Mr. Speaker, I am please to have the opportunity to speak to private member's bill C-640, an act respecting VIA Rail Canada and making consequential amendments to the Canada Transportation Act.
An intercity passenger rail service with VIA Rail as the predominant service provider is an important component of our transportation system. VIA benefits our economy and society by connecting Canadians from coast to coast. Recognizing this, our government has and continues to support VIA Rail.
Our government provides VIA Rail with substantial financial support to operate and maintain its network. VIA was given a subsidy amounting to $305 million in 2013-14, a significant amount of funding. In addition, our government is making unprecedented capital investments in VIA Rail to allow it to make important improvements to modernize its operations.
Our government has made available more than $1 billion in capital funding over the past seven years to upgrade and modernize portions of VIA Rail's network and many of its rail cars and locomotives.
However, despite our government's demonstrated support for VIA, we cannot support the bill. The bill would introduce legislation that would not only increase these costs, but would fundamentally alter, for the worst, how the corporation would be operated and managed.
VIA Rail is a federal crown corporation. Like all corporations, both private and public, VIA is governed by a board of directors that is responsible for all decisions the corporation takes. Our government has made efforts to strengthen governance practices in crown corporations and agencies by setting guidelines and best practices for board membership and operation. These best practices include seeking candidates with a range of experience drawn from both public and private sectors. To this end, VIA's board of directors is made up of qualified citizens who represent the diversity of Canada. There are currently members from many regions of the country, with each member bringing their unique skills, experience and perspective to the board.
The bill proposes to limit the pool of potential candidates for selection as VIA board members to only those candidates who are already members of the Canadian Tourism Commission and the Federation of Canadian Municipalities. This is curious logic, as by unduly limiting potential candidates for the VIA board, the bill works against these best governance practices.
Furthermore, as VIA board members have the responsibility to act in the best interests of the corporation and exercise due care and diligence, the proposal in the bill would put VIA directors in a real or perceived conflict of interest with their obligation as directors of the Federation of Canadian Municipalities and the Canadian Tourism Commission.
The bill also promotes the addition of significant financial risk to the government by moving VIA Rail from its current non-agent structure to that of an agent of the Crown. Our government cannot support this proposal as being an agent of the Crown would increase the government's financial risk by exposing the government directly to all VIA's debts, losses and liabilities.
Bill C-640 would further add to the financial risk to the government by providing VIA with borrowing power. The proposed bill allows the corporation to borrow, issue or pledge debt on the credit of the corporation. It also allows the Ministers of Transport and Finance, in co-operation with the Governor-in-Council, to authorize VIA to borrow up to an aggregated total of $500 million from the consolidated revenue fund. Ultimately, however, the government would have to backstop these financial commitments.
Furthermore, the bill proposes to change the share structure to provide employees with a 10% ownership in VIA. This makes no economic sense, given VIA's reliance on federal subsidies to operate. Typical of most scheduled, intercity passenger rail carriers around the world, VIA has no market value as its debts and liabilities far outweigh its assets. With little prospect for share value appreciation, the granting of non-market traded shares as performance incentives to employees would likely be an ineffective and inappropriate use of taxpayers money.
The bill also attempts to define a new mandate and objectives for VIA. In fact, it makes many of VIA's objectives inflexible and removes VIA's ability to seek an optimal balance between its objectives. On the one hand, the proposed legislation mandates the current root structure, while on the other hand, it requires VIA to maximize its financial performance. In other words, the bill ties VIA's hands and sets it up for failure.
Our government believes that VIA operates most efficiently as an independent crown corporation. This means the government does not operate the railway. This means the government does not get involved in VIA's day-to-day operations. This means the government does not try to tell VIA how many times per day it should operate its services.
It does not mean our government provides VIA with the necessary resources and funding needed to achieve its plans. This process has been clearly evident in recent years, with our government providing significant capital infusions and increased operating funding to allow VIA to build extra capacity, replace equipment and align the delivery of its services with planned resources.
Our government believes the current method of approving VIA's direction through annual corporate plans is the best approach. Currently, VIA's object is:
To offer a national passenger rail transportation service that is safe, secure, efficient, reliable, and environmentally sustainable, and that meets the needs of travellers in Canada.
Overall, this approach provides the necessary flexibility in service delivery to Canada's passenger rail service.
Although passenger rail remains an important service, particularly in remote areas and to support tourism across Canada and along the Quebec-Windsor corridor, it is no longer a predominant mode of transportation in Canada. Travel by private car remains the overwhelming choice for most intercity travellers.
VIA Rail is ultimately responsible for making business decision on its operations, including how best to lower its cost to reduce its reliance on federal taxpayer dollars, while meeting its objective to operate a national railway system that is safe and efficient. This is why VIA rail has to continuously assess its markets and operations to decide how best to provide the most economically efficient service to passengers.
The bill would make the process for determining the optimal mix of routes and fleet resources more difficult to achieve and delay VIA from proactively reacting to changes in its marketplace. It would take away this essential flexibility for VIA, resulting in poorer financial performance and governance processes that would not align with best practices for crown corporation governance. It bill would result in higher borrowing, insurance and risk management, costs for VIA. The bill would also result in higher costs and risk exposure for the Government of Canada.
Our government will not support Bill C-640.