Mr. Speaker, I am pleased to make my contribution as one of the first speakers on Bill C-89, which would privatize CN's rail assets, including their track, rolling stocks, buildings, et cetera.
Unfortunately, the bill excludes a major part of CN's assets, such as non-railway real estate assets, probably the most valuable part of the company. Reformers would like to see these assets sold off before the privatization effort takes place, in order to reduce CN's debt load.
My hon. colleague has described a number of flaws with the bill that need to be fixed. These include prohibiting the government from arbitrarily cancelling all or part of CN's debts prior to privatization; removing the requirement to leave CN's headquarters in Montreal; removing the requirement that CN comply with the government's policy of official bilingualism; and removing the 15 per cent ownership restriction.
I want to use my time today not just to point out the obvious flaws in this bill but to talk about privatization in general and introduce a number of ideas for consideration by the government before this bill is sent to committee.
The privatization of CN is a good thing, but the government has an opportunity to make it a great thing. I want to suggest the government use this, its first effort at privatization, as a testing ground for the privatization of all crown corporations.
In 1987 Madsen Pirie, president of the Adam Smith Institute in London, a world renowned expert on privatization, spoke at a Canadian symposium on privatization organized by the Fraser Institute. He had this to say about the fundamentals of privatizing a crown corporation:
When government engages in an activity such as privatization, it is speaking to several audiences. Among the audiences that government speaks to are the managers of crown corporations, the workers who are employed in them, the members of the general public who are customers of crown corporations, the general public who are taxpayers and who pay subsidies to support the losses of those corporations, potential investors who might buy shares in those corporations, the financial and business community which takes an interest in their performance, and the media commentators who observe this process and comment on the results and declare it to be a success or a failure. Every act of privatization speaks to all of those audiences, and every act should be tailor made to maximize the support of each of those different groups.
When reviewing this bill we should test it against Dr. Pirie's list of vested interests or audiences. Bill C-89 must address each of the groups affected by the privatization: the managers, the workers, the customers, the taxpayers and the investors. If Bill C-89 does not specifically address each of the needs and interests of these groups, amendments will be necessary.
Dr. Pirie also outlined three key principles of privatization. First, never cancel a benefit. If people are deriving a benefit from the public activity of a crown corporation, never cancel it, however unjust it is.
Second, make friends out of your enemies. Find out who the people are who might lose on the privatization process and structure the policy to make sure they gain instead.
Third, disarm the opposition. Identify all possible objections to privatization and tailor make the policy so every single one of these objections is dealt with in advance. The government should ensure it has considered each of Dr. Pirie's three principles in planning for the privatization of CN and the necessary legislative measures are included in Bill C-89.
Based on these audiences and principles I believe that every privatization initiative must have a list of groups with a vested interest in the sale of CN and give them the first opportunity to buy CN shares. CN employees should be given the first opportunity and the highest priority. CN customers come second on the priority list and Canadian taxpayers and investors are third.
I would also like to explore some new ideas for consideration by the government before Bill C-89 becomes the law of the land. What about linking two or more government objectives into one?
For example, the government is giving landowners in the west a one-time payout for eliminating the WGTA subsidy for the railways, commonly known as the Crow rate. Would it be possible to give western farmers the choice to have their Crow rate buyout in the form of shares rather than cash? Farmers could then have a direct financial interest in the economic performance of CN. If done properly, the government could overcome opposition to both the Crow rate buyout and the privatization of CN with one move. I offer this idea to be explored by the government to lessen some of the negative effects of both programs.
In 1986 the Economic Council of Canada published the report: "Minding the Public's Business". In chapter five titled "Government Enterprise and Business" the economic council made the following recommendations:
Entry into rail carriage could be promoted in different ways. The provisions in the proposed legislation could be expanded to make running rights more easily available and to open entry into rail carriage to anyone who can meet the basic requirements related to safety and liability coverage. Instead of regulating the activities of CN and CP in their capacity as providers of the roadbed, the management of all track could be assigned to a new publicly owned track authority. This would require the nationalization of CP's roadbed and the separation of CN's track from the other components of its operation. Alternatively, a public track authority could be created, based exclusively on the infrastructure of CN.
This is an idea whose time has finally come. The government should give serious consideration to establishing a public track authority which would operate similarly to our highway system. This would eliminate the tax disadvantage placed on rail companies because while they pay fuel taxes, they also have to pay the full costs of maintaining their own railbed. Trucks on the other hand pay fuel taxes but their roadbed, the highways, are maintained at public expense.
Such a public track authority could charge user fees to rail companies based on the use they make of the tracks and as a result could be self-financing. At some point in the future even the public track authority could be privatized.
The Canadian Chamber of Commerce supports a fully user pay rail infrastructure. It had this to say in its 1994 submission to the special joint committee reviewing Canada's foreign policy:
Canadian businesses are increasingly pointing to an unlevel playing field between the Canadian and U.S. commercial environments-.One tangible example among many can be found in the Canadian transportation industry. Rail, for example, provides the most economic mode of transportation for a large part of Canada's freight and for many shippers is the only cost effective mode. It is fundamental to Canada's trade, moving 40 per cent of Canada's exports and provides a fully user pay infrastructure not liable to ongoing public funding.
Finally, I would like to comment on the importance of the port of Churchill to the farmers of Saskatchewan and Manitoba. The privatization of CN should be seen as an opportunity to privatize, expand markets, modernize and increase exports and imports through the port of Churchill.
This will take more than just the privatization of CN. It will take the co-operation and likely the privatization of both VIA Rail and Ports Canada. It will take the co-operation of the federal government, the governments of the provinces of Manitoba and Saskatchewan, and the co-operation and support of every community and producer whose future will be improved by taking advantage of the most cost effective shipping route for bulk commodities to our customers in Europe, Africa and South America.
I respectfully ask the government not to look at the Churchill line and the port of Churchill as a liability but as an opportunity requiring creative thinking and a co-operative creative privatization strategy. I hope to have an opportunity to comment on a few of these ideas in future debates on Bill C-89.
I would like to close with the comments Dr. Pirie made at the 1987 Fraser symposium. He describes the most exciting part of the privatization process. He said:
You will find privatization enables you to bring opportunities to ordinary people. It gives your citizens a chance to take part in the wealth creating process. It speeds up economic growth. It cuts the costs of government. It turns losses into tax revenues. In Britain, it is ending the old politics of division-the old politics of "us who don't have it and them that do".
These are the real reasons that Reformers support privatization of crown corporations.
