Transport Committee on Sept. 20th, 2016

[Fred Gaspar]

With all due respect, that is a question ultimately for policy-makers to settle on. I think what we can say is that our experience shows that efforts that you put into ensuring the efficiency and intermodality of the system tend to have rewards. As Randy pointed out, it's an entire supply chain. Spending a heck of a lot of effort on one particular mode and ignoring the touch-points with other modes and the transfer points makes it a less effective exercise.

[Vance Badawey, Liberal, Niagara Centre, ON]

What role do you see yourselves playing with respect to offering those very incentives to the customer, versus just government offering those incentives?

[Fred Gaspar]

From our perspective, going back to our core mandates, one of the services we offer is level-of-service arbitration between the shippers and the railways, and that's very helpful. We're effectively a quasi-judicial body and an economic regulator, so once policy direction has been set, we're there to provide regulatory instruments to make sure it's being applied properly. We don't engage on the policy questions, but we do have mechanisms in place that can catch those hiccups in the system. That's where a provision like interswitching, and the interswitching rates and regulations that we set, do serve to address that. It's basically a way to communicate to all the stakeholders in the marketplace that this right exists, so govern yourselves accordingly.

That's where we see our role, to identify a regulatory framework and an adjudicative framework that can help implement the policy direction set by the Government of Canada.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much, Mr. Gaspar.

Ms. Watts now has the floor for six minutes.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Thank you very much. I appreciate your being here.

I have three questions. I just want to go back to the Emerson report for a moment. You're well aware of the recommendation that the 160-kilometre interswitching clause of Bill C-30 be allowed to sunset...and review. It was also recommended to get rid of the maximum revenue entitlement, and to exempt non-hopper cars carrying grain from the MRE calculation in the short term. That was the recommendation, and I know everybody's aware of that.

I just want to get your comments on the recommendation, the impacts of it, and on whether we should keep the existing legislation.

[Randall Meades]

It's a difficult question for us, and it's a difficult question because you're right in the heart of Transport Canada's mandate. The Minister of Transport is in the process of responding to not only that recommendation, but a whole host of them. There's a process that's in place. We are part of that process through our relationship with Transport Canada. That's the extent to which we have a role and a view in this area, and the view is to provide input to both the minister and Transport Canada.

That said, in order to gather more information, our chair has taken the opportunity to have what we call an enhanced outreach program. Unlike in previous years, he's been out meeting with every stakeholder that we have. That's just another way we are trying to bring more information into the discussion and bring our data into the discussion as well.

I think the one problem—and this is a personal view—is the fact that the take-up on a lot of these measures is so small that to draw inference from them based upon the data.... The set is just too small. So it's all about going out there, consulting, talking to stakeholders. That's what I understand Transport Canada is doing, and we're helping to facilitate as best we can.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Okay.

Regarding that process, I heard you earlier say that there was significant stakeholder engagement to develop Bill C-30.

[Randall Meades]

Right.

If I can, I'll just talk a bit about the CTA review. The data they were using was not based upon 2015, because the data hadn't come in yet for 2015. Looking at what was available in 2014, I think we had in the neighbourhood of six shippers that utilized the interswitching regulations. Six shippers is 600 carloads, which is virtually zero. In 2015, the first full year we have data for—it came out after the report was published and tabled in the House—it's shown to be up a bit, but it's still very small.

What I'm saying is that I think we need a little bit more time. From my own vantage point, we need to get more data so we can make learned observations and learned inferences from the measures.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Through that process, will you be making recommendations directly to the minister?

[Fred Gaspar]

No, actually Transport Canada sets the policy direction. We answer their questions, when and if they're presented. They're operational in nature or data in nature. They may sometimes reach out to us and ask us what numbers we have or what our experience shows, but we don't have a formal role in the consultation process.

[Randall Meades]

The only formal input we have to the minister is through our annual report. The chair makes operational recommendations on how the act can be better used, as you will, and that's done annually.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Okay, great.

Thank you.

My colleague has some questions.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

I heard you state earlier that interswitching is a tool that is used to adjust market failure.

The distances in Bill C-30 were put in to address what would have been some extraordinary things coming together and creating a bottleneck within the system. While you said there hasn't been a lot of uptake on the 160-kilometre distance, would it not be fair to say that it's good to keep that distance in the legislation? If we come up against another set of circumstances that would require that length of interswitching, it would be good to have it there so you wouldn't have to perhaps come together quickly and put in a piece of legislation to address that situation.

[Randall Meades]

The only way I would be able to comfortably address that is if I had empirical evidence to substantiate it. We have had anecdotes. As far as the hard data, there's not enough to really make a determination on this—a fair determination.

Secondly, what we're hearing anecdotally is consistent with what you were saying. However, there is no empirical basis on which to base that.

I'm not an accountant, I'm an economist, and I guess that's one step removed. I would be very uncomfortable making any kind of judgment call based on sort of the back of the envelope.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much, Mr. Meades.

Mr. Fraser now has the floor for six minutes.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much.

To follow up on some of the questions that Ms. Block asked and you just commented on in terms of the need for empirical evidence, do you really need more time under the current framework to understand the impact it's had?

[Fred Gaspar]

There's certainly no doubt that the more time, the more dataset you have, the better you are able to provide empirical evidence. I can't say to you definitively that's it's an absolute requirement in order to be able to affect our role in the system. What I can tell you is that the existence of the provision has had an effect more broadly than just what the evidence shows in terms of the negotiating climate between shippers and carriers.

Again, that's all based on anecdotal evidence, so as long as members distinguish what we're saying, between what the facts say and what inferences we are making.... The two are different.

[Sean Fraser, Liberal, Central Nova, NS]

In terms of the assessment that this has had on efficiency or economic growth, essentially what you're stuck with now is a multiplier of how many cars have actually been used times the value of goods on those cars.

[Fred Gaspar]

Yes, and we're not actually even looking at the value per se. We're just looking at what it's done to the movements of grain—

[Randall Meades]

—and other commodities.

[Fred Gaspar]

—and other commodities. That's right.

Certainly it has had an impact, but there's been a greater impact at the smaller distance levels as opposed to going as you approach 160.

[Sean Fraser, Liberal, Central Nova, NS]

You're saying that the bulk of the people who have used it beyond 30 kilometres are still closer to 30 than they are to 160, for example.

[Fred Gaspar]

Yes.

[Randall Meades]

Again, I would caution, we have 16 shippers that we're making this inference on. When we break it up and analyze it based upon 10-kilometre distances, we're in a world where we have, quite frankly, a handful at any one particular.... I would be very cautious in drawing definitive inferences from numbers that are so small.