[Recorded by Electronic Apparatus]
Thursday, November 9, 1995
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[English]
The Chairman: Colleagues, good morning.
This meeting is in consideration of Bill C-101, the Canada Transportation Act.
We welcome to the table this morning representatives of the B.C. Federation of Agriculture: Jake Janzen and Judy Thompson, the vice-president.
Good morning and welcome to the committee. What you'll be giving us of course is your submission, and that submission is recorded in the minutes of this committee and available to any member who wishes to get caught up to speed on your presentation.
We appreciate the time you've taken to be with us today. We look forward to your submission of 15 minutes or less so that we can have some time to ask questions of you, Mr. President and Madam Vice-President, and your organization. Proceed when you're comfortable.
Mr. Jake Janzen (President, British Columbia Federation of Agriculture): Thank you very much for accommodating us on rather short notice.
You have our presentation. I want to go through it highlighting a few things, and you can read it for yourself.
We are here as B.C. Federation of Agriculture people, but we're also representing the Feed Freight Assistance Board, which is a provincial organization organized under the auspices of the B.C. Federation of Agriculture specifically for the purpose of addressing how feed freight assistance adjustment funds can be applied without them going directly to producers in order to buy, for instance, some long-term benefits to sustain the agricultural industry in British Columbia.
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The livestock industry is very significant to B.C., even though in Canadian terms it is a relatively small industry, being about 6% of Canadian agriculture.
Like other provinces with relatively small grain producing areas, British Columbia's problems in the new world have been accentuated by the fact that the agricultural safety net fund, or budget, has rather inequitable applications at the moment, primarily because many of the safety net programs, such as gross revenue insurance, crop insurance, and advanced payments, have little application in British Columbia. Consequently, B.C. currently receives about 2% of the safety net budget, whereas its production is 6%. This simply accentuates the fact that we have to be more than diligent to ensure that we stay in business.
B.C. currently has about a 50% net self-sufficiency in food production and currently the province is pursuing an agrifood policy whose goal is that we rise above that, not only for the purpose of achieving greater independence but because agriculture in B.C. is perceived to be very much part of the social fabric of the province.
The thing of note for British Columbia is that it must not only be competitive in general terms, it must compete in order to survive, particularly with production in the prairie provinces. Consequently, we're concerned about the discrepancy between export freight rates to British Columbia as opposed to domestic rates. We are suggesting that in the act, where carriage of grain refers to a port in British Columbia for export, the reference should in fact be carriage of grain to British Columbia, particularly considering that the maximum rate to Thunder Bay is for all grains, export and domestic. That seems to be an inconsistency, with export grain moving to Vancouver at a different rate from domestic production.
The federal government has determined that export grain shippers who have lost the Western Grain Transportation Act need the protection of a maximum rate scale. Domestic grain shippers who have lost feed freight assistance probably need this protection, especially given current circumstances, almost more than the grain producing areas, principally the prairie provinces.
We should note that when feed freight assistance terminates at the end of the year, the freight rates for British Columbia users will increase 50% or more. It is a dramatic increase.
In our view, the higher domestic freight rate is a direct disadvantage for British Columbia producers in competing with Alberta livestock producers. This is crucial to the industry. It is in our view an advantage to railways, because unlike the maximum rate for export grain, the domestic rate is left to their discretion, given that competitive forces do not really exist. Therefore, the livestock production sector, the domestic use sector, is pretty vulnerable to the wishes and goals of the rail system.
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Finally, it is likely a disadvantage to the grain sectors on the prairies, because present circumstances will reduce the use of grain in British Columbia, which in essence is an export market for the prairies and a domestic market for Canada. So we view this discrepancy as almost a deliberate disadvantage for livestock producers in British Columbia.
Then there are the trade implications. The federal government in the past supported the concept of eliminating the western grain transportation subsidy because of the GATT concept under internal transport and freight charges on export shipments provided by or mandated by government on terms more favourable than for domestic shipments. We think that the application of a maximum rate only to export grains clearly is just as much a trade difficulty as it was with regard to having to remove the western grain transportation subsidy.
To conclude, before Judy tells you a little bit about the island, which is kind of unique in British Columbia, it seems to us that during a period when the major thrust for the federal government is to create jobs, it is very logical that discrimination against domestic and value-added production should be avoided at all costs, particularly when it can be achieved at no financial costs to government.
There is no difference in Canadian grain destination for domestic use versus the export market, insofar as both types of grain move on the same rail system, use the same types of rail cars and go through the same handling system. Yet a 50% premium is being charged by rail companies for the movement of grain slated for domestic use. So we would strongly urge your committee to recommend that this difference be equalized and that a maximum freight rate be established on domestic grain movement to British Columbia.
Having said that, however, there may be other options for addressing this issue, and we would be happy to pursue them with you after Judy gives her presentation.
Ms Judy Thompson (Vice-President, British Columbia Federation of Agriculture): Thank you.
I am a poultry producer on Vancouver Island, and right now there are 31 of us there. We produce about 10% of B.C. chicken. Other livestock commodities have similar amounts. Right at the moment, in view of the way my industry is running, I'm breaking even.
In December I'm going to be facing an increase in feed costs. There's a $25 feed freight assistance to Vancouver Island. There's just under $10 to the mainland. Two things are going to happen. First, my costs for feed are going to go up, and I am not capable of adding to my price to get that back from the marketplace. I'm also not going to be competitive with my own mainland, and that is going to cause perhaps the destruction of the industry on Vancouver Island.
Quite naturally, we're looking for ways in which we can offset this very great $25 fee difference that's going to happen.
One of the things we have to address is this difference in export and domestic rates for B.C. That has the potential of helping. There is also the feed freight assistance program, and if this domestic rate change to export rates is done there will be a greater amount of that money that will also be able to come to my island and help its very great difference in feed freight costs.
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There are a lot of growers on the island who are right now basically on the edge of staying there or not staying there. I have suggested to my industry that we're somewhat like a canary in a mine shaft, and they should be worried because we're coughing. We should be telling our industry that their primary producers are in trouble.
I suggest to you that Vancouver Island is a bit like that for Canada. If Vancouver Island isn't going to be able to survive, will the rest of Canada be able to survive under similar conditions?
This inequity between the domestic rate and the export rate is an easy fix, and I suggest to you that it's one you should make. The survival of my industry on the island is important enough to take that equity into place.
I understand there is also a capping on the export rates. I suggest to you that if you cared enough to do that for exports, you should also care enough to do that for the domestic rates.
We're looking for ways to help these very, very increased rates that are going to come to us in December. This is one of the ways; it won't be the only one. It isn't a total fix, but it is a partial fix and a very necessary fix.
Mr. Janzen: The only thing I wanted for us to pursue is the concept that obviously somebody has negotiated with the railways for an export rate into Vancouver. I suspect government has had quite a lot to do with that.
