Transport Committee on March 6th, 2014

[Lisa Raitt, Conservative, Halton, ON]

Louis.

[Louis Lévesque]

Just for clarity on the numbers and the actions that have been taken, in the case of aviation safety, it's important to note there's been a movement of an element outstanding from one element of the program activity architecture to another element, which is the program that we have to help airports with safety improvements. That reflects fundamentally the change. So it's not really a decline in terms of spending in that area.

I would remind members that, as was said, at the time of implementation of the deficit reduction action plan, there were no reductions to direct oversight positions in the department on aviation safety, on marine safety, on rail safety, and—

[David McGuinty, Liberal, Ottawa South, ON]

So there have been no cuts to safety expenditures.

Because of time, sir, you'll understand.... If I had 70 minutes, we would have a much longer discussion. We have seven minutes to dance together.

[Louis Lévesque]

I'm telling you the cuts were directed at the overhead in the department. There were no cuts to safety activities in the department.

[David McGuinty, Liberal, Ottawa South, ON]

Okay. My next question talks about some more numbers.

The Auditor General's report said, regarding the number of employees Transport Canada needed to oversee that SMS is implemented by the 31 federal railways on a three-year cycle, it required an estimate of 20 system auditors, 20 auditors, to audit each railway once every three years. According to the department, there are currently 10 qualified inspectors for conducting audits. With the current workforce, the department has conducted very view audits, only 26% of the audits that Transport Canada itself said it needed to have completed.

At this pace, it's going to take many years before the department audits all key components of SMS regulations and key safety systems. It's going to take even longer, Minister, now that the department is to oversee some key components of 39 additional non-federal railways.

Here's the question: Minister, how many qualified inspectors does Transport Canada currently have on staff?

[Lisa Raitt, Conservative, Halton, ON]

I'm going to turn to my officials on the actual number, because they have a better handle on that.

It does give me the opportunity, with my officials at the table here, to say it's important to note that when the Auditor General's report came out, it was very clearly put to us that we need to do better. We talked to the officials about that. They developed a plan to move forward. But I think it's important that we do acknowledge the fact that those were good recommendations from the Auditor General and that we do need to move forward better.

With respect to the number of inspectors, I'll ask my deputy to respond.

[David McGuinty, Liberal, Ottawa South, ON]

Very quickly, Minister, just a number. How many do we have?

[Louis Lévesque]

To go back to your question on the audits, clearly the report of the Auditor General indicated that the department needs to do a better job at audits.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Lévesque, I respect your need to clarify. I just need a number. How many do we have?

[Louis Lévesque]

We have about 100 inspectors directly on rail, but that doesn't include all the oversight positions. Specifically on that, what we are doing is putting in place a clear action plan that will increase not only the number of inspectors but, as we mentioned, we need to have people who are able to do audits of systems in order to fully implement safety management systems exactly as recommended by the Auditor General.

[David McGuinty, Liberal, Ottawa South, ON]

So have you gone from 10 qualified inspectors to 100?

[Louis Lévesque]

In terms of rail safety inspectors, we have about 100 inspectors. What the AG is saying is we should have more people who have the skills to do audits.

[David McGuinty, Liberal, Ottawa South, ON]

How many of those people do you have?

[Louis Lévesque]

I would have to find you the exact number we have at this point.

[David McGuinty, Liberal, Ottawa South, ON]

Okay, that would be good. I would appreciate that.

[Louis Lévesque]

The instructions to the department are to staff the required positions and implement the action plan put together after the Auditor General's report.

[David McGuinty, Liberal, Ottawa South, ON]

Minister, the next number I want to put to you is the $5-billion disaster in the Canadian grains industry. I think it's fair to state that your government set this in motion. The elimination of the Wheat Board was supposed to provide more opportunities according to your Prime Minister. He has many quotes on the record about getting the trains moving.

