Debates of May 7th, 2014

Transport—Main Estimates, 2014–15

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, the underlying assertion of fact is incorrect. I do not knowingly think that this is impossible. In fact, I think it is quite possible, and that is exactly why we introduced this standard, based upon good information that was provided to me by officials.

At the end of the day, we are trying to get to the right place for rail safety in this country. We know that these companies can absolutely meet three years, and if they cannot, they will be telling it to us as we go through with developing standards.

Today in the United States, the secretary of transport made the same kind of analysis, that they do not want to be using these cars at all for the purposes of transporting, so we are on the same page on this. We want safer communities and safer rail travel.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Chair, if the minister wants safer communities and safer rail systems, why is her government spending more money on economic action plan advertising every year than on rail safety?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, with respect to rail safety, this government has spent over $100 million in extra funding in rail safety for the past number of years since 2009. We started in 2007 with respect to doing a study on what was needed for rail safety, and we acted on it by putting the money behind it. This is what the department indicated was needed: $72 million over five years plus and an extra $15 million in operating funds. Those are the numbers that are needed in order to carry out what we are doing in rail safety.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chair, I am glad to have this opportunity to question the minister. I must say that in response to the last exchange, it certainly does stand out that the government is spending close to $100 million on rail safety and close to $600 million on tax-paid government advertising.

I would like to take the minister to Bill C-30, the issue of grain transportation in western Canada and the horrendous backlog of grain transport this last year. The industry is forecasting, and indeed, I think the minister herself used this number, that the carry-forward at the end of this particular crop year will be something in the order of 23 million tonnes that was grown last year but was unable to be shipped because the grain handling and transportation system failed so badly. If that is the carry-over on top of even a normal crop in western Canada this summer, the industry will be facing much the same challenge this year as it faced last year. It will be a huge problem for a great many farmers.

Will the government ensure that the system, which failed last year, will not fail this coming year, that it is ready to cope with that volume and that it is ready to cope with other exigencies, like difficult weather conditions? Will farmers have that assurance?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, that is exactly why we have introduced Bill C-30, and that is why we enjoy the support of all parties on C-30, because we want to get to the right place, and the right place is ensuring that we are moving as much grain as we possibly can.

However, we cannot forget or deny the fact that this has been a bumper crop year. We have seen an increase of over 33% over previous years. We had anticipated there would be a higher carry-out if it continued along at the same level. That is why we found it necessary and important to issue an order to the railway companies to make sure that they are moving a million tonnes of grain a week so that we can move and clear out as much of this backlog as possible.

Even more important is preplanning. Commencing next year, in coordination with the CTA, I would be, as minister, in the position of being able to discuss and plan at the front end what the crop looks like and how we will accomplish moving the crop. It is something in which we believe very strongly and in which we are taking strong action.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chair, with respect to that issue of preplanning and dealing with the situation as it exists today, apart from the problem of very low volumes being moved through most of this past year, the second most serious problem has been the unfair treatment of various producers in various shipping corridors under the impact of the order in council. I wonder if the minister could indicate what she is planning to do to make sure that various shippers in various corridors across western Canada are all treated fairly.

For example, one of the most discriminated against areas is the central part of Saskatchewan that wants to move a significant volume of grain south into the United States. However, the railways would prefer to move it east or west, and so they favour Alberta and shippers in Manitoba. The central corridor of Saskatchewan moving south is finding it very difficult to move grain, as well as producer cars and short-line rail operators.

What is the government prepared to do now to ensure equity among those various corridors?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, there are two aspects to this.

We have a commodity supply chain table that Transport Canada is facilitating to have these kinds of discussions about the chains.

We took it very seriously when we set the actual tonnage level that we expected the railways to move. It was done so in contemplation that all corridors would be moved, and the numbers chosen actually reflected that maximum amounts of grain had moved through those corridors on a historical basis. As such, we knew that we would be pushing the railways in terms of how much they could carry, and indeed they have fulfilled their marks we have set out for them.

