EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 24, 1995

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[English]

The Chairman: Good afternoon, colleagues. We are resuming consideration of Bill C-101, the Canada Transportation Act.

Our first witness before us is a familiar face to this committee. He is Ron Bennett, a legislative director for the United Transportation Union. Joining him is Tim Secord, who is the alternate legislative director.

Gentlemen, welcome back to this committee. We always look forward to hearing your inspirational submissions to our hardworking committee members. We look forward to what you have to say to us today, hopefully within fifteen minutes, Ron, so we can ask some questions at the end of your submission.

Welcome, and begin when you're comfortable.

Mr. Ron Bennett (Legislative Director, United Transportation Union): Thank you, Mr. Chairman. Certainly, as always, it's a pleasure for the United Transportation Union to come before this committee. Although over the years things have changed and we've lost our spot in the railway committee room, the committee still has a lot of important work to do.

This bill before you is certainly a large undertaking for extensive change to the Railway Act, which has served us well for many years. But I think even we admit there is a real need for house cleaning, and that's one thing Bill C-101 attempts to do.

We will basically go through a few points that we feel highlight our brief, which we provided you with ahead of time. We're more than prepared to answer any questions.

With me, as you said, is Tim Secord, who is the alternate Canadian legislative director. Effective the first of the year he will be the Canadian legislative director. I'm sure he will be appearing before you many times in the future.

The first thing I want to say is that the UTU agrees in principle that changes are necessary to the National Transportation Act, 1987, and certainly the Railway Act has become outdated in many aspects. Some parts have been repealed or changed by other acts such as the Railway Safety Act. Although we agree there is a necessity for change, we're concerned that the change may be going a little too quickly.

I think it's also fair to say, however, that we did partake in some consultation with the minister's office and staff and found it to be a welcome change. We haven't often been consulted ahead of time on proposed legislation in the past. We certainly enjoyed the opportunity to discuss some of the drafts that were before the staff at that time.

We are very concerned about the changes in the rail operation and the abandonment process in the aspect of the lack of public consultation and public input. We feel this is one area that has served the National Transportation Act, and the Canadian Transport Commission before it - the opportunity to have public hearings on the abandonment process.

I understand that the need and philosophy behind changing that aspect is to have speedier resolution of the abandonment, sale or conveyance of lines. We just have some concerns about the lack of public input and hope you may be able to look at some changes in that area.

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We are also concerned because it appears that this process is going on not only in the transport industry but in other industries as well, where the cost of doing business in Canada and operating that business is being passed on down the line from the federal sector to the provincial sector to the municipalities. We feel this is going to result in either a downgrading of services or a high cost to the taxpayer at the bottom end.

We certainly recognize that if there's any cost to the federal government today, the taxpayer will ultimately pay that. However, our concern is that in the less fortunate areas of the country they're not going to be able to pay for services and therefore are going to lose them.

We realize that the changes to the WGTA have gone ahead, and we're just concerned that the adjustment fund that was set up is not adequate to offset the needs caused by the changes to the Crow benefit. We're not sure whether the provincial governments are going to be in the position - especially in those areas of the prairies where the road network is not like it is here in Ontario - and have the money to handle the number of trucks that will ultimately end up on the highways when the grain is no longer being shipped by rail over the expanse of branch lines in the prairies.

We also have some general concerns that there needs to be - and it may seem strange for us to say it - a federal program initiative to address the national highway situation. Maybe the government needs to take some money from the increase in excise tax on gasoline or whatever and earmark it for a national highway program. Although it is unusual for us to support improving highways, because we see trucks as our major competitors, we do see the changes to the WGTA and the changes in Bill C-101. There is major pressure on the infrastructures of western Canada.

Our second major concern is that the issue of passenger rail service doesn't really seem to be addressed in this bill. The passenger runs not under VIA now that are subsidized by the government under the NTA are now going to be put - as we say in our brief, and maybe it is strong - at the whim and mercy of the minister under clause 49. We feel that those passenger services that have been proven to be needed by the public should be subsidized. Clause 49 should be clearer in that regard, rather than leaving it to negotiations between the minister and the various carriers.

The UTU supports the shift from abandonment to conveyance. We certainly don't like to see any track abandoned. However, in some cases, no matter what you do, the track needs to be abandoned. But at least when we talk about abandonment versus conveyance, with conveyance we see the shipments remaining on rail, and I think that's important. We are not opposed to short lines. However, we strongly believe that those short lines, to quote myself a thousand times, should be internal. They should remain with the railway. We don't believe they should be used or appear to be used as a way to de-unionize the railway workforce.

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Certainly, we see that in the suggestion from the Railway Association of Canada, basically asking to get into the labour code. We're not going to do that. We don't expect this committee to deal with or make recommendations with respect to the labour code, save and except that we believe that if this act is going to be used to hive off a number of branch lines, etc., we should have some protection for the people who are going to be affected by that change.

It's interesting to note that we had the first short-line experience in Canada with the Central Western Railway. There was a big to-do about that. We've always been suspicious about how that happened and where the money came from, but now when there are changes and we hear from the government that we must look to free enterprise and the free movement of goods, what do we see? We see another bail-out for the Central Western Railway, with money being set aside out of the western grain payments to allocate to the Central Western Railway in order to keep them afloat. We were certainly surprised that this government, in their move to privatize CN, to make things more like the U.S. and more like Staggers, would have made that move in respect to that railway.

In a lot of ways we're concerned with the changes to the Railway Act. However, we're not going to go into those now because we said at the outset that we recognize there was a need for housekeeping. We believe that this bill may go too far, too quickly. However, we understand that some of the principles behind it are to help speed up the sale of CN to make it more attractive.

We're not totally convinced that Canada needs to go as far as Staggers, and we're not totally convinced that it's worked in every case in the U.S. However, that's the action the government has decided to take in respect of this bill, and you've certainly heard that some may feel it didn't go far enough.

I can tell you one area that the UTU knows was considered and not put in the act was the granting of running rights for short-line railways over major carriers. That would have been a terrible mistake. That would not have led to the efficiencies that the shippers want.

I'm not sure what the shippers want. They have 1974-75 rates now. They won't be happy until they get 1930 rates, but that's something we were certainly thankful to see disappear. I think if the committee had any thoughts of looking at that, it would not serve the purpose of the shippers in the long run and certainly not the purpose of railways in Canada.

With that, Mr. Chairman, I'd be more than happy to answer any questions.

The Chairman: Thanks very much, Mr. Bennett. As has been the case in the past, the UTU has again carefully gone through each and every page of this bill and has made suggested changes. We thank you for your submission.

We can start with our round of questioning.

Mr. Johnston, do you have any questions, sir?

Mr. Johnston (Wetaskiwin): Not at the present time, Mr. Chairman. Thank you.

The Chairman: All right.

Mr. Nault.

Mr. Nault (Kenora - Rainy River): Thank you, Mr. Chairman.

I wanted to go through a portion of the bill itself and the UTU submission as it relates to legislating versus negotiating internal short lines.

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I'd like an explanation, and maybe a clarification, from the UTU about why they feel the way they do about what is written in paragraph 22, on page 7 of the brief:

We will continue to do this for as long as the legislative process permits, but we believe that such a process should have been included in the Bill.

I presume the process that you're talking about is the one dealing with internal short lines. Could you give us a better understanding of what you mean by putting it in the bill? There is obviously the ability to have short lines and internal short lines, both presently and in the future. Are you suggesting that we legislate that it be the preferred option first, before we go to some other form of short line? I guess that's the clarification I'm looking for.

Mr. Bennett: A short clarification, Mr. Chairman, would be to say, yes, we would love to see it legislated or somehow protected. Enshrine in the legislation that the internal short line must be examined first before the line is sold, leased or somehow conveyed.

Our problem with the bill, as we see it, is that we now have a situation in which we have negotiated short-line agreements. We hope to do more, but with this bill we feel it makes it so much easier for the railways to sell off portions of the railroad that we will not have the opportunity to negotiate further internal short lines, even though we think it's to the benefit of all.

So that's my answer in brief. However, we don't know how to suggest amendments or whatever, except that we'd like to see the concept protected within the act. Right now it is not.

Mr. Nault: The other issue I wanted to touch on is the UTU's belief, expressed in paragraph 23 on page 7, ``that...shortlines [should] remain under federal jurisdiction''.

I'm sure you're aware that it is perfectly within the rights of the short-line owners to get a federal charter and be a short line under federal jurisdiction if they so wish. Are you suggesting, then, that we don't allow them the option of being provincial or federal and, in essence, force them to be a federal short line?

Mr. Bennett: Mr. Chairman, it's unusual to get a question that I can answer so briefly: Yes.

Mr. Nault: Having said yes, why is it that you feel there should be no option for the short-line owner?

Mr. Bennett: We feel the protections under the federal legislation are more beneficial to the workers of this country. That's the main reason why we would like to see the short line remain federal. I certainly think one of our points, as I said in my opening statement, is that we want to see some protections there for the people who are now employed on CN and CP, the major federal railways. We don't see any protection under the current legislation. So that's our point in paragraph 23.

Mr. Nault: You didn't mention in great length the issue that seems to be the bone of contention for the shippers, and that's subclause 27(2) of the act, which of course deals with access to the agency - at least from their perspective, but we're in fact still debating whether that is necessarily the case.

Do you have any comments about subclause 27(2) and about the whole process of regulation that relates to the shippers having protection from competitive rates in some form or manner? I'm curious about the union's position on the whole affair of this regulatory regime and the changes that we're making. Here in this committee we've gotten into a significant debate with the shippers about the effects of these changes on them in terms of their bottom line and their abilities to compete.

Mr. Bennett: In fact, I guess when we first looked at the whole idea of competitive rates, we were not too thrilled by it because we didn't even understand it. I'm not sure they've totally lost their opportunity for relief.

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When I look at subclause 27(2), I'm not sure that.... They must be concerned about ``significant prejudice'', but I really don't understand their point. As a rule, we haven't really looked into those sections of the act with respect to what we would call the financial operations between the shipper and the carrier. We haven't spent a lot of time on that area.

Mr. Nault: There is one last question that I would ask. There's an indirect rather than direct inference by the shippers that since 1987, with the NTA, there has been a form of fabricated competition through the act, and it has been a very effective means of getting good agreements between the railroads and the shippers. One of the arguments that the shippers have made is to question why we're even here. They say there is some housekeeping to be done, but that they're doing very well, thank you, and so are the railroads, so why do we need to make these significant changes?

I would be interested in the union's opinion on how you think the railway industry as a whole is faring in Canada, and on whether there is in fact a necessity to make some changes, because if we don't, we may see something that we won't enjoy or appreciate down the line once they are made. I would be interested to know what the workers think as it relates to that.

Mr. Bennett: The workers are normally aware of the need for change - our members certainly are - but we're always hesitant. We're suspicious of change. However, we've looked at it, we've talked to our people, and they know that certain changes need to be made.

They are always worried of legislative changes, such as those that happened in the last round of bargaining when, although they felt it was supposed to be designed to recognize both the labour relations aspect and the overall good of the railway industry from coast to coast, it didn't happen. The judge only looked at the coast-to-coast operations, or the Montreal to Vancouver operation in the case of CP, and did not look at good labour relations. Our members are therefore suspicious of all these changes.

We are slowly recognizing that something has to be done in western Canada, something has to be done about the branch-line situation, and something has to be done about the overall cost. If the provinces aren't prepared to lower their various fuel and property taxes, something else has to be done. But we're getting tired of being asked at the bargaining table to do it all.

We're starting to recognize slowly that we have to maybe support some of these other changes that are coming. I certainly can't, and never would, carry a brief for the shippers, because I have called Mr. Mazankowski's freedom to move legislation a shipper's act. It remains a shipper's act, and I don't believe Bill C-101 has changed that. I think that as a whole this is still designed for the shipper, and I guess you could make the argument that in the end this is for the betterment of the railways and the public. I'm just concerned that the railways remain in a position where they can recover their costs in a free market. If we have a free market, they should be able to recover their costs.

The Chairman: Any other questions, colleagues?

It doesn't seem that we have any.

Mr. Bennett, Mr. Secord, thank you very much for coming to our committee and for making your submission. We do appreciate the work you've done with this report.

Mr. Bennett: Thank you, Mr. Chairman.

I just wanted to add that since I am lucky enough, through bad negotiations in the past, to have the opportunity to retire at the end of the year at my young age, I am going to take advantage of it. This will be my last appearance before this committee. I have enjoyed the various times that I've been here, with the various governments and the various members, and certainly wish you well in your deliberations.

Thank you very much.

The Chairman: All the best in your retirement, Ron.

Colleagues, we welcome to the table John Edgar, from Repap Enterprises Inc.

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Mr. John R. Edgar (Vice-President, Transportation, Repap Enterprises Inc.): Good afternoon.

The Chairman: Good afternoon. I'm losing track of the time of day, but welcome to the committee.

If you could summarize your presentation in about fifteen minutes or less, we could have time to ask a few questions of you and your organization at the end of your presentation. When you're comfortable, maybe you could introduce the guests you have brought with you and we can begin. Thank you, sir.

Mr. Edgar: My name is John Edgar and I am the vice-president for transportation for Repap Enterprises Inc.

I have with me today Mr. Howard Hart. Mr. Hart is on the board of directors of Repap, and previously he was the president of the Canadian Pulp and Paper Association.

Repap subscribes to the submission made to the committee by the Canadian Pulp and Paper Association. We make this specific submission for Repap, focusing only on the ready and reasonable access to the agency. We believe that if ready and reasonable access is not available, the shipper relief provisions elsewhere in the act will become meaningless. We have already given this committee a copy of our submission.

