[Recorded by Electronic Apparatus]
Wednesday, October 4, 1995
.1528 
[English]
The Chairman: Good afternoon, colleagues.
Pursuant to Standing Order 108, we begin consideration of Bill C-101, the Canada Transportation Act. As you know, this legislation has been referred to our committee for a thorough review. We have received over 100 written submissions from stakeholders and we have an equally large number of potential witnesses.
Having read your briefing material, you'll all realize, I'm sure, the importance of this legislation to Canada's transportation system.
Without further delay, we invite the Honourable Douglas Young, Minister of Transport, to make an intervention to our committee to initiate our legislative review.
Mr. Minister, I have had a request at the last second - usually these things are done beforehand - by one of our committee members on a point of privilege.
Mr. Gouk, do you want to make your point of privilege, keeping in mind the minister has a very short period of time?
Mr. Gouk (Kootenay West - Revelstoke): Thank you, Mr. Chairman. I will be quite short.
I feel my credibility as a member of this committee, on starting into these hearings, has been questioned. I'd just like to clarify that.
During debate on Bill C-101 on October 2, the chair of this committee stated that I had made misleading statements to the House. Two specific points were made, and I'd like to suggest that it is the chair rather than myself -
The Chairman: Mr. Gouk, I'm sorry, but I don't see that as a point of privilege. In fact I see it as a point of debate. If you want to raise it on a point of order after the minister has made his intervention, then I'd be glad to -
Mr. Gouk: If you're prepared to take it at that time on record, I am prepared to wait.
The Chairman: We'll hear your intervention. Up to the point you've read it, I would consider it a point of debate, not a point of privilege and in fact not even a point of order, but maybe we can touch on it after we've heard from the minister.
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So, Mr. Minister, without further ado, welcome to the committee. You're always accessible to this committee. You've helped us kick off the legislative process before. We welcome you and look forward to hearing from you. I know your time is short.
Colleagues, we'll try to keep our questions short, and the minister's answers hopefully will be full but short. Then we can get right through it.
Hon. Douglas Young (Minister of Transport): Thank you very much, Mr. Chairman and members of the committee, for the opportunity.
May I say at the outset two things unrelated to the particular matter we're dealing with today but that I think are quite important.
First, I have a great respect for the traditions of transportation in Canada and the transport committee, and I would suggest humbly that from time to time it might be useful to recall the traditions and the history of the Standing Committee on Transport by convening some of these meetings in the Railway Committee Room, where we normally used to do these things. It's not that I don't enjoy the surroundings here, but it's the kind of thing you might want to consider. I simply pass it along as a suggestion.
The Chairman: I thank you very much for that, Mr. Minister. I couldn't agree more.
Mr. Young: The other thing is the reason I've asked your indulgence to be allowed to leave no later than 4:40 is I have to catch a flight at 5:25 to Saint John, New Brunswick, to attend the funeral of a very distinguished former employee of Transport Canada. Louis Murphy was a long-time employee of Transport Canada in Saint John who passed away recently after having been a member of the New Brunswick Legislative Assembly for many years. I want to pay respects, both personally and on behalf of the government, to Mr. Murphy at his funeral service tomorrow morning.
On Bill C-101, it's been a wonderful initiative to provide the committee with an opportunity to deal with it before second reading. Once you've heard witnesses with respect to this bill, you will understand the challenges that faced the department and the government in trying to craft a bill that would respond to contemporary problems in the transportation industry.
We know there will be a lot of different views expressed. The shippers in Canada obviously count on a regulatory framework to help them in their dealings, particularly with rail, and we all know that rail, whether it's private or public - and pretty soon it will all be private - has had a very difficult time.
One of the difficulties is to strike an appropriate balance between conflicting interests, to a certain extent. Railroads need to be viable. We can't speak of rail in an abstract way or on the basis of the very substantial subsidies they have enjoyed over the years from various sources. On the other hand, we have to make sure that shippers and their interests are adequately protected.
I hope that as you review the legislation you will come to understand just to what extent we have attempted to go down the middle of the road. It's the Canadian way. We've tried to find a suitable balance between the conflicting interests.
Rights that shippers have enjoyed, particularly since 1987, are very important to them. Bill C-101 preserves the key shipper rights.
The shippers support the principle of competition and reduced regulation, I believe. It's not always clear exactly what their ideology is with respect to competition and deregulation, but I try to understand it as best as I can. I think it has something to do with wanting as much competition as possible, but with a lot of protection through regulation as well. That's not an easy conundrum to resolve.
Short-line railways support this bill. I think you will hear that when they come before you, with perhaps one exception that has some concerns about the running rights aspects of the bill.
Main-line railways are more than capable of expressing their views, and I will leave that to them to do, but certainly I want to emphasize that what we're attempting to do here with respect to this legislation as it applies to railroads goes far beyond the CN commercialization project and is critical for Canadian Pacific.
I'm extremely pleased to see that the Ontario government is going to facilitate short-line operations in Ontario. It's a major step forward if we can have companies exploit the possibilities that I think most of us believe exist not only in Ontario but across the country.
The Ontario experience could be a great launching pad for short lines. We've already had some success with them in Nova Scotia and in a few other areas in the country, but the breakthrough that is most likely to occur in Ontario will be of great significance.
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The approach we wanted to take in this legislation.... Let me demonstrate what Bill C-101 is replacing.
This is, by and large, the legislation. I was never able to get a specific package, because of all the changes, the modifications, the amendments, and so forth. It is all very difficult to pull together.
We think that Bill C-101 has a major role to play in conjunction with other initiatives the government has taken with respect to air, what we will be doing with ports, and of course rail.
I don't intend to go through the bill item by item. I would like to take just a couple of minutes to suggest to you that the objective is to try to provide a regulatory framework that allows for railroads to function and hopefully to be viable and to interest potential shareholders, to the extent that they are prepared to invest in the entities.
The dilemma with which we were faced is that everybody points to the United States. I hope we don't believe that the right way to go about this is to have most of our operations go bankrupt before we find ways to make the situation better. As all of you are well aware, and as you will hear during these deliberations, in the U.S. there are no running rights and there is no common carrier protection.
