moved that Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), be read the second time and referred to a committee.
Mr. Speaker, I am pleased to rise today to support Bill C-52, the fair rail freight service act. I would also like to take a moment, since it is the first time this year that I have spoken in the House, to say that I wish everyone a great 2013 and look forward to passing great legislation, such as the act I am about to speak to.
First, I congratulate the Minister of Transport, Infrastructure and Communities for his tremendous work on this important file. I would also like to thank my colleagues, the former Minister of State for Transport, the hon. member for Yellowhead; the Minister of Agriculture and Agri-Food; and the Minister of Natural Resources for their contributions and support. In addition, there were many more people who contributed to the legislation in order to make it the best legislation possible.
Our Conservative government remains focused on jobs, growth and long-term prosperity. The bill advances these priorities. It will help shippers maintain and grow their businesses, while ensuring that railways manage an efficient shipping network for everyone.
Canadian businesses count on a reliable rail transportation system.
With 70% of Canada's surface freight moving by train, railways are extremely important to the competitiveness of our economy. In 2010, Canada's major freight rail companies, Canadian National and Canadian Pacific, served approximately 5,000 shippers and transported products to more than 10,000 destinations in North America and around the world.
As my hon. colleagues know, our government launched the rail freight service review in 2008. Its objective was to address ongoing issues raised by shippers concerning the reliability and consistency of rail freight service. We appointed an independent three-member panel to conduct a comprehensive review of service issues and problems related to the rail system in Canada. The panel was asked to submit recommendations to improve the efficiency, effectiveness and reliability of rail shipping in order to support trade and economic growth. The panel held broad consultations across the country, hearing from both shippers' representatives and railways.
Their recommendations proposed the use of service agreements to increase the clarity and predictability of rail service. These agreements would clarify and clearly define the services that railways would provide and how shippers and railways interact. This proposal is based on the idea that by working together to develop these agreements, shippers and railways can improve the efficiency of the supply train rail freight system and in doing so enhance their contribution to Canada's competitiveness in the world economy.
It is worth nothing that service agreements are a commercial tool, which our government believes is the best approach to improve the relationship between railways and shippers. We base this view on the fact that shippers and railways have always worked together commercially to define their private business dealings. Sometimes, however, shippers have been unable to negotiate contracts with railways to address service issues. Many shippers would like these agreements to know what service they can expect from the railways in order to manage their businesses and plan for the future.
On March 18, 2011, our government announced that it accepted the panel's commercial approach. In fact, we went beyond the recommendations. We put in place four key measures to improve the performance of the entire rail supply chain. First, we launched a facilitation process to bring together shippers and railways to negotiate a template service agreement and develop a process to resolve commercial disputes. This process focused on improving the private commercial relationship. This six-month facilitation, which was led by Mr. Jim Dinning, took place in 2012.
Second, we committed to table legislation to give shippers the right to service agreements with railways and to establish a process for obtaining an agreement if commercial negotiations fail. The fair rail freight service act would fulfill this commitment and give shippers the certainty that they would be able to obtain service contracts from the railways.
Third, we committed to establish a body of rail shippers to address logistics and develop standards to improve competitiveness. This group, known as a commodity supply chain table, will soon be established. Finally, we determined the need for an in-depth analysis of the grain supply chain to focus on issues that affect that sector and help identify potential solutions. This study is under way and should be completed soon.
Together, these measures deliver on our Conservative government's commitment to ensure Canada has the rail system it needs, one that supports strong economic growth and long-term prosperity.
It is worth noting why the legislation is needed. Canadians and Canadian businesses depend on rail to transport products to markets, both here in Canada and around the world, and it has to be done efficiently. We drafted the fair rail freight service act by working closely with and listening to the stakeholders involved. Shippers from a wide range of commodities and manufacturing sectors have told us what is important to them and what they need. Rail companies also explained the obligations they have to serve all shippers and the constraints they may face in carrying out their business.
This consultation helped us develop reasonable and intelligent legislation that would reflect the interests of both shippers and railways to meet the needs of the Canadian economy. This consultation also helped us develop reasonable and intelligent legislative proposals that reflect the interests of all the various stakeholders throughout our economy. The fair rail freight service act would create a strong incentive for issues around rail shipping to be settled through commercial means.