Mr. Hart will make a few opening statements and we will be available to answer any questions you may wish to direct to us.

Mr. Hart.

Mr. Howard Hart (Director, Repap Enterprises Inc.): Mr. Chairman and members of the committee, it is a pleasure to be here this afternoon.

If I may, I'll just take ten seconds to establish my credentials. As Mr. Edgar has mentioned, during my working career I was with the Canadian Pulp and Paper Association, where I worked for some 40 years. For the last 23 of those 40 years, I was the association's president and CEO.

I can tell you that transportation issues were never far from my mind in that job. They have always been a preoccupation of the association on behalf of the industry, and over the years we have participated in a number of public policy debates that are related to transportation. I believe those working years indeed provided me with a unique opportunity to witness firsthand the impact of a number of Canadian legislative regimes with respect to transportation and how those regimes have impacted on both railroads and shippers.

When I first became involved in this issue, we were dealing with legislation that was in place in the post-World War II years. My goodness, it seems so far back that it's almost as if it was legislation from another planet, but nevertheless it was what we dealt with at that time. There was then the National Transportation Act of 1967, and the National Transportation Act, 1987. In my view, there is no doubt that the 1987 act, the one currently in effect, was the most vital and most effective transportation legislation that this country has seen.

That act did a number of things. It freed the railroads from some of the elements of their regulatory burden. It required the railways to compete with each other in setting rates, whereas under the earlier legislation the railways were permitted to, and in fact did, agree on the rates that they would make available to shippers.

As a result of this new competitive thrust - and I think this was a major impact of this legislation - that was introduced in that act, the railways became much more innovative in terms of the services they provided. Railway efficiency improved and costs were reduced. I think one must say, in any fair analysis of what has happened over those years, that the railways have done a very good job in taking advantage of the legislation.

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The 1987 act also clearly established the philosophy that competition would be the driving force in establishing both rates and services. In those instances where there was inadequate or ineffective competition, the act established pro-competitive elements such as the well-known competitive line rate, the interswitching arrangements and final-offer arbitration. The act also backed up those pro-competitive elements by access provisions to the National Transportation Agency that were simple and efficient, and that, most importantly I believe, provided for rapid action.

In my judgment, this turned out to be first-class legislation. It was effective in spurring new efficiency initiatives by the railroads, and it established a pro-competitive environment within which the carriers and shippers conducted their business. It worked and it worked well.

Bill C-101, which this committee is now reviewing, maintains many of those same thrusts, and for this I believe the policy drafters should be complimented. The bill would further reduce the regulatory burden on the railways, a much needed remedy. And we can be confident that the railways, based on their recent performance, will act further in this regard to increase their efficiency and productivity.

The basic competitive rate and service facilities are still there - competitive line rates, interswitching, final-offer arbitration - and that's very good news. But, unfortunately, there are few new concepts introduced in Bill C-101 that are not such good news and that, quite frankly, we feel are unnecessary. We will try to convince you of that.

Bill C-101 has used some new language, and it's of doubtful and uncertain interpretation. The bill has also introduced a more rigid process for access to the agency. These are the points on which the Repap submission concentrates.

The Repap group, by the way, fully supports the brief of the Canadian Pulp and Paper Association, and was indeed a party to that brief, but in its own submission wishes to concentrate on the points of access to the agency.

Subsection 27(2) will require a shipper to show significant prejudice before gaining access to the agency's adjudication process.

Now I ask the question, what is significant prejudice? I don't believe it's ever been used in railway legislation before. How does it differ from other kinds of prejudice, or perhaps just ordinary prejudice alone? So I think it's a very confusing terminology.

But more importantly, why is it even necessary at all, when the current NTA process, without such a hurdle, has not resulted in a burden of cases that went to the National Transportation Agency? Indeed, I believe only a handful of cases have gone to the agency over the course of the approximately eight years that the act has been in effect.

Subsection 34(1) permits the agency to award damages if an application is deemed frivolous or vexatious. I'm glad that is not an accusation; it just sets that up as something that might happen. But the record does not show a burden of cases - vexatious, frivolous, well-merited or otherwise. So, again, why such a hurdle? Why is it being put in place?

In short, I believe experience over the last eight years shows that the simple, effective and timely process for access to the agency created by the act of 1987 has been an ideal form of legislation. It stimulated carriers and shippers to find their own negotiated settlements, which they largely did without seeking the agency's intervention in except perhaps a handful of cases. Simple access to the agency is what made that happen, and I think that's wonderful. It got settled in the commercial arena and not before the agency.

I am not at all astonished that subsections 27(2) and 34(1) have been severely criticized in a number of the submissions that have been made to this committee by important and reputable transportation interests. These include, to name just a few: the Atlantic Provinces Transportation Commission, the Canadian Pulp and Paper Association, the Canadian Chemical Producers' Association, the Canadian Industrial Transportation League, the Canadian Manufacturers' Association, and possibly others of which I am not aware.

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They, like Repap, request that those two sections be removed from the bill. They seek the assistance of this committee in making that happen.

In this same connection I am impressed by the words of Minister Young when he addressed this committee on October 4 and touched on this same subject. I think he hit it bang on. I think he said in perhaps five lines what I said in a number of paragraphs.

He said:

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.

He thereby encouraged this committee to consider carefully what kind of language and openness might ensure that sort of a facility would be maintained.

It is our view that the removal of 27(2) and 34(1) and maintaining the access provisions as they were under the NTA of 1987 would do that.

A final thought, if I may, Mr. Chairman. In recent years the railways have substantially improved their efficiency, their productivity, their financial performance, the way they do business. I believe that the pro-competitive elements of the NTA of 1987 have encouraged that process. I think placing any hindrance on the access to agency provisions that were in that bill will certainly not improve that situation.

Thank you. John?

Mr. Edgar: If you have questions, gentlemen, we will be pleased to answer them or attempt to do so.

The Acting Chairman (Mr. Hubbard): We'll move first to Mr. Johnston, or would you rather pass for now?

Mr. Johnston: Yes, I think I would.

I enjoyed your presentation but it didn't spark any questions.

Mr. Chairman, perhaps I could pass to my colleague?

The Acting Chairman (Mr. Hubbard): I have to go by the parties first.

Mr. McKinnon.

Mr. McKinnon (Brandon - Souris): Gentlemen, welcome to the committee. I would like to comment on my impression of what I heard, but I haven't read it all yet so I'm perhaps not totally accurate in my comments. What I'm sensing is you would rather see us stay with the status quo rather than make any changes in legislation, or would that be reading something into the record that really isn't accurate?

Mr. Hart: With respect to the very narrow focus of the Repap submission, which I am representing here today, that would be the case. We wish to see subsections 27(2) and 34(1) removed. In effect this would take it back to the status of the 1987 act, which we believe, for all the reasons I've mentioned, worked very well.

Mr. McKinnon: I think the view that the committee is hearing from all of the industry is that there are some problems that need to be addressed. Hence some language that is new and different is included in the legislation.

I agree with you about some of the wording - frivolous and vexatious and some of the other terms that you have raised. Do you have some suggested alternative phraseology that might be more appropriate?

Mr. Hart: I guess our recommendation is simply to cross them out. Let's be clear. We've all heard the expression ``If it ain't broke, don't fix it''.

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With respect to this specific area of access, Mr. Chairman, we think it works very well, and I would think many others of slightly different interests than we have might feel the same way. This is because it did put the shippers and the carriers together, and in virtually all cases they resolved the issue themselves. Therefore, there was mutual satisfaction in the resolution.

Mr. Edgar: I might add to that, if I may. In my opinion, access to the agency under the 1987 act acted as a discipline that drove the carriers and the shippers to a negotiated solution. In this process the agency was very seldom involved.

Ready access to the agency, if you like, acted as a policeman at the elbow. If ready access is not available, I think the carriers and shippers will not be in negotiation, but they will be in litigation. In other words, the intent of subsection 27(2) and subsection 34(1) requiring a prerequisite significant prejudice and frivolous and vexatious tests will not reduce the number of cases going to the agency, but in fact will increase the numbers.

I was involved in cases prior to the 1987 act. One, for example, was with Prince Albert Pulp Company and the case lasted for six years.

Do you have a case or don't you have a case? This is where we're going to get back again what is significant and what is prejudice. Can I steal from your wallet or must I break into your safety deposit box?

In some Repap locations we are in fact in a captive situation. Competition does not flow evenly right across the rail system. It varies. There is very vigorous competition in the industrial heartland, but you don't have two-way hauls up in The Pas, Manitoba and you don't have trucks there every day. You don't have trains there every day. We have longer distances to travel to the markets, and in general terms, because we have the availability of access to the agency, we are able to sit and negotiate with the railroads in good faith. Things work out reasonably well and they're seldom involved with any frivolous or vexatious case, or any other kind of case.

Mr. Hart: Mr. Chairman, my colleague made an interesting point about previous legislation. You said the Prince Albert case went on for six years. Did you win it?

Mr. Edgar: Yes.

Mr. Hart: But it took six years to get redress. There was a case that went on about the same time that was launched by an industry group - I believe it was called the Western Wood Pulp case - and I don't know how many years it went on. The industry finally won it in the courts, but it took great physical endurance and deep pockets to stand the test of those cases. That's what you had under the 1967 act, and the 1987 act largely eliminated all that.

The Acting Chairman (Mr. Hubbard): Mrs. Sheridan, we have a few minutes left on the ten-minute round.

Mrs. Sheridan (Saskatoon - Humboldt): I have one small question for you to clarify something that was said. I think you said it, but at this stage of the game I'm not sure.

I understand your comments about subclause 27(2), and we have heard them from many people, including the Canadian pulp and paper people. But did I hear you say just now, while you were talking about final-offer arbitration, that you see subclause 27(2) as an obstacle that would spill over into your accessibility to final-offer arbitration as well?

Mr. Edgar: No.

Mrs. Sheridan: Could you clarify that for the record in case there are others who misunderstood?

Mr. Edgar: I don't believe we mentioned final-offer arbitration. We were referring to the cases that go before the agency or would go before the agency. I believe that final-offer arbitration is separate and apart from that.

Mrs. Sheridan: Yes, it is. But we've had other people coming before us who seem to see the two as somehow linked, so I just wanted to be absolutely sure that you were not in that category.

Mr. Edgar: No.

Mrs. Sheridan: Thank you.

Mr. Hart: I agree there's been confusion on that point. I've received the same question several times, and I guess we should all go back to the wording in the bill.

Mrs. Sheridan: If you look at the words, one is talking about the agency and the other is talking about the arbitrator. But nonetheless, not everybody is one of these slimy, high-priced lawyers I've heard so many bad things said about.

Mr. Hart: I'm glad I'm not one.

Mrs. Sheridan: They're not really that bad. That's all, sir.

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The Acting Chairman (Mr. Hubbard): Now back to Mr. Johnston. Will you forego for Mrs. Wayne?

Mr. Johnston: I sure will.

Mrs. Wayne (Saint John): Thank you very much.

Mr. Hart, as has been stated by my colleagues, many of the shippers who have been before the committee have been referring to not only subclauses 27(2) and 34(1), but they've referred to clause 113 as well, which refers to the clause that says a rate or condition of service established by the CTA must be commercially fair and reasonable. There's no definition of fair and reasonable in Bill C-101.

I wonder if you have any comment to make? Most of those who come before us have major concerns about that clause and they would like to have it removed from the bill.

Mr. Hart: Yes, I have an opinion on that, Mrs. Wayne, and thank you for your question.

Those words you mentioned are in the eye of the beholder; it's like beauty. What is fair and what is reasonable?

I believe it's unwise to have that kind of wording in legislation because it means that ultimately something is going to go to litigation. One party or the other is going to be dissatisfied with the ruling of the agency; therefore, they will take it to a court and we'll all be in it for probably some years at great expense.

Again, I would suggest that it's adding something that was not in the NTA of 1987 with respect to access and the handling of these things, and if you'll forgive me - I guess it's obvious - we just feel that the 1987 situation did the right thing. I would think government must be very happy about it because they don't have to get in the mêlée. They in effect force the shippers and the carriers to resolve it themselves.

Mrs. Wayne: Thank you very much.

The Acting Chairman (Mr. Hubbard): Are there other questions?

We'd like to thank you for coming before this committee. I've met before with Mr. Edgar and have heard most of his concerns, and Mr. Hart, you too have added to our deliberations. Are there any concluding statements you would like to make?

Mr. Hart: I would conclude by saying that I appreciate very much the time you've given us. I'm sorry that Bob Nault was not here for part of it. I had the pleasure of appearing before him in another committee some months ago. It's nice to see Mrs. Wayne again and it's a pleasure to be here.

I think we've made it very clear what our views are, and we hope you will help us rectify that situation in Bill C-101. I think Mr. Young feels the same way too, based on that quotation.

The Acting Chairman (Mr. Hubbard): You'll have to remind him.

Mr. Edgar: I'd just like to add to that and say it's a pleasure to see Miramichi at one end of the table and at the other end.

The Acting Chairman (Mr. Hubbard): And Repap.

We'll take a recess until 4:30 p.m., at which time Mr. Campbell with the Canadian Chamber of Commerce is scheduled to appear.

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PAUSE

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The Acting Chairman (Mr. Hubbard): We'll start our meeting again then. We'd like to welcome Mr. Campbell and Ms Glover from the Canadian Chamber of Commerce.

We'll wait for your presentation. We have set aside thirty minutes. Hopefully in ten to fifteen minutes you will have made your brief, and then we'll have questions from the various members of our committee.

Ms Sharon Glover (Vice-President, Government Relations, Canadian Chamber of Commerce): Thank you, Mr. Chairman.

