Mr. Speaker, I am glad the opposition has raised this matter for debate. As all members know there are many pressing issues facing the railway industry and Canada is at a crossroads with respect to the industry's future.
Before dealing specifically with VIA I would like to put the rail passenger services into the larger context of the national transportation system. The hon. Minister of Transport set out a clear vision for the government's national transportation policy on June 3 in Thunder Bay.
Obviously transportation is as important now as it was in the past. We need a realistic achievable vision, and new partnerships to move the Canadian transportation system into the 21st century. We should respect the past but by doing so we must meet the challenges of the future.
We believe that the role and structure of crown corporations such as VIA Rail and CN must be reviewed. Because of the current uncertainty in the rail sector and concerns over its long term viability, the Minister of Transport intends to convene a meeting of industry leaders to discuss the problems railroads are facing and to search for solutions.
We must be pragmatic and focus on what will work. We must ensure that the common sense realistic needs and affordability are among the criteria driving Canadian transportation policy of the future. Passengers must have a multimodal transportation system that is safe, reliable and affordable. VIA has a role to play as we put the system in place.
Because of the need to reduce the government expenditures VIA has been required to operate within lower funding levels. Notwithstanding the fact that the funding to VIA has been reduced and its network restructured in 1990 we now have a streamlined and more efficient rail passenger carrier. The corporation has been able to complete cost studies of its operations that show where opportunities exist to make cost effective changes. Identification of such opportunities prompted VIA for example to introduce new service frequencies in the Montreal-Ottawa triangle while reducing further its requirements for government subsidies.
The government is pleased with what the corporation has been able to accomplish with the introduction of its silver and blue service on the western transcontinental trains. Public response has been outstanding. With both revenue and traffic increasing, on time performance is now at 90 per cent.
VIA has demonstrated that it is capable of meeting the challenge of subsidy reductions. That has been accomplished with the use of better equipment, improved productivity and a quality of on board services.
Recent years have seen VIA management exercising greater flexibility and control over the planning, development and operation of rail passenger services. With our government that trend will continue.
The 1993 budget reduced VIA funding over a three year period beginning in 1994-95 from $343.4 million to $235 million in 1996-97. The recent budget exercise further reduced annual funding over the next five years by a total of $9.6 million.
As my colleague, the Minister of Finance, has already told the House, Canada has been building up a mountain of debt. We simply cannot allow this trend to continue. This was the reason behind our decision to confirm the VIA funding levels announced in the 1993 budget. VIA has met its challenges in moving to a more efficient customer oriented company.
This government is now asking the corporation to assist the government in reducing our national deficit. VIA's ability to meet this challenge is fundamental to its long term viability. The government's decision to confirm VIA's reduced funding was a necessary one and the right one for Canada. We cannot put the decision aside and look to the past. In my opinion that would be the wrong course. Rather we must now look to the future and forward building on VIA's successes.
There has been much discussion concerning the level of government subsidy to passenger rail service. In particular comparisons have been made with other modes of public transportation in Canada: buses, aeroplanes and the automobile. While the automobile and air modes have received more funding overall, each passenger on the rail mode receives a far greater subsidy than any other mode of transport.
Since its creation in 1977 the government has spent more than $7 billion on VIA's operating and capital expenditures. Despite these government subsidies rail passenger service retains only 1 per cent of the total Canadian intercity passenger traffic. In comparison the air mode has a market share of 6 per cent. The automobile enjoys the lion's share of the market at 89 per cent. Even the bus mode enjoys a greater share of the market at 4 per cent.
These figures reveal that Canadians have a definite preference for passenger modes other than rail and they have sent a clear signal of that preference.
Like all Canadians we must ask ourselves what is it that we can afford. We must make choices based upon utility and value. We cannot say to Canadians: "You must continue to pay more and more for something you rarely use".
I would encourage the opposition to recognize that we must face the reality of our economy, of our modes of travel, in particular the cost and benefits of rail passenger service.
If I may, I would like now to address the issue of where VIA is today. At the outset it would be helpful to briefly review some of the facts on VIA's performances in 1992. For the system as a whole the operating subsidy was $332 million. This translates into an average total subsidy of $92 per passenger. For the corridor, the most heavily travelled segment of the network, the operating subsidy was $171.8 million for an average subsidy of $56 per passenger.
As we move to the other categories of service we see that the level of subsidy rises dramatically. For example, it rises from an average of $254 per passenger for Trent Continental service to $454 per passenger for services to the remote communities.
It is also interesting to look at the level of cost recovery. It ranges from a high of 38 per cent on the corridor to a low of only 8 per cent on the remote routes. Nevertheless, VIA has not stood still since the 1993 budget announcement. To help meet the funding targets it embarked on a major restructuring of its corporate and management expenses last November. We as a government must respect the taxpayers' ability to pay. That is an important first step.
Unfortunately, with even bigger streamlining and a pared down corporate structure VIA cannot achieve viability unless at the same time it addresses its cost base. For example, labour costs represent approximately 46 per cent of the corporation's operating costs. These are in fact the largest single cost items in VIA's budget.
The decisions facing both VIA and its labour unions in the current contract negotiations will be difficult. At the same time it will be necessary for them to work together to find a resolution of their differences which is within the final financial constraints.
VIA is currently evaluating the effect on its operations of the budget funding cuts. As well, the negotiations between VIA and its employees will have a significant impact on future levels of service.
In addition, the corporation is reviewing every aspect of its operations to maximize all expenditures which do not impact directly on services to the travelling public.
In conclusion, I believe it is important to tell this House and Canadian taxpayers, who are in fact funding VIA to the tune of $323 million this year, that a resolution and a solution can be found. It lies within VIA itself coming up with some additional efficiency gains and the workers and labour components of VIA working co-operatively with the company to ensure greater efficiencies. Passengers and the travelling public who have a great desire for using passenger rail service-at least that is what they tell us-at the same time jump in their cars and drive down the 401. Ninety per cent of passengers do that.
I think the solution for passenger rail service, and there is no doubt that there is one in this country, lies with the passengers utilizing VIA more, the labour component part helping, and VIA looking for greater efficiencies. We believe that we can have a viable affordable passenger rail service in this country.