October 26, 1951

PC

Howard Charles Green

Progressive Conservative

Mr. Green:

If I may continue with the point of order-

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Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

I just wonder how serious this matter is. Citation 246 (c) in Beauchesne, third edition, reads:

246. Besides the prohibitions contained in standing order 41, it has been sanctioned by usage both in England and in Canada, that a member, while speaking, must not: . . .

(c) refer to any matter on which a judicial decision is pending.

I understand that these figures have been published in the press. I am wondering if their appearance in Hansard would be apt to have any effect upon a pending judicial decision. Most of them have already been put in this afternoon. Would there be much objection to allowing the figures to go in?

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?

Some hon. Members:

Agreed.

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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

I am not making a formal ruling on it, but the circumstances are that 94699-30 a

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the figures have appeared in the press and have been widely publicized, and some of them are already on Hansard.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

I am not going to object. The only thing is, I was hopeful that an interminable list would not be put on the record because the plan that was submitted is very lengthy. There are hundreds of thousands of freight rates, and my hon. friend might be tempted to put a substantial list on Hansard. It was for that reason I interrupted.

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PC

Gordon Francis Higgins

Progressive Conservative

Mr. Higgins:

I guarantee not to put on 100,000. I will put on five so we may be clear about the matter.

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LIB

J. G. Léopold Langlois (Parliamentary Assistant to the Postmaster General)

Liberal

Mr. Langlois (Gaspe):

Five thousand.

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PC

Gordon Francis Higgins

Progressive Conservative

Mr. Higgins:

Just five. I should like to refer to the conclusions and recommendations of the royal commission on pages 125 and 126 of their report. No. 8 is as follows:

The board has requested the railways to submit to them the railways' proposals for equalization of freight rates throughout Canada subject to statutory prohibitions . . .

And so on. I think, Mr. Speaker, that has been done. That is why I think these figures are admissible, but we will not argue.

I have only five examples, and I will put them on Hansard. As I said a short time ago, the present rate from Toronto to St. John's on class 1 freight, which is drygoods, motorcars, etc., is $3.12. The proposed rate is $6.32, an increase of $3.20 or 102-6 per cent. On class 3 freight the present rate is $2.39 and the proposed rate is $4.52, an increase of $2.13 or 89.1 per cent. Class 3 includes chiefly canned goods. On class 5 the present rate is $1.57 and the proposed rate is $2.84, an increase of $1.27 or 80.9 per cent. That class is chiefly carload lots of various types. On class 8 the present rate is $1.14 and the proposed rate is $1.89, an increase of 75 cents or 66 per cent. That class is special bulk movements of freight. On class 10 the present rate is $1.04 and the proposed rate is $1.70, an increase of 66 cents or 63.5 per cent. That class is also bulk shipments.

I think these figures speak more strongly than any argument any hon. member from the maritimes in all his wisdom could possibly adduce. It is going to mean a definite increase in the cost of living for the people of Newfoundland and the maritimes. It is against that most iniquitous system of equalization that I am protesting in the strongest way I can. We can say what we like about the railways, but my own idea is that they should be regarded in the same category as public works, wharves and so on. They should, if necessary, be subsidized so that people in certain parts of Canada may live on a fair basis with the people in the better off

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provinces. As it is six o'clock, Mr. Speaker, I will let the matter stand at that point.

At six o'clock the house took recess.

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AFTER RECESS The house resumed at eight o'clock.


CCF

Hazen Robert Argue

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

Mr. H. R. Argue (Assiniboia):

I believe, Mr. Speaker, the main feature of the bill we are now discussing is the fact that it does recognize the principle of equalization. It does suggest that at least a target of equalization is being set. The royal commission on transportation recommended that there should be a strengthening of the board of transport commissioners. I see that the bill makes certain changes in the possible term of office, pension and some other matters in reference to the board. However, there has been no change in one particular part of the Railway Act where I believe a change should have been made, and that is the provision that the chief commissioner must have been a judge of the superior court of Canada or of any province of Canada, or must have been a barrister or advocate of at least ten years standing at the bar of any province.

I have no quarrel at all with the legal profession. I suppose if I were, in some manner or other, to get into trouble I might have to seek the advice of a member of that profession. They have their place, but I cannot see why it is a necessary qualification for a chief commissioner that he be a lawyer. If one were to look across Canada in an effort to pick out a group of men who are best qualified to deal with the matter of freight rates, who have the greatest knowledge of railway problems and the efEect of freight rates on the various parts of our economy, I believe one would be forced to pick the majority of that group from our universities, from men trained in the field of economics. I would think that the best freight rate specialist would be a man who had majored in economics, with special training in railway affairs and freight rates. I, for one, cannot see why the chief commissioner or the deputy chief commissioner must be a member of the legal profession. When it comes to selecting the personnel of the board of transport commissioners I feel the government should endeavour to get the best possible candidates for the job, whether they be lawyers, the members of some other profession or merely laymen with outstanding ability.

One of the members of the board of transport commissioners who has recently

resigned, Mr. W. J. Patterson, who was premier of the province of Saskatchewan for nine years, was not a lawyer. As a matter of fact I believe he did not have a university degree of any kind. He was an able man, however, with sufficient ability to lead a political party in a province and to be premier of that province for a period of nine years. Yet when he became a member of the board of transport commissioners he knew there was no promotion within that board for him. Whether or not he was the best man on the board, there was no hope of advancement for him simply because he was not a lawyer. I say, therefore, that this particular section should be changed. I do not say that judges or lawyers should not be members of the board. If they are the best men the government can obtain, well and good. But other able people should not be barred from becoming chief commissioner or deputy chief commissioner merely because they do not happen to be members of the legal profession.

The main part of this bill is contained in section 332A which states:

It is hereby declared to be the national freight rates policy that, subject to the exceptions specified in subsection four, every railway company shall, so far as is reasonably possible, in respect of all freight traffic of the same description, and carried on or upon the like kind of cars or conveyances, passing over all lines or routes of the company in Canada, charge tolls to all persons at the same rate, whether by weight, mileage or otherwise.

Then it goes on to say that the board of transport commissioners may, with a view to implementing the national freight rates policy, require any railway company to establish a uniform scale of mileage class rates applicable on its system in Canada; and,

(b) to establish for each article or group of articles for which mileage commodity rates are specified, a uniform scale of mileage commodity rates applicable on its system in Canada . . .

In other words, that is the target. This bill provides that the railways shall, "so far as is reasonably possible", establish equalized freight rates. The board of transport commissioners may-apparently it is at their discretion-with a view to implementing this policy require the railway companies to establish uniform scales of mileage -class rates and mileage commodity rates. In my opinion, Mr. Speaker, that is no more than a well spelled out target. It does not mean necessarily that within six months or twelve months there will in fact be an equalized freight rate structure throughout the country. In fact, for a long period of time it has been the government's stated -policy that freight rates should be equalized in so far as possible. The order in council passed on April 7, 1948,

instructing the board of transport commissioners to conduct a general inquiry asked them to do that, and I quote from the order in council:

. . . with a view to the establishment of a fair and reasonable rates structure which will, under substantially similar circumstances and conditions, be equal in its application to all persons and localities . . .

