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.

On the agenda

MPs speaking

Also speaking

Cam Dahl  President, Cereals Canada
Bob Masterson  President and Chief Executive Officer, Chemistry Industry Association of Canada
Jeff Nielsen  President, Grain Growers of Canada
Kara Edwards  Director, Transportation, Chemistry Industry Association of Canada
Fiona Cook  Executive Director, Grain Growers of Canada
Pierre Gratton  President and Chief Executive Officer, Mining Association of Canada
Joel Neuheimer  Vice-President, International Trade and Transportation and Corporate Secretary, Forest Products Association of Canada
Karen Kancens  Director, Policy and Trade Affairs, Shipping Federation of Canada
Brad Johnston  General Manager, Logistics and Planning, Teck Resources Limited
Sonia Simard  Director, Legislative Affairs, Shipping Federation of Canada
Gordon Harrison  President, Canadian National Millers Association
Jack Froese  President, Canadian Canola Growers Association
Steve Pratte  Policy Manager, Canadian Canola Growers Association
François Tougas  Lawyer, McMillan LLP, As an Individual
James Given  President, Seafarers' International Union of Canada
Sarah Clark  Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
Jean-Philippe Brunet  Executive Vice-President, Corporate and Legal Affairs, Ocean
Martin Fournier  Executive Director, St. Lawrence Shipoperators
Mike McNaney  Vice-President, Industry, Corporate and Airport Affairs, WestJet Airlines Ltd.
Lucie Guillemette  Executive Vice-President and Chief Commercial Officer, Air Canada
Marina Pavlovic  Assistant Professor, University of Ottawa, Faculty of Law, As an Individual
David Rheault  Senior Director, Government Affairs and Community Relations, Air Canada
Lorne Mackenzie  Senior Manager, Regulatory Affairs, WestJet Airlines Ltd.

9:40 a.m.

Liberal

The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)) Liberal Judy Sgro

I'm calling to order the meeting of the Standing Committee on Transport, Infrastructure and Communities, pursuant to the order of reference on Monday, June 19, 2017, to study Bill C-49, an act to amend the Canada Transportation Act and other acts respecting transportation and to make related and consequential amendments to other acts.

I welcome our witnesses who are here to help us get through Bill C-49 and let us know what your thoughts are. I'll open it up by everybody introducing themselves.

Cereals Canada, would you like to start?

9:40 a.m.

Cam Dahl President, Cereals Canada

Certainly. My name is Cam Dahl, and I'm the president of Cereals Canada. Cereals Canada is a value-chain organization covering the entire country, going from the development of seeds, and of course, including farmers, right through to the grocery shelf.

9:40 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you.

Chemistry Industry Association of Canada, do you want to introduce yourself?

9:40 a.m.

Bob Masterson President and Chief Executive Officer, Chemistry Industry Association of Canada

Yes. Thank you, Madam Chair.

I'm Bob Masterson, president and CEO of the Chemistry Industry Association of Canada. I'm joined today by Ms. Kara Edwards who is our transportation specialist and an expert in all matters related to Bill C-49.

Thank you.

9:40 a.m.

Liberal

The Chair Liberal Judy Sgro

That's going to be interesting.

Grain Growers of Canada, go ahead.

September 13th, 2017 / 9:40 a.m.

Jeff Nielsen President, Grain Growers of Canada

Good morning.

I'm Jeff Nielsen, I'm a producer in Olds, Alberta, and president of Grain Growers of Canada. I'm here with my executive director, Fiona Cook.

9:40 a.m.

Liberal

The Chair Liberal Judy Sgro

Okay.

Going back to Mr. Dahl, would you like to lead off with your presentation?

9:40 a.m.

President, Cereals Canada

Cam Dahl

Certainly.

On behalf of Cereals Canada, I want to thank the committee for the invitation to appear before you today. It's not usual for a committee to be holding hearings like these when Parliament is not sitting, and it's definitely not usual for a committee to be holding marathon sessions such as you have been holding. We recognize this and thank you for the high priority you are placing on this legislation. It is absolutely critical for Canada's agriculture sector.

As I mentioned, Cereals Canada is a national value chain organization. Our membership comprises three pillars: farmers, shippers, and processors in crop development and seed companies. Our board has representation from all three of these groups. All parts of the value chain look for transportation reform as a key requirement for the success of our sector.