There could also be the possibility that a domestic rate be negotiated with railways that might even be somewhat higher than the export rate to Vancouver, but it could perhaps result in the same net benefit for producers as would an equal rate. This is for the simple reason that in all likelihood, there would have to be some kind of distribution investment from the lower mainland area to producers in order to benefit from the same rate, simply because Vancouver is not the best place to land grain for domestic use. Obviously that's going to cost some money, and the committee is considering expenditure of some of its feed trade adjustment fund on such a venture. However, if it can be avoided and we can get a lower rate without those investments, then we'd be interested in that.
The Chairman: Mr. Janzen and Ms Thompson, thank you very much for your submission to the committee. We appreciate it.
I'd like to turn to questions now. Mr. Mercier.
[Translation]
Mr. Mercier (Blainville - Deux Montagnes): Mr. Janzen, can you tell me whether there are any regulatory or legal constraints imposed by GATT or NAFTA on the transportation of grains for export?
[English]
Mr. Janzen: The submission, on page 5, the second-to-last paragraph, says:
- That agreement clearly defines an export subsidy as `` - internal transport and freight charges
on export shipments, provided by or mandated by governments, on terms more favourable than
for domestic shipments.''
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[Translation]
Mr. Mercier: I wanted to know if there were any regulatory provisions in NAFTA or GATT.
[English]
Mr. Janzen: Regulatory provisions under NAFTA or GATT - well, the same thing really. Export subsidies are not considered GATT-acceptable. Now, I've been told by a federal person that this is probably not a subsidy because it's simply a lower freight rate. But it is mandated by government and it is different from the rate for domestic use. Therefore, we clearly think there are trade implications with this discrepancy in place.
[Translation]
Mr. Mercier: Do you think that this provision might be attacked by the GATT tribunal?
[English]
Mr. Janzen: Yes.
The Chairman: Mr. Chatters, did you have a question?
Mr. Chatters (Athabasca): It's not really anything specific. It just doesn't surprise me that domestic feed grain going east qualifies for the rate cap while grain moving west doesn't. That's been the history of grain movement in western Canada for many, many years.
I support your position that it's grossly unfair that it would apply one way and not the other. If there's going to be a rate cap for domestic feed grains anywhere in Canada, it should apply everywhere in Canada. That only seems reasonable to me. I can't see where anyone could argue with that.
But I think I understand your presentation well and I don't think I have any questions specific to that.
The Chairman: As a supplementary, Mr. Janzen or Ms Thompson, whoever can answer, in this particular bill we are dealing, as you are well versed in, with the export commodity. For domestic purposes, have you or your organization or even those chicken producers on the east coast of this country gone to the federal Minister of Agriculture and Agri-Food and sat down with him to try to negotiate something outside of the dictates of this bill?
Mr. Janzen: With respect to freight rates?
The Chairman: That's right.
Mr. Janzen: We have gone to him with the same concept we're presenting here.
The Chairman: When did that meeting take place?
Mr. Janzen: Approximately two weeks ago, three weeks perhaps.
The Chairman: Thank you, Mr. Janzen.
Mr. Hubbard (Miramichi): Just to clarify, you're saying before us that the domestic rates and the rates for export on a basis of per tonne-mile should both be serviced by the same cap.
Mr. Janzen: That's right.
Mr. Hubbard: Have you studied the cap in terms of present costs? There might be concerns that the cap will become the accepted rather than the maximum rate. Do you have concerns along that line, that the cap will become the accepted rate and it will be detrimental to what the present rate is?
Mr. Janzen: We don't hold out any hope that the rate will be any less than the maximum cap.
Mr. Hubbard: So you're saying that for the next five years, I guess, the cap will be accepted. Is it higher or lower than the present rate in terms of grains going to, let's say, Vancouver Island or the British Columbia mainland?
Mr. Janzen: We're not really aware of what the export rates have been in the past. There was, of course, the western grain transportation subsidy involved. But at present the maximum rate for export grain to Vancouver is approximately $10 lower than the domestic rate charged by railroads for domestic use.
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Mr. Hubbard: I still am not clear, though, in terms of Ms Thompson's concern about what it's going to cost her to maintain her poultry operation. Is the maximum rate in this legislation above or below your present cost plus whatever the subsidy is the governments are putting up?
Mr. Janzen: It's about the same.
The Chairman: Mr. Comuzzi.
Mr. Comuzzi (Thunder Bay - Nipigon): Just for clarification, Mr. Janzen and Ms Thompson, the wording you refer to in clause 147 has a remarkable similarity to the wording in the free trade agreement with the United States. You bring up a very good point that I had not considered. In the free trade agreement any type of grain that moved to the west coast for domestic use was not subject to subsidy, but grain that moved east to the port of Thunder Bay was subject to subsidy.
I know I'm not clear in this question, but did you consider the free trade agreement when you were reviewing this? This clause you're referring to is remarkably similar to that section in the free trade agreement.
Mr. Janzen: We're just concerned that not only the B.C. livestock industry but Canada generally is going to have difficulty with trade agreements if we have these kinds of discrepancies in export and domestic rates.
Recently I did talk at some length with Howard Migie, who is fairly informed about trade issues. For one, he says he has always supported the idea that domestic and export rates in Vancouver should be the same from a trade perspective. However, his contention is that there are also those kinds of discrepancies in the U.S., namely the Mississippi area versus other areas.
Mr. Comuzzi: Is the product you're referring to, the chickens and the livestock, for domestic consumption or do you export it?
Mr. Janzen: It's primarily for domestic consumption across the board, and we can't deal with specific commodities. B.C. is approximately 50% self-sufficient in food production, more in some commodities than others. Essentially it is for domestic product. However, there is a growing export market in specialty products, especially in the meat sector, particularly to Japan and Asiatic countries.
Mr. Comuzzi: Thank you.
The Chairman: Thanks, Joe.
Our thanks to the B.C. Federation of Agriculture for your presentation to us this morning. Thank you both.
Mr. Janzen: Might I just ask a question of you, Mr. Chairman?
The Chairman: Certainly.
Mr. Janzen: We're asking here for the rate to be the same. What we really want is a lower rate, of course. That's the issue. Is there any process whereby instead of dealing with this through the act we could deal with this as the railways did?
The Chairman: That was my original question to you by way of the supplementary to Mr. Chatters, asking if you had gone to the Minister of Agriculture and said this is what we want. What was his response to you?
Mr. Janzen: We haven't had a response.
The Chairman: I think he's the man to press. I would say you should take your suggestions and submissions to him to try to work another street on the issue.
Mr. Janzen: Like the railroad?
The Chairman: Exactly.
Mr. Janzen: Thank you very much.
The Chairman: Thank you. We appreciate your time.
We call to the table representatives of the Canadian Cable Television Association. Good morning, gentlemen.
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Ian Scott is vice-president of telecommunications and Peter Neilson is director of government and industry communications at Shaw Communications. They are from the Canadian Cable Television Association.
