Mr. Speaker, I appreciate the opportunity to provide some comments on the transportation modernization act, Bill C-49.
As a member of the Standing Committee on Transportation, Infrastructure and Communities, I want to start by applauding the work of all of my colleagues on the committee. We dedicated a full week in early September to studying the bill, hearing key witnesses, and working through a clause-by-clause analysis that produced well-considered, well-debated and productive amendments.
While Bill C-49 contains important aspects in marine and air travel services, notably, as my colleague from Mississauga—Streetsville just commented on, the creation of our air passenger bill of rights, I would like to focus my comments on the freight rail provisions. Modernization in this area was, in my view, an important step forward to creating equity for shippers across Canada, while balancing our national interest in ensuring a healthy rail sector.
Bill C-49 would ensure that service agreements establish, as much as possible, equal performance obligations between rail companies and their customers, better conflict resolution, and mechanisms. Therefore, balance is vital. Our producers, shippers, and others need reliable rail service to meet their obligations to customers at home and around the world. In the case of our international customers, it is critical that Canada, as a trading nation, build and protect a reputation as a reliable trading partner.
At the same time, we have to acknowledge that our class 1 rail services, CN and CP, must have the financial ability to maintain and modernize their capital assets across this vast and geographically-challenging nation. As we think about the struggles we had as a nation to see our railways built in the first place, we have to recognize that despite those challenges our country presented, our shippers enjoy among the lowest rates in the world.
Bill C-49 seeks to achieve equity and balance in three important areas: first, by creating a more competitive environment for shippers and producers across Canada when it comes to shipping rates, especially for those who were otherwise captive customers of one rail company; second, by creating service level agreements that establish a level playing field; and, third, by creating measures to improve transparency in the business relationship between the railways and their customers through a more transparent sharing of performance data and service capacity forecasts.
Creating a more competitive environment for otherwise captive customers involves a mechanism known as “interswitching”. Therefore, in response to my friend from Central Nova, here are more details on that.
Simply put, Canada has for years allowed customers within 30 kilometres of a transfer point between rail lines to have one company hand off its shipments to another if that other company offers better rates. The government sets the rate a rail company receives for transferring cars to another carrier, a rate that includes an allowance for the capital investments that the rail company requires for the line's state of good repair and improvement.
In 2013-14, we saw a record prairie grain crop, followed by one of the worst winters in Canada's history. Faced with service shortfalls by our railroads, the previous government expanded the interswitching limit to 160 kilometres, clearing the way for more captive grain shippers in the Prairies to access other rail services, including lines in the U.S. While it appears no shipper actually used the full 160 kilometre limit, the ability to shop for better rates led to improved performance by our railways, both in services and rates.
Bill C-49 introduces “long-haul interswitching”, a 1,200 kilometre limit open to all rail customers, except in two corridors where CN and CP both provide services, those being the Quebec City to Windsor corridor and from Kamloops to Vancouver. In our study of Bill C-49, I was pleased to introduce an amendment to the exclusion corridors that opened up long-haul interswitching to producers and shippers in northern Quebec, as well as both north and southeast of Kamloops in British Columbia.
Bill C-49 would take interswitching, a mechanism that in a limited way provides a competitive shipping rate for grain producers in the Prairies, and make it available in a big way to mines, mills, manufacturers, and producers across Canada.
Bill C-49 would also correct a long-standing inequity between the rail lines and their customers. Until now, a rail company has been able to penalize shippers for delays in loading or unloading cars, but there has been no reciprocal penalty against the railway for failing to provide the agreed to number of cars at the agreed to time.
When we think of the costs involved in keeping a ship waiting in Vancouver harbour for a train to arrive, not to mention the reputational damage we suffer when we do not deliver to customers on time, establishing equitable performance obligations between shippers and the railways makes sense. That is what Bill C-49 will do.
Finally, shippers and rail companies will more properly share responsibilities for the efficient and timely movement of goods. They will do this by accepting the consequences of non-performance in service agreements through reciprocal penalties.
Recognizing that issues will arise in negotiating and performing commercial agreements, Bill C-49 amends the Canada Transportation Act, allowing the agency to provide confidential, informal, low-cost, and expedient dispute resolution assistance. This has the potential to spare rail companies and their customers from the need to pursue expensive and time-consuming remedies. Similarly, access will be expanded to a summary, paper-based final offer arbitration process as a way to resolve disputes. Formerly this was available only when the freight charges involved were less than $750,000. Bill C-49 increases the threshold to $2 million, making this process available to more small and medium-sized shippers.
In our standing committee's study of Bill C-49, and previous studies, witnesses consistently called for more transparency in the performance data that the railroads release. This is important to ensuring that service standards are kept. This, of course, is of interest to producers and shippers because it allows them to fulfill contracts with customers. It also opens the way for them to collaborate more effectively in the management of the rail-based supply chain. The government is also keenly interested in this data because our reputation as a reliable trading partner is of national importance.
Bill C-49 will require the railroads to provide timely waybill information on the shipments they carry. This is data that shippers can reference in their negotiations for service agreements and rates with the rail companies. The data will also be used by the Canadian Transportation Agency to set the interswitching rates that the rail companies will be paid to move shipments to transfer points. Canada's two national railways have extensive operations in the United States, where they have been required to provide waybill data for some time, so this measure in Bill C-49 will put Canadian shippers on an even playing field.
As well, in the interest of transparency, CN and CP will also see new requirements to report in advance on any plans to close rail sidings or connection points, or to abandon sections of track.
Finally, referring back to the importance to farmers, shippers, and Canada's trade reputation of having reliable grain shipments, Bill C-49 will require the railways to provide a report before the start of a crop year which assesses their ability to meet their grain movement obligations. Then, before October 1, the railways will have to review the state of the year's crop and forecasts for the upcoming winter, and provide the government with its contingency plan to move grain in the event we see another scenario like the one we faced in the winter of 2013-14.
Bill C-49 has been an exercise in listening to some long-standing issues in Canada's freight rail system; considering, debating, and refining long-sought measures to make the system more equitable; and achieving a balance that will preserve the health of our rail sector while improving performance for our producers and shippers. It has sought a win-win result, with the greatest win being for Canada itself as the source of high-quality products and resources, and as a reliable and trusted trading partner in the world.