Mr. Speaker, I will be splitting my time with the hon. member for Cariboo—Prince George.
As I said earlier today, I got into politics to, in my own small way, expand freedom so people could take responsibility for their own lives, earn success and own their destiny. To make space for this freedom, I believe governments should only do the things that people cannot do for themselves. It is therefore with great skepticism that I always approach any proposal that legislates government action within the economy. The question is this. Does this legislation represent an action that is needed but that people cannot do on their own? In analyzing the industry of which we speak, I believe it does.
Canada is the second largest with the eighth least dense population of any country on earth. There are 5,500 kilometres separating Cape Spear, Newfoundland from the Yukon-Alaska border. On these vast lands, with much of them thinly populated, the prospect of ubiquitous railway competition is almost impossible. It is not the result of human error. It is the result of physical geography and math. As a result, we have only two class A railways in the country and many communities that require for their economic lifeblood the export of products to far away markets often have only one choice to ship those products.
Seventy per cent of Canada's goods and services are moved by surface freight. However, as I have said, we have only two class A railways to move them and in many places there is only one option. This creates immense economic imbalances between the buyer and the seller of the service. As such, there is a consensus that some redress of this economic imbalance is justified in this rare circumstance. As a result, we have proposed Bill C-52, the fair rail freight service act, which is designed to do as I just described. Allow me to describe the practices that this law would codify.
The legislation would give shippers the right to a service level agreement with a railway. A shipper would now be able to ask their railway for an agreement and the railway would be obligated to provide one within 30 days. This statutory right to an agreement would be an important gain for all shippers, including small and medium-sized shippers. This right would allow shippers to initiate bilateral commercial negotiations with the railway and clarify in writing the service agreement the railway would provide.
These agreements could identify performance standards such as frequency of service, transit times and the number and type of cars that the railway would provide to the shipper. These agreements could also include recovery plans that identified the actions the railway would undertake to recover from service failure or the communication protocols for monitoring service performance and dealing with any service issues that might arise.
In most cases, shippers should be able to reach an agreement with their railway commercially, but when they cannot, the shipper should be able to go to the Canadian Transportation Agency and ask an independent arbitrator to establish service agreements for them. Furthermore, the shipper should now be able to trigger a fast and efficient arbitration process, thanks to the bill. All he or she has to do is demonstrate that an effort has been made to reach an agreement commercially and give advance notice to the railway before commencing or requesting arbitration.
Shippers get to control the timing of launching an arbitration process. The legislation allows shippers to frame the issues to be addressed in the arbitration process by identifying the services they need. This gives the shipper the ability and the flexibility to ask for what is important to them. Every shipper operates in unique circumstances and has unique needs, and that is why these agreements will take many different forms. Tailoring service agreements to suit circumstances of both shipper and railway will allow for the diverse nature of Canada's transportation economy to continue to flourish.
Let me be clear. The bill is not about forcing our railways into an agreement, but ensuring that their obligations are met. We want railways to continue to manage an efficient, low-cost network to meet the needs of all of their customers in their network. The arbitration will follow a very efficient process to make these decisions. In a market where time means money, shippers have repeatedly asked for a process that is quick and timely so they can focus on growing their businesses.
The bill stipulates that the shipper can get an arbitrated service agreement within 45 days, although this could be extended in unique circumstances by an additional 20 days. In very complex service agreements with the shipper and the railways, the extension would be applied. The point remains that this is a fast process, to ensure we continue the operation of our rail network and get our supplies to where they are most needed.
I should note that the government acted with a great deal of meticulous care in setting up this process. We realize that in the last three decades the federal government has largely gone out of the rail business, through reduced regulation and obviously reduced ownership. This experience with a private sector railway system has been an unmitigated success. We should celebrate every day the success that our railways and their workers have created through this free enterprise system. We should congratulate them for the enormous improvements they have achieved in service standards, particularly when compared to their international peers. At the same time, without reintroducing excessive government intervention into the system, we are redressing a natural market imbalance that is inherent in most rail sectors around the world, and particularly so in a country with our geography and population.
We on this side of the House of Commons understand that a commodity-based economy, spread across vast distances, will require an efficient, effective rail system to move the commodities to their marketplace. That is why we have acted in this bill to provide a system by which our free market rail industry can continue to prosper and connect businesses with customers, and customers with the goods and services they need.