I don't know whether you've been meeting with farmers, Minister, about this crisis, but one of the things and one of the questions put to you in the House of Commons yesterday was that more than a year ago, your government was warned that your new law would not work because there's no clear definition of services, no objective way to measure success or failure, no liquidated damages payable to farmers when the railways screw up as they are doing right now. We have ships sitting empty off the coast of British Columbia. We have billions of dollars of grain sitting stockpiled in Canadian farm settings and we can't connect these dots.

You have all the necessary amendments to fix this mess. They have already been drafted. The question that was put to you yesterday is, are you prepared today or tomorrow before the House rises for two weeks to deal with this crisis, to bring those amendments forward in the House for unanimous consent so we can get this done by tomorrow before the House adjourns?

[Lisa Raitt, Conservative, Halton, ON]

With all due respect to my learned colleague and friend, amendments that have been proposed will not address some fundamental issues that we have here. The fundamental issue we have to focus on is the fact that we have a crop this year that is 33% higher than it has ever been. It's great for farmers. The frustration for farmers is that the capacity of the railway isn't there to be able to move that to market, and you know, I feel for the farmers, absolutely—

[David McGuinty, Liberal, Ottawa South, ON]

Why is the capacity not there, Minister?

[The Chair, Conservative, Larry Miller]

Mr. McGuinty, your time is up—

[Lisa Raitt, Conservative, Halton, ON]

You know what? I'm going to answer all your questions, because I think it's a good opportunity to explain, from our point of view in Transport Canada, what our analysis is of what has occurred.

In order to learn how to fix going forward, you have to understand the problem, and there seems to be a focus on amendments to the Fair Rail Freight Service Act from last year, which is a different conversation, and not the one that addresses our problem here right now.

The railways provide a capacity for a normal year, a five-year average, and they do so when they're putting their business plans together. Unfortunately, and fortunately, because this is a two-sided coin here, we have a great harvest and the farmers did extraordinarily well in bringing in production. We do expect that rail should have the capacity to have a surge, a swing, on how much they can provide.

That was exacerbated by the weather we've seen this year. Minus 25 degrees and below causes trains to have to be shortened, and there are concerns with respect to the health and safety of people working in operations.

We ended up having the situation of a huge crop, 33% more, which, if you take a look at it, is 20 million tonnes more than we normally see. That would mean 10 million tonnes for each railway to carry, because they're about fifty-fifty in grain in the country. That exceeds the entire potash industry, for example, in one year, in one fell swoop.

As for what we've done, we met with the CN and CP CEOs on Saturday and went through what they can do and how many cars they can move. They understand the urgency. Of course, I have met with the Canadian Federation of Agriculture and I've met with the grain companies.

The Fair Rail Freight Service Act was passed last year for the purpose of having shippers and railways communicate with each other in order to ensure that we have a smooth system. That legislation has not been utilized by grain or by the railways up to this point, and that's a difficulty. We'd like to see that utilized. More importantly, we'd like to see the railways start accelerating how much they're moving in the Prairies right now, and they've indicated that they would do so.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Komarnicki, you have seven minutes.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Thank you for being here, Minister, with your officials. Certainly, the transportation file has been very active in the last particular while.

I come from the Prairies, from Saskatchewan, southeast Saskatchewan in particular. We have the Bakken oil field, which has increased oil transport by railway. We have potash in the riding as well, of course, and we have long stacks of railcars for delivering potash. As you've stated and as Mr. McGuinty has stated, we have a bumper crop, which is a prairie term for a very bountiful harvest.

In Saskatchewan we've seen our economy increase exponentially, by 70% since 2007. Last year the province posted a record oil production of 177 million barrels. Also, of course, the oilseeds and grain crop was at 38.4 million tonnes.

We are hearing from farmers and from elevator companies. They're quite frustrated in terms of not getting the car spots they want. They're not able to load and deliver the cars to ports while ships wait at port, and of course there are markets for the commodities, markets that are anxious to receive the product.

