Evidence of meeting #61 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was shippers.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Richard Paton  President and Chief Executive Officer, Chemistry Industry Association of Canada
Fiona Cook  Director, Business and Economics, Chemistry Industry Association of Canada
Pierre Gratton  President and Chief Executive Officer, Mining Association of Canada
Roger Larson  President, Canadian Fertilizer Institute
Jim Facette  President and Chief Executive Officer, Canadian Propane Association
Claude Mongeau  President and Chief Executive Officer, Canadian National
François Tougas  Representative, Lawyer, McMillan LLP, Mining Association of Canada

5:10 p.m.

Conservative

Mark Adler Conservative York Centre, ON

The review process, and, if you want to answer, the writing of the legislation.

5:10 p.m.

Director, Business and Economics, Chemistry Industry Association of Canada

Fiona Cook

I think the review process was very well done. It came out with results that supported what we'd been saying for a while.

Again, I just want to re-emphasize that what we're looking for here is sustainable long-term improvements in service. Looking at two months, looking at a year is not enough. We don't want to go back to where we were. The economy is going to pick up again. The system will be under pressure. We don't want to go back to those days again, so we do need change.

I'll add that in the U.S., as Mr. Mongeau correctly notes, the Canadian railways are better functioning, and I would argue it's because of the regulation we have here. Actually in the U.S. right now they're working on new regulations to imitate what we have here.

5:10 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you.

Was there somebody else who wanted to comment on the same point?

5:10 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Richard Paton

Maybe I could just add one point. Oh, you're going to....

5:10 p.m.

President and Chief Executive Officer, Canadian Propane Association

Jim Facette

Thank you, Mr. Chair.

On the process and the legislation, the process was fine. It allowed for a great deal of input. On the writing of the legislation itself, we found the department to be very open and accessible. They asked us specific questions and we gave them specific answers. In fact we actually shared those answers with many of the members of this committee. So we had no problem in how you got here.

5:15 p.m.

Conservative

The Chair Conservative Larry Miller

Mr. Paton, quickly, please.

5:15 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Richard Paton

Just a point. Mr. Mongeau is making a strong argument that service is improving, etc., and that we don't really need this legislation. What I don't really understand in the railway argument.... If you look at proposed amendment one, all this does is say this is what a service agreement should look like. I would assume this would be of benefit to both the railways and the shippers, because now we at least have a common commercial framework. This is not regulatory; this is a framework. We don't want to be into arbitration and all these penalties. Basically this is what we're asking that this legislation say, that if the government is going to move forward and Parliament is going to move forward with the right to a service agreement—which I assume you will, as I can't imagine that's going to disappear from this draft act—then one would assume that you would want to be clear about what it is. I think that would actually further both the aims of the shippers and of the railways.

Assuming, Mr. Mongeau, you're going to end up in a situation where you're going to have this in the bill, I don't quite understand why you would object to that.

5:15 p.m.

Conservative

The Chair Conservative Larry Miller

Okay. You two can argue that another day. I'm going to have to move on.

Sorry, Mr. Gratton.

Ms. Morin, you have five minutes.

5:15 p.m.

NDP

Isabelle Morin NDP Notre-Dame-de-Grâce—Lachine, QC

Thank you, Mr. Chair.

I gather that Mr. Mongeau considers it normal to have commercial forces in control and doesn't think we should have gotten involved. To my mind, there's an imbalance of power. I'd like to hear from each of you what your relationship with CN is like now, before the bill is passed.

Mr. Mongeau said he had good relationships with a number of people. That might not be quite as true for you, Mr. Tougas.

I'd like each of you, in turn, to tell me how things are now. Do you think your ability to sway things is fairly considerable? What happens when you don't get what you want?

5:15 p.m.

Representative, Lawyer, McMillan LLP, Mining Association of Canada

François Tougas

I will answer in English.

I have a couple of points. One is a point that I think has already been raised, which is that to look at the very short term is not helpful to the exercise before us today. This is a bill that is going to stay in the act for a long time, so we need to be able to go through the cycle and all the changes in the economy in order to deal with problems as they arise over time, and to try to stay out of dispute resolution processes that are managed by the agency and thus allow parties to deal with one another commercially within a framework that is guided by the legislation.