That was unacceptable in Canada, as far as I could tell and as far as the government could determine, so we have tried to come up with a balance. It is a very significant change overall. Hopefully, it will provide some certainty for operators of rail, in particular, and shippers, but there are also measures that deal with other modes of transportation.
We know that this is not perfect. There are those who seek perfection. I am not one of those; I try to achieve the attainable.
This bill is a compromise on a number of fronts. It will not satisfy the railroads and it will not satisfy shippers, so we are probably just about where we should be.
If I saw the railroads grinning from ear to ear, then I would be sure that the shippers would be very concerned. If all the free market, competitively spirited shippers - who like a lot of protection - were too happy, then it would probably mean there would be no railroads in the country, because they would have insisted on so much protection for their own purposes, but very little protection for railways, that no one would be prepared to continue to fund these operations to the extent that they will need to be funded over the next 20 to 30 years.
The bill will generate a lot of interest. I haven't seen the roster, but I am told that you have a lot of witnesses who are articulate, who are knowledgeable, who understand the industries that are affected, their own role in it. But, as a result of the efforts of this committee in asking for submissions and so forth, we have already been made aware of a number of problems with the legislation.
So, Mr. Chairman, to try to expedite matters, when I leave today, I will leave with the committee some amendments that we believe should be incorporated already, as a result of representations that have been made to the committee, copies of which were sent to us, and so forth.
I hope that this will demonstrate to members of the committee that we are not at all inflexible. What we would like to do is to find a better way to be able to deal with the questions this legislation addresses.
As we go along, I want to make a commitment that departmental staff will be here to deal with specific issues. I think all of you have been provided with very comprehensive information, on a clause-by-clause basis, on the bill. I think that material has been distributed.
The staff will be available for representations in this public forum, but also, if there is any need for meeting in camera or going into more detail on a technical basis, we are prepared to do whatever is required to try to make this a good and a fruitful exercise.
At various points we thought we had achieved consensus. It is very difficult, because the players.... The two railroads are fairly easy to identify and we can normally determine where they are coming from, but between coalitions and organizations representing various players, it's not easy - and I'm sure you'll discover this as you go through the process here - to get a really hard fix on exactly what people want and who can engage the people for whom they speak to do specific things. We found that the field and the goal posts and the consensus and all the rest of it shifted fairly often.
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That wasn't something that upset us. It just means that as you go through the next few weeks, you'll have to be very careful, Mr. Chairman - I'm sure all of the members will do this - to listen to what everybody has to say and to challenge people when they're nearly diametrically opposed in terms of what they think is in the best interest, not of themselves, because I don't give a damn about vested interest, but what's in the best interest of Canada. What's in the best interest of the transportation system? How do you keep various modes of transportation operating in a viable way - private-sector supported, little or no subsidy involved? And how, of course, do you provide the means to move people and goods, for those people who have to look at that side of the equation?
I'm sure the improvements that you will suggest will be helpful to us and to those people who will be affected by them. I'm always concerned, after having looked at a lot of statutes and a lot of law over the years, that people get hung up on what is prejudicial or what is unfairness. I think there has been a fair amount of work done in common-law countries over the last century or so that can give us a hand in trying to determine what these kinds of things mean, depending on the context in which they're put forward.
Recourse is an important question that has to be addressed in this bill. There are still some questions as to whether or not we've got it absolutely right.
The aim of the exercise, Mr. Chairman, is to ensure that at the end of the day we're not at the Canadian Transportation Agency, or in court, but that we're doing business. I encourage all members of the committee and all of the witnesses who will appear to try to find ways to make the language as transparent as possible and to find ways to ensure that we have produced a piece of work that is efficient, that is effective, and allows for ordinary commercial business practices to be exercised.
Some of my friends talk about the Staggers Act and various other kinds of solutions. If somebody is prepared to propose that and demonstrate how it can assist us.... The status quo is something that I've never understood because everything is on a changing base, I think, at all times.
But the government - in closing, Mr. Chairman - is open. We hope that what we produce is a final product after the efforts of your committee, and when we take it back to the House and to the Senate it will be something that's constructive and productive. If anything we can do would be helpful in that regard, in terms of supporting you and your colleagues, we'll be happy to do it.
The Chairman: Thank you for your frank and focused intervention, Mr. Minister. I also want to thank your departmental officials for their thorough briefing materials that have been supplied to the committee members.
Colleagues, we'll begin questions in the usual rotation.
Mr. Gouk, ten minutes, please.
Mr. Gouk: Mr. Minister, a couple of things. First with regard to clause 5 of Bill C-101, which outlines the national transportation policy. That clause refers to transportation as a tool for regional development. Transportation in a commercial sense means getting products to their market. If true competition is to exist, these markets must be established by competition. With the minister's practice of downsizing and privatizing his department, how does he intend to dictate regional development strategies under privately owned and operated industries?
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Mr. Young: I wouldn't want to leave the impression we're going to dictate the way this is done. This is a sort of general declaration, as you know, and I would have thought most Canadians would agree transportation is a key to regional economic development. I didn't see that as being a ground-breaking declaration, or part of a declaration.
But no, I don't think, Mr. Chairman, in response to the hon. member's intervention, there's any intention to dictate. What we think we should be doing is providing a framework in which transportation modes will be able to be very supportive of regional development, but not on the basis of dictating it.
Mr. Gouk: I just wondered because it is part of the government's national policy, and as such it suggests there would be some intervention by government.
About the three-year plan, there are a couple of areas maybe you could clear up for me. Under this three-year plan, can the rail line start the sixty-day abandonment process on a line that is not in that three-year plan, or if they can't, can they put it on today and start the process tomorrow? Or what would be the required waiting period?
Mr. Young: Some of the specific technical details I'll let Mrs. Greene, from the department, deal with.
Ms Moya Greene (Assistant Deputy Minister, Department of Transport): It is intended that the railway should give notification in a three-year plan of its longer-term intentions for the network. There is an opportunity for the railway to amend its plan to allow for a specific sale opportunity that may have arisen and that could not have been foreseen. If that's the case, I guess theoretically the plan could be amended. Then the railway would be forced to go through the normal process of advertising the line as for sale, giving the sixty days for people to come forward and express interest, and if anyone did come forward and express interest, giving those parties the period of months required actually to try to negotiate a deal.