We look forward to your submission. Hopefully you'll give it to us in fifteen minutes or less so that we can ask questions of you about your organization. Thank you.
Mr. Ian Scott (Vice-President, Telecommunications, Canadian Cable Television Association): Thank you, Mr. Chairman.
Good morning, members of the committee. My name is Ian Scott, as the chairman indicated. I'm the vice-president of telecommunications for the Canadian Cable Television Association. With me this morning is Mr. Neilson, who's director of government and industry relations.
We do indeed promise to be brief this morning, and we appreciate the opportunity to appear before your committee.
The CCTA represents 694 federally licensed broadcasting distribution undertakings, which collectively provide cable television service to more than seven million Canadian households. In addition, we have close to 150 associate trade and service members, including virtually all of the Canadian-licensed pay television, pay-per-view and specialty services.
We intend to address only two issues this morning.
Let me introduce Mr. Neilson and ask him to make a few short comments.
Mr. Peter Neilson (Director of Government and Industry Communications, Shaw Communications, Canadian Cable Television Association): Thank you.
As stated in our submission of September 20, there are really only two principal issues the CCTA wants to raise to the attention of this committee. Those are the levies charged by the railways when cable operators cross their rights of way and also the absence of any long-term protection afforded to the cable operators whose cables cross the rights of way when the railways decide to sell or transfer ownership of those lands.
Cable companies in Canada have virtually thousands of crossings, as do other utilities, such as telephone, hydro and gas. I'm sure you've heard representation from those industries over the last few weeks and months.
In fact a lot of our cable plant that crosses railways crosses in conjunction with other utilities and uses their own supporting structures to either install our cables or attach our cables to them.
When we cross railways, we typically have to spend a lot more time and a lot more money on doing our railway crossings. We have to adhere to the railway's criteria; quite often the rights of way, which would be the province's, the region's and the municipality's; clearances to other utilities; and our own technical requirements. The end result is that a utility or cable line crossing a railway is a much more expensive undertaking than just going down the street or through the country.
The feeling of the industry is we're already paying an awful lot of money to cross the railway right of way, by virtue of the physical installation of the plant, and we don't really see the rationale for charging us a right-of-way fee or excessive administrative costs to do that. We don't believe that's really necessary.
The cable industry is not asking for a free ride. We're certainly not asking for the railways to pay costs out of pocket as a result of our crossing their rights of way, but certainly they should be charging no more than their reasonable costs directly related to our crossings.
You already heard from others such as Stentor with respect to National Transportation Agency orders and rulings that state the annual documentation fees and payments to the railway companies are not warranted when no appreciable damage to the lands of the railway company is demonstrated.
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I'm not going to get into all the previous orders and talk about that. The CCTA certainly agrees with the submissions of Stentor and the Canadian Gas Association, and we're fully in agreement with the position stated on this matter.
The CCTA respectfully requests that Bill C-101 in some way be amended to prohibit railway companies from charging utility companies rental or administration fees where a utility plant is placed across railway rights of way. More specifically, we ask that railways not be permitted to charge those companies using railway crossings any more than for the reasonably directly related costs associated with that crossing.
The second issue we raised in our written submission was the concern about secure access. Maybe the best way I can illustrate the difference between the railways and how we're accustomed to being dealt with on a right of way is when a municipal road authority will dispose of a road allowance. Typically they'll notify all the utilities that have plant on that right of way that they're going to close the road allowance or sell it, either to the adjacent property owners or somebody else. Before they sell that land, they give the utilities an opportunity to be granted an easement, which gives them secure right on that land to continue to provide the services they've been providing, in some cases, for decades. Typically the municipality will assess the cost of doing the survey and any documentation or registration of any easements that are granted to the utility. That's all.
Unfortunately, we're finding that the railways are asking for more than that. If and when they agree to give us that extended right prior to selling the land, they are often asking us for market value of that land. Again, this is for existing utility plant that has been there a long time, decades in some cases, providing service to Canadians.
The CCTA respectfully requests that Bill C-101 be amended such that the sale of a railway right of way will be subject to a continued use of all existing utilities, and further, that if the sale of a right of way is not to a party whose actions are governed by Bill C-101, the utilities will be granted a registrable easement prior to the sale of the right of way.
The Canadian cable industry certainly intends to play an ever-increasing role in the provision of telecommunications services in this country. As telecommunications becomes a more integral part of business and social life in this country, we will need to be able both to install and maintain our cable plant in as efficient and economic a manner as possible to ensure reliable and reasonably priced services to Canadians.
The CCTA recognizes that these issues and our requests may not appear to be of equal importance to some of the other issues that have been raised before this committee. However, the ability for cable operators to continue providing secure and reliable service to Canadians will be affected by your actions.
For our part, we will continue our discussions with the railway companies in the hope that as a result of interest expressed by the CCTA on these related issues, the railways will agree to more reasonable arrangements.
We greatly appreciate the opportunity to make this presentation today and look forward to any of your questions. Thank you.
The Chairman: Thanks, Mr. Neilson and Mr. Scott, for coming to the committee and for your submission. We've heard a couple of others that are like-minded, though maybe not this specific in the request on the amendment.
As a point of information - and I have asked this of the others that have come before us on the same issue - how much does the Canadian Cable Television Association pay for these rights of way on an annual basis?
Mr. Neilson: Mr. Chairman, I'm afraid I don't have, as others may not have had from an association perspective, what the aggregate cost is or the charge paid by the -
The Chairman: They all gave us a ballpark.
Mr. Neilson: Well, I would venture to say that the crossing rates vary from $50 to $1,000 a year, and there are thousands of railway crossings. So we could probably say there are maybe hundreds of thousands of dollars a year in just the crossing fees.
There are other fees that go along with this, like the fees we have to pay them to process an application. We don't have any room to bargain with these people when we're submitting an application. We have to pay the fee they prescribe. Recently some of the railways have been talking about a $1,500 fee for that. I'm not confident that all of the various parties who want to cross over their right of way are being told that the fee for a permit, or the rental fee shall we say, is the same. I think there's a variance there.
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The Chairman: Negotiated, yes. Thanks, Mr. Neilson.
Mr. Hubbard: Are each of these crossings documented, and are there long-term arrangements that for specific point one, there is an annual five-year rotating lease, or how -
Mr. Neilson: Typically the situation is that every crossing, there is an actual contract, a railway crossing or a wire-crossing agreement. In that agreement are numerous terms and conditions, one of which is the term and one of which is the rate. Quite often they'll run for a five- or ten- or twenty-year term. But there's a provision in the agreement that in some cases will give the railway a 60-day notice period to tell the utility, or the cable company who's crossing, that they have 60 days to get off.
As you can imagine, the entrepreneurs who were building the cable industry over the last 40 years would have signed any agreement in order to get that cable out, just have other utilities, to provide service to the people of this country.