In other words, the well spelled out target of equalized freight rates, as provided in this bill, is very little if any more specific than the target of equalized freight rates spelled out in the order in council of April 7, 1948. Therefore if there is to be in fact an equalization of freight rates the board of transport commissioners must, on their own initiative, see that such a policy is undertaken and accomplished. I believe the minister should inform the house as to how long he expects it will take the board of transport commissioners to establish this government policy that is outlined in the bill. The people of Canada should know whether they can expect to wait another six months for equalized freight rates, or another twelve months, or if in fact there is going to be any target date, or any particular date by which they may expect that this legislation will be implemented.

The minister has said that this legislation implements the recommendations of the royal commission. I think that statement is only partially correct. This legislation may implement the recommendations of the royal commission on transportation if, as a result of this legislation, we in fact obtain an equalization of freight rates. The very fact that this legislation is being passed, based as it is on the recommendations in the report of the royal commission, does not in itself guarantee that we shall obtain equalized freight rates in Canada, as was the hope of the royal commission. I therefore stress again that time is of the essence. The people of western Canada have now waited for many years in the hope of getting equalized freight rates. This legislation may bring about an equalization of freight rates if, in fact, the government sees to it that such an equalization is brought about. It is one thing for the government to ask parliament to approve this legislation, and it will be another thing for the government to see that it is made effective.

We on the prairies feel that we have every right to ask and expect from the government whatever steps are necessary to establish the equalization of freight rates. The building of the transcontinental railroad across a wide barren waste, as it was at that time, was part of our national policy. As a result of

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that national policy our freight has travelled east and west whereas, from the standpoint of the prairies, it might well have travelled to a greater extent north and south. The national policy has, in fact, placed extra burdens on the people of Canada. When one considers what should be done in order to correct the disadvantages that have come about as a result of freight rate policies in the past, one must consider the results oi other national policies in other fields. The tariff policy has siphoned off industries from the maritimes to central Canada, as the hon. member for Cape Breton South (Mr. Gillis) has often pointed out. The tariff system has made it almost impossible for any significant industry to be built up on the prairies. The tariff policy has aided the industrialization of central Canada.

The national policy now is for the construction of the St. Lawrence seaway. The St. Lawrence seaway will no doubt result in lower transportation charges in this area. It may force the railway companies further to lower existing competitive rates. I do not complain of the national policy in the past or of the national policy today in building the St. Lawrence seaway. But I say that if government policy results in so much greater advantage for the provinces of Ontario and Quebec in respect of tariffs, the St. Lawrence seaway and other matters, then I think it is all the more necessary that steps should be taken to lift the burden of freight rates from the people on the prairies, in the province of British Columbia and in the maritimes.

In this bill the government has announced that, in order to implement further the suggestions of the royal commission, a $7 million subsidy will be paid for the maintenance of the bridge between east and west. In my opinion that $7 million subsidy might result in great advantage to the people on the prairies; but I have yet to hear from the minister what formula will be used to pay out that $7 million. What assurance can the minister give to parliament that the $7 million will, in fact, result in a lowering of the freight rates for .people living in western Canada, shipping out goods from the west and receiving goods from the east? The $7 million could well merely result in further income for the railway companies. Something will have to be done if the $7 million is in fact to be passed on to the people of western Canada in the way of lifting the burden of freight rates.

I for one am not opposed to subsidies. I am not afraid of the government spending too much on subsidies. I think there is a

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definite place in national policy lor subsidies in order to relieve, in this instance, the burden of freights. I hope this legislation will in fact result in an equalization of freight rates. However, even though we pass this legislation, and even though the government may overhaul and strengthen the board of transport commissioners, I am not at all sure that we still may not have an inequitable freight rate structure. It may well be that competitive rates in Ontario and Quebec are so important and so far-reaching that even though other rates may be equalized, in fact the freight rate burden will still be relatively heavy on people outside those provinces. For that reason I believe there is great merit in the suggestion advanced by the province of Saskatchewan in its brief to the royal commission, wherein it suggests that whatever subsidies may be necessary should be used in order to establish, for all practical purposes, an equal freight rate structure for the people on the prairies as compared with persons living in Ontario and Quebec.

The Saskatchewan brief went even further. It said that in order partially to compensate the people of Saskatchewan, Alberta and Manitoba for the results of tariff and other policies which meant the industrialization of Ontario and Quebec, there should be a further subsidy to roll back freight rates as applied to the prairie area. Saskatchewan asks for a prairie freight rates act similar to the Maritime Freight Rates Act. I believe the $7 million might better have been used as a partial payment toward the establishment of fair rates through a prairie freight rates act. If the $7 million itself were applied to the rates prevailing for western Canada we would be assured that this amount of money would in fact result in a lesser freight rate burden for the people on the prairies. But because the $7 million will be paid to the railways, and because the minister has not yet informed parliament what steps will be taken to guarantee that the subsidy does in fact result in lower freight rates on the prairies, we cannot be certain that when the people of Canada pay that $7 million we shall obtain a reduction in freight rates equivalent to that amount. Therefore I say there is great merit in the submission of the province of Saskatchewan, asking for subsidies on freight rates prevailing in western Canada in order partially to compensate us for other disadvantages resulting from other national policies.

I believe the minister should assure the house on one further thing, namely that there will not be another horizontal increase in freight rates before this legislation has been made effective. On June 12, during last

session, we in this group endeavoured to ward off the last horizontal increase in freight rates. On that day I proposed the following motion, seconded by the hon. member for Melfort (Mr. Wright), as reported at page 3972 of Hansard:

". . . in the opinion of this house no further increases in freight rates should become effective prior to consideration by parliament of the government's proposed legislation arising out of the report of the royal commission on transportation."

The Speaker did not feel the resolution was in order at that time and consequently ruled it out of order; but it does make clear that the members of this group, before the last increase in freight rates had been made, indicated to the government that it was our wish that there be no further horizontal increase in freight rates until the new legislation had been introduced in parliament. So once again I ask the minister whether he can assure the house and the country that there will be no further horizontal increases in freight rates until the steps forecast in this legislation have been undertaken and fulfilled.

The very fact that a horizontal increase in freight rates was allowed on July 4 makes the problem of equalizing freight rates now even more difficult. The fact that following that increase in freight rates there was no similar increase in competitive rates in the eastern area makes the disparity between freight rates in central Canada and the prairies even worse. Instead of obtaining freight rates more nearly equal after the royal commission report had been tabled and we had learned its important recommendations, we found that the board of transport commissioners once again allowed a further increase in freight rates resulting in a further disparity between the rates existing in eastern and western Canada.

I might quote part of an editorial appearing in the Regina Leader-Post on July 6. That paper has always been a staunch supporter of this government. It reads in part as follows:

Although interim in effect, the transport board's award oi a 12 per cent across-the-board increase will simply accentuate existing inequities and render any subsequent adjustment of the structure that much more difficult. The added burden as far as the west and the maritime provinces are concerned will be even greater in view of the railways stated intention of not applying the increase to competitive rates prevailing in the central provinces.

The article then goes on to suggest that the thing for the government to do was to set aside that 12 per cent increase. Well, if it were true that there should not have been a horizontal increase in July, it is even more true today. When this legislation has at last been introduced into parliament then there

should be no further horizontal increase in freight rates until it has been made effective.

To sum up, Mr. Speaker, I suggest that the qualification for members of the board of transport commissioners should not in anyway be limited to membership in the legal profession. The government should endeavour to get the best men possible. If they are members of the legal profession, well and good. If they are not members of the legal profession they should not be barred for that reason. I further suggest that there should be a time limit, some assurance from the minister that within a specified time this legislation will in fact be made effective. Further I believe, as does the Saskatchewan government, that there should be a compensatory payment to the railways in order that freight rates may be lowered to western Canada, partially to compensate for the effects of other national policies on the people within that area. And finally the minister should assure the house that until this legislation does in fact become effective, until there is an equalization of freight rates, there will be no further horizontal increases in present rates.

