Transport Committee on Sept. 11th, 2017

[Sean Fraser, Liberal, Central Nova, NS]

If we can, I'd like to again shift gears and go into some questions about interswitching, and I'll start with Mr. Al-Katib.

We heard during our prior study on Bill C-30 from some folks not in the grain industry that, “Gee, we'd really like to have this, too.” It impacted a certain geography and a certain industry. Although it was put forward, really, in an environment where we were dealing with a bumper crop and terrible weather, the fact that we can be introducing competition where there is none seems to me like a good idea. Is there any reason that we shouldn't be extending this to different industries across the entire country?

[Murad Al-Katib]

Well, one of the things that are being attempted with the long-haul interswitching solution is to expand that out to various sectors and across the country. There is one glaring criticism at this point of the Bill C-49 provision: the Kamloops-Vancouver corridor is actually excluded from the long-haul interswitching. It's not very clear to me why that is the case, and I think it's certainly something that needs to be looked at. But from the perspective of having it accessible, one thing is that when we did our consultation, the broad 160-kilometre interswitching wasn't being used. It was being used after we filed our report. We couldn't find a single incidence of it being used at the time. That being said, I'm not a fan of remedies just hanging out there for the convenience of shippers. But with a well planned remedy, like the long-haul interswitching, if we can get the CTA to react quickly and to extend that from year to year quickly, I think it's a very effective mechanism, and it is going to inject competition into the system.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go on to Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I have a quick question, and I think it will go to Mr. Emerson.

With respect to the reviews of the CTA, how important is it to regularly revisit laws as well as to review the Canada Transportation Act?

[David Emerson]

Well, we said in our report, and I said in my remarks, that the system today is so big and so complicated and so messy that keeping up with competitive conditions requires much more than a decennial review. There needs to be an evergreen process, I would argue, at least every two years. I believe the act should spell out the requirement for there to be a national transportation strategy and probably specify some of the key components to it, such as a strategy for national infrastructure projects that are critical to transportation and logistics over the next 20 years. You have to get ahead of these projects 20 years or you're going to be building and producing something and getting into regulatory delays and so on to the point where by the time you're finally finished, the economics has swamped you in some other way.

[Vance Badawey, Liberal, Niagara Centre, ON]

And you'll obviously find that both the strategy and the infrastructure investments that are being made will yield better returns if they're in fact going to follow one another?

[David Emerson]

Well, for anything, I believe, you need an infrastructure priority list, if you like, that is carefully thought through and analyzed, with a lot of the pre-engineering done, and a lot of the economics and financial dimensions, and some comprehensive assessment of risk. You need private sector investors to give you input into what kind of cost of capital you're looking at for different types of infrastructure and the different arrangements that might be put to financing them. That's all part of it. Leaving it vague and ill-defined and then expecting to be able to implement a timely infrastructure program, I think, is wishful thinking.

[Vance Badawey, Liberal, Niagara Centre, ON]

This is with respect to sustainable infrastructure investments and, most importantly, the returns for both the economy and the industry itself.

I guess I can shift over to Mr. Streiner with respect to the agency. Is it incumbent upon the Canada Transportation Agency? You mentioned earlier that you're responsible for, as you say, smooth and efficient transportation systems. Is it appropriate to assume, for lack of a better word, that part of your role is to ensure that the infrastructure that is carrying trains, floating boats, and so on is actually being sustained, is safe, and is adequate for the current transportation environment?

[Scott Streiner]

No, Madam Chair, the CTA's mandate does not include monitoring the maintenance of transportation infrastructure. That's not included currently in our mandate under the legislation.

[Vance Badawey, Liberal, Niagara Centre, ON]

So who in fact is...?

[Scott Streiner]

With respect, I would refer the question back to Transport Canada. It regulates for safety and security purposes. The Canadian Transportation Agency, the institution I lead, regulates for economic and accessibility purposes.

[Vance Badawey, Liberal, Niagara Centre, ON]

We spoke a lot on governance today. Mr. Emerson had a lot of comments with respect to governance and how much better we can be in governing our airports especially and similar assets, including marine-related. I can cite a few governance challenges that we have with some of those assets, but I'll leave that to another discussion.

Is the CTA charged with ensuring that those who oversee these pieces of infrastructure are doing so in an appropriate manner, whether it be through a code of conduct or whether it be reporting of conflicts of interest and things of that nature? Does the CTA have any opinion and/or any jurisdiction over that area?

