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 bill was last introduced in the 42nd Parliament, 1st Session, which ended in September 2019.

Sponsor

Marc Garneau  Liberal

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

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.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

May 22, 2018 Passed Motion respecting Senate amendments to 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
May 3, 2018 Passed Motion respecting Senate amendments to 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
May 3, 2018 Failed Motion respecting Senate amendments to 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 (amendment)
Nov. 1, 2017 Passed 3rd reading and adoption of 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
Oct. 30, 2017 Passed Concurrence at report stage of 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
Oct. 30, 2017 Failed 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 (report stage amendment)
Oct. 30, 2017 Failed 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 (report stage amendment)
Oct. 30, 2017 Passed Time allocation for 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
June 19, 2017 Passed 2nd reading of 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
June 15, 2017 Passed Time allocation for 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

Resumption of Debate on Address in ReplySpeech from the Throne

December 9th, 2019 / 11:45 a.m.
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Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Mr. Speaker, I am going to share my time with the member for North Okanagan—Shuswap.

Though I rose briefly during Routine Proceedings last Friday, this is my first speech in the 43rd Parliament and I would like to take this occasion to give some additional words of thanks. As a temporary custodian of this seat in Parliament, I am deeply honoured to have the enormous responsibility of representing some 140,000 residents as part of a centuries-old tradition of protecting citizens by checking the otherwise unlimited power of the Crown. Parliaments exist in order to ensure that the Crown and its agent, the government, cannot impose itself on citizens without their consent. That consent is granted through votes in this incredible institution.

Once again, I thank the voters of Calgary Rocky Ridge for electing me to be their servant in the House. I also wish to thank the 270-odd volunteers who assisted my election campaign. I thank them for their support, for their commitment to their community and for their love of their country. I could not have done it without them. I would like to thank the other candidates who contested the election in Calgary Rocky Ridge for giving the voters choice, without which there is no democracy.

Finally, I wish to thank my family. My three daughters, it seems I began the last Parliament with three young girls who are now three young women. My loving wife, Kimberley, I thank for her love, her understanding, her patience, her unwavering support and for always keeping it real in the Kelly house. To my parents, Marnie and Duane Kelly, I thank them for their constant love and encouragement.

Today we are debating last Thursday's Speech from the Throne. My response to the Speech from the Throne is coloured by the recent experience of having knocked on a little under 30,000 doors with my re-election team. What I heard on the doorsteps is what informs my remarks and my impressions of the Speech from the Throne.

To be blunt, the government has virtually no support in my riding. That is simply a fact and it is supported by the election results. I knocked on doors in the communities of Calgary Rocky Ridge in every provincial and federal election over the last 30 years as an activist and in 2015 and 2019 as a candidate, and I have never experienced anything quite like it.

It was never easier. People have never been more forthright in coming forward and identifying themselves as Conservative supporters. However, at the same time, I have never had more difficult conversations on doorsteps than I did in this election with people who suggested that they intended to support me, my party and my leader.

For most candidates in most elections, conversations with our own supporters are the easy ones, but not in 2019 in Calgary Rocky Ridge. Some of the conversations I had with supporters were downright heartbreaking. I spoke with people who had not worked in years. I heard from people who told me that they were on the verge of losing their homes. I talked with people whose spouses were working in Texas and coming home for a couple of weekends a month or were working in the Middle East or other parts of the world and only coming home a few times over the course of a year.

I talked with a man who has lived in his neighbourhood for 20 years and he said that since 2015, seven previously stable families on his block had come apart in divorce. Economic stress and anxiety from unemployment and failing businesses have taken their toll on families, tearing apart the very fabric of our communities.

I spoke with people who openly and candidly expressed their despair, anger and incredulity over what they see as a failure of their country to respect their province. For decades, Alberta has welcomed Canadians from across Canada and indeed people from around the world to be a part of Alberta's economic opportunities. It has transferred much of that wealth back to other provinces and continues to do so despite a recession that has been going on for five years.

My constituents are demanding action. They cannot wait. They made it abundantly clear to me that regardless of which party was to form a government after the election, they would expect me to speak clearly and without ambiguity about just how devastating these past four years have been.

They expect me to be candid about just how upset they are with their federal government. They told me that they wanted the no-more-pipelines bill reversed. They told me they were stunned that a tanker ban on Alberta exports was brought in while tankers continued to bring in oil to eastern refineries from Saudi Arabia.