Canada exports more than 20 million tonnes of cereal grains every year, worth about $10 billion. Virtually all of this grain moves to export position by rail. The profitability of every part of the Canadian agriculture value chain depends on the critical rail link to our markets.

Agriculture has a strong growth potential. The Barton report indicated that Canada has the potential to become the world's second-largest agriculture and agri-food exporter in just a few short years. The report set a target of $75 billion in exports in 2025. This is up from $55 billion in 2015. Modernized transportation legislation is critical if Canada is to meet this growing demand and maintain our reputation as a reliable supplier.

Agriculture is not just about exports. The industry employs Canadians. One in eight jobs in Canada depends on agriculture. Our ability to meet these growth targets and our ability to increase the number of Canadians employed by the sector depend upon moving production to market in a timely manner. I want to stress this next point: “timely manner” must be defined by the international marketplace. We will not achieve these goals if transportation providers limit our ability to satisfy world demand.

These are the implications of Bill C-49, which is before you today. The first message I want to deliver on Bill C-49 is to quickly return this bill to the House for third reading. The bill will help introduce better commercial accountability into the grain transportation system, it will help improve grain-movement planning, and it will improve transparency and reporting.

I do not want to leave the impression that the grain sector has received all that it requested in this bill. There are provisions that the industry had requested: continuation of the extended interswitching provisions from the Fair Rail for Grain Farmers Act is an example of provisions that have not been brought into the legislation. However, no piece of legislation is perfect, and we believe that the bill should proceed. Cereals Canada has some suggestions for technical amendments to Bill C-49, which are outlined in detail at the end of the written brief you have received.

I want to touch briefly on why we're here and why we have the need for legislation.

Flaws in the grain handling and transportation system were highlighted in 2013 and 2014 when the system suffered a significant breakdown. The systemic failure impacted the entire value chain and damaged Canada's brand and reputation as a reliable supplier of agriculture products. This resulted in lost sales and it resulted in decreases in price. The crisis cost farmers, grain-handling firms, exporters, Canadian value-added processing, and ultimately the Canadian economy.

This was not the first time the transportation system failed one of Canada's largest sectors. This is clearly demonstrated by the multiple past reviews and commissions, such as the studies conducted by the late Justice Estey and by Arthur Kroeger and the report from the senior executive officers, and the list goes on. It is a long list of reports on grain transportation. History shows that if the underlying structural issues are not addressed, transportation failures will recur. Canadian agriculture and the Canadian economy cannot afford to let this happen again.

Railway monopolistic power is a key reason the grain transportation environment does not function to maximize the profitability of the entire value chain. Virtually all shippers are served by one carrier and are subject to monopolistic pricing and service strategies. Therefore, the government has a critical role to play in establishing a regulatory structure that strikes a measured and appropriate competitive balance.

I stress the word competitive. System reform will be successful only if the legislated and regulatory structure for grain transportation is adjusted so that it mimics the conditions of a competitive environment.

It is worth noting that the record size of the 2013 crop, over 70 million tonnes in western Canada, is often cited by the critics of reform as the cause of the breakdown in 2013 and 2014. However, this level of production is not an anomaly. Rather, it is the new normal. Grain production in Canada continues to grow, as does world demand.

This year, 2017, I'm sure many of you have heard—and Ms. Block is in the affected part of the province—there was a drought in many parts of Saskatchewan, yet western Canada is still going to produce one of the largest crops we have ever seen. We expect it to be between 63 million and 65 million tonnes. We have to be able to meet growing demand with growing supply.

I'm not going to go into the details of our amendments; you have them. But in summary, Bill C-49 will move us towards a more accountable and reliable grain-handling and transportation system. This is good news for everybody involved, including our customers.

The grain, oilseed, and special crops industries have been united in their call for measures that will help ensure accountability in the performance of the railways. Bill C-49 will help correct the imbalance in market power between the railways and captive shippers.

The legislation includes the following key positive elements: tools that will allow shippers to hold railways financially accountable for their service performance; improved processes for the Canadian Transportation Agency if issues do arise; clarification of the railway responsibility in the Canada Transportation Act by better defining “adequate and suitable” service; and increased requirements for reporting and railway contingency planning.

If passed, Bill C-49 will help balance railway market power and will help mimic what would happen if we had open competition. This is good economic and public policy.