Mr. Gouk: Would it be possible for them, with virtually no notice - in 61 days, say - to be at the end of an abandonment process? Would it be possible for that to happen under this?
Ms Greene: Theoretically, but only if no one was interested in taking over the line, because as you know, Mr. Gouk, after you've got your advertisement in the paper, you have to give people the period necessary for them to reply. So yes, they could abandon, but only if no one has expressed any interest in the line.
Mr. Gouk: During the consultation process that took place with both Transport Canada and the minister before the introduction of 101, I would like to ask if the Minister of Transport gave written assurance to one of the shippers - specifically a coal shipper - that provincial short-line running rights would be incorporated into C-101.
Mr. Young: I don't recall. I would have to look at my correspondence to check that. I don't mentally tabulate every letter I send or not. But I could certainly look into it, Mr. Gouk, and I would undertake to get back to you on it. If you have a copy of the letter or anything like that, it might be useful...if we could address it. You might know the answer to the question.
Mr. Gouk: I believe in fact provincial running rights were included in the initial draft of the legislation.
Mr. Young: Oh, if you're asking -
Mr. Gouk: No, this is a separate question. I would just ask what criteria there were for removal of these provisions and why the shippers that were involved in these early discussions were not notified of this, and the reasons for its being removed.
Mr. Young: First of all, as you know, in this kind of process there never is a bill until there's a bill. If you want to have me recreate what we went through, the whining and the belly-aching would probably drive everybody out of this room. So I don't want to get into that. We had weeping and gnashing of teeth and people lobbying all over the city, holding little get-togethers and so forth, on everything.
Let me tell you very candidly, my preference - and I've said this before, so I'll repeat it - was to look at unlimited running rights and no common-carrier protection. At one point that was the kind of discussion. But people tend to hear only what they want to hear. So they would hear, wow, all kinds of running rights, but they didn't hear that was balanced by only a common law, common carrier protection situation.
Mr. Gouk: I would just like to clarify that I'm not necessarily supporting the concept. I'm just wondering how the process -
Mr. Young: How the process went, Mr. Gouk, was that as you put these things forward and as we discussed them with people, sure, we put every possible alternative forward. Sometimes they really stuck to the wall. People thought it was great. But they didn't hear, or they appeared not to hear, that there was an alternative they might not find so palatable on the other side, in shippers' protections or something else, or vice versa. Railroads like to hear us talking about no common carrier protection. They weren't quite as excited when we talked about unlimited running rights.
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Mr. Gouk: Subclause 34(1) threatens claimants with sanctions if their claims are deemed to be frivolous or vexatious.
Mr. Young: Yes, I hate that kind of stuff.
Mr. Gouk: First, where is the definition for this language? Second, what precedent warrants inclusion of such sanctions?
Mr. Young: We think frivolous and vexatious actions that cost money and time should be avoided. Processes are undertaken in a number of fields that can be deemed by the body doing the adjudication to be without foundation and simply a ploy for whatever reason.
I think we should be sufficiently respectful of the process. People will be able to - and have been, in courts and in various areas of quasi-judicial activity - determine whether things are vexatious or frivolous. This tries to keep people away from that kind of nonsense. The definitions are always the result of people making determinations of whether or not the action taken was a legitimate pursuit of a right that had either been disregarded or not taken properly into account, or was simply vexatious and frivolous.
Mr. Gouk: What is the purpose in clause 48, which seeks to stabilize national transportation systems in times of disruption, excepting labour strikes?
Don't you consider this rather dangerous considering the fact that you, as the Minister of Transport, and the cabinet are not all-knowing when it comes to resolving a transportation system in chaos? Shouldn't Parliament as a whole be part of this type of situation?
Mr. Young: I think that would certainly be an absolute last resort.
But as you know, Parliament doesn't always sit. Sometimes people don't like to be taken away from summer vacations to become involved in various kinds of activity. It's the absolute last resort, Mr. Gouk, a way to try to resolve extraordinary situations. It's not something that could be relied on, and of course one would always be subject to the sanction of Parliament if one were to abuse that kind of thing.
You would think there would be a pretty strong response from members who feel their rights are being usurped. It's absolutely a last resort. Only in extremely unusual and extraordinary circumstances would one ever look at that.
Mr. Gouk: Subclause 27(2) gets into the concept of significant prejudice. I ask again, as I did in the case of frivolous and vexatious, if that can be specifically defined, and why is that being used to place limits on the shippers' access to the CTA?
Mr. Young: As I recall, I think that works both ways. It works for both shippers and carriers. The object of the exercise is to try to provide an environment where people do things that are commercially reasonable and that can be justified on a business basis.
I think the government should intervene - I'm an interventionist - but I think we should do it in a very transparent way. If you want to mandate somebody to do something, tell him you want him to do it and then pay whatever it costs.
I don't think we want to get into any area where there are burdens being put on any of the parties. In the analysis of people who understand normal business practice, it would just not be reasonable. I think that significant prejudice means, depending on the circumstances, that you're putting a party at risk - usually at financial risk. Again, it should not be terribly difficult to determine.
It's impossible to define what it means because it is always an assessment of circumstances made at a given time, taking into account the prevailing situation with respect to whichever party is pleading that they would be the subject of substantial prejudice.
Mr. Gouk: I suggest there is a sort of double redundancy between the two. If you have one, you don't need the other.
Mr. Young: Are you talking about significant prejudice?
Mr. Gouk: Yes; significant prejudice.
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Mr. Young: I'm prejudiced every day by one thing or another, but at some times it's more significant than at others. Again, I think -
Mr. Gouk: I'm saying that versus the concept of penalties for frivolous or vexatious applications.
Mr. Young: I think they'd be looked at in two totally different ways. The vexatious thing would be the bringing of an action that would incur cost and might just be a delaying tactic - I don't want to try to give you a specific example, but I'm sure that some of them will come to mind for you - whereas the significant prejudice is more a financial burden being imposed or a cost or a result that would be prejudicial to whichever party was affected. It would be more than just incurring costs in a useless action that's being pursued; it would have real bottom-line kinds of implications for the party affected.
