Agriculture Committee on Dec. 5th, 2024

[Eric Harvey]

As I indicated, we have in our network 14,000 grade crossings. It's a lot of crossings. That project took considerable time. In the first part of this initiative, we had to coordinate with all road authorities, the municipalities and the province, plus each private user to determine their type of usage of the crossing. The type of vehicle has an impact on the type of protection that has to be installed.

Our concern from day one was the cost for the private users of the section 103 crossings under the Canada Transportation Act, which are at the cost of the owner and users. Railway equipment is very expensive. With inflation and everything, we're now at a stage where the protection required for the few remaining exceeds $1 million. This is why we applied to Transport Canada to seek an exemption for the 57 that were remaining, understanding that at those 57, you have essentially very limited use. Some are farm crossings, so they're used from spring to fall for the purpose of harvesting and so on. Some are residences, where people are using them basically to access their homes.

We're glad to say that of the eight crossings, we have one that we agreed with the owner to close. That person agreed. They found another alternative and therefore that one was closed. Then we have three where we basically agreed to apply slow orders—in other words, to reduce the speed of our trains such that the crossing becomes compliant with the regulations. Those were at residences. For one, the speed restriction was very close to a zone where the speed was already reduced, so we thought it practical.

What's left are four crossings in the Kingston subdivision, which is a subdivision that connects Montreal to Toronto. There I would say we've reached out to all owners. The challenge we have is that this is the corridor used by Via where they operate at a very high speed. Therefore, it's very challenging to make them compliant. What we're doing is engaging with each individual user for the purpose of establishing a temporary closure during the wintertime. We believe they're not used during the winter, so the speed can remain as it is. During the winter, we'll try to explore whether there are other alternatives. If there are not, then I guess we'll have to pay for those upgrades.

I say “pay”, but as I said in my opening remarks, CN has invested $200 million in our network. We believe the few remaining, depending on the outcome of our engagement, are ideal candidates for the rail safety improvement program that Transport Canada manages.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

That's great. Thank you very much.

You've made great progress. Ten years is a long time, and it sounds like it was a really big project with all those different players.

[Eric Harvey]

Yes, it was.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

I just want to use the rest of my time, Mr. Chair, to table a motion, because I know we're getting to the end of studies.

I'd like to table a motion for a study to start, hopefully, in the new year. It's to do with Canadian farmland and reimagining the future of agriculture. We know that Canadian farmland is a vital natural resource for food security, for rural economies and for combatting climate change. The agricultural sector right now—and we've heard this many times—is facing growing challenges: urban sprawl, soil degradation, climate change, etc.

I'll circulate this. I'm not going to go through the entire motion right now. It would be a study that basically looks at the future of agriculture, which would present an opportunity to foster innovation, to enhance ecological stewardship and to promote sustainable food systems, while making sure that we have a secure and prosperous future for all Canadian farmers and for consumers.

A number of the things I would like to look at in the study, which I've detailed in this motion, evaluate the current threats to farmland, look at sustainable agricultural practices that are already in use and that could be expanded, look at ways to make sure farmers are compensated for the contribution they're making to the environment, assess the role of farmland in the protection of our domestic food security and look at advancing our environmental and economic goals. Those would be things like carbon sequestration and emissions reduction.

Lastly, the study would look at organics, plastics and plant-based agriculture as an opportunity for farmers, with a $25-billion market opportunity. It would also look at how that could work with the transition that some farmers are having to make right now because of climate change to more plant-based organic farming.

The idea is to engage a number of stakeholders from across the community—obviously farmers, agriculture organizations, experts and indigenous communities—to talk about this.

I will circulate this motion, but I think this study would be very beneficial for all farmers across Canada.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Taylor Roy.

There is about a minute and a half left, because we stop when you move motions. I know Mr. Longfield wanted to get in.

Lloyd, you have 45 seconds for a question and maybe 45 seconds for response, if you want to go.

[Lloyd Longfield, Liberal, Guelph, ON]

Sure. Thank you.

This one is likely for Mr. Brazeau.

I was on the committee when the Emerson report came out. At the time, we had some problems with winter shipments getting through the mountains. There was grain in terminals. The farmers were having trouble getting paid for the grain that was sitting without movement. The rail lines added locomotives and engineers so that we would not have the second delay we had in the time we were looking at. There was one, I think, three years previous to that.

Could you update us on how it's gone with new locomotives and with new hiring?

[Marc Brazeau]

That's probably a question I'll leave to my colleagues because they have specific data on that.

[Lloyd Longfield, Liberal, Guelph, ON]

Okay. Thank you.

[Nathan Cato]

I can take that one quickly.

In our case, at CPKC, we've been investing significantly in new capacity, including and especially in our grain supply chain in Canada. We've invested more than $500 million in the acquisition of 5,900 new high-capacity hopper cars. When you combine those higher capacity hopper cars with our 8,500-foot loop train model, or what we call our high-efficiency product train model, we're getting more than 40% more grain on every single unit train. That is a massive capacity lift for the Canadian grain supply chain, and we're really proud of that.

[The Chair, Liberal, Kody Blois]

We'll have to leave it at that.

Mr. Perron, you have the floor.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Good morning to the witnesses. I'm sorry I couldn't be there in person this morning. We'd like to doubly thank them, since they've appeared before the committee twice. I apologize for the parliamentary procedures that took place last time.

My first question is about the Canada Labour Code. Several of the witnesses talked about the need to look at the impact of conflicts as well as binding arbitration, which is used in certain circumstances.

Don't you think that workers' rights could be violated, in the long term, since employers will say that, in any case, there will be arbitration and that they don't need to make concessions?

Isn't there another solution that would help us avoid conflicts?

[Eric Harvey]

Thank you for the question, Mr. Perron.

