Transport Committee on Sept. 13th, 2017

[Sean Fraser, Liberal, Central Nova, NS]

I forget which witnesses—I believe there was more than one—commented specifically about the importance of data and transparency. Right now I understand there's a disparity between even what the bill proposes and what exists in the United States, for example.

I don't want to get into the territory where we're starting to interfere with the proprietary information of the railways, but what can we realistically expect to see? Is harmony between the U.S. and Canada the gold standard here? What kind of data would make it most effective for shippers without compromising the proprietary information of railways?

[Cam Dahl]

That's a great question. Of course, data is key to the concept of accountability. Data is also key to the goal of the legislation in allowing for contingency planning and for capacity planning in advance. That data is absolutely critical.

Some of the amendments we have brought forward tighten up that time window with precisely those objectives of the bill in mind, to ensure, for example, that some of that data is coming forward within a week and is available and useful to shippers, as opposed to three weeks after the fact where it's not as useful. It might be useful for an academic in a university, but not for somebody who's planning for a late train to Vancouver.

Similarly, with some of the provisions of some of the data requirements coming into effect, to your comment about what is happening in the U.S., the railways are already providing that information to the Surface Transportation Board in the U.S. It's not something new. There aren't new systems that have to be brought into place.

This is absolutely critical for contingency planning and for capacity planning, and there's no reason to delay that a year after the bill comes into place.

[Jeff Nielsen]

I totally agree with that. When we talk about CN and CP both providing that data to the Surface Transportation Board in the U.S., it's no different from what they could be providing to us.

When you look at Quorum Group, which is supported through the federal government, their reporting period is weeks, maybe up to three to four weeks after, before they can get some of this data. The Agriculture Transportation Coalition group is going from the industry perspective. They do not get the information from the railroads. We're trying to work with it.

[Sean Fraser, Liberal, Central Nova, NS]

On the timeliness issue, Mr. Dahl, I know you just mentioned that a week might be reasonable, as opposed to three or four weeks. I'm sure you're going to say real-time data is the best data.

What is the reasonable window that you can be working with that's going to make a difference for business decision-making?

[Cam Dahl]

That's why there are three very specific proposals in the brief that has been given to you.

They are proposals 1(a) through 1(c) that tighten up that timeline, as well as some of the specific provisions for proposed section 51.4, proposed subsection 77(5), and proposed section 98. Those amendments are brought in specifically to move that reporting time frame from what would be three weeks in total to about a week. That's in line with what we see in the U.S.

[Sean Fraser, Liberal, Central Nova, NS]

Shifting gears for a moment, I think you're spot-on in discussing that in a world of the global marketplace, timely transport of our goods is absolutely essential. One of the things I find governments aren't very good at is communicating to the people who live in the communities we represent that international trade is good for small businesses and it's good for workers in our communities.

Has anybody done an economic impact on what the losses are for our failure to transport goods in a timely way, using perhaps the 2013 example where you mention that we lost markets to Scandinavia? Is there any kind of economic assessment that we can trumpet at home to say that if we don't do this, we're going to lose jobs in our communities?

[Jeff Nielsen]

I believe that there has been. We had data.... Sorry sir, I can't think of the number that we stated in grain loss sales from the 2014 crop year, but it was a significant amount of dollars. As Cam mentioned, it's our reputation.

There are harvests going on somewhere within the whole world almost every month. We have to compete in that marketplace when our crops come off at this time of year—September, October. We have to make sure that we have those markets.

Winter is hitting, and as Bob has mentioned, we have the Rockies to the west of me. We have to get the grain through those Rockies. It's a bit of a challenge, but we need to be able to guarantee our customers that we are a reliable supplier of a quality product.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Nielsen.

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I'll preface my questions by stating that on Monday we had a strong theme of safety and passenger rights. Yesterday we had a strong theme of safety and business practice, which ultimately lends itself to safety. Today we're hearing about service levels to the customer.