[Scott Streiner]

We have very limited jurisdiction with respect to, say, airports or port authorities, which I assume is what the honourable member is referring to. We do have authority with respect to accessibility issues, which I talked about earlier. That's the accessibility of airports and port terminals that serve passengers. We do not have oversight with respect to some of the other issues you identified, or not under the law as it currently stands.

[Vance Badawey, Liberal, Niagara Centre, ON]

How about currently owned federal assets that may be managed by private corporations? Do you have any authority there with respect to the question I just asked?

[Scott Streiner]

If the question pertains to governance issues, such as the use of funds, etc., again, we don't have authority to oversee that. We can hear or receive complaints regarding the fees charged by port authorities or by pilotage authorities, but with that exception, and the earlier exception I talked about on accessibility, we have very limited jurisdiction with respect to the entities you describe.

[Vance Badawey, Liberal, Niagara Centre, ON]

Great. Thank you.

For my last question I'll switch gears and ask Mr. Al-Katib a question with respect to the interswitching.

In your opinion, is asking the CTA to set the long-haul interswitching rates based on comparable traffic a feasible way of setting the fare rates while also ensuring that class 1 railroads are not penalized?

[Murad Al-Katib]

That's probably the biggest outstanding question. To set it at a fiftieth percentile and to be able to effectively deal with that in the 30-day window I think will be the judgment of success or failure of this initiative. I think it can be done. I think the costing data is there. The comparables can be identified. I think it can be done.

[Vance Badawey, Liberal, Niagara Centre, ON]

Great.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Ms. Block.

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

Thank you very much, Madam Chair.

My colleague Mr. O'Toole was about to ask a question and wasn't able to. He pleaded with me to get this question on the books, so I said I was willing to use—

[The Chair, Liberal, Judy Sgro]

[Inaudible--Editor] leave, or I would have had to make an exception.

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

That's okay.

The question is for you, Mr. Emerson. He noted that you served as a trade minister in the past, and he wanted to know, if you were the trade minister in the position of renegotiating NAFTA, whether you would have transportation as a key priority.

[David Emerson]

Well, I think it's a very important priority and should at least be part of the strategic thinking when it comes to the negotiations. Canada might want transportation as a sector specifically discussed at NAFTA. Whether you would get take-up on that from the Americans in particular, I don't know.

As I said earlier, I believe that probably the number one driver of competitive success that we need to deal with going forward is transportation and logistics. As I've said, we have a massive, high-volume, high-speed system. We have all kinds of issues around taxation of rail assets and so on. A large range of issues and border issues create kinks and discontinuities in what should be a smoothly flowing, liquid system.

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

Thank you very much.

I feel like my colleague Mr. Fraser. There are many things I would like to ask, but I am going to go to you, Mr. Streiner, and circle back to some of the comments you made in your opening remarks.

You said that perhaps the most significant rail-related change in Bill C-49 is replacement of the CTA's authority to set interswitching distances beyond 30 kilometres and of the competitive line rate provisions with long-haul interswitching. I think it connects quite well with what Mr. Al-Katib said in terms of the angst around interswitching. This would be one of the issues that is raised with me time and time again when I'm meeting with stakeholders around the long-haul interswitching, so some of my questions are based on the conversations with them.

For you, Mr. Streiner, I first want to ask about long-haul interswitching orders and reasonable direction of the traffic. In the bill, clause 136.1 states that an LHI order should be applicable to the “nearest” interchange “in the reasonable direction of the...traffic”. In southern Manitoba, for example, traffic is often moving north to an interchange in Winnipeg, before it moves somewhere down into the lower 48 states. There are, however, closer interchanges at the border, but these are not of the same size or efficiency as the Winnipeg interchanges.

Does Bill C-49 allow for an LHI order to have traffic still move to Winnipeg even if there's a closer but less efficient interchange?

[Scott Streiner]

Madam Chair, I trust that the members will understand that as an adjudicator I have to be careful about interpreting legislation that's not yet on the books and on which we don't have an application. Having said that, as I read the bill, it doesn't dictate to the CTA that the traffic must flow in one direction only, so I think we will make that determination and other determinations, if Bill C-49 is passed into law, based on the facts before us and the arguments brought by the parties.