Mrs. Cowling (Dauphin - Swan River): My question is with respect to running rights and the provisions for them under the new act. Will that have any detrimental effect, or any effect, on short-line railways?
Mr. Young: You'll certainly have an opportunity to hear witnesses. Our first cut at this indicates that what we've proposed is supported by all of the short-line operators in the country, with the exception of one.
There's obviously a jurisdictional question when you get to provincial short lines and so forth, with which I have to be very careful. But, as I indicated earlier, I think the Ontario situation and what we've already experienced in Nova Scotia demonstrate that short lines can be a viable option to what's happening now, with total abandonments and that kind of thing happening.
On that I would prefer to have the short-liners themselves tell you, because they know their way around this. However, my belief at this point is that in general this will be supported by short-line operators, with one exception.
Mrs. Cowling: Clause 113 says that the freight rate or the condition of service established by the agency must be commercially fair and reasonable. This would apply to things such as levels of service and interswitching and competitive line rates and so on. This requirement didn't exist under the NTA.
Mr. Young: Nobody cared as long as the government was paying.
Mrs. Cowling: Why is it necessary now?
Mr. Young: Because the taxpayers are no longer involved. When you have companies, whether they're shippers or they're railroads that are owned by shareholders, that are owned by real people as opposed to this mythical taxpayer who has bottomless pockets, you want to make sure that, whatever arrangements are arrived at, if there's a recourse to an adjudication, the result will be on a fair and reasonable basis.
It's like the question put by our friend earlier with respect to significant prejudice or frivolous and vexatious. You can't have this kind of nonsense going on in real business.
Because we're in the regulatory business, we have to use terms such as that that will have to be defined from time to time based on the peculiar circumstances of any given situation.
Mrs. Cowling: I'd like to go back to a question that was posed by the third party of the House. It's with respect to subclause 27(2). Was there any abuse by the shippers at any point so this clause was added?
Mr. Young: I don't want to suggest that anybody in the business would be abusive. We're just making sure that they won't be.
The system is changing. We're trying to avoid people having to go to the Canadian Transportation Agency every time they turn around. We've reduced the kinds of situations from something like 200 different examples to 40.
There are people who believe that railroads are in the business of driving the shippers out of business, apparently. That's what they tell me, that there are railroads that are so bad and bullying that they actually plot to drive people out of business. Then there are railroads that think there are shippers who would try to put them into very uncompetitive situations by insisting on levels of service, and that kind of thing, that don't make any sense.
So ``fair and reasonable'' is a benchmark that I think most people understand, but it will have to be worked out over time.
[Translation]
Mr. Mercier (Blainville - Deux-Montagnes): Mr. Chairman, the Bloc Québécois is in complete agreement with the principle of the bill and with the need to review the existing Act and rationalize everything. We do however have objections or questions regarding four points. I'll take them one at a time.
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First of all, according to clause 7, the former National Transportation Agency will only have three as opposed to nine members and will no longer have regional responsibilities. We are critical of this change and we would like to know the reasons behind it.
Mr. Young: Mr. Mercier, we are flexible as to the number of members. When we drafted the bill, we realized that the number of cases that would be submitted to the agency would drop considerably.
I must tell you that there are conflicting opinions as to whether these three people can really do the work required, and I'm flexible about this. One way to resolve the problem would be to perhaps have more full-time members, say five, for example, and not have any part-time people whatsoever, except in special situations where we could go out and obtain the services of a few people for some type of panel. I'm quite prepared to hear what the committee and the witnesses have to say on this issue.
Your second question pertained to regional development, Is that not right?
Mr. Mercier: Regional representation.
Mr. Young: Obviously, this is always a problem when you are dealing with a limited number of people, however, these two questions can be reviewed. I would like to know what the members of the committee think about this matter.
Mr. Mercier: Secondly, in order to achieve greater rationalization in a non-restrictive manner, it would have been preferable to have kept the short-line railroads under provincial jurisdiction and companies governed by federal regulations under federal jurisdiction. However, it appears that in both cases, this is not the situation. If a short line railroad is entirely or partially controlled or owned by a national corporation, it comes under Bill 101. Parliament can also adopt a law putting a particular short-line railroad, regardless of how it was initially organized, under federal jurisdiction and declaring it to be of national interest. Would it not have been preferable and more logical to keep all of the short-line railroads under provincial jurisdiction and all of the national companies under federal jurisdiction?
Mr. Young: Your comments on this issue are interesting. It remains to be seen whether or not industry and all of the provinces will see this the same way. During quite general discussions with one of the larger Canadian provinces, we have already heard that it would be wise to harmonize all aspects of the railroad system and that there was a willingness to accept the standards and procedures of the Government of Canada in an attempt to avoid duplication, overlap and all that.
Once again, we are willing to listen to the pros and cons and to examine them. Obviously, if a group of people or companies apply for a federal charter in order to set up a given business, there is a reason for that. The option of forming a company under provincial law still exists.
I believe that the exercise that you will be undertaking in the next few weeks will be very useful to us. We will then see whether it will be possible to do things in a more appropriate and effective manner.
Mr. Mercier: My third question is as follows. In clause 99, which establishes the conditions for building a new line, we do not see any reference to the need for an environmental assessment. Is this because environment legislation already provides for that?
Mr. Young: I believe, in this case, the federal law, or depending on the situation, the provincial law, may have an impact. That does not come under the jurisdiction of the department nor does it come under this bill.
Mr. Mercier: Fourthly, I am putting clauses 143 and 145 together. I believe that that could easily be improved. When a company states that it is ready to sell, lease or transfer its railway line or its operating interest in it, an individual or an interested person has 60 days to make the purchase. This seems like an extremely short deadline. Finally, if nobody is interested, the federal, provincial and municipal governments each have 15 days to take action. That's not very long.
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I once was a town mayor and I can really imagine myself organizing a meeting. Obviously, a municipality would want to consult people before making any decision. It is not always possible to do that in 15 days.
