1967, the Centennial Expo held in Montréal, Québec, was a huge success.
February 1, 1972, proclamation of the Pilotage Act.
1983, the Western Grain Transportation Act replaced the Crowsnest Pass Agreement.
Centennial year was a time of euphoria. Throughout the spring and summer of 1967, Canadians enthusiastically waved their flag – the new maple leaf that had been adopted by Parliament in 1965 – and expressed their national pride with countless parades and costume parties.
Expo 67 in Montréal, the centrepiece of the Centennial, was a huge success. Expo officials clocked more than 50 million paid admissions to the site from April 28 to October 27.Note 38
The influx of tourists brought heightened activity to the transportation industry. CNR reported that 18 million people used its passenger rail services that year, a 25 per cent increase over the previous year.Note 39 Airlines experienced a spike in business as well, with a 20 per cent rise in traffic (from 1966) at Montréal's Dorval airport alone.Note 40
In the cooling winds of autumn, the celebratory mood drifted away. Party streamers were swept from dance-hall floors, Centennial tartan sports jackets – just slightly garish – were relegated to the backs of closets where they would stay, and colonial-style dresses with matching bonnets were stuffed into boxes to gather dust in patriotic attics.
On September 20, 1967, the Canadian Transport Commission (CTC) met for the first time. The new president was John W. (Jack) Pickersgill, most recently the Minister of Transport who had personally escorted the new National Transportation Act through Parliament.
Ferry MV Federal Avalon, St. John's, Newfoundland and Labrador 1975, photographer: M. Segal, CSMT/CN001689
Since passage of the legislation in January, Pickersgill had assessed his own future and decided it was time for a career change. As he related in his memoir, Seeing Canada Whole, he saw little ahead for himself in politics, after sitting in the House of Commons for 14 years. At the age of 62, however, he was not ready for retirement. After some discussion with Prime Minister Lester Pearson, Pickersgill resigned from cabinet and the House of Commons. Then on September 20, he took the top spot at the newly created Canadian Transport Commission.Note 41
Pickersgill's new job did not go unremarked in the House of Commons. On September 25, Tommy Douglas, leader of the New Democratic Party, commented that it had been said "a Member of Parliament could get out of politics in one of two ways, either by dying or by being defeated. The first is so final, and the second so humiliating." But Douglas added: "Mr. Pickersgill has managed to find a third way. It is not every member who can write his own ticket or draft the bill for his own final haven of rest."
Whether Pickersgill got any rest at the newly formed commission remained a matter of lighthearted conjecture in the House of Commons for some time, but the CTC set to work, nevertheless, at an earnest and steady pace.
The Canadian Transport Commission absorbed most of the members from the previous boards – the Board of Transport Commissioners, the Air Transport Board, and the Canadian Maritime Commission. (Roderick Kerr, who had been chairman of the Board of Transport Commissioners, moved to the Exchequer Court.) The National Transportation Act had provided for a maximum of 17 members who would serve for 10 years and to a maximum age of 70. According to the Act, there would be a president and two vice-presidents, one to supervise legal and administrative matters, the other to oversee research.
The CTC also absorbed the staffs of the previous boards, which numbered 377 in 1967. In late 1968, the CTC set up headquarters at 275 Slater Street in Ottawa.
The Canadian Transport Commission's mandate was to deal with all modes of transportation as a competitive whole "with the object of co-ordinating and harmonizing the operations of all carriers engaged in transport by railways, water, aircraft, extra-provincial motor vehicle transport and commodity pipelines."
The ultimate aim of the Act was "an economic, efficient and adequate" transportation system. To achieve that, the CTC was instructed to provide regulation without restricting competition among the modes of transportation; to ensure fair distribution of costs of services provided at public expense; to provide compensation for services that carriers were required to provide in the public interest; and to ensure that rates set by carriers should not be unfair.
The CTC established separate committees to handle the five modes of transportation: rail, air, water, motor vehicle and commodity pipeline (except oil products). Most of the authority and responsibilities held by the CTC's predecessors in the areas of rail, air and marine were assumed by the new committees, with a few striking differences.
Under the new National Transportation Act, railways would be able to set their own rates (other than on grain covered by the Crowsnest Pass Agreement), and they would be allowed to abandon uneconomic branch lines and passenger services, unless required in the public interest. The Railway Transport Committee would make decisions on abandonment applications.
