April 13, 1948

P.C. 1486


Certified to be a true copy of a minute of a meeting of the committee of the privy council, approved by His Excellency the Governor General on the 7th April, 1948. Freight Rates



April 7-That was the very day the amendment was moved in this house. The order in council goes on: The committee of the privy council have had before them the petition of the transportation commission of the maritime board of trade (representing, inter alia, the governments of the provinces of Nova Scotia, New Brunswick and Prince Edward Island), and representations on behalf of the governments of the provinces of Manitoba, Saskatchewan, Alberta and British Columbia to vary order No. 70425 of the board of transport commissioners for Canada of March 30, 1948, by providing that tariff schedules published and filed under the provisions of the said order be not effective until at least thirty days from the date of the said order. The committee of the privy council, having given due consideration to the said petitions and representations, are unable to advise that the said order of the board of transport commissioners for Canada be varied in the sense requested. (Signed) A. D. P. Heeney, Clerk of the privy council. My point is that application was made by seven provinces, that the government considered it and turned it down, and only now, after long discussions in the house, does the government come forward and say that if they receive a petition for a further appeal they will give consideration to it. I want to deal with one other point in this connection. When the minister was speaking of the decision to have a full investigation made of the freight rate structure, he made the statement that if the amendment now before the house moved by the hon. member for Rosetown-Biggar (Mr. Coldwell) were passed, it would result in denying to the railways any further revenue by way of increased freight rates, and he implied that if that were the fact there could be no other result than that the railways in Canada would have to amalgamate.


CCF
PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

I did not say the hon. member did; I said that was the minister's implication. I wish to say here that, so far as this party is concerned, we are opposted to amalgamation and opposed to any conditions which would bring about amalgamation. We feel that this country is better served by having one privately owned railway and one publicly owned railway. We think one will check the other. We think that the privately owned railway will check any tendency toward extravagance on the part of the publicly owned1 railway, and we think that the publicly owned railway will tend to check arbitrary decisions and any danger of exploitation by way of rates or otherwise by the privately

owned railway. We think we are better served the way we are-by two railways rather than by a railway monopoly.

In what I shall have to say now, I wish to look at this question from as broad a point of view as possible. Here are two great railway institutions serving this country. They are very important to our economy and emphasize the necessity of dealing with measures such as this as wisely as it is possible for human beings to deal with them. Canada is a land of vast distances, with diversified resources which are widely scattered, and with a sparse population in relation to its wide extent of territory. The combination of these circumstances has created a dependence upon communications, especially railway communications, unequalled in any other country in the world. With our small population scattered over a vast territory the railways are a basic element in the economic life and development of a nation.

Each of the economic regions of Canada is rich in its own particular type of resources, but is largely dependent on the other regions for the rest of the needs of life, and for markets. Practically everything that we eat and use and produce must be transported, generally over a vast distance. Matters affecting transportation have therefore a direct and enormous impact on the daily life of every Canadian. It is not surprising therefore that people of so many parts of Canada are gravely concerned in any measure affecting freight rates. Freight rates are an important factor in our standards of living and in determining our competitive power in domestic and world markets. The very existence of our whole industry and the lives of millions of Canadians are profound!}' affected by any sharp increase in freight rates.

The railways themselves are similarly affected by these vast distances, and they have their cost of living problem the same as the rest of us. There are three great areas which are relatively deserts to the railways so far as revenue-producing traffic is concerned, producing only a relatively small amount of business. One of those areas is the long circuitous route from the maritime seaboard in the east to the cities in the St. Lawrence valley. Another is the long stretch over the Canadian shield north of the great lakes, and the third is the great height and great expanse of the Rocky mountains. These areas must be traversed, and it costs as much-or more-to operate the railways through them as it does in populous regions where substantial revenues are derived.

There is also the question of the numbers to be served by the railways. In Canada there

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are barely 200 persons to every mile of railway tract, as against more than 400 persons per mile in the United States and 2,000 persons per mile in the United Kingdom.

Further, the cost of railway operation has been steadily rising. The deadly work of inflation has not spared our railways. When we promote or cause to be developed a state of affairs in which the cost of living rises by fifty' per cent, it is not conceivable that these great industrial organizations can carry on their operations without increasing their revenues at least to some extent.

