Transport Committee on Oct. 26th, 2006

[Claude Mongeau]

There are 21,000.

[David McGuinty, Liberal, Ottawa South, ON]

How many people do you have working in stakeholder relations to interface with communities?

[Claude Mongeau]

We have a large group of people whose job it is to do government relations and community relations. Our public affairs and government relations staff is in the order of 25 people, but it is a responsibility of our field officers to also interact and to be very knowledgeable about whatever happens in their communities, so we have literally hundreds if not thousands of people interacting daily with the community.

[David McGuinty, Liberal, Ottawa South, ON]

How many noise hot spots do you have across the country?

[Claude Mongeau]

I don't know the exact number, but I would tell you they are on one hand, and mostly in Quebec and in B.C.

[David McGuinty, Liberal, Ottawa South, ON]

Okay. So your hot spots are the province of Quebec and the province of British Columbia.

[Claude Mongeau]

It's very much so, yes.

[David McGuinty, Liberal, Ottawa South, ON]

Years ago I used to act for different corporations and I've watched the evolution of different industrial sectors over the last 15 to 20 years. The Canadian Chemical Producers' Association came up with a responsible care program, which is now in 85 countries worldwide. It was invented here in Ottawa. It is an international success story for the industrial sector. The Forest Products Association of Canada completely rebooted itself and set new standards for their members, as did the CCPA, and said to industrial players out there, “If you want to play as part of our team, we're not waiting for government or the environmental liability that's forthcoming from a major spill in a lake, and we're not waiting for lender liability provisions to creep up from the United States, as they are into Canadian litigation today, which will cost you not $100 million in a case like this, but probably $1 billion in environmental damages.” They simply said, “We're jumping ahead. We're going to become, as they say in French, chef de file. We're going to come together and we're going to say we're not waiting any more.”

Canada is urbanizing at breakneck speed. Intensification and densification is occurring in every major urban centre. In this city where we live it is 10%. In other cities it is 15%. For some it is 8% and for some it's 25%.

Are your insurance rates up as a result of the spill?

[Claude Mongeau]

I would expect they will be next year.

[David McGuinty, Liberal, Ottawa South, ON]

Is it costing you more to borrow money as a result of the spill?

[Claude Mongeau]

No.

[David McGuinty, Liberal, Ottawa South, ON]

Wait for the Fleet Factors decision to arrive from Boston. When we start seeing that kind of environmental litigation, your capital costs will soar.

Do you have accelerated capital cost allowance on any of your retrofits for your rolling stock?

[Claude Mongeau]

Unfortunately, we have more in the U.S. than we do in Canada. We'd like Canada to follow suit.

[David McGuinty, Liberal, Ottawa South, ON]

Yes. Finance doesn't like the accelerated capital cost allowance.

The technology to reduce noise on braking, is it shrink-wrapped technology, on the shelves today?

[Claude Mongeau]

I don't want to raise expectations unduly. There are technologies that help noise. Their deployment, given the life of our asset, is very slow. Our cars are good for 40 to 50 years, so we replace them at a very slow rate. Whenever we do replace we buy the best technology, a lot of it Canadian-made. The new cars tend to be a lot more environmentally friendly and less noisy.

[David McGuinty, Liberal, Ottawa South, ON]

What about Mr. Mackay's suggestion to manage this at a local level as opposed to looking for a national perspective?

Your licence to operate is in large measure social. You're kind of a special creature. You have some capital costs invested by the public over the years. The Crown transferred this to you, and consideration was remitted back to the Crown. That's fine—it's kind of a moot argument. You have a special social licence going back to Confederation. Why wouldn't the sector simply call time out? You have wildfires across the country on noise, toxic spill problems, Langley, B.C. Why not make a quantum leap and take this industrial sector into the 21st century?

Why aren't you pushing for a decibel-based test? You could announce to Canadians and all those affected parties that your sector was going to meet a specified timeline. You could pull your laggards forward. Every industrial sector I've interfaced with in the last 10 years or 15 years has accepted that reality and decided to move forward.