The Air Transport Committee held responsibility, under the government's new policy of restricted competition, for regulating air licencing and tariffs. In considering licences, the committee was instructed to consider "present and future public convenience and necessity." The aim was for broader competition without endangering the privileged status of the publicly owned airline, the newly renamed Air Canada.
The CTC also created a Motor Vehicle Transport Committee with the intention of assuming some authority over the extra-provincial commercial trucking and bus industries. Truck companies had become the railways' main competition for freight traffic, but they were largely unregulated. The federal government had handed control of interprovincial commercial trucking to the provinces in the Motor Vehicle Transport Act of 1954. Regulations between the provinces were uneven or non-existent. Part III of the National Transportation Act allowed for the cabinet to make exemptions to the 1954 Act that would give the CTC jurisdiction in specific areas. The provinces, however, were reluctant to give up their powers. Part III of the Act was not proclaimed until 1970, and then was seldom put to use.
The Motor Vehicle Transport Committee did, however, assume other responsibilities. In 1969, the CTC began to implement the Atlantic Region Freight Assistance Act, which extended to truckers in the Atlantic provinces the same subsidies that railways had received since 1927, under the Maritimes Freight Rates Act. The subsidies were intended to reduce the burden on shippers in the Atlantic provinces for moving their goods either out of the region to Central or Western Canada, or to other parts within the Atlantic region.
According to the 1969 Annual Report, the Motor Vehicle Transport Committee made "another step in equality of regulation" when it began to allow exemptions for trucking companies from the Lord's Day Act. When the Act, which basically prohibited work on Sunday, was drafted in 1906, it had specifically exempted railways and shipping companies. Now, upon application, trucking companies could be exempted as well.
In 1967, the Commodity Pipeline Transport Committee was also created to handle the fifth mode of transportation under the new CTC's jurisdiction – pipelines for commodities other than oil or its products. There were no actual commodity pipelines to regulate in 1967, however. The National Energy Board had assumed control of oil and gas pipelines in 1959.
The National Transportation Act had also provided for a Research Branch, which Pickersgill had envisioned as setting priorities for transportation studies and recommending policy. By the end of 1968, a full-time staff of 23 was employed in the Research Branch and an advisory board of interested citizens had been established to help determine priorities for study. As it turned out, however, the Research Branch never functioned as Pickersgill had intended.
In Seeing Canada Whole, written many years later, Pickersgill wrote, "Unfortunately a good deal of frustration developed largely because the planned scope of the Research Branch was not adequately explained." He continued, "My hope of an independent and permanent entity available for research into transport problems and opportunities faded away." In 1970, the Ministry of Transport established its own research facility, the Canadian Transportation Development Agency, and recruited some of the CTC's research staff.
The CTC set up the International Transport Policy Committee in 1968, which took over responsibility for monitoring international agreements for the different modal committees. And in 1970, yet another committee was formed, the Review Committee, set up to review appeals of decisions that had been made by the modal committees.
The majority of the CTC's work, however, was concentrated on the rail and air modes.
The Railway Transport Committee's first priority was to set out the framework for rationalizing passenger rail service and branch lines. Since 1959 when the Railway Reductions Act had been enacted as a temporary measure, freight rates had been frozen and the government had been paying annual subsidies to railways for their losses. By 1967, the government had paid out over $500 million.
The CTC's goal was to eliminate the subsidies by gradual reduction within eight years; to allow railways to set their own rates according to competition; and to allow railways to abandon the uneconomic branch lines and passenger service, unless required in the public interest, at which time the government would compensate the railways.
In 1968, the CTC allowed CNR to discontinue its trans-Newfoundland passenger rail service, known as the Newfie Bullet. The decision was based on CNR's assurance that it would establish its own service for the province of "unquestionably clean, modern and fast buses." Jurisdiction of the CNR-operated bus service was passed to the Newfoundland Board of Public Utility Commissioners that year.
In 1969, the Railway Transport Committee, after months of hearings and consultations, issued the Costing Order, which outlined the method to determine railway operating costs and to calculate losses in order to apply for discontinuance of service.
As soon as the Costing Order was issued, the CTC received 31 applications for passenger-train discontinuance, including 18 applications from CP to discontinue all of its passenger service, except commuter lines. CP claimed more than $30 million in losses in 1968. CNR filed applications for 13 services, claiming losses of more than $11 million. The CTC set to work to determine actual losses, and then, as required by statute, to begin public hearings into each application for discontinuation. That in itself was a mammoth task since every public hearing could involve submissions from several parties and several days of hearing. The CTC was required to consider the public interest in every discontinuance, and as laid out in the Act, it had to ensure "efficient, economic and adequate" service.