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PC

William Joseph Browne

Progressive Conservative

Mr. W. J. Browne (St. John's West):

Mr. Speaker, as a representative from Newfoundland I feel that I should have something to say on this important subject. I do so with a certain amount of diffidence because the matter is technical, and I think any hon. member who has studied it will find that it is complicated as well.

There is a certain amount of mystery about the origin of this legislation. On reading the report of the royal commission on transportation I find certain contradictory statements on page 124 that logically would justify the government in ignoring the recommendations of the royal commission and not proceeding with this equalization bill at the present time at all. In giving the history of the subject of equalization the report says:

In 1925 by P.C. 886 the governor in council directed a general freight rate investigation and stated that "The policy of equalization of freight rates should be recognized to the fullest possible extent as being the only means of dealing equitably with all parts of Canada."

That was in 1925.

The matter was discussed in a recent judgment of the board of transport commissioners in the 21 per cent case, and the board pointed out that there are instances where rates in the west are lower than in the east and in other cases the reverse is true, but they said: "The general rate level as a whole in Ontario-Quebec is below that in the prairies." The board, however, justified this on the grounds set out above.

It has been demonstrated that over the years there has been a gradual improvement in the situation and the railways argue that now, taking into

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account the Crowsnest rates on grain there is little or no difference in the general over-all level of rates between the west and the east.

Nevertheless the fact remains that the alleged inequalities in rates have been a subject of contention for many years and in April, 1948-

And that was before the judgment in the 21 per cent case.

-the governor in council by P.C. 1487 directed the board to conduct a freight rate investigation "with a view to the establishment of a fair and reasonable rates structure, which will, under substantially similar circumstances and conditions, be equal in its application to all persons and localities . . ."

The report puts in P.C. 1487, after the judgment in the 21 per cent case. To my mind that judgment in the 21 per cent case should have disposed of the question and made it unnecessary for the government to proceed with this sort of legislation.

Then the report goes on to set out the arguments of the provinces, showing that the western provinces of British Columbia, Alberta, Saskatchewan and Manitoba wanted equalization but did not believe that it was feasible, and that the maritime provinces did not subscribe to or support the so-called equalization of freight rates. So the provinces, if one includes Newfoundland as having come in, were equally divided on the subject- four in the west and four in the east. As the hon. member for Annapolis-Kings (Mr. Now-lan) pointed out, where is the justification for the conclusion and recommendation in the first paragraph on page 125, which states:

It would appear, from the foregoing and having regard particularly to the terms of order in council No. P.C. 1487, that the broad general principle of equalization throughout the country is now accepted.

Logically I cannot see how they can come to such a conclusion. It continues:

It must be noted, however, that the order in council provides that this equalization shall be subject to such special statutory provisions as affect freight rates.

It seems to me there should be some clarification by the minister as to why the government is proceeding with this legislation, and what it is going to mean. It is strange that, although the provinces seem equally divided, it should be gone ahead with at this time. At page 126 the royal commission shows how far it intends to go, when in paragraph 9 it says:

Consideration of the various complaints and suggestions referred to in the immediately preceding chapter and the recommendations made with respect thereto indicate that substantial progress towards the goal of equalization may be accomplished by the following means:

(a) The abolition of the present standard maximum mileage tariffs;

(b) The establishment of one uniform equalized class rate-

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In my opinion this is revolutionary when taken in conjunction with the new section 332A which says:

(1) It is hereby declared to be the national freight rates policy that, subject to the exceptions specified in subsection four, every railway company shall, so far as is reasonably possible, in respect of all freight traffic of the same description, and carried on or upon the like kind of cars or conveyances, passing over all lines or routes of the company in Canada, charge tolls to all persons at the same rate, whether by weight, mileage or otherwise.

The royal commission recommended and the government is proceeding with the repeal of sections 328 to 332 which set out the manner in which freight rates could be charged. They propose to substitute a new scale of rates or a new method of rates. As the hon. member for Annapolis-Kings and my colleague from St. John's East (Mr. Higgins) pointed out, the railways have been asked to put forward to the board a scale of rates, and they have done so. It is this scale of rates that has caused consternation in the maritime provinces, especially in Newfoundland.

It seems to me reasonable to ask the minister what the effect of this legislation would be if it were enacted at the present time, if it did not have to go before the committee, and if there were no change in it. What would its effect be? Or supposing it should go before the committee and receive endorsation immediately; what effect would it have? I submit it would be possible for the new freight rate structure as put forward by the railways to be accepted by the board and put into effect, and that it would have the results that have caused such anxiety in the east, especially in Newfoundland.

I am sure the government must have given some consideration to these recommendations. The Secretary of State (Mr. Bradley) must have delved deeply into the effect this would have upon his native land. He must have pointed out to the government that it was going to be serious. We are informed that it would be serious and, as I propose to show in a moment, the Maritime Freight Rates Act gives little or no relief. In one instance it gives no relief at all.

Is the minister able to say whether this equalization policy, if adopted, will have the effect in the west of levelling rates up or bringing them down? Or will it bring the rates up or down in the maritimes? This legislation is not wanted in the maritime provinces. The remedies they suggested are found in the report of the royal commission at page 29. No mention is made there of the principle of equalization. They wanted instead-

(a) Restoration of the arbitrary over Montreal that existed on July 1, 1927;

(b) Limitations on horizontal increases;

{Mr. Browne (St. John's West).]

(c) New Brunswick in particular requests that the reduction under the Maritime Freight Rates Act be made to apply to inbound as well as outbound freight and that the 20 per cent reduction accorded by the act be increased to 30 per cent;

(d) Prince Edward Island asks that the reduction apply to inbound freight on certain articles entering into costs of production in that province; and

(e) An extension of the reduction granted under the Maritime Freight Rates Act beyond Levis to points as far west as Toronto or Windsor, Ontario.

It is reasonable to agree that the managers of the railways want to make them as profitable as possible. Certainly the shareholders of the Canadian Pacific Railway, the privately owned concern, would feel much better pleased to see their company making a lot of money than to see it going into the red. And the duty of the management of the Canadian National Railways is to manage the railways efficiently and fairly for all the people in Canada.

Nevertheless it has been recognized by the royal commission and by previous royal commissions-by anyone who has studied the subject-that there are certain geographic,, economic and historical considerations that cannot be ignored by anyone, certainly not by this government. The hon. member for Annapolis-Kings (Mr. Nowlan) pointed out that the Intercolonial railway had been built over the most expensive route for strategic reasons. Is it fair that those who buy in central Canada and have their goods transported over that line or who send goods from the east to the west over that line should be charged on a mileage basis when the route is 250 miles longer than it should be?

Economic conditions in Newfoundland are-similar to those that exist in the maritimes and there was complete justification for the immediate application of the Maritime Freight Rates Act. We have the same primary industries of fishing, mining, lumbering and papermaking and the number of secondary industries is quite small. The same type of intelligent men that will be found in Toronto or Montreal have been struggling against great handicaps for many years to build up industry and make the country self-supporting. In Newfoundland we have a railroad 547 miles long which runs uphill, downhill, over steep grades and around sharp curves and takes 26 hours to go from St. John's to Port aux Basques along a narrow-gauge track. I do not think the house will think it unfair if the people of Newfoundland ask for some consideration, when the actual distance between St. John's and Port aux Basques is only 315 miles. They should not have to pay on a mileage basis because that road was constructed in a great semicircle around the island in order to touch at as many settlements as possible.

