Natural Resources Committee on April 1st, 2008

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

So there is very little, or perhaps no, marine transportation.

[David Church]

There is, but the vast majority of the mills are not on tidewater. There are a number of mills right on the water, and that tonnage would obviously go directly to the ship. Mills in Trois-Rivières, Shawinigan, and so on that are shipping offshore are going to ship it by rail or truck to the port of Montreal or the port of Trois-Rivières or the port of Quebec City.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

What is the ratio between natural resources and finished products which are transported? Can you give us the percentage of natural resources or pulp which you ship by rail?

[David Church]

Virtually all of the pulp is shipped by rail. Some of the newsprint is shipped by truck to the United States, to the publishers in the eastern United States. That would go by truck. A large portion of it, though, is shipped by rail to warehouses in Chicago or Philadelphia or St. Louis and then shipped by truck from those warehouses to the publishers.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

The forestry industry is not the only sector complaining about the bad service the rail companies provide; farm producers and the petro-chemical industry also have the same complaint. In fact, every industry which deals with the railway companies complains about the poor service provided by Canadian Pacific and Canadian National. They all say that these railway companies have a monopoly, which explains the quality, or lack of quality, of the service provided.

Your association has high expectations with regard to the railway transportation review which the minister promised. Have you officially asked to be a full-fledged participant, since you ship your products by rail, in this review? In your document, you say that you want to be involved and to play a major role in the review. Have you made a written request of the minister? If so, can you provide the letter to committee members?

[Marta Morgan]

We have worked very closely with the other associations representing shippers, who have the same interests we do, and with whom we have worked together on Bill C-8. We are working with these associations to provide our collective input to the government. I could ask our partners if there are documents we can provide to the committee.

Our association has not sent a letter to the minister. However, we can give you certain documents which outline the point of view of shippers with regard to the review of the services. We could also come back before the committee, Mr. Chairman.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Ms. Morgan, you said that you have certain expectations of the government with regard to the review being conducted in a timely manner and as quickly as possible, since the financial health of your industry is at stake. What do you mean by “in a timely manner”? Do you have an idea of the timelines which would be acceptable for your association?

[Marta Morgan]

We hope that the government will be beginning the review as soon as possible. We believe that an in-depth, detailed review, which contains conclusions, should take between six months and one year to complete, but no more.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Not more than a year from the time—

[Marta Morgan]

From the time the review begins.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Perfect.

Do I have any time left, Mr. Chairman?

[The Chair, Conservative, Leon Benoit]

Your time is actually up, Madame DeBellefeuille.

Ms. Bell.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you, Chair, and thank you to the witnesses today for the information.

Being the third one to ask a question, I think some of the things I would have asked have already been answered, so I am going to pick up on something that was mentioned by Mr. Multamaki regarding the environmental option of rail.

We look at our increasing greenhouse gas emissions and at every way possible to cut our emissions across the country. Every industry is looking at reducing emissions, especially the forest sector, because we want to advertise a sustainable sector.

We're promoting wood products as a sustainable alternative or a green way to go in building homes and other buildings, with also the possibility that carbon is going to be costed and the industry is going to have to pay for that as a way of reducing greenhouse gas emissions.

Has there been any kind of study done on what the savings would be or what the cost would be if their usage of rail is not increased or the availability of rail is not there?

[Hartley Multamaki]

I don't have access to studies of that nature. However, I would point out that in the last figures I saw in Canada, the forest products industry is one of the only industrial sectors, if not the only sector, that has met what in the past would have been Kyoto targets. The last number I saw was about 28% below those targets in 1990. We've done an excellent job of beating the greenhouse gases.

Unfortunately, a big part of that is because of the curtailments in operations and the shutdowns and certainly the application of new technologies and what not. I think it's very apparent, if you look at the figures, that the transportation industry, along with the electrical sector, has a significant impact on greenhouse gases and carbon emissions.

If you were to eliminate the opportunity of rail and had to go by truck, there would be a significant increase in greenhouse gases, mostly because there are a lot more diesel engines on the road moving the same amount of product. Rail is a very environmentally friendly option because of the ability to move large volumes with very low emission rates. It's the same with the seaway. Unfortunately, the seaway is only available to those people who have access to it and are relatively close. It doesn't do a lot of good for people in Saskatchewan and Manitoba unless they can get it to a port. I would suggest that is a key item you bring up.

[Hal Brindley]

Also, I'd like to mention our two mills at Longlac and Nakina. They're about 95% serviced by rail because we can't truck from Longlac to Atlanta or to other areas. Rail is the only viable way of doing the types of volumes we're doing for the distances we travel.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Multamaki and Mr. Adams.

Go ahead, Ms. Morgan.

[Marta Morgan]

I would agree. One of the things that's happened over the last few years is that as fuel costs have gone up trucking has become an even less viable option for exactly the reasons the other witnesses have mentioned.

While it is clear that rail is an environmentally preferable alternative, the forest industry has met Kyoto seven times over, primarily through switching to bioenergy and from collecting energy off the grid. FPAC committed to become carbon neutral by 2015 without buying carbon offsets through the whole value chain, and of course part of that is the transportation system and ensuring we have the lowest carbon footprint transportation system.

One thing the Railway Association of Canada has proposed--and it's one of the few areas where we make common cause with them, but I should mention it--is the elimination of the fuel excise tax. It is partly for environmental reasons, given that it's an environmentally preferable mode of transportation that does pay for the maintenance of its own routes. We would support them on that, both from the environmental perspective and also from a cost reduction perspective. We would expect those costs would be passed along to shippers.

[The Chair, Conservative, Leon Benoit]

Ms. Bell, you have about a minute and a half.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you.

I live on Vancouver Island, and we have a small commuter rail service. There's a little bit of a transport issue with it, but it's a community owned rail line. We call it our corridor. They are looking to the federal and provincial governments to help bring the tracks up to speed. It's an older service.

One of the things they say is that before the forest industry, which is one of the main industries in the province, can realize its full potential, it needs efficient rail transportation. I think it's interesting that this small organization recognizes that, and I'm hearing that from across Canada.

I think you said that in British Columbia rail is the largest transport service for forest products. And I think the federal government did give some money under the pine beetle program to improve rail service on one of the lines to bring out forest products. Can you tell me anything about that?

[Marta Morgan]

It's my understanding that the federal government has been working with B.C. under the infrastructure program and it has made funding under the infrastructure program available for improvement on short-line railways in partnership with provinces.

They've been working quite actively, I believe, with Quebec. Quebec has put together a whole proposal, and I believe that option would be open to other provinces as well, under the infrastructure program. But I'm not familiar, under the pine beetle program, whether there's been specific funding for railways in B.C.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Bell.

Mr. Church, you had something to add.

[David Church]

I was just going to say that the federal government has committed fairly significant sums of money to the Asia-Pacific gateway to improve the transportation system through to the port of Vancouver, which is obviously a benefit for us, because so much of our tonnage now--both solid wood and pulp and paper and so on--is going to Asian markets. So anything that can be done to improve the Asia-Pacific gateway is obviously a benefit to our industry and I assume all the other industries located in western Canada.

[The Chair, Conservative, Leon Benoit]

Okay, thank you.

We go now to the government side, to Mr. Trost, for up to seven minutes. Go ahead, please.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

Ms. Morgan was saying in her testimony that now may not be the time to discuss greater competition issues, but frankly, that's largely what this is all about.

I'm going to give all of you here a few minutes, and then if you want to give longer answers than you normally would in this back-and-forth we've been doing here, feel free to go on a little longer. Basically sketch out your ideal world of what you would want for competition: what you would want, why you would want it, and how it would affect your industry, your facility specifically, etc. It's a very broad question I'm asking here. You talk about running rights, effective competition, line rate provisions--anything else? I'm giving you a bit of a wide-open, go-for-it period here.

[The Chair, Conservative, Leon Benoit]

We'll start with Ms. Morgan.

Gentlemen, perhaps you can be ready to answer after.

Go ahead, please.