International Trade Committee on Oct. 18th, 2022

[Doug MacDonald]

Well, there's very little oil that moves by rail. It's a very minuscule part of the market. A lot of it's heavy oil, which doesn't go well with pipelines, and generally it moves to refineries that are not pipeline-connected, so that's where it is. When the oil sands in Alberta were producing really well and it was over the pipeline capacity, that's when you saw some surges over the last five years in moving it by rail, but that has died down to almost nothing with the pipeline capacity expansions that have been done.

[Colin Carrie, Conservative, Oshawa, ON]

Okay. Thank you.

You mentioned the Milton facility and how long it took to build. Again, I'm all about competitiveness and getting more jobs to come to our country and stay in this country, but eight years to get through our regulatory system.... You mentioned 334 conditions, I believe, that you have to go through. Are you able to let us know if they're municipal? Is that federal or...?

[Doug MacDonald]

It's 100% federal. They've taken into account some of the municipal requirements. I get that. Literally, it's five years through the environmental process and another year through the courts, so I'll say it's six years through the government side of it. Now we're finally into the construction, and we're still in court with the municipalities because they're still trying to get it stopped at the same time. It's a fight, but we're going to get there. We started construction this year, realigning two creeks, which is part of the conditions; it's fine. It'll take us another year to do more of the conditions, so we'll probably only have it up and running two or two and a half years from now.

[Colin Carrie, Conservative, Oshawa, ON]

Okay.

You mentioned that we don't want history to repeat itself. Is there a recommendation you could make to the committee to streamline that? It does deter people from coming to Canada.

[Doug MacDonald]

Well, it's not just rail, so even when big companies want to put up plants, they all face the same types of hurdles. Really, what we'd need is, I would say, a government process that allows them to streamline through all the different ministries to get things done quickly and allow decisions to be made in a much more rapid manner. Five years for an environmental approval is a long time.

[Colin Carrie, Conservative, Oshawa, ON]

Is it ever.

Here's my last question. In Oshawa, we have an airport and we have a port. You mentioned human resources. I know that Congressman Higgins in the United States was asking Canada to increase resources—meaning the people—who could help get these goods across the border. I know that in Oshawa we had a CBSA office, and basically it was full time. Now it's been shut down; I think somebody comes in every now and then.

What do you think we could do to increase that capacity? Is it just hiring more people? What do you see?

[Daniel-Robert Gooch]

The CBSA would be best placed to respond to that question. The federal government has invested in the CBSA. In my previous role, border modernization was something we pushed for several years, and we did see that move forward.

At the end of the day, you always need people to do certain things, but a greater reliance on technology and greater flexibility for them would help. I speak to flexibility and nimbleness for our port authorities; our government agencies need that as well. Sometimes they face policy constraints that are not necessarily within their control.

In terms of their human resource challenge, I'd really have to defer that to the officials at CBSA.

[Colin Carrie, Conservative, Oshawa, ON]

Okay. That's great.

I have one more minute.

Could you delve in a little about the tools in the tool box?

You mentioned a couple of times the borrowing limits that you have. I've heard from my local port that to be competitive, you need to modernize. How much of a restriction is this for you to do the modernization? How difficult would it be for the federal government to just change that quite quickly? It appears to me that it's not going to increase the cost to the government. Basically, you're just going to be borrowing.

How quickly could those changes be made?

[Daniel-Robert Gooch]

I believe it's really a matter of a couple of lines of legislation. We know the amendments to the Canada Marine Act are going to be tabled soon. We're certainly going to be looking at what the government is suggesting in terms of changing that.

One thing that's been talked about is streamlining the process for increasing the borrowing limits. That might be an improvement, but that may not be the best way in terms of opening things up.

You mentioned the cost to government. Really it would actually help the cost to government, because the national trade corridors fund is filling a lot of the gaps that could be otherwise filled if ports had that greater flexibility.

There's more to flexibility than that. I'm still learning about how this system works, but land transfers and the ability to buy land and develop things like inland ports.... There are restrictions on a lot of the options that ports could undertake to do what they need to do to fulfill their mandate.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Mr. Miao for five minutes, please.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madame Chair.

