Debates of May 29th, 2013

Fair Rail Freight Service Act

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, yes, of course, shippers across the country will want some progress. One step forward is better than nothing, especially after almost 20 years.

The hon. member knows full well that there was still tremendous frustration that the bill did not go further. For example, the penalties in the service agreements are very limited, a maximum of $100,000, and they do not compensate the shippers. The penalties go to the federal government. It can be costly to fight this arbitration process. There was concern about how all that would work. The arbitration process only applies in very limited situations and only to future agreements, not to existing ones.

There are still real problems, but, as the member heard me say from the outset, we will support the bill.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, a number of Conservatives have stood in their place and pointed out that X and Y support this legislation. There is no doubt there is a fairly long list of individuals or different stakeholders supporting the legislation. I would highly recommend to those listening or presenting this list that they also recognize the fact that just because they are supporting the legislation does not mean they would not like to see the legislation improved upon. In fact, I suspect if we were canvass a number of the groups that the most recent questioner put on the record, we would find a number of them would like to have seen some of the proposed amendments supported and passed by the government.

Is my colleague of the same opinion that many groups support the legislation because they see it as a step forward, but, in the same breath, it is a lost opportunity where we could have done so much more? The minister might have the support of all members in the House, but it does not necessarily mean the Conservatives should pat themselves on the back because they could have done a whole lot more. Would she agree with that synopsis?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, after almost 20 years of dealing with the frustrations and tremendous power imbalance, I would call it, between the power of the railways to determine the level of service they will offer and the shippers who are desperate to get their products shipped within Canada, out of the country or perhaps to the U.S., certainly any step forward is better than nothing. I agree with that.

However, let me give one example of a shortfall. We have greater transborder trade and exchange with the U.S. than between any other two countries in the world, yet shipments from Canada to the U.S. are not covered by the legislation. It is another area where there is a shortfall. Does that mean this bill does nothing? No, of course not. It is a step forward, but it is a missed opportunity. It is not even half a loaf. It is a couple of slices of bread when perhaps we could have had the whole loaf. That is the point.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I thank my colleague from Parkdale—High Park for her excellent speech and her responses to the people who asked her questions. I am always impressed by what a fine job she does as finance critic. I am convinced that Canada would be much better off if she were Minister of Finance today.

I rise in the House today to speak to Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), which comes to us from the office of the Minister of Transport, who is also one of my riding neighbours.

I want to say that, although the NDP and I are preparing to support this bill, which is a step in the right direction, we found the government's closed-mindedness during the study in committee unfortunate.

As opposition members, both Liberal and New Democrat, we put forward amendments that were supported by witnesses and experts in the field, and the Conservatives systematically voted against them.

I also want to congratulate my colleague from Trinity—Spadina on the incredible job she does as transport critic. Seriously, I would immediately substitute her for the minister from Roberval, who is the Minister of Transport, and transit in Canada would be much better for it.

To get to the heart of the matter, for those not familiar with this bill, I want to say that it partly addresses the problems of railway transportation service customers that do not have access to adequate service as result of the monopoly held by the major railway companies.

However, since the bill covers only new service agreements, current agreements and contract breaches, which are major causes of revenue losses for shippers, are not affected by Bill C-52. That is one of its deficiencies. We would have liked to remedy that in the Standing Committee on Transport, Infrastructure and Communities, but that was not done.

I will mainly address three points, given the time I have today.

First, Canada's shippers deserve fair, reliable railway transportation service that is worth what they pay. The need to strengthen the shippers' position against the monopoly of CN and CP is only partially addressed in Bill C-52, as I mentioned.

The six recommendations from shippers, in committee, were reasonable, practical and modest. That is why we proposed them. Yet the Conservatives rejected them without even considering them. I will elaborate on this later.

There are other areas that need improving.

I would like to stress that the NDP, especially the member for Trinity—Spadina, the NDP transport critic, will continue to work with shippers. Shippers shared their concerns with us, and it is clear that despite the passage of this bill, this file will not be closed.

We are going to continue to work alongside shippers to improve Bill C–52 and address the problem of excessive prices caused by a lack of competition. This is a problem, for which the Conservatives are to blame, because we know that they are in bed with the lobbyists for the major rail companies.

Personally, I believe that the bill is biased. The Conservative government has acted shamelessly. It could have taken a closer look at the bill and what shippers wanted instead of systematically siding with the rail lobby.

