Speaking Notes for the Honourable Marc Garneau, Minister of Transport at Edmonton Chamber of Commerce to discuss the Transportation Modernization Act and Freight Rail
May 18, 2017
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Good morning, Bonjour.
It is a pleasure to be joined today by so many important stakeholders from across our rail system, and across the country.
Last November, I laid out the Government of Canada’s vision of a cutting-edge transportation system that will move our country into the 21st Century.
It’s called Transportation 2030 - A Strategic Plan for the Future of Transportation in Canada.
The plan is focused on a safe, secure, innovative transportation system that promotes trade and economic growth, a cleaner environment and the well-being of Canadians.
A strong transportation system is fundamental to Canada’s economic performance and competitiveness.
That is what Canadians told us they expect, during our extensive consultations last year.
I appreciate not only your attendance here today – but also your input, your expertise and your guidance during the extensive period of consultation that led to our Fair Freight for All plan.
I’m not going to pretend that our consultations were a harmonious chorus of Kumbaya. There were competing interests and differing viewpoints – and my officials and I heard them all expressed passionately over the course of more than a year of discussions.
But there was also a lot of common ground. The vast majority of people we spoke with – including many of you in this room here today – agreed that when it comes to rail policy, we are long past the point of stop-gap measures and Band-Aid solutions.
In an increasingly competitive world, we need to take a look at the whole system – and set it up for long-term success.
As we celebrate the 150th anniversary of Confederation, we reflect on our many accomplishments as a country – including the bold and visionary decision to build the transcontinental railroad.
The challenge of our time is to further enhance the utility, the efficiency and the fluidity of our rail system.
We need to put in place a series of policies that will support a safe, fair, competitive industry that works well for all participants in the system – and for Canadians as a whole.
Freight rail is a backbone of the Canadian economy. It creates and supports thousands of jobs across our country.
Each and every year, it directly enables the movement of $280 billion of goods – so we as a country can trade among provinces, across the U.S. border and with other nations of the world.
I’ll be candid with you, though. Before I became minister, I don’t think I fully grasped the importance of rail to our local, provincial and national economies.
Many Canadians likely share a similar perspective.
They know that our freight rail system plays a central role in shipping goods, as it has for a well over a century.
Today, it moves everything from grain and potash, to oil and coal, to the cars we drive, the clothes we wear, and the food we eat.
But Canadians may not be aware of the extent to which we rely on rail… how much of our economy moves through rail… and how important it is that we have an efficient, modern and competitive rail system.
Jobs depend on it. Our economic strength depends on it. Our citizens and the growth of the middle class depends on it.
For bulk commodities, rail is the only viable, long-distance travel option. It simply must work – efficiently, effectively and above all fairly.
Here is the reality of where we find ourselves today.
Over the past three decades, the revenue of goods traveling by rail has more than doubled.
That growth has been supported by deregulation and privatization within the industry. It has become more productive, efficient and reliable.
Investment in the railway network has been strong. Freight rates have remained competitive – the lowest among major countries.
That’s all good news. Our rail network is today more commercialized and more competitive. That’s a tribute to the efforts of participants across the system – from those who operate and maintain it, to the farmers and companies who use it to transport their goods.
But as we all know, new pressures are beginning to emerge. I’ll focus on three areas in particular:
First, ongoing growth in rail usage has revealed capacity constraints within the system. Our rail network’s ability to serve as a reliable supply chain partner has been affected by congestion.
That becomes a more pressing concern when we look at forecasts saying that western grain production is expected to increase by almost 20 per cent over the coming 10 years.
We need to relieve that congestion – for today and tomorrow. And we need to make sure that our rail system is as fair as possible to all who seek to use it.
Second, the emergency rail legislation passed by the previous government was a band-aid on an unbalanced system.
As we all know, the Fair Rail for Grain Farmers Act was introduced as an emergency measure – a direct response to the millions of tonnes of prairie grain left stranded in bins and in fields across the West during the winter of 2013-14.
The resulting legislation addressed a real and immediate crisis. But it was targeted to address one moment in time, and largely one sector of our economy. Any long-term solution must address all of Canada’s sectors, not just grain.
And third, across the globe there is growing pressure on all supply chain participants to deliver transportation solutions that are reliable, predictable and cost-effective.
We must therefore ensure a fair balance between the service obligations imposed on our railways and their need for ongoing capital investments to ensure that shippers are served efficiently.
Tuesday, I stood in the House of Commons and introduced Bill-C49, the Transportation Modernization Act. This would put into law initial measures to modernize Canada’s transportation policies, networks and infrastructure.
We are bringing forward a number of measures to facilitate more efficient trade and address the concerns of travelers. For instance, you may have heard a lot yesterday about our plan to establish and protect passenger rights for air travelers.
Today, I am here to focus squarely on trade – and, in particular, the imperative to build a freight rail system for the future…
…a fair, competitive and commercially oriented freight rail system.
One that is productive and efficient…
That works well for shippers and railways alike…
A rail system that maintains low rates, so we can trade competitively and remain an essential part of global value chains.
A system that through investment remains modern and reliable.
That increases capacity so we can meet the demand to move an increasing amount of freight.
A rail system that would help strengthen our economy, and reinforce our efforts to support the middle class and those working hard to join it.
A system that offers Fair Freight for All.
There would be four key elements to our plan:
The first would be to increase transparency. This is about collecting and making productive use of information – to ensure that Canadians have a state-of the–art freight rail system that is transparent and competitive.
Under the current system, too much supply chain information is unavailable.
Shippers often don't know whether shipment delays are the result of unavoidable congestion issues or operational failings on the part of the railway.
