Chair and CEO Scott Streiner addresses the Pulse and Special Crops Convention on July 7, 2016
Check against delivery
As I was putting the finishing touches on my speech last night, I glanced out of my hotel window and I saw the rail lines running from Union Station out towards Ottawa, Montréal, and Halifax. I saw the Gardiner Expressway in its usual state of gridlock. I saw a shipping vessel docked at the Port of Toronto. And I saw a plane coming in to land on the island at the Billy Bishop Airport.
I was struck by how much the scene encapsulates the significance of transportation in Canada, and indeed of our modern way of life.
Transportation in Canada
It's simply inconceivable today that modern economies and societies could function without an efficient and fluid national transportation system. And this is true everywhere, but particularly in a country that is as vast as Canada.
The wide dispersal of our population across huge distances, the diversity of our manufacturing, our natural resources, and of course, our agricultural production all require a national transportation system that meets the needs of all its users and facilitates an effective national economy.
Indeed it is true today, but in fact, it has always been true.
Transportation has been a part of the Canadian reality from the very beginning. The British North America Act—our founding constitutional document—which sets out the terms of union for British Columbia when it joined the Confederation, actually included provisions requiring the construction of freight rail links. These ribbons of steel, which connected farms, cities, towns, and ports across Canada, are in fact the building blocks of Canada as it is today.
The national transportation system and the Agency
The history of the Agency is inextricably tied with the evolution of the national transportation system, and the evolution of agriculture and other industries in Canada which rely on that system.
First established as the Board of Railway Commissioners in 1904, the Agency has gone through a number of incarnations. After 113 years of existence, it is Canada's longest-standing independent tribunal and regulator.
In that time it has gone through a number of name changes, and its mandate has been adjusted by Parliament. However, at its core, the Agency is about ensuring that the national transportation system in general, and the freight rail system specifically, function well and serve the needs of its users.
At the end of the day the Agency exists:
- to create a predictable, fair framework for the relationship between transportation service providers and transportation service users; and
- to respond when there are challenges in those relationships.
Today the Agency has three core mandates.
- Its original mandate—to keep the national transportation system running— is still its most economically significant.
- Its second core mandate is to protect the fundamental right to accessible transportation for people with disabilities.
- And, its third mandate is consumer protection for air travellers.
To fulfill these roles we have three tools that we can apply.
- Our first tool is setting ground rules. We do so through regulations and through voluntary guidelines, codes of practice, and interpretation notes.
- Our second tool is dispute resolution. When shippers or travellers have an issue with a transportation service provider, the Agency can deploy both informal and formal dispute resolution tactics to resolve those issues and allow the parties to move forward.
- Our third tool is to collect, analyze, and disseminate information on the transportation system as a whole.
Challenges in the transportation system
Now, if transportation was critical to the founding of Canada, it is even more critical today.
Nearly $1.7 trillion of the national economy is tied to the transportation system. Within that, agricultural production and shipping are crucial. Canada is the world's fifth largest exporter of agricultural products and it holds 35% of the global pulse trade. In 2014, 64 million tonnes of grain were moved by rail. The rail and port networks in Canada are essential to the success of the Canadian agricultural sector.
Despite the mutually dependent relationship between the agricultural sector and the rail companies, it's a relationship that has long been marked by challenges.
Producers and shippers have often felt that they are captive to one or two railway companies, and as a result they don’t enjoy the negotiating power to achieve what they consider to be fair outcomes. Railway companies have contested this notion, and have argued that the issues around captivity and market power are overstated.
We saw how some of those dynamics unfolded most clearly back in the winter of 2014. A record crop, difficult winter conditions, and noisy public sparring between shippers and railway companies resulted in the passage by Parliament of special legislation related to grain shipments.
Looking forward, ideally, we'll avoid crisis situations. We'll be able to anticipate where things are going, and we'll be able to keep relationships on a more even keel.
Responding to change
The globalization of trade means huge opportunities for the agricultural sector but it also means competitive pressures for shippers and railway companies.
New technologies offer opportunities for automation and greater transparency but can also create downward pressures with respect to margins.
Of course, we're also seeing the introduction of new business practices both in production and shipping, as well as in railway operations, which have started to shift the dynamics between them. In the midst of these changes—in the midst of all of this—public policy and public administration have to keep pace.
If the Agency is going to accomplish the mandate given to it by Parliament—a mandate to keep the national transportation system functioning efficiently in everyone's interest—then the tools that we use and the approaches that we adopt have to keep pace.
There are four ways in which we are trying to meet that challenge of change and trying to ensure that we deliver our mandate effectively.
The first relates to the Government more broadly. Because we are an arm's length organization, we are not as direct a player in governance as is Transport Canada, whose avenue for response is legislative change.
The Canada Transportation Act review, as you know, was tabled in February of this year. The report made a series of recommendations regarding the Act, which is the Canadian Transportation Agency's enabling statute. The Minister of Transport, the Honourable Marc Garneau, is currently undertaking discussions with stakeholders.
Taking into account the recommendations set out in the review and what Minister Garneau hears from various parties, the minister will make decisions on the future of the transportation system—and the possibility of legislative change in the future.