Shippers are often SMEs. I stand up for SMEs. My riding is located in rural Quebec, in Saguenay—Lac-Saint-Jean. The main industries in the region, for those who are not aware, are forestry and aluminum production. The Niobec mine, not to mention agriculture, can also be found in my riding. All of these products can be shipped by rail.

This bill and the future of Canada's railways directly affect me. At the end of the day, the more that is done to improve the rail network, the stronger the economy that uses this mode of transportation will be. Rail transportation is far more environmentally friendly than transportation by truck.

Concerning my first point, many shippers are not satisfied with the services they receive given the price they pay for those services. They are especially critical of the rail transportation service interruptions and the hundreds of millions of dollars in costs to the Canadian economy year after year.

For Canadian industries, this may mean that harvests rot in the fields, that plants and mines are just marking time and they miss the ships meant to transport their products. It may also mean that inadequate rail freight services hurt Canadian exporters, jeopardize our competitive position internationally and cost jobs in Canada.

We cannot afford to suffer losses on the international marketplace just because the railways are unable to organize their services properly.

In addition, the clients of rail freight services, from farmers to mining companies, are penalized by the virtual monopoly in rail services. In most parts of the country, shippers cannot choose which rail carrier to use because they only have access to CN or CP. Such is the case in my riding. Even where both rail companies provide services, one of them usually sets its price too high, leaving the shipper with hardly any choice at all.

Shippers routinely defray the cost of service interruptions, delays and a range of performance shortcomings by CN and CP. Pickups and deliveries are made on time or not at all. The number of cars requested is often different from the number of cars provided, and the cars provided are sometimes damaged.

The situation affects many sectors, such as natural resources, manufacturing, agriculture, forestry products, mines, chemicals and the automotive sector.

For the most part, the products of these industries are intended for export. The poor quality of rail transport services undermines the ability of Canadian exporters to compete on the international marketplace.

As an example, soybeans from Argentina have a competitive advantage on, for instance, Japanese and Chinese markets because they are delivered more quickly and more punctually than soybeans from Canada, even though the distance covered by the Canadian products is substantially shorter. This clearly shows that there is a problem with our rail system.

Shippers have told the Conservative government about their dissatisfaction for years now, but the Conservatives have not taken any real measures. Since 2007, their approach has been to talk about it and wait. They started off by promising to ask a panel of experts to study the issue.

I know that the Conservative government likes to postpone the passage of good bills endlessly. However, at some point, you have to move from consultations to actually taking action.

What we want is clear. Farmers and other businesses have been footing the bill for years for the poor quality of rail freight services and have never really been able to get Ottawa’s attention. I am pleased that they have a listening ear in the member for Trinity—Spadina.

In order to truly remedy the situation, the NDP advocates strengthening the shippers’ position. We are on the side of businesses and exporters, and we are determined to get them the rail freight services they deserve.

Bill C-52 will cover only new service agreements, not existing ones, and that presents a problem. It means that many shippers will continue living with unreliable and unfair services with no access to the resolution process when existing service agreements are violated.

Arbitration is available only to shippers negotiating new agreements. Instead of offering all shippers speedy, reliable assistance through dispute resolution, Bill C-52 offers a limited arbitration process to a small group of shippers.

The arbitration process presented could be very expensive for shippers and place an unfair burden of proof on them by asking them to prove that they need the services of the rail transportation company.

One of the things we are calling for is the inclusion of penalties in service agreements, to compensate shippers for service interruptions, damage and lost productivity.

In its present version, the bill provides for maximum fines of $100,000 to be paid to the federal government, not the shipper. In order for fines to have a deterrent effect, they should be higher, given that CN made a profit of $2.7 billion in 2012.

The NDP will stand up for farming, mining and forestry communities, like the ones in my riding, and will fight to put an end to the unacceptable treatment and unreliable rail transportation services provided by the big rail companies.

We need a stronger bill to protect the customers. We will work with shippers to get them the fair and reliable rail transportation services they deserve.

The poor quality of rail transportation services causes Canadian shippers hundreds of millions of dollars in damage every year. Canadian jobs are at stake. We have to act now.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I want to put on the record what Richard Paton, the president and CEO of the Chemistry Industry Association of Canada, said:

The level of service offered by Canada’s railways can make the difference between companies investing here, or taking their business elsewhere...this legislation is critical — not only for our industry's competitiveness, but for Canada’s overall productivity and prosperity.

Would that encourage the member to help have this legislation be moved expeditiously?

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, first, I would like to tell my Conservative colleague that the NDP and I want to have this bill passed, even though it is not perfect.

