:
Mr. Speaker, today I rise to speak in support of Bill . I will focus my remarks on how this bill will contribute to strengthening the shipper-railway relationship as it facilitates the commercial negotiation of service agreements.
Canada's freight rail network is a vital link to global markets and supply chains, because it facilitates the import and export of millions of dollars worth of commodities and manufactured goods each and every day. Our economy relies on the billions of dollars of revenue generated by Canadian manufactured goods and export commodities, such as grain, pulp and paper, coal and potash. Canadian consumers and businesses also depend on containerized goods, arriving daily from Asia and Europe, moving to cities across the country in an efficient manner.
Bill will help the thousands of companies that rely on rail to ship these goods and will help the Canadians who are employed by these sectors. Given the importance of rail to Canada's economy and trade, ultimately Bill C-52 will contribute to Canada's economic growth and job creation.
The goal of Bill C-52 is to support the adoption of service agreements between shippers and railways. Service agreements can help strengthen the shipper-railway relationship. They can make it easier for businesses to plan how they will transport their goods to market. In recent years, the railways and their supply chain partners, including shippers, ports and terminals, have signed many such agreements. These agreements have improved rail service, collaboration, communication, and ultimately, supply chain efficiency. In short, service agreements are a tool to bring greater certainty and reliability to rail freight service.
This bill supports best practice in the industry. To achieve this, Bill has two parts. It would provide shippers with the right to a service agreement, and it would offer service arbitration to establish the terms and conditions of service in the event that negotiations fail. Most importantly, the new provision would create a strong incentive for the parties to negotiate service agreements commercially.
A shipper who wanted a service agreement could approach a railway. In turn, the railway would be obligated to respond to the shipper within 30 days. This would ensure that shippers and railways would first try to reach commercial solutions to tailor their service relationships.
In the event negotiations failed, the shipper would then turn to service arbitration to receive an imposed service agreement. However, before arbitration could begin, the shipper would be required to provide advance notice of 15 days to the railway. This 15-day period would further support commercial negotiation, as it would allow both parties one last chance to reach a compromise before service arbitration started.
In the end, it is expected that the current use of service agreements would be expanded. Going forward, any shipper who needed a service agreement would be able to obtain one either commercially or through service arbitration.
Some may try to say that this proposed legislation would be adding red tape and would burden rail companies. To this I would like to respond, no. We are providing a solution in case of service failure. We expect railways and shippers to continue working together and building on the success of the proactive measures from the rail freight service review.
This proposed legislation is important, because it provides the framework to enhance the standard level of respect for service agreements. This has many benefits. By facilitating better collaboration between shippers and railways through negotiating service agreements, parties could then agree on clear service elements and performance standards. Shippers and railways would clearly know what was expected of each other and would be able to work better together to make their day-to-day interactions more efficient.
Service agreements could also strengthen the relationship between shippers and railways by determining what to do when there is a service failure. Communication protocols could be put in place and recovery plans could lay out how and when service could resume.
Canadian shippers and railways could also use service agreements to lay the foundation for how they could expand their businesses together. Negotiations on a service agreement could be an opportunity for a shipper to discuss traffic growth plans and see how railway service could be adapted to respond to growth. The legislative right to a service agreement, supported by an arbitration process if commercial negotiations fail, would therefore be quite powerful.
Across Canada, shippers, whether large or small, whether shipping intermodal containers or raw commodities, would be entitled to obtain service agreements establishing a road map with the railway to achieve the benefits I just explained.
However, do not take only my word for it. This is what Mr. Rick White, General Manager of the Canadian Canola Growers Association, had to say about Bill . He said:
The Canadian Canola Growers Association is pleased to see the inclusion of a number of important elements in Bill C-52, including the right to negotiate a service level agreement if commercial negotiations fail.
With over 85 percent of canola seed, oil and meal exported to more than 50 markets worldwide, effective and efficient rail service is critical to the success of farmers and our entire industry.
That brings me to Canadian trade and our gateway and corridor initiatives. The railways played a primordial role in Canada's settlement and economic expansion, and they continue to play a key role. Rail networks are a core part of Canada's transportation system.
Our Conservative government has worked to strengthen Canada's transportation system in various ways, including with strategic gateways and trade corridor initiatives. Through these initiatives, our Conservative government, along with its partners, has made significant investments to reduce congestion along key corridors and to build capacity to capitalize on growing trade opportunities. Our gateway initiatives also encourage stakeholder engagement and dialogue as a key means of improving how our gateways function. Evidence shows that this gets results. Through working together, stakeholders have been able to address operational issues and enhance the performance of our gateways.
The proposed new legislative measure on service agreements supports such partnerships. It is through such partnerships that we can achieve an efficient and reliable supply chain. This would allow us to meet demand in existing, expanding and new trade markets. In this sense, the legislation would support our government's economic agenda.
In my role as chair of the Standing Committee on Transport, Infrastructure and Communities, I had the opportunity, as the other members did, to hear first-hand from shippers and other stakeholders about the importance of this legislation. I was pleased to hear that there was an astounding amount of support for this bill, and the committee heard this testimony from the groups involved. Whether it was Port Metro Vancouver from British Columbia; the Manitoba Minister of Infrastructure and Transportation, Steve Ashton; or the Halifax Port Authority, Canadians from coast to coast to coast were supportive of this legislation.
That does not take away the fact that in agreements like this, not everyone gets everything he or she wants, but I think everyone would have to admit that we came out with a balanced bill. That is why I am here speaking in support of it.
Let me just take a few minutes to read some of the testimony we heard on this legislation:
Bill C-52 is extremely important to Port Metro Vancouver.... Past performance of the railways has made Bill C-52 necessary. I think the bill has appropriately walked the fine line of mandating action but allowing for the flexibility to tailor agreements to the needs of each shipper.... I would recommend proceeding with the approval of Bill C-52.
I think we need to accept the fact that in some circumstances it won't be possible for a party to actually, in good faith, negotiate an agreement. In that sense, Bill C-52 does suggest a mechanism for resolving that impasse.
The legislation includes the right to ask an arbitrator to establish an agreement. In that sense, Bill C-52 is an improvement and it needs to be passed.
I will not re-read the entire transcript of the meetings we held, but this gives the House an indication of the testimony we heard at our committee.
So far I have discussed the benefits of the bill in terms of the service agreements that are in place and how the bill expands Canadian trade. I have also gone over some of the testimony that was heard at the transport committee during the study of the bill.
I would now like to shift the focus to a sector that is very important to me, agriculture. I represent the rural riding of , and while shipping by rail is not extremely common in my neck of the woods, I have certainly seen that farmers are very concerned about how their product is transported from the farm to the markets.
Having been a farmer myself, I know that the agriculture business is full of uncertainties. That is why I am very happy that we will be moving forward with Bill to ensure that Canadian farmers will be protected by these service agreements so that they know they will always have a viable option to ship their product.
As I said, agriculture is one of the main pillars of my riding and certainly one of the main pillars of the Canadian economy. Canada's agriculture, and indeed the entire agri-food industry, plays a vital role in creating jobs and keeping our economy strong. However, our farmers depend on efficient, effective and reliable rail service so that they are able to move crops off the farm to valued customers, not just in Canada but around the world.
That is exactly what Bill will do for our hardworking farmers. It will ensure their right to a service agreement with railways to enhance clarity, predictability and reliability when shipping their product.
Furthermore, I would like to expand on the nature of the bill and indicate that the bill is not only a benefit to the shipper but that the rail services will also benefit from the changes that will be brought forth in the bill. The bill does not pit shipper against rail service. The goal of this legislation is rather to encourage railways and shippers to work together.
The fair rail freight service act would help shippers to manage and expand their businesses while ensuring the railways can operate an efficient network for the benefit of all users. This will ensure a strong, competitive rail freight supply chain, which is critical to the success of the Canadian economy. In these challenging global economic times, all sectors of the economy must work together to drive growth, create jobs and ensure long-term prosperity.
Before I wrap up my comments, I would like to proactively answer some the questions that opposition members of the House may have with regard to the bill. I will begin with the possible question that may arise about why the bill had not been tabled earlier. The response to this is quite simple: it takes time to get things right.
On this piece of legislation, we took the time necessary to hold in-depth consultations with stakeholders on the matter. We carefully reviewed the submissions that we received so that we could advance with a framework that would benefit all parties involved. It was a long process, but as members can see by some of the quotes I presented earlier, it has worked, and we have a very useful bill before us in the House.
I would like to take this opportunity to thank all the members of the Standing Committee on Transport, Infrastructure and Communities. I see members of that committee from all sides of the House here. We did not always agree on everything, but at the end of the day we have a good bill, and I would be remiss if I did not mention the strong work and support by the . This is a bill that many people, including shippers, have asked for, for a number of years. The minister has done it, and we are here today discussing it in the House.
Another question that is brought up around the bill is the notion that new provisions in the bill will negatively affect the efficiency of Canada's rail system. This is not true. The arbitrator must consider the efficiency of the rail network and railways' obligation to provide service to all shippers when making decisions.