As I said in my response to one of your committee colleagues, we do recognize the right of our employees to negotiate and to have some form of pressure tactic to do so.

Recently, however, we've seen that the pressure tactics seem to go beyond the interests of employers and have repercussions that go beyond the Canadian economy as a whole. These pressure tactics sometimes extend over long periods, and that has a cost in terms of our gross domestic product or other analyses of that kind.

In terms of solutions to consider, it might be worthwhile to conduct a study to determine what the options might be. Mandatory arbitration is one option, but there are also other countries that manage their labour relations without necessarily having to suffer the same repercussions we are experiencing at home. Perhaps we need to look at a slightly broader vision to see how these issues are addressed in other countries.

That said, it seems important to note that the current situation is harmful to our economy. That's the situation we're mainly denouncing, and that's why we're asking for action to limit this risk, while allowing our employees to be paid properly.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you very much for that detailed answer.

You say that other options should be studied. I imagine you're thinking about the possibility of considering certain goods as an essential service, a minimum service, a bit like what's done in the health care system.

Is that correct?

[Eric Harvey]

Let me give you an example.

The United States passed special legislation to manage labour relations between employees and railway companies. It has a very elaborate mediation and conciliation regime that needs to be used prior to the strike phase. This device makes it possible to exhaust all recourse, by bringing competent people to the discussion table to determine whether the requests of both parties are reasonable or not, so as to influence the outcome.

As you just said, it would also be possible within the current framework to broaden the definition of what constitutes an essential service in order to be able to cover certain circumstances, such as a strike in the rail sector or in the supply chain. There are a series of choices.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you.

[Eric Harvey]

I think the question that needs to be asked is which of those choices would be best suited to Canada's particular circumstances.

That's why we're asking that efforts be made in this regard.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you very much, Mr. Harvey. I'm sorry to have to cut you off, but my time is limited.

I would also like to hear what the other three witnesses have to say about interswitching.

Mr. Harvey, you mentioned that the 160‑kilometre interswitching zone moves rail traffic to areas served by American companies, if I understood you correctly. I had no idea about that.

My question is twofold.

First, what do you think the consequences would be if that area were to move to 500 kilometres?

Second, agricultural producers told us that the 160‑kilometre zone did not make it possible to reach certain groups of producers. Couldn't there be, without going as far as 500 kilometres, a midway measure, an exception zone where an intermediate tariff would be put in place?

There's only a minute left, but we can come back to it later.

[Eric Harvey]

First, the introduction of a 500‑kilometre interswitching zone would be extremely harmful to the Canadian rail industry. That would mean that the compensation paid to the railways would be based on costs, whereas all railway expenditures are based on a commercial market value. We pay our employees at a commercial value, and we pay for our gas and equipment at a commercial price. Remuneration based on a cost that is below market would result in a subcompensation that would ultimately lead to a reduction in the quality of service and safety.

Second, it's important to note that, as we mentioned in our opening remarks, the measure that regulates the revenue cap that Canadian railways can receive for grain transportation provides a 30% advantage over other commodities in Canada. Also, it applies to all producers who are covered in the Prairies.

The idea of extending this measure or extending the interswitching distance is a bit perplexing to us. The Canadian agriculture industry already has an advantage that no other Canadian shipper has.

[The Chair, Liberal, Kody Blois]

Thank you.

I know, Nathan, that you want to come in. You have 15 or 20 seconds if you have anything to say.

[Nathan Cato]

I would add to the comments of my colleagues.

On the debate about distance for extended interswitching, I'd highlight that shippers today have access to long-haul interswitching, which is 1,200 kilometres away. There are a few exceptions to it, but it applies nationally. It's a 1,200-kilometre distance to give the shipper access to a competing carrier. The difference is that the rate is based on comparable traffic.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Go ahead, Mr. Cannings, for up to six minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you all for being here.

This is a new subject for me, so I'm trying to wrap my head around it. It seems the main issue you're all concerned about is competition with BNSF, which is operating under a regulation-based, cost-based rate, while you're using average market rates.

I'm going to start with Mr. Cato of CPKC.

I assume BNSF is forced to offer a cost-based rate because it's regulation-based. Does CPKC operate under that as well? Is this an American regulation?

[Nathan Cato]

It's a Canadian regulation. It's under the Canada Transportation Act. What it does is create a 160-kilometre zone in only three provinces—Alberta, Saskatchewan and Manitoba—where there's a cost-based rate applied to traffic interchanged to a competing carrier.

What that means for us on our network is that, because we interchange with the BNSF at Coutts, Alberta, right at the border.... What this Canadian regulation does is give the BNSF a 160-kilometre reach into Canada to solicit traffic exposed within that zone at a cost-based rate. Essentially, they can undercut us marginally on the long-haul portion of the movement. They can get that traffic. There's an incentive being created with that cost-based rate to move traffic under a competing American rail carrier.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Over the last few years, from what I hear, both CPKC and CN have done very well. Your profits, according to the National Farmers Union, have tripled in the last 10 years. CN's have doubled.

How has this interswitching pilot impacted that? Would your profits be quadruple or higher if that were the case? It seems you're doing fine. Farmers seem to want this interswitching. You say you can do better than the United States and you're offering lower prices. It's just mysterious to me why we're having this conversation.

[Nathan Cato]

I would say that the public policy question for parliamentarians is focused on jobs and investment in Canada. We need a regulatory environment in Canada that facilitates investment.

For our part, the railroad industry is an incredibly capital-intensive one. We're now spending record amounts in our capex. We're looking at spending up to $2.8 billion a year in investment in our infrastructure for safety and capacity enhancements. That's very important. We've also been investing, as I noted earlier, in capacity expansion—more than $500 million for high-capacity hopper cars. We've been growing our network to enhance competition.