that we may have had. We're not getting a premium for our product, because on the international trade market when we're talking about our producers and we want agriculture to have a $75-billion trade business, which is fantastic, we're taking away every possible tool for our producers to be able to reach those types of goals.

Can you touch on the fact that we are not getting a premium for our product because we are no longer a reliable trading partner because we cannot meet our sales deadlines because we can not get our product to market?

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

For the last little while, you have been calling for Bill C-49 to be passed as quickly as possible. Do you have an opinion on the Canadian passenger bill of rights, though? Do you have an opinion on the public participation of foreigners in the funding and shareholding of Air Canada? That is the problem with Bill C-49.

The problems with Bill C-49 can be traced primarily to the fact that the Liberals refused last June to divide up the bill so as to speed up the adoption of certain measures. The two opposition parties wanted to proceed very quickly in order to avoid the black hole of August, given that the special measures established in Bill C-30 were about to expire and become void. That is the truth.

The government does not want us to be partisan, but it behaved in a partisan way itself by putting forward Bill C-49, which is full of things that have nothing to do with each other. Now, it is using us to get this bill passed as quickly as possible, but you have nothing to do with the passenger bill of rights.

What we want is for the grain to be shipped. What we want is for you to sell it on the market. What we want is for the system to work. Unfortunately, what the government wants is to pass an omnibus bill that is full of things that have nothing to do with grain shipment. That is the problem.

If the bill had been divided up and we had been able to pass these measures last June, would we be in the same situation today?

[Tyler Bjornson, Consultant, Western Grain Elevator Association]

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

I'm presenting to you today on behalf of my client, the Western Grain Elevator Association. We're pleased to have the opportunity to contribute to your study of the grain transportation backlog.

The WGEA represents Canada's six major grain handling companies, with inland and port facilities from Quebec to British Columbia. Collectively, these companies handle in excess of 90% of western Canada's bulk grain movements. Working alongside grain producers and other rail-reliant industry sectors, the WGEA has been committed to finding long-term solutions to chronic capacity and performance deficiencies in our rail freight system.

The growing backlog of rail shipments in western Canada continues to have a significant negative impact on shippers and the farmers they serve. As you will hear from numerous witnesses over the course of this study, declining rail service over the winter months has created the worst backlog we have experienced since 2013-14.

According to the Ag Transport Coalition, the total railcar shortfall is currently at almost 28,000 railcars. This represents over two and a half million tonnes of grain that companies have submitted orders for that have not been filled in the week they were ordered.

Overall performance over the course of this shipping season has been steadily deteriorating, with car order fulfillment below 50% on average in most weeks. One railway in particular has brought the average down, hitting an all-time low in the week of February 12, when just 17% of cars ordered were filled for that order week.

For grain shippers, that translates into serious costs in the form of not just lost sales but penalties due to vessels waiting at port. It also means a hit to Canada's reputation as a reliable supplier, a reputation that has not yet recovered from the 2013-14 grain crisis. As members of the committee will know, in a highly competitive market like ours, once business is lost to a competing supplier, it is very difficult to win that business back. These are the immeasurable costs that hurt us not only in the immediate term but also for years to come.

In this context of challenging service, we would like to thank Minister MacAulay and Minister Garneau for their interaction with the railways and for working to find ways to see an immediate improvement in rail service, not only for grain but also for the many sectors that are experiencing problems.

As most of you will know, the WGEA has been singularly focused on fixing rail issues in a permanent way. While this current backlog is shining much-needed light on the systemic problems that plague Canada's rail logistics system, the issues are of a much more chronic nature.

The WGEA is of the view that the measures contained within Bill C-49 represent a big step in the right direction toward arriving at permanent legislative solutions. The ability to negotiate reciprocal penalties into our service level agreements, for example, is in our view one of the most important provisions contained within the bill.

Consider what has likely precipitated the current rail backlog. Would the railways have planned differently this fall had there been the legitimate threat of penalties for not moving grain and other bulk commodities? We believe the railways would have taken different decisions if credible reciprocal penalties had been in place. Unfortunately, with the provisions of Bill C-30 expired and the passage of Bill C-49 uncertain, grain companies and farmers are effectively left in this no man's land with no tools or remedies for poor service.

It is to that end that the WGEA has joined with farmers and the entire grain sector in asking that Bill C-49 be passed without delay. The bill, as you know, is currently before the Senate committee on transport and communications. We are grateful to the senators of that committee, who are taking the time to ensure the bill achieves its intended goal of better performance by rail.

It will be well known to members that the WGEA is of the view that the bill needs to be improved in a key area with respect to the long-haul interswitching mechanism, the LHI mechanism. The LHI provision is not only more bureaucratic and difficult to use than the extended interswitching mechanism we saw in Bill C-30; we are also concerned that the grain sector will not be able to leverage its use properly if two small targeted amendments are not made.

As the bill is current written, if an elevator is dual-served—meaning it already has access to two competing rail lines on site—or if it's located within 30 kilometres of an existing interchange, the facility will be excluded from applying for an LHI order. Now, if those two rail lines are both headed in the relatively wrong direction—for example, east-west when the traffic's final destination is the southwestern U.S.—that elevator for all intents and purposes is still captive. The LHI is useless to them.

We have done an analysis on this point and have determined that 75% of all Canada's value-added grain processing facilities would be prohibited from using LHI because of this restriction. In terms of creating competition, we believe this was not the intent the government had when it drafted this provision.

The grain sector submitted an amendment to the House of Commons transport committee study to address this situation, but unfortunately it was ultimately rejected by the House.

It is our hope that now, during these final hours of consideration and in the context of the current grain handling situation, the Senate committee will take this opportunity to include these important targeted amendments in their report.

I want to take these final seconds to address you, the members of this agriculture committee, to ask for your help to ensure that once the bill is brought back to the House, you will work with your colleagues to do whatever is necessary to get the bill passed.

The WGEA, grain farmers, and our sector as a whole have waited too long to see this bill made law. We implore you to work across party lines in the interest of this sector to get the job done.

Members of the committee, the reality is that we've already lost too much in this shipping season. Let's not lose the next one as well.

Thank you for your time. I look forward to your questions.

[Mark Dyck, Senior Director of Logistics, G3 Canada Limited]

Thank you very much for the invitation to be here today to speak about the grain backlog. My name is Mark Dyck. I am the senior director of logistics for G3 Canada Limited.

G3 Canada Limited was formed through the combination of the former CWB and Bunge Canada's grain assets, funded by two strategic shareholders, Bunge and SALIC, with the long-term vision of establishing a state-of-the-art grain handling company in Canada and a new competitor for Canadian grain farmers.

The G3 transportation model was developed well in advance of the formation of G3 in 2015. G3's strategy was formed on the heels of the bumper crop in 2013-14, when the Canadian grain handling system's fundamental weaknesses were highlighted through shipping and rail backlogs. The government of the time intervened with Bill C-30 to further regulate the Canadian grain handling system with minimum volume requirements to address the short-term issue.

There were some unintended consequences. Service levels did increase; however, they may have at any rate, as that coincided with warmer weather and the reopening of the port of Thunder Bay. We believe the regulation never solved the fundamental problems in the industry.

Western Canada is blessed with an abundance of natural resources. The markets for those resources rely largely on Pacific export corridors, and grain must compete with other commodities for a scarce resource: rail capacity. G3 is making investments to address some of these issues to ensure grain handling remains competitive with other industries in Canada.

We believe the fundamental issues are as follows.

Insufficient improvements have been made in the grain industry to invest in efficiency improvements. The last major port terminal construction was in the early 1980s. Much of the port terminal infrastructure dates to the mid-1950s or earlier, when the industry was still moving grain in boxcars. They have been upgraded since, but not to the same standard as for other resources, such as coal and potash.

Inland primary elevators are of a newer vintage, with most dating from the mid-1990s to the early 2000s, but many small shippers still exist. The logistical technology that is incorporated at these elevators has failed to keep pace with other industries and is relying on ladder tracks and breaking trains apart. This slows the loading process for grain, which is exacerbated in the cold Canadian winters when it is difficult to air up the train when it is being reassembled.

The supply of grain does not enter the grain handling system in a steady state. Market conditions are such that demand for rail capacity is generally higher in the fall and winter months. The surge capacity required to effectively conduct these exports, particularly off the west coast, does not exist today. Terminals are generally operating at or near capacity, and this problem will continue to grow as the production level in Canada continues to increase.

Early this crop year we saw that farmers were tight holders of grain during what has historically been a very busy season immediately following harvest. The volumes started to shake loose at the same time that western Canada entered winter. The railroads did not have the capacity to service such a spike, following a slower than expected delivery in the early fall period.

If these are the fundamental issues, what are the solutions?

First, it's important to recognize that the situation is not as dire as it was in 2013-14. Production in western Canada in 2017 was 70.9 million metric tons, down about 1% from last year but about 3% above the five-year average. According to Quorum Corporation, the federally appointed grain monitor, total metric tons unloaded at the Vancouver, Prince Rupert, and Thunder Bay ports, which is where the vast majority of western Canadian grain is shipped, is 6% behind last year but on par with the five-year average.

In comparison to 2013-14, Quorum shows that the railways moved 25% more grain hopper cars—that's about 40,000 cars—to Vancouver, Prince Rupert, and Thunder Bay in 2017-18 versus 2013-14. That is from August through January. The February date is not yet available. While rail performance has not met industry's expectations this year, the situation is not as bad as it was in 2013-14. That said, the long-term issues need to be addressed with long-term solutions.

G3's long-term strategy was born out of discussions with industry experts, the railroads, and farmers alike. G3 is investing significant money in a new type of grain handling system featuring loop tracks, a feature not uncommon in the coal and potash industries. We load grain faster and more efficiently than ever before. In addition, we are constructing a new state-of-the-art grain terminal in Vancouver, with loop tracks that will be able to accommodate three fully loaded grain trains intact on the property. G3 is making investments that industry has not experienced in decades, investments that will create surge export capacity, rail efficiency, and velocity.

In periods when demand spikes and conditions become challenging, companies such as G3 will still be able to function at levels not seen anywhere else in the industry. We are able to load a full, 134-car unit train even in extreme cold weather by keeping the trains intact, with the railway locomotives on the train. When locomotive power is not left on the train, the railroads are forced to shorten train lengths to ensure they can properly air out the train for their braking systems. Our model creates a win for us as the grain handler, as well as for the railroads and for farmers.

G3's position is that its investments in efficiency will allow Canadian farmers to effectively reach world markets, allow railroads to function, and allow those grain handlers willing to make the investments to thrive in the long term. Competing exporters around the world—in the U.S., Latin America, the Black Sea, and Australia—have been investing in efficiency for decades. It is time that Canada does the same. We are leading by example in this regard.

The railroads have the responsibility to provide sufficient rail service to the grain handling system. Overall, we are supportive of Bill C-49, which introduces reciprocal penalties, as each party in the supply chain needs to be held accountable. We believe this will provide the motivation required for the railways to be adequately resourced to handle surges in rail demand and winter operating conditions. Further, Bill C-49 introduces the incentive for railways to invest in newer hopper cars, allowing for more grain to move on the same unit train. New, shorter cars will bring additional efficiency to the supply chain and allow companies such as G3 to load 150 cars on our loop tracks, where today we can only load 134. In addition, each car will be able to load about 2.5% more product. This represents a total increase of 16% for each train that arrives at one of our elevators. We would like to see Bill C-49 pass as soon as possible.

We are also supportive of the national trade corridor fund and hope to see some of this fund applied to projects that will further increase railway efficiency, specifically around the port of Vancouver.

In conclusion, I would like to thank you for the opportunity to share G3's unique perspective on the issues and potential solutions pertaining to grain handling in Canada.

Thank you.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Again, I'm a guest at this committee today, and I appreciate being here. I'm going to draw on some historical knowledge. I've been talking to some of the other people in the room who were here before, when we did this the last time. We had two meetings, and then we had five meetings on Bill C-30, which was the legislation, so you could say that in 2013-14 we had seven meetings to talk about this.

Right now in my riding I have a farmer-owned rail line that has 65 loaded cars sitting there. They have been sitting there and sitting there, and when they are sitting there full of grain, that means everything else behind them is full of grain, so the farmer-owned terminal is full of grain.

To say, okay, we're going to come back when it's convenient for us, I don't think is appropriate. I think we should come back next week and show them that we are committed to this. To me, the 15th makes a lot of sense, because CN and CP are supposed to have that data for us on what their game plan is moving forward.

It's nice to see CN publish it in the paper. I think that's good, but I've had them do this to me in the past so many times when the railways said that they were going to do this and do that. When it comes to actuality, it never happens. That's why you need to have penalties in place. You need to have an order in council in place. That's why I think you need to have the Minister of Transport here, listening to those farmers. He should be here for the full four or eight hours, whatever we do, to really get an understanding of the impact this has on people's livelihoods and on their families, their farms, and their operations.

I would suggest that we come back on the 15th and do the whole day. The ministers can be here. The stakeholders can be here. The farmers can be here. You can take any committee room you want. You can televise it so that people back in western Canada can watch us and listen. It would show from this committee that we're serious, that we're taking this issue very seriously, and that we care.

This isn't a partisan issue. You'll find that at least in the past it has never been a partisan issue. We're on the same side in fighting for our farmers and our producers. CN and CP are the problem here again, unfortunately, and we can learn from the things we did in 2013-14. We can make some fixes and do some improvements in the order in council to make it more effective and efficient. We can have something in place so that the producers know they have a backstop right now, and then Bill C-49 will do what Bill C-49 does, with amendments or without amendments, split apart or not split apart.

The reality on Bill C-49 is that even if you wrote them a letter today, the Senate won't read it until probably the 21st, and then, in terms of the reaction time from there, we would probably be looking at May, June, or July. That's not even a feasible option. You would have more impact by writing a letter to the ministers, because they can do stuff right now. They can do an order in council tonight if they so choose. They can take action if they so choose.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you very much, Mr. Chair.

The committee's Conservative and NDP members called for this emergency meeting because farmers need the government to take action now. We are united in our willingness to find immediate and long-term solutions. I am convinced that the committee's Liberal members also have the willingness to find a solution.

The situation is disastrous. When the government began an ideological battle by introducing Bill C-49, an omnibus bill from the Minister of Transport, all the observers warned it of the dangers of a new crisis.

We have all seen the figures. Between the two of them, CN and CP fulfilled 32% of hopper car orders last week. CN fulfilled 17% of the orders, and CP fulfilled 50% of them. Combined, last week marked the worst performance so far for the 2017-18 crop year.

Farmers are forced to absorb demurrage fees. We don't often use that term. I will give the definition of “demurrage”, for those who are not used to hearing that word. Demurrage fees must be paid by the charterer to the ship owner, in a voyage charter, when the time it takes to load or unload exceeds the laytime set out in the voyage contract. It's good to use the proper term.

In order words, the grain remains in elevators.

We learned that there are 35 vessels in the Port of Vancouver, we think for grain. Another five are waiting in Prince Rupert. With every unfulfilled order, Canada's reputation as a reliable trading partner is taking a hit. To quote an editorial:

Increasingly, our reputation among global customers is that of a supplier with aging and inadequate transportation infrastructure which fails to deliver its products on time, whether it’s canola or crude.

This has very real implications at a time when we want to expand market access, maximize our crops' yield, and increase our exports.

Every unfulfilled order undermines the reputation of reliable partners for Canada.

Unfortunately, the Liberals have ignored our advice to pass a separate bill on grain transportation and have not extended or made permanent the provisions of the Fair Rail for Grain Farmers Act. So protection for grain producers disappeared on August 1, 2017. Consequently, as predicted by the official opposition and a number of observers, a crisis occurred. It did not take two years; the first winter following the end of protection ensured by Bill C-30, a crisis situation arose in grain transportation.

Allow me to read a few excerpts of comments made on June 5, 2017, at second reading of Bill C-49, since that's pretty important.

My colleague Kelly Block, who is the transportation minister within our shadow cabinet, took the floor to speak to this omnibus bill. If people are still unsure that it is indeed an omnibus bill, here is how Minister Garneau himself described it, on June 5, 2017:

Specifically, the bill proposes to strengthen air passenger rights; liberalize international ownership restrictions for Canadian air carriers; develop a clear and predictable process for approval of airline joint ventures; improve access, transparency, efficiency, and sustainable long-term investment in the freight rail sector; and, increase the safety of transportation in Canada by requiring railways to install voice and video recorders in locomotives.

That is how the minister himself described Bill C-49. You will understand that we are far from Bill C-30, which focused only on grain transportation.

That is one of the reasons why the consideration of Bill C-49 is taking so long: the government wanted to make an omnibus bill focusing on several different topics and concerning a number of stakeholders. It was clear that its consideration would take time.

My colleague Mrs. Block reiterated the following, during the study of Bill C-49, at second reading:

Furthermore, when I introduced a motion in transport committee last week calling on the committee to write to the Minister of Transport and his government House leader to ask them to split the bill into the following sections, rail shipping, rail safety, air, and marine, to provide an enhanced and possibly expedited scrutiny, every single Liberal member voted against it without even a single comment as to why.

In short, on June 5, 2017, we already asked that Bill C-49 be split, so that we could study the protection of western grain producers more quickly.

The Conservatives responded positively to the request of their Liberal colleagues from the transport committee to expedite the study of Bill C-49. The Conservatives agreed to return to committee a week before Parliament resumed. NDP members were also in attendance. If I remember correctly, they were also fully prepared to review the bill and to dedicate a whole week to that study in order to expedite the process. After the summer break, all the committee members came here and spent a week discussing Bill C-49. We knew it was important.

However, there was a major issue. When we were studying Bill C-49, the provisions in Bill C-30 had already expired nearly two months before. So the protection was already gone. Those are the arguments my colleague Kelly Block reiterated when the committee studied Bill C-49.

Let me draw your attention to another excerpt from Mrs. Block's comments:

In the fall of 2016, the Standing Committee on Transport, Infrastructure and Communities undertook a study of Bill C-30 and held a number of meetings on the merits of these measures and whether they should be allowed to sunset. We were assured that if we lived with this extension, these issues would be dealt with by August 1, 2017.

Unfortunately, the government did not keep its word. It did not ensure that those provisions would be dealt with by August 1, 2017.

Mrs. Block concluded her comments with the following:

In conclusion, this much is certain: the key measures in Bill C-30 will be allowed to sunset on August 1, before this legislation receives royal assent. The Liberals have had nearly a full year to get new legislation in place but failed to do so, and shippers will suffer the consequences.

On June 5, 2017, she predicted that this would happen. Unfortunately, we are now facing that situation.

The Liberal government and railway companies have been inactive since August. It was business as usual for everyone. It was only yesterday that the Minister of Agriculture and Agri-Food bothered to take the first step to resolve the crisis: he wrote a letter with the Minister of Transport asking railway companies to prepare a plan to resolve the crisis and to post that plan on their websites by March 15. However, since the consequences of this crisis are being felt every day, last week we asked the government to act now, to implement the necessary tools and use its power to resolve this crisis as quickly as possible.

It seems that the calling of this emergency meeting had the positive effect of getting things moving. The Minister of Agriculture and Agri-Food has at least written a letter. This is a step in the right direction, but we have to go much further. We were expecting the minister to call a Cabinet meeting to adopt measures and make things happen, so that this crisis would be resolved immediately. The presentation of a plan and measures to ultimately find a solution should not be endlessly postponed again. The crisis is happening now.

This leads us to conclude that the government, aside from this letter, is once again relying on luck and the good faith of railway companies, instead of taking action and implementing the necessary measures to ensure that grain is shipped to markets, that farmers are paid and that this season's exceptional crop yields would not be compromised owing to a lack of planning by those who have the power and the tools to take action.

It's simple: the Liberal government must take immediate action to address the backlog in grain delivery and provide the tools needed to hold railway companies accountable for inadequate services. Inaction is costly. Talk to the president and chief executive officer of CN about that, as he lost his job because CN had not managed to provide a quality service. CN clearly indicates in its press release that it fired its president and chief executive officer for that reason.

If CN has realized that it should have taken action earlier, I don't understand how none of the advisors and other employees who are working at the offices of the Minister of Transport and the Minister of Agriculture and Agri-Food saw this crisis coming. Will a minister have to be fired for inaction—

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Madam Speaker, I am pleased to take part today in the debate for Bill C-49, the transportation modernization act. This Liberal omnibus bill would substantially amend 13 different acts and have a profound effect on three major modes of transportation: rail, air, and water.

These are big changes, and it does not look as if the Liberals would be changing the rules for the better. Bill C-49 is the first legislative response to the 2016 Canada Transportation Act review. While we welcome the commitment to a modernized and safer transportation strategy, we are concerned that the proposed changes would have costly unintended consequences.

While I would like to discuss all the complicated sets of changes from Bill C-49, such an undertaking would be impossible, given the time constraints of this debate. Today, I would like to particularly talk about the changes to rail transportation and what this means for our Canadian farmers and producers.

Our biggest concern on the changes to rail transportation has to do with the changes to the long-haul interswitching that this bill would make, in replacing the provisions introduced by the previous Conservative government with Bill C-30. Bill C- 30, or the Fair Rail for Grain Farmers Act, extended interswitching distances to 160 kilometres. Those provisions expired on August 1.

While new interswitching provisions were anticipated, this bill is far from meeting its objective of improving shipper and producer options with the new 1,200-kilometre interswitching tool. The system introduced through Bill C-30 was popular with shippers. It provided the certainty of a regulated rate up to 160 kilometres, and it is key that they dealt with the regulated rate for that full 160 kilometres.

With Bill C-49, the Liberals are putting forward a new long-haul interswitching tool on hauls of up to 1,200 kilometres, or up to 50% of the length of the entire haul. Shippers would be charged the regulated interswitching rate for the first 30 kilometres of the haul, and then the rate determined by the Canada Transportation Agency, which is determined on a case-by-case basis based on similar pricing hauls. That goes for the remainder of the distance to the interswitch point.

Shippers would only be able to interswitch at the first available interswitch point. The nearest interswitching location for many shippers and producers in northern Alberta and British Colombia would be in the Kamloops–Vancouver corridor, and the other exclusionary zone is from Quebec City to Windsor. lnterswitching is not allowed beyond 30 kilometres in these areas. For captive shippers, the new interswitching provisions would do nothing to encourage more competitive rates or improve competition.

This is a serious problem. It is important to remember that railways in Canada operate in a near monopoly situation. Captive shippers and producers have no choice but to use one company, to which they are effectively held hostage. This situation could put shippers and producers at a real disadvantage.

While there are provisions in Bill C-49 that would allow shippers to request a contract from a railway with reciprocal penalties, the penalty needs to be designed to acknowledge that the railways have much greater economic power than the shippers. We can also see that Bill C-49 is intended to encourage the efficient movement of shippers' traffic while creating a system that is fairly balanced between the shipper and the railway, but this original intention is eclipsed by the many uncertainties of Bill C-49, which are also present on this issue. To achieve the intended outcome, the government must improve and clarify its provisions for both issues of interswitching and penalties.

Bill C-49 also proposes changing the 30-kilometre interswitching rate so that the interswitching rate over 30 kilometres would be decided by the CTA on an ad hoc basis, as I mentioned earlier. This 30-kilometre interswitching rate would be set each year. It purports to take into account the railway's infrastructure needs across the entire network, which could increase the rate paid by shippers.

The rate-setting regime this bill introduces needs to be designed to ensure shippers always have access to competitive rates. As it stands, the rate would be derived from comparable traffic that is subject to captivity. This system needs to concentrate on a concrete review mechanism to ensure it is actually working for shippers.

However, the Liberals cannot just design this system and leave it to simply administer itself. It is not a budget. Without a sunset clause or predesigned review dates in two to three years, there are absolutely no guarantees for shippers and producers that they will benefit from it.

To remain competitive, shippers and producers rely on clear provisions to ensure efficient access to competing railways. The Liberals are failing to provide clarity and assurances for our Canadian shippers.

In addition, the new long-haul interswitching rates would be more difficult for shippers to use and will not serve as a useful tool in negotiations with the railroads. The proposed slew of changes to the long-haul interswitching rate present very vague outcomes. The sheer number of the regulatory changes and the administrative cost will put Canadian carriers at a disadvantage, especially against U.S. carriers.

Some argue that implementing these changes will increase U.S. railroad access to Canadian traffic at regulated rates without reciprocity. The government has expressed a desire to increase agricultural exports exponentially in the coming years, but has come up short with policies that would help achieve this. If we want to help the agricultural sector increase production and expand its global market share, we need to do more to increase its competitiveness in the global market, not restrict it. One of the ways to do that is to make sure they have efficient and reliable ways of moving their products.

Transportation needs to work much better and the bill must strive to improve rail transportation, because increasing the amount of produce that our amazing farmers produce will be useless if getting it to market becomes a substantial business cost for our producers. Canadians need and expect great rail service. We need an efficient system that ensures the cars show up and grain gets shipped on time.

An article in the Manitoba Cooperative states:

Western Canada’s bigger-than-expected crop is moving to export slower than at last crop year’s record pace, and while grain companies aren’t panicking, Keystone Agricultural Producers’ (KAP) president Dan Mazier says it’s costing farmers....

For most of the current crop year, which began Aug. 1, Mazier said CN Rail hasn’t delivered as many cars as it did a year ago, based on data published by the Ag Transport Coalition (ATC). It reports weekly on the number of cars most grain companies order and the number the railways deliver.

I have the Ag Transport Coalition numbers here for week 12 from October 15 to 21, showing that CN supplied 51% of the hopper cars that were ordered for shippers for that week, which resulted in an unfilled shipper demand of 2,614 hopper cars; and CP supplied 94% of the hopper cars ordered by shippers for grain in week 12, resulting in unfulfilled shipper demand of 281 hopper cars, with nearly 3,000 in total not making it in week 12.

In addition to that, speaking of competitiveness, we are also aware of the ongoing NAFTA negotiations. It is therefore remarkable that the government would allow the new 1,200 kilometre interswitching distance to increase U.S. rail access to Canada at regulated rates, allowing the U.S. to access this Canadian traffic without reciprocity. It seems like weak negotiating on the part of the government to give up this leverage before the NAFTA negotiations are concluded. It is another head scratching idea by the Liberal government to propose such changes even as NAFTA is being renegotiated. No wonder people think that the Prime Minister is napping on NAFTA, because Canadian competitiveness seems to be at the bottom of his priority list. Policies like this directly hurt our competitiveness and are yet another hurdle for producers and shippers to clear.

As it stands, there is simply too much uncertainty about the impact of the newly redesigned interswitching provisions. They need to be reviewable and timely.

Unfortunately, all of this uncertainty and unintended consequences stem from the Liberals' inability to actually consult and listen to industry experts and Canadians. The Liberals are quick to spend taxpayer money to travel around the country to consult and take selfies with Canadians, but when it comes down to it, the Liberals only listen to themselves.

Members from this side of the House have spoken to many stakeholders and experts. Many of these experts believe that what the Liberals are proposing is a convoluted remedy with unknown consequences.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Madam Speaker, actually, many shippers feel that the new approach to long-haul interswitching to be created by Bill C-49 will merely be a renamed version of the current and hardly used competitive line rates. There must be reasons that system is hardly used. This new long-haul interswitching rate would be more difficult for shippers to use and would also not serve as a useful tool in negotiations with the railroads, which Bill C-30 did. That bill was greatly appreciated by our farmers, to the point where they said to the government that they did not want to see it changed. They wanted to see that good policy continue.

There is another issue with this long-haul interswitching remedy. It will increase U.S. railroad access to Canadian traffic at regulated rates without reciprocity. When NAFTA is being renegotiated, it is unwise for Canada to be making this concession before those negotiations have gotten to where they need to be on this issue.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Mr. Speaker, in the fall of 2016 of the Liberal mandate, the Standing Committee on Transport, Infrastructure and Communities undertook a study of Bill C-30 and held a number of meetings on the merits of these measures and whether they should be allowed to sunset. The vast majority of the testimony heard was supportive of maintaining the 160-kilometre regulated interswitching limit. That is why the committee's first recommendation was the following:

That the Canadian Transportation Agency retain the flexibility provided under the Canada Transportation Act by the Fair Rail For Grain Farmers Act to set interswitching distances up to 160 km, in order to maintain a more competitive operating environment for rail shippers with direct access to only one railway company.

The current government ignored the committee's main recommendation. Basically, what the government is proposing with this new legislation is to replace 160-kilometre extended interswitching with the creation of a new long-haul interswitching on hauls of up to 1200 kilometres or up to 50% of the length of the entire haul. Shippers would be charged the regulated interswitching rate for the first 30 kilometres of the haul and then a rate determined by the Canada Transportation Agency, which would be determined on a case-by-case basis based on the price of a similar haul for the remainder of the distance to the interswitch point. Shippers would only be able to interswitch at the first available interswitch point within the zone. What the government has done is effectively taken a little-used existing remedy called a competitive line rate and renamed it long-haul interswitching.

When Bill C-30 was first introduced, there was universal support among shippers for the extended interswitching. The recommendation from stakeholders was to retain the interswitching distances up to 160 kilometres in order to maintain a more competitive operating environment for rail shippers with direct access to only one rail company. Again, the Liberals went through the motions of appearing to consult, and once again deaf ears prevailed.

To make up lost time and opportunity, the transport committee began special hearings on Bill C-49 in the week prior to the House's return from its summer recess. A total of 44 hours of testimony from dozens of stakeholders and expert witnesses was heard in each of the sectors touched by Bill C-49. Also on record are briefs and letters consisting of thousands of pages of data with more than 100 suggested technical amendments from those whose lives and livelihoods would be affected by this bill. From these incredible witnesses, there was unanimous agreement that Bill C-49 was a good start and that, if their suggested amendments were made, the bill would actually accomplish its stated objectives.

After only giving two weeks to review this mountain of information, the Liberal members of the transport committee defeated more than two dozen reasonable technical amendments. Again, these amendments were suggested by a wide range of stakeholders and experts and were written to make the act a workable solution for all involved.

Once again, the Liberals have a skewed definition of consultation—in other words, they pretend to listen and then blah blah blah—and prove again that it is only a buzzword that they used to get elected. With the introduction of long-haul interswitching, the Liberals sought to create their own solution to a problem that had already been addressed with a reasonable Conservative solution. In the Fair Rail for Grain Farmers Act, the previous Conservative government created a regime of extended interswitching that worked so well in the prairie provinces that shippers of all kinds from across Canada requested that it be extended to the entire country. Instead, the Liberals are committed to their complicated, inefficient long-haul interswitching regime that has such poor conception and so many exceptions that it would be basically useless to many shippers.

For example, a minor technical amendment proposed by both Conservative and NDP members of the committee would have changed the wording of the provision to allow the first interchange point to be in the reasonable direction of the shippers' destination. Under the legislation as it is, shippers may have to send their products potentially hundreds of kilometres in the wrong direction to reach the nearest interchange point, increasing their costs.

What happened to this very reasonable amendment? The Liberals defeated it. They ignored the advice and recommendations of even the the most competent, experienced, and concerned Canadians in regard to extended shipping lines.

Canadians have been ignored by this Liberal government. The laudable and credible efforts of Canadians to contribute in meaningful ways to improving the weaknesses of the Liberal legislation have again fallen on the deaf ears of the government.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Mr. Speaker, I am pleased to rise today and speak to Bill C-49, the transportation modernization act. This bill would amend a number of different bills, I believe 13 in fact, with many significant changes being more than just technical in nature. My focus will be on the issues around grain transportation as this portion of the bill is of great concern to those who farm in my riding of Yorkton—Melville and ship their products from Saskatchewan to multiple destinations by rail.

I look at this omnibus bill and wonder what the rationale was for creating such complex legislation. It could have been more effective on many levels to split Bill C-49 into rail shipping, rail safety, air, and marine to target consultation to expedite the best legislation for each. My colleague, representing Carlton Trail—Eagle Creek and the transport shadow minister, put forward such a motion in response to the Liberal member for Niagara Centre, who raised the idea of expediting the passage of this bill in order to provide grain farmers a greater amount of certainty as they negotiate contracts for future shipping seasons. It is telling that the member did not have the support of his Liberal transport minister or his colleagues, as the Liberal vote was unanimously against splitting the bill.

The Minister of Transport's silence and inaction on critical and time-sensitive transport issues over the past two years, especially on rail transport, has fuelled uncertainty with both shippers and the railroads as they negotiate shipping rates for the coming season. The previous Conservative government introduced Bill C-30, which gave the Canadian Transport Agency the power to allow shippers access to regulated interswitching up to 160 kilometres, mandated that CN and CP both haul at least 500 tonnes of grain per week, and introduced a new definition for adequate and suitable service levels. With this extension, the number of primary grain elevators with access to more than one railroad with the extended interswitching limits increased from 48 to 261. These measures were met with universal support from the shipping community because, even if shippers did not use interswitching, they could use it as a tool to increase their negotiating position with the railways, as the shippers knew exactly how much the interswitch portion of the haul would cost them. At the same time, the former Conservative government had announced that the Canada Transport Act statutory review would be expedited. It began a year early in order to provide long-term solutions to the grain backlog of the 2013-14 shipping season and other problems in the transport sector within Canada.

[Sean Fraser, Liberal, Central Nova, NS]

Mr. Speaker, it is my pleasure to rise and offer some comment on Bill C-49, an act to amend the Canada Transportation Act.

I had the pleasure of sitting through an inordinate amount of witness testimony as we went through this important bill, which really is the first step in implementing the minister's transportation 2030 strategy to make transportation more efficient in Canada.

I will start by offering a few comments on the importance of transportation to our country.

In the 21st century, we know that Canada is a trading nation. We know that in order to maximize our economic output, we depend heavily on global markets. When we are trying to maximize the economy in Canada, it does not take long to realize, with our skilled workforce and natural resources, that we have the capacity to produce more than we have the ability to consume domestically. As such, getting our goods to the world market is of extraordinary importance if we are going to succeed and thrive in a 21st century global economy. This is where Bill C-49 comes in. We recognize that to get our products to market in a timely way, we depend on the efficiency of the transportation system. We know that customers around the world are waiting anxiously for their products, and if they cannot find a reliable supplier, then they are going to go elsewhere.

The Canadian transportation system has a number of different important links along the way, and Bill C-49 addresses a few of them. Specifically, it deals with certain measures in the rail sector, air sector, and the marine sector, which has been the subject of little debate thus far, but it really does enhance efficiency of getting products to market or improve the experience of Canadian or international travel for Canadian travellers.

I will start first with the rail transportation in Bill C-49.

The importance of the rail sector in Canada cannot be overstated. Of course, before Confederation, north-south trade was of extraordinary importance, but as I mentioned at the outset of my remarks, getting products to global markets is becoming increasingly important. Of course, the rail corridor from east to west is of extraordinary importance as well.

The key part of the measures dealing with rail transport really has to do with the concept of long-haul interswitching. When I looked at the rules we had embedded in law before Bill C-49, they were not sufficient to deal with getting products from different industries and different regions to market in Canada. What we did have, and we heard this in a number of questions from members opposite, was Bill C-30, which dealt with the transportation of western Canadian grain to market.

Bill C-30 came in 2013, when there was a unique set of circumstances. We dealt with one of the worst winters in modern memory, and at the same time dealt with an unimaginable grain overproduction at the time, which really put our producers and shippers in a bind. If something were not done to get the product to market in a timely way, the economic output would have been significantly lessened. To the credit of the government at the time, it took some action to deal with that and implemented a system that simulated competition where there was none.

In Canada, it does not take long to realize that when we are dealing with rail transport, we are dealing with many captive shippers. There is essentially a duopoly in Canada with two major class I railways. However, for many shippers, there is only one option. If one is living in the northern prairie provinces, one does not always have access to competition, which can drive rates up. Therefore, measures in the previous legislation stated that within 160 kilometres of an interchange point, one would be allowed to essentially treat the monopoly holder as though it were competing, and one could create a bargaining circumstance around the table when there was none. It was not used all that frequently, but we did hear testimony from witnesses that it had made a difference at the time.

However, there is a key problem with that short-term fix, which was needed at the time. It did not consider that the Canadian economy depends on more than western Canadian grain. Bill C-30 did some good things for that industry in that region, but it did nothing for forestry or mining, and it did nothing for provinces such as Ontario and Quebec. Of course, the province I am from, Nova Scotia, does not necessarily have the same problem, with not having the class I railways present.

My point is that long-haul interswitching has come in to solve this problem because it provides opportunities for captive shippers who might not be within 160 kilometres of an interchange who might be in the industry of producing natural resources outside of grain in western Canada. This would provide an opportunity to simulate a competition around the table for so many different producers and this is a very important thing.

In addition to this significant change in the way that products can be transported on Canadian railways, we see a number of measures that were implemented in Bill C-49 to recognize that shippers sometimes have a tough time getting their products to market. We see reciprocal penalties. Previously, there was no remedy necessarily for a shipper whose service obligations were not being met by the railway. In this instance, we can imagine the brand recognition that it does and the cost of having goods waiting to get to market and having no way to transport them. Now the penalty is cut both ways and it encourages everyone to meet his or her obligations to ensure that goods get to market.

We also see a definition of adequate and suitable service. We are seeing enhanced data disclosure. We are seeing that the maximum revenue entitlement has been retained. We are seeing efficiencies embedded into the arbitration process, which creates the equivalent of a small claims process for disputes of less than $2 million. We are seeing agency authority to regulate service-level agreements going forward.

Quite a big focus of our testimony over the course of our committee study on this issue went to the rail sector. However, I do not want to ignore the other important sectors that really do make a difference in the communities that I represent as well.

When we look at marine transport, some of the nonsensical features that we had embedded into Canadian law previously included that international shippers did not have the ability to move empty containers within the Canadian ports system. This might put people who are shipping from Europe to a port in Montreal, for example, in a place where they are not able to take that container from Montreal and move it to the port of Halifax to help local exporters in the province I represent get their products to Europe. When we put it to them to say, “Is this a big Canadian industry right now? Are we going to be interfering with local jobs?”, we heard that in fact this is not being done right now. However, to protect the economic interests of Canadian workers, Bill C-49 would only allow this kind of practice to go forward on a non-revenue basis. Essentially, if I am a European shipper, for example, and I want to move my own empty containers between Canadian ports to make the transportation system for Canadian exporters more efficient, I would be able to do that under Bill C-49.

Of course, one of the key parts of Bill C-49 was the air passenger bill of rights. There are a number of substantive rights that were built into the framework, although a lot more of the details and specifics are going to be embedded in regulation that follows. One of the reasons that this has gotten a bit of uptake in the media is that so many of us, when we see those viral videos of passengers being hauled off planes, become frustrated because we have experienced the ordinary frustrations of air travel ourselves. I have personally experienced having my luggage be damaged and come off one size-16 shoe at a time on the carousel. We know what it is like to see that someone is going to be charged more to sit next to his or her infant. When people are travelling with a musical instrument, if it is not handled properly there can be severe damage and that damages some musicians' livelihoods. A number of these problems are being addressed in Bill C-49 and we are going to require that airlines make it known to the public how they can seek recourse when an airline falls below the standard expected for travellers who paid for quality service on their flight.

In addition, there is a key part of air travel that I wanted to hit on as well. We have changed the foreign ownership limits from 25% to 49%. This is going to encourage more investment by international companies in the Canadian air sector and potentially drive the cost of air travel down. We have already seen two discount airlines, when they qualified for this kind of an exemption under the previous rules, announce that they were going to be making investments in Canada to service secondary markets and offer cheaper service.

To wrap up in the little time that I have left, Bill C-49 is the foundation of the minister's strategy to enhance the efficiency of the Canadian transportation sector. It would see products move in different industries in different regions of our country to get to global markets more effectively. It would protect the rights of passengers who are travelling in the air sector. It would, important from my perspective, make shipping a more efficient part of the international transportation system. It would help exporters in places like Nova Scotia get their goods to market in a cost-effective and efficient way. This is a good bill and I hope the entire House supports it.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, the ideology of the long haul is one thing, and I would not be against that, but the number of exclusions in this bill are such that no one can take advantage of them. It used to be, under a previous bill of the Conservative government, that the concerns of western grain farmers were addressed; I believe it was Bill C-30 at the time. That was allowed to sunset by the current government. Then, inadequate measures are put in this bill that are vague and, as I said, include so many exclusions that people cannot take advantage of them. The execution was not acceptable.

[Sean Fraser, Liberal, Central Nova, NS]

Mr. Speaker, one of the themes I keep trying to hit on, being from the eastern part of our country, is that Bill C-49 has changed the rules around transportation on freight rail in a fairly dramatic way. Under a different iteration of legislation that dealt with the transportation on freight, Bill C-30 previously, it dealt only with the ability for shippers of western Canadian grain to move product up to 160 kilometres That was in response to some unique circumstances that arose in 2013. One of the things we see in Bill C-49, by contrast, is a shift towards long-haul interswitching. This would see the ability of shippers in different industries in different parts of the country take advantage of a new regime that stimulates competition around the negotiating table and gives a remedy to captive shippers to make sure they can get a market price.

Does the hon. member support the expansion toward long-haul interswitching, which serves different provinces and different industries, including Ontario?

Motions in amendment

[Sean Fraser, Liberal, Central Nova, NS]

Mr. Speaker, I have had the pleasure of sitting on the committee during the hearings on Bill C-49 and enjoyed the company of the hon. member for Bow River.

I took some of the member's comments to suggest that perhaps the bill would not go far enough to protect the interests of shippers. I cannot help but point out that the bill includes a number of pro-shipper measures, such as reciprocal penalties, adequacy of service, protecting the maximum revenue entitlement, enhancing data disclosure, improving the arbitration process, and a number of other things.

The member raised the measures included in Bill C-30, suggesting that they were preferred, according to the witnesses he heard. When I listened to the witnesses over the course of the entire study, many of them suggested that having remedies only for one industry and only for one region of the country was not the best approach and that the long-haul interswitching would open up a more efficient transportation system across sectors and across geography. Does the member support measures that would extend this improved service to new parts of the country and to different sectors?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Chair, I would just put forward that Bill C-30 was introduced in 2013-14 to address some very unusual circumstances, and here we are in 2017, three years later, saying we have all the information we need to conclude that while the extended interswitching was great for the circumstance for which it was created, we need to allow that measure to sunset and move on to another remedy.

I would respectfully disagree that three years doesn't give one enough time to review a piece of legislation to see if a certain remedy is working. That's apparently what happened with extended interswitching here, so I would welcome somebody perhaps lengthening that time, but I think with long-haul interswitching, it would be a really good idea to review that legislation to see if it is in fact accomplishing the purpose for which it has been created.

[Sean Fraser, Liberal, Central Nova, NS]

As a general comment, I think this amendment is, as you described, to say that some people like the extended interswitching and that in your view it's superior to the proposed long-haul interswitching.

To follow up on the comments made by our officials here, I think that Bill C-30 was the right thing to do. It was actually very smart at the time to help move product that was stranded, and I would have supported it at the time.

We've now had the benefit to consult across Canada. I keep thinking to myself that the starting point is not the draft legislation we all started with. Right now, there's not a system in place. I see long-haul interswitching as part of a pretty intricate balance that extends the ability of producers and shippers to move goods in different geographies, in different commodities.

When I look at some of the protections that are available here to shippers, I view this as a very positive bill from a shipper's perspective. I'm looking at data disclosure, retaining the maximum revenue entitlement, reciprocal penalties, adequate and suitable service.

I understand that there are some shippers in the grain industry in a limited geography who are familiar with a certain system, but I want to have my voice on the record as saying, given the starting point that we have right now, this is a pretty intricate balance that I think is really going to help shippers in different commodities, in different geographies, get their goods to market. I can't in good faith support an amendment that's going to essentially dismantle the long-haul interswitching system that is really the focus of a major portion of this bill.

[Ryan Greer]

Part of the challenge with LHI, as I think you heard from both the railways and the shippers, is that there's still a lack of understanding about exactly how it would function and what the outcomes would be. The railways will hope that it doesn't lead to a larger loss of business. Some of the shippers have suggested that the old interswitching provisions weren't used nearly often enough but were an important negotiating pressure point for them. It's unclear how LHI might itself include into it. Reading the bill as it is, I think LHI is probably an improvement from the old Bill C-30 in that it's seen as a matter of last resort, but again, we'll have to wait and see until it's in action.

Again, to us the biggest concern is that the exemptions stay in place. Without them, it would really be a free-for-all on major Canadian lines.

[Sean Fraser, Liberal, Central Nova, NS]

I'm just curious, then, if we compare it not with the status quo but before Bill C-30 sunsetted, and if we look at the extended interswitching as a comparison, from your perspective, what's the relative loss of business that you would see under a new regime with the excluded corridors? This is as compared with the extended interswitching regime.

[Cam Dahl]

Yes. The protections that the grain industry had under the Fair Rail for Grain Farmers Act were valuable tools. From my perspective it wasn't just the message that was sent to Canada, but the message sent to our customers. I visit many of our customers internationally, and one of the first questions I am always asked, whether I'm in Bangladesh or in Japan or in Nigeria, is a question about Canadian logistics. I cannot stress enough the harm to our reputation that was caused by that 2013 and 2014 failure. We cannot afford another one.

As Jeff said, we have a large crop to move, despite the drought conditions we have in the Prairies, and we need to have tools in place that will help ensure that if problems begin to develop, they don't turn into the large, systematic failure that we had in the past.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I want to address the sense of urgency that I am picking up on from our witnesses today. The question that comes to me as a result of that urgency is this.

We had the Fair Rail for Grain Farmers Act sunset in the middle of this past summer. You are, then, in fact without any remedy when it comes to interswitching, except for the 30-kilometre right. Is that what's precipitating the urgency to get this law passed, so that you are negotiating contracts with certainty and with terms that you can actually go to the railways with?

[Cam Dahl]

Certainly.

On behalf of Cereals Canada, I want to thank the committee for the invitation to appear before you today. It's not usual for a committee to be holding hearings like these when Parliament is not sitting, and it's definitely not usual for a committee to be holding marathon sessions such as you have been holding. We recognize this and thank you for the high priority you are placing on this legislation. It is absolutely critical for Canada's agriculture sector.

As I mentioned, Cereals Canada is a national value chain organization. Our membership comprises three pillars: farmers, shippers, and processors in crop development and seed companies. Our board has representation from all three of these groups. All parts of the value chain look for transportation reform as a key requirement for the success of our sector.

Canada exports more than 20 million tonnes of cereal grains every year, worth about $10 billion. Virtually all of this grain moves to export position by rail. The profitability of every part of the Canadian agriculture value chain depends on the critical rail link to our markets.

Agriculture has a strong growth potential. The Barton report indicated that Canada has the potential to become the world's second-largest agriculture and agri-food exporter in just a few short years. The report set a target of $75 billion in exports in 2025. This is up from $55 billion in 2015. Modernized transportation legislation is critical if Canada is to meet this growing demand and maintain our reputation as a reliable supplier.

Agriculture is not just about exports. The industry employs Canadians. One in eight jobs in Canada depends on agriculture. Our ability to meet these growth targets and our ability to increase the number of Canadians employed by the sector depend upon moving production to market in a timely manner. I want to stress this next point: “timely manner” must be defined by the international marketplace. We will not achieve these goals if transportation providers limit our ability to satisfy world demand.

These are the implications of Bill C-49, which is before you today. The first message I want to deliver on Bill C-49 is to quickly return this bill to the House for third reading. The bill will help introduce better commercial accountability into the grain transportation system, it will help improve grain-movement planning, and it will improve transparency and reporting.

I do not want to leave the impression that the grain sector has received all that it requested in this bill. There are provisions that the industry had requested: continuation of the extended interswitching provisions from the Fair Rail for Grain Farmers Act is an example of provisions that have not been brought into the legislation. However, no piece of legislation is perfect, and we believe that the bill should proceed. Cereals Canada has some suggestions for technical amendments to Bill C-49, which are outlined in detail at the end of the written brief you have received.

I want to touch briefly on why we're here and why we have the need for legislation.

Flaws in the grain handling and transportation system were highlighted in 2013 and 2014 when the system suffered a significant breakdown. The systemic failure impacted the entire value chain and damaged Canada's brand and reputation as a reliable supplier of agriculture products. This resulted in lost sales and it resulted in decreases in price. The crisis cost farmers, grain-handling firms, exporters, Canadian value-added processing, and ultimately the Canadian economy.

This was not the first time the transportation system failed one of Canada's largest sectors. This is clearly demonstrated by the multiple past reviews and commissions, such as the studies conducted by the late Justice Estey and by Arthur Kroeger and the report from the senior executive officers, and the list goes on. It is a long list of reports on grain transportation. History shows that if the underlying structural issues are not addressed, transportation failures will recur. Canadian agriculture and the Canadian economy cannot afford to let this happen again.

Railway monopolistic power is a key reason the grain transportation environment does not function to maximize the profitability of the entire value chain. Virtually all shippers are served by one carrier and are subject to monopolistic pricing and service strategies. Therefore, the government has a critical role to play in establishing a regulatory structure that strikes a measured and appropriate competitive balance.

I stress the word competitive. System reform will be successful only if the legislated and regulatory structure for grain transportation is adjusted so that it mimics the conditions of a competitive environment.

It is worth noting that the record size of the 2013 crop, over 70 million tonnes in western Canada, is often cited by the critics of reform as the cause of the breakdown in 2013 and 2014. However, this level of production is not an anomaly. Rather, it is the new normal. Grain production in Canada continues to grow, as does world demand.

This year, 2017, I'm sure many of you have heard—and Ms. Block is in the affected part of the province—there was a drought in many parts of Saskatchewan, yet western Canada is still going to produce one of the largest crops we have ever seen. We expect it to be between 63 million and 65 million tonnes. We have to be able to meet growing demand with growing supply.

I'm not going to go into the details of our amendments; you have them. But in summary, Bill C-49 will move us towards a more accountable and reliable grain-handling and transportation system. This is good news for everybody involved, including our customers.

The grain, oilseed, and special crops industries have been united in their call for measures that will help ensure accountability in the performance of the railways. Bill C-49 will help correct the imbalance in market power between the railways and captive shippers.

The legislation includes the following key positive elements: tools that will allow shippers to hold railways financially accountable for their service performance; improved processes for the Canadian Transportation Agency if issues do arise; clarification of the railway responsibility in the Canada Transportation Act by better defining “adequate and suitable” service; and increased requirements for reporting and railway contingency planning.

If passed, Bill C-49 will help balance railway market power and will help mimic what would happen if we had open competition. This is good economic and public policy.

While the most important part of the railway legislation is the increase in railway accountability, all of these provisions are important. Improving CTA processes is important to ensure that problems are caught and addressed before they snowball into major failures. Together with clarification of the meaning of “adequate and suitable”, this will help ensure that the Canadian transportation system meets the expectations of our customers both within Canada and internationally.

No piece of legislation is perfect, and Bill C-49 is no exception. Cereals Canada has presented a number of technical amendments. The adoption of these amendments should not significantly delay the passage of the bill, and the adoption of these amendments will significantly improve the transparency of the legislation. These are the first four amendments in our brief. They will also help align North American regulations between Canada and the U.S.

The amendments will also help to improve operational planning, as stated in the fifth amendment in our brief. It will also help give improved access to competitive tools to help improve the imbalance in market power. These are the last three amendments.

I welcome any of your questions on my verbal remarks or on the more detailed brief that has been circulated.

[Greg Northey, Director, Industry Relations, Pulse Canada]

Thank you, Madam Chair and members of the committee, for the opportunity to discuss Bill C-49 with you.

Pulse Canada appreciates your focus on this bill and your efforts to expedite the study prior to the return of Parliament. We submitted a brief to you, and I will touch on a few of the recommendations contained within it.

Pulse Canada is a national industry association that represents over 35,000 growers and 130 processors and exporters of peas, lentils, beans, chickpeas, and specialty crops like canary, sunflower, and mustard seeds. Since 1996 Canadian pulse and specialty crop production has quadrupled, and Canada is now the world's largest producer and exporter of peas and lentils, accounting for one-third of global trade. The value of the industry's exports exceeded $4 billion in 2016.

The market for pulse and specialty crops is highly competitive, and maintaining and growing Canada's market share in over 140 countries that the sector ships to is a top priority for the industry. Pulse and specialty crops are the most multimodal grain crops in western Canada; 40% of our sector's exports through Vancouver are containerized. Efficiently managing the logistics in these supply chains drives the competitiveness of our sector. As such, predictable and reliable rail service is central to ensuring this competitiveness and economic growth.

It is through this lens that Pulse Canada has assessed Bill C-49. Will it deliver improved service, increase rail capacity and competitive freight rates to the small and medium-sized shippers that constitute much of the pulse and specialty crops sector? Pulse Canada believes that Bill C-49 has the potential to deliver these outcomes, but we would like to offer some recommendations to ensure that the bill delivers the results that government intended, that shippers need, and that the overall Canadian economy expects.

Increased competition is the most effective way to deliver improved service capacity and rates, and this is where the proposed long-haul interswitching rate regime holds the most potential. The competitive forces that extended interswitching delivered to the rail market as a result of Bill C-30 were directly beneficial to pulse and specialty crop shippers, and the sector would like to see the long-haul interswitching deliver the same results.

You have heard significant and detailed recommendations on how to improve LHIR today. So I would only like to reiterate one point: excluding large groups of shippers from accessing the provision or limiting a shipper's access to the nearest rail competitor when the next competitor may offer the best combination of service, price, and routing, significantly decreases the potential impact of this provision. For LHIR to work as intended, by letting market forces and competition prevail—a point shippers and railways agree on—it should not be artificially limited through a list of exclusions that cuts out huge swaths of the economy. These exclusions should be removed to allow shippers and railways to operate under LHIR in as competitive an environment as possible. This will bring maximum benefit to shippers, railways, and the Canadian economy. This would also help reduce the differences in interpretation and intents as well as the expected legal challenges that will plague decisions with this remedy for years to come.

I will now focus on provisions of the bill that are intended to help increase supply chain transparency. Creating a competitive environment with balanced commercial relationships requires a transparent freight rail system so that all involved can make commercial decisions based on timely and accurate information. To achieve this, the bill proposes two significant new data regulations and a transitional provision that would require railways to provide service and performance data based on the model used by the U.S. Surface Transportation Board. This is a good start. However, Bill C-49 proposes that this data will not be available to the commercial market until a full year after royal assent. When the data does become available, the bill allows a three-week lag between collection and publication of this data.

In the U.S. case, the railways and regulator began publication of this data within three months after it was ordered, and it was available publicly one week after the railways provided it to the regulator. With a concerted effort by shippers, governments, and railways, and an amendment to Bill C-49, Pulse Canada believes Canada can match, at minimum, the timelines set in the United States and fulfill the intention of Bill C-49 to provide timely data to the commercial market.

As recommended by the committee in your report on Bill C-30 in December, Bill C-49 has introduced a significant new requirement for the railways to provide confidential, commercial, and proprietary data to the Canadian Transportation Agency.

As you identified, this data is important, as it would permit the agency to more effectively identify and investigate issues in the rail system and exercise its authority to issue orders to railway companies. This is the point that Scott Streiner identified yesterday as an important issue, and it's one that Pulse Canada believes in as well. However, Bill C-49 limits the use of this data by explicitly specifying that it can only be used by the agency to calculate long-haul interswitching rates. Requiring this data from railways, but narrowing its application, severely limits the impact of this new regulatory provision and does not fully achieve the intent for the data to support the agency's delivery of its statutory responsibilities. Equally important, this data could be used to fully measure the impact of Bill C-49 and allow for evidence-based assessments as the bill is implemented.

To conclude, I'd like to address the proposed changes in Bill C-49 that will remove containerized grain from the maximum revenue entitlement. Pulse Canada understands that the government's intent with respect to this policy change is to incent innovation in the container supply chain, increase container capacity, and improve levels of service. These are valuable outcomes, and we must collectively ensure they are achieved, as removing this traffic from the MRE could potentially negatively impact the Canadian pulse and special crop sectors' international competitiveness. The focus, then, must be to ensure that other provisions in Bill C-49 set the necessary conditions for this change to the MRE to be a success and to truly result in more service and capacity. The data recommendations I discussed earlier will help ensure that everyone can measure the policy outcome, but Pulse Canada has recommendations on other provisions within the bill that will ensure that the remedy suite available to shippers in the event of service failure or costing disputes is functional.