In 1940 the combined gross revenues of the two principal railway companies, as the minister stated, was some $384 million, from which a net revenue of $80-5 million was obtained. But in 1947, seven years later, a gross revenue of $693 million, produced only $71 million in net revenue before fixed charges, income tax and dividends. In other words an 81 per cent increase in gross revenues resulted in 1947 in a 12 per cent decline in net income. Ultimately the Canadian National Railways showed a loss of $15-8 million, and the Canadian Pacific Railway had an income of some $318 million and an expenditure of $295 million. But it is reported that even this road would have had a loss of $4-1 million had it not been for "other income" not accruing from railway operation.

I am not quite certain of all the details but I think what I shall have to say as to railway wages is substantially correct. There was a cost of living bonus granted to employees early in the war. In any event, early in 1944 this was absorbed into a wage increase. This added charge amounted to an increase of $36,000,000 a year to the railway companies. In 1944 also there was a wage increase of six cents an hour to substantially all employees, and it was dated back to September, 1943. That increase resulted in a $24,000,000 a year wage bill to the railways. On June 1, 1946, a little less than two years ago, another increase of ten cents an hour was granted. This created a further charge of $37,000,000 a year on the expenditures of the two railroads. At the present rate of employment, therefore, the two railways are paying about $97,000,000 a year more than the same number of workers would have received before the war. Roughly it would appear that they have received on an average about twenty-five cents an hour increase. But the cost of living, as compared with pre-war days, has gone up 50 per cent, while the average wages of railway employees it would appear have gone up only some 33 per cent. That last figure is just an approximation; some say it is 40 per cent. Under

such conditions of increased cost it is beyond question that the railways require an adjustment of their financial position if they are to stay in business and to provide Canada with the efficient service whioh is essential on economic, political and strategic grounds.

What has been done in the circumstances, and what will be the consequences of present actions? The board of transport commissioners have ordered a 21 per cent general increase in freight rates. It is estimated that this will give the Canadian Pacific Railway an increase of $30,000,000 in revenue and the Canadian National about $40,000,000. One of the consequences is, as the evidence strongly suggests, that even this will not give them sufficient revenues to meet their needs. The railways have stated that nothing less than a 30 per cent increase will meet their needs. That is their position. We do not need to accept that statement without examination. Anyway, that is their statement. Within the board itself there was a doubt, reflected in Commissioner Wardrope's recommendation of a 24 per cent increase. Finally, Mr. A. R. Mosher, president of the Canadian Brotherhood of Railway Employees, has stated that the 21 per cent rate increase is not adequate to provide for necessary wage increases.

We may say that the views of the railways on the one hand and the views of Mr. Mosher on the other are one-sided or possibly prejudiced views; but I mention them for what they are worth. In any event it must be remembered that also concerned in this issue are 180,000 railway employees. These working men and women have had no adjustment of wage rates since June of 1946. Yet since that date the cost of living index has risen 27-2 points over the 1938-39 average, and the food index has gone up 43-8 points during the period when they have had no increase. Clearly this aspect of the matter deserves immediate and most careful consideration.

Finally it is entirely possible that the increase in rates will result in a falling off of traffic. Even the railway officials themselves do not like having to do this, and yet under these conditions, in order to pay for the goods they buy and pay the wages they have to meet, an increase has had to be asked for. But in asking for it they recognize that the higher the rates are the more it tends to discourage traffic.

Finally, it is entirely possible that the increase in rates, as I have said, will result in falling off of traffic, thus reducing actual revenue below the 21 per cent increase which is assumed. If, then, the financial needs of the

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railways and their employees are not met, what is the effect on the rest of the country? If it does not fully meet that need, we might look at what is the effect elsewhere. ,

First, a general flat increase on all rates serves to intensify the discriminations that now exist and to increase the inequalities which exist in our freight rate structure. It is as simple as this, Mr. Speaker. If over there in one area there is a high rate and over here in another area there is a lower rate, and J'ou put 21 per cent on that high rate and 21 per cent on the low rate, you get a bigger increase over there than over here, and you intensify and increase the discrimination rather than lessen it.