Finally, I will respond to the possible question of why there is not a list of elements that must be included in a service agreement under the bill. This is because there is not a one-size-fits-all solution to these agreements. Every situation between shippers and rail services will be different and will require different needs. Therefore, this approach will ensure that the arbitrator has the flexibility needed to make the appropriate decisions.
I think there will be few of these arbitration decisions, but there would be that flexibility for the two parties to sit down, and the arbitration process would occur only when a custom-made deal that works for both parties cannot be worked out.
To conclude, service agreements are an important commercial tool that supports the shipper-railway relationship because they bring clarity and predictability to rail service. As some associations put it after the tabling of the bill in December 2012, this will serve as a platform for continued collaboration with Canadian railways.
This bill would work wonders for shippers and rail services in Canada and would be of enormous benefit to all sectors, including the agriculture industry.
The government's objective is to facilitate the adoption of service agreements between shippers and railways for those shippers who want one, and Bill would accomplish this.
I urge members to join me in supporting this bill. I hope that my colleagues across the way will show their support for this bill and vote in favour of its passage.
We have heard from many members during the discussion on this bill, and while I mentioned agriculture quite a bit, because there are a lot of agriculture products that travel, the bill would affect everything from forestry to fertilizer to potash. Therefore, this bill is very important.
Saskatchewan is the largest producer of potash in the world, a lot of which is exported, and rail allows it to get moved. As well, the mining industry transports all kinds of products. There is even talk right now of more crude oil moving by rail. I think we all have to admit that pipelines would be the preferred route, but business will always look at every opportunity out there, and rail is one of them.
:
Mr. Speaker, to begin, I would like to tell you that I will be sharing my time with the very able member for .
I am pleased to rise in the House today to discuss the bill that would give customers of railway companies the right to establish service agreements with those companies and would create an arbitration process in case of failed negotiations. Despite its weaknesses, the bill is very important for the Canadian economy, especially for the agricultural, mining and forestry sectors, which depend heavily on rail transport.
The bill is not perfect. Still, we appreciate that after so many years of fine words and no action, the Conservatives have finally acted and introduced the bill.
On this subject, I would like to thank the hon. member for who, by introducing her own bill on protecting customers of railway companies, was able to prod the Conservative government into action. The government presented its bill six months later. Better late than never.
My speech will have three parts. First, I will highlight the importance of strengthening the position of shippers in Canada's rail transport sector. Then I will show that the bill does not go far enough to improve services and protect shippers. Finally, I will propose amendments based on the recommendations presented to the Standing Committee on Transportation, Infrastructure and Communities by the Coalition of Rail Shippers.
Why is it important to take action to improve rail transportation services? Because rail is among the most-used means of transport in Canada. In Canada, railways transport more than 70% of goods shipped on land. The economic power of railways is considerable.
That leads me to my second point. Despite the importance of this mode of transportation for many shippers, service interruptions, delays and various problems with productivity are common among rail transporters. This situation affects many sectors, including natural resources, agriculture, forest products, mines, chemical industries and the automotive sector.
In terms of agriculture, 80% of service agreements are not complied with by the railway companies. This means delays or trains that simply do not arrive, damaged rail cars or not enough rail cars. In addition to the losses caused by this kind of problem—such as harvests that may rot—the poor quality of rail transport services undermines the ability of Canadian exporters to compete in world markets. This situation costs the Canadian economy many hundreds of millions of dollars every year.
Let us now try to determine the source of these problems. One of sources of these problems is, of course, the virtual monopoly. As the hon. member for said earlier in his question, the problem is the monopoly held by the railways in Canada. In most regions of the country, shippers cannot choose their railway carrier because they have access either to CN or to CP. Even in cases where both companies are present, one of the two usually charges prices that are much too high, which does not leave shippers with much of a choice. To some extent, the monopoly situation was made possible by the Liberals when they were in power. They are the ones who privatized CN in 1995. By failing to set out protective measures for shippers, they reinforced the virtual monopoly we have today.
At the time, one option would have been to privatize railway activities while ensuring that the rail transportation system remained public, which also would have been beneficial for VIA Rail. Right now, VIA Rail mostly has to use rented tracks belonging to CN.
[English]
When I was deputy critic of transport, I met with the Western Canadian Shippers' Coalition and it let me know what it needed to help foster economic growth in the west, on the Prairies. I am sure it is going to be happy to see this very bill come to life. It has been waiting for more than five years. It has been waiting for seven years for this legislation to come to life.
Just to clarify for Canadians, the Western Canadian Shippers' Coalition is made up of important Canadian companies, like the Alberta Newsprint Company, Al-Pac Forest Industries Inc., Canadian Forest Products Inc., Canadian Oilseed Processors Association, Canadian Wheat Board, Coal Valley Resources Inc., Coalspur Mines Ltd., Dunkley Lumber Ltd., Grand Cache Coal Corporation, Lehigh Cement, Chemtrade, Millar Western Forest Products and Suncor, among many other important Canadian companies. Many of these companies are in the natural resources sector.
The government tends to think that it is the best friend of the resource sector. The sector relies on the government as a regulator to ensure reliability in terms of service. The result, if it is done properly, is that companies prosper and flourish. Without leadership, without the government taking on its role as regulator, the companies simply endure or, even worse, sometimes flounder. This legislation would allow the companies to simply endure. It is not good enough to let them prosper and flourish.
The NDP would prefer to see these companies prosper and contribute to the health of our resources sector and the agricultural sector. In committee, there were amendments proposed by these two sectors. The NDP listened, but the government was in such a rush to fall behind, that it really did not listen to what these companies were asking for. I am going to read what the companies asked for and what the Conservatives did not consider.
One thing they wanted to do was to fix the service agreements. They wanted, one, to include details on service agreement components; two, a deletion of the term “operational” as it would limit the ability to negotiate and arbitrate service agreements; three, to include a dispute resolution mechanism in service agreements for breach of contract; four, to limit the ability of railway companies to levy penalties and charges that are not in the service agreement; five, to limit arbitration for failed service agreement negotiations to matters raised by the shipper; six, to limit railway companies' ability to raise network issues in arbitration, for example, finding convenient excuses for not agreeing to shippers' demands in contract negotiations and arbitrations.
New Democrats felt that these were very reasoned amendments and the government had a choice: it could listen to the resource sector and Canadian farmers or it could listen to a monopoly with a long history of manipulating government throughout Canadian history. Unfortunately, it looks like it chose, for these amendments at least, the side of the monopoly, as the member for mentioned.
Mr. Dan Albas: Duopoly.
Mr. Jamie Nicholls:It is a duopoly. Sure, I will give him that.
I would like to read a quote about monopolies, which goes like this:
They had begun to consider the Government...as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
That is a quote by Franklin Roosevelt, a democrat. Contrary to allusions by the government, the “D” in NDP stands for “Democratic”. We are the only party over the past 50 years to stand up for the democratic rights of all Canadians and not just a select few. When we hear the smears from the other side, we know our principles. We do not abandon those principles for the sake of power. We do not remain silent in the face of adversity.
As I mentioned before, for competition to flourish in our country, sound, organic and healthy competition, it requires co-operation. The government should have listened to the good people who work on the farm or the people who work in the resource sector. Instead, time after time, Conservatives choose to listen to the privileged few to enable their abuse of power and give them carte blanche to crush Canadian competitiveness. Canadians deserve better.
In 2015, the NDP will provide the leadership to steer our economy out of the perilous straits, out of scandal and corruption to that prosperous future Canadians long for and desire.
:
Mr. Speaker, I am pleased to stand in the House to speak to Bill . This topic has been a very important one for my constituents and for people across rural communities and, particularly, western Canada.
Before I go further, I want to acknowledge the hard work of my colleague, the member for , who for years has been a real advocate when it comes to fairness in the transportation industry. She has worked very hard on reforming this act, in particular, and bringing the NDP position forward.
The NDP position is fundamentally one of seeking fairness and a fair playing field for those who depend on rail service as part of their work, business and industry and, very important, the communities that depend on fair rail service to ensure their employers and industries are dealt with appropriately.
We in the NDP have made it clear that we support the bill at this point, but we believe it must be strengthened as we go forward. We are not pleased with the delays that the government has allowed and also the kind of cowering we have seen from it, which is not a surprise, to major corporate interests in this field.
As we know, the proposed bill will give rail freight customers or shippers the right to service agreements with rail companies. It also puts in place a Canadian Transportation Agency-led arbitration process for failed negotiations and penalties for those who violate the arbitration results.
Key amendments that the shipping company pushed for and that were championed by the NDP were unfortunately defeated in the committee. Without these rejected amendments, we believe the bill remains a partial success for the shippers and it must be strengthened in the future.
It is important that we indicate to stakeholders and to the government that this is not a done deal. As with anything, but particularly when we talk about this area, the bill needs to be further strengthened.
Bill partially addresses the fact that rail freight customers, known as shippers, have been suffering from insufficient freight services stemming from the abuse of market power by the large rail companies.