They told me that they could not understand why a government was running such large deficits at a time of economic expansion. They told me that they were appalled by the constant parade of ministers to the Ethics Commissioner, by a Prime Minister prepared to bully his own cabinet and break the law just to get his own way, and by the way the Prime Minister's personal conduct never matches his moral preening.

They told me, at door after door, that the Prime Minister is a constant source of embarrassment on the world stage, and that they do not believe that he is up to the diplomatic challenges of our times, because they believe that he is fundamentally an unserious person.

With the campaign behind us, with the country's divisions laid bare in a minority Parliament, last week the Prime Minister had an opportunity to acknowledge the failings of the last Parliament, which cost him seats and votes in every region of the country.

He had an opportunity to chart a new course to address the concerns of Canadians who rejected his government's track record. Instead, he delivered a speech full of the same flowery language and grand aspirations that we heard throughout the last Parliament with only a few inadequate words for my constituents in a partial sentence, kind of as an afterthought, where he claimed that the government would “also work just as hard to get Canadian resources to new markets and offer unwavering support to the hard-working men and women in Canada's natural resources sectors, many of whom have faced tough times recently”.

Really? “Unwavering support” and “have faced tough times recently”, is that it? Since 2015, hundreds of thousands of energy workers have lost their jobs. Over 100,000 of them are out of work in Alberta right now. There is $100 billion in energy investment that has left Canada since the Liberal government took office.

Encana, which was once Canada's largest company, and TransCanada PipeLines are changing their names to remove “Canada” from their business names and relocating to the United States because that is where the work is. However, all the Prime Minister had to say in his Speech from the Throne was “unwavering support” and “tough times recently”?

The Prime Minister has been unwavering in his stated desire to phase out the natural resources sector, and he is succeeding. One incredibly insulting sentence that contained a flagrant untruth was all the Prime Minister had to say about this in his entire speech.

If the Prime Minister meant what he said about getting Canadian resources to market, it would require him to undo much of the work of the last Parliament. It would require him to repeal Bill C-69 or implement every single one of the Senate amendments that were rejected last spring.

It would require him to repeal Bill C-48. It would require him to champion Canada as a reliable source of ethically extracted resources and to disown his own prior anti-Canadian-energy rhetoric. It would require him to actually take concrete steps to ensure Trans Mountain could be completed. It would require him to apologize for chasing its private sector proponent out of Canada and for having to send $4.5 billion to Texas so they could compete with us by building pipelines elsewhere.

The Liberals think they deserve some kind of credit for buying a pipeline that should never have been for sale in the first place. I can assure them that not one single person I met in my riding, where pipelines are a huge issue, thought that buying it was anything other than a last-ditch solution to a problem 100% of the Liberals' own making.

To sum up, the throne speech contains nothing for my constituents. I received a strong mandate from the people of Calgary Rocky Ridge, and I expect them to hold me to a high standard. My constituents expect nothing less.

May 9th, 2019 / 11:25 a.m.
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Liberal

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

One of our objectives is to reduce costs for passengers. Of course, costs must be incurred for security measures. Users pay for their security, that is to say those who buy airline tickets, but we do not want the cost to be higher than needed.

For airports that are not served by a system such as CATSA, as mentioned in Bill C-49, the modernization of the Canada Transportation Act, airports have access to this system, but at their own expense. It is possible that, in the future, we will review the designated airports, but we don't expect that by June.

March 17th, 2019 / 2:10 p.m.
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Luc Berthold Mégantic—L'Érable, CPC

Thank you very much, Mr. Chair.

First, I want to thank the members of the committee very much for being here. Indeed, the canola issue does not affect only the west, it affects all of Canada as well. Thank you, Mr. Chair, for mentioning that fact.

I also want to thank the members of the committee for having given me some time today as opposition critic for agriculture and agri-food.

This matter is extremely important. As my colleague Mr. Maguire mentioned a few minutes ago, the Barton Report indicates that Canadian exports are expected to increase to $85 billion by 2025. It is clear that stakeholders in the agricultural sector and international trade will have to work hand in hand in the future.

Unfortunately, the Minister of Agriculture and Agri-Food who has been in the position for three years has not taken part in the discussions on international trade. I wanted to mention that, because it is important for agricultural representatives, farmers and Canadian producers to know that the Minister of Agriculture and Agri-Food is an active participant in important activities like international negotiations. When the previous government was in power, the Minister of Agriculture and Agri-Food took part in these international negotiations. Unfortunately, since 2015, no place is being set for this minister at the negotiation tables.