First, the reciprocal penalty provision and the accompanying dispute resolution process introduced for service level agreements is a valuable change that will establish commercial accountability between shippers and railways. We applaud the government for introducing this. To ensure that it functions effectively, Pulse Canada asked the committee to consider clarifying that the intent of these penalties is to be sufficient to encourage commercial accountability and performance while recognizing the differences in economic power of small shippers compared with that of the railways.

Second, for small and medium-sized shippers and containerized shippers no longer shipping under the MRE, it will be essential that the general strengthening of the agency's information and dispute resolution services introduced in this bill, Bill C-49, is effective. The agency having the ability to attempt to resolve an issue a shipper may have with the railway company in an informal manner provides shippers with a less confrontational, more cost-effective and timely way to resolve service issues without having to bring a formal level of service complaint to the agency. These are barriers facing shippers when considering accessing agency provisions, and this is why the agency has stated they will increase outreach to shippers. It has nothing to do with the agency “drumming up business”.

To fully realize the potential of this provision, Pulse Canada requests the committee to consider clarifying what it means for the agency to take action on informal resolution. Our view is that taking action can include a wide variety of activities, including such things as questioning, site visits, requesting information, investigating, etc. Clarity on this issue would help during the implementation of this bill. Ultimately, however, Pulse Canada views agency own-motion powers, which has been discussed at length today, as the most efficient and effective way to address disputes and network issues and strongly urges the government to consider the agency's request to be granted these powers.

Finally, I'd like to briefly touch on a provision in Bill C-49 that is specifically focused on the grain sector. The requirement in clause 42 of the bill that railways self-assess their ability to move grain during a upcoming grain year and identify the steps they will take to enable grain to move can be an extremely powerful provision that can establish the basis for measuring railway activities against their plan both during and at the end of the grain year. To strengthen this provision and ensure it delivers the intended outcome, Pulse Canada offers recommendations in our brief to enhance that section to clearly set the parameters for the type of information railway companies must provide. For the pulse and special crops sector, better defining these parameters provides an additional platform for the monitoring and assessment of the impact of the decision to remove containerized grain from the MRE.

Thank you.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Yes, so extended is what you recommend. I would recall for my friend that it was in our Bill C-30, but let's forget that it was a Conservative measure. This is what people asked for, and it's what would help.

Is there any other recommendation or any other issue you would like to see addressed in this bill?

Mr. Audet, you talked about safety. Of course, there are the recordings that can be heard after the fact, but you think the focus needs to be on training. What would you like to see in Bill C-49 to that effect?

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I would comment first off that the session that we've been having this past week has been very non-political and today that changed, which is giving me the opportunity to respond. I want to make three points based on Mr. Blaney's comments.

If in fact Bill C-30 was good legislation, why did the previous government also introduce the sunset clause? The second point is why did we hear loud and clear from the witnesses criticizing long-haul interswitching during the fair rail for grain farmers study? Lastly, why did the previous government also take it upon itself to commission David Emerson to review the system, as well as propose long-term solutions as seen in Bill C-30?

My apologies, but I had to correct the record.

[Perry Pellerin]

In Saskatchewan, especially with some of the short-line grain shippers, access to what was in Bill C-30 would allow some new businesses to take a look at our short lines as an opportunity to build on to give them access to other class 1s. The way it's structured right now, I think new business would be reluctant to build on the short line, because you might as well at least get within that 30-kilometre zone to give you those options.

To be honest with you, I think my answer would have been that if we didn't have Bill C-30, this one's worse. I'd rather not have it at all compared with what we had before, if that makes sense.

[Lucia Stuhldreier]

This map will look different from the description of the excluded corridors, but realistically any shipper in that area that's shipping traffic to the Vancouver area, to terminate on a rail siding there, would not be able to use this. We can draw a very similar map for Quebec to show that some of the most captive shippers in the northern part of that province will have exactly the same problem, because their only connection to any other carrier will be in that Quebec-Windsor corridor.

Quite apart from these things, though, one of the underlying issues that WCSC has with this remedy is that it will fundamentally succeed or fail with the willingness of any one of the railways to act as a connecting carrier and to compete for that traffic using long-haul interswitching. Just like its predecessor the CLR, that can make or break that remedy. We haven't seen any willingness to do that, to compete using CLR since the early 1990s, and we don't see anything in the long-haul interswitching remedy that changes that dynamic.

On top of that, the scope of traffic that's eligible for long-haul interswitching, geographically as well as in other respects, is much narrower than what could theoretically take advantage of competitive line rates.

Third, there are a number of hurdles built into this remedy that don't currently exist with CLR.

From that perspective, and given the experience with CLR, even though we may have seen some willingness to compete up to 160 kilometres under the Bill C-30 regime, we haven't seen anything beyond that. CLR has been on the books that entire time. We're concerned that we're not going to see what is really required, which is a willingness to compete on the part of CN and CP—certainly in western Canada the majority of interchanges is between those two carriers—that is necessary to make a remedy like this work.

Yes, the requirement for an agreement with the connecting carrier is taken away, but the fact that people haven't been able to get that agreement is really just a symptom of that underlying, more fundamental issue, which is that CN and CP have “declined to compete”. Those, I want to make sure you know, are not my words. Those are the words of the statutory review report that was issued in 1992. They were repeated in 2001, and I think there was also something along those lines in the most recent report.

[Kevin Auch, Chair, Alberta Wheat Commission]

Thank you, Madam Chair.

My name is Kevin Auch, and I am pleased to appear before this committee this afternoon alongside our industry partners from the Western Canadian Shippers' Coalition and the Western Canadian Short Line Railway Association to provide a producer perspective as part of this committee's review of Bill C-49, the transportation modernization act.

I am chair of the Alberta Wheat Commission, an organization dedicated to improving the profitability of over 14,000 wheat farmers in the province of Alberta. I also farm in southern Alberta near the town of Carmangay.

I am here today because rail transportation has been one of the commission's top priorities since its inception in 2012. Costs associated with railway failures are ultimately passed down the supply chain to producers. As a price-taker, I cannot adjust the price of my product, so ultimately, these increased costs reduce my profitability. They also negatively impact my cash flow, making timely bill payments an issue.

These challenges are not unique to my operation. They are widespread and that is because when it comes to rail transportation in Canada, the agriculture sector operates in a monopoly environment. Most of the elevators where farmers in western Canada deliver their grain have only access to one railway, leaving both shippers and farmers captive to monopoly carriers.

This is a significant problem because wheat is a crop that relies heavily on export markets and rail transportation to ship our product from the Prairies to port terminal facilities along the west coast and Thunder Bay, as well as our neighbours to the south of the border. While we appreciate this government's efforts to increase market access for farmers through the establishment of free trade agreements, we will lose credibility with international buyers if we are unable to fulfill their orders due to railway failures. We experienced this in 2013 and 2014 when buyers simply sourced their grain from other countries. Canada's reputation as a reliable supplier to global markets is at risk.

Canada's grain supply chain is making significant investments in order to take advantage of new and growing market opportunities. We are seeing major expansion both in port terminal and country elevator capacity. Grain companies have invested hundreds of millions of dollars to ensure they are ready to service growing international markets, and farmers are preparing to take advantage of these opportunities as well. Farmers' significant investments in research as well as new and innovative technology have led to significant yield increases over the years. In fact, just last month CN Rail announced this growth when they implored the Canadian government to invest in new rail infrastructure in order to accommodate the influx of grain. In 2017, CN moved a record 21.8 million metric tons of grain.

My point is that ensuring adequate rail service is paramount to the growth of our sector and Canada's reputation as a reliable supplier of grain to international markets.

AWC appreciates the government's commitment to legislation that will ensure a more responsive, competitive, and accountable rail system in Canada. We believe that Bill C-49 is in fact an historic piece of legislation that paves the way for permanent long-term solutions to the rail transportation challenges that Canadian farmers have faced for decades.

That is why AWC is pleased to see the inclusion of provisions aimed at improving railway accountability, including shippers' ability to seek reciprocal financial penalties, a clear definition of adequate and suitable service, and enhanced interswitching—all measures that AWC has long advocated for. Bill C-49 also contains important provisions that will enhance the inquiry powers of the Canadian Transportation Agency and require that data on rail system performance be made available to the public.

Furthermore, AWC supports the decision to retain the maximum revenue entitlement with modifications that will reflect individual railway investments, incentivizing innovation and efficiency.

With respect to the role that reciprocal penalties play in this legislation, railways have always had a variety of measures that govern shipper efficiencies, including asset use tariffs. These tariffs are used to penalize shipper failures through monetary fines in order to gain shipper efficiencies. For example, when the railway spots cars at my local elevator and the grain company fails to load them within 24 hours, the grain company faces automatic monetary penalties. On the other hand, if the railway shows up two weeks late, there are no penalties. Therefore, the railways are the only link in the grain logistics supply chain that are not held to account.

In order to create an efficient supply chain, one with balanced commercial accountability, railways need to be held accountable for service failures.

We were recently made aware that CN Rail has included a form of shipper tariffs in about 70% of their service-level agreements. On the surface this seems like good news, but these tariffs are limited to a failure to spot cars and still neglect to address common challenges, including timely delivery or the provision of accurate information. We are encouraged to see that CN has taken some steps to increase railway accountability, and we are confident that the provisions outlined in Bill C-49 will ensure that, going forward, penalties are truly fair and reciprocal.

In addition to increasing accountability, reciprocal penalties will create the incentive needed for railways to focus on performance and invest in the assets that can improve efficiencies. This recommendation positions railways to compete in order to drive efficiencies, lower shipper risks, and ultimately better serve foreign markets for Canadian exports.

Under Bill C-30, which expired on August 1 of this year, extended interswitching provisions proved to be a powerful competitive tool for grain companies. Bill C-49 proposes that, under some circumstances, interswitching distances will be increased to 1,200 kilometres, but unlike the previous extended interswitching option, there are conditions within the new provisions that seem to contradict the true intentions of the legislation, making them less effective than the provisions under Bill C-30.

For example, the previous interswitching provisions allowed shippers to access any interchange within 160 kilometres without the need to obtain a permit from the Canadian Transportation Agency. The provision outlined in Bill C-49 stipulates that shippers must seek permission from the originating carrier or obtain an order from the agency to access the interchange, and it must be the interchange that is closest to them. Not only do these changes make interchanging more onerous and complicated, they can essentially render the provision useless in a variety of scenarios, including if the interchange in question does not service the appropriate corridor. In other words, if it moves the product in the wrong direction, if the nearest interchange cannot accommodate the size of the car load, or if it is serviced by the wrong rail company, the nearest competing line does not necessarily have lines running the full distance to the shipment's final destination.

To address these challenges we would ask the committee to consider the amendments put forward by the crop logistics working group, of which AWC is a member, that would allow shippers to access the nearest interchange that can accommodate their requirements with respect to the direction, size, and preferred carrier.

Costs incurred by shippers are ultimately passed down the line and on to producers. That is why our members are also concerned about the formula outlined in Bill C-49 to determine the rates associated with long-haul interswitching. Proposed subsection 135(2) directs the agency to set a rate not less than the average of the revenue per tonne kilometre of comparable traffic. In our view this encourages monopoly rate setting as it is based on revenue as opposed to a cost-plus model. Rates should allow for a reasonable profit, but should not reflect those previously charged in a monopolistic environment.

In closing, the Alberta Wheat Commission strongly supports the quick passage of Bill C-49 because we believe it will help to correct the imbalance between the market power of railways and captive shippers. We encourage the federal government to continue the conversation with Canada's agriculture sector as it works to develop the regulations to support the spirit and intention of the legislation, which seeks to create a more responsive, competitive, and accountable rail system in Canada.

With that, I would like to thank the committee for the opportunity to share the producers' perspective with you today, and I invite any questions you may have with respect to the comments I've made.

[Wade Sobkowich]

I could take this one, and then maybe Norm could.

We've definitely seen an increase in harvest volumes year over year. We have an upward trend. If you take a look at the last five years, we're now talking about a crop of 65-million tonnes being an average crop. Man, if we'd gotten that number 10 years ago, we would have been busting the rafters of our elevators. We definitely have more and more grain coming off the fields during harvest time. That's attributable to changes in agronomic practices and changes in technology. Farmers are operating with better practices and that sort of thing.

If your question is what has changed to give us comfort that we won't end up with a similar situation to what we had when we started seeing some of these big crop volumes, from our perspective nothing has changed. We don't have a change in the competitive environment. When we had Bill C-30 and we had extended interswitching, we had a glimpse of a change in the competitive environment, but that has sunsetted. We don't have Bill C-49 passed yet, so really, nothing has changed in the competitive environment and nothing has changed in the legislative environment to give us comfort that if we don't get something passed here, with tools we can use like reciprocal penalties, we won't go back to the situation we had in the past.

Does that answer your question?

[Sean Fraser, Liberal, Central Nova, NS]

If we can, I'd like to again shift gears and go into some questions about interswitching, and I'll start with Mr. Al-Katib.

We heard during our prior study on Bill C-30 from some folks not in the grain industry that, “Gee, we'd really like to have this, too.” It impacted a certain geography and a certain industry. Although it was put forward, really, in an environment where we were dealing with a bumper crop and terrible weather, the fact that we can be introducing competition where there is none seems to me like a good idea. Is there any reason that we shouldn't be extending this to different industries across the entire country?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

I just want to follow up on some of my colleague's questions around long-haul interswitching as it goes to the extended interswitching that was in Bill C-30. I thought I heard you say that some of the measures in Bill C-30 have been carried over in Bill C-49, but in fact there are no measures in place right now when it comes to interswitching or long-haul interswitching or extended interswitching because that legislation was allowed to sunset on August 1, before this legislation has received royal assent. So right now our shippers are without any ability to do any kind of long-haul or extended interswitching. Is that correct?

[Helena Borges]

I have looked at all of the recommendations that were in your study of Bill C-30. I believe you had 17 recommendations. We've gone through all of those, and I would say that we have addressed them all, as well as actually implementing some of the recommendations you had in there and allowing some to sunset. Those that sunset are two that were in Bill C-30. We have a rationale for letting those sunset: it is basically because the situation has changed considerably since 2013-14.

I don't believe there is a gap. I think we have addressed all of the recommendations well. In fact, I would say that we have gone beyond in addressing other recommendations that the CTA review panel put forward and for which stakeholders have been asking for a few years.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Good morning. I'd also like to welcome you back.

In your opinion, do you think there's a gap between Bills C-49 and C-30?

Transportation Modernization Act

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Speaker, it is my privilege to rise today to speak to Bill C-49, the so-called transportation modernization act.

Before I go any further, I would like to say that I will be sharing my time with the member for Saskatoon—University. I look forward to his presentation on this as well. He comes from a neighbouring province to the west, and he also has a great knowledge of what is required in this field.

It is a privilege to put on the record again, as I had the opportunity to do with our opposition day motion on Monday this week, how important the movement of grain is to western Canadian farmers, as my colleague just said. However, it is not just important to the farmers but to the whole industry and economy of western Canada, which affects us all. We are one of the largest exporters of grain in the world with regard to the percentage that we grow.

I think the changes that have come forward in the bill would be somewhat detrimental, although there are a few that will work very well on the grain side.

Bill C-30 was brought in by my colleagues when we were in government due to the conditions that took place in the Prairies in the winter-fall of 2013 and the spring of 2014. I will never forget that because that is when I was elected as a member. Having farmed in western Canada all my life prior to getting into politics, I certainly know the importance of making sure that we have a reliable system of moving grain and exporting it, not just for the farm community but for the logistics of the rail companies and the port authorities and facilities on the west coast, east coast, and in Thunder Bay. At that time, there was also some grain movement through the Port of Churchill.

Before I get into too much of that, I would like to say that what we need to do in the Prairies with regard to the evolution of the transportation system, as we move forward, is to make sure that we look at processing more of these grains on the Prairies than we have in the past. I was in the room with the minister from Regina—Wascana, which I believe was his constituency at the time, in 1995, when the Crow benefit changed and was taken away. I lobbied to make sure that happened. I did that because my farm was located halfway between Vancouver and Montreal at the time, and we would have been faced with the highest freight rates on the Prairies, right in my kitchen.

We did that so that our future family members, our children, in western Canada would have a job locally by processing more of that grain. That is one of the key reasons for a lot of the lobbying that went on in those days to make changes not just to the rail system but to the way grain was marketed. My colleagues in the House have also brought forward the opportunity to allow farmers to sell their own grain and do their own marketing, which is key to the future development of more processing plants and those types of facilities in the Prairies.

The processing of grain is an example of how important this can be. We have rail lines that begin in Winnipeg and pretty well run parallel out to Portage la Prairie, and then branch off to Calgary and Edmonton through the west. That is why the interswitching that my colleague has brought in, and extending it from 30 kilometres to 160 kilometres, was a great advantage for farmers and competitive rates in the Prairies. It did not only work for them but also for the grain companies. It gave them the ability to have a bit more competition.

The types of things that we gained from the 160-kilometre range of interswitching would be taken away in this new bill, Bill C-49, which I think is a detriment to the longevity of the competitiveness we could have. One example is that we can only do it at a point where that interswitching is available. If one's grain is in northern Alberta or the Peace River areas of northern B.C., the first point of interswitching is Kamloops.

Of course, then one cannot really have much competition for all of that grain in northern Alberta and the Peace River area, if one cannot get access to a competitive rate until it gets to Kamloops. I worked there in the early seventies. I know the city well. It is a great place. I know my colleague from Kamloops agrees with me. This would not allow the type of rate competitiveness that we could have seen in the Prairies.

Bill C-30 also mandated the rail companies to carry half a million tonnes each of grain per week to catch up on some of the backlog that was there at that time. This bill just allows them to continue to talk. It does not mandate a level of grain shipments. That was for a period of time until that backlog got taken care of, which happened later on that summer. We hope we do not see those kinds of conditions, but we do have cold weather on a regular basis in western Canada in wintertime and there was a lot more at stake than just the cold weather in forcing that grain back on to the Prairie farms at that time.

There may be some opportunities here. We cannot haul all of the grain in the Prairies by truck. It has to get onto a rail system at some point. Now that there are more opportunities for farmers to move their own grain, I have young farmers coming to me every day talking about the movement of their grain north-south by truck. Some of that is entering into the United States.

We also purchase a lot of grain in feed form, and that sort of thing, from the U.S., and we need to look at continuing to expand our processing. We need to make sure we continue to have that mechanism to move the grain and also to import from the United States.

We also need to make sure that we are continuing to process even more of the product we have on the Prairies. That is being done in many places in Saskatchewan and Alberta. Some of it is being done with the expansion of our livestock industries, because they consume an awful lot of feed grains in western Canada, which then gets moved in another form. Most of it ends up being slaughtered in some of the largest processing plants in the world in Alberta, in Brooks and High River. We know there is an opportunity there to continue to move that product.

It is being done in Manitoba with the largest pea processing plant in the world, coming to Portage la Prairie. It is a $400-million investment by a French company. The Manitoba government is putting very little infrastructure money into this, other than connecting the hydro lines and natural gas.

These are the kinds of investments we need. I know Bill C-49 will not be as good as Bill C-30 was, as far as that goes. It also speaks to other areas though, such as the air industry and marine industry as well. We need to make sure that while there are changes taking place, they are not detrimental to the future of those industries as well, because we do rely quite heavily on our export ports, particularly on the marine side, to be able to export and move this grain.

Bill C-49 eliminates some of the things that were good parts of Bill C-30, particularly in regard to ordering the railways to compensate any person for expenses caused by the railway's failure to fulfill service obligations.

I will end there and see if anyone has questions before my colleague, the member for Saskatoon—University, takes over.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Mr. Speaker, I am pleased to rise and add my remarks to the debate on Bill C-49.

Before I begin, I would like to take a second to acknowledge a very poignant moment today in the House. I was here when the Clerk, Marc Bosc, arrived for his last shift here in the House of Commons as Acting Clerk of the House, as we have heard from a number of sources.

Mr. Bosc was the person who welcomed the members who had been newly elected in 2015 to the House. It was a very emotional time for us. To us, Mr. Bosc is the Clerk of the House, because he is the only one we have ever known. Mr. Bosc has always been there for us and has always shown the utmost professionalism. He was respected by all, at least by everyone on this side of the House. Mr. Bosc has always served with enormous professionalism, and we have always respected him.

For me, Mr. Speaker, it was a very poignant moment to see him enter the chamber this morning and take his place before us, to begin his final sitting day in the House of Commons. I trust that Mr. Bosc will always hold a place of honour here in Parliament.

In closing, we found out about this rather suddenly. I would have liked the opposition parties to be consulted more on the process to replace the Clerk. No offence to the incoming Clerk, but I just wanted to take a few moments on behalf of my colleagues, myself, and my family, who shared in all the emotion that we experience when we first arrive here, to acknowledge Mr. Bosc's excellent work.

Mr. Bosc has been here much longer than I have, but like me, he has seen his share of governments and their different approaches to ensuring that their bills get passed.

Bill C-49 is another example of the government using closure to prevent giving the opposition opportunities to speak to this bill or criticize it. By the minister's own admission, this bill is quite complex, and it will make significant changes to Canada's transportation industry. Even so, we will have just a few of hours of debate to discuss it and raise what I think are some very important points.

Why is this especially troubling in the case of Bill C-49? It is because this bill does not amend just one or two sections or one or two acts. It amends 13 pieces of legislation.

For the past two days, I have been listening to the arguments given by the Minister of Transport who says that the opposition is overreacting, since 80% of the changes proposed in Bill C-49 will amend just one law, and therefore the opposition has no reason to protest so loudly. What? How is that an argument? It is as though one section of an act were more important than another. If the 20% of Bill C-49's clauses that amend 12 other laws are not all that important, why bother including them? Why are we talking about them? If they are not that important, if everything is focused on just one law and the opposition is outraged, why keep the other 20% of the amendments? Why not remove them and create another bill with those amendments and consider it separately? It does not matter, because everything is in the same bill.

Clearly, this argument simply does not hold water. It is particularly troubling. As members know, I have been a member of the Standing Committee on Transport, Infrastructure and Communities since I arrived in this place. Obviously, transportation affects all Canadians in every field. Transportation has an impact on the daily lives of all Canadians, whether we are talking about the transportation of goods or people.

They say this is a complex bill, that they will not give the opposition much time to talk, and that, since 80% of it is specific to one act, there is no need for us to protest so loudly. I think the minister should go back to the drawing board, take another look at what is in his bill, and think carefully about the repercussions that each amendment in Bill C-49 will have on the day-to-day lives of all Canadians.

Here is the lowdown on Bill C-49. The Liberals' omnibus transportation bill will establish a new air passenger rights regime; liberalize international ownership restrictions for Canadian air carriers; enable the Minister of Transport to consider and approve joint ventures by two or more airlines; update the Canadian freight system; require railways to install audio-video recorders in locomotives; expand the Governor in Council's powers to require major railway companies to provide rate, service, and performance data; and amend the Canada Marine Act to allow port authorities to access Canada infrastructure bank loans.

However, there is nothing there. According to the Minister of Transport, a few hours of discussion are enough to address all of these issues, since he did not think that the opposition had anything relevant to say during the first hours of this debate. Why would the government want to continue listening to opposition members provide supposedly irrelevant information when it can simply expedite the process by muzzling them? At least, that is what the minister seems to think.

Since when are opinions that differ from the government's irrelevant? The big problem with the Liberals is that, when we do not agree with them, on this or any other issue, they feel threatened and under attack. They think that anyone who does not share their opinion and does not think like they do is irrelevant, and so they have no reason to take any interest in what those people have to say in the House. That explains a lot.

It explains a lot, such as Motion No. 6 and the many time allocation motions that have been imposed on us since the beginning of this session. It explains the infamous discussion document that the Leader of the Government in the House of Commons tabled to supposedly improve the way the House operates. When we read that document carefully, we learned that the Liberals' intention was once again to avoid hearing what the opposition parties had to say.

It is not complicated. When things do not sit well with the government, it decides to muzzle dissenting voices that cast grey clouds over Liberal sunny ways. Well, I have news for the Liberal government. The official opposition and all the other opposition parties, I am sure, have no intention of staying quiet. We have no intention of letting changes slip through. We have no intention of completely agreeing with everything the Liberals put in front of us. We have no intention of being the people who enable the Liberal Party to push through their entire election platform. That is not our role here. Our role is to present criticisms.

As an aside, let us talk about the Liberal platform. It did not take long for the Liberals to realize that much of what they wanted to do is simply impossible. They promised big spending and small deficits. They kept only one of those promises. They are spending big, but they have come to realize that that requires huge deficits. That is something the government does not want the opposition to criticize. They would like us to keep quiet and just watch them and applaud them because they really like applause. That is not what we are going to do. That is not our role.

Let us come back to Bill C-49 because it seems like we are off topic, that we just keep providing an overview, and that we keep talking about everything but Bill C-49. Let us talk about Bill C-49 and what it amends. As I was saying, it significantly amends 13 different laws and has repercussions on three modes of transportation. This legislative measure will weaken legislative protections for shippers and western Canadian farmers.

We want to concentrate on proactive measures to make travel less expensive and more convenient for all travellers. This would include abolishing the carbon tax, instead of the Liberals’ plan to establish reactive compensation that will benefit only a small segment of the population.

This bill provides very little detail about the proposed air passengers’ bill of rights, and it does not have the support, in its current form, of many passengers’ rights advocates. Also, port authorities and their wholly owned subsidiaries will have access to loans and loan guarantees from the Canada infrastructure bank. There is an inconsistency here. That does not make any sense to me, since this bank does not exist yet. It remains a proposal for now, and it is held up in another house, for very good reasons.

Like us, the senators think that the infrastructure bank warrants its own bill, given the impact it will have and the $15 billion that the government intends to provide to it. That is $15 billion from Canadian taxpayers to be given to a board of directions to manage on our behalf without any accountability to Parliament.

These points alone justify our opposition to the passage of Bill C-44, which is currently being studied on the other side in its current form and includes all these budget measures as well as creating the infrastructure bank. I hope that people will get the message.

In Bill C-49, they already assume the outcome. Port authorities are being given approval to access loans from the non-existent infrastructure bank. What I do not understand is that the government, ever since it began telling us about the infrastructure bank, keeps saying that it will be an independent bank. As an aside, the process to find the president for this non-existent bank has already started.

Therefore, the infrastructure bank, which does not exist, will be made up of a so-called independent board of directors who will manage the money given to them by the Liberal government. At the same time, these supposedly independents will be told that they have to invest $1.3 billion in Montreal’s Réseau électrique métropolitain and provide loans to port authorities. To sum up, here is an independent infrastructure bank that will not be independent and does not yet exist. However, we are being asked to approve a clause of the bill that will allow port authorities to secure loans from this infrastructure bank that will be created in the near future.

It is clear that something is not working, that they are improvising, and that the minister wants to move quickly. We do not understand why he insists on moving so quickly. Some will tell us that it is because they want to settle the matter of Bill C-30 before it expires on July 31 in order to protect western grain producers in their rate negotiations with the railways. That could be the case, but that is not what is going to happen, since even if Bill C-49 is rushed through today or Monday and is referred to committee, the committee meetings are scheduled for September.

The committee was prepared to meet in July if the government agreed to hive off all the measures concerning Bill C-30. That would have allowed us to study them quickly in order to avoid having a legal vacuum for western grain producers. These meetings could have been held before August 1. The committee was prepared to meet in the middle of summer, during vacation—at least, the opposition members of the committee were. That would have been a major sacrifice for some of us to show up and study a bill to help western grain producers.

Why was the official opposition prepared to do that? Because we get that this is important. Right now, grain producers are concerned about what is going to happen this fall if there is a legal vacuum. We do not know exactly how the market will react. These people are negotiating right now.

We see another problem here. I myself am not a grain producer. However, several of my House of Commons colleagues represent western Canadian ridings, and they know a lot about grain production. From what I understand, grain producers usually harvest their crops in the fall. What time of year is busiest for grain producers? The fall, when they are bringing in the harvest.

The government is going to ask grain producers to testify on Bill C-49, which will have a major impact on their future, in the fall. The government is going to ask them to leave their machinery and their fields so they can come testify in Ottawa in September. That is when they should be in their fields doing their work, doing what we support them doing, and making their contribution to Canada's economy by producing and working. This makes no sense.

That is why the opposition was prepared to agree to move quickly on that part of the bill. We were prepared to let many things slide in order to move quickly. Why? Canada's grain producers are far more important to us than adding another number to our legislative record. The farmers need us to come to Ottawa to protect them, stand up for them, and help them succeed. That is our role.

If we are not taking extraordinary measures to get Bill C-30 passed before the deadline, then there is no urgency to justify speeding up the process and muzzling the opposition. The government probably does not want to let the opposition speak because it does not want to hear arguments like mine in defence of western grain producers.

I want to talk about another initiative that was very well received by the public, I admit. This was the main point in the message from the Minister of Transport. Indeed, he wants to create an air passengers' bill of rights. This is urgent. Like all of us, all Canadians who have flown over the past few months have seen the coverage of some of the dramatic incidents that have taken place in the U.S. Since the bill announced the creation of an air passengers' bill of rights, we thought we would get some information. We thought we might be told what to expect, but no, all the minister did was mandate the Canadian Transportation Agency to begin consultations that will eventually lead to regulations and, at some point, the air passengers' bill of rights.

Do we really need a bill to ask the Canadian Transportation Agency to begin consultations on a bill of rights? It makes no sense. There is no need for urgency when it comes to Bill C-49, apart from the legislation protecting western Canadian grain farmers; on that, we agree.

We believe that the only way to go and the only explanation or justification to make this measure acceptable, to make this gag order acceptable, would have been to split the bill and immediately pass the measures in Bill C-30, in order to make certain temporary measures permanent. We were ready to go ahead with that, but everything else could have waited; there is no need to panic. The only emergency here for this government is to silence the opposition. The government is not ready. It is improvising and presenting measures that just do not make sense.

For all these reasons, and despite a few good measures in the bill, the official opposition cannot support Bill C-49.

Bill C-49—Time Allocation Motion

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Madam Speaker, I would like to clarify for the member what has been done in the act. It is a complex act.

The extended interswitching of 160 kilometres was a temporary measure that was put into the Fair Rail for Grain Farmers Act. It was a temporary measure that was put in place because of the exceptional circumstances in 2013 and 2014. It has been replaced by something that is more comprehensive, called long-haul interswitching. It does apply to grain out to 1,200 kilometres, not 160 kilometres, but it also applies across the country and to all commodities.

This is the approach we have taken to fix something that has needed to be fixed for a long time. I will point out that after bringing in Bill C-30 in 2013-2014, the government had a golden opportunity to modernize freight rail legislation. Why did it not do it?

Opposition Motion—Canadian Economy

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, I am pleased to rise this evening to contribute to this debate on the complete failure of the Liberals on this economic file.

For a government that would have us believe it is all about the middle class, as it is wont to add that at the end of every statement it makes, for example, more ethical government for the middle class, a Liberal commissioner of official languages for the middle class, new standing orders for the middle class, better innovation for the middle class, and a carbon tax for the middle class, it is remarkable just how out of touch Liberals are on the most important issues facing the middle class: jobs, the economy, and affordability.

On housing, for example, as the price of homes rose significantly faster than inflation in Toronto and Vancouver, the Liberals decided to implement a one-size-fits-all mortgage policy designed to cool down the housing markets of Toronto and Vancouver. Unfortunately, this policy is having a similar impact across the country, regardless of whether Canadians live in Warman, Saskatchewan or Queen West, Toronto.

Before the Liberals made these changes to the mortgage rules, a person with $50,000 pre-tax income could qualify for a $277,000 mortgage. Now, that same person qualifies for a mortgage of $222,000. This change makes buying a first house more difficult for many. Several people looking to buy their first home, and realtors, have raised concerns about this policy with me. However, these changes have not had the attention they deserve, considering the disproportionate impact they are having on first-time homeowners in smaller communities where housing prices are typically more affordable.

The Liberals are also tone deaf when it comes to western Canada. On May 12, the Minister of Transport introduced the oil tanker moratorium act, a bill that his own political staff conceded would only impact the future development of Canada's oil sands, and no other activity in northern British Columbia. Let us think about that.

It was not enough for the Liberals to reverse the independent National Energy Board's 2014 decision to approve the northern gateway pipeline subject to Enbridge fulfilling 209 conditions. They decided to go one step further by opting to handcuff future governments should they want to diversify Canada's energy exports. Bill C-48, the oil tanker moratorium act, will do nothing to enhance marine safety in British Columbia. U .S tankers will continue travelling up and down the coast between Alaska and Washington state.

This is the epitome of political irony. Venezuelan oil in Quebec is okay. Saudi Arabian oil on the east coast is okay. Canadian oil in Vancouver is okay. Alaskan oil in northern B.C. is okay. However, Canadian oil in northern British Columbia is not okay. Blocking tidewater access for western Canadian energy producers was not enough. To add insult to injury, this year's federal budget removed incentives for small companies to engage in energy exploration in Canada.

Furthermore, the new carbon tax will disproportionately impact energy-producing provinces. What the Liberals fail to realize is that Canada does not have a monopoly on the production of energy. In North America alone, western Canadian producers are competing against companies operating in the Gulf of Mexico, Alaska, the Permian Basin, and the Bakken formation. As the U.S. is making important efforts to reduce obstacles to energy development, Canada is going the other way.

Capital and expertise in this sector is very mobile, and Canada is in very real danger of being left behind. Canadian firms and foreign investors will not invest in the Canadian economy if the overall cost of doing business vis-à-vis our American counterparts is higher, as has been mentioned. However, the energy sector is not the only sector being targeted. Western Canadian shippers, and especially captive western Canadian grain shippers, are feeling particularly ignored by the Liberal government.

Unlike Ontario and Quebec, where many products can be trucked to their final destination or to a port for overseas export, western Canada is particularly reliant on rail to get product to market. That is why the Minister of Transport's inaction on critical and time-sensitive rail transport issues is leading to uncertainty for both shippers and railroads. Both need it as they negotiate shipping rates for the season and invest in the required infrastructure to keep products moving to market in a timely manner.

That is why, over the past several months, I have asked many times whether the government intended to renew or build on the sunsetting measures of Bill C-30 before they expired on August 1, 2017. The response, time and time again, was that the government recognized the urgency to get this done and that legislation was forthcoming. Unfortunately the Liberals now acknowledge that the key measures in Bill C-30 will sunset before any replacement legislation can receive royal assent and become law.

Since the transportation modernization act was introduced on May 16, the government has set aside less than two and a half hours to debate it, with the Minister of Transport taking the floor to lead off debate at 9:45 p.m. on a Monday night. This means there will be at least a two and a half month gap from when Bill C-30 measures sunset and Bill C-49 receives royal assent.

By the time this legislation has passed, the majority of contracts for the year will have been negotiated with the law in flux. Because of the government's mismanagement of its legislative agenda, these popular measures will sunset without any replacement, and shippers will be the worse off. What is worse is that while this two and a half month gap will negatively impact both railways and shippers this year, the replacement legislation will weaken shipper protections from what they are today. While something is better than nothing, the transportation modernization act is not a replacement for the Fair Rail for Grain Farmers Act.

What the government is proposing in its omnibus transportation legislation is to take a little used existing remedy called a competitive line rate and rename it long haul inter-switching.

Under a competitive line rate, a shipper could apply to the agency to set the competitive line rate, the designation of the continuous route, the designation of the nearest interchange, and the manner in which the local carrier shall fulfill its service obligations. We know from history that this remedy was infrequently used because of the prerequisite that the shipper must first reach an agreement with the connecting carrier and the two main carriers effectively declined to compete with one another through CLRs. While the requirement that the shipper must have an agreement with a connecting carrier prior to requesting a CLR has been removed, the greater issue is whether the terms imposed by the connecting carrier will be acceptable to the shipper.

While railways do have a common carrier obligations, we know there are ways to avoid doing a haul. For example, both railways have set the price of hauling uranium so high that it is no longer economical for it to be shipped by rail. Furthermore, while long haul inter-switching will be extended to 1,200 kilometres or 50% of the total haul distance, the first inter-switch location from any captive shippers in north Alberta and northern B.C. will be located within the Kamloops-Vancouver corridor, where inter-switching is not allowed beyond 30 kilometres. Therefore, these captive shippers will not be able to utilize this remedy to increase railway competition.

By borrowing and spending in good times, the Liberals have made it harder to deal with real crisis. According to the PBO, even a minor recession would cause deficits to be as large as during the great recession, and that is before considering the fiscal costs of any response.

The Liberals have mismanaged Canada's finances and have closed many doors for economic development. Unfortunately, the full effects of their policies have not reverberated across the entire economy yet.

The choices the Liberals have made to date are not random. They are the result of an overarching vision of picking winners and losers. Right now, my province is coming out on the wrong side of nearly every Liberal policy decision.

For a government that professes to be focused on the middle class, first-time homebuyers, farmers, shippers, and energy workers are all feeling left out in the cold.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Speaker, I am pleased to rise today to speak to the opposition day motion brought in by my colleague, the member for Selkirk—Interlake—Eastman, which indicates that the government has been very ineffective with respect to the care and due diligence of this nation.

In particular, I want to say that damaging Canadian industries and diminishing Canadian economic stability, as he has pointed out in his motion, are certainly things that we care about every day in the House. We hear it from our constituents when we get back to our constituencies on weekends and during constituency weeks. It is certainly a situation that I have heard about quite regularly from my constituents.

My colleague, the member for Durham, has just pointed out that there is a huge deficit in place in Canada although the Liberals talked about small deficits during the election campaign. They have outgrown that by $30 billion, which is about 30 times what the Liberals said they would have. That is terrible mismanagement. Our future generations are going to have to pay for that every day of their lives as they move forward, not to mention the fact that all of us in this chamber today will share in that burden as well.

There are three major areas of concern that the member has pointed out: the softwood lumber deal, the carbon tax, and in particular, the current rail service agreement with respect to rail transportation in the Prairies.

The member has talked at great length about the softwood lumber deal, so I do not need to say much more. Suffice it to say that thousands of jobs are dependent upon an agreement between Canada and the United States. With the tariff that has been put in place by the United States today, we clearly see that the government did not have an answer when it came up with about $870 million as payment to cover some of the costs that will be borne by our industry. We need to find long-term leadership with respect to this matter. These stopgap measures are not good enough. That is what we are seeing in the other areas too.

The carbon tax that the government has implemented or is forcing upon provinces is certainly something that is going to continue to put people out of jobs. There were 200,000 jobs lost in Alberta alone. There are jobs lost in my constituency. We have a very small oil industry in western Manitoba, most of which is in my constituency. People have been put out of work there as well. We are only seeing some stability back in that area because of the stability in the price of oil right now, as well as an upgrade in the American economy. There has been a bit of a boost there. That is giving us some stability right now in Canada. However, it is very nebulous as to how long that may continue and if it will be on a long-term basis.

The area that I want to speak about today is mainly the current rail service agreements that ensure that our farmers can get their products to market.

In the spring of 2014, through the winter of 2013, our government brought forward Bill C-30, the Fair Rail for Grain Farmers Act, with our transportation minister, at the time, and our agriculture minister. They did an exceptional job of putting a program in place that would allow farmers some protection with respect to the movement of grain. There were extenuating circumstances, for sure, that winter. At that period of time, we had some of the coldest weather we have ever had. However, we are used to that in Canada, particularly in western Canada, so that is not an excuse with respect to being able to get grain to port on time.

There were three or four areas that were very important in that whole venue with that act. One of them was allowing interswitching to move up from a 30-kilometre basis to 160 kilometres, which made it quite effective to have a bit of competition in the industry, which we do not have most times when we have two railroads with, basically, a duopoly with respect to being able to move grain in the Prairies.

Trucks can only move so much grain effectively and we do not have the processing plants to process all of the grain in the Prairies. In fact, at that particular time, about 50% of the grain in Canada was going for export. That is why we desperately need to have that kind of openness and a bit of protection against the movement of other products. We cannot just leave grain, because of the massive volumes of it alone, and because it is basically in a captive area. It has to be grown every year. It has to be moved and marketed, perhaps not all in one year, but it does have to be moved, and it is a perishable product in the long run.

That is why it is so important that we move forward for Canadian families and businesses on the Prairies and in Canada as a whole, because wheat contributes greatly to the gross domestic product of our nation. Millions of jobs in Canada depend on the shipment of grain in the agricultural industry.

The minister has brought forward Bill C-49 but there is great concern as to whether it will have any teeth and whether it will get passed before we rise in the House for the summer. I commend the minister for bringing it forward, but I would encourage him to talk to his colleagues and move forward with it. If the bill does not move forward there is going to be a huge gap in this whole area. Bill C-30 will take over again, and it dies on July 31. That would leave the huge gap I referred to earlier and farmers will go into the coming harvest without any type of rule or regulation in place that will allow for the convenience of knowing the conditions under which grain can be shipped for the coming year.

I referred to interswitching rights earlier. Long-haul interswitching could be utilized. It certainly allowed for competition within that 160-kilometre radius. Interswitching is a tool that we brought in with Bill C-30. It is a much better rule than using competitive line rates, which have been in since the change in the Crow benefit in 1995. Competitive line rates, while sounding good, really were an ineffective way of providing the certainty that farmers and grain companies would have some competition. That is why the grain companies and the farm groups have joined together to lobby the government to put a stronger rate in place, a much stronger and more useable mechanism to use in that area.

A number of groups in Saskatchewan, and a growing chorus of western Canadian groups, have called for an extension of the Fair Rail for Grain Farmers Act that we had in Bill C-30. I am calling on the government today to extend that again. It was extended once by the government but it needs to do it again. That will provide fairness and equity and predictability in regard to the movement of product into the fall.

The government is talking about proroguing the House. If the House is prorogued this summer or early in the fall, the legislation would die on the Order Paper and the government would have to start all over again. This would provide unpredictability in the industry for some extended time down the road. It would be the spring of 2018 at the earliest or the fall of 2018 before we would have any kind of predictable rules to carry on with the movement of grain products in western Canada and to get grain to port in the just-in-time fashion that is required today to meet the markets that we built up so extensively through the 40-some free trade agreements that the Harper government signed with our trading nations. Keeping markets open is one of the best things that a government can do in relation to our agricultural industry.

The government needs to also look at the coordination of the grain grading system between Canada and the United States because there is much grain movement back and forth. A lot of livestock goes back and forth. Having sat on the western standards committee of the Canadian Grain Commission for a number of years as a farm representative, I know how important access to the U.S. is.

There are other things that I would ask the Minister of Transport to do. One of them is to get the Minister of Agriculture on side to move forward with some of these areas as well. He is looking at removing deferred grain tickets, cash tickets, and that would not be helpful to farmers either. The Minister of Agriculture needs to move more quickly in regard to the PED virus in hogs and cleaning trucks in Manitoba.

There were nine cases last month, and there has still been no action on that to make sure we maintain a strong hog industry.

All of that fits into the transportation of product. We are talking about the transportation of grain, but the movement of livestock is part and parcel of the use of grain on the Prairies.

I look forward to any questions.

Rail Transportation

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Mr. Speaker, a closer look at Bill C-49 reveals that the Liberals are trying to sell shippers a weaker version of the Fair Rail for Grain Farmers Act. Adding insult to injury, the pro-shipper measures contained in Bill C-30 will sunset on August 1. As a result of the minister's delay tactics, farmers will be forced to negotiate next year's contracts without the benefit of a law.

This omnibus bill is too late for western shippers. Will the minister now separate the rail shipping measures for expedited scrutiny?

Transportation Modernization Act

[Lloyd Longfield, Liberal, Guelph, ON]

Mr. Speaker, I hope I can comment sufficiently on the question from the member for Sherbrooke.

Bill C-30 really looked at grain. It was looking at a bumper crop situation and it had to do something. It was really a Band-Aid solution that focused on the grain market.

In the case of today's market and what we propose in Bill C-49, we would also be handling lumber. We are looking at softwood lumber being an issue in the United States. We are looking at new markets in Asia. How do we get lumber to either coast, and a lot of it? Lumber would be something that we would want to address. In the case of mining, resources coming out of the ground, how do we get that efficiently to market? How do we get auto parts to market in southwest Ontario?

It is really more than just a Band-Aid solution for grain. We need a comprehensive solution that is part of an integrated transportation strategy. Bill C-49 addresses that need.

[Lloyd Longfield, Liberal, Guelph, ON]

Mr. Speaker, it is my pleasure to speak today to Bill C-49, which proposes amendments to the Canada Transportation Act to advance the efficiency and competitiveness of our freight rail system. This is especially important to Guelph, which is home to one of Canada's three federally chartered railways.

The Guelph Junction Railway was established in 1886 by a special act of the federal government to foster economic growth in Guelph and in the surrounding communities. The City of Guelph has owned the railway since 1908. The GJR operates 38.6 kilometres of track that runs from Guelph Junction near Campbellville, Ontario, to Guelph's northwest industrial park. It is a strategic line that runs between the Canadian Pacific Railway and the Canadian National Railway.

Canadian exporters today have the advantage of the lowest freight rates in the world, even lower than in the United States, and a track record of significant investment by the railways that is essential for keeping these rates low in the future. However, even the strongest system has room for improvement, and we have heard concerns from both shippers and railways through our consultation process. We have heard in particular about system bottlenecks and other constraints that slow the movement of our goods. We have heard about delays in shipping that can affect our nation's reputation for reliability, and about regulations that dampen investment in the network to everyone's detriment.

Canada's rail system is the backbone of our export trade. It moves our goods to destinations across the country, to the United States, and for export overseas. The conditions we establish now, in 2017, will be essential for our nation's long-term growth and prosperity.

Following extensive consultations, our government is proposing new measures that would lay the groundwork for future success.

The bill would promote greater efficiency and investment in the system for the benefit of all Canadians. First, the bill proposes a new competitive access tool for shippers that would allow them to obtain better options for service and rates. This new tool, long-haul interswitching, would allow a shipper served by only one railway to access a competing railway at a rate and on service terms set by the Canadian Transportation Agency. Long-haul interswitching has been designed to meet the needs of captive shippers across a wide range of sectors: grain, forestry, and mining just to name a few. It would apply at a distance of 1,200 kilometres or more to ensure that some of our most remote shippers could benefit.

By providing competition between railways, this measure would improve system efficiency in moving goods to market, and at the same time, railways would be fairly compensated for their services and for the cost of maintaining infrastructure. The agency would set the rates under this measure based on comparable traffic. This would help prevent the risk that railways might under-invest or even close their lines due to lack of revenue.

As a part of this, we would allow extended interswitching in the prairie provinces to sunset as planned on August 1. Many members will recall that this measure was adopted in 2014 under the Fair Rail for Grain Farmers Act in response to the unique challenges in the grain handling and transportation system at that time and in that season.

Most challenges no longer exist, and extended interswitching is problematic in many respects. It only applies up to 160 kilometres and only in the prairie provinces. It does not cover other shippers in Canada who have told us about railway service issues. Its rates are far too low to compensate railways for moving the traffic, which would erode investment over time. A key beneficiary of this measure is not the shipper community but the American railway, the railway that scoops traffic away from Canadian railways but makes comparatively little investment in the Canadian network.

Long-haul interswitching is a far better tool as it would apply across sectors and across regions of Canada.

The grain sector would be far better off, as all captive grain shippers would have access to this competitive tool, not just those falling within a specific zone. The railways would be compensated appropriately to ensure that the system runs smoothly and grain moves to market effectively. The proposed new measure is also being carefully structured to minimize the risk of American railways unfairly taking traffic.

Many members will recall that the Fair Rail for Grain Farmers Act also imposed minimum volumes of grain to be moved by the railways. In our consultations, we have heard that this had negative effects. It benefited specific shippers to the detriment of others. It was good for the large companies, but not for the farmers. More importantly, the unique challenges of 2014, and that growing season, no longer exist. For these reasons, the volume requirements would be allowed to sunset as planned on August 1.

Our government recognizes the importance of moving grain and other commodities efficiently to market. Greater transparency on how well the system is working is obviously critical to efficiency. That is why Bill C-49 would require railways to report publicly every year on their plans to move grain and to manage weather-related disruptions. They would also need to report service and performance metrics that help them measure how the system is doing. The agency would have clear new authorities to hold an inquiry into any emerging issue at the minister's request. These measures would help all parties to keep track of emerging problems and work together to find solutions before the crisis point hits.

Importantly, this bill would provide shippers with the ability to maintain reciprocal financial penalties in service agreements. Applying penalties for service failures would encourage the most efficient service possible. Our rail system can only flourish within the right regulatory framework. To promote system efficiency, the bill would also modernize the Canada Transportation Act. For example, it would update the insolvency regime for railways, which dates back to 1903 and cannot address the complexity of modern business arrangements.

The railway industry must invest significantly in the network to keep it running safely and smoothly. That is why this bill also proposes measures to promote continued investment. For example, it would loosen shareholder restrictions on CN Railway that have been in place since it was privatized in 1995.

Bill C-49 would also fix problems with the maximum revenue entitlement, which caps the revenue per tonne that CN, CP, and Guelph Junction can earn for moving western grain. I just threw in Guelph Junction. It would fairly credit their investments in the network, and encourage them to obtain new modern hopper cars. It would also promote the movement of grain by containers, which is an innovative way to provide service and extra capacity at peak periods when the system is full. Again, this would apply across all regions of Canada, including Guelph.

Together, these amendments would achieve the goals of a competitive, efficient freight rail system, a system in which commercial forces drive efficiency but legislative backstops are in place to ensure that the system is fair, balanced, and transparent, a system in which the conditions are right for low rates, future investment, and future success.

I urge colleagues to adopt Bill C-49 as quickly as possible so that we can serve our farm community.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Mr. Speaker, I know this is something that is very near and dear to the member's heart.

Coming from Alberta, knowing that the Fair Rail for Grain Farmers Act was actually addressing issues that grain farmers in the Prairies were experiencing, I can tell members that what we have been hearing from stakeholders, as they have begun to review the legislation and as they have begun to take these two pieces of legislation and compare them, is that they are confused. They do not understand exactly what the changes are meant to accomplish. They believe that the devil is in the details.

While they continue to look at this, they continue to highlight the fact that these measures in Bill C-30 are sunsetting on August 1. There will be a gap. That is why we asked the committee to consider calling upon the minister and the government House leader to break out at least the measures in Bill C-49 that would address the measures in Bill C-30 so that we could at least address the concerns of our shippers and our producers as they are bumping up against that August 1 deadline.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Mr. Speaker, on the contrary, I think I pointed out at the beginning of my speech that what we have in front of us is an omnibus bill. We actually tried, in committee, to encourage the members to consider breaking out the different modes of transportation so that we could actually study them more effectively, and in fact, expedite those measures that are in Bill C-49, which were meant to replace the measures that were in Bill C-30.

My answer is absolutely not. However, I think that we could have taken a more systematic approach and not had all of these measures included in an omnibus bill, which is probably not going to get the due consideration it needs.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Mr. Speaker, I am pleased to rise this evening to debate Bill C-49, the transportation modernization act, at second reading.

The bill could simply be renamed the transportation omnibus act for the number of different bills being amended, with many of changes being more than just technical in nature. The Air Canada Public Participation Act, the Canada Transportation Act, the CN Commercialization Act, the Railway Safety Act, the Canadian Transportation Accident Investigation and Safety Board Act, the Canadian Air Transport Security Authority Act, the Coasting Trade Act, the Canada Marine Act, the Bankruptcy and Insolvency Act, the Competition Act, the Companies' Creditors Arrangement Act, the 2009 Budget Implementation Act, and the Fair Rail for Grain Farmers Act are all being amended.

How this squares with the Liberal election promise not to use omnibus legislation is beyond me. Do not get me wrong, I am not complaining about an omnibus bill, just the fact that the Liberals did and then made a promise they knew they would not keep. Furthermore, when I introduced a motion in transport committee last week calling on the committee to write to the Minister of Transport and his government House leader to ask them to split the bill into the following sections, rail shipping, rail safety, air, and marine, to provide an enhanced and possibly expedited scrutiny, every single Liberal member voted against it without even a single comment as to why.

I found this vote particularly ironic, as it was the Liberal member for Niagara Centre who raised the idea of expediting the passage of the bill in the first place, in order to provide grain farmers with a greater amount of certainty as they negotiate contracts for future shipping seasons.

The more measures that a bill contains, the more time it takes to provide adequate scrutiny. Separating the bill would be the easiest way to facilitate expedited passage, and thus my motion calling on the bill to be split into several parts.

Unfortunately, Liberal members were unwilling to split the bill into these natural divisions. This does not inspire confidence that when the bill eventually does reach committee, the Liberal Party members will be open to any amendments. While Bill C-49 is supposed to be the Minister of Transport's legislative response to the 2015 Canada Transportation Act review led by the Hon. David Emerson, it would appear that what we have before us is a bill that is designed to change the channel from some of the bad news that keeps piling up for the Liberals.

The government's communications strategy for this legislation has overwhelmingly concentrated on the air passenger compensation regime that is being introduced, and not the other very consequential measures. Here is what the Minister of Transport posted on his Twitter feed as he introduced this legislation, “These air passenger rights will ensure that travellers are treated like people, not just a number.”

Like many members here, I travel a lot and only have positive things to say about all the employees working for the airlines and at our airports. Of course, on occasion, flights do not go as we hope, but the Minister of Transport appears to be willing to pit passengers against airlines rather than fixing the structural problems in Canada's aviation regime.

This legislation does not spell out what the compensation regime will be, just that there will be one. The bill states that after consulting with only the Minister of Transport, the Canadian Transportation Agency will make regulations concerning carriers' obligations toward passengers. However, for even greater clarity, subsection (2) of proposed section 86.11 states that the Canadian Transportation Agency must comply with any instruction from the minister with regard to setting regulations concerning carriers' obligations to passengers.

What this means is that the Canadian Transportation Agency is tentatively responsible for setting what financial penalties a carrier would have to pay to the passenger in the case of a service breach, unless the minister is dissatisfied with the level of prescribed compensation that the CTA decides is appropriate, in which case he or she can dictate what that level of compensation will be.

It is noteworthy that the agency will, by law, only be allowed to consult with the Minister of Transport concerning the setting of these regulations, and not with consumer advocate groups, airlines, airports, Nav Canada and other stakeholders in the sector.

I do not understand what the purpose of consulting only the minister is. If the Canadian Transportation Agency is to be an arm's-length organization, this legislation clearly diminishes its independence. If the minister will not allow the agency to independently set the parameters of the passenger compensation regime, he should just spell out in legislation what it will be and let members of Parliament and stakeholder groups decide whether this is a good proposal or not.

If this legislation were truly aimed at reducing the cost of travel for the passenger, while increasing service and convenience, the minister would immediately lobby to have the government's carbon tax, which will make every single flight more expensive, withdrawn. He would reform the air passenger security system, which was universally identified as a major irritant for all passengers during the Canada Transportation Act review by all the organizations that participated in the process.

While it would be preferable to have the sections of the bill dealing with air and rail examined as stand-alone pieces of legislation, I can only surmise that the government's complete mismanagement of the House's agenda has led us to the point where an omnibus transportation bill is what we have in front of us today. At least we have finally begun debating something in the transport sector, now that we are two years into the government's mandate. So far, the only achievement the minister has to show in terms of legislation is the act to amend the Air Canada Public Participation Act.

Let us talk about Bill S-2, an act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another act. This was first introduced by the government's representative in the Senate 13 months ago and passed third reading in the Senate on February 2. The minister claimed that Bill S-2 was a priority in his speech to the Montreal Chamber of Commerce in November 2016, yet it has not been touched since.

On May 12, just days before the introduction of the legislation we are debating today, the Minister of Transport introduced the oil tanker moratorium act, a bill that his own officials conceded would only impact the future development of Canada's oil sands and no other activity in northern British Columbia. Equally concerning about this oil tanker moratorium, which could be renamed the oil pipeline moratorium, is that there is considerable support among first nations on B.C.'s coast for energy development opportunities, but the wishes of these first nations are being ignored. For the Liberals to move forward with this tanker moratorium without properly consulting coastal first nations is extremely hypocritical.