What are some of the discriminations? One might mention a few that have been brought prominently, before us. There is the mountain differential, which bears so heavily upon industry and the consumers of British Columbia, a western province, separated from the rest of Canada by the Rocky mountains. One of our railroads has to go up over a hill a mile high to carry all its freight from one section of the nation to the other. The other railroad has to go up two-thirds of that distance. It is 'because of that condition that high rates result.

It is said by some that the Canadian Pacific Railway was forced to take the southern route for political reasons. I do not mean "political" in the narrow sense; I mean it in the large national sense. It is said that they planned to go through the low passes of the north, the Yellowhead region, where the Canadian National Railway now goes through, but that it was government policy to see that the railway came down further south and went through the Kicking Horse pass west of Calgary. It is said that that was done in order to keep United States railway interests from getting into southern Canada and eventually having larger sections of what is now Canada tacked on to the United States. If that was so, and to the extent that it was a political decision, then the nation should bear that cost and it should not be left as a burden upon one or two of the nine provinces of Canada.

Among these inequalities, as I have said the mountain differential bears heavily upon the industry and the consumers of British Columbia. Then there is the heavy burden in the Alberta rates-Alberta, a long way from eastern Canada and separated from the west by the Rocky mountains. Someone has said that Alberta is at the apex of the rate structure in Canada. These rates bear more heavily upon that province than perhaps any other province of the dominion. The Crowsnest agreement

sought in part to overcome that handicap. This was an agreement entered into many years ago, an agreement by which the railway accepted some $3,000,000 from the government of Canada in connection with the construction of a railway into the Crowsnest pass. In return it undertook, wisely or unwisely, certainly unwisely from the point of view of the railroad, but wisely from the point of view of the people of western Canada, to give low through freight rates on the grain produced in that area. That is the agreement I referred to a little while -ago. In 1925 we had to fight for its preservation.

Another of the inequalities was in connection with the maritime freight rate concessions. Ever since confederation the maritimes 'have been fighting because of the increased burden of freight rates on their economic life. The maritimes were once the most prosperous parts of Canada, but when the nation became centralized after confederation, industries started leaving the extremes of Canada to come to the centre. Then the burden of freight rates became unduly heavy on the maritimes, and as long as I can remember they have been fighting to get a better deal and they have been given it to a degree. Now in the maritimes they have a 20 per cent concession in freight rates. That is one of the inequalities, and in the effort to correct other inequalities we must take steps to see that this concession is not lost to the maritimes.

Secondly, in addition to the specific hardships I have just mentioned, the substantial increase in freight rates will have several important effects on the nation as a whole. I have stated quite frankly that under conditions where the cost of living goes up 50 per cent, and the cost of goods goes up 50 per cent, no industrial concern can get along without increased revenues. If the plans proposed do not succeed in meeting the needs, what then is the general effect on the nation? How much better off would we be if we could avoid it?

First, these increased rates will increase the cost of living. It is estimated that even butter, which we heard so much about, will be a cent a pound more, meat two cents more, eggs one or two cents a dozen more, sugar one cent per pound more, coal twenty-five cents a ton more. The last is specifically provided in the recommendations approved by the government, and prices in the maritimes, the prairies and British Columbia will be higher.

Second, it will increase the cost of production. The figures I have here are taken from one of the financial papers and I do not vouch for them. Steel will go up from $1.47 to $1.75,

Freight Rates

fuel by twenty-five cents a ton, and building and other materials in varying amounts.

Third, it will decrease our competitive power in world markets, because the higher our costs rise as a result of railway freight rates the less will be our competitive power in world markets. For example, aluminum will possibly be a cent a pound more and newsprint $1.40 a ton more.

Fourth, it will increase the exchange problem by diverting purchases of the maritimes and British Columbia from Canadian suppliers, who must ship by rail, to foreign producers, who can deliver by sea. Canadian-produced machinery and equipment will be a little further out of reach for the men of the prairies.

Fifth, it will cause the further emigration of industries from the maritimes, thus de-industrializing the region which it is most important should be industrialized further in Canada.

