Debates of Feb. 13th, 1995

Western Grain Transportation Act

[An hon. member]

Be careful. They will ask for examples.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Speaker, I would like to read another statement by Mr. Hehn, chief commissioner of the wheat board. When I asked him about the backtracking he said: "It is not a wheat board issue". The chairman of the agriculture committee said: "Thank you". Mr. Hehn replied: "Our job is to maximize returns for farmers and if the backtracking option is there, we

are going to use it". He does not care a hoot how long it ties up cars or how inefficient it makes the system as long as he can move a bushel of wheat that is worth $3. Forget about the canola that is worth $8, $9 or $10. That is efficiency. That is the kind of efficiency this Liberal government is promoting.

It is time for somebody to take the bull by the horns and do something. There is a lot of bull on that side. We hear a lot of it. We are not short of that.

[Jim Silye, Reform, Calgary Centre, AB]

The backbenchers are getting restless, Jake.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Maybe it is time they got restless. Maybe it is time for them to get a few ants in their pants and start moving on some of these issues. When I hear that it takes a whole year to draw up a bill like this, I have a feeling we will be all dead before it is implemented.

Maybe I have said enough. I do not want to wake the hon. members up too much because they might not be able to sleep very well tonight. We would like to see them back here tomorrow morning and go at them again.

It is real pleasure to address these people. We know they try their best. There is not much they can accomplish in a year so we will give them another year or two.

[Bernie Collins, Liberal, Souris—Moose Mountain, SK]

Mr. Speaker, I appreciate the opportunity to speak on this very important issue, the amendment to the Western Grain Transportation Act tabled by the Minister of Agriculture and Agri-food, dealing with Bill C-66 as put forward on December 15, 1994.

Bill C-66 is a short term response to problems that have arisen in our grain handling and transportation. It will help ensure speedier delivery of Canadian grain to our customers around the world. Bill C-66 is not intended to be a substitute or a reform to the system.

I am convinced the short term amendments presented to the House today will benefit all those concerned. These changes will see an end to the system of backhauling through the U.S. and allow grain to qualify for WGTA subsidies. The amendments will implement a system of demurrage and storage charges on rail cars that are misused by shippers for storage purposes. They will end the WGTA subsidy on grain shipments to Mexico and ensure continued access to important markets.

These corrective measures were initiated by a group assembled by the Minister of Agriculture and Agri-Food on May 16, 1994. We all realize the WGTA has some weaknesses that need to be reformed that can no longer wait to be dealt with.

As the Minister of Agriculture and Agri-Food said, maintaining the status quo is an option that makes less and less sense. Longer term reform is essential and it is essential to achieve a compliance with the new World Trade Agreement. It is essential because the current subsidy distorts markets, encourages producers to ship grain to markets rather than processing it. It is essential to respond to the country's fiscal responsibilities with fewer government dollars. It is essential to promote the economic growth and diversification across the prairies.

I would like to discuss these long term reforms today. As members know the federal transport minister is now in the process of concluding extensive consultations on a package of grain transportation efficiencies. At the same time, the Minister of Agriculture and Agri-Food is concluding productive consultations with major key players of the sector on the future method of paying the WGTA benefit.

Throughout these consultations leaders of farm groups and industry have been given the opportunity to make significant contributions by going over specific questions on how best to allocate WGTA funds. The intent of these consultations was and still is to elaborate effective and viable solutions that will fit the long term needs, be comprehensive in nature and be progressive for the industry.

The question is not about whether to change the WGTA but rather the best way to deliver the program to Canadian farmers. If the WGTA is left unchanged, the GATT could have significant impacts on certain crops such as canola.

We basically have two choices. We can change the WGTA so it is no longer within the definition of an export subsidy, or we can continue to pay the railways, but do so only with volume and monetary limits allowed by GATT. If we choose to continue to pay the railways, there will be immediate and severe restrictions on the volume shipped through the west coast and Churchill. That will be a problem with regard to the eligibility for subsidy.