We feel that the economic and geographic considerations that warranted the Maritime Freight Rates Act are to be found in our province. However, following the pattern set out in the report of the royal commission the minister has told us that freight rates are to be treated on a national rather than a regional basis. I apologize if I have not expressed his thoughts in as fine language as the minister would use, but I found it hard to follow him as he read his statement this afternoon. As I understand it, the recommendation of the royal commission is that in future freight rates should be treated on a national basis and as far as possible the regional idea should be eliminated. That is impossible. I do not believe the government will be able to answer the complaints and objections that will be made to the committee in regard to the application of the principle of equalization to the maritime provinces and Newfoundland.

It is generally believed in Newfoundland that the new scale of freight rates put forward by the railroads to the board of transport commissioners is likely to come into effect. This has caused a great deal of anxiety among members of boards of trade and industry generally in Newfoundland. These people have organized themselves to fight and if possible have this principle dropped. The hon. member for St. John's East (Mr. Higgins) quoted from the Daily News of October 22, and I should like to quote an editorial which appeared in the Daily News of October 18. I hope the minister will not feel offended at the strong language that is used; I think it indicates the feeling that prevails in Newfoundland. The editorial is headed "Iniquitous Proposals" and reads:

The so-called freight equalization measure, now before parliament, seems to have made all too little impression on the public mind. That is unfortunate because its provisions will affect the living of every citizen of Newfoundland. Its effect will be to double or nearly double all existing freight rates between St. John's and the main distributing centres of the mainland.

And again:

Under the equalization system class 1 commodities would show a freight rise of from $2.60 to $4.86 per 100 pounds on the relatively short journey from Montreal to St. John's. Other commodities would show sensational rises of from 80 to 100 per cent above prevailing rates.

And further down:

The long and the short of It is that the equalization bill is an iniquitous measure which might very easily spell the economic ruin of this province and make a mockery of the whole institution known as confederation. It would wipe out at a single blow every advantage gained by the maritime provinces as compensation for the weakness in the Canadian federal system of their economic geographical position. It would concentrate wealth in the centre and underwrite poverty in the maritimes.

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And then it concludes:

The government of this province has a big stake in the fight against equalization. It has the stake of its own industrial development policy. For if new industries have to pay exorbitant freight rates to get their goods to market or have to pay those same exorbitant rates not only to send their finished products to consuming centres but also to bring in some of their raw materials, they haven't a ghost of a chance to succeed unless the government sets up its own system of subsidized transportation between Newfoundland and the mainland. That is a prospect that nobody wants to contemplate but which may have to get serious consideration if equalization cannot be stopped.

It appeared to me this afternoon that the hon. member for Halifax (Mr. Dickey) did not appreciate the effect this legislation may have upon freight rates to the maritimes from central Canada and from the maritimes to central Canada. The hon. member referred to their being unanimity in the house, in favour of this bill, but I am sure the minister must realize that there is no evidence of such unanimity on the part of speakers on this side of the house representing the maritimes. Such unanimity does not exist. The hon. member for Halifax referred to subsection 4 of the bill which reads:

(4) Subsections one, two and three are subject to the proviso to subsection five of section three hundred and twenty-five of this act and to the Maritime Freight Rates Act, and do not apply in respect of

(a) joint international rates between points in Canada and points in the United States of America;

(b) rates on export and import traffic through Canadian ports, where in practice such rates bear a fixed and long-standing relationship with rates on similar traffic through ports in the United States of America:

(c) competitive rates;

(d) agreed charges authorized by the board under part V of the Transport Act, 1938;

(e) rates over the White pass and Yukon route; and

(f) any other case where the board considers that an exception should be made from the operation of this section.

I have here the Maritime Freight Rates Act. It has been pointed out to us by the maritime transportation commission, to which Newfoundland adheres and which is the source of the figures quoted by the hon. member for Annapolis-Kings, that there will be an increase of from 63 per cent to over 100 per cent if the rates proposed by the railways are accepted. It is the contention of the hon. member for Halifax, and I believe it is the belief of the minister, that the Maritime Freight Rates Act will protect the maritimes and Newfoundland from the application of any such rates. The minister has not said so and I do not think he was sure of it himself, although he did say that there will be no 100 per cent increase.

The hon. member for Halifax said it was fantastic to think of a 100 per cent increase.

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Certainly it is fantastic, but that does not mean to say that the government will not do something fantastic. One never knows what the government might do. If they do this they will certainly be doing something that is fantastic. Section 3 of the Maritime Freight Hates Act reads as follows:

All persons or companies controlling, or concerned in the preparation and issue of tariffs of tolls to be charged in respect of the movements of freight traffic, whether on behalf of His Majesty or otherwise, upon or over the eastern lines specified in section 4 of this act, and hereinafter called "preferred movements," are hereby authorized and directed upon and after the first day of July, one thousand nine hundred and twenty-seven, to

(a) cancel all existing freight tariffs in respect of such preferred movements;

(b) substitute other tariffs for the tariffs so cancelled showing a reduction in such tariffs of approximately 20 per cent.

That arises out of the famous Duncan report. The tariffs that were in existence in 1927 had to be abolished and new tariffs cutting them by 20 per cent had to be substituted. Those tariffs are not in effect today. They have been increased by several freight increases. What is to prevent their being increased again?

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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LIB

John Horace Dickey

Liberal

Mr. Dickey:

Read the act.

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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PC

William Joseph Browne

Progressive Conservative

Mr. Browne (St. John's West):

I have been reading it for the last couple of days.

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
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LIB

John Horace Dickey

Liberal

Mr. Dickey:

Read it for another couple

of days.

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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PC

William Joseph Browne

Progressive Conservative

Mr. Browne (St. John's West):

I do not

think the hon. member for Halifax can have read it. You will notice that section 3 refers to preferred movements. Preferred movements are described in section 4 of the act, which reads:

The following are preferred movements as referred to in section 3 and other sections of this

(a) Local traffic, all rail-Between points on the eastern lines; for example, Sydney to Newcastle;

(b) Traffic moving outward-

That is traffic moving out of the maritimes, westward. That is what is meant by that. It continues:

-westbound, all rail-From points on the eastern lines westbound to points in Canada beyond the limit of the eastern lines at Diamond Junction or Levis; for example, Moncton to Montreal-the 20 per cent reduction shall be based upon the eastern lines proportion of the through rate or in this example upon the rate applicable from Moncton west as far as Diamond Junction or Levis;

(c) traffic moving outward, export traffic, rail and sea . . .

That is traffic that goes right through to Liverpool. The next section of the Maritime Freight Rates Act states that the 20 per cent reduction does not apply to traffic moving inward or outward from the United States, all rail, or to traffic moving inward east-bound from Canada, in other words from

points in Canada not on the eastern lines eastbound to points on the eastern lines. For example, from Toronto to Moncton or from Toronto to Saint John, or from any place west of Diamond Junction or Levis going east the 20 per cent reduction does not apply at all. Therefore you will see that if there is any increase in freight rates it will apply to the traffic moving to the maritimes and Newfoundland, and the most the maritimes can expect by way of relief is 20 per cent of the newly increased rate on the traffic westward.