Sixth, it will cause the further departure of farmers from the prairies, thus tending further to depopulate the region which most needs a heavy increase in population.

One of the distressing features of the development of our Canadian economy, particularly in recent years, has been the tendency of the west not to grow in population, the tendency of the central parts of the prairies to become less in population. Some of the figures I have show that it is less in some parts than it was ten years ago; and that condition is being perpetuated by the policies of the government- policies affecting livestock, which are driving people out of livestock production in the west, and policies of the government with respect to the price of wheat in preventing its being sold to advantage.

The policy of the government with respect to freight rates results in these being increased where they are already too high. As evidence of all this, the average farm in western Canada is reported now to be more than 400 acres, nearly twice as much as it was when I first went there nearly forty years ago. With the way things are going, it will not be long until the average farm in the prairies is twice 400 acres. I say that because it is almost impossible to get farm labour; often those who can be got are not too well trained for the work, and the farmer has to compete with the cost of labour in urban industry. With these conditions facing the farmers, they find that it is more economical, and that they can make more money, by using large and heavy machinery, thus needing fewer people to farm the land, while at the same time farming more land. That has been the tendency over the last forty years, and under present conditions it will continue.

These ill consequences are not the fault of the board of transport commissioners. By their terms of reference they are required to consider only the position of the carrier petitioning for an increase in rates. These great economic, social and political issues were not their responsibilities. The responsibility for the issues affecting the welfare of the nation falls upon the government, and upon the government alone.

I am referring now to the responsibility of the government in dealing with these major issues, and not with the detailed issue of determining whether a rate should go up five cents here or down three cents there. It is proper that that responsibility should be left with the technical board, and that a political institution such as this should not be charged with the responsibility of fixing these rates. If we ever get back to that state of affairs it will be a serious day for Canada. But when I say that, I say equally that the government cannot avoid its responsibility for meeting these major questions that are before us.

I repeat, the responsibility for the issues affecting the welfare of the nation falls upon the government and the government alone. The action which has been taken is not an adequate solution of the problem. It tends to accomplish one thing at huge economic costs and creates still further inequalities in the process.

The government has denied without a hearing the pleas of seven provinces. I read its own order in council denying those pleas. The government has allowed no stay of these increased rates to give time for a removal of discriminations. The government has allowed a situation to develop in which it is made to appear that the railways are pitted against the people. The only suggestion the government has to offer is a long investigation. A few days ago it was suggested that it would be a year or two; today the minister suggested that it might be less. He has not been very specific about it, but it is a matter of a long delay during which time anything can happen to the railways, their employees and the public.

In this connection I wish to take a moment or two to deal with various discriminations, and I shall do so briefly. The discriminations and inequities that are claimed are many and varied. For example, the maritimes claim that reductions elsewhere, made by the railways to meet competition, have impaired-in fact, some of them say they have nullified-their 20 per cent differential granted by the Maritime Freight

Freight Rates

Rates Act. Ontario claims, at least some people in Ontario claim, that their rates are unduly high in comparison, for example, with western grain rates. I am referring to those low through-rates achieved many long years ago by a bonus to one of the railways.

Alberta claims that, being at the apex of the transcontinental freight structure, the people there are victimized more than others in consequence of long-distance hauls. Alberta claims that through rates across Canada to Vancouver, put into operation to meet water competition via the Panama canal, enable goods in certain cases to be shipped by rail to Vancouver and back into Alberta more cheaply than they can be shipped direct to Alberta. That, of course, is a simple statement of fact. That is what the construction of the Panama canal did to the economy of Canada. It gave to both coasts economic advantages and a disadvantage to inland points..

British Columbia complains of the mountain differential. This higher rate simply means that the people of British Columbia bear an extra charge for the mountain haul. British Columbia also claims that freight rates on goods brought from eastern Canada, under compulsion of the tariff, are higher than freight rates on bought goods shipped from British Columbia to markets in eastern Canada, although there is no corresponding difference in haulage costs.