As I said yesterday, a lot of what we're discussing regarding safety has to do with business practice. How do we lend ourselves to the broader transportation strategy of Bill C-49, building in a better business practice, a better level of service, and being able to bring our product to market, nationally and internationally?

I want to drill down a bit. In my former life at the municipal level we were all about these issues. We considered how to apply ourselves, our daily business at city hall, so as to allow business to be in a more effective and friendly environment. That's what I see here. One of the things we did back then, which I can see happening now on a national level, was to sometimes enter into the business world, not as a government but as a partner. Back then we entered into a partnership with a short-line railway because the class 1s abandoned us. To keep what happened in nearby jurisdictions from happening in ours, we bought a railway, which we ran and operated. We brought a short-line operator on board to make sure the companies that depended on those railways continued to be healthy and got the service they needed.

I want this to be a dialogue like we had back then, the same kind of dialogue here in Ottawa. Business often finds itself abandoned by the traditional transportation services. That could be on the water, the railways, the roads, or in the air. It could have to do with the government or the private sector. One example is short-lines. We all know this service attaches itself directly to business and provides a link to a broader transportation network. Often the future of business depends on that link and that network.

My question to you is twofold. First, can the product be moved by truck or other method of transport? I think I got that answer earlier when you said no. We know that some companies ended up closing because those lines were abandoned and nobody picked up the ball with a short-line operator.

Second, Bill C-49 addresses the broader transportation network and the broader transportation strategy. Do you, being in the business every day, have any recommendations on how this bill could give short-line operators a mechanism that would allow them to pick up on these abandoned lines so that local economies are not hurt and local communities remain healthy?

[Bob Masterson]

From our perspective, short-line railways are very important, and we've stressed that their importance has been underplayed in the transportation 2030 agenda. Many of our producers carry product on that crucial first mile, and more important, when you're trying to reach a forest products mill in northern Saskatchewan, you're on the short-line for the last mile as well.

The short-lines are essential, and this is true beyond the provisions of Bill C-49. We've argued in past submissions to the finance committee that, because short-lines play such an important role in the manufacturing sector, we ought to consider putting some of the investment incentives we use for manufacturing into the short-line railways. Perhaps the tools we use to stimulate investment and growth could be applied to make sure those short-lines are on a sustainable financial footing. We should bear in mind that when these short-lines fail it's devastating for our members, our customers, and for many communities.

[Vance Badawey, Liberal, Niagara Centre, ON]

This is a dialogue. It's what I'm trying to get out of this in considering the recommendations we bring forward for Bill C-49. It could also affect the deliberations of the finance committee and other committees, as well as future transportation or economic strategies.

Taking it a step further, we can see that a lot of the problems exist because of the capital side of it. There's no question that they're abandoning these lines because the ballast, the rails, or the ties are deteriorating. Instead of putting the capital in, they abandon these lines altogether because they're not getting acceptable returns. Do you find there's a need, not just from the operating side but also from the capital side, to take action before these situations happen?

I say this because we have a lot of capital assets in the form of infrastructure. There is rail, water. There is the St. Lawrence Seaway, where the docks and the canals are falling apart and no capital is being put into those assets. Before it gets to the point of having to abandon these assets, what role do you see government playing to ensure that they're preserved?

[Bob Masterson]

Here are two quick responses from us. Then we'll turn it over to our colleagues.

First, what we feel is very important, and the provisions in Bill C-49 will help with this, is the data access and timeliness to support decision-making. Anecdotally, our view is that the Port of Vancouver, in particular, is getting quite congested. We think about growth plans. We think about a new $6-billion to $10-billion facility in Alberta. Then you have to start to think that the market for that is not North America; it's Asia. How's it going to get there? Anecdotally that's there, but that's why we need the data and the provisions that are here in Bill C-49 to help us understand where the pinch points are.

