Evidence of meeting #19 for Industry, Science and Technology in the 39th 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.
Conservative
Colin Carrie Conservative Oshawa, ON
You had the opportunity to plead your case, so to speak, but you really haven't had any responses from the officials?
Board of Directors, Canadian Association of Railway Suppliers
We haven't had any from the present government since this presentation was made, but we're hopeful of having a response.
By repeatedly presenting it to different groups--different finance committees, different parliamentarians--the situation is becoming better understood, and perhaps we're getting a little more skilled at explaining it. I think there is some light on the horizon with Finance.
Conservative
Colin Carrie Conservative Oshawa, ON
In its budget the new government did have record tax cuts. Listening to the witnesses we've had, it appears that they're almost unanimous in saying we need to go even further than we're going now.
Do you have any numbers on the impact of the benefit of the tax cuts we've made here in 2006, or any projected impact for your association members?
Director of Government and Industry Affairs, Canadian Association of Railway Suppliers
A lot of our SMEs did benefit from many of the corporate tax cuts that were given. But on the future of our sector, I'll give you an example. One of our member companies, RailPower Technologies, used the freight sustainability demonstration program to develop the Green Goat, which is a hybrid locomotive. We were disappointed to hear that the program, which I believe gave a subsidy to CP to test these programs, is no longer available. Whether it's called that or something else, we need that kind of structure to ensure that we're developing those kinds of innovative technologies.
But as far as a lot of those tax incentives are concerned, our members were quite happy with them. As to numerical data on how that has helped us out, I don't have that information with me.
Conservative
Colin Carrie Conservative Oshawa, ON
Can you think of any other ways the government could encourage greater utilization of rail transport in this country?
Board of Directors, Canadian Association of Railway Suppliers
I think it's an issue of the railways themselves becoming more competitive, more efficient--and more competitive with trucks specifically. Better operations through technology will make their costs lower so they can be more competitive with trucks.
The two areas there are freight rates and speed of service. The railways have always been able to compete with the trucks on price, but being able to compete with them on speed of service has been a running battle throughout history, since trucks became competitors to the railways. There's a lot of technology that will help them, as Mr. Nordenstrom mentioned, like GPS tracking of trains and locomotives and better record of movement of products. Our ability to track the movement of freight items, containers, and freight cars has been around for almost forty years now. Canadian railways were almost world leaders in that. They were right up at the top with the best of the U.S. railroads when the application of computers to the railways started.
So there is a future in being more competitive, and the government can perhaps help with support on technology and research. That would have the most effect in the long run.
Director of Government and Industry Affairs, Canadian Association of Railway Suppliers
We also talked briefly about incentives. If we believe that freight, in addition to passenger transportation, has societal benefits, then giving tax incentives to shippers who take a greener way from port to market would certainly help the rail industry. I have nothing against trucking, but I think we need to have a multi-modality strategy within trucks and rail, more of an umbrella policy. Certainly, that would give a shot in the arm to the manufacturing industry as a trickle-down.
Charlie Angus NDP Timmins—James Bay, ON
I'm pleased to be able to speak with you today. I'll put it on the record that I am a hopeless romantic for trains. I love passenger trains, and I spent my growing-up years on the Ontario Northland, on the night train. I say this because I'm interested in the fact that we are, in freight, the most efficient country in the world, and that's very heartening. In passenger service, however, I'd imagine that we're not even in the game. I'm looking to see if you have any recommendations on a policy or a strategy that would encourage passenger service of the kind we see in Europe.
Board of Directors, Canadian Association of Railway Suppliers
That's a good question. I could spend a lot more than six minutes talking about it. It's upfront in our minds in the work we're doing. Our members are doing things like inventing crossing protection systems that will be a fraction of the cost of the conventional ones. These will have an impact on passenger operation. Basically, it's the passenger trains that are restricted by inadequate crossing systems. They can't operate at the speeds they should be able to go at.
Equipment and technology are pretty well available. What's missing is the incentive for people to take the train in volumes sufficient to make it worthwhile. Our commuter trains operate very well. It's the intercity ones that are not doing so well. We have good commuter services in Montreal, Toronto, and Vancouver, and they're getting better.
Personally, I think the costs are still too high. I think the way to get people out of their automobiles is to come up with costs that are comparable to the gasoline out-of-pocket cost. If we could have fares that meet those criteria, then I think all the people would become real fans like you.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Has your organization come up with concrete proposals? We would need to look at an incentive system to encourage a transformation of intercity passenger rail. Do you have concrete proposals on how we might go about that?
Board of Directors, Canadian Association of Railway Suppliers
As an association, no. But some of our members have been pursuing things like that.