The Crowsnest agreement and the Maritime Freight Rates Act should be protected in any reference to the commission for further consideration of freight rates. The whole matter, however, is most complicated and deserves an impartial approach, one having regard both to local needs and to the national welfare. So I say the responsibility rests upon the government to deal with these major principles in connection with freight rates, but the detailed decisions with respect to smaller matters affecting rates should be left to the impartial and technical body we call the board of transport commissioners and its advisers.

The government's policies-its livestock policjq its labour policy, its marketing policy with respect to wheat, the decision to place oats and barley under a board which, by government decision, is not to get the best price it can for the farmers but rather to depress prices-all these tend still further to depopulate the prairies. I say in all sincerity that this vast agricultural empire, eight or nine hundred miles wide, is likely under present policies to see either a very slow increase or an actual decrease in population

in large sections. Such policies as these will tend still further to strangle industrial development in the -maritimes and will hold back development in Alberta and British Columbia.

The 20 per cent freight rate concession to the maritimes should be preserved. The Crowsnest Pass rate should be preserved. In my judgment the mountain differential should be removed. The apex of freight rates is reached in Alberta. In this and related regions the rates should be examined with a view to possible adjustments. The board of transport commissioners is the proper body to deal with these matters; but the general principles should be settled by the government with the approval of parliament. Political bodies should not be asked to determine such details. That is why a while ago we objected to the appointment of a political body, in the form of the wheat board, to determine the prices farmers will receive in this country. We do not want political prices, and we do not want political rates. As I have said, the government should tell the commission to protect the rate concessions already won by the maritimes; to protect the concessions bought and paid for under the Crowsnest Pass agreement; to reconsider the situation where the apex of freight rates bears heavily upon certain communities in Canada, and to remove the mountain differential which so hampers the development of British Columbia and Alberta.

In the meantime the government should do one other thing. It should get off the backs of the people. Here we are with two great railway systems in Canada, one asking for $30,000,000 and the other for $40,000,000 in order to meet costs which are ever-increasing, due largely to government policies. They are asking for $70,000,000, while this year this government is collecting as much revenue as it collected in the highest year of taxation in the middle of the war. We do not know what amount was collected last year; the Minister of Finance (Mr. Abbott) knows and he will tell us when the budget comes down. It will probably show that our revenue was in the neighbourhood of $3,000 million, and that our surplus is seven or eight or nine hundred million dollars, or perhaps more. Here we have this government taking seven or eight or nine hundred million dollars from the people more than it is spending in services; then the railways come along and the government says, If you want more money go and put higher rates on the people and get your $70,000,000.

My proposal is that the government should get off the backs of the people and to a large

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extent lessen the costs of running the railways. In this way the government could make it possible for the railways to meet their obligations without imposing such high freight rates. I say the government should reduce taxation, and in this way lessen to a great extent the impact of the freight rate burden upon the people of this country. This could have been done if the government had made, or if it will immediately make, a major reduction, particularly in the indirect taxation, which multiplies and pyramids upon itself, taking from the people of this country quite unnecessarily from fifteen per cent to thirty per cent or more in increased prices for the things they buy.

A hasty examination of such evidence as is available suggests that some $250 million to $300 million of the annual expenditure of the railways contains a substantial element of indirect taxation; and it also appears that the average rate of the indirect tax is not less than fifteen per cent and probably is much more. The lowest sum which might be saved to the railways by the removal or substantial reduction of these taxes would be not less than $30,000,000, and probably it would be much more. By removing some of these indirect taxes, if not all, or by at least lessening them, it would be possible by government action to reduce the need for a freight rate increase by probably one-half. Such a measure would be fully justified. It would not be a special privilege for a particular industry but the lifting of an intolerable burden from the whole nation, a burden which falls with the greatest severity upon those sections of the people least able to bear it. Canada is a nation which has been created out of a group of isolated communities linked together by steel rails. But it is not enough to "create" a nation; that nation also must be preserved and maintained, and we must ensure that the chief physical factor in our unity continues to serve us well.