The Conservative government has finally tabled legislation, after years of talking and inaction, to address the fact that many shippers cannot even get a service agreement as rail companies have not been willing to negotiate.
As the bill only covers new service agreements, current agreements and contract violation, which are all a major source of revenue loss for shippers, are not affected by Bill C-52.
Certainly in terms of the stakeholders that have been involved, I would like to read into the record some of the stakeholders who have spoken out in support of the NDP broader position, which is that the act must be strengthened.
I recognize that the wish for this act to be strengthened comes in large part from people who work in the mining industry. As someone representing an area that depends on mining and as someone who is proud to say that I come from and live in a mining town, I recognize that in order to ship the ore and the goods that are needed for the mining industry to both do its job and to export its product, fair rail services are essential.
The Mining Association of Canada, as represented by Pierre Gratton, indicated:
Although MAC appreciates the government's initiative through Bill C-52, it is our view that the bill, unless amended, will not deliver on the government's promise...“to enhance the effectiveness, efficiency and reliability of the entire rail freight supply chain”.
Coming from western Canada, I share with many of my colleagues from there the understanding and the clear recognition of the importance of agriculture in our region, particularly agriculture when it comes to grain production. I want to read the message that was brought forward by the Grain Growers of Canada, as represented by Richard Phillips. He noted:
I think what we're looking at here is the level of service and timeliness of service to meet our sales commitments. That's what we're really talking about. [...] When Pulse Canada was down in Colombia and we'd just signed a deal there, we were looking forward to increased exports to Colombia, and the Colombians said they weren't sure they'd actually buy anything more from us because they couldn't get reliable enough delivery of product on time.
Clearly there is a concern about our ability to export. These are clearly serious concerns brought forward by our clients when it comes to reliability and timeliness of exports of a fundamental product, which is grain. That is unacceptable. It is a clear indication of why it is absolutely essential that we not see this as a "done deal" as such, but that we understand it is something that needs to go forward. We must continue to listen to stakeholders and seek a truly fair system when it comes to the rail service provided in our country.
As someone who is proud to come from western Canada, I want to read into the record the words of the Western Canadian Shippers' Coalition, as represented by Ian May. He noted:
Since the government committed to the legislation, we've heard that service has improved. I can tell you that it hasn't. I can tell you that as recently as two weeks ago we had mills just about shut down because they couldn't get boxcars in western Canada, and not just one. Whether that's coincidental with a broader understanding of Bill C-52 and perhaps the fact that it is balanced versus a shipper bill that would have levelled the playing field—and that's our language—I don't know.
The Western Canadian Shippers' Coalition, a very inclusive coalition and one that has a great deal of clout in western Canada, is clearly stating that the bill does not go far enough, that there are serious problems in the kind of rail service that is provided and that they are getting a raw deal. That concerns me a great deal. In the last few years, and certainly since I have had the honour of being a member of Parliament for northern Manitoba, it is clear to me, day by day, the way in which people in my part of the country are getting a raw deal from the government.
I want to indicate the cutbacks to Via Rail, for example, have directly impacted the people of northern Manitoba and will continue to impact as tourism picks up in the summer. The people who are affected are those who live on the Bayline and in Churchill, who depend on reliable, quality rail service provided by Via Rail.
I also want to indicate the lack of imagination and commitment to another transportation hub, which is the Port of Churchill. It is truly a gateway to Arctic trade and to opportunity, not just for Manitoba but for all of Canada, yet the government has squandered opportunities to truly make investments. The gutting of the Canadian Wheat Board as we knew it played a major role in setting us back. As we know from last year, the shipments through the Port of Churchill are nowhere near where they ought to be.
I also want to indicate the government's failure to invest in an all-weather road network across northern Manitoba, something that could improve the quality of life of many first nations and Metis people in that part of the country, as well as the economic development opportunities.
Again, time after time, we are seeing a government being short-sighted toward the interests of northern, rural and western Canadians, and we see it in this bill that must go further. I agree with my colleagues that western, northern and rural Canadians deserve far better.
:
Mr. Speaker, it does not surprise me. The NDP members feel the Liberals nipping at their heels, so they are a little excited and a little nervous.
We are here to talk about Bill , so let me begin.
Some hon. members: Oh, oh!
Mr. Mark Adler: I am happy to receive such praise from the opposition, and I look forward to their support of Bill C-52.
I would first like to thank the for his steadfast and laser-like focus on creating the bill that is before us today to bring fairness to this sector of our economy. Of course, I also want to thank my colleagues on the transport, infrastructure and communities committee, particularly our chairman who has done yeoman's work in making sure the bill got through the committee expeditiously.
As the minister said on December 11, 2012, “This bill will help shippers maintain and grow their businesses while ensuring that railways can manage an efficient shipping network for everyone”.
Bill supports the interests of the entire economy. Given the importance of rail service to our country, shippers need to have service clearly defined and they need to know that the railways will deliver rail service efficiently and effectively. That is the only way shippers can properly plan and seize market opportunities.
I would like to talk about some of the new provisions that are proposed in Bill . First, the bill would give every shipper the right to a service agreement with the railway and would provide an efficient and effective process for establishing such an agreement when commercial negotiations fail. That is key. Every shipper would be able to request a service agreement with their railway. That is an important point. The railway would now have 30 days to respond. This particular change is an important gain for all shippers, including small and medium-size businesses. It would ensure that they have an opportunity to negotiate service with the railway directly.
Second, if the parties cannot agree commercially, the shipper would have access to a timely and efficient process to establish an agreement. Under the auspices of the Canadian Transportation Agency, shippers would be able to request an arbitration process. This important arbitration process would establish, in a clear and comprehensive manner, how the rail service would be provided by the railway.
For many years, shippers have raised concerns that they have faced additional costs or lost sales when rail service is inadequate, particularly when they face regular problems such as delays in receiving rail cars. Canadian businesses or farmers can agree that this situation is a significant challenge for their operations. Shippers generally acknowledge that railways have made improvements to freight service in recent years. However, shippers believe that an effective enforcement mechanism is essential to ensuring that improvements continue.
This brings me to the third important point. We want to ensure that railways are held accountable in the event of service failures. This would be achieved through monetary penalties. These financial penalties could reach up to $100,000 for every confirmed breach of an arbitrated service agreement. Specifically, the financial penalty would take the form of an administrative monetary penalty under the auspices of the Canadian Transportation Agency. This consequence would ensure greater railway accountability.
Now, let me explain how this new provision would work. When a shipper is concerned that a railway has breached a service agreement that the agency had arbitrated, he or she could ask the agency to examine the situation. If the agency confirms a service failure in such a case, it can apply the monetary penalty to the railway company for a confirmed breach.
This potential and significant financial penalty would provide a strong incentive to comply with arbitrated service agreements. The amount of the penalty imposed would depend on the severity of the service breach. As with any administrative monetary penalty system managed by a regulatory body, the penalty would be payable to the Crown and not to the shipper. The agency is the appropriate body to confirm whether a breach has occurred, and can set a penalty accordingly. Indeed, the agency's role under this new provision would be to look at the reason for the breach and determine the right consequences, case by case.
Giving the agency the authority to impose the administrative monetary penalties is a sound approach. During consultations for this bill, both shippers and railways acknowledged the agency's expertise in rail freight service issues. In addition to this strong new enforcement tool, shippers will also have access to two other mechanisms to address railway service problems.
Of course all shippers will retain their right to file a complaint on service with the agency. All shippers will also retain the right to seek damages resulting from railway service failures through the courts. These rights apply regardless of whether shippers have agreements arbitrated by the agency or agreements they negotiated commercially.
First, a shipper can file a complaint with the agency under the existing level service provision under the act, which requires railways to provide adequate and suitable service. If the agency confirms that the railway has not met its service obligations, it has broad powers to order a range of corrective actions to be taken by the railway.
The new provision on service agreements complements this existing remedy for examining rail service complaints. If a shipper has a service agreement that defines clearly the railway's service obligations, this will provide a more precise reading of when obligations are not met, and facilitate the filing of a complaint in such a case if a shipper deems it necessary.
Second, shippers will continue to be able to sue for damages incurred due to rail service failures. Seeking damages through litigation is an especially important option for those shippers who are seeking compensation for significant lost sales or costs incurred due to a railway service failure.
Shippers wanted to ensure that any new enforcement tool, such as administrative monetary penalties, does not undermine any existing remedies. This strong new enforcement mechanism would not in any way disrupt, replace or erode existing shipper remedies.
I am confident that in most cases shippers and railways would be able to work out service agreements commercially that include communication protocols to be followed when service failures occur. Moreover, I expect commercial agreements would also identify recovery plans to mitigate the impact of any service failures.
The great strength of Bill is that all of its elements would help drive commercial negotiations.
Through the implementation of the bill, shippers will be in a better position to negotiate service agreements with the railway in the commercial forum. Both railways and shippers have expressed their preference for commercial solutions.
As all stakeholders continue to work in collaborative partnerships, I firmly believe that Bill includes a strong enforcement mechanism. It provides the best way forward in supporting commercial solutions and innovations that strengthen our rail freight system, a system that will foster Canada's economic growth, a system that will support shippers and railways as they strive to grow their businesses, capture new opportunities and create jobs and prosperity for Canada and Canadians.