Mr. Hubbard: On page two at paragraph three you say `` - that Bill C-101 be amended such as to prohibited - from charging utility companies rental or administration fees - ''. You want all these fees -
Mr. Neilson: We certainly don't understand why there is a requirement for a cable company, or for that matter any other service provider, to pay a rental fee as a result of us crossing that line. Most of these crossings, certainly in urban areas, are where the utility plant, in this case the cable plant, is going down a street. It could be attached to the hydro or telephone poles, or be buried under the ground. Streets and railway lines intersect.
Mr. Hubbard: You're suggesting, though, that these fees should be done away with. Is that what you're saying in paragraph three?
Mr. Neilson: Yes, it is.
Mr. Scott: With the exception of when costs are incurred by the railway in the course of providing access. If they do indeed incur costs, those reasonably should be recovered, but they should not be able to charge when no costs are incurred.
Mr. Neilson: This is completely consistent with orders from the NTA as a result of applications over the last several years by phone and pipeline companies who have gone to the NTA and said we don't like this arrangement for this particular route; we don't like this whole thing any more, and we're going to object to it by filing applications.
Mind you, that takes an awfully long time. If you're in a hurry to get your plant built -
Mr. Hubbard: You're saying to this committee, though, that annually in the past you've paid fees to the railways, and that you want these fees done away with.
Mr. Neilson: Yes.
Mr. Scott: Where they incur no costs.
Mr. Neilson: Yes, like the rental fee.
Mr. Hubbard: Now, you have one of the most lucrative groups of financial companies that deal in communications in this country, and you're suddenly asking the railways and those that may get rights of railways to do away with those crossing fees you historically have paid. Is that a realistic request to make to a government or to a -
Mr. Scott: Again, I'm not sure, when you say the cable industry is one of the most lucrative groups of companies - I mean, our rates are subject to regulation just as are those of the railways.
Mr. Hubbard: I'm not wanting you to defend that, I'm just asking if it is realistic. For example, most people in this country pay more for your service than they do for their telephone service, yet you come to us and ask us, as legislators, to give you more benefits, to make more money. Is that realistic? Yes or no.
Mr. Scott: With respect, I think it is realistic -
Mr. Hubbard: Okay, thank you, then.
Mr. Scott: - to ask that we be charged only for services for which we receive some service.
The Chairman: I guess, Charlie, it's the age of à la carte fees. I find it interesting that cable's here asking what it's asking, and yet with cable companies, if I want to have pay-TV movies come into my house, I have to go rent a box that sits on my TV just so that the paid movie comes into my house. Wouldn't you think the box would be free? At any rate, it's an argument for another day.
Mr. Nault.
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Mr. Nault (Kenora - Rainy River): Mr. Chairman, I want to focus a little bit not so much on the fee for easements but on the issue of abandonment of rail lines. I think it would be interesting to have - [Technical Difficulty] - from being a railway to a non-railway. When it becomes a non-railway, do we still, in your mind, have the obligation under this act to suggest that this easement carries forward, or has that become a provincial jurisdiction?
Mr. Neilson: Depending on who acquired the abandoned railway right of way - it could be a rails to trails, it could be an equestrian club, it could a provincial or regional government or a whole host of different public or private sector groups - I would doubt very much that unless they were performing some transport function, i.e., another railway, they would not fall under the jurisdiction here.
The concern isn't that we are asking for a registrable easement today. We realize there's a process that, again, would require effort and expense, and needless expense shouldn't be made. So we're saying in the event that the railway lands, the right of way, will cease being used for the purpose of a railway or other transport and will be transferred into the hands of some organization that will not be regulated by this legislation, then we would ask that the railway grant us that easement. Again, the costs of doing so would be borne by the cable company.
Mr. Nault: I understand that, but the question I'm trying to get at is that jurisdictionally speaking - I can understand the argument and question of registered easements from transferring from, for example, a class one railway to a short line, and that there be a registered easement to make sure when the short line buys it off of CP or CN or somebody else you still have the abilities to continue your easement. But I guess I'm having difficulty accepting the argument that once that no longer is railway land, we have the right to force registered easement on a piece of property that is no longer used for railway purposes.
Mr. Neilson: I don't think that would be the case. Once it's been transferred, it's too late. So the idea would be to have it done just prior to the transfer of ownership of the land; the easement is registered and the land is transferred from the railway to somebody else.
Mr. Nault: Okay, but the question I'm asking as a follow-up to that is whether this is the wrong jurisdiction of which to be asking that question. Should you not be asking that to the province to have some form of registered easement on abandoned lines that become something other than a railway?
That's where I'm coming from. I'm just trying to figure out the process. I don't think we have the authority to do that under this bill.
Mr. Scott: I understand the question. I think - and I am not a lawyer - the authority would lie with the vendor. It would be properly within your jurisdiction while it is still subject to federal regulation. If it is done before the land is transferred, jurisdictionally that shouldn't be a problem.
We could undertake to look into that issue and provide you with a further answer.
Mr. Nault: Could you?
Mr. Scott: Yes.
Mr. Neilson: Just to add to that, I know in Ontario the various utility service providers - telephone, gas, cable, hydro, etc. - have been working with the provincial government. They have an interministerial committee on abandoned railway rights of way. The utility sector has been involved in discussions and in expressing their concerns about what happens when a rail line is abandoned and an alternative use is applied there. So there have been discussions.
Again, it would seem that as long as the land is in the ownership of the railway, the requirement for an easement would fall under this jurisdiction.
Mr. Nault: But there has been no legislation by any of the provinces dealing with lines that were abandoned and turned over to other uses for the protection of utilities and the utility easements there.
Mr. Neilson: Not that I'm aware of.
Mr. Nault: Okay. Thank you.
Mr. Comuzzi: Is what I'm told correct, that when you negotiate with the railway for an easement you don't register that easement against title?
Mr. Neilson: Typically the railways will not grant you an easement, period.
Mr. Comuzzi: Then how do you go through?
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Mr. Neilson: You sign a contract with them that's called a wire-crossing or a railway-crossing agreement. It has terms and conditions in it. If you want to cross, you sign it.
Mr. Comuzzi: So it's a calculated business risk the cable business takes dealing with another entrepreneur. It's a calculated risk. Why are you asking us to interfere?
Mr. Neilson: We have to provide service when it's requested by people in a licensed area. We may not have a choice. It's pretty hard to go around a railway. You have to cross it sooner or later and that's the concern. We don't have -
Mr. Comuzzi: No, no, but you're not going to the tip of the argument. The tip of the argument is that you made an application to provide service. You knew you were going to have to do some things with easements and cross certain properties and so on. You took that into consideration when you applied to the CRTC for approval. Now you're coming to this committee and saying that you did that, but you really don't feel comfortable with it now and you want some more protection through this committee that you couldn't get through the CRTC or the railways. That's basically what you're asking.