Director of Government and Industry Affairs, Canadian Association of Railway Suppliers
We now see the three levels of government working together on a gas tax going towards public transit. We also see initiatives that result in more investments. In our backyard, just look at the O-Train. In Montreal and Toronto there are big investment projects as well. We are seeing more public funding, triggered by an awareness of the societal benefits of public transit. In the next couple of weeks we're hoping to see some strong wording in the government's green document.
Board of Directors, Canadian Association of Railway Suppliers
Another answer to your question is that there are two areas of very significant development that will help.
One of our members has done a great job of putting together the prototype of a locomotive upgrade for VIA Rail that modernizes twenty-year-old diesel locomotives. That was important, because there isn't a new product on the market. You can't just go to the locomotive manufacturer and say you want twenty nice, new passenger locomotives. They're making 1,000 freight locomotives a year, and this product just isn't available anymore, so upgrading the old locomotive was a fantastic idea. VIA wrote the specs for it, and one of our members has done the work. But they need the funding to upgrade the fifty remaining in the fleet. They have the prototype done now.
This is something that is with the transport ministry, and probably the transport committee, to look at. But it's important to us as an industry, because it's our members who are doing the work. I've seen the work.
The second thing is that we have the capability to do railway electrification for passenger services. We have technology that was acquired in the early 1980s from Sweden. One of the problems in going to a different technology like that is how it will work in our climate. What do you do about snowplowing and snow removal, and will it work at minus forty? A lot of these systems won't, but the one that was brought into British Columbia about twenty years ago was acquired from a railroad that operates north of the Arctic Circle.
We have the technology. We have the capability. We just need the incentive to move a step further with it, and this is where the government could help.
NDP
Charlie Angus NDP Timmins—James Bay, ON
I have just one more question in light of designing a new passenger car.
These are big-ticket items. Companies aren't buying them every day, and you need a dedicated industrial capacity that can do that. Has the loss of some of that industrial capacity—you said it was 50% since the 1980s—left us with a gap in being able to take advantage or move forward if the railways are interested in examining newer technologies?
Board of Directors, Canadian Association of Railway Suppliers
It has hurt us on the freight car side of the business but not on the passenger car side. Bombardier has done very well and has a good market in the U.S., with technology that was originally developed here in Canada. The commuter cars made in Thunder Bay are considered to be the most attractive ones virtually in the world. Certainly they're attractive to 14 operators in North America. The Toronto Go Train recently acquired some of those cars in Montreal. It's our member, Bombardier, that acquired the plant and the designs to make them, and they've been an ongoing product. The Vancouver Sky Train was designed and made in Kingston, Ontario, by UTDC originally and Bombardier now.
That market is still there, and there's a risk we will lose more of it to the new entrants into the railway industry from Korea and some other countries that are making pretty good products and taking market share away from our members. But it's not market share in Canada. What has sustained us is the export of those products. They're still there. They're still being developed. They're new products. There are new changes to them. When these GO Transit-type cars--as they're more popularly known--are made, the laser welding of the aluminum side plates is magnificent. It's just top technology in manufacturing.
Conservative
The Chair Conservative James Rajotte
Thank you.
Thank you, Mr. Angus.
We'll go to Ms. Stronach for five minutes.
Liberal
Belinda Stronach Liberal Newmarket—Aurora, ON
Thank you, Chair.
Thank you for joining us in committee today.
I have a few questions. I'll just go through them one by one.
I'd like to get a sense of how many jobs pertain to your sector.
Board of Directors, Canadian Association of Railway Suppliers
There are between 60,000 and 65,000.
Liberal
Belinda Stronach Liberal Newmarket—Aurora, ON
Where are most of those located? In which geographic area are they?
Board of Directors, Canadian Association of Railway Suppliers
They are mostly located in Ontario and Quebec, but there are quite a few in Alberta, surprisingly. The third-largest group is in Alberta.
Liberal
Belinda Stronach Liberal Newmarket—Aurora, ON
As you already know, the former Minister of Transport was in favour of levelling the playing field, so to speak, with respect to the capital cost allowance. Perhaps you could illuminate that in terms of the overall positive economic benefit to the country, toward our competitiveness.
Board of Directors, Canadian Association of Railway Suppliers
To make a very rough sort of assessment, it would give us about 20% more production of freight cars. That is, we would not be losing so much to the U.S. manufacturers. I would guess about 20%, and if we were really lucky, maybe a 25% increase in freight car production that would probably represent maybe 500 or 1,000 jobs--quite a lot of income for smaller suppliers. It isn't only the welding of the freight car from steel plates; it's all of the parts that go together, the brake systems and all the little bits and pieces.
Liberal
Belinda Stronach Liberal Newmarket—Aurora, ON
I would assume too that it affects the supply chain to the suppliers, and there's another spinoff after in terms of jobs that are affected.