Mr. Chairman and committee members, on behalf of the members of the Canadian Chamber of Commerce, we'd like to thank you for the opportunity to appear before you today to discuss proposed Bill C-101, the Canada Transportation Act.

My name is Sharon Glover. I'm the chamber's senior vice-president of government relations and policy. I'm accompanied by the chairman of the board, Mr. Gary Campbell.

For those members who don't know us, the Canadian Chamber of Commerce is Canada's largest and most representative association. Our members cover the entire spectrum of private enterprise, and that allows us to speak with a single voice for business.

Our network of 500 community chambers and boards of trade provides us with affiliate partners in every riding of every federal member of Parliament. This network, which also includes more than 90 trade associations, has a membership of over 170,000 companies.

In light of the nature of our organization, therefore, the chamber's participation in this forum should be understood as one representing not just shippers or rail members, but the entire spectrum of business interests across the country that will benefit from the renewal of the nation's transportation infrastructure and increased efficiency in our economy.

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We have contributed to the related public policy dialogue for many years. The chamber closely followed the work of the National Transportation Act Review Commission that proceeded the tabling of this bill.

In our discussions with NTARC and Department of Transport officials, the Canadian Chamber stressed that a viable Canadian-based transportation industry is vital to the economic health of Canada.

Before Mr. Campbell addresses the bill in question, I want to indicate to the committee that it's the intent of the chamber to speak to the overall broad policy issues these reforms address and to indicate areas where our chamber members would like to see further progress.

We defer to our members in all affected sectors to provide their expert counsel on the more technical aspects of the legislation in question.

I'll now turn it over to our chairman, Mr. Gary Campbell.

Mr. Gary Campbell (Chairman of the Board, Canadian Chamber of Commerce): Thank you. Good afternoon.

The Canadian Chamber of Commerce recognizes that the quality of our transportation infrastructure is vitally linked to Canada's competitiveness.

Continuing to move forward in addressing the long-term viability of our transportation infrastructure is of paramount urgency if Canada is to develop its promise as a competitive nation of tomorrow. Action taken needs to be part of a long-term strategy for Canada, aimed at strengthening our prospects as world-class competitors in transportation and in the many sectors that rely on viable transportation for their own competitiveness.

The railways' capacity for investment is a crucial element that must be addressed. This will have a positive impact upon shippers as they gain access to more competitive services. To put the importance of this proposed legislation into context, it is important to note that the viability of Canadian carriers and some export ports has eroded since January 1988, when the 1987 NTA came into effect. Even since January 1992, when the review commission began its work, there have been more failures in the trucking industry, record losses by railways, and intensified problems for civil aviation and marine sectors.

The need for reform in Canada's non-market-oriented regulatory environment has been heightened by the relatively competitive regime that characterizes the United States transportation industry. In the context of an ever-increasingly integrated North American economy, it is vital that there be an equity of obligations and imposed costs, to the greatest extent possible, among providers of transportation services on both sides of the border.

An increasingly unlevel playing field between Canada and the U.S. favours the U.S. carriers and facilities. As Canada's economy continues to become more north-south oriented, the negative competitive effects of such an unlevel playing field will continue to grow for Canada.

U.S. carriers already have a natural market advantage over Canadian carriers because of their road infrastructures and the economies resulting from greater traffic density. Therefore, the Canadian carriers that face an additional series of non-market impediments are jeopardized in their competitive supply of Canadian-based transportation services. Unnecessary regulation of reporting burdens in Canada act as impediments to greater competitiveness. The Canadian Chamber of Commerce has repeatedly argued that the regulatory environment for transportation must not adversely impact on the cost-efficiency and effectiveness of providing transportation services.

In light of these challenges, the chamber is encouraged by the recent efforts of Minister Young and Transport Canada officials to liberalize Canada's non-market-oriented regulatory system. Recent legislation to privatize CN Rail sets an important precedent by allowing the private sector to do what it does best through commercialization. The elimination of expensive subsidies to railway shippers, which resulted from the reforms to the Western Grain Transportation Act, was another reform supported by the chamber.

Bill C-101, presently in question, continues this process of liberalization. In particular, the contents of this bill highlight the department's recognition of the need to reduce the regulatory burden faced by carriers and shippers.

The Canadian chamber policy statements have pointed out that limitations on the ability of federally regulated railways to match capacity to demand were increasing their operating and capital costs. As a result, the Canadian chamber's 1995 policy statement on rail renewal specifically resolved to support changes to NTA and the Railway Act that would permit Canada's federally regulated railways to efficiently manage their operations and physical plant.

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The Canadian chamber is thus encouraged by the provisions of Bill C-101 that ease the restrictions on track rationalization. They support the premise that freedom to enter and exit a market is a critical requirement for a competitive marketplace.

As you are all well aware, provisions of the bill offer ample opportunities for private or, in some cases, public buyers to bid on auctioned lines. At the same time, the carriers are permitted to abandon lines if no buyers present themselves. The chamber supports this approach, which would lead to a situation where existing rail services will be maintained to communities where market forces warrant.

Another example of unnecessary regulations being addressed by the bill relates to the elimination of the National Transportation Agency regulation of mergers and acquisitions. This is now to be handled by the Competition Bureau. It is important that this and other duplicate effects be addressed, in particular between the provinces and the federal government. In this way the operating environment is simplified for both shippers and carriers.

It is important that shippers' provisions, such as the access to competitive line rates or interswitching between carriers, are maintained as another important element of the bill. Nevertheless, in line with the chamber's position that deregulation and transparency should be promoted in the transportation sector, we feel that certain ambiguities in these provisions should be addressed by committee members.

The significant prejudice test, as well as the clause that threatens penalties in the event of frivolous or vexatious complaints, need to be clarified if they are to remain in the bill.

Our concern in this regard is that shippers with legitimate complaints not be burdened with excessive regulatory requirements or legal fees or time commitments. We repeat our position that commercial negotiations should not be distorted by unnecessary government regulations in situations where market-based options exist. An alternative solution may be that the agency only grants remedies in cases where no effective or efficient means of competition be proved to exist.

One final area of concern relates to the implications of clause 48 of the bill that allow for capacity and pricing restrictions in the case of ``extraordinary disruption'' to the national transportation system.

The chamber's members have complained that this concept is vague and could be open to future abuse because of the sweeping powers envisioned by the clause. The clause must be narrowly defined, or dropped, in light of existing provisions that enable Parliament to enact temporary measures in such situations.

In concluding this discussion of the bill's provisions, the chamber recognizes the committee's difficult responsibility as it seeks to balance the long-term viability of the carriers versus the needs of the shippers, telecommunications carriers and other affected sectors. While improvements are needed in this section, we feel that Bill C-101 goes a long way toward achieving this balance. Surely, all groups will benefit from the liberalizing effects of the bill.

In closing, the Canadian Chamber of Commerce reiterates its support for Bill C-101, in particular its facilitation of rail-line rationalization. At the same time, however, we encourage the government to more explicitly recognize the need for further measures to be taken for the long-term economic viability of Canada's transportation industry.

We recommend that this notion of viability be included in the bill's preamble. In this way, the goal of pursuing further fiscal and deregulatory measures will be facilitated.

While Bill C-101 was a partial cumulation of the project of railway renewal, the excess burden of taxes facing Canadian railways vis-à-vis their U.S. counterparts must be next on the legislative agenda. Canadian carriers are still at a major disadvantage in both tax levels and regulatory burdens.

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We would ask that in your meetings with the provincial governments you impress on them the importance of reducing provincial locomotive fuel and rolling-stock sales taxes, cutting taxes on railway right-of-way property, and assessing other railway property at non-discriminatory rates.

In this sense, legislative efforts that are designed to facilitate rail renewal must not be defined in terms of the NTA 1987 alone. We believe since the act constitutes only part of the Canadian transportation industry's competitive environment, a policy regime is now required in which the fiscal and regulatory policies of the federal and provincial governments are aligned with the market-oriented spirit of the act.

This is the principal message the chamber would like to underline this afternoon. With this in mind, we would welcome any opportunity to continue our participation in a review process on an ongoing basis.

Thank you very much for your time.

The Acting Chairman (Mr. Hubbard): Thank you. It's probably one of the first objective presentations we've had for some time. Others have been very subjective.

Mrs. Sheridan.

Mrs. Sheridan: Thank you. It was a very good presentation; very clear.

I want to ask you about what you said about regulation, I guess, and how it's generally to be avoided if at all possible. You said, if I heard you correctly, perhaps the only legitimate role for regulation is in those instances where the shipper has no alternate means of transport. It was something to that effect. I don't have the exact quote. You said perhaps regulation would be necessary in those circumstances. If you could just tell me if that's correct, then I'll ask you the question I have. Maybe I misunderstood you.

Mr. Campbell: I think the way you framed it was a little broader than we intended. There would be certain regulations. We were referring to the dispute mechanism between shippers and carriers, perhaps.

Ms Glover: That's right. We had come up with an alternate solution, I guess. We were talking about it in the case that...normally commercial negotiations should not be distorted by unnecessary government regulations. An alternative solution may be that the National Transportation Agency.... It was when we were referring to granting remedies. In cases where there was clearly no market or a monopoly situation, then the National Transportation Agency could step in. If not, it should be left to competitive forces to sort out.

Mrs. Sheridan: If you're talking about a situation where there isn't a competitive situation because there is no alternative but the railway, let us say, there you might see a role for regulation of some description. Are you suggesting, then, that this bill ought to incorporate a sort of captivity test to determine if this shipper is captive or not? We've had people coming before us and saying that's opening another very large and unpleasant can of worms; it would spawn nothing but complicated and expensive legal wrangling if we were trying to come up with that kind of definition. Or am I reading more into it than you are saying?

Mr. Campbell: No, we were simply trying to present some alternatives to the two specific areas we referred to, where it was perhaps going to be very difficult for shippers to get a ruling on a difficulty with a shipper. We were just suggesting that it be eased up from the shipper's point of view and that the agency could be used to resolve certain disputes.

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We've heard the complaint that if you have to go too far in other methods of resolving disputes as a shipper, it could get ridiculous because you'll be all over the place, whereas you should be able to go to the agency and get it straightened out.

I don't think we are able to get much more detailed than that because we really are trying to give a fairly broad perspective, but to simply point out that we think the committee is going to have to consider the mechanisms in those areas.

I don't know if I've really answered your question, but....

Ms Glover: Well, maybe I can add to it in that we didn't consider a captivity test. We didn't discuss it all in our committee. We didn't get that specific in what we were trying to come up with.

Mrs. Sheridan: Good, that's what I needed an answer on. Thank you.

The Acting Chairman (Mr. Hubbard): Mrs. Sheridan, do you have another question?

Mrs. Sheridan: No, thank you. That's it.

The Acting Chairman (Mr. Hubbard): Okay, I'll then go to Mr. Johnston.

Mr. Johnston: I believe, Mr. Chairman, I will defer to Mrs. Wayne, if that's okay with you.

The Acting Chairman (Mr. Hubbard): Yes, it is. Mrs. Wayne.

Mrs. Wayne: I have two question, Mr. Chairman. First, I would like to know if the Chamber of Commerce has done a study on shipping by road versus shipping by rail and if you have looked at the cost of the rebuilding of the roads if too much traffic is on them, as they have in other countries around the world.

Mr. Campbell: I'm going to have Ms Glover answer that. She's more involved with the actual transportation committee.

Ms Glover: No, we haven't done such a study. Perhaps it would help if you knew how the Chamber of Commerce developed its positions.

We have committees made up of people, corporate members, who belong to the chambers. Obviously they pay our livelihood. They give us volunteers to sit on committees. On our transportation committee we have shippers, we have rail companies, we have ports.

We have tried to include as many people involved in transportation as possible, and this is what we came up with. But we're not a research institution, nor do we pretend to be able to carry out research. Not that it's not needed, but our organization just doesn't do it.

Mrs. Wayne: The reason I asked that question was that I know you're not a research group. On the other hand, looking at business and looking at the cost and your taxes and so on, when you look at the fact that you would have to rebuild the roads if we don't have strict control over how much weight is going on those highways, it's going to cost you a heck of a lot and you're going to subsidize one industry - that's the trucking industry - versus the railway industry. So I just thought as a group of businessmen....

Concerning the other question I have, you mentioned that you had a committee with shippers and so on, and I note in your presentation that you do not focus in on subclause 27(2), which is what the rest of the shippers have been focusing in on, saying they feel this should be removed.

Did they focus in on...? I thought it was subclause 34(1). Frivolous or vexatious is subclause 34(1), and they focused in on that. Did you focus in on subclause 27(2) as well, regarding significant prejudice?

Mr. Campbell: Yes, we did.

Mrs. Wayne: Oh, I'm sorry.

Mr. Campbell: Well, we simply indicated that we thought that might be too tough a test.

Mrs. Wayne: Yes.

Mr. Campbell: But we don't bring a solution to the table.

Mrs. Wayne: You don't say remove it like the shippers do.

Mr. Campbell: We have just said that the committee should clarify it, really, because -

Mrs. Wayne: We should just clarify it.

Mr. Campbell: Yes.

Mrs. Wayne: Okay, thank you very much, Mr. Chairman.

The Acting Chairman (Mr. Hubbard): Are there further questions? Mr. Nault.

Mr. Nault: One of the questions I was going to ask - and maybe the chamber can consider it and get back to the committee on it - was that you have suggested in subclause 27(2) that there may be an alternative approach to it, which suggests in your brief that there would be a necessity for a captive shipper definition, because if there is no means of competition, then in fact what you're suggesting is a form of captive shipper definition, which is what Mrs. Sheridan was relating to you.