I wanted to mention that fact to the committee because it is important. I strongly encourage you to ask the government to see to it that the Minister of Agriculture and Agri-Food take an active part in the various international negotiations, especially when agriculture is being discussed.

As you mentioned, Mr. Chair, canola is an important part of Canada's agricultural exports. Forty per cent of Canada's canola exports are sent to China. In 2017, this amounted to about $3.6 billion. This is a major crisis, and that is why the members on this side of the table requested emergency meetings. We also asked the Standing Committee on Agriculture and Agri-Food to hold a meeting on this subject, but unfortunately, for all kinds of reasons, our NDP colleague could not approve such an emergency meeting.

I commend the decision of the Standing Committee on International Trade to hold this meeting, because it is very important to show Canadian canola producers as well as all other Canadian agricultural producers that their government, their Parliament and their MPs are concerned and are focusing on what is happening to relations between Canada and China.

What is at stake is maintaining the trust of buyers and of producers who export their products, as well as the agreements that were established. Unfortunately, doors are closing. Companies have stopped buying and producers are stuck with their products. We absolutely have to head off this situation, all the more so since there are already issues with grain transport to the west despite the adoption of Bill C-49. We thought that this project would miraculously solve everything and allow the export of Canadian products. We thought it was a panacea and that everything would be settled as if by magic. This year we can already see that that is not the case. We are going to have to be even more vigilant in the future.

The trust of producers and buyers is at stake. Buyers have to know that Canadian producers can provide the merchandise. Without going into all of the details of the context and of China's claims, it's important to know the political response of the Canadian government to this situation.

That is why I unreservedly support the motion that this committee to simultaneously invite the Minister of Agriculture and Agri-Food, the Minister of International Trade Diversification , and the Minister of Foreign Affairs. This is a political crisis, and we have to obtain answers from the people who are politically responsible for the current situation.

More than half of the agri-food products grown in Canada are exported, which makes agriculture highly dependent on exports and international markets. We can't simply observe this crisis and expect it to magically resolve itself.

I strongly urge the members of the committee to hold this meeting with the three ministers as soon as possible. This crisis urgently needs to be resolved. We cannot wait for other productions to be threatened or for the advent of new obstacles to the Chinese market. We must react as quickly as possible.

I know that the budget will be tabled this week, but I think that nothing prevents the members of the committee from showing good faith. We can hold a meeting with the ministers as early as this week, at any time of the day or night. We are here today on a Sunday, which proves that we are willing to travel at any time. We are ready to receive the ministers and you will have the full support of the opposition if you decide to hold this meeting this week at any time of the day. We are available.

The members of the committee are ready to hold this meeting to shed light on this topic and obtain answers to the questions of Canadian canola producers with regard to the current crisis.

November 27th, 2018 / 10:35 a.m.
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Conservative

Earl Dreeshen Conservative Red Deer—Mountain View, AB

Thank you.

I guess one of the things that we should find out is just where the regs are, as far as Bill C-49 is concerned. That's always an issue. In order for this to work well, we have to make sure that we recognize that's part of the system as well, the process of making sure those regs are done.

Just quickly perhaps, David, could you talk about the corridors? Where I am, I know that when CN and CP want to ship a lot of grain, they'll take it all out of our spot, which is great, but there are a lot of places in Saskatchewan and northern Alberta that have problems.

November 27th, 2018 / 10:20 a.m.
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Policy Manager, Canadian Canola Growers Association

Steve Pratte

I'll speak quickly to your question. We all know this, but we just need to remain cognizant that we're still in the early shadows and aftermath of Bill C-49. It only received royal assent on May 23. August 1 is the start of the grain year that all of the planning and reporting goes into. We're still just several months out from that, so I think we need to give that a little bit of time to see the true effects of some of those commercial tools, as the shippers and railways try to either negotiate under that new framework or use some of the mechanisms that are at the shippers' disposal.

As far as the grain transportation system goes, and not to belabour the point, I think we're at a new equilibrium, if you will, on the communications side of things. Part of that is dictated by Bill C-49, and part of that is just all parties getting their acts together and increasing communication over what we've seen in the last several years.

Again, we need to let some time elapse, so that we can give more of a critical analysis of what we've been able to do as an end-to-end supply chain.

November 27th, 2018 / 10:15 a.m.
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Executive Committee Member, Board of Directors, Grain Growers of Canada

David Bishop

At the moment, to my knowledge, nobody has applied for interswitching. The railways could answer that better than I could.

As long as shipping is good, I don't think you'll see it used. I think if there comes a time when there is a delay for some reason, especially in the southern Prairies, the interswitching will likely be used. That's one of the things we're waiting to see with Bill C-49—all this stuff that's been implemented.