Farmers are concerned about the fact that they are not able to deliver, and about the fact that it's beginning to affect their bottom line. Also, of course, they have cashflow problems. They realize it's winter, but in Saskatchewan, winters generally do get cold. They're wondering what might be done in the short term, because obviously they need to deal with this particular harvest. They're also looking at some long-term solutions, in the sense that this problem isn't going to go away. Even if the bumper crop is delivered, there are a lot of things happening in the Prairies that are exponentially increasing demand. The question they have is whether or not there is capacity there and what Transport might or might not do going forward.

I have two questions. First, with the current grain backlog, in the short term, what is being done and what can be done? Second, in the longer term, is there something we can do? You mentioned in your opening remarks that rail needs to meet the transportation needs going forward in our economy.

Go ahead, Minister. There's a lot in there.

[Lisa Raitt, Conservative, Halton, ON]

I appreciate the questions.

I think it shows that everybody's very concerned with respect to what's happening right now. As I said, it's hard to read the stories about farmers who are having difficulties with cashflow. It's hard to read those stories because they have done so well. They have provided wonderful bounty for us, as you pointed out, and the frustration is there about moving it in the short term.

Perhaps I could focus on short term and long term. In the short term, we do have a serious matter because we do have what's going to be a carry-over into the next year. The laws of physics mean that you can only move a certain amount of grain in a certain amount of time based upon what infrastructure the rail has. They do understand the issue. They understand the problem.

Minister Ritz has been meeting with officials for weeks. I have been meeting with officials at the railways as well. What we need is for them to tell us what the highest capacity they can run is, and that they do run that capacity. That's the way, in the short term, we can move the grain and work with the elevators and work with the terminals and work with the ports to ensure that this moves as smoothly as possible, so we don't have a situation where we have 200 cars sitting on a siding waiting to go into a terminal because they're waiting for a different train to come in as well, because those orders have to go out first.

The chain has to have capacity. The chain has to have direction. Those are the things that you work with in terms of operations with those two entities, the grain companies as well as the rail companies.

In the longer term, if I may, what it has shown is that we do have a constriction in our supply chain that wasn't able to deal with two things: an increased amount, and weather with intensity that we had not seen before in terms of operations.

One of the things that came out of the Fair Rail Freight Service Act was that we would set up a commodity supply chain table and ensure that there would be discussions there and that there would be another group that came out of Agriculture to deal with grain as well. Those tables have to work and they have to work together. For a hundred years there has been this tension between railways and grain companies because everybody wants it shipped as fast as possible, and it is the government's role to give good policy overall to smooth that out and ensure that the producers do get their grain to market, that they do get their product to market as well. We're setting up the table, which we'll be announcing soon, from the Fair Rail Freight Service Act. As well we're working with the companies now.

As Minister Ritz pointed out in the House yesterday, all options are being considered right now, just because of the real impact it's having on farmers in the west, and the real concerns. When we come to a position on the options we have before us, we'll be in a place to be able to announce those, and that's not right now.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

I appreciate that. When we look at the general trends.... A constituent wrote to me drawing to my attention that notwithstanding the bountiful harvest, the trend lines on his farm, because of a variety of reasons, have been trending upward. Production has been on an upward incline. Our oil production in Saskatchewan has been on an upward incline, and the Bakken fuel itself is posing some challenges, and potash also. Everything is sort of trending upwards. The big question everyone wants to know is, is there a capacity issue that needs to be addressed? Is someone looking at that fact? Obviously, we have two rail companies so there are not many options, and we're having trade deals signed fairly frequently these days, essentially with the idea that we would be able to get our product to foreign markets. We're sort of a landlocked country particularly in the Prairies, and the only way to move a lot of our product is by rail, and we only have two rail companies.

Is somebody looking at the capacity issue long term? I'm talking now about five or ten years. Do we have what we need to meet that? It appears it needs some substantial action to take it to the new level, to the new century of what's happening with our country and with our economy.