It would be interesting to know what you think that definition should be, because that obviously is a bit of an argument and debate in this particular committee and one that we've asked shippers to give us a definition of as well, which we haven't been able to get out of anybody at this point. So I leave that with you as something we would like to have the chamber get back to us on, if they can.

The other issue relates to your brief and the approach on page 2, in the last paragraph, where it says:

The process envisaged in the act provides ample opportunities for private or, in limited instances, public buyers to bid on auctioned railway lines at market rates. At the same time, it allows the railway company to abandon the line if no buyers come forward. The chamber favours this approach, which seeks to maintain existing rail services to communities where market forces warrant.

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One of two questions on the particular issue is, is the chamber confining itself to freight only, or does this in general also envision passenger service, that if communities and/or lines cannot dictate through market forces and be successful, we allow those passenger service lines to be let go or shut down?

The second question is, do you envision a public interest at all by the government as it relates to keeping a line open that, at this point in its history at least, is not commercially viable, but in fact for the betterment of a region as a whole, that it may be of interest to the government to have a policy that relates to subsidizing in a transparent manner.

I'd like to know your views on those two issues.

Mr. Campbell: Our position from the committee and through the chamber is basically deregulation in this area and to allow the market forces to dictate. So we do not have a position defined any further down than that, unless you have anything to add, Sharon.

Ms Glover: No, we didn't specify just freight, so our position covers passengers as well. The government often chooses to subsidize different areas to support different regions. Unfortunately, given the government's fiscal situation, it's not able to do that as it may wish. It may not have the luxury of doing it any more. So I would suggest that leaving it to market forces where it may not be palatable is probably most fiscally responsible for this government.

Mr. Nault: One thing I would like to follow up on is, depending on which chamber you talk to in which part of the country, you get a very different view based on the resolutions that they've passed. Being from northern Ontario, I get a somewhat different perspective on regional development than what you've presented in your broad-based approach here.

Have you done any analysis or questions to the member chambers in the different regions about the appropriateness of governments being involved in a transparent fashion in regional development as relates to the transportation sector? That means, if there is a particular rail line - and I'll use one that's used in this committee on a regular basis, the line to Churchill, which is of very great importance to the region of northern Manitoba - the argument is put that, in a transparent fashion, if you wanted to subsidize that, it would be subsidized in a regional development envelope versus having a railroad, both CN or CP, subsidize it by cross-subsidization with profits on one end of the railway and having to pay for a line that's unprofitable in another part of their lines. Have you ever asked your members how they envision economic development in the outlying regions of the country versus areas where they already are commercially viable and obviously that's not a tough issue for them?

Mr. Campbell: Where we have policies at the national level, they are developed at our annual meetings by having delegates from all across the country. They are heavily debated, with lots of notice on the policies and then a vote, and that then becomes the policy. Obviously everyone doesn't agree with each policy because there are 500 chambers, but it becomes at least a majority rule. Did you want to speak specifically about subsidization?

Ms Glover: Specifically, the Churchill line you raised was an issue a few years ago that came up at our annual meeting where we were asked to support it, and that did get defeated at our annual meeting. It takes a two-thirds majority for a vote to get defeated. So it was discussed; it was debated and not passed.

Mr. Nault: Okay, let me see if I can put this to you in a different way.

Regional development is not necessarily classified as subsidization. Regional development is an approach to give benefit in the long run to your economy in that particular area. What I'm trying to find out is does the national chamber ask the regions and their chamber members if in fact there are mechanisms to use to get benefit through forms of partnerships between either private sector, municipalities, provincial governments, federal governments getting involved in regional development - and part of that would be the transportation corridors that are necessary for us to be competitive. I'm trying to get a sense of whether in fact anybody is looking at the whole regional development envelope and what it means to them as it relates to transportation.

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Mr. Campbell: As the national body, once we have our policy in place - and if our basic policy is in support of this bill, particularly on the deregulation of the branch lines, and so on - we don't take a position on a regional basis. If something is good for a particular region, whether it be local or provincial or federal involvement, we wouldn't take a position on that. Our basic policy based on the vote of the national representation is in the one direction, the general policy that we believe in deregulation but don't interfere on a regional basis.

I don't know whether that's really what you're looking for, but we don't agree or disagree with, we work for, the individual chambers. We do our best to represent the national view of 500 chambers and 170,000 members. But obviously we aren't always stating the precise thinking of any one chamber, because they may disagree. We can only speak on behalf of the majority but certainly never interfere with regional initiatives at all.

Sharon.

Ms Glover: If I can just add to that, Gary, we haven't done any work per se.

Gary is absolutely right in that we're trying to give the national perspective, but we haven't done any work on a regional basis to see what the effects of different subsidies are on different regions. We just haven't gotten into that area.

Mr. Nault: Okay. Thank you, Mr. Chairman.

The Acting Chairman (Mr. Hubbard): Thank you, Mr. Nault.

After mentioning Churchill, I thought Mr. McKinnon would -

Mr. McKinnon: Yes, I think we had better explore that.

Insofar as business in communities along the lines is concerned and, for that matter, at either end, more importantly, for shippers to get product offshore, as Manitoba members from the government side - and I think we have a lot of support on the opposition side, as well. The Province of Manitoba is vitally interested in seeing that line become sustainable or more sustainable than it currently is.

Is the chamber concerned about such kinds of development in the more remote areas of the country in general or the Churchill line in particular?

Ms Glover: I suspect that it's very important to the local chamber in that area. What they would do if they wanted to bring it to our attention is send us a policy resolution that would be debated at our annual meeting on that issue. So we wouldn't go to Churchill and ask what is their issue. They would come to us and feed their policy into us. They have not done that on this issue for the past few years. It's been at least two years since this one has been on the table.

Mr. McKinnon: So it has raised its head before?

Ms Glover: Yes, indeed.

Mr. McKinnon: To your knowledge, what was the position of the chamber at that time?

Ms Glover: To my knowledge, the position of the local chamber was in support of the line, but it did not get support of the national body.

The Acting Chairman (Mr. Hubbard): Finally, Mrs. Sheridan, you have a question to finish your....

Mrs. Sheridan: Yes, my question relates actually to what Mr. Nault was saying in terms of your membership and how you speak for them.

I wonder, first of all, does the national organization represent rural chambers of commerce, the towns in, say, rural Saskatchewan or rural Manitoba? Would they be part of your membership?

Mr. Campbell: Absolutely.

Mrs. Sheridan: It's not simply larger cities?

Mr. Campbell: No.

Mrs. Sheridan: I'm neutral. I'm objective, as the chair said you were. So what I'm asking you is this: if you're representing the chambers of commerce of rural towns, has this been debated, first of all, and are they in agreement with the notion that loosening up the abandonment process is a good thing? As someone who does represent people in rural towns, I'm hearing that we, as a government, shouldn't loosen these regulations because it can mean the death of a small community to have a branch line abandoned. It can also mean a tremendous waste of money, let's say, for the RM that has built the road to go to an elevator that's on a branch line that's now abandoned. Does your representation here speak for those areas as well, and has that issue been debated?

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Mr. Campbell: To answer the first part of your question, we represent all 500 of the chambers in Canada, plus the provincial and territorial chambers. We have not debated and discussed the abandonment per se, at this stage.

Mrs. Sheridan: It is a strong statement, so I just wondered if it had gone through some sort of process.

The Acting Chairman (Mr. Hubbard): Thank you, and thank you to our witnesses.

I think we have a major task, with over 100 different groups coming before us. Many of them are singing the same song, but it's good to hear various singers. Hopefully, when it is concluded, we will have some music everyone can work with. Thank you.

Mr. Campbell: Thank you very much.

The Acting Chairman (Mr. Hubbard): We would like to welcome Mr. Doidge, Mr. Bradley and Mr. Sonneveld to our committee hearings.

We have a number of committee members from the west, Mr. Sonneveld, and it might be good for us to hear, in terms of grain production, what the province of Ontario does compared to what our Canadian agricultural groups do.

I am not sure who your spokesman is, but we certainly look forward to your presentation for ten to fifteen minutes. It will be followed by questions from the various members of the committee.

Mr. Brian Doidge (Marketing Analyst, Ontario Grains and Oilseeds Group): Thank you, Mr. Chair.

I would first like to give a brief introduction. I am Brian Doidge, representing the Ontario Corn Producers' Association. I think some of you may know Gus Sonneveld, the research director for the Ontario Wheat Producers' Marketing Board. We also have Cecil Bradley, the research director for the Ontario Federation of Agriculture; and John McGill, the interprovincial trade liaison for the Ontario Wheat Producers' Marketing Board. We also have Kim Cooper, who is the trade representative for the Ontario Soybean Growers' Marketing Board.

Collectively our organizations represent around 64,000 growers in Ontario. We produce about $1.3 billion worth of grain and oilseeds, and about one-third are exported. We have a vested interest in bulk shipments, so obviously the Canada Transportation Act is of interest to us.

I am not going to read the briefs we have prepared, but we do want to make several points. First of all, we agree with the general thrust of the bill as we interpret it, to a less regulated, more efficient, lower cost and more competitive rail system. We want to emphasize the word ``competitive''. We therefore support a lot of the clauses in the legislation.

We have concerns about two major areas that we want to bring to your attention. The first has to do with the appeal process, and I think you have heard a lot about that, time and time again. We are just going to hit on a couple of highlights.

The second one you may not have heard a lot about, and that has to do with the relationship between the short-line railways and the class one, or federally authorized railways.

Before we go any further, we want to point out that we support short-line railways, but we are very concerned about the working relationship between the class ones and the short lines.

It is our view that in rural Ontario in particular, CN and CP, the class one railways, have not served agricultural interests particularly well. There have been numerous examples of a lack of service and a lack of rail car allocation. In general, the railways have made it quite clear that they are not overly interested in the agricultural volume that either originates in or is destined for rural Ontario. If that's the case, relying on a short-line system that does not have a very clear working relationship with those class one railways is going to leave us in an untenable situation.

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We want to point out our last paragraph on the first page.

We think we can overcome most of these difficulties in Bill C-101 by a statement allowing reciprocal running rights between short lines and class ones at least to the nearest interchange. If we had reciprocal running rights we think we could ensure the competitiveness of the rail system.

We note that there are a number of other presentations and submissions, some of which you've already heard and some of which you will. For example, the Canadian Oilseed Processors Association makes that very point, as does the Canadian Industrial Transportation League.

On the second page we talk about the appeal process. You've heard about clauses 27, 34 and 35 before. We see Bill C-101 making it more difficult for a shipper to have his day in court. We don't think that's a step forward. Specifically, for clause 27 we think you need to define both the level and the method of determining the level at which a damage is sufficient for the agency to hear the appeal. That's not clearly defined in the bill. Without that it's an impediment to a small shipper having his day in court.

Under clause 34 we think that Bill C-101 must clearly define what constitutes frivolous or vexatious and who decides whether this criteria has been satisfied. We think you need to clearly define what costs can be charged to all applicants.

Under clause 35, we think the bill must define up-front appeal fee so the small shipper knows what he's up against in the first place.

Our major concerns start on our next page and deal with the relationship between the short lines and the class ones. In particular, we want Bill C-101 to clearly define freight rates, the level of service, provision of cars, running rights, and the relationship between the short lines and the main lines.

We view a lot of rural Ontario as a captive shipper. To put things in perspective, agricultural shipments into and out of Ontario - and by that we mean not only grains, but also fertilizer and inputs, chemicals, and everything related to agriculture - account for approximately 3% of the railway traffic for CN and CP in Ontario. That's meaningless.

They've been very clear on what they visualize for the rail system in southern Ontario. It is a main-line connection from Sarnia through to Toronto and eventually to Quebec. We think there's going to be a connection down through the Niagara Peninsula through Buffalo-Fort Erie, and there may be another connection down from London to Windsor. But that's it.

The vast majority of southern Ontario is not going to be serviced by main-line carriers. We're going to be left with a series of short-line operators, and if we don't have a clearly defined and defensible working relationship between those two entities, we don't think we're going to end up with a system that's viable.

To that end, we want to emphasize some clause - clause 113 for example. We believe that Bill C-101 must clearly and simply define the process and formula to be used by the agency when setting rates. Reference to comparable rates must be part of the process. If you can't see your way clear to doing that, we support total removal of that clause.

We also would like to make a passing reference to clause 28, which we didn't mention in our brief. Clause 28 deals with the actual lack of an immediate relief clause. Under the NTA of 1987 there is an immediate relief provision. We suggest that you introduce subclause 28(3) in Bill C-101 providing for immediate relief in the event of an appeal process. A small shipper in southern Ontario can't wait three to six months for relief. By then he would be out of business.

Clause 114 hits on a very important point, in our view. Bill C-101 is very specific about defining what a railway company is. It uses the term ``local carrier'' to refer to a short line. In all your provisions within Bill C-101 it talks about a railway company and a railway company. It does not talk about the relationship or the obligations between a railway company, meaning the class ones, and the local carrier, meaning a short line. We view that as a tremendous deficiency in the bill. We want you to look at clearly stating the service obligations owed by a federally regulated railway to a provincially regulated short line. To that end, we think Bill C-101 must clearly state the service time requirements owed by a federally regulated railway to a provincial short line in terms of how long it takes to spot the rail car, how long it takes to pick up that rail car.

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When we get to clause 28 and other clauses in the bill that deal with interswitching and interchanging, all the definitions deal with a railway and a railway, which would mean class one to class one. It doesn't say anything about interchange or interswitching between a main line and a short line.