In moving forward, we are going to be looking more closely, through the review of the Canada Transportation Act, at the importance of ensuring that the chain is robust, it can adapt to differences and that we attract investment into this chain over the long term. I am looking forward to that discussion and that review as well.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chair, Bill C-30 is largely enabling legislation that would give the power to create regulations. Producers do not have a good idea about what the legislation would do until they actually see the regulations. The consultation has not yet started with respect to the regulations, and the weeks and months are ticking by.

I wonder if the minister can indicate when the consultation with stakeholders, even on an informal basis, will get under way so that they can know what is being contemplated under those regulations.

Will those regulations provide specific definitions of what constitutes level of service and how level of service will be measured in terms of performance? Will those regulations provide specifically for reciprocal penalties to be applied, which every single one of the witnesses before the parliamentary committee said was necessary?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, moving it to a regulatory power is very important because having a statutory obligation to come in to amend a statute is a much more blunt instrument than being able to move through regulatory reform.

As the hon. member knows as well, we will be striking a review panel for the CTA. It will be charged first and foremost with handling these matters that the hon. member just set out with respect to the movement of grain.

I cannot presuppose what the result of those consultations will be, nor what the advice of this panel would be. However, I can say that it will be charged with this at the outset as the most important thing for it to handle.

We look forward to being able to announce the launch of this panel in the coming weeks.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chair, I assume that the regulations in all cases will be prepared well in advance of the beginning of the next crop year, on August 1, so farmers will be sure to know what they are.

Under Bill C-30, the section that empowers the Canadian Grain Commission to create regulations specifically contemplates penalties for performance failures, but the section in Bill C-30 that empowers the CTA to create regulations does not specifically refer to reciprocal penalties. Why is there a difference in the language? Does the government in fact plan that the regulations with respect to the railways not have that crucial power of reciprocal penalties? Will they be there or not?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, first of all, I want to clarify that once the bill is passed, of course, consultations on the regulations will commence.

When I was talking about the Canada Transportation Act review, I was talking about the bigger picture with respect to grain, and that too will happen as well.

With respect to the specific question regarding reciprocal penalties, it is an issue that has come up, which we have studied in the past. We came up with an act last year in order to deal that, the fair rail shippers act, which we passed.

In this case, we will be looking at the regulations and going to consultation on the same issues, and we will be prepared to give our feedback on that when those consultations are concluded.

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Before we go to resuming debate, I would like to make a clarification. On the 15-minute time that is allocated to members, the maximum time in that 15 minutes for debate and/or a speech is 10 minutes. Normally in that 15-minute slot, one could take up to 10 minutes for remarks but the remaining 5 minutes would be left for questions from members of their particular caucus.

My apologies to the hon. member for Stormont—Dundas—South Glengarry. In the last iteration, we may have been off sync in terms of what we were doing.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Chair, I apologize for my enthusiasm. I just could not wait to get started on this wonderful speech that I have for the House. It gives me a chance to offer congratulations on the minister's birthday a second time, so that is a good thing.

As I started out to say, I want to talk about Canada Post but I want to acknowledge at the outset that it is an arm's-length crown corporation.

First, let me deal with the financial situation at Canada Post. It is undeniable that the business of delivering mail has evolved at a remarkable rate, especially with the incredible popularity of electronic mail. But whether we talk about individuals, business, or governments, everybody has to live within their means. This is as true of me and my family as it is of the government or of Canada Post. Canadian families know they cannot continually spend more than they earn. Business and governments are no different. Canada Post will not receive government subsidies to operate in an unprofitable fashion. It must adapt, as we all have to.

That said, the throne speech highlighted our government's unwavering commitment to control spending while investing in Canadians' priorities to safeguard our economy. Year after year in budget after budget, we have put in place credible plans to achieve financial sustainability and set clear targets to bring our deficit down.