The Liberals go to painstaking lengths to emphasize the amount of consultation they undertake, but it is becoming more and more apparent that their interest in consulting is about being told what they want to hear and not about listening to differing views. If anyone needs further proof that Bill C-48 was introduced only for political purposes, it is that this moratorium has been introduced as a stand-alone bill and not as part of this omnibus package we are debating today.

The Minister of Transport's silence and inaction on critical and time-sensitive transport issues, especially rail transport, is leading to uncertainty for both shippers and the railroads, which both want certainty as they negotiate shipping rates for the season.

That is why over the past several months I have asked many times whether the government intends to renew the sunsetting measures in Bill C-30 before they expire on August 1, 2017. The response I have been given time and time again is that the government recognizes the urgency to get this done and that legislation is forthcoming. Unfortunately, the Liberals have made a muck of this, and the key measures in Bill C-30 will sunset before any replacement legislation can receive royal assent and become law.

Last week in the transport committee, a Liberal member moved a motion calling on the committee to begin its consideration of this bill, Bill C-49, in September, before the House begins sitting, to expedite the study of the sections of the bill that deal with the shipping of grain. While Conservatives have no objection to considering this legislation in September before the House returns from the summer break, government members fail to realize that our producers needed them to turn their attention to this months ago, as the measures will sunset on August 1 of this year. At best, there will be a two-and-a-half-month gap between when the measures in Bill C-30 sunset and replacement legislation is in place.

By the time this legislation has passed, the majority of contracts for this year will have been negotiated with the law in flux. Because of the government's mismanagement of the legislative agenda, these popular measures will sunset without replacement, and shippers will be the worse off.

This is important to note, because for a combination of reasons, including a lack of rail capacity, preparedness by railways and shippers, weather, and the size of the crop, western Canada's 2013-14 grain crop did not get to market in a timely manner. Consequently, the previous Conservative government introduced Bill C-30, which gave the Canada Transportation Agency the power to allow shippers access to regulated interswitching up to 160 kilometres, mandated that CN and CP both haul at least 500 tonnes of grain per week, and introduced a new definition of adequate and suitable service levels. With this extension, the number of primary grain elevators with access to more than one railroad with the extended interswitching limits increased from 48 to 261.

These measures were met with universal support from the members of the shipping community, because even if they did not use interswitching, they could use it as a tool to increase their negotiating position with the railways, as the shippers knew exactly how much the interswitch portion of the haul would cost them.

At the same time, the government announced that the Canada Transportation Act statutory review would be expedited, and it began a year early to provide long-term solutions to the grain backlog of the 2013-14 shipping season and other problems in the transport sector within Canada. The hon. David Emerson, a former Liberal and Conservative cabinet minister, was tasked with leading the review. This review was completed in the fall of 2015 and was on the Minister of Transport's desk shortly before Christmas. The minister then tabled this report in mid-February 2016 and promised wide consultations on the report. As the key measures of Bill C-30 were going to sunset on August 1, 2016, and parliamentarians were hearing from the shipping community that it would like to see these extended, Parliament voted in June 2016 to extend those provisions for one year.

In the fall of 2016, the Standing Committee on Transport, Infrastructure and Communities undertook a study of Bill C-30 and held a number of meetings on the merits of these measures and whether they should be allowed to sunset. We were assured that if we lived with this extension, these issues would be dealt with by August 1, 2017.

The vast majority of the testimony heard was supportive of maintaining the 160-kilometre regulated interswitching limit at committee, which is why the committee's first recommendation was the following:

That the Canadian Transportation Agency retain the flexibility provided under the Canada Transportation Act by the Fair Rail For Grain Farmers Act to set interswitching distances up to 160 km, in order to maintain a more competitive operating environment for rail shippers with direct access to only one railway company.

Anyone who has read this bill will know that the government ignored the committee's main recommendation. At some point during this debate, I hope to hear from Liberal members on the transport committee about whether they believe that the government was right to ignore the committee's recommendations, and if so, whether the entire committee study was just a waste of time.

Basically, what the government is proposing with this legislation is to replace the 160-kilometre interswitching limit with the creation of a new long-haul interswitching tool that would be in effect between Windsor and Kamloops on hauls of up to 1,200 kilometres, or up to 50% of the length of the entire haul. Shippers would be charged the regulated interswitching rate for the first 30 kilometres of the haul and then a Canada Transportation Agency-determined rate, which would be determined on a case-by-case basis based on the price of a similar haul, for the remainder of the distance to the interswitch point. Shippers would only be able to interswitch at the first available interswitch point within the zone.

What the government has done is take a little-used existing remedy, called a competitive line rate, and rename it long-haul interswitching.

Under a competitive line rate, a shipper could apply to the agency to set the amount of the competitive line rate, the designation of the continuous route, the designation of the nearest interchange, and the manner in which the local carrier would fulfill its service obligations. We know from history that this remedy was infrequently used because of the prerequisite that the shipper first reach an agreement with the connecting carrier, and the two main carriers effectively declined to compete with one another through CLRs. What we do not know is what the difference will be at a practical level between this new long-haul interswitching and the existing competitive line rates.

Like competitive line rates, long-haul interswitching is a much more complicated system for shippers to use, and the jury is still out on whether this will achieve the minister's stated objective of improving rail access for captive shippers. When Bill C-30 was first introduced, there was universal support among shippers for the extended interswitching. So far, very few organizations I have spoken to can say that this tool is better.

In conclusion, this much is certain: the key measures in Bill C-30 will be allowed to sunset on August 1, before this legislation receives royal assent. The Liberals have had nearly a full year to get new legislation in place but failed to do so, and shippers will suffer the consequences.

Canada remains one of the most expensive jurisdictions in which to operate an airline, and it is about to become even more so with the imposition of a national carbon tax. This bill does nothing to address the systemic cost issues, which are passed on to passengers, that were identified by the Transportation Act review. As has been the case with almost everything with the current government, optics trump everything, and this bill exemplifies that.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

I would like to move my motion that I put on the order paper on Tuesday, so I know we have it.

It's the one I read it out earlier today, so I won't read it again. I know it's been circulated to all the members.

In introducing and speaking to my motion, I made a lot of the comments I wanted to. I'll just reiterate that I introduced this motion for two reasons: the first being that we are dealing with an omnibus bill addressing a number of issues within numerous modes of transportation. The second would be that the members opposite, the government members, wanted to see us expedite the study of this bill, which I think demonstrated the need to address certain measures in the bill in a more timely way than others perhaps. That led me to ask at the last meeting if the members would be willing to break out the part of Bill C-49 that addresses the measures that are due as a result of the sunsetting of Bill C-30. As I was not able to get an answer then because of time constraints, I introduced the motion.

I want to respect and believe in my colleagues' desire to provide clarity and certainty to our producers. As I've pointed out, I don't think the time frame he's outlined within his motion will make any difference. That window has closed. I think the only way to redeem it is to break out this section of Bill C-49 and do a study as expeditiously as possible.

Thank you, Madam Chair.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

My thanks to Mr. Badawey for this motion.

The first thing is that the date of our work does not matter to me. We are elected to do this work. As soon as it is necessary, we will be there. It could be in July, August or September. That's not really the issue.

However, there are some questions I cannot find an answer to.

First, let's face it, Bill C-49 is an omnibus bill because it amends 13 pieces of legislation. If we meet before work resumes in September to answer questions about Bill C-30, we will be late because the deadline is August 1 or July 31. I do not understand why we would meet in September to solve a problem for which we would already be late.

If I were told that we would be meeting for one or two weeks, holding two to four meetings to deal urgently with what needs to be done for grain transportation, it would be one thing. However, I also see that we want to study Bill C-49 in the interval between the dates proposed in the motion and the return to the House for the new session. In that case, I say no.

Before I vote in favour of the motion, I would like to get an idea of how many hours we want to spend on Bill C-49. No less than 13 pieces of legislation are affected. There is no way that we will manage to do it properly in four meetings. That doesn't quite make sense. I wonder where the urgency to work in September comes from if we are already late.

Can we have an idea of the time that we want to spend on Bill C-49, to see if we have time to cover all the topics? I know that the first come, first serve game works, but there is also a motion coming up that proposes that the minister be asked to split the bill so that we can quickly study what is urgent and take the time we need to study the rest of the bill.

If I have to vote on those motions in the order in which they are moved, because I do not have the information I need and the ruling has not been made to ask the minister to divide his bill so that we can deal with what is most urgent and study the rest afterwards, I will unfortunately have to take issue with that. However, that's not because I don't want to work in September.

[Vance Badawey, Liberal, Niagara Centre, ON]

As I alluded to at the last meeting, colleagues, you will recall that we conducted a study on freight rail transportation in 2016 and, more specifically, the transportation of grain and agricultural products. We heard from numerous stakeholders that the measures in Bill C-30, also known as the Fair Rail for Grain Farmers Act, including extended interswitching, were not in fact ideal. The legislation was often characterized as a temporary band-aid, hastily applied after the grain-handling crisis in 2013 and 2014, a piece of legislation with many flaws.

Many farmers and other shippers felt that the 160-kilometre extended interswitching did not go far enough. Notably, sectors such as mining and forestry, in particular, pointed out that they too would like to benefit from interswitching but were usually outside the 160-kilometre radius. At the same time, rail companies objected to the rates not being determined on a commercial basis and argued that this would be a disincentive to them as regards making needed investments in their infrastructure.

In the absence of a solution that could address these various conflicting interests, this committee ended up passing a motion calling on the government to extend the provisions for interswitching that were due to sunset for one year, until August 2017, but only until such time as the minister could find a better—and I want to stress this point—longer term solution.

The good news is that with Bill C-49, the proposed transportation modernization act, the minister is proposing just such a long-term solution, including a new measure, calling for longer haul interswitching, which will be available to captive shippers within a 1,200-kilometre radius.

I understand that the initial reaction from shippers, including farmers, has been very positive thus far. However, there will be a legislative gap between when the interswitching provisions in Bill C-30 sunset in August 2017 and when Bill C-49 receives royal assent, assuming it does, likely sometime later this year, depending upon how long it takes to get through the House and, of course, the Senate. Some shippers are understandably concerned about this gap and would like to start benefiting from the new and improved measures contained within Bill C-49 as soon as possible. I know our government has heard these concerns and wants to help, and I'm sure that members of the committee, especially those in sensitive areas such as Saskatchewan, have heard the same concerns.

I understand that the government House leader has indicated a willingness to deal with Bill C-49 at second reading and get it to our committee before the summer adjournment. If that in fact happens, I propose that our committee meet prior to the House's returning in the fall to study Bill C-49. This would provide us an opportunity to hold extended meetings and do a lot of work in a relatively short period of time. Ideally, we could even complete our study before the House gets back in September.

I think this would go a long way to speeding up the process and delivering results for our grain farmers and other captive shippers who are eagerly awaiting the passage of this bill and will certainly be supportive, in our view, of the certainty that this bill will provide.

Bill C-49 also includes a number of other important measures, notably a passenger rights regime for air travellers that is long overdue and that I'm eager to start studying.

I hope our colleagues in opposition will join me and the rest of the members of the committee in supporting our farmers and agree to hold the meetings prior to the return of the House in September. I know that on this side of the table we're prepared to do that work. We're prepared to bring this bill forward, we're prepared to support our farmers, and we're prepared to expedite this process to hopefully get Bill C-49 through and fill the gap between the August 1 sunsetting and the passage of this very important bill.

Thank you, Madam Chair.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I understand, from our discussions, that the government House leader has indicated a willingness to deal with Bill C-49 based on some of the comments made, both by the committee and by the opposition in the House of Commons, with respect to bringing it to second reading and getting it to this committee before the summer adjournment.

If this happens, I would propose that our committee meet to study Bill C-49 prior to the House's returning in the fall so we can attempt to expedite this—again, based on some of the comments we've heard here in the testimony, as well as comments made specifically by the opposition in the House of Commons.

Madam Chair, this would provide us with an opportunity to hold extended meetings with the stakeholders and do a lot of work in a relatively short period of time to deal with the issue, as was articulated by members of the opposition in the House. There is a need to expedite this because of the sunset clause attached to Bill C-30.

As part of our work program moving into the fall, that's what I would propose, and I think it would go a long way toward speeding up the process and delivering results for our grain farmers and other captive shippers who are eagerly awaiting the passage of this bill. It would certainly provide them with the service levels they expect.

As members of the committee understand, Bill C-49 also includes a number of other important measures, notably a passenger rights regime for air travellers. Our studying this is long overdue, as well as hearing from those who are being impacted dramatically by it.

Madam Chair, I would throw that out there for discussion. Hopefully, we can get to this sooner rather than later because of the expediency it well deserves and needs.

[The Chair, Liberal, Judy Sgro]

They will be here for the first hour on Thursday. Thank you very much. I'm really glad when we can work together.

Now we have 15 minutes left to talk about committee business: what we have outstanding that's coming to us or that we still have to deal with.

We have Mr. Bratina's motion on water quality, which we have to deal with before December 1. We have a draft report on infrastructure that our analysts have done, which we have not gone back to review. We can take action on it, or we can simply leave it there until the fall, depending on the will of the committee on those two issues.

Legislation-wise, at some point we're going to have Bill S-2, Bill C-48, and Bill C-49. That's the legislative agenda ahead of us, over and above all the other issues that we'd like to dealt with.

As we look forward to the committee business ahead of us, we should sort out how we're going to deal with some of it. Bill C-49 is a very important piece of legislation, given the fact that it affects the issue of the sunset clause in Bill C-30.

That's what's ahead of us. We need to sort out how we are going to get these issues dealt with in the couple of meetings we have left.

I'm going to open the floor.

Mr. Badawey, go ahead.

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

Also making sure we have a transportation system that works.

Can I get some brief comments on transportation because I know it's very important. Bev and I were on the committee when we had the transportation crisis. We dealt with Bill C-30. The new government prolonged some of the provisions in Bill C-30, which we're happy about. There's the importance of transportation in Canada, and then I'm going to ask a quick question of the NFU.

[Claire Citeau, Executive Director, Canadian Agri-Food Trade Alliance]

Thank you, Mr. Chair.

Thank you for inviting me to speak on behalf of the Canadian Agri-Food Trade Alliance, the voice of Canadian agriculture and agri-food exporters.

CAFTA represents farmers, processors, and exporters from the beef, pork, grains, oilseeds, pulse, soy, malt, and sugar sectors. CAFTA members account for 90% of Canada's $54 billion agriculture and agrifood exports, supporting 940,000 jobs across Canada.

To illustrate the important contribution of our sectors to the Canadian economy, I'll give you some numbers. In terms of GDP, Canadian agriculture and agrifood exporters generate a direct and indirect GDP of $30 billion for agriculture and $65 billion for food manufacturing. In terms of employment, our sectors represent 352,000 direct and indirect jobs in agriculture, along with 588,000 direct and indirect jobs in food manufacturing.

The specific contribution of our sectors is similar to the direct contribution of entire sectors such as universities, financial investment services, and arts and entertainment, and is even much greater than the contribution of the aerospace manufacturing sector.

Competitive access to global markets through free trade agreements is our top priority, and at the top of the list are Europe, Japan, and the Asia-Pacific region. Access for Canadian agriculture and agrifood products is a core benefit for Canada in the CETA agreement. CAFTA has long been a champion of the CETA agreement and of increased trade with Europe. We have attended many negotiating rounds and have met regularly with the negotiators and the government to ensure that the negotiated outcomes would provide real benefits for our exporters.

CAFTA was able to immediately and unequivocally voice its support of the agreement in principle when it was announced in October 2013. We were also pleased by the conclusion of the negotiations earlier this year and were present in Brussels for the signing of the historic deal. CETA offers tremendous potential and secures substantial access to one of the world's few billion-dollar markets, and it does so ahead of our major competitors.

With a population of 500 million people, the EU is the second-largest importer of agrifood products in the world. In 2014 Canada shipped $3.2 billion in agriculture and agrifood products to the EU, led by wheat, soybeans, oilseeds, pulses, canola oil, frozen foods, and maple syrup. This is only about 5% of our total agrifood exports. Really, our exports should be much higher.

CAFTA has expressed support for CETA as the EU market has the potential to result in significant benefits for our exporters. The agreement could drive an additional $600 million in beef, $400 million in pork, $100 million in grains and oilseeds, and $100 million in sugar-containing products, as well as a further $300 million in processed fruits and vegetables. Taken together, this is $1.5 billion in new Canadian agrifood exports to the EU.

This is assuming that negotiated outcomes provide for commercially viable access. Canadian agrifood exports to the EU currently face high tariffs, with an average of 14%. On day one of implementation, tariffs on almost 40% of products will be eliminated immediately. The tariffs are not the only part of the access equation, and for some sectors, non-tariff barriers are as important as tariff reductions.

In CETA, Canada and the EU have committed to working together to advance a number of non-tariff issues, and today, unfortunately, it is clear that commercially viable access that was promised for all exporters may not be fully achieved for some time, and certainly not by the time the agreement is implemented. CAFTA has long stated that in order to achieve meaningful access, CAFTA members needed to have both tariff and non-tariff barriers fully resolved before CETA implementation.

To date, the issues that remain outstanding include the timely approval of biotechnology traits, the timely approval and re-evaluation of crop-input products, and the approval of meat-processing systems. Throughout 2014 and 2016 CAFTA has strongly encouraged the completion of respective legal and political processes related to CETA while simultaneously completing the technical discussions so that the stated benefits can be realized in the form of commercially viable access for our exporters.

We've stated that our support for the implementation of CETA will be based on the extent to which the negotiated outcomes result in commercially viable access. Last August our members met with officials from Global Affairs Canada and Agriculture and Agri-Food Canada to discuss the value of a CETA implementation plan for Canadian agriculture and agrifood exporters as part of a path forward.

Today, given the slow progress that the EU is making to resolve these issues, CAFTA gives conditional support to the implementation of CETA, with three conditions.

First, CAFTA will support the implementation of CETA if the Government of Canada commits to a well-resourced advocacy strategy and a comprehensive CETA implementation plan for Canadian agricultural and agrifood exporters to achieve real access for all exporters. Such plans will focus on ensuring that the negotiated outcomes result in commercially viable access, including but not limited to the grains and oilseed sectors and the meat sector through the establishment of high-level working groups.

Second, CAFTA asks that the committee today recommend in its report on Bill C-30 that the Government of Canada commit to the CETA implementation plan for Canadian agricultural and agrifood exporters to ensure that negotiated outcomes result in viable access for our exporters. It must be noted that this implementation plan will need to remain in effect until such time as the market access outcomes contained in the agreement become commercially viable for all of our exporters.

Third, CAFTA asks that the Government of Canada exert every effort to resolve as many of the outstanding technical barriers as possible during the interim period between now and the date the agreement is implemented.

In closing, more work needs to be done. Due to the strong potential and CAFTA's history of working collaboratively with government, CAFTA supports the passage of Bill C-30 and the implementation of CETA with the three conditions outlined above. CAFTA will be pleased to report to the committee on a regular basis on the progress achieved for Canadian agricultural and agrifood exporters as CETA gets implemented.

Thank you.

[Greg Northey]

We see the provisions in Bill C-30 as building blocks that go into the overall strategy. No one of them is the solution, but they certainly represent key directional ideas for how things should go. A provision that hasn't been discussed a lot is this idea that the agency was given powers in Bill C-30 to award expenses for non-performance, and the general concept of financial consequences when a railway fails to perform is an important one. It goes to this idea that we talk about financial consequences. The idea's there and it's been established, and now we can build on it.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thanks very much, Madam Chair.

I would like to continue where my colleagues have left off. I think good is not the enemy of best, and any improvements that can be made as we move toward a transportation strategy should be made in an effort to address concerns that are being raised from our shippers and producers. I think that is why we took on the study of Bill C-30, recognizing that some of the issues will be embedded in a national strategy as we determine what sort of recommendations we might want to make after having a conversation with all of our stakeholders.

I know we focused a fair bit on interswitching with every panel, and what I heard today was that it was a tool in the tool box that somehow helped to rebalance the market powers that exist.

I want to follow up on some of the comments that have been made about the agency.

You talked about interswitching as a tool and about increased data sharing as another tool that would help. Are there any other measures or tools that you could share with us that need to be put in that tool box, that would help make this system a more efficient and effective system for our producers and shippers, while recognizing that we need the railways in order to keep our economy going?

[Vance Badawey, Liberal, Niagara Centre, ON]

Of course that capacity with respect to each method of transportation would change based on an overall national strategy, and, quite frankly, that can be international with respect to working with other countries that may be integrated within our transportation network.

All of that being said, with respect to how you're operating, as you may know, the Canada Transportation Act review has been tabled by the minister, and this committee is moving toward establishing a transportation and logistics strategy for all modes of transport as well as all of the commodities that are utilizing those modes of transport.

Do you think, given a lot of the comments and opinions that have been expressed today and a lot of the recommendations that may come out of this exercise with Bill C-30, that this strategy should take the recommendations out of a process of strategizing? Having a recommendation come forward may in fact suffice for the interim, but ultimately the overall recommendations that would come forward would come out of that strategy. What are your thoughts on that?

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

My next question is for Mr. Marshall.

In your presentation, I believe you said the 500,000 tonnes imposed on rail companies likely caused harm to other types of natural resources that require rail transportation. However, you didn't refer to an unfair situation. That said, the representatives of the main rail lines told us that with or without Bill C-30, they would have transported the same quantities of grain.

Can you give me clear examples of harm caused by Bill C-30?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I will quickly follow up on the concern you raised in regard to data sharing. One of the measures in Bill C-30 was the second measure, which reads, “Subject to volume demand and corridor capacity, [CP and CN] must each move at least 500,000 tonnes of grain during each week” following harvest. One can well imagine that this would have increased the requirement for data sharing by the railways to ensure that was happening.

I guess what I'm hearing from you is that there is a need for increased data sharing by the railways to the shippers and producers. Would you see taking on some of the measures that were put in this bill and were specifically for the movement of grain? Would you see some of those being beneficial if they were to be applied across the board to other shippers and other commodities?

[Brendan Marshall]

I'm building off Lauren's point. Just for context, many mine sites operate in remote regions, and I'm aware of just two of 37 members at MAC who were able to take advantage of that measure.

Our concern isn't so much about the principle of the policy; it's clearly understanding what the implications are should there be some broad overarching extension across the entire network. Our suspicion, given the rapidity with which the original Bill C-30 was drafted, tabled, and turned into law, is that insufficient assessment was undertaken of what those implications were for the whole network.

I would caution the committee to carefully assess what those implications are and to take a fact-based approach about whether or not that's in the overarching best interests of the network. Principally, MAC doesn't take a view about the merits or the demerits of interswitching as such. We support a fact-based, evidence-based approach to any public policy measure designed to effect change in the rail freight network.

[Lauren van den Berg, Manager, Business and Stakeholder Engagement, Chemistry Industry Association of Canada]

Thanks so much. I'll jump in there. My name is Lauren van den Berg and I'm with the Chemistry Industry Association of Canada. Dave and I are sort of tag-teaming here.

I think you raised an excellent point. In fact, the wording of Bill C-30 was designed by its very nature to include all commodities and not just grain. Technically it does that, but the catch—because there's always a catch—is that you have to be within the right distance. You have to be within that 160-kilometre zone, zone 5. The problem that a lot of our members have—and I'm sure it's a problem shared around this table and it's a problem you've heard echoed in other witness testimonies—is that it's not enough. It helps only those who are lucky enough to have facilities or plants or mines within that zone. The extension of the interswitching provision last year without a doubt resulted in material cost savings, as we heard from several of our members, but again, only for those lucky few with facilities in the right zone.

The Chemistry Industry Association and several of the other associations we work with are advocating, as shippers, to expand interswitching beyond the 160-kilometre zone. We want it expanded throughout Canada, across all the provinces, and frankly, we want it made permanent.

I will pick up on a theme you've heard before, the idea of captive shippers and the power imbalance those represent. Seventy-eight per cent of our members alone are captive to a single class 1 railway, which represents a significant power imbalance that, if you'll pardon the pun, rails against the very principle of a competitive market economy. When we talk about economic security interests—which, I think, is a very valuable phrase that we could do well to echo every so often—and we're looking to encourage investments over the long term in Canada, we have to be able to make the case that transportation is not just safe and reliable but also competitive, and that's going to benefit the country from economic and security perspectives.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

Thank you to our witnesses. It is great to have such a diverse panel before us. We've heard from some other producers and also from the railways, and I think it's really great to hear from the mining association, the chemistry association, and some other producer groups.

I think what we have heard from our producer groups is that interswitching has been an effective tool for them in leveraging competition. As Mr. de Kemp pointed out, it has taken a monopoly and turned it into a duopoly.

Over time, as I have met with different stakeholders, I've asked whether the 160-kilometre link implemented in Bill C-30 has been beneficial to commodities of all types. The act itself is called the Fair Rail for Grain Farmers Act. I'd like you to comment on not only the interswitching measure that was due to sunset but also the other measures that were due to sunset. Also, are there elements in Bill C-30 that you would want to see applied across the board to commodities other than just grain?

[Brendan Marshall, Vice President, Economic and Northern Affairs, Mining Association of Canada]

Thank you.

Ms. Chair, esteemed members, committee clerk, and fellow attendees, I'm Brendan Marshall, vice-president, economic and northern affairs, Mining Association of Canada. MAC is the national voice of Canada's mining and mineral processing industry, and we're pleased to appear and to discuss this important matter with you.

The Canadian mining industry is a major economic driver, contributing over $55 billion in GDP in 2015, employing approximately 374,000 people, and accounting for $92 billion, or one-fifth, of Canada's overall total export value. As a consequence of this international reach, the mining industry is one of the largest users of Canada's transportation sector. From a rail perspective, the industry represents the single largest industrial customer group of Canadian railways. In 2015, for example, crude minerals and processed mineral products accounted for 51.4% of total rail freight revenue.

Having recently polled our membership, I can report that the response on rail service is mixed. While some members have seen improvements, others have said it's gotten worse. For example, one member stated that they have only been getting 50% to 80% of their weekly empty-car orders since last spring, and typically at the lower end of that range. This challenge spreads through their business, as the timely movement of concentrate is critical to managing rising inventory levels at mine sites. It's also problematic for keeping the flow of raw materials to smelters going at levels that support their feed stream requirements.

Another example is CP's refusal to ship a member's products under contract unless that member contractually conceded their recourse to the shipper remedies in the act in the event of poor rail service. Perhaps the worst example is both class I railways persisting in their refusal to transport uranium, a decision that defies the common carrier obligation and could adversely affect investment in Canada's world-class uranium resources.

There's a cost to the Canadian economy resulting from poor rail service. Railways do not produce the goods for export that allow trade to grow, our economy to expand, and employment to increase. Rather, they are an essential conduit for Canadian industry to receive crucial inputs and get its goods to market. In this light, the railways are a significant and essential domestic component of market access for Canada's exports as well as its domestic deliveries. Trade begins at home, and without a healthy and reliable railway network, Canada's reputation and success as a trading nation and as a destination for investment, generally speaking, are seriously hampered.

Building on this, and with respect to the extension of Bill C-30, MAC has three areas of concern.

The first is grain volume commitments. Maintaining grain sector-specific volume commitments will exacerbate existing rail capacity constraints to the detriment of all other shipping sectors, including ours. As testified to this committee by the former president and CEO of CN Rail during the first study of Bill C-30, strongarming railways to redirect rail capacity to grain shippers will present a cost to other customer groups on the network. Further, the volume commitment provision operates in conjunction with the rail rate cap that farmers already enjoy. Grain is the only commodity that has a rail rate cap. By paying higher rail rates than those set by the grain cap, miners and all other shipping industries effectively subsidize rail service for the movement of grain. As a result, grain farmers now have the potential for preferential service, with volume commitments at a preferential rate with the grain cap, meaning all other shipping sectors pay more for less.

Mining companies are also concerned that enacting grain sector volume commitments will undermine the legal remedies available to shippers in the act. If mandatory minimums are put in place, how can mining companies forced to operate outside the provisions of Bill C-30 make a service case against a railway that is legally obligated, through pain of penalty, to serve grain companies? A railway's unwillingness to break the law requiring it to move grain presents a viable defence against the legal remedies available to other rail customers seeking to address their service challenges.

The second issue that we'd like to discuss is regulating improvements to the service level agreement mechanism. Bill C-30 enabled the Canadian Transportation Agency to regulate prescribed elements in arbitrated service level agreements, the details of which were determined through a consultation process soon after the legislation was enacted. While this consultation provided some increased clarity in defining operational terms, the service level agreement provisions persist in requiring that an arbitrator take a rail company's service obligations to other shippers into account before rendering a decision. In the context of Bill C-30, an arbitrator in a service level agreement process will be bound to consider the railway's legal obligation to transport grain against the elements of service that a non-grain shipper is seeking. A railway's volume commitment obligations under the law will supersede regulations designed to enhance a non-grain shipper's position in an arbitrated service level agreement.

In MAC's view, these provisions are instructive in understanding why so few companies have pursued service level agreements.

With respect to interswitching, many MAC members are concerned that the interswitching provisions have resulted in railways being forced to do more short hauls, which are operationally more expensive than longer ones. A consequence of this reduction in rail freight revenue due to the interswitching rate being federally regulated will lead the railways to make up for lost revenue by reducing service to other sectors to better optimize their assets and regain those profits.

MAC is not opposed to interswitching regulations in principle. However, many miners are captive shippers, and there is concern this measure has adversely affected them. We also have members who have benefited from the extension. In this sense, MAC doesn't take a position one way or the other, but would strongly support data disclosure to enable a thorough assessment of the implications of this policy on all shippers reliant on rail freight services.

Finally, the largest obstacle for shippers and public policy-makers in addressing rail freight challenges is the inability to adequately assess the nature of rail service capacity challenges due to a lack of transparency and disclosure of railway data. Because a railway company has control over its data, the shipper is at a significant disadvantage when considering whether to initiate one of the remedies under the act. This is because railways are able to fashion submissions for the adjudicator to which a shipper either cannot respond adequately or respond at all.

The same challenge is faced by decision-makers when attempting to assess the merit of the claims that railways and shippers make in respect of their service, either the service that they're delivering or the service that they're receiving. Needless to say, it's challenging to develop balanced public policy with a data deficit, and recent legislative attempts to do this are a testament to that challenge.

With the goal of enabling balanced commercial relationships in the rail freight market that render better service delivery and avoid costly quasi-judicial hearings, while simultaneously enabling the railways to remain profitable, MAC recommends government take a phased approach.

The first phase would require railway companies to publicly share sector performance and capacity data on a monthly basis, or periodically, and confidentially share company-specific data at a shipper's request.

The second phase would be for decision-makers such as yourselves to collect and analyze this performance and capacity data with the aim of identifying where the specific issues are in the network.

The third phase would be to undertake an agenda of legislative and regulatory changes as needed, only after the causes of rail freight service challenges have been isolated and fit-for-purpose solutions have been identified and informed by data.

MAC supports this approach because collecting and publishing railway data would not only enhance transparency in the transportation system but would also improve railway-shipper relations by minimizing the need for disputes and provide government with the tools necessary to identify, assess, and resolve challenges. It is also consistent with the government's commitment to data transparency and evidence-based policy.

[The Chair, Liberal, Judy Sgro]

Thank you very much. The time for this panel has finished.

Thank you all very much for the information you have provided today, which no doubt will be reflected as we continue our discussions on Bill C-30.

[Robert Aubin, NDP, Trois-Rivières, QC]

My question is for either company.

In the study conducted in 2013, there was considerable discussion about service level agreements. Has the number of service level agreements between shippers and producers greatly increased, or has it remained about the same as before Bill C-30?

[Sean Finn]

Maybe, but the obstacle was the network and railcar capacity. We could have exceeded the quotas if the network had had more railcars available and if there had been the capacity to receive more deliveries. However, since the crop was substantial, as soon as the temperature warmed up, we delivered the grain. We occasionally exceeded the 500,000 tonnes during that period. It's not that CN or CP didn't want to deliver grain. It's that we had a hard winter and a bumper crop.

Since that time, partly thanks to Bill C-30, but also as a result of the rail companies' recognition of the need to do more—because we're expecting larger and larger harvest volumes—this year, we're ready. At CP, we have more locomotives. Our rail crews are in place. We've invested in equipment in order not to need grain quotas. We'll deliver the grain as soon as it becomes available, to meet the demand. We're there to serve our clients and to deliver the grain to the international market.

[Robert Aubin, NDP, Trois-Rivières, QC]

Could these deliveries have exceeded the 500,000 tonnes set out in Bill C-30?

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you and welcome. It has been a pleasure to hear you speak.

However, I was a bit surprised by Mr. Finn's opening statement. I was on the Standing Committee on Transport when hearings were held regarding Bill C-30. Serious concerns were raised. Correct me if I'm wrong, but you said earlier that if Bill C-30 hadn't been adopted, the capacity of companies to deliver grain would not have changed at all, and the same goals would likely have been achieved another way.

I'll try a different tack. Did your companies experience negative effects or consequences as a result of the regulation requiring you to transport 500,000 tonnes of grain a week?

[Janet Drysdale]

I would just add another comment to that. The regulation of the 160 kilometres was not based on a thorough fact-based, data-rich analysis. In the context of developing good transportation policy, I think we're trying to do that analysis before we make the policy. There's good justification to allow it to sunset and perhaps continue the research, if that's required.

I think the key point we've been trying to raise here is that the existence of that legislation is detrimental to encouraging investment into the supply chain network. When we think about the looming capacity issue with respect to grain cars, and when we think about the amount of investment that's required to sustain railway networks for CN, we reinvest over 50% of our operating income every year just to maintain the safety and fluidity of the rail network.

Those levels of capital investment need to be somehow reflected in legislation that continues to support the ongoing level of investment. Bill C-30 goes exactly against those principles.

[Janet Drysdale]

Short-line rail is a very important partner for us in the supply chain. They typically have smaller branch lines that feed into the larger CN and CP networks. Certainly coordination, good information sharing, is an important part of how we deal with the short-line network.

However, with respect to Bill C-30, CN doesn't have a particular view with respect to the short-line perspective in that regard.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

If Bill C-30 was reversed, that would take BNSF out of the picture or significantly decrease its competitiveness.

[James Clements]

Thank you, Madam Chair.

Good morning. We thank the committee for the opportunity to discuss the consequences of Bill C-30 for the Canadian grain supply chain. The majority of our comments this morning will focus on the provisions of the act that grant authority to the Canadian Transportation Agency to extend the interswitching limits in the prairie provinces from 30 kilometres to 160 kilometres.

As background, grain is CP's largest line of business. Grain accounted for approximately one-quarter of CP's total revenue ton-miles in each of the last three years. CP's grain movements are roughly two-thirds originated in Canada and one-third from U.S. locations. Both regions supply agricultural products to domestic and international markets. CP serves directly or indirectly multiple export terminals for shipments overseas with major outlets on the west and east coasts, the U.S., and Mexico. The majority of CP's grain traffic is regulated, with two-thirds of our 2015 grain revenue relating to that traffic.

The grain supply chain starts at the farm gate. Every tonne of grain is loaded on a truck, and as a result, producers have the freedom of choice as they determine both the destination and the timing of their deliveries.

There's a high degree of coordination required within the grain supply chain, particularly with respect to grain moving to marine ports for export. The capacity of that system is determined by the capabilities and operating practices of the entire supply chain, and not just rail.

I'll note that it's important to understand the context that led to the introduction of Bill C-30 by the previous government. In the 2013-14 crop year, CP moved a record amount of grain. The challenge that the system faced was driven by the fact that the capacity of the system did not match the demands created by an extraordinary grain harvest. The crop that year was 23.5-million metric tonnes larger than a typical year's grain crop. That's the equivalent of an extra 13 Rogers stadiums full of grain that hit the supply chain at once, or put another way, more than double Canada's typical export movement of potash.

The system's ability to respond to the challenge in moving the large grain crop was compounded by the winter of 2013-14, which was extremely harsh. The weather pattern set in for a lengthy period of time across the entire North American supply chain. As Mr. Emerson's report noted:

In spite of the challenges confronted by the grain-handling-and-transportation system, it still managed to move record volumes of grain under some very difficult conditions.

Temporary, extraordinary demands like the ones in 2013 pose a significant challenge. No efficient supply chain in the world is designed to handle extraordinary, atypical volumes under abnormally challenging operating conditions. A system built to handle these outliers would be under-utilized and/or under-compensated at all other times.

Although we are used to and prepared for dealing with challenging winter conditions in Canada, extremely cold temperatures require the railway to run shorter trains at slower speeds in order to operate safely. This reduces overall system capacity. The unusual, cold temperatures also caused the seaway, an important grain outlet, to be closed for a month longer than normal. Once the weather improved, the supply chain moved record volumes of grain. This performance was already in place before the legislation was passed, and it would have happened in the absence of any legislative intervention by Parliament.

Fundamentally, Bill C-30 was based on a flawed premise, namely, that Canadian railways had the ability to move an extraordinary volume of grain but were choosing not to. This premise simply defies logic because moving grain, our largest line of business, is how CP makes money.

The stated goal of the Fair Rail for Grain Farmers Act was, and I quote from a press release of March 26, “to help the entire grain transportation system reach the goal of getting product to market quickly and more efficiently following a record crop year for...farmers.” It was never clear how the legislation would actually achieve that goal.

At the time we cautioned that Bill C-30 would have a negative impact on Canada's competitiveness, threaten job growth and investment, and hinder the grain supply chain. The data over the past two years demonstrates that Bill C-30 has not resulted in the movement of any more grain. Regrettably, this legislation is harming capacity, efficiency, and competitiveness of the Canadian supply chain to the detriment of all shippers and the performance of the Canadian economy.

The extension of interswitching limits from 30 kilometres to 160 kilometres for all commodities in the prairie provinces is our major concern. The change has harmed the supply chain in three distinct ways: overall rail system capacity has been reduced as a result of the added complexity and variation; U.S. railroads have been given an unfair competitive advantage, which is drawing traffic away from Canadian railroads; and the regulated rate that Canadian railways can charge for interswitching is non-compensatory, so we lose money for every car that we interswitch, which undercuts investment in capacity-building infrastructure that could help move grain at a greater velocity in the future.

Overall system capacity declines because the extended interswitching limits reduce our operating efficiency. Interswitching creates additional work events to process cars to and from interchange locations.

The last thing a railway needs to do is to try to get air through railcars at -35° C. The extra work increases time and complexity in the supply chain. These inefficiencies reduce capacity and velocity for all players.

Bill C-30 also puts the Canadian railways at a competitive disadvantage to the U.S. railways because there is no reciprocal interswitching provision in American law. The expanded interswitching limit in Canada gives U.S. railroads significant reach into Canada, and has caused Canadian traffic to be interswitched to U.S. railroads. The lack of reciprocity in the U.S. prevents Canadian railways from doing the same in the U.S. For the 16 months from May 2015 to August 2016, BNSF obtained 3,945 carloads from CP through the application of extended interswitching regulations. Currently, the volume of this traffic is relatively low and involves six customers, but it is growing rapidly. Almost one-third of the BNSF interchange traffic related to non-grain commodities.

Perversely, an unintended but real consequence of extended interswitching is that 20% of the volumes are inbound to Canada, meaning that Canada is subsidizing U.S. exports into Canada, and these volumes included grain. All traffic interswitched with the BNSF runs the majority of its movement in the U.S., increasing density and therefore efficiency of the U.S. system, allowing U.S. carriers to earn profits and pay taxes to a foreign government, and providing jobs to U.S. workers.

The lack of regulatory harmony in the rail industry is inconsistent with the access reciprocity that exists in other transport sectors. Air transport access for the Canadian and American air carriers is governed by bilateral air agreements negotiated on the basis of reciprocity. Similarly, access regulations governing coastal and inland marine services in Canada and the U.S. are reciprocal. The lack of reciprocity for the rail industry harms Canada's economy, and the expanded interswitching reach is pulling traffic south of the border. We ask why the Government of Canada's preferred policy position is to see rail traffic moved to American railways for shipment?

The current government has made a promise to Canadians to make policy based on evidence, and we applaud them for that commitment, but Bill C-30 is a perfect example of a policy based on politics, emotion, and anecdote, without any reference to data and evidence. Now, with the benefit of two years of data generated after Bill C-30 became law, we submit that the evidence demonstrates that the extended interswitching limits cause far more harm than good, both for the grain shippers the act purports to help and the broader Canadian economy.

Every legislative review of extended interswitching limits has reached the same conclusion. The panel conducting the first review of the CTA in 2000-01 rejected calls for extending interswitching limits and recommended that the 30-kilometre limit be retained. The panel said at the time, “expanding the interswitching limits would worsen the market-distorting aspects of the interswitching rate regime and would be a step backward.”

The more recent review, headed by Mr. Emerson, recommended that the extended interswitching limit be allowed to sunset. The negative consequences for infrastructure investment, system capacity, and supply chain efficiency are strong grounds for the sunsetting of Bill C-30.

We urge the committee to listen to the evidence-based advice and analysis in the Emerson report and past reviews of extending interswitching, and allow the sunsetting of the Bill C-30 provisions. We have the most efficient rail system in the world. Layering on further regulation of the grain supply chain is not the answer.

What will help move Canadian grain to international markets? Market-based capacity-building infrastructure investments and innovation that drive operating efficiency improvements across the Canadian grain export supply chain. Here we have good news to share. Over the past two years, country grain elevator and port capacities have been increased. CP has invested record amounts in new and expanded infrastructure that will improve the rail system's ability to move higher volumes of grain more efficiently. CP has also developed new programs that improve asset management and availability for our grain customers and provide them better predictability to what they can sell to international markets. These are the features of a rail system that will actually improve the performance of the Canadian grain supply chain, and this should be our collective focus going forward.

Thank you.

[Janet Drysdale]

While quotas are an ineffective means to increase capacity, extended interswitching is far more problematic, undermining Canada's export agenda and exacerbating the looming issue with respect to railcar capacity for grain.

For those of you who travel by air to Ottawa, I imagine that given the option, you prefer a direct flight. Having to connect reduces your efficiency in trying to get from point A to point B. Like a connecting flight, extended interswitching introduces delays, sometimes significant, and uses up precious railcar capacity, reducing the overall throughput of the supply chain.

For every day that extended interswitching adds to the entire grain fleet, 785 additional railcars are required to move the same amount of grain. That translates into an additional supply chain expense of more than $100 million, directly impacting the competitiveness of Canada's grain exports.

Extended interswitching, over time, will also stifle investment. In April, fire destroyed a bridge on CN's rail network in Mayerthorpe, Alberta. Forty per cent of carloads originating or terminating west of that bridge fall within extended interswitching. If the only compensation CN received were the regulated interswitching rate for that traffic, we would not have been able to justify the $10 million required to rebuild the bridge. The same fundamental concern applies to all kinds of capital requirements across Canadian rail networks. When regulations discourage investment, we are putting the sustainability of Canada's supply chains at risk.

Another very serious concern with extended interswitching, which also discourages investment, is the opening up of Canadian traffic to U.S. railways. Extended interswitching enables U.S. rails to draw Canadian traffic onto their network while paying extremely low regulated rates to the Canadian railway performing the interswitching, thereby improving the density of the U.S. rail network and improving the U.S. railway's reinvestment capabilities.

As Canadian traffic is diverted to the U.S., the investment to maintain a safe and fluid domestic railway will by definition need to be spread over a smaller traffic base. Two things are likely to result from that: one, the need to charge higher rates on the remaining Canadian traffic; and two, the likelihood that some reinvestment simply does not take place, ultimately reducing Canada's competitiveness, particularly with respect to export supply chains.

In the U.S., switching rates are commercially negotiated, and there is no forced access provision equivalent to Canadian interswitching. The poaching of Canadian traffic by U.S. railroads without reciprocity will negatively impact reinvestment in our nation's transportation system. Rest assured, we are not suggesting that Canadian rails are not prepared to deliver or receive traffic from U.S. rail carriers. We are simply saying that the terms to do so should be based on commercial negotiations, thereby ensuring a level playing field in how Canadian and U.S. rails interact on both sides of the border.

The notion that extended interswitching is an important customer lever in price and service negotiations overlooks how much regulation and competition already exist. With respect to price for grain shipments, railways are already regulated under the maximum revenue entitlement. With respect to service, it is important to remember that all grain starts in a truck. Eighty per cent of western elevator capacity is either dual-served by rail, within the 30-kilometre interswitching regulation, or within 50 truck miles of CN or CP. Those existing competitive options operate far more efficiently than extended interswitching.

Shippers also already have the benefit of other regulatory measures that address price and service issues, including final offer arbitration, common carrier obligations, level of service complaints, and service level arbitration provisions. It is also very important to note that close to 75% of CN's grain is now moving under commercial terms that include reciprocal penalties for car supply and car usage.

We are already dealing with the unintended consequences of regulation in the country's Vancouver trade corridor, where significant investments cannot be justified by rail companies because the regulated returns are simply insufficient.

Canada needs a transportation policy that supports our export-oriented economy with innovation and investment. Market-driven forces have enabled Canada to create a world-class rail network, in which Canadian shippers benefit from rates that are among the lowest in the world. We would like to keep it that way. If we collectively hope to do so, Bill C-30 must be allowed to sunset.

Thank you.

[Sean Finn]

Thank you, Madam Chair.

Hello everyone. My name is Sean Finn and I'm the executive vice-president of CN. I'm joined by my colleague, Janet Drysdale. We appreciate the opportunity to meet with the committee to share CN's views on Bill C-30, the Fair Rail For Grain Farmers Act.

I would like to take this opportunity to confirm that CN is ready to transport grain this fall. Our locomotives, train crews and railcars are ready to serve our clients and Canadian farmers.

Regarding Mr. Pellerin's comment on the grain shortage on the south side of Vancouver last week, the explanation is very simple. The grain was not transported because it was not available last week for delivery to a market. So there is no danger with regard to transportation in Vancouver or issue with supplying grain to the network.

We are pleased that the committee has decided to review the provisions of Bill C-30. We recognize that, as a result of the serious backlog of grain in the 2013-14 crop year, the government of the time felt it had to take some action. However, the reality is that the grain would have moved at the same pace without this bill. The situation in 2013-14 was a result of the largest crop on record, combined with one of the longest and most severe winters in recent Canadian history.

To operate safely, railways must reduce train length in severe cold weather, which significantly impacts our capacity. We assured the government of the day that as soon as extreme winter conditions broke, which they did ultimately, we'd quickly ramp up to meet the capacity of the export terminals. The government felt compelled to bring in the quotas, but wisely, they were set at realistic levels based on what we and others recognized was the capacity of the supply chain. While there were a few individual weeks when we missed the quotas, overall we exceeded them.

CN believes the quotas are unnecessary and fail to recognize the importance and interconnectedness of the grain supply chain. If any part of the chain—ports, export terminals, vessels, or country elevators—is not operating at peak efficiency, the whole system suffers. We are only as strong as our weakest link.

Regulation that singles out only one component of the supply chain is, in our view, unnecessary and ineffective. I would also suggest that the quotas send the wrong signal to other Canadian shippers, by definition implying that their traffic does not have the same priority. This is not the message we want to convey to any of our customers, particularly other bulk exporters that are also competing in the global marketplace, as well as those shippers who choose to use Canadian ports and railways when they have other options.

[Perry Pellerin, Chairman, Saskatchewan Shortline Railway Association]

Good morning, Madam Chair and committee. First, thank you for inviting me to speak today and for giving the Saskatchewan Shortline Railway the opportunity to supply our thoughts on your study of the amendments to the Fair Rail for Grain Farmers Act.

As you are aware, short-lines transport approximately $500 million worth of commodities per year in Saskatchewan alone. The vast majority of this is grain, with producer cars making up over 65% of that number. The success of grain farmers is critically important to us, and we appreciate the opportunity to contribute in this topic.

The sections under discussion today are timely and critical to Canada's reputation as a reliable export partner. The volume of grain being produced in Canada is growing each year, and we believe that the future of transportation should include improved, competitive choice for farmers and shippers. We believe to achieve this the following points are critical.

Firstly, maintain Bill C-30 provisions which afford the agency more power. Second, create a rail transportation ombudsman, in the hopes of achieving real-time correction of issues that adversely affect the economy. Third, re-examine the minimum volumes model. Fourth, extend interswitching provisions to local carriers, short-line railways. Fifth, we believe we need to act quickly on small, isolated issues. These are issues that usually fester and soon become very costly and much larger issues in a short time. I think over the past few years, since 2013, we've been looking for a global fix for the grain transportation issue, but instead maybe we should be looking at more isolated problems and fixing those problems before they become larger ones.

Regarding agency powers and the ombudsman, subsections 5.1 (8), (10), (11), and (12) of the Fair Rail for Grain Farmers Act deal with agency powers in some form. The Saskatchewan Shortline Railway Association does not support any changes to the act that would limit the minister's or the agency's ability to delegate, arbitrate, set penalties, or require a railway company to compensate those adversely affected by failure to fulfill service obligations.

To support and encourage competition, there must either be competitive choice by several service providers or an increase in policing of service obligations to ensure that a limited choice of service providers fulfill their service obligations. While interswitching, which I will discuss shortly, allows for some increase in competition, Canada is largely at the mercy of two national freight carriers, CN and CP. Any disruption to service obligations affects Canada's international reputation as a reliable, safe transportation network. The service disruptions in 2014 have already negatively impacted our reputation. With increased technology and yields, Canada's farms will only continue to grow, increasing the strain on the rail network.

The Saskatchewan Shortline Association feels that a critical piece missing from the grain transportation system is a transportation ombudsman. It is extremely foolish to let issues build to a breaking point as they did in 2013-14. The current system of dealing with the railway company's failure to fulfill its service obligation is slow, difficult to manage, and inefficient. This harvest season has already seen signs of 2013-14. But in the current system, again, we'll only be able to discuss issues after the fact, and cannot deal with them in a simple or timely manner.

We're having issues today on the south shore that would have directly affected customers such as Columbia Containers, which in week nine had to cancel all new orders because of a backlog of traffic. If farmers and shippers and stakeholders had an easy and accessible place to log concerns as they arise, it might be possible to avert issues rather than reflecting on them post-disaster. A public advocate, appointed by the minister, would be an excellent way to represent the interests of the public and stakeholders by investigating and addressing complaints and violations in real time. The ombudsman could easily identify systematic issues leading to poor service and attempt to resolve them through recommendations or mediation without the red tape so systematic in the current transportation system. We don't need more regulation. We need more timely actions.

In essence, an ombudsman would allow the government to protect Canada's export capacity proactively rather than reactively. It would also protect the smallest shipper to the largest shipper, and in some cases probably even protect the railways.

This brings us to the topic of minimum volumes. We support measures to encourage the movement of grain. However, there has been some unintended negative consequences to minimum volume regulations.

First, locations that are further geographically from the port are being unfairly disadvantaged. It is logical, less costly, and more logistically efficient to move grain from Alberta and western Saskatchewan to port than it is for the rest of Saskatchewan or Manitoba. This is not fair for farmers who are further from western port positions.

Second, customers shipping to the U.S., for example, those shipping oats, are negatively impacted, as CN and CP have trouble logistically meeting the minimum grain targets if they have to focus resources on these customers. This is not fair for farmers growing certain types of grain, and has a false impact on what farmers choose to grow in the future.

Third, small shippers are disadvantaged, as short-lines and producer cars do not always have enough volume to regularly ship assembled 130-car unit trains. As a result, large grain companies with huge storage facilities or mainline points are preferred for the mainline carriers.

The current obligation to move grain, which is in essence a positive provision, encourages CN and CP to favour large unit trains from large grain companies as close to western ports as possible, disadvantaging the eastern sites in western Canada and those shipping to the U.S., small shippers' producer cars, and subsequently short-lines. Small shippers deserve the right to move cars when sales are made, not when everybody else is done.

Michael did a very nice job on interswitching. Interswitching is, or could be, a useful and effective competitive access provision. It allows shippers access to the entire Canadian rail network and is a critical decision point for some shippers when deciding to do business in Canada.

Interswitching regulations do not benefit short-lines in their current form. We are only connected by an intermediate railway that can set intermediate or interswitching rates. A recent example of this is one class I carrier who set a rate of $2,600 to move a car one mile.

As a result, this makes short-lines a less attractive option to shippers looking for a location to build facilities with low-cost access to both CN and CP for competitive purposes. It would be ideal for short-lines to have interswitching regulations apply to us or not have the regulation at all. Currently this is actually a disadvantage for us, for the fact that if a new customer is looking to build a facility, especially in Saskatchewan, he's not going to look at a short-line. Under the current way that interswitching works, he doesn't have access to both carriers. He's much better to build on CN or CP.

In conclusion, we believe it is important to maintain the provisions of the Fair Rail for Grain Farmers Act, which provide the agency and the minister with the power to effect needed change. We also suggest taking one step further, the establishment of a rail transportation ombudsman to act in a timely fashion and prevent disasters like 2014.

As well, we believe there are added provisions needed for a minimum grain shipment section to ensure the act is indeed fair for all grain farmers.

Finally, we'd like to see interswitching provisions extended to short-line railways or abolished. Under the current form, as mentioned, it's a disadvantage to us.

I really appreciate the opportunity to speak here today, and thank you for all the work you have done. I want to express that time is of the essence. We've been talking about this, it seems like forever. Again, we're getting into trouble and we need to do something about it.

Thank you.

[Michael Bourque, President and Chief Executive Officer, Railway Association of Canada]

Thank you, Madam Chair.

My name is Michael Bourque. I am the president and chief executive officer of the Railway Association of Canada. With me today is Gérald Gauthier, our vice-president.

I'm here to speak on behalf of our federally regulated railways and to discuss our concerns with the Fair Rail for Grain Farmers Act, and in particular, the effect that interswitching provisions have on the railway sector and the customers it serves.

The Railway Association of Canada represents more than 50 freight and passenger railway companies. Our membership includes the class I freight operations of CN and CP and more than 40 short-line railways across Canada. It also includes Canada's principal passenger, commuter, and tourist railways. Since you will be hearing from CN and CP shortly, I will focus on the impact on short-line railways, but the detrimental effects of these provisions apply to class I railways as well.

Short-line railways are a vital part of Canada's transportation system. They own approximately 20% of the national rail network. One in five carloads originates on a short-line railway. These railways transport everything from bulk commodities such as metals, lumber, and grain to manufactured goods, accessing the high-density continental network operated by CN and CP.

Short-line railways provide an essential feeder service for businesses situated in rural and remote areas across the country. This service provides shippers with a cost-effective and energy-efficient option for moving their products to North American and global marketplaces.

Short-lines compete with trucking, but they are significantly different. They run on private track, not on public roads. They have lower emissions, lower greenhouse gases, and they don't congest our roads or wear them out.

Under the existing interswitching rules, a shipper serviced by one federal railway can ask the railway to move its traffic to the point where its line connects with another federally regulated railway, or the interchange point, at a prescribed rate. These rates are cost based. Subsection 128(3) of the Canada Transportation Act states that:

In determining an interswitching rate, the Agency shall consider the average variable costs of all movements of traffic that are subject to the rate and the rate must not be less than the variable costs of moving the traffic, as determined by the Agency.

As the vast majority of traffic interchanged in this country is between CN and CP, it is their costs, not the costs of short-line railways, that are considered by the agency in its rate determination. This is a fundamental flaw in the methodology as it does not align with short-line railway's unique cost structure. The RAC, our organization, has voiced its concerns to the Canadian Transportation Agency many times, including during the very brief consultation process that supported Bill C-30. Rates under the interswitching provisions are not compensatory for short-line railways.

It is important to note that short-lines have access to a limited revenue stream and are unable to make systemic improvements or expand and build their infrastructure at a rate comparable to class Is. Short-line revenues are sufficient for the purposes of maintaining existing infrastructure in accordance with regulatory requirements, but they just do not have as much investment to put in as class Is.

Over the last three years, the costs of operating a railway in Canada have increased for short-line railways. The new rail regulatory requirements for rail crossings, minimum insurance requirements for dangerous goods, and increased fuel costs have put their long-term sustainability at risk. You will recall that as part of your review of Bill C-52, short-line railways testified that the proposed minimum insurance requirements would create a substantial cost for them, and they have.