Mr. Scott: We're asking to be guaranteed fair access to a facility or bottleneck that's beyond our control, just as -
Mr. Comuzzi: But you knew that going in, Mr. Scott. You knew that at the outset when you made the application for a particular territory. You knew the risks involved. Am I correct?
Mr. Scott: If you term it a risk, you are certainly -
Mr. Comuzzi: There's always a risk.
Mr. Scott: - aware that you'd have to extend service. You make a commitment to extend service to all the customers within the serving area -
Mr. Comuzzi: That's right, but you took on that undertaking and that responsibility at the outset, whenever you got your licence or whatever you had to do in a regulatory manner to get the approval to be the cable provider in a certain area. Is that correct?
Mr. Scott: As does any utility.
Mr. Comuzzi: Right, and you knew very well at that point that you would have to traverse some lands that didn't belong to you.
Mr. Scott: We would have to cross railway crossings, yes.
Mr. Comuzzi: What you're asking us to do now through this committee is to alleviate that problem you faced at the outset. You're trying to get in the back door what you couldn't get in the front door.
Mr. Scott: The issue was not at issue in the licensing process. We, like other public utilities, are simply asking for fair treatment.
As Mr. Neilson suggested, there have been a number of cases or complaints brought to the National Transportation Agency with respect to the reasonableness of this approach. We think it would be a more efficient and fair method to deal with it to effect change through the legislation rather than on a piecemeal basis before the NTA.
The Chairman: Thank you, Mr. Comuzzi.
Seeing no other questions, I thank you for your submission to the committee and for coming today to let us know the opinion of the Canadian Cable Television Association.
Mr. Scott: Thank you for the opportunity.
The Chairman: Finally, colleagues, we invite to the table Mr. Frank Collins from KPMG Peat Marwick Thorne.
Welcome, Mr. Collins. I understand you have not a written but an oral submission for us today. Could we keep it under fifteen minutes so that we can ask questions of you, sir? Thank you.
Mr. Frank Collins (Partner, KPMG Peat Marwick Thorne): Thank you, Mr. Chairman. Good morning, ladies and gentlemen.
I do not have a written paper. I am speaking from notes here. What I'd like to do is speak for five or ten minutes and then invite you to ask me any questions you like.
If I may, Mr. Chairman, I'd like to tell you just a little about myself so you'll know where I'm coming from in making my remarks. I spent virtually my entire career in the transportation industry as a transportation specialist with my firm, KPMG Peat Marwick Thorne. In that career I worked with carriers, all modes. I worked with shippers. I worked with regulatory bodies and policy bodies. I think I've seen most sides of this picture.
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I did have some involvement in the framing of the National Transportation Act of 1987 and I was very fortunate to serve as a member of the National Transportation Act Review Commission several years ago. That was a very important experience that has shaped many of my views on Bill C-101. And I did spend a little time as a special adviser to the Hon. Doug Young, especially in railway matters and development of his transportation transition plan.
It's from that background that I'd like to give you my perspective of Bill C-101 and the context in which it resides.
I would say from the outset that I think this is a sound piece of legislation. I think it's timely. I think it's necessary. I think it strikes a reasonable balance between the competing interests of shippers and carriers.
I'm going to focus, if I may, mainly on the railway clauses of the bill because I know them best and because I think they are the most controversial, but I'd be happy to entertain any question you have on any other part of the bill.
When I began my career in the early 1960s, MacPherson had just finished his seminal work and as you know, that led to the National Transportation Act of 1967. That was our country's first cut at deregulation. It's important - and I think you know this - to realize and remember that prior to that, the railway industry was very tightly regulated, so tightly regulated for so many years that it created a mindset that carried on for generations really.
The step we took in 1967 was a big step forward. Then around 1980, as you also know, the U.S. leapfrogged ahead of us with massive deregulation, with the Staggers Act, with the Motor Carrier Act. This kind of upset the apple cart.
The immediate problem was that the Canadian railways were at a disadvantage in relation to U.S. railways, and they started to complain. When that process commenced, shippers in Canada also got on the bandwagon. They had their own agenda, because some of them were hurting rather badly under the National Transportation Act of 1967. The shipper relief mechanism built into that act, as you probably have heard many times, was a very imperfect mechanism. As a result certain shippers, particularly captive shippers, were really hurting.
When we got into the development of that act, the NTA, 1987 - I mentioned I had a certain involvement - our firm was involved in conducting a couple of major research studies related to the rail side of the act. One of those studies looked at the U.S. experience in deregulation and its relevance to Canada. The other one looked at the comparative U.S. versus Canadian railway economic and regulatory frameworks, and the prospective impacts of the new act on Canada. I'm not going to take you through all of that except to say there was a lot of good information there.
An important thing we were asked to do was to try to assess the impact on railway revenues of what were then the very controversial clauses of the bill: the shipper relief clauses, competitive access, final offer arbitration and so on. That was a very difficult thing for us to do because there were so many things you couldn't pin down, but we did estimate that the revenue loss of the railways would be in the range of $40 million to $240 million a year - that's CN and CP combined. Those are substantial cuts in revenue.
Since that time, of course, we've had actual experience, and it's still impossible to prove what caused what because there were many other factors at play. It's my belief that the revenue loss attributable to the features we put into the act is probably toward the upper end of that range, maybe even higher.
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Those cuts in railway revenues, I have to say, in many ways were cuts that were reflected in shipper relief of certain shipper rates, which in many cases were necessary. Shippers were hurting. So we can't say that the loss by the railways was something that had no benefit.
In any event, I went on in 1992 to become a member of the NTA Review Commission. As you know, we reviewed the entire legislation. We consulted extensively with the whole community: shippers, carriers, and related parties. I think our findings and recommendations found fairly wide acceptance. For me it was a very interesting and positive experience.
I'm pleased to see that in Bill C-101 and in related things the government has done a very large measure of what was recommended and found in the NTA review has been adopted. That gives me great comfort.
I would like to point out, though, that perhaps the biggest single problem we discovered when we did our work in the NTA review was the railway industry. Railway financial viability and the disintegration of the railway industry in Canada were a huge concern to us. We made a number of recommendations as to what ought to be done, and I think this bill has picked up on them.
One could well ask, then, if this bill is so good, why is it so controversial? Why are we having all the conflicting testimony that has come forward?
I think myself it's basically a classic conflict of interest. Shippers, of course, want as much leverage as they can possibly get over the railways. The railways, for their part, want all the freedom that they can get to run their own affairs as they see fit. The parties tend, I think, to see it as a zero sum gain. Whatever the shipper gets, the railway loses, and vice versa.
I don't think it's quite so, but it's nevertheless cast in that way. I suspect that your committee is hearing from the people who have come forward much the same conflicting views and arguments that we heard in the review commission. Certainly the railways and shippers sing a very different story.