On June 18, 1970, after the required public hearings, the CTC rejected CP's application to discontinue the Canadian, its daily transcontinental passenger train service. The Canadian's losses in 1968 were set at more than $15 million.
As the CTC's Annual Report for 1970 stated, "Because of the probable annual level of subsidy required to continue the Canadian – more than $1 million a month – the CTC directed CP to produce a plan of rationalization." One can almost hear an intake of breath from the CTC – and the government – as that monthly sum was considered.
Freight train transporting potash in yard, Melville, Saskatchewan 1967, CSMT/CN000543
In February 1971, the CTC rejected CNR's application for discontinuance of the Super Continental, its transcontinental passenger service, and set CNR losses for 1969 at $14 million.
On April 14 of that year, the CTC announced that it would conduct a study of an integrated transcontinental passenger service plan. Another study was set up to examine passenger service from Montréal to the Maritimes.
By the end of 1971, CNR had filed for discontinuance of all of its passenger services. With the CNR filings, the CTC had received applications for discontinuance of all the passenger rail service of any significance in Canada. Annual losses for passenger services from CNR were reported at $76.3 million in 1970. CP annual losses were set at $31 million. The total, including some small passenger lines, was $108 million.
The CTC's Annual Report for 1971 carried a message that, considering the escalating compensation to be paid out for uneconomic services, might have been a plea for help: "The figures ($108 million) emphasize the importance of the commission's rationalization program which is aimed at discontinuing those services no longer required by public need, ending unnecessary duplication and eliminating any over-capacity that may exist on services that are required to continue operating in the public interest."
The railways were working to reduce costs on those lines. "The total annual savings from rationalization effected by the CNR and CP during the last three years are $17.5 million," the 1971 CTC report stated. "Without such steps most of that amount would have become a recurring subsidy charge on the taxpayers." The railways had also started to introduce some cost cutting in local train stations. New technology had introduced the use of computers and the centralization of communications. Gradually in the early 1970s, the major railways began to remove local station agents from the smaller centres. All these factors helped the railways to cut some costs.
However, a substantial amount would still have to be paid from the public coffers for uneconomic services that the CTC had ordered to continue in the public interest – to the tune of 80 per cent for passenger lines and 100 per cent on branch lines.
Under the National Transportation Act, the plan was to phase out general railway subsidies, or "normal payments," which had been agreed upon prior to 1967. A schedule was set up so that payments that totalled $110 million in 1967 would decline by $14 million a year to reach $12 million by 1974. No railway would receive any other subsidy – for instance, for running uneconomic passenger service or branch lines – until those claims exceeded the amount of subsidy they were already receiving under the normal payments plan. Only too quickly, however, the railways reached the point where their losses exceeded the amounts that they were receiving in previous subsidy payments.
By 1973, the CTC had issued decisions on all 70 applications for discontinuance of passenger-train service it had received since 1967. Of those, it had ordered 59 services continued and approved the discontinuance of 11.
Similarly, by the end of 1973, the CTC had decided that all branch lines in the Prairies should be protected from abandonment until the end of 1974. In turn, the railways running the uneconomic branch lines would be compensated for their losses.
The CTC's Annual Report for 1974 remarked on the sharp increases in operating costs for "every segment of the transportation industry." That year, "the total payments for various statutory subsidies administered by the CTC for rail, water, road and air transport rose to more than $232 million, up $52 million from 1973. The major outlay was in payments to the railways as compensation for uneconomic services they were required to provide in the public interest during 1973."
Furthermore, the Annual Report stated, "Total claims from railways for losses caused by running uneconomic services in the public interest amounted to $160.4 million." Another $26 million was paid in claims through a continuous process of verifications from 1969-72.
That same Annual Report announced a new "railway branch-line freeze in the three Prairie provinces. The new policy designates a basic network of 12,413 miles of track to be protected from abandonment until the year 2000. Another 6,283 miles will be protected until the end of 1975. A total of 525 miles of track, not currently in use, is open to abandonment procedures."
The railways had been relieved of huge losses for running uneconomic services that the CTC deemed to be in the public interest, but the price paid by taxpayers was constantly mounting.