Second, again, we broadly applaud the work of both the former minister and the current minister. When we look at the transportation infrastructure plans that were announced earlier in the year, we see they will make important contributions to addressing many of the concerns. Anecdotally, again at least, we've been assured that there's opportunity to address short-line issues in there.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Go ahead, Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madam Chair.

Thank you for being here this morning. I appreciate the information you're bringing to us.

Going to the LHI, saying that it's regional and doesn't apply, we have exclusion zones in this one. We had Teck here yesterday, talking about the monopoly and the exclusion zones. That's a problem.

Now we go to you and your world. Tell us about exclusion zones.

[Bob Masterson]

Absolutely. We mentioned in our submission and our comments what we think.

If the desire is create a more competitive relationship and more balanced relationship between shippers and carriers, why put in other additional limitations? This is not a competitive marketplace. We should do the maximum we can. Certainly it's our view that those limitations should be removed.

[Martin Shields, Conservative, Bow River, AB]

You're saying the exclusion zones should be gone in the corridors.

[Bob Masterson]

Absolutely.

[Martin Shields, Conservative, Bow River, AB]

Okay. Thank you.

Moving to Grain Growers of Canada, thank you for mentioning the oats. People may not know, but the area you live in is the most valued for oats in the horse-racing industry in North America. You ship to the U.S. because they are the best quality oats for the racehorse industry. You have to get access to the U.S. market, and you grow those oats in your area. Thank you for mentioning that. They need to be put in there.

One of the things may be an understanding where the farm industry is. I relate the farm industry to the day traders in the market, in a sense. You are technologically advanced. You're day traders, and day traders need access to markets and need things to move. I think people don't understand how technically advanced you are. Maybe you want to touch on that again.

[Jeff Nielsen]

Thank you.

I don't grow oats. I find them one of the itchiest crops around. Barley is much better shovelling than oats.

[Martin Shields, Conservative, Bow River, AB]

Yes, it is.

[Jeff Nielsen]

It's a very good point. I get market updates three or four times a day. I have market advice coming to me. I look at the opportunities for future contracts for my crops. Usually a certain percentage every spring already has a forward contract. I'm looking at my financial timeline, when I need to make payments for land, equipment, machinery, or whatever. I'll pick certain months that I find a good price, and then I know my bill payments are due that month.

That's where, if there are glitches in the system, there are glitches in my finances. I have, fortunately, with maturity, a very good banker now that will allow me some leverage, but we look at the next generation, the younger farmers coming on. They don't have that ability. They don't have that credit rating built up with a bank.

[Martin Shields, Conservative, Bow River, AB]

And with the income tax thing.... Never mind.

Anyway, we have a word in here, “adequate”. Some of us were more recently in the education system. I spent a lot of time in both the public and advanced education, and the bell curve says adequate is C. I think we all relate to what a C is. To me that's adequate. That's not a gold standard.

Mr. Dahl, do you want to respond to that, because you mentioned it?

[Cam Dahl]

Yes.

The terms “adequate” and “suitable” have been part of transportation law and jurisprudence for a long time. That, in fact, is the minium standard that the railways have to meet. That's the reason why those words are used. That's the lowest. That's the point at which the agency can start looking at remedies for shippers. That's not a goal. That's the bare minimum.

[Martin Shields, Conservative, Bow River, AB]

Right. We're talking about up to a 40% increase in the next 10 years, and we have problems with it now. In the rail system, if we expand that by up to 40%, which is the goal in the next 10 years, and if we're operating at a minimum, what's going to happen?

[Cam Dahl]

That's why a key point in looking at what we need from our transportation system needs to be defined by the markets. It needs to be defined by what farmers like Jeff are supplying and what customers around the world are demanding. What we can supply to the market should not be defined by what our service providers want to meet.

What level of service is required is something that needs to come from the marketplace. It's something that needs to ensure that Canada is meeting the demand both here at home and in the U.S. and offshore markets as well.