Mr. Young: Mr. Mercier, one must take into account the deadlines you have mentioned regarding the three year planning. They would be some signs or indications of our intentions. The final decision has obviously not been made, but we must indicate our intentions over the next three years. Therefore there would be a lengthy period during which there might be some uncertainty, but at least, one would say that it is possible that some branch line of a system might be abandoned or sold. Those who keep an eye on that type of things will not come at the very last minute and will not make a major investment after thinking about the whole thing for only 15 or 60 days. Normally, there negotiations, these things are quite complicated.
But of course there is another side to the story. Everywhere we went, people have said that they wanted the system to be far more flexible and faster. Once again, I agree with you: for a municipality, to make a decision in 15 days... I do not think that we could give an example where a municipality would simply ignore the fact that the whole thing might already have been considered.
Mr. Mercier: There therefore is some kind of flexibility regarding these deadlines. Thank you.
[English]
Mr. Gouk: I've read the rationale regarding subclause 141(3) regarding the sale of the line. I don't quite understand how it applies if an existing or new short line came forward to one of the rail companies and wished to negotiate buying a line that they have not advertised in their three-year plan and came to some terms that were acceptable to both sides. Why is it that they would then have to put this on their three-year list and basically advertise it for sale when they have a deal that they're quite prepared to take. What is the real reason for that?
Ms Greene: I'm sorry. I don't understand the question.
Mr. Gouk: Even though they may have a buyer, they may have negotiated the whole thing and it's virtually a done deal, before they can actually transfer that line it states in subclause 141(3) that the plan:
- is void unless, before the transfer is completed, the plan indicates the railway company's
intention to transfer or discontinue operating it.
Ms Greene: It was to give notice. It was to give others an opportunity to be involved in the sale.
Mr. Young: Because there could be a discontinuance. It's not just a sale, it's an option. It can be for sale or discontinuance.
Mr. Gouk: It's not specifically a sale.
Ms Greene: Say there is a sale opportunity that the railways had not anticipated and therefore it is not on the three-year plan. The process ought to be more precise so that the railway can go ahead with such a sale. If that's what you are suggesting, Mr. Gouk, then it's the kind of thing that's very helpful to hear.
The reason why the clause is written this way is so that railways will feel an obligation to let people know what their plans are, and not to proceed to completion with their plans without giving people adequate notice.
We may not have captured exactly the situation you raised.
Mr. Gouk: Then it would have to entertain offers from other people if they came forward with it? They would be obliged to do that?
Ms Greene: They would have to advertise it, yes.
Mr. Gouk: What about an internal short-line creation. What obligations do they have if they intend to create an internal short line on one of their operations.
Ms Greene: But that's not a sale, usually.
Mr. Young: But the notice requirements are the same.
Mr. Gouk: So they would still have to give notice?
Ms Greene: If it was a sale. But in most internal short lines these are not sales. The railway is keeping ownership of the line. It is a new business unit subsidiary being created within the same enterprise, so that is not a sale.
Mr. Gouk: It would not be subject then to clause 141?
Ms Greene: No.
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Mr. Young: But we would have to be very careful on what the structure of the new entity is. It's one thing to be an internal short line; it just depends on how you're structuring your business. Some of them would have to be looked at if in fact there was a different structure for ownership or any significant change in how that particular operation was going to be conducted.
Mrs. Terrana (Vancouver East): I have a few questions. One is to do with marine. The final offer of arbitration seems not to be accepted very well by the marine industry. They feel it is going to be a long process by the marine industry because they have to go to final arbitration and they have some comments about it. They feel it's going to be a long process and it's going to put a lot of undue burden on them. Do you want to comment?
Mr. Young: What process do they like?
Mrs. Terrana: Do you want to comment on it?
Mr. Young: That's what they're doing now. It's just a question of trying to shorten it up.
Ms Greene: We shortened up the process.
Mrs. Terrana: It's better than before but it's still -
Mr. Young: If they have a way, a gunfight at the OK Corral or something, I'm open. If there's some other system they think will work more quickly, more expeditiously, that is useful to them, we'll look at it. We understand the need to be expeditious in trying to resolve these things, and final offer arbitration has been a fairly widely accepted process, but it's not the only one. If the marine industry or anybody else wants to propose something else, fine.
Mrs. Terrana: On the motor carriers, you said if they would eliminate provisions that allow for regulation of extra provincial bus and trucking companies.... Are the provinces on board with this? Do they accept this elimination? It has to do with the provinces so I am just questioning whether -
Ms Greene: Mrs. Terrana, in all except one case, that regulatory area had already been delegated under the Motor Vehicle Transportation Act. The only case in which the whole part of the old MTA applied was a single bus in Newfoundland. In fact, it has been done for many years.
Mrs. Terrana: Thank you.
The last question has to do with rail. Lately, actually yesterday, there was an article in the paper - again, you can question its credibility - regarding VIA Rail and the possibility that is coming next. Why was this not looked into before we got into this big bill again, the rationalization of all these regulations, rather -
Mr. Young: Because it has nothing to do with this.
Mrs. Terrana: So it would be a separate issue.
Mr. Young: This is a transportation bill that deals with all modes. It doesn't deal with the future passenger rail policy that the government may wish to adopt. We're saying that a number of events have taken place, including the study on Train à grande vitesse, from Ontario, Quebec and Canada.
There are pressures from the fisc constantly for the reduction on subsidies to VIA. There's the need to make some decisions, and we think that now, with the arrangements that are available to VIA and to other passenger rail services as a result of this act, if it's passed, which will be useful to them, the time has come, as we've looked at everything else, to look at VIA. But we purposely kept it to the end.
Mr. Gouk: Back to clause 141 again. If the rail company has a purchaser to which they are interested in making a sale and they're required, through subclause 141(3), to advertise it and entertain other offers, are they obliged to accept any of those other offers?
Ms Greene: No.
Mr. Gouk: Then why do we insist that they do that if they don't wish to?
Mr. Young: One of the things is that everybody has been very anxious to make sure we don't have abandonments, to try to put every possibility forward before there's a discontinuance of a service or a total abandonment. One of the things, unfortunately, that people went through was what was called line demarketing, line abandonment. There was no real effort on the part of railroads in many instances to really try to find an alternate solution.