I appreciate the Senate amendments. They were really needed and I congratulate you guys on getting that all done.

Everything is going pretty well right now. In my mind, we'll see how good the bill really is when we have something go wrong

November 27th, 2018 / 10:15 a.m.
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NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Mr. Bishop, when Jeff Nielsen was here in March, he had been in the room listening to CN and CP Rail's plans at the time. I had asked him at the time if he felt very optimistic. In summary, he basically said no, and then underlined that Bill C-49 was really needed.

We did make an attempt to get the railway provisions of that bill sped through as quickly as possible. That being said, it's all done and dusted now.

With respect to the interswitching provisions, have you noticed any improvements or is it too early to tell?

November 27th, 2018 / 10:15 a.m.
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Policy Manager, Canadian Canola Growers Association

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.

November 27th, 2018 / 10:10 a.m.
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NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Thanks, Mr. Bishop and Mr. Pratte, for appearing today. I'm already noticing a bit of a contrast from testimony we heard in March. It seems to be a little bit more hopeful and optimistic, with the caveat that we still have the majority of winter coming our way.

Mr. Pratte, in your opening remarks you noted that the reporting that is now mandated under Bill C-49 could use further refinement.

Mr. Bishop, you also mentioned that you needed to see more details from railways on their planned minimums. Are these two related in terms of the more data you'd like to see?

November 27th, 2018 / 10:10 a.m.
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Executive Committee Member, Board of Directors, Grain Growers of Canada

David Bishop

I'm encouraged by the wording in the bill and that, but our worry is what will happen when this actually, one day, does happen. Hopefully it never will, but if it does happen, we're wondering how this is going to work through the bill. How does it apply and who does it? There are a lot of questions on my mind as a producer on how Bill C-49 is going to work when something does go sideways.

November 27th, 2018 / 10:10 a.m.
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Policy Manager, Canadian Canola Growers Association

Steve Pratte

I will take that one first.

On reciprocal penalties, I think there are two things to think about. For instance, the railways will say that a very high percentage of the current traffic falls under reciprocal penalties. They are talking about a per car debit/credit.

I'm not speaking for the grain companies, obviously, but I think their conception is bigger. We're not concerned about $200 per car here and there. We're talking about the value of that being $1 million. Let's have something with a bit more skin in the game and on the table.

To my understanding, under the amended process for the arbitrated SLAs under Bill C-49, encouraging.... I'm not aware—that would be commercially confidential—if anyone has stepped up to try to use that new tool in the tool box, but certainly as a concept with a legal backing, it is something I know that the shippers of grain are happy about and pleased with. Again, you might need to talk to them about more of the detailed nuances of it and whether they have started to use it.

November 27th, 2018 / 10:05 a.m.
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Liberal

Lloyd Longfield Liberal Guelph, ON

Thank you, and it is giving Tuesday. I have to think of how I can reciprocate.

Bill C-49 introduced the idea of reciprocal penalties so that when there's a surge of demand and the grain elevators aren't able to access cars, there are penalties. It seems to me that would be a flag where, if there was a reciprocal penalty demanded, there would be a root-cause investigation to see why we had to go through this.

Has your association discussed, I guess, the opportunity or challenge those reciprocal penalties provide when we see a surge in demand?

November 27th, 2018 / 9:55 a.m.
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David Bishop Executive Committee Member, Board of Directors, Grain Growers of Canada

Good morning, and thank you for inviting me to present on this important issue. I'm glad to be here representing the Grain Growers of Canada, 65,000 grain farmers from coast to coast.

My name is David Bishop, and my wife, Mary, and I farm in Barons, Alberta. We produce cereals, oilseeds and pulses on 3,500 acres, including 640 acres of irrigation. My family's farming history in Canada dates back to 1910, and I began farming with Mary's parents in 1986. Currently, I'm also vice-chair of Alberta Barley, and I am past-president of the Alberta Seed Processors. I am proud of my involvement in commodity organizations and feel it is important for farmers to come to Ottawa to speak to you directly on these issues.

I would like to start by thanking this committee for the work you have done and continue to do on transportation. Transportation is an important issue for farmers across the country, and your past hearings, including the special hearing you held in March, helped to shed light on the challenges we have faced and has helped ensure the right solutions are put in place.