I consider it a privilege to have spoken today, because it is not often possible to speak, when we are gagged with time allocation motions.

I am grateful that my colleagues and I have been able to speak. It is very important to hear what people have to say. In Ottawa, I like to talk about my riding and about agriculture and forestry and mining companies.

I would therefore like the others to be allowed to speak.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I congratulate my colleague from Chicoutimi—Le Fjord on his excellent speech and for standing up not only for Chicoutimi—Le Fjord, but all of the Saguenay. He does a very good job at representing the greater Saguenay region.

Moreover, unless I am mistaken, the greater Saguenay region will soon be celebrating its 175th anniversary. We can therefore be proud of our member of Parliament. I am very proud of him.

Like him, other colleagues have done an excellent job on the Standing Committee on Transport, Infrastructure and Communities. Unfortunately, the Conservatives chose not to adopt the excellent motions moved by the NDP. Nevertheless, we did a remarkable job in committee. We always bring forward amendments to improve bills.

Unfortunately, the Conservatives are blinded by their ideology, and they do not listen to the experts.

Would my colleague like to share his comments regarding the excellent job the NDP did on the Standing Committee on Transport, Infrastructure and Communities?

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, my NDP colleague from Drummond stole my thunder.

The NDP team is doing an excellent job on every committee of the House of Commons.

Indeed, in my speech, I did not have the time to mention all my New Democratic colleagues who are doing an excellent job and are doing their utmost to convince the Conservatives on the other side of the table to adopt good amendments, even though they are not always successful.

I would therefore like to thank the members of the Standing Committee on Transport, Infrastructure and Communities: the member for Trinity—Spadina, the member for Trois-Rivières, the member for Notre-Dame-de-Grâce—Lachine and the member for York South—Weston. They made a valiant attempt to have nine amendments passed to improve the bill.

This evening, Canadians realize that in 2015, they will be able to vote either for the status quo or for a proactive team that wants to improve Canada's rail system.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, earlier, my hon. colleague from Chicoutimi—Le Fjord spoke about how important it is to have legislation that will convince the big rail companies to respect the people who use them: forestry workers, miners, farmers and so on.

He went on to say that the fine was not steep enough to convince the major corporations, CN and CP, which make billions of dollars a year, to respect their clients. Of course, this ruffled the Conservatives’ feathers.

It is important to have good managers. Yet on the other side of the House, the Conservatives are very bad managers. They lost track of $3.1 billion earmarked for the fight against terrorism, and they have no record of a $90,000 cheque from their chief of staff, which was used to pay off the debts of senators who are not able to pay their own debts.

I would therefore like to hear why my colleague thinks that it is important to have credible, solid legislation to ensure that rail companies respect their clients.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, under the current bill, the fines imposed on CN would only amount to $100,000, which is really too little for a company that makes $2.7 billion.

The CN president even did some lobbying of the Conservatives, and he managed to influence them so they would not increase the fines. We can see that the Conservatives are not on the side of shippers, but are on the side of the rail lobby instead.

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, I am pleased to rise and put some comments on the record in regard to this bill. I had the opportunity to serve as the chair of the transport committee that listened to most of the presentations, and we certainly listened to the concerns expressed.

Before I begin my comments, I would like to give congratulations to the Minister of Agriculture and Agri-Food and the Minister of Transport. This has not been an easy file. It has been a file where if they do not get it right, they will not get a lot of second chances. They have spent a lot of time working together. They have listened to stakeholders and they have listened to the people who have vested interests in producing a fair deal at the end of the day. This particular bill we are putting forward would address many of the issues that were proposed and put forward by the stakeholders in the negotiations.

I do want to start right off by saying that I support this bill. Particularly in my new role as chair of the agriculture committee, it is one that will benefit the agricultural sector, and also the people I represent in the communities of Brandon and Souris.

The decision to move to a fair rail freight service act was discussed in 2011. It was an act to provide shippers with the right to a service level agreement and a process to establish such agreements when commercial negotiations fail. Many people would ask why this new bill is important. Why it is important to agriculture and to farmers? Like any business, it is one thing to have a great product, which I believe our farmers in Canada have, but it is another to be able to get it to market in a timely and efficient way.

Across Canada, producers and processors export 50% to 85% of their production, and they rely on an efficient and effective rail service to get their products to their customers. Farmers today ship 65% of their soybeans, 70% of their wheat and over 83% of their pulses beyond our borders. Last year alone, Canada reached a new record of exporting $47.7 billion in agricultural food and seafood, with significant increases in key markets, such as China, Hong Kong and Russia.