For the first few years, the monetary limitations are not a significant problem, because the value of the WGTA has declined over the years from its peak amount.

However, the volume limitations are the major problem. Volumes have gone up dramatically, specifically in the new crops like canola and other specialty crops. The GATT value limiting oilseeds and special crops will very likely be reached sometime during the first part of the 1995-96 crop year.

That means sometime during that year shippers will suddenly run out of subsidy. As the volume exceeds that level, they will have to pay the full cost of the WGTA to the ports of Churchill and the west coast. Once those volume triggers are reached a tremendous problem will be created for them. That is obviously untenable and unacceptable.

There have been suggestions that if we were to subsidize all the grain movements into British Columbia, not just those for export, we might be able to disguise the situation. This would be called a domestication argument. It is an interesting concept but in reality it would likely not work.

The GATT agreement states that the export subsidy provisions shall not be applied in a manner which threatens to lead to circumvention of export subsidy commitments.

The notion of domestication is clearly and admittedly an attempt at circumvention. Canada cannot expect other exporters to allow that to go by unchallenged. The U.S. and the European Community would most certainly complain and probably win. If we were to expect them to honour their GATT commitments, which we do, then certainly it is incumbent upon us to be prepared to do the same.

Three options on the future method of paying the WGTA benefit are now being considered. One was put forward by the producer payment panel in June of 1994 and one by the Alberta government one month later. The third alternative consists of an upfront buyout plan. This type of option has been discussed and there will be a process worked out in the very near future. I know that the University of Saskatchewan has professors putting forward ideas.

Let us look at the producer payment panel recommendation. It suggests that across the prairies the benefits of the WGTA be distributed directly to producers. Producers would initially be paid on a cultivated acreage and then phased into an arable acreage payment. The panel also recommended that some of the funds be put into safety nets.

For its part, Alberta proposed allocating each prairie province their historic share of WGTA funds and allowing variations on how the payments would be paid to producers within a set of principles. The Alberta government proposal recommended against putting WGTA funds into safety nets. That was also supported by the Government of Saskatchewan.

In the near future the Minister of Agriculture and Agri-Food will bring all of the input received together in a reform to be presented to Parliament for its final consideration. The proposal will have to be consistent with the new rules of the World Trade Organization and will have to fit with our fiscal realities.

We still have some work to do before we reform the WGTA. The major amendments to be addressed on long term issues will be introduced soon. In the meantime, I urge all members to support the short term amendments contained in Bill C-66.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, I listened to my colleague from Saskatchewan talk about the initiatives which the government is undertaking, but there are a lot of things that he neglected to mention. Perhaps I might take a minute to remind him of a couple of them.

First, the government caved in on protecting durum producers, and maintaining the most rapidly expanding market, which is the market in the United States. Mr. Speaker, can you imagine if half of our car exports to the United States were suddenly cut off. There would be a hue and cry. The government did nothing to oppose the cut in the export of durum to the United States.

It is one of the most disastrous policies undertaken by the government and by the current minister of agriculture. It has the potential to be devastating to durum producers if they lose such a strong market. In this market, the buyer pays cash and the producers do not have to work on loan programs and offer credit to the purchaser. The producers are receiving good dollars for their product, which is the best in the world.

Also the potential is there for the government to cave in as far as the sugar industry is concerned. The minister of agriculture has not come out strongly and said he would stand up to the Americans in their rumblings about taking trade actions against us on sugar.

We know the current government has been pitifully slow at reforming and reorganizing the department of agriculture and producer support programs. We know that the government has wasted a year on this backtracking issue. We are talking about it in February 1995 and the Liberals took power in 1994. Of course the Conservatives before them balked at fixing one of the most stupid problems we have ever faced in western Canada.

