Transport Committee on June 4th, 2019

[Scott Northey]

I think it's fair to say that any consideration of a corridor is going to gravitate towards an east-west flow. At some point, we have to start looking north-south and our primary focus has been to at least establish a premise for going north, off whatever east-west corridors may exist. I think having any corridor is going to be useful. We always say that a right of way is a right of way that allows you to do a lot more than if you're nothing right now. So we figure with the road, we can put in hydro, fibre optics. We can do a lot of things with it. I think the concept of a corridor is a good one.

I guess our concern would be that everyone would gravitate towards an east-west corridor at the expense of something going north, if we're going to look at allocating limited funds.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

So rather than perhaps having to wait some time for your turn, it's still better in your view that we go with incremental pieces such as we do now?

[Scott Northey]

I think so. I don't know how you have a broader body dictate which is the most effective corridor especially when you're going across time zones and provincial boundaries and all the rest of that stuff. I think my view is that rather than being a push from the top, it should be a pull from the bottom where the people who are local start the processing—we need access—and they maybe group together with people who also need access, and at that point you can start to create a more collective effort.

But the corridor is always going to be a top-down approach. That gets problematic because then you get into a situation of which corridor is the better one to be targeting.

It's a long way of saying that I think it's a good idea. I just don't know how you determine which is the right corridor to fund. I'd also say that everything is going to gravitate towards east-west as opposed to north-south.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Anablak, while we're up north, I wanted to ask you a technical question. Everybody sees the impact of climate change. The Northwest Passage is becoming a more viable trade route it seems every year. But we also see an awful lot...the thawing of the permafrost and the basic foundation on which you build things is changing. I'm wondering. When you're looking at your infrastructure needs, are you actually able, through even just the engineering side of it, to come up with reasonable cost estimates of what it will take to build something when literally the ground is shifting under your feet?

[Stanley Anablak]

I know for a fact that in our area we live mostly on the bedrock. That's pretty well for my home community of Kugluktuk and the communities on the coast, except for Cambridge Bay—it's pretty well on no bedrock. We see changes happening with the land. So, yes, climate change is impacting already.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Fair enough.

I'll go to you, Peter, in Vancouver. You look like you're channelling your inner hockey play-by-play look there.

Governments come and go, and each one comes in with a different ideology, a different agenda. This government has committed, for what looks to be a relatively long term, what looks to be a substantial amount of money, which I would presume adds some surety to the kind of planning that you can do.

The opposition right now is saying we have to be concerned about things like deficits and maybe we should pull back on future commitments if it means going into more debt. It becomes not just an ideological argument but also an argument about what kind of approach works.

What are your thoughts on that?

[Peter Xotta]

As you can imagine, mine are not as expansive as government generally. I'm focusing on supply chain challenges. I often say, though, that Canada's brand, which I put simply as, “Buy our stuff. We'll get it to you”, is at risk here. We're in a position, and I'd say it's an enviable one, where demand for trade with Canada is growing at a pace that is clearly challenging our supply chains to keep up. It's a good problem to have.

The response is something that also needs some urgency. The business of assessing the level of deficit in the country I'll leave to folks in Ottawa. But from our perspective, the fundamental merits of the programs that we've enjoyed the benefits of have been very compelling. I mentioned some numbers previously: $700 million led to $2.4 billion in private investment. I think it's a compelling argument that demonstrates that there is pent-up demand for investment, either in the supply chain or in productive capacity in other parts—particularly western Canada—to seize that opportunity.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Xotta. I'm sorry, I have to cut you off.

On to Mr. Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

My thanks to our guests for joining us.

If I may, I will start with you, Ms. Field.

Since this meeting began, there is some consensus that the fund seems satisfactory. I imagine that receiving funding for their projects helps to make people happy and ready to move forward.

However, you tell us that, of the 17 rail companies that your association represents, only seven proposed projects. Of those, three have already been rejected and three others are waiting for an answer. Those numbers seem very low to me. Could it be that the program is simply not designed for you?