Therefore there is nothing in the legislation or in the Maritime Freight Rates Act to give any reassurance to the people of the maritimes and Newfoundland that they are not likely to have serious freight rate increases imposed upon them. It seems to me the minister should give some assurance on this matter. If the reasoning that has been put forward by the hon. member for St. John's East (Mr. Higgins), the hon. member for Annapolis-Kings (Mr. Nowlan) and myself is not sound, then I feel that the minister should say why it is not sound. The other evening I tried to get him to do so, but he did not. I have read his speech again and I can find nothing in it to show why the arguments and the fears of the people of the maritimes and Newfoundland are not justified. Therefore it seems to me that at this stage there is every reason for the minister when he replies, if he has evidence that we are wrong, to show where we are wrong and allay the anxiety which I believe is justifiably felt in the maritimes and in Newfoundland.

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Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
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CCF

Percy Ellis Wright

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

Mr. P. E. Wright (Melfort):

Mr. Speaker, I make no apology for taking part in the debate on this bill. I think it is probably one of the most important measures we will have before us at this session, especially as it affects western Canada, the maritimes and British Columbia. I should expect that every member from western Canada would want to take part in the debate and express his views and opinions as to what should happen with regard to the Canadian freight rate structure. We can never have distribution of industry in Canada until we have a freight rate structure different from what we have at the present time. It is one of the main reasons industry is concentrated in central Canada, and why it is so difficult to disperse industry throughout the country. Therefore I should think every member from western Canada would feel it his duty to take part in this debate.

The first thing mentioned in the bill is the board of transport commissioners. It deals with the salaries of the members and certain conditions under which they serve. I agree with many members who have preceded me

and with the report of the Turgeon commission, that the personnel of the board of transport commissioners should be strengthened. Too often in Canada appointments to such boards have been on the basis of service rendered to a political party rather than a particular knowledge of the subject the board has to deal with. I think it is time that practice was stopped, especially on a board of the importance of this one. There is only one other board I can think of that is as important; that is the tariff board. Both boards deal with very complicated subjects which it takes not one or two months but probably one or two years to master. The personnel of these boards should be men of standing in the community, men with some knowledge of the subjects with which they are dealing.

I agree with the hon. member for Assiniboia (Mr. Argue) with respect to the chief commissioner and the assistant chief commissioner. I do not see why of necessity they should be members of the legal profession. As a matter of fact I know of no other group in the country who have less to do with freight rates than the members of the legal profession, unless they happen to be connected with one of the railway companies as legal advisers. There are businessmen in this country who have through their own business a fair knowledge of the freight rate structure and of some of the difficulties of operating thereunder. I would think such businessmen or economists could quite well fill these important positions. As a matter of fact in the fourth section of the bill it states that an appeal now lies from the board to the Supreme Court of Canada upon a question of law or jurisdiction. Therefore if the chief commissioner made a mistake with respect to a question of law it would not be as serious today as it might have been before when there was no appeal on questions of law to the supreme court. Therefore the necessity that the chief commissioner be a legal man would seem to me to be removed by this section of the act. I would suggest that in Canada there are men other than those in the legal profession who could serve on this board and do a very good job so far as equalizing freight rates is concerned, and the various other duties which come under the jurisdiction of the board. We have had members of the legal profession on the board as chairmen, and according to this report of the Turgeon royal commission on transportation in the past 23 years the board has not performed its functions in a satisfactory manner. As a matter of fact in a great many respects

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this report is a condemnation of the board. On page 271 of the report the commission states:

That the board accepted the assumption that all rates could be justly and reasonably increased by the same large horizontal percentage increase . . . This is an unwarranted assumption;

That the board did not itself obtain, or compel the railways to file with it, proper statistics concerning traffic movements so as to enable it to determine which articles could bear greater or lesser increases in rates;

That the board has not paid sufficient attention to the classification to ascertain that articles are properly classified to meet changing conditions;

That the board has not over the years kept close enough supervision over competitive rates;

That the board has not in the past 23 years taken steps to bring about equalization between rates in the west and in the east.

That the board has not paid proper attention to the effect of increases in rates on long haul traffic.

These were not all faults of the board. In another place the report states that the government has failed to see that the board had the proper technical help to do the job that it should do, and that the board did not get the assistance it should have obtained from the railways in that the railways did not file sufficient information with the board to enable them to make decisions. I do not know whether the board had the authority to demand that the railways do so, but at least up to the time this report was tabled apparently the board did not have the proper statistics or information to enable it to do otherwise than make large horizontal increases in freight rates.

There are some good features in this bill. It does provide that the board shall have more authority than it had before to demand that the railways file certain information. Up to date, however, the board has failed to do the job it was appointed to do in maintaining reasonably equalized freight rates across the Dominion of Canada. I know that in Canada it is impossible to have a completely equalized freight rate structure. It is just nonsense to talk of it in those terms. We have geographical conditions in Canada which make it impossible. We have certain commodities which must be exported, and to be in competition with the exports of the countries where the commodity is produced close to the seaboard it is necessary for us to take that into consideration in setting the freight rates.

But having said that, there still remains in Canada a great field in which equalization could be carried out. Provision should be made for that. Some provision is made in the bill. In the last part of the bill there is an indication that a grant of $7 million will be made to bridge the gap between eastern and western Canada, and that this subsidy will be

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paid to the railways for the maintenance of the track in that area. But I want to point out that $7 million is just a drop in the bucket. Today we are paying far more than that on just one product, feed grain to eastern Canada. Since 1941 we have paid a total subsidy of approximately $160 million on that product. I ask the minister this. When the $7 million is paid is the government going to consider that they have bridged that gap, and so drop the subsidy on feed grain being shipped to eastern Canada? That would be the logical conclusion to draw, that having made a payment of $7 million they will drop the $16 million a year they are now paying as a subsidy on feed grains. There has been no indication from the government in any of this legislation as to their intentions in this regard.

In connection with this matter of feed grains I want to point out that the recommendation of the Canadian Federation of Agriculture is dealt with on page 161 of the commission report in these words:

The Canadian Federation of Agriculture recommended that the feed grain assistance policy be incorporated in the freight rates structure as a permanent feature of Canada's agricultural program, and stated it should be brought about by "parliamentary statute similar to the Maritime Freight Rates Act."

We have three bills before us, and I ask the minister what the intention of the government is with regard to this subsidy. At the present time these payments are made from year to year, and the agricultural industry has no assurance that they will continue to be paid. That is not a fair position in which to leave the agricultural industry of this country. If the government expects increased production, if they expect a stabilized agriculture, they have to do something about the subsidy being paid on feed grains. Before this subsidy was paid the situation in Canada was that feed grain going to eastern Canada to be fed by the producers of agricultural products in eastern Canada paid a higher freight rate than similar grain going to the producers of similar products in Holland, Belgium and the Scandinavian countries. The producers in those countries could buy feed grain for less than the producers in Ontario, Quebec or British Columbia. This is a matter that has apparently escaped the attention of the government. They are continuing to deal with it from year to year as pressure is brought to bear at the time the freight rate on feed grain is reconsidered. I would ask the minister to state the policy of the government with respect to this matter when he speaks at the conclusion of this debate.

