Agriculture Committee on June 2nd, 2009

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair, and thank you, gentlemen, for coming out this morning and this afternoon. It's been enlightening for sure.

I guess my first question will be to you, Mr. MacKay. The level of service is always an issue at the farm gate, and it has been in a quite substantial way. As a farmer, what always bugs me is that we have these things called computer programs, with programs such as Outlook on them that have a calendar. We'll have the trains phone and say “Yes, the train is going to show up on Friday. You have 24 hours to load that train, and if you don't load it in 24 hours, we're going to start charging you an hour and twenty flat.”

That Friday comes along. As Mr. Farmer, I load all my trucks on Thursday. I'm three and a half hours from the terminal, so I load my trucks, because I know that train is going to be there on Friday. They said it would be there on Friday, so it's going to be there Friday.

Heaven behold, Friday comes along, my trucks are on the road, and your train doesn't show up.

Who should pay for that? I know that right now the person paying for it is the farmer. But who should pay for it?

[Cliff Mackay]

That's a good question. I think the nature of the contractual relationship in this context is going to be one of the key questions that comes up in the service review. I will tell you frankly that it varies all over the map, depending on the individual shipper and what goes on.

The reason my members, particularly the larger members, are becoming more insistent all the time on demurrage charges and this sort of thing is that one of the fundamental changes that has taken place in railways, particularly in the last 10 years, is a clear indication that if you're going to be productive, competitive, and profitable, you must keep your assets moving. It's no different from any other kind of transportation business. Over many years, one of the big issues in railways was that their performance in that context was, frankly, not very good in the old days.

[Randy Hoback, Conservative, Prince Albert, SK]

I'd say it's not good right now, and I have some strong concerns with that. Mr. Easter mentioned what it's costing farmers. That doesn't show up in any report. As a farmer, all of a sudden I could have five or six trucks on the road, because it's no longer one three-tonne load of grain; it's three or four B-trains. I've got a neighbour who actually has to ship out three B-trains a day, so when you guys hiccup, it hics him up.

You don't seem to appreciate that. You don't even seem to care. I know you mentioned that guy's phone number; if we put it in the The Western Producer, I think he'll get a lot of phone calls.

[Cliff Mackay]

That's fine. He's said that. Quite frankly, he has told me on more than one occasion, “If you have a specific complaint and it's CP rail, tell them to call me.”

[Randy Hoback, Conservative, Prince Albert, SK]

Okay. That's good to know.

Mr. Schmeiser, you talked about wholesale financing. I just want to touch on that, because it is a big issue. I come from a background of Flexi-Coil and then Case New Holland. Because Flexi-Coil is a small short-line company, wholesale financing is very important.

I understand the minister has said he is rather hopeful that FCC is going to step in on that. Can you give us an update on where that's at?

[John Schmeiser]

Absolutely. First of all, on the retail side, we're very grateful that FCC has entered the market, because they're providing the most competitive retail finance program in the equipment industry right now.

We've met with FCC numerous times to encourage them to get into the wholesale finance business. We do not view their cost of funds as the barrier that other finance companies may have.

Through these numerous discussions, they have told us that at this time they are not prepared to put in place a wholesale finance program. It would take them 12 to 18 months to do that. They don't have the system in place; they would have to build that system to actually provide that service to our members. For the time being, all they are going to do is tweak their advancer loan program, which is pretty much a short-term solution; instead of requiring a piece of equipment for security for lending purposes, they want the security to be on the land and the building.

We're hopeful that our continued discussions with them will lead to a better solution.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

Mr. Mains, I used to be quite involved in exporting into eastern and western Europe. I can definitely talk about the MacDon family and their industry. MacDon is a great organization and a great company that sells all over the world. You mentioned their name and that they're having problems. I've heard little inklings of that, but you're the first one to identify it.

Do you have any suggestions on how we should handle it?

[Howard Mains]

One thing the members of the committee can do is speak to the Minister of International Trade, who is going to be meeting with his Russian counterpart three weeks from today, and put this on as an issue to be addressed between the two ministers. That would be of great help. I'm sure that whether it's MacDon in Winnipeg or the folks who make air seeders out in your neck of the woods, the companies would be quite grateful for that.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay, good.

I don't want to leave you out, Ron.

The opposition leader keeps on talking about a carbon tax. How would that affect your industry?

[Wayne Easter, Liberal, Malpeque, PE]

I have a point of order, Mr. Chair. The member knows that's not true. I don't know why they perpetuate these myths.

[An hon. member]

He said it.

[Wayne Easter, Liberal, Malpeque, PE]

No, he did not. Get off it, guys. Get off it.

[Randy Hoback, Conservative, Prince Albert, SK]

I'd like an answer to the question, Mr. Chair.

[The Chair, Conservative, Larry Miller]

Mr. Lennox, answer it briefly, if you can.

[Ron Lennox]

The cost would simply be passed through to the shippers of goods. We handle our fuel charges through a surcharge; as the price of fuel goes up and down, people who use our services pay more or less for those goods to be shipped. My feeling is that if there were a carbon tax, it would simply be more expensive to ship goods.

