Bill C-49 (Historical)

Transportation Modernization Act

An Act to amend the Canada Transportation Act and other Acts respecting transportation and to make related and consequential amendments to other Acts

This enactment amends the Canada Transportation Act in respect of air transportation and railway transportation.
With respect to air transportation, it amends the Canada Transportation Act to require the Canadian Transportation Agency to make regulations establishing a new air passenger rights regime and to authorize the Governor in Council to make regulations requiring air carriers and other persons providing services in relation to air transportation to report on different aspects of their performance with respect to passenger experience or quality of service. It amends the definition of Canadian in that Act in order to raise the threshold of voting interests in an air carrier that may be owned and controlled by non-Canadians while retaining its Canadian status, while also establishing specific limits related to such interests. It also amends that Act to create a new process for the review and authorization of arrangements involving two or more transportation undertakings providing air services to take into account considerations respecting competition and broader considerations respecting public interest.
With respect to railway transportation, it amends the Act to, among other things,
(a) provide that the Canadian Transportation Agency will offer information and informal dispute resolution services;
(b) expand the Governor in Council’s powers to make regulations requiring major railway companies to provide to the Minister of Transport and the Agency information relating to rates, service and performance;
(c) repeal provisions of the Act dealing with insolvent railway companies in order to allow the laws of general application respecting bankruptcy and insolvency to apply to those companies;
(d) clarify the factors that must be applied in determining whether railway companies are fulfilling their service obligations;
(e) shorten the period within which a level of service complaint is to be adjudicated by the Agency;
(f) enable shippers to obtain terms in their contracts dealing with amounts to be paid in relation to a failure to comply with conditions related to railway companies’ service obligations;
(g) require the Agency to set the interswitching rate annually;
(h) create a new remedy for shippers who have access to the lines of only one railway company at the point of origin or destination of the movement of traffic in circumstances where interswitching is not available;
(i) change the process for the transfer and discontinuance of railway lines to, among other things, require railway companies to make certain information available to the Minister and the public and establish a remedy for non-compliance with the process;
(j) change provisions respecting the maximum revenue entitlement for the movement of Western grain and require certain railway companies to provide to the Minister and the public information respecting the movement of grain; and
(k) change provisions respecting the final offer arbitration process by, among other things, increasing the maximum amount for the summary process to $2 million and by making a decision of an arbitrator applicable for a period requested by the shipper of up to two years.
It amends the CN Commercialization Act to increase the maximum proportion of voting shares of the Canadian National Railway Company that can be held by any one person to 25%.
It amends the Railway Safety Act to prohibit a railway company from operating railway equipment and a local railway company from operating railway equipment on a railway unless the equipment is fitted with the prescribed recording instruments and the company, in the prescribed manner and circumstances, records the prescribed information using those instruments, collects the information that it records and preserves the information that it collects. This enactment also specifies the circumstances in which the prescribed information that is recorded can be used and communicated by companies, the Minister of Transport and railway safety inspectors.
It amends the Canadian Transportation Accident Investigation and Safety Board Act to allow the use or communication of an on-board recording, as defined in subsection 28(1) of that Act, if that use or communication is expressly authorized under the Aeronautics Act, the National Energy Board Act, the Railway Safety Act or the Canada Shipping Act, 2001.
It amends the Canadian Air Transport Security Authority Act to authorize the Canadian Air Transport Security Authority to enter into agreements for the delivery of screening services on a cost-recovery basis.
It amends the Coasting Trade Act to enable repositioning of empty containers by ships registered in any register. These amendments are conditional on Bill C-30, introduced in the 1st session of the 42nd Parliament and entitled the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, receiving royal assent and sections 91 to 94 of that Act coming into force.
It amends the Canada Marine Act to permit port authorities and their wholly-owned subsidiaries to receive loans and loan guarantees from the Canada Infrastructure Bank. These amendments are conditional on Bill C-44, introduced in the 1st session of the 42nd Parliament and entitled the Budget Implementation Act, 2017, No. 1, receiving royal assent.
Finally, it makes related and consequential amendments to the Bankruptcy and Insolvency Act, the Competition Act, the Companies’ Creditors Arrangement Act, the Air Canada Public Participation Act, the Budget Implementation Act, 2009 and the Fair Rail for Grain Farmers Act.

Transportation Modernization Act

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

Mr. Speaker, I thank my colleague for the question.

Tabling a bill without proper consultation strikes me as disrespectful. Consulting stakeholders before tabling a bill is the sensible thing to do. Committees can also hold consultations while they are studying bills, that is okay too. However, when the government says that it is going to hold new consultations on top of studies that have already been done and those that will be done by the committee, it feels like overkill. I do not think that there are so many stakeholders interested in transportation modernization, even if we consider every mode of transportation, that a single round of consultations cannot cover all of them in one go.

My colleague already did all that when she sat on the Standing Committee on Transport. The minister did it as well, and the Standing Committee on Transport will do it again for Bill C-49, and the minister is talking about further consultations.

Are we going to fall for that or will we finally accept that this is all about kicking the can down the road to buy time?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I thank my colleague for his excellent work.