While the most important part of the railway legislation is the increase in railway accountability, all of these provisions are important. Improving CTA processes is important to ensure that problems are caught and addressed before they snowball into major failures. Together with clarification of the meaning of “adequate and suitable”, this will help ensure that the Canadian transportation system meets the expectations of our customers both within Canada and internationally.

No piece of legislation is perfect, and Bill C-49 is no exception. Cereals Canada has presented a number of technical amendments. The adoption of these amendments should not significantly delay the passage of the bill, and the adoption of these amendments will significantly improve the transparency of the legislation. These are the first four amendments in our brief. They will also help align North American regulations between Canada and the U.S.

The amendments will also help to improve operational planning, as stated in the fifth amendment in our brief. It will also help give improved access to competitive tools to help improve the imbalance in market power. These are the last three amendments.

I welcome any of your questions on my verbal remarks or on the more detailed brief that has been circulated.

9:45 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Dahl.

On to the chemistry industry and Mr. Masterson.

9:45 a.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

Thank you again, Madam Chair.

It is an honour to be among the witnesses to appear before this committee as it conducts this very important business on the review of Bill C-49, the transportation modernization act. In our brief time with you today, we want to share three key messages on behalf of Canada's chemistry sector. These are included in the brief before the committee, which provides additional details on our thoughts on Bill C-49.

Briefly, here are our three comments. First, it's important that you recognize that the chemistry industry plays an important role in the Canadian economy, and efficient and competitive rail transportation is critical to our business success. The second key point I wish to emphasize is that we enthusiastically applaud the work of Minister Garneau and his department. They've listened, and both the transportation 2030 agenda and Bill C-49 are highly responsive to the long-standing concerns expressed by our industry regarding Canada's freight rail system. Finally, while we do want to see Bill C-49 advance promptly, and we do not wish to introduce any new measures, we do believe that some amendments are necessary to ensure that the provisions of the act will indeed meet their intended objectives.

Let me begin by providing you with information about our sector, to underscore how important Bill C-49 is to the growth prospects of our industry. Canada's chemistry industry is vital to the Canadian economy. We are the third-largest manufacturing sector, with over $53 billion in annual shipments. Nearly 73% of that is exported, making us the second-largest manufacturing exporter in the country.

Like many people in the country, you probably don't give much thought to the role of chemicals in the economy, but it's important to note that 95% of all manufactured goods are directly touched by the business of chemistry. That includes all the key sectors of the Canadian economy: energy, transportation, agri-food, forestry, mining, and metals. Likewise, the goods the industry produces are also critical to communities and to quality of life for Canadians. This does include some dangerous goods: products such as chlorine, used to purify drinking water; and sulphuric acid, used in the manufacture of agricultural fertilizers.

Equally important, chemistry is a growing sector, both globally and within North America. During the past five years, more than 300 global-scale chemistry investments, with a book value of more than $230 billion Canadian, have been announced in the United States alone. Unfortunately, Canada has missed out on much of that initial wave of investment, but there are some promising prospects for capturing a share of the next wave of investments.

More than three-quarters of the chemistry industry's annual shipments in Canada move by rail. That accounts for 14%, or nearly one-seventh, of all freight volumes in the country. This makes rail costs and service two of the most important factors when investors are deciding whether to locate a next new facility or expand operations in Canada—or not. This makes a well-functioning and competitive rail freight market vital to the competitiveness of our industry and its investment prospects.

As mentioned earlier, we wish to stress that we applaud the government's efforts and are supportive of the rail freight measures to advance “a long-term agenda for a more transparent, balanced, and efficient rail system that reliably moves our goods to global markets”, as outlined in transportation 2030. Regarding Bill C-49, we believe the government has struck a balance between the needs and concerns of both shippers and rail carriers. We also believe the provisions of the bill are highly responsive to the concerns we have shared during consultations both with the Emerson panel, and more recently, with Minister Garneau leading up to the publication of transportation 2030.

Specifically, Bill C-49 addresses the important issues of data transparency and timeliness, market power, shippers' rights, reciprocity, fairer rates, and extended interswitching. The bill also proposes important measures to incorporate best available safety technologies by incorporating in-cab video and data gathering systems that have been used for many years in other transportation industries.