I am now wondering what steps the member's government is taking to prevent another serious disaster in the western Canadian grain economy that would take place if there were a disruption in grain movement to port created by a rail strike. What steps is the government taking to prevent a potential disaster?

[Bernie Collins, Liberal, Souris—Moose Mountain, SK]

Mr. Speaker, concerning a number of the observations made by the member opposite with regard to the minister of agriculture, I think his dealings on many issues, whether it be on sugar, barley or durum, have been very concise and accurate. They reflected the needs and wishes of the agriculture community of Saskatchewan and of Canada.

With regard to the problem that may be confronting us at the end of this month concerning rail companies and whether they will continue to provide service through their unions, I along with the member opposite have real concern about what will happen.

However, I can assure the member that the Minister of Transport and the minister of agriculture will deal with those situations in a very proper, efficient and significant manner to look after the farmers of Saskatchewan, Alberta and any other province. I appreciate the member's concern, but I think he will see that they will deal with those matters very quickly as they have with all other matters.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Speaker, I have a question for the hon. member for Souris-Moose Mountain. I know he supports the government quite fully and he is a good Liberal. I congratulate him and pat him on the back for that.

We had a trade agreement signed by the agriculture minister with a peace clause in it that we would not be harassed by the Americans any more. I see now they are starting to use the end user certificate against us. This is a real detriment to farmers.

What could the member do to influence the agriculture minister to get a little tougher on some deals that he has made to make the Americans, the Japanese, the Mexicans or whomever live up to the agreements that were signed?

[Bernie Collins, Liberal, Souris—Moose Mountain, SK]

Mr. Speaker, with regard to end user certificates, the hon. members knows that we have them. I understand what he is saying. Certainly we want to be assured that we are playing on a level playing field with our counterparts whether they be the United States or any other country.

I share the concern that when we enter into an agreement we expect that those people are going to live up to and honour the agreement. I have some problems when they use the export enhancement program improperly. It is a program that will have to be reviewed and they will have to be accountable in the world they trade in.

They are going to be challenged by all of us, Canadians and all other countries, to play on a level and fair trading field. You will see that they will be forced to reduce their export enhancement program. That is something all of us share. We want to deal with all our counterparts throughout the world in a fair way.

[The Deputy Speaker]

I would ask all hon. members not to say "you" when referring to other members.

The hon. member for Vegreville is not the culprit; he has not spoken.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, I also have a few comments and a question for the member.

The member was talking about the proposed changes to the WGTA. I would like to ask a broader question with regard to future reform of the WGTA. In particular I would like to ask the member if he believes when the National Transportation Act replaces the WGTA that reform is necessary to the National Transportation Act to make it work in the grain business.

As the WGTA has changed there are other restrictions that will have to be removed to make the whole transportation grain handling industry work, particularly the Canadian Wheat Board.

I would like to ask two questions with regard to the Canadian Wheat Board. First, does the member favour a board of directors elected by farmers to replace the appointed commissioners? Second, does the member support the use of a plebiscite to allow farmers to decide what they want the Canadian Wheat Board to be in the future?

[Bernie Collins, Liberal, Souris—Moose Mountain, SK]

Mr. Speaker, with regard to the questions directed to me concerning the Canadian Wheat Board, the member will find that our party is on record as being in support of the farming community at large wanting to make some changes. That is the direction in which we would want to go. The farming community should be able to do that. We are certainly not in opposition to that kind of approach.

With regard to the Canadian Wheat Board and the structure that is in place now, I feel the process is a good one in terms of those who are elected and serve.

The hon. member is right, though. Those members who served on the Canadian Wheat Board have a commitment. We know that their job will be carried out properly. We feel as well that the Canadian Wheat Board like all boards needs to be reviewed from time to time and improved.

[Glen McKinnon, Liberal, Brandon—Souris, MB]

Mr. Speaker, I rise to support Bill C-66, an act to amend the Western Grain Transportation Act, the WGTA. The bill received first reading on December 15, 1994, just prior to the House rising for its Christmas break.