In the Eastern Townships, we are mostly affected by the issue of rail safety, and one of our main concerns revolves around the regulation of this specific area of transportation.

I was wondering if my colleague could comment on the presence or absence of measures that deal with the concerns of my fellow citizens in Sherbrooke regarding the number of operators per train. Does the bill address the problem raised in the wake of the Lac-Mégantic tragedy? The lack of oversight is also an issue. Trains are sometimes left unsupervised, without any operator around. Sadly, as was the case in Lac-Mégantic, these trains can go out of control.

There is also the issue of the kinds of materials transported by rail and whether the municipalities can have access to information in real time to deal to accidents. All of these questions regarding rail safety have been raised.

Could my colleague talk about the presence or absence of measures to respond to these concerns, in particular those that feature in the Transportation Safety Board of Canada report that was released after the Lac-Mégantic accident?

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

Mr. Speaker, I thank my colleague for Sherbrooke for his question. To paraphrase the minister, “Railway safety is my first priority.” However, according to Bill C-49, air transportation is also his first priority, and so is maritime transportation. Actually, every mode of transportation is the minister's first priority.

Bill C-49 is not exactly ripe with concrete measures designed to prevent tragedies like the one that happened or make sure nothing like it ever happens again.

The only provisions related to rail safety involve audio-video recording devices that are of no help at all in the wake of a catastrophic event. These are among the many questions that we will have to ask in committee to improve the bill and make sure that the opposition does its job and the government's job by making significant amendments to Bill C-49.

The House resumed consideration of the motion that Bill C-49, An Act to amend the Canada Transportation Act and other Acts respecting transportation and to make related and consequential amendments to other Acts, be read the second time and referred to a committee.

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

Mr. Speaker, before I begin my comments, I would like to note that I will be sharing my time with the hon. member for Guelph.

In commenting on Bill C-49, I will be focusing on the liberalization of the international rules of Canadian airlines.

Canadian travellers and their experiences are top of mind for our government. During consultations conducted by the Minister of Transport, we asked Canadian travellers for their feedback and they were clear. They wanted lower cost air travel, more opportunities for leisure and business travel, and they wanted to see Canada become a more attractive travel destination for visitors. They asked for long-term sustainable competition, which would allow for the introduction of additional air services, improved air connectivity, and perhaps above all, more choice. The government has listened and is committed to achieving tangible improvements to the traveller experience.

As a result of the feedback we received, a number of proposals have been introduced in Bill C-49 to help improve the traveller experience in Canada.

For example, the government intends to liberalize international ownership restrictions for Canadian air carriers. What does this mean for Canadian travellers? Let me begin by briefly describing this initiative.

Like most countries, Canada limits international ownership and control of domestic air carriers. Under the Canada Transportation Act, non-Canadians currently cannot possess more than 25% of the voting shares of a Canadian carrier. Additionally, Canadian air carriers must also be controlled by Canadians, which means they may not be subject to controlling influence by international investors.

Limits on foreign ownership and control of air carriers are the norm around the world. For instance, in the United States, the limit is 25%, while the European Union, Korea, Australia, and New Zealand allow up to 49%, and Japan allows 33.3%. Limits vary depending on the circumstances of each country and the circumstances of each region.

However, Canada's current ownership limits may be acting as a barrier to new services and enhanced competition. Two prospective ultra low-cost carriers, Canada Jetlines and Enerjet, have already applied for and received exemptions to the current limits on international ownership from the Minister of Transport. Both companies successfully argued that under the current 25% limit, there was insufficient risk capital in the Canadian market to support the launch of new services.

Reflecting on this reality and the Canada Transportation Act review recommendations, the government is proposing changes that would allow international investors to own up to 49% of the voting shares of Canadian air carriers by introducing legislation that would amend the act and all other relevant acts.

As mentioned earlier, countries have different approaches to international ownership of air carriers, and our government wants to ensure that Canadian carriers compete on a level playing field. To protect the competitiveness of our air sector and support connectivity, no single international investor or any combination of international air carriers will be allowed to own more than 25%.

The direct impact of higher levels of international investment is that Canadian air carriers would have access to a wider pool of risk capital. This would allow air carriers to be better funded and could allow new carriers, which are otherwise not able to find sufficient risk capital, to enter the Canadian market.

New carriers, including ultra low-cost carriers offering extremely competitive prices, are expected to bring more competition into the entire Canadian air travel sector. This could in turn reduce the cost of air transportation and open new markets to Canadian consumers and shippers.

Small markets currently underserved by existing carriers could also benefit from services by new carriers. For instance, airports in smaller cities that currently offer services to a very limited number of destinations could benefit from the addition of new services, since we know that ultra-low-cost carriers use these smaller airports as their hubs. All of this could lead to more choice when purchasing an airline ticket; more travel destinations for all travellers, including those from smaller cities; and lower prices for Canadian travellers. Additionally, there could also be benefits for airports and suppliers and the entire country as more jobs and more prosperity are added to the Canadian economy.

