Madam Speaker, I am pleased to take part today in the debate for Bill C-49, the transportation modernization act. This Liberal omnibus bill would substantially amend 13 different acts and have a profound effect on three major modes of transportation: rail, air, and water.
These are big changes, and it does not look as if the Liberals would be changing the rules for the better. Bill C-49 is the first legislative response to the 2016 Canada Transportation Act review. While we welcome the commitment to a modernized and safer transportation strategy, we are concerned that the proposed changes would have costly unintended consequences.
While I would like to discuss all the complicated sets of changes from Bill C-49, such an undertaking would be impossible, given the time constraints of this debate. Today, I would like to particularly talk about the changes to rail transportation and what this means for our Canadian farmers and producers.
Our biggest concern on the changes to rail transportation has to do with the changes to the long-haul interswitching that this bill would make, in replacing the provisions introduced by the previous Conservative government with Bill C-30. Bill C- 30, or the Fair Rail for Grain Farmers Act, extended interswitching distances to 160 kilometres. Those provisions expired on August 1.
While new interswitching provisions were anticipated, this bill is far from meeting its objective of improving shipper and producer options with the new 1,200-kilometre interswitching tool. The system introduced through Bill C-30 was popular with shippers. It provided the certainty of a regulated rate up to 160 kilometres, and it is key that they dealt with the regulated rate for that full 160 kilometres.
With Bill C-49, the Liberals are putting forward a new long-haul interswitching tool on hauls of up to 1,200 kilometres, or up to 50% of the length of the entire haul. Shippers would be charged the regulated interswitching rate for the first 30 kilometres of the haul, and then the rate determined by the Canada Transportation Agency, which is determined on a case-by-case basis based on similar pricing hauls. That goes for the remainder of the distance to the interswitch point.
Shippers would only be able to interswitch at the first available interswitch point. The nearest interswitching location for many shippers and producers in northern Alberta and British Colombia would be in the Kamloops–Vancouver corridor, and the other exclusionary zone is from Quebec City to Windsor. lnterswitching is not allowed beyond 30 kilometres in these areas. For captive shippers, the new interswitching provisions would do nothing to encourage more competitive rates or improve competition.
This is a serious problem. It is important to remember that railways in Canada operate in a near monopoly situation. Captive shippers and producers have no choice but to use one company, to which they are effectively held hostage. This situation could put shippers and producers at a real disadvantage.
While there are provisions in Bill C-49 that would allow shippers to request a contract from a railway with reciprocal penalties, the penalty needs to be designed to acknowledge that the railways have much greater economic power than the shippers. We can also see that Bill C-49 is intended to encourage the efficient movement of shippers' traffic while creating a system that is fairly balanced between the shipper and the railway, but this original intention is eclipsed by the many uncertainties of Bill C-49, which are also present on this issue. To achieve the intended outcome, the government must improve and clarify its provisions for both issues of interswitching and penalties.
Bill C-49 also proposes changing the 30-kilometre interswitching rate so that the interswitching rate over 30 kilometres would be decided by the CTA on an ad hoc basis, as I mentioned earlier. This 30-kilometre interswitching rate would be set each year. It purports to take into account the railway's infrastructure needs across the entire network, which could increase the rate paid by shippers.
The rate-setting regime this bill introduces needs to be designed to ensure shippers always have access to competitive rates. As it stands, the rate would be derived from comparable traffic that is subject to captivity. This system needs to concentrate on a concrete review mechanism to ensure it is actually working for shippers.
However, the Liberals cannot just design this system and leave it to simply administer itself. It is not a budget. Without a sunset clause or predesigned review dates in two to three years, there are absolutely no guarantees for shippers and producers that they will benefit from it.
To remain competitive, shippers and producers rely on clear provisions to ensure efficient access to competing railways. The Liberals are failing to provide clarity and assurances for our Canadian shippers.
In addition, the new long-haul interswitching rates would be more difficult for shippers to use and will not serve as a useful tool in negotiations with the railroads. The proposed slew of changes to the long-haul interswitching rate present very vague outcomes. The sheer number of the regulatory changes and the administrative cost will put Canadian carriers at a disadvantage, especially against U.S. carriers.
Some argue that implementing these changes will increase U.S. railroad access to Canadian traffic at regulated rates without reciprocity. The government has expressed a desire to increase agricultural exports exponentially in the coming years, but has come up short with policies that would help achieve this. If we want to help the agricultural sector increase production and expand its global market share, we need to do more to increase its competitiveness in the global market, not restrict it. One of the ways to do that is to make sure they have efficient and reliable ways of moving their products.
Transportation needs to work much better and the bill must strive to improve rail transportation, because increasing the amount of produce that our amazing farmers produce will be useless if getting it to market becomes a substantial business cost for our producers. Canadians need and expect great rail service. We need an efficient system that ensures the cars show up and grain gets shipped on time.
An article in the Manitoba Cooperative states:
Western Canada’s bigger-than-expected crop is moving to export slower than at last crop year’s record pace, and while grain companies aren’t panicking, Keystone Agricultural Producers’ (KAP) president Dan Mazier says it’s costing farmers....
For most of the current crop year, which began Aug. 1, Mazier said CN Rail hasn’t delivered as many cars as it did a year ago, based on data published by the Ag Transport Coalition (ATC). It reports weekly on the number of cars most grain companies order and the number the railways deliver.
I have the Ag Transport Coalition numbers here for week 12 from October 15 to 21, showing that CN supplied 51% of the hopper cars that were ordered for shippers for that week, which resulted in an unfilled shipper demand of 2,614 hopper cars; and CP supplied 94% of the hopper cars ordered by shippers for grain in week 12, resulting in unfulfilled shipper demand of 281 hopper cars, with nearly 3,000 in total not making it in week 12.
In addition to that, speaking of competitiveness, we are also aware of the ongoing NAFTA negotiations. It is therefore remarkable that the government would allow the new 1,200 kilometre interswitching distance to increase U.S. rail access to Canada at regulated rates, allowing the U.S. to access this Canadian traffic without reciprocity. It seems like weak negotiating on the part of the government to give up this leverage before the NAFTA negotiations are concluded. It is another head scratching idea by the Liberal government to propose such changes even as NAFTA is being renegotiated. No wonder people think that the Prime Minister is napping on NAFTA, because Canadian competitiveness seems to be at the bottom of his priority list. Policies like this directly hurt our competitiveness and are yet another hurdle for producers and shippers to clear.
As it stands, there is simply too much uncertainty about the impact of the newly redesigned interswitching provisions. They need to be reviewable and timely.
Unfortunately, all of this uncertainty and unintended consequences stem from the Liberals' inability to actually consult and listen to industry experts and Canadians. The Liberals are quick to spend taxpayer money to travel around the country to consult and take selfies with Canadians, but when it comes down to it, the Liberals only listen to themselves.
Members from this side of the House have spoken to many stakeholders and experts. Many of these experts believe that what the Liberals are proposing is a convoluted remedy with unknown consequences.