Agriculture Committee on Dec. 9th, 2010

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

Thank you, Mr. Chair.

We have a big country. It's a northern country. We have a small population. With our transportation systems, sometimes it seems as if Air Canada and the rail companies almost have a monopoly.

As Canadians, we sometimes have to give them leeway because of their costs, I guess, but oftentimes, we get less service than our neighbours to the south. They have more competition, as maybe they have the economies of scale, and they get a better price.

What we see in the United States in the rail industry is that there's a lot of investment going into the rail industry there, especially out west. We had Warren Buffett and his investing companies putting a lot of money into rail service in the western United States.

Much of the time, we're trying to protect our ports and we're trying to protect our airports in keeping our east-west links happening. You talked about alternative competition for transportation in the Ukraine, the States, and Australia, which have their water very close.... It's not going to happen here. We have to use rail, which is a given for the foreseeable future.

Are there ways that we as government could encourage going through the U.S. more, for instance, and using their ports if our canola is going to Asia or our wheat is going to the Arab countries? Maybe that would result in more competition. Maybe that would smarten up our rail people. I don't know. I know it doesn't sound very Canadian, but at the end of the day, we have to compete with these other suppliers of grains. If we don't have the best transportation system available....

Are you people open to that? Is it possible to have more north-south shipping so that you would ship your grain through United States ports to get to your markets?

[Allen Oberg]

I certainly agree with your statements that western Canadian farmers are captive to rail. The distances are too great for trucking and we don't have access to a river system, so we're dependent on rail. The other factor is that on a percentage basis we export much larger amounts of grain than our American counterparts.

One thing that's happening in western Canada is that a large number of short lines are taking over some of that system. Providing some protection for those short-line operators so they can stay in business is something that government can do.

The other thing government can do is to protect what infrastructure still remains. People think that consolidation of the system is over, but it's still happening. Bit by bit, that precious infrastructure is being lost. Once it's gone, it's gone forever. That's another thing that I think governments can look toward doing.

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

Can you talk a little more about protecting some of the assets?

[Allen Oberg]

Sorry--on what?

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

You were talking about protecting some of the assets we have in Canada. Are you talking about the rail sidings and the short lines for farmers...?

[Allen Oberg]

One thing is that when a piece of rail line is to be abandoned, there's always salvage value that's part of it. One suggestion I've heard is to take the salvage out of the equation. So if that line ceased to operate, that would be fine, but the infrastructure would stay, and at some point in time, it might make economic sense to operate it again, especially with some of the environmental concerns that are becoming more and more present. That's one idea.

Another idea is that because short-line operators have to deal with the major railways for rates, some protections there to allow their viability might also be useful.

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

Does anybody else have a comment?

[Humphrey Banack]

As Allen said, in Alberta in particular, we have a short line running virtually from Calgary to Saskatoon that CN Rail is abandoning right now, the Lyalta to Oyen line. As for the value to those farmers, the farmers are trying to buy that line for $19.1 million. It's a huge cost for farmers out there to pick up. I last met with them Thursday in Three Hills. The group doesn't know whether they'll be able to do this. This would be a huge amount of infrastructure being lost.

In 2009, CN abandoned 52 sidings in western Canada, and then they removed them. Fifty-two sidings removed: that's infrastructure that's removed from the rail system. We really believe that some of the processes involved with the abandonment of these sidings have to be changed. too. Costing and service are huge, but the loss of the infrastructure has absolutely another huge impact on our industry.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Storseth, you have five minutes.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thanks very much, Mr. Chair.

I don't have a lot of time, Mr. Banack, but I agree with you. That's not just infrastructure that's lost--that's infrastructure that we as Canadians paid for. But that's a different topic that we'll get on to.

I've done a lot of work on the shippers. As many of you know, I've met with many of you in the past on the shippers' bill of rights. But one of the things we're really losing sight of today is that it wasn't about the level-of-service reviews or costing reviews.