I strongly encourage all members of this place to vote in favour of Bill , a bill that would not only help strengthen our railway system, it would support our growing economy and lead to jobs, growth and long-term prosperity.
:
Mr. Speaker, I will be sharing my time with the member for . I also want to thank my colleague from for her work as our transportation critic, for her tireless work with a community that is invested in seeing improvements to the Transportation Act and for her efforts to improve the bill.
Bill would amend the Canada Transportation Act. It is a bill that is long overdue.
Rail transportation is the backbone of the Canadian economy. It is in the DNA of our history, and it is something that touches a huge part of our economy. More than 70% of all surface goods in Canada are shipped by rail. We are a vast country and a country that is open to the world. It is very export oriented, and having good transportation networks is absolutely fundamental.
Many of us are familiar with the railway industry. I know that in my family, my grandfather, my husband and my mother all worked in the railway sector. It is part of our country, part of our history and part of our current economy. It touches so many Canadians.
What we have been finding through the study on the bill and leading up to the bill is that 80% of service commitments for agricultural rail customers, which means that they deal with food, feed and farm materials, are not met by the railway companies. There are serious delays, insufficient numbers of rail cars, et cetera. A rail freight service review found that 80% of shippers were not satisfied with the service they received.
What is the root of the problem? One would think that after a couple of centuries, we would be getting our rail service right, but sometimes when governments rush to fix one problem, they create other problems. Sometimes when governments have ideological blinders on, they are wilfully blind to the problems they are creating.
In 1995, the Liberals were in a rush to show that they were jumping on board the privatization bandwagon. They wanted to prove to the world that they could privatize with the best of them. One of the companies they rushed to privatize was CN. They privatized the company, CN. They privatized the tracks. What they forgot to do was put in any safeguards for Canadians, safeguards for shippers and safeguards for our passenger rail service in terms of access to the railway tracks. They basically turned it over to the private sector.
CN is doing very well. It made a profit of $2.7 billion. Bravo. It is doing well. It was just announced this week that the CEO made a salary of $48 million. I am sure he worked hard for every single penny of it.
The trouble is that these ideological decisions create problems. It was the Liberals in 1995 that unleashed this, and frankly, neither the Liberals nor the Conservatives after them, for almost 20 years, have done anything to fix the problems until this bill. It is with insufficient measures that they are trying to address the problems.
Let me say up front that this is a bill we will be supporting at report stage and third reading, but it is a weak bill. It is a bill that does not do the job Canadians really need it to do.
The bill would give rail freight customers or shippers the right to service agreements with rail companies. It is shocking that they have not had this before now, especially with the two majors, CN and CP. It also puts in place an arbitration process, led by the Canadian Transportation Agency, in cases of failed negotiations or where there are penalties for violating the results of arbitration.
This is positive. Canadians deserve fair and reliable freight services. This is obvious and logical.
Shippers pay good money, but they need a stronger position vis-à-vis the two main companies that form a duopoly. Together they have a kind of two-party monopoly. Their power is only partially addressed by Bill .
There were recommendations by the shipping community at the committee stage that were sensible, practical and modest, yet the Conservatives ruled them out of hand with no serious consideration.
As the official opposition finance critic, I certainly know this. With every budget bill we have massive omnibus budget bills. We have been dealing with another one this week, Bill , which again, is an amalgamation of all kinds of changes to different laws, many that have nothing to do with finance and budgets. We have seen that they never accept one amendment to any of their budget implementation legislation. Experts in their fields have testified at the finance committee that the government will have problems if it bullies ahead with certain changes, such as getting rid of the inspector general of CSIS. The expert who helped set up CSIS told us that this would cause problems, but it did not matter. The Conservatives are more expert than the experts, and they went ahead and made the changes anyway.
In this case, they heard expert testimony about why certain changes should be made. However, the Conservatives gave them no serious consideration. They rejected the changes out of hand, which is a bit sad, because this House ought to be about discussion, debate, learning, and ultimately, compromise to get the best laws possible for Canadians.
The bill needs further improvement. The NDP will continue to work with businesses and shippers across the country to improve this legislation and to tackle the issue of uncompetitive freight rates and gouging of the shippers. What we heard from businesses across the country was that they are getting poor customer service. They have had disruptions in rail service and unacceptable service costs. We heard about produce rotting, because it could not be shipped. We heard about lost contracts, because there was no guarantee that the goods could be shipped reliably, which made Canadian businesses unreliable suppliers. We heard about missed connections with ships for travel and shipping. This is a daily occurrence for industries across Canada.
Poor rail services are hurting Canadian exporters, damaging our global competitiveness and costing us jobs, which is a little ironic from a government that talks a lot about jobs. However, when the rubber hits the road, it often misses the train. That is what has been happening with this legislation.
There are a number of key amendments we put forward that the shipping community pushed for. They were championed by the NDP and defeated at committee. Without the rejected amendments, this bill remains only a partial success. Nevertheless, it is still worthy of our support. I want to stress that we are dissatisfied with the outcome. It is not what the shippers really wanted to see. Therefore, there is a need for future strengthening of this legislation.
Sadly, I see that my time is just about up. There is so much else to say. Thanks for the attention of this House. I look forward to the questions of my hon. colleagues.
:
Mr. Speaker, I thank my colleague from for her excellent speech and her responses to the people who asked her questions. I am always impressed by what a fine job she does as finance critic. I am convinced that Canada would be much better off if she were Minister of Finance today.
I rise in the House today to speak to Bill , which comes to us from the office of the , who is also one of my riding neighbours.
I want to say that, although the NDP and I are preparing to support this bill, which is a step in the right direction, we found the government's closed-mindedness during the study in committee unfortunate.
As opposition members, both Liberal and New Democrat, we put forward amendments that were supported by witnesses and experts in the field, and the Conservatives systematically voted against them.
I also want to congratulate my colleague from on the incredible job she does as transport critic. Seriously, I would immediately substitute her for the minister from Roberval, who is the Minister of Transport, and transit in Canada would be much better for it.
To get to the heart of the matter, for those not familiar with this bill, I want to say that it partly addresses the problems of railway transportation service customers that do not have access to adequate service as result of the monopoly held by the major railway companies.
However, since the bill covers only new service agreements, current agreements and contract breaches, which are major causes of revenue losses for shippers, are not affected by Bill . That is one of its deficiencies. We would have liked to remedy that in the Standing Committee on Transport, Infrastructure and Communities, but that was not done.
I will mainly address three points, given the time I have today.
First, Canada's shippers deserve fair, reliable railway transportation service that is worth what they pay. The need to strengthen the shippers' position against the monopoly of CN and CP is only partially addressed in Bill , as I mentioned.
The six recommendations from shippers, in committee, were reasonable, practical and modest. That is why we proposed them, yet the Conservatives rejected them without even considering them. I will elaborate on this later.
There are other areas that need improving.
I would like to stress that the NDP, especially the member for , the NDP transport critic, will continue to work with shippers. Shippers shared their concerns with us, and it is clear that despite the passage of this bill, this file will not be closed.
We are going to continue to work alongside shippers to improve Bill and address the problem of excessive prices caused by a lack of competition. This is a problem, for which the Conservatives are to blame, because we know that they are in bed with the lobbyists for the major rail companies.
Personally, I believe that the bill is biased. The Conservative government has acted shamelessly. It could have taken a closer look at the bill and what shippers wanted instead of systematically siding with the rail lobby.
Shippers are often SMEs. I stand up for SMEs. My riding is located in rural Quebec, in Saguenay—Lac-Saint-Jean. The main industries in the region, for those who are not aware, are forestry and aluminum production. The Niobec mine, not to mention agriculture, can also be found in my riding. All of these products can be shipped by rail.
This bill and the future of Canada's railways directly affect me. At the end of the day, the more that is done to improve the rail network, the stronger the economy that uses this mode of transportation will be. Rail transportation is far more environmentally friendly than transportation by truck.
Concerning my first point, many shippers are not satisfied with the services they receive given the price they pay for those services. They are especially critical of the rail transportation service interruptions and the hundreds of millions of dollars in costs to the Canadian economy year after year.
For Canadian industries, this may mean that harvests rot in the fields, that plants and mines are just marking time and they miss the ships meant to transport their products. It may also mean that inadequate rail freight services hurt Canadian exporters, jeopardize our competitive position internationally and cost jobs in Canada.
We cannot afford to suffer losses on the international marketplace just because the railways are unable to organize their services properly.
In addition, the clients of rail freight services, from farmers to mining companies, are penalized by the virtual monopoly in rail services. In most parts of the country, shippers cannot choose which rail carrier to use because they only have access to CN or CP. Such is the case in my riding. Even where both rail companies provide services, one of them usually sets its price too high, leaving the shipper with hardly any choice at all.
Shippers routinely defray the cost of service interruptions, delays and a range of performance shortcomings by CN and CP. Pickups and deliveries are made on time or not at all. The number of cars requested is often different from the number of cars provided, and the cars provided are sometimes damaged.