The Railway Transport Committee had other concerns, among them railway safety. A rash of accidents in 1970 on the main lines between Montréal and Toronto led to an inquiry and later the formation of a task force to establish safety measures for the movement of dangerous commodities by rail. A Railway Safety Advisory Committee was established in 1973.
The railway committee also continued to hear rate applications for telephones and telegraphs, part of the mandate passed on from the previous Board of Transport Commissioners. In August 1970, the committee took over regulation of charges by private wire-service companies. In 1971, the CTC set up a separate Telecommunications Committee to deal with the increasing rate issues. The CTC's workload continued to grow and so did its committees. Now it had eight.
Meanwhile, the Air Transport Committee was occupied with the steady stream of applications for commercial air licences. As with CTC decisions on the discontinuance of rail service, the Air Transport Committee considered the licencing applications on a case-by-case basis, to determine present and future public convenience and necessity. The volume of applications increased – from 377 in 1967 to 695 in 1974.
In 1969, CP Air (formerly Canadian Pacific Airlines) was allowed a larger share of the transcontinental route – 20 per cent, as had been outlined in the government's air policy of 1967. By 1970, CP Air was providing 25 per cent.
Regional carriers were also taking over more routes, often in areas where the large carriers chose to withdraw their services. Subsidies were used as encouragement for the regional airlines to supply uneconomic routes, where no other transportation was available. Although more competition was being allowed in the air mode, Canada's publicly owned airline was still granted priority.
The CTC's policy in this regard is illustrated in its 1974 Annual Report. "Nordair was denied authority for a route linking Montréal, Ottawa, Sudbury and Thunder Bay. The Nordair decision followed public hearings at Sudbury and Thunder Bay during which Air Canada announced plans to add the same route to its schedule early in 1975."
Successive annual reports in the 1970s hint at the fast pace of developments in the transportation industry since the CTC had been formed in 1967.
In 1971, the CTC's Marine Transport Committee conducted a study on coasting trade and recommended that traffic between Canadian ports be reserved for Canadian vessels and that restrictions be broadened to offshore activities like dredging, salvage and drilling. Proclamation of the Pilotage Act of February 1, 1972 gave the Marine committee new jurisdiction over tariffs of pilotage charges for the country's four pilotage authorities -- Pacific, Atlantic, Great Lakes and Laurentian.
In 1973, the CTC reported that "a major round of negotiations with the United States gave 46 new Canadian and U.S. scheduled air routes, bringing the total to 81."
The Annual Report for 1974 announced that the CTC's International Transport Policy Committee had established an International Intermodal Transport and Facilitation Branch. The branch would "co-ordinate, harmonize and develop policy on economic regulation of international multimodal transport, including movement of containerized and break-bulk cargo." One area of study would be a single through bill-of-lading for entire intermodal transport of goods from the point of origin to the destination.
Since the CTC's early days, there had been a power struggle with the Ministry of Transport over policy-making. As early as November 22,1968, an Opposition Member of Parliament had put his finger on the problem. Conservative MP Thomas Bell had asked in the House of Commons: "Who is really the boss in transportation? Is it the minister or is it the new chief dictator of the CTC (referring to Pickersgill)?"
Pickersgill's retirement on August 31, 1972, did little to deflect the rivalry with the Ministry of Transport. He was replaced by Edgar J. Benson, who had served as finance minister during Prime Minister Pierre Trudeau's first term in office. Benson, a chartered accountant, had overhauled Canadian tax laws in the late 1960s and was still young – only 49 – when he turned his energies to overseeing the CTC.
In the early months of 1974, a jurisdictional dispute between the CTC and the Ministry of Transport surfaced in the House of Commons. A shortage of railway cars that winter had caused a slowdown of freight traffic in the West, including the movement of grain to export markets.
Transport Minister Jean Marchand described his quandary on March 7, 1974, in the House of Commons: "About the same number of boxcars are available this year as we had last year. This means that no provision was made for any growth in the economy. So, what do we do in this situation? Honourable Members might say, 'You are the minister; you do it.' It is true that Honourable Members gave responsibilities to the minister, but they forgot to give any authority at all in many instances.' "
"We have the CTC," Marchand continued, "which has final authority over almost everything, except in a few cases where there is provision for an appeal to the minister."