By the way, we're not arguing against these safety regulations, on the contrary. I'm simply noting that they, especially crossing regulations, have been very costly for short-line railways.

If maintained, the existing interswitching zone of 160 kilometres can have a detrimental effect on the short-line sector by further eroding their access to the revenues they require to maintain, upgrade, and expand their infrastructure. Over time, the resulting effect will be a slow and steady decline of short-line railways in Canada. For shippers in rural and remote areas, their rail link to a low-cost, safe, and highly efficient class I rail network will be lost.

In closing, the reality is that interswitching provisions, in their current format, are harmful for the rail sector in Canada. In no way can this regulation stimulate or incent the investments that are required to improve the movement of goods by rail in the Prairies. In fact, there is a demonstrable need to create a dedicated funding program for the short-line railway sector, and I would be glad to come to talk to the committee about that at another time.

Short-line railways in the U.S. have a different support structure, which includes a variety of dedicated federal and state-level funding programs. To date, there are no similar programs available to short-line railways in Canada.

The interswitching provisions brought forward under the Fair Rail for Grain Farmers Act were introduced as a temporary measure, hoping to facilitate a more efficient movement of grain in the Prairies. With the 2013-14 grain crisis behind us, we believe that the provisions should be allowed to sunset and that the public policy discussion should focus on how Canada can stimulate the investments required to remain competitive and move goods to the marketplace more efficiently and safely.

Thank you.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I know that in the last session we developed a habit of extending our meetings in order to accommodate a fairly aggressive agenda. I'm not opposed to extending meetings for that purpose.

If the government members are not willing to schedule a time during committee to have a conversation with members of the opposition to determine what the fall session is going to look like, regardless of whether or not we talked about extending a study on interswitching, for example, on the provisions that were being phased out in Bill C-30....

Yes, we agreed to do that. We put that extension in place until August 1, 2017. We said we would report back by that time. There was an agreement to do the study, but we didn't sit down and say that it's going to happen at the very beginning of the session, that we're going to take this many meetings to do it, and that we're going to launch into another study.

I think it's a sign of disrespect to members of the opposition not to plan to have that conversation at the beginning of a session. While you say you're reluctant to do that unless we extend the meetings, I think there's an expectation that it should be one of the first things that happens during a committee meeting at the beginning of a session.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I'm extremely grateful for the fact that we are continuing on with our discussion with you, Mr. Emerson. As we've gone through an hour of testimony, I have numerous questions that have arisen, not only from your answers, but from questions and comments that my colleagues have been making.

I do want to follow up on the comment that you made in regard to the unfairness that perhaps is perceived or actually created in the system as a result of the interswitching provisions that were put in for our grain farmers in Bill C-30.

One of the questions I have Mr. Katib or you could answer. Is there an issue of timing when moving grain, other cereal commodities, or other cereal crops that needs to be taken into consideration as opposed to other commodities?

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you, Mr. Emerson and Mr. Al-Katib.

I want to focus on Bill C-30, which was something that was brought along due to some extraordinary circumstances. Those circumstances haven't gone away. Our crops are continually improving, and who knows what the weather is going to deal us. I want to focus first on that, and then perhaps later in this session, I want to come back to some broader issues that you addressed in your report.

With interswitching, what I understand is that there's no big problem if we leave it at 160 for a while. We need something longer term or a longer-term strategy to migrate to something else.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

From reading the piece of legislation, Bill C-30, it's my understanding that interswitching can be applied to other commodities and take into account the various regions across the country. It's my understanding that there are various rates also contemplated. Interswitching goes back to 1904. It started with a four-mile distance. Now there are a number of distances contemplated.

If 92% of producers now have access at the 160-kilometre distance for interswitching, more than they did have before that was implemented, why wouldn't you just keep it in the legislation and then go ahead and contemplate longer distances if that made more sense?

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Actually, Mr. Ruest, I want to give you one more shot at this one. Very simply put, I asked a question of the CTA about this imbalance of commercial accountability. If the shipper's ship isn't there on time, they get dinged by the railway. If you haven't got your goods ready to move by the time the cars are there, you get nailed by the railway. But if the railway fails to perform, I get the sense that there is really no consequence to that, certainly not covered by Bill C-30. Is that correct?

[Jean-Marc Ruest]

I guess we'll go back to the status quo of the previous environment that existed prior to Bill C-30 being adopted. We'll go back to limited interswitching being used because there are very few connection points between the grain elevators that currently exist and a connecting railway 30 kilometres.... I don't know what the numbers are, but I would say probably 6% of the grain shippers would have access to an interswitching spot, so you lose the ability to actually interswitch and you lose the ability to use that as a point of leverage in negotiations on rates and service with rail carriers.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

I know you've mentioned some of the benefits of the measures existing in Bill C-30 up until now, but can you speak to whether the changes introduced in the bill change the way shippers time their requests for pickup in order to maximize the price they get?

[Fiona Cook, Executive Director, Grain Growers of Canada]

Thank you, Mr. Chair.

My thanks to the members of the committee for the opportunity to appear today and to comment on certain provisions of Bill C-30, the Fair Rail for Grain Farmers Act.

My name is Fiona Cook and I'm executive director for the Grain Growers of Canada. The Grain Growers of Canada acts as a national voice for over 50,000 farmers across Canada, who actively grow and care for a variety of crops, including wheat, durum, barley, canola, oats, corn, soybeans, peas, and lentils.

We welcome the government's decision earlier this year to extend certain provisions of Bill C-30 for an additional year, effective until the end of July 2017. Today I would like to focus on the extended interswitching distance of 160 kilometres for the prairie provinces. I am here to tell you why this measure is so important for individual farmers and why we believe it should be made permanent.

On an annual basis, roughly 50% of Canada's grain crop is exported, with 94% of it moving by rail. Of these exports, 77% are exported by rail to port; 17% are direct rail, for example into the U.S. and Mexico; and approximately 5% are by road. Close to 70% of our wheat is exported, and some commodities are even more dependent on export. Over 90% of Canadian canola, including seed, meal, and oil, is exported annually. Over 90% of Canadian oats is exported to the U.S. Canadian pulses are a big success story—they're exported to over 150 countries. In fact, we are the world's largest exporter of lentils and peas.

It's not just about the exports. We have value-added domestic processors that also need access to reliable and consistent rail service: wheat millers, canola crush plants, oat millers, and barley malters are critically reliant on domestic shipments of raw product via the rail system. In many cases, they also depend on rail to transport the finished product to Canadian as well as export markets. Many of these facilities operate very lean production lines, employing just-in-time delivery, with smaller amounts of raw and finished product moving in and out on a timely basis. Most of these operations, like the grain elevators, are captive to one railway. They are therefore essentially operating in a monopoly-like environment.

Interswitching is an effective regulatory tool that can address captive situations and encourage behaviours in the rail industry that market forces would normally drive in a competitive environment. The extension of interswitching rights to a 160-kilometre radius was put in place in August 2014. It commits a rail carrier to pick up cars from a shipper and move product to a junction with another railway. Increased access to the lines of competing railways is good for farmers. It provides new options for grain handlers and processing operations in routing, as well as a new tool in negotiating with the railways better service, rates, and terms and conditions.

Extending the radius to 160 kilometres better reflects the large expanse of the prairies and the nature of grain transportation in western Canada. The original 30-kilometre radius was intended for urban centres and moving product at port. It encompassed very few grain-loading facilities: 6% had access at 30 kilometres. Now at 160 km, 92% have access.

When grain handlers and processors experience rail service issues, this directly affects the farmer's ability to sell grain and generate cash flow for their operations. It also negatively affects the price grain handlers pay for Canada's grain, oilseed, and specialty crops.

Every order for grain hopper counts. In a complex supply chain spanning an average of 1,520 kilometres, the ability of the railways to get agricultural products to an export position is crucial to every player in the value chain, especially the farmer. When the grain handlers or processors can't move product, the result is reduced orders and lower prices to farmers, to act as a signal to reduce the amount of grain they put up for offer. This means lost revenue to farmers when they have to sell grain outside peak periods. It can also affect future sales through a loss of confidence in Canadian shippers and their ability to deliver on time.

Rail interswitching provides grain producers with alternative options for rail services. The rule has already made for more competitive freight rates and service, and has directly benefited farmers. Not only have farmers noted reduced costs, they have also gained more leverage in getting rail capacity where needed.

In fact, the greatest use of interswitching has been a passive one. Some elevators operationalize the right to interchange by applying for an interswitching rate, while others use it as a leverage in negotiations with the railways. The mere existence of the option can provide shippers with the necessary leverage to obtain better terms and conditions. Shippers report that after using interswitching and the alternate line to move shipments, the originating carrier has often come forward to offer better rates and terms of service.

According to the grain monitoring program, for the crop year up to May 20, 2016, interswitching resulted in savings of almost $4 million and almost 1,300 additional railcars put into service.

Canadian grain production has seen steady growth of about 3% per year for more than a decade, a trend we expect to continue. It's been confirmed by my colleagues here this morning. Future production is not only contingent on a farmer's ability to access and utilize new technology, but also our ability to capitalize on growing opportunities and established and new export markets, many supported by Canada's active trade agenda. The 2015-16 crop year is expected to be another big one, with estimates ranging from 70 million to 75 million tonnes. Canada's 2013-14 crop year was recording-breaking, with over 90 million tonnes harvested. We expect these trends to continue.

In conclusion, the new interswitching provision has proven itself to be an effective tool, and for this reason we believe that it should become permanent.

Thank you very much.

[Humphrey Banack, Vice-President, Canadian Federation of Agriculture]

Thank you very much for giving me the opportunity to come this morning to speak to the committee about Bill C-30. My name is Humphrey Banack. I'm vice-president of the Canadian Federation of Agriculture. I'm a grains and oilseeds farmer in central Alberta. Transportation is critical to our family operation there. We farm 7,000 acres of grains and oilseeds. Today it's very difficult for me to leave the farm. We're harvesting wheat. Yesterday afternoon I got the combines running and left them in my wife's and my brother's hands and away I went. So for me to leave the farm at this time of year is a challenge, but transportation is key to our moving forward.

As I said, our organization represents farmers right across Canada, and I think it's very important to have the farmer's view here today. Bill C-30 has several key objectives. This act amends the Canada Grain Act to permit the regulation of the contracts relating to the arbitration of grain disputes, respecting the provision of those contracts. It also requires CN and CP to move minimum amounts of grain specified under the Canada Transportation Act by the order of the Governor in Council.

I hope by the time I'm finished here today you will recognize the importance to farmers of achieving these objectives of transportation of our product and fully appreciate that when we talk of shippers we're talking of grain companies. But it's ultimately farmers who will pay these bills. All of these objectives are covered and closely related to the Emerson report, which is soon going to be coming before the House and to the minister's table.

Before I go into specific reasons why Bill C-30 needs to be maintained, let me briefly explain our position in the industry. Farmers in western Canada sell or export 70% of the wheat we produce, 50% of the canola, and 25% of the coarse grains because of a small Canadian marketplace for our product. Western Canadian grain on average has to be transported 1,500 kilometres while most of our major competing countries around the world have a much shorter haul in the range of 300 to 400 kilometres. At least 94% of those exports are moved by rail to Canadian port positions and to final destinations in the U.S. and Mexico, unlike our competing farmers in the U.S. who in contrast use trucks and barges to transport 50% of the grain they export. This provides viable transportation competition to railways. Canadian farmers have no other viable transportation opportunities.

Consequently, between 35 million and 40 million metric tonnes of western Canadian grain is captive to rail monopoly annually. In the 2014-15 year, Canadian farmers paid $1.4 billion in freight charges to export their grain. This was not paid by the shippers. The shippers are sent the bill but the freight is paid by farmers who have no way to recoup these charges outside of markets. In this equation, grain companies are little more than service providers with farmers paying the entire bill. Farmers pay for the lack of grain movement. They pay all the freight for moving the grain. They pay for disruptions. They pay for delays. They even pay the penalties charged by shipping companies when their vessels have to wait in port, for demurrage.

This is acknowledged in the Emerson report that says that if service is unreliable or unpredictable contract penalties, lost sales, and lost premiums ensue. Shippers bear these costs, which are significant, and pass them back to farmers. Our livelihood and even our monthly cash flow depends on the timely, dedicated, and concentrated efforts of the two railway companies that basically have a monopoly. Farmers' ability to manage their grain movement—and by extension their cash flow and their ability to pay their bills on time—is captive to a transportation system that is a monopoly focused solely on cutting costs and maximizing returns.

On managing the volume of grain moved by the railways, the minister must maintain the legislative authority to mandate the volumes of grain needed to be moved at any given time. The success of the Canadian grains and oilseeds industry is contingent on finding international markets, providing a competitive price for those markets and getting the product to the market in a timely fashion. All those conditions cannot be left to the vagaries of the railways that are focused on high return commodities and cutting costs and increasing returns. Because farmers have no alternatives for access to export markets and because farmers need competitive freight rates, volumes of grain need to be moved in a timely manner, especially during times of bumper crop conditions and high demand in the international markets.

In my opening remarks I said we are in the midst of harvesting our wheat crop today. It is the largest wheat crop I've ever grown on our farm, and across western Canada we're hearing huge numbers.

We're going to have another very big crop in western Canada, very similar to the one in 2013. The government needs to maintain the authority to regulate volumes through an order in council by a request to the transport minister to ensure the railway system does not neglect the grain industry. We cannot afford to let down our international markets. When well-established markets to customers are lost because product is delivered late or not at all, it is very difficult to get those markets back. Financial success and even the survival of our farms is contingent on our being able to sell our grain to pay hundreds of thousands of dollars in production costs.

It is important to note that if volumes are regulated, it needs to be done in a way to prevent unintended negative consequences. In 2014, when the volumes were regulated, the railways, in order to increase the volumes to meet the demand, left areas with longer haul distances and logistic challenges plugged with grain. Northeastern Saskatchewan is one point to take in.

The regulated volumes imposed only applied to export grain. That is where the largest issue was and is. The railways moved the necessary infrastructure and met most of those targets.

The domestic markets, both for human consumption and for animal feed, were put in peril, as both were well below accepted input storage levels for an extended period of time. From reports received, a flour mill in eastern Canada was hours away from being unable to supply flour to Tim Hortons, and feed mills in the Lower Mainland of B.C. had feeding operations on restricted deliveries. While a shortage of our daily Tim Hortons' order may be devastating personally, a barn full of birds without feed would be an industry nightmare.

As we have learned from past experience, every action has a reaction. Steps should be taken to ensure that when grain movement volume is regulated, it is done in a balanced fashion, in order to ensure that problems solved in one area do not create problems in another.

Interswitching has been a huge topic around the table this morning. It gives shippers the opportunity to shop for lower freight rates and is extremely important, and expanded distance should be maintained. It is critical that railways work within the rules and the spirit of interswitching objectives. Interswitching is a simple mechanism facing competition in what is otherwise a monopoly. People even say that interswitching isn't working. We've seen some smaller numbers; Jean-Marc showed me some numbers, such as 4,500 cars moving here. It may not be a lot, but it's important to make sure it's always there. Pulse Canada has said that where expanded interswitching is available, the freight rate has been cut by about 20%.

Thank you very much for your time this morning. I'm getting a signal from the front, so we'll leave the last couple of pages to put in at the end.

Thank you. I hope my time off the combine is well spent.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

I heard you state earlier that interswitching is a tool that is used to adjust market failure.

The distances in Bill C-30 were put in to address what would have been some extraordinary things coming together and creating a bottleneck within the system. While you said there hasn't been a lot of uptake on the 160-kilometre distance, would it not be fair to say that it's good to keep that distance in the legislation? If we come up against another set of circumstances that would require that length of interswitching, it would be good to have it there so you wouldn't have to perhaps come together quickly and put in a piece of legislation to address that situation.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Okay.

Regarding that process, I heard you earlier say that there was significant stakeholder engagement to develop Bill C-30.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Thank you very much. I appreciate your being here.

I have three questions. I just want to go back to the Emerson report for a moment. You're well aware of the recommendation that the 160-kilometre interswitching clause of Bill C-30 be allowed to sunset...and review. It was also recommended to get rid of the maximum revenue entitlement, and to exempt non-hopper cars carrying grain from the MRE calculation in the short term. That was the recommendation, and I know everybody's aware of that.

I just want to get your comments on the recommendation, the impacts of it, and on whether we should keep the existing legislation.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Good morning.

In regard to Bill C-30, the bill establishes requirements regarding the minimum amount of grain to be moved by certain rail companies. It sets maximum penalties of $100,000 a day for rail companies that do not meet these requirements. You made mention of this as well. To me, $100,000 a day seems like a large number.

Would you agree that for any company, rail or otherwise, that's actually a large number?

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

We hear quite often from shippers that—whereas they have to pay penalties if they're not ready to use the railcars, or the terminals have to pay penalties if they don't unload the railcars; up to this point anyway—the perception is that the railways get off scot-free if they don't actually perform according to what they promised to do. In your view, has Bill C-30 adequately addressed that and returned a bit of balance between rights and responsibilities of the railways?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair. I join you in welcoming everybody back from a full summer I'm sure. I look forward to the work that we're going to do this fall, and also want to welcome Mr. Aubin to the committee.

I look forward to the study that we are doing on Bill C-30 and interswitching in particular. I do note that this act was introduced in the House of Commons by the Minister of Agriculture and Agri-Food. It was read for the first time in March. I think what that highlights is the relationship that we often see between different ministries—as we are the committee for transportation, communities, and infrastructure—that exists in developing legislation like this. So I'm wondering what, if any, input the agency did have in developing those sections pertaining to its authority in this legislation.

[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.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Madam Chair, may I suggest that it would be a good idea in the fall...? You will remember my reluctance about the deadline put in that motion about Bill C-30.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

We talked about Bill C-30.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Chair, would not taking a look at the Emerson report also inform us in regard to some of the issues in Bill C-30? I think some of the recommendations in the Emerson report would actually be part of a Bill C-30 study, or vice versa.

[The Chair, Liberal, Judy Sgro]

It is my understanding that regulations on the drones are being worked on and will be sent here. We have Bill S-2 in the Senate, which is going to be sent here. We have Bill C-30, which will pass shortly and is coming back to us. The extension there was for one year, on the presumption that we were going to be doing some work to come up with a long-term strategy.

We have a lot on our plate, but I think the Emerson report—and what Mr. Badawey is suggesting about doing a comprehensive study—has to get started. We will have to stop and start it, but it is not something that is going to be done in three months. It is going to take maybe the next six months, nine months, or a year, in order for us to do the best we can.

I think we can do a variety of things at the same time. I think we are a pretty smart bunch around this table and we can be working on this and then stop. If we have to shift to Bill C-30 or drones, we can also do that as we go forward.

Mrs. Block, go ahead.

Transport, Infrastructure and Communities

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

Mr. Speaker, I know that the provisions that have been prolonged are very important to keep. One aspect that keeps coming up when I speak to farmers is the importance of data sharing and predictability, knowing when things are happening, when they are going to arrive. That is something that we had brought up and when Bill C-30 was at committee, we wanted to make sure that there was better data sharing, transparency. That is something that I think would be very important for shippers, not just agricultural products, but everyone would like to have better data sharing like we see in the U.S. If the U.S. can do it, why can we not do it here?

That is something that would help everyone. It would make sure there is more predictability and information sharing and then we could look into penalties to make sure that when delays are not respected, whether it is the railways or at grain, that there is some kind of reciprocity. That is very important too. I am really looking forward to seeing what the government comes up with and working together to make sure that we get our grain and our transportation going in Canada so that we can respect our international trade agreements.

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

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

I think many of the provisions passed in Bill C-30 are really important for the industry, as well as for ensuring the safe transportation of agricultural products and other goods. I am really pleased that the government moved a motion at the last minute to extend many of those provisions once again. I think we need to keep those provisions, including the one on interswitching, for example. All the stakeholders and farmers told us repeatedly that they were really happy with the decision regarding the extension of interswitching distances to 160 km.

Perhaps we could consider the possibility of extending that distance, since, as members know, Canada is vast and transportation is rather complex. I would also like to see what comes out of the consultations being held by the Minister of Transport, Mr. Garneau. I look forward to hearing about that and I hope to have some news when the House returns this fall. I also think the Minister of Agriculture and Agri-Food could show a little more initiative on this.

The House will recall that Bill C-30 was introduced by the former minister of Agriculture and Agri-Food. This directly affects producers and therefore we must consult these experts. I hope that the Minister of Agriculture and Agri-Food will show more leadership and, together with the Minister of Transport, will ensure that producers have fair and adequate service.

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

Mr. Speaker, I am pleased to speak today about the motion from the Standing Committee on Transport, Infrastructure and Communities.

We have been calling for the Liberal government to take action on the grain transportation file for a long time. The report simply requests that the changes set out in Bill C-30, which expire in August 2016, be extended for one year. I agree with that request and will support it when it comes time to vote.

Before explaining why it is important that the government extend these provisions of Bill C-30, I would like to give my colleagues in the House a little bit of background about the grain transportation crisis. About two years ago, I spoke specifically about Bill C-30 in the House.

The combination of an excellent harvest and a harsh winter uncovered major flaws in our grain transportation system that cost farmers and the Canadian economy between $7.2 billion and $8.3 billion.

Although the government at the time had known since the fall of 2013 what our farmers would be up against, Bill C-30 was its belated response to this major crisis. The opposition parties and stakeholders had to pressure the government for months before it did anything.

Unfortunately, the bill did not go far enough. What is more, it was temporary, as members can see from the provisions that expire in August.

The Premier of Saskatchewan said that the bill was flawed and disappointing. Throughout the crisis, the Conservatives acted as if the situation was out of the ordinary, even though farmers had clearly indicated that the system was broken and the duopoly of Canadian Pacific and Canadian National over the market was allowing the companies to provide inadequate service without fear of repercussions. There is still an imbalance of power between farmers and the railway companies.

In an attempt to address the many shortcomings in Bill C-30, my party proposed a number of amendments: implementing mandatory reporting of the price of grain throughout the transportation system; requiring adequate service in all corridors; ensuring that producers in all affected regions would be consulted about the regulations; requiring the government to work with the provinces to develop and implement a plan for open access running rights to ensure effective competition in the rail service; imposing a moratorium on the closure or delisting of producer car sites; increasing fines and directing those revenues to compensation programs for producers; and opposing the temporary nature of the provisions in Bill C-30, which suggested that systemic structural problems were actually temporary and exceptional.

Unfortunately, all of the amendments that the NDP presented in committee were rejected. By the end of winter 2015, the delayed delivery of more than 11,000 grain shipments prompted us to try again. Despite Bill C-30, there was another crisis.

As a result, I moved another motion in the Standing Committee on Agriculture and Agri-Food for the immediate study of problems related to the transportation of grain and agricultural products. Subsequently, my colleague from Sydney—Victoria moved a motion in the House.

His motion, which was adopted unanimously on April 22, 2015, called on the House to recognize that an increase in rail service and capacity is essential to the livelihood of Canadian agriculture and that changes to legislation are needed to address the structural gaps in our system.

When I spoke to the motion, I made sure to emphasize how important it is for the government to listen to all stakeholders. That point is important and remains valid.

The current government should improve the system. It should implement the recommendations of all stakeholders, the experts, and especially farmers.

I am pleased to see that the Minister of Transport said that he would take the Emerson report as advice only and that his government would consult stakeholders before making any decisions.

I can tell him right now that producers and shippers are not keen to abolish maximum revenue entitlement and interswitching. Stakeholders all agree, as do the parties here in the House, that these two measures should be removed.

As Dan Mazier, the president of Keystone Agricultural Producers, said:

“The report doesn't address [the lack of competition in grain transportation] at all, and this is the fundamental thing those in the grain industry believe lies at the heart of all of our problems.”

Since the beginning of the year, stakeholders have also all agreed that it is important to extend the provisions of Bill C-30, which expire on August 1. All of the groups I met with mentioned this to me. The members of the Standing Committee on Agriculture and Agri-food received many letters to this effect from such organizations as Alberta Barley, Alberta Canola, Alberta Pulse Growers, Alberta Wheat, and Grain Growers of Canada.

They wrote to us to encourage the fact that we need to act very quickly and that the pro-competitive measures introduced in Bill C-30, the Fair Rail for Grain Farmers Act, do not expire on August 1.

Among the other measures, the legislation provided for the establishment of minimum grain volume targets for railways, gave authority to the Canadian Transportation Agency to establish regulations governing rail service level arbitration, and provided for the extension of railway inter-switching distances from 30 km to 160 km, in Alberta, Saskatchewan, and Manitoba.

Parliament must pass a resolution prior to August 1, 2016 to extend these elements of railway regulation or Canadian shippers will lose these important shipper protection measures.

The report presented to the House by the Standing Committee on Transport, Infrastructure and Communities goes precisely along the same lines. That is why we support it. However, the government must adopt a long-term vision and address producers' concerns. This is important. A number of agronomists and officials at the Department of Agriculture and Agri-food have said that crop yields would only increase.

If the government does not improve our system, we will see more crops like those we saw in 2013 and more crises like the one we experienced in 2014-15. The government must show leadership and must implement long-term solutions for producers.

I sincerely hope that the Liberal Party will keep its promises on this issue and that its decisions will be consistent with what it said and did when it was in the opposition. It is one thing to get all worked up to defend producers when one is in the opposition, but it is another thing to do so when one is in government.

Since the beginning of their mandate, the Liberals have not had a great record on agriculture and agri-food, but they now have an excellent opportunity to take action and to stand up for producers. We hope that they will take this opportunity today and will take action quickly.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I would like to say at the outset that I am sharing my time with the member for Berthier—Maskinongé.

Before I proceed with my speech, I just want to comment on the mention made by my colleague in the Conservative Party. I have been working very closely with the NDP critic in agriculture in great frustration, with the breadth of the issues in transportation, that for this area of agriculture it makes common sense for those who are dealing, day in and day out, with agriculture issues that maybe these matters to do with the transport of our agricultural products should be going, at least in part, to the agriculture committee.

We will continue to pursue that. Lord knows and those of us who are on the transport committee know that we have a lot to deal with anyway.

I feel confident in sharing that prairie farmers will be greatly relieved that the government has at long last, and at the very last possible moment, taken action to extend the time period for the application of the emergency legislation enacted last year under the Fair Rail for Grain Farmers Act.

One important provision, as we have discussed here, of that law postponed the expiry of the extended access by farmers to interswitching from 30 to 160 kilometres until August of this year. Were this action not taken, farmers would have been greatly disadvantaged.

Greg Sears, chairman of the Alberta Canola Producers Commission supported this extension, which is also endorsed by the Agricultural Producers Association of Saskatchewan, the Canadian Canola Growers Association, the Barley Council of Canada, the Canadian Oilseed Processors Association, Cereals Canada, Prairie Oat Growers Association, Grain Growers of Canada, Pulse Canada, Western Grain Elevator Association, and the Inland Terminal Association of Canada. They all support this.

Mr. Sears said:

Extended interswitching is being used by grain shippers and is emerging as an effective tool to provide better rates and service between two Canadian Class 1 railways, as well as other North American railways. Time is of the essence to ensure this provision does not lapse before parliament adjourns for the summer.

Farmers, especially in the Prairies, need better access to interswitching to get their crops to market. This was identified as a key issue in the Emerson report, but extended rights under the Fair Rail for Grain Farmers Act are set to expire August 1 of this year. This means that many farmers could lose access to markets this season, which would lead to severe hardship.

On May 13, at the request of the Canadian grain, canola, and pulse growers, I put this exact request to the government on behalf of agricultural producers. I asked that the government commit to legally extending these rights for fair rail before the House rises in the summer. While the Prime Minister made a commitment in April of this year, it was not until today that any action occurred.

This motion will ensure extended access for at least another year. For this coming year, Canadian grains and pulses will potentially reach markets in a timely manner. This is critical to provide expanded options for producers to access markets, thereby making grain sales more competitive. However, as grain producers have advised, they require longer-term solutions than just a one-year extension.

Again, as Greg Sears has expressed:

Truth be told, all farmers would benefit from 1,000 kilometre interswitching or open running rights because there are still major farming areas not receiving any benefit from the extended interswitching, such as the Peace region of Alberta that is over 500 kilometres north of Edmonton.

As Mr. Sears reminds us, agriculture is among the most trade-dependent sectors with the majority of product exported. He reminds that rail remains the only economical option to ship those products from prairie to port.

This makes prairie producers almost entirely dependent on the railways for the long-term viability of our Canadian farms. Farmers are reminding us that Canada cannot afford a repeat of the 2013-14 shipping debacle and the damage to the Canadian agriculture industry as a reputable supplier of high-quality grains and oilseeds.

In the farmers' view, these measures are critical to correct the imbalance of market power controlled by the railways. As submitted by the Agricultural Producers Association of Saskatchewan, further measures will be needed to “address the fundamental problem of railway market power as the primary factor constraining rail service and commercial accountability in the grain transportation system.”

The president of the Canadian Federation of Agriculture, Humphrey Banack, an Alberta farmer, has said that extended access to interswitching is critical in order to hold rail companies accountable. He recommends that the extension continue, at a minimum, until after the Emerson report is considered and acted upon by the government in a process, he stresses, of direct consultation with the agricultural producers.

As my Conservative colleague has stated, what would be absolutely critical is that, as the government moves forward to review the Emerson report and all of the issues that arise out of the Fair Rail for Grain Farmers Act, the producers themselves play an active part at the table and not be peripheral. It is absolutely critical to our economy at this time, particularly in areas such as Alberta, where the economy is suffering. Agriculture has always been an important part of the revenue for my province and contributes to the wider Canadian economy. It is absolutely necessary that we get this right and that we do not let the rail companies continue to, frankly, railroad our farm producers.

I am very happy to support the motion, which I contributed to at committee. It is very important that any review of the motion be further expedited so that the farmers have some kind of clarity and are not left hanging, as they were this year, right to the bitter end.

Opposition Motion—Canadian Dairy Industry

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

Mr. Speaker, my colleague and I are both veteran members on the agriculture committee, and we are on the same page on a lot of issues: trying to study the TPP at committee, looking at the Emerson report, and making sure that some of the provisions in Bill C-30 actually stay in place. However, when it comes to supply management, the TPP, and CETA, there was a compensation package announced by the previous government, and we did not see a follow-through by this government. There is so much uncertainty.

I knew the Canadian milk producers were going to be okay if there were some kind of compensation, but that is not on the table anymore. We have been dealing with milk proteins for the last few years. The situation is getting worse. There are companies that have built up in the States and have a lot invested in it. There are millions of dollars at play.

We have to stand up for Canadian farmers here. I am standing up for my constituents and for the supply-managed sector. We need to see the government standing up for farmers and taking care of this milk proteins issue, because we are going to see farmers sell their quotas, close up their farms, and leave.

Therefore, we are asking for the government to take concrete action, confirm to us today, with a date, when it is going to stop milk proteins coming into Canada, and reassure Canadian farmers instead of letting us be had by the Americans.

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

Mr. Chair, I would just like to add my voice to that of Chris. I think I said it a little while ago. It's kind of funny to be agreeing with the Conservatives so much.

How committee used to work is we tried to find consensus on a lot of issues. We used to have great studies at ag committee and we were able to produce reports and recommendations for the minister. The minister would come in and meet with us quite often. I really thought that after the election we would get along and we would find consensus at committee, but that's something we haven't been able to find at committee, sadly, after a few months.

I was happy that we were able to look at diafiltered milk and talk about milk proteins at committee, but they were two short meetings. We could have written a report and sent it to the House.

We have witnesses here and I'm sorry they haven't had a chance to speak yet.

I just want to reiterate the importance that we do maybe look at other subjects that are more important and more pressing, like the Trans-Pacific Partnership. I've said it before and I'll say it again: consulting Canadians is important. This is an important trade deal. It's vast, thousands of pages, and it does impact the ag industry, and having an in-depth study on that with recommendations to Parliament would be important. Tomorrow we're going to be looking at milk proteins in the House of Commons and eventually we'll have to vote on my motion dealing with milk proteins and applying the rules already in place.

The Trans-Pacific Partnership is important. Yes, the international trade committee is travelling and it is doing consultations, but the ag piece is really important. We could hear from different commodity groups. I do think we had a really great meeting earlier this week. I can't wait to hear the testimony from the witnesses we have today.

I think Chris mentioned also the importance of looking at grain transport. Bev and I were on the same committee when we were looking at C-30. We know how important it was for all parties to get consensus and work on making that piece of legislation the best it could be. The NDP put forward quite a few recommendations. Some of the provisions, four provisions, will be sunsetting on August 1. I think all of us have heard from different stakeholders about the importance of making sure that some of those provisions do not sunset. They're going to be going fast, right? We're getting into crazy season. We've seen it today, with votes occurring in the middle of a committee meeting. It's only going to get worse in May and June, with time allocation and pushing forward certain bills that need to be dealt with before we leave for the summer.

Grain transport was something that, on this side at least, we really wanted to have dealt with at committee, have witnesses come and talk about the importance of keeping some of those provisions and making sure that the government gets recommendations from this committee, because it will take an Order in Council and then it will take a motion in the House. We have lists of people and groups that would want to come in and talk about how they were negatively impacted a few years ago and talk about maybe infrastructure investments that could be done to make sure that rail is moving and people are on a level playing field when it comes to grain transport and the transport of all commodities.

It's frustrating and it saddens me a little bit to see that we've made it to this point, and Growing Forward, we will look at that. The committee did look at that, Growing Forward 2, in the past. We spent a few weeks at least—I could probably ask the analysts how long we actually spent on it—but we had great witnesses come in and we submitted recommendations. But we're not getting much clarity from you right now on what that'll look like and we don't have much information on what the structure will look like for Growing Forward 3. There are so many issues that we need to be dealing with instead of Growing Forward right now. There is grain transport. There is the Trans-Pacific Partnership.

Chris talked about busywork. I saw a lot of busywork in other committees. I know what it smells like and looks like, and this kind of smells like that.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Mr. Chair, that's the disturbing thing. We have members across the way saying to just stop talking. It was those same members last committee who were telling my colleague in the NDP that it was inappropriate that she moved a motion during the hearings. Now today, they've done the same. I'm disturbed, Mr. Chair, not only because they've done this, but now they're telling me to stop talking.

They're doing that in the House right now. They've now allocated a day for a debate on an important and substantive bill. They've talked about being open and transparent, being welcoming to the views and opinions of others, and yet what we have is members are now chastising us, telling us to quit talking and to quit supporting our agricultural producers across the country who have asked us to bring other issues to the floor.

If this motion passes, let's be clear. The Liberals have talked about having 20-some meetings that would take the entire rest of this session of Parliament for this discussion. We have issues of grain transport. Provisions of Bill C-30 will expire in the summertime. On August 1, when Parliament is not sitting, those provisions will expire. Farmers and shippers have asked us to call on the government to extend those provisions. If it is the Liberals' intent to stop us from having a discussion and supporting our agricultural producers across the Prairies who have demanded and asked for us to bring this conversation forward, if we're going to hear again and again to quit talking about the things that matter to farmers, well that's disturbing.

We're seeing them engage in those behaviours in the House. They decried the procedure in the House to limit debate in the last Parliament, but in those cases, there had been five and six weeks of debate sometimes and then there was a procedure to move to the vote. Now they're shutting down debate after a single day on a substantive and a comprehensive bill. What we're seeing again in this place is they're saying, “We're going to move this motion, so quit talking, because we want you to talk about nothing else for the rest of this session of Parliament”.

Well, I'm going to talk more about grain transport. I'm going to talk about the necessity of passing the TPP and addressing the concerns of agricultural producers. I'm going to talk about diafiltered milk. I am going to talk about the things that producers are asking me to talk about. I'm going to talk about the necessity for labour supply in slaughter facilities. I'm going to talk about building supply chains that support our agricultural industry. I'm going to talk about the things that farmers have asked me to talk about, and if the Liberals want to shut me up, I think what they're going to find is that I'm going to talk even more and defend farm families who are depending on this side to educate that side, apparently, about the priorities that the farm families have.

What I would ask is for the Liberal members opposite, rather than telling us to quit talking, to embrace our conversation, embrace the needs and the desires and the expectations of farm families across this country and do some heavy lifting and do some good work to ensure that farm families have the support that they need from their government and from the minister.

We as committee members have an important and great role to play. We have the opportunity of bringing forward concerns that farmers have asked us to bring forward. This motion would limit debate on all of those things for the rest of this session. There are provisions and elements within industry, which affect farm families, that cannot wait for months and months while we debate a program on which we have been told by the minister that we will have next to no say.

So, if we're looking for busywork, this is exactly what the Liberals are trying to pass. But I will not shut up. I will continue to talk about the things that farmers and commodity groups have asked us to do. The more that they tell us to quit talking, the more we're going to talk.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

May I suggest with Bill C-30 that you sit down with the chair of the agriculture committee and come back with a report to the committee with next steps?

Second, with respect to the Emerson report, I'm just dying to get into that report. I think we all are, after reading it. It's quite an exciting time for the country with a lot of the recommendations and/or discussion and dialogue that will happen with respect to next steps. I don't think it's all that realistic to think that we'll get into that before we rise in June. I think the fall time frame will be more realistic, and I think it allows us that. Nevertheless, I think it will take a lot of our time, as it very well should. It very well should because it's very important to get through it. I personally would like to see a national transportation strategy come out of that, and I think for the most part the minister is very aware of that.

To repeat myself, Madam Chair, I would suggest, if I may, that Bill C-30 be dealt with by your meeting with the chair of the agriculture committee and coming back with a report to the committee. Second, we can look at the Emerson report following all this, more than likely in the fall, and we can proceed then.

[The Chair, Liberal, Judy Sgro]

We'll do some communication and see what we can find out as to where we go.

We'll go back to your Bill C-30 issue, Mr. Badawey.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I have one other suggestion, Madam Chair. I'm wondering if we could discuss or entertain an idea of establishing an ad hoc subcommittee to discuss Bill C-30, and the opportunity that there may perhaps be to extend the four provisions in that act that are due to sunset during the summer. The minister has indicated that he's going to be taking the summer, and possibly into the fall, to review the Emerson report. We know that this other legislation is going to sunset. Many stakeholders have indicated that it would be really good to have those provisions extended, and then, depending on what happens with the review of the Emerson report, you could turn around and do something different. But I asked the minister a question about this in the House last week and he indicated that he was looking at it very seriously. So I think that might give us an opportunity to provide some input to the minister as he makes his decision.

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

I would like to thank the witnesses for their presentations today, but also welcome all the women who are here. It's so nice to have such a strong presence of young women. I hope you're finding the committee very interesting.

Claire, I know you represent some member growers of canola, grain, cereals. I'm sure you remember very well that few years ago, we had a problem with grain transportation in Canada. It doesn't matter how many trade agreements we have, if we can't move the grain and fulfill our commitments, it's very harmful and can be damaging because our reputation is very good. We have amazing products and that year we had a bumper crop. I know there were so many circumstances that made it impossible to get things working appropriately. I'm sure you're well aware that Bill C-30 came before the ag committee and some measures within that bill will be sunsetting in the next few months. I think it's August 1. I think everybody who comes to the committee will be very favourable to the TPP, except if you're in the supply managed sector.

I was just wondering if you could talk about the importance of transportation and of some of those provisions not sunsetting. I'm not quite sure how much you know about Bill C-30.

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

I have a question.

I know that at the last meeting you said you were going to follow up on a discussion you were having with the chair of the transport committee. I'm wondering if you could tell us whether the discussion has progressed, because, clearly, on the other side there doesn't seem to be an urgency to deal with Bill C-30, [Inaudible—Editor] the only option open to have experts here.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

To answer the question I was asked from across the way, I would love to have all of the input that I possibly could in terms of the framework. However, I do know that if you're going to the negotiation table in June, by the time we got into this it would be April, and if we haven't concluded.... If the minister doesn't know what his framework is at this point, we have to wonder what he's going to the table with in June. He's not going to wait for us to contribute to that before he prepares for the table.

The first meeting is in June. If somebody across there wants.... Look, I'm ready to drop everything and go out and study this or get feedback from farmers on Growing Forward 3. If there's a particular area that the minister needs some assistance with—it needs some hearings—we'll go do that. But tell us what that is, because if we are just going to do busywork....

If we look at the time frame, we can't do a comprehensive study of a Growing Forward 3 study before the minister would have all of what he needs to be prepared for that first meeting. I know that the ministers in respective provinces have already started to compile their information. They've been given the framework by the minister, what they expect to negotiate at that first meeting. I'm not sure what exactly we would be involved with. I don't understand.

I recognize that we're enthusiastic to put our oar into the waters of the negotiation that others are engaged in, but I'm not sure exactly what we hope to accomplish or contribute to the minister on a negotiation that has the first table meeting in June.

Look, I have great ideas, and I'm certain that if we travelled the country, farmers would have some great ideas as to what they'd like included in that. But we don't have that kind of time. What is it specifically that the minister is inviting us to contribute for that discussion? If it's just busywork that this committee is engaged in, I think we're all going to be disillusioned with our jobs.

Let's do effective work. Let's actually do stuff that's going to impact and benefit farm families across this country. On the grain transportation provisions that will sunset this summer, an essential thing for us to decide as a committee, if we're going to recommend to our minister and the Minister of Transport whether or not they would be extended, I believe strongly that they should be. I believe that every tool in the tool box of the Minister of Transport to protect farm families is absolutely paramount. I think that's effective and good use of our time to ensure that farm families are protected.

I just wish somebody across the table could tell us what piece of information the minister is missing that he would like us to consult on with Canadian farmers before he goes to that table in June. If he doesn't have a clue what he wants the program to look like, then we have bigger problems, and maybe we should go immediately into a study. We can tell him what we think should be included in that. We could meet with farmers across the country. We could leave tomorrow, if in fact he hasn't got that, but I suspect that's not the case. I suspect that the minister has a very good idea as to what he is expecting because he's already spoken to his provincial counterparts.

What is it that the minister needs our help with defining for those negotiations? Before we just decide that we're going to do busywork, let's actually find out what he wants us to do, what we could do to be useful, and what we'll actually contribute to a better program. If somebody from across the way could tell me that, I'll cancel every meeting that I have henceforth to make sure that we get the best program to move forward.

If we don't have something that we're being asked to contribute to, then we have stuff that will have a meaningful impact for farm families across this country. There are a number of motions, a number of things that stakeholders across this country have told us, so we have the necessity to make sure we deal with the C-30 provisions that will sunset this summer.

We've heard from the produce growers who need provisions relating to PACA, the provisions of bankruptcy protection that don't exist today because of the challenges that have developed as it relates to the Americans. That's on what we can do to make sure that bankruptcy protections are there to protect farm families and ensure they can get their commodities to market.

We've heard from countless organizations that have very specific requests of this committee.

If the minister wants us to travel or to hear from farmers, as it relates to Growing Forward 3, we need to have an idea as to what we're doing and that it's not just busywork, because we have real work that needs to be done.

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

I would like to echo the comments that Mr. Drouin just made. It takes a while for the government to make decisions sometimes.

I think from the witnesses we just had today, and from meetings I think we've all had individually with farmers and different stakeholders, we know the importance of the past Bill C-30 and of maybe looking at the four recommendations that were in the Emerson report.

I was on the agriculture committee before. We did go over Growing Forward 2. We made recommendations.

I know that governments have changed, and you guys want to work together a little bit more. I'm really hopeful and optimistic that if we do make recommendations, they might be adopted a little more than they were when it was you guys back then.

This is a pressing issue. I think we could still get to Growing Forward 3 in due time, but I still think we should absolutely concentrate on grain transport. There were billions of dollars of losses for farmers, huge losses, and this could happen again. We're shipping less oil. They had a bumper crop, yes, but this is a pressing issue. I'd be very uncomfortable going forward with Growing Forward 3 or whatever it gets named, because this is an issue that needs to be acted on now.

We could ask the ministers to extend the provisions and not let them sunset, but we can't force their hands to do it. That's why I think it's important to have witnesses, experts. You know, we meet with farmers, but I'm not a grain farmer in the west. I represent a dairy, pork, and heavily supply managed area in Quebec. But I meet with people across Canada, farmers across Canada, and they're telling me they're worried, they're concerned. They want the government to act.

I think it would be a great opportunity for us to study this at agriculture committee. Transport is not necessarily the best place to do it. They're busy with rail safety. This is an ag issue. We need our farmers here. We need our commodity groups. We need them to come and tell us why it's important for the interswitching, why it's important for MRE, why it's important for the four recommendations. We have to make this legislation right.

I was on committee. I fought to have a lot of these things kept in place. I fought to make it the best piece of legislation it could be. Sadly, I'm sorry, you guys voted down—remember, Bev?—a lot of the things we recommended that were based on witness testimony.

So it's a plea. I'm kind of asking, I guess, that as committee members we find some consensus and go forward with a study on grain transport, because that is an issue that will help farmers right now.

Cultivons l'avenir, Growing Forward, will come in due time and we will do a study later. We will make recommendations to try to make that better, but this is an issue that I think we could deal with and put farmers at ease. This is a huge, huge issue for them.

I guess I'm just pleading that we do a study on grain transport and the Emerson report and look at keeping some of the recommendations that were made by our experts who came to committee.

[The Chair, Liberal, Pat Finnigan]

That concludes our presentation by the witnesses. I want to thank both of you, Mr. Tupper and Ms. Duff, for coming over and talking to us about the grain transportation system, and also Bill C-30. Thank you very much.

We will take a couple of minutes' break, and then we will return with committee business.

[Shawn Tupper]

I want to reiterate that these are two separate activities. The consultation and the move forward through to the fall with respect to the review is a different thing than the government's ability to extend the elements of C-30.

The minister has certainly heard from the agricultural sector. He's heard from other stakeholders in the transportation sector. The government is seized with the issue about what to do with the coming July dates and the sunset of C-30. I think I need to leave it to the minister and deputies to make that announcement.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Thank you so much, Mr. Chair.

I do appreciate this conversation. I think it's an important conversation.

There's been a fair bit of discussion as to whether Bill C-30 went far enough or did everything. It was intended as a stopgap measure for a period of time but also to be in place until such time as the CTA review was completed. That was the second step to the program, to allow the minister to continue to have tools in his tool box if in fact the circumstances redeveloped, whether it be weather, if it be another bumper crop in the west. Those circumstances, those conditions, could easily re-present themselves this winter.

I'm hopeful. I'm the son of a farmer, and farmers are forever optimistic that the next year will be better and might be better. So I do think that is a possibility, and, of course, who can tell what the weather will be? We do know that the minister has said there is a time frame for the replacement legislation. The timeline is such that we know it will be consulted on through until the fall. We know the process for legislation, and sometimes it takes years to get legislation fully complete.

In your view, is there any danger, any harm, in maintaining the provisions of Bill C-30 until such time as replacement legislation is in place? Is there any encumbrance that that extension would place on anybody?

What I should say is, giving the minister the tools.... Obviously the rail companies are very uncomfortable with the interswitching provisions. I get that.

We're at the agriculture committee; I guess I should say I'm here to defend my agricultural producers. Will the farmers be poorly served by the extension of the provisions of Bill C-30 until the legislative replacement from the review is in place?

[Shawn Tupper]

As we've indicated, Bill C-30 was put into place to deal with a very specific situation. That situation has now passed. We've returned to more normal operating parameters.

Again, I think the act and the advice we got from Mr. Emerson and his panel allow the government to move forward in that exact conversation: what are the needs for the future, whether it's regulatory policy or investment?

[Lloyd Longfield, Liberal, Guelph, ON]

Very good. I'm hoping that climate change will be something that we're able to discuss in further detail in other meetings. With an extended grain season, what does that mean for the crops? The pulses are up and wheat is down. We're going to be seeing a really dynamic change in the market.

I'm wondering whether Bill C-30 is in the way of any of that or whether it prohibits the modernization of the transport. Is it something that was a good stopgap but really needs to be re-addressed? Do you have any thoughts on that?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman. I may split my time with Mr. Warkentin if I run out of questions.

To start, I have some comments. Most of my questions would go to the policy people, actually, but those aren't for you.

I'll go back a bit just so the committee really understands the significance of the Fair Rail for Grain Farmers Act. When that came in, there were more issues than just the significant issues around getting grain from the farms, from those that had specific grains. Some grains would move, but specific ones that were sold couldn't get moved. As a committee, we also wanted to make sure that this was not just about farmers tramping on top of other shippers, because we had also forestry, mining, minerals, energy, and the fertilizer industry.

In terms of the grain farmers act, it was brought in with the co-operation of and full consultation with other shippers. It was interesting, and obviously we learned a number of things, one being that it wasn't just about grain. This act came forward with a lot of discussion, particularly at the agriculture committee, about how we were going to improve the Grain Act.

When I look at the sunset clauses from that time that are set out here, I see that they're almost here right now. July isn't very far away. It seems like it's a long way when it's -20°, but it's not very far away in terms of how acts and legislation take place. If we were to let that sunset.... I caution our committee on this, and I submit to the government that this cannot happen. These sunsets cannot be left out there and not be acted upon. It will take us back to where we were before the grain farmers act. The reason it had some timing in it is that the Transportation Act review was needed, and it was agreed on by the committee that we needed that to take us to this point.

I'm looking at a question that I might ask you, though. Those were my comments. I know that all of us, just from the comments that have been made around the table, know the significance of making this protection be put back in place. Many of us have listened to many of the producers who are raising four or five major issues with the report, and I think this committee needs to be able to come alongside and reinforce the support that they are talking to us about.

One of the things—and it's likely just because I don't understand all of it—is that one of the recommendations is to redefine “producer car shippers” as just “shippers”. I'm wondering what that means in terms of the change in rights that would come with taking away “producer car shippers” and making those rights the same rights that “shippers” have. Help me with that.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

All right.

At the time, how was Bill C-30 received by agriculture? Were they pleased with the outcomes at that time?

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

Thank you, Mr. Chair.

My thanks to the witnesses. I am really pleased that we are studying grain transportation in Canada.

A few years ago, my colleague Mr. Shipley and I participated in a study on Bill C-30 at this committee. Producers were facing huge losses in revenue when goods could not be delivered by rail. Something had to be done. All three parties reached a consensus in the committee, which was very interesting.

I hope the committee will once again be prepared to undertake a study like that, in order to provide a report with recommendations to the Minister of Transport and the Minister of Agriculture and Agri-Food, who are both responsible for handling this situation.

In the report there were four recommendations, and from what I understand, the minister can go through with an order in council. I think a motion would have to be put before the House, if we wanted to keep some of these provisions in place.

Is that right—an order in council and then a motion before the House?

[Lenore Duff, Director General, Surface Transportation Policy, Department of Transport]

All of the provisions in Bill C-30 collectively will expire. The defining operational terms, the interswitching, the grain volume requirements and...I'm missing one of them.

The permanent ones are the Canada Grains Act amendments that relate to contracts, and the data requirements under the regulations, which are continuing.

I'm just missing the last one.

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

We studied Bill C-30 at committee, and we had experts come in. They explained to us the importance of interswitching and many of the technical terms. When I meet with farmers in different commodity groups, it is grain transport that keeps coming back, and the TPP.

I would thus like to put forward a motion that we continue with the 13th, Wednesday, on the grain transport numbers and report; that we do that for one hour, but then we extend it, maybe until the middle or end of May, in a study on grain transport; and that we make a report with recommendations.

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

I agree that this is an agriculture issue, but it touches trade and so many other ministries. When we had the grain crisis, the bill, I think Bill C-30, did come to the ag committee. We tried to amend that bill. I've actually gone back and read it and looked at all the amendments brought forth by the three parties.

I think this meeting coming up on the 13th is important, but I really think we should concentrate on trying to get this right. The TPP is not going to change if we put it back a few more weeks. I think we need to really move forward on looking at the grain issues and having witnesses come in and submit their recommendations. When it comes to MREs or interswitching, I think that's something we need to do.

How does it work, Mr. Chair? Do we have to put a motion, or are we just going to be agreeable on what we're going to do moving forward?

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

I was at committee when we had the bill—I think it was Bill C-30—to help facilitate grain transport. You did mention that some provisions will be sunsetting in August and that it has to go before Parliament. Does it have to come before Parliament in order to keep those changes in place? Or could it be done by a directive from the minister to keep some of those provisions?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Getting back to the scenario, as a result of putting out the review...that's why I want to get the review out really quickly, so that people could comment. The comments that have been made to you have in fact been made to me and to the Minister of Agriculture.

We have not made a decision on whether or not to extend Bill C-30. It is certainly a bill that addresses some of the points that you're talking about, the MRE, the interswitching, those kinds of issues. We are studying this at the moment.

Remember that we've only had this report for a short time and we want to take the best possible approach to making sure that grain moves efficiently—it's an important resource—but in the larger picture, that we're also moving potash efficiently, that we're moving pulses, that we're moving coal, that we're moving all products including containers—

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Minister. I'm not hearing an indication of a major shift, and you can be sure I'll pursue it. I know what rules and regulations are. I know what self-audit is, and it has to end in this sector.

I only have a few minutes left, I think. This is a huge portfolio. I wish I had more time but I do feel obligated to raise some concerns of the agriculture community.

I have met with organization after organization that are deeply concerned about the recommendations in the Emerson report. They would like a commitment from you that you are going to extend the deadlines under Bill C-30 which sunset in August 2016.

They are very deeply concerned about calls to end the MRE without additional protections in there for our grain producers. They also are very concerned about the proposed changes to interswitching. I know that's between you and the agriculture minister.

I would appreciate clarification on what kinds of measures are going to be taken to make sure that our agriculture producers can participate in the trade opportunities.

Rail Service

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

Mr. Speaker, before I begin, I would like to thank all of my colleagues who are members of the Standing Committee on Agriculture and Agri-Food for their work. Every member wants to promote the smooth functioning of the agricultural system and the emancipation of agricultural industries. I would also like to commend the member for Sydney—Victoria for moving this motion, which just received the government's support. I would therefore like to thank her once again for getting the government's support for her motion.

On February 5, I moved a similar motion at the Standing Committee on Agriculture and Agri-Food. That motion had the same objectives as those we are talking about today. In fact, I asked the committee to immediately examine the problems that currently exist with the transportation of agricultural products by consulting all of the stakeholders. In that motion, I said that given recent reports on the deterioration of rail service, ongoing problems with the provision of cars to transport grain and the specific impact of ongoing transportation problems in the agricultural sector, we proposed that the Standing Committee on Agriculture and Agri-Food immediately examine the problems that currently exist with the transportation of agricultural products, establish long-term projections for 2015 and consult all members of the grain supply chain, including producers, elevator operators, grain companies and rail companies.

Unfortunately, the government refused to step up to its responsibilities, and that could happen with this motion too. However, once again, there is good news. I hope that this will change things.

A year ago, I was here to talk about the same problem in the context of Bill C-30, which was designed to resolve the grain transportation crisis farmers were experiencing. I do not need to paint a picture to make the point that the Conservatives' decisions have not solved much of anything in the past year and that farmers are still in the same boat. I am proud to express my support for this motion.

We need to talk about the context and compare the situation to last year. As I said, and as happens so often with government bills, I get the feeling I'm going through exactly what happened last year all over again.

Last year, farmers' growth was hampered by inefficient CN and CP services. At the time, the Minister of Agriculture and Agri-Food said that rail companies were providing adequate service, but thousands of farmers were exasperated by the fundamental flaws in the grain transportation system.

How are things now? About the same. Rail companies delivered over 11,000 orders late. That is about 11% of their orders. Ongoing delays have cost the Canadian economy over $8 billion. What is more, in the past six months, fewer than half of all orders were delivered on time.

What did the government decide to do? It decided not to renew the requirements that CN and CP transport a minimum volume of grain. We also found out that, after having rejected an offer to purchase from an association of Canadian farmers, the Conservatives offered up a majority stake in the Canadian Wheat Board on a silver platter to foreign interests. That is another Conservative decision that shows a lack of support for Canadian farmers.

Again, a year later, farmers have lost $8.3 billion. They have received nothing, apart from compensation under Bill C-30, which puts them back into a similar situation today.