We know they're now all converts on the road to Damascus and they're going to behave well and everybody is going to be up front and clear, but we still believe, as long as we have a regulatory requirement, that we should have these kinds of provisions that oblige the operators to make known their intentions, to make sure everybody who has an interest, whether it's a municipality or another company or what not, is aware this is happening.
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Mr. Gouk: I accept that for the concept of abandonment, but for the specific sale process I'm having difficulty.
Mr. Young: What happens with the sales, Mr. Gouk, again - and I'm not trying to be difficult, and we'll listen to what people have to say about this. But sometimes sales are not the best result you may want either, depending on what the purpose of the sale is, who the buyer is. We've had a lot of experiences in this country with entities being transferred to buyers where you may not have known it was a discontinuance or abandonment when the sale took place but a few weeks or a few months later that's in fact what happened.
I think it's really just another way of trying to make sure everybody who has an interest gets a kick at the can, without any obligation on the part of the vendor. We're not interfering in the commercial process.
Mr. Gouk: I understand what you're saying, yet I can still see some vagueness in it.
The old process was a catch-22 one. That's one thing I hope we are going to address properly in that, when you talk about how on certain occasions they would find alternate routes or there were shippers on a line they wanted to abandon. They were in a catch-22, because if they built it up and said, look, what a good deal this is, why don't you buy it, and nobody bought it, now they had to prove to you that in fact it was a financial hardship. They usually went one way or the other and not both.
Hopefully this will address that. I'm just concerned about that one part. But we'll probably deal with it further.
Mrs. Wayne (Saint John): Mr. Minister, I know you're aware of the New Brunswick Southern Railway and the wording ``wholly Canadian''. I know it's been shared with you by the local government.
I don't honestly believe it was the intent to create any problems whatsoever when this Bill C-101 was drafted. I wonder if you feel there has to be an amendment or clarification to allow our line, our Canadian Pacific line, which is now the New Brunswick Southern Railway, through northern Maine, to be deemed wholly within Canada for the purposes of competitive line rates.
Mr. Young: I met with counsel - perhaps ``counsel'' is not the right word - an adviser to the owners of that rail line, and we've asked them to put forward the specific legal language that would alleviate their concerns. I don't believe we've received that yet. At least I haven't seen it yet. It may be in the mill. But we certainly have indicated to them that, first of all, we wanted the analysis in writing on what their concerns were on a legal basis, and then, if they were able to articulate those concerns legally, they could come back with an amendment that would alleviate their concerns.
Mrs. Wayne: I have this copy, and I'm not sure if it has the wording or not, Mr. Minister, but it was September 8 -
Okay, thank you very much.
Mr. Taylor (The Battlefords - Meadow Lake): Minister, I have to disagree with your interpretation of specifics in the bill relating to abandonments. The history of the prairies and the rail lines has been one filled with tremendous disagreements. In the history of Canada government has had to intervene to protect producers on the prairies from the railways on many occasions. Bill C-101 in one sense, in particular in abandonments, basically abandons the producer to the whims of the railways and once again takes us back to the days when the producers had no ability to fight against the actions of the railways. Once -
Mr. Young: We're at abandonment now, not common carriers.
Mr. Taylor: No, I'll come back to abandonment specifically in a minute. But just to set this up -
The history of the prairie farmer moving grain to port, which is absolutely essential, has been filled with disputes between rail lines and producers that require the government to be there to protect the producers. In the broader, general sense Bill C-101, I'm saying, abandons the producer to the railways once again.
About specific abandonments, previously it wasn't just notice that was provided. The railways did have to answer questions in the public interest. The railways did have to talk about really what would happen to a community if the rail line were abandoned in that area. Public meetings occurred; public interest was involved in the abandonment process. That has all been removed in Bill C-101. Railways now simply make notice and abandon the line or in fact sell it. It is a commercial proposition. The public interest is gone from the process.
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Many communities in my constituency in the northern part of Saskatchewan are dependent upon the railway, but they will likely be subject to abandonment proceedings as this bill comes into force. Our people are very concerned about this.
What do you have to say about the public interest? Is there not a role for the public interest to be served, or do we simply throw the doors open to commercial operations and expect that our country will be better served because of it?
Mr. Young: Let me address the question of public interest directly.
I believe that the public interest has to be protected, but I don't think that the shareholders of Canadian Pacific, or of Canadian National after the middle of November, are the people who have that obligation. I believe the government has that obligation.
If you want to protect people by having mandated operations or levels of pricing, then I have no difficulty with that, if that's government policy. Then what you do is send the cheque and pay for it.
I am not one who believes that the private sector can afford to do public policy. Governments have the role to ensure that levels of service, whatever they feel is appropriate, are carried out. I couldn't agree more.
I'm from Atlantic Canada, where the railroads you refer to in the west no longer exist. Canadian Pacific is a regional railroad now; it doesn't operate east of Montreal. Canadian National operates to Halifax; there is no service in Prince Edward Island or Newfoundland. So some of us have great experience with abandonment, with communities being crushed, with shippers not having service. So obviously I'm very sensitive to that.
What we need to understand is that if you as a government, provincially or federally, wish to mandate a service that is not commercially viable and that is detrimental to the interest of...not railroads, because railroads are like banks: they don't exist; they're figments of somebody's legal imagination. Railroads are owned by shareholders, real people who put money into investments and hope they'll get a return. At least, that's the case with Canadian Pacific, and it will soon become the case with CN.
So if, in the public interest, governments wish to maintain a service, whether it's rail, road, sea, or air, then I have no difficulty with that, but it should be done not on the basis of Bill C-101 or that type of legislation but, rather, by direct government intervention based on public interest and funded in a transparent way so people will know what the real costs are.
That I think can be dealt with in a number of other ways, but I didn't see Bill C-101 as being the way to do it.
Mr. Taylor: In which case the people of Atlantic Canada and the people in Big River, Saskatchewan, in my own constituency, worried for years about the loss of their rail line, hear what you're saying today and therefore wonder, in the public interest, with the Minister of Transport removing their opportunity to participate in this process, what you should put in place. How do you serve the public interest for the people in Big River, Saskatchewan, as the Minister of Transport, guaranteeing that the product grown or produced in that community will get out of there to a central rail position?