The situation affects many sectors, such as natural resources, manufacturing, agriculture, forestry products, mines, chemicals and the automotive sector.
For the most part, the products of these industries are intended for export. The poor quality of rail transport services undermines the ability of Canadian exporters to compete on the international marketplace.
As an example, soybeans from Argentina have a competitive advantage on, for instance, Japanese and Chinese markets because they are delivered more quickly and more punctually than soybeans from Canada, even though the distance covered by the Canadian products is substantially shorter. This clearly shows that there is a problem with our rail system.
Shippers have told the Conservative government about their dissatisfaction for years now, but the Conservatives have not taken any real measures. Since 2007, their approach has been to talk about it and wait. They started off by promising to ask a panel of experts to study the issue.
I know that the Conservative government likes to postpone the passage of good bills endlessly. However, at some point, you have to move from consultations to actually taking action.
What we want is clear. Farmers and other businesses have been footing the bill for years for the poor quality of rail freight services and have never really been able to get Ottawa’s attention. I am pleased that they have a listening ear in the member for .
In order to truly remedy the situation, the NDP advocates strengthening the shippers’ position. We are on the side of businesses and exporters, and we are determined to get them the rail freight services they deserve.
Bill will cover only new service agreements, not existing ones, and that presents a problem. It means that many shippers will continue living with unreliable and unfair services with no access to the resolution process when existing service agreements are violated.
Arbitration is available only to shippers negotiating new agreements. Instead of offering all shippers speedy, reliable assistance through dispute resolution, Bill offers a limited arbitration process to a small group of shippers.
The arbitration process presented could be very expensive for shippers and place an unfair burden of proof on them by asking them to prove that they need the services of the rail transportation company.
One of the things we are calling for is the inclusion of penalties in service agreements, to compensate shippers for service interruptions, damage and lost productivity.
In its present version, the bill provides for maximum fines of $100,000 to be paid to the federal government, not the shipper. In order for fines to have a deterrent effect, they should be higher, given that CN made a profit of $2.7 billion in 2012.
The NDP will stand up for farming, mining and forestry communities, like the ones in my riding, and will fight to put an end to the unacceptable treatment and unreliable rail transportation services provided by the big rail companies.
We need a stronger bill to protect the customers. We will work with shippers to get them the fair and reliable rail transportation services they deserve.
The poor quality of rail transportation services causes Canadian shippers hundreds of millions of dollars in damage every year. Canadian jobs are at stake. We have to act now.
:
Mr. Speaker, I am pleased to rise and put some comments on the record in regard to this bill. I had the opportunity to serve as the chair of the transport committee that listened to most of the presentations, and we certainly listened to the concerns expressed.
Before I begin my comments, I would like to give congratulations to the and the . This has not been an easy file. It has been a file where if they do not get it right, they will not get a lot of second chances. They have spent a lot of time working together. They have listened to stakeholders and they have listened to the people who have vested interests in producing a fair deal at the end of the day. This particular bill we are putting forward would address many of the issues that were proposed and put forward by the stakeholders in the negotiations.
I do want to start right off by saying that I support this bill. Particularly in my new role as chair of the agriculture committee, it is one that will benefit the agricultural sector, and also the people I represent in the communities of Brandon and Souris.
The decision to move to a fair rail freight service act was discussed in 2011. It was an act to provide shippers with the right to a service level agreement and a process to establish such agreements when commercial negotiations fail. Many people would ask why this new bill is important. Why it is important to agriculture and to farmers? Like any business, it is one thing to have a great product, which I believe our farmers in Canada have, but it is another to be able to get it to market in a timely and efficient way.
Across Canada, producers and processors export 50% to 85% of their production, and they rely on an efficient and effective rail service to get their products to their customers. Farmers today ship 65% of their soybeans, 70% of their wheat and over 83% of their pulses beyond our borders. Last year alone, Canada reached a new record of exporting $47.7 billion in agricultural food and seafood, with significant increases in key markets, such as China, Hong Kong and Russia.
We are not done. We are on track to increase those export dollars and expand our markets. A full one-third of those exports are driven by Canada's world-class grain industry, which is also a powerful engine of our jobs and our economy and what our government has been all about for the last several years. It brings $15 billion to the farm gate. Jobs and growth depend on exports. An efficient rail service upholds the reputation of our agricultural exporters in foreign markets, and if our buyers are happy with delivery they will come back for more Canadian products rather than moving on to other sources of supply.
Our government remains very focused on trade because it drives one in five jobs across our great country. As part of our government's strategy for economic growth and prosperity, we have been pursuing a very ambitious trade agenda. I suggest to the members opposite that regrettably they were not able to participate in approving the trade agendas we have put forward, but they continue to move Canada forward, particularly our agricultural producers.
In fact, a key part of our economic action plan is the most ambitious trade agenda in Canadian history. Since taking office, we have concluded trade agreements with nine countries and have many more in the hoppers. We recently released the Agriculture and Agri-Food Market Access Report, documenting some of the keys wins we have had on the trade front over the last few years. Those wins include restoring beef access to South Korea, a potential market of $30 million by 2015; expanding access for canola to China, a market worth $1.6 billion; and, just recently, expanding access for our beef to Japan, which will double our market there.
I understand that numbers being put out there sometimes confuse people, but the bottom line is this: our Manitoba producers, our Canadian farmers, our food processors and our economies depend on trade to prosper.
What would the bill do to ensure a more efficient and reliable rail system for farmers? Most importantly, the fair rail freight service act would give shippers new tools to level the playing field in their relationship with the railways. The fundamental change would help to ensure the smooth and uninterrupted delivery of Canadian products to our customers. Agriculture and Agri-Food Canada is backing this commitment with the crop logistics working group, which provides a forum for transportation-related issues. On November 20, 2012, the announced a new mandate for this working group to continue finding efficiencies and driving costs out of the entire food value chain.
We all know that the potential for growth lies beyond our borders in this great country, and our Conservative government continues to work closely with industry to open up new markets while strengthening and expanding our existing trade relationships. We cannot afford to put that business at risk. Canadian grain farmers and grain marketers have sales orders to fill around the world and are heavily dependent on the railways to move their product to market.
I am pleased to note the strong support from industry for this new bill. Stephen Vandervalk, president of the Grain Growers of Canada, said:
This new legislation will go a long way to address our farmers’ shipping needs. We are thrilled to see this legislation moving through Parliament. A lot of hard work has gone into this.
Pulse Canada also stands behind this new legislation. Gord Bacon said:
We're very pleased to see the government taking some action, because we have a long history of wanting to see improvements in the predictability and reliability of rail traffic.
The Keystone Agricultural Producers have expressed their support by stating:
The ability for shippers to acquire service level agreements is something we’ve been requesting for a long time.
Reliable rail service is a major concern when we market our grain, so the sooner this passes, the better.
This legislation is a no-brainer. We have both sides at the table. We have both sides in agreement. Rail service disruption damages our entire reputation for exporting into foreign markets. If our buyers are concerned about delivery disruptions, they will soon move on to other sources of supply. We do not want our customers to think twice about buying from Canada. The livelihood of Canadian farm families depends on uninterrupted, timely and efficient rail service. I ask that we act now. I ask that we move forward on the bill as quickly as possible.
I would also like to add a couple more comments from people who have passed them on to me.
Richard Paton, president and CEO of the chemistry association said “...this legislation is critical — not only for our industry’s competitiveness, but for Canada’s overall productivity and prosperity”.
I want to congratulate all parties involved in this. It was a difficult challenge laid before parliamentarians, but also for members of the committees who met to try to hammer out this deal. Mr. Jim Dinning was very effective in creating the groundwork that we needed to come to this. At the end of the day, I believe with the ability to create service agreements, the people who have had issues with rail delivery and rail service in the past will have a way of resolving this.
I want to congratulate the rail companies, the short-lines and all people involved in that transportation industry. They have worked very hard to create an atmosphere where we can grow, where our opportunities will continue to grow, and where service will become the mainstay of western Canada and Canadian deliveries, not only to our markets to the south but to markets around the world.
I encourage all members to support this legislation.
:
Mr. Speaker, thank you for attempting to regain a little order. It is much appreciated.
What I was saying was that there is significant disappointment, not just in the House but in the shipping community. The legislation does not fully achieve the objectives that the shipping community had been hoping for. They have been waiting for this legislation for a long time.
The debate about level of service agreements in the country began in 2006-2007. Before that period of time, the focus was on costing agreements and the level of freight rates and whether or not farmers and other shippers were receiving the full value that they thought they should receive. The argument was all about having costing reviews and the timeliness of costing reviews, what revenue was raised by freight rates and how it was shared or not shared across the entire continuum, from the shipper to the port and ultimately to export destinations.
In 2006-2007, the focus really zeroed right in on the issue of level of service agreements. That is when this debate really began.
The government took a while to think about that, but in 2008, the government said it agreed that there was a legitimate issue, that service levels might well be deficient and there ought to be a review of the level of service provided by the railways to the various shippers.
