Mr. Speaker, I appreciate the opportunity to speak on this very important issue, the amendment to the Western Grain Transportation Act tabled by the Minister of Agriculture and Agri-food, dealing with Bill C-66 as put forward on December 15, 1994.
Bill C-66 is a short term response to problems that have arisen in our grain handling and transportation. It will help ensure speedier delivery of Canadian grain to our customers around the world. Bill C-66 is not intended to be a substitute or a reform to the system.
I am convinced the short term amendments presented to the House today will benefit all those concerned. These changes will see an end to the system of backhauling through the U.S. and allow grain to qualify for WGTA subsidies. The amendments will implement a system of demurrage and storage charges on rail cars that are misused by shippers for storage purposes. They will end the WGTA subsidy on grain shipments to Mexico and ensure continued access to important markets.
These corrective measures were initiated by a group assembled by the Minister of Agriculture and Agri-Food on May 16, 1994. We all realize the WGTA has some weaknesses that need to be reformed that can no longer wait to be dealt with.
As the Minister of Agriculture and Agri-Food said, maintaining the status quo is an option that makes less and less sense. Longer term reform is essential and it is essential to achieve a compliance with the new World Trade Agreement. It is essential because the current subsidy distorts markets, encourages producers to ship grain to markets rather than processing it. It is essential to respond to the country's fiscal responsibilities with fewer government dollars. It is essential to promote the economic growth and diversification across the prairies.
I would like to discuss these long term reforms today. As members know the federal transport minister is now in the process of concluding extensive consultations on a package of grain transportation efficiencies. At the same time, the Minister of Agriculture and Agri-Food is concluding productive consultations with major key players of the sector on the future method of paying the WGTA benefit.
Throughout these consultations leaders of farm groups and industry have been given the opportunity to make significant contributions by going over specific questions on how best to allocate WGTA funds. The intent of these consultations was and still is to elaborate effective and viable solutions that will fit the long term needs, be comprehensive in nature and be progressive for the industry.
The question is not about whether to change the WGTA but rather the best way to deliver the program to Canadian farmers. If the WGTA is left unchanged, the GATT could have significant impacts on certain crops such as canola.
We basically have two choices. We can change the WGTA so it is no longer within the definition of an export subsidy, or we can continue to pay the railways, but do so only with volume and monetary limits allowed by GATT. If we choose to continue to pay the railways, there will be immediate and severe restrictions on the volume shipped through the west coast and Churchill. That will be a problem with regard to the eligibility for subsidy.
For the first few years, the monetary limitations are not a significant problem, because the value of the WGTA has declined over the years from its peak amount.
However, the volume limitations are the major problem. Volumes have gone up dramatically, specifically in the new crops like canola and other specialty crops. The GATT value limiting oilseeds and special crops will very likely be reached sometime during the first part of the 1995-96 crop year.
That means sometime during that year shippers will suddenly run out of subsidy. As the volume exceeds that level, they will have to pay the full cost of the WGTA to the ports of Churchill and the west coast. Once those volume triggers are reached a tremendous problem will be created for them. That is obviously untenable and unacceptable.
There have been suggestions that if we were to subsidize all the grain movements into British Columbia, not just those for export, we might be able to disguise the situation. This would be called a domestication argument. It is an interesting concept but in reality it would likely not work.
The GATT agreement states that the export subsidy provisions shall not be applied in a manner which threatens to lead to circumvention of export subsidy commitments.
The notion of domestication is clearly and admittedly an attempt at circumvention. Canada cannot expect other exporters to allow that to go by unchallenged. The U.S. and the European Community would most certainly complain and probably win. If we were to expect them to honour their GATT commitments, which we do, then certainly it is incumbent upon us to be prepared to do the same.
Three options on the future method of paying the WGTA benefit are now being considered. One was put forward by the producer payment panel in June of 1994 and one by the Alberta government one month later. The third alternative consists of an upfront buyout plan. This type of option has been discussed and there will be a process worked out in the very near future. I know that the University of Saskatchewan has professors putting forward ideas.
Let us look at the producer payment panel recommendation. It suggests that across the prairies the benefits of the WGTA be distributed directly to producers. Producers would initially be paid on a cultivated acreage and then phased into an arable acreage payment. The panel also recommended that some of the funds be put into safety nets.
For its part, Alberta proposed allocating each prairie province their historic share of WGTA funds and allowing variations on how the payments would be paid to producers within a set of principles. The Alberta government proposal recommended against putting WGTA funds into safety nets. That was also supported by the Government of Saskatchewan.
In the near future the Minister of Agriculture and Agri-Food will bring all of the input received together in a reform to be presented to Parliament for its final consideration. The proposal will have to be consistent with the new rules of the World Trade Organization and will have to fit with our fiscal realities.
We still have some work to do before we reform the WGTA. The major amendments to be addressed on long term issues will be introduced soon. In the meantime, I urge all members to support the short term amendments contained in Bill C-66.