What are the relevant facts here? Certainly, as I said before, some shippers were hurting badly prior to the act of 1987 and they needed to gain some leverage in their dealings with the railways. They were given enormous leverage in the provisions of the act of 1987, and they have their leverage now. You can of course always ask for more, and I guess some of that is going on, but the shippers did succeed in 1987 and they have the leverage they need.
As I said before, there remains a very serious problem with the railways. They're not earning their cost of capital, and the evidence of that is not just the independent research you can rely on, but what is happening to the industry. It is continually shrinking and will continue to shrink unless we do something.
We've seen in the east, for example, how CP has basically retreated from the east. It may go further. CN has had difficulty. The government has had to recapitalize CN a number of times. Hopefully with the privatization, if it goes forward - it looks as though it will - we won't have to do that again. But these are all clear evidences of the problem we have with the railway industry.
I think the other thing that's happened over the years is that shippers and carriers have come to rely too much on regulation rather than on commercial dealings. You need regulation as a surrogate where competition doesn't exist, but you shouldn't have to rely on regulation when you can do a commercial deal. I think this bill takes a step in taking us out of that box.
Having good commercial relationships I think is slow to come. I think the truth is that some of the shipper-railway relationships over the years have suffered from bad blood. I think the railways have not been uniformly well managed. They've had problems with their management, and I think they've at times browned off some of their customers. Customers have long memories for something that was done. They don't forget that easily.
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Still, what I see is far from perfect. The railways are changing. They certainly are working very hard on their cost structure, which is important, but I think they're also seeking to address their markets and customers better. I think that, in conjunction with this bill, is very salutary.
Taking all of that background into account, I think the bill really does represent sound legislation. I think it's a reasonable, equitable balance between competing interests. It largely preserves the shipper relief mechanisms that were so important in the 1987 act. It in fact extends them, to the extent possible under law, to the short lines. It provides the railways with some of their much-needed freedoms, and it does make significant progress with deregulation. I believe it will enhance railway financial viability. It won't solve all the problems of the railways, but it will be an important step forward. I think it adequately responds to the imperfections in the Canadian rail markets, particularly to the problem of captive shippers. I think it will facilitate growth in the short-line industry in Canada.
I find the provisions of Bill C-101 are very much in consonance with the findings and recommendations of the NTA Review Commission.
On that note I think I'll stop and invite any question you'd like to ask of me.
The Chairman: Thank you, Mr. Collins, for your submission to the committee.
Mr. Mercier, please.
[Translation]
Mr. Mercier: Mr. Collins, I gather that even with Bill C-101, Canadian railways will be even more regulated that American railways. Can you tell me what the differences are between the United States and Canada with respect to regulation? To what extent is the United States less regulated that Canada? Can you give me an example?
[English]
Mr. Collins: Yes, sir. It's been a long time since I've made a careful read of the Interstate Commerce Act, but I can tell you that the railway industry in the United States is much less regulated.
To begin with, there is a provision in the Interstate Commerce Act - I believe it's section 105.05, but I can check that - that provides for the regulatory body to exempt from regulation any class of traffic that it believes does not require regulation, does not require economic regulation. Under that section very large sections of traffic, such as intermodal, all the boxcar traffic - which is a huge amount of traffic - and certain agricultural commodities are deregulated. So there's a very large realm of traffic in the United States that is deregulated. We don't have anything like that in Canada, nor will we have under this bill.
Also, the ability of the regulator to deal with rates, to control shipper rates, is much less in the United States. Basically the Interstate Commerce Act says that the railways are free to set any rate they want unless you can prove there is market dominance, which basically means unless you can prove the shipper is captive. But even in the captive shipper case there are very strict hurdles as to what the regulator can do, so the captive shipper relief in the United States is very much less.
In the U.S. you of course have nothing like final offer arbitration, which is heavily used in Canada, and you have a very limited ability to enjoy interswitching. In Canada we have a very broad interswitching arrangement, which was extended in 1987 and is preserved and somewhat extended in this bill. That's very important. It enhances competition. In the United States, if you want to get interswitching, if you don't have it, you have to apply for it. It's very difficult to get it. You don't have competitive line rates.
These are some of the main differences. There are of course others. The prescriptions for level of service in Canada are much more explicit and binding than they are in the United States.
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So it is quite true, sir, that in Canada we will be left with much more regulation than they have in the United States.
[Translation]
Mr. Mercier: Thank you.
[English]
The Chairman: Mrs. Terrana, please.
Mrs. Terrana (Vancouver East): Good morning, and thank you for coming. I also thank you for the positive spin at the end of this series of witnesses we've had here.
You seem to have no concerns about this bill. Is it true that you have no concerns about this bill, or do you think it could be improved to some extent?
Mr. Collins: Nothing's perfect, including me, but I do believe the bill is a good product. It essentially represents a good compromise.
Now, if you asked me whether, if I had my druthers, I would change anything, my answer, if mine were the only voice, would be yes. There are some things I might change, I might promote. I'm not so certain, though, I could convince others. I'll tell you what they are.
I have to tell you, I've always been somewhat uncomfortable with the competitive line rate provision of the bill. I know it's something the shippers want and like and rely on to a considerable degree, but it's a very intrusive mechanism. It's not a commercial type of mechanism, and I think it sends the wrong kind of signal.
So if I had my druthers, if mine was the only voice, I would eliminate the competitive line rate provision in favour of the final offer arbitration provision, which I think is a provision that's used a lot more and has a much more commercial aspect to it.
I've always been uncomfortable with the fact that regional development is written into the policy section of the bill. In the NTA Review Commission we recommended that be eliminated. It's still there. I am told by those who are much better at politics than I that it would be a firestorm to attack that thing. For practical purposes, it doesn't cause any difficulty, but it still rubs the wrong way.
Another thing that bothers me about the bill that I would like to have seen done differently is part of the grain section. I know that came out of a different kind of proceeding, but as you know, under the grain provisions the railway rates, or the maximum rates, are set by the rate formula. I understood that was to be a transitional provision and that by the 1999-2000 crop year it would be looked at. The onus would be on those who wanted to keep it. Instead, I think the bill came out the other way around. If those who want to get rid of that rate control want to get rid of it, the onus is on them.
I think that's the wrong way around. As a transitional measure, that rate framework is proper, but ultimately, if we keep that indefinitely we're going to hurt the efficiency of grain transportation in Canada.
Those are a few things that, if mine were the only voice, I would change, but I realize that there are many other voices.
Mrs. Terrana: Do you have any concerns about subclause 27(2), the part that has given us the most trouble? This ``significant prejudice'' subclause has been brought up here, especially by the grain producers.
Mr. Collins: I think it's an appropriate addition. I can't say it's something we recommended explicitly in the NTA review, although we had recommended some other things that were akin to it and have not been adopted.