I should make the point that we are not talking here about just the agricultural sector. As large and as important as the agricultural sector is, the shipper community includes those who move virtually anything by rail. It includes the forestry sector, the chemicals sector, the fertilizer sector, mines and minerals, and manufactured goods. It is a broad cross-section of those who rely upon our railway system. They made the general complaint that they thought the services they were getting were in fact deficient.
As I said, the government agreed in principle, but there was an issue here, starting in 2008, and it said it would have a formal review. That review panel was appointed in the fall of 2009. It got to work pretty quickly and completed its work in about a year. It finished its report in the fall of 2010. The report was officially published at the beginning of 2011 and by about March, the government said it accepted the report of the review panel and that it intended to implement the report.
The panel essentially said that the marketplace for transportation services was basically a non-competitive marketplace, that there was not a fair balance between the shippers on one side and the railways on the other and that there was indeed an imbalance of market power that was biased in favour of the railways. That report of the review panel appointed by the government came out at the beginning of 2011.
In March of 2011 the government said that it essentially accepted that principle and that it would do something about it. The discussion continued to go on without a specific proposal from the government. In fact, it referred the whole matter back to another review process, chaired by Mr. Jim Dinning from Alberta. He was not able to move the yardsticks any further in trying to reach consensus between the railways and the shippers, so the process dragged on through 2011 and through 2012. By the end of 2012, in December of last year, the government finally tabled legislation. We are now halfway through 2013.
I would just remind the House that this whole process began in 2007. It has been a long time, and the shippers have waited patiently for legislation that they hoped would address their concerns. Unfortunately, they are disappointed. They find this legislation to be deficient.
The shippers essentially wanted four things in the legislation. First, they wanted in legislation the enshrined right that they would be entitled to an enforceable level of service agreement with the railways. That was number one.
Number two, they wanted the legislation to lay out what constitutes the basic services that the railways are to provide and how performance or non-performance would be measured. That was their second request. They wanted some clarity and some specificity about what constitutes service and how it is measured.
Number three, they wanted it very clear that if there were a breakdown somehow in the system, if the level of service that they contracted for was not in fact delivered as promised, then they would be entitled to recoup damages for the deficient service that they were delivered.
I would note that the review panel had reported, when it examined all of the anecdotes presented by shippers, that the typical agricultural shipper in western Canada could expect to get exactly what it ordered from the railways only 50% of the time. That is a pretty compelling statistic. If we can count on the transportation we have ordered to deliver only 50% of the time, we have a big problem if we are relying upon the railways to actually perform in that manner. Obviously the situation was serious and the shippers wanted the opportunity to recoup damages. They hoped they would not have to do that, but they wanted the opportunity to recoup damages if in fact the level of service fell below what was expected.
Finally, the fourth element was the dispute resolution mechanism.
The right to have a level of service agreement was point number one. They could negotiate that. If the negotiations were not successful, then it would be referred by arbitration to the Canadian Transportation Agency and the agency would impose an arbitrated agreement. That actually is in the law and that is a good part of Bill . It is the other elements of the ask that are missing. The clarity with respect to the definition of what services are to be provided and the consequences if the level of performance falls short. In other words, the ability by the shippers to recoup damages.
Those two things, the clarity of the definition and the ability to recover damages, are not in Bill . Those are the two primary reasons why the shipping community feels that this legislation is deficient.
The government's answer with respect to the definition of level of service is that it is just going to rely upon the traditional language that has been in the Canadian Transportation Act for 40 or 50 years and it does not need to upgrade that language or make it any more specific to satisfy the concerns of shippers. I think quite frankly that the government is going to find out that this is a false conclusion on its part. The definition in the act is what has caused the problem in many ways over the last number of years. It is not clear. It is like nailing Jello to the wall. To simply say, “we're going to carry on with those same definitions of service levels in the future and cross our fingers and hope for the best”, the government, the shippers and the railways are going to be disappointed. The language has proven to be deficient in the past and the definition of insanity is continuing to do the same old thing over and over again and expecting a different result.
We are not going to get a different result, so the definition in this legislation is not adequate to change the water on the beam, to solve the problem that the shippers have been complaining about and that the government's own review panel concluded was in fact a legitimate problem and that the shippers were not crying wolf.
Second, on the issue of enforcement, what happens when the level of service turns out to be deficient and it does not measure up to the standards that the shippers have every right to expect? The government's answer is not to give the shippers damages. The government's answer is to establish a system of administrative monetary penalties, in layman's language, fines for railway substandard performance. Some might think that is a kind of penalty and enforcement mechanism, would that not work? The problem is the fine goes to the government. It goes into the general revenue fund.
It simply becomes an additional revenue source for the treasury of the Government of Canada and bears no relationship whatsoever to the transportation problem out in the field. What the shippers need is the ability to recover damages. If a shipment is not delivered on time and it misses a customer or a market, that is a monetary penalty that shippers have to pay. They lose income, lose profit and incur added costs because the transportation system has failed them.
It does them no good whatsoever to say we will slap the railways on the wrist and they will pay a fine to the government. That does not move an extra bushel of wheat, that does not move an extra tonne of lumber. All it does is transfer a bit of money from the railways to the government. Meanwhile, the shipper is stuck with the same problem: deficient service for which there is no remedy because they cannot recover damages unless they go through the elaborate process of going to court.
We just had a discussion about small shippers and the disadvantages they have. The railways have deeper pockets for the lawyers in the court process than the shippers have and, undoubtedly, that imbalance will continue to function in favour of the railways and to the disadvantage of the shippers.
Probably the greatest illustration of the discrepancy remains on the playing field. Remember, the panel said the original problem was a lack of balance on the playing field. It was tilted in favour of the railways and the shippers were largely in a captive market situation. They were not in a position to find some other railway to move their product and they were not in a position to enforce their legal rights because they did not have the legal rights, so they were stuck in a disadvantageous position.
Perhaps the greatest illustration of that discrepancy is the fact that railways can, and always have been able to, level unilateral demurrage charges against the shipper if the shipper fails to deliver their side of the bargain on time or in the way the railways had expected. The railways can extract a cash penalty from a shipper called demurrage if the shipper falls down on its obligations, but on the flip side of the equation, the shipper does not have the ability to recover a cash penalty or cash damages from the railways if the railways fail to perform. Therefore, the railways have the power to punish the shippers, but the shippers do not have the power to punish the railways. That is a classic illustration of the fundamental market imbalance that exists in this situation and the imbalance that the shippers had hoped would finally be rectified by this new legislation.
Those are the fundamental problems. The legislation creates, to a certain extent, some steps forward. There will be a legislated right on the part of all shippers to have level of service agreements with the relevant railways. They can first try to negotiate those agreements and if the negotiations succeed, great. Everybody hopes that is the way it will work, that they will not need recourse to the legislative and regulatory framework so that the parties will be able to work out a deal. However, if the shipper is not able to successfully conclude an agreement with the railways, the legislation takes an additional step, which is good, in saying that the shipper can then to go to the Canadian Transportation Agency and get an arbitrated settlement from the agency. Those steps in the legislation are positive steps forward.
However, let me repeat that where it falls down is in the language that is in the act or, more accurately, that is not in the act defining what “level of service” means. The same vague old language is being used that has been there for decades and that vague old language is part of the problem. There needs to be greater clarity about what constitutes level of service and the way level of service is measured. The second major deficiency is that when there is a failure to perform on the part of the railways, there is no ability on the part of the shipper to go to the Canadian Transportation Agency through some form of dispute settlement process and obtain liquidated damages to address the practical problem that the shipper has, that their goods are not moving because the railways have failed to perform.
Paying a penalty to the government does not do the shipper any good. The money is in the pocket of the government, not in the pocket of the shipper and the shipper is the one that has experienced the problem.
Those are the issues that were discussed at committee. Those are the issues that members of this House, both in committee and otherwise, have discussed with the shipping community across the country. They say that, because of the legal provision in Bill that would create the right to have a level of service agreement, the legislation is a step forward. It is, as they put it to me both verbally and in writing, better than nothing. They would like substantially more, but it is better than nothing.
On that basis, that it is some small improvement over what has existed in the past, Liberals will be reluctantly supporting this legislation. We would prefer to have it vastly improved. There still is an opportunity to do that. The parliamentary process is not yet complete.
Hopefully before it is complete and before this legislation is given royal assent, the government will have the opportunity to reflect on those two key points. First, a more effective definition of level of service and the way it is measured; second, the way proper service is enforced by the railways, by giving the rights to the shippers to have liquidated damages, as opposed to just a penalty paid to the government.
If the government would change those two things, the shipper community members would be a lot more satisfied with this legislation than they are today. I think all of us are reluctantly accepting it the way it stands, but the government will find it will be revisiting this issue in a year or two.
There is a statutory review of the Canada Transportation Act in the year 2015. This is going to come back again, because this time the government has not seized the opportunity to do it right, the way it should have.