Having regard to the views we hold in this matter, Mr. Speaker, I am going to move an amendment to the amendment. With much of what is said in the amendment I am in agreement, but it leaves open the question as to whether the requirements of the railways, in respect even of wages, will be met. I am not now criticizing the amendment, except on that point, which is not clear. This is the amendment I move, seconded by the hon. member for Vancouver South (Mr. Green):

That all the words after "this house" in the fourth line of the amendment be deleted, and that the following be substituted instead thereof:

"regrets the government's failure to secure the removal of inequalities and discriminations in the Canadian railway freight rates structure

before the imposition of a horizontal increase of twenty-one per cent-an increase which is bound to intensify the aforesaid inequalities and discriminations; and

"Further regrets that the government has refused the reasonable request of seven provinces that the imposition of increased freight rates recently authorized by the board of transport commissioners be delayed for thirty days until they could be heard."

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CCF

Wilbert Ross Thatcher

Co-operative Commonwealth Federation (C.C.F.)

Mr. W. ROSS THATCHER (Moose Jaw):

Mr. Speaker, first of all I should like to say that I was pleased this afternoon to note that the Minister of Transport (Mr. Chevrier) was much more conciliatory and much more humble than he was last Wednesday. Perhaps the Liberal caucus this morning had something to do with that.

On the other hand I wish to say-and I believe I speak for many westerners-that the minister's remarks this afternoon were particularly unsatisfactory, so far as we are concerned. I think he tried to befog the issues as best he could.

A little more than a week ago, as hon. members will recollect, the board of transport commissioners allowed this increase which was, with a few exceptions, a flat increase of 21 per cent across the board. Since that time, as the minister pointed out this afternoon, protests have been pouring in to the government. Some of them have been pretty violent protests, I think, particularly, from the outlying sections of this country. Those protests have come from producer organizations. They have come from farm organizations; they have come from city councils, and they have come from private citizens. I believe almost without exception, those protests pointed out-

Mr. MITCHELL; Did any come from labour organizations?

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CCF

Wilbert Ross Thatcher

Co-operative Commonwealth Federation (C.C.F.)

Mr. THATCHER:

Possibly so. I shall come to that in a minute. Those protests pointed out that this decision, if it were approved, would increase a discrimination which was already unfair, and would perpetuate injustices which were already severe.

The announcement of the board of transport commissioners a few days ago aroused such resentment in the west, and in the maritime provinces, that those provinces protested to the federal government. They sent in an appeal to the federal cabinet, which was the only place where they could take such an appeal. All the provincial governments asked was that the increase be held up thirty days, until the seven premiers could come to Ottawa and discuss the matter themselves, with the government.

Freight Rates

Surely that was a reasonable request. What was the minister's reply last Wednesday? I quote what he said, as reported at page 2717 of Hansard:

Without prejudice to any appeal, the government has decided that it should not interfere with the effective date of the board's order.

Was there ever a more abrupt; was there ever a more arbitrary; was there ever a more unreasonable reply, given to a legitimate plea? I think that, regardless of the merits or demerits of the case about which we are arguing today, the government has been guilty of shocking rudeness to the premiers of seven provinces. Knowing their wishes, and without even giving them the courtesy of a hearing, the government allowed these rate increases to be put into effect.

The minister uses the expression, "without prejudice to any appeal". I wonder if be is trying bo kid someone. It is quite true that the premiers can still come to Ottawa; it is quite true they can still have their conference ; it is quite true they can talk over the matter if they wish to. But the fact of the matter is that their appeal has been prejudged. The minister has already rendered his decision. He has allowed the rates to go up.

I believe every member in the house will concede that the conference, even if held, has been rendered futile in advance.

I say the minister's action was similar to that of a judge of an appeal court who renders a decision before he has heard the evidence. We hear a good deal today about the need for better dominion-qrrovinoial relations. I think the need for better relations in that field certainly exists. But surely the action of the Minister of Transport last Wednesday, when he rode rough-shod over the express wishes of those seven premiers, marked a new low in dominion-provincial relations. The people of those seven provinces are looking to this parliament today to rectify that blunder; and the failure of the House to Commons to do so could in my opinion have far-reaching consequences.

Why are these freight rates causing so much resentment in the maritimes; why are they causing so much resentment in the west? Is it because westerners feel that the railroads should not obtain additional revenue? Perhaps that is the answer in part.