As this committee is aware, prairie grain farmers are almost entirely dependent on the rail transportation system to get our products to market in a timely manner. The unfortunate reality is that poor railway performance has prevented that from happening on almost regular five-year intervals. It is my hope that actions over the last year will help break the vicious cycle that has left farmers in a critical situation where we can't move our grain. As you know, when we can't move our grain, we don't get paid.

While my grain is moving well right now, the delayed harvest means that this year has not been without challenges. I experienced a five-week delay and a reduction in grain quality due to the bad harvest conditions and will now be counting on reliable grain service to move what I did get off.

The passage of Bill C-49 is a significant achievement for the rail shipping industry in Canada. It brings in measures long called for and rebalances the competitive environment. I appreciated the comments from CN and CP in the first hour of this meeting and would like to recognize that both railways have been reaching out to engage our group, the Grain Growers of Canada, and other groups to build strong relationships. Such outreach gave me hope for the future, and I look forward to continuing this relationship.

We've also been pleased to welcome investments in the new infrastructure, including the ordering of new hopper cars by both CN and CP. These critical investments are a clear indication that the bill has provided security of return on investment that the industry needs. Infrastructure has been degrading for many years, and it will take a significant injection of funds to ensure that the rail system can meet the needs of the industry as we continue to grow and meet the government's export goals. We hope to see many such announcements in the future.

I would like to take a minute to address the reports that have been released by the two railways. The new grain report and winter report are steps in the right direction. It is promising that they have been accompanied by an increase in engagement between the government, railways and the grain value chain. However, improvements are needed to get to the point where grain farmers can be confident that Bill C-49 will deliver transparency and collaboration that works.

A significant challenge with the plans that have been released is that the railways only commit to targets or maximum movement levels. They provide no indication of a minimum amount, and as such the railways could move substantially less grain and still declare it a success. Grain farmers need the railways to provide details on their planned minimums, and that information needs to be provided by corridor.

As I said earlier, grain farmers welcome the important investments being made by railways in new high-capacity hopper cars. However, the plans released by the railways continue to provide movement targets in line with historical averages. Given the continued growth that is expected in the grain sector, the reports provide little evidence of how the railways plan on meeting that increased demand. It is also worth noting that while the reports released to date speak to the apparent uncertainty in the supply chain, what is certain is that grain farmers need grain shippers and railways to move as much grain as possible between October and March when demand for Canadian grain is at its highest. This is essential for supporting a profitable farm gate.

What has become increasingly clear over the last five years is that we need ongoing oversight and engagement from this committee, the government and the Canadian Transportation Agency to hold all members of the supply chain to account to get the rail freight service that grain farmers need. It remains crucial that the government continues to closely monitor performance by the railways and is prepared to enforce the new regulations as necessary.

We are a mere 15 weeks into the new crop year, and we're just now moving into the critical time where performance typically will start to degrade, if it is going to. Around this time last year my industry was trying to raise alarm bells for what was to become a severe grain shipping backlog. These alarms fell on deaf ears, and these things are too important to be left to chance.

As all farmers say, winter happens every year. Time will tell if the plans the railways put forward will be up to the challenge of keeping grain moving across the Prairies and out to port. From what I hear, grain is moving pretty well and that is great news, but it needs to be sustainable.

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

November 27th, 2018 / 9:50 a.m.
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Steve Pratte Policy Manager, Canadian Canola Growers Association

Good morning, Chair, and members of the committee. I'm Steve Pratte, Policy Manager at the Canadian Canola Growers Association.

Thank you for inviting the CCGA here this morning to discuss our perspective on grain movement this year. The Canadian Canola Growers Association is a national association governed by a board of farmer directors. It represents Canada's 43,000 canola farmers from Ontario west to British Columbia. As members well know, grain farmers critically rely on transportation to move our products to continental customers and to terminal position for export to our global customers.

In terms of canola, Canadian farmers grow a truly global crop. We are the world's largest exporter of this highly valued oilseed, and in any given year, over 90% of Canadian canola, in the form of raw seed or the processed products of canola oil or meal, is ultimately destined for export markets in more than 50 countries. In 2007 this amounted to $11.4 billion in sales.

Turning specifically to the movement of grain in this 2018-19 crop year, we have been very pleased with the recent aggregate performance of the grain supply chain. As we heard this morning, by various measures railway performance in the grain sector has been very strong, not only in total volume moved in the first 16 weeks of the crop year but also in terms of the various week-to-week performance metrics such as railway hopper cars supplied against shipper demand.