This was crucial as we dealt with the damaging effects of a worldwide recession, one of the worst in more than seven decades. We had to get our fiscal house in order to keep Canadians working and our economy growing. The proof of this commitment is in the results. I remind the House that one of minister Flaherty's greatest legacies will be a balanced budget in 2015.

More than just managing debt, our government is tackling spending. We are reducing the size and the cost of government to ensure taxpayers get good value for money. We are working hard to make government more efficient and responsive to the needs of Canadians. This is because of our overreaching goal to create the conditions for jobs, economic growth, and long-term prosperity for all Canadians.

We are the envy of the world. Three credit rating agencies, Moody's, Fitch, and Standard & Poor's, have reaffirmed their top ratings for Canada. Both the International Monetary Fund and the OECD expect Canada to be among the strongest growing economies in the G7 this year and next.

Reducing spending, lowering taxes, and paying down debt are enabling us to seize new economic opportunities as we promote free trade and innovation, the keys to job creation, economic growth, and prosperity. I lay out these facts to underline that these same truths apply just as much to Canada Post as it faces unprecedented challenges.

One need not be a learned scholar to judge the trends in the fiscal forecast of Canada Post to see where the trend leads. A 2013 report prepared by The Conference Board of Canada into the corporation's future projects that unless major changes are made, annual operating deficits will reach nearly $1 billion by 2020, that is $1 billion per year. That is certainly a deficit that requires significant and immediate attention.

While many Canadians will admit they use mail less and less, some are quick to point out the popularity of parcel delivery. Could this not be a promising area of business growth, they ask? Absolutely it can. The parcel market is increasing as more and more Canadians are making online purchases. E-commerce helped parcel volumes grow by about two million pieces in the first nine months of 2013 compared to the year earlier. Canada Post parcel revenue was up 11.2%, which amounts to $32 million from the third quarter of 2012. However, I believe the minister could confirm that parcel revenues are simply not enough to compensate for mail volume declines.

Consider that in 2012, total transaction mail revenue amounted to $3 billion or 51% of the corporation's operating revenues. Parcels on the other hand accounted for less than $1.3 billion or 22% of operating revenues. Even though parcel volume is projected to increase by 26% by 2020, it will not be enough to get Canada Post out of the red.

Quite simply, the corporation's current business model no longer allows it to earn sufficient revenues to offset its cost. Without changes, the future viability of the postal service is in question.

As the minister has highlighted in this place many times before, the challenges of Canada Post have arisen in part because of the global recession. The pace of postal decline has been accelerating in Canada and other developed countries for a number of years. However, it has accelerated after the global recession began in 2008.

Companies cut their mailing costs as part of overall cost reductions. Many opted to ship more billing statements and marketing online. At the same time, individual consumers began moving en masse from traditional to digital communications. Canadians are now more likely to send a text message or an email than to take the time to write a letter, post it and wait several days to be delivered.

As the minister has noted many times, mail volumes per address have dropped by nearly 25% between 2008 and 2012. In fact, more than one billion fewer pieces of letter mail were sent last year than in 2006.

The U.S. Postal Service has reduced service hours and the number of employees to address financial pressures, for instance, while the U.K. has privatized and significantly increased stamp prices. Not to mention, neither of these countries presents the same unique challenges that our northern communities presents.

The digital economy is not going away. Canada Post has no option but to find new ways of doing business to keep its operation sustainable. Canada Post must manage its business prudently. It has no choice. It has a mandate to operate on a self-sustaining financial basis. Financial responsibility is a legislated obligation.

The services currently provided by Canada Post are clearly no longer affordable. The corporation needs to spend within its means in the same way that individuals do as they manage their family budgets. More than that, change is essential if Canada Post is to keep pace with the choices Canadians are already making about the way they prefer to communicate.

Since delivery accounts for about 40% of Canada Post's operation costs, it is the most obvious place to start.