The second part is that now we have a situation where I think many shippers feel that their relations with the railways are much improved over what they were during the service failure period that lasted so long, which Monsieur Mongeau talked about. We don't want to go back to those days. I'm sure he doesn't want to go back to those days. The reality is, though, that nothing has really changed in the market structure we have. We still have two railways servicing the companies we have in Canada that use rail to transport goods.

In the mining industry, for example, almost all of them are in remote locations, so that's not going to change. As Monsieur Mongeau said, it's very unlikely that you're going to see a second line built into some mine.

All we're talking about is trying to have a mechanism to allow the parties, when conflicts arise, to be able to address matters that either the railway is unwilling to give or.... If the shipper is asking for too much, the arbitrator is going to be able to settle that, but right now there's an inability for many shippers to even have a commercial negotiation. That's the thing that I think we're trying to overcome.

5:15 p.m.

President and Chief Executive Officer, Mining Association of Canada

Pierre Gratton

I'd like to add, too, that Mr. Mongeau has talked about his happy clients and service.

I think you said that it's 95% delivery.

I guess I would just make the point that if it is as good as he says it is, then I don't understand why there's a problem with providing access to a remedy. It presumably won't be used all that often because most of his clients are satisfied, so why not at least allow for that remedy, a proper remedy that can be used in those circumstances when it's needed?

5:20 p.m.

NDP

Isabelle Morin NDP Notre-Dame-de-Grâce—Lachine, QC

Mr. Mongeau, would you care to respond?

5:20 p.m.

President and Chief Executive Officer, Canadian National

Claude Mongeau

I would say that, if Mr. Gratton wasn't always with Mr. Tougas and I were to speak with his customers, we could probably come to an agreement in most cases.

When you create legislation that allows not only for commercial negotiations, but also for the use of a regulatory tool to impose something the other party does not want to provide, you have an unprecedented situation on your hands. You don't see that in any other transportation sector. That happens only with railways because of this residual regulation that comes into play regularly.

5:20 p.m.

NDP

Isabelle Morin NDP Notre-Dame-de-Grâce—Lachine, QC

Very well.

I have another question. In an ideal world, if your amendments were included in the bill, you wouldn't be able to benefit from those measures now in the case of existing contracts. What is your take on that?

That question is for each of you.

5:20 p.m.

Representative, Lawyer, McMillan LLP, Mining Association of Canada

François Tougas

This is a point that endured some debate before Transport. I think this is a legitimate point of contention between the parties: how wide should those gates be opened.

Most contracts, as has been mentioned already, are of short duration, so eventually that's going to come up. There are many long-term contracts, however. Nevertheless, what we're really talking about is being able to arbitrate things that are not in a contract, or are incapable of being put in a contract simply because one side will not agree to them. Once that happens, the shipper is left in a position of either accepting a high tariff rate with no service conditions or a contract that maybe has some things but not all the things you would normally see in a commercial contract. That's all we're talking about.

Monsieur Mongeau tries to characterize me as a regulatory lawyer. I'm not. I'm slightly offended by that.

5:20 p.m.

Voices

Oh, oh!

5:20 p.m.

Conservative

Ed Holder Conservative London West, ON

Which part?

5:20 p.m.

Representative, Lawyer, McMillan LLP, Mining Association of Canada

François Tougas

The lawyer part.

5:20 p.m.

Voices

Oh, oh!

5:20 p.m.

Conservative

The Chair Conservative Larry Miller

Very quickly, please.

5:20 p.m.

Representative, Lawyer, McMillan LLP, Mining Association of Canada

François Tougas

I'm actually an antitrust economic lawyer.

In this domain, what you're looking for is to allow the optimal result to occur. What we're trying to achieve here is sufficient balance between the parties. It's never going to be perfectly balanced in that you're always going to have a dominant carrier, but sufficient balance to allow for a normal negotiation, a commercial negotiation.

5:20 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you.

Mr. Toet, for five minutes.

5:20 p.m.

President and Chief Executive Officer, Canadian National

Claude Mongeau

Mr. Miller, could I just say one more small thing?

5:20 p.m.

Conservative

The Chair Conservative Larry Miller

Very quickly. I don't want this....

5:20 p.m.

President and Chief Executive Officer, Canadian National

Claude Mongeau

It's not further debate, but it is quite unprecedented that we would even consider opening contracts that have been negotiated in the past, and that we would do so in a way that separates the normal negotiation of price with that of service. In no other business in the world, in no country would you find that.