[The Chair, Conservative, Larry Miller]

Go ahead, Mr. Eyking.

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

Thank you, Mr. Chair.

Thanks to the guests for coming here today.

Last week we had visiting Ottawa the Federation of Canadian Municipalities. Some of the things in their report, especially on the conditions of secondary roads and short-line railroads.... They said it was almost coming to a point of no repair, which will have a future impact on these rural areas. You mentioned how many goods come out of the rural communities.

So what needs to be done? What lead should the federal government be taking now, especially when you look at the fact that we're supposed to be rolling out this infrastructure? How can we put more into those secondary roads and secondary lines?

Second, how could this government help you to be more efficient with your equipment, such as locomotives and trucks? Some other countries are pushing for equipment--there was talk here about tractors--that would help when you're idling and stopping and things like that. What is out there that could help your industries be more efficient and environmentally friendly?

Those are my two questions.

[Ron Lennox]

In terms of the condition of rural roads, roads are a provincial responsibility, but we've always felt that the federal government could do a better job of allocating the diesel fuel tax to highway infrastructure through federal-provincial agreements with the provinces. The current tax is 4¢ per litre. I've got to admit, it's been a while since I've looked at the numbers, but the federal government puts just a small fraction of that back into the road infrastructure. It's been a long-standing position of ours that we'd like to see more of that money go back to the provinces so they can maintain their road infrastructure.

In terms of specific things that we can do, if I understand your question correctly, to make our operations more efficient, I've mentioned some of the things that are coming in terms of border crossings, in terms of electronic manifests, which I think are a good thing. There were some hiccups as we introduced them, at least as the U.S. introduced them, but we'll get over that hurdle, and that will help.

I can give you an example of one efficiency measure that we'd like to see. When trucks idle, to keep the cab warm or cool, it burns a lot of fuel. There are devices out there called auxiliary power units, APUs. At one time, NRCan had a program to help fund these things. Those are the sorts of programs we'd like to see. We'd also like to see the provinces allow some discretion on weights. For example, if an APU weighs 600 pounds or 800 pounds, we'd like to see additional carrying capacity, because that's money out of our pockets.

There are lots of things that could be done.

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

Are you suggesting they should be more standardized across the country, amongst the provinces?

[Ron Lennox]

What should be standardized?

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

Rules.

[Ron Lennox]

Absolutely. We have ten provinces as well as the territories. They all set their own weight and dimension limits, for example. It does make it complicated for the trucking industry. We also obviously operate cross-border, so we have to deal with U.S. limits.

So yes, there's a whole slew of things on the trucking side that are inconsistent from one part of the country to another.

[Cliff Mackay]

On the rail side--I've already spoken briefly on the short-line issues--very pragmatically, the programs are ready to go. What needs to happen is some political decision-making to say, “Do it now.” That decision-making has to come directly out of the provincial government ministers who are directly responsible for the stimulus program and, on the federal side, of course, out of Minister Baird's office.

Frankly, we've been ready to go. I'm very concerned that we're going to find ourselves in a crisis mode fairly soon, with a few railways across the country. We would like to avoid that, if possible. Anything this committee can do on that side....

On the technology side, it's very similar to trucks. We're spending a lot of time and money on fuel efficiency issues, going to what's called type 4 EPA standards for locomotives. We already have systems that will shut down our systems, hybrid locomotives for yardwork, and a whole range of different technologies.

The big issue is to focus more time and money on technology development in these areas. We've been pushing the federal government to get back into the transportation R and D business in a much more substantive way. They essentially exited the business in the nineties, when we had to deal with the deficit. While they have a couple of small, fairly effective programs, they are not significant players in the way the FRA and other agencies in the U.S. are.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, witnesses, and thank you, Mr. Chair.

Mr. Lennox, I just have a comment. You mentioned that you'd like to see the federal government doing more in terms of gas fuel tax. I think you mentioned diesel.

Just for clarification, the Federation of Canadian Municipalities, a number of years ago, had asked for the gas tax to go back up to 5¢. So that actually was to be on a program that we accelerated, and now they get all of that 5¢.

The provinces, quite honestly, also collect a tax. I think what you will find is that they also have that option of doing something within their own tax structure. Something that wasn't done prior to our coming in is we've actually increased the transfers to provinces. We've done equalizations that were not there before. I think in terms of what the federal government has done for roads and what we've done for municipalities and what we've done for provinces is likely much more than has been done for generations, quite honestly. So I think in terms of that gas tax going back up, we all understand the need for infrastructure--that being roads--and I think that's where we've stepped up to the plate on it.

Mr. Schmeiser, you made a comment earlier regarding California, with the tier 4 engines. I may have got it wrong that they will actually determine that it's going to be tier 4 engines that will be used.

Are they large enough, then, to determine that this is what is needed for North America and that all manufacturers now will do that, whether it meets the requirement of the provinces or a state or the rest of the country?