Under clause 137...our experience in Ontario shows the main lines are not interested and Bill C-101 does not detail their obligations either to short-line carriers or to shippers. Therefore, we think Bill C-101 must clearly define rail car supply, timing, and delivery obligations owed by a federally regulated railway to provincially regulated or short-line railways, even to the extent that if a railway makes an offer of a rate, that automatically implies an offer of service, so if a railway's going to offer a rate, the rail car will be provided.

Under clause 138, dealing with running rights and track usage, we think Bill C-101 must include reciprocal running rights for provincially regulated or short-line railways.

I'll give you a perfect example. In Ontario some of you may be familiar with the Goderich-Exeter line. It picks up grain and delivers fertilizer and chemicals in the regions of southern Ontario. We can originate grain destined for the U.S. east coast on that rail line. It must connect with CN. There is no other way out. CN, in the haul from, say, Clinton, Ontario, down to Baltimore or to the southeast U.S.... The CN portion of that whole haul may be 70 miles. It's CN that is the short line in that whole connection, and CN has already indicated it is not terribly interested in picking up or delivering agricultural products in southern Ontario.

So put yourself in the position of a grain shipper in southern Ontario. We have a short line already in existence. If they can get rail car service and if they make a delivery and sales commitment into the southeast U.S. but CN's not interested in picking it up, or in spotting those cars, because all that's left of CN in southern Ontario is a main-line link from Sarnia through to Toronto, the existence of the short line is null and void. If we don't have the service and if we don't have provision of service obligations in Bill C-101, the whole emphasis, in our opinion, is misplaced, at least in southern Ontario.

The last clause we wanted to mention was clause 141, which deals with the three-year plan for the abandonment of rail lines. It's been our proposal for some time that we would like to see a planned system of rationalization in southern Ontario.

A question was asked of the previous presenter about the rural community's viewpoint on rail rationalization abandonment. The four groups we represent are resigned to the fact that there's going to be significant rail rationalization and there's going to be significant rationalization of the elevator industry and service and supply industry. That said, our position is let's plan it out for all of Ontario and not leave it to a piecemeal abandonment. Therefore we strongly support the clause in Bill C-101 that makes the railways put forward a three-year plan.

One final point. The OFA has a particular point they would like to make, so if I could take two minutes and turn it over to Cecil.... It has to do with abandonment of rights of way.

Mr. C. Bradley (Representative, Ontario Grains and Oilseeds Group): In addition to being a party to the brief Brian has just reviewed for you, OFA also provided a separate representation to the committee on essentially the issue of right-of-way maintenance. It's perhaps a small issue in relation to some of the larger themes of Bill C-101, but it's nevertheless an issue that's very important to a lot of our members. It affects them daily and for some of them it is a daily irritation.

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Some of them are looking ahead, as Brian indicated, to the possibility that substantial trackage will be abandoned in Ontario as rail companies attempt to come to grips with market realities. In that abandonment, substantial lengths of right of way are going to be put into a kind of limbo. It's our members' experience that the railways' attention to property maintenance - I'm talking about fencing, drainage, weed control, right-of-way maintenance, and those sorts of things - drops off remarkably once the rail carrier has been successful in obtaining an abandonment permit.

We believe, although NTA 1987 doesn't specifically direct railways in this regard, that it's something that would be worthwhile including in Bill C-101, or its eventual proclaimed form; some sort of explicit direction to the rail lines for their responsibilities for right-of-way maintenance until the time-title for the right-of-way transfers to some alternate use, whether that will be a municipality for running it as a recreational corridor, a short line to run as another kind of rail company, or, in some instances, a transfer to the adjacent property holders. But there should be explicit direction given to the railway as to their maintenance responsibilities until the time-title transfers.

Thank you.

The Acting Chairman (Mr. Hubbard): With permission from the committee, I'd like to go to five-minute rounds. Jim, would that be okay with you?

Mr. Gouk (Kootenay West - Revelstoke): I think it's sufficient for me. I have just a couple of things.

When I reviewed this myself, prior to hearing any witnesses, I tagged all the areas that I thought may be contentious. Then, rather than totally making up my mind, I waited to hear what interveners had to say.

I find it interesting. I did tag clause 114, yet I've heard almost nothing on that particular thing. So it's very interesting to hear you bring those points up. I certainly make note of them and run it against my own notes.

Consider clause 34, and specifically subclause 27(2). Are you totally opposed in any form to subclause 27(2), or are there ways in which it could be clarified or modified that would make it acceptable to you? Is it the concept itself, or is it concerns that you have that it may interfere with the ability to get to the agency, or the possibility of it applying to final-offer arbitration?

Mr. Doidge: I might answer that. The way we constructed our brief, unlike some other submissions that say to remove it, we think there's hope for it. But our suggestion is that you must clearly define the level of what we're talking about with ``significant prejudice'' in subclause 27(2). You have to define the level at which a small shipper is not in danger of having his whole appeal thrown out because he can't demonstrate sufficient damage.

We think that if you could define that level, then there might be more merit to that clause. We didn't say to throw it right out, because we don't want to have a whole lot of frivolous appeals either.

Mr. Gouk: You don't think clause 34 catches you on that.

Mr. Doidge: That's right.

Mr. Gouk: It's interesting that you would pick that word.

Mr. Doidge: I was going to use ``vexatious'', but I can't spell it.

Mr. Gouk: I've heard arguments on subclause 34(1), for example, such that it may act as much to shippers' benefit as to their detriment, insofar as it would stop frivolous roadblocks being put in front of your application by the other side. Some case study indicates that may well in fact be true.

I have mentioned this to some of the groups, some of the shipper-producer groups I've talked with, and after consultation with their counsel they have agreed that perhaps it isn't to their total detriment to have that in there.

Have you any thoughts on that?

Mr. Doidge: I would suggest, again, that the fact we didn't suggest removing it suggests that we think there's merit to it, with some modification. The modification I think you need to look at is to clearly define what constitutes ``frivolous'' and ``vexatious''.

The way it is right now, that could be argued to death with every appeal that comes forward. First, what is ``significant prejudice''? Then, what is ``vexatious'' and ``frivolous''? Clearly define it. Then I think we have a better chance, as a small shipper, of knowing whether or not our appeal would stand a chance.

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Mr. Gouk: The last question I have deals with your comments on clause 28. Are you essentially looking for the old clause that used to be in NTA 1987 to be brought forward and introduced into Bill C-101?

Mr. Doidge: Very much so. In particular, subclause 40(3) of the NTA 1987. Our suggestion is to bring it forward.

Mr. Gouk: I already have it noted. I certainly will have a look at that.

Thank you, Mr. Chairman.

The Acting Chairman (Mr. Hubbard): Thank you, Jim.

Mrs. Cowling, you have a question?

Mrs. Cowling (Dauphin - Swan River): Yes, I do. Thank you, Mr. Chairman.

My question is with respect to the grains and oilseeds industry in the province of Ontario. Is that industry completely dependent on rail?

Mr. Doidge: No.

Mrs. Cowling: What other modes of transportation are there. If there are other modes, are they a competitive factor to rail?

Mr. Doidge: We have the luxury in southern Ontario of having access to water, road and rail. A lot of it depends on the destination of the goods. A lot of the wheat that Gus ships overseas obviously goes by water. A lot of the corn and soybeans that goes into the U.S., particularly the northeast and the southeast, moves by rail. A lot of the wheat that moves to milling or corn that moves to some processors close to the border would move by truck.

So our main interest is in keeping competition in transportation viable. We want a competitive seaway. We want competitive rail access and competitive trucking.

Mrs. Cowling: My other question is this: because we're looking at the Goderich short line, could you explain to this committee some of the things that we should really watch when we take a look at short lines? What are the areas we should be concerned about as parliamentarians?

Mr. Gus Sonneveld (Representative, Ontario Grains and Oilseeds Group): There are many issues, but, as you know, a farmer usually has to pay the bill one way or the other. A market is really not a market just of price, but of logistics. The price of a product is time, transportation and facilities. That's what it is. Whether you live in western Canada or eastern Canada doesn't make a difference. That is the marketplace.

I'll give you an example of what happens in switching whereby you sometimes can obtain a market or you cannot. Let's say you're using the extra line as an example. We in the practice of marketing are saying this. Once a switching charge is over x many dollars per tonne, we can no longer use that line for a specific period of time until the switch cost comes back. So it prevents that line from being used. Those are some of the things I think you should take a look at.

What is the total cost and sharing of rates, which I think Mr. Doidge has used? These are the very particular issues.

The shippers do not pay the cost. Remember that. It is the producer or the consumer that pays the cost. So if you're going to analyse something, that's the one you must take a look at. Is it affordable to the consumer or the producer of the product, whether it's pulp wood or grain? It doesn't make any difference.

You're looking for a market. The logistics either allow you to go to that market or they prevent you from that. Those are the principal issues that you should look at when you're taking a look at the whole bill and some of the presentations. Is that clear?

Mrs. Cowling: Thank you.

Mr. Hoeppner (Lisgar - Marquette): I really don't have a question. I just want to compliment the gentleman on his attitude.

I tried to point out early this afternoon, or morning, that it's the farmer and the consumer who really pay the cost in the end. If they get rid of the farmer, there aren't going to be consumers very long. So the producer is very valuable. I thank you for that comment.

The Acting Chairman (Mr. Hubbard): I do see quite a few farmers around the table today. I'll refer to Mr. Nault, who is not a farmer, but a -

A voice: He's a railroader.

Mr. Nault: That's not necessarily true.

Mr. Sonneveld: Literally?

Mr. Nault: Literally. You can take that any way you want to.

First, I want to deal with the issue of service obligations by federally regulated railways to the provincially regulated railways. My understanding is that there are common carrier obligations under a federally regulated charter. So I'm trying to find out exactly what you mean by service obligations. It seems to me that what a short-line owner obviously has to do is get the product to the main line of the common carrier. It is then the common carrier's obligation to get that product to market.

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I'm having difficulty understanding why you feel you don't have the ability to go to the agency with the argument put under subclause 27(2). It suggests that if the short line is in operation and can get its product to the main line, the common carrier then has an obligation to get the product to market within a reasonable time. At the agency, you could argue under subclause 27(2) that there is significant prejudice to the viability of that particular short-line shipper because the common carrier is not meeting its obligations. Am I missing something, or is that not the issue? That's the first reason why I think the argument that you made on clause 114 doesn't have a lot of merit, because the common carrier obligation is still there.

Secondly, on subclause 27(2), I'm a little bit surprised that shippers are suggesting that we specifically define what is intended by ``significant prejudice''. What you're asking this committee, and the Government of Canada, to do is to tie the hands of an agency that has the ability, under very different commercial circumstances - one being in Ontario, one being in western Canada - to decide what may be classified as significant prejudice. It would be up to the third-party arbitrators - and I don't mean the arbitration process, which is separate from the agency - to rule what is significantly prejudiced in this case.

I'm a little bit concerned that you want us to define it for them when we leave it to the agency to define it based on commercial principles. Could you give me an answer as to why they would want us to define this? I think that is more dangerous, in some cases, than letting an agency that is at arm's length from the government make a decision that is in the best interests of both parties when they come to the agency.

Mr. Doidge: I guess I'll deal with the question in two parts, as you proposed it.

The first one dealt with reliance and common carrier obligations. The first part of your statement was that the short-line carrier gets the goods to the interswitch. If the main-line carriers do not provide rail cars, how is the short-line carrier going to get the goods to the interswitch?

Mr. Nault: That's my point. Is that not reason enough to go to the agency for significant prejudice to the operation of a shipper? I decide I'm going to go into a short-line business - it doesn't matter if it's provincial or federal - and I go to CN or CP and say that in order for me to be successful, they have to supply cars in a reasonable time in a process whereby I can make a living. They agree that they would like to ship my product, that they just didn't want to run that rail line, and that I decided to do it myself or someone else bought it. If they refuse to do that, is that not grounds for me to go to the agency in that they are in fact putting me, the particular shipper on that line, out of business? To me, this is what the significant prejudice is all about.

Am I missing something? That's how I read that particular clause and the intent of it.

Mr. Doidge: Our suggestion to you is that it is the details that are going to be the make or break. Timing is important; it is what is significant for a short-line operator and for a grain trade company on a short-line railway. A delay of a week, two weeks, or a month in delivery of the rail car can put that whole deal for naught. We won't have the same -

Mr. Nault: That's my point. Is that not enough significant prejudice for you to go to the agency, saying that these guys are purposely not giving you the cars or the right turnaround on those cars in order for you to be successful in making sure you get that contract with that particular individual who wants to buy your product? No one's ever tested it.

Mr. Doidge: The answer depends very clearly on your definition of significant prejudice.

Mr. Nault: But I don't have a definition.

Mr. Doidge: Right, and neither does the bill.

Mr. Nault: It's up to the agency to decide whether in fact that has merit.

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Mr. Doidge: Right. Yet you're asking a short-line shipper to, first of all, sit back to determine if there is a significant prejudice that he thinks he can sell to the agency. He then has to do so in the face of a railway arguing that no, they agreed to deliver the rail cars but had some trouble getting them, so they brought them up two weeks later.

That's the argument. The small shipper is sitting there and doesn't know what significant prejudice is. He's going to have to make a judgment call: I think I've got a good case here and I'm going to carry it forward. He now has some other risks that he isn't aware of. He doesn't know the costs that the agency can take into mind and calculate against him if the agency finds against him. That's assuming, of course, that the agency doesn't throw his appeal out in the first place because it's frivolous and vexatious.

Mr. Nault: Well, we'll get to that in a second. The reasoning that I'm using is just the reverse. If you define for the agency the timeframe that is acceptable for car allocation before we even get to the agency, circumstances that are acceptable for one shipper will not be acceptable for another. So as an agency, how do I go about ruling on it if you tell me that two weeks is a good timeframe but for another guy two days is a good timeframe? Every circumstance necessitates that the agency has to make up its own mind as to what is the acceptable time limit. I don't know how I can do that as a government if I'm defining for you what is an acceptable time limit for car allocation.