We are not done. We are on track to increase those export dollars and expand our markets. A full one-third of those exports are driven by Canada's world-class grain industry, which is also a powerful engine of our jobs and our economy and what our government has been all about for the last several years. It brings $15 billion to the farm gate. Jobs and growth depend on exports. An efficient rail service upholds the reputation of our agricultural exporters in foreign markets, and if our buyers are happy with delivery they will come back for more Canadian products rather than moving on to other sources of supply.

Our government remains very focused on trade because it drives one in five jobs across our great country. As part of our government's strategy for economic growth and prosperity, we have been pursuing a very ambitious trade agenda. I suggest to the members opposite that regrettably they were not able to participate in approving the trade agendas we have put forward, but they continue to move Canada forward, particularly our agricultural producers.

In fact, a key part of our economic action plan is the most ambitious trade agenda in Canadian history. Since taking office, we have concluded trade agreements with nine countries and have many more in the hoppers. We recently released the Agriculture and Agri-Food Market Access Report, documenting some of the keys wins we have had on the trade front over the last few years. Those wins include restoring beef access to South Korea, a potential market of $30 million by 2015; expanding access for canola to China, a market worth $1.6 billion; and, just recently, expanding access for our beef to Japan, which will double our market there.

I understand that numbers being put out there sometimes confuse people, but the bottom line is this: our Manitoba producers, our Canadian farmers, our food processors and our economies depend on trade to prosper.

What would the bill do to ensure a more efficient and reliable rail system for farmers? Most importantly, the fair rail freight service act would give shippers new tools to level the playing field in their relationship with the railways. The fundamental change would help to ensure the smooth and uninterrupted delivery of Canadian products to our customers. Agriculture and Agri-Food Canada is backing this commitment with the crop logistics working group, which provides a forum for transportation-related issues. On November 20, 2012, the Minister of Agriculture announced a new mandate for this working group to continue finding efficiencies and driving costs out of the entire food value chain.

We all know that the potential for growth lies beyond our borders in this great country, and our Conservative government continues to work closely with industry to open up new markets while strengthening and expanding our existing trade relationships. We cannot afford to put that business at risk. Canadian grain farmers and grain marketers have sales orders to fill around the world and are heavily dependent on the railways to move their product to market.

I am pleased to note the strong support from industry for this new bill. Stephen Vandervalk, president of the Grain Growers of Canada, said:

This new legislation will go a long way to address our farmers’ shipping needs. We are thrilled to see this legislation moving through Parliament. A lot of hard work has gone into this.

Pulse Canada also stands behind this new legislation. Gord Bacon said:

We're very pleased to see the government taking some action, because we have a long history of wanting to see improvements in the predictability and reliability of rail traffic.

The Keystone Agricultural Producers have expressed their support by stating:

The ability for shippers to acquire service level agreements is something we’ve been requesting for a long time. Reliable rail service is a major concern when we market our grain, so the sooner this passes, the better.

This legislation is a no-brainer. We have both sides at the table. We have both sides in agreement. Rail service disruption damages our entire reputation for exporting into foreign markets. If our buyers are concerned about delivery disruptions, they will soon move on to other sources of supply. We do not want our customers to think twice about buying from Canada. The livelihood of Canadian farm families depends on uninterrupted, timely and efficient rail service. I ask that we act now. I ask that we move forward on the bill as quickly as possible.

I would also like to add a couple more comments from people who have passed them on to me.

Richard Paton, president and CEO of the chemistry association said “...this legislation is critical — not only for our industry’s competitiveness, but for Canada’s overall productivity and prosperity”.

I want to congratulate all parties involved in this. It was a difficult challenge laid before parliamentarians, but also for members of the committees who met to try to hammer out this deal. Mr. Jim Dinning was very effective in creating the groundwork that we needed to come to this. At the end of the day, I believe with the ability to create service agreements, the people who have had issues with rail delivery and rail service in the past will have a way of resolving this.

I want to congratulate the rail companies, the short-lines and all people involved in that transportation industry. They have worked very hard to create an atmosphere where we can grow, where our opportunities will continue to grow, and where service will become the mainstay of western Canada and Canadian deliveries, not only to our markets to the south but to markets around the world.

I encourage all members to support this legislation.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, we have noticed in the northwest of B.C. that because of the system we have established, where there is often a monopoly of service to some of the shippers, that CN, in the case of the people I represent, has been less than forthcoming about getting cars, especially on any of the spur lines. Lumber mills or grain shippers who happen to be slightly off the main line have an incredibly hard time finding a company that is willing to deal with them. There have been a lot of complaints lodged with the Competition Bureau, et cetera, and so on down.