I think the way it will act will simply be to discourage the kind of reliance on regulation that shippers and carriers should not be seeking. It really only applies in three cases, such as the case of a competitive line rate, somebody applying for extended interswitching, and somebody making a complaint under the service sections of the bill. Those are the main things.
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As far as I can see, it does not apply to the setting of rates for the standard interswitching, which is a very important aspect. That's done by regulation. It wouldn't deal with that. Of course, it doesn't deal with final offer arbitration. To me those are the two most important things shippers have, the most commercial practical things, and it doesn't even touch those. It only touches a few things. I believe it's unlikely to cause any really serious difficulty to a shipper.
I can understand, though, why shippers are antsy about it. They wonder if this is going to make it impossible to get any kind of relief if they have a complaint under service, for example. Perhaps, but I doubt it would.
Mr. Comuzzi: Mr. Collins, with your wealth of experience in analysing and reviewing and observing the National Transportation Agency - and they are, at the end of the day, the people who are going to implement the parts of this bill - what kinds of appointments should be made to this new commercial transportation agency, in your opinion, so that every hearing process at the agency level gets treated with some empathy for their business concern, or the point being brought up, whether it's a small individual who will be entitled to make a complaint if he's harmed, or a large corporation, like the salt people or the grain people? What kind of an agency do you project to have the best interests of Canadians at heart?
Mr. Collins: Mr. Comuzzi, I think you're talking about the members of the agency.
Mr. Comuzzi: Yes.
Mr. Collins: Okay. I think the kinds of people you need to fill those positions are people who have a background in transportation or transportation-related matters. To the greatest extent possible, they should have a commercial background. They should come from a background where they have had commercial dealings, where they've cut deals, where they've been in negotiations. They understand the cut and thrust. They should have, to the maximum extent possible, a knowledge of the industry and how it works.
Mr. Comuzzi: It's not necessary to have a legal background, because it's a quasi-judicial function they're performing. It's not necessary to have a legal background to adjudicate those matters, is it?
Mr. Collins: I don't think so. It's been tradition that at least one of the members would have such a background. Often the chair has this. But I think it would be quite possible for none of those members to have a legal background. After all, the agency does have a good legal department. They have good lawyers the members rely upon.
Nothing I'm saying here should be construed as saying that a lawyer must not have the job, because as you know, many lawyers do have good commercial experience and have cut deals and so on. But I wouldn't think it's absolutely necessary, no.
Mr. Fontana (London East): Mr. Collins, in your answer to the question by Mr. Mercier with regard to the comparison between Canada and the U.S., you didn't mention anything about the pricing in the United States. As I understand it, there's less regulation in the United States. There appears to be more competition. Therefore, their prices are much higher than the Canadian prices as they relate to the shippers. At least some of the documentation we've seen would indicate that the U.S. model leads to higher prices for the shippers.
Is there a correlation? Because I too, in listening to an awful lot of the witnesses - While everybody talked about competitiveness and competition, at the same time they seemed to confuse competition with regulation.
I know we've developed a system of protection and regulation that I suppose has served the shipper community very well, and in fact probably the economy very well. I'm just wondering whether or not there are some additional gains either for the shippers or the carriers in more deregulation as you see it between the Canada and the U.S. model.
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Let's face it, the competition is perhaps not so much east-west any more; it's becoming much more north-south, especially if you take into consideration some of the other modes of transportation that exist, either by way of trucking or by way of the seaway and the Mississippi and so on. Do you have any comments on that?
Mr. Collins: Mr. Fontana, I think you raise a number of points. I'll try to deal with each of them fairly succinctly.
Ideally, we should deregulate more. The problem is what the economists call market imperfections. If the market is truly competitive, you don't need regulation; it's crazy to have it. Regulation is really just a surrogate for competition. The fact of the matter is that the U.S. market is, as I think you've suggested, inherently more competitive than the Canadian market simply because they have more population density. That gives them more highways, more motor carriers, more rail lines. They have a larger intra-waterway system. We know that.
On the other hand, it doesn't mean there are no captive shippers in the United States. There are. There are quite a few, particularly in the coal industry, also in the steel industry, in aluminum ingots, in chemicals and in some agricultural products. Those captive shippers in the United States don't have nearly the protection they have in Canada. If you say rail rates are higher in the U.S., I haven't seen complete evidence, but I would imagine that the captive shippers in the United States are paying higher prices than in Canada.
Looking at the overall revenue picture in the United States, I'm looking now at the National Transportation Agency's annual review - a very useful review - on page 91. I look at what's happened to rail rates in Canada and the U.S., measured in constant dollars and I guess equated between U.S. and Canadian dollars, and in fact they have both fallen monotonically. The U.S. rates are actually a bit lower than the Canadian, on average. We're talking about freight revenue per tonne-kilometre. The reason they're lower on average is that with their very high traffic density, their costs are lower.
To get to the very nub of your question, though, can we afford to deregulate more in Canada, more than what this bill recommends? I have said that I think we could possibly get rid of the competitive line rate thing. But having said that, I think what's in the bill is basically the right balance. We still have relatively more captive shippers in Canada, and my belief is that we still need to protect those shippers. It would be a mistake at this time to remove the relief they have. I think we have the right balance. Subclause 27(2) puts a little hurdle there so they can't just ask for crazy things, but I think we have the right balance.
Mr. Fontana: I think it has already been mentioned that there seems to be an awful lot of distrust between shippers and railroads. Obviously they have a long history of negotiations and animosities and so on. In fact, some would indicate that there was really no competition. Some shippers, where in fact they have two railroads within 35 miles of one another, where you would think competition would exist, essentially said there is no competition because it really is a monopoly or duopoly sort of system.
Do you think that really exists, trying the cut through all of what the shippers say and the railroads say? The railroads say they're not making enough money. Shippers don't believe it; they think the railroads are getting fair return on their capital and/or equity, and therefore they're pretty fine.
You said it right. It's not the duty of this committee to try to divvy up the pie so that the shippers get a little more and the railroads get a little less, or vice versa, that the railroads get a little more and the shippers get a little less. At the end of the day both the railroads and shippers serve a greater constituency, and that is the producer and the customer who ultimately buys the goods and services this country sells to other countries, because most of it is exported anyway.
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l am sure you have experience with both the railroads and the shippers. Is there any way of telling them they have a common interest? Do they realize they have a common interest to make sure transportation costs are in line with other countries so that the end price of a product, the delivered price, is competitive? If it's not, we just don't sell anything. If we don't sell anything, we just don't produce or move anything.
Mr. Collins: We have to create the kind of commercial environment that will encourage the shippers and the carriers to work together as partners and businessmen. You can lead a horse to water, but you can't make it drink. I think the provisions of the bill will facilitate that.