We all know car allocation is one hell of a process, and I know because I used to switch them around. If you get a lazy conductor, you're in big trouble. But there are all sorts of reasons. You can have mechanical breakdowns - all sorts of things that keep you from getting your cars and that may be frivolous can happen in the railway industry. If an engine breaks down because it was stuck in the snowbank somewhere and went on the ground, you may not get your cars for a week because it was the only engine available. Otherwise, they would have brought them from somewhere else.

Now, you may go to the agency and say you were unduly damaged by that, while the railway will say it has a legitimate reason for it. That's where the flexibility is necessary, so I'm questioning why you want this defined so tightly that we'll basically be telling the agency how it will rule before things even get there.

Mr. Doidge: Let's step back for a minute and look at it from the perspective of a small shipper in southern Ontario who is trying to access rail cars. We're exposed to a situation in eastern Canada where we're not even involved in the rail car allocation process.

In February 1994 the GTA threatened to impose a 10% clawback or holdback on the direct-line operating costs payable to CN and CP. That amounted to a threat to withhold about $20 million. CN and CP responded in the space of one weekend. On a Friday they made the announcement that in CN's case, they were going to pull back 150 rail cars. That's 20% of their eastern fleet. That same afternoon, CP said they were going to double the freight rate through Buffalo. This was going to be imposed not in two months or two weeks, but on Monday, the very next working day. The main-line railways were telling the shippers in southwestern Ontario, you can forget about all those rail cars we promised you because they have to move back out west to service the GTA-mandated west coast delivery targets.

That's the situation we're exposed to in southern Ontario. We're not even in the rail car allocation formula. We're not even at the table. Our interests are not represented.

Mr. Nault: That's a separate argument, but I know you're bringing it forward because it is a major problem.

The Acting Chairman (Mr. Hubbard): I may have to -

Mr. Nault: Mr. Chairman, this is probably one of the best ones we have had. I think we should follow this up a little.

The Acting Chairman (Mr. Hubbard): I think you have followed it up quite well, but I've given you overtime already.

Mr. Nault: Well, I really wanted to get into the issue of right-of-way maintenance. It's a major issue for southern Ontario, but I suppose we'll have to deal with it at some other time.

Mr. Bradley: I suppose you could invite us back.

Mr. Nault: I can stick around for an extra five minutes; I have nowhere to go.

The Acting Chairman (Mr. Hubbard): I'll probably now refer back to Jim. He had something to say.

Mr. Gouk: I just have one short comment, Mr. Chairman.

With regard to subclauses 27(2) and 34(1), the agency is being called as a witness and has been put on considerable notice. I've asked that they bring forward examples as to why they need this. In other words, since 1987, what cases have there been in which they could or should have been able to use this? I would suggest that with all the notice they have, if they can't show why they need this, I would really question why it's even in there. That's the approach I'm going to be taking.

I'm not arbitrarily saying it has to go, but I'm sure putting them on notice to justify why it has to be there. If there are case situations that they can identify as having been solvable if they had had subclause 27(2), or problems that could have been resolved with subclause 34(1), that's great. But show me some evidence, because if there is none, I want to know why it's even in there.

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The Acting Chairman (Mr. Hubbard): Thank you to the witnesses. We could probably spend all evening here, but we do have a timeframe to follow. All members are not happy with that time schedule, but I know your group would be available to discuss privately with Bob or anyone else....

Mr. Sonneveld: On behalf of the group, I'd like to thank you for the opportunity to be here. On many other issues you are correct. I know your timeframe. But any time you want some information you can contact either of the organizations mentioned here and we would be willing to give you some data.

The Acting Chairman (Mr. Hubbard): I'd like to welcome now as our next witness the firm of James Richardson & Sons Limited - Grain Division represented by Mr. Jim Weir.

Mr. Jim Weir (Vice-President, James Richardson & Sons, Limited - Grain Division): Thank you very much, Mr. Chairman.

Through some of my contacts with friends in the industry and from listening for a few minutes while sitting back there, I really feel like I should be playing the music to Monty Python and Now For Something Completely Different. I'd like to be able to offer you something completely different. Unfortunately, I think today I'm going to try to reinforce the position some of the people who have previously appeared before your committee have made with respect to this bill.

Your committee has created an opportunity for those of us involved or affected by transportation legislation at the federal level to participate in the creation of a new and hopefully improved transportation regime for Canada.

By now we all recognize that the cost of having a system that gives everyone what he or she wants is prohibitive in today's economic world and involves great economic waste.

At the outset we can agree with the real need to have a clear, rational and logical set of principles or expressions of intent by the government through this legislation.

In our opinion, this bill, through clause 5, has set out some guiding principles. I think the bill heads us in the right direction, where it may be possible to have the rates charged and services generally provided set through a more normal commercial mechanism rather than by regulation. We believe the combination of market forces that encourage both price and service competition should be coupled with sensible protections from unfair or restrictive practices.

We think the government has properly recognized two things in particular in this bill. The first is that competition and market forces in transportation, especially related to grain, are clearly not perfect and therefore not the only means of protecting the public interest.

We also think this bill recognizes the need for a period of adjustment or transition from one regime for grain to another.

In the end, we need a set of transportation laws that are made in Canada, for Canadians, and not simply import rules from somewhere else that are put in place in this country; laws that recognize the unique conditions and circumstances of Canada's economy. We believe that applies particularly to shippers of Canadian grain, an activity that represents about one out of every four tonnes of bulk movement in this country.

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For the committee members' benefit, I'd also like to put my remarks in a bit of context. A tremendous amount of energy is being extended by everyone involved in our business these days, as you probably are aware, to work together to build a better system. This brief is, if you like, only a snapshot view in time of this proposed legislation. We will go on with or without this bill, working with other grain companies, working with farmers, working with the railways and government, to find common-sense solutions to our problems and challenges.

The regulatory reform focus of Bill C-101 continues needed momentum, in our view, towards a constructive process for change in the movement of goods to market in a timely and cost-effective manner. In general, the federal government has brought forward what we believe to be legislation that tries to reflect a reasonable balance between the needs of carriers and the needs of shippers.

The grain division of my company is primarily interested in the relationship this bill creates between the two national railways and ourselves as shipper customers. In general, we believe the competitive access provisions in the proposed bill have been properly supported by the retention of common carrier obligations.

In general, the provisions of NTA 1987 will, through the proposed Canada Transportation Act, now be available to the grain industry of western Canada. During the critical transition period it will be incumbent on all system participants to work toward achieving goals that will ensure long-term growth and prosperity for the agricultural community and the Canadian economy in total. We believe some modifications could be made to the proposed bill that would be helpful and that would assist us in that goal.

Leading up to repeal of the Western Grain Transportation Act...shippers of grain were interested in and concerned about the new environment in which their business would be conducted. I'm sure committee members can appreciate that grain farmers have been enclosed, or encased, as elevator operators and the railways in western Canada have been enclosed or encased, in a very highly regulated regime for many years.

NTA 1987 contained levels-of-service provisions that in essence described the rights and obligations of shippers and carriers. In the new bill clauses 114 through 117 retain the existing provisions. In our opinion, the retention of these ground rules provide necessary support to the competitive access provisions of the bill. A flaw of the original proposal has been corrected by retaining the common carrier provisions.

Common carrier obligations and the competitive access provisions in our opinion do exactly what they are supposed to do: act in the absence of real competition. In the grain industry in western Canada there are many cases where one railway acts in a monopoly situation. In others there is a duopoly. But there is no really effective competition between modes for grain traffic. Trucks cannot realistically handle 30 million tonnes of grain in a year. No other infrastructure is in place to handle this traffic, such as the inland waterway, for example, that exists in the United States.

So the competitive access provisions of NTA 1987 should continue to be available for shippers of bulk grain from the prairies because this traffic is captive to rail generally, and to one rail specifically in a large number of locations. That will continue. Even with rationalization of the grain elevator system this will continue to occur at many locations.

Through the competitive access provisions the bill correctly places regulatory provisions at the disposal of shippers and the railway companies. The fact that they have been little used in the past demonstrates, in our view, their complete appropriateness for grain shippers during the important transition period.

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A new Canadian transportation agency replaces the current NTA, National Transportation Agency, and we would like to have the government consider that the agency should not be in any way stripped down to a mere shadow of itself such that it is unable to complete and perform its function in a fair and reasonable manner.

We are appreciative of the government's intention to streamline to cut costs, but the agency must be allowed to conduct its mandate and there must be sufficient resources for it to do so, including the number of members.

In regard to rail-line abandonment procedures and the process for doing so, in our view the bill aims to streamline the ability of a railway to exit from a market, abandon excess and underutilized trackage, or convey the line to a short-line operator. Generally, the proposals of the bill are sensible if the railways are to be encouraged to become more efficient - and, after all, one of the goals of this government is to encourage a more effective rail system.

The provisions of the proposed CTA have been appropriately narrowed to deal with rail regulation as it relates to railway and shipper competitiveness issues and the abandonment or conveyancing of lines. The inclusion of any provisions that would expand the purpose of this bill through Transport to include other social or economic considerations is inappropriate.

I will now move into three or four specific areas.

Clause 155 is necessary and relates to the agency itself in its eventual decision-making with regard to the maximum rate scale regime. It needs to be able to collect evidence to make a rational determination as to what efficiencies have been gained during the important transition period. This can be obtained through continued use of costing reviews, such as are presently carried out by the agency.

With regard to the final three sections of our short brief, a fair bit has been said in relation to these particular clauses, in our opinion often from a cynical or at least somewhat skeptical point of view. These remedies are sometimes discussed in such a way as to suggest that shippers and carriers are forever at war with one another.

Second, these remedies available to shippers are discussed in a context as if they were regularly- or often-used provisions used to address the fate of some poor shipper. Two of these clauses almost predict, in fact, a slew of challenges that will result from the new regime.

In point of fact, we foresee very little practical use being made of these remedial provisions. The record shows that they have not been used often. The point is that they exist and a reasonable, affordable, and fairly expeditious process exists as a last resort only to assist two parties to continue to do their business together. To introduce additional barriers or tests would serve only to encourage a more adversarial relationship, and in the end we don't believe that such a relationship is healthy or at all productive and in the best interests of our customers.

Subclause 27(2), which has been referred to by many others, provides that the agency must, in effect, be presented with a prima facie case that an ``applicant would suffer significant prejudice if the relief sought were not otherwise available''. Nowhere in the bill or other available information have we been able to find a satisfactory explanation as to what is meant by an application. Could it mean complaints with reference to common carrier obligations? We don't know. What is the reason for this open-ended clause that lacks clarity and definition?

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In the absence of some precise detail, we're left with the conclusion that this provision is of somewhat dubious value. A significant, time consuming and potentially expensive hurdle has been erected that conceivably has the undesirable effect of discouraging legitimate activation of the shippers' rights provisions. A case would likely be even more difficult, given the new commercially fair and reasonable clause 113. So our recommendation would be to delete subclause 27(2).

We have a similar recommendation for clause 34. We support the general notion of the agency's continued ability to award costs. We don't understand, again, the rationale behind introducing additional subclauses in that and additional wording. In fact, I think it could be cut off approximately at mid-sentence, and I can look that up for you.

Finally, clause 113, referred to earlier, is similar to clauses 27 and 34. Again, we would suggest that, because of its fairly glaring weakness and no particular rationale being offered for the introduction of this clause, it also be deleted.

Mr. Chairman and members, in summary, the proposals of the bill, by and large, we believe, are reasonable. This bill will not meet completely all of the specific interests of every participant in the transportation system. The important question is: are we headed in the right direction and is there reasonable balance?

If there are shortcomings in the bill as it relates to our business, the grain business, we believe the remedies we have offered do not stray significantly from the path that has been laid out by the government. Our suggestions really relate to the environment in which we operate today, and likely for a few years down the road. With these changes in place, there is a reasonable exchange for the massive upheaval to the regime for grain transportation that is taking place as we speak.

That ends my presentation. If committee members have any questions, I'd be glad to try to answer them. If there are any I can't answer, I'll certainly commit to getting those answers to the committee as soon as possible.

The Acting Chairman (Mr. Hubbard): Thank you, Mr. Weir.

I'll go to five-minute rounds. Jim, are you ready?

Mr. Gouk: Yes. We might be able to split it for what I have.

I won't bother going into the business of subclause 27(2). You were here so you've heard the comments I've made.

I have one question with regard to an area on which I don't have as much background as some of the other parts of this, dealing with the freight rates, the ceilings or the caps that are placed on them for grain. I was curious about your position on that. You didn't mention that. Are you in favour of the phase-out of that, the continuance of that, or the complete removal of that?

Mr. Weir: The maximum rate regime that has been put in place is a transition-type of move that I think has considerable support in western Canada.

As your colleague has mentioned, it really is the farmer, the producer, who in the final analysis is the one who has to bear, in some way - either directly or indirectly - the result of that type of regime. Given the fact that we have been under a regulated freight regime and the transitionary nature of a regulated rate regime, I think we can continue for a period of time moving perhaps toward a more commercially disciplined system.

Mr. Hoeppner: A short question on the grain handling restructuring or rationalization. I look at the number of elevators you have, and we know that unit trains are going to be something that is a must in the new and more efficient rail system. Will that cause you a problem? Will you be able to handle that, or how does that tie into the future plans of the company?