I deplore the fact that there still has not been any compensation for the losses suffered by producers, especially for the crises and problems that occurred in previous years. A responsible government is able to prevent such situations, instead of always finding temporary solutions to these messes.

In other words, Bill C-30 had very little impact in the medium and long term. It simply brought everything back to square one.

We have to ask ourselves: why are we here? For the same reasons that the opposition always has to go over the flawed bills introduced by this government, which, despite the warnings of my colleagues and stakeholders, refuses to listen.

We are in the same situation because in enacting Bill C-30, the government did not listen to all the stakeholders. A number of them were critical of the government for getting rid of the CWB and said that the board was useful when it came to grain transportation. However, the government did nothing about it, and today it is encouraging the sale of the CWB to foreign interests.

The stakeholders were calling for a mechanism to evaluate the performance and quality of rail freight services, but the government rejected that idea.

Today, the stakeholders are claiming that service is still bad. They say they are frustrated by the persistent delays, whereas the government is still saying that everything is just fine.

As usual, things were done too quickly without any plan or long-term vision. The government disregarded our amendments, which took into account all the requests of all stakeholders, not just those of the corporations and the major producers. The government did not implement enough of the necessary sanctions to ensure the efficient transportation of grain by rail.

In closing, the situation is critical because this government mismanaged it and the minister keeps saying that rail companies are doing just fine.

What should have been done and what should we be doing now?

Adopting the proposed amendments would have addressed the root of the problem. My party fought to have Bill C-30 consider the interests of farmers and not just those of major producers.

Our amendments would have implemented mandatory reporting of the price of grain throughout the transportation system, required adequate service in rail transportation corridors and ensured that producers in all affected regions would be consulted about the regulations.

That could have prevented the current crisis, but it is pointless to talk about the past. We have a mess in our hands and we have to deal with it.

We have to examine this crisis and take action to establish new communications protocols and new penalties for non-compliance with delivery agreements. We must also ensure that producers have information about exports and ships and establish the mandatory reporting of price throughout the grain handling chain. All producers, even small ones, must have equitable access to rail infrastructure, and we have to think long term by developing a strategy for the future of rail service that will consider the growth of the agricultural sector.

The minister needs to step up and admit that he failed in his obligations. He must admit that he made a mistake by abolishing the Canadian Wheat Board, by supporting the sale of this former crown corporation to foreign interests, by refusing to be transparent about exports and by refusing to bring in performance standards for rail transportation.

In addition, the Minister of Transport needs to impose the fines she promised to impose—$100,000 per day and not per week—on the companies that do not comply with the agreements.

It is time that the government started listening and started working with all stakeholders in order to resolve the grain transportation issue once and for all. That is why I support this motion and why I will vote in favour of it.

[Malcolm Allen, NDP, Welland, ON]

Mr. Speaker, it is a pleasure to speak to Motion No. 550 put forward by the member for Sydney—Victoria.

I find it rather interesting that we are talking about a motion that deals with what we ought to have done, but it does not actually include anything that says how we should have done it. Be that as it may, it would have been helpful if the member had actually put in some of the amendments we tried to get through the agriculture committee that talked to how to make the system work, because ultimately, it is about trying to make the system work.

I do applaud the member on his efforts at least to hold the government to account to some degree, but it would have been nice if it actually had some real teeth in it. Something we had talked about was that it should have the fines that were there in the first place.

If we had done that, perhaps it would have been doing something rather than what the government eventually did in a sort of clandestine way when they literally changed the numbers. What was supposed to be a fine per incident turned out to be a fine per week, which I found rather unusual and slightly disheartening.

We helped the government with the legislation. I know that the other side has a hard time believing we help with these things, but when it comes to Bill C-30, we did help with that legislation. We tried to move it along swiftly, because we understood the plight of prairie farmers coming out of the winter of 2013. It literally was a bumper crop. It was stuck on the Prairies, because according to the railroaders, it was too cold for them to move grain. The rail system seems to not work in a Canadian winter. It was almost as if somebody had brought some folks up from Florida, with no offence to the good folks from Florida, and transplanted them into Saskatchewan, Alberta and Manitoba in the middle of winter, and they did not know what to do because it was cold. The railroaders decided that was an excuse for them not to do what we felt they ought to be doing.

Unfortunately, the folks who suffered the most were the farmers. Ultimately what we saw was the price for them was not as lucrative as it may have been if the grain had actually been moving.

This speaks to the whole sense of how the system operates and how it should operate, and who is responsible to make sure it does operate. Clearly, it was not operating.

Many times we asked the minister in the House why over 40 ships were sitting in the port of Vancouver waiting for grain that was stuck on the Prairies. It was costing literally thousands of dollars a day.

The port manager at the port of Vancouver said that they were like car jockeys, except the problem is they were working with big ships. They are brought out of anchor, put at the dock, and when they find out there is no grain being delivered, the ship has to be moved off the dock because another one wants to come in. He said that every time an anchor is pulled up and a vessel comes in, it is a $10,000 move. That is a heck of a lot more money than someone who jockeys cars for a living, which might be $10.

Those were issues facing the farmers. That cost ends up going back through the system, and it is the farmers who pay, because they get less for their grain. At a time when they should have been getting a good price, in fact one might say they should have been getting a great price, they were getting less because the system was not working.

There are farmers who fill their own hopper cars, what the trade calls producer cars, which is simply a small railroad somewhere owned by a group of farmers who got into a co-op and decided to pool their resources. They get the short-line railroad and bring the cars down to the main line. When they put in orders for producer cars, they were not seeing any. They were being told that they should just truck their grain to an elevator. The problem was the elevators were full. The elevators were saying not to truck it to them because they had no space.

It ends up being stored. Many farmers had contracts. The government was always good about talking about forward contracts, that if they were forwarded out, they could make some money. The problem was they had forward contracts, but that time would come and go, and they could not move anything, because there was no room in the elevator. The elevators were still full because the railroaders were not getting an opportunity to move the grain, because of the cold winter, they say.

Ultimately, the folks who paid in all of this were indeed the farmers on the prairies.

We saw the order in council come through, and then Bill C-30 came forward. We tried to work with that. We tried to push some amendments on what the fines should be like. We actually agreed with Premier Brad Wall. We thought we should double the fine. The government proposed $100,000. We thought it should be $200,000. We actually agreed with the Premier of Saskatchewan. Many people out there would probably not believe that we would agree with Premier Wall on that particular issue, but we did.

We also pushed forward a number of amendments on how we could have some sort of transparency in the system so that farmers could follow whether the ship was in port, whether the grain was moving, where it was stuck, what the final price was, and why the farmers got a particular price when they sold to the elevators.

Many of us in the agricultural field know that there is a set price for grain travelling west to the port of Vancouver. The railroads charge a set price, so it is easy for farmers to calculate if they know the final price at the port destination. Farmers can calculate how much it cost to send it to the elevator, how much it cost for the elevation of it, and how much it cost to transport it.

Some reports, one of which came from a professor at the University of Saskatchewan, said that the farmers were basically losing $160 per tonne because of the way the system had plugged up. That being the case, the opportunity for farmers to take a bumper crop and turn it into a bumper financial crop was wasted because of what happened with the railroads.

The motion talks about making sure that this does not happen again, but what we need to see is that the government makes sure it does not happen again. We need a system of fair rail and a system that allows those who ship to make the railroads accountable.

I talked about agreeing with Mr. Wall, but I suggested in an amendment at committee that we should have open rail. Two companies in this country do not want open rail, Canadian National and Canadian Pacific, which I find ironic, because they do not mind asking the United States for open rail. They do not want to see competition. We actually think that if we had competition in the system, if we had transparency in the system, like they do in the U.S., where they can actually tell what the grain price is at the port of Seattle, farmers would know if they were not getting a fair price. It would give them more leverage and more information, and information in the marketplace is important when they make those final decisions to sell now or sell later or to contract it. Ultimately, we have seen a system that does not function well for farmers.

Another amendment we pushed was to make sure that now that we have to move a million tonnes, it will be fairly distributed. What we saw justified our fears. The railroads figured out how to turn it around fast. Basically they chose the elevators closest to the western port of Vancouver, and the rest, who were further east, suffered.

Many of us who have kids or grandkids who like Cheerios will remember that the Cheerios factory was going to shut down. Why did that happen? It was because the oat farmers in this country supply all the oats needed in the United States to make Cheerios. However, there were no trains moving north-south. They tried to take the shortest route back and forth through the western corridor and did not run north-south at all.

I spoke to an oat farmer not long ago. He said that there is still an issue trying to get trains to come and serve them. Clearly this is a government that did not actually get the job done, even though we had Bill C-30. We suggested that they do not sunset the clauses in it. The Conservatives decided that they would sunset the clauses in it.

I would say to the government that if it is to do a rail review, it should not worry about the carrot; it should get out the big stick. If it is to bargain with two railroads, they will bring big sticks, and if the government does not bring a big stick, it will lose.

Then again, there will be an election, and by that time, we will have the big stick, when we sit over there. We will make sure that the railroads deliver service to farmers across the prairies and that they get the service they deserve.

[Lisa Raitt, Conservative, Halton, ON]

It would be my pleasure.

Of course, the review that's being undertaken by Mr. Emerson is at arm's length from us, and that's the way it should be. He has a secretariat, and he has a panel that is receiving submissions from across the country. What I understand is that there have been numerous submissions made, which is good news. Indeed, when I speak at events, I always encourage the stakeholders in the room: if they have an opinion on something, they really should bring it forth. This is our opportunity to take a look at what we currently have and how to change it for the better for the future.

I know that the panel is seized with the issue with respect to grain delivery. I know there are concerns not only about the costs associated with transportation, but with the levels of service as well. We've been through a number of reviews of service levels in the rail system in the past number of years, and we of course passed the Fair Rail for Grain Farmers bill last year, which was very important too. It added to the tools that I would say shippers have with respect to ensuring that they get good and fair rail service to their place of work.

That said, we still do need to take a look at it in the bigger picture of what other commodities are involved. If you say that there's going to be a minimum volume of one commodity, do the other commodities worry that they're not going to have the same kind of service? We've been balancing those as best we can.

What I look forward to, coming out of the panel's review, the panel's analysis, and some recommendations for the future, is what the system will really look like in a world where we are developing and signing more free trade deals and we want to expand and open up markets. We want to increase the goods that we're shipping out of the country and the goods that we're shipping into the country as well. They're all connected by that rail line. That ribbon of steel is incredibly important, and we want to make sure that whatever we put in place is going to positively enhance our ability to move a good supply chain.

The department as well has some good round tables with respect to commodity supply chains, where we bring the parties together to talk about it. I've met with the Mining Association of Canada. My colleagues have met with the agricultural aspects of the rail shipping lines. We need to continue to come up with the bigger-picture solve on this, and not just try to think where we should be going, but really understand fully where we want to be and get there. I do believe that it's Mr. Emerson and his committee that will help us get there.

Rail service

[Earl Dreeshen, Conservative, Red Deer, AB]

Mr. Speaker, it is a pleasure to stand here today to speak to the motion.

Since the motion addresses agriculture, I would like to recognize my much older brother Alan on his Groundhog Day birthday as well as his outstanding career as a rancher, grain farmer and businessman. He was my first farming partner from a time long ago when we were both teenagers.

Last year, Canada's 60,000 grain producers exported some 40 million tonnes of world-class grain products worth over $20 billion. That is important for agriculture because it represents about half of all agriculture and food exports, but it is also important for Canadians who live in cities. A strong agriculture and food sector drives one in eight jobs in our country and almost 7% of our gross domestic product.

Canadian grain farmers depend on exports to sell 70% of their wheat, 75% of their pulse crops and 85% of their canola. That is why the rail service is so critical to Canada's hard-working grain farmers.

Regarding today's motion, our government has taken steps to address each of the five points, namely: recognizing that improved rail service is essential to farmers' livelihoods; recognizing that the ongoing review of the Canada Transportation Act will provide an opportunity for improvements; the need for all stakeholders to sit down together; the need to correct the imbalance of power along the chain; and ensuring government and industry work together. We have addressed these points and we continue to do so. Let me elaborate.

We recognize our rail service is essential to the livelihood of Canadian farmers. Likewise, we have moved to address the imbalance of power along the logistics chain.

Canadian farmers pay over $1 billion to move regulated grain by rail. On the prairies, grain travels an average of 1,400 kilometres to reach a port position. Our farmers and our economy depend on efficient, effective and reliable rail service to move those crops off the farm to our valued customers in Canada and around the world. That is why a year ago our government took action when our farmers were facing the prospect of moving a record crop.

First, we introduced an order-in-council mandating the railways to move a minimum volume of one million tonnes of grain a week, backed by penalties. Two weeks later we introduced Bill C-30.

The Fair Rail for Grain Farmers Act has put into law clear and achievable solutions to ensure grain and other commodities get to market in a predictable and timely way. The act amended the Canada Transportation Act to include the authority to set volume requirements in order to mandate that certain grain volumes be moved. The legislation also gives us the ongoing flexibility to monitor and adjust volume requirements as needed. The act also created the regulatory authority to enable the Canadian Transportation Agency to extend inter-switching distances for all commodities on the prairies.

Bill C-30 amended the Canada Grain Act to strengthen contracts between producers and shippers. The amendment will provide the Canadian Grain Commission with the authority to regulate grain contracts between farmers and grain elevators.

Bill C-30 also enacted regulatory power to add greater specificity to service level agreements as requested by all shippers.

In addition, we required additional, timelier and more detailed data from the railways to increase the transparency of railway, port and terminal performance across the supply chain.

In August, the regulations came into force and we renewed the minimum volumes to ensure continued movement through the fall.

In December, we did the same, while committing to increased monitoring throughout the winter months.

These measures are concrete and comprehensive and they have been delivered. The grain is moving faster than last year and faster than the five-year average.

Speaking to the second point of the motion regarding the review of the Canada Transportation Act, this process was up and running in the summer. We accelerated the review by a full year to focus on long-term structural issues affecting all rail transport, including grains.

A discussion paper was released in September for industry comment. Since then, the CTA review panel has been busy throughout the fall and winter, meeting with a number of stakeholders to get a clear picture of the challenges facing the western Canadian grain handling and transportation system.

We will continue to bring the whole value chain together to manage future challenges and create a rail supply chain that has greater capacity, predictability and accountability for the industry and, most important, for our global customers.

As far as urging industry to work together to improve the system is concerned, we have delivered on that as well. We have established a number of opportunities to bring together all the players to develop solutions for the longer term. We have also formed the Crop Logistics Working Group, bringing the entire industry together to focus on the performance of the supply chain for all crops in this new and exciting marketing freedom environment.

We moved forward on recommendations from the working group around performance measurement and government support, with a $3 million industry-government investment in a study on supply chain improvements. We also launched the commodity supply chain table, with stakeholders from the agricultural, forestry, chemical, and petroleum industries, as well as railways, ports, grain elevators, and shipowners. The group is exploring solutions to the challenges facing Canada's rail-based supply chain. Together, these initiatives will ensure that Canada's grain industry can to shape a strong logistics system for the future, one that responds to the needs of the Canadian grain sector.

However, we are not stopping there. This government has an overall plan to create a modern and competitive grain industry that will open up new opportunities for farmers in the 21st century. The cornerstone of our reform is marketing freedom. This landmark legislation restored to farmers a basic business freedom they had been denied for 69 years, the freedom to sell the crop they paid to grow to the buyer of their choice, the same freedom that helped create the canola and pulse industries, which made them juggernauts of Canada's farm economy over the past two decades. The overwhelming majority of western grain farmers have embraced the opportunities opened up by marketing freedom, which allows them to make decisions at the speed of business.

In the post-monopoly era, Canadian wheat is finding new customers in Asia, Africa, and South America, where sales of Canadian wheat in 2013 and 2014 surpassed the previous five-year averages. Meanwhile, instead of one buyer for farmers' wheat, there are now dozens of grain companies competing for their crops, as we saw with the deregulation in Australia. Since marketing freedom came into force, the number of grain dealers licensed by the Canadian Grain Commission has risen significantly.

In December, we took another key step for Canada's grain industry when we introduced BillC-48, the modernization of Canada's grain industry act. This proposed legislation builds on major reforms we made to the Canada Grain Act in 2012. It would modernize the regulatory framework for the grain industry to reflect current practices. It would enhance producer protection and grain quality and safety assurance. Enforcement of the act's provisions would be improved and less burdensome. Efficiencies would be realized in producer protection. This proposed legislation would benefit producers, the grain industry, and all Canadians in a big way.

Trade is also critical to the competitiveness of Canada's grain industry. Internationally, we have continued our aggressive trade agenda by pursuing free trade agreements and ensuring a science-based approach to trade issues, like low-level presence of genetically modified crops. We have concluded major agreements with 38 countries, including the European Union and South Korea, opening up key markets for our producers and processors.

Once the trade agreement with the EU is fully implemented, our grain farmers will have virtually tariff-free access to half a billion consumers from Italy to Scandinavia. To give traction to these trade agreements, the Minister of Agriculture and Agri-Food continues to travel with industry for face-to-face meetings with our customers in key markets. These missions help to promote the qualities of Canadian grains to every corner of the world, while bringing back valuable feedback from our customers to ensure that our grains continue to command a premium in the world.

The other key element in our grain modernization plan is innovation. We are keeping our wheat producers on the leading edge of innovation through investments in the wheat genome and disease-resistant varieties. That includes the national wheat improvement cluster. We have matched funds, bringing in investment up to $25 million. We have dealt with the Western Grain Research Foundation, again bringing all of these things together to help our farmers.

In conclusion, the future is bright for Canada's grain industry. The Food and Agriculture Organization estimates that over the next 35 years, farmers will need to increase their annual production of cereals by a billion tonnes. To meet the world-class demand, they need a world-class transportation system. This government remains committed to ensuring that Canada does, indeed, have a world-class transportation system.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I will say at the outset that the official opposition will be speaking strongly in support of the motion entered today by the member for Sydney—Victoria.

The motion talks about the need to identify increased rail capacity, rebalance the system, and make sure all sections of the industry are convened. We take that to mean that the farmers will be sitting at the table and be strongly involved in enforcing service level agreements and ensuring fair access and adequate compensation for farmers.

It is pretty obvious that it is time to get the railways moving. There is not the level of sophistication and coordination that is needed within our system. It is “absolute chaos”, to use the term used by the hon. member, and we really need to get back to it. It is costing our farmers billions of dollars.

It is no secret. We can ask any farmer what needs to be done, and there are five things. One, we have to increase pressure on rail companies, including through implementing and enforcing rail performance standards, which I will be talking about. Two, we have to ensure that export and vessel information is accessible to producers, and that mandatory price reporting is available throughout the grain supply chain. Three, we have to make sure that grain producers have fair access to rail infrastructure in order to move their products wherever they are. Four, there has to be a full costing review of producer rail service in Canada. Five, we have to develop a strategy for future rail service that accounts for the kind of sustained agricultural growth we have seen in the last few years.

I talked about enforcement. We heard the member for Bruce—Grey—Owen Sound talk about the weather as if the cold weather last year was some sort of excuse. He is quoted as saying:

I noticed the cold weather did not stop them from moving thousands of additional carloads of oil.

Obviously that has been fine. He went on to say he does not blame them, stating:

The first duty of any company president is to maximize profit for his shareholders, and that's what the railways are doing. They can make more money hauling oil than grain, and so that will continue to be their priority. ... If I were a railway president, I would probably do that same.

We had a start with an order in council a couple of years ago that talked about administrative monetary penalties of $100,000 a day. How many of those were issued? Zero. Then, in Bill C-30, the law was changed to contemplate administrative penalties of $100,000 a week, but there was still no action.

In the words of my colleague for Welland, the excellent agriculture critic for the New Democratic Party:

You need a big stick to get their attention. But the fines were supposed to be levied by the day, and the government obviously lost its nerve and made the fines weekly. Their big stick is actually a twig.

That, of course, is the point. The government is not serious about enforcing the rules. The Conservatives huff and puff, go from crisis to crisis, lurch here, lurch there, but when it comes to coordinated action, there is not the kind of single-desk action that we used to have when we had the Canada Wheat Board. It is not longer here. It is every farmer for himself or herself, and that seems to be the way the current government believes our precious grain industry should be treated.

I live on the west coast. Every day in Plumper Sound, I see sometimes 40 ships sitting for months waiting and indirectly costing farmers a lot of money. They are waiting for deliveries that never arrive and end up turning around and going back. This is no way to run a railroad, to use the hackneyed phrase, and it is certainly no way to run a sophisticated modern grain delivery service.

We have had record crops, but here is the irony: people cannot sell it. It sits and rots in grain elevators. Individual farmers have to come up with money to store the grain because they cannot get it to market. They are what are called in economic terms “captive shippers”. They really have nowhere to send it. They often have only one of two monopolies, CP or CN, and they are not able to meet the minimum volume requirements under the Fair Rail for Grain Farmers Act.

Again, there are no penalties if there is any problem in doing what the minister has said they should do, which is to increase volume. Penalties are lowered, and there is no enforcement. That seems to be the way that the government has dealt with this crisis on our prairies.

The NDP fought for certain amendments, but those amendments were ignored. The hon. member for Sydney—Victoria made the same observation. We fought together, and the amendments were ignored. We fought to have real consideration for farmers' interests included in the emergency legislation, the so-called order in council, such as establishing a system of mandatory reporting for the price of grain throughout the transportation system at specified points along the delivery chain. That was not allowed. We fought for the requirement for all corridors to receive equitable service. That was not allowed.

We fought to ensure that all producers in all affected regions were consulted about the regulations, but no. We fought for the requirement that the government work with the provinces to develop and implement a plan for open access running rights to ensure effective competition in the rail service, but no. We fought for the requirement of a moratorium on the closure or delisting of producer car sites and for increasing fines and directing those revenues to compensation programs for producers. That was not allowed.

We also have serious problems with service level agreements. I would like to cite Senator Mercer, from the other place, who talked about the importance of addressing this service level agreement issue head-on in Bill C-30. He said:

Bill C-30 really does not do a lot to establish or enhance existing service-level agreements between shippers and the railways. All it actually does is permit the Canadian Transportation Agency to regulate elements in those negotiated service-level agreements.

Many stakeholders agree that the amendments were needed to clearly define “service”. What do the words “adequate” and “suitable” mean? What does the phrase “service obligation” mean? Obviously, they are too ambiguous to have any meaning. They are too subjective. Therefore, we need language that clearly defines the rights and obligations of all parties. They need to be nailed down. That is something that is clearly needed if we are going to get anywhere in nailing down these service level agreements that are so critical.

As I said in my remarks earlier, in the past the Canadian Wheat Board gave farmers a dependable place, a single desk that was involved in this marketing. Now, it is every farmer for himself or herself. As was pointed out by several of the stakeholders, a lot of farmers just do not have the time or the interest to sit around at night figuring out the market. They used to have someone to do that, but now, of course, the coordination function that was performed by the Canadian Wheat Board has been lost.

This lack of coordination is a problem, as my hon. friend mentioned. It means that we leave ships in dock or sitting out there in Plumper Sound. The port terminals are competing with each other for handling. There is no coordination of the kind that we used to have. That means that they are grabbing rail shipping capacity and having grain delivered without considering the demand.

There have been enormous increases in the amount of oil shipped by train, but the problem is that increased oil shipment creates a lack of capacity for grain producers. It is obvious to everyone, but the lack of coordination is equally obvious, and the need for action is urgent.

When I look at the people who have spoken on this matter, and they are legion all across the prairies. Doug Chorney, the president of Manitoba's Keystone Agricultural Producers, said that the backlogs could be blamed on “abysmal service” by Canada's two major railways. Mr. Paterson points out that those railways are now often controlled by foreign interests. Some 73% of the shares of CP are American-owned. The two men shaping CP's recent history are CEO Hunter Harrison and activist shareholder Bill Ackman. Both are American. CN Rail is roughly half Canadian-owned and half American-owned.

That inadequate service is something we have all seen. It is great to have free trade, but if we cannot get the product to market, it is of no value.

We salute the member for bringing forth this important motion today. We need to get on with it and get our grain moving.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I listened with interest to my friend from Sydney—Victoria. I congratulate him on a motion that we will certainly be supporting as the official opposition.

When the member uses words like “disastrous system”, “absolute chaos”, and “real hardship”, we concur entirely. Again, I would thank the member for this important motion.

He mentioned in his remarks that he wished to put shippers and the railways on an equal footing. I would like to ask whether the member would agree that better enforcement of surface level agreements requires a better explanation of terms in Bill C-30, such as adequate and suitable “service obligations”. The terms are too ambiguous in our view. We need language to clarify rights and obligations. Would the member agree?

[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.

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

Thank you, Mr. Chair.

It's great to be back at this committee. I'm joined today, as you said, by the deputy minister, Andrea Lyon; Greg Meredith, who is the assistant deputy minister of strategic policy; and Pierre Corriveau, assistant deputy minister of corporate management. This committee continues to do very important work for producers and processors in the broader Canadian agricultural industry as a whole.

We're meeting at a time of tremendous opportunity for our sector. It's estimated that farmers will need to produce 60% more food by 2050 to feed an anticipated population of some nine billion. In China alone the middle class is projected to grow by as many as 35 million people every year over the next decade. That's more than the population of our entire country on an annual growth basis.

Canadian farmers and food processors are well placed to address this growing demand, and the world is knocking at our door. Last year our agricultural exports topped $50 billion for the first time in our nation's history and they're 14% ahead of that pace this year. A recent study by Farm Credit Canada shows that Canada is now the world's leading agricultural trader per capita. That's a great track record, but we know our competitors are not standing still on global market access. That's why we're working hard across our great industry, across government, across the world, to keep Canada out in front on world markets. The supplementary estimates you have before you reflect that, with $4.9 million to CFIA to undertake activities to improve market access for Canadian agricultural products, and another $2 million to support the establishment of a Canadian beef centre of excellence to showcase our Canadian beef advantage to the world.

We're continuing our aggressive trade agenda. We were in China three weeks ago with the Prime Minister—my third trip this year—and a number of industry leaders. We were able to secure some key market gains, including an agreement finalizing access for Canadian cherries, valued at up to some $20 million a year; progress on access for Canadian blueberries, valued at $65 million a year; and a new contract for Canadian canola oil, valued at $1 billion. This builds on market gains achieved during our China mission in June, valued at some $400 million by industry members. In fact, our agriculture and food trade with China has increased fivefold since our government took office in 2006. China is one of a number of priority markets identified in collaboration with industry, through the Market Access Secretariat, which takes a holistic approach, bringing all government industry to the table to focus and grow our trade.

Hand in hand with our ground offensive, we have our government's aggressive trade agreement agenda. Since 2006, the government has successfully concluded negotiations on free trade agreements covering no fewer than 38 different countries. As a result, Canada now has trade agreements with more than half of the entire global marketplace, a total of 43 countries, while continuing to protect the pillars of our supply management system. The historic trade agreement with Europe will open the doors to the world's single largest market for food and food stuffs, boosting our agriculture and food trade by an estimated $1.5 billion per year. The agreement we signed with Korea, which is now reaching final agreement in the Senate, levels the playing field with our competitors and gives Canada its first ever foothold in the Asia-Pacific region.

Of course, if we are able to serve these markets, we need a predictable and reliable supply chain here at home. That's why, when the grain backed up last winter, we moved quickly with an order in council mandating minimum volumes for CN and CP, and with Bill C-30 to strengthen accountability information sharing throughout the system. I want to thank this committee for its hard work in moving Bill C-30 forward while ensuring we had a fulsome debate.

The Fair Rail for Grain Farmers Act puts into law clear and achievable solutions for the short term to ensure Canadian shippers have access to a world-class logistics system that gets Canada's agricultural products and other commodities to market in a predictable and timely way. Grain is moving. Exports are up some 25% over last year, and 32% over the five-year average. Deliveries using producer cars are also at all-time highs. As for the minimum volume requirements, we've said all along that the order in council will be there as long as it is needed. Our government will be making an announcement on any future requirements very soon, so stay tuned.

At the same time, we continue to work to ensure our logistics system is strong for the long haul. We accelerated the review of the Canada Transportation Act by a full year to focus on long-term structural issues affecting all rail transport including grains. The CTA review panel has been very busy through the fall meeting with a number of stakeholders to get a clear picture of the challenges facing the western Canadian grain handling and transportation system. A discussion paper was released in September, and we are encouraging industry to vet their thoughts by the end of this calendar year. We'll continue to work with Transport Canada and the whole value chain to manage future challenges, and create a rail supply chain that has greater capacity, predictability and accountability for the industry, and most importantly, for our global customers.

Transportation is one piece of this government's plan to modernize Canada's grain sector to stay in line with emerging 21st century realities. We're now working to build on reforms passed in 2012 to the Canada Grain Act as part of our commitment to marketing freedom.

We're also encouraged to see that the Canadian Wheat Board remains a viable and voluntary option for farmers who choose to use it as their marketing tool. The CWB is leading the process toward its own commercialization. The act requires the CWB to submit a plan to government, and we're certainly encouraged to see that they have actively moved forward to become a private, independent organization that can meet farmers' needs in this competitive sector. A viable and voluntary CWB, along with our aggressive trade and innovation agenda, will mean a stronger farm gate and a rich harvest for Canada's economy.

The other key to competitiveness is, of course, innovation. Farmers must have the latest tools to compete in the global marketplace. That's why we're updating plant breeders' rights under Bill C-18. The agricultural growth act will strengthen intellectual property rights for plant breeders so Canada can catch up with the rest of our competitors. This is supported by every relevant farm group across Canada. Aligning our regulations will not only level the playing field for our producers but it's also expected to encourage foreign breeders to release their varieties in Canada. This will give our farmers access to new varieties that their competitors are already using.

Entrenched in Bill C-18 is, of course, the right for farmers to save, clean, and use seed for their own operations.

Finally, Mr. Chair, innovation takes investment, and that is reflected in these investments, with the allocation of a further $41.7 million for Growing Forward 2 cost-shared initiatives including innovation. Growing Forward 2, which is now hitting its mid-season stride, is backed by a 41% increase in funding on science and innovation throughout the agricultural sector. That's helped us almost double our support of the industry-led research clusters to some $125 million and to add four new clusters. At the same time, our business risk programs are there to backstop producers such as Manitoba livestock producers suffering feed shortages following another extremely wet growing season.

As always, expenditures are driven by demand. Business risk management programs can fluctuate depending on the needs of Canadian producers. This fluctuation will impact our spending numbers, which will be lower if demand for the BRM programs is lower.

To close, Mr. Chair, as does this committee, I remain very optimistic about the future for agriculture. Canadian farm cash receipts totalled almost $42 billion for the first three quarters of this year, which is an increase of almost 3% over the same period last year.

The long-term fundamentals of the industry are good with growing populations and incomes and great products to sell.

I look forward to working with you as we drive new opportunities for our industry and new growth for our economy.

Thank you, Mr. Chair. I look forward to any questions or comments.

Agriculture and Agri-Food

[Lisa Raitt, Conservative, Minister of Transport]

Mr. Speaker, again I want to personally thank the Minister of Agriculture and Agri-Food for his great work on the file, to ensure that we are working together as a government on this matter.

We should also talk to the people out there who are the ones who are the beneficiaries of Bill C-30.

Brett Halstead, President of the Canadian Canola Growers Association stated:

This action demonstrates that Government is listening to farmers' concerns. We look forward to working with the Government and other industry stakeholders.

Quite frankly, the opposition is not in the game on this one. The government is the one that is dealing with this on a daily basis and is out front through the minister.

Motions in Amendment

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I am very pleased to rise in the House today to speak to Bill C-13, which has already been debated for three hours today and has just come back from the Standing Committee on Justice and Human Rights.

A lot of hard work has been done on this bill. I am thinking, in particular, of the many witnesses who appeared before the committee. I am happy to hear that good work was done in committee.

However, the results of that work are perhaps not quite what we on this side of the House expected. Unfortunately, the amendments that were made to this bill were not sufficient for us to be able to support it at report stage.

I must first say that this bill may be a rather sensitive subject for some people. It may hit close to home and be a sensitive subject for some people because it involves bullying and there is often mention of the unfortunate incidents that were reported in the media. It is vital that we remember the importance of the work we are doing as parliamentarians to try to address this issue, which sometimes has tragic consequences. Bullying is a problem in our society that has evolved over the past few decades. Obviously, the Internet is one of the elements that has changed the problem of bullying. It is becoming easier to bully someone online today because we can easily access the Internet with our cell phones and computers.

This problem has evolved and has become quite a significant issue for our youth and also for adults. As parliamentarians, we must discuss this problem and try to solve it, even though there is no magic solution. We have to consider the underlying causes. My colleague from La Pointe-de-l'Île often talks about the underlying causes. Furthermore, we must not believe that the solution to the problem is to create a Criminal Code offence and that all of a sudden there will be no more bullying. It is never that simple. It is therefore important to discuss this problem and other ways of dealing with it.

We were also somewhat disappointed with the process that led to the drafting of this bill. Members will remember that Bill C-30 was also introduced in the first session of the 41st Parliament and that there was significant opposition to that bill from civil society and the different political parties. It is unfortunate that Bill C-13 contains some of what was widely rejected in Bill C-30. I am talking about the provisions concerning the electronic surveillance of Canadians.

My impression is that the government is taking Bill C-13 and the issue of bullying—which is a very important and sensitive issue—and integrating certain parts of Bill C-30, which was very controversial, as I said. It was abandoned by the Conservatives after the uproar that followed its introduction. It is sad that they are using this tactic and are trying to do indirectly what they said they would not do. It was abandoned. It is disappointing to see that it is now being included in Bill C-13.

This issue could have been settled quickly, or at least more quickly. I do not think that we are going to solve the problem of bullying overnight. However, we could have at least moved in the right direction.

The hon. member for Dartmouth—Cole Harbour introduced a worthwhile bill. Unfortunately, it did not receive the Conservatives' support. However, one part of his bill did find its way into the Conservatives' current bill. I find that somewhat curious.

If I understand correctly, the Parliamentary Secretary to the Minister of Justice seems to have an explanation. He says that it is all well and good to add an offence to the Criminal Code, but it is also important to grant investigative powers to the police.

I do not remember when exactly during the process of studying the bill this happened—it may have been the day after it was introduced—but the Spencer decision provided some clarification. Unfortunately, the bill did not change, even in light of the decision, which defined the limits that can be placed on electronic surveillance and the amount of personal information Internet service providers can share about Canadians.

I believe that the government should have complied with the Spencer decision, but that is not the case, unfortunately. That is the main reason we are opposing this bill.

I would like to clarify the court's decision in Spencer, which had to do with providers sharing information. The decision clearly established that Canadians had the right to online anonymity and that the police had to get a warrant to find out Internet users' identity.

However, Bill C-13 creates a new policy that allows access to personal information with or without a warrant. This opens the door to obtaining personal information without a warrant even though the Spencer decision said the opposite. It said that a warrant was absolutely necessary to get personal information about a Canadian citizen on the Internet.

Internet service providers have access to that information. They can find that information and share it with law enforcement to investigate bullying cases, for example. The Spencer decision set boundaries for getting information by requiring a warrant. However, Bill C-13 opens the door to getting personal information without a warrant.

All of this is unfolding in an era when people have growing concerns about electronic surveillance because the government is monitoring our actions more and more. Not long ago, groups met peacefully to talk about issues or met in the streets to demonstrate. We know that the government, which has thousands of employees who monitor Canadians, would watch what such groups were doing during those completely peaceful meetings and demonstrations that could not have given anyone any reason to believe there was a threat to Canada's security.

This is unfolding in an era when people feel that the government is collecting more and more information about Canadians. We also have to set clearer boundaries about how this information is obtained and about Canadians' right to privacy.

I would be pleased to answer my colleagues' questions.

Agriculture and Agri-Food

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

Mr. Speaker, let us look at Bill C-30. It was introduced into the House on an urgent basis and passed by the House on an urgent basis. It increases supply chain transparency, it strengthens contractual mechanisms between producers and shippers and it helps to ensure that the entire grain handling and transportation system is working at its capacity. It obligates the rail companies to move one million metric tonnes of grain a week.

This system is working and it is serving our western Canadian grain farmers.

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

Mr. Speaker, the Prime Minister and the Minister of Agriculture showed tremendous leadership by tabling Bill C-30, the Fair Rail for Grain Farmers Act, to solve the serious grain transportation problems that were present in Canada. The bill was well received across Canada by stakeholders and right here in the House. It was a bill that was clear and unequivocal and it set ambitious but realistic goals.

The latest figures show that our government's efforts to get grain moving are working.

[Dr. Parry Aftab]

Yes, I wonder if there's any support that the telcos are responsible for this provision within the law. They're the ones who benefit. I find it unusual that they haven't commented on this themselves. I think that there is a matter of contract, and I checked the Rogers agreement, and it doesn't say they have the ability to turn over my information except under laws that require so.

So this is voluntary. It's not required in the way C-30 had been, so I think there would be a violation. If I enter into a commercial contract with a commercial provider, I don't think the government should be involved in giving one side a way out without giving me a way out of paying for my service or anything else.

Also, I indicated that it's a great marketing opportunity, and I hope if this is indeed televised, that Telus and Rogers and all of the rest are going to understand that, although the discussion of privacy has been very complicated in this bill, and there's lots of media and lots of things going on, I don't know how many normal grassroots Canadians understand some of the things going on.

Perhaps we haven't done a good enough job of explaining it and we get overly complicated, but if you turn to somebody in P.E.I. or Alberta and ask if he or she is going to use a telco that's going to voluntarily give away information without these standards, I think the answer is going to be no. If somebody says, “We'll stick with your contract, even though it's voluntary. We're not going to go down that road,” I think they're going to get a lot more customers right now. They'll certainly get me.

[Stephen Anderson]

I think one difference between Bill C-30 and Bill C-13 is that, thankfully, Bill C-30 mandated warrantless disclosure, whereas this bill doesn't mandate it, but it pretty much in practice means the same thing through the immunity clause.

In terms of accountability, I don't see a lot of difference there. There's very little in terms of accountability or oversight that I can see. I don't understand why there isn't any in here. I don't see why we would not add mandating subscriber notifications. I don't understand why we can't all agree that it's a good thing—record keeping of personal information requests so that we actually can look later and see what's happening and have a kind of data-driven process going forward, and a regular release of transparency reports by both government officials and telecom companies.

I would say that while there's been some progress and learning between Bill C-30 and Bill C-13 on the accountability and oversight side, I haven't seen much movement. I'm hoping that there can be some reforms made in that area. I would love to know if someone could explain why we wouldn't do that.

Energy Safety and Security Act

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Mr. Speaker, I would like to thank my hon. colleague for all of his hard work on behalf of his constituents.

Today, I read an op-ed in the Manitoba Co-operator, where my colleague from Welland was quoted as saying that we all came together as parties to move through Bill C-30, the railway act. Here we had this instance of co-operation. It is something that often does not happen. All parties got together, the government listened, we made suggestions and, all of a sudden, we had a bill that benefited all Canadians.

This is a golden opportunity for this bill to go to committee and for the government to listen and not do what it did, for example, when I was on the agriculture committee studying the food safety bill. Both the NDP and the Liberal Party provided something like 25 amendments, and not one was accepted. That is not how government works and that is not how democracy should work. This is an opportunity.

I welcome the question from the member for Winnipeg North. I really hope that once it gets to committee, we will have this debate and strengthen the bill so it will be our bill on behalf of Canadians, not just the government's bill.

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

I absolutely think it will be. The one thing they're not telling you is that feed wheat, with the amount of volume there is in the world, is down about $100 per tonne. So at $40 extra to truck it, they're still saving $60. I know there were a certain couple of people who were saying if they didn't have feed in two to three days, they'd be putting down turkeys and so on. That was complete hogwash—pardon the crossover pun. When I talked to the feed mills in central B.C., they had six weeks' supply of grain, so the crisis wasn't quite as abrupt as it could have been.

We take it seriously though. In business, everybody relies on stability and predictability. So we take that seriously. One of the attributes of getting Bill C-30 passed is to have that ability on a corridor-by-corridor basis, and delivery of those types of grains and so on will be highlighted. That's never been done before under Quorum's oversight—

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

I'll have to talk really fast.

Thanks very much to the minister for being here. Since I joined the committee earlier this year, it's the first time we've had this opportunity.

I met with chicken farmers earlier this week, and they reminded me of how many jobs they support in the country—more than the oil and gas industry does—and how much they pay in taxes, which is $1.3 billion. One of the things they were very concerned about with Bill C-30 and the bottlenecks that have emerged is that they tend to get passed by when it comes to production for feedstocks for chickens. They've had to move a lot of their purchasing and shipping of feedstocks onto trucks, which they estimate costs them an average of about $40 per tonne. With feed making up over half their costs, this is a significant burden being passed over to the chicken farmers.

They're wondering when this will get resolved and whether that will be soon enough to actually save them from very serious costs.

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

Thank you, Minister, for coming today.

I just want to talk to you about C-30, the fair rail for grain farmers act. I guess we've said it enough. It shouldn't be hard to say but it seems to still be hard to say.

Anyway, I guess the fact that our rail capacity is challenged by all the commodities we have to sell is actually a good problem to have, because it shows that the world wants our commodities. Although it's a good problem, we still are faced with the fact that it is a problem. I just wanted to know, from your perspective, why it's important that this bill is passed and why it is good for our farmers.

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

That's a very pertinent question, and I'm happy to do that.

As you may know, the Senate passed Bill C-30 last night. As I understand it, royal assent will be put to that bill tomorrow at some point. When it comes to the regulatory package that goes along with that, as you know, the legislation is an umbrella that creates the ability to put regulations in place. We went that route because regulations are more flexible. They can be more timely and you can adapt and change them to what's needed on an ongoing basis, as opposed to coming back to the House all the time on legislative changes.

When it comes to any type of compensation for farmers, I guess rather than compensate farmers after the fact, which is what was done prior to this, this piece of legislation and the regulatory package that will be attached to it will actually see to it that farmers are not hurt to begin with. What this does is make sure that the railways deliver the product from where it's asked to be delivered from, and in a timely way, to whichever port facility the shipper wants it to go to. There's no more opportunity for storage of grains costs or demurrage costs along that chain going back to the farm gate. They are now stopped in the service level agreements between the shipper of record, whoever that may be, and the railway of record. That's the difference, in that it doesn't require compensation to farmers because they are now covered proactively under those service level agreements.

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

Thank you, Chair.

I'd like to thank the minister and his team for their presence today at committee.

As you know, we've done a lot of work in dealing with the grain transportation crisis. I was wondering if you could update us on what is going on with Bill C-30 and the government's amended bill, and where money will be allocated. Because with the amendment that was accepted here at committee, we would just like to know where the money will come from when it comes to compensation for farmers.

[Michael Spratt, Member and Criminal Defence Counsel, Criminal Lawyers' Association]

Thank you. It's always a pleasure to be here.

As you may know, the Criminal Lawyers' Association is a not-for-profit organization comprising more than 1,100 criminal defence counsel from across Canada. One of our objectives is to educate not only our membership but also the public on issues relating to criminal and constitutional law. The CLA has routinely been consulted and invited by various parliamentary committees to share its views on proposed legislation pertaining to these issues. The CLA supports legislation that is fair, modest, constitutional, and supported by the evidence.

To cut to the chase, the CLA is simply unable to support Bill C-13. Quite simply, Bill C-13 is not only overly broad but is also likely unconstitutional.

Bill C-13 purports to be concerned with tackling cyberbullying by stopping the spread of intimate images that are disseminated without the subject's consent. The real tragedy of Bill C-13 is that those provisions are necessary, laudable, and should be proceeded with; however, in reality that aspect takes up only a small percentage of the bill. Bill C-13, in the balance, sacrifices privacy in favour of expanded police powers and liberal disclosure standards.

Bill C-13, along with Bill S-4 and Bill C-31, represents a dangerous and in our opinion unconstitutional pattern of erosion of privacy.

Let me speak of the cyberbullying provisions. They are important, are laudable, should be proceeded with, and are indeed necessary in the modern world that we live in. Largely, I don't have any objection to the small percentage of the bill that deals with those provisions.

Having said that, I would add that there is a legitimate argument that those provisions in and of themselves may be overly broad, in that the standard imposed for the mens rea is “recklessness”. That standard of recklessness may go too far, in that it may make individuals potentially liable who don't know or could not have found out the circumstances to which the images that are the subject of that provision relate. To that extent, the problem with the cyberbullying provision is not necessarily its aim but rather its execution in that one small regard.

The bill's aim is to punish those who transmit intimate photos sent to them, when the person who took those images has an expectation of privacy. That is likely to have significant public support, as it should; however, the scope of the provision is potentially overly broad, because it expands the mens rea element. By making “recklessness” one of the potential mens rea standards for that offence, the provision may catch not only the individual who was the original recipient of the image but also those down the line—the second-hand recipients of that image—who may have no knowledge of the circumstances in which that picture was taken or made.

Some caution comes from Don Stuart, a pre-eminent expert in the field of criminal law. As he points out in Canadian Criminal Law, the fifth edition, there is a risk that the recklessness standard can devolve into a far broader conception of fault than is desirable, and a more nuanced approach would involve defining recklessness as knowledge both of the risk and that that risk was likely.

That provision can be seen in other aspects of the code; for example, in item (a)(ii) of section 229, which deals with murder.

A modified recklessness standard in the cyberbullying provision would target the so-called “revenge porn” conduct, without drawing to the net those who simply pass on the photos without context and may not necessarily be as morally culpable.

If the provision is allowed to remain there without a clearer definition of recklessness, the section may attract some charter scrutiny. At that point, the issue would become one of over-breadth: does that section capture individuals who may not be morally blameworthy, but may nonetheless be captured under the recklessness standard? As I said, this is a minor issue with that aspect of the bill.

More troubling is the “lawful disclosure” aspect of Bill C-13. The bill announces itself as being about cyberbullying and protecting Canadians from online crime, but certainly it far exceeds those parameters.

I will start by saying that of course the most controversial aspects of Bill C-30 have been removed—the mandatory warrantless disclosure of basic subscriber information. However, there are still some serious concerns. I'll deal with two issues.

The first is that there is simply insufficient judicial oversight in obtaining those orders.

Now, the Supreme Court of Canada has recently considered the standard for reasonable suspicion, which is the standard we're dealing with in the legislation, in the case R. v. Chehil. The court made it crystal clear that the standard of reasonable suspicion falls well below the normal requirement of reasonable and probable grounds. That's the normal standard we usually deal with. Specifically, the Supreme Court said that the state's interest in detecting and preventing crime begins to prevail over the individual's interest in being left alone at the point where credible-based probability replaces suspicion.

The data, which is the subject matter of the searches contemplated in Bill C-13, contains a great deal of personal information. It's a misnomer to simply call it metadata. That dilutes the importance and impact of that data.

I understand that a pre-eminent expert in this area, Dr. Michael Geist, will be testifying at this committee later this week, and I think he will agree that metadata is deserving of an increased level of protection. And indeed he's not alone in that view. When we look at reports in 2013 from the Information and Privacy Commissioner of Ontario and the Office of the Privacy Commissioner of Canada, both reports reveal the heightened expectation and the intimate information that can be revealed through metadata. I would commend you to read those reports. It's quite shocking what can be discerned about an individual's communications and basic information about the individual through simply an IP address or some of the other metadata that's discussed.

Metadata as a starting point has a heightened expectation of privacy, and that is something that has been echoed by the Supreme Court, which agrees seemingly with Dr. Geist and with the privacy commissioners. In the recent case of Vu, which dealt with metadata found on a personal computer, the Supreme Court of Canada adopted the Criminal Lawyers' Association's submissions—we intervened in that case—finding that ordinarily this information, metadata, can help a user retrace his or her cybernetic steps. In the context of a criminal investigation, however, it can also enable investigators to access intimate details about a user's interests, habits, identities, drawing on a record that the user created unwittingly. Of course, in modern times there's a capacity to store, catalogue, and cross reference this information, revealing more and more.

The Supreme Court's comments about the heightened privacy inherent in this type of data is simply incompatible with the proposed reasonable suspicion standard that's found in Bill C-13. That incongruity exposes this proposed legislation to charter scrutiny, and in my opinion supports a conclusion that there's not only charter scrutiny here but indeed charter infirmity. There's simply no principled and justifiable reason that the new warrant provisions contained in Bill C-13 should not be based on the traditionally and judicially approved standard of reasonable and probably grounds.

Next, moving to the issue of the incentives for non-judicially supervised disclosure, Bill C-13 will also likely lead to an increased request for a telecommunications company to disclose information without court oversight and the corresponding protections. Privacy in this regard should be strengthened and not abandoned. Falling back on section 25 in the current Criminal Code is no answer to this problem. If you read section 25 carefully, you will see that section 25 requires reasonable grounds, and no comfort can be found in the appeal legislation as it offers no protection.

Of course as we see with that existing provision in Bill C-13, it broadens the scope of disclosure. No longer will the requesting organization be under an obligation to actually be enforcing or administering an act. The room for those requests is greatly increased. And indeed we see codification of the civil and criminal immunity which isn't in section 25, and as I said, section 25 requires reasonable grounds, which is completely absent in this section.

The real concern is that the expansion of police power and limiting liability for the party agreeing to disclose will result in increased police fishing expeditions, and of course we have seen from some reports some very alarming information about current practices in that regard.

Indeed, it would have been preferable to have discrete legislation on both the cyberbullying and on the lawful access legislation. However, given the current formulation of Bill C-13, the CLA recommends that the standards for obtaining those warrants be strengthened and brought in line with what the current Supreme Court case law would suggest is appropriate. No one wants to see evidence excluded. No one wants to get it wrong at the outset, and years later find out that the constitutionally suspect legislation was passed, evidence was excluded, and prosecutions were jeopardized because things weren't done right the first time. The provisions respecting the voluntary disclosure should be reconsidered to ensure both fairness, respect of privacy, and ultimately, constitutionality.

Extension of Sitting Hours

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

moved:

That, notwithstanding any Standing Order or usual practice of the House, commencing upon the adoption of this Order and concluding on Friday, June 20, 2014:

(a) on Mondays, Tuesdays, Wednesdays and Thursdays, the ordinary hour of daily adjournment shall be 12 midnight, except that it shall be 10 p.m. on a day when a debate, pursuant to Standing Order 52 or 53.1, is to take place;

(b) subject to paragraph (d), when a recorded division is demanded in respect of a debatable motion, including any division arising as a consequence of the application of Standing Order 61(2), but not including any division in relation to the Business of Supply or arising as a consequence of an order made pursuant to Standing Order 57, (i) before 2 p.m. on a Monday, Tuesday, Wednesday or Thursday, it shall stand deferred until the conclusion of oral questions at that day’s sitting, or (ii) after 2 p.m. on a Monday, Tuesday, Wednesday or Thursday, or at any time on a Friday, it shall stand deferred until the conclusion of oral questions at the next sitting day that is not a Friday;

(c) the time provided for Government Orders shall not be extended pursuant to Standing Order 45(7.1);

(d) when a recorded division, which would have ordinarily been deemed deferred to immediately before the time provided for Private Members’ Business on a Wednesday governed by this Order, is demanded, the said division is deemed to have been deferred until the conclusion of oral questions on the same Wednesday;

(e) any recorded division which, at the time of the adoption of this Order, stands deferred to immediately before the time provided for Private Members’ Business on the Wednesday immediately following the adoption of this Order shall be deemed to stand deferred to the conclusion of oral questions on the same Wednesday;

(f) a recorded division demanded in respect of a motion to concur in a government bill at the report stage pursuant to Standing Order 76.1(9), where the bill has neither been amended nor debated at the report stage, shall be deferred in the manner prescribed by paragraph (b);

(g) for greater certainty, this Order shall not limit the application of Standing Order 45(7);

(h) no dilatory motion may be proposed, except by a Minister of the Crown, after 6:30 p.m.; and

(i) when debate on a motion for the concurrence in a report from a standing, standing joint or special committee is adjourned or interrupted, the debate shall again be considered on a day designated by the government, after consultation with the House Leaders of the other parties, but in any case not later than the twentieth sitting day after the interruption.

Mr. Speaker, I am pleased to rise to speak to the government's motion proposing that we work a little bit of overtime over the next few weeks in the House.

I have the pleasure of serving in my fourth year as the government House leader during the 41st Parliament. That is, of course, on top of another 22 months during a previous Parliament, though some days it feels like I am just getting started since our government continues to implement an ambitious agenda that focuses on the priorities of Canadians. We still have much to do, and that is the basis for Motion No. 10, which we are debating today. Regardless of what other theories that folks might come up with, our objective is simple: to deliver results for Canadians, results on things Canadians want to see from their government.

As government House leader, I have worked to have the House operate in a productive, orderly, and hard-working fashion. 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. Let us look at the facts.

In the previous session of the 41st Parliament, 61 government bills received royal assent and are now law. In 2013 alone, which was a shorter parliamentary year than normal, the government had a record-breaking year with 40 bills becoming law, more than any other calendar year since we took office, breaking our previous record of 37 new laws in 2007 when I also had the honour to be the leader of the House. That is the record of a hard-working, orderly, and productive Parliament. With more than a year left in this Parliament, the House has accomplished so much already, handing many bills over to the Senate for the final steps in the legislative process.

Just as we had a record year for legislative output, Canadian grain farmers experienced a bumper crop with a record yield in 2013. Understanding the real challenges faced by grain farmers, our government acted quickly on Bill C-30, the fair rail for grain farmers act, moving the bill through three readings and a committee study before handing it over to the Senate. This bill would support economic growth by ensuring that grain is able to get to market quickly and efficiently. The House also passed Bill C-23, the fair elections act, which would ensure that everyday citizens are in charge of democracy, ensuring the integrity of our electoral system and putting rule breakers out of business.

Two supply bills received royal assent, thereby ensuring that the government has the money it needs to continue providing services to the people.

When we passed Bill C-25, the Qalipu Mi'kmaq First Nation Act, we fulfilled our promise to protect the Qalipu Mi'kmaq First Nation's enrolment process, making it fair and equitable while ensuring that only eligible individuals will be granted membership.

Earlier this spring, royal assent was also given to Bill C-16, the Sioux Valley Dakota Nation Governance Act, making the Sioux Valley Dakota Nation the first self-governing nation on the prairies and the 34th aboriginal community in Canada to achieve self-governance.

Next on the agenda is Bill C-34, the Tla'amin Final Agreement Act, which will implement the agreement with the Tla'amin Nation. Bill C-34 will give the Tla'amin increased control over their own affairs. They will have ownership of their land and resources and will be able to create new investment opportunities and make decisions determining their economic future.

We considered and passed through all stages of Bill C-5, the Offshore Health and Safety Act, which will enhance safety standards for workers in Canada’s Atlantic offshore oil and gas industry to protect Canadians and the environment while supporting jobs and growth.

Bill C-14, the Not Criminally Responsible Reform Act, became law just a few weeks ago. This act will 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.

Also, this spring, our government passed Bill C-15, the Northwest Territories Devolution Act, which honoured our government's commitment to giving northerners greater control over their resources and decision-making and completing devolution all before the agreed-upon implementation date of April 1, as well as Bill C-9, the First Nations Elections Act, which supports the Government of Canada's commitment to provide all Canadians with strong, accountable, and transparent government. Bill C-9 provides a robust election framework, improves the capacity of first nations to select leadership, build prosperous communities, and improve economic development in their communities.

However, despite these many accomplishments, there is more work to be done yet before we return to our constituencies for the summer, let alone before we seek the privilege of representing our constituents in the 42nd Parliament.

During this mandate, our government's top priority has been jobs, economic growth and long-term prosperity.

It is worth saying that again. During this mandate, our government's top priority has been jobs, economic growth, and long-term prosperity. That continues. Through three years and four budgets since the 2012 budget, we have passed initiatives that have helped create hundreds of thousands of jobs for Canadians, as part of the one million net new jobs since the global economic downturn. We have achieved this record while also ensuring that Canada's debt burden is the lowest in the G7 and we are on track to balance the budget in 2015.

As part of our efforts to build on this strong track record, our government has put forward this motion today. Motion No. 10 is simple. It is straightforward. It would extend the hours of the House to sit from Monday through Thursday. Instead of finishing the day around 6:30 p.m. or 7 p.m., the House would, instead, sit until midnight. This would give us an additional 20 hours each week to debate important bills. Of course, the hours on Friday would not change.

