Transport Committee on Sept. 12th, 2017

[Brad Johnston]

Sure. We're data-driven people. We spend a lot of time trying to use facts to guide our supply chain. The fact there's really no such regime in Canada currently is a problem for shippers, railways, and policy-makers. Being called upon to enact legislation, being called upon to invest in infrastructure, in the absence of data, is a problem. Someone even made a reference to congestion. In our view, that's a conclusion one makes from assessing data. It's not just something that someone gets to state. You should have to prove it.

Data will allow us to do that. We'll be able, in a meaningful way, to make a whole bunch of very good decisions if we have the right data. That is why, in our submission on the draft bill, we spent a great deal of time talking about data and what we think would allow for that to improve and give everyone—shippers, railways, and policy-makers—a very clear understanding of what's happening in our supply chain.

[Martin Shields, Conservative, Bow River, AB]

As a major supplier of steel or coal, that on-time delivery, do you think it would negotiate some strength for you, or for both parties be advantageous, if you had agreed-upon data?

[Brad Johnston]

Absolutely. Our supply chain might even then have an opportunity to become what we could call world class. If everyone had a very clear understanding as to what was taking place, absolutely.

[Martin Shields, Conservative, Bow River, AB]

Thank you.

[The Chair, Liberal, Judy Sgro]

You have a minute left.

[Martin Shields, Conservative, Bow River, AB]

Sir, you had 10 recommendations. You got through some of them. Is there one out of those 10 that you would stick out and say it would really make a difference?

[Forrest Hume]

The recommendation we make with respect to the changes proposed to the level of service provisions is important. We believe there is no need for further clarification of those provisions.

In the last three years, there have been a number of cases that were litigated before the agency and the Federal Court of Appeal that clarified in detail the seminal Patchett case of 1959 and the agency's evaluation process for determining level of service complaints. The need for clarification no longer exists. In fact, putting mandatory considerations in place only gives the opportunity for the finality of the agency's decision to be disturbed through protracted litigation and appeals. I have level of service cases that are going on for two and three years without a final conclusion in the courts.

[Martin Shields, Conservative, Bow River, AB]

That's a lot of wasted time and money.

[Forrest Hume]

Correct.

[Martin Shields, Conservative, Bow River, AB]

Thank you.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Go ahead, Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I want to give you folks an opportunity to think outside the box. Looking at a transportation vision 30 years down the road, 23 years down the road, the minister has put forward a transportation strategy 2030. With this bill, we are looking particularly at trying to establish balance and therefore return in value, in particular as it relates to future investments that support the overall transportation strategy.

That said, managing risks and creating value is of utmost importance. As business, shippers, and service providers, looking through a lens of contributing to economic environmental social strategies, what are your opinions on how we can utilize Bill C-49 to ultimately contribute to an overall transportation strategy and how it's going to help you be a global enabler and lead us to perform better economically on a global stage?

[Robert Ballantyne]

Goodness.

[Brad Johnston]

Mr. Hume will comment if you—

[Robert Ballantyne]

Yes, go ahead.

[Brad Johnston]

I would like to answer that question. I'm just going to collect my thoughts. It's quite a question.

Anyway by all means, please, Mr. Hume.

[Forrest Hume]

I'll start off, if I may.

It would be important that the bill comport with our existing national transportation policy, which highlights competition in market forces. If we can get these two railways to compete with each other in the manner that is contemplated by that policy, we will have a bright future in this country.

[Vance Badawey, Liberal, Niagara Centre, ON]

The time is ticking, guys.

[Brad Johnston]

All right.

There's no doubt about it that Canada is a trading nation and, in our particular case, our main competitor is Australia. The output for steelmaking coal mines in Canada has been more or less flat for a decade, and in Australia it has grown by, let's say, 60%. I reflect sometimes on why that is, and one of the reasons is supply chain.