To finish, let me underscore that the experience of Canadian air travellers is a great priority for the Government of Canada. We know that it is also a priority for Canadians. This is why we have proposed to increase international ownership restrictions for Canadian air carriers. If this initiative is implemented, we believe it could significantly improve the travel experience for all Canadians. Once in place, it could also help lower prices, support increased competition among air carriers, provide more choice to Canadians when it comes to purchasing an airline ticket, and ultimately improve service and connectivity for Canadian travellers.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I thank my colleague for his contribution to the debate on the bill.

As was explained earlier, parliamentarians are being asked to approve a bill containing an air passengers' bill of rights that is not defined. The only information we have are a few quotes by the minister here and there to try to explain it, but in the bill, the air passengers' bill of rights is an empty shell.

How can the member explain that parliamentarians are asked to support a bill of rights without knowing what it will contain? We have been talking about it for a long time.

In the past, one of my NDP colleagues proposed a bill of rights that was well-defined. Almost two years after taking office, the Liberal government has still not defined its own bill of rights. It is always puting it off. What will air passengers' rights be?

How can my colleague explain that parliamentarians are asked to approve or reject a bill of rights that has no content?

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

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

It is very important for the government to have a more competitive air transportation system in which air passengers have more choices. If the air transportation system is more competitive, Canadians will have more rights to decide what they want to do. Let us think, for example, of a family that wants to take a two or three week vacation somewhere. Changing the rules will mean more choices for Canadians. That is very important. Airlines must have the ability to do that. I am completely in favour of making those changes.

[Lloyd Longfield, Liberal, Guelph, ON]

Mr. Speaker, I enjoy sitting on the agriculture committee with the hon. member.

I am going to go back a few years. Before politics I was on the advisory board of the local airport in Waterloo, YKF. We were trying to attract small air carriers to a smaller community to go to other smaller communities, communities that the larger airlines would never service, communities that we could not get the larger airlines into even if we wanted to because of the cost of their operations versus the cost of the other lower-cost airlines that we are talking about in the bill tonight.

When we talk about choice, there is choice between airlines, but there is also choice at the local level in getting air service into communities. Could the member expand on how this could help rural Canada?

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

Mr. Speaker, we are a vast country, and as a government we tend to focus on the big cities. Though not exactly in my riding of Steveston—Richmond East, YVR is a little north. The focus tends to be exclusively on YVR, but that ought not to be the case. By increasing the limits on international funding, the bill allows the smaller centres, like Kelowna, Prince Rupert, all over B.C., and all across the country, the opportunity to expand and develop as hubs. They give choice for folks to travel wherever they want to go. I think this is a welcomed improvement on our transportation system.

[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.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I listened carefully to my colleague's speech on grain transportation in Canada, which is an extremely important issue. He is saying that this part of the bill is very important. My colleague from Trois-Rivières has just moved a motion to divide the bill so as to prioritize grain transportation and to immediately send the bill to committee so it can be passed as quickly as possible. Unfortunately, when my colleague asked for unanimous consent, several nays were heard from the side of the House where he sits.

Therefore, I find it hard reconcile the priority aspect of this part of the bill that my colleague talked about in his speech with the fact that the Liberals have completely refused to immediately deal with this issue at the transport committee so the bill can be passed as soon as possible.

There is indeed an important deadline, specifically August 1, 2017. How can he reconcile that? The Liberals opposed this perfectly reasonable motion. We were not playing procedural games. The goal was merely to speed up the process for this part of the bill.

How does the member explain that some nays were heard from his side of the House, considering he just said how important this part of the bill is?

[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.

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

Mr. Speaker, I have to confess that on the interswitching piece of the legislation, the hon. member for Guelph might be able to further explain how that would deal with the efficient allocation of rail to grain shipments so it reaches destinations in a timely way.

I certainly remember in December of 2013 when Vancouver Island was two days away from being completely out of grain to be milled for livestock to keep the livestock of Vancouver Island farmers fed. It was a very desperate situation. They ended up organizing truck fleets. Of course, that increased the price of getting grain to the mills. The mills were normally competitors, but they were actually pooling what grain they had to share it to ensure that everybody could still produce what they could to get it to the livestock. It was a desperate situation that caught the government off guard. It would not have happened if we had the Wheat Board.

I wonder if the interswitching proposals in the bill will really give us the oversight and the ability to organize rail so we match up when grain needs to get to market with available freight shipments.

[Lloyd Longfield, Liberal, Guelph, ON]

Mr, Speaker, the long haul switching looks at a couple of things. We have mentioned a 1,200 kilometre limit, but also it would be able to break off up to 50% of the haul in situations where that needed to be done, something like the emergency the hon. member described.

Each shipment would be negotiated. Therefore, it is important, when we look at the LHI strategy, that each circumstance would be included in the negotiations for each shipment rather than a one size fits all. It is integrated, it covers all types of equipment, and it is flexible.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

Resuming debate, the hon. member for Richmond—Arthabaska has the floor.

I remind the hon. member that he has 10 minutes before the expiry of the time provided today for the consideration of the bill, but he will have 10 more minutes the next time Bill C-49 is before the House.