Taken together, the package of measures in Bill C-49 has the potential to make a meaningful contribution to a more balanced relationship between shippers and carriers, where the realities of today's transportation system mean a normal market environment cannot exist. Therefore, we believe that Bill C-49 presents a rare instance where our sector welcomes government involvement in creating market conditions.

The key word I want to stress in what I've just said, however, is the “potential”. Again, we do believe Bill C-49 is responsive to shippers' needs, we do believe it makes an important effort to establish a more balanced relationship between shippers and carriers in an otherwise non-competitive marketplace, and we are not here today to propose a suite of additional measures for your consideration.

Nevertheless, we are concerned that specific measures outlined and described in the bill may not achieve the desired outcomes. Specifically, with respect to the data transparency provisions in the bill, we would strongly recommend that these provisions include commodity-specific information on rates, volumes, and level of service that would support investment decisions and assessment of fair and adequate service. In this regard, we also recommend that the availability of information to shippers be expedited by establishing a firm early timeline for the implementation of the regulations.

On a closely related note, we recommend that the act include specific requirements for railways to provide the highest level of service that can be reasonably provided. We see ambiguity in the current language that stops short of equating “adequate and suitable” with the highest reasonable level of rail service. This should be clarified for all parties.

With respect to the Canadian Transportation Agency's powers and informal resolution process, we recommend that the agency's powers be increased, providing it with the ability to independently investigate issues on its own initiative and ensure informal resolutions are implemented and effective, and that policy-makers and stakeholders are then able to measure and analyze the broader trends in freight rail performance.

Finally, and perhaps most importantly to us, the intent of the long-haul interswitching provisions in the bill are most welcome. As noted in the government's own discussion paper, the previous competitive line rate measures were little used and provided no appreciable contribution to establishing a more balanced environment between shippers and carriers. We are, however, concerned that the range of limitations and specific exclusions on long-haul interswitching in the bill will likewise lead to its underuse and ineffectiveness. Many of our members are captive shippers. For many, trucking is not an option. For over 50% of our members, trucking becomes economically unviable at a distance of 500 kilometres. As such, we recommend the elimination of those limitations specifically related to toxic-by-inhalation products, to traffic originating within 30 kilometres of the interchange, and to exclusions pertaining to high-volume corridors.

Madam Chair, in my brief time with you, I'll stop here and welcome any questions you may have. Thank you again for the opportunity to speak to you today.

9:55 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Masterson.

Now we'll go on to the Grain Growers of Canada, with Mr. Nielsen, please.

9:55 a.m.

President, Grain Growers of Canada

Jeff Nielsen

Thank you, Madam Chair, and committee members.

Thank you for the opportunity to provide comments on this important bill. Grain Growers of Canada represents 50,000 grain, pulse, corn, oilseed, and soybean farmers from across Canada. We have members from the Atlantic provinces to the Peace Country of British Columbia. We are the only national farmer-run group representing all the grains that are exported around the world. Given our dependence on export markets, farmers like myself are highly dependent on a reliable, competitive rail system.

I run a family-owned, incorporated grain farm in south central Alberta near Olds. I grow wheat, malt barley, and canola. Right now, we're in the middle of the harvest. Luckily, we had rain today and I got the day off and I came here. It is important for me to come here personally to speak as a farmer on my thoughts about Bill C-49.

We greatly appreciate the work this committee has done in the past, including the excellent study on the former Fair Rail for Grain Farmers Act, and the recommendations made to the government. As Cam mentioned, the Barton report brought to light how important agriculture is, how the government views the goals, and how agriculture can grow to $75 billion in exports by 2025. We're thankful the government has that recognition and had the Barton report presented to Parliament.

The Grain Growers of Canada welcomed the announcement of this new legislation back in December, and we are hopeful for third reading of this bill and royal assent as soon as possible to avoid any of the handling issues with this year's crop, as we are heading well into fall now and winter is on its way. My entire crop is shipped by rail. I need a rail system that will not only perform for me but for our customers. These customers, we know, can go elsewhere. It is imperative that Canada has a rail system that is effective and responsive to get our crops to export position.

With that, I see opportunities within Bill C-49 to look at the ability to hold railways financially accountable for service provided. I want to give an example of how this would work for my farm.