I would imagine all hon. colleagues are well advised that the minister has been consulting with all sectors of the agri-food industry and all political colleagues in neighbouring provinces on these major reforms to the WGTA.

As I mentioned earlier, Bill C-66 deals with three issues. I intend however to speak only to the issue of exports to Mexico, which is very important to NAFTA and other trading arrangements Canada has recently entered into.

On April 4, 1994 the Government of Mexico launched a countervail duty investigation of both Canadian WGTA wheat shipments to that country and U.S. exports under its export enhancement program or its EEP. At that time Mexico had concerns that wheat imports from Canada and the U.S. were affecting its domestic market. It believed that the WGTA was a subsidy which along with U.S. EEP subsidized wheat sales into

Mexico. This was affecting the price of wheat received from Mexican farmers and grain companies.

Over the following months our federal government participated in the investigation of the Government of Mexico and wanted to ensure that all facts were brought forward explaining Canada's grain marketing system. After much discussion the federal government reached a negotiated resolution to Mexico's concerns about the impact of Canadian WGTA supported wheat exports to that country. Under the agreement Canada will refrain from making payments under the WGTA on Canadian wheat shipped to Mexico. In return, Mexico's current countervailing duty investigation of Canadian wheat exports will be terminated.

The federal government has always indicated its preference for a negotiated solution to this matter rather than run the risk of having excessive countervailing duties in place.

I know there are some people in Canada, indeed some in the House today, who will cynically see the agreement as a loss. These people will point to it as an example of Canada making concessions while receiving nothing in return. As usual this is not the case.

First, the agreement will in no way interfere with or limit the amount of high quality wheat Canada can export to Mexican customers. The Canadian Wheat Board has already indicated to the federal government that it will continue to have a major presence in the Mexican market even with the voluntary withdrawal of WGTA.

Second, perhaps the greatest benefit is that the U.S. has voluntarily agreed to withdraw use of the export enhancement program from Mexico. Mexico was not included in the recently issued list of countries eligible for U.S. EEP allocations for the 1994-95 marketing year. In the previous year, 1993-94, Mexico's EEP allocation for wheat was some 1.4 million tonnes. This move by the U.S. to rein in its EEP restores a level playing field in that market with the result that prices will increase to North American levels.

Should the U.S. at some point decide to revert to its trade distorting subsidy program and resume using EEP on a large scale in the Mexican market, Canada will use NAFTA provisions to request the Government of Mexico to resume its countervail duty against the EEP.

The hon. Minister of Agriculture and Agri-Food has often referred to the EEP as "the most trade distorting program on the face of the earth". Anyone who is even remotely familiar with Canada's recent bilateral agri-food trading relations with the U.S. will attest to the accuracy of the remark. By agreeing to remove WGTA payments on wheat to Mexico, Canada has in effect restored a level playing field or contributed to such in the Mexican market. I might add that this is a growing and promising market for Canadian wheat in the future.

Bill C-66 will permit Canada to continue to sell wheat into the Mexican market without having to worry about possible excessive countervailing duties. It will also be able to do this without having to worry about competing against EEP and the billions in the U.S. treasury.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Speaker, I would like to ask the hon. member for Brandon-Souris whether he is not a little concerned about Thunder Bay since wheat going to Thunder Bay is not declared an export subsidy. How is he going to keep wheat from Brandon-Souris going to Thunder Bay? I am sure the Mexicans are going to refuse it if there is a subsidy on it. Could the hon. member answer that question?

[Glen McKinnon, Liberal, Brandon—Souris, MB]

Mr. Speaker, our wheat from Brandon-Souris will be going everywhere.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, I have a few comments and questions for the hon. member for Brandon-Souris.

The first one is to ask the hon. member what impact removing the WGTA subsidy on shipments to Mexico will have. What kind of an impact will it be? How many tonnes or how many dollars are we talking about in that regard?