With any complex system, aggregate performance can mask specific issues, which in the grain supply chain often occur within the first and last miles of the movement and are very often specific to location or facility. Despite farmers' overcoming a challenging and late grain harvest in many areas of western Canada, the total system's performance has supported the relatively free flow of farmer grain deliveries into the country elevator and domestic processing streams, and the export of products continentally and abroad.

This is a good-news story—on balance. The grain supply chain to date has been relatively fluid. The performance of the railways in their service to our shippers, being the critical link between the elevator and terminal, is to be noted and given credit.

That stated, in western Canada we are now entering the annual period of lowering temperatures that will bring sustained system operational challenges and complexities, particularly, as we heard again this morning, for the railways. We encourage all supply chain partners to continue to work together to mitigate supply chain risks and swiftly deal with emergent issues.

To that end, it is worth making very brief mention of some of the early effects of recent changes to the legislative framework governing rail transportation in Canada that directly and indirectly impact winter railway operations.

Firstly, Bill C-49, the Transportation Modernization Act, contained a new feature aimed at enhancing annual communication and coordination of grain stakeholders: the annual publication of the August 1 grain report and the October 1 winter contingency report. The railways were given latitude in the preparation of these reports, and they did interact with grain shippers and stakeholders in the development of their inaugural publications. The grain sector is of the opinion that these reports are a good first step and that they could use some further refinement in the future.

Through this process and other corporate actions undertaken by the companies, the railways have certainly introduced a greater degree of communication and information sharing with the broader grain sector than existed even five years ago. I'll tip my hat to them for that.

In any year there will no doubt be specific or localized issues that arise, such as major line interruptions, and sometimes these will produce knock-on effects impacting a larger geographical region and extending deeper into the supply chain, essentially creating backlogs. Thankfully, this has not occurred to date, and hopefully it won't this year.

The real effect of these backlogs is that they negatively impact the farmers' ability to satisfy existing contract obligations with their grain buyers or their ability to sell into buoyant markets to receive payment to support their businesses, and ultimately, their families. In short, as members on this committee would know, if there's no grain delivery, there's no farmer payment.

If and when disruptions do occur, hopefully the suite of measures communicated to government and stakeholders in the railway winter contingency plan will suffice to bring a return to normal operations in quick order.

Secondly, Bill C-49 appears to have effectively dealt with the policy issue of the aging grain hopper car fleet. By amending several details in the calculation of the maximum revenue entitlement formula, the bill has had the intended effect of unleashing investment by both railways in the new generation of hopper cars, with announcements emerging from both companies immediately following the bill's receiving royal assent.

It should be noted, though, that farmers are ultimately paying for this railway investment through the structure of the maximum revenue entitlement, but it is a critical investment required to modernize the rolling stock. As the railways begin taking ownership in the coming months and continued fleet renewal occurs over the next several years, this is expected to produce significant increases in the efficiency of our grain supply chain when coupled with shortening cycle times and new train configurations, essentially allowing the system to move more with less.

Although the impact on this winter's movement may be negligible, moving forward, this will have a welcome and positive effect as the cars have a 50-year service life, and this will literally have positive impacts for more than a generation.

Finally, Canada has an aggressive trade agenda supported by recent trade agreements, and the agricultural sector plays a major role. Canada's canola sector and broader agri-food sector are focused on sustained, long-term growth, and this has been identified as a near-term driver of the Canadian economy.

The recent report of the economic strategy table challenged the agri-food sector with an ambitious target of $85 billion in annual exports by 2025. The service provided by our two major railways will play a major part of supporting the sector's realization of this goal, as will the port of Vancouver.

CCGA encourages members to consider the critical infrastructure issues in the port of Vancouver and what the role of government, be it policy, programs or investment, could be. It is time to ensure that long-term capacity is in place to sustain this national economic activity, and this may require some bold approaches to the regulatory and investment environment. In particular, the critical last mile of the grain supply chain into the port of Vancouver should be assessed and addressed.

In closing, this year we are heading into the winter optimistic but realistic about the railways ability to sustain their service to the grain sector and, more broadly, all commodity shippers.

Thank you for the opportunity to be here this morning.

November 27th, 2018 / 9:05 a.m.
See context

Liberal

Lloyd Longfield Liberal Guelph, ON

Thank you, and thanks to both companies for coming in to give us an update.

As you know, at the beginning of last year, we had an emergency meeting to talk about the dire situation we were facing. It looks like we've had some progress. I know we've had some progress legislatively through Bill C-49.

Part of Bill C-49 talked about data sharing and transparency between the networks. How is that going between CN and CP, in terms of transparency of capacity, data sharing between the rail lines, and interchanging opportunities because of that?