Another matter which I believe should be dealt with in the equalization of freight rates concerns freight rates over the Hudson Bay railway. I have figures which indicate that a shipment of pulp, for instance, to the port of Churchill from Erwood in northeastern Saskatchewan via the Hudson Bay railway pays double the freight rate for the same product shipped the same number of miles to the United States market. This does not make sense. It simply means that the port of Churchill cannot be used for the export of these products because the freight rate is such that they cannot compete in the European market. If we had some equalization of these freight rates it would mean that we could use that port to export some of these products which can be produced in northeastern Saskatchewan and northwestern Manitoba.

Another matter with which I should like to deal is the classification of freight. This is a tremendously involved matter, and I am not going to try to argue the technical points. It is so involved that even the shippers are unable to find out exactly what classifications their products take. Not only that, but the railway agents themselves in many cases are unable to give proper classifications to shippers. I know of a man in western Canada who makes his living by going to merchants and asking them for their freight bills for the last month. He looks over those freight bills and then says to the merchant: "I believe I could save you a lot of money on these freight bills". The merchant inquires as to what it will cost. The man replies: "Just half of what I save you." By getting the proper classifications and making applications for refunds, he is making a good living and the merchant is getting half the take-home pay of this particular man.

As a result of classifications that are so involved that the shipper himself cannot determine what the proper classification is, and the agents of the railway companies themselves apparently do not know what the proper classification is-and being in doubt of course they naturally classify the particular article in the highest category-the shippers in this country find that freight charges are costing them much. This act claims to simplify these classifications. I know it is not an easy matter to accomplish this result. Under the old act the classifications were: (a) the standard freight tariff; (b) special freight tariffs; and (c) competitive tariffs. There were, of course, a great many other classifications under those three headings. But under the new act there Eire four classifications: (a) class rate tariffs; (b) commodity rate tariffs; (c) competitive rate tariffs; and (d)

special arrangements tariffs. Special arrangements tariffs are defined in section 7 of the bill which sets out the new section 328, subsection 5 of which reads as follows:

Special arrangements are charges, allowances, absorptions, rules and regulations respecting demurrage, protection, storage, switching, elevation, cartage, loading, unloading, weighing, diversion and all other accessorial or special arrangements that in any way increase or decrease the charges to be paid on any shipment or that increase or decrease the value of the service provided by the company.

I do not know just what they can put under that definition, but it seems to me they can put nearly everything under it. Just how the ordinary shipper in this country is to be able to tell what classification his particular freight comes under will still be a mystery to him, to the agents of the company and to everyone who has not made a special study of the act. I would therefore suggest to the minister that as to these classifications some simplification be brought about so that shippers may at least have some knowledge of the proper classification under which their freight comes. Otherwise you will find that, as at present, some people will make a living simply by going around and correcting the mistakes made by either the shippers or the agents of the companies themselves.

These are matters which I think the minister and the committee should take into consideration in redrafting this act. Freight rates are important to our economy in Canada; in fact I know of nothing that is more important to our economy. Unless we get under this act some clarification with regard to the equalization of our freight rates and the classification of our freight, there will not be much advantage in drafting a new act.

There are many other matters which might be mentioned in dealing with this act, but I do not propose to deal with them tonight. When this bill goes to the committee I believe witnesses will be called before it, and the committee will have more evidence than we have here on which to base its judgment and recommendations with regard to improvements in the act. When the bill comes back to the house I hope it will be more specific than it is at the present time with respect to some of its clauses.

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Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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PC

Walter Gilbert Dinsdale

Progressive Conservative

Mr. W. G. Dinsdale (Brandon):

Mr. Speaker, it has not been my privilege to listen to the background of debate of this question of freight rates other than that to which we have been listening today. I think, however, that sufficient has been said to give me one or two points that I may use in my remarks tonight. Of course I have also made it my business to read carefully the bill and the report of the Turgeon commission, as well as

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the brief submitted by the Manitoba government. Tonight I want to deal with some of the main problems that the bill we are considering at the moment raises with respect to Manitoba and the prairie provinces generally.

It seems to me the question of utmost importance that emerges out of the discussion is the possibility of increasing freight rates. It would seem that is even more important than this matter of equalization which has been discussed by so many hon. members today. The whole problem was brought to the attention of the government in the first instance, I believe, by the submission of the prairie provinces with regard to the problem of rapidly increasing freight rates; and in the early stages the matter was discussed before the board of transport commissioners and the federal cabinet; then more recently, of course, it was discussed by the royal commission on transportation.

I think I am correct when I say that Manitoba was the first province to appear with its brief before the royal commission on transportation. I agree with the other hon. members who have taken part in the debate today that the railroads are extremely important to the whole of the Dominion of Canada; and obviously they are extremely important to the economic well-being of western Canada. We have had references to the history of the development of our railroad system, and at this time there is no necessity for me to repeat those facts. I should like, however, to give some suggestions that will indicate why Manitoba has a special interest in the bill that is under discussion here this evening.

In 1951 the two railroads will collect from the people of Canada more than $1 billion. While the average Canadian pays $5 out of $100 of income received, the statistics I have obtained indicate that the Manitoba resident will pay close to $1 out of every $15 of income received or almost $7 out of every $100 of income. Mr. Moffat, the economic adviser to the Manitoba government in regard to this matter, recently made this statement:

I doubt whether there is any other place in the world which pays such a high proportion of its income for transportation services as do the people of the prairie provinces.

There is another way of expressing the thought I am endeavouring to convey to the members of the house. The payments that will be made to railroads in the present year are about equal to the normal average farm value of all the wheat, oats and barley produced in Canada.

Looking at the bill specifically-and I have endeavoured to read it as carefully as possible

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*-I say it seems to be a mixture of sections which merely clarify and spell out more carefully certain procedures. Second, there are other sections which make rather important changes in the rate structure of the Canadian railways. This of course has been pointed out very effectively by the speakers representing the maritime point of view. Let me quote from the famous section 332A, if I may be permitted to repeat. It reads:

It is hereby declared to be the national freight rates policy that, subject to the exceptions specified in subsection four, every railway company shall, so far as is reasonably possible . . . charge tolls to all persons at the same rate, whether by weight, mileage or otherwise.

The bill then goes on to say that with a view to implementing that policy the board of transport commissioners may require any railway company:

To establish a uniform scale of mileage class rates applicable on its system in Canada.

Second:

To establish for each article or group of articles for which mileage commodity rates are specified, a uniform scale of mileage commodity rates applicable on its system in Canada.

That deals with this matter of equalization which has been discussed so frequently today. If I may express it in another way, for the first time this parliament is proposing to pass a law requiring the board of transport commissioners and the railways to provide throughout Canada a uniform scale of railway freight rates. That is the matter on the surface. There is a joker, as we soon discover as we read the bill. This joker is in the form of the many exceptions to the equalization aspect. I am going to mention some of these exceptions at the risk of repetition; but in order to make my point this evening it will be necessary to do so. The first exception is that there can of course be differences in the rates if the description of the commodities is different. In other words, the rate for wheat can be different from the rate for automobiles. The second exception is the rate can be different if a different kind of equipment is used. The rate for tank cars and the rate for gravel cars can be different. Then there is a third exception, which is that joint international rates between Canada and the United States can continue to be dealt with on an international basis and need not be equalized. Then, fourth, rates introduced to meet competition do not need to be equalized. An elaborate new section is included with respect to the information to be provided to the board when any competitive rate is introduced. The thought in mind in regard to this clause apparently is that the board should take a more aggressive stand in regard to competitive rates to see that the railways do not continue

the practice which has developed in the past, under which competitive rates in some areas were reduced to such an extent that the revenue loss had to be made up by extra high charges on long hauls of non-competitive traffic in other areas.