Second, I would like to ask the same questions I asked the last speaker from that side of the House concerning the Canadian Wheat Board. It fits in with the WGTA because of the restriction that comes into play due to the Canadian Wheat Board Act. There are two things in particular. Does the hon. member opposite favour replacing the appointed commissioners who now control the Canadian Wheat Board with a board of directors that would be elected by farmers? Would the hon. member favour a plebiscite which would allow farmers to determine exactly what the wheat board would be and how it would work?

[Glen McKinnon, Liberal, Brandon—Souris, MB]

Mr. Speaker, I will work in reverse on the questions. In terms of a plebiscite and getting membership on the wheat board, I have concerns to some degree about the political process that may come into play by having people seeking the appointment, perhaps currying favours in some areas geographically, somewhat like the advisory committees to the wheat board.

I believe the first question was on the impact of the WGTA subsidy being removed. The minister indicated that there were 909,000 tonnes or $22 million in place. I have no reason to believe that is necessarily going to change. However, I do not have any data at my disposal to honestly answer the question.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Speaker, I know the hon. member for Brandon-Souris is good with figures. He was in the teaching profession for a long time. The data I have are from the Grain Transportation Agency. I seem to be getting data that are no good. I hope these are good.

They point out that a rail car going to Vancouver travels at a rate of 5.05 miles per hour and one going to Thunder Bay travels at 3.62 miles per hour.

I wonder if he thinks this was excessive speed for these rail cars or whether somehow the Liberals could speed up that whole transportation system a bit.

[Glen McKinnon, Liberal, Brandon—Souris, MB]

Mr. Speaker, it is simply because of those high mountains. Once we climb to those heights, it runs downhill all the way to the west. To the east it is because of the high air density that is created from Winnipeg that blows in that direction.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, I would like to ask the hon. member a question. It has to do with the Canadian Wheat Board again.

The first question was whether the hon. member favours an elected board of directors to replace the appointed commissioners. Second, following the election of a board of directors would the hon. member favour the use of direct democracy plebiscite, and it can be controlled, as a mechanism for determining what the wheat board would be in the future?

[Glen McKinnon, Liberal, Brandon—Souris, MB]

Mr. Speaker, if I may be so bold concerning plebiscites, having served as a mayor of a community for many years I have had great concerns about engaging in the plebiscite game. Once you start, where do you stop?

In terms of elected representation, I have no problem if the farm community feels that is the most applicable means of putting a knowledgeable board in place. I sense that the majority of appointed commissioners have a very strong agricultural background that makes them very effective.

In terms of whether elected they could do a better job, I do not feel I can evaluate that kind of question.

[Gordon Kirkby, Liberal, Prince Albert—Churchill River, SK]

Mr. Speaker, it is with great pleasure that I rise again today to speak in support of Bill C-66, an act to amend the Western Grain Transportation Act.

I wish to sincerely thank and congratulate the minister of agriculture for bringing forward more legislation to assist the prairie farmer in a very positive way.

This legislation is the result of identifying a longstanding problem that has existed within our nation for many years, bringing together all of the stakeholders who were affected by the existing circumstances or will be affected by the proposed changes and by working together with them to find an appropriate and fair solution.

Our minister is a problem solver and has already contributed much to assist the economic well-being of our prairie farmers. The successful completion of the Uruguay round of the GATT was good for Canada. By agreement the Americans and the Europeans will be forced to reduce unfair subsidization of agricultural products, thereby making Canadian agricultural products more saleable and competitive on the world market.

The minister-

[The Deputy Speaker]

The bill, as the member will know, is summarized in two sentences. There is a rule we are all expected to obey in this House called relevance. In borderline cases the member should be given the benefit of the doubt, although the Speaker has frequently admonished members who have strayed in debate.

I would respectfully bring that to my colleague's attention and ask him please to remember the relevance rule in his further comments.