Mr. Young: I don't see the role of the Minister of Transport, who has a very limited budget, as being one that can allow funding for what's really very often very much in the public interest. What I think happens is that government, through the wide spectrum of its activity, determines what's in the public interest and then funds it.
If I were to use your argument, then the Minister of Transport is really remiss, because in the town of Tracadie there is no rail service at all and there hasn't been for 30 years. So would it be in the public interest for me to put a spur line in from Bathurst to Tracadie because I think it's in the public interest? I don't think so.
Mr. Taylor: Possibly.
Mr. Young: I don't think so.
What the Government of Canada or the Government of New Brunswick would have to decide is that if it's in the public interest to do that, it means that the taxpayer will pay the bill. I have no difficulty with that. When there are situations where taxpayers believe it's in the public interest, they should do that. Governments have done that historically and I'm prepared to see it done again, but not on the basis of back-dooring it, because the public interests in your town and in my town are identical.
You try to take care of people as well as you can, and if you can't do it on a business basis through operators of services such as railroads, then you go in and you pay them to do it. I have absolutely no difficulty with that at all, but I'm not very good at going through the back door.
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Mr. Gouk: I have one question. Under Bill C-89 I had proposed an amendment that would have provided for ten years' continuance of the CN line from Montreal to Halifax. That was narrowly defeated.
I give notice that I intend to raise that again under Bill C-101, reducing it to five years, which is supported by the Port of Halifax, and I would ask you for your position on that and your rationale behind it.
Mr. Young: I'm a very consistent person, and as an Atlantic Canadian, I believe the best opportunity for service from Halifax to Vancouver on one railroad is to make sure that railroad operates in a regulatory framework and in an economic environment that allows it to survive.
This country can do anything it wishes to do in terms of providing service, so long as the taxpayers are prepared to pay for it. But I do not believe it's appropriate at this stage, where we're going. We have a prospectus out. We're going to be selling CN this year.
I certainly believe in the democratic process that any amendments can be proposed, but we would not be going to the Canadian investment community and the international investment community, saying we are mandating CN to run from Halifax to Montreal.
Let me put in one caveat. If the Reform Party of Canada is saying they will pick up the tab to do that - and that would be strange to me because I didn't think they were great supporters of subsidies and those kinds of things - and it's part of their amendment that they will say to the new investors in CN ``Yes, you have to operate, but we're going to pay you to do it'', then I suppose we'd all have to look at it. It would put quite a different light on the matter.
Mr. Gouk: I would suggest that's a rather cute answer, given all the constraints you've put on CN with your particular -
The Chairman: Let's try to go through the chair.
Mr. Gouk: I would suggest that the minister made a very cute answer, given that Bill C-89 put numerous constraints on the sale of CN.
Mr. Young: Like what?
Mr. Gouk: Such as location, language, percentage of shares and so on.
Given that for almost eighty years the federal government has manipulated and interfered with the market system with regard to CN, I hardly think it's inappropriate, even from a party that does not like subsidies, to have a five-year phase-out, given particularly that we have upcoming legislation in the ports system that is going to get rid of their subsidies and their government guarantees.
We need some kind of transition. No, we don't believe in subsidies, but we most certainly believe in a reasonable and fair transition. We don't like going from an over-bloated system to no system at all overnight.
Mr. Young: I can only say that if in four months the honourable member has gone from ten years for transition to five years, let's hope that by Christmas we'll be all set.
Some hon. members: Oh, oh!
The Chairman: Thank you, Jim.
Colleagues, we're going to give Mr. Guimond five minutes, then I have a question and then we'll let the minister go.
[Translation]
Mr. Guimond (Beauport - Montmorency - Orléans): First I wish to apologize for being late. I also wish to welcome you, Mr. Minister. It is the first time that we can speak directly to each other since our return in September. Your behaviour is so exemplary in the House and you are so quiet that the chances that I will ask you a question are diminished. This is the reason why I have not asked you a question yet but, to use a saying that we have in Quebec? What's bred in the bone comes out in the flesh. I am convinced however that before the end of the session, I will have the opportunity of hearing you address us which will trigger a question from us.
Mr. Young: I was very disappointed to see that the honourable member was not here at the start of the meeting and I really missed you.
Mr. Guimond: Mr. Minister, I have always been of the opinion that the absent are always in the wrong. Therefore, if I asked you a question that has already been asked by my colleagues...
[English]
The Chairman: This is all great, Mr. Guimond, but your time is almost up.
Some hon. members: Oh, oh!
[Translation]
Mr. Guimond: ...feel free to say so and I will refer to the unedited copy.
My colleague, Mr. Mercier, told me that he had asked you questions on deadlines, because, you will all agree, sections 140 to 146 are talking about a deadline that is all in all rather short. We could talk about a possibility of 105 days.
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We certainly intend to introduce an amendment and I would like to know your field of interest in that respect. If you show some openness, my colleagues, the Liberals on the committee, will show some as well. Even though you are telling me that they are free to do what they wish in terms of the agenda, I am convinced that sometimes officials from the Department help them to take decisions in committee.
Because of the very short deadline, could we not ask the railroads to table their three-year plan starting in 1996 so that everyone has some lead time before the short line railroads are introduced? Couldn't we determine that 1996 will be some sort of a base year? I am not asking you to delay the passing of the bill but would it not be possible to ask the railroads to table their three-year plan well in advance, specifying that the abandonments will start only in 1997?
My remark is in line with the motion that I have sent yesterday to the committee that examines votable items. I am requesting that under the former system - the 1987 Act - the railroads that have already obtained abandonment be required to put their assets up for sale.
I am not sure that the results that are sought through the bill will be obtained if the three-year plans are to start as early as 1996. I do not know if I made myself understood -
Mr. Young: That question was debated partly earlier on. Once the witnesses have testified before the committee, we can certainly revisit this question.
From our point of view, we are trying to improve the situation as quickly as possible. Up to now, I have not detected problems in terms of the two railway systems. But I am ready to hear what the committee suggests. I think it is also very important to debate and listen to what the major stakeholders have to say.
