Transport Committee on June 12th, 2012

[Peter Leigh Scott]

The lighter-weight shorter car is a benefit no matter where it goes, so even on the lighter density lines, although you won't be able to load it to capacity, it's still going to have a tremendous advantage over the existing equipment. You're still going to get more units per train start. And the car is lighter; therefore, that light weight is going to be transferred in the lading, so more grain is going to be carried.

[The Chair, Conservative, Merv Tweed]

It's my understanding that those cars didn't, and that's why they were eliminated from the fleet.

[Peter Leigh Scott]

I think it was a different strategy; they looked at lighter yield materials and so forth, maybe aluminum cars and that sort of thing. That proved to be problematic. With this strategy, it benefits, despite what the capacity of the rail line is. It improves the heavier the load, but it's still a very good benefit for the Churchill area.

[The Chair, Conservative, Merv Tweed]

Monsieur Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

How many tractor trailers does the Government of Canada own in the trucking sector?

[Gregory Aziz]

I believe it's zero.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

So the government doesn't own and then provide trucking companies with free tractor-trailers?

[Gregory Aziz]

That's correct.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

In the airline industry, which transports mostly people but also some cargo, how many private sector companies operate government-owned and government-provided aircraft to do their transportation?

[Gregory Aziz]

I'm not qualified to answer that question.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

I've never been on a government-owned aircraft operated by a private sector company. I think I've flown on every airline in this country, or most of them.

I guess the question is, why does the government own over 10,000 grain cars?

[Gregory Aziz]

Well, the government did own as many as 23,000 or 24,000 grain cars.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Why?

[Gregory Aziz]

I can't answer that question. I think this goes back to the Crow rate and maintaining subsidies for Canadian farmers and protecting the Canadian farmer from transportation costs that could have been deemed to be too high.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

You are trying to sell an enhanced technology for the transportation of essential commodities in this country.

[Gregory Aziz]

That's correct.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

From the case you've made, you have an excellent product. None of us in this room operates railways. None of us is in the business of shipping grain. So we're obviously not the most qualified people to decide whether or not to buy your cars. Presumably people in either the agricultural or rail industry would be. Doesn't that make the case for private sector ownership of these privately operated assets?

[Gregory Aziz]

As I mentioned a few moments ago, the government is already heavily invested.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

That's what I'm asking. I'm asking if such should be the case.

[Gregory Aziz]

If you'll allow me to continue, please, the fact of the matter is a decision needs to be made with respect to the obsolete equipment that's being used right now.

We're proposing that the obsolete equipment be scrapped and replaced with new modern and efficient equipment for the benefit of everyone in the supply chain.

As I mentioned earlier, we believe if it's left up to the transportation industry, they'll take an awfully long time to invest in this new equipment, if they do at all. They'll just keep using obsolete free equipment, basically.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

In the 1950s, global trade as a share of the global economy was in decline. Had that trend continued, there wouldn't be such a thing as globalization today. One thing changed that trend: the shipping container. It allowed, as you know, the intermodal transportation of large amounts of complex goods by ship, rail, and truck almost seamlessly. That idea came from Malcolm McLean and a series of private sector entrepreneurs who had to overcome government obstacles to make it possible. But it was the private sector that made that innovation occur.

You're proposing an innovation as it relates to bulk shipping, and you're expecting that government is going to lead the adoption of that innovation. Does that not run counter to the historical experience, which demonstrates that it's the private sector that innovates and not government?

[Gregory Aziz]

I would point out that National Steel Car is the world leader in container cars. We also manufacture those double-stack container cars for carrying the exact containers that you're talking about.

What we're proposing here is something to assist a situation in which the government is already heavily invested. That's our only reason for appearing. We have a piece of equipment that will dramatically improve the existing situation. We didn't really come here to talk about the theory of transportation, or how, in theory, the Canadian transportation system would work better. There are all kinds of theories you can come up with—

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

With respect, these are not theories. What you're asking for is taxpayers to purchase your product. If you're going to ask for taxpayers to buy your product, I think it's a practical question of whether or not it's the taxpayers' business to buy your product. That's not a theoretical issue; it's a very tangible financial one.

I haven't heard you explain why you think taxpayers, and not the industries that use these cars, should be paying the cost.

[Peter Leigh Scott]

Economics drove the decision for the government to get into the railcar business to begin with. You had to support the Canadian farmers. They're a long way from market.

So all the cars that were put in position and given to the railways were subsidized. I don't know the exact details behind it, but there are pricing benefits for the Canadian farmers to be competitive on the world market.

Again, we're not here to debate whether the government should be in this business or not in this business. You are in the business today, and that's why we're here. But if you choose to get out of it and you want for-profit companies to upgrade their fleet, that cost has to go downstream, so it's going to go down to the Canadian farmers.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

You want to push it up to the Canadian taxpayer.