Transport Committee on Sept. 22nd, 2016

[Murad Al-Katib]

Okay.

First of all, the agency itself doesn't have the power to obligate information to be collected. Today, they can request it. They cannot go to railways, industry, or anyone to obligate them to provide data. That's one of the powers of the agency we think was very important. We said clearly to the agricultural industry, “Be careful what you ask for. You're going to have obligations, along with the railways and others, to provide info.”

Everybody says they want to provide the info to allow policy and decision-makers to have accurate, relevant data and to be able to make decisions. We think that should be collected by the agency or by an independent third party. It should be available to the public. It should be robust. It should be tested in terms of relevance, and it should be an ongoing thing. Information is certainly power, in policy, in efficiency, and in growth of the capacity of our system. This is a critical recommendation within the report.

[David Emerson]

The reactive as opposed to proactive comment in the report really refers to the fact that the agency is empowered to react to specific complaints. If some shipper, for example, has a complaint about treatment by a railway, and yet this is part of a pattern of behaviour on the part of the railways or some systemic issue, the agency is not empowered to deal with that. They're only empowered to deal with the specific complaint by the specific complainant and the party that has caused the grievance.

We're saying that the agency should be empowered to get ahead of issues, to create systemic solutions, and have ex parte power when a crisis evolves to issue orders that could create fixes that pertain to more than one shipper, for example.

[Murad Al-Katib]

That's very similar to the Surface Transportation Board in the United States.

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

Thank you.

Do I still have a minute, Mr. Chair?

[The Vice-Chair, Conservative, Luc Berthold]

You have 30 seconds.

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

So I conclude that you are in favour of the agency having proactive investigative powers. That could also give it some clout.

Thank you.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much, Mr. Aubin.

Mr. Badawey now has the floor. He has six minutes.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chairman.

I'm very excited about this discussion because it's something that we have been discussing for the past few months. In my thoughts, it results in outcomes that will be, quite frankly, a catalyst to a national economic strategy that takes advantage of the strengths that we have with respect to transportation. On that point, Mr. Emerson, I'm going to try and dig down toward a Canada transportation and logistics strategy, having to do with process, governance, and of course investment.

I happen to come from an area in the Niagara region that has been designated as a provincial gateway centre. That is because of our geographic area, through which significant incoming and outgoing transport flows, and is distributed by means of transfer and transshipment.

With that said, we are on a border. We are on the New York border, and although international in scale, our hub requires a significant and associated amount of infrastructure.

You mentioned that it has to be big when you look at different areas of strength when it comes to these transportation-related infrastructures. Would you consider, especially in a border community, that part of that strength, part of that size is not just what is located in Canada, in our case in Niagara, but that it's also what's located in the United States? An example is the Continental 1, which is currently being established between Miami and western New York, and that flow of shipment coming through Canada.

[David Emerson]

Absolutely. One of the points of focus in the report was the importance of interoperability and taking a North American approach to the transportation system. There are a number of reasons for that. One, that's the biggest market. Two, a lot of the ability to have an efficient transportation system derives from Canada being attractively located, so that traffic can flow through Canada and on to the U.S. If all we had was Canada-destined or Canada-originating traffic, whether on the road or in the air, we would not have the critical mass to have an efficient transportation system. It would be far too lightly used and we wouldn't have the gains and productivity opportunities that we have. Because transportation is a complete interlocking system, it's only as good as the weakest link, and if the weakest link is on the other side of the border, you had better figure out how to fix....

[Vance Badawey, Liberal, Niagara Centre, ON]

Absolutely. With that being said, you mentioned about the need for money, investment, and the participation of the private sector. To facilitate the fast and efficient movement of both goods and people in partnership with our biggest trading partner, what other mechanisms or enablers do you feel would also contribute to the infrastructure investments?

[David Emerson]

One of the observations in the report, and there is a recommendation around it, if you're going to have a national transportation and logistics strategy, we have recommended that we do as the U.K., Australia, and some others do, which is to have a national critical projects list for transportation that should derive from the priorities of a national transportation strategy.

Today we don't have such a list. There is not at the moment a well-considered project list for transportation, much less a list of shovel-ready projects. We believe there needs to be a lot of work done to pull together a database on the existing infrastructure in Canada. What is its condition? Where are the critical fixes needed in the existing portfolio of infrastructure? Then we need to assess where are the critical priorities to lay on new infrastructure and new projects, and how to look at different ways of financing it.

We have recommended in the report that they enlist the advice of the institutional investment community to give them ideas on how they can get rid of risk in a way that allows government to take some risk out of it to avoid having to put up taxpayer dollars in their entirety and allow private sector investors to come in with a suitably long-term and responsible prospectus.