Currently, there's no avenue to penalize the railroads for poor service. This lack of accountability impacts all players in the supply chain and, ultimately, farmers. I market my crops throughout the year when I see best-price opportunities for my farm and for my financial needs. Let's say I decided to sell 200 metric tons of canola in February because I saw a price signal there, and also in February I have an input bill that my farm needs to pay. It is not that I like choosing February, because it's minus-20 and I might need to shovel snow, but I'm quite willing to haul grain any time of year when I have signed contracts.

Here comes February. It's cold, it's snowy, and I'm out there ready to haul grain. The auger's in the bin, and I get loaded up and the elevator calls me that the train's not here. It has been put off for a few weeks. Then I call again and find the train has been put off for another few weeks. Now it's late April, and I'm getting my machinery ready to seed next year's crop. I have delayed paying my farm account, because I hadn't had the grain sales that I thought I had contracted for in February.

It has had a great effect on me personally and on my farm. My grain company has been affected, too. They had sales booked for that canola for an offshore customer. That canola did not reach port in time and those ships may have had to wait in Vancouver harbour for a lengthy period of time. That costs money too. It's called demurrage, which sooner or later will be passed back to me as a producer.

On the flip side, my grain company is fined by railroads if a train is not loaded within a set period of time, yet my grain company cannot fine the railroads for not supplying the train on time as scheduled. I've seen cars sit there for well over a week after they've been filled, yet there's no penalty issued to the rail companies then. That delay in moving that train for that week also delays the next train from coming in, which starts a snowball effect of delays.

We are all very familiar with the mess that happened in the winter of 2013-14. As a grain producer, I experienced it in many ways. I believe I lost marketing opportunities since I could not sell into certain markets because there were no opportunities for grain to be delivered. We saw contracts that were set for December and not delivered until well into the spring. That, of course, affected farmers' financial cycles as far as paying their bills and such. We saw customers, and I'll point to oats here specifically, who lost business. Those customers in the U.S. who wanted Canadian oats went to Scandinavia to fill their needs.

As I mentioned before, our customers have other choices. If we continue to allow the railroads to provide irregular, spotty service, we will lose those customers forever. Winter on the Prairies happens. Sometimes it's more severe than others, but it happens every year.

One of the other provisions we welcome in Bill C-49 is the increased requirement for reporting and railway contingency planning. It is hoped that our rail companies will quickly adopt and publish sound contingency plans to demonstrate that they have the capacity to get our products to wherever on time.

In the fall of 2013, farmers, grain companies, and Stats Canada knew that we were going into a large crop, which as Cam has pointed out, is now the norm. We are producing more grain continually, yet our rail companies, in the fall of 2013, were not ready. Winter hit and things literally went off the rails.

Data collection is another key point. It is important that we have a complete dataset. I commend the work of the Agriculture Transportation Coalition and Quorum Group for the information they provide, which has filled in significant gaps and helped us work with railroads to hold them more accountable in the last couple of years.

In Bill C-49, we also appreciate the ability of the Canadian Transportation Agency to play a larger role in areas such as improved dispute resolution. We see increased clarity of railway responsibility in the act when it comes to the definition of adequate and suitable service. One of the clear benefits I see of these two items is a much-needed assurance to me, as a producer, that if there are issues, they will be identified and hopefully dealt with prior to any severe impacts and the potential loss of sales or customers.

Grain Growers of Canada has a few recommendations we feel will strengthen the bill. I reiterate that it is critical that we have this legislation passed as soon as possible to ensure the smooth movement of this year's crop.

Grain farmers support maintaining the current maximum revenue entitlement, MRE, with the adjustments for capital spending, as proposed in Bill C-49. The MRE is working well at this time, and changing it slightly to recognize and incorporate the investments made by each railroad should encourage more investment and will gain infrastructure for the future as a result. The point there is our hopper car fleet, I believe. As we know, it's aging badly.

One glaring omission of grains under the MRE is soybeans. On behalf of our members, we ask that soybeans be included as one of the crops under the MRE's schedule II. Soybean acreage is increasing year over year in the prairie provinces, and naturally, those products are shipped by rail. This update reflects the current needs of an industry that were not anticipated at the time the MRE was set. This truly will be a modernization of the act. Once Bill C-49 is fully in effect, and we've seen the proposed improvements, a comprehensive review of the MRE can be undertaken, but not before.

