Evidence of meeting #118 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was railways.
A recording is available from Parliament.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Thank you, Mr. Sobkowich.
Mr. Youzwa, I will ask you the same question.
Chair, Pulse Canada
I concur with what Wade said. We just need to find innovative ways to increase competition and allow it to occur.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
This is for both of you again.
Earlier, the discussion went off track and onto the carbon tax. Bill C‑234 is now dormant in Parliament; it proposes to provide an exemption for grain drying.
If we were to hold a vote on that bill in the House of Commons tomorrow morning, what message would you have for the MPs from the various parties who are present here, and more specifically for the ones from the parties that are preventing the work from moving forward? We could vote on Bill C‑234 and give you that exemption now.
Chair, Pulse Canada
We don't dry grain because we want to dry grain. We dry grain because we have to dry grain to ensure its quality. Paying tax on the fuel we burn to improve the quality of the grain so that it has a sellable home and isn't destroyed because it's inadequate doesn't make a lot of sense.
Liberal
The Chair Liberal Kody Blois
Thank you, Monsieur Perron.
Mr. Boulerice, the floor is yours for two minutes.
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Thank you, Mr. Chair.
I have two minutes and there are four of you.
I am going to get away from the question of the day a bit and look at the news.
The American president-elect has told us that his government would be imposing tariffs on everything. What do you think this will look like for your industry? What repercussions do you anticipate? What do you want the Canadian government to do in these circumstances?
President, Ontario Federation of Agriculture
There's no doubt there are potential challenges ahead with some of the trade issues we see across agriculture, but we want to make sure that our entire agriculture sector is ultimately supported and that we can continue the trading relationship we have with the United States. Obviously, some of that is out of our hands, but we'd like to see our negotiators and the folks within government move forward with a balanced trade position that supports all sectors of agriculture so that our entire sector can continue to grow and be prosperous and our farmers can continue to move forward.
Chair, Pulse Canada
CUSMA is a very successful trading relationship and the supply chains are deeply interwoven, so I encourage the government employees who have been working on this to fully do everything they can to keep it functioning in the interests of all three countries.
Second General Vice-President, Union des producteurs agricoles
I think my colleagues have said it well: The supply chain between the two countries is definitely interconnected and interdependent. Ensuring that the trade agreements work well is to the advantage of the Americans as much as it is for Canadians.
We expect the Government of Canada will honour its commitments to the agricultural sector and make sure it protects our gains properly and does its utmost to ensure that we have access to the markets on the other side of the border.
Liberal
The Chair Liberal Kody Blois
Thank you very much, colleagues.
I'll just take a quick stab at this.
First of all, to the OFA, do you have an estimate on what the railroads would normally contribute to the drainage system? Obviously, what I'm hearing from you, Mr. Spoelstra and Mr. Bent, is they've been pulling out over the last number of years and trying not to contribute. You mentioned lawsuits. Does the OFA have a broad estimate of what we're talking about in terms of the railroads' contribution to that system?
Director, Policy Research, Ontario Federation of Agriculture
We don't have an estimate, but it is precedent-setting. With the way the Drainage Act works, if drainage work has to occur through a municipal drain, there is an assessment based on the area drained by each parcel, and that's the cost. It's when that work is being undertaken that there may be an assessment and the railway chooses to play the federal card.
Liberal
The Chair Liberal Kody Blois
Just quickly, because I don't want to push my colleagues' time too far, do you have a sense of what the apportionment normally is? I guess it would depend on the project, but is it 30%, 50% or 70%? How is that generally evaluated to determine what the railway's contribution to an overall project on a percentage basis would be?
Director, Policy Research, Ontario Federation of Agriculture
It would be based on how much land it's draining into. The other issue is if, for instance, the work involved a culvert under the railway, which is a matter separate from costs.
Liberal
The Chair Liberal Kody Blois
One of the points you're making is about essentially enshrining in federal legislation something that, as I understand from your testimony, used to exist under the Railway Safety Act and no longer exists in the Canada Transportation Act. Obviously, as you mentioned and as it has been testified to, Ontario has a long history on this.