Under our plan, Class I railways, like CN and CP, would be required to make public more metrics related to their performance and service. And they would be required to submit to government more detailed routing and rate data to help us ensure that Canada maintains a strong freight policy and an efficient, modern regulatory regime. As well, more light will be shed on shipper performance issues.
In all ways, private information and competitive details would be kept confidential. But all players will be provided with a better sense of shipping performance.
This is also about all parties being in a better position to collaborate to solve issues with more data out in the open.
This would be an essential step to improve clarity, increase fairness, and demonstrate to potential international investors that Canada is committed to a truly modern and transparent railway system.
We would further build on this spirit of transparency by providing the Canadian Transportation Agency with clear authorities to inquire into emerging issues of concern within the rail system.
In each instance, the Agency’s findings and recommendations would be made in a timely manner – and the subsequent report would be made public and shared widely, minus any confidential or commercially sensitive data of course.
A more transparent rail system – with more information shared and more data available – is a rail system that is better positioned to compete and to thrive in our modern age.
The second element of our Fair Freight for All plan would be to increase efficiency.
Plain and simple, this is about the benefits that stem from a level playing field – building the kind of fair and open system that is in tune with Canadian expectations and values.
To achieve this goal, we would be putting in place a new, permanent mechanism called long-haul interswitching.
The nature of our economy and the realities of our railway infrastructure mean that there will always be captive shippers who have access to only one railway.
The new mechanism would assist captive shippers across regions and sectors of the country, by providing a competitive alternative where one doesn’t exist.
Our plan provides meaningful relief by:
- introducing an interswitching option that would be available to captive shippers across different sectors and regions of Canada;
- that applies for distances up to 1,200 km or 50 % of the total haul in Canada, whichever is greater; and
- that is at comparable rates that balance the needs of shippers and railways.
And, as a result, the system would be more open, fair and effective.
The third element of our plan is setting the conditions to encourage long-term investment in our rail system. Canadians know the value of planning ahead – and maintaining the infrastructure that supports our shipping economy.
It is essential that we – as a trading nation – maintain a modern rail system. We would therefore encourage ongoing investment in our rail system in part by maintaining and modernizing the Maximum Revenue Entitlement.
Grain farmers are the lifeblood of the prairie economy. Upwards of 60 per cent of their crops are destined for export markets. We are talking about more than $15 billion in sales. They deserve to be well and efficiently served by our railways.
We would therefore be keeping in place the MRE and changing the way it is calculated, to encourage railway investment in infrastructure, including hopper cars. That creates incentive.
Under our plan, we would use the tools at our disposal to create the conditions for railways to invest more in their own success – and in their ability to serve farmers and other shippers across the country.
The fourth element of our plan would be to ensure fair access. This is about bringing balance and promoting better supply chain performance.
Under our plan, we would permit reciprocal, performance-based financial penalties. This would ensure greater fairness by holding both shippers and railways accountable for their performance standards.
As well, Agency decisions on level of service complaints would be made more quickly.
We would also streamline and improve the existing system of Final Offer Arbitration.
To enhance predictability and efficiency, we would allow shippers to extend the arbitrator’s decision to two years, instead of just one. And we would increase the threshold for a summary FOA to $2 million, which means the process would be made more available to small- and medium-sized businesses.
There is one other key aspect of fair access. Under our Fair Freight for All plan, we would clarify the notion of “adequate and suitable” service – to ensure that shippers and railways alike understand the rules, the expectations and the obligations.
This would be an important measure because “adequate and suitable” service forms part of the foundation of the relationship between shippers and railways.
Farmers and shippers, understandably, want rail cars to show up the very moment they’re ready to be served. Railways, on the other hand, must confront scheduling, capacity and congestion issues.
In the interests of fairness, it would be important that we have in place clear parameters that help determine what is reasonable, what is realistic and what can fairly be expected by parties on both sides.
Taken as a whole, ours is an ambitious plan to secure long-term stability and success in Canada’s freight rail system.
It’s all about finding the right balance – so that we have a freight rail system that works for everyone. For farmers. For rail companies. For businesses. For workers. And for our economy.
Our freight rail system is a Canadian advantage.
Our plan would protect and build on that advantage.
It would ensure that we have a competitive and commercially oriented industry for the long-term.
It would ensure Fair Freight for All.
Ladies and gentlemen, there have been reforms made to rail policy over the decades – some of them well thought out, some hasty.
But this is one of the only times in our history that government has stepped back, looked at the big picture and the road ahead, and come forward with a comprehensive plan to deliver Fair Freight for All – now and in the future.
At all points, we have been guided by the knowledge that Canada simply does not work without its railroads.
We need our system to run safely and smoothly.
We need our farmers and our businesses to be able to ship their goods efficiently and reliably.
I’m proud of our plan. We faced a number of tough decisions but I’m confident in its success – because it’s fair. Because it’s the right choice for Canada and the right plan for the Canadian future.
Railroads have a storied place in our history. We associated them with the birth, the expansion and ultimately the success of our nation. They stand as a symbol of unity and ambition. They connect us over great distances and hard terrain – across prairies, through mountains and onward to our coasts.
And they contribute to our prosperity – helping to move the goods that support our families and power the growth of our economy.
We live in a country in which a fifth of all goods are shipped by rail. There are more rail cars than ever on the tracks – at a time when speed of delivery has never been more important.
We need our railways to be efficient and competitive. We need goods to get where they’re going.
As a government, we want to build an even better rail system – one that supports customers and delivers continued investments.
Now is the time to set the conditions for our freight rail system to continue to thrive in the decades ahead.
Now is the time for a long-term approach that supports our farmers, our manufacturers, our resource industries and our railway companies.
Now is the time for a plan that helps our economy and our businesses grow, a plan that creates and supports good jobs and helps strengthen our middle class.
Now is the time for what our plan delivers: Fair Freight for All.
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