Marchand, who was well known for his blunt manner, concluded: "We have everything in Canada. We have water, air, surface – we have ice, we have snow and we have distance – we have everything to have fun in transportation. Something we do not have is a real policy and I hope that sooner, rather than later, it will be possible to have such a policy."
Under questioning from the House Standing Committee on Transportation, Benson said that it was not within the CTC's responsibilities to order the railways to purchase additional equipment. Marchand had further reason to take policy-making into his own hands.Note 42
On April 8, Marchand reported to the House that he was preparing a policy paper on transportation.
A July election returned Trudeau's Liberals to power and Marchand set to work on his transportation policy proposals. A year later, on June 16, 1975, he tabled a document called Transportation Policy – A Framework for Transportation in Canada, along with an Interim Report on Inter-City Passenger Movement in Canada and an Interim Report on Freight Transportation.
Marchand's policy paper envisaged "the use of transportation as an instrument of national policy rather than as a passive support service." It further explained "that the transportation system should be accessible, equitable and efficient, rather than economic, efficient and adequate. The notion of efficiency is not lost, but the emphasis is on service to Canadians."
The paper also stressed that it would "rely on competition where economic and technical conditions permitted, rather than relying almost exclusively on competition." In effect, Marchand was changing the course of national transportation policy – directing it away from competition and back to regulation with the top priority being service to Canadians.
Marchand defined the Canadian Transport Commission's role in this way: "Transportation in Canada is too big a business to dispense with an organization such as the CTC. But we would like to see the policy made by the Ministry of Transport and applied by the CTC. Right now, there are many fields where it is the CTC that is making the policy, not the department at all."
Marchand continued, "I do not mind if they (the CTC) have a lot of authority but what I do mind is that if we think it is in the interests of Canada to do certain things, I want to be able to say to the CTC that this is a new policy and that they will follow it."
Marchand did not get a chance to have his way with the CTC. On September 25, he was removed from the Transport post in a cabinet shuffle. The Montreal Gazette explained the next day that "Mr. Marchand, deservedly popular for his human qualities, his frankness and his negotiating skills, came to the point where he needed the lighter load he has been given." Marchand became a Minister without Portfolio, while Justice Minister Otto Lang was appointed to the Transport job.
According to Trudeau, The Gazette reported, the economy was "in a serious situation." And the prime minister was "determined to take whatever measures are necessary to achieve positive results."
The Gazette had reported on September 16 that CP had announced a new round of layoffs as part of the railway's austerity measures in response to "low levels of freight traffic and rising costs. CP reported it was curtailing spending in a variety of ways, besides layoffs, including storing locomotives and boxcars, reducing administrative costs and postponing capital projects."
In October 1975, Trudeau's government introduced wage and price controls, a three-year program to tackle rocketing inflation. The country had been struggling for several months with spiralling costs in the face of a world-wide oil crisis. The government's belt-tightening measures would be felt in all areas of Canadian life, including transportation policy.
As the CTC's 1975 Annual Report explained, the anti-inflation program "placed an increased responsibility on the CTC to regulate or monitor rate increases and profit margins in those areas of transportation and telecommunications that fall within federal jurisdiction."
A commission of inquiry, headed by Emmett Hall, a retired Justice of the Supreme Court of Canada, was appointed in 1975 to investigate the railway requirements of grain producers, elevator operators and related businesses. Meanwhile, the freeze on abandonment of 6,283 miles of branch lines in the Prairie provinces was extended for another year to the end of 1976. While the Hall Commission held hearings throughout the four Western provinces, the CTC allowed 362 of the 525 miles of unprotected Prairie trackage to be abandoned.
In January 29, 1976, Transport Minister Otto Lang issued a directive for development of "a basic single network of rail passenger services across Canada" with the expressed purpose of "avoiding duplication of services." The CTC was asked "to conduct a series of public hearings to ensure that the views of Canadians continue to be determined and taken into account in arriving at a national passenger service network."
On June 11, Lang described in the House of Commons his interpretation of Canada's transportation problems: "The conglomeration of approaches to transportation in Canada which has developed over the years is full of inconsistencies and contradictions, that have built into it tremendous costs and non-productive expenditures."
Lang answered critics of his "user-pay" approach to controlling costs in transportation with the response, "If it is not the user who should pay, then who should pay – the non-user?"
Lang went on to say: "Productivity in this country will be improved by the rational approach to transportation and the lowest cost alternatives being selected.
