Evidence of meeting #69 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-49.
A video is available from Parliament.
2:55 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Thank you, Madam Chair.
Mr. Harrison, you mentioned, quite often of course, that yours is a just-in-time system, you need just-in-time delivery. You mentioned the difficulties in 2013-14. We recognize that there were some pretty extraordinary conditions there, a nasty winter as well as a bumper crop on the Prairies that those producers wanted to have moved. Outside of 2013-14, does your membership experience frequent difficulties with their just-in-time delivery?
2:55 p.m.
President, Canadian National Millers Association
Frequent, no, but it's not unheard of, however. I think what you've touched on is very important. We're going to have a bumper crop every year from now on, and we're going to have weird winters a lot more often than we've had them in the past, based on our experience of recent years, so the demand for service is going up, and predictability is highly important.
I want to come back to just-in-time again. It's just-in-time for the milling company to meet the customers' needs. It's not just-in-time for the processor. It's well in advance so that the processor can store grain of the right quality, protein level, variety, and all that stuff.
I hope people haven't fixated on just-in-time, but that's the way it works when the mill has to deliver.
2:55 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
In the past, how many of your operators have been basically stranded by the abandonment of a rail line?
2:55 p.m.
President, Canadian National Millers Association
Very few, in fact. I can't think of a case in point. Most milling establishments that are of some age have been situated predominantly close to the populations as opposed to in rural parts of the country. The majority of milling capacity is close to the population in the eastern one-third of North America.
2:55 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
I'm sorry if I have cut your answers short. I have more questions than I have time for, as usual.
We get this cat-and-dog thing going between shippers and railroads. What about the governance of the railroads? Are your interests not represented on those boards of directors at all?
September 13th, 2017 / 2:55 p.m.
President, Canadian Canola Growers Association
Not really. I mean, we've convened a lot of conferences and stuff like that, but the railroads are never there. I'll give you an example, talking about service-level agreements. Our local elevator has a call that they have a unit train coming in. They don't source the grain until just hours before the train arrives. You have basically 48 hours. Their agreement says that they have to fill that train in 48 hours, and so they have to gather that grain just before that period to make sure that they don't fill the elevator with something that might not move in the event that the train doesn't come.
When the train does come, and they load it in 48 hours, the train will sit there for a week.
2:55 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
We've heard those stories before, but do those stories percolate up or down to whatever levels in the railroad operations, their governance, or their decision-making process, to have an impact on the way the railways manage themselves? I'm seeing blank looks across the piece.
3 p.m.
President, Canadian National Millers Association
Railways used to own milling companies and big milling companies. I have just come from our annual conference from a hotel that used to also be held in part by railways. Those integrations were gone decades and decades ago.
We have just had a meeting for the first time in my 28-year history where railways were not represented there, not because we're at war with one another. It just didn't happen this time because of the focus of our organizations. No, our processors are not there.
The other thing I have to share is that under federal law the milling industry is designated as being for the general advantage of Canada, just like railways are under the act. We were recognized for a century as an essential producer of goods, and railways have been recognized for more than a century as an essential provider of those raw materials, and that's the reality, but no, we're not directly represented, to the best of my knowledge.
3 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
When we met on Bill C-30, the Fair Rail for Grain Farmers Act, a lot of the interest that we heard about interswitching was to basically get access to Burlington Northern Santa Fe and get that grain moved.
In a conversation with you a little bit earlier, Mr. Tougas, we were talking about the fact that, on those excluded zones, Quebec to Windsor and Kamloops to Vancouver...and this is when the penny kind of dropped for me. What the LHI is supposed to do that it may not do, which is really not to give access to Burlington Northern Santa Fe, is spur competition between the two railroads in Canada.
3 p.m.
Lawyer, McMillan LLP, As an Individual
Yes, certainly that has to be one of the objectives. I would have said that by the nature of the exclusion zones the main thing that's happening is eliminating competition that might be possible between CN and CP.
Really, the LHI is dedicated to the idea of what the rate is going to be for the origin portion to connect to that connecting carrier. In those zones.... Let's just take Kamloops again. If you're heading west, you could be coming in on CN into Kamloops, or you could be coming in on CP into Kamloops. If you're trying to switch to the other one, that would be the connecting carrier. There's only one connecting carrier there that's not the same as the origin carrier.
In Quebec, in the Quebec-Windsor corridor, you have the same two railways that are essentially vying for business, but if you're in the Maritimes or you're in northern Quebec, it's CN, CN, or CN. Those are the choices.
To the extent that the American railways can get into the LHI system, I actually think that's a positive. I don't go for the fearmongering about how much business BN is going to get out of this. You've heard the answer already. How many cars actually moved under extended interswitching? It's a tiny number. CN's own witness admitted it, right? It's not a big number at all, so I just don't buy into this “it's a catastrophic kind of problem”.
On top of it, if it is going to be a problem, that's the good part, right? If there's actually going to be competition that gets created out of the system, that's a win, not a loss.
3 p.m.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Thank you very much, Madam Chair.
Perhaps I'll continue with that line of questioning, but maybe in a bit of a different direction. I have two questions.
First, what other remedies are available to U.S. shippers beyond better data information?
My second question, which was asked earlier this week by one of my colleagues, is this: should our Canadian government prioritize transportation in its NAFTA negotiations? We're in the midst of that and we're discussing transportation issues. Embedded in that are trade issues, and we know that we're going to have discussions here in Canada at the end of next week.