I wonder if my colleague is satisfied that the changes being made here would provide some of those sawmills with service. I am talking about Burns Lake and Fort St. James, and places that are keeping their mills going but just hanging on. The idea that cars do not show up is unacceptable. They are willing shippers. They are willing consumers. They have the money and they have the product to move but they are too small sometimes, it would seem, for CN and these large players. We have afforded them this monopoly in a lot of cases. They do not have access to another way of getting their product to market.

Would this legislation satisfy what these shippers, sawmills and grain shippers are going to need? As he said at the beginning of his remarks, we only get a few chances to get this thing right. We do not look at reforming our rail too often, and it has been wrong for a while, particularly for these types of producers.

I wonder if he has anything in this legislation that would offer those good people a solid sense that they will be able to be viable in today's competitive market.

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, it is important to note that no matter how big or how small we are in this industry, it is individual producers who ship grain cars. They are reliant on not only agreements but on working arrangements with the rail line companies.

For the shippers and the people who use that service, with the ability to have service agreements and contracts, a commercial deal will always stand up. Lack of service has always been the challenge and the question the shippers have put out there. What do they do when they are shorted? They have no alternative.

Having it in the agreements and having commercial agreements will go a long way toward resolving a lot of those issues, and not only for people in the hon. member's community. I respect that, but we have the same issues and the same situation, and we are trying to resolve them. I think this measure will help.

[Vic Toews, Conservative, Minister of Public Safety]

Mr. Speaker, I want to congratulate the member for Brandon—Souris for the very good work he is doing as the chair of the committee that is examining the bill. He has done a lot of great work over the years. He has worked with both shippers and the railway companies to find a suitable legislative resolution for what are sometimes very difficult problems.

With the demise of the Wheat Board monopoly, which has been quite good for western Canada, producers now have the opportunity to grow more wheat and send out more product.

We are seeing a tremendous resurgence in some of the crops that were not being grown because of the stifling effect of the Wheat Board monopoly, but I am concerned about the smaller shippers mentioned by the member across the way, small grain farmers and others who want to ship their products around the world.

Does the member see a solution for some of the concerns people have raised when it comes to smaller producers and smaller shippers against larger rail companies?

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, it is important to note that recently producers from western Canada were before the agriculture committee. One of the questions raised was whether they had seen a service level improvement, even without the agreement but with the idea that it is in place and looks to be moving forward. To a person they suggested to us that the shipping, through the west coast particularly, had become better than ever before. We have obviously seen an increase in wheat grown this year, and I think it is because of the freedom of choice that people have.

The fact that agreements can be struck with any individual, any organization or any business suggests that the companies, particularly the rail companies, are very serious about doing business. They got the message loud and clear, and other than a few glitches this winter with weather and other conditions, we have seen the ability to provide service. We have seen them making great efforts to satisfy their market. They know very well that their success depends on getting that product to market in a timely fashion.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I thank the hon. member.

Bill C-52 is a step in the right direction. Nevertheless, the shippers made six recommendations to the committee that were not considered by the Conservatives; none of them were accepted. Yet we know very well that these new agreements will not address contract breaches.

Since there are two main railway companies providing these services, if there is an interruption of service the shippers cannot count on another railway company to transport the goods. That affects their ability to compete on the world market.

How does the hon. member propose to improve this bill, which is really a mess at present?

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, I have read most of the transcripts of the debate and the discussions that went on in moving this bill forward. A number of organizations, particularly the shippers, came forward and expressed discontent that they did not get it all and that there were other things.

Negotiation is that way. Whenever I go to negotiate, I always want to get more, but at the end of the day, when both sides are a little bit happy and a little bit unhappy, they have probably reached a fairly good compromise.

When we have comments by the leaders in the industry saying that this is a good thing for their suppliers and their people, I suggest that it is a good thing for all Canadians.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I appreciate the opportunity to congratulate the chair of the committee on making sure this legislation is going through smoothly. I would like to remind him how important it is, and I know he knows this, to our own agriculture industry.

I am surprised that there were shippers who were not happy. I read that the president of the Grain Growers of Canada said:

This new legislation will go a long way to address our farmers’ shipping needs. We are thrilled to see this legislation moving through Parliament. A lot of hard work has gone into this.

He added:

We were also happy to see performance standards included in the arbitration process.