I would like to quickly speak to long-haul interswitching. In the previous Fair Rail for Grain Farmers Act, we saw interswitching increased to 160 kilometres. This provided a very useful tool for our grain companies to obtain more competitive terms of service.

To illustrate how important interswitching is, I draw your attention once again to oats. Oats are a corridor-specific commodity being used by major processors in the U.S., and they need to get to the buyer in a regular, timely fashion. Many customers were lost as a result of the 2013 winter crisis, and the industry is still trying to get those markets back. The extended interswitching provision has helped many oat growers. Given the usefulness of that tool, we, as the Grain Growers of Canada, are concerned that the long-haul provisions set out in Bill C-49 may not be as effective or address some of the needs of all our producers.

We ask that you review the attachment to our submission for the recommendations from the newly reinvigorated crop logistics working group, of which I am a member. The group has proposed amendments to the long-haul provisions that we believe will ensure the security and market reliability the previous extended interswitching provided. Already this year we are seeing increased demand in the U.S. for some of our crops due to the poor quality in the U.S., and it must go by rail.

Grain producers are working hard to provide the world with top-quality grain, oilseeds, pulses, and corn. We believe strongly that the goals set out for increased exports are achievable and we are ready to work with the government to meet those goals. However, we need this legislation to pass as soon as possible to ensure that we can rely on the grain-handling system to get our products to export position.

I thank you for the time.

10:05 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Nielsen, in particular for your personal challenges. Sometimes we forget just how difficult it is out there.

We'll move on to our questions.

Ms. Block.

10:05 a.m.

Conservative

Kelly Block Conservative Carlton Trail—Eagle Creek, SK

Thank you very much, Madam Chair.

I want to thank each one of you for joining us today. I do appreciate your attendance.

As you pointed out, Mr. Nielsen, we know that the timing of these hearings doesn't dovetail very well with our agricultural community, but as it has been pointed out, this is important work that needs to be done. Your testimony here today is crucial in providing the committee with the information needed to ensure that the right balance is struck in addressing the underlying issues that exist in our transportation system. But we know that this is not the first time that your input has been solicited to aid parliamentarians in our deliberations on how to structure legislation that ensures market access and an efficient means of transportation for our shippers and producers.

Every witness so far has testified that there needs to be some changes to this legislation, and all have identified issues with the provisions around long-haul interswitching. Because I have such a limited amount of time to ask each of you questions, I have two questions that I would like each of you to answer.

Does Bill C-49 enhance competition in rail service, and, on balance, do you prefer the extended interswitching at 160 kilometres, as previously outlined in the Fair Rail for Grain Farmers Act, or do you prefer the LHI provisions in this bill? I'll have each one of you answer those questions.

10:05 a.m.

President, Cereals Canada

Cam Dahl

I'll give just a quick response to both of those questions. Yes, Bill C-49 will improve the competitive balance when it is passed, which is why, on balance, we are asking that the legislation be brought to royal assent as quickly as possible. This bill will improve railway accountability, will improve transparency, and will move us closer to what we would have if market competitive conditions existed.

That being said, the extended interswitching was used. It was extensively used by the grain industry and it was an effective tool. Given our desire to have Bill C-49 in law as quickly as possible, our approach to you today has been to offer some amendments to the long-haul interswitching. That would make those provisions more effective.

10:05 a.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

I think the first answer is, yes, we do believe that the provisions of Bill C-49 will make a more balanced and competitive rail freight environment, but we have to remember the word “balanced” is important. We're not just saying that as a means to keep the peace. Our competitive position depends on the railways also being competitive and profitable. No one's here to punish them, but it hasn't been a balanced relationship up until now. We believe the provisions in this bill will create a more balanced relationship that will allow all of us to have commercial success and to grow our businesses in the future.

To your second question, of course, it depends, and unlike perhaps the agricultural community, with large volumes in a fairly tight geographic boundary, our industry is spread coast to coast and it really depends on the individual circumstances of individual producers in a very heterogenous sector. That said, there have been people who took good advantage of the earlier provisions and did quite well. They were pleased with it. That's one of the reasons why in the consultations as a sector we asked for something that was permanent, something that was available to all sectors, and something that truly provided relief for the opportunity for competitive commercial discussions between service providers on an ongoing permanent basis.

I hope that helps. Thank you.

10:10 a.m.