That is very important so far as the prairie point of view is concerned. There is a fifth exception which says that in addition to those specified exceptions the equalization section will not override the subsidy arrangement included in the Maritime Freight Rates Act and the special provision with respect to the Crowsnest pass rates in western Canada. And finally there is a provision that an exception to the principle of equalization can be made in any other case where the board considers that an exception should be made. From this long list of exceptions, and from the importance of the items covered in the exceptions, it seems clear to me that the new legislation with respect to equalization of freight rates in different parts of Canada is applicable only to a relatively small part of the total rail traffic.

We might look at it in this way. It provides that the rates shall be equal for the same distance in eastern Canada, western Canada or central Canada for all traffic which moves under similar conditions in all parts of Canada. But where conditions are different the rates also may be different. Obviously the situation with respect to the shipment of grain in very large volume from the small towns of western Canada to Fort William is quite different from the situation with respect to the shipment of grain from one point in eastern Canada to another point in eastern Canada. Consequently no one, so far as I can see in the report, has seriously proposed that the grain rates in western Canada and eastern Canada should be equalized. We might use another illustration. There are great differences in the shipping conditions applicable to the coal mines in Alberta and the small towns in the prairies as compared with the shipment of coal from import points in eastern Canada to the big cities of eastern Canada. And again no one has seriously suggested that the coal rates in the two areas should be equalized. It appears that what it will mean is that a person shipping hardware or groceries 100 miles from Brandon, Souris or any other Manitoba town will pay the same rate he would pay if he shipped the same commodity the same distance from a town in Ontario, Alberta or British Columbia. As far as I can see this is as far as the equalization aspect goes.

Turning from the problem of equalization -and that has been the issue most frequently discussed-as I indicated in my opening

remarks I feel that underlying the discussion today is the problem of the constant demand for increased freight rates. I want to spend a few moments dealing with that situation. This matter of equalization should never obscure the fact that an increase of 5 per cent in the general level of rates will cost the people of Manitoba about $8 million. The regional questions and the questions of equalizing rate levels, important as they are, particularly in the manner in which they call upon one region to meet deficits arising elsewhere, are very unlikely to amount in dollars and cents to a figure that is at all comparable to the cost of a general rate increase of 4 per cent or 5 per cent, and that is the crux of the matter. It was that situation, as I indicated, which brought the whole problem of freight rates out into discussion, and I think it still lurks very strongly in the background and will inevitably have to be dealt with by the board of transport commissioners, as well as possibly by hon. members.

If I might review just briefly the story of freight rate increases since 1946 as I have discovered it in the reports, it was in October of 1946 that we had the first general increase in Canadian freight rates since 1920. During the twenties, the thirties and for that matter all during the second world war, the railways operated on the same basic rate structure and were able to maintain their systems in such condition that they found it possible to meet the tremendous increase in wartime traffic without any serious disruption in the ordinary services provided.

At first glance it might seem strange that railways could carry on with no change in rates between 1920 and 1946, a period of some twenty-six years, and that in the next three years they should apply six times for rate increases and feel justified in asking for a further 20 per cent in June, I believe, of 1951. On the other hand of course it may seem strange that in a period when prices of commodities in Canada have risen rapidly, and when everyone is aware that living and operating costs are increasing, there should be strong opposition to increases in railway freight rates. Underlying the dilemma is the problem of inflation which has also been discussed in this chamber from time to time during this session.

There are two viewpoints in the matter. First there is the viewpoint of the railroads, and then there is the viewpoint of the various groups we have heard expressed today. I should like to refer particularly to the Manitoba viewpoint in regard to freight rate increases. The railway problem, in one sentence, is that of increased operating costs

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which mean increased wages paid to employees and increased costs of materials used by them. I have some statistics which have been compiled and which present the situation from the railway standpoint. In the present year the two railway systems will pay very close to $500 million in wages to their employees. This alone uses approximately one-half of their total revenue. The railways estimate that if the 1939 wage rates were still in effect they would have to pay only about $270 million in wages. In other words the increase in wages alone, according to the railways, has cost them about $230 million more than the pre-war period.

Then there are the costs of fuel, ties, rails and other materials used in railway operations, which have increased at an even more rapid rate, but which actually form a smaller part of the total railway costs. The Canadian National Railways have estimated their increase in these items at about $75 million; and while there are not any figures for the Canadian Pacific, they would correspond to those of the national system.

When the railways present their case, as they will be doing of course after the house has considered the legislation, these will be the arguments used. The provinces, on the other hand, point to the very large increases in revenue which have occurred, without regard to the rate increases. In 1939, according to my statistics, the Canadian railways hauled 85 million tons of freight, while in 1951 they will haul over 155 million tons of freight, an increase of over 80 per cent. Even at the old rate, the extra revenue from that amount of extra traffic would go far toward meeting the additional costs about which the railways talk. In addition there have been very large rate increases. Some of them were put into effect by the railways themselves, without need of approval by the board of transport commissioners. Some of them were based upon the international rate, where the practice has always been to allow Canadian roads to put in the same increases that are allowed by the interstate commerce commission of the United States, and some are increases granted from time to time by the board of transport commissioners.

On the average I am told these increases amount to about 40 per cent above the rates which were in effect up to April, 1948, and they represent revenue to the extent of $220 million in 1951 even at the present rate levels, without any increase on the basis of the new application. The result is that when everything has been said on both sides, inevitably we will have to face an issue-I suppose the board of transport commissioners

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will have to face it-to decide whether the increase in the operating costs of railways, as the result of wage and material cost increases, has or has not been covered adequately by the rate increase and the revenue from the increased volume of traffic hauled by the railways.

There seems to be some fear among hon. members that perhaps decisions will be made in favour of increases in railway rates. Of course the job primarily will be to balance the estimate of extra wage costs arising out of the forty-hour week and the extra costs of materials at current prices against the extra revenue which will come from the higher traffic volume this year, and to decide what increase, if any, is necessary to cover these costs and still leave available sufficient cash for the general purposes of the railways in the payment of interest, taxes, depreciation, dividends and enough surplus to carry through in any difficult period, or to improve the standard of the service. And that, of course, is a real problem.

I must not dwell longer upon that theme. I have not been too specific, so far as it affects the prairie provinces. My interpretation of the brief submitted by the Manitoba government is that they were very disturbed over the possibility of freight rates increasing above the present level. The whole matter was initiated by those provinces-the maritime provinces as well as the western provinces

which have found themselves in an unfavourable position so far as freight rate structure is concerned.

I wish to conclude by making brief reference to the Crowsnest pass rates. It may be that we are beating old straw, but I have been doing some research to satisfy myself and I find that these rates have been in effect at their present level for many years. I believe they were introduced in 1899 as the result of an agreement under which the Canadian Pacific was given a subsidy by the federal government for the construction of a railway line through the Crowsnest pass in southern British Columbia.