The Agency stands ready to provide the Minister and his officials with whatever information and analysis would be helpful as they undertake this work.
Of course, as the organization with the primary responsibility for administering the legislation, we do have some observations on what's working most effectively in the legislation, what's working less effectively, and where the toolkit that we have to do our job may be lacking.
A number of stakeholders, and the CTA review itself, suggested that the Agency's toolkit be expanded to give it the ability to, among other things:
- initiate inquiries on its own motion where there is evidence that there may be a continued issue in the transportation system;
- be able to make general orders that would apply across a sector in the event that a problem was found to be systemic in nature; and
- collect and analyze more data than it currently does, and disseminate that information widely.
Those recommendations from stakeholders and the CTA review are indeed worthy of consideration.
The second observation is more internal to the Agency and within our current authority. We are taking action to ensure that our services and activities keep pace with change outlined earlier. On April 1, I implemented a re-organization at the Agency that is aimed at strengthening capacity in key areas and in improving efficiency and focused on service delivery.
- gathered together functions that are more strategic in nature into a new analysis and outreach branch; and,
- created a specialized team within our dispute resolution branch that focuses specifically on mediating resolutions between railway companies and shippers.
The creation of a specialized unit for rail mediation brings me to the third area I want to emphasize in terms of looking forward. It involves how the Agency responds to what's happening in the agricultural sector.
There are a lot of concerns around the dynamics between shippers and railway companies. A relatively small number of those concerns are brought to the Agency for recourse.
In speaking to some of you and to other shippers, it's evident to me that one of the reasons for not bringing forward a case for adjudication is that it's a daunting proposition. A shipper that chooses to bring forward a concern for adjudication is potentially facing many months of proceedings, significant costs and potentially negative impacts on the relationship with the railway company. That doesn’t mean that adjudication doesn't have a place in dispute resolution.
My takeaway from these conversations is that it is important for you to be aware that there are non-adjudication options available to try and resolve disputes between shippers and railway companies, and —in particular—that we are strengthening specialized mediation services in that regard.
We're not shopping for business; if things are going well, so much the better. However, I encourage you as shippers to keep in mind the availability of the Agency's services. Recourse mechanisms like the ones the Agency has available are there to serve as a failsafe; the preference, as always, is that sound commercial negotiations take place between the parties, the regulatory and adjudicative body ‒ the Agency ‒ need only intervene or provide support in rare instances.
Finally, to the fourth area where we're taking action is regulatory modernization. The Canadian Transportation Agency administers nine sets of regulations on its own, and several others that we co-administer with other organizations.
To be frank, some of these regulations are antiquated. Some of them were set over twenty years ago and the business models that we see in the transportation sector—the best practices of good regulatory action and indeed the expectations of users in the transportation system—have changed tremendously over those decades.
Our Regulatory Modernization Initiative
The Agency could have continued to try and address those issues one at a time in an ad hoc fashion. Instead, we made a conscious choice to put all of our regulations on the table and move forward with a regulatory modernization initiative where we say to parties "All of these are open for discussion".
We have started with the fundamental purpose of regulations: what are the goals that the regulations seek to achieve? We will then look at the existing text and determine whether there are provisions that are no longer serving any purpose and should be eliminated. Are there provisions that do serve a purpose and can be retained as they are? Are there provisions that serve a purpose but need to be updated in terms of language? Or, are there new provisions that need to be added?
We are prepared to do a wholesale review of all of our regulations to ensure that:
- moving forward, the language of those regulations is clear and is consistent with current business practices;
- the regulatory obligations that are imposed on the parties that are subject to regulations are only as heavy as needed to achieve their public policy goals; and
- these regulations are written in a way that allow us to identify and correct instances of non-compliance easily.
Specifically in the freight rail area we will have robust conversations on:
- interswitching regulations and operational terms;
- costing of rail activities for the purpose of regulated rates; and,
- any other matter shippers or railway companies want to put on the table.
As the regulatory body we will seek your input. As well, we will ground our analysis in overarching public policy goals of the regulations, and we will apply a neutral evidence-based lens to assessing what regulations should look like moving forward.
We have planned for four tranches of consultations as part of our regulatory modernization work. One of those, likely to start in late 2016 or early 2017, will focus specifically on rail issues. When the time comes I invite you to provide your input.
Our intention is to complete consultations and the drafting of new regulations by the end of 2017. Then, we'll finalize approvals and move into implementation in 2018. It's an ambitious schedule for regulatory change but, in my view, a feasible one.
Let me conclude by inviting you to provide your input on regulatory reform and, if required, to avail yourselves of our dispute resolution services.
I also encourage you to engage with the Agency on any matters of concern to you that relate to your relationships with the national transportation system and the services it provides.
At the end of the day, the Agency exists to provide assistance to shippers, travellers, railway companies and other transportation service providers, and the communities that are served by them.
The Agency is here to serve, we're open for business, and we are committed to doing our job in a way that is impartial, evidence-based, innovative, and engaged.
Let me conclude by inviting your questions and comments and thanking you for your attention and the organizers for inviting me to speak to you today.