[Vance Badawey, Liberal, Niagara Centre, ON]

Would you also agree that it's going to result in economic clusters and returns on those clusters that can be invested in infrastructure?

[David Emerson]

Yes.

[Vance Badawey, Liberal, Niagara Centre, ON]

The second part of it is, would you agree that the supply and preservation of employment lands need to be guaranteed, so that there are those growth areas with respect to those strengthened areas?

[David Emerson]

Yes. When you say employment lands, we have recommended as part of the preservation of critical gateways and corridors that industrial land for the purpose of supporting the transportation and logistics system be part of it, yes.

[Vance Badawey, Liberal, Niagara Centre, ON]

This is my final question. How much time is there?

[The Vice-Chair, Conservative, Luc Berthold]

Twenty seconds.

[Vance Badawey, Liberal, Niagara Centre, ON]

Okay, in 20 seconds, one of the challenges we have at the federal level and sometimes at the municipal level is that when we want to create these economic clusters and infrastructure investments to go alongside and work in tandem with, we run into the provincial government. The provincial government has the jurisdiction over roads.

What recommendation would you give with respect to trying to create that cluster? We have the marine, the air, the rail, all of which we can participate in. Now we need that road. We need that expanded new road, or a road that will connect, for example, to the Continental 1 in the United States. How do we facilitate that?

[The Vice-Chair, Conservative, Luc Berthold]

Mr. Emerson, Mr. Hardie is probably going to let you reply during his six minutes, given that the question lasted much longer than 20 seconds.

Your turn, Mr. Hardie.

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

Yes, please proceed with Mr. Badawey's answer.

[David Emerson]

A quick answer is that we have recommended the provinces be part of this national advisory council on transportation and logistics. They would be part of the deliberations around creating a national strategy and a national project priority list.

Getting down to a more granular level, I come back to the money comment. I think federal infrastructure funding should be levered with provinces, municipalities, and the private sector, so that you get $5 for every dollar you put in and you get the priority recognized.

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

I think the gateway project in metro Vancouver, particularly the Roberts Bank rail corridor, which my colleague Dianne and I both are familiar with, is a good example of that.

I wanted to take a much higher level view of things. In some of your earlier comments, you talked about transport being critical to the unity of the country, and a key foundation of government's economic policy. In our country, because we don't have the huge free market infrastructure they have in the United States, that inevitably forces the creation of a partnership between government and the free market.

I sensed in your report that you think it's time for the pendulum to swing a little more toward the free market. I could be wrong there, but I guess the question becomes, in the context of what we're dealing with now in the country, if government and the free market are to be partners in this, then what are the value adds that each one brings?

[David Emerson]

I hope we didn't come across as aggressively wanting more free market. In point of fact, I think various parts of the report call for a rebalancing, to bring government's regulatory focus back in, albeit a very efficient interface with the transportation sector, but government needs to be empowered to do more. If you really want to protect small shippers or passengers going on airlines from mistreatment because of power imbalance, the only way you're going to correct that power imbalance, in our judgment, is by having a more strongly empowered regulator that can get in between the grieving parties.

I think we have also been quite clear that the north and remote areas will not develop and will not have vibrant transportation infrastructure and therefore vibrant economies without a significant helping hand from government. The free market is not going to do it. As much as I'm a free market economist, I think we've given a little too much credit to what free markets can actually do without a wise helping hand from government. It's the creation of the wise helping hand that's the challenge.

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

Within the last 10 years we've certainly seen some failures with the free market system. We've seen the development or the growth of something called quarterly capitalism, which I was introduced to a short time ago. How do we square that? Obviously, our two major railroads, for instance, or the airlines, or the shipping companies will all be subject to those same pressures from their shareholders. How do we square that with the need, as Mr. Badawey inferred, for long-term, clear, concise strategic planning and delivery of infrastructure?

[David Emerson]

When you think about free markets, I urge you not to associate free markets necessarily with the stock market. The stock markets are crazy and turbulent, and quarterly earnings and so on drive short-term thinking and decision-making. I urge, and our report urges, us to do a better job of harnessing the trillions of dollars that are in pension funds and institutional investment funds, where the investors have a long-term perspective because of the nature of their liabilities that they want to match their assets with, and so on.

I think there are huge opportunities where Canadian pension funds today are investing all over the place. We just saw OMERS investing in the port of Melbourne, and the teachers' pension plan is invested in airports in the U.K. and in continental Europe, and so on and so forth.