Extended sitting hours is something that happens practically every June. Our government just wants to roll up its sleeves and work a little harder a bit earlier this year.

Productivity is not just a function of time invested, but also of efficiency. To that end, our motion would allow most votes to be deferred, automatically, until the end of question period to allow for all hon. members' schedules to be a bit more orderly.

Last year, we saw the New Democrats profess to be willing to work hard. Then, mere hours later, after the sun would go down and people were not watching, what would the NDP do? It would suggest we pack it in early and move adjournment, without any accomplishment to show for it.

In order to keep our focus on delivering results and not gamesmanship, we are suggesting that we use our extra evening hours to get something done, not to play idle, unproductive games. We are interested in working hard and being productive, and doing so in an orderly fashion. That is the extent of what Motion No. 10 would do. Members on this side of the House are willing to work a few extra hours to deliver real results for Canadians. What results are we seeking? Bills on which we want to see progress, that are of great significance to Canadians, are worth spending a little extra time to see them considered and, ideally, passed.

Of course, we have the important matter of passing Bill C-31, Economic Action Plan 2014, No. 1. This bill implements our government’s budget—a low tax plan for jobs, growth and a stronger Canadian economy. It is also an essential tool in placing the government on track to balanced budgets, starting in 2015.

We have a number of bills that continue to build on the work we have done in support of victims of crime. Bill C-13, the Protecting Canadians from Online Crime Act, is another essential piece of legislation that will crack down on cyberbullies and online threats by giving law enforcement officials the tools necessary to investigate and tackle these crimes. We are taking clear action to combat cyberbullying and I ask the opposition to join us in this pursuit.

Every day in Canada, our most vulnerable—our children—are the victims of sexual abuse. This is truly unacceptable and as a society we must do our part to better protect our youth. With Bill C-26, the Tougher Penalties for Child Predators Act, we are doing our part.

Our government's comprehensive legislation will better protect children from a range of sexual offences, including child pornography, while making our streets and communities safer by cracking down on the predators who hurt, abuse, and exploit our children.

Therefore, I ask the opposition to work with us, support this important piece of legislation by supporting this motion.

It is also important that we move forward with one of the most recent additions to our roster of other tackling crime legislation. Last month, we introduced Bill C-32, the victims bill of rights act, which will give victims of crime a more efficient and more effective voice in the criminal justice system. It seeks to create clear statutory rights at the federal level for victims of crime, for the first time in Canada's history. The legislation would establish rights to information, protection, participation, and restitution, and ensure a complaint process is in place for breaches of those rights on the part of victims. It would protect victims, and help to rebalance the justice system to give victims their rightful place. I hope we can debate this bill tomorrow night. By passing Motion No. 10, we will make that possible.

Our efforts to protect families and communities also extend to keeping contraband tobacco off our streets, so that the cheap baggies of illegal cigarettes do not lure children into the dangers of smoking. Bill C-10, the tackling contraband tobacco act, would combat this by establishing mandatory jail time for repeat offenders trafficking in contraband. Aside from protecting Canadian children from the health hazards of smoking, it will also address the more general problems with trafficking and contraband tobacco propelled by organized crime roots. With luck, I hope we can pass this bill on Friday.

Just before the constituency week, the Prime Minister announced Quanto's law. Bill C-35, the justice for animals in service act, would pose stiffer penalties on anyone who kills or injures a law enforcement, military, or service animal. I know that the hon. member for Richmond Hill, having previously introduced a private member's bill on the subject, will be keen to see the extra time used to debate and pass this bill at second reading before we head back to our constituencies.

Bill C-12, the drug-free prisons act, could also have a chance for some debate time if we pass Motion No. 10. This particular bill will tackle drug use and trade in the federal penitentiaries to make the correctional system a safer place, particularly for staff, but also for inmates, while also increasing the potential for success and rehabilitation of those inmates. As a former public safety minister, I can say that this is indeed an important initiative.

Delivering these results for Canadians is worth working a few extra hours each week. Our clear and steady focus on the strength of our Canadian economy does not simply apply to our budgets. We will also work hard next week to bring the Canada-Honduras free trade agreement into law. Bill C-20, the Canada-Honduras economic growth and prosperity act, would enhance provisions on cross-border trading services, investment, and government procurement between our two countries. It would also immediately benefit key sectors in the Canadian economy, by providing enhanced market access for beef, pork, potato products, vegetable oils, and grain products.

As a former trade minister, I can say first-hand that this government understands that trade and investment are the twin engines of the global economy that lead to more growth, the creation of good jobs, and greater prosperity. Trade is particularly important for a country like Canada, one that is relatively small yet stands tall in terms of its relationship and ability to export and trade with the rest of the world. If we are to enjoy that prosperity in the future, it is only through expanding free trade and seizing those opportunities that we can look forward to that kind of long-term prosperity.

Through Bill C-18, the agricultural growth act, we are providing further support to Canada's agriculture producers. This bill would modernize nine statues that regulate Canada's agriculture sector to bring them in line with modern science and technology, innovation, and international practices within the agriculture industry. The act will strengthen and safeguard Canada's agriculture sector by providing farmers with greater access to new crop varieties, enhancing both trade opportunities and the safety of agriculture products, and contributing to Canada's overall economic growth.

As the House knows, our government has made the interests of farmers a very important priority. We recognize that since Canada was born, our farmers in our agriculture sector have been key to Canada's economic success. As a result, Bill C-18 will be debated this afternoon. It would be nice to have the bill passed at second reading before the summer, so that the agriculture committee can harvest stakeholder opinion this autumn.

Over the next few weeks, with the co-operation and support of the opposition parties, we will hopefully work to make progress on other important initiatives.

My good friend, the President of the Treasury Board, will be happy to know that these extra hours would mean that I can find some time to debate Bill C-21, the red tape reduction act. This important bill should not be underestimated. It would enshrine into law our government's one-for-one rule, a successful system-wide control on regulatory red tape that affects Canadian employers. Treasury Board already takes seriously the practice of opining that rule, but we want to heighten its importance and ensure that it is binding on governments in the future. We want to ensure that Canadians do not face unreasonable red tape when they are simply trying to make a better living for themselves, and creating jobs and economic growth in their communities.

Another important government initiative sets out to strengthen the value of Canadian citizenship. For the first time in more than 35 years, our government is taking action to update the Citizenship Act. Through Bill C-24, the strengthening Canadian Citizenship Act, we are proposing stronger rules around access to Canadian citizenship to underline its true value and ensure that new Canadians are better prepared for full participation in Canadian life. This legislation will be called for debate on Wednesday.

The health and safety of Canadians is something that our government believes is worthy of some extra time and further hard work in the House of Commons.

Tomorrow evening, we will debate Bill C-17, the protecting Canadians from unsafe drugs act. Under Vanessa's law, as we have called it, we are proposing steps to protect Canadian families and children from unsafe medicines. Among other actions, the bill would enable the government to recall unsafe drugs, require stronger surveillance, provide the courts with discretion to impose stronger fines if violations were intentionally caused, and compel drug companies to do further testing on a product. In general, the bill would make sure that the interests of individual Canadians are looked out for and become a major priority when it comes to dealing with new medications and drugs.

Bill C-22, the energy safety and security act, would modernize safety and security for Canada's offshore and nuclear energy industries, thereby ensuring a world-class regulatory system, and strengthening safety and environmental protections. This legislation, at second reading, will be debated on Thursday.

Bill C-3, the safeguarding Canada's seas and skies act, could pass at third reading under the extended hours, so that we can secure these important updates and improvements to transportation law in Canada.

We could also pass the prohibiting cluster munitions act. As the Minister of Foreign Affairs explained at committee, the Government of Canada is committed to ridding the world of cluster munitions. Bill C-6 is an important step in that direction, but it is just the beginning of our work. Extending the relevant elements of the Oslo Convention into domestic law would allow Canada to join the growing list of countries that share that same goal. I hope members of all parties will support us in this worthy objective.

By supporting today's motion, the opposition would also be showing support for Canada's veterans. The extra hours would allow us to make progress on Bill C-27, the veterans hiring act. The measures included in this legislation would create new opportunities for men and women who have served their country to continue working for Canadians through the federal public service. As a nation, we have a responsibility to ensure that veterans have access to a broad range of programs and services to help them achieve new success after their time in uniform is complete. This initiative would do exactly that.

Of course, a quick reading of today's order paper would show that there are still more bills before the House of Commons for consideration and passage. I could go on and on, literally, since I have unlimited time to speak this afternoon, but I will not. Suffice it to say that we have a bold, ambitious, and important legislative agenda to implement. All of these measures are important, and they will improve the lives of Canadians. Each merits consideration and hard work on our part. Canadians expect each one of us to come to Ottawa to work hard, to vote on bills, to make decisions, and to get things done on their behalf.

I hope that opposition parties will be willing to support this reasonable plan and let it come to a vote. I am sure that members opposite would not be interested in going back to their constituents to say that they voted against working a little overtime before the House rises for the summer.

I commend this motion to the House and encourage all hon. members to vote for adding a few hours to our day to continue the work of our productive, orderly, and hard-working Parliament, and deliver real results for Canadians.

Transport—Main Estimates, 2014–15

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Chair, today I was talking to one of the minister's colleagues from Alberta. He has been unable to get his grain off to market. We can only hope for better next year, but we cannot be assured. We just hope that more and more of our farmers will not go belly-up.

My next question is this. If the minister thinks the changes in Bill C-30 to deal with the grain crisis are important, why do they all have sunset clauses?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chair, I assume that the regulations in all cases will be prepared well in advance of the beginning of the next crop year, on August 1, so farmers will be sure to know what they are.

Under Bill C-30, the section that empowers the Canadian Grain Commission to create regulations specifically contemplates penalties for performance failures, but the section in Bill C-30 that empowers the CTA to create regulations does not specifically refer to reciprocal penalties. Why is there a difference in the language? Does the government in fact plan that the regulations with respect to the railways not have that crucial power of reciprocal penalties? Will they be there or not?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chair, Bill C-30 is largely enabling legislation that would give the power to create regulations. Producers do not have a good idea about what the legislation would do until they actually see the regulations. The consultation has not yet started with respect to the regulations, and the weeks and months are ticking by.

I wonder if the minister can indicate when the consultation with stakeholders, even on an informal basis, will get under way so that they can know what is being contemplated under those regulations.

Will those regulations provide specific definitions of what constitutes level of service and how level of service will be measured in terms of performance? Will those regulations provide specifically for reciprocal penalties to be applied, which every single one of the witnesses before the parliamentary committee said was necessary?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, that is exactly why we have introduced Bill C-30, and that is why we enjoy the support of all parties on C-30, because we want to get to the right place, and the right place is ensuring that we are moving as much grain as we possibly can.

However, we cannot forget or deny the fact that this has been a bumper crop year. We have seen an increase of over 33% over previous years. We had anticipated there would be a higher carry-out if it continued along at the same level. That is why we found it necessary and important to issue an order to the railway companies to make sure that they are moving a million tonnes of grain a week so that we can move and clear out as much of this backlog as possible.

Even more important is preplanning. Commencing next year, in coordination with the CTA, I would be, as minister, in the position of being able to discuss and plan at the front end what the crop looks like and how we will accomplish moving the crop. It is something in which we believe very strongly and in which we are taking strong action.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chair, I am glad to have this opportunity to question the minister. I must say that in response to the last exchange, it certainly does stand out that the government is spending close to $100 million on rail safety and close to $600 million on tax-paid government advertising.

I would like to take the minister to Bill C-30, the issue of grain transportation in western Canada and the horrendous backlog of grain transport this last year. The industry is forecasting, and indeed, I think the minister herself used this number, that the carry-forward at the end of this particular crop year will be something in the order of 23 million tonnes that was grown last year but was unable to be shipped because the grain handling and transportation system failed so badly. If that is the carry-over on top of even a normal crop in western Canada this summer, the industry will be facing much the same challenge this year as it faced last year. It will be a huge problem for a great many farmers.

Will the government ensure that the system, which failed last year, will not fail this coming year, that it is ready to cope with that volume and that it is ready to cope with other exigencies, like difficult weather conditions? Will farmers have that assurance?

[David Fraser]

Thanks very much for the question.

I agree that in virtually every circumstance in which government or law enforcement agencies obtain the information about an individual when that individual is not informed at the time, they should be informed within six months—six months seems to me a reasonable interval of time—unless the law enforcement agency or government agency can convince a judge that providing that notice at that time would in fact impede a current, ongoing investigation.

I'm not as concerned about cases in which this information is disclosed and obtained by law enforcement and then charges result. That ends up seeing the light of day, in a courtroom or otherwise, and so there is accountability and transparency in that case.

What I am concerned about, and think Canadians should know, is how often information about Canadians is obtained, with or without a warrant, that never in fact leads to charges. That kind of situation could lead, if we take a close look at it, to their maybe getting information more often than they should. Maybe they're getting information about a huge number of people, such that in fact it amounts to fishing expeditions whereby they're going to catch a couple of bad guys, but it's too much.

I think it's critical that everybody around this table, everybody in this room, but also every Canadian have the information in order to properly understand what's going on, so that we can have a proper debate on it. We've seen very adamant and strong positions over the last couple of years. We've had Bill C-30, we've had the revelations about the Canada Border Services Agency, this 1.2 million—we've seen the amount of ink that's been spilled in the interest of these topics. But at no time does everybody actually have the information in front of them to properly understand. It just becomes fodder for arguments based on doctrinaire positions.

If we knew and if individuals knew, then we could actually have a much more informed and better discussion about it, leading to better laws, leading to appropriate oversight, leading to appropriate police powers in all of these circumstances.

I'm a very strong advocate of transparency, and that includes not just aggregate numbers, but individual notification.

Fair Rail for Grain Farmers Act

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

Mr. Speaker, there have been consultations, and if you seek it, I believe you will find unanimous consent for the following motion regarding Bill C-30, which was just reported back.

I move:

That, notwithstanding any standing order or usual practices of this House, Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures, be deemed concurred in at the report stage and deemed read a third time and passed.

(Bill C-30. On the Order: Government Orders)

May 1, 2014—Report stage of Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

Agriculture and Agri-Food

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, I have the honour to present, in both official languages, the third report of the Standing Committee on Agriculture and Agri-Food in relation to the order of reference recommitting Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

The committee has studied this bill and has decided to report the bill back to the House with amendments.

Opposition Motion—Safeguarding of Personal Information

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

moved:

That, in the opinion of the House, the government should follow the advice of the Privacy Commissioner and make public the number of warrantless disclosures made by telecommunications companies at the request of federal departments and agencies; and immediately close the loophole that has allowed the indiscriminate disclosure of the personal information of law-abiding Canadians without a warrant.

Mr. Speaker, I would like to begin by stating that I will be sharing my time with my colleague from Timmins—James Bay.

I am very pleased today to move this motion to ensure that justice is served for Canadians. However, I am very disappointed to have to rise once again to protest this government's extremely reprehensible actions.

I would have thought that, after three years, it would have finally understood. However, once again, the government has been caught spying on its own people.

With such ridiculous statements as, for example, if we did not support bill C-30 we were siding with pedophiles, the government has constantly tried to minimize the impact of its proposed measures on the lives of Canadians, all the while boasting and insinuating that it is proposing reasonable and necessary measures, which has been proven to be false by many impartial stakeholders.

The Conservative government called our assessment “speculation and unwarranted fearmongering” or a series of outlandish conspiracies made up by the NDP. After being harshly criticized by the public, media, and civil liberty and rights groups, as well as by privacy experts, the government finally listened and withdrew these bills or let them die on the order paper.

However, we still need to point out that exploiting the personal information on Canadians without reasonable cause and without a warrant is a huge violation of their privacy. I do not think I have heard about 1.2 million criminals being convicted of accessing personal information in 2011.

Last week, new revelations showed that government agencies and departments allegedly asked telecommunications companies to share personal information with them without a warrant. Not once, not a hundred times or a thousand times. They asked 1.2 million times.

We condemn this highly questionable tactic, since there is no legislative oversight to determine whether the government's reasons for accessing this information were valid.

Like many Canadians, I understand and support the need for security authorities to have the tools they need to fight crime in our country and to make us feel safe at home.

However, how can the government justify 1.2 million requests in a single year to achieve that goal? That happened in 2011, and the government was not required to explain what this information was necessary or how and for what it would be used.

When I think of the majority of Canadians who abide by the law and who could be affected by these requests, I find it unacceptable, disgusting and incomprehensible that the government is treating them like criminals.

The privacy of Canadians has been taken lightly by past Liberal and Conservative governments for far too long, and Canadians affected by the thousands of data breaches in government agencies are paying the price. To hear that the government is snooping on them as though they were common criminals when they have done nothing wrong is another blow on top of it all. Last week the government tried to make us believe these requests were made for public safety reasons, but let us look at the case of the CBSA.

In response to my order paper question, after reviewing the number of requests made from the CBSA in one year, we find that no requests were made in exigent circumstances. The 18,849 others were made in non-exigent circumstances. From these requests, only two were made for national security reasons, none for terrorism alerts, none for foreign intelligence, and none on the grounds of child exploitation, so it is hard to believe the government when it says that these millions of requests were made for national security reasons when the numbers speak a very different truth.

Canadians understand that law enforcement institutions need information to identify, catch and judge criminals. However, when the government makes 1.2 million requests for Canadians' private information from telecommunications companies per year, that is not just about cracking down own crime; that is spying.

The vast majority of Canadians are law-abiding. There is no reason for the government to engage in such broad spying activities. If the Canadian government decides to spy on its own citizens, it should do so only if it has reason to suspect them and only with a warrant.

If the law permits this kind of warrantless spying, the law must be changed immediately, and that is what the NDP is trying to do today. If the government needs a warrant to listen to Canadians' phone conversations, the same should apply to their online activities.

We understand that certain extremely urgent circumstances do not permit the obtaining of a warrant. However, the information we received from the Privacy Commissioner last week goes far beyond the imaginable: 1.2 million requests for subscriber data without a warrant is unacceptable and unjustifiable.

In Canada, we are very lucky to have a legal framework for obtaining a warrant. That framework protects Canadians and prevents abuses by the authorities. Unfortunately, there is a loophole in the system the Liberals introduced.

Today, the Conservatives are taking advantage of that loophole to spy on their own citizens. Clearly, the government is no longer in control of the warrantless disclosure procedures.

As I said earlier, the Conservatives' spying cannot be justified on national security grounds. Moreover, it is done in secret. The Privacy Commissioner is not even informed.

If the government had a real, viable motive for snooping on Canadians, it would have no problem whatsoever with warning Canadians when they were being snooped on, it would have no issue working with the OPC, and it would strengthen our laws to better protect Canadians against these types of abuses.

We do not know why, how often or how long the government has been spying. What is even more incredible is that the Conservatives have long been trying to expand the legal framework around requesting information without a warrant. If the government decides to spy on Canadians, there should be just cause, it should be overseen by the courts and it should happen only under exceptional circumstances.

What is even more ridiculous than the government's unwillingness to protect Canadians' privacy is its complete lack of understanding about the scope of the problem. Just last week, the Privy Council Office asked that all departments provide details about the number of personal information requests submitted to various telecommunications companies over the past three years.

That proves that the government has abused the loophole in the law to the point where it has lost control of its departments on this issue.

The Conservatives have proven that they are unable to protect the privacy of Canadians. The Privacy Act dates back to 1983, before the arrival of the Internet, and PIPEDA has not been updated since 2000, before the age of social media.

Instead of strengthening the laws and increasing government accountability, the Conservatives are moving in the other direction. Instead of protecting Canadians' privacy, Bills C-13 and S-4 will increase the likelihood that the government will spy on its own citizens. From an ethical standpoint, that is extremely problematic.

With Bill C-13 alone, the government would expand the number of people who can make requests for subscriber data so that even people like Rob Ford could access our personal information. It would create legal immunity for voluntary disclosure of personal information and it would expand the circumstances under which personal information could be disclosed.

As if that were not enough, the government is using taxpayers' money to spy on them. Government agencies pay telecommunications companies between $1 and $3 for each information request. That means that, at the very least, Canadian taxpayers have paid between $1.2 million and $3.6 million to be spied on. I say that is the minimum because only some of the telecommunications companies have disclosed how often they provide information to the government.

If all of those information requests were justified, and if the telecommunications companies were not worried about disclosing their practices, I would likely not be making this speech today. Unfortunately, the Conservatives are trying so hard to hide their spying that it is worrisome.

What are they using all that personal information for? Can they even justify the importance of the information? It is clear that the government believes that Canadians are criminals because it spies on them without their knowledge, as though it suspected them of something. This motion defends the privacy rights of law-abiding Canadians, and it is meant to counter the government's nefarious attempts to get information by the back door.

Since becoming the critic for digital issues, I have risen dozens of times to draw attention to and criticize the alarming state of our privacy laws. Laws that are meant to properly protect us in the digital age should have been revised years ago and are now unsuitable for protecting the public and our children.

In my time as opposition critic for digital issues, I have seen not one but four different pieces of legislation introduced in the House that would facilitate government snooping instead of fixing the problem.

Canadians are worried. They are right to be. The Internet that they have known as an open and free space for social and political discussions is threatened by the snooping of their very own government. Law-abiding citizens should be able to benefit from the Internet without the threat of being treated like common criminals.

I ask all my colleagues to vote in favour of our motion in order to restore Canadians' trust in matters concerning the protection of their privacy and of the Internet as the social and political tool it should be.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Chair.

I want to confirm something. Is what Mr. Eyking is talking about pertaining to contracts that exist between a farmer and a grain company, or is this amendment pertaining to service level agreements and contracts between grain companies or shippers and rail companies?

Bill C-30 deals with both, but in two separate sections and in two different ways. In one part, the Canadian Grain Commission is dealing with arbitrating contracts between farmers and shippers, and in the other part, under the Canada Transportation Act, the CTA is responsible for service level agreements and for this clause we just inserted between shippers and the rail companies.

What is this pertaining to?

[The Clerk]

—contrary to the first time we dealt with Bill C-30.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Malcolm, the difference between before and now is that Parliament itself has authorized the committee to include this amendment in Bill C-30 if it so chooses. That's the difference.

The process that we saw in the House cannot repeat itself, because the House has stated clearly that the committee should have another look at this amendment and if it chooses to incorporate it, it may be incorporated.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Hoback spoke most eloquently, but when we look at the package of Bill C-30, it exists to address an urgent situation in western Canada regarding the movement of grain. That's right now and for the foreseeable future. It's not meant to be a change. These changes are not meant to be in effect for eternity, for any long period of time. They're meant to be in effect to address the problem that exists today until it is properly rectified.

That's the whole package of changes. That's why I was asking Madame Brosseau some questions about this particular amendment, because this is a package of changes, not just a single change. It all works together in the same piece of legislation to address the problem that exists today and for the foreseeable future.

As Mr. Hoback said, “I think it's appropriate that it has a sunset clause”. As I mentioned in my first remarks, that sunset clause can be delayed. The clauses that would repeal all of what we're doing in Bill C-30 can be delayed if the situation has not been rectified by the time we get to August 2016.

There is already a mechanism that allows for the extension of all of these provisions built into the legislation if the problem has not been rectified in a suitable way by August 2016. I believe we've addressed this in a very comprehensive manner. It has a start; it has a finish. The finish can be extended if the problem of moving grain in western Canada has not been rectified in a meaningful way.

As Mr. Hoback mentioned, there's going to be a full review of the Canada Transportation Act earlier than previously thought. That will start, as you said, this summer, Mr. Hoback. That might be where discussion would take place about long-term changes to the Canada Transportation Act as opposed to what's seen here as a short-term implementation of initiatives to address a specific problem, and then routing one of them out and saying, “Well, that one we want to go on and on and on”.

In fact, as Mr. Hoback said, that would or could restrict or have an impact on the more fulsome review of the Canada Transportation Act when it starts this summer.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Chair, I'd like to ask another question.

There's a package of initiatives contained within this bill, and yet you're singling out one that you want to extend. Is that what it is? There are a number of initiatives here that are particular to Bill C-30. All those initiatives will sunset in August 2016 unless the provisions are extended.

You asking for this one to be extended?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

I would like to thank the opposition members for supporting the motion in the House to move this back to committee. As you know, we feel this is an extremely important clause that we want to insert into the legislation, Bill C-30. We also heard from our witnesses that this was a very important aspect of what they were looking for to improve rail service to grain shippers in western Canada in particular. So I think it is important that it's back here in front of committee with the authority of the House for us to be able to include it in the bill. I look forward to our discussion this morning and to accomplishing that.

Thank you.

[The Chair, Conservative, Bev Shipley]

Good morning everyone. I want to call the committee to order. This morning, pursuant to the order of reference of the House of Commons, we are dealing with Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures, but this morning we're actually dealing only with an amendment.

The committee did clause-by-clause examination of the bill back on April 7. As we will all remember, we had a lot of good debate on it and in the end there was a recorded vote of nine to zero in support of moving the bill forward to the House, which we did.

When it went to the House there was a point of order presented to the House that in turn has returned the bill to us, again on the order of the House of Commons. So we are here this morning because the amendment only deals with the Transportation Act. As a result, we will not be dealing with clause by clause again. We will only be dealing with the relevant clause 5.1, and as part of that we will also deal with clauses 6 and 15, which are consequential clauses.

With that I'll open up the floor for discussion on the motion that is in front of us.

Mr. Lemieux.

Business of the House

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

Mr. Speaker, first, let me acknowledge my colleagues', and I say that in the plural, co-operation with respect to both Bill C-30, the fair rail for grain farmers act, and Bill C-25, the Qalipu Mi'kmaq first nation act, today. We appreciate that co-operation.

This afternoon, we will continue with the second reading debate on Bill C-33, First Nations Control of First Nations Education Act. That debate will conclude tomorrow and we will then proceed with a committee study of this important legislation this spring.

Monday shall be the fourth allotted day. We will debate a proposal from the New Democrats.

The Liberals will then get their turn on Tuesday, which shall be the fifth allotted day. I am still waiting to see a proposal from the Liberal leader on the economy. Maybe he is still finessing his newest definition of the middle class. I recommend to him the recent study from the U.S.A., the one that has been widely reported, which demonstrated that the Canadian middle class, according to his recent definition, that is the median income, is doing better than ever in history. For the first time, the Canadian middle class is doing better than its American counterpart. Perhaps we will see that on Tuesday as the subject of debate in the Liberal motion, since they claim that the middle class is their priority.

On Wednesday, we will start the report stage debate on Bill C-23, the fair elections act. I want to take this time to acknowledge the hard work of the members of the procedure and House affairs committee. My friend was just talking about the hard work they have been undertaking and the difficult pressure they are under. Largely, it should be said, it is a result of the lengthy filibuster, of which the New Democrats were so proud, at the start, whereby the committee lost many days, when it could have heard witnesses.

Notwithstanding that loss of work, those delay tactics, and the obstruction by the New Democrats, the committee has got on with its work. It heard from almost 70 witnesses. It had over 30 hours of meetings. Now it has gone on to complete about a dozen or so hours of detailed study of the clauses of the bill and the government's reasonable and common-sense amendments to the bill. I expect that it will complete that work shortly.

Despite the long hours the committee members are putting in, I know that they will be keenly anticipating the appearance, before the next constituency week, of the Leader of the Opposition at that same committee. That will, of course, be in compliance with the House order adopted on March 27 respecting the allegations of inappropriate spending and the use of House of Commons resources by the New Democratic Party. There the hon. member for Outremont will have the opportunity to answer many important questions of interest to all Canadians, including, I am sure, some questions from his own caucus members, who have been dragged into the scheme the NDP leader has put in place.

Finally, on Thursday morning, we will consider Bill C-3, the safeguarding Canada's seas and skies act, at report stage and third reading. After question period, we will resume the third reading debate on Bill C-8.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, this was not a good month for this government: three of their bills were rejected by the courts because they were flawed.

Given that the government is routinely invoking time allocation and closure, the work on the bills has been sloppy.

This morning, another flawed bill, Bill C-30, was sent back to committee because this government did not do a good job in the first place. Mr. Speaker, you were obliged to reject the manner in which the government put in place this bill.

The government's process is not working. The courts and even the Speaker of the House have to call this government to order.

Now the government seems to be doing the same thing with Bill C-23, the unfair elections act. The committee was working to address many of the problems that exist in the bill. The NDP, as it always does, offered sound amendments to bring forward on this bill so that it would actually work for Canadians and Canadian democracy. However, we have the government now setting an artificial deadline. When the committee still has over 200 pages of the bill to scrutinize and still has hundreds of amendments to consider, the government is saying that the committee has to finish its work within just a few hours.

This is obviously going to be another bill that the government is going to screw up. How can the government expect bills to stand up to scrutiny if it will not allow proper scrutiny in committee and in the House?

My question is very simple. What will the Conservatives do next week to start restoring the confidence of Canadians that has been sorely lost by the amount of botched legislation we have seen coming from the government?

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.

[Brent Rathgeber, Independent, Edmonton—St. Albert, AB]

Mr. Speaker, I am curious as to whether the hon. member believes that the Canadian Transportation Agency is, in fact, the right body to issue compensation or whether claims for compensation ought to go to a different tribunal, court of law, or arbitration? Why does he believe that the CTA has the expertise to adjudicate claims when, before the amendment to Bill C-30, that was not something the CTA had ever been called upon to adjudicate?

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

moved that the bill be read the third time and passed.

Mr. Speaker, it is indeed a pleasure to report Bill C-30 back to the House.

The bill addresses the immediate needs of Canadian farmers, bulk shippers, and our overall economy. Our government knows our economy needs a supply chain that works today and tomorrow, with the capacity to move what is produced.

I was proud to speak to the benefits of this bill at the agriculture committee last month. I understand the committee had a very extensive series of meetings, including testimony from over 20 stakeholder groups. The committee heard from the entire supply chain from farm to port, and from a wide range of commodity shippers, from wheat to oats to barley, as well as from fertilizer, mining, and timber groups.

I was pleased to see a strong will around the table to work toward industry-led solutions focused on service and private sector responsibilities.

This is a piece of comprehensive legislation, and opposition and government together appreciate the non-partisan work of the committee to date, along with all of the witnesses that came forward. By working together, we were able to strengthen the bill, which, I would like to note, passed through the committee with unanimous support. I thank the committee members for that.

It was extremely unfortunate that the member for Edmonton-St. Albert turned a deaf ear to those farmers and shippers by attempting to deprive them of meaningful service level agreements, or SLAs. His point of order accomplished nothing but delaying the much-needed measures in the bill.

I want to be clear that these parliamentary games, while unfortunate, will not deter our government and the opposition from amending Bill C-30 to include service level agreements with reciprocal penalties. Testimony shows that the majority of stakeholders support the bill and what it sets out to accomplish.

During the committee's consultations, shippers of all commodities applauded this legislation, but they also asked the government to go further. They asked us to put more teeth into service level agreements to bring day-to-day accountability to the railways. Responding to this feedback, my parliamentary secretary introduced an amendment at committee on behalf of the government.

The first part of the amendment would give the Canadian Transportation Agency the authority to

...order the company to compensate any person adversely affected for any expenses that they incurred as a result of the company's failure to fulfill its service obligations...

By “company”, of course, we mean railways.

The amendment allows shippers who enter into service level agreements to be directly compensated for any expenses they incur as a result of the railways' failure to meet those service obligations. This includes compensation if the shipper is out of pocket for costs such as demurrage, contract defaults, or penalties. It goes further than the reciprocal penalties that many in the industry have requested, because it applies to any level of service complaint under the Canada Transportation Act. This is a market-based solution that would help get all bulk commodities moving and continuing to move.

The second part of the amendment reads:

...or, if the company is a party to a confidential contract with a shipper that requires the company to pay an amount of compensation for expenses incurred by the shipper as a result of the company's failure to fulfill its service obligations, order the company to pay that amount to the shipper

This measure is equally important, because it allows compensation to be paid within a commercial contract. It would encourage the shippers and railways to come to the table and set their own terms and agree on SLAs with reciprocal penalties, should they so desire.

The goal is to level the playing field and provide better tools for shippers when railway companies breach their service obligations.

We are working to continue to improve the efficiency, reliability, and predictability of the entire supply chain. I am pleased to say that strengthening SLAs has the support of industry, the provinces, and the opposition, and I thank them all.

Industry groups that support this needed amendment include, but are not limited to, the Inland Terminal Association of Canada, the Barley Council of Canada, the Canadian Canola Growers Association, Cereals Canada, the Mining Association of Canada, the Canadian Fertilizer Institute, and the Freight Management Association of Canada. It covers all of the spectrum.

The importance of the bill cannot be understated. I recently returned from a trade mission to South Korea and Japan, where, alongside Canadian industry, I spoke directly with international buyers of Canadian grains about problems incurred in our immediate past. I assured these buyers that our government was not taking this situation lightly and explained the details of Bill C-30 to directly address their concerns. These buyers were pleased to hear that our government was taking this needed action to ensure Canada's reputation as a reliable grain shipper, and they thanked our government for acting quickly.

Farmers and all shippers need our government to pass the bill, as amended, as expeditiously as possible. Our economy and Canadian jobs are relying on us to act.

Crop yields show every sign of continuing to grow through better technology, higher yielding, more disease-resistant varieties and better agronomic practices.

Shippers of all bulk commodities that rely on rail are growing their businesses exponentially and are demanding increased capacity to get those products to a burgeoning marketplace. That is why we must move forward to strengthen the supply chain now for the next crop year and beyond.

Bill C-30 holds solutions that would benefit the entire supply chain. I urge everyone in the House to work together to pass this important bill, with this needed amendment, as quickly as possible.

The House proceeded to the consideration of Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures, as reported (without amendment) from the committee.

Bill C-33—Time Allocation Motion

[Malcolm Allen, NDP, Welland, ON]

Mr. Speaker, I think you heard a lack of noise from this side when the House leader from the government moved the closure motion, because it is so usual for us to hear that.

The minister suggested that somehow we oppose everything. Let me remind the minister that today Bill C-30 will come before us and that it was this opposition, this New Democratic Party, this critic of agriculture, who said to the minister opposite, “We will help you, sir. We will help you get the legislation through. We will help you at committee. We will help you bring it back, because it is an emergency.” We intend to continue to do that.

Unfortunately, as you heard earlier in the Speaker's ruling, the government brought forward amendments. What happened in its rush to do all of that? The government was ruled out of order. When we rush, we make mistakes. That is a human frailty. It is not necessarily a Conservative frailty, albeit the government is the one that brings closure all the time. Clearly, its frailty is probably more obvious than anyone else's when it comes to making mistakes.

This single piece of legislation is immensely important. I do not sit on that committee, so my opportunities to speak to this legislation are limited to this place. By doing what the government has done 60-odd times, it limits the opportunity for those of us who do not have the opportunity to go to committee. Some would ask why we do not just substitute in. That would be an opportunity. However, I can imagine that the government would come up with some sort of ruling that there could only be so many substitutes, because if we all tried to substitute in to listen to committee hearings, the government would say that it would take too long as well.

There are times we need to take the time to study. In this case, the minister should reconsider. I do not know why he wants to rush this through. Education is important for every child. We agree with him that first nation children deserve to have the same education and the same opportunities as everyone else, but let us get it right in the first place. Let us not make mistakes.

Standing Committee on Agriculture and Agri-Food—Speaker's Ruling

[The Speaker, Conservative, Andrew Scheer]

I am now prepared to rule on the point of order raised on April 10, 2014, by the hon. member for Edmonton—St. Albert, regarding the admissibility of an amendment adopted by the Standing Committee on Agriculture and Agri-Food for Bill C-30, an act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures and reported to the House on April 8, 2014.

I would like to thank the hon. member for Edmonton—St. Albert for having raised this matter, as well as the Parliamentary Secretary to the Leader of the Government in the House of Commons for their comments.

The member for Edmonton—St. Albert claimed that an amendment adopted by the Standing Committee on Agriculture and Agri-Food in relation to Bill C-30 is inadmissible, because it aims to amend a section of the Canada Transportation Act that is not contained in the bill. He argued that, in so doing, the committee had exceeded its authority and went beyond the scope of the bill that had been referred to it.

On April 28, 2014, the Parliamentary Secretary to the Leader of the Government in the House of Commons countered the points made by the member for Edmonton—St. Albert. He asserted that the amendment in question was relevant and consistent with the subject matter of the bill, and respected the rules and usual practices of the House. He explained that the amendment aimed to modify the Canada Transportation Act, which is under consideration in Bill C-30. He also reminded the House that the amendment was considered without procedural objection and was adopted by a recorded vote without dissent.

In a Speaker’s ruling delivered on April 28, 1992, which can be found at page 9801 of Debates, Speaker Fraser explained the restrictions faced by committees when considering amendments to a bill. He said:

As the House knows, the Speaker does not intervene on matters upon which committees are competent to take decisions. However, in cases where a committee has exceeded its authority, particularly in relation to bills, the Speaker has been called upon to deal with such matters after a report has been presented to the House.

In relation to the Speaker’s authority with respect to amendments adopted in committee, House of Commons Procedure and Practice, second edition, at page 775 states:

The admissibility of those amendments, and of any other amendments made by a committee, may therefore be challenged on procedural grounds when the House resumes its consideration of the bill at report stage. The admissibility of the amendments is then determined by the Speaker of the House, whether in response to a point of order or on his or her own initiative.

I have reviewed the amendments adopted by the committee, and particularly the amendment that gave rise to this point of order, which created the new clause 5.1 in the bill. It amends section 116 of the Canada Transportation Act, a section that was not originally amended by the bill, to provide an additional power to the Canada Transportation Agency.

The parliamentary secretary referred to several procedural authorities to support his arguments. Most notably, and helpfully, he quoted from House of Commons Procedure and Practice, second edition, at page 766 on the issues of scope and relevance. However, in the same paragraph that he quoted from, a critical element went unmentioned. At pages 766 to 767, it also reads:

In the case of a bill referred to a committee after second reading, an amendment is inadmissible if it proposes to amend a statute that is not before the committee or a section of the parent Act, unless the latter is specifically amended by a clause of the bill.

This is sometimes referred to as the parent act rule.

The Chair has no difficulty agreeing with the parliamentary secretary that the amendment is relevant to the subject matter of the bill. Indeed, as a fellow Saskatchewan MP who represents a large number of grain producers, I can certainly agree on the importance of this issue. As Speaker, however, not only can I not simply act according to my personal beliefs, I must respect House of Commons precedents which, in the case before us, are only too clear. Relevance is not the only test to be applied in judging admissibility. As the amendment in question reaches back into the parent act to modify a section of the act originally untouched by the bill as passed at second reading, long-standing practice leaves the Chair no choice: the amendment and those consequential to it are inadmissible.

The procedural jurisprudence is clear. I am therefore obliged to rule that the amendment, and the two other consequential amendments adopted by the committee, are null and void and no longer form part of the bill as reported to the House. In addition, I am directing that the bill be reprinted without these amendments.

Let me close by recalling how the parliamentary secretary to the government House leader has reminded the House that this bill enjoyed all-party support at second reading and that the specific measures this ruling addresses were unanimously agreed to in committee. In light of that, the Chair would be remiss if I did not, in turn, remind the House that, should there still be a clear will on the part of all parties in the House to effect these changes in the law, there are several very simple and straightforward procedural options available.

I thank honourable members for their attention.

[David Marit, President, Saskatchewan Association of Rural Municipalities]

Thank you, Mr. Chairman, for this opportunity to appear before the committee.

I'm the president of the Saskatchewan Association of Rural Municipalities, and we've appeared before the committee in the past and appreciate the ongoing relationship we have with the members.

Today, I'd like to provide you with a summary of the current and future challenges facing rural Saskatchewan regarding rail safety. These issues are of great importance to SARM and our member municipalities. Rail transportation service is an issue of vital importance to our province. Our small, yet growing population, large volume of agriculture, and oil and potash production right in Saskatchewan mean that a significant amount of our products are exported. The distance to ports and the landlocked nature of our province make rail the only mode of transportation currently available to haul our products to export position.

As a result, our province’s economic advantage is very much dependent on a competitive rail transportation system. The recent rail disasters have clearly raised questions about the safe transport of dangerous goods via railways through our municipalities across Canada. We'd like to begin today with comments on grade crossing regulations.

Proposed changes to rail crossings currently being consulted through part I of the Gazette raise issues of concern about both safety and cost for municipalities. SARM supports the intent of the proposed grade crossing regulations; however, their current direction is unclear. SARM is concerned with safety and emergency service access to communities and the length of trains. We understand that there will be a move to two-mile trains and this will block crossings and cause unintended consequences for communities. The continuous obstructions of grade crossings by trains is a large concern for municipalities.

SARM recommends that guidance be provided by the Department of Transport to municipalities on how to address these issues at the local level to increase safety.

The costs for municipalities to upgrade crossings are unknown, and the long-term maintenance can be expensive. It is required that all crossings be upgraded to meet the indicated standards. There remains a possibility that smaller municipalities will face significant costs, ones they cannot afford. Not maintaining crossings will result in closures as a result of municipalities being unable to meet the expense for upgrading sight-line requirements. This would have tremendous impact on local ratepayers and the rural municipalities.

SARM recommends that additional funding be provided to ensure municipalities can comply with the requirements.

It is our understanding that there will be some flexibility in meeting the requirements within the final regulations. SARM recommends that a reference guide be developed that outlines the flexibility that local authorities have to comply with the regulations.

In consultation with the Saskatchewan Shortline Railway Association, SARM has made a submission to the Canadian Transportation Agency on third party liability insurance coverage regulations. The Lac-Mégantic tragedy was a rare case in which no reasonable requirements for third party liability insurance would have provided adequate coverage. After an internal review and consultations with industry stakeholders in our province, we don't believe there should be additional or different third party liability insurance requirements related to the transportation of certain commodities such as dangerous goods.

Our recommendations include the following.

Provincially regulated short lines are a lot different from the high volume, high speed railways that are federally regulated. If minimum requirements for liability insurance are imposed, SARM recommends that the short-line railway requirements be less than those of class I railways.

We also recommend that adequate consideration be given to the level of risk posed by provincially regulated short lines and that, if regulations are imposed on them, they correlate with the level of risk. Because railway operations vary in terms of the volume of traffic, commodity mix, scope of operation, and number of crossings, minimum requirements should be less on shoreline railways and based on individual risk assessments, past history, and length of service.

Short lines have become integral to the transportation network, moving Canada’s mining resources to local and regional markets. Our concern is in regard to increased liability and whether or not the requirements for class I railways will be downloaded onto short lines. The shoreline sector is essential for providing a continuous railway network across federal and provincial jurisdictions; therefore, additional costs in obtaining higher third party liability insurance could be detrimental to their business. SARM recommends that these additional costs remain with the class I railways.

With respect to rail shipments, SARM has always advocated that an effective rail transportation system is critical to the competitiveness of our agriculture sector and other rural-based industries in Canada, including oil and potash, which we will see being transported via rail more regularly as pipelines hit capacity and potash production increases.

The poor level of rail service for the grain industry has been affecting grain profitability across Canada. The rail capacity to handle increased grain exports is vital to supporting the Canadian economy and to the competitiveness of our agriculture and food sector.

SARM supports the efforts the federal government has made to improve grain movement throughout our province, and supports the amended version of Bill C-30, the fair rail for grain farmers act. We are, though, disappointed that the legislation did not include more substantial penalties on the railways and failed to increase the number of grain cars that railways are required to deliver.

With regard to stiffer penalties and minimum grain cars, in order to ensure that a similar backlog does not reoccur in future years, SARM recommends that mandatory levels of rail service agreements be legislated, with much stiffer penalties imposed when levels of service are not met, and that legislation be implemented to ensure that the railways move a minimum of 13,000 cars.

In closing, SARM recommends the following to ensure that rail transportation service continues to sustain Saskatchewan’s growing economy.

If costs for municipalities to meet the proposed grade crossing requirements prove to be too expensive, additional funding should be provided to ensure that municipalities can comply. Guidance should be provided to municipalities to address safety concerns regarding obstruction of grade crossings, and a reference guideline should be developed that outlines the flexibility that local authorities have while attempting to comply with the regulations.

Second, third party liability insurance requirements should be lower for short-line railways than for class I railways, and additional costs should remain with the class I railways.

Finally, to improve the overall current level of rail service for the shipment of products, stiffer penalties should be imposed when levels of service are not being met to ensure that the minimum cars will be moving grain.

Thank you very much, Mr. Chairman, for this opportunity.

Standing Committee on Agriculture and Agri-Food

[Brent Rathgeber, Independent, Edmonton—St. Albert, AB]

Mr. Speaker, I was under the impression, in fact, we had been advised that the Chair would be delivering a ruling on my point of order raised in the House on April 10 with respect to the amendments passed by the agriculture committee regarding Bill C-30.

The Chair is not in a position to offer a ruling now, but I was curious if you might be able to advise the House when that ruling might be forthcoming. As you can appreciate, I, the government House leader and, I suspect, the Minister of Agriculture and Agri-Food are very anxious to hear your ruling.

Protecting Canadians from Online Crime Act

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, the member indicated that the warrantless production of documents and the warrantless search is now a thing of the past, and that this element of Bill C-30 is not present in Bill C-13. However, there is something in Bill C-13 that would provide immunity to Internet service providers and telephone companies when they produce records at the request of law enforcement authorities. In order to make it easier for them, this immunity would apply to both criminal prosecution for the production of these records and any civil suit.

Given that the member's position is that there are no longer warrantless searches, is it not the case that there is now an incentive for co-operation among Internet service providers, or at least a disincentive has been removed, which is tantamount to having warrantless searches all over again? What the government is doing indirectly is what it tried to do directly, through Bill C-30.

Standing Committee on Agriculture and Agri-Food

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I am rising today to respond to the point of order raised on April 10 by the hon. member for Edmonton—St. Albert respecting the amendments to Bill C-30, the fair rail for grain farmers act, contained in the second report of the Standing Committee on Agriculture and Agri-food presented on Tuesday, April 8. The government disagrees with the assessment offered by the hon. member.

The amendment in question, which adds clause 5.1 to the bill, is relevant to the subject matter of Bill C-30. It respects the rules and usual practices of the House. It would amend a part of the Canada Transportation Act, a law that is already under consideration in Bill C-30.

The summary of Bill C-30 clearly states that a goal of the legislation, and in particular the part which would amend the Canada Transportation Act, is to “facilitate the movement of grain by rail”. This amendment would provide the tools required in the supply chain to make sure all parties are committed to making this happen.

The sponsor of the bill clearly believes that this clause is relevant and consistent with his policy intentions or he would not have asked his parliamentary secretary to propose that amendment.

Clause-by-clause consideration of the bill followed an ambitious and full series of meetings by the agriculture committee. Many witnesses with interests in this legislation appeared and gave evidence. The government heard what witnesses asked for. In response, it drafted an amendment to fulfill the desire of witnesses.

Furthermore, I understand that the amendment was considered at committee without objection. Not only was it considered without procedural objection, it was adopted by a recorded vote of nine to zero. Every member of the committee voted for and supported the amendment. A competent and informed decision was made when each member reviewed, considered, and voted for the amendment. The unanimously adopted amendment aids and advances the bill's purpose of facilitating the movement of grain by rail.

As the Speaker knows, House of Commons Procedure and Practice, Second Edition, at page 766 states:

An amendment to a bill that was referred to a committee after second reading is out of order if it is beyond the scope and principle of the bill...Similarly, an amendment which is equivalent to a simple negation of the bill or which reverses the principle of the bill as agreed to at second reading is out of order.

An amendment to a bill must be relevant in that it must always relate to the subject matter of the bill...

Erskine May's Parliamentary Procedure, 24th Edition, helpfully defines the scope of a bill at page 6564:

Any amendment (or new clause or new schedule) proposed to a bill must be within its scope. The scope of a bill represents the reasonable limits of its collective purposes, as defined by its existing clauses and schedules. In particular cases difficult questions of judgment may arise. The scope of a bill, particularly of a bill with several purposes, may be wider than its long title, although the long title may help to determine the scope.

Bill C-30's long title is An Act to Amend the Canada Grain Act and Canada Transportation Act and to provide for other measures. Clearly clause 5.1, which would amend the Canada Transportation Act, meets this threshold.

Let me add from page 565 of Erskine May:

An amendment which is outside the scope of a clause may be admissible if presented as a new clause, provided that it is within the scope of the bill.

As I have previously mentioned, clause 5.1 joins other amendments to the Canada Transportation Act to facilitate the movement of grain by rail.

Beauchesne's Parliamentary Rules & Forms, 6th Edition, addresses the admissibility of amendments to legislation at citation 698. Let me quote from some of the paragraphs of this citation. Paragraph (1) says:

An amendment is out of order if it is irrelevant to the bill, beyond its scope, or governed by or dependent upon amendments already negatived.

That is not the case here.

Paragraph (2) reads:

An amendment must not be inconsistent with, or contradictory to, the bill as so far agreed to by the committee, nor must it be inconsistent with a decision which the committee has given upon a former amendment.

This amendment complements and enhances the purpose of the bill. It absolutely is not inconsistent with the bill.

Paragraph 5 informs us that “An amendment which is equivalent to a negative of the bill, or which would reverse the principle of the bill as agreed to at the second reading stage is not admissible.” However, this is not applicable because the amendment does not overturn the principle of the bill. I could offer even more quotes from citation 698 to make my case, but in the interest of time, I will not.

Let me take a brief moment, especially as a member of Parliament from Saskatchewan, to acknowledge and thank the opposition members for the work they did; and in fact the non-partisan work they all did, as well as the cordial approach taken during the committee's work to see this important bill considered promptly, expeditiously, and thoroughly.

Members of the House understand extremely well that this amendment is important because it gives tools to the shippers who enter service level agreements. In fact, the proposed amendment further facilitates the movement of grain by rail through the creation of a better balance and accountability between shippers and railways and the strengthening of the strong foundation provided for effective and reliable service. The amendment is something that many witnesses from all commodities have asked for at the committee. The Alberta Wheat Commission said this recently:

AWC would like to recognize the members of the House of Commons and the Standing Committee on Agriculture and Agri-Food for the amendments made to strengthen the legislation and the potential for effective Service Level Agreements between railways and shippers. [...]The need for financial penalties was identified by AWC as a necessary component for Service Level Agreements.

Mr. Speaker, it is for these reasons that you should find it easy to reject the point of order raised by the hon. member for Edmonton—St. Albert and find in order the second report of the Standing Committee on Agriculture and Agri-Food on Bill C-30, the fair rail for grain farmers act.

[Brent Rathgeber, Independent, Edmonton—St. Albert, AB]

Mr. Speaker, I rise on a very important point of order.

On Tuesday morning, during routine proceedings, the chair of the House of Commons Standing Committee on Agriculture and Agri-Food reported Bill C-30 back to the House with amendments. I wish to seek a ruling from the Chair as to whether an amendment to Bill C-30, adopted by the committee, is in order.

I understand that generally, the Chair does not involve itself with the business of committees, given that committees are masters of their own proceedings. However, as Speaker Milliken pointed out on February 27, 2007, at page 7386 of the Debates, ruling on a similar matter:

As the House knows, the Speaker does not intervene on matters upon which committees are competent to take decisions. However, in cases where a committee has exceeded its authority, particularly in relation to bills, the Speaker has been called upon to deal with such matters after a report has been presented to the House.

I submit that an amendment moved by the Parliamentary Secretary to the Minister of Agriculture and Agri-Food, and adopted by the committee, is out of order, because the committee has exceeded its authority.

The amendments to the committee-adopted subsection 116(4) seek to add an entirely new and different provision to the Canada Transportation Act that was clearly not envisioned in the original draft of Bill C-30, as tabled and passed by the House at second reading on Friday, March 28, 2014.

The summary of the original Bill C-30 states that:

This enactment amends the Canada Grain Act to permit the regulation of contracts relating to grain and the arbitration of disputes respecting the provisions of those contracts. It also amends the Canada Transportation Act with respect to railway transportation in order to, among other things, (a) require the Canadian National Railway Company and the Canadian Pacific Railway Company to move the minimum amount of grain specified in the Canada Transportation Act or by order of the Governor in Council; and (b) facilitate the movement of grain by rail.

Bill C-30, as originally tabled, was about moving grain. It is much needed. It is a serious problem with respect to farmers getting their grain to market. However, the amendment, tabled at committee by the Parliamentary Secretary to the Minister of Agriculture and Agri-Foods, and adopted by the committee, seeks an entirely new power:

Subsection 116(4) of the Canada Transportation Act is amended by adding the following after paragraph (c):

(c.1) order the company to compensate any person adversely affected for any expenses that they incurred as a result of the company's failure to fulfill its service obligations or, if the company is a party to a confidential contract with a shipper that requires the company to pay an amount of compensation for expenses incurred by the shipper as a result of the company's failure to fulfill its service obligations, order the company pay that amount to the shipper;

The Minister of Agriculture may believe that this is a favourable amendment, and it may very well be. The problem is that it exceeds the authority of the original bill and provides quite an extraordinary remedy in that it gives the regulator the power to award damages in the absence of any procedural fairness, any rule of law, or any discoveries.

In the ruling on the power of a committee to make amendments, Speaker Fraser ruled, on April 28, 1992, at page 9801 of the Debates, stating:

When a bill is referred to a standing or legislative committee of the House, that committee is only empowered to adopt, amend, or negative the clauses found in that piece of legislation and to report the bill to the House with or without amendments. The committee is restricted in its examination in a number of ways. It cannot infringe on the financial initiative of the Crown, it cannot go beyond the scope of the bill as passed at second reading, and it cannot reach back to the parent act to make further amendments not contemplated in the bill no matter how tempting this may be.

It may have been very tempting to amend the bill to provide for compensatory powers within the regulator, but it falls outside the four corners of Bill C-30 as it was adopted by the House.

Mr. Speaker, I submit to you that in this instance, the amendment to Bill C-30 is both beyond the scope of the bill and also reaches back to make changes to the Canada Transportation Act that were not contemplated by the bill. The amendment passed by the committee has the effect of giving the Canada Transportation Agency the right to award damages, a right that at this point in time has been the sole purview of the courts.

The amendment to subsection 116(4) is out of order, because it does not relate to the original subject matter of Bill C-30 as introduced and passed by the House at second reading and because it introduces new issues that were not part of Bill C-30 as originally introduced. The amendment is therefore beyond the scope of Bill C-30 and should be removed from the bill. I look forward to a ruling from the Chair.

Agriculture and Agri-Food

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, it is indeed a pleasure and an honour to present, in both official languages, the second report of the Standing Committee on Agriculture and Agri-Food, in relation to Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

The committee has studied the bill and has decided to report the bill back to the House with amendments.

[Jeff Watson, Conservative, Essex, ON]

Maybe this is one that our lawyers can answer, but my reading of the way Bill C-30 is constructed is that if you were to accept this amendment, but not amend subclause 8.(2) to include subsection 169.31(1.2) that, in fact, the measure you're proposing wouldn't sunset.

Is that a fair reading, Mr. Langlois?

[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]

Just listening to the explanation you're talking about corridors but the measure in front of us talks about regions. What regions? The Prairies as a region? B.C. as a region? Eastern Canada as a region? I'm not sure that the two are interchangeable in your discussion in terms of the table here. Having said that, it may not be a small technical point, it could be a large technical point. We've had some discussion already, but we did hear from witnesses who suggested that the further down we begin to regulate in terms of the specificity of movements, the more difficult it gets for us. You mandate by volume but not necessarily within a given time on the calendar. Now you're committing to an equitable distribution regardless of where flows actually begin to move.

I think it was Kevin Hursh, if I recall correctly, who warned us against the idea of trying to bore down and start regulating every detail in every corridor, and that this would be a problematic approach, Mr. Chair. I think we should back away from that. If we look at what producers were saying, they would prefer that commercial agreements, with teeth, are what regulate the movement of the carry-over and any additional future harvest that's coming. Our G-1 amendment to Bill C-30, I think, achieves that now, the mechanism by which the commercial regulatory framework can take over instead of getting us trapped on the government's side of regulating deeper in a problematic fashion.