By requiring railways to offer agreements to shippers that requests them, the legislation would give the shipper the legal right to ask for a service level agreement. When a shipper requests an agreement, railways would have 30 days to offer one. The agreement would cover the terms of service that the railway and the customers would follow to move the shipper's goods. It could also include communication protocols and performance indicators, such as frequency of service, transit times and the number and type of cars, as elements that the rail companies would provide for their customers. This right to a service agreement would provide an effective tool for shippers to use in their discussions with railways.
In the event that negotiations for such an agreement fail, Bill C-52 proposes a fair, speedy and inexpensive process to establish the service contract. The shipper would be able to go to the Canadian Transportation Agency to ask an arbiter to impose an agreement. To make such a request, the shipper would have to demonstrate that an effort had been made to reach an agreement commercially and that a 15-day notice had been served to the railway prior to the request for arbitration. The shipper would trigger the arbitration and frame the service issues to be addressed. The shipper and the railway would then each have the opportunity to provide submissions to the arbiter with their views in respect to the contract.
This process, however, would be an interest-based arbitration. This means the arbiter must consider the interests of both the shipper and the railway in establishing the service contract. The legislation would provide guidance to the arbiter on factors to consider when establishing a service contract, including the shipper's transportation requirements and the overall obligations of the railway to provide service to all shippers. The arbiter would have the flexibility to determine the right service contract for each individual case. Every shipper is different. There is no one-size-fits-all approach. In establishing a contract, the arbiter must consider the unique circumstances in each case. As a result, arbitration decisions would be fair and reasonable for both parties.
Finally, the fair rail freight service act would provide a strong enforcement mechanism to ensure compliance with arbitrated service contracts. It proposes the use of administrative monetary penalties to hold railways accountable for their service obligations, as defined in the arbitrated contracts. If a railway breaches its service obligations, the shipper would be able to complain to the Canadian Transportation Agency. If the agency confirms the violation, it could apply a penalty of up to $100,000 for each violation by the railway.
Taken together, these measures of the right to service agreements, an efficient and speedy process when commercial negotiations fail and strong enforcement for arbitrated agreements would provide shippers with clarity, predictability and reliability when they need to grow their businesses and plan for the future.
Our primary objective is to encourage better commercial relationships between railways and shippers. This legislation creates a very strong incentive for parties to settle agreements privately. In most cases, shippers and rail companies should be able to negotiate terms and agreements on their own. Second, over the last number of years rail companies have improved their service. Shippers themselves acknowledge that service has improved, and I would like to take a moment to congratulate the rail companies for this progress. Despite this fact, we must pass Bill C-52 to solidify and improve upon these gains to ensure that Canada's rail system is well positioned for the future. We must ensure the entire rail system in Canada will be able to support the expected increases in shipping, which is bound to occur due to our government's robust trade agenda.
As demonstrated by several new and developing free trade agreements, Canada is turning increasingly towards global trade to generate economic growth. This means we need efficient and effective transportation networks to give Canadian businesses a competitive advantage in the world markets.
Before I conclude, I would also like to note that this legislation supports our government's responsible resource development agenda. In our efforts to modernize the grain sector, as we expand Canada's international exports, we need a rail transportation system that can move our resources to global markets efficiently and reliably.This legislation will make an enormous difference for our shippers in the resource sector. It will give grain farmers more predictable service as they work to sell their grain on the international market. It will give lumber mills more reliable service as they expand sales to Asia, and it will improve service to exporters of minerals, such as potash and coal. By improving the reliability and predictability of rail service, we help to strengthen Canada. We help strengthen Canadian companies and help increase Canadian companies' overseas sales.This legislation will create jobs, make Canada more competitive in the world economy and will make Canada a more attractive place to invest.
This proposed legislation offers a strong new tool to enhance the relationship between shippers and railways. Our Conservative government is proud to be taking this strong action to enhance efficiency, effectiveness and reliability of the Canadian rail freight system. I am convinced that these proposed measures will help build an even stronger freight rail system and contribute to Canada's success in international trade.
Bill C-52 will promote growth, create jobs and build prosperity for all Canadians. I encourage all members in this House to vote in favour of this legislation and refer it to the Standing Committee on Transport, Infrastructure and Communities without delay.
I would like to thank the many stakeholders, parliamentarians, and the shippers and rail companies, for their input in this process. We have come forward with legislation that I think has very broad support and will, as I have said many times already, make our country stronger. We live in the best country in the world, at the best time in history to be alive, and now we can ship our products more easily.