OTTAWA, March 3, 2016 – The Macdonald-Laurier Institute has once again contributed meaningfully to helping make Canada the best-governed country in the world, this time in the important field of freight rail policy.
MLI’s recommendations on how to maintain Canada’s world-class rail system while still keeping Canadians safe are reflected in a federal government mandated report which examined the future of freight rail.
The review of the Canada Transportation Act, chaired by the Hon. David Emerson (who is also an MLI advisory council member) filed its report in December 2015 and it was tabled for Parliament last week. The final report recognized that the freight rail system is working well and that in general significant new regulations are not required – which are the same conclusions MLI reached.
Transportation expert Malcolm Cairns, in a 2015 report for MLI, argued Ottawa should avoid attempting to “fix” perceived issues of safety, capacity, competition and service by blanketing the system in more regulation.
Instead, Cairns demonstrated, a more sophisticated and relaxed regulatory system has resulted in greater investment and lower rail rates.
MLI’s report contributed significantly to informing the panel. The panel consulted Cairns directly and also quoted from his MLI report.
The panel’s recommendations also reflected several other MLI ideas:
- Cairns advised against expanding “running rights” to allow open access to rail lines on the basis that it would upset the competitive balance. The panel also rejected this because associated costs would outweigh any perceived benefits.
- Cairns said the federal government should consider eliminating a ceiling on the amount of money that can be made from transporting western grain. The panel said that eliminating this cap in the next seven years would help put grain on a level footing with other transported goods.
- Cairns recommended that the government allow extended interswitching to lapse in 2016 as it undermines pricing freedom and differential pricing for the Canadian railways, distorts competition in favour of US railroads, and will deter future investment. The panel recommended that the extended 160 km interswitching limits in western Canada, and related to the Fair Rail for Grain Farmers Act, be allowed to sunset.
- Cairns said recent changes to the regulations concerning rail service should be given time to see how they are working, while also monitoring the full supply chains to provide a more system-wide approach. The panel said the complex list of recommended changes to the level of service provisions and associated commercial tools will require further scrutiny to estimate their impact.
The panel’s report also reflected MLI’s recommendations on Final Offer Arbitration on price and service, and the regulatory approach to noise and vibration complaints.
For the full comparison between the panel and MLI, click here.
Dr. Malcolm Cairns holds a PhD in mathematical statistics from the University of Toronto. He has previously worked as director of business research for Canada Pacific Railway. He also worked for nearly twenty years with various government departments, including Statistics Canada, the Canadian Transport Commission, the Office of Privatization and Regulatory Affairs, the Grain Transport Agency and Transport Canada. In 2000, Cairns was involved in the previous review of the Canada Transportation Act.
The Macdonald-Laurier Institute is the only non-partisan, independent national public policy think tank in Ottawa focusing on the full range of issues that fall under the jurisdiction of the federal government.
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