[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.

[Greg Meredith]

That's correct. The farmer's interests are in the CGA. The amendments to Bill C-30, which we talked about earlier, deal with provisions that can be inserted into contracts and the penalties for breach of those provisions. That's the relationship between the shipper and the farmer, and that's how the farmer gets compensated.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thanks, Mr. Chair.

I think what I want to highlight is that this amendment deals with service-level agreements. SLAs generally exist between, for example, elevators and rail companies based on service. That's what we're talking about.

The other thing I would point out is that service-level agreements are dealt with already in the Canada Transportation Act. This particular act here, Bill C-30, is not trying to reinvent SLAs and the way in which they're handled or arbitrated. That's already within the Canada Transportation Act. What this is doing, though, is it's responding to the witnesses, who we all heard from, who said that when it came to service-level agreements, they wanted teeth in those SLAs. That is what this is delivering.

You were asking for an example, so let's take demurrage. A grain shipper contracts with the rail company, has a service-level agreement with the rail company, the SLA is not respected by the rail company, and there are demurrage fees. That would normally be paid by the grain shipper, but now the rail company actually has a role to play in compensating the grain shipper for that, through the SLA. If there's a breakdown, then there's an arbitration process that's already in place for SLAs.

The thing I would point out is that this amendment is strongly supported by shippers from all commodities. It's also my understanding that the Coalition of Rail Shippers supports this.

So this type of an amendment has very strong support.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

That's great. Thank you, Chair.

I understand that this is dealing with basis calculations. I get that. But I do have some concerns. These clauses of Bill C-30 deal with the Grain Commission ensuring that contracts are honoured. But I don't think it's the role of the government to be involved in fairness and accuracy. Those are very general terms for us to be legislating and their interpretation is wide open here. I don't think it's for the government to look at something and say, “Well, that's fair ” or “That's accurate”.

Mr. Chair, I would say that the clause, as it stands right now, is sufficient, and as I mentioned, it ensures that contracts relating to grain must be honoured.

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

Mr. Speaker, this government has shown real leadership in putting in front of Parliament, Bill C-30. We had witnesses come in front of committee; we held extensive meetings all last week, and we have received written inputs as well. Tonight we will be doing clause-by-clause, and the committee will be doing its work. I ask the member to let the committee do its work.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, about grain transportation, all parties are trying to deal quickly with Bill C-30. The deadline for filing amendments was last Friday. Because of that timing, some key stakeholders had no chance to submit their views, including the Province of Saskatchewan.

We have all just received a letter from provincial minister Lyle Stewart. Will the government accept his request that emergency legislation not be sunsetted in 2016, but kept in place until the CTA review is done and permanent legislation is enacted? That is sensible. Will the government agree?

Agriculture and Agri-food

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

Mr. Speaker, I have been paying attention. I spoke on Bill C-30, and we have been studying it in committee every day.

I want to know when the Conservatives will stop taking these farmers for granted and actually take action.

The minister knows full well that increased interswitching limits do not compensate farmers and that Bill C-30 is not a long-term solution. These changes will cost rail companies more, and these higher costs will be passed on to farmers. While a few grain companies will fight over the profits, it is farmers who are paying more.

Will the minister accept our constructive amendments at committee?

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

Mr. Speaker, I would invite this member to follow what is actually happening here in Parliament.

Just last week, our government put forward Bill C-30, which is the fair rail for grain farmers act. It would obligate the rail companies to move one million metric tons of grain a week to help clear the logistic backlog with respect to grain. It would also increase supply chain transparency, strengthen contractual mechanisms between producers and shippers, and help ensure that the entire chain is working at peak capacity.

I invite this member to vote in favour of this legislation.

Business of the House

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

Mr. Speaker, I am pleased to see that the House is currently focusing on jobs, growth and long-term prosperity by debating Bill C-31, the Economic Action Plan 2014 Act, No. 1, at second reading.

This debate will continue tomorrow, Monday and Tuesday, with members of Parliament having an opportunity that night to vote on this bill to enact key measures of our low-tax plan for jobs and growth in the Canadian economy.

I am currently setting aside next Wednesday and Friday for debate on Bill C-32, the victims bill of rights. This important and much needed piece of legislation would give victims their rightful place in our justice system: at its heart. The Conservative Party has long stood alone in putting the rights and interests of victims ahead of those of criminals.

Also, I would like to note that Bill C-30, the fair rail for grain farmers act, has been making good progress in committee this week. Should that bill be reported back to the House next week, I will make time for its consideration if we are able to enjoy the same level of co-operation that we saw at second reading last Friday, when it was passed by the House after we heard from a speaker from each party.

Finally, Thursday, April 10, shall be the second allotted day. I understand that we will debate a Liberal motion on that day. Perhaps the hon. member for Papineau will ask the House to debate his definition of middle class. In fact, it appears he could have a vigorous debate on that issue with himself that would fill the entire day. I eagerly await to see if his newest definition of the middle class will still include the CEOs of the big banks. I am confident that his caucus will stand ready to move an amendment to that motion if, during the course of the day, his definition changes yet again.

I noticed today in question period that we heard yet another definition of middle class. It is that one magical person who happens to make the median income in Canada. At least that way the middle class is easily defined and the number of people who are middle class is unlikely to change. It is one person, and that is a number that I know the member for Papineau will be able to grasp. He will be able to remember the number one. It is easier than remembering the thousands of billions number that he is also fond of.

I am also confident that he will not choose as the subject of debate the matter of eliminating the budget deficit. After all, he says the budget will balance itself.

[Jeff Watson, Conservative, Essex, ON]

Right.

That being said, you've raised some other issues that wouldn't be contingent per se on the Canada Transportation Act review. Those, I think, form some important advice to this committee in this process right now with Bill C-30.

[Jeff Watson, Conservative, Essex, ON]

Before I get to any questions, it's probably appropriate to take a step back for a second.

The government's approach with respect to what is happening in the west first of all was an immediate solution to ramp up the cars available, if you will. That was the order in council.

Bill C-30 is not a long-term structural change. It's intended to address near-term issues in a more comprehensive way than the order in council allows us to do. Through that we're proposing, among many things, a flexible regulatory approach to some of the service level issues that have been raised, as opposed to putting in force a legislated framework, and trying to be prescriptive about it in that approach for a short duration.

The third aspect is that we are proposing to accelerate the review of the Canada Transportation Act. It's important because of some of the bigger structural questions. Earlier we heard from witnesses about the establishment of a transportation authority and some other things like that. These are major structural things and we don't necessarily know what the interrelationships will be. I don't even know if they'll exceed the scope of the bill as it currently exists. But some of these issues related to major structural changes to the legislative framework of the Canada Transportation Act are probably dealt with better in that earlier review, so we can take a look at that.

I think Bill C-30 has to be looked at with a view of not trying to solve all the issues, if you will, in a structural fashion. That being said, it doesn't mean there aren't opportunities. There'll be consultation, obviously, on the regulations. I think we've heard a number of witnesses who think that will achieve at least some of the important objectives related to operational terms of service level agreements.

Is that a fair understanding of that approach in that regard? Do we understand that we're not trying to solve all of the issues, if you will, structurally with this particular bill? Are you comfortable with that approach, knowing that the bigger questions will be dealt with in an accelerated fashion?

[Garnet Etsell]

Let me address the domestic grain issue because that really comes from ANAC, the Animal Nutrition Association of Canada. If we do not get some kind of prioritization in Bill C-30, we will be unable to get enough grain in the valley to feed our animals. If that day comes where the bins are empty, we are going to be faced with a decision. The decision is going to be to cull animals.

Just from an animal welfare point of view, you cannot send a half-grown chicken to market. There's only one thing to do and that's to destroy it. That is what we're faced with.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much for sharing that.

I'm wondering in terms of the other recommendations you made, if you could share what kind of feedback you've had from others on the ground that you work with, not just through your organization, but perhaps other organizations. Do people agree with the kinds of recommendations you're putting forward? Should this committee be aiming to improve Bill C-30 by adding these recommendations, based on the views of many people out there?

[Niki Ashton, NDP, Churchill, MB]

Thank you for the clarification, but that's not necessary. Mr. Zimmer, I understand very well what happens in this Parliament.

All this to say that where I come from, producers and people in communities across Manitoba are very concerned about the backlog and the lack of federal leadership on this front. To hear from people on the ground is the most important.... We've heard a lot certainly from industry and from representative organizations, but the fact of the matter is that the frustration is being felt first-hand by people on the ground.

In light of this discussion, I realize that the Canadian Federation of Agriculture has also put forward recommendations on the way in which Bill C-30 could be improved, certainly recommendations that we believe need to be looked at very carefully. I'm especially interested in recommendation number seven, where you're calling for transparency in the grain logistics system. You talk about how the U.S. has a model that supports producers by offering greater transparency. What we're hearing, and we heard it in the previous panels as well, is the need for federal leadership, the need for coordination, and the need to have information that is housed and offered by government, and obviously in the interests of producers.

I'm wondering if you could speak to the importance of that kind of coordination and federal leadership when it comes to transparency.

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

Thank you for coming to the committee tonight.

I'll start with Roger.

From some of your comments, I think we think completely alike. You said you want a market-driven solution to the problem. You said that it's an overall infrastructure shortage that is the issue; yet within a few minutes you said that as an organization you don't have an answer as to what a solution would be for this infrastructure problem.

Here we are. We're asking for a solution to the infrastructure shortages and an answer as to how we can fix this thing. We're looking at Bill C-30. Yes, it's more short-term as a solution, but long term.... So we come back and ask you what your solution is. Your answer is that you don't even really get along yourselves to provide us with such a solution.

I guess that's where we're stuck. If you want a market-driven solution, then you need to give us a market-driven solution. If you want our solution, we'll give it to you, but.... Do you know what I'm saying?

We want you to give us that solution.

I'll go to Humphrey and Garnet. I would say to Garnet, too, that a bit of the overlooked problem here is that we talk about exports, but we haven't been talking a whole lot about domestic supply and the shortages there. I'm from B.C. I lived in the Lower Mainland when I went to school. I lived in Abbotsford and your area, so I know how turkey farms operate. You need a lot of feed for those turkeys.

I mean real turkeys, not—

[Roger Larson, President, Canadian Fertilizer Institute]

Or less than eight minutes, I hope.

Mr. Chairman, thank you very much for your introduction and your invitation to appear before the Standing Committee on Agriculture and Agri-Food on this important issue, Bill C-30. Good evening, members of the committee, and thank you for staying so late.

My name is Roger Larson. I'm president of the Canadian Fertilizer Institute. CFI represents the manufacturers of nitrogen, phosphate, potash, and sulphur fertilizers, as well as the major wholesale and retail distribution companies in Canada. Our members produce over 25 million tonnes of fertilizers annually, over 75% of which is exported to more than 60 countries around the world. Canada accounts for about a third of world potash production and 45% of world potash trade. Canadian farmers purchase $3.5 billion of fertilizer annually.

The Canadian fertilizer industry understands the urgent demands for prompt action to alleviate the current backlog of grain through Bill C-30. However, our position has been that government-mandated allocation is not an effective solution. Without an expansion of rail capacity it is a zero-sum game. Our industry supports commercial solutions through clear service level agreements negotiated between the railways and their customers.

In addition, there are three other critical points that I would like to make.

Policy commitments announced in conjunction with the tabling of Bill C-30, with the additional enhancements, could be a robust solution to the current challenges which exist for all rail shippers.

We do not believe that this winter's backlog of grain and other rail shipments, including fertilizers, is a blip. Canada's commodity transportation system is hitting the limits of its capacity, both domestically and for exports. Only a strategic partnership of governments, railways, and shippers can ensure that Canada's place as an export powerhouse will be realized.

Regarding Bill C-30, our industry understands that the government is moving to rapidly pass this legislation; however, there are important issues which need to be addressed before this bill becomes law.

First, expanding interswitching distance beyond 160 kilometres would allow our members' fertilizer facilities to have access to multiple railway companies, improving service and competitiveness.

Second, enhance service level agreements or SLA policy commitments to include the following provisions: the collection, reporting and measurement of performance metrics; the performance standards applicable to the railways' obligations; the charges, penalties or fees that a railway should pay upon a breach of its service contract; and a mechanism for the resolution of disputes under SLA.

I want to emphasize that this winter's backlog of grain and other rail shipments is part of a trend. Canada's commodity transportation system is hitting the limits of capacity domestically and for exports. The crisis in rail shipments is not just a perfect storm of bad weather, record grain harvest, and lack of customer focus by the railways; rather, it is a wake-up call for everyone in the transportation and logistics community.

The frustration of shippers who simply cannot get their goods to markets has been boiling for years. This is not, and should not become, a power struggle with the railways. It's about farmers, miners, and manufacturers who are losing money because of inadequate rail service.

With the Canadian government looking to aggressively grow Canada's trade with key markets, the clock is ticking on the readiness of the Canadian logistics and supply chain to accommodate a huge surge in traffic.

We need to act now to optimize our existing framework so that we can achieve this economic opportunity. Addressing one sector's concerns without considering the broader supply chain will result in a patchwork of policies that do not solve any fundamental issues. Shippers, railways, and the government need to take a holistic look at the challenges facing Canada's transportation system and develop sustainable commercial solutions that are good for all sectors, the railways, and the Canadian economy.

In closing, I'd like to thank the members of the committee for this opportunity to present our views. A good dialogue between government and the private sector is important as industrial policies are contemplated, ensuring a good understanding of the opportunities and challenges that businesses face, as well as opening the door for partnerships that strengthen Canada's economic competitiveness.

We welcome the opportunity to continue this dialogue. I am pleased to answer any of your questions.

Thank you.

[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.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you to the witnesses for coming tonight to discuss this really important issue.

We had this outstanding crop across the Prairies, far more than was forecast by anybody, and obviously, with that difficulty, it was certainly trying to get that to market.

I just want to make a comment here with regard to the GTA. I understand that it was cut in the 1995 budget, which was under the previous Liberal government.

Mr. Otto, you said that Bill C-30 was a good first step. I wonder if you want to expand your thoughts on that particular piece.

[Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada]

Thank you, Mr. Chair, members of the committee, clerk, and fellow attendees. I appreciate this opportunity. I didn't think I'd have an opportunity to speak to the agriculture committee in this role of mine.

The Canadian mining industry is a major economic driver contributing over $52 billion to gross domestic product in 2012, employing some 400,000 people, and accounting for $92 billion, or over 20% of the value, of Canada's total exports.

As a consequence of this international reach, mining is one of the largest users of Canada's transportation sector. We represent the single largest industrial customer group of Canadian railways, and consistently account for over half of the total rail freight revenue and the largest share of total volume carried.

Having recently polled our membership, I can report that poor rail service has been causing a range of challenges for miners since the fall of 2013, including unacceptable ratios, with some 50% to 60% of cars ordered versus cars delivered, resulting in some instances in the downscaling of production and operations. Just today I learned that CP Rail verbally communicated that it will no longer transport uranium, a decision contrary to the common carrier obligation that could adversely affect investment in Canada's world-class uranium resources and undermine all of the excellent work and leadership that the government has undertaken to secure access to Asian markets for uranium.

There is a cost to the Canadian economy resulting from poor rail service. Railways do not produce the goods for exports that allow trade to grow, our economy to expand, and employment to increase. Rather, they are an essential conduit for Canadian industry to receive crucial inputs and get its goods to market. Without a healthy and reliable railway network, Canada's reputation and success as a trading nation are seriously hampered.

With respect to this bill, MAC is sympathetic to the grain growers' difficult circumstances and to the government's motivation in assisting them. We also appreciate the sincere effort at reform. However, we are concerned about the unintended consequences that will befall other Canadian sectors reliant on rail service, including mining, as a result of the measures contained in Bill C-30.

Specifically, we have three areas of concern.

The first area of concern is the grain volume commitments. Enacting grain sector specific volume commitments will exacerbate existing rail capacity constraints to the detriment of all the other shipping sectors, including ours. Mining companies are also concerned that enacting grain sector specific volume commitments will undermine the legal remedies available to shippers in the Canada Transportation Act. How can mining companies forced to operate outside the provisions of Bill C-30 upon enactment make a service case against a railway that is legally obligated, through pain of penalty, to serve grain companies? A railway's unwillingness to break the law requiring it to move grain is a defence against the legal remedies available to other rail customers seeking to address their service challenges.

Our second area of concern is the limited extension of interswitching provisions to the Prairies. We are concerned the new interswitching provisions will result in the railways being forced to do more short-hauls, which are operationally more expensive than longer ones. A consequence of this is a reduction in rail freight revenue due to the interswitching rate being federally regulated, which will leave the railways to make up for lost revenue by either reducing service to better optimize their assets and/or increasing rates for shippers who are captive, or have uncompetitive options. While MAC is not opposed to interswitching regulations in principle, we would encourage appropriate consultation on their potential positive and negative impacts on the effectiveness of Canada's rail network as a whole before implementing them.

Our third area of concern has to do with regulating improvements to the service level agreement mechanism. Bill C-30 proposes amendments that would give the Canadian Transportation Agency the authority to regulate prescribed elements in arbitrated service level agreements, the details of which would be determined through a consultation process. While this measure may seem promising, we do not believe it will be effective. The service level agreement provisions in the act mandate that an arbitrator take a rail company's service obligations to other shippers into account before rendering a decision. If Bill C-30 passes, an arbitrator will be bound to consider the railway's legal obligation to transport grain against the elements of service that a non-grain shipper is seeking, superseding any regulation designed to enhance a non-grain shipper's position in an arbitrated service level agreement.

In summary, we do not think the legislation will address the challenges faced by all shippers, and it could make the situation worse for some. I am also very concerned by an approach to rail reform that attempts to address rail issues piecemeal, one commodity at a time.

We support a collaborative approach to addressing rail service challenges in Canada and strongly advise against government or Parliament picking winners and losers. Exacerbating the rail service challenges that miners already experience is not the right way to go. As I mentioned earlier, we are responsible for over 50% of rail revenues. If those decline because mines aren't able to operate, the costs of the overall transportation system will go up for everyone.

We need to take a step back and look at the whole supply chain and the kind of transportation Canada needs to succeed as an export-driven country rich in natural resources. We need solutions that are based on commercial market-based principles. A long-standing MAC recommendation to ameliorate the commercial balance between railways and their customers, for example, would be to insert a new stand-alone section in the act that would define “adequate and suitable accommodation” and “service obligations”. This would not regulate the railways; it would merely define an existing measure available to shippers to pursue in their contract negotiations with the railways.

Second, we need policies informed by accurate data. The president and CEO of CN appeared before this committee last night and emphasized in his presentation the need for better alignment across the supply chain and accountability for performance. MAC supports the spirit of these remarks and recommends that the government require railways to provide both regular monthly public rail performance data on a sector basis and confidential company-specific performance data upon request.

Such a measure as is already being undertaken in the grain sector will provide all parties with the tools to quantitatively understand the nature of rail service challenges and causally identify why service failures occur and where the capacity choke points are forming, and based on such analysis, determine what can be done to fix the problems.

Increased transparency should improve the relationship between railways and shippers, as both parties, in possession of the same facts, will be more motivated to find solutions that are mutually beneficial and that provide the government with better information to guide its own actions.

While MAC remains sympathetic to the agriculture sector's difficult circumstances and acknowledges that the government's motivation is to try to ameliorate the situation, we would be remiss if we did not raise concern about the unintended consequences that will befall other Canadian sectors that rely on rail service, including mining, if the measures currently contained in Bill C-30 become law.

Thank you.

[Brian Otto, Director, Western Barley Growers Association]

Thank you, Mr. Chairman.

Good evening to everybody. I appreciate your taking the time to listen to us this evening. I know it's been a long day, so I'll try to be as brief as I can.

Thank you for inviting me here today to discuss the rail transportation issues on behalf of the Barley Council of Canada and the Western Barley Growers Association.

My name is Brian Otto. I'm the chairman of the Barley Council of Canada. I have sat on numerous boards, I have been a director with Alberta Barley, the Western Grains Research Foundation, and I am the past president of the Western Barley Growers Association. I have a mixed farming operation at Warner, Alberta, which is just north of the Montana-Alberta border. I am chairman of the Barley Council of Canada, which represents farmers from across Canada, as well as the entire supply chain for barley from the malting and brewing industry to the livestock industry.

At the Barley Council of Canada we believe the government's initiative to address the rail transportation issues is a good first step in addressing a larger problem within the system. This problem is that the rail system is simply not working efficiently for Canadian shippers. While we respect the work that's being done to make railway work, at the end of the day it's the smaller businesses, such as malt companies, that will buy smaller volumes of barley that aren't able to do business effectively under the current conditions. These businesses provide a diversity to our economy that brings significant value to all Canadians.

Our transportation issues at home are affecting our international reputation. In the coming months we need to take the united approach being suggested by the government to ensure that all commodities are represented. Canada is pro-trade. We are on the verge of signing two major international trade agreements, but we have to prove that we are reliable trading partners.

We are not here today to pit farmers against anyone. Farming is an economic driver, and we simply want to help drive the economy forward. The stakes could not be higher. The barley industry is ready for growth and prosperity. We formed a national organization across the supply chain. We brought partners together. We have buy-in from our value chain. We have the supply and the quality, but there are hurdles restricting our ability to conduct good business. Hurdles such as market access issues, falling behind our competitors on trade agreements, lack of transportation efficiencies and logistics are holding us back from maximizing our potential.

We want the grain industry to have fair and equal access under a transparent system and we want our industry to grow in conjunction with other commodities. In particular, we recognize the challenges faced by our colleagues in the forestry, potash, mining, coal, and other sectors. This is why we want a solution for transportation in Canada that's focused on a collaborative effort involving everyone in the value chain. We believe it is in Canada's national economic security interest that a competitive rail system is developed for all commodities. We also believe that the work we do for agriculture now is just as important as the ongoing debates over oil pipelines and other economic priorities.

The good news is that we never hear any complaints when we have full grain trains. But we do know that we need a more transparent system, and that we need better communication throughout the system for it to operate efficiently. Canada's national economic security depends on our ability to respond to a growing demand for our quality products. Canada's international reputation was built over time and has required significant investment from a cross-sector of stakeholders. There is mounting evidence that Canada's reputation as a reliable shipper is in jeopardy as many of our customers have started to source product from our competitors.

At least one General Mills facility in the United States is turning to Scandinavia as a result of the challenge they experienced accessing oats from our traditional suppliers in Saskatchewan and Manitoba. Japanese buyers who have purchased Canadian wheat for years are now turning to the United States after one of our ships sat waiting in Port Metro Vancouver for three weeks.

In addition to these issues, I'd like to focus a little bit more on what's happening to our small businesses that are affected by the rail transportation issues. Encouraging east-west access means more grain is moving along the major routes at the expense of the smaller shippers, like our malt companies that move product north and south.

Remembering the importance of our largest trading partner to the south is paramount as transportation corridors are being affected by the new legislation. It's important to encourage all shipping to all ports, not just Vancouver, Prince Rupert, and Thunder Bay. Our transportation difficulties could be more manageable when we involve our shipping partners to the south.

Some of our niche shippers, malt barley shippers in particular, aren't able to get any cars to ship south. This affects our ability to do business and impacts our reputation as a country with our international customers. It's not the way to do business.

Following the example of the Barley Council of Canada, we believe everyone needs to be at the table to fix transportation in Canada, the entire value chain. By working together, I believe we can fix the problem, and by taking the time to fix the system now, we are better able to ensure our national economic security for the future for our children and grandchildren.

The Barley Council of Canada supports the proposed changes in Bill C-30 and looks forward to a more secure future for our value chain. We see the government's recent efforts as a good first step, while looking forward to a time when the system will function better for all in the future.

Thank you.

[Ian McCreary, Farmer, As an Individual]

Mr. Chairman, honourable committee members, thank you for the opportunity to appear to discuss this critical issue facing the grain and oilseed industry in western Canada.

I've been involved in transportation issues throughout my adult life, and I thank the committee for providing me this opportunity to provide my perspective on a path toward the solution to this complex problem. I'd like to offer my assessment of the problem, suggest what is needed to find a solution, and identify the strength and weaknesses of this bill in moving us towards a solution.

First, the problem. Western Canada is a landlocked region that is further from tidewater than any other major exporting region. The transportation corridors to market are constrained. Further, the two main export channels are very different in total costs. The cost of movement from my delivery point in central Saskatchewan to the west coast is approximately $72 a tonne, while the cost of moving east is around $100 per tonne. Thus, in periods of relatively inexpensive ocean freight rates such as we have right now, it's less expensive to move grain to all offshore destinations from my farm through the west coast. However, the west coast can only handle approximately 21 million tonnes of grain per year. Western Canada regularly produces 35 million tonnes of exportable supply, and this year has produced more than 50 million tonnes of exportable supply. The result is that the price spread between what the price farmers are paid for the grain and west coast prices has risen dramatically.

Currently, farm prices for wheat have fallen to $170 per tonne, below west coast export values. Only $70 of this can be accounted for in the cost of movement and handling, so farmers are paying grain companies an extra $100 a tonne for the privilege of selling our grain. This extra cost to farmers has been there since mid-October, and if production stays at average to above average levels, this new grain robbery as it is being seen on the Prairies, will be there for the foreseeable future. Alternatively stated, current international prices are very strong, and western Canadian farmers are the only ones not to gain from this strong market.

The current problem has no solution under the current regulatory framework. Shippers are the only ones with standing with the agency. Shippers are the grain companies, which are making record profits from the current basis; thus a solution through the agency is unlikely.

To solve this transportation and marketing juggernaut requires action at a number of levels.

First, the industry needs a body that guarantees an aggregate level of service for grains and oilseed exports.

Second, there needs to be a way of apportioning the constrained capacity among competing users. Remember, every merchant will make the most money by shipping west, yet only 40% can go west.

Third, improvements are required in transparency, both in prices and in grain flow. Improved information improves the market function, and we can go some distance simply by getting better information out in public.

Fourth, the revenue cap needs review, but must be maintained. Producer cars and single-point shippers need to be protected.

Fifth, the competitive position of farmers depends on the existence of independents and alternate channels. The current regulatory framework puts both of those marketing channels at risk.

Sixth, we require improved rail competition. Done properly, this has the potential to improve service, increase capacity, and reduce rail costs.

Finally and perhaps more importantly, we need a long-term plan to develop an increase in capacity in both export corridors with a focus on fixing some of the issues at the west coast.

Moving specifically to the current bill, Bill C-30 provides one tool to deal with aggregate levels of service, and does wave a flag at rail competition through potential changes to interswitching. Both of these are positive; however, this bill will not solve the problem. The problem has many components, and the bill deals only with rail.

I would like to suggest additional pieces that I feel need to be part of a long-term solution for the western grain industry.

I'd like to start by suggesting reinventing the GTA or a GTA-like organization. In 1979, the then Conservative government pulled the responsibility for aggregate service levels from the Canadian Wheat Board and established the Grain Transportation Authority. This group was responsible for aggregate service, apportioning cars, long-term planning, and information flows. This worked well until it was ended in the 1995 federal budget.

The CTA level of service claims subsequently placed the Canadian Wheat Board back into the position of responsibility for aggregate service. When the government chose to end the Canadian Wheat Board, none of the transportation services were understood or replaced. The result is the current mess. Now is the time to re-establish the office of the Grain Transportation Authority to provide aggregate service, car apportioning, and the desperately needed long-term planning for the growth of our industry.

In addition, I think the long-term planning.... If we do move in the direction of establishing a body such as the agency, many of the functions can be dealt with directly through there, specifically the price transparency and the transparency on movement and flows. Some work has been done by the minister with the changes in the mandate of Quorum, which again is positive, but the price transparency component is a potential addition that could be done through the Canadian Grain Commission with additional amendments to the Canada Grain Act.

The rail competition on the interswitching side is unlikely to be aggressive enough to do what's required on the additional capacity and the long-term effects on prices.

Mr. Chairman, it's my hope that we can all pause and look to a solution that has the potential to be longer term. It is my view that if we have an average to above average crop, the bill that is before us will not change adequately to adjust basis levels in the foreseeable future. I think we still have more work to do, and I hope everyone can work together to find the solutions required.

Thank you, Mr. Chairman.

[The Chair, Conservative, Bev Shipley]

I call the meeting to order.

I apologize. We are running a little late. We had about an hour of votes and bells that interrupted our schedule a bit. I want to thank the staff for getting us back on track.

With that, we'll begin our next panel in terms of the study on Bill C-30.

I want to welcome from the Western Barley Growers Association, Brian Otto, director, and Caitlan Schnitzler, public relations coordinator.

From the Mining Association of Canada, we welcome Pierre Gratton, president and chief executive officer, and Brendan Marshall, director of economic affairs.

By video conference from Moose Jaw, Saskatchewan, we welcome Mr. Ian McCreary, as an individual.

I think I will start with you, Mr. McCreary, just in case something happens; you're participating at a distance, via video conference.

Please begin, Mr. McCreary. You have eight minutes.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you very much, Chair.

And thank you to our witnesses for changing their schedules in order to accommodate these meetings.

I guess I'll echo a comment I made yesterday.

What I'm hearing generally from witnesses is that they support this legislation, Bill C-30, and what it sets out to accomplish. What I'm also hearing is that there is anticipation, hopeful anticipation, for a review of the act itself and of it being accelerated because there are a number of other issues that need to be tackled when that review actually happens.

I believe that's what I'm hearing from most of our witnesses, though I am also hearing about the idea of corridors, which has come up again. I want to echo a point I made last night, and that is that government legislative intervention in a matter like this is done on an urgent basis and we have to find that balance, right? That balance between setting targets that are achievable and that are measurable without getting into the details, because I think what Mr. Phillips said is absolutely right.... The further down you go, the more complicated it gets—it does not get clearer—and the unhappier people are.

I do want to pick up on a comment by Mr. Phillips about teamwork because I think that is the solution in a very great sense. What I'm hearing from witnesses is that they're anticipating that they will get almost no service while another grain commodity will get almost all the service, and then what will they do? But each commodity is saying the same thing, when in fact the reality is somewhere in between. Yes, grain will move. A lot of grain will move at 1 million metric tonnes a week, but we also have to allow the players and the system to work cooperatively to be able to respond to priorities. I did want to pick up on that because I thought that was a really key point, whereby the stakeholders work together to also manage the system because there is a sense of teamwork to it.

So let me just ask that question about corridors. I'm trying to remember exactly who mentioned it.

Were you in dead earnest when you wanted the government to legislate corridors and cars or tonnage per corridor, or were you just worried that your commodity might be underserved by having a global target of 1 million metric tonnes?

Kevin, was that you who brought that up?

[Kevin Bender, Director, Alberta Wheat Commission]

Thank you, Mr. Chairman.

I'd like to thank the committee for inviting me to present on behalf of the Alberta Wheat Commission and the wheat farmers this commission represents.

Also here with me today are Jeff Jackson and Erin Gowriluk. Jeff is our marketing manager and interim operations manager, and Erin is our policy analyst.

I am also a director on the Cereals Canada board and at the Western Canadian Wheat Growers Association. As you can see, I like wheat.

I'm a director on this commission. I farm in the area around Bentley, Alberta, in west-central Alberta.

This year's transportation backlog has affected all commodities and has threatened Canada's brand and reputation as a consistent and reliable supplier. Bill C-30 is an important first step on the path to the long-term solutions required to build a sustainable and reliable rail transportation system in Canada.

We thank you for your actions so far and for this opportunity to speak to the regulations that will be developed as a result of the proposed legislation.

We join our shipping partners in seeking a more specific definition of “adequate and suitable” so that railway service obligations meet the transportation needs of the shipper within the context of the Canada Transportation Act. Adjustments are required to remove the ambiguity of these terms, and the definition should be adjusted to ensure that the transportation needs of the shipper are met.

Bill C-30 will build on the temporary provisions put in place as part of the order in council announced on March 7. One of these provisions is that if the railways are failing to perform, the Government of Canada may impose minimum volume requirements and fines of $100,000 per day for failure to meet these obligations. However, this is just a prerequisite to move prairie grain and does not specify where that grain needs to go. More recently, we witnessed the rail companies’ refusal to provide service for shipments destined for the U.S., in order to move more grain to west coast port terminals.

In addition to international markets, the western Canadian wheat producers also rely on the domestic feed industry. The Animal Nutrition Association of Canada has expressed concerns over the shortage of railcars allocated to the movement of western grain to the B.C. Lower Mainland. All corridors are important, and a lost customer in the U.S. is just as costly as a lost customer in Asia, so in addition to the overall shipping requirement as specified in Bill C-30, there need to be corridor-specific guidelines as well. The input of the supply chain should be considered when setting corridor minimums.

Further to this point, we ask that the government consider increasing the daily penalties if movement does not improve and direct that revenue to programs that support shipping infrastructure, such as the Building Canada fund.

We also seek increased accountability through the inclusion of reciprocal penalties as a mandatory component of service level agreements. Currently, there are no service level agreements in place. The key reason for this is the railways’ refusal to include penalties if they fail to deliver on their contractual obligations. Without these penalties in place, there is no reason for a shipper to attempt to conclude a service level agreement. Railway tariffs impose set penalties on shippers if they fail to meet their contractual obligations; for example, loading and unloading cars within a specific timeframe. The regulatory package that follows Bill C-30 must ensure that penalties are also in place for railway non-performance.

For these reasons, we see this bill as an important step forward and we thank all parties for their willingness to expedite this legislation. The regulatory package that follows also needs rapid attention and we stand ready to be a constructive part of that discussion.

We emphasize the need for the Canadian Transportation Agency to immediately begin the capacity planning exercise for the 2014–15 shipping season and include shippers, carriers, and commodity groups in this process. In addition, it is very important to begin the review of the Canada Transportation Act as soon as possible. Long-term change is needed in this system that encourages an increase in capacity for all corridors.

Bill C-30 would require the Canadian Transportation Agency to become directly involved in grain logistics capacity planning. A key element of this role will be the dissemination of information on the supply of, and demand for, transportation services.

The Alberta Wheat Commission supports this new role for the agency. We emphasize the need for the Canadian Transportation Agency to immediately begin a capacity planning exercise for the 2014–15 shipping season. This planning process must include shippers, carriers, and commodity groups. We note that sales are being made into this time period and it is critical that shippers have an understanding of the capacity that might be available.

The Alberta Wheat Commission also wants to emphasize the need to gain certainty past 2016 when the provisions under Bill C-30 may sunset. This planning horizon for producers and shippers extends beyond a few months, and all participants in the value chain need to know what regulatory environment they will be functioning in at least a year in advance, if not more.

We commend the government for their recent efforts to grow the international marketplace for Canadian agriculture, more recently in the development of free trade agreements with the European Union and South Korea. Western Canadian producers are poised to meet the growing demands for their products, but we require an efficient transportation system to ensure that we can fulfill the demand and grow the Canadian economy. Canada's reputation as a consistent and reliable supplier of quality products requires an efficient and effective rail system that's committed to on-time deliveries to our valued customers across this country and around the world.

Canada is a country built on railways. In 1867 Canada was united by the promise of a transcontinental railway. Our growing infrastructure needs can be attributed to the growing demand for our quality products. Our international reputation was built over time and has required significant investment from a variety of stakeholders. We need to work together to protect that investment and respond to the growing demand for Canadian products.

Thank you.

[Richard Gray, Professor , University of Saskatchewan, Bioresource Policy, Business and Economics, As an Individual]

Thank you very much, Mr. Chairman, for the opportunity to speak to this group.

As for my background, I'm a professor of agricultural economics from the University of Saskatchewan; I've been there since 1990. Prior to that, I was a crop market analyst with the Saskatchewan Department of Agriculture. I remain involved in the family farm at Indian Head, Saskatchewan, and on March 26, I helped host a grain handling and transportation summit in Saskatoon.

We find ourselves in a very difficult situation in western Canada. After a record crop of all grains in Canada of 90 million tons, we see farm stocks remaining high, we see cash prices are depressed relative to export values, and I think we're losing some of our reputation for being an international supplier of grains. It's very costly for the industry as a whole.

Moves to increase the level of service are vitally important for the industry. One of the things that we see in this, in terms of prices, is a dramatic increase in the difference between the west coast prices and prices in Saskatchewan. Right now there's a basis from Saskatchewan points to Portland of over $200 a ton, which is about $130 a ton more than what you would call regular tariff charges. Similarly, if you look at canola basis, including the crush margins, we see levels about $160 higher than normal.

Unfortunately, it doesn't look like the situation is going to get better any time soon. With the large crop this year, we're going to have large ending stocks going into and adding to the next crop year. If it's a normal crop next year, it'll still leave us with abundant supplies a year later and so on. If we have above normal crops, this could persist for some time to come.

The increase in the basis between port prices and western Canada has created some rents. Some of those rents are going to producers that were fortunate enough to contract forward. Some of them are going to grain companies and processors and some of them are being paid into merge. It's having a profound impact on price levels and in particular, producer incomes for those who were either unable to or did not contract their prices ahead of time.

The one thing I wanted to add to the discussion was the need to address west coast capacity in the long run. If rail movement increases, the west coast capacity quickly becomes the bottleneck. The west coast is by far the cheapest route to the Pacific markets from all areas of western Canada, and from Brandon west it's also the cheapest route to Europe—excluding Churchill, which is small.

The west coast movement, unfortunately, hasn't exceeded 23 million tons historically, and there's a limited capacity to move west even though we have some demand. This demand for west coast capacity is going to increase in the future. Production has been trending up in western Canada because of the reduction in summer fallow, improvement in technologies, and improvement in soil quality because of the zero tillage. At the same time, we've seen a shift in the Pacific versus the Atlantic markets. We've seen a growth in the competition in the Atlantic coming from the Black Sea exporters and from South America. At the same time, we've seen it grow with an Asian demand. Our markets are west and if we can't ship west, we have to ship east all the way through to Panama or at least into a market where prices are depressed and that creates a real cost for western Canadian producers.

These are just back of the envelope calculations, but my calculations are that if we could provide sufficient west coast capacity, we could have about $800 million in transport savings if we include all the basis all the way to the Atlantic and around, which is a lot and would have a profound long-term impact on reducing that basis. There are large potential benefits worth exploring.

In terms of policy to increase capacity, thinking about both of those issues, in terms of the revenue cap, I think it's important to improve it if we can.

One would be to do a costing review, which I think has been called for for a while.

Second, I would like to propose the notion of using a premium in the revenue cap during the three winter months. These are the months when the railways face higher costs, and to me it makes sense that the railways would in fact get, if you like, some degree of premium during those months within the formula to reflect those higher marginal costs. We need effective rail service requirements within that revenue cap and a mechanism to do that.

There's some need to re-establish some form of a grain transport authority, I believe—a book order or order-book process. If sellers want to place orders and they're filled, that works well when we don't have a capacity constraint, but once the system becomes backed up—several weeks in the case of this year—it becomes very difficult as to which orders are going to be filled first, and it becomes arbitrary decisions and not very well managed within the current mechanics. We need someone to sort that out.

I also think that we need some mechanism to share information across companies. They're probably not willing to share it with each other, but they might be able to share that with third parties so we make sure the shipments that have the highest priorities or are the most important are actually made, rather than just some arbitrary rules.

Third, we need much better information planning and logistics. I think we need a much better public forecasting system in western Canada. We should have bi-weekly forecasts by professional agrologists throughout the summer into the harvest period so we don't miss the mark by tens of millions of tonnes in the end.

I worry a little bit in Bill C-30 about setting the transport service levels at July 1. I think this is far too soon. At that point, we don't know whether we're going to have a devastating frost or we're going to above-average yields. It's just simply too early in the crop year, and having firm rules or a firm date fixed in the legislation could be a problem for planning. I think we need more flexibility and responsiveness instead of an early date.

I think we need better price reporting, and I would also argue that a west gate coast grain exchange would be very useful in providing more information. Part of it is to increase the physical capacity in the system at key bottlenecks. That includes existing terminals, new terminals, containerized systems, enhancing the rail, and obviously, some system-wide planning incentives and public incentives would help do that.

We need to increase competition in the system from end to end of the supply chain. This includes increased competition at the port terminals. That means perhaps new facilities and new players. I would also argue a “for sale” at Prince Rupert to a single buyer would inherently put another player in the system and make that facility more fully utilized.

On rail, I think the increased interswitching provisions are welcome. I'm not sure how they work in the legislation, but they're certainly welcome. I think the idea of a greater use of short lines is important as well. I think short lines have more surge capacity.

Finally, in terms of elevation and rail capacity, we need more refinements there, but maintaining producer cars may be important for the competition.

[Garnet Etsell, Executive, British Columbia Agricultural Council, Canadian Federation of Agriculture]

My name is Garnet Etsell. Our family operates a turkey farm in the Fraser Valley of B.C. For 13 years I was also the chief financial officer of a group of agribusinesses in the Fraser Valley. The core company of that group was a feed mill serving the dairy and poultry industries.

It is indeed a pleasure to be able to present to you today. I want to echo Humphrey and applaud the government for taking a bold move to remedy the grain backlog situation we face. However, this move has brought unintended consequences.

I noted with some comfort that both Ministers Ritz and Raitt, when presenting to the committee on Monday, indicated that there would be no negative impacts on the government's initiative on other commodities. I have grave concerns with these statements. Minister Raitt acknowledged that the railways' best performance to date, prior to the introduction of the order in council, was 9,800 cars—last night we heard it was 9,500 cars—and 11,000 cars per week is the target contained in the order.

My concern is that the difference in cars will come at the expense of other commodities. All the discussion to date has focused on moving the grain backlog to export positions. What about the value-added livestock and milling sectors that need that grain to feed their animals and process grain through their mills? We have a $2-billion livestock sector in B.C.'s Lower Mainland that is dependent upon prairie grain. Our volume demand is a constant 100 cars per week, 52 weeks of the year.

The livestock sector is currently dependent upon producer cars and shipments from smaller independent terminals, both of which have experienced challenges in getting adequate rail service. The big four grain companies are not currently taking any orders for domestic delivery, and with the order in council and now with Bill C-30, virtually all the effort on the part of the rail company is being focused on getting the grain to export positions.

To make up for this shortfall, it has been suggested that B.C. just truck the grain in. Firstly, it is questionable whether there is the trucking capacity to make up this shortfall. Secondly, trucking costs are $40 to $70 per tonne higher than shipping by rail. If B.C. started to resort to trucking its feed grain requirements, and if—and it's a big if—we could truck it all, it would cost the livestock sector an additional $18 to $34 million on an annual basis. On my farm alone, I would be paying $114,000 more just for transportation costs. Clearly this is not tenable.

To quote Bob Dornan, who is secretary treasurer of the B.C. Animal Nutrition Association, the association all of the feed mills belong to, we need to:

expedite and facilitate a resolution to the issue of reliable rail service to the Fraser Valley before we find ourselves in an emergency situation where lack of...grain supply causes animal health and welfare issues, notwithstanding serious supply chain impacts at all levels.

In summary, ladies and gentlemen, it must be recognized that the Canadian domestic livestock sectors and milling sectors are facing a crisis as well, as we depend on reliable transportation of prairie grain. Therefore, it is our recommendation that Bill C-30 contain provisions that ensure that priority is given to Canadian feed grain and other value-added Canadian markets to ensure our continued viability.

Thank you.

[Humphrey Banack, Vice-President, Canadian Federation of Agriculture]

Thank you, Mr. Chair, and committee members.

The issue with the bells here is much like shipping grain in western Canada: it's on; it's off; you never really know what it's going to be doing right through the whole system. We start our trucks; we're going to deliver grain Monday. No, we're not; we're going to deliver it Tuesday. No, we're not....

It's wonderful to know that we are not the only people across this country who get our chains yanked on a regular basis.

My name is Humphrey Banack. I am the first vice-president of the Canadian Federation of Agriculture. With my wife, I operate a 4,500-acre third-generation grain farm in the Round Hill area of Alberta and crop about 3,800 acres of pulses, oilseeds, and coarse grains. The balance is leased to local beef producers.

I am pleased to be here today to speak on Bill C-30. I will be splitting my time with Garnet Etsell, a B.C. director of the Canadian Federation of Agriculture, who will speak to you about the issues facing livestock producers who rely on our prairie grain to feed their livestock.

The Canadian Federation of Agriculture has created a crop transportation and logistics committee composed of crop producers and shippers in western Canada that will develop recommendations addressing not only the short-term transportation issues facing our farmers, but also lasting solutions that will strengthen the entire logistics chain. My presentation today reflects the views of that committee.

We have attended most of the committee hearings on this bill over the past several days, so there is no need for us to repeat what many of the witnesses who have appeared before the committee have already stated about the problems of inadequate rail service this winter for prairie crop farmers.

Also, for the record, the CFA fully endorses each recommendation made by the previous shipper and farmer representatives appearing before the committee on BillC-30, especially those pertaining to service level agreements.

Instead, l'II bring the committee's attention to two areas that we feel need further discussion.

The first area is the extent of market power the railways exert on the crop supply chain. As the committee will recall, the government's Rail Service Review Panel stated:

There is no doubt that effective competition exists in some markets. However, based on a broad range of considerations, the Panel does not believe that the degree of effective competition is as extensive as the railways indicate.

Further, the panel states:

Based on the considerations discussed above, the Panel concludes that railways continue to have market power over some of their customers and that there are sectors and regions where competitive alternatives are limited or lacking altogether. This railway market power results in an imbalance in the commercial relationships between the railways and other stakeholders.

I raise this issue as it pertains to service level agreements between shippers and railways. Although the Fair Rail Freight Service Act enacted last year provides for shippers and railways to enter into service level contracts, given the market power railways enjoy there is little incentive for them to negotiate terms and service levels that fully meet the needs of shippers. The only recourse for shippers is a time-consuming and costly arbitration process through the Canadian Transportation Agency.

Despite the desire of both government and industry for a crop supply chain driven by commercial and competitive considerations, one is not possible, given the current market power exerted by railways in western grain transportation.

To remedy this situation, the Canadian Federation of Agriculture recommends that Bill C-30 contain provisions that compel railways and grain companies to enter into service level contracts that contain terms and performance measures that would reflect those that would be included in a truly competitive marketplace. We understand that the bill has accounted for this provision through establishment of future regulations. The CFA would be pleased to work with the committee and the government to develop regulations that meet the needs of the entire supply chain.

The second area I would like to address is producer car needs.

Producer cars are quite essential to the grain transportation system in Canada and provide farmers some good options to deliver their grain. The producer car gives farmers access to rail transport, but it also acts as a competitive cap on the basis levels that elevator companies can charge. The record number of producer car orders in 2013 demonstrates the importance of this avenue for prairie farmers.

However, the grain backlog has caused disruption in the system for producer cars as well. We feel that if Bill C-30 does not carry sufficient teeth to keep producer cars available and make the railways accountable for spotting of producer cars, they will be forgotten.

Bill C-30 also outlines the minimum weekly amount of grain CN and CP must move for the 2013-14 crop year, and the Canadian Transportation Agency, after consultation with railways and grain handlers, will recommend the minimum amounts of grain the railways must move thereafter. To ensure that the needs of the producer car users are met, the bill should be amended to ensure that producer car users are also consulted by the CTA before it makes its recommendations to the minister.

Over the past 20 years, to maintain their profitability, CN and CP have closed half the sidings where producers load cars, but at the expense of farmers. The events of this winter and spring demonstrate that the grain transportation infrastructure in western Canada is nearing or at capacity, and therefore producer car sites are ever more important. The government must place a moratorium on CN's and CP's ability to delist or close producer car sites, or western Canadian grain farmers' competitive situation will continue to worsen. In order to further increase capacity, the government must also designate sidings that are currently used for loading other commodities as eligible producer car loading sites.

I will now turn our presentation over to Garnet, and he will fill us in on—

[The Chair, Conservative, Bev Shipley]

I'd like to call the meeting to order.

We have witnesses before us.

It appears that the bells may go for half an hour at some point in time. If they do, we unfortunately will have to stop, do our voting, and then come back.

I want to welcome the witnesses as we continue to look at C-30, an act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

We've just had a change. Apparently there will not be a vote, so we're good to go, I hope.

We have from the Canada Grains Council Mr. Richard Phillips, president; from the Canadian Federation of Agriculture Humphrey Banack, vice-president, and Garnet Etsell, executive of the British Columbia Agricultural Council; then, as an individual—I believe via video conference—we have Mr. Richard Gray of the University of Saskatchewan's bioresource policy, business, and economics department.

I want to welcome each of you.

We will start off with the Canadian Federation of Agriculture.

Mr. Banack, if you would, start for eight minutes, please.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

I want to thank the witnesses for coming out and being part of the chain in terms of the moving along of Bill C-30.

With that, I want to thank the witnesses again. Committee members, before you leave, I like to tell you that tomorrow I would like to have about 10 minutes at the end of our meeting for some in camera discussion about where we're going next week. Thank you very much.

The committee is adjourned.

[Jeff Watson, Conservative, Essex, ON]

Without the order in council, without Bill C-30 with the two-year time limitation on it, if you will, the estimated carry-out could be in the range of either 17 to 27 million tonnes, the lower end with the requirements in place. If we weren't to proceed with Bill C-30, then how can you convince this committee? What would your plan be to deal with the carry-out, considering that next year it could be 63 million? You've got a carry-out that's quite large. What is your plan? If it wasn't a mandatory requirement, what's your plan of convincing us?

I'd like Mr. Creel to answer the same question, by the way.

[Jeff Watson, Conservative, Essex, ON]

Are you saying to the committee today that neither the order in council nor Bill C-30 are necessary measures? Is that your position?

[Keith E. Creel, President and Chief Operating Officer, Canadian Pacific Railway]

Good evening, Mr. Chairman. Thank you for the invitation to appear before you to discuss the grain supply chain in bill C-30. This is obviously an important conversation, not only for farmers and Canadian Pacific but for all Canadians, which is why I'm personally here to talk about this matter tonight.

For more than the past two decades, I've obtained considerable experience as an operating officer in both Canada and the United States. For the last 12 years, I've served in a number of increasingly senior operating positions at both Canadian National and Canadian Pacific, which has provided me experience in this grain supply chain in western, central, and eastern Canada.

My comments today will focus on the supply chain capacity, how CP, despite exceptional weather challenges, has performed this crop year, and why interswitching is not a compelling solution to this matter.

Specific to the supply chain capacity, I am not here to debate the new normal in crop sizes, but I'd be remiss not to emphasize the absolute fact that this crop is 37% above the five-year average of 58 million tonnes and an all-time high. In a normal grain year, Canadian railroads export approximately 33 million to 34 million tonnes. This year's exceptional crop requires the supply chain to move an additional 20 million tonnes, which equates to an over 50% increase. The reality is that the supply chain cannot move these types of volume over a short period of time. To put it in perspective, the surplus alone exceeds the total volume of potash that Canada typically exports every year.

This is clearly a total supply chain capacity problem. We need to be searching for a total supply chain capacity solution.

From a capacity perspective, the challenge is to create a grain supply chain that can meet today's and the future's demands. It is important to understand that this is not a single-component supply chain. This total grain supply chain is made up of essentially five components: first, the grain originates in a truck; second, it gets elevated in country; third, it moves to port by rail; fourth, it is then offloaded by a port terminal elevator; and fifth, it is finally loaded on a ship by the port terminal elevator again. To suggest any component, let alone a single component, could ramp up capacity with little to no warning to handle this exceptionally large grain crop is simply unrealistic.

I'll shift my comments to share the facts about CP's performance this crop year. In August, with an approximately nine million tonne carry-over from the previous crop year, we practically had no grain to move. At CP, we started storing grain cars in May and June. In fact, we had 4,000 railcars stored due to a lack of demand to move grain at the beginning of August when a normal crop was expected at that time, according to Statistics Canada.

From September through November with the harvest in full force, CP responded by moving more grain than we've ever moved during this comparable time period. We moved 20% more grain in Canada than the five-year average, and 14% more than the previous year. This demonstrated the surge capacity CP has to move more grain in response to strong demand.

In December and January, our double-digit growth was impacted by the extraordinary cold weather. To quote Environment Canada, “If we take the two months and combine them, we find it is the coldest December-January since 1949-50”. The facts are that December, January and February were extremely cold, with 49 days below -25°C from Kamloops, B.C., across the Prairies, and through to the east versus 25 days on average in a typical Canadian winter. I can tell you that I have never experienced anything this extreme in over two decades as a railroader.

I say -25°C because it's a critical tipping point in railroad operations. Sustained temperatures like this across a network or a country cause significant capacity reductions and safety concerns to operations. Train sizes decrease. The technology of railcar airbrakes does not allow maintaining brakes on a normal length grain train, let alone any train, in these temperatures. A 50% reduction in train size is not uncommon. Safety concerns increase. Trains must be slowed to safely operate to avoid derailments. As a result of these two key factors, the velocity slows, congestion increases, and therefore our effective capacity goes down. No one in the supply chain is immune to this capacity-reducing weather, from the country elevators to the ships on the Great Lakes and the trucks on the highways.

Moving to February, even in the face of record cold, CP was up 15% for grain. So far in March, we're up 20% over last year in Canada.

Mr. Chairman, in face of these extreme weather conditions, I am proud to say that our railroaders as well as CN's—who worked tirelessly 24-7, 365 days a year, even with crews operating grain trains Christmas Day to move this record crop—did this despite the fact that our efforts are absolutely not being matched by other partners in the supply chain, despite what some of the naysayers are saying, despite what some of the elevators and the grain companies are saying. In times like we've faced and are facing trying to move a record crop, it's critical that all components of the grain supply chain step up with the same efforts. This simply has not happened.

While some report to the contrary, CP has shipped and continues to ship record volumes to the betterment of farm communities, grain companies, and the Canadian economy.

As I have stated a number of times in the past two months, weather permitting, we would get back to a performance level like last fall. This is not because we've been ordered to do it; it's because the extreme weather has lifted, and we have the capacity and operating conditions to perform to this level.

Given the last two weeks of performance by CN and CP, operating at levels consistent with the government order, we are in fact bumping up against supply chain capacity limits. This is slowing velocity and reducing capacity at Vancouver and Thunder Bay. The railway is not the bottleneck, nor can it solve this capacity problem alone.

That said, rather than finger pointing, we need to have a constructive dialogue about how we can create additional total supply chain capacity. In the near and long term, additional capacity can be brought online if railcars are unloaded, when available for unloading, seven days a week, 24 hours a day.

For instance—this is fact, not rhetoric—yesterday morning, consistent with what we have experienced over the last three weeks, we had over 1,500 cars to unload in Vancouver between both railroads versus a run rate of 600 unloaded per day by the shipper terminals over those same past three weeks. This is because some terminals operate three shifts per day, five days a week, while others operate two shifts per day, seven days a week.

There is only one terminal of five in Vancouver that operates consistently three shifts per day, seven days a week. Unloads, using the last three weeks as an example, are 34% higher on weekdays versus the weekend. We need the entire supply chain to be thinking velocity to create additional available capacity. Instead of cars sitting, waiting to be loaded or unloaded, these cars should be cycling back to the prairie elevators and to the ports.

I'll now turn my comments to extended interswitching. l'm not here today to talk about the commercial implications of extended interswitching. I will, however, talk to the capacity concerns and implications of it. It will not allow the supply chain to move more grain, and has the potential for unintended consequences to a system that is world class. This could include competitive impacts for the Canadian economy. More specifically on capacity concerns, extended interswitching will lead to multiple handlings of grain shipments that will slow down the grain supply chain, negatively impacting transit times. It can also create circuitous routings, further complicating the supply chain and reducing capacity. That is the exact wrong thing to do.

In summary, if the supply chain is to do better, we need to find a collaborative approach in the near term and create capacity in the total grain supply chain in the longer term. This is how we will ultimately benefit the farming community and the Canadian economy.

Thank you, Mr. Chairman.

[Cam Dahl]

I would just like to reiterate the comment about the extraordinary level of unity within the shipping community on this issue. I think it would be good to focus on that level of unity. Most of my shipper members are actually members of the railcar coalition.

Specifically to your question, I think Bill C-30 may enable the changes we need if that regulatory package meets the criteria that have been outlined today. I think the legislation you have before you now can be successful, but it does require the right regulatory package.