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Mr. Weir: All of our friends in the business, all of the companies, are facing the very same situation to a greater or lesser degree. We know that you know we have overcapacity as it relates to our ability to generate efficiencies from the handling of that product.

So all of the companies, my own included, are being required to recapitalize, to reinvest in the system. I know that it's a significant investment these days to build a new facility - anywhere from $5 million to $10 million - and these facilities are going to be part of our new structure in the future.

Mr. Hoeppner: You know it comes out of the farmers' pockets in the end. That's why I was wondering how you would handle that restructuring.

Mr. Weir: I think farmers have clearly said that we cannot afford the system we have today. If you can't afford the system you have today, that requires rationalization, both of rail and of the other infrastructure, the grain elevator system.

Farmers do not expect to have an elevator every six miles any more. In most cases, farmers do not expect to be driving their own trucks down an old road to get to an elevator. As you well know, the business of farming and grain production in this country is very well advanced and farmers are very sophisticated and good business people. They understand the economics of this business as well as anyone.

Mr. Hoeppner: I am concerned that some grain companies are having problems with capitalizing their restructuring. That's more or less the question. I wondered how that would affect you. James Richardson is still fairly well off.

Mr. Weir: I don't see pots of money just lying around there for anyone to pick up. I think all of us have to be very careful about where money is invested and where you can get a return for that investment.

Our shareholders, by the way, are at least as equally concerned about where their dollars are spent, whether it happens to be in the particular end of the business that I work in or whether it's some other business that they operate. They're like any other company.

Mrs. Cowling: Thank you, Mr. Weir, for your presentation. I'll try to be brief.

You mentioned that there needs to be a period of time for adjustment. Could you expand on that for the committee? Also, do you believe that the Government of Canada should move to a completely deregulated regime for the grain sector?

Mr. Weir: In answer to the first question, yes. I think it's fairly well recognized that a period of transition does make sense. The reason for that, among other things, is that we have a particular infrastructure and a way of doing business in place now and there needs to be some time to adjust to the new way of doing business. How long a period of time, or the pace at which that adjustment occurs, is yet to be determined. If rail abandonments are very aggressive we will obviously be going at a much quicker pace to rationalize the elevator system.

I think a period of transition is always required. The length of it may be debatable but in this case I think taking an industry from one type of regime and simply throwing it into another fails to account for some of the unique situations that have been present for a long time in that business.

As for the second question, I think part of the brief referred to the fact that we would prefer in most cases - and when I say ``we'' I think that means everyone in the industry - to be operating without artificially set prices and regulations in our business. We would prefer that.

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However, as I have been trying to explain - and others have probably done at least as good a job of explaining it as I have - the geography considerations and the mere volume of product that has to be moved in some cases generate situations that may require that some external protections be available.

If you are asking for a prediction about whether we will ever get to a situation where we have no regulation, I would say we'll probably never get to a situation where we have no regulation, but my hope would be that we will get to a situation where we use very little of it. That to me is more important than whether we actually have it or not. It's whether we need to use it.

Mr. McKinnon: Back to the comment about your views on the long-term involvement of the trucking industry in grain. I believe you said it was quite small, around 3%. Do you feel it's going to continue into the future at that level?

Mr. Weir: I don't think I used any figures. What I said, or what I will clarify, is that more and more producers are hiring out their trucking requirements -

Mr. McKinnon: Right.

Mr. Weir: - their transportation requirements. What I said was that producers don't require there to be a grain elevator every six miles, or virtually within shooting distance of their farm.

Mr. McKinnon: Only if it is with a registered gun.

Mr. Weir: That is a different debate.

Did I answer your question? Not quite?

Mr. McKinnon: Not quite, but we're close.

Mr. Nault: On subclause 27(2), what we have found out in discussing with just about everybody who has come to this committee is the issue of compensatory rates, or line rates, and that going to the agency has never been used more than a few times. Can you tell me if in the old bill, in your mind...there were very few times when people went to the agency...that there was a definition in the bill, or in fact that a definition was brought forward by the agency over time, based on experience of what was reasonable and commercially fair.

Mr. Weir: To be quite honest with you, I don't know if the agency had a published set of definitions. The point I was trying to make about subclause 27(2) and a couple of other clauses of the bill was simply that what we have in NTA 1987 and in the use that has been made of the existing provisions seems to have done its job. The question we are simply posing here is where did these new parts come from and what is it that is going to make a better environment and help us do better business in those additional words, better than what we have done under the old system?

Mr. Nault: Would you not agree, then, that the only reason why it was effective in the old act was that it was used for leverage by the shippers -

Mr. Weir: Yes.

Mr. Nault: - and that is the only reason why it is there? Obviously most people didn't bother going to the agency with significant prejudice of any kind, in the sense that they were unduly harmed in any way, shape, or form, but used it as a bargaining chip.

Mr. Weir: I can't comment on whether that was or was not the case, or all the situations shippers and carriers might have found themselves in, except to say this. In another jurisdiction we have had recent experience with agency involvement and have really found to our delight that in fact we have not had to go as far as perhaps what is allowed in the existing legislation. Both the carrier and ourselves have been somewhat disciplined by the fact that a very complicated and long procedure could be in place, and wouldn't it be better for both of us if what we did was really to sit down and have a common-sense approach to solving whatever the problem is, rather than needing to go to another step.

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Mr. Nault: Thank you, Mr. Chairman.

The Acting Chairman (Mr. Hubbard): Are we finished with the questions?

Mr. Weir, thank you for coming.

Mr. Weir: You're welcome.

The Acting Chairman (Mr. Hubbard): Good luck in your enterprise. Hopefully things will work out very well for you and all the growers and shippers.

Mr. Weir: Thank you.

The Acting Chairman (Mr. Hubbard): You were speaking to a farmer there, when you were telling him what a good job farmers were doing. I hope you recognize that.

Mr. Weir: I know.

The Acting Chairman (Mr. Hubbard): We'd like to welcome representatives from the Transportation Communications International Union: Mr. Daniher, who I've met before in Thunder Bay, and Mr. Prebinski, is it?

Ms Maureen Prebinski (Director, Education, Transportation Communications International Union): Ms Prebinski.

The Acting Chairman (Mr. Hubbard): Sorry; Ms Prebinski.

I think you've probably been here listening. We have basically about half an hour to meet with you. Usually we divide that into ten to fifteen minutes of presentation and then ten to fifteen minutes or so of questions. We'll ask first if you'd like to make your presentation, and then we'll have the questions to follow.

Mr. Herbert Daniher (Executive Vice-President, Grain Division, Transportation Communications International Union): We want to thank everybody for the opportunity to appear here today, and we will keep our comments brief to allow time for questions and answers.

The Transportation Communications Union represents over 10,000 workers across Canada. We're involved in the transportation of goods, people, and information. The TCU members work for Canada's national provincial railways, trucking firms, ferry operations, and grain industry. Almost one-half of TCU members are involved in rail transportation and its ancillary industries, including grain handling and intermodal traffic.

Our interest in Bill C-101 is from the perspectives of workers in the industry and the public interest.

We have outlined a number of concerns and have highlighted them in the next paragraph. You can review that at your leisure.

It is disturbing to note that the bottom line has governed Canada's national transportation policy since 1987. Section 3 of the U.S. Rail Act of 1980 states that the purpose of their act is to provide for restoration, maintenance and improvement of the physical facilities and the financial stability of the rail system in the United States.

In contrast, in the Canadian model, the principal thrust of the Canadian deregulation that is currently before us is to provide an adequate network of transportation services at the lowest possible cost. This is done through examples such as ensuring low rates for shippers through such measures as competitive access features.

Such a narrow focus prevents our government from developing a truly integrated transportation policy for this nation. Whereas the United States government recognized that the economic viability of their carriers was necessary to promote the growth of intermodal transportation plans that integrated rail, road, and water, Canada has relinquished its responsibility to competition and market forces.

Regional planning models taking into consideration different transportation modes and needs as well as the environment must be developed, taking into account the public interest. The responsibility to establish a truly integrated transportation policy in this country rightly lies with the government and should not be subjected to the whims of the market forces.

Under Bill C-101, the Canadian government has abdicated its responsibility to regional development by relinquishing regulations to shippers. In fact, under Bill C-101, shippers can designate routes through the United States if there's no cost-effective continuous route wholly within Canada that is available to the shipper and over which it is reasonable to move the shipper's traffic. In other words, there is no obligation to ship goods from point to point wholly within Canada, if it is not the least expensive routing.

With this we will see an increasing amount of Canadian freight traffic being moved by the U.S. to destinations within Canada. The elimination of the Western Grain Transportation Act subsidies is an example and will accelerate this north-south movement. Yet nothing has been done to address the key factors that have undermined the rail industry's competitiveness vis-à-vis the United States. Factors such as taxation policies, including diesel fuel tax rates, are not addressed in this particular piece of legislation.

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In a deregulated environment the continued deregulation of the transportation industry and Canada's rail systems under Bill C-101 will have a profound effect on public access to transportation links, as well as a negative impact on railway safety. Transport Canada briefing documents on Bill C-101 indicate that one of the primary goals is to streamline and shorten the current process for rail-line rationalization.

The act would promote the development of what the department refers to as a healthy short-line industry. The department believes that the short lines will revitalize the rail industry and provide service to small communities. It points out that it perceives success of short lines in the United States and states that up to two-thirds of the rail lines in Canada are likely candidates for rationalization that could support viable short-line operations.

It's with these goals in mind that Bill C-101 has removed the requirement for the NTA approval of railway line sales and/or abandonment. Instead, a railway corporation would prepare a detailed plan that indicates which of the rail-line operations it intends to maintain and which it intends to sell, lease, or abandon within the next three years.

There is no requirement under clause 141 for the corporation to file this plan with the new Canadian Transportation Agency, any government department, any of its affected employees, or any other community stakeholder.

An expedited process is outlined in the next couple of paragraphs in our brief, but I moved down to the main point, which is that the ability of third parties to request a hearing before the NTA has been eliminated. Where there were difficulties under the NTA in the past, at least there was an avenue for third-party intervention; under the new act there will be no avenue for public input into the sale or abandonment of rail lines.

We feel that it's important for all stakeholders to have an opportunity to be heard in respect of the sale and/or abandonment of vital railway links within their communities.

Transport Canada seems to be convinced that the provisions of Bill C-101 will develop a healthy short-line industry, as previously mentioned, and retain rail services that might otherwise be lost. In a briefing document on the proposed legislation released in June, the department indicated that it believes short lines offer a great potential for revitalizing the sector and retaining service to smaller communities.

Conversely, on the other hand, in a 1993 NTA review commission report numerous obstacles to the growth of the short-line industry in Canada were listed.

It's quoted here that, first, there appears to be a lack of Canadian entrepreneurs ready to bid for available lines and a lack of venture capital to support those who are interested. Short-line operators might also be purchasing property that requires substantial investment to bring infrastructure up to acceptable standards.

This leaves our branch-line railways vulnerable to acquisition by U.S. firms. Make no mistake: U.S. short-line operators are no small business entrepreneurs, unable to afford what are referred to as the Cadillac wages, benefits, and other protections that workers receive from collective agreements. U.S. short lines are owned by multinational corporations with millions of dollars in assets and profits. Most of their acquisitions are made through leveraged buy-outs, and they typically operate short lines on a shoestring budget, making huge profits but putting little back into the lines' infrastructure and surrounding communities.

Through a loophole in the Interstate Commerce Commission regulations, they are able to buy a branch line as a non-railway entity. Thus, they are granted exemptions from labour legislation that would guarantee the workers protection under their existing collective agreements for a specific period.

One would have to ask: does not Bill C-101 set the stage or pave the road for similar activities against Canadian workers?

The ability to make a profit on the short lines is solely on the backs of employees, as there is no other, or limited, opportunity for savings that could be made elsewhere in the operation. For example, they cannot benefit from cheaper rates for supplies, parts, and equipment, which the large carriers can purchase through negotiated block rates or economies of scale.

Transport Canada also believes short lines enhance shipper service and encourage the development of more cost-efficient and service-oriented industry practices. There are certainly numerous examples on the States side, and some in Canada, where access becomes a problem and standards are not met. There are numerous examples where a person is actually left with less service, no service, or limited access to service, rather than the commercial viability of the particular line in point actually being increased.

It's a vicious circle for short-line railway workers. If the company's only way to make a profit is by concessions of its labour force, eventually the company will demand further concessions.

Again, an example that we see in the United States is that some short-line operators are now lobbying Congress to be exempt from paying into the workers' retirement plan. The precarious nature of short-line employment would extend even into workers' retirement if the companies are successful in their lobbying efforts.

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Again, we have impacts if short lines take a foothold in Canada. What happens to the employees who currently work on those lines? The average rail worker at CN and CP has worked most of his or her adult life on the railway. The average of seniority on Canadian National is 17 years and there are railway workers in remote northern Ontario communities with 20 or 25 years of service who can only hold jobs on the midnight shift because they have the least seniority in that particular district. Up to now, these employees have been protected under employment security and job security provisions. What will happen if there are no provisions, no protection, to ensure that these workers are dealt with in a fair fashion?

As we see in Ontario, they're currently going to change their Labour Relations Act to deal with the whole question of successor rights. They've laid a foundation regarding a piece of legislation that's going to sort of mould the process for a regulatory regime for short lines. In fact, Mr. Harris will be basically eliminating that particular protection away from workers in that province, probably before the end of the year.

Some protection for the existing workforce must be built into the legislation, be it successor rights under the Canada Labour Code or provisions under the proposed act to ensure that new owners negotiate with existing bargaining agents of the workforce. In effect, we have two examples. One is an example at ACR where we led a group of unions - there are currently nine unions. Wisconsin Central came and purchased that particular property. We now have one collective agreement on that property. We led the negotiations and they were drawn to a successful conclusion. So there are examples we've been involved with that deal with success stories regarding takeovers of lines that are going to be operated as a short-line entity.