Perhaps you could answer those questions for me.
3 p.m.
Lawyer, McMillan LLP, As an Individual
On the last one as to whether we should prioritize transportation in NAFTA, the systems are very different. I don't think that the goal, or even an important goal of NAFTA would be to harmonize our rail transportation policy and systems. They are very, very different. I think that would be a pretty darned tall order to try to do, particularly in the current environment. I think we have enough troubles at home that I would make a priority dealing with the domestic issues that we're facing in rail transportation. There are plenty of those to go around. My whole career is built on it. I depend on these problems, so do my kids.
On the first question, whether the remedies exist for U.S. carriers, I think you would hear from American shippers that they would love to have final offer arbitration and don't. They're looking at it. They've been looking at it seriously for a number of years. They don't have it. They have a completely different system. You do have access to a rate reasonableness mechanism before the Surface Transportation Board, and it's used. It's more rule-oriented down there, not surprisingly, than our system is, but they have access to that.
They have all that data, and they have another thing. The Mississippi is a brilliant of example of this. I heard the rail carriers on Monday talking about all this alleged other competition that we have in Canada. By the way, in case they missed it, there's no river in the west that goes to Vancouver from the Prairies, so there is no river competition, but in the Mississippi you have all seven class I railways touching it, or going down that spine. You have the river traffic and you have truck traffic. That's a competitive environment. That's what it looks like when you have a bunch of players. Welcome to reality. In Canada, with a very diverse geography—and by diverse I mean topographically and by the remoteness of our industries—we just need to have a system that deals with the remedies.
If you take just LHI by way of example again, if you want to make that remedy work for people who are remote—and this is where our production facilities are, particularly in the bulk resource sector—in the grain sector these are so remote that they need a remedy, because we're not building any new railways. That is not going to happen. We cannot do that in North America, so we have to rely on the systems that we have now.
Going back to the short-line point earlier, infrastructure is very hard to come by. Giving that up, I think, is a huge mistake. Whenever we have an ability to maintain infrastructure, I think we should. I don't know that we should go to the extent of subsidizing all that activity. Somebody smarter than me is going to have to figure that out. I would definitely make the remedies that we have available for our infrastructure work in a way that makes it accessible and viable for shippers to use in those circumstances. You also heard earlier that nobody's lining up to do this stuff. We don't have hordes of shippers trying to get access to the remedies, waiting for their turn. This is the most reluctant thing they do in their business, so when they use it, it's because it's a last resort and it has to be viable.
3:05 p.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
Thank you, Madam Chair.
I would like to continue the conversation with Mr. Tougas.
It seems to me that you quietly debunked a myth, in your opening remarks, and I want to make sure that I have understood correctly.
You say that we are not in a process of harmonizing the U.S. system and the Canadian system. At most, Bill C-49 helps us compare ourselves to what is being done in the United States, and my understanding is that this is not really beneficial.
Is that the idea behind what you said?
3:05 p.m.
Lawyer, McMillan LLP, As an Individual
I will answer that by saying that while our systems are very different, to the extent that we have an opportunity to grab better systems from other places, I think we should do so. If somebody has a better idea, we should do it, and right now they have a data disclosure system that is better than ours. It's not great, but it's better than ours. We should grab that, and we should fix it so that we can make it usable in our system. Bringing it holus-bolus, the way it is right now, into Canada, I don't think accomplishes a ton of stuff. Worse than that is that we're not grabbing it all, we're only grabbing part of it. For example, we've left off the commodity list, you don't have to report commodities. So what if all boxcars moved at this speed this week? That's one of the things that's going to be reported. Who cares? You need it corridor by corridor. You need it railway by railway.
3:05 p.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
I think that confirms my thoughts.
If I may, I have a friendly little criticism. You answered a question by someone—seemingly not someone at the table—asking you which of your amendments you would prioritize. By doing so, you shrunk our playing field.
Did you agree to do so because it's really the priority, or are the recommendations you have submitted part of a coherent set that would help us become a leader instead of a pale copy?
3:10 p.m.
Lawyer, McMillan LLP, As an Individual
My recommendations do not all stand together. You could take one out and the rest would work. They're not a whole. I prioritized them because people came up to me—nobody here from this committee—and asked me, “If you could only have one, which one would it be?”
I've said the one that it would be, because I'm looking at it. We have an LHI bill in front of us, essentially, and if it's is going to go through, fixed or unfixed, then the other remedy that gets used is final offer arbitration. There's only one rate remedy, final offer arbitration, and that is it. If we're not going to fix the LHI system, you have to make the FOA system work better than it's currently working. That's all I'm saying.
3:10 p.m.
Liberal
The Chair Liberal Judy Sgro
We have completed our first round and have a few minutes left. Does anyone on this side have any pertinent questions that you seek answers to?
Then I'll look over to this side. Mr. Hardie.
3:10 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
I don't know if anybody is in a position to answer this question. I you look at our two national railways, CN and CP, unlike their American cousins they cross the border and they have routes very deep into the United States. I have to wonder out loud if there are some things they do in the States that somehow disadvantage their operations here in Canada. Is there preference given to what they are able to do down there that somehow works against our interests here?
If nobody has a really good idea, I wouldn't want you to speculate on something such as this, but I'll just put it out there.