I just wondered if the member would like to elaborate a little on what this is doing for our agriculture, especially in landlocked areas such as Saskatchewan and Manitoba, and how important it is to have this for our farmers.

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, I thank my colleague for the question, but I would suggest that sometimes Manitoba and Saskatchewan are not always landlocked, since they are surrounded by water.

It is interesting, because the whole debate about this rail service agreement was to find a way to satisfy both the shipper and the rail companies. We understand that choices are limited, so the rail companies have to understand that they have to provide good service, while the shippers have to understand that they have obligations to make and commitments to keep in a deal. If either one makes a mistake or creates an impasse, there are legal ways of resolving it and coming to the solution and ways of moving forward without being tied up. Previously they were tied up in courts forever, and it was just a waiting game. Now we have a direct resolution.

I think producers like it. I think shippers like it. I think the rail companies will grow to like it as we move forward. Canadians will benefit from it.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, it is a pleasure to participate in this debate on Bill C-52. During the course of this debate, all sides in the House have said they are glad to see this piece of legislation before the House. At the end of the day, it will probably garner pretty general support.

However, there is indeed disappointment, not just in the House but among a very significant number of those in the shipping community, who had been hoping and working for years—

[The Deputy Speaker, NDP, Joe Comartin]

There is a conversation going on at a fairly loud level. Could I ask members who want to have a conversation to take it outside into the lobby? I am having a hard time hearing the member.

The hon. member for Wascana.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, thank you for attempting to regain a little order. It is much appreciated.

What I was saying was that there is significant disappointment, not just in the House but in the shipping community. The legislation does not fully achieve the objectives that the shipping community had been hoping for. They have been waiting for this legislation for a long time.

The debate about level of service agreements in the country began in 2006-2007. Before that period of time, the focus was on costing agreements and the level of freight rates and whether or not farmers and other shippers were receiving the full value that they thought they should receive. The argument was all about having costing reviews and the timeliness of costing reviews, what revenue was raised by freight rates and how it was shared or not shared across the entire continuum, from the shipper to the port and ultimately to export destinations.

In 2006-2007, the focus really zeroed right in on the issue of level of service agreements. That is when this debate really began.

The government took a while to think about that, but in 2008, the government said it agreed that there was a legitimate issue, that service levels might well be deficient and there ought to be a review of the level of service provided by the railways to the various shippers.

I should make the point that we are not talking here about just the agricultural sector. As large and as important as the agricultural sector is, the shipper community includes those who move virtually anything by rail. It includes the forestry sector, the chemicals sector, the fertilizer sector, mines and minerals, and manufactured goods. It is a broad cross-section of those who rely upon our railway system. They made the general complaint that they thought the services they were getting were in fact deficient.

As I said, the government agreed in principle, but there was an issue here, starting in 2008, and it said it would have a formal review. That review panel was appointed in the fall of 2009. It got to work pretty quickly and completed its work in about a year. It finished its report in the fall of 2010. The report was officially published at the beginning of 2011 and by about March, the government said it accepted the report of the review panel and that it intended to implement the report.

The panel essentially said that the marketplace for transportation services was basically a non-competitive marketplace, that there was not a fair balance between the shippers on one side and the railways on the other and that there was indeed an imbalance of market power that was biased in favour of the railways. That report of the review panel appointed by the government came out at the beginning of 2011.

In March of 2011 the government said that it essentially accepted that principle and that it would do something about it. The discussion continued to go on without a specific proposal from the government. In fact, it referred the whole matter back to another review process, chaired by Mr. Jim Dinning from Alberta. He was not able to move the yardsticks any further in trying to reach consensus between the railways and the shippers, so the process dragged on through 2011 and through 2012. By the end of 2012, in December of last year, the government finally tabled legislation. We are now halfway through 2013.

I would just remind the House that this whole process began in 2007. It has been a long time, and the shippers have waited patiently for legislation that they hoped would address their concerns. Unfortunately, they are disappointed. They find this legislation to be deficient.

The shippers essentially wanted four things in the legislation. First, they wanted in legislation the enshrined right that they would be entitled to an enforceable level of service agreement with the railways. That was number one.

Number two, they wanted the legislation to lay out what constitutes the basic services that the railways are to provide and how performance or non-performance would be measured. That was their second request. They wanted some clarity and some specificity about what constitutes service and how it is measured.

Number three, they wanted it very clear that if there were a breakdown somehow in the system, if the level of service that they contracted for was not in fact delivered as promised, then they would be entitled to recoup damages for the deficient service that they were delivered.