I was surprised to hear you say that one of your railways had been devalued by 50%. Is that also the case for class 1 railways? Is it your impression that the program's approach is not tailored to your needs?

[Allison Field]

Exactly. I'm not sure how it works for CP and CN in the class 1s, but for us, definitely, funding has always been an issue because the banks just don't know what to do with us. This program, the NTCF, was really designed for bottlenecks and whole-of-network improvements. For some of our short lines it was difficult to prove that. Although they were really important pieces, because obviously for 26% of the rail network they're important, being able to justify that they had an impact on the entire national corridor was really difficult. Also, there was the short timeline. We only had four to six weeks to get our packages together. If we hadn't been planning on it for a short line that couldn't get funded by the bank or.... We were trying to work with our partners to come up with...50% is a lot of money in a very short period of time. We needed board approvals. It was just too difficult for some of our short lines to take part in.

Plus, in all honesty, quite a few of our short lines have been turned down for federal funding so many times that they just don't want to go through the whole process again.

[Robert Aubin, NDP, Trois-Rivières, QC]

Presently, we are looking for fluidity in the delivery chain between point A and the terminal. The railways are important players, of course, but are you telling me that, even within that sector, it is difficult to get from point A to point B and to coordinate projects in order to achieve greater fluidity? For example, are there discussions between your association, CN and CP, in order to ensure greater fluidity of freight shipments?

[Allison Field]

Several of our projects that went ahead will improve fluidity. To get very specific, in some situations, if we aren't fluid on our network then we have to sit our trains on their main lines, which means they are interrupted, which can have a huge impact. So I would say yes, definitely.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

I would like to take a few minutes to talk to Mr. Xotta.

The Vancouver-Fraser Port Authority seems to be playing its cards well in terms of this funding program. However, when I hear that we are losing our international reputation a little, I have questions about the program itself. Billions of dollars have been announced over a long period. I wonder whether it would not be preferable to have the entire sum from the outset, in order to set our infrastructures up properly. In Canada's trade corridors, not just the ones in the West, but also those in the Atlantic, the Gulf of St. Lawrence, and the Great Lakes, I don't think our companies are competing among themselves. The companies competing with them are mainly American.

Are we in the process of falling behind and never being able to catch up?

[Peter Xotta]

I'm optimistic about our ability to respond. As you mentioned, the Port of Vancouver and our partners have done reasonably well in terms of accessing federal funding, in part because of the preparedness we had to enter that process. We've been analyzing the supply chain, both regionally and within western Canada, for some time, so we're fortunate to be in a position to respond to the questions fairly promptly.

I believe that our ongoing commitment to infrastructure programs is a key or foundational piece. International customers want to see and hear a very strong and long-term commitment from the stakeholders, including the Government of Canada, to improving and delivering the capacity necessary for trade to continue to grow. Keep in mind that our port, Vancouver, has grown by approximately 30 million tonnes in the last 10 years. We have been doing what I believe is a fairly good job of responding to the challenge.

The question of timeliness and accelerating beyond to make sure we can deal with demand is the key issue.

[The Chair, Liberal, Judy Sgro]

You have 30 seconds.

[Robert Aubin, NDP, Trois-Rivières, QC]

In 30 seconds, I would just like to know whether Ms. Baratta shares that optimism or whether she has a different opinion.

[Lisa Baratta]

I share Peter's optimism.

[The Chair, Liberal, Judy Sgro]

Thank you.

By the way, the Western Transportation Advisory Council through Ms. Baratta has submitted a reference document called “WESTAC Compass” report, which we need permission from the committee to have translated. Is everyone okay with getting that document translated?

Thank you.

We move now to Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

First off, I do have to say to all of you thank you for being here and for bringing us to the next level. The purpose of the national trade corridors fund, as we all know, is to invest in the Canadian transportation logistics strategy, and specifically the trade corridors. With that, we're expecting that fluidity of bottlenecks, and attached to international trade and our ability, especially with the new trade agreements that are made available to you in the international market, that that would once again happen with fluidity and ultimately strengthen Canada's overall trade performance moving forward.