ChatGPT quickly tells me that there are similar types of drainage acts in other jurisdictions. When you talk about provincial legislation, are you asking for something specific to Ontario or is this broader? Is OFA's position that we need to protect the existing relationship in Ontario? I ask this because we haven't heard about many other instances elsewhere in the country.
Director, Policy Research, Ontario Federation of Agriculture
It would be related to provincial drainage legislation, so it's not specific to Ontario. A possible amendment would basically give the Canadian Transportation Agency direction to consider provincial drainage legislation when they make decisions.
Liberal
The Chair Liberal Kody Blois
Lastly, Mr. Steinley talked about carbon pricing. We may share a slightly different view. I've submitted in the House that if we are serious about reducing emissions, there is no free lunch. To do it, you're going to regulate the activity, which means sometimes compliance costs are passed off to consumers, or you have a pricing mechanism. I sometimes tease my Tory colleagues that this is inherently the most Conservative way to do it in the market. You can also subsidize the activity, but it's going to come out of taxpayers' dollars one way or the other.
There are different ways to look at this, but one conversation that I think is fair to have is how the railroads are able to pass costs off to shippers.
Mr. Sobkowich, Mr. Steinley gave us numbers on what that cost represents to farmers and shippers. The premise of a carbon price is to incentivize a change in behaviour. If the entirety of that cost is being passed on, with no provision for there to be a true cost to the railroads to try to get them to incentivize a change in behaviour to reduce emissions.... I agree with Ms. Murray that it's having a beneficial impact in the country, with a reduction in emissions, but then there's the equity of how it's applied. I was surprised that I didn't hear you talk about this.
Would the Western Grain Elevator Association like to see some type of a limit on the amount of the carbon price that can be passed off to your shippers? Mr. Steinley makes the assertion that it's 100%. I've heard from APAS, and they suggest it's the same. What do you say?
Executive Director, Western Grain Elevator Association
We support those comments, for sure. We don't have a precise recommendation because, of course, it comes to us in freight rates, and we put those freight rates into the cost we offer to the farmer. It's a bit of a flow-through for us in most cases, although some of it gets absorbed by grain companies.
I think the main point is that we're price-takers on the global stage. It's not as though you can go ahead and charge your customer for this extra cost. It goes into your ability to compete internationally, and if you can't compete, you can't extract as many foreign dollars.
Liberal
The Chair Liberal Kody Blois
I understand all that, Mr. Sobkowich; I understand that comment. What I'm trying to understand is this: Is your assertion to this committee that 100% of what CN may pay in carbon pricing is passed off to your membership?
Liberal
The Chair Liberal Kody Blois
Okay. Then you would support some type of legislative scheme that would limit the ability for that to happen. Maybe it should only be 50%, because the railroads should bear some of this responsibility.
If we as parliamentarians were to do something like that, would the railroads be able to shift in other fashions the costs they may be accumulating, or would you be protected in that sense if it were legislated?
Executive Director, Western Grain Elevator Association
That's a good question, and I don't fully know the answer.
For the grain industry, we have something called the maximum revenue entitlement, which governs the amount railways can charge for regulated grain, so there may be a better ability to police that for grain than there would be for other sectors.
The railways are very creative in finding ways to extract their pound of flesh when you put in place rules and regulations regarding pricing, so I think they would probably figure out a way to get that back. However, we are definitely supportive of our industry colleagues' positions on that subject.
Liberal
The Chair Liberal Kody Blois
I think the committee would benefit from a formal position, if you have one in the days ahead, on whether that's a recommendation we could pass off to the Minister of Transport.
Colleagues, thank you for the indulgence.
Conservative
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
In response to your question of the witnesses and for the benefit of the committee, I'll note that a letter was sent in April 2023 to the then minister of transport that outlined the costs that municipalities are bearing, with a response from the railways. It was from the Township of Perth East, in response to an Association of Municipalities of Ontario survey to which 60 municipalities responded, 48% of which had drains across their lands with railways. Unpaid maintenance—this was in the spring of 2023—was $500,000. Unpaid capital construction was approximately $1 million, and about $2.7 million in projects and upgrades was being delayed because of the position of the railways.
That's now a year and a half ago, so those figures would be low. I can table this with the committee.