I would note that the review panel had reported, when it examined all of the anecdotes presented by shippers, that the typical agricultural shipper in western Canada could expect to get exactly what it ordered from the railways only 50% of the time. That is a pretty compelling statistic. If we can count on the transportation we have ordered to deliver only 50% of the time, we have a big problem if we are relying upon the railways to actually perform in that manner. Obviously the situation was serious and the shippers wanted the opportunity to recoup damages. They hoped they would not have to do that, but they wanted the opportunity to recoup damages if in fact the level of service fell below what was expected.

Finally, the fourth element was the dispute resolution mechanism.

The right to have a level of service agreement was point number one. They could negotiate that. If the negotiations were not successful, then it would be referred by arbitration to the Canadian Transportation Agency and the agency would impose an arbitrated agreement. That actually is in the law and that is a good part of Bill C-52. It is the other elements of the ask that are missing. The clarity with respect to the definition of what services are to be provided and the consequences if the level of performance falls short. In other words, the ability by the shippers to recoup damages.

Those two things, the clarity of the definition and the ability to recover damages, are not in Bill C-52. Those are the two primary reasons why the shipping community feels that this legislation is deficient.

The government's answer with respect to the definition of level of service is that it is just going to rely upon the traditional language that has been in the Canadian Transportation Act for 40 or 50 years and it does not need to upgrade that language or make it any more specific to satisfy the concerns of shippers. I think quite frankly that the government is going to find out that this is a false conclusion on its part. The definition in the act is what has caused the problem in many ways over the last number of years. It is not clear. It is like nailing Jello to the wall. To simply say, “we're going to carry on with those same definitions of service levels in the future and cross our fingers and hope for the best”, the government, the shippers and the railways are going to be disappointed. The language has proven to be deficient in the past and the definition of insanity is continuing to do the same old thing over and over again and expecting a different result.

We are not going to get a different result, so the definition in this legislation is not adequate to change the water on the beam, to solve the problem that the shippers have been complaining about and that the government's own review panel concluded was in fact a legitimate problem and that the shippers were not crying wolf.

Second, on the issue of enforcement, what happens when the level of service turns out to be deficient and it does not measure up to the standards that the shippers have every right to expect? The government's answer is not to give the shippers damages. The government's answer is to establish a system of administrative monetary penalties, in layman's language, fines for railway substandard performance. Some might think that is a kind of penalty and enforcement mechanism, would that not work? The problem is the fine goes to the government. It goes into the general revenue fund.

It simply becomes an additional revenue source for the treasury of the Government of Canada and bears no relationship whatsoever to the transportation problem out in the field. What the shippers need is the ability to recover damages. If a shipment is not delivered on time and it misses a customer or a market, that is a monetary penalty that shippers have to pay. They lose income, lose profit and incur added costs because the transportation system has failed them.

It does them no good whatsoever to say we will slap the railways on the wrist and they will pay a fine to the government. That does not move an extra bushel of wheat, that does not move an extra tonne of lumber. All it does is transfer a bit of money from the railways to the government. Meanwhile, the shipper is stuck with the same problem: deficient service for which there is no remedy because they cannot recover damages unless they go through the elaborate process of going to court.

We just had a discussion about small shippers and the disadvantages they have. The railways have deeper pockets for the lawyers in the court process than the shippers have and, undoubtedly, that imbalance will continue to function in favour of the railways and to the disadvantage of the shippers.

Probably the greatest illustration of the discrepancy remains on the playing field. Remember, the panel said the original problem was a lack of balance on the playing field. It was tilted in favour of the railways and the shippers were largely in a captive market situation. They were not in a position to find some other railway to move their product and they were not in a position to enforce their legal rights because they did not have the legal rights, so they were stuck in a disadvantageous position.

Perhaps the greatest illustration of that discrepancy is the fact that railways can, and always have been able to, level unilateral demurrage charges against the shipper if the shipper fails to deliver their side of the bargain on time or in the way the railways had expected. The railways can extract a cash penalty from a shipper called demurrage if the shipper falls down on its obligations, but on the flip side of the equation, the shipper does not have the ability to recover a cash penalty or cash damages from the railways if the railways fail to perform. Therefore, the railways have the power to punish the shippers, but the shippers do not have the power to punish the railways. That is a classic illustration of the fundamental market imbalance that exists in this situation and the imbalance that the shippers had hoped would finally be rectified by this new legislation.