Aerial view of a westbound train near Kamloops, British Columbia 1975, CSMT/CN000559
Productivity will also be improved as users of transportation face the real cost to this country of what we are trying to do and not the artificial rates based on some Band-Aid, political opportunity subsidy. Those subsidies we will want to remove and that will be our task." That, as Lang and others were to discover, was easier to say than do.
Another government plan was mentioned in the CTC's 1976 Annual Report. "Transport Minister Otto Lang announced in mid-year that the government was willing to provide up to $2 million for start-up costs involved in the establishment of air services to certain points in Manitoba and Saskatchewan. The Minister directed the CTC to invite proposals on the operation of specific routes and to provide him with a detailed assessment of the submissions received." The routes were jet service between Regina, Brandon and Toronto, and jet or non-jet service linking Saskatoon and Yorkton in Saskatchewan to Dauphin, Brandon and Winnipeg in Manitoba.
In 1976, CNR's Roadcruiser bus service, the only public passenger service in Newfoundland, was put under the CTC's jurisdiction. A dispute between CNR and its provincial regulator had led Ottawa to make an exemption to the Motor Vehicle Transport Act, according to Part III of the National Transportation Act.
In another jurisdictional change that year, the Canadian Radio-Television Commission assumed authority over telecommunications from the CTC.
In May 1977, the Hall Commission on Grain Handling and Transportation released its report called Grain and Rail in Western Canada. It recommended the abandonment – in stages from 1977 to 1981 – of 2,165 miles of grain-related Prairie branch lines and the retention of the other branch lines until 2000. The report also recommended the establishment of a Prairie Rail Action Committee. The CTC subsequently began to consider applications for abandonment of the eligible branch lines.
The CTC Annual Report for 1977 reported that restrictions had been eased on CP Air's transcontinental routes to allow turnarounds at Western points other than Vancouver. The CTC also noted that the government would allow CP Air to provide air services to Saskatchewan, and also to consolidate all of its licences into one, which would allow the airline to operate flights between any two points named in the consolidated licence.
The Air Transport Committee also warned, "Continued cost pressures, including world-wide increases in fuel prices, caused air carriers to file for increases in international and domestic fares and rates in 1977."
Meanwhile, Bill C-31, the bill based on Marchand's policy plan to amend the National Transportation Act, was stalled in its first reading in the House of Commons in January 1977. Enthusiasm for the bill gradually waned as efforts for change in transportation policy were directed elsewhere.
The Air Canada Act of 1977 removed the airline from CNR control and made it a separate Crown corporation, under the jurisdiction of the CTC and subject to the same regulations as its competitors. In 1978, the CTC allowed the airlines to introduce a variety of new fare discounts.
Between April 1978 and October 1979, the Western and Eastern transcontinental passenger services of both CP and CNR were absorbed into a new Crown corporation called VIA Rail.
In March 1979, the CTC issued a report on a meeting about public transportation for people with disabilities, and created a special advisory panel. Among its recommendations were changes to tariffs to allow self-reliant passengers with wheelchairs to travel alone and to require VIA Rail to provide lifting devices for their assistance.
The Canadian Transport Commission opened a Western division in Saskatoon on May 1. In response to a government policy that enunciated a need for a Western presence, the CTC 1979 Annual Report stated, "Its mandate is to perform all those functions of the CTC that are delegated to the modal committees: from Thunder Bay to Pacific Coast for rail and from the Ontario-Manitoba border to Pacific coast for other modes." Two commissioners were appointed to the CTC's Western division. It took over responsibility for the Prairie branch-line rehabilitation program, and Prairie branch-line abandonment applications. The CTC pointed out, "Although it is in charge of all modes, its primary concerns at this time are the rail and air divisions."
Also in May, a member of the Canadian Transport Commission attended a meeting in London, England, to discuss the Bonn Declaration on Terrorism. In the declaration made in1978, seven Western nations, including Canada, had agreed that sanctions – in the form of cancelling air services – would be directed at any country that refused to extradite or prosecute hijackers, or to return hijacked aircraft. The airline industry had entered a chilling new era in which peacetime was no protection against violence in the skies.
Then in the fall of 1979, danger hit closer to home. On November 10, 1979, 24 CP cars carrying liquified chlorine and other flammable compressed gases derailed in Mississauga, a suburban community west of Toronto. A raging fire resulted, forcing the removal of 230,000 citizens from the area. Although no deaths were reported, the catastrophic possibilities of the derailment alerted the nation to potential disasters ahead. A Board of Inquiry was appointed, under Ontario Appeal Court Justice Samuel Grange, to investigate the derailment.