The other example I would give - and a horror story - concerns a feed plant in Thunder Bay that Archer-Daniels-Midland purchased. They came in and basically have taken the collective agreement that was currently in place...and it's certainly not like a perceived rail agreement; this one was bare bones to begin with. They basically tossed the current collective agreement in the garbage, came through and eliminated all seniority rights, eliminated the pension, eliminated benefits. The only reason we have a grievance and arbitration procedure in that particular collective agreement now is because it was legislated. So if we want the Archer-Daniels-Midland example to come forth in Canada and that's the way we want to treat our workers, that's what will happen unless we provide some protection. I wish the consequence of the ADM takeover on no Canadian worker.

Deregulation and safety. One needs only to look at the deregulated trucking industry to be concerned over safety issues. One of the most noticeable impacts of the deregulation in the trucking industry was the concurrent drop in safety standards within the industry. Due to the deregulation, the industry became a shipper-driven market where shippers dictated freight pricing. Shipper-dictated pricing has driven down wages and the income of drivers while at the same time increasing permissible driving hours per day. This has contributed to increased driver fatigue and a hazard in long-haul trucking.

Most of you are probably aware of the inspections that were done this summer in Ontario, where 50% of the trucks on the highways were pulled from the highways because they didn't meet the Ministry of Transport safety regulations.

In the rail industry, the government downsizing industry self-regulation will have a direct impact on the ability of Transport Canada to maintain public safety. It is our fear that short-line operators will attempt to gain exemptions from key safety regulations provided in other railway safety acts. We share the concerns of the Canadian Labour Congress in their brief on the Canadian Railway Safety Act, October 1994, that the public interest is not served by the current regulatory process. It allows for regulation, development and enforcement of safety standards by the industry.

The Western Grain Transportation Act. The elimination of the WGTA subsidies will have the effect of deregulating grain transportation and production in Canada. Grain movements to ports will be market-driven as opposed to a legislative requirement to ship through Canadian ports in order to access the government subsidy.

What we fear is an increasing amount of Canadian freight being moved via the U.S. to destinations within Canada or offshore. With the elimination of WGTA subsidies, this will accelerate the north-south movement. A study conducted by the Northern Ontario Transportation Coalition warns that when the farmers start to pay the full cost of moving their grain to export position, the subsidized Mississippi barge route could attract Canadian grain exports away from the eastern Canadian rail and port systems.

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All rail routes to the U.S. gulf are also an option, because competition from barges keeps rail rates low. The catchment area for grain diverted to the U.S. gulf could extend as far west as Moose Jaw.

I'm not going to start to elaborate on whether in fact the Mississippi River system is subsidized by the government. We all know it is subsidized by the U.S. government. We're basically not going to be put on an equal competitive footing with the United States in that regard.

The impact of the elimination of the WGTA subsidy will only worsen if there are substantial gains in the value of the Canadian dollar. It will be felt not only by the carriers but also by the port of Thunder Bay and the St. Lawrence Seaway and all its workers.

In a staff report of the NTA review commission in 1992 it was reported that grain has an influence on railway profitability that is greater than that for any other commodity. In the case of the WGTA we've gone from a system where it was focusing on maximizing the return to the producer to something that's going to maximize the return of the railway. What I would ask is when we start looking at when we get a return for the Canadian public in having sustainable economic development and retaining the tens of thousands of jobs that go along with that effort.

There's a section in the next couple of pages of the brief that basically was clarified through early lobbying. Minister Young has indicated funding will not be cut for the railway companies, as indicated in our brief. But I think what's lacking is still that Bill C-101 has no process for third-party intervention. It isn't included in the bill. So in effect the funding hasn't been cut, but there's certainly no process to question if somebody decides to close the rail lines to provide public transportation in areas that are outlined in the brief.

In closing, we would reiterate on behalf of the members of the TCIU our concerns about Bill C-101. This legislation does not establish an integrated transportation policy that will meet the needs of Canadians as we head into the 21st century. While the United States has put the financial stability and restoration of its rail system at the forefront of its transportation policy, the Canadian government talks about an adequate network of transportation service at the lowest possible cost.

We would agree with the comments of the Northern Ontario Transportation Coalition that the NTA be amended to establish the sustainable economic viability of Canadian-based carriers as a specific objective of the bill. We are in agreement with the view and further submit that Bill C-101 should expand further on this national objective for those industries directly relying on Canada's transportation network, including rail, air, truck, and water.

The Acting Chairman (Mr. Hubbard): Thank you, Mr. Daniher.

Mr. McKinnon.

Mr. McKinnon: Thank you for your presentation.

I picked up on a couple of points I jotted down. My quote from you is not word for word...but I'll attempt to do so. You said any efficiencies or changes or improvements were on the backs of the employees - were perceived to be. I'm wondering whether or not that was an overstatement that could be or should be challenged to some degree, at least, as oversimplification, if nothing else.

Mr. Daniher: In the time that's allotted here, it's almost like a separate topic or category. We're an international union and we have numerous examples. We've represented literally thousands of workers on those lines. There was a loophole in the legislation that provided for them to buy the lines without having any regard for the collective agreements that were in place. In effect what we're seeing - and there are examples - is that they go in and they cut back on the labour component, take all they can out of it, and then they abandon it to the next function.

Mr. McKinnon: I agree with the thrust of what you're saying, but things other than just that must be involved here. Surely to goodness there may be changes in regulations that would reduce some of their costs as well: inspections that have proven over a period of time they still do meet safety codes, etc.

I'd just like to challenge you on that point, that there must be other -

Mr. Daniher: I would suggest the primary focus in our report was on what was going to happen to the worker, the employee who currently works there.

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The second part would be that even in this regulation - I just reviewed what Ontario was doing - when you go to a short-line system, you're not waiving the regulatory.... They're still going to have to meet, basically, the safety standards, and that's a big issue. The short lines that are in Canada today have to maintain their infrastructure. That was one of the points we brought out in our brief regarding the ability of Canadian investors to have the dollars available to invest in the infrastructure to maintain those standards.

I can't say for sure whether it was otherwise profit driven because there was regulation, but we know for a fact that our workers, the members we represented on those lines, suffered greatly. We don't want a repetition of that in Canada, and that's a point we're making in the brief.

Mr. Gouk: You talked about how loss of the WGTA will increase the potential of some grain traffic now going south. I presume that you are aware of the back-haul provisions that were done at Thunder Bay, where the grain was hauled into Thunder Bay, the WGTA was paid, and then the train took off with the grain again, going south.

Mr. Daniher: Yes, we were aware of it. In fact, the mid-Canada task force, which I currently chair - I was a sitting member at that time - lobbied the government extensively on that particular issue, because what we saw was an inefficiency. It also tied up rail cars needlessly. Currently we're not in a rail car shortage, but in the last couple of years we felt it was impacting on the productivity of the port because there was a shortage of rail cars because they were tied up in this sort of back-haul issue. So not only were we aware of it, but we also took strong action to get that eliminated. I guess they tried to eliminate that even prior to the elimination of the WGTA.

Mr. Gouk: Good. I commend you on it, because it was a stupid provision and I'm glad that it disappeared even prior to this happening.

I'd like to get onto the main point, where you talk of short lines and the problem of losing successor rights. I have to tell you that I do not support the concept of successor rights for short lines, the reason being that if you have successor rights, then you get into craft rules, or whatever the proper term is, where if you have a big organization, CN or CP, then you have enough people to cover any one job because there's enough of that job being required. If you have a 30-mile-long railroad, then it becomes very impractical to have people in all those categories. So, more than a change in wages, it's necessary to have a change in those craft rules in order to allow a person to do other types of jobs where it's just not practical otherwise.

If there are four different work descriptions, craft positions, but there's enough work for only two people, how do you remedy that if you can't basically renegotiate the contract or write a new contract based on that?

Mr. Daniher: It's sort of a twofold question.

One part is that there has to be some maturity within the bargaining relationship to understand that somebody who's going to come in on a successor relationship isn't going to do it if in fact they think they're going to get bombarded with some sort of feather-bedding provisions or these types of things where if there's work for two people, you have to have four on. It simply is not going to be economically viable to do that. In effect, if you want to maintain the jobs within that current area and what not, then people are going to have to recognize that fact and work with the purchaser, and I think that can be done through a negotiated settlement.

We have an example in the ACR where they've dealt with those types of issues. It's a competitive world, and you have to deal with the realities of how you're going to service that customer and be competitive. At the major rail lines we see that they want to abandon a lot of trackage because they can make more profit by running just main lines within the country. I think that if you really started to analyse that in detail, people would view it as.... They always say that there are all sorts of inefficiencies because if you buy something that has successor rights of that particular provision of that contract in place, then you're stuck to that. That isn't necessarily the case.

I think there's little or nothing to draw on. It's always used as an excuse. It's always used as a political tool, but in actual fact through experience....

I think the UTU just has had an example with some Quebec lines as well, where the company was talking about privatizing them and they've sat down and worked out a feasible way to deal with those types of what some people might view as archaic or inefficient work rules and in fact have reached some agreements.

I know that our ACR agreement is like that, and in the grain industry, where I deal, we're dealing in a changing environment on a day-to-day basis. Even with a mature bargaining relationship, we're still making changes within our relationship that deal with meeting customer needs and making us more productive so we can share our sustainability for the future.

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Mr. Gouk: I don't have a concern with the employee group and the employer. That's between the two. The problem is an abandonment or a potential abandonment situation, which then affects the communities and all the things pertaining to that.

Within my own riding in British Columbia, which is one of the three provinces that have successor rights at the moment - and will probably be the second one to lose it in the next little while, I suspect - I have had two abandonments, one in my riding and one partially in my riding. In both cases there were experienced, knowledgeable railroaders interested in buying that line, and in both cases they walked away - not wholly but in part - because of the successor right provisions.

There were other provisions that were problems, and you've addressed them in here. There other factors like taxation policies, fuel taxes, property taxes and so on. As for successor rights, in both cases they told me directly those rights were a problem while these negotiations were ongoing.

An alternative is these internal short lines. Frankly, when I first heard about it I thought the unions would be up in arms. I was surprised to find them readily agreeable to it. It was not an unqualified acceptance, but they were certainly agreeable.

My concern is a situation where the railroads say they're getting out of that line, where they say either somebody buys it or they're simply going to rip the track out. I want to see that line operating. That's my bottom line. If the people who might buy it say they cannot or will not buy it - and frankly from a community perspective it doesn't matter which because of successor rights and the inherent contract that we bring in - I have to look for some kind of alternative.

We had union groups before us last week. I asked them how they would feel if we put an amendment in - and I don't know how it would be worded yet - where we talk of the process for a railroad to offer their line for sale before abandonment. They have to put it up publicly. They have to deal with anyone who makes an offer. If they get no offers that they want to accept, then it has to go to - depending on the jurisdiction - federal government, provincial government or regional government.

So what if there were a provision that said before it goes and it's sold, they also have to go at some point to the union so they can either be signed off on any interest in the internal short line or to have that negotiated process similar to what they would with a purchase offer for development of an internal short line. So the unions would be in the loop and would have the opportunity to do that. Would that be a solution in this area for you?

Mr. Daniher: Do you mean that the unions would in fact become a purchaser of the line or just sit down as a straight -

Mr. Gouk: No. I mean the same way it's been done in the past.

Let's say it's CN. It still belongs to CN. It's operated by CN employees. They are still employees of CN, but they agree to the fact that the alternative is that this line is getting sold - and there are some of these in place - and they write a new contract for that specific line. The workers who are working on that line work for that specific internal short line. So there are changes in the contract, but it's an alternative to losing the line and losing the jobs for union employees.

Mr. Daniher: Exactly. It brings the point forward that everybody should be concerned even if they're not going to work on a line, because it's going to go out of feeder. If they abandon a line and start hauling everything by truck, that feeder line is lost. That's going to affect their jobs in the long run in any case but will definitely affect someone working in some sort of a community in which he's worked all his life. An alternative for them isn't going to be....

We have people on our employment security who have to move across the country to protect their work. If there were some other feasible opportunity for them to stay within their community where their family is, where their base is....

Mr. Gouk: So you think the concerns you've raised would be basically alleviated if we put some kind of provision in there to include an opportunity for an internal short line with the existing unions before that line could actually be abandoned.

Mr. Daniher: I think that would be part of a process and would provide an outcome, but it certainly would fall far short of providing protection as far as what's currently in place. With successor rights you have a bargaining position to come up with that. As I said, if we get into -

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Mr. Gouk: For example, I understand that since successor rights have been brought in there has not been a successful purchase of a short-line operation within Ontario. There have been some where people have looked at it and then simply walked away, primarily - or so they claimed, at least - because of successor rights.

The Acting Chairman (Mr. Hubbard): I'm going to have to move on from this point now. I think I've actually gone a little bit over your time and I'm sorry.

Mr. Nault, do you have any questions?

Mr. Nault: No, I don't.

The Acting Chairman (Mr. Hubbard): We'd like to again thank our witnesses for coming and presenting.

Mr. Gouk certainly raised a point that we have to consider. We've asked those questions when the railways have been here and I know that the rights of employees in the past sometimes haven't been that well looked after with some of the dispositions of railways and railway properties. We certainly will consider that, and we'd like to thank you for coming and bringing this and other points to our attention.

Mr. Daniher: Thank you.

The Acting Chairman (Mr. Hubbard): The committee will stand adjourned until 3:30 p.m. tomorrow in room 209, west block.