[Jeff Watson, Conservative, Essex, ON]

I want to focus my time on clarifying a few items.

I know that Mr. Goodale on the other side of the table raised the question of whether you'd like the draft regulations to be tabled in advance of the bill passing. First of all, that would render the prospect of consultation with stakeholders meaningless, but apart from that, regulations usually flow once a bill is actually adopted. So I don't see how that's possible.

To our witnesses who are here today, I'm hearing some conflicting messages. At times I'm hearing some support for a regulatory approach. At other times I'm hearing support of, for example, the Coalition of Rail Shippers' approach, which is a legislative approach. I just need to be clear here, because the two are not fully compatible, if you will.

Are you looking for prescriptive legislative response in changes to Bill C-30, or are you content that some of these issues will be done under the regulatory approach after that?

I'd like each of our stakeholders to answer that briefly, and then I'd like to move on to another question.

[Wade Sobkowich]

Sure. At a high level, there are two elements that we need to make, that we're striving to achieve. One is to get as large a service pie as possible apportioned appropriately among the corridors. The second element is to hold the railways accountable to providing that larger pie.

If there were one amendment that we would ask for in Bill C-30, it would be to provide clarity, that when the volume thresholds are set, they are to be set on a corridor-specific basis. That is extremely important to us so that we can serve all the markets we sell to and get the highest value for that grain.

[Malcolm Allen, NDP, Welland, ON]

The dilemma with changing behaviour is that people need to know there's a consequence, so that they actually want to change their behaviours initially, not that I disagree with you, Cam, on the issue of how you can't write a ticket for every single car that goes by. It doesn't work that way.

Let me draw back into what Wade has been quoted as saying, related to some of this today, and ask you the question if it's about tying it to this piece of legislation minus.... You had six suggestions. Let me go through these. They talk about how, on this element, the questions are how to ensure grain shippers receive railcars, one, at the right level, two, at a consistent rate, three, apportioned appropriately among the corridors, four, spotted at the inland terminals where shippers require service, and five, at increased volumes when required to account for peak shipping periods. Suggestion number six is about beyond 2016, in talking about this as a sunset provision.

Let me leave the last one out, because if the CTA gets done and the rail service review gets done prior to that, that takes care of beyond 2016, if that becomes a piece that gets worked out and that folks are happy with. That remains to be seen, of course.

Not knowing what the regulations will be either, in the sense that we're still waiting for those as well, is there anything in those first five suggestions, Wade, that you want to see in Bill C-30 now?

There are two timelines here; well, maybe there are even three, if you want. There's the immediate of this crop year, which is sort of the end of July; it's kind of over, and that's why that provision, even with this legislation, ends July 31. Then, of course, there's the medium term until we get into the review process, even though we want to see it expedited. You've lived through that once before. It takes a bit of time to do that. Even if we rush it, it'll still take some time. Then, of course, the long term is what's on the other side of that.

Can I get your comment on those pieces?

[Cam Dahl, President, Cereals Canada]

Mr. Chairman, on behalf of Cereals Canada, I want to thank the standing committee for the invitation to appear before you today.

The crisis in grain transportation is something that impacts the entire value chain and is a threat to Canada’s brand and reputation. Cereals Canada appreciates the actions taken by the Government of Canada, including both the recent order in council and the fair rail for grain farmers act.

My name is Cam Dahl, and I am the president of Cereals Canada. While I have had the privilege of meeting many of you, I have not had the opportunity to do so while leading Cereals Canada, so I would like to take a few moments to introduce the organization.

Cereals Canada brings together a broad and diverse collaboration of partners from all sectors of the cereals value chain with the intent of enhancing domestic and international competiveness. Our members include farm organizations from coast to coast and grain handling firms, along with seed and crop development companies. Cereals Canada is guided by a board of directors composed of 12 individuals equally representing each of the three major stakeholder groups.

Cereals Canada going forward will focus on applying a coordinated effort to supporting market development, innovation in the cereals sector, and policy initiatives that will ensure the profitability and long-term sustainability of all elements of the cereals value chain. Bill C-30 amends both the Canada Transportation Act and the Canada Grain Act. I don’t think there is much in the way of clarity required on the Canada Grain Act, so in the time I have I will concentrate my remarks on the changes to the Canada Transportation Act.

Like many involved in the cereals value chain, Cereals Canada supports legislative solutions that will help ensure that the logistics failures that we have seen this past fall and winter do not recur. Legislative action is required to reassure our customers, both here in North America as well as offshore, that Canada will continue to be a reliable supplier of high-quality grains. Maintaining our reputation as a reliable supplier is critical to our economic growth and development as an industry, as well as for the economic health of the nation.

Legislative action is also required to help create and maintain an economic environment that encourages private investment in the system by all participants, including farmers, grain handlers, and rail companies. Cereals Canada supports Bill C-30, and we encourage all parties in the House of Commons to come together to pass this bill quickly.

However, we note that passing this legislation in and of itself will not provide a complete solution to the logistics backlog that we are experiencing today. There are some key elements that must be included in the regulatory package that will bring Bill C-30 into force, if we are going to accomplish our goal of preventing the next grain transportation crisis.

I'm not going to go into great depth on the key points that we would raise; rather I would like to share with you, as an executive summary, some of the key measures that must be part of the final legislative and regulatory package. I would be happy to expand on any of these points during our discussions today.

I will raise three key points.

First, Cereals Canada believes that at a minimum the Bill C-30 legislative and regulatory package must provide for a better and more specific definition of “adequate and suitable” whereby railway service obligations must meet the transportation needs of the shippers within the context of the Canada Transportation Act. The purpose of this adjustment to the regulations is to ensure that adequate capacity is available to shippers, and that is all shippers, not just those in the grain industry. The current definition of “adequate and suitable” is too vague and open to subjective interpretation when determining the common carrier obligations of the railways.

The second key point is that the regulatory and legislative package must ensure that financial consequences for railway non-performance and dispute resolution for liquidated damages are part of service level agreements. My members support financial accountability within the grain logistics network. But to be an effective tool to prevent service failures like the failures we have seen in this crop year, financial accountability must apply to all players.

Currently, grain shippers are accountable for their performance through penalties built into railway tariffs. For example, if a terminal in Vancouver fails to unload a grain car within the specified timeframe, they face a penalty of $150 per day per car. There is no similar financial accountability for railway performance or non-performance.

Clause 8 of this bill amends section 169.31 of the Canada Transportation Act to allow the agency to determine the operational terms that will be included in a service level agreement between shippers and carriers. Regulations relating to this amendment must make very clear that operational terms include financial accountability for railway performance.

The third key point that I would like to raise is to ensure that shipping requirements for the railways, should these be necessary, include corridor-specific requirements to reflect the needs of all grains, oilseeds, pulses, and special crops shippers.

Cereals Canada appreciates the unprecedented order in council that requires the railways to move at least a million tonnes of prairie grain per week. The potential for directions of this nature, again should they become necessary in the future, would be enshrined in law through Bill C-30. We support these amendments.

The regulations that will bring these measures into effect must be more specific than just a broad direction for total movement: direction must also include specific guidelines by traffic corridor, including the west coast, Thunder Bay, eastern Canada, domestic movements, and shipments to the United States. This specificity is required to prevent one or two traffic corridors from being shut down while the railways attempt to meet their legal obligation for total shipments.

I believe that all of these provisions can be enabled by Bill C-30, but success will require the right regulatory package.

Bill C-30 will provide for an extension of the interswitching distance limits. Cereals Canada supports these measures and believes that they may provide for additional competition for some movements. However, we note that transportation oversight will be required to ensure that carriers do not attempt to frustrate all efforts to obtain an interswitching agreement. Some members of Cereals Canada have faced this frustration even with the current distance limits.

Bill C-30 would require the Canadian Transportation Agency to become directly involved in grain logistics planning. A key element of this role will be the dissemination of information on the supply of and demand for transportation services. Cereals Canada supports this new role for the agency.

We emphasize the need for the Canadian Transportation Agency to immediately begin the capacity planning exercise for the 2014-15 crop year. This planning process must include shippers, carriers, and the commodity groups. We note that sales are already being made into this time period, and it is critical that shippers have an understanding of the capacity that might be available.

Cereals Canada also wants to emphasize the need to gain certainty past 2016, when the provisions under Bill C-30 may sunset. The planning horizon for producers and shippers extends beyond a few months, and all participants in the value chain need to know the regulatory environment they will be functioning in at least a year in advance, if not more.

It's important to pause for a moment to emphasize the strong unanimity that is coming forward from Canada’s grains, oilseeds, special crops, and pulse industries. It has been sometimes said that if you get two of our groups together in the room, you will come out with four different opinions. That can happen sometimes, but not in this case and not on this issue. The points that are presented to you today have strong support from almost all sectors and across the value chains. I know that you will find this reflected in the testimony from others who have come before you. I ask that it is upon this unity you focus during your hopefully short deliberations on Bill C-30, and not the minor differences that may surface.

Grain handling and transportation is a complex file. This is not a complete list of the issues that need to be resolved, nor is it a complete explanation of the details on the key points that must be ironed out if this legislative and regulatory package is to successfully meet our shared objectives.

Cereals Canada will continue to work with you, with ministers, and officials as the legislation moves forward through Parliament, as the regulatory package is drafted, and as we move through the review of the Canada Transportation Act.

Again, thank you.

[Wade Sobkowich, Executive Director, Western Grain Elevator Association]

Good afternoon. Thank you for inviting the Western Grain Elevator Association to appear. We appreciate the support of the federal government in attempting to address the serious rail capacity issues the grain industry has faced this year.

Bill C-30 sets out a framework for railway volume thresholds to be set by the Governor in Council. The WGEA believes this to be a workable structure. However, it is critical that the details be worked out properly before we can tell whether or not the measure will have the intended effect. For example, if the volume thresholds are set too low or if they don't include enough specificity, the benefits of the legislation will be diminished.

Rail service must flow to where the customer needs the grain and not to where it best suits the desires of the railway. To this end, it is very important that the volume thresholds recommended by the Canadian Transportation Agency and ultimately passed by the Governor in Council include corridor-specific numbers for the west coast, Thunder Bay, eastern Canada, the United States, and domestic movements.

It's important to reiterate that these corridor numbers must be market driven. Grain shippers and exporters will sell into the highest-value markets first, and we have customers in each of these corridors. If we don't have corridor capacity to allow access to all markets, producers will fail to achieve full value for their crop.

It's recognized that it may not be practical to establish hard numbers for each corridor and that such numbers should be treated as a practical minimum.

Legislation ultimately needs to better define the goal lines for service to influence railway behaviour and to provide adequate capacity on an ongoing basis without a connection to the political process.

To address the ongoing capacity issues, the WGEA has recommended a more specific definition of adequate and suitable accommodation and service obligations than that found within section 113 of the Canada Transportation Act, with a view to depoliticizing the establishment of capacity thresholds and taking away much of the ambiguity involved with what actually is proper service. This is something the WGEA will be looking for through the upcoming expedited CTA review process.

While volume thresholds can work in addressing capacity issues from a macro perspective, they do not provide clarity in the relationship between an individual shipper and an individual rail carrier. We presume this issue will be addressed by the new regulatory authority charged with establishing more specificity with respect to operational terms in a service level agreement.

Grain shippers are subject to unilaterally imposed railway tariffs as well as other forms of regulation, which already include shipper penalties paid to the railways for performance the railway deems to be poor.

We continue to seek the commensurate ability to negotiate and, if need be, arbitrate penalities for poor performance by the railway companies in the same way.

Provided the regulatory process included with the announcement on Bill C-30 results in clarification that operational terms include railway penalties, reflecting the way railways penalize shippers through unilateral railway tariffs, and a fair process by which to recover liquidated damages, then this would be a positive measure and would address an overarching issue that the WGEA has been trying to have addressed for a very long time.

Regarding the amendments to the Canada Grain Act, the WGEA does not necessarily object to the changes authorizing the Canadian Grain Commission to create regulations if necessary to promote fair and equitable contract agreements between shippers and farmers. However, this item is inextricably linked with the previous item: railway penalties and recovery of liquidated damages. If grain shippers can recover these amounts from the railway for lack of rail service, competition would dictate that these funds would be used the following ways: to pay vessel demurrage costs, to pay contract extension penalties to the customer overseas or wherever they may be, and to compensate producers for their inability to deliver due to lack of rail service.

Should the CGC see fit to require these elements in producer contracts without providing grain companies the ability to recover damages from the railways, grain companies would have no choice but to respond with some combination of the following: they would probably include a risk premium in their prices to farmers; they might contract with wider delivery windows or nearer-term delivery windows; or they would do more street pricing and less contracting in general.

That's what I mean when I say it's inextricably linked with the railway penalties. We need that in order to be able to properly compensate farmers.

The extended interswitching to 160 kilometres is a positive change. Every grain elevator in western Canada should have practical access to an interchange. I'm advised that interswitching can be a cumbersome process for both the railways and the grain shippers. However, this in and of itself could serve as a motivating factor for a railway to provide better service just to avoid the interswitch.

The government must keep in mind that measuring success on interswitching goes beyond monitoring the increase in occurrence of interswitching. It includes measuring the increase in service levels or added capacity at a particular location due to the elevator's now having some degree of access to an alternative.

We wish to point out that under the current railway tariffs, interswitch traffic from one Canadian carrier to another does not qualify for multiple car rates, so this could make the economics of an interchange very challenging.

The legislation has a sunset of August 2016, and it will be the decision of the government at that time to determine whether to renew the legislation or allow it to expire. Grain companies begin booking business almost one year in advance, so in August 2015 we will be in the position of not knowing what shipping volumes will be while still selling forward past August 2016. To the extent possible, we require certainty on capacity volumes well in advance.

Similarly, the bill provides for the Canadian Transportation Agency to set volume requirements starting in the peak fall period. Given the nature of our business, grain companies are currently selling grain six months and into the future. If the agency is to make recommendations to establish volume thresholds, this must be undertaken immediately.

In conclusion, we still ultimately require a permanent piece of legislation that drives correct railway behaviour without a connection to the political process. We look forward to fully participating in the CTA review process to help establish legislation that will provide balanced accountability between a shipper and a railway that withstands the test of time.

Thank you.

[Art Enns, President, Prairie Oat Growers Association]

Mr. Chairman, I'd like to thank the committee for inviting me here today in my roles as president of Prairie Oat Growers as well as an executive member of Grain Growers of Canada and also as a farmer.

The transportation crisis has affected all commodities and is damaging Canada's international reputation as a reliable exporter. We in the agriculture sector want to be clear that Bill C-30 is an important interim step, but must be part of long-term measures that address the needs of all shippers.

I'd also like to express appreciation for the measures proposed to get grain moving again. The order in council set minimum levels of grain movement. It has been a step in the right direction, and we welcome this legislation.

We do see some areas for improvement. We join with many organizations in seeking: a proper definition of adequate and suitable service, to clarify that it must meet shippers' needs; increased accountability by providing reciprocal penalties within service level agreements; dispute resolutions for liquidated damages as part of service level agreements; consideration of increased penalties if movement does not improve and directing that revenue to programs that support infrastructure, such as the building Canada fund; implementation of interswitching provisions at 160 kilometres and consider extending further in areas with unique needs of border points; setting minimum volumes for movement by corridor; and the input of commodity groups when setting corridor minimums...seems we are well placed to understand long-term demand and immediate production realities.

Let me illustrate the importance of corridor-specific targets with a particular situation from oats. The Canadian oat industry is heavily dependent on trade, in particular with the United States, to which 90% of our exports go. While a few have worried that grain traffic will come at the cost of other commodities, the volume targets allow grain to return to some level of normalcy.

Like other producers reliant on rail, oat farmers are suffering from the transportation crisis, but oats are in a dire situation. The first six weeks of this year saw just half of the exports that the prior year saw. So far this crop year, as of the week ending March 23, oat exports are down 101,000 tonnes from last year and 196,000 tonnes from two years ago.

In using these numbers, I'm not talking about moving the additional crop we grew this year. Oat production was up by 38%; however, this increase in production has been met with a decrease in the volume of oats moved. There has been demand by oat millers, and prices for oats have been high, so it is doubly difficult for Canadian farmers to see part of that demand filled by other countries because we can't get the oats to them.

The failures of the transportation system represent real loss for Canadian farmers. The remedies have focused on west coast ports, often to the exclusion of other corridors. This is why we need long-term forward thinking by corridor, including southern corridors, and support for alternatives to the existing system.

The impact on oat growers is enormous and is likely to echo for many years to come. It is an example of losses experienced across the grain sector.

For these reasons, we see this legislation as an important step forward and we thank all parties for their willingness to expedite this legislation. The regulatory package to follow also needs rapid attention, and we stand ready to be a constructive part of that discussion.

We also want to emphasize the need to gain certainty past 2016, when the provisions under Bill C-30 may sunset. The planning horizon for producers, shippers, and railways must be at least one year ahead.

As a result, we emphasize the need for the Canadian Transportation Agency to immediately begin the capacity planning exercise for the 2014-15 shipping season. In addition, it is very important to begin the review of the Canadian Transportation Act as soon as possible.

Long-term change is needed in this system, change that encourages an increase in capacity for all corridors. Improved agriculture production is a long-term trend.

For Canada's economy to keep growing, we need a transportation system that works for all commodities, including addressing the rural economy of the country and the historic contributions of the agriculture sector in building it. Canada's reputation as an exporter relies on this.

Thank you.

[Ralph Goodale, Liberal, Wascana, SK]

Thank you, Mr. Chairman, and thank you for your welcome.

I'm glad to be here tonight with Mark Eyking and other colleagues, and certainly with these witnesses who are providing us with some very helpful and important information.

I have three basic areas that I'd like to question on. Perhaps I'll ask all three questions at once and then leave the maximum time for the witnesses to answer.

First of all, would it be helpful as we're dealing with Bill C-30 to actually see what the draft regulations might look like? For the most part the act creates the authority to create regulations, but the regulations are not yet in the public domain. I wonder if that would be useful to actually see at an early stage what the government has in mind for the drafting of those regulations.

Second, with respect to the contracts between grain companies and farmers, which are referred to in the legislation, and the possibility of regulations being promulgated under the Canada Grain Act,should those regulations spell out damages or penalties to be paid to farmers if and when specified delivery opportunities are not provided by the grain companies as had been contracted for? Should there be consequences if you can't deliver when your contract says you ought to be able to deliver, and what would those consequences be? As well, should there be regulations that would impose some kind of transparency and potential limits on the calculation of the so-called basis, the deductions that appear, anecdotally at least, to be consuming about 50% of the international price of grain? That's being absorbed before it even gets to the farmer, so how can you bring transparency and some kind of limit on this calculation called basis.

Third, with respect to the other type of contract that's referred to in the legislation, the service level agreements between shippers and railways under the Canada Transportation Act, do regulations there need to be very clear in specifying the service levels that the railways are expected to provide? Do the regulations also need to be clear in specifying the way in which performance is to be measured, have the railways in fact provided it or not, and about the payment of damages to farmers if the service isn't what was specified in the service level agreement?

Should those three things, first, definition of service, second, how do you measure it, and third, what is the consequence if service fails, be in regulations or should they in the act itself?

Finally, with respect to the Canada Transportation Act, beyond this vague phrase that's been there for a hundred years, “adequate and suitable accommodation”, are our witnesses telling us here—and I think this is what I heard—that railway service obligations need to be defined as performing in such a way that the railways actually meet the needs of their customers? In other words, the rules are designed to service customers, not service railways. That would certainly change the paradigm in Canada of the last 143 years.

I wonder if I could just leave those questions, Mr. Chairman, and see what our witnesses have to comment.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Matt. I appreciate your comments and your time.

Before I start the round of questioning, I want to welcome Mr. Goodale to the committee tonight as we talk about Bill C-30.

The first round, Madam Brosseau, for five minutes.

[Matt Sawyer, Chair, Alberta Barley Commission]

Good evening. On behalf of the Alberta Barley Commission and the Grain Growers of Canada, I’d like to thank you for inviting me here today to discuss Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures, the short title of which is the fair rail for grain farmers act.

I'm Matt Sawyer, chairman of the Alberta Barley Commission. I'm here on behalf of Alberta Barley's 1,000-plus barley farmers, as well as the 45,000 farmers represented under the banner of the Grain Growers of Canada, of which I'm also the vice-president.

The reason I am in Calgary today and not with you in Ottawa is I cancelled all of my appointments this week as I had the hopes of hauling grain. Last night at five o'clock I received the call that the train once again didn't show up, so I've been pushed back another week on a February contract for 20,000 bushels of canola and 60,000 bushels of wheat. So, once again these February-March contracts are being pushed back, and I'm pushed back once again.

But I certainly am honoured and thankful to be here today to speak with you, but I really wish that I were hauling some grain.

I certainly can’t emphasize enough that this crisis is real with major consequences for my farm and for farms across the country. I know that I am not alone.

At Alberta Barley, our mandate is to grow our barley industry and its profitability. Profitability is key to doing business, and if you can't make a profit, there’s no point in doing it.

What's troubling to me is that farmers are up against a transportation system in Canada that prevents competition and holds us back.

It's frustrating to me that our transportation system has left farmers to bear all of the costs of its failings. We are nearing $3 billion in lost revenue this year due to the basis and other items that will only grow as long as we go without a long-term solution to this pressing problem.

With the transportation system the way it is, my life will continue to be on hold. That, I guess, is what being a farmer in Canada was like in the past: your life is on hold in the hopes that you possibly get the call to deliver grain. And when you get the call, you just go. You drop everything. You don't argue; you just go because you'll miss your delivery opportunity.

Basically, to make an analogy, receiving a call this year to haul your grain is kind of like waiting for an MRI appointment that you've had booked for the last two years. If you miss that MRI appointment, you're going to miss your opportunity. That's basically what it is. This is what it's like for farmers in western Canada; when you get the call to deliver grain, you go.

This past year, due to the failures of our transportation system, grain deliveries have largely been put on hold. This is why the farmer members of Alberta Barley and the Grain Growers of Canada support the changes to the legislation to ensure grain deliveries are a priority over the next two years.

Canadian farmers grow exceptional crops. I believe they are the best in the world. We have a well-earned international reputation for growing a high-quality premium product.

Unfortunately, we have developed another reputation as a country that can't get our grain to market in a timely manner. Nine out of ten farms in this country are dependent on exports, and Canada is the fifth largest agrifood exporter in the world. Our economy depends on maintaining the trust and faith of our buyers around the world.

Our country was built on the railways. For nearly 150 years, the trains have been key to making Canada work. Our railways are posting significant profits while farmers are not able to get the grain to port in a reliable manner to our customers.

Don’t get me wrong. I understand that the problems with the railways aren’t limited to farmers. Everybody is affected.

We're not asking for grain to be shipped at the expense of other commodities. However, due to the size of the crop last fall, farmers are in a cash crunch. We need to move this grain. Chemical, fertilizer, loads of machinery payments are due, and we're sitting on mountains of grain that we can't deliver because once again we didn't see that train coming and it's not coming down the tracks.

The reason legislation is needed to fix this problem is that there isn’t just one factor at play. We can’t simply fix the weather and ensure that grain deliveries will increase. We need legislation because we can’t simply implement stronger contracts between the grain companies and railways today and hope that they will be enforceable tomorrow.

In order to get the grain moving, and keep it moving while farmers are already planting their next crop, the legislation is key. Otherwise farmers have to hope for the best out of a system that we know is broken.

That is why we welcome the government's efforts to review the Canada Transportation Act. We support the work being done throughout the industry to identify gaps. For example, the north-south corridors are just as important as the east-west corridors.

As you'll hear from my colleagues throughout the industry, we have some specific ideas on how to improve the grain transportation system in Canada, and these include the following. The definition of adequate and suitable accommodation and service obligations within the legislation needs to be made clear. To be frank with you, we need a bill that has teeth. While we appreciate the drive for more accountability, we also need real and tangible measures. Currently, there is no statutory guidance on how a railway is to fill its service obligations and the words “adequate and suitable” are ineffective in providing that.

The current level of service complaint remedy and particularly the definition of “adequate and suitable” have been ineffective for shippers. Regarding service level agreements, we believe that the mandatory reciprocal commercial penalties should be incorporated into service level agreements during the regulatory process. If you have two parties willing to commit to a deal, it will mean the producers can finally get their grain to port. Reciprocal penalties simply mean that everyone is accountable, which is the key to having a reliable transportation system.

We are all in this together, and from my perspective, asking a farmer how to solve the railway issue is kind of like asking an accountant how to fix a combine. My message is this. Farmers have always been willing to step in and fix the problem. This past winter, we had many meetings where we sat around and discussed with politicians and chemical representatives and industry participants about how we're going to fix this. How are we going to air up a train? How are we going to get it to the coast? It's too cold. Well, bottom line, we've all had to make improvements in our system to get the wheels rolling, and I certainly know that if it were up to me, I'd make sure it happened.

But it shouldn't be up to farmers to fix this problem, and it's not up to us to figure out how to make the rail system more efficient. We just want to ship our commodities, and through processes like this we can ensure that we can create efficiencies in the system so that this can happen.

I am thoroughly disappointed that the rail transportation crisis has cost us around $2.5 billion as well as our reputation as a reliable shipper of our products. The Grain Growers of Canada and the Alberta Barley Commission support the proposed changes, and certainly look forward to a more secure future for farmers. We see this as a good first step to ensure the railways remain responsive to Canadian business and we look forward to participating in future discussions.

Thank you very much.

[Rick White, Chief Executive Officer, Canadian Canola Growers Association]

Thank you.

My name is Rick White.

The imbalance in the commercial relationship between the railways and the other stakeholders in the grain supply chain has been fully exposed this crop year negatively affecting producers and to the ultimate detriment of our national economy and our reputation as a reliable supplier of food products.

We agree that the focus on market-driven solutions and longer term statutory frameworks are the preferred solution over temporary market intervention by government. Simply stated, a framework of balanced accountability to drive commercial behaviour in the supply chain will come from two primary sources. The first one is service obligations and the second is contractual relationships.

On the first point, a proper definition of adequate and suitable service in the common carrier obligations contained in the Canada Transportation Act is required. Railway service obligations must meet the transportation needs of the shipper.

Section 113 currently states that the railway will furnish “adequate and suitable accommodation for the receiving and loading of all traffic offered for carriage...”.

Defining adequate and suitable service as that which meets the shipper's needs inherently addresses the capacity issue in a way that is not specified by government edict, and would clarify that the rail service provider is statutorily compelled to do what they need to do in order to carry the traffic presented to them.

This needs to be added to Bill C-30. The current definition is too vague and it requires tightening to leave little room for misinterpretation or legal wrangling.

Now with the current proposed amendments to the Canada Transportation Act, the increased forecasting, supply chain coordination, and reporting are all very positive elements. Capacity planning needs to begin now for the 2014-15 crop year. Input from commodity groups is critical to receive predictive information regarding both near term and longer term production levels in marketing. If required, future shipping requirements made of the railways need to be corridor specific to ensure that product is moving to where it needs to go, as opposed to what is the most expedient to fulfill statutory or regulatory volume obligations.

The proposed extended interswitching limit is a positive action that has the potential to inject increased commercial competition across the west for both grain and other shippers. Expanding system capacity is critical. We need to assure capacity is expanded if we are to, first, meet the needs of all supply chain participants across all commodities, and second, to meet future obligations and capture Canada's export growth market opportunities.

On our second point, there must be explicit provision for the element of reciprocal penalties in service level agreements. CCGA and other shippers have been stating this since the rail freight service review process in 2009. The current contractual framework is extremely weak and practically ineffective. Service level agreements that include the mandatory element of reciprocal penalties for non-performance when service obligations are breached will increase the accountability between parties in the supply chain and hold them financially responsible to each other. Ideally, this will also allow for penalties to flow through to producers, who currently contract their grain with grain companies and receive no consideration when there is a service failure between the grain companies and railways.

The shipping community continues to support that the six amendments presented to government in 2010 by the Coalition of Rail Shippers remain central to effecting meaningful change in the service level agreement mechanism. Those amendments need to be incorporated in this act. The experience this year has clearly demonstrated that the railways operate in a privileged position where statutory common carrier obligations can be skirted as they please, punishing the Canadian agricultural producers, shippers, and ultimately the national economy.

Several implications of this for the grain and oilseed sector are going to be: unprecedented carry-out stocks that will impact the markets for several years to come; a sustained wide basis as grain companies signal producers to hold product; and our greatest fear, a shrinking or loss of international markets and relationships due to the perceived vulnerability and ineffectiveness of the Canadian supply chain.

It is time to re-balance the commercial relationships within the supply chain and increase accountability through meaningful and effective contracts on service and performance. Bill C-30 presents us an opportunity to do just that.

We are committed to working with the government to make sure we capture this opportunity for the benefit of our growers and supply chain participants in all commodities.

We appreciate being here to address the committee this evening and look forward to taking your questions. Thank you.

[Brett Halstead, President, Canadian Canola Growers Association]

Thank you, Mr. Chairman.

I'm Brett Halstead. Good evening to everybody there.

Members of the committee, thank you for inviting us to speak with you today about Bill C-30.

The Canadian Canola Growers Association is a national association that represents the voice of Canada's 43,000 canola farmers. With more than 90% of Canada's canola ultimately destined for export markets, canola farmers critically rely on the service of Canada's railways to help get our products to customers and keep those products competitive in world markets.

The competitiveness and reliability of our industry, which currently contributes $19 billion to the Canadian economy, is highly dependent on the railways' providing predictable, timely, and efficient service. As we look forward 10 years, we see further rising demand for our products. In the future, supply chains and rail logistics will be even more important as our industry strives to meet new goals of 26 million tonnes of canola production per year.

This crop year, canola farmers harvested a record 18 million tonnes of canola. This, coupled with relatively good canola prices, meant that canola farmers were feeling optimistic about their prospects. However, producers were not fully able to realize the economic benefit of this bumper crop because of a breakdown of the transportation system, specifically of the movement of product by rail from country elevators to terminals.

Not only have we lost market opportunities, but in many cases, farmers who had well-established grain marketing plans now face severe cash flow challenges as their canola continues to sit in their grain bins because of lack of delivery opportunities.

CCGA appreciates the government's ongoing commitment to resolve both short- and long-term service problems with Canada's rail transportation system, and particularly its responding to this crisis in the grain and oilseed sector.

The government has announced several measures to improve grain logistics, including better monitoring. These measures are all steps towards making the logistical system commercially responsible. We would like to underline that through this process, we have been striving to ensure that the framework is fundamentally restructured to benefit all shippers, regardless of commodity or geography.

With Bill C-30, we have a tremendous opportunity before us to rebalance the commercial relationship that historically has been heavily, and I repeat heavily, tilted in favour of one party, the railways, which form only one component of the value chain.

CCGA fully supports solutions that modernize the relationship between shipper and railway under a framework of balanced accountability.

Rick.

[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.

[The Chair, Conservative, Bev Shipley]

I'd like to call the committee to order, please. We're here pursuant to order of reference of Friday, March 28, 2014, Bill C-30, an act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

Tonight we have three different panels, from 6:30 to 7:30, 7:30 to 8:30, and 8:30 to 9:30. We're going to try to keep our times fairly tight so that we can get as much information out as we possibly can during our time scheduled.

Tonight on the first panel, we have Greg Cherewyk from Pulse Canada. Thank you very much for joining us.

By video conference we have from the Canadian Canola Growers Association, Brett Halstead and Rick White.

Also by video conference, from Calgary, Alberta, we welcome Matt Sawyer, the chair of the Alberta Barley Commission.

We will enter into opening remarks. You have a maximum of 10 minutes each, and then we'll move into rounds of questions by our committees.

Greg, I'll give you the opportunity to start with your opening statements.

Agriculture and Agri-Food

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

Mr. Speaker, the member for Wascana has pointed out a portion of the new legislative package, Bill C-30, and the regulatory capacity under that. As he well knows, witnesses will be there all this week at the SCAAF committee, talking about this very issue.

What we have in mind is for the ability of farmers to have some reciprocity when a contract is issued by a grain company, so they actually have some power to push back. Right now, there is only buyer's preference. We would like to see something from the farmers' perspective that would give them some leverage as well.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, in Bill C-30, the government seeks to regulate contracts between farmers and grain companies, but it is not clear what kind of regulation. They should in fact table the draft regulations.

One problem is the so-called basis calculation, meaning how grain companies discount world prices to set the actual Prairie price paid to farmers. Farmers call this deduction “tookage”, and it has never been bigger than it is today.

Would Bill C-30 force transparency and put some limits on this grain company cash grab that is gobbling up about half of the farmers' price?

[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.

[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.

[The Chair, Conservative, Bev Shipley]

I'd like to call to order the Standing Committee on Agriculture and Agri-Food. Pursuant to the order of reference of Friday, March 28, 2014, we are considering Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

Colleagues, we have with us today the Honourable Gerry Ritz, the Minister of Agriculture and Agri-Food, and the Honourable Lisa Raitt, Minister of Transport.

Welcome to our ministers and to those who are here with them: Greg Meredith, assistant deputy minister at the strategic policy branch, Agriculture Canada; and Scott Streiner, assistant deputy minister in group policy with the Department of Transport.

We welcome you to our committee on a very important but also significant act that is now before this committee. We will be setting up meetings throughout the week to deal with as many witnesses as we can. I appreciate that you would take the time today, right at the start and from the get-go to be a part of that.

I'll turn this over to Minister Ritz to make an opening statement.

Minister, you have 10 minutes, please.

Fair Rail for Grain Farmers Act

[Brent Rathgeber, Independent, Edmonton—St. Albert, AB]

Mr. Speaker, it is indeed an honour for me to add a few comments in the debate on Bill C-30, the fair rail for grain farmers act. I certainly support the motivation behind this bill, and I am most mindful of the problem that exists in the prairie provinces, Alberta, Saskatchewan and Manitoba. However, I want to place a couple of concerns on the record and ask whether there may be some unintended consequences of the bill. I support the bill and will keep my comments short enough so that this bill can be moved expeditiously to committee before the end of the day.

This bill seems to be based on a premise that it is the railroads, and the railroads alone, that are responsible for the inability of farmers to get their grain to markets. Although there may be some truth to that statement or that moral blameworthiness, I think it is an oversimplification.

The Parliamentary Secretary to the Minister of Agriculture talked about the extensive consultation with the railroads before the implementation of the order in council approximately three or four weeks ago and the tabling of legislation. The railroads claim that there was a lack of consultation. CP president Hunter Harrison stated in the media that he was very concerned about the speed and the lack of consultation by the government in making such significant changes. Canadian National, which forms the southern boundary of my riding of Edmonton—St. Albert, has expressed similar concerns with respect to this legislation.

Mr. Speaker, you will no doubt know, being a member of Parliament from Saskatchewan, that this is a complicated supply chain. For grain to be moved to market, it requires the co-operation and coordination, as the member for Wascana just indicated, of multiple moving parts, including grain cars, elevators, and inland terminals. Of course, the railways are a big piece of the puzzle, but there are also ports, ships, and weather. All of these things have to work together if grain is going to be moved in an orderly manner from the field to the bin to the elevator to the railcar to the port and to markets.

We had a bit of a perfect storm last year, in a good way. There was a bumper crop. Crops have been estimated to be anywhere from 50% or higher than average yields, and that created a problem. The railroads have also had some weather experiences this winter, which was a very significant amount of snow and cold weather over the prairie provinces, and all over Canada as a whole. As a result, their ability to move grain was comprised. The government needs to be mindful of that.

I am always concerned when the government's solution to any problem is to bring in heavy-handed regulation, especially if the railroads are correct in their assessment that the regulations were brought in without adequate consultation. In fact, there is some suggestion in some editorials today that a solution like this may have unintended consequences that could cause more problems than it would solve. They may get grain moving; they may not. We always have to be mindful that there is not infinite capacity for the railroads to move product. There are only so many rails and so many cars. We also have to be mindful of other conditions, such as weather, and something that I do not think we have talked about today, which is safety.

The year 2013 was horrific for rail accidents. The most tragic was the Lac-Mégantic tragedy, in July 2013. However, there were also derailments in Alberta and Saskatchewan, where products, including dangerous products, were derailed and caused fires, though thankfully nothing as catastrophic as was experienced in Quebec.

Nonetheless, if we are going to put extra pressure on the railways to move more product, does that mean they are going to have to move trains faster? Does that mean they are going to have to use longer trains? Has anybody properly considered what that might mean for the safety of moving product by rail? There are those who live in communities that surround railroad tracks, like I do. I live less than two blocks from the Walker Yard, which is the main switching yard in western Canada for CN Rail. I hope the government takes into consideration that it is a complicated chain.

Another problem with the weather this year, as I understand it, is with respect to the Great Lakes and moving product through Thunder Bay and that region. The ice is not allowing for the free flow of water, and perhaps the government needs to consider using icebreakers to help break up the ice so that more ships with grain can move through the Great Lakes.

The problem is much more complicated than simply blaming the railroads. There is no doubt they have major responsibility and are a major part of the supply chain, but the supply chain is larger than they are.

I will resume my seat and take questions in a moment because I want to see the bill go to committee before the clock hits the bottom of the hour, but I would ask the government to consider what some of the unintended consequences of bringing in more regulations to the railways might be.

The last thing I want to say is that rail is responsible for moving other products besides grain. There is potash. There is oil. If the railways are forced by threat of a $100,000-per-day fine to put priority on grain over other commodities, are we going to be standing up in the House three months or six months from now debating a potash fair transport act or an oil fair transport act? Those products are going to become compromised if grain becomes the only priority.

I support the intention of the bill. I am very sympathetic to the farmers who are unable to move their product and who have grain in their bins that could conceivably rot and spoil if left there too long, so I support moving the bill to committee today. However, I ask the government and the committee to consider some of the unintended consequences to the railroads as the bill moves forward to committee and back to the House. The railroads are only one part, albeit a big one, of the supply chain.

[Rosane Doré Lefebvre, NDP, Alfred-Pellan, QC]

Mr. Speaker, I would like to thank my colleague for his speech. We have heard some very interesting things in the House today.

About 80% of the riding that I represent is made up of farmers. The area has a lot of farmland. We do not grow a lot of grain, but I know quite a bit about the situation and about how important it is to discuss Bill C-30 and to hear from as many witnesses as possible in committee.

I do not know how the Standing Committee on Agriculture and Agri-Food works. I know more about other committees. However, I do know that, unfortunately, over the course of this session, the Conservatives have not wanted to discuss issues. This is becoming customary. I would like the member to expand on that.

Does the member really believe that the government will accept the amendments proposed? Does he think that the Conservative government will be able to accommodate the many witnesses who want to testify regarding Bill C-30?

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

Mr. Speaker, I would like to thank my hon. colleague for his speech and say we are all on the same page here. I want to clarify that the NDP is ready to work as long as it takes on the agriculture committee to accommodate all the witnesses who would like to come before our committee.

We recognize there is not much time to get this done. We have about two weeks, which means four meetings, but we are ready to work as long and as hard as permitted by the government. It will be up to the Conservatives to agree to how much we can dedicate to the witnesses coming before committee for Bill C-30.

I wonder if the member could comment on Saskatchewan's agriculture minister, who wanted targets set to 13,000 cars a week with daily fines of up to $250,000. Right now we have fines up to $100,000, but that is up to $100,000 and it is not paid to farmers who are being so heavily hit because they have done a great job. They have a bumper crop, but if they are not able to move it, they are not being paid. Could the member comment on some of the suggestions by the Saskatchewan agriculture minister?

[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.

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

Mr. Speaker, I thank my hon. colleague for the question and for her hard work with the Standing Committee on Agriculture and Agri-Food. It is always a pleasure to work with her.

During the recent two-week constituency break, I had the opportunity to visit Saskatchewan and Regina, where I met with many farmers, economists and stakeholders in the field, people who work on the ground. They are worried, frustrated and desperate. You can see in their eyes and hear in their voices that they are at the end of their rope. They have to borrow money, because the government is telling them to wait and to borrow money if they have a problem. This government's failure to act and its lack of vision are frustrating. How many months did it take for them to introduce this bill?

Now the Minister of Agriculture has a chance to save face. There is a lot of pressure from people who are angry and disappointed in the Minister of Agriculture regarding grain transportation and the crisis they are going through. They are also frustrated by the Conservatives in general, because they cannot trust the Conservatives. How can anyone trust a government that turns its back on farmers? They are desperate. That is why we are standing up for them.

When the Standing Committee on Agriculture and Agri-Food examines this bill, I hope we have the opportunity to hear from many witnesses. We will also then have the opportunity to make some amendments to Bill C-30 in order to make it better.

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

Mr. Speaker, I rise today to speak to Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

The new measures set out in this bill include the extension of inter-switching limits from 30 km to 160 km in Alberta, Manitoba and Saskatchewan; shipping contract provisions, particularly with regard to the sanctions imposed when a contract is broken and dispute resolution; and the regulatory powers set out in the Canada Transportation Act with regard to foods that will be monitored to determine whether shippers are abiding by the agreements concerning the quantity of grain that must be shipped.

I am going to talk more about the content of this bill, but first I would like to provide some background information.

For a number of months now, grain farmers have been extremely frustrated with the problems they are having moving the grain they harvested last summer. These transportation difficulties are resulting in a drop in the quality of their grain and thus a drop in its price. They are worried that they will not be able to transport future harvests. Between $14.5 billion and $20 billion worth of grain is sitting in bins and cannot be moved. That is huge and unbelievable. It is estimated that the backlog is between 17 and 27 million metric tons.

This situation is all the more untenable since business partners are losing confidence. Not everyone is aware of this, but those who are dealing with consequences of the grain transportation backlog on a daily basis can tell you that this is a serious situation.

For a long time, Lynn Jacobson, President of the Alberta Federation of Agriculture, has been asking shippers to increase their capacity to respond to the need. We have been asking the same thing for months. Like everyone, Canada's grain farmers have bills to pay and loans to repay, and the banks will not wait.

For months, we have been urging the government to take action in order to achieve tangible results for farmers. It is completely unacceptable for hard-working farmers to be unable to ship their grain. In my opinion, this bill does not go far enough.

Two weeks ago, I was in Saskatchewan and met with farmers who told me what effect this transportation crisis had on their bottom line. I had a chance to better understand the situation and how complex it is. One farmer I met with made a map for me. This map now hangs in my office and has come in quite handy. A few things have become clear to me thanks to his explanation, such as prices, for one. Producers are seeing a large gap between the farm gate price and what they are seeing at the port. The most recent numbers I have seen are from March 19. The price in Davidson was $5.75 per bushel, and the price at the port of Vancouver for the same period was $10.60 per bushel. That is half.

I am disappointed to see that given the crisis, which is costing $8.3 billion in lost sales, there is still no direct compensation for farmers. I would have liked to have seen measures in this bill that would have compensated farmers for their losses.

When I met with farmers in Saskatchewan, one of them told me that he felt lucky, because his crop had been destroyed by a hail storm recently. He was lucky, because he had crop insurance, and he came out ahead of most farmers, despite that hail storm. This is not how farming should work. If our farmers produce a record bumper crop, they should be able to reap those rewards, not be penalized for years to come.

Another farmer told me that he sold high-grade grain for feed, because he could get a higher price than he could shipping it. That might be good news for the hog industry. We might be seeing some very healthy hogs this year, but for the grain producers, this is completely unacceptable.

The other thing I understand from the map is that transportation logistics is extremely complex in this country. Some of the farmers I met mentioned that there is no plan to replace the important work of the former iteration of the CWB. The NDP opposed the undemocratic and reckless gutting of the Canadian Wheat Board. We can see how important it is to have strong institutions representing our farmers and helping solve logistical issues in their interest.

I want to talk briefly about grain capacity. When the minister presented the order in council on March 7, farmers knew right away that it would not be enough. The minister is requiring that the rail companies move one million metric tonnes a week. That amount is what the railways always said they could do. Therefore, in the end, the government is forcing the railways to do something they were already going to do.

I will quote Lyle Stewart, the Minister of Agriculture for Saskatchewan, who stated:

...at first blush...the legislation itself is deficient.

We made some substantial asks and they weren't numbers that we pulled out of the air. They were numbers that we got from industry and we knew that they were achievable. We believe that 13,000 cars a week of grain could be unloaded, for instance, without handicapping other commodities that need to flow from Western Canada and we thought that $250,000 a day penalties were not out of line for non-compliance.

It is clear that the government could have required more from the railways.

It is time the government took action, but this bill does not go far enough. The minister is trying to clean up a mess that he should have predicted and prevented. The measures being imposed will expire in two years. This is not a long-term solution that will keep this from happening again.

The government lacks vision. Many agronomists and public servants at the agriculture department have said that harvests are only going to get bigger. The bill does not attempt to find long-term solutions for farmers. In addition, the majority of the measures proposed in the bill will be implemented at a later date, but the issue is all too real right now.

The fact that the measures will expire in two years demonstrates, yet again, that the Conservatives see this as a short-term issue. In reality, this is a structural issue that farmers are faced with. The problem could well resurface in just a few harvests.

The minister did not respond to requests from the hardest hit provinces. They wanted stiffer fines, compensation for grain farmers and higher minimum targets for grain cars. As I said earlier, we condemn the fact that farmers have not received any compensation. This crisis has cost farmers $8.3 billion since it began, yet there is still no direct compensation for them. The NDP would never do that to farmers.

We have long been calling for better arbitration and tougher penalties for breaking service agreements. The Conservatives refused to pass those amendments six months ago. Now that they are facing a crisis, they have started listening to us. They should also listen to the Minister of Foreign Affairs.

I would like to end my remarks on the bill by reflecting on the policy direction of the government. I would like to see the government have a comprehensive vision for agriculture in this country. Agriculture is so important. It represents one in eight jobs in this country. It is vital to our economy.

The minister is bringing in pieces of legislation that seem to be reacting to issues, rather than leading the way on ag issues. It seems that we only have a chance to debate agriculture-related bills in the House when something goes wrong. The latest grain transportation crisis is a good example of this. The government has waited months and months before acting. Then it has scrambled together a bill that could help farmers get their grain moving. This government only acts when it needs to, and it delays action as much as possible.

I wish we could work together. I am looking forward to having witnesses at committee. I am really hoping the government can agree to accept amendments and work together.

I am looking forward to seeing this bill go to committee, where we can hear witnesses and make this a better bill that will actually support farmers, get grain moving, and prevent this problem from happening in the future.

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

Mr. Speaker, I am proud to stand today to speak to Bill C-30, Fair Rail for Grain Farmers Act.

Today we debate this important bill that has the singular purpose of improving our supply chain and rail logistics in Canada. Since its introduction on Wednesday, the ministers of agriculture and transport have been out on the ground, meeting with stakeholders in that supply chain and working hard to ensure that this gets done properly and quickly.

The current transportation challenges affect all players in the supply chain, and it is essential that Canadian shippers remain competitive in domestic and international markets. Our government is focused on a way forward that will benefit all shippers, selling every commodity from grain to oil, and that will continue to grow our resource economy.

That is why we are taking immediate action to get all commodities moving faster, through legislation and regulations that are designed to increase supply chain transparency, strengthen contracts between producers and shippers, and help ensure the entire grain handling and transportation system is working at peak capacity. This legislation addresses the immediate needs of our economy and longer-term challenges because our economy needs a system that works today and tomorrow, with the capacity to move what is grown.

Yes, we are counting on all sides of the House of Commons to do the right thing and help us to implement these critical measures as quickly as possible. Our economy depends on it. As we all know, farmers delivered a record crop last year, one-third higher than the previous year and 50% higher than average. As many have said, if this type of performance is expected to be the new normal, we must prepare for that. That is what this legislation is about.

Farmers have not been able to deliver their grain to port or to customers, meaning that they do not have cash to finance their operators or storage capacity for next year's crop. A record $5 billion worth of grain could be sitting in farmers' bins, heading into the next crop year.

That is why earlier this month, we brought forward an order in council under the Canada Transportation Act to stabilize the national transportation system and to get grain moving to port. The order in council requires the Canadian National and Canadian Pacific Railways to move a minimum quantity of western regulated grain each week. We are now building upon that order in council.

We will amend the Canada Transportation Act so that it includes the power to regulate volume requirements, as necessary, and extend the interswitching distances to 160 km for all commodities in the Prairies. We will also amend the Canada Grain Act in order to regulate grain contract provisions; require other information to increase transparency of the performance of railways, ports and terminals; and create the regulatory authority to add greater specificity to service level agreements, as requested by all shippers.

These concrete and comprehensive measures will take effect immediately after they are passed.

Under the bill, we will amend the Canada Transportation Act to set out minimum volumes of grain, in extraordinary circumstances, that railways are required to transport, at the joint recommendation of the Minister of Transport and the Minister of Agriculture and Agri-Food. This change would provide greater predictability for shippers and producers, supporting specific volume performance requirements and ensuring that the supply chain is prepared to respond to peak demand.

Second, our government is creating the regulatory authority to enable the Canadian Transportation Agency to extend interswitching distances to 160 kilometres from 30 kilometres for all commodities on the prairies. Interswitching is an operation performed by railway companies in which one carrier picks up cars from a shipper and drops off these cars to another carrier that performs the line haul.

Increasing the access that farmers and elevators have to the lines of competing railway companies will increase competition among railways for business and give shippers more transportation options. Up to 150 elevators would then have access to more than one railway, compared to only 14 right now. This will increase competition among railways as well as the grain elevators for farmers' business.

Third, we will amend the Canada Grain Act to strengthen contracts between producers and shippers. Regulatory provisions could be created to require that grain companies compensate producers if they do not honour their contracts.

Fourth, we are establishing regulatory power to add great specificity to service level agreements, as asked for by all shippers. We will do this by defining in regulations which operational requirements would be mandatory in these agreements.

These are the immediate measures we are taking in this legislation to get the grain moving now and over the coming months. But we are not stopping there.

We will also require the railways to deliver more timely and detailed data on grain movement. This will help in monitoring the performance of the supply chain. The Canadian Transportation Agency will also gather information from all grain supply chain partners on shipping capacities and plans prior to each new crop year.

This legislation will allow us to adopt clear and realistic solutions so that Canadian shippers have access to a world-class logistics system that will ensure predictable and timely shipping of Canada's agricultural and other products to markets.

Today we are also announcing that the government will expedite the review of the Canada Transportation Act, which will focus first on rail transportation.

This expedited review will evaluate solutions to the structural problems of the grain supply chain and determine how to amend the Canada Transportation Act in order to create a more flexible system.

Taken together, these measures would strengthen contracts between producers and shippers, improve performance by railways, and help ensure that the entire supply chain is working at full capacity.

As the minister of agriculture for Alberta said:

We are pleased that the federal government has brought forward the Fair Rail for Grain Farmers Act, which addresses some of our concerns and will help strengthen rail transportation system performance in the immediate- and long-term.

The minister of agriculture for Manitoba said:

The Manitoba government supports this move as it means trains will be able to travel longer distances along other rail companies’ tracks and will improve Manitoba’s access to the port in Churchill as well as important U.S. markets

Finally, the Canadian Canola Growers Association said:

The measures announced in yesterday’s Bill, along with other efforts recently implemented demonstrate that Government is listening to farmers concerns.

This legislation is not the final step. Our government will continue to engage the full value chain and the provinces to look at the challenges of transporting this year's record harvest and identify all and any improvements moving forward. At the same time, our government will continue to build a stronger grain sector through an aggressive trade and innovation agenda.

We are looking forward to the debate in the House today. This legislation will be moving to committee as soon as possible. I do look to my colleagues in the other parties to support this important legislation before the House.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

moved that Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures, be read the second time and referred to a committee.

Agriculture and Agri-Food

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

Mr. Speaker, as I mentioned, Bill C-30 is important and very good legislation. This legislation would help to correct the problem that farmers are having moving their grain to port. It would impose transportation requirements of one million metric tonnes of grain moved to port each and every week by the two railroad companies. It would impose fines of $100,000 per day for non-compliance.

I have quotes here. The Manitoba minister of agriculture states, “The Manitoba government supports this move”. The Alberta minister of agriculture says, “We are pleased that the federal government has brought forward the fair rail for grain farmers act.”

I would ask that member and his party to support this key legislation.

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

Mr. Speaker, the last time legislation was put before the House to deal with the grain transportation issue, the government ignored all the good advice it got from farmers. It voted down every single amendment that farm groups proposed, and because of that it has this $8 billion grain crisis on its hands now.

When farmers, provincial governments, and even its own parliamentary secretary are saying that Bill C-30 is not good enough, is the government finally going to listen? Will it protect short lines and producer cars?

Offshore Health and Safety Act

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, the member made reference to grain. In the Prairies, we are really sensitive these days on the issue of grain and the transportation of grain. In fact, I would have loved to have seen us debating Bill C-3 today. I know that my colleague, the Liberal Party critic for agriculture, wants to see that bill get to committee, where we can hear from farmers and other stakeholders.

The Liberal Party has long been very supportive of efforts that would ensure protective measures in occupational health and safety. We appreciate that this is something being driven more by our provinces than by Ottawa.

We recognize how important it is to have those offshore industries, which provide all sorts of economic opportunities and so much more in terms of wealth for all Canadians. There is a lot happening on the east coast. One does not have to be an eastern member of Parliament to have an appreciation for what is taking place there. I am very happy to see the prosperity.

Having said that, it is important to have labour laws and occupational health and safety measures enshrined. This is what this legislation is going to do. It has fallen short, to a certain degree, but it is a strong step forward. We give the government credit for that.

I wonder if the member might like to comment on what she believes would have given more strength to the legislation we are going to pass.

Business of the House

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

Mr. Speaker, I first want to say here what I said on Twitter last week; that is, I would like to thank the hon. member for Skeena—Bulkley Valley for the working relationship that we have enjoyed over the last couple of years. I wish him well with his new critic responsibilities.

Now let me thank the hon. member for Burnaby—New Westminster for his first Thursday question. I welcome the hon. member to his new role as the House leader of the official opposition. I have been told by my staff that he is the tenth House leader from across the aisle with whom I have had the pleasure of working.

While I am confident that his predecessor has briefed him on our government's approach toward facilitating a hard-working, productive, and orderly House of Commons, I see that he has already fallen into one of the grievous errors of his predecessor. For a whole bunch of reasons, I would encourage him to look in some detail at the House of Commons rules and procedures.

For example, he was concerned with time allocation and referred to it again as limiting debate, yet when he reviews the rules, as I know he is going to, and I know he will do that with some enthusiasm in the near term, he will notice citation 533 of Beauchesne's Parliamentary Rules and Forms of the House of Commons of Canada , sixth edition, which reminds us that:

Time allocation is a device for planning the use of time during the various stages of consideration of a bill rather than bringing the debate to an immediate conclusion.

That is what we have always tried to do here: schedule debates so that we can make decisions, have fair and adequate debate, and give members of Parliament an opportunity to decide questions. It is not to curtail debate; it is to schedule and facilitate decisions being made. I hope that the member will have regard for those rules, something that had escaped his predecessor.

However, I should say that I do look forward to working with him on our business in the future. That said—and I hope that he will not take personal offence to this—in our scheduling of these matters, we will continue to work off of the Gregorian calendar, not the Julian calendar.

Today, we will continue the third reading debate on Bill C-5, the Offshore Health and Safety Act. Tomorrow, we will start the second reading debate on Vanessa’s law, Bill C-17, the protecting Canadians from unsafe drugs act. Monday will see the third day of second reading debate on Bill C-20, the Canada-Honduras Economic Growth and Prosperity Act.

That is one that I know he is a great supporter of.

Tuesday, April 1, shall be the first allotted day. It being April 1 after all, I assume that the NDP will ask us to debate one of its economic policies.

Finally, starting on Wednesday, we will debate our spring budget implementation bill to enact many of the important measures contained in economic action plan 2014, our low-tax plan for Canadians, as we make further progress on balancing the budget in 2015.

I might also add that with regard to the grain situation, Bill C-30 is now before the House. There have been very positive discussions among the parties to date. I hope that they will lead further to being able to have that bill passed through at least second reading on a fairly constructive basis. I hope those discussions will yield fruit, in which case there might be some change to the schedule I have presented to the House today.

Fair Rail for Grain Farmers Act

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

moved for leave to introduce Bill C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and to provide for other measures.

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