Door-to-door delivery is by far the most expensive mode of delivery. It costs between two and three times what it costs to deliver to a community mailbox. Compare $283 annually for home delivery versus $108 for community mailboxes. They are also cheaper than delivering to a rural mailbox, which rings in at $179 per year.

To be clear, we are talking about changes affecting only home delivery. Businesses with large volumes of mail or located in business zones will generally retain their door-to-door delivery. However, the remaining one-third of Canadians still will have door-to-door service. The minority of people in our country, I would add and I am one of them, will gradually shift over the next five years to community mailboxes instead. Community mailboxes provide secure mail storage in a convenient place close to home to receive parcels and packages.

Remember that Canada Post introduced community mailboxes back in 1981, so it has been successfully delivering mail and packages this way for a very long time.

The corporation is expected to reduce its workforce by between 6,000 and 8,000 positions by 2019 and this will be achieved largely through attrition, which will help reduce its overhead dramatically. Like most workplaces populated by baby boomers, many will leave the workforce in a few years' time.

In closing, I have a question that I would like to pose for the minister. I hate to present her with such a tough question, but although it is tough, it is fair. I was hoping that the minister would inform the House on the current crisis facing Canada Post and the government's commitment to ensuring that it does not become a burden on taxpayers, because the taxpayers are up to here with unnecessary costs. Please explain what we can expect the post office to do to rein in these costs?

[Lisa Raitt, Conservative, Minister of Transport]

Mr. Chair, I thank the hon. member for his insight into a topic that we certainly must understand better.

In 1981, Canada Post was set up as a crown corporation. In its documents, it was done so to ensure that postal services, financial security and independence continued. That is exactly what we are trying to do today by accepting Canada Post's five-point plan for moving into the future.

The reality is twofold. First, Canada Post has to actually deliver to more mailboxes or to more addresses than before. It is increased by 1.2 million. Second, Canada Post, as well, is delivering fewer letters. In fact, most Canadian families only buy two stamps a month. That is significant.

It is clear that the five-point plan is something Canada Post has researched, has consulted on, has studied and has indicated is its best path forward for achieving financial self-sustainability along with the continued service provision that it needs to do.

I appreciated the words of my hon. friend when he talked about the costs associated with community mailboxes. In terms of trying to ensure that we have a delivery system that is efficient and cost-effective, it is important to note that the door-to-door service to one-third of Canadian households is $298 on an average annual cost per address. However, delivering to a community mailbox is $113 on an annual cost per address basis.

That is a significant savings. It is one of those kinds of savings that Canada Post has looked at to ensure Canadians will continue to receive mail on a daily basis, which is what it said it wanted to do. At the same time, what it also said was it wanted to ensure it was not relying upon taxpayer dollars. That is what Canada Post is attempting to achieve.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Chair, the minister mentioned a five-point plan. Could she elaborate a little on that five-point plan? Is it a tenable proposal to return Canada Post to fiscal responsibility?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, I can only refer to the news release that Canada Post has put out, because it is its five-point plan. What it says in the title is that the plan will return system to financial sustainability by 2019 and ensure continued role of enabling trade and commerce.

It is looking at areas of growth. The hon. member mentioned those, and one of them, of course, was parcel delivery. As indicated, with the increase in the amount of addresses Canada Post has to deliver to and the lack of letter mail that is delivered, it does have to do other things.

In its five-point plan, it lays out certain things it would like to do. The main initiatives are these: over the next five years, convert the remaining one-third of Canadian households that receive their mail at the door to community mailbox delivery; that it has a new approach to pricing letter mail to take effect, which has happened; that it expands convenience through postal franchisees; that it streamlines it operations; and that it does address the cost of labour.

As was pointed out by the hon. member, it is worthy to note that the average age of a current employee of Canada Post is 48 years old, almost my age today. Canada Post expects that nearly 15,000 employees will retire or leave the company over the next 5 years. That is more enough, in its view, to allow for the reduction of between 6,000 and 8,000 positions, mainly through attrition.