In my view, there are different characteristics of what we might call a world-class supply chain, and that would include a platform for investing in infrastructure. That's well understood by the participants. It would include real-time measuring and monitoring of the supply chain. It would include a common platform for planning, and.... Well, let's just leave it at those three items.

It's a measure of how the participants control the supply chain. All those things are fact driven; they're data driven. It's why we spent so much time in our initial submission on data, on assessing the U.S. waybill system, and the main point of our response.

On the earlier question, I talked about the importance of getting the data right. We're not measuring what we're doing right now. There's nothing world class about that, and we can't improve. As a quality management system person, you have to measure what you're doing. The actual publishing of that measurement has to be transparent. Everyone has to have the same understanding of what's taking place. That's how people run supply chains.

[Vance Badawey, Liberal, Niagara Centre, ON]

Great.

Mr. Ballantyne.

[Robert Ballantyne]

I have a couple of other comments.

In April of last year, Mr. Garneau made the following statement: “I see transportation in Canada as a single, interconnected system that drives the Canadian economy.”

If the overall objective is to make our economy as competitive as possible on a global basis, then all the things in Bill C-49, and obviously other pieces of legislation and so on, and our trade agreements, whether NAFTA or CETA or whatever, should be geared towards that objective. One would hope, as we're talking about Bill C-49 today, that the various provisions would help lead to that objective.

I think in talking about it being an interconnected system, one of the inconsistencies that we have, and this is just an issue of a normal free market system, is that each of the players in effect is an island unto themself. They're all trying to maximize their own situation. That's, in a sense, a conundrum in terms of Mr. Garneau's view that it should be an interconnected system.

One of the governance problems, it seems to me, for the government, is how you reconcile the quite legitimate needs of private businesses to maximize the return for their shareholders on the one hand, but make sure that the system is working effectively for the whole economy on the other hand.

I think those are things that hopefully this bill will contribute to.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Blaney.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Thank you very much.

I really liked the question from my colleague at 40,000 feet, but unfortunately the road to hell is paved with good intentions and the devil is in the details.

My question is for Mr. Hume, but before I ask it, let me stress how important it will be to consider the excellent recommendations made here when studying the bill. This bill will increase paperwork and it shows serious gaps in data collection. In addition, there are many comments about the interswitching system.

My question will be for you, Mr. Hume. At the beginning of this presentation you were cut short, and I would like to give you the opportunity to expand.

You were mentioning that you were recommending the elimination of the exclusions for long-haul interswitching. Could you elaborate a little more on how we could fix this bill, if I could put it that way, to at least reach the ultimate objective of making our country more effective in terms of this transportation supply chain?

[Forrest Hume]

Well, of course, our recommendation is to eliminate the exclusions, but one of the things that could be done to make the long-haul interswitching rate efficacious is to make its application automatic. Right now, a shipper would have to apply to the agency. I'm quite well aware of what happens when the shipper applies to the agency. There is protracted litigation. It's lengthy. It's costly. There are appeals to the courts. It takes months, and in some cases years, before the shipper actually knows what the final determination is.

The difference between extended interswitching and long-haul interswitching is that extended interswitching was automatic. The shippers knew what the rate was by simply referring to the regulation. The agency calculated the rates on a fair and commercially reasonably basis, it included a reasonable contribution above the railways' costs, and it was accepted.

The long-haul interswitching remedy is not automatic. It will be as litigious, in my view, as competitive line rates were. There were five cases of which I am aware of competitive line rates. One of them went to the Federal Court of Appeal. Eventually, the railways stopped competing with each other and rendered the remedy inoperative. I don't want that to happen to long-haul interswitching. If it's made automatic, it will work.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Yes, so extended is what you recommend. I would recall for my friend that it was in our Bill C-30, but let's forget that it was a Conservative measure. This is what people asked for, and it's what would help.

Is there any other recommendation or any other issue you would like to see addressed in this bill?

Mr. Audet, you talked about safety. Of course, there are the recordings that can be heard after the fact, but you think the focus needs to be on training. What would you like to see in Bill C-49 to that effect?