:
Mr. Speaker, I take great interest in the debate this evening, as well as a bit of pride, because this legislation is very close to me. I was in charge of the railways at the time when the rail freight service review was happening and on behalf of the government, I was able to introduce the announcement to initiate this legislation.
Here we are going into third reading, which is great not only for the House but for the country because all parties are indicating their support for the legislation. It is a great legislation for a lot of reasons.
I will start with why it is here and why we need the legislation. I would like to go back a bit and explain to the House and Canadians what the problem really was.
At the time when I was put in charge of railways, in western Canada the on-time delivery for CN's cars was about 52% to 55% for grain shipments. That is not a good performance. How could western Canadian farmers get their products from the combine to the port and off to international markets when they could only rely on the cars being there at the proper time 55% of the time?
As my hon. colleague from Wascana mentioned, during the review CN upped its game considerably. New management came into CN and really concentrated on trying to up its game at the time, and it did. It went from 55% to over 90% within about a year to a year and a half period. That was strictly because the spotlight was on it and it put full attention toward upping its service because the service review was taking place.
A lot of the shippers came to us and asked that we keep the review going and keep the spotlight on the industries and the railways so they would up the game. We encouraged them to continue to have service agreements with all their shippers. They committed to doing that and signed as many shipping service agreements as they possibly could. In fact, I know there were some in some of the industries, perhaps the coal industry, for over a decade, so there were some long-term agreements that were signed at that time.
This legislation does not really speak to the agreements. That is intentional because they are so diverse. Producers cars would have a completely different need and service agreement than would shipping of a coal, potash or forest industries. However, they all want service. Under this legislation, those agreements would be totally flexible because they could contain all kinds of penalties. We are not privy to what the agreements are. We do not need to know what they are. However, when the two parties come to an agreement, they need to have some kind of mechanism to do things.
The first is to ensure that whatever agreement they do reach is complied with. That is what this legislation does. It has penalties that would go to either a shipper or a railway depending on which one breaches the agreement.
The second is there for when an agreement cannot be reached. If negotiations between the shipper, the railway, and so forth are done to the best of their ability, whether in the forest, egg, coal or potash industry, whatever the commodity, yet they cannot come to an agreement, then they are really stuck. This legislation is a way for them to reach a final arbitrated settlement that would give them clarity as to what was fair in an agreement. That is what the industry and the shippers have asked for.
Instead of being held ransom and saying they cannot come up with an agreement because no one wants to negotiate, they are saying, with this legislation, that if they cannot come to an agreement, there will be an arbitrated settlement. It does not say who is going to win or lose in that arbitration. Rather it calls for that to happen. Because of that, there will be a better system all the way around. If we go through the rail service review data carefully, as did the committee and the government, there was a lot of blame on both the shipper and the railway sides.
Let us not pick winners or losers. Let us just fix it in the best interests of this country. That is what this House is all about. It is about designing a piece of legislation that will move the country along. We do not really care who wins or loses. We want it to be fair so that both win. Canada wins because we move product to shore and on to international markets, where the real win is for the railways, the shippers and the country. That is why this should be supported.
International trade is really our stimulus for the future. We just came through a tremendous economic recession that has challenged the world. It challenged North America. It challenged the United States, our largest trading partner. Last year we had $528 billion in trade. Three-way trade between Mexico, Canada and the United States is almost $1 trillion per year. That is a large number, when we start talking about trillions of dollars.
About 40 million jobs have been created in our country because of NAFTA. I love the map at the Canadian embassy in the United States. The map shows for each state the number of dollars traded with Canada and the number of jobs created in that state because of that trade. It is very effective information that our American cousins need to understand more directly. Canadians also need to understand it. The number of dollars traded and the number of jobs created in each province is also on that map. I would recommend it to anyone.
Why do I mention that? It is because one of every five jobs in Canada is created because of trade, because of exports. Sixty per cent of our GDP is from that trade. Is it growing or is it shrinking? The last statistics I saw show a 73% increase in trade internationally between now and 2025. That is a large number. Those countries that capitalize on that growth in trade are the ones that are going to win. I like the way we are positioned to capitalize on that. We are about to sign a European free trade agreement, which I hope will work. That is 500 million people and $17 trillion in GDP in that market that we will be able to capitalize on. Not only that, but when we go to the west coast, with the trans-Pacific partnership, we will be talking about 110 million people and GDP of $17.6 trillion.
These are tremendous opportunities, not only with respect to China and India but with the trans-Pacific partners. It will depend on what we have to offer those markets. We are also working on a bilateral trade agreement with Japan. We are working on more trade with China. China is a big player, particularly when it comes to railways and moving products to the west coast.
What do they want? They want two things: food security and energy security. Canada can provide both, and railways are a major part of that. Before railways and shippers start saying negative things about each other, why do both groups not look at the opportunity before us? Why do we not look at the opportunity before Canada? Never has the opportunity been greater to create a winning situation for Canadian industries. It might be products manufactured and moved back and forth by rail, as we do with United States when we move automobiles back and forth by rail. We can actually supply for the United States products coming from China through the port of Prince Rupert two and a half days faster than any other port on the west coast. It is two and a half days faster, because it comes through Prince Rupert and goes right down to Chicago to supply the largest economy in the world: the United States. It is because of our railways and our system.
People have been criticizing this piece of legislation and asking why we did not include shipments to the United States in this rail service agreement. I can say that the United States is looking very closely at this piece of legislation. Americans are wondering how it is working, what kind of support it is getting and if it is going to actually do the job. I believe that it will do the job. The Americans are very keen to look at it and perhaps even use it as a model for their country. When that happens, there will be a continuous system between Canada and the United States, which is our largest trading partner and always will be.
This is a great piece of legislation for many reasons. When we look at the international markets, it is indeed amazing.
The railways carry a tremendous amount of freight, about 240 million tonnes of freight. About 70% of the surface freight in this country is moved by rail. That includes the bulk commodities such as grains, minerals, forestry products, energy products and so on.
I was talking to a representative of CN last night. He was telling me that the number of cars they are ordering to supply energy to markets by rail is off the charts. That is happening because of the resistance to pipelines. Whether or not the pipelines come, there is no question that rail will play a big part in moving our energy products to shore and beyond.
It is very important that this piece of legislation work not only for the agriculture sector, for grains and seeds, but for the energy sector, mining, potash and so on. It is a great piece of legislation that would go a long way in making certain that we level the playing field.
My hon. colleague said that CN used to be one of the worst as far as providing service. I would tend to agree with him. Perhaps now the reverse is happening, and CP is having more of a struggle providing service than CN. That is hard to argue with, and it is probably true.
We have heard arguments from the president of CN. He is asking why we are bringing in this legislation. He says that it will halt negotiations and drive people away from the negotiating table. It would do just the opposite. It would drive people to the negotiating table, because if they did not get a service agreement, there would be a very quick arbitration process in place through this legislation that would actually make sure they got a deal. That is what the legislation is designed to do. That is why it would work so well.
Would it be used an awful lot? Probably not. I hope not. I hope it is never used. If we bring it in, the jig is up. There should be an arbitrated settlement. If there is not, somebody will do it for them. They will do it quickly, and it will not cost a lot of money. Once the process has been challenged, a precedent will be set. The rest will fall in line with it, and the service agreements will comply.
I do not believe that this piece of legislation will be used terribly much, but it needs to be there, because the manager of CN or CP may not always be the most friendly guy who always wants to do the right thing. When we bring in legislation, it is for a long period and it is in the best interests of the country. It has nothing to do with the personalities of the people who were there.
I remember the forest industry. We were within hours of finalizing an agreement with the forest sector of this country. We brought them to the table. We did everything we possibly could to get them over the line. We could not quite get there. We would get there now, because we would have a piece of legislation that would arbitrate it. I will not say who would win or lose in that arbitration, because I do not know, but I do know that there would be an arbitrated settlement and they would move on.
It is really important that cars are placed in yards at the appropriate time for product to move from where it is produced to the market. That is the number one thing we can do to create the kind of economy, jobs and prosperity this country needs to move forward.
A lot has been said about the penalties that would go to the government. That is because we do not want winners or losers to use this piece of legislation other than as a tool to make certain that services are provided at the appropriate time.
There could be all kinds of penalties within their service agreements if the parties agreed to them. If the agreements were not recognized and not realized, the penalties would be a tool to make sure the service agreement was complied with.
It is a very great day for me. This has been a long process. It is a process that has had a lot of consultation.
I have quotes here from the agricultural, forestry, coal, potash and mining industries that say that this is a very big step in changing the dynamic between the railways and the shippers. They feel that they have a government that will back them in an arbitrated settlement process that does not play one against the other. It is truly there to try to make certain that an agreement works for both and that the service is provided in an appropriate way. Predictable service is something we cannot talk enough about. Unpredictable service is the number one thing that will retard the opportunity for shippers to be prosperous and get their products to market.
I want to commend the standing committee on transport. It worked very hard over a number of years to make this happen. The has picked this ball up and has pushed it very hard. He has worked very hard to bring this to where it is tonight.