The Canadian Transport Commission became the focus of the federal Auditor's Report in 1979. "The commission, in common with some 30 other federal government departments, is currently engaged in an intensive review of its management practices and controls," the CTC reported at the end of the year. "The reforms that can already be foreseen as resulting from this review will touch upon almost every aspect of the Commission's organization and operations.
"In addition to improving its internal management and financial controls, the commission has an important role to play in the realm of regulatory reform. As the largest of the federal regulatory agencies, the CTC will be the trial agency upon which new policies, aimed at lightening the burden of regulation upon society, will be tested. Those policies which are found to be workable and beneficial will then be passed on to the myriad of other, smaller federal regulatory agencies."
Regulatory reform was already under way. As the CTC reported, "Regulatory amendments liberalizing domestic and international charter rules were approved December 21, 1979 and incorporated into the Air Carrier Regulations."
The CTC reported in 1980 that in the air sector "more flexible regulations and simplified accounting procedures were established to permit greater carrier competition and less regulatory burden." Among other things, the CTC was allowing more competition in air fares: "For scheduled flights, carriers can now innovate fare reductions of nearly 50 per cent."
That laissez-faire experiment was sidetracked in 1982, "after a number of carriers had made it known that fare-discounting had reached a point where revenue losses had begun to threaten the stability of the domestic scheduled airline system." The CTC imposed restrictions on discounts of more than 25 per cent, which included requirements such as round-trip travel and 14-day advance booking.
The Grange Report on the Mississauga Railway Accident Inquiry was released on January 19, 1981. On September 30, the CTC ordered implementation of several recommendations including a speedier conversion to roller bearings, modifications of tank cars to increase safety, the use of additional hot box detectors, and a reduction in speed and in the length of trains.
In 1981, just three years after it had been created, VIA Rail was weighed down with a deficit and had applied to the CTC to abandon 20 per cent of its passenger services. The CTC allowed the discontinuances on September 28, 1981. By the end of the year, VIA had cut nine trains, including the Super Continental, one of two transcontinental services.
In late 1983, the Western Grain Transportation Act was passed to replace the venerable Crowsnest Pass Agreement. The Crow rate, considered sacred by Western farmers, was a reduced freight rate on grain that CP had agreed to in 1897. The Act to replace it was hammered out by Jean-Luc Pépin, who had been Transport Minister since 1980.
But when the bill was released, it caused enough of an uproar among Western farm groups that Prime Minister Trudeau quickly moved his only cabinet minister from the West into the Transport portfolio.Note 43 Lloyd Axworthy, from Winnipeg, replaced Pépin on August 12, 1983. The new Act, allowing for a freight price increase (to a maximum of 10 percent on the world grain price) and federal compensation to railways for losses, was passed on November 17. The CTC took over responsibilities for the costing of grain movements, cost forecasting, determining rates, and payment of the government's commitment to railways, now at $650 million.
There were other changes afoot in the early 1980s. The Liberal government faced increasing public dissatisfaction in the midst of economic recession and high unemployment.
The CTC Annual Report of 1983 announced a series of public hearings to be held in early 1984 to discuss air fare policy at Transport Minister Axworthy's request. It also announced an inquiry into intermodal and multimodal transportation services. And in a revision of its general rules, the Canadian Transport Commission set new time limits for itself in issuing decisions.
In the closing days of 1983, the Canadian Transport Commission welcomed an old opponent into its fold. Jean Marchand resigned from the Senate, where he had spent the past seven years, to become the CTC president on December 16. Edgar J. Benson had completed his 10-year term on August 31, 1982, and had taken an ambassadorial post in Dublin. During the interim, the CTC's John T. Gray, vice-president-law, had filled in as president. The 65-year-old Marchand hardly had time to settle into his chair before there was a flurry of more changes.
The 1984 CTC hearings on Canadian air fare issues and domestic charters determined that there was need for a new air policy. Amendments to the Air Carrier Regulations governing domestic and international Advance Booking Charters had been suggested. Another report on air services in Northern regions, based on hearings held in June and July, stressed the necessity of providing better air service in remote areas between Labrador and the Yukon. Transport Minister Axworthy introduced a new Canadian air policy that year, implementing suggestions from the CTC hearings.