When we first came into it, the first step was legislation. It was Bill C-8 and the shippers' bill of rights that we put in place. The former government, the former parliamentary secretary, didn't even address that in Bill C-25 and Bill C-44 when they were in government. It didn't address half the issues. It didn't identify shipper service issues, disconnects, or railway shipper accountability. It didn't define solutions to address service and accountability issues.

I think we need to at least admit that we already took the first step in the last Parliament. Would you guys agree that Bill C-8 was a good step forward and triggered the level-of- service review?

[Greg Cherewyk]

We've been with the coalition since 2006, and Bill C-8 was the priority at the time. I think it's fair to say that the shipping community felt as though it made some compromises and concessions on the provisions that were included in Bill C-8 provided that there would be a rail freight service review, and the government lived up to that promise.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Banack.

[Humphrey Banack]

I would say the same thing. We welcomed Bill C-8. The changes it brought were very welcome in the industry. We're very supportive of the service review. We're waiting to see what the final report says in order to move forward.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

As you know, when I was on the transport committee, I fought hand and fist to make sure that the level-of-service review was part of that. I met with dozens of shippers and hundreds of farmers over the course of the 24-page report that I did on this. We all agreed that the next step was a level-of-service review and that, if necessary, it needs to be followed by a costing review, and that, if necessary, it needs to be followed with legislation. Do you guys agree with that?

I'll start with you, Mr. Cherewyk.

[Greg Cherewyk]

Yes, absolutely.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Banack.

[Humphrey Banack]

Yes, as the pulse growers said, maybe we need some legislation in the middle to address the service issues; before we wait for the end of the costing review to bring out one big lump, we should address the issues from the service review immediately.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

But we all agree that the legislation kind of needs to be there in the ether if needed, in consultation with you guys. If needed, we can bring it forward. There may not at the end of the da, be a need for it, but it certainly has to be there, and it has to be ready to go. Would you guys agree with that?

[Allen Oberg]

I think the two issues are separate. I don't think there's any reason why the cost review and the service review--which is nearly completed--couldn't be conducted at the same time, because they are separate issues.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I think that's a fair point, Mr. Oberg; it's just not the point that I heard from dozens of shippers during my review across western Canada and parts of central Ontario. But it is one point of view out there. It's just that within the shipping coalition I found it to be definitively the minority view.

I would like to go to the next point. I have a question on productivity, but I'll leave that for afterwards.

On the level-of-service review, I'll start with Pulse Canada. What's the most defining point that you want to see out of the level of service review? I know we're talking about costing, but level of service is important before we get to costing. What's the most important point that you want to see out of the report that the government moves forward on?

[Greg Cherewyk]

From the pulse industry's perspective, it is the fallback provisions included in section 6.4, and this relates back to your previous comment that we could keep legislation for some future point if needed.

I think what we're talking about is immediate drafting and enactment of fallback provisions that are truly fallback provisions. This is no different from CN entering negotiations with its labour union and going through the collective bargaining process, but always knowing that the tool, that back-to-work legislation tool, that fallback provision, exists, in case they don't reach the commercial agreement. That's what we're asking for. We need that in place now, immediately.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

And from the Canadian Federation of Agriculture's perspective, Mr. Banack?

[Humphrey Banack]

Absolutely: that fallback is huge right now. We need that implemented soon. As for the three-year time period of commercial arrangement that the interim report alludes to, I don't think will work. It hasn't in the past. That immediate fallback to legislation is something that we look forward to the government moving forward with.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you.

Thank you, gentlemen.

I do want to state that this government has shown that, first of all, the railways are Canadians' railways. We built them. They're our infrastructure. Second of all, I think we can move forward on this. This is something that I was originally critical of the government on, and that I stood up to them on, but they amended Bill C-8 in the fashion we wanted.

I'm confident that on the level-of-service review our minister and Minister Strahl will be there for western Canadian farmers and shippers again. I think it's important that we continue to have a good working relationship with the shippers' coalition and with everybody who's affected by this so that we can continue to move forward for farmers and for shippers across the country.

I thank you guys for coming.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Bellavance, you have five minutes.