Tonight is a wonderful evening. Think about it. When was the last time we had a substantive piece of legislation such as this that was agreed upon by everyone in the House? I can think back a long time. I know that there have been frivolous pieces of legislation that perhaps have had unanimous consent, but there have not been major pieces of legislation like this that are paradigm shifters that would change the dynamic. It is probably the most significant piece of legislation to come between shippers and railways in 50 years or more, so this is a very significant evening. It is a significant piece of legislation.
I am very proud to be lending my voice to it, and I look forward to the vote, which I hope will happen tomorrow. We will move it into the Senate and on to royal assent very quickly.
:
Mr. Speaker, I rise today in support of Bill .
Before I get going, I cannot help but mention that here we are, trying to debate an important piece of legislation, and yet the government has moved time allocation once again. This is the 37th time. What does the government have against parliamentary democracy? Why is it so determined to shut down debate and to prevent members of Parliament from having their say on important pieces of legislation? My colleague said how important this legislation is, and because it is so important, I am very disappointed that the Conservatives had to use these tactics yet again.
When we look at this bill, it actually gives our rail freight customers, or shippers, the right to service agreements with rail companies, especially CN and CP. It also puts into place, as my colleague said, a Canadian Transportation Agency-led arbitration process for failed negotiations, and penalties for violating the arbitration results.
This all sounds good, but I want us to take a look at what this means. By the way, we are speaking in favour of this bill. However, we do not believe this bill is complete. It does not address all the issues that the shippers, farmers and everybody needed it to address, but it does go part of the way.
We call this bill a baby step in the right direction. As good behaviour should always be rewarded, it is a piece of legislation going in the right direction. We have heard that this will not alleviate all the challenges faced by the shippers but it will go a long way in addressing a few of them. It is one of those cases of “better something than nothing”. That is why we are supporting this bill.
At this time I want to acknowledge the work done by the member for on this file. She is an amazing critic for the transportation file. She is dedicated, passionate and has worked incredibly hard with different organizations of shippers, and representatives from the mining companies, the pulse growers, the Canadian Wheat Board, the automotive industry, as well as the mineral and chemical companies.
It is her commitment, compassion and not letting go of this issue that I believe has forced the Conservative government to bring this bill to this House right now. Quite honestly, they have been dilly-dallying over this piece of legislation for a very long time, long after the report was out. They have had lots of time to act.
The member for has a private member's bill, Bill , rail customer protection act. It is her absolute advocacy and outreach, and that kind of work in the House, as well as the pressure from the shipping community, that has put pressure on the Conservatives to table legislation.
I think we should always give credit when members of Parliament put in an incredible amount of work to benefit our farmers, mining companies, automotive companies that have to move cars, and, of course, all the other resource industries as well, including forestry. We are absolutely delighted with the work that the member has done.
I also want to pick up on something that was said just a few minutes ago. CN made a profit of $2.7 billion in 2012, in one year, yet when I look at the penalty they will face, it is $100,000. By the way, that penalty is not paid to the shippers; it will be paid to the government.
I look at that and ask which lobby group has been successful. One just has to take a look at this bill. I have talked with shippers in my riding and visited a port where grains and legumes come in. This is when I learned something absolutely amazing, which you will be surprised at as well, Mr. Speaker. Did members know that Canada is the largest provider of pulses to India? In my naiveté, I always thought that lentils, chickpeas and all of those legumes were being brought to Canada from India and other countries. I was quite shocked to find out it was the opposite. It was the Canadian consul in Chandigarh who told me. He presented the figures and asked me if I knew that Canada is the largest exporter of legumes to India. A lot of those legumes go through the port of Vancouver and the port of Delta.
What I have heard from business people in my community, those who receive and ship, is the travesty that exists right now. They actually have to wait, sometimes for days and days, because the promised carriages do not arrive. If they are slow to unload a trolley—I think it is called a trolley—when it arrives, they end up having to pay fines, but there are no consequences for the railway companies if they are late, do not send enough trolleys or if the trolleys that arrive are damaged and, therefore, cannot be used.
I looked at the ledger with one of these business people in great detail, who wanted to show me the impact it was having on his business. Let us say that he does not get the shipment on time, that the shipment of pulses that arrives from the Prairies does not get to his place on time. In the meantime, he not only has trucks and truck drivers waiting but labourers waiting to unload, and he has time booked at the port. Guess what? He has to pay all of them, through no fault of his own, just because the railway company is delayed or because it does not deliver all the trolleys he was expecting on that date.
I thought it must just be a few dollars here and there. I was surprised at how much these shippers pay if they do not empty the trolleys on time. However, I was also shocked at the port fees they still had to pay if they did not take up their spots and how the costs escalated the longer they waited. Really, we are not talking about simple costing. This bill has compensation—no, not compensation, a slight penalty for the railway companies of $100,000 when they make $2.7 billion in profit. Guess who that money goes to? It does not go to offset the real costs incurred by the shippers and receivers, those who grow and ship the goods. That money goes to the government.
I have been shaking my head on that one, thinking this makes very little sense. Does the government really have a vested interest in making sure that this new piece of legislation really works, if it knows that every time CN Rail is late, it is going to get $100,000? That does not seem like a penalty. It seems like the government has built in a bonus for itself. We really have to take a look at that.
Our railway system is the backbone of our country. There is no doubt about it. From some of the early CP and CN stories we have all read about, glorious or not so glorious, we know that 70% of our surface goods are moved by rail. That is a significant amount. When we say that there are shippers who actually suffer the consequence of this, we are not talking about a small number of people.
This is another figure that absolutely astounded me. It is that 80% of service commitments for agricultural rail customers are not met by rail companies. I think 80% would get a big F if I were grading them for service. Let us say, out of 100 times, 80 times they fail to meet their deadlines. We are talking about produce that has to be moved quickly and people are waiting for it. We are also talking about some produce that could get spoiled, but we are also talking about the ricochet or cascading costs that I just mentioned earlier.
There are delays. There are insufficient numbers of rail cars. Some rail cars arrive and they are damaged. Sometimes they order 12 rail cars and guess how many arrive? For one person I was talking to, shippers might only get half the rail cars they ordered. That puts all kinds of stress on the system. Once again, when we look at the losses incurred by the shippers, the bill fails to address that. I would urge my colleagues, even at this late stage because it is in their hands, to really take a look at that.
The rail freight service review said that 80% of shippers are not satisfied. By the way, we are not talking about one industry. Of course agriculture plays a huge role in this area, but we are also talking about forestry, natural resources, manufactured goods, mining, chemicals and as I said earlier, all the agricultural belt. Key stakeholders in agriculture, mining and forestry industries, not just individual people but associations representing these industries, have been calling for freight legislation for years.
Let me give some examples: Pulse Canada, Grain Growers of Canada, Forestry Products Association of Canada and the Mining Association of Canada. Once again I would say that as I have talked with many business people in my community who are involved in the shipping industry they have been so full of praise for the member for who has done such great work on this file.
Canada's shippers deserve fair and reliable rail freight service for the good money they are paying. Right now with the way our country is, CN and CP seem to hold a dual monopoly. The impact of that monopoly has not been addressed by Bill because the one area that has not been addressed is pricing. That is a critical part as well, and it is not only pricing, but also the fact that there is no compensation for the shippers.
There were six recommendations from the shipping community at the committee stage, sensible, practical and modest. They were all rejected. This is an all too familiar pattern. I sit at the immigration committee as vice-chair, and it does not seem to matter what amendments we propose. Even amendments that the minister thinks would be really good ones because we take up his wording just get rejected.
However, these were not amendments from the opposition. These were amendments suggested by the shipping community, the business community, the people who are the backbone of this country who pay taxes and who were looking to the government to show them a level playing field. Once again, the government has failed to show a level playing field to all the industries I mentioned, including agriculture. Once again, it has chosen to stand closer to the big corporate friends like the railway lines, CP and CN.
Members know that the NDP is not going to give up. We are not planning to go away. We are planning to work harder than ever. We will continue to work with the shipping community to tackle the issue of gouging through uncompetitive rail freight rates.
Do members know what? This was an opportunity for the government to address that issue, to take a holistic approach, instead of taking a baby step, a very tiny baby step. In here, we can talk about the economy. We can talk about growing jobs. We can talk about all kinds of issues. However, here was a concrete opportunity for the current government to do something that would help to bolster our economy, agriculture, the mining industry, the forestry industry and the automotive industry. Once again, it was very short-sighted and just decided to take a baby step.
One of the key things we have to take a look at is that when we look at the moving of goods and think that 70% of our surface goods are moved by rail, in this huge country—and by the way, as we know, moving goods by rail is much more environmentally sound than it is to move them by road—the government had an opportunity, at this time, to support the pulse growers, the grain growers, the mining industry and the forestry industry.
We know that disruptions to rail freight services and unacceptable service costs cost the Canadian economy hundreds of millions of dollars every year. The businessmen I have talked to when I have taken a look at the losses they incur, when they incur those losses, they impact the community I live in. They impact right across this country. A few of the business people have been telling me that they absolutely—
Some hon. members: Oh, oh!