As I said, there is some bad blood over past dealings. I have little doubt that in cases the railways did act as monopolists. As far as the degree to which they want to compete, I've yet to meet any businessman who has told me he wants to have increased competition. Businessmen do everything they can to differentiate themselves to mitigate competition. I would think if there are cases when a shipper has told you there are two railways 35 miles apart, don't want to compete, there may be a background to it. It may be because they don't want to get into the competitive line rate game, because that's a death spiral. That's probably what they're talking about.
Where the ground is fertile for competition between railways - and there are many cases, particularly where you have interswitching - you have very virile competition between the railways and it's very commercial.
So I'm not unduly concerned with what those shippers are saying. I do think we have to set the groundwork so they'll have an environment where they can deal like other businessmen.
The Chairman: Mr. Hubbard.
Mr. Hubbard: Mr. Collins, you gave us a historical presentation. I realize you're a dollars-and-cents man; you've indicated a lot of figures there. You said that in 1987 your study of the legislation that was coming about at that time was a hit on the railways to the tune of $40 million to $240 million. You said that really it may have been more than that. You analysed it in 1987. I'm going to ask today, in analysing this bill in 1995, do you have any financial figures to give our committee on who the hit is on and to what extent?
Mr. Collins: No, I haven't done any such analysis. I can say, though, that the provisions in the bill basically preserve the shipper relief mechanism, so I would not expect to see railway revenues starting to trend up sharply. I don't think so. In any case, those average railway revenues are pretty much tied to the delivered prices of products. The railways can't charge any more than a certain amount or else they drive the traffic away. So I would not expect to see the railway revenues start to sharply trend up. There may be a little relief there for the railways, but not much.
The very important thing about this bill is that it should go a long way to helping reduce railway costs. All the things you are doing in the way of the plant rationalization scheme should contribute -
Mr. Hubbard: I don't want to take a lot of time, Mr. Chairman. In 1987 you did a financial analysis of what the bill at that time was going to do in terms of the industry -
Mr. Collins: What the shipper -
Mr. Hubbard: - but do you have that for today? As a committee member, I would like to know.
Mr. Collins: You see, very little has changed in your bill. Very little is changing from what's in the 1987 act. If someone were to ask me to do an analysis, I would say the impact on the revenue side is not likely to be very great.
On the cost side it will be substantial, and that's really what we need to do. There's work in the NTA Review Commission report that talks about how much cost saving you can get from plant rationalization. You could refer to those figures and that will go to the railways' bottom lines.
Mr. Hubbard: I had hoped that if you had done it in 1987, you could have given us some real live figures in terms of 1995.
Mr. Collins: What I'm saying to you is that you're really not changing very much on the revenue side. The revenue side won't change much.
If you want to commission our firm to do a study, we'll do it for you.
Some hon. members: Oh, oh!
Mr. Hubbard: The balance side, not the revenue side, but you say the hit was that much. We know railways haven't done well; at least they tell us they haven't done well. But you're saying in terms of the balance side, as a person dealing with economics and finances, that you have no information to give our committee on the effect of this bill and what may happen with two railways in the future.
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Mr. Collins: I don't think that's quite what I said, but we haven't done the analysis that I think you're after.
The Chairman: Mr. Nault, a short question and then we'll wrap up.
Mr. Nault: Mr. Chairman, I just wanted to ask Mr. Collins, based on his expertise and the fact that he was at the NTA - There has been a significant amount of debate - that word ``significant'' again - on subclause 27(2) and clause 113. I have in front of me a particular statute or construction of statutes under a court of appeal ruling that was done by one of the chief justices as it relates to a process that's dealt with the agency. It reads as follows:
- Today there is only one principle or approach: namely, the words of an act are to be read in their
entire context, in their grammatical and ordinary sense, harmoniously with the scheme of the
act, the object of the act and the intention of Parliament.
Let me follow through with the question a little further. Clause 113 says `` - the Agency under this Division must be commercially fair and reasonable.'' Then under the powers it says `` - the particular case, that the applicant would suffer significant prejudice - ''. Would it not make more common sense if the same terminology and words were used if, when you go to the courts or when the agency looks at the whole process, they're interlinked? One is powers and one is a more restricted clause, but it still deals with rates and conditions of service.
Can you explain to me from your analysis of the time you were there why we have drafting that's different under two clauses when in fact they will have to be interpreted as one, in one fashion?
Mr. Collins: Mr. Nault, you're asking me a legal question that I don't believe I'm very competent to answer. I was not involved in any way in drafting either of these clauses or even in putting them forward.
I think they're both reasonable clauses and I believe they are interrelated to a degree, in that under subclause 27(2), if there is a rate made, then at the same time it has to respond to clause 113; that rate must be commercial fair and reasonable. That's interlinked.
Mr. Nault: So why wouldn't subclause 27(2) say something like ``the particular case, that the applicant would suffer commercial harm'', which ties right into clause 113, which deals with ``commercially reasonable''? We should probably take ``fair and'' out of there and just say ``commercially reasonable''. Then they would mean the same thing, so applicants or grievers or people who feel they have to go for relief would know that they are linked and therefore have the same meaning. We wouldn't have to argue about what lawyers are going to say and do when they go to this particular process. When you go -
Mr. Collins: I suspect that clause 113 has a broader application than subclause 27(2). For example, as I said, I think subclause 27(2) can only apply to competitive line rates, extended interswitching and level of service. Clause 113 may, for example, apply as well to a rate set for standard interswitching. That must be commercially fair and reasonable as well. But again, you're testing a legal point that I don't think I'm very competent to answer.
The Chairman: We may be asking the wrong guy this question.
Mr. Collins: There may be merit in what you say, but I'm out of my depth here.
The Chairman: Mr. Collins, thank you for coming before our committee and answering our questions. We appreciate the time you've taken to be with us today.
Mr. Collins: Thank you for your attention. I wish you good luck.
The Chairman: Colleagues, could you stick around for just one minute?
At the outset, let me say that this brings us to the end of our list of witnesses on Bill C-101. For your information, we've spent 55 hours in committee. We've heard from 154 individuals representing 85 organizations. You've worked hard, colleagues, and I thank you for your cooperation.
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What I'd like you to do, colleagues, is pencil this into your daytimers: This committee will reconvene one week from Tuesday, on November 21. At that time departmental officials will be here to answer all your questions.
On Wednesday, November 22, bring your sleeping bag. We're going to go to clause-by-clause in consideration of Bill C-101. I've ordered in dinner. We'll start at 3:30 p.m. and go as late as 11 p.m. if we have to.
On Thursday we're going from 9 a.m. until 2 p.m. if necessary, and I'm bringing in lunch on that one. So I'm asking for you to pencil it in so that you know we're going to be around.
There is one motion, colleagues. Is it agreed that this committee submit a supplementary budget of $18,000 to cover witness expenses of representatives who have asked that they be reimbursed reasonable travelling expenses on Bill C-101?
Mr. Nault: So moved.
Motion agreed to
The Chairman: Thank you, colleagues. We'll see you a week from Tuesday. Good luck in your constituencies next week.