It is taking a legacy company and turning it around for the future, meeting the needs of Canadians and doing so in a financially self-sustaining manner.

[Jeff Watson, Conservative, Parliamentary Secretary to the Minister of Transport]

Mr. Chair, on the particular topic of Canada Post, speakers have noted that Canada Post has put forward a five-point plan. In that there are a mixture of measures both to increase revenues for the company, as well as cutting costs.

One of the items not talked about, but is a looming issue with respect to all postal operations around the world, or at least in advanced economies, is some of the difficulties funding pensions. I know that was an additional measure that had to be undertaken.

Could the minister talk about how the government had to assist Canada Post with respect to its obligations in order to manage its cash flow situation?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, what we have seen is that those companies in the Canadian federal jurisdiction that had fund benefit plans in the past number of years have experienced difficulties with respect to their pension not being sufficient to pay the obligations they have amassed.

The minister of finance has dealt with that matter with respect to Canada Post. There have been some various abilities given to Canada Post with respect to that.

That aside, what is important is that it has a plan operationally to ensure there will be a continuous self-sustaining basis going into the future, taking into consideration all of its obligations, including pension obligations.

[Matthew Kellway, NDP, Beaches—East York, ON]

Mr. Chair, let me join with others in wishing the minister a happy birthday. Good for her to be with us on such an auspicious occasion, or perhaps she, like I, would rather forgo recognition of these dates at this point in time.

In any case, I appreciate the minister being here to answer some important questions to which Canadians want answers. The questions first and foremost among them have to do with the safety of our transportation system.

The Transportation Safety Board has issued its 2013 statistics for Canadian marine, pipeline, railway and aviation accidents. Could the minister tell us what the increase in accidents was over the previous year?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, I will take the information from my parliamentary secretary. Overall, the number of accidents increased by 3% from 2012, with respect to marine, pipeline, railway and aviation occurrences. That is a significant number of transportation occurrences that are reported, 3,395. Compared to the five-year average, the number of incidents increased, yet the number of accidents actually decreased by 4%.

[Matthew Kellway, NDP, Beaches—East York, ON]

Mr. Chair, I appreciate the intervention from the parliamentary secretary, although I had the answer: the 3% increase, to almost 3,400 accidents across Canada.

Could the minister tell us by what percentage she cut Transport Canada's spending on transportation safety?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, I can appreciate what the hon. member is trying to drive at. I can tell him this. In rail safety, no government has contributed more in financing this area than this government. We have demonstrated that from 2009 until currently, putting over $100 million in rail safety areas.

In the marine safety area, the kinds of work that our inspectors do and as well the kinds of work people do with respect to safety and security is extremely important, and we have to ensure that we continue to do the right things. In fact, as I mentioned in my speaking notes, we increased marine security and marine safety through world-class tanker funding by 686%. That is going to be significant and will have significant—

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Order, please. The hon. member for Beaches—East York.

[Matthew Kellway, NDP, Beaches—East York, ON]

Mr. Chair, the minister appreciated what I was driving at, but did not answer the question that I was driving at, which is this. What were the cuts in safety that led to the 3% increase and almost 3,400 accidents across Canada?

However, in any case, does the minister agree with the Transportation Safety Board that all commercial marine vessels should have safety management systems, and that those systems should be certified and audited?

[Lisa Raitt, Conservative, Halton, ON]

Mr. Chair, with respect to aviation safety, going back to the hon. member's previous question, it is important to note that any decrease that he may see in the main estimates with respect to aviation safety is predominantly attributed to the movement of an air capital assistance sub-program to reflect a new administrative structure. It is not a decrease in safety.

He cannot stand in the House and say that cuts in safety that are not happening are causing more accidents. That is completely irresponsible for the member to say such a thing as that. He should know better.