President, Grain Growers of Canada

Jeff Nielsen

Thank you. I agree with the previous comments. When you look at what we heard in December, when this bill was announced, it was really a godsend. It hit a lot of the avenues we've been searching for. When you look at reciprocal penalties, look at data collection, and is it “adequate and suitable”, these are things we've been asking for in this industry for a long time. We need to have railroads that are accountable. As Cam mentioned, they're a monopoly, a duopoly if you want it call it that. I'm only on one main line. I could access another main line, but it's a good distance away from me, so I'm restricted there.

As far as the long-haul interswitching is concerned, we've done a lot of work with the crop logistics working group at presenting the amendments. As Cam and the rest of us have all mentioned, we need to see passage of this bill soon. We're coming into a large crop this fall. We need to make sure this crop gets to market and gets to export.

Thank you.

10:10 a.m.

Conservative

Kelly Block Conservative Carlton Trail—Eagle Creek, SK

I want to address the sense of urgency that I am picking up on from our witnesses today. The question that comes to me as a result of that urgency is this.

We had the Fair Rail for Grain Farmers Act sunset in the middle of this past summer. You are, then, in fact without any remedy when it comes to interswitching, except for the 30-kilometre right. Is that what's precipitating the urgency to get this law passed, so that you are negotiating contracts with certainty and with terms that you can actually go to the railways with?

10:10 a.m.

President, Cereals Canada

Cam Dahl

Yes. The protections that the grain industry had under the Fair Rail for Grain Farmers Act were valuable tools. From my perspective it wasn't just the message that was sent to Canada, but the message sent to our customers. I visit many of our customers internationally, and one of the first questions I am always asked, whether I'm in Bangladesh or in Japan or in Nigeria, is a question about Canadian logistics. I cannot stress enough the harm to our reputation that was caused by that 2013 and 2014 failure. We cannot afford another one.

As Jeff said, we have a large crop to move, despite the drought conditions we have in the Prairies, and we need to have tools in place that will help ensure that if problems begin to develop, they don't turn into the large, systematic failure that we had in the past.

10:10 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

We will move on to Mr. Sikand.

10:10 a.m.

Liberal

Gagan Sikand Liberal Mississauga—Streetsville, ON

Thank you, Madam Chair.

My question is for Mr. Masterson.

First, thank you for being here. I appreciate your opening remarks and I'm very pleased that the ministers heard you. It's a sentiment that's been reiterated by many of our witnesses.

Correct me if any of my facts here are wrong. You said there was a $200-billion investment in the United States and that 14% of rail volume is made up of chemicals. To the best of my knowledge, in the United States the chemical industry also has access to barges to move their products—

10:10 a.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

That's correct.

10:10 a.m.

Liberal

Gagan Sikand Liberal Mississauga—Streetsville, ON

—and we don't have that here in Canada. I can imagine there are some implications from this difference within the industry.

Could you just speak to that, please?

10:10 a.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

This is a question that came up in discussions previously. Does Canada need something that the U.S. has that we don't have? There are a number of factors that say, yes, we do need it. To answer the question from Madam Block, yes, we need it urgently.

The United States has a number of factors that assist in transportation issues. One is that industry and people are much more consolidated and concentrated. When it comes to our business of chemistry, their resources—natural gas, petroleum products, and others—are located much closer to coasts. Texas is on the coast. Louisiana is on the coast. It's easy to get stuff to market, and especially through barging.

In Canada we have tremendous resources, largely in the petrochemical industry concentrated in western Canada—specifically Alberta—and there is something called the Rocky Mountains between Alberta and the west coast that prevents our moving any volumes at all by barge.

Canada is, then, a different marketplace. We have much longer distances to market, and in our case fully 60% of every tonne of product that we move goes across the border into the U.S. Those are long distances. Our industry, like many, is deeply interconnected. Volumes move between Alberta and Texas and back into Ontario, and even into Mexico, on an ongoing basis. That is not going to be accomplished by moving millions of tonnes of product by truck.

We have to make the system we have.... If we want the economy to be strong and to attract investment into our sector, we have to make sure that the economy is working as efficiently as it can in all areas. What you've heard regularly from the stakeholders who have been here is that the rail freight market has not been efficient and competitive for many years.

10:15 a.m.

Liberal

Gagan Sikand Liberal Mississauga—Streetsville, ON

Thank you.

I think Mr. Graham is going to take the remainder of my time.