[Gordon Kirkby, Liberal, Prince Albert—Churchill River, SK]

Mr. Speaker, if I might, this is a preamble very much fitting in and leading up to the bulk of my statement. Further, with respect to other speeches I have heard today I would submit this line of discussion is perhaps far more relevant than others that have existed. I wish to continue this line.

The minister also found a solution to the troubling durum wheat dispute with the United States, retaining for Canada an upper limit of shipments of wheat well above historic levels, thereby allowing Canadians farmers to continue shipping our high quality product to the United States.

Our minister of agriculture has developed a very predictable pattern to resolve problems in agriculture. He identifies the issue, he consults broadly with all stakeholders and in consultation with these stakeholders he puts forward concrete solutions to help our farmers.

Bill C-66, an act to amend the Western Grain Transportation Act, follows that successful approach. The purpose of these amendments is to eliminate the WGTA subsidy on movements to Thunder Bay of grain subsequently moved westward by rail to destinations in the United States.

Second, these amendments will provide the railways with the authority to implement demurrage and storage charges and dispatch rail cars carrying grains, crops and products under the WGTA.

Third, these amendments will eliminate the WGTA subsidy on wheat shipments to Mexico. In respect of the Thunder Bay backtracking, the way the present WGTA subsidy operates is to encourage the rail companies to ship grain to Thunder Bay from the prairies. When they wish to ship it to the United States, they ship it all the way back to either Fort Frances or Winnipeg before it is shipped to the United States.

The problems with this approach are many. It increases the time grain cars are in use, therefore reducing the speed at which grain can be shipped to market. It costs the government money to send the grain the extra miles. I do not think the grain really appreciates the extra scenery the taxpayers are paying for.

This amendment will reduce the cost to the Canadian taxpayer and will enhance the reliability of Canada as a shipper and seller of high quality grains. An improved reputation as a supplier will increase the demand for our product. No doubt because of its very high quality, when we have this very stable and enhanced reputation as a dependable supplier the buyers are going to come. All of this will be good for the Canadians farmer. Certainly that is very good news.

Presently under the WGTA storage and demurrage costs cannot be charged against cars hauling grain qualifying for the subsidy rates. This has resulted in grain cars being used for storage of grain, sitting there holding the grain, but not moving it.

Grain cars were built to move grain. With this type of amendment that is what they are going to be doing. Allowing for storage to merge and dispatch will ensure quick transfer of grain to market and will further enhance Canada's reputation as a prompt supplier of high quality grains.

This bill will alleviate the countervail duty investigation currently lodged against Canadian wheat exports by Mexico. The removal of the subsidy will be beneficial in meeting the volume limits of the export subsidy provisions of the GATT for wheat and wheat flour categories. Canada, therefore, will maintain access to the growing Mexican market.

I wish to once again thank our minister for acting, after consultation, in a very prompt fashion to get the grain moving in western Canada. He is doing a great job. One problem at a time, our system is improving.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I was wondering if the previous speaker could tell us why the Liberal government waited for 18 months before introducing this very minor piece of legislation which is going to have a great effect on the way we ship grain around on the prairies.

He mentioned that he could only see that we were going to save a little time and a little money. He forgot about efficiency and I think he forgot about straightforward common sense. I cannot imagine why we would be moving grain to Thunder Bay and back again for 16 months before this government gets around to doing anything after "W5" highlighted the program and basically acted as its eyes and ears.

What about fairness? The Minister of Finance tells us he wants to be fair. Why should the Canadian taxpayer be paying taxes to move wheat to Thunder Bay and back for 16 months while this Liberal government sat around saying there is no problem with the way it spends money in this country? It took a television program to point out to the government that it was a ludicrous waste of money. The Reform Party is saying multiply that a thousand times. We have identified $10 billion in savings, this being one.

I would like to ask the hon. member why the government has waited this long to save this amount of money when it could have been done a year ago and we could have been further ahead.