It does seem to us that it is somewhat strange for the Canadian Pacific to ask such a large rate increase just after it has shown in its annual report a surplus of $47,000,000, the second largest in its history. Most of us are a little dubious about the contention of the two railroads that they need an additional $70,000,000 in order to balance their books.

Yet most of us I think agree basically with the railroads when they say that the cost of railroading has gone up. We know that wages have gone up. We know that materials have gone up. We know that other costs have gone up. We know that at the same time the rates have stayed pretty well stationary.

In railroading, as in other business, if costs increase, then sooner or later prices have to go up. I believe it is in the national interest to have a railroad system which is efficient, and a railroad system which is financially healthy. And for that reason, while I query the amount, I do not argue basically with the contention of the railroads that they must have some extra revenue.

On the other hand I believe fundamentally that the method they are suggesting to obtain this additional revenue is discriminatory. I believe that it is unfair, and that it is contrary to the interest of certain sections of this country.

It is conceded by the railroads-I believe it is conceded by all hon. members-that over the past few decades, rates in the maritime provinces and in the west have been higher than those in central Canada. Originally the prairie scale of rates was 40 per cent higher than the eastern scale, and the British Columbia rates, in turn, were 100 per cent higher than those of the prairies. However, as a result of unceasing protests for forty years the prairie scale stands today about fifteen per cent higher than the east, and the British Columbia rate is about sixteen per cent above that of the prairies.

The judgment brought down last week ignores the fact that this heavy and unjust discrimination is already there. The recent decision of the cabinet means that for the first time in forty years, the west and the maritimes have lost ground in trying to obtain equalization of freight rates. So far as the prairies are concerned, the fifteen per cent discrimination now becomes eighteen per cent. That is our basic grievance. We can see no reason why we in the prairies, or in British Columbia, or in the maritimes, should pay rates which are higher than comparable rates in Ontario or Quebec.

A moment ago the Minister of Labour (Mr. Mitchell) asked about the attitude of labour unions in that connection. I say there is no great difference of opinion on this issue among C.C.F. members, whether they are farmers, or members of labour unions. I should like to read a statement issued only a few moments ago by Mr. A. R. Mosher, president of the

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Canadian Congress of Labour and the Canadian Brotherhood of Railway Employees and other Transport Workers. The release states:

Asked to comment on the alleged difference of opinion between the C.C.F. members of parliament and himself, as representing a large group of railway workers, regarding the twenty-one per cent increase in freight rates, Mr. Mosher said he felt that there had been a good deal of exaggeration in that respect. "It is true that I have supported the increase," he continued, "as being fully justified, in the light of present-day costs of operation, and, so far as I am aware, there has been no attempt by the C.C.F. to deny the need of the railways for increased revenue.

Mr. Coldwell, on behalf of the C.C.F. asked for delay in the application of the increased rate for the purpose of dealing with alleged discrimination, which it is claimed will seriously affect the western and the maritime provinces. I am opposed to delay in this respect, but I am in full support of an examination of the whole rate-structure, with a view to removing any discriminatory features that may exist, and I share Mr. Coldwell's view that every section of Canada and the Canadian people should be fairly and justly treated.

The fact, however, that there may be differences of opinion on specific issues does not affect the mutual confidence and respect which exists between the C.B.R.E. and the C.C.F., and I have no doubt that in each case such differences will be resolved in a satisfactory manner."

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LIB
?

Some hon. MEMBERS:

Sit down.

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LIB
CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

There are still rules of order.

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SC
LIB

Humphrey Mitchell (Minister of Labour)

Liberal

Mr. MITCHELL:

My hon. friend stated clearly that Mr. Mosher was opposed to any delay in the increase in freight rates.

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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

Quite right; that is an honest difference of opinion.

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CCF

Wilbert Ross Thatcher

Co-operative Commonwealth Federation (C.C.F.)

Mr. THATCHER:

That is just what I read.

