Madam Speaker, it is a pleasure to speak to Bill C-34, amendments to the Canada Transportation Act.
This bill has a great potential to influence the income of western Canadian farmers. It is in this context that I wish to begin speaking to the bill.
We know that the incomes of western Canadian farmers in the past couple of years have been at Depression era levels. It was distressing to learn within the last couple of weeks that in Saskatchewan the income in the early part of this year dropped a further 10%.
When we look at where farmers spend their money, we find that grain farmers spend at least one-third of their gross income from grain on transportation. Any improvements that can be made to help them on the cost side in transportation are very important indeed.
The legislation does offer farmers a break on freight rates. In that respect it is very important. I might add that this is a break the railways can very well afford. CP Rail announced for the first quarter of 1999 profits of $187 million on rail. That is a 33% increase over the previous year. Can the railways afford to give farmers a break on transportation costs? You bet they can. This legislation promises that but the question we have to ask ourselves is at what cost to these same farmers in the medium and long term?
We heard from my hon. colleague from Palliser about the Crow rate and the Crow benefit. When the Liberal government took away the Crow rate it did something very similar to what it is doing here. It said it was going to give farmers a payout. The government gave them a payout for one or two years and took away the Crow rate in perpetuity. Farmers are huge losers on that score. In Saskatchewan we estimate it is to the tune of $320 million every year in perpetuity scooped out of our economy.
That is what we fear here. The government is giving us a carrot. It is giving farmers a carrot of $178 million in freight reductions next year, but we ask ourselves what is going to happen in two, three, five, ten and twenty years? It is for that reason the NDP caucus is going to oppose this bill as it is currently written.
I would like to explain our parliamentary rationale for this. It goes to the heart of our role as an opposition party in the parliamentary system. We believe that this is flawed legislation. It is our responsibility to point out those significant flaws and to try to get some improvements in the legislation. That is what we are going to be doing. It is not simply for parliamentary reasons.
This bill has the potential to affect farmers' income for many years to come. We believe that it has to be as good a bill as possible. That is the reason, as a parliamentary opposition party, we feel disappointed with the bill. We will oppose it at this reading. My colleague from Palliser has indicated that we will not try to delay this process, but we want and are obligated to point out the flaws in the bill because it is in the financial interests of tens of thousands of Canadian farm families.
My colleague from Palliser has spoken about how squeezed and telescoped this whole process is. It was two and a half years ago that Mr. Estey was appointed to study the whole matter of grain freight rates. We have come to the point now where we have two or three weeks left before the parliamentary summer break. This is when the government decided to introduce the legislation, in the full knowledge that it will not receive a thorough airing, and that the committee process, which is often where amendments and improvements are made, will be severely hampered. It will be difficult, if not impossible, for the opposition parties to squeeze any decent concessions out of the government on the most important aspects of the legislation. We are keenly disappointed by that.
My colleague from Palliser has talked about some of the big problems with the legislation. I want to give a bit of context and background. Mr. Estey did his job and was followed by Mr. Kroeger. From our perspective, Mr. Estey listened to the last best offer of CP Rail and put it into his report, saying that it would freeze freight rates for six years, that it did not want them dealt with in the longer term. There has been a rate cap in place. My colleague has indicated why it has been so important over time to have a rate cap in place. The railroads did not want that. It was our observation that Mr. Estey gave the railroads almost everything they wanted. Interestingly, it was pressure put on the government by members of this party and farm groups which led to a mini revolt in the Liberal western caucus at the Liberal meeting last spring, which began to wring out a few concessions. I believe that is why we actually have a decrease in freight rates rather than a simple holding of the line.
I might also add that the railroads are always talking about the need, as do our colleagues in the Canadian Alliance, for competition. They do not want regulation; they want competition. They do not want regulation when it applies to them, but they do not want competition either. We were calling for open running rights, where anybody who could put together a rail company could use these lines, just as we all use the telecommunications infrastructure. Of course the railways did not want that because that would introduce competition. I note in this legislation that we do not have that. We will have somebody look at open running rights in the long term.
Let us be clear. The railways do not want regulation; they want competition, or so they say. What they really want to do is maintain an oligopoly, which they have done for the last 100 years. That is precisely why the government has to intervene with some form of regulation. We are in a situation, which will not change, of monopoly and duopoly. In this type of situation, if we cannot introduce competition, which so far has not happened, the government has to play a role.
In the remaining few minutes I want simply to talk about the two or three things that are most important from our point of view about this new legislation. First, it significantly removes the Canadian Wheat Board from its role in co-ordinating the transportation of grain for export. We believe now, as we always have, that removing the board from a transportation role will erode the power of farmers within the system and will undermine and cripple the board's ability as an exporter of grain.
I will not go into more detail on that because I want to get to what is the single most important thing, and that is the replacement of the current freight rate cap with an annual revenue cap. The are two problems, which my colleague from Palliser outlined. We saw this happen, if I might say, this past April when the railroads were granted a 4.5% increase in freight rates based on the cost of things like fuel. That is fair enough. What did not happen is that we did not look, and the Canadian Transportation Agency is no longer mandated to look, at what are the railways' real costs.
As my colleague mentioned, they have made great savings through efficiencies. They have fewer and fewer elevators all the time, so farmers have to bear the cost of hauling the grain farther. The railways save money. The farmers pay more money. However, when it comes to the rates, that is never reflected.
That is the single most important problem. We have a situation set up where there is a revenue cap, but the government will not look at what efficiencies the railways manage to capture, and they do not have to share those with farmers. If we set up a system like that for the long term, farmers will be set up in perpetuity as losers.
My colleague has mentioned that the estimate is that since 1992 the railroads have saved approximately $700 million in efficiencies. They did not want to share any of it. They are now having to share $178 million. When we look ahead, they will win in perpetuity and farmers will lose in perpetuity.
I might simply say in closing that when the Estey report came out our colleagues in the Reform Party, or the Canadian Alliance, came out with a news release saying “Do it all and do it right away. We cannot do it fast enough”. I wonder why they always end up on the railroads' side. I wonder if that could have anything to do with the fact, for example, that, in the last year I looked, Canadian National donated $70,000 to the Reform Party.
It is people on this side of the House, people in our party, who are looking out for the best interests of farmers, and I dare say not those groups who are taking funding from the railroads, the banks and probably the international grain companies as well.
We believe this is flawed legislation. We cannot support it at this time. Our interest is in the income of farmers and the health of farm communities.