In the fall of 1984, the CTC held an inquiry into the effects in Canada of U.S. rail deregulation. The study had been requested by Axworthy "after two major Canadian railways reported revenue losses of $100 million to U.S. competitors." The Staggers Act, passed in the United States in 1980, freed the American rail industry from economic regulation and opened the way to competition. As the CTC reported, the inquiry found that "the rail regulatory systems of the two countries are no longer compatible and suggested a number of legislative changes to restore trans-border railway pricing harmony."
A federal election on September 4, 1984, brought in a Conservative government under Brian Mulroney. One of the priorities identified by the Mulroney team in its campaign platform was transportation policy reform.
In July 1985, Transport Minister Don Mazankowski introduced a position paper on transportation in the House of Commons. It was called Freedom to Move – A Framework for Transportation Reform. The paper outlined sweeping revisions to transportation policy that involved reduced economic regulation and greater reliance on market forces. As the CTC Annual Report announced, "the effects on the Canadian Transport Commission will be dramatic."
The Annual Report quoted these words from Mazankowski's speech: "Economic regulatory reform in transportation is needed in Canada if it is to achieve economic renewal and growth to meet international competition. Canada's ability to achieve economic progress in the 1980s and 1990s will depend in a large measure on a productive and more efficient transportation system."
The Transport Minister continued, "It is the federal government's view that the changing environment of regulatory administration, coupled with the determination to reduce government interference in the marketplace, requires the establishment of a new regulatory agency as a successor to the Canadian Transport Commission."
Launching of the Labrador coastal ship MV Taverner, Collingwood, Ontario, May 1962, CSMT/CN001653
The fate of the Canadian Transport Commission had been decided. It would be replaced by another agency with less regulatory authority. Jean Marchand resigned as president on July 31, 1985, soon after Mazankowski's policy paper was released. J. David Thompson, the CTC's vice-president-law, sat in the president's chair until Erik Nielsen was appointed in early 1987. Nielsen had been a Conservative Member of Parliament since 1957. He served in Joe Clark's short-lived government in 1979-1980 and then held several cabinet posts in the Mulroney government. In January 1987, he had resigned from the House of Commons to head the CTC.
While the new legislation was drawn up, the commission continued with its daily workload. Mazankowski had asked the CTC's Western Division to inquire into possible alternatives to railway branch lines in Canada. The objective, according to the CTC, was to find better ways to improve the effectiveness, efficiency and reliability of the railway system at a minimum cost. The Western Division issued a report on June 28, 1985, on alternatives to railway branch lines. The report found that branch-line subsidies had grown from $37.1 million in 1971 to $322 million in 1982. It also found that consideration had not been given to competition from other modes of transport. The report recommended a complete review of railway costing.
On June 26, 1986, Transport Minister Mazankowski introduced Bill C-18 in the House of Commons. It was the new National Transportation Act that would create an agency to replace the Canadian Transport Commission. Ironically, the CTC's Research Branch, created by Pickersgill back in 1967 to serve as an instrument of policy-making, had assisted the Mazankowski team in drafting the new legislation.
Among changes to the original Act of 1967, there were provisions for confidential contracts for rail shippers; increased intramodal competition; reduced regulation governing the commercial airline sector; rate arbitration for shippers and carriers; and protection of the unique nature of the North's air and marine transportation.
John Crosbie became Transport Minister on June 30, 1986, a couple of days after the National Transportation Act was tabled. He guided Bill C-18 and the accompanying Bill C-19, the new Motor Vehicle Transport Act, through Parliament.
"With the late summer passage of Bill C-18," the CTC reported in the 1987 Annual Report, "and in anticipation of the new National Transportation Act becoming law on January 1, 1988, the commission began to phase out its activities." A transitional team was set up to accommodate the relocation of staff, which had grown in 1986 to almost 1,000 people.
Among the CTC's final decisions in December 1987 was the approval for CNR and CP to operate their trains without cabooses. The prospect of trains running without cabooses seemed strange in those days. But once discarded, they were soon forgotten.
The Canadian Transport Commission would meet a similar fate. After 20 years, it had become obsolete. Under a new agency, Canada's transportation system would have "freedom to move".
Notes for Chapter 3
The main sources of research for this chapter were the Annual Reports of the Canadian Transport Commission from 1967 to 1987 and the House of Commons Debates. Newspaper sources are noted in the text.