With that, when we look at—and I'll go to what I know best in my area, so back to Mr. Hamilton—Niagara-Hamilton and of course the GTA, they attach themselves to over 44% of North America's annual income within one day's drive. When you look at the eastern seaboard, at south Ohio or the southern states or northern states south of Ontario, at Ohio, east to Michigan, Indiana, and as well Illinois, and of course back into Ontario and Quebec, it's a pretty extravagant market that we attach ourselves to within one day's drive.

With that said, international trade and bottlenecks become a deterrent, and travelling in and out of the Niagara-Hamilton area from those locations I just mentioned, it's critical that with those trade agreements in place, having that fluidity become a major strategy.

I have two questions for Mr. Hamilton. What are your thoughts towards further ensuring that fluidity and of course the strategies attached to the same that would then again align with the investments to the NTCF? What are your thoughts on what should be done or what should be invested in to satisfy the objectives of those strategies?

The second question, with respect to NAFTA, CETA, CPTPP and of course all of the product coming in and out of the Midwest from those areas and into those areas that I just mentioned, is how do these agreements affect the demand and the pressures you're going to see within these trade corridors within the immediate future as well as in the long term?

[Ian Hamilton]

Thanks, Mr. Badawey. Maybe I'll answer your second question first.

Certainly, as a result of the free trade agreements, we've seen fairly material growth in the Port of Hamilton and the surrounding area for overseas cargo. We now carry over $1 billion worth of agricultural products, mainly into Europe, which is close to a $750-million increase per year over the last 10 years.

As we enter into each one of these agreements, and with Canada the only country with free trade agreements with all the G7 countries, I think we're in a very strong position to continue to grow. When there are disruptive things in the marketplace, such as trade wars or retaliatory tariffs, I think we'll continue to be well positioned as Canada to take advantage of that, whether it be the steel market or the agricultural market, as we've done locally. All that said, the demand is going to continue to grow for the products, and it's going to have the impact of increased congestion.

I think that in the line of questioning for Ms. Baratta from Mr. Aubin earlier on, they both talked about it. I think it's an integrated transportation strategy that's going to be critical; that's a strategy that truly focuses on how we use all the modes to their best advantage. I think that's an area the NTCF could probably further develop to understand how we use our fund to tie together those modes so that we're truly offering the most efficiency.

We have the roadways that are being used at the right time, the rail that's being used at the right time and the marine that's being used at the right time. As Mr. Aubin pointed out, sometimes we have a tendency to think in silos, but we're starting to see a momentum towards that integrated transportation strategy. I hope we can continue to use the funding to address how the modes integrate together to get the biggest benefit from each one of them, tap into capacity, like there is in the marine industry on the Great Lakes with the 50% available capacity, and continue to take advantage of that.

I hope that answers your question.

[Vance Badawey, Liberal, Niagara Centre, ON]

Yes, it does.

Now I'm going to bounce over to you, Ms. Field, and short-line railways. I have some background in that in my former capacity as the mayor of a community that brought in a short-line operator—I was for the short line—working with CN and CP.

My question for you is, with respect to the capital that you're going to need, are you partnering with the municipalities that you've attached yourself to? You mentioned that CN and CP are not co-operative when it comes to the capital side but do benefit from it. Is there a further opportunity for you to actually saddle CN and CP with some revenue opportunities for you, based on their use of the short line that you have available within your area?

[Allison Field]

Yes, with the municipalities, not so much. With the building Canada fund, a lot of funds are technically available to short-line rail, but we need municipal support. It's essentially impossible, because it's always going to be putting the private railway ahead of the community's water supply or the community's...you know. We're never going to be able to measure up, and the municipalities don't typically—

[Vance Badawey, Liberal, Niagara Centre, ON]

In terms of track rights, when you look at cars coming on or off CN or CP lines—

[Allison Field]

Yes.

[Vance Badawey, Liberal, Niagara Centre, ON]

—and utilizing your short line, is there not an opportunity to charge a per-car rate by you to them?