After being in effect for about four years they were reduced by the company, on its own initiative, to a level well below the agreement level, and were kept at the lower figure until 1918. Then from 1918 until 1922 the rates were suspended by action of the federal government, and they were restored in 1922. I understand these rates are fixed specifically by act of the Canadian parliament, and therefore cannot be changed except by another act of the federal parliament. It seems that because of this they were not an issue in the presentations before the board of transport commissioners. However, according to the report the C.P.R. did submit

figures to the Turgeon commission attempting to prove substantial losses at the present rates on grain, and asking the commission to make a complete inquiry into the whole subject. The governments of the three prairie provinces, the wheat pools, the united grain growers, the Canadian Federation of Agriculture as well as the provincial federations of agriculture in the western provinces took the position that this was much too large an issue to be dealt with by any body other than the highest policy-making body in the country, the federal parliament. If there is any change made in the Crowsnest pass rates it wffi come only after much discussion in this house. The future is unknown and no one can predict what may happen, but I feel that there are implications inherent in the bill now before us. I should like to read what the Turgeon commission had to say with reference to the Crowsnest pass rates problem:

The commission does not believe that the time has come to deal with this great export industry without regard to considerations which the board cannot apply. If it is suggested that in this case parliament might give special directions to the board, the answer is that the result of such procedure would likely prove unsatisfactory. So long as planning of any sort is called for in regard to these rates it had better continue to be done by parliament itself ...

In expressing the opinion that these Crowsnest pass rates should remain in their present position what is meant is only that they should remain under the immediate control of parliament. It cannot be said, and nobody has asked that it should be said, that their present level must never be changed. None of those who oppose repeal have asked for any more than that parliament's control should continue and that parliament itself should make whatever changes in these rates, upward or downward, it may appear just and reasonable to make as time goes on.

From the point of view of western agriculture that conclusion by the Turgeon commission is in one sense quite encouraging, but in another sense it seems to point a warning finger at the future. The recommendation is that those rates should continue under the control of parliament, but it leaves absolutely open the possibility of future review. No doubt as we move into a discussion of other aspects of the report beyond the scope of the present bill this matter will come up for consideration. I merely wanted to introduce it tonight so that Manitoba's position might be on the record.

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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CCF

Robert Ross (Roy) Knight

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

Mr. R. R. Knight (Saskatoon):

Mr. Speaker, I sometimes think the ministers on the other side must think that when we of the opposition are confronted with a Swiss cheese we see nothing but the holes therein, but the fact is that at times some of the legislation presented by this government does contain holes.

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

Too many maggots too.

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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CCF

Robert Ross (Roy) Knight

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

Mr. Knight:

I did not say that. However, I do want to refer to a couple of holes which I detect in this particular delicacy. It would not be expected that any member representing the federal constituency of Saskatoon would keep completely silent when the matter of freight rates or their equalization was being discussed in this house. That may be due to the fact that we are centrally located between two oceans a great number of miles apart and are therefore greatly dependent upon a reasonable freight rate. As the minister knows, our prosperity or lack of prosperity depends upon that.

Our geographical position is such that almost all the things we need must be brought in by freight. We bring our lumber, our apples and other fruits across the mountains from British Columbia; then across that unproductive bridge that has been referred to tonight we bring many of the manufactures of the east, farm machinery, canned goods, building material and so on. Saskatoon is a great wholesale and distributing point. There are many warehouses there to which goods are shipped and then from them reshipped to the smaller towns throughout the province. Those are the imports, but we also ship out all those products which are indigenous to the rich lands which surround our city.

Another matter which concerns us is the success of the Hudson Bay railway. The minister does not need to be told of the extent to which I have interested myself in that project. There again we have the inequality of freight rates working to the disadvantage of traffic moving over that route. That has a considerable bearing upon the future of our city.

I admit that most of the arguments have been covered by the western members from this C.C.F. group, and I hope some of my western Liberal friends will have a word or two to say upon these matters before this debate closes. One subject which I think has taken up too much time in this debate has been whether or not lawyers are the best men to be appointed as transport commissioners. I am inclined to agree with the hon. member for Assiniboia (Mr. Argue) that it does not matter what profession a man has, provided he is the best man for the job. He mentioned as a potential member of such a board a professor of economics. It is a matter of pride to me that we have in our city a man who has some reputation in connection with boards of this description. I am thinking of Dr. George Britnell, a professor of economics residing in my city. Some time ago he was briefed by Guatemala to make an economic survey of that country. I think he did that with great success. He

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presented a report which brought him considerable personal praise and which was of great assistance to the country which had employed him. Dr. Britnell also helped in the preparation of a brief which was presented to the royal commission on transportation. He is not a lawyer. Two other Saskatoon men also were of assistance in that matter, Dr. Fowke and Dean Cronkite. The latter gentleman is a lawyer, but I am sure he is none the worse on that account.

I should like to come back to the holes in the cheese to which I referred. Needless to say I welcome the principle contained in this bill and am prepared to support it because it contains the principle of equalization of freight rates. However, there are some other things in the bill from which I gain no comfort. The bill contains no assurance in connection with one thing with which we are concerned. Provision is made for the handing over of $7 million per annum to the railroad companies.

It is said to be the implementation of the recommendation of the royal commission on transportation that this money should be handed over to cover the maintenance of that barren portion of the railroads between the prairies and the industrial east. However, it was my understanding that the money was to be used for a reduction of freight charges across that unproductive bridge or other stretches of rail and therefore would have been an implementation of the principle of the bill, namely some degree of equalization. But I do not find that laid down in the bill. I find the principle laid down but little else in that particular clause. I do not find any provision stating that the railroads will have to give any return for that money, no quid pro quo, no guarantee that there will be in fact any equalization or reduction in freight rates in consequence of such payment.

I cannot see the value of the bill if it leaves so much to the discretion of the board of transport commissioners. There is another vital section of the act, and I say "vital" because it is the crux of the whole matter which is unsatisfactory to me. This is what I might call the equalization section. It sets out in two or three clauses labelled a, b, and c, the manner by which the board shall compel the railways to establish in some degree a uniform scale of freight rates such as is desired. That is fine as far as it goes. It permits the board to interfere with any freight rate scale which, in the opinion of the board, is unjust and unfair. But having done that it then proceeds, to my mind, to negative the whole matter so that these subsections do not apply. In the bill it is implied

Railway Act

that the board cannot be expected to tamper with international rates or with import and export rates. With that I suppose I can have no quarrel because another nation is concerned; but clause (c) gives me some concern. It simply consists of two words, "competitive rates". I do not know exactly what that term means, but I take it that we now have such rates; and if the term refers, as I think it does, to competitive water or motor transport rates then I ask hon. members if that loophole does not nullify the whole thing. Is it not in this particular section that the government should, by some method or other, prove its sincerity in its desire for equalization?

Then there is another clause which in my opinion leaves too much to the discretion of the board, in that it states that the board has jurisdiction over any other case in which the board considers that an exception should be made from the operation of this section. To my mind this clause nullifies the whole purpose of the bill because it simply leaves the board the discretion to allow any freight rates considered unfair by the people of Canada to remain unaltered.

Time is short, and I am quite sure the minister, who has been the victim, one might say, of all the inquiries, questions and doubts expressed, among which are mine, will want to speak at some length upon these matters. I think he cannot be expected to do so in the period of a minute and a half that is left. Therefore I think we should postpone his reply until another day when the minister can, in his own clear and concise way, answer our questions, put an end to our doubts, and give us in this case the complete cheese without any holes in it. I ask him when he replies to these questions to pay attention to the points I have put before him and try to satisfy me on these two particular matters.

On motion of Mr. Knight the debate was adjourned.

Topic:   RAILWAY ACT
Subtopic:   IMPLEMENTING CERTAIN RECOMMENDATIONS OF ROYAL COMMISSION ON TRANSPORTATION
Sub-subtopic:   MAINTENANCE OF TRACKAGE
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October 26, 1951