I would like to share my time with MP Sheehan, if I don't use it all up.

Through you, Madame Chair, I would like to direct the following question to Mr. MacDonald.

Understanding that half of your railcars are designed for 40-foot containers, can you please let us know how the railcars designed for 40-foot containers have reduced delays and altered your circumstances in comparison to other rail companies that do not have the same number of railcars that are compatible with the 40-foot containers?

[Doug MacDonald]

From the ocean standpoint, there are 40s and 20s. It's a function, a multiple. When we look at providing railcars to off-load from the ports, we provide about 30 kilometres' worth of railcars every single day to the ports to bring in containers and also to bring empties or loads back. Ideally, you want as much as possible for those to be 40s and 20s, because they go directly to the ships.

Now, on our inland terminals, we use 53-foot containers, which is the North American standard. We try to keep those out of the ports in order to maximize exactly how many 53s you can put on for the inland versus the 20s and 40s out of the ports. We have a whole group trying to match that up every single day.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you.

To address surge capacity, what is being done to build that surge capacity? What is your timeline on expanding it, especially with market change? By the time we have the surge capacity addressed, will that affect the long-term changes in our economy?

[Doug MacDonald]

We're not building surge capacity per se; we're building capacity based on the business that our customers are telling us is coming in.

What I'm saying is that if the supply chain or the government wants to build surge capacity, it's most likely going to have to come with some funding, because our customers aren't willing to support it, and that's how we build things. It's based on the business that they're going to give us. We have a contractual commercial arrangement with them and we build that infrastructure accordingly.

A great example is the grain industry. If they want to move another 1,000 or 10,000 tonnes a day to port but they're not willing to commit to it, it's hard to invest in that rail line just on a say-so, so we would look for help with that.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you.

Terry, do you have more questions?

[The Chair, Liberal, Judy Sgro]

Go ahead, Mr. Sheehan.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much.

How much time do I have, Chair?

[The Chair, Liberal, Judy Sgro]

You have two minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you.

The surge capacity you've been talking about and the need to build towards it, I think, are really critical. We've talked about how the market is going to take care of certain things. However, when I start to think about some of the ambitious plans that Canadians have for the future—the transportation networks—we really need to continue to invest in them. We talked about the national trade and transportation corridor, in which, we heard, there's a billion-dollar investment, with $300 million coming from the government.

Could you just expand a little bit? What's that being used for? We ran out of time earlier. Just explain the investment and the good it's going to do.

[Duncan Wilson]

Thank you. I would be happy to do that.

What happens is that the $300 million is divided among approximately 40 different projects in the Lower Mainland that were identified. They are typically things like grade separations to remove road-rail conflicts. In some cases those projects are allowing railways to stage longer trains closer to strategic locations. Also, in some cases—in many cases—those projects also benefit the communities in which they are located by removing bottlenecks in terms of local traffic congestion and the like.

All of them are projects that were identified through a collaborative process involving a number of agencies, the federal government, provincial government and industry. Those projects were identified and then jointly supported into the national trade corridor for funding.

We get a third of the funding from the federal government. The port authority prefunds a third of it on behalf of industry. We recover that investment from industry over time, over the amortization of the project. Then a third of that funding typically will come from the railways. It really depends on the project. For most of the projects we're doing now, the remaining third would come from the railways.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

It's certainly a very well-thought-out plan.

[The Chair, Liberal, Judy Sgro]

Be very brief, Mr. Sheehan.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

This is more of a comment.

I agree with the individual that perhaps our regional economic development agencies could look at being a small cog in some of the ways that we could get our products to market.

[The Chair, Liberal, Judy Sgro]

Okay. Thank you very much, Mr. Sheehan.

We have a few minutes. Does anyone have any outstanding questions?

Mr. Martel, you can have a very short question.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Yes.

It's very short.

Mr. MacDonald, according to what you were saying earlier, the oil you transport by rail cannot be transported by pipeline. Is that correct?