As I said a few moments ago, it seems to me that the chief issue in this debate is very clear cut. Is confederation to be an association of provinces equal in every respect, or is confederation to be an association of provinces where seven provinces will receive treatment less favourable economically than the other two? Is the transport board, where freight rates are concerned, to treat some provinces as first-class provinces and others as second-class? That is the question before us today.

As a Canadian who comes from a western province, I ask for precisely the same treatment on freight rates as is given to the Canadian who comes from Ontario or Quebec. My constituents ask for no more than equality, but they will willingly accept no less.

Some hon. members may feel that there are certain reasons why the west should pay freight rates which are higher than those paid in central Canada, but I can assure them that there are many reasons for the opposite being true.

The prairie provinces have almost everything which should make for low rates. We have flat country with very few rivers. We have almost no natural obstacles. I think these features should make for low operating costs. Certainly the capital investment of the railroads has been kept much lower than it is in central Canada. The hauls on the prairie are long, and the density of traffic is there. The prairies have bulk products which should make for lower operating costs. Despite the advantages which we have, we are at an overwhelming disadvantage through not having competition similar to that which is present in the east. In the east there is competition from the United States railroads, from the great lakes, and from trucks. All these factors have forced the railroads to keep their rates at a reasonable level. Speaking in Saint John, New Brunswick, on November 25, 1946, Mr. D. C. Coleman, then president of the Canadian Pacific, had this to say about the proposed increase:

Railway rates should be based on what the traffic can afford to bear.

Obviously that is the way in which the railroads have fixed their rates during past years. The west has had to pay higher rates simply because it was felt that it could afford to pay them. The railroads have taken advantage of the situation to make the west "pay through the nose" in many cases. If hon. members think I am exaggerating I would refer them to exhibit 131 filed by the Canadian Pacific during the recent hearing.

In the past ten years 1936-45 inclusive, 65-8 per cent of the operating profits of the Canadian Pacific were made in western Canada. In the twenty years ended in 1945, the Canadian Pacific earned $245 million in the east as compared with $525 million in the west. In my opinion the recent 21 per cent increase will not be fully enforced in central Canada because of the competition to which I referred a moment ago.

In the past, high freight rates have had a definitely harmful effect upon the economy of the west. In the first place, our standard

Freight Rates

of living has been adversely affected in direct proportion to the unfair differential. In the second place, higher freight rates have made it difficult for industry to develop in the west since industry must start out under a disadvantage as far as eastern competition is concerned because of those higher rates. It seems to me that if this is allowed to go through the discrimination will be increased. In other words, it is the firm belief of this group that, before this increase goes through, equalization across Canada should take place.

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?

An hon. MEMBER:

Two years.

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CCF

Wilbert Ross Thatcher

Co-operative Commonwealth Federation (C.C.F.)

Mr. THATCHER:

That is too long. The Minister of Transport on Wednesday last and again tnio afternoon made a feeble attempt to placate public opinion. He stated that the board of transport commissioners would be instructed to investigate these rate differentials in the near future. Let me tell the minister that I do not think he is-

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. CHEVRIER:

The hon. member should state what the minister said before commenting on it. He is all wrong.

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CCF

Wilbert Ross Thatcher

Co-operative Commonwealth Federation (C.C.F.)

Mr. THATCHER:

All right. The idea of charging the Canadian people an additional $70,000,000 and then ducking behind a new investigation, will be recognized by the people of Canada and by hon. members of this house for what it is. If after sitting for nearly two years, the transport commissioners do not know that there is discrimination in the railway rate structure of Canada, then I doubt if they ever will know it. What is the point in having them spend another two years on an investigation, as the hon. member for Lethbridge (Mr. Blaekmore) said the other day, simply to discover abuses which they know already exist?

I believe the last time we had a similar investigation was in 1925. At that time it took the board seven months to commence after they had been ordered to start, and then it took them eighteen months to finish their inquiry. I think the government is simply shelving the whole matter for a couple of years, during which time Canadians will be forced to pay higher rates.

Where were all the Liberals when this decision was made? When the Minister of Transport spoke in the house the other day backbenchers got up-I give them credit for this-and protested. I hope they will vote according to the way in which they spoke in the house the other day.

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An hon. MEMBER:

They have had a caucus since.

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April 13, 1948