Mr. Speaker, let me assure the hon. Reform Party critic that it is the intention of the government and the committee to get some positive and constructive comments from the Reform members who seem to always criticize and have absolutely nothing good to say about anything.
I rise today to lend my support for Bill C-101 and the Minister of Transport's motion to refer Bill C-101 to the Standing Committee on Transport before second reading.
This is an important bill. Transportation touches all our daily lives and has far reaching ramifications in today's business world. The government is advancing a comprehensive program and a vision to overhaul the large unwieldy framework of regulations, outright ownership and specific involvement in transportation particularly as it pertains to rail. While the bill deals with all modes, there is no doubt that the most talked about provisions deal with the rail industry, so I will address myself to that aspect in particular in these remarks.
In this regard I see the 30 or so railways now operating in this country as being at a critical juncture. CN and CP are two mainline carriers that dominate the rail freight sector and have, as have other railways, managed to weather the recent economic downturn.
CN and CP have done this by introducing new marketing initiatives and operations more closely tailored to the 25,000 shippers they serve. They have also expanded intermodal links with the trucking industry and have implemented new technology and operating methods.
Stringent cost cutting measures have been taken and since 1983 CN and CP have abandoned 20 per cent of their rail lines. Total employment has decreased by 40 per cent.
To move into the 21st century, however, I believe CN and CP must further adjust to changing trends, increased competition and the need to reduce costs. CN and CP cost cutting efforts have been stifled by the regulatory hurdles they must jump in order to tailor their rail line networks to their core markets. While the Minister of Transport has made reference to the proposed rail line rationalization process, I will build on his comments.
Like shippers' rights, rail line rationalization can be controversial. I will first set the issue in the context of the current rail environment. The main line rail network is vastly over built. Even after efforts by both railways in recent years to reduce trackage, 84 per cent of CN and CP traffic travels on one-third of the network.
The adversarial nature and the length of the process can deter the sale of underutilized lines to short lines and some say can lead to the downgrading of a marginal line on purpose. A line must be uneconomic or near so for abandonment to proceed. It is the creation of short lines that we wish to foster in the legislation now before us.
The process for sale of a rail line under current legislation can be long and drawn out. In one instance the owner and the potential purchaser had agreed to the sale, in other words the continuance of a line, but under the existing NTA process with its convoluted regulatory approvals the prerequisite abandonment proceedings took two years with a cost of $10 million per year to CP before the sale could be finalized.
In the U.S. the sale of a line, not an abandonment, to another operator can be accomplished in as little as seven days. Purchasers are required only to prove public need and that they have the financial capability to purchase and operate the line.
The most important means by which the federal government can help our rail carriers to reduce their cost is through regulatory reform, and that is what we intend to do.
The new proposed Bill C-101 will do this and will focus on the encouraging of the sale of rail lines to other rail operators. The process will require a railway to set out for all interested parties its intention for its network in a three-year rolling plan.
The owner railway will not be allowed to abandon a line unless it has made every effort to negotiate the sale of the line for rail purposes. The negotiating phase has a finite limit of seven months. This phase could take as little as two months if there is clearly no buyer interest.
If no private sector buyer comes forward, governments at each level will in turn have 15 days to exercise an option to buy for public purposes. They will have had ample notice of the possibility through the plan at the start of the whole process.
No abandonment of a rail line will take place unless no one, neither the private sector nor governments, is interested in acquiring that line.
The process advanced in Bill C-101 is not as radical as that adopted in the United States but is instead a made in Canada approach that gives every interested party ample opportunity to acquire the line. It allows CN and CP to rationalize their track within a specified time frame. It allows for a more planned approach to the future of the Canadian rail system, which will be a benefit to the railways, shippers and communities alike. It also promotes the creation of a short line industry which will benefit all and which is key to keeping the most extensive network possible.
The experience in the United States under its deregulated environment has shown the high potential for rail lines to be acquired by short lines, providing hundreds of jobs.
Today there are over 500 short lines in the U.S., of which 263 were created since 1980. Conversely, there are only 12 Canadian short lines in operation. I believe under our proposed new regulatory process many more will emerge. Short line railways typically operate under a less burdensome cost structure than the main line railways and pass much of the savings on to their customers.
In addition, through more focused marketing and closer tailoring of services to customer needs, short lines can both recover traffic previously lost by the main line railway and generate traffic that was not previously present.
It is in the interest of main line carriers to sell to other railways rather than to abandon. The main lines get both the proceeds from the sale and a new partner that can act as both a generator and a feeder of traffic.
The proposed legislation not only eases exit but makes getting into the railway business less onerous. In future all railways under federal jurisdiction will simply require a certificate of fitness to either operate or perhaps even to construct a railway. Shippers and railways agree this is a significant improvement over the process now in place.
While no one can guarantee continued rail service in every corner of the country, the law will create the right environment so that wherever possible service should be maintained it will be maintained.
Rail is the only mode of transportation in Canada whose business decisions can be easily and often delayed, varied and sometimes even reversed by public authorities. Everything from sales to bookkeeping is subject to regulatory permission, sanction or appeal, with some regulations dating back to the turn of the century.
Under the proposed legislation, treatment of the rail freight industry will be brought more in line with other Canadian transportation businesses and U.S. rail counterparts, thereby enhancing competitiveness.
Transportation has historically been highly and intricately regulated. I was amazed at the mass of the build up on the economic side. For rail alone it filled over 1,000 pages of statutes spread over eight different acts.
With the passage of Bill C-101 we have the opportunity to help our railways, large and small, and ultimately their customers in their efforts to improve competitiveness.
Under the proposed amendment to the Transport Act, regulation of non-safety matters will be condensed into just over 100 pages. This reduction in volume alone will make the regulatory burden less onerous and costly, fostering a more commercially oriented basis for the provision of rail service. It will also make the legislation governing transportation much more logical and understandable.
I hope I have not given the impression that the bill is good only for the railways. On reflection I believe listeners will recognize that what I have outlined for the railways can easily be seen to benefit shippers as well. Once the railways have their house in order, the benefits will surely flow to their customers.
The Minister of Transport has made it clear that the bill preserves key rights now enjoyed by the shippers. A balance between the needs of shippers and railways must be found or our railways will continue to suffer. That outcome ultimately will not serve their customers either.
The sweeping nature of the regulatory housecleaning for all transportation modes will necessarily have an effect on the National Transportation Agency. The proposed legislation defines a streamlined and more focused regulatory body and renames it the Canadian Transportation Agency. Its role and powers will be clarified and brought into line with the reform of rail regulation and changes to the other transportation modes.
In future the agency will concentrate on core quasi-judicial and administrative functions such as the issuing of licences and the setting of regulated rail rates. Regulation is always a poor substitute for market discipline. We need regulation only when there are no practical transportation alternatives.
The federal government is aggressively examining the way it does business on all fronts. It is regulating only where needed and leaving the private sector to activities it can do better and at less cost to taxpayers. Regulatory reform in the transportation sector is one very important part of all these efforts.