Mr. Guimond: This is why I am asking you to state your position. A lot of shipper groups are writing to us. The Canadian Pulp and Paper Association is not ready to endorse the bill and they are not alone. I think it is fair to say that generally, the shippers' associations are rather cold towards Bill C-101. Does that surprise you? Does that affect you or do you remain indifferent? You said that I was playing psychologist and that I was trying to seek your feelings down deep into you, but I would like to know you reaction towards the associations.
Mr. Young: I do not lose sleep over that.
[English]
The Chairman: I just want to ask the minister one question in connection with the WGTA.
We had all the work that was done on the WGTA incorporated into the legislation, and part of that was a maximum cap set for moving grain until the year 2000. Then this sunset clause was removed. In the interests of the competition we speak of and given a five-year transitional period, why remove a sunset clause? Why not continue? Why not give them their five years and let the grains work like other bulk commodities?
Mr. Young: Well, I'm trying to break some new ground, and I still think that most of the time a deal is a deal.
The Chairman: Maybe you could explain that to me. I'm not quite sure what you mean.
Mr. Young: There has to be a certain degree of certainty in what you do and in what people expect will be the rules of the game.
An honourable member spoke earlier on the transition and another issue. We have to try to accommodate as much as we can in very significant changes. Members of this committee are aware to what extent we are making substantial changes in the transportation system in this country.
I understand. I'm not making light of the comment by the honourable member with respect to shippers. Naturally we're concerned about what will happen to shippers and how their interests can be protected. That's why they have, I think, everything that was in the 1987 act. But I'd be very surprised if they didn't want more. It's natural.
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We understand there are a lot of changes and we can't change it all overnight. We're going to have a lot of difficulties.
The Chairman: So this is part of the balance that you're trying to strike between the two sides.
Mr. Young: We hope that's how it's perceived. That's certainly what the intention is.
The Chairman: Mr. Minister, thank you for coming before our committee today. I trust that if there is any reason in the next five to six weeks that we need you back here, I know you're always so cooperative that you'll be prepared, with notice, to come back and see us again.
Mr. Young: Thank you very much, Mr. Chairman and members of the committee. I especially want to emphasize that Mrs. Greene and other members of the staff will be available.
These are very complex things, but you've got probably as sophisticated a business as there is in the country, between the shippers and the railroads. I think you'll be hearing from a lot of people who understand the issues very well.
Just keep in mind that Solomon works overtime.
The Chairman: Thank you, Mr. Minister.
Colleagues, we're going to be getting a lot of information technically from the department when it's available and we're going to be trying to get through it. Perhaps we could distribute these now. They're the suggested amendments already being put forward by the department on this bill. Some of this is already being done.
I want all committee members to have a look at this because it will perhaps offer a different direction on questions, etc.
As we go through the mountains of testimony that we're going to be coming across, if we could discuss any of your potential amendments - if there are any - to any particular part of this bill as we go along, I think it will save us a lot of time at the end of the process.
Sometimes we come to the end of the process and we start into clause-by-clause. An amendment is brought forward and there's a lot of discussion on that amendment and maybe we want to call a witness back on the amendment, etc. If we can strike them as we go, if at all possible, I think it would be to our mutual benefit.
To those questions that you might have on a particular clause, put forward the suggested amendment so there's time to digest it and even maybe ask questions of witnesses on it. This quite frankly will give any of our colleagues here a better shot on the amendment than if they are just unloaded en masse at the end of the whole process. It's just a little twist on the way we have been doing things for the last year or two.
Mr. Gouk.
Mr. Gouk: Stan, I'm not opposed to that in concept, although I would point out - and I'm sure all of us are here under the same circumstances - I'm not here specifically to push my agenda forward, but rather to try to make a decision, given the input from both sides, as to what changes are necessary to satisfy legitimate concerns brought forward.
As such, these are going to be ongoing. I have some ideas clearly now, but I'm going to listen to both sides and decide whether I wish to make amendments to my own ideas before I bring those forward.
The Chairman: Yes, absolutely. I'm with you on it. I'm just suggesting that if the questions are available, as the amendments by the department have been put to us, so that we can ask the witnesses as they come forward, then I think we can get some of the answers we need in order to determine whether it makes any sense or not at the end of the line. This is just up for consideration.
Mr. Gouk: You're going to deal with my point as well, are you?
The Chairman: Yes, in a moment.
Colleagues, tomorrow we're on in the morning at 9:30 and we'll have a couple of witnesses. Then Ms Greene will be back with her officials and we can start into that process. That doesn't mean we only have her for one hour. It means we'll come back the following week after the break and have her back, even through the entire process. Right, Moya?
Any time we need the departmental officials they'll probably be in the same room with us, so we can always call them up at the end of a meeting for any points of clarification, etc.
Are there any other questions on this particular matter? No.
The clerk, of course, has begun the process of calling and trying to lump all our witnesses in order to ensure that everyone who can come forward will come forward on the bill.
At the same time, I want to try to keep some semblance of continuity going: try to have government people in one week, the grain people in another week, the railroads in another week, and so on, so that we can try to concentrate and focus with the different organizations coming together during this. While the questions may be a little boring and repetitive, at least we'll be able to focus and concentrate, I think, on that grouping. I think that way we can get through in an organized fashion quickly to the end of the process.
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Having no other questions, Jim...I heard the way you started last time. I already determined it wasn't a point of privilege. I'll hear you for another couple of minutes.
Mr. Gouk: Another thing I would clarify in going into this is that, as I say, it made a specific statement that I was misleading.
I wish to clarify the two points that were used to illustrate that. I thought this was a better arena, amongst only those people who are concerned primarily with Bill C-101, rather than doing it in the House. I thought this was a far simpler way to do it. I have only two very short paragraphs and that will be my total intervention.
The Chairman: As I say, I'll start hearing you, but....
Mr. Gouk: On the first point that was raised regarding request for submissions, the chair stated:
- I asked them to prepare not 25 copies as alleged by the member for Kootenay
West - Revelstoke earlier this day but 15 copies....
- In the copy of the letter sent out to the stakeholders and signed by the chair, it clearly states
``please prepare 25 copies of your written submission''.
The Chairman: Okay. You got that off your chest.
Are there any other interventions? We'll see you tomorrow at 9:30 am. The meeting is adjourned.