Those are the fundamental problems. The legislation creates, to a certain extent, some steps forward. There will be a legislated right on the part of all shippers to have level of service agreements with the relevant railways. They can first try to negotiate those agreements and if the negotiations succeed, great. Everybody hopes that is the way it will work, that they will not need recourse to the legislative and regulatory framework so that the parties will be able to work out a deal. However, if the shipper is not able to successfully conclude an agreement with the railways, the legislation takes an additional step, which is good, in saying that the shipper can then to go to the Canadian Transportation Agency and get an arbitrated settlement from the agency. Those steps in the legislation are positive steps forward.

However, let me repeat that where it falls down is in the language that is in the act or, more accurately, that is not in the act defining what “level of service” means. The same vague old language is being used that has been there for decades and that vague old language is part of the problem. There needs to be greater clarity about what constitutes level of service and the way level of service is measured. The second major deficiency is that when there is a failure to perform on the part of the railways, there is no ability on the part of the shipper to go to the Canadian Transportation Agency through some form of dispute settlement process and obtain liquidated damages to address the practical problem that the shipper has, that their goods are not moving because the railways have failed to perform.

Paying a penalty to the government does not do the shipper any good. The money is in the pocket of the government, not in the pocket of the shipper and the shipper is the one that has experienced the problem.

Those are the issues that were discussed at committee. Those are the issues that members of this House, both in committee and otherwise, have discussed with the shipping community across the country. They say that, because of the legal provision in Bill C-52 that would create the right to have a level of service agreement, the legislation is a step forward. It is, as they put it to me both verbally and in writing, better than nothing. They would like substantially more, but it is better than nothing.

On that basis, that it is some small improvement over what has existed in the past, Liberals will be reluctantly supporting this legislation. We would prefer to have it vastly improved. There still is an opportunity to do that. The parliamentary process is not yet complete.

Hopefully before it is complete and before this legislation is given royal assent, the government will have the opportunity to reflect on those two key points. First, a more effective definition of level of service and the way it is measured; second, the way proper service is enforced by the railways, by giving the rights to the shippers to have liquidated damages, as opposed to just a penalty paid to the government.

If the government would change those two things, the shipper community members would be a lot more satisfied with this legislation than they are today. I think all of us are reluctantly accepting it the way it stands, but the government will find it will be revisiting this issue in a year or two.

There is a statutory review of the Canada Transportation Act in the year 2015. This is going to come back again, because this time the government has not seized the opportunity to do it right, the way it should have.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, Bill C-52 only applies to new agreements. Contract breaches and service interruptions are often related to existing agreements. The shippers have no recourse and they suffer financial losses. Sometimes these losses also cause job losses. If the crops are just waiting and are not sold, there are repercussions for the economy.

The bill is incomplete and it is imperfect. Perfection is difficult to attain. Still, the bill does not in any way reflect the six recommendations the shippers made in their testimony to the committee.

What does the hon. member think of the serious effect this has on the shippers' quality of life and Canada's economy?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, questions about existing service agreements between some shippers, certainly not nearly all of them, but some have over the last number of years been able to negotiate some kinds of confidential contracts with the railways to deal with their level of service. Those contracts are confidential between the railway and the shipper and their content, in terms of how effectively they deal with the service issues between the two parties, is not a matter that is on the public record.

However, the hon. member is correct to say that in those cases where a service agreement, such as it is, exists at the moment, the shipper is not entitled to refer the matter to the CTA unless and until that existing confidential contract expires. This may mean that some shippers might have to wait for some period of time before they would have access to the arbitration process.

We asked a number of questions in the committee about the existence of these pre-existing confidential contracts between some shippers and some railways. We were told that there were not very many of them and they were all pretty well of short duration. That was the testimony before the committee by the parties directly involved. We were given to understand that this was not a large problem.

However, if in fact there turn out to be more of these confidential agreements already existing than we were led to believe there were and if they are of longer duration, five or ten years rather than one or two, then I think there will be a problem with the legislation because a significant number of shippers would then be excluded from the right to have arbitration for some considerable length of time.

However, according to the shippers themselves, when we asked them the question on how many of these agreements existed now and how long they lasted, there were not very many of them and they did not last very long. That was the testimony they gave before the committee.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I think it is rather hypocritical of my Liberal colleague to come to the defence of improved rail service in Canada when we know that it was the Liberal Party that helped create the current crisis by privatizing CN in 1995, without any protective measures for shippers. We might say they put the finishing touches on the virtual monopoly we see today.

What does my Liberal colleague have to say about that?