[Claude Mongeau]

Mr. McGuinty, we are a champion in the rail sector for responsible care. We're a champion on safety measures and a leader in establishing safety protocols. We have been recognized worldwide, and we have railroads from all over the world come to meet us every day to understand how we do things. Still, we're not perfect: we have all sorts of issues to improve.

[Cliff Mackay]

Can I pick up on that? We have had a very aggressive emissions reduction program for over ten years. We're the only part of the transportation sector of Canada that has actually reduced its greenhouse gas emissions in the last ten years, while we've grown exponentially.

Mr. McGuinty, we have stepped out, and we're going to step out some more. We didn't wait for the government to put Bill C-11 on the table. We've been pushing noise and proximity issues for three or four years now, and we've been taking the lead on them.

[David McGuinty, Liberal, Ottawa South, ON]

Can I make a final plea? It would be helpful for me if you could give us a narrative of some of the things you put on the table today. This would help us to reconcile what you're telling us with what we've heard from community people, local people, hot spots, non-hot spots. I'm not referring only to the question of net salvage value.

[The Chair, Conservative, Merv Tweed]

Mr. Sorenson.

[Kevin Sorenson, Conservative, Crowfoot, AB]

Thank you.

I want to thank both of you for appearing before this committee today. I'm not a regular on this transportation committee. I serve on another committee, but I am a member of Parliament who represents a rural riding.

I can tell you that when I get calls or letters from constituents dealing with rail lines, never are they handing out bouquets to the rail lines. The call is about either an area down by Calgary, or the Carseland area, or the Strathmore area, where now, because of the extra freight being moved to British Columbia through Calgary, rail lines are asking municipalities to close roads so that they can park longer trains for longer periods of time. A lot of this affects agriculture. It affects the farmers. It affects their land values. It affects their ability to resell that land. Never do they call because they're happy about what's going on.

I get calls from Lyalta, from Oyen about grain not moving, about plugged elevators. The rail line blames the Canadian Wheat Board. The Canadian Wheat Board blames the rail line. The farmer can't deliver his grain. So very seldom do we have a lot of real bouquets that are handed out to the rail lines.

One thing I know is that over a period of time it would seem that if I am an agricultural producer, my elevation and transportation costs are the major components of my input costs to produce grain. Farmers were convinced by governments years ago that getting rid of the Crow would be the best thing for them. We found out that the government was wrong, and that we are less able to see a profit or less able to grow as an operation because of it.

I also realized that after the Crow was taken away, there was an intermediate step put in place for grain transportation charges. That intermediate step was a cap. Since 2000, the rail lines have been free to set rates for moving western grain in response to market conditions as long as their total revenues from these movements don't exceed this cap.

The bill we're looking at here today proposes to allow the Canadian Transportation Agency to make a one-time adjustment to that grain revenue formula, to reflect the current cost of maintaining transportation, and to address the issue of government hopper cars.

I have two or three questions for you. What do you expect to be the ramifications for the farmer when the grain transportation agency allows this provision on grain revenue? That's my first question.

The other question deals with the cost of these hopper cars. You've been charging back to the producer close to $4,000 a hopper car, from what we've been told. Other groups have said those are not the real costs. The real costs are $1,600 to $1,700, and yet you've been stinging the farmer. You've been stinging the producer. You've been stinging those who want to move their grain with this $4,000 per hopper car. Why should we trust you? Why should we as producers trust anything that you guys say, especially if these revenues go down?

Some say that when this one-time adjustment takes place, it may end up saving grain producers some money. In fact, it could be $50 million to $75 million that could go back in per year. Is that correct?

[The Chair, Conservative, Merv Tweed]

I'll give you the time you need to answer, but that will be the final question. I'm sorry.

Mr. Mongeau, go ahead, please.

[Claude Mongeau]

It's a good one. I tell you, Mr. Sorenson, the facts are the following. Grain producers in Canada pay 35% less than grain producers in the U.S. for transporting grain. In the farming sector, the cost of transporting grain is the cost of doing business that has had the smallest increase over the last ten years. In fact, it's come down.

[Kevin Sorenson, Conservative, Crowfoot, AB]

Who owns the cars